Mel Watt's FHFA confirmation receives support
Will Senate hear the calls to dethrone the current FHFA head?
Now that members of Congress have squared away some of their differences—effectively ending the government shutdown—all eyes are on Congressman Mel Watt, D-N.C., and his pending nomination to head the Federal Housing Finance Agency.
The uproar on Capitol Hill began when Senate Majority Leader Harry Reid, D-N.V., filed cloture on Watt’s nomination, following a high-level meeting earlier this week between industry representatives and senior White House staffers.
A procedural vote on whether to consider Watt for the FHFA spot could happen as early as Thursday.
As of Wednesday, Watt’s nomination doesn’t have the necessary votes, but the situation remains incredibly fluid, Compass Point Research & Trading Group said when analyzing the situation.
Policymakers and organizations are dropping breadcrumbs on the nomination trail, hoping that voicing their support will lead Watt to victory.
Civil rights and human rights groups — including the National Urban League — announced their support for Watt Wednesday, outlining various criteria Watt needs to meet to replace FHFA current acting director Ed DeMarco.
Many of the groups signed a joint letter sent to the Senate, citing Watt’s experience in housing finance — including 20 years as a member of the House Financial Services Committee.
Similarly, the chairs of the Congressional Tri-Caucus — comprised of the Congressional Black Caucus, the Congressional Asian Pacific American Caucus and the Congressional Hispanic Caucus are behind the Watt nomination.
"Rep. Watt advocated for provisions that protect the American people from damaging financial practices and that expand the availability of affordable housing for low-income and middle class families," the Congressional Tri-Caucus chairs said.
The Mortgage Bankers Association is also climbing aboard the Watt nomination train.
The organization believes Watt could bring considerable experience to the post of FHFA director given his strong base of understanding on a wide variety of public policy issues related to housing finance, explained MBA chairman E.J. Burke.
Other participants in the industry have questioned a Watt's nomination, fearing his decisions over conterversial issues such as principal reductions would be politically motivated, rather than based on what's good for the housing market.
Rep. Maxine Waters, D-Calif., has been all but quiet in her support of Watt’s confirmation, arguing that the Congressman is well equipped to address housing finance challenges as he remains committed to protecting consumers, expanding affordable rental and providing oversight of financial institutions.
"We need a leader like Mel — thoughtful, well-informed, principled and fair — to address the most important challenges that we face as a nation," she stated.
However, there are industry experts holding firm that Watt’s confirmation will not happen — it’ll be a close race, nonetheless.
Compass Point is increasing its odds that Watt will be confirmed from 30% to 45% given the renewed White House push. Not to mention, the swaying of Republican votes and the likelihood of Senators to put procedural holds on a number of nominations, resulting in another battle followed by a broader confirmation deal under the shadow of the nuclear option — a situation similar to the Richard Cordray CFPB nomination.
Regardless, it won’t be enough to hand over the FHFA throne to Watt.
Bottom line: The sudden push for a new director all boils down to one thing: timing.
The White House is intent on making a final push for Watt’s nomination before it’s forced to shift attention to Janet Yellen’s nomination in advance of her mid-November hearing, coupled with the filing deadline to run for Congress in North Carolina, which has direct bearing on whether Watt will run for reelection, explained Compass Point analyst Isaac Boltansky.
While Watt’s confirmation will be a close call Thursday, the bigger meaning behind his confirmation or rejection will reflect whether the industry can handle a shift in regulatory change or will stick with what they know: DeMarco.