Rep. Mel Watt cleared a significant hurdle Tuesday afternoon toward becoming the new leader of the influential housing-finance regulator that oversees Fannie Mae and Freddie Mac.
The U.S. Senate voted 57 to 40 on a procedural motion that ensures a full vote on the nomination later today or early tomorrow.
Republicans had blocked the nomination for months, but Senate Democrats last month changed filibuster rules that made it harder to block White House nominees.
Watt is expected to be confirmed. President Barack Obama nominated the Charlotte, N.C., congressman and longtime member of the House Financial Services Committee in May to lead the Federal Housing Finance Agency.
The little-known agency has big responsibilities overseeing the combined trillion-dollar portfolio of the two government-controlled mortgage finance giants, Fannie Mae and Freddie Mac.
Watt’s nomination has been held up by wrangling between Republicans who want Fannie and Freddie to keep the focus on profitability and returns for investors and Democrats who want to make mortgage lending easier for all Americans.
Republicans like acting director Ed DeMarco. They think Watt is too closely tied to the White House, isn’t politically independent and lacks the needed technical experience for the position.
They worry that he’d force Fannie Mae and Freddie Mac to relax some mortgage-underwriting requirements to speed up lending. The White House also has advocated for lenders to forgive loan principal for Americans who owe more on their mortgages than their homes are worth. DeMarco has resisted that move on the grounds that Fannie and Freddie shouldn’t pay for it.
“You want someone in there who is pretty resistant to political pressure. And career politicians are not legendary for that,” said former Congressional Budget Office Director Douglas Holtz-Eakin, who leads the conservative research center American Action Forum.
Watt, who’s attending the memorial service for former South African President Nelson Mandela, couldn’t be reached for comment Monday.
Watt has the support of the National Association of Realtors and the National Association of Home Builders. But he’s faced opposition from influential conservative groups, such as Heritage Action for America and the Club for Growth.
Republicans, for the most part, like Watt. At his nomination hearing, Sen. Mike Crapo, R-Idaho, the ranking member of the Senate Banking, Housing and Urban Affairs Committee, commended him on his successful career and work on the House Financial Services Committee.
But Crapo questioned whether Watt was politically independent enough and had the necessary policy and technical expertise for the job.
“The director has virtually unchecked power to control two multi-trillion-dollar companies and through them the entire mortgage market,” Crapo said.
This isn’t the first time that Obama has looked to North Carolina to fill the position.
The last man nominated to head the Federal Housing Finance Agency, North Carolina Banking Commissioner Joseph Smith, withdrew his name in January 2011 after losing support from Republicans who were concerned about whether he’d exert enough independence from the Obama administration.
“It’s interesting when Joe Smith was nominated . . . he was not elected because he was viewed as too much of a technocrat,” said Rick Judson, the chairman of the National Association of Home Builders. “And yet you have Mel Watt – who is bright, articulate, experienced and knows the financial side of things – and yet he’s viewed as not as much of a statistician. It really boils down, unfortunately, to the political side of things.”
This week’s vote on Watt would be the first nonjudicial executive branch appointment to come up for a vote since the Senate’s parliamentary move changing the rules to allow confirmation by a simple majority of senators instead of the 60-vote filibuster-proof threshold needed to advance to a final vote.
Watt expressed confidence after the vote that he’d finally be confirmed.
“I’ve known it’s not been about me,” he said. “Every once in a while they’ll make some noises about qualifications. But no one felt they were saying that with a straight face. This has been about politics, and a lot of it has been directed at this president.”
Holtz-Eakin said Republicans would want to shed some light on an appointment that many of them thought was for the wrong guy. But he expects Watt to be confirmed and doesn’t think Republicans will waste much political capital fighting the nomination at the risk as being seen as obstructionist.
“I don’t think they’ll run the clock out as long as they could, because it’ll be viewed as just doing it for the sake of doing it,” he said.