On Tuesday, December 10, the Senate completed a series of procedural votes on the nomination of Rep. Mel Watt (D-NC) to head the Federal Housing Finance Agency (FHFA), voting 57-41 to confirm Rep. Watt as Director of the FHFA.  The vote broke mostly along party lines.

As Director, Rep. Watt has the authority to establish minimum risk-based capital requirements in excess of the minimum capital levels set forth in the Housing and Economic Recovery Act of 2008 to the extent necessary to ensure that Fannie Mae and Freddie Mac operate in a safe and sound manner.  In addition, he will be able to issue and enforce prudential management and operations standards, including: credit, interest rate, and market risks; counterparty risk; internal controls; liquidity; and investments.

Director Watt will also have the discretion to end the FHFA’s conservatorship over Fannie Mae or Freddie Mac.  Furthermore, in acting as conservator, Rep. Watt is authorized to operate Fannie Mae and Freddie Mac with all the powers of the shareholders, the board of directors, and the officers of these companies.  As such, in addition to shaping the business operations of Fannie Mae and Freddie Mac, Rep. Watt will also have the ability to shape the future of housing finance reform.

Just three weeks ago, Senators voted 52-48 to change rules on judicial and executive nominations in the Senate from needing a two-thirds vote to proceed with nominations to merely requiring a simple majority vote.  Had this procedural change not taken place, Rep. Watt would not most likely not have been confirmed.  In fact, his nomination was blocked on October 31 by Republican Senators under the 60-vote threshold.

We expect Rep. Watt to be sworn in as Director in the coming weeks.  Departing FHFA Acting Director Edward DeMarco has indicated he will remain at the Agency for a transition period.

For Additional Information

For additional details on how we expect Rep. Watt to lead the FHFA and how his confirmation will affect recent efforts at housing reform , please contact Micah Green, msgreen@pattonboggs.com, (202) 457-5258;  Vince Frillici, vfrillici@pattonboggs.com, (202) 457 – 6021; Daris Meeks, dmeeks@pattonboggs.com, (202) 457 – 5205; Matthew Kulkin, mkulkin@pattonboggs.com, (202) 457 – 6056; Mara Giorgio, mgiorgio@pattonboggs.com, (202) 457-6522; or Brandon Roman, broman@pattonboggs.com, (202) 457-5330.