Fannie Mae Regulator Nominee Watt Backed by Senate Banking Panel

The U.S. Senate Banking Committee approved the nomination of Representative Mel Watt as Federal Housing Finance Agency director, setting up a floor fight over President Barack Obama’s pick to oversee Fannie Mae.

The panel today approved Watt, a North Carolina Democrat, in a 12-10 party-line vote that reflected lawmakers’ divisions over the nomination. He now faces an uphill battle to win Republican support for full Senate confirmation.

If Watt is backed by all 54 lawmakers who caucus with the Democrats in the 100-member chamber, he would need support from at least six Republicans to gain the 60 votes needed to bring the nomination to the Senate floor. Senator Richard Burr of North Carolina is the only Republican so far to endorse Watt.

The FHFA is the chief overseer of Fannie Mae and Freddie Mac, the mortgage financiers that have operated under U.S. conservatorship since they were seized amid losses in 2008. Watt would replace Acting Director Edward J. DeMarco, who has been criticized by Democratic lawmakers and consumer-advocacy groups for doing too little to help struggling homeowners.

Republicans have criticized Watt’s past support of Fannie Mae and Freddie Mac and calls for cutting the principal owed on troubled mortgages. Republicans also argue that Watt isn’t qualified for the job because he is a politician rather than a technician. Watt, 67, has served in Congress since 1992.

‘Wrong Signal’

“To end up having a politician overseeing two entities that politics have helped destroy, to me was not the place for us to go,” Senator Bob Corker, a Republican from Tennessee, said at a Bipartisan Policy Council event yesterday. “I just think it sends the wrong signal.”

The Watt vote comes after threats to change the Senate rules on stalled contentious nominations. On July 16, the Senate reached an agreement to end filibusters and confirm Richard Cordray as director of the Consumer Financial Protection Bureau. In return, Obama agreed to withdraw and replace two nominees for the National Labor Relations Board.

It is not clear if the recent Senate bipartisanship on nominations will translate to a Watt confirmation. If he gets the 60 votes needed to close debate, he’d need only a simple majority to gain confirmation. Senator Mark Warner, a Virginia Democrat, said it is a test of the nomination deal.

“This will be an early test to see whether the new and improved Senate has a 36 hour lifetime or longer,” Warner said yesterday.