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Republicans Block Watt Nomination for FHFA Head

""Senate"":http://www.senate.gov/index.htm Republicans blocked on Thursday a vote on the nomination of Rep. ""Mel Watt"":http://watt.house.gov/ (D-North Carolina) to head up the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA).


Watt's nomination was stopped in a 56-42 vote to end the debate over his confirmation. Sixty votes were needed to invoke cloture and move forward.

Edward DeMarco has led the agency as acting director since August 2009 following his appointment by President Obama. Throughout his tenure, he has attracted criticism from Democrats and consumer advocates who say he hasn't gone far enough to help distressed homeowners. One of the bigger controversies surrounding DeMarco is his steadfast opposition to the use of principal forgiveness by the GSEs, which he believes would be too costly to taxpayers.

While he has said he would have to further investigate before making a move as FHFA director, Watt has in the past urged for principal reduction. (He asserted at a Senate Banking Committee hearing in June that he was advocating for his constituents in North Carolina at the time and not necessarily the country at large.)

The topic of principal forgiveness isn't the only point where Watt and DeMarco diverge, however.

""A Watt-led FHFA would be a considerable departure from DeMarco's tenure,"" said ""FBR Capital Markets"":http://www.fbr.com/ in an analysis released before the vote. ""He would be less likely to lower the loan limits at Fannie and Freddie and would be unlikely to make aggressive changes to their multi-family lending programs. We believe that Congressman Watt could change the course of some of DeMarco's strategic goals and could be more accommodative to lender concerns on clarity for representations and warranties.""

FBR also noted that Thursday's failed vote could throw a wrench in Watt's plans, with February 28, 2014, being the deadline for the congressman to file for re-election should his nomination not work out.

""Practically speaking, he would likely need to make a decision well before the deadline,"" the firm said.

Should Watt take his name out of the hat, FBR has its eye on Sandra Thompson, who is currently FHFA's deputy director of housing mission and goals, as the next potential nominee.


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