As President Obama renews his call for the Senate to confirm Rep. Mel Watt as the new head of the Federal Housing Finance Agency (FHFA), it is time to evaluate the direction FHFA is taking in housing finance. The agency is increasingly closing off options for housing finance reform rather than opening them, and it has placed affordable housing issues in a distinctly second tier. Senate confirmation of Rep. Watt would allow the agency to take a new direction toward fulfilling the housing needs of all in America. The confirmation decision should be based on policy considerations, not partisan point-scoring.
The conservatorship of Fannie Mae and Freddie Mac has moved well beyond the brief stabilization role initially anticipated. Now in its sixth year, conservatorship by necessity affects the ongoing operation of the secondary mortgage market entities and plans for the future. Although FHFA has done much to preserve the assets of the GSEs, it has also taken steps that run counter to meeting pressing housing needs. Examples include the reductions in multifamily production, unwillingness to allow shared appreciation or other principle reductions on distressed loans, the de facto moratorium on product innovation, and the decision not to fund the National Housing Trust Fund.
Rep. Mel Watt brings a dedication to affordable housing, long experience overseeing the GSEs through his committee service in the House, and extensive experience dealing with a wide range of housing stakeholders. If confirmed by the Senate, we expect he will guide the agency ably through the difficult decisions ahead. We urge Senators considering his nomination to focus on the pressing policy issues involved and Rep. Watt’s qualifications to lead rather than partisan distractions. The housing needs in this country—ongoing foreclosures, neighborhoods struggling to recover, and burdensome housing costs for households of modest means—cannot wait on the political maneuverings among parties and branches of government.