Fannie and Freddie Overseer Promises to Maintain Independence

Joseph A. Smith Jr., who has been nominated to be chief regulator of Fannie Mae and Freddie Mac, promised to resist pressure from administration officials and maintain independence if he is confirmed to the job.

Smith, currently North Carolina’s banking commissioner, made the promise to the Senate Banking Committee, which held a hearing today on his nomination to lead the Federal Housing Finance Agency. The Senate is expected to vote on his nomination later this month.

“Will you be independent?” Alabama Senator Richard Shelby, the panel’s top Republican, asked Smith.

“Yes,” Smith responded.

He also pledged to work to end government control of Fannie Mae and Freddie Mac.

“Conservatorship cannot be a long-term solution,” Smith said. “Congress and the administration have important decisions to make regarding the future structure of the housing finance system.”

Obama nominated Smith, 61, on Nov. 12. If confirmed by the Senate, he will replace FHFA Acting Director Edward J. DeMarco at the helm of an agency that has overseen Fannie Mae and Freddie Mac since they were seized by the federal government in 2008.

The assignment places Smith at the center of Obama administration efforts to determine the future of the mortgage companies, which own or guarantee more than half of U.S. mortgages.

The U.S. Treasury Department, which has provided $151 billion in aid to sustain Fannie Mae and Freddie Mac under U.S. conservatorship, will present a plan for overhauling the nation’s mortgage-finance system in January.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.

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