Wednesday, May 1, 2013

New Obama Nominees: Melvin Watt and Tom Wheeler

President Barack Obama intends to nominate Rep. Melvin Watt to head the Federal Housing Finance Agency, the government regulator that oversees lending giants Fannie Mae and Freddie Mac.

If confirmed by the Senate for the FHFA post, Watt, D-N.C., a 20-year veteran of the House, would replace Edward DeMarco, an appointee of President George W. Bush who has been a target of housing advocates, liberal groups and Democratic lawmakers.

Watt represents the Charlotte area, home base of behemoth Bank of America Corp. He becomes yet another high-profile African-American and the second North Carolinian nominated by Obama in three days to a top government post. On Monday, Obama nominated Anthony Foxx, mayor of Charlotte, to head the Transportation Department.

Watt, who has a consistently liberal voting record, is expected to face Republican opposition to his confirmation. The White House was already lining up supporters who might hold some sway with GOP senators.

Watt’s nomination comes at a crucial time for Fannie Mae and Freddie Mac, two government sponsored mortgage-finance enterprises that the government rescued at the height of the financial crisis in September 2008 as they teetered neared collapse from losses on soured mortgage loans.
Taxpayers have spent about $170 billion to rescue the companies. So far, they have repaid a combined $55.2 billion.

Fannie and Freddie together own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans. Those loans are worth more than $5 trillion. Along with other federal agencies, they back roughly 90 percent of new mortgages.

The nomination also comes as the housing industry is making a comeback. Home prices are up, foreclosures are down and housing construction is on the rise. Moreover, Fannie Mae had its biggest yearly profit last year, earning $17.2 billion.

This nomination comes nearly a year after DeMarco, who has been acting director, stood by a decision to bar Fannie and Freddie from reducing principal for borrowers at risk of foreclosure, resisting pressure from the administration. DeMarco long has opposed allowing the mortgage giants to offer principal reduction.

In March, attorneys general from nine states, led by Democrats Eric Schneiderman of New York and Martha Coakley of Massachusetts, sent Obama a letter saying that under DeMarco, Fannie and Freddie have been a “direct impediment to our economic recovery.”

White House Officials say that President Obama plans to nominate Tom Wheeler as the country’s top telecommunications regulator. He is expected to name FCC Commissioner Mignon Clyburn to serve as acting chairwoman while Wheeler awaits Senate confirmation.

Wheeler is former head of the Cellular Telecommunications & Internet Association and the National Cable Television Association. Since 2005, he has been a venture capitalist at Core Capital Partners. Wheeler would replace outgoing chairman Julius Genachowski, who announced in March he would be stepping down.

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