Does Obama Care About Housing Pick Mel Watt?
Posted at 1:57 p.m. on May 1
One day after bluntly conceding the limits of his congressional suasion, President Barack Obama is picking another potential uphill fight with Congress — curiously, by choosing one of its own for a top administration job.
The president is nominating Rep. Melvin Watt — the No. 3 Democrat on House Financial Services in his 21st year as a North Carolina congressman — to run the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac.
Even before the formal announcement Wednesday, some senior Senate Republicans began signaling they will move to block Watt’s confirmation. Some view him as having been far too cozy with the government-backed mortgage financers over the years, most dangerously, in their view, during the runup to the housing crash of five years ago.
Others fear that Watt would move quickly to allow the president to carry out a plan to permit “underwater” home owners — the ones who owe more on their mortgages than the worth of their houses — to reduce the principal on their mortgages.
“This gives new meaning to the adage that the fox is guarding the hen house,” said Sen. Bob Corker of Tennessee, the No. 3 Republican on the Senate Banking Committee, where the Watt nomination will first be considered. “The debate around his nomination will illuminate for all Americans why Fannie and Freddie failed so miserably.”
How big of a fight Republicans put up against Watt, and how strenuously the president pushes back will be further indicators of how much the balance of power has tipped away from the president as he passes the 100-day mark of his second term. At his news conference Tuesday, Obama seemed to concede that he might not again be able to credibly claim the upper hand in that relationship before the 2014 midterm elections. So he started a new line of criticism against the GOP conservatives who have regularly showed their ability to block him at almost every turn in both the House and Senate.
“You seem to suggest that somehow these folks over there have no responsibilities, and that my job is to somehow get them to behave,” he said, answering a reporter’s question. “That’s their job.”
“There are common-sense solutions to our problems right now,” Obama continued. “I cannot force Republicans to embrace those common-sense solutions. I can urge them to. I can put pressure on them. I can rally the American people around those common-sense solutions. But ultimately, they, themselves, are going to have to say, we want to do the right thing.”
Watt, a former chairman of the Congressional Black Caucus, has an unambiguously liberal voting record and has championed progressive causes on both Financial Services, where an interest has been promoting lending to the poor and minority-group members, and on Judiciary, where he has been a champion of civil rights. But at the same time, he’s drawn considerable campaign support from the financial services industry, which is not surprising given that his district includes parts of Charlotte, the south’s main banking center.
During the early stages of the financial crisis, he promoted legislation to permit bankruptcy judges to write down the principal and interest rate of loans for people whose mortgage balances are higher than the value of their homes. It was a forerunner of sorts to the proposal Obama has been pushing, but which has been blocked by the current FHFA chief, Edward J. DeMarco, a holdover from the Bush administration. Republicans fear the effort to aid underwater borrowers would lead to more federal bailouts.
Watt was a central player in negotiations over the Dodd-Frank financial services overhaul enacted three years ago. The next year, he opposed a bill to suspend already approved packages for Fannie Mae and Freddie Mac executives, arguing that slicing executive pay would have a negative effect on the companies in the future.