Mel Watt: The Wrong Man For The FHFA Job

*Mel Watt: The Wrong Man For The FHFA Job*
**By Phil Hall**

new-PhilH***President Obama’s nomination of Rep. Mel Watt, D-N.C., to become the director of the Federal Housing Finance Agency (FHFA) can be seen as a classic case of good news and bad news. The good news is that the White House has finally gotten around to filling a position that has been vacant since August 2009; the president initially chose former North Carolina Banking Commissioner Joseph Smith in 2010, but that nomination stalled in the Senate and Smith withdrew from consideration. The bad news is that the president opted to fill the FHFA spot with a political hack rather than an economist who understands the complexities of housing finance.

****Watt’s congressional record has more than its fair share of potholes. For one, his vocal opposition to efforts to audit the Federal Reserve took the debate to a strident low, while his attempt to slash the budget of the Office of Congressional Ethics following a 2009 investigation of his dubious fundraising tactics displayed a pettiness that was unbecoming even by Washington standards. Watt, a member of the House Financial Services Committee, has also been accused of being a little too comfortable with the banking industry – according to data from the Center for Responsive Politics, commercial banks have donated more than $365,000 to his election campaigns during his years in office.

****Watt has also displayed an uncomfortable level of tactlessness in dealing with his Republican counterparts. In a speech delivered on the floor of the House of Representatives last June, Watt claimed that his peers on the other side of the aisle were ignoring what he had to say.

****“I find that most of the time, my colleagues on the opposite side are tone deaf,” Watt said. “They are not really listening to what anybody is saying to them. They are off on some radical right undertaking, falling off the right edge of the Earth, and they are not listening to anything I say.”

****But, ultimately, it is the White House that is tone deaf. The FHFA is not supposed to function as a cabinet position. Instead, it is an independent regulator that needs to focus on what is in the best interests of the public. While Acting Director Edward DeMarco has been an erratic steward at many levels, he has been able to focus on risk mitigation within the government-sponsored enterprises while carefully planning how to approach the ultimate goal of ending their state of conservatorship. He has also shown a degree of leadership on housing finance issues that has been painfully lacking from either side of Pennsylvania Avenue.

****Watt, by comparison, is not a “big picture” man, and it is impossible to imagine that he will provide the leadership necessary to bring Fannie Mae and Freddie Mac to their next chapter. His unapologetic partisanship will most certainly contribute to the blockage of his nomination by Senate Republicans – which may not be such a bad thing after all. Going forward, the FHFA (and, by extension, the state of housing finance) will require a person of vision and courage to make tough, yet intelligent, decisions that could impact the economy. Mel Watt is not the person for that job, and his nomination for the FHFA spot is a humorless joke.

****ABOUT THIS COLUMN: We are happy to welcome Phil to the PROGRESS in Lending team. He’s a veteran financial services reporter with vast industry knowledge. In this regular column he’ll tell it exactly like he sees it. He will hold nothing back and his thoughts will surely be very colorful, which is why this new regular column will be appropriately called “Color Commentary.”