Republicans block nomination of Mel Watt to be key housing regulator

WASHINGTON -- The nomination of Rep. Mel Watt to be the regulator for housing finance giants Fannie Mae and Freddie Mac failed a key procedural vote Thursday because of strong Republican opposition.

President Obama nominated Watt, a veteran Democrat from North Carolina, in May to be director of the Federal Housing Finance Agency.

But attempts to bring his nomination to a vote by the full Senate failed Thursday as supporters were unable to muster the 60 votes needed to stop a threatened Republican filibuster.

Most Republicans fear Watt would force bailed-out Fannie and Freddie to take more aggressive steps to help the housing market, such as reducing principal on mortgages.

The so-called cloture vote fell three votes short. Only two Republicans -- Richard Burr of North Carolina and Rob Portman of Ohio -- joined all 53 Democrats and two independents in voting to advance Watt’s nomination despite strong lobbying by the White House, along with civil rights and housing groups.

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Senate Republicans also blocked a confirmation vote Thursday on Obama’s nomination of Patricia Millett to the U.S. Court of Appeals for the District of Columbia.

The White House is expected to continue to push Watt’s nomination. In an indication of that, Senate Majority Leader Harry Reid (D-Nev.), changed his yes vote to no at the end of the roll call. The procedural maneuver makes it easier for him to bring up the nomination for another vote.

The final tally was 56-42.

Watt would replace acting director Edward J. DeMarco, who has led the agency since 2009. Many liberals have criticized DeMarco, saying he has not done enough to try to help struggling homeowners, and there have been widespread calls from Democrats for him to be replaced.

DeMarco, a career bureaucrat, has not allowed Fannie and Freddie to reduce the principal on mortgages the firms own or guarantee. The government seized Fannie and Freddie in 2008 to prevent their collapse. They play a major role in the housing finance system, owning or backing about 60% of all mortgages.

Obama has been trying to replace DeMarco for several years. But Watt is the second nominee to be blocked by Republicans, who like the job DeMarco has been doing and support his opposition to principal reductions.

Republicans agreed with DeMarco that principal reductions by Fannie and Freddie could cost taxpayers money.

Since their seizure, Fannie and Freddie have received about $188 billion in bailout funds. The firms have paid about $146 billion in dividends on the bailouts to the Treasury.

Several Republicans also criticized the selection of a politician for a job they said was better filled by an expert on housing finance.

But Watt’s supporters noted he is a veteran of the House committee that oversees housing finance issues.

“Mel has over four decades of experience on issues related to housing and housing finance,” said Rep. Maxine Waters (D-Los Angeles), who added she was “extremely disappointed” by the Senate vote.

“Blocking the nomination of someone as qualified as Mel Watt has deprived the FHFA of a strong leader who is much needed to confront the challenges that lie ahead,” she said. “I do not believe we could find anyone better than Mel Watt to do this job.”

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