UPDATE 1-U.S. Senate panel backs Watt for housing regulator
WASHINGTON, July 18 (Reuters) - The Senate Banking Committee on Thursday backed Representative Mel Watt to be the next regulator of government-controlled mortgage financiers Fannie Mae and Freddie Mac, sending the nomination to the full Senate where it faces an uncertain fate.
President Barack Obama nominated Watt, a Democrat from North Carolina, to replace Edward DeMarco as head of the Federal Housing Finance Agency on May 1, but many Republicans were quick to make clear they would not support the nominee.
Members of the committee approved the choice strictly along party lines, a sign of the trouble the nomination is likely to face in the full chamber, where some Republican support will likely be needed for Watt to win final approval.
"As Congress continues to seek consensus on a long-term solution for our housing finance system, we need a Senate-confirmed director in place at the Federal Housing Finance Agency," said the panel's chairman, Democratic Senator Tim Johnson of South Dakota. "Congressman Mel Watt is well-qualified to lead the FHFA in its conservatorship of Fannie Mae and Freddie Mac, and he too should be confirmed without delay."
The panel also approved Jason Furman to head Obama's Council of Economic Advisers, and Michael Piwowar and Kara Stein to be members of the Securities and Exchange Committee. It also backed current SEC Chair Mary Jo White to serve a full term.
In contrast to Watt, who has served in the House for two decades, those nominees garnered Republican support. To win confirmation by the full Senate, the 67-year-old North Carolina lawmaker will likely have to win a super majority of 60 votes to overcome Republican procedural hurdles.
Democrats control the chamber, with the current breakdown at 52 Democrats, 46 Republicans, and two Independents, who both caucus with the Democrats.
Republicans who oppose Watt's nomination contend he lacks the technical expertise needed to take on the conservatorship of Fannie Mae and Freddie Mac, which currently back about half of existing U.S. home loans. Watt is a long-time member of the House Financial Services Committee, which has jurisdiction over Fannie Mae and Freddie Mac, and a former head of the Congressional Black Caucus.
"Because the conservator has virtually unchecked power to control two multi-trillion dollar companies and through them our entire mortgage market, the conservator must be an apolitical financial regulator with technical expertise and someone who will resist political pressure from all sides of the political spectrum," said Senator Mike Crapo of Idaho, the top Republican on the Banking Committee.
If Watt's nomination does not clear the Senate, it would mark the Obama administration's second failed attempt to win confirmation for a permanent FHFA director. DeMarco has been serving in an acting capacity since 2009, and Obama's first attempt to fill the FHFA post met strong Republican opposition and the president's nominee Joe Smith, then the North Carolina banking commissioner, eventually withdrew in 2011.
Fannie Mae and Freddie Mac were seized by the government in 2008 as mortgage losses threatened their solvency. They were propped up with $187.5 billion in taxpayer funds, but have since returned to profitability and have paid about $132 billion to the U.S. Treasury in dividends for the government's stake.