Housing nominee may test Senate's newfound spirit of compromise

The president’s nomination of Rep. Mel Watt (D-N.C.) to permanently fill a long-vacant slot as the nation's top housing regulator could prove an early test on the Senate’s newfound compromising spirit.

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Watt has faced staunch opposition from Senate Republicans in his bid to take the reins of the Federal Housing Finance Agency (FHFA), but it is still not clear whether Republicans will look to halt the nomination outright, just days after senators huddled for hours in private to strike a deal to move another set of stalled presidential picks.

Sen. Mark Warner (D-Va.), a Senate Banking Committee member, said earlier this week Watt’s nomination “will be an early test to see whether that ‘new and improved’ Senate has a 36-hour lifetime or longer.”

That accord allowed the Senate to move ahead with several nominees that had been sidelined for quite some time. For example, Richard Cordray, the director of the Consumer Financial Protection Bureau (CFPB), was confirmed Tuesday after a roughly two-year wait.

But Watt will be one of first contentious nominees to hit the floor under the new, more agreeable Senate, and will test the boundaries of the deal hammered out between Senate Majority Leader Harry Reid (D-Nev.) and Sen. John McCain (R-Ariz.).

On Thursday, Watt was approved on a party-line vote by the Senate Banking Committee, but it was clear his appearance before the panel in June had done little to win over skeptical Republicans, who have argued he lacks the technical expertise and political independence for the job.

Sen. Mike Crapo (R-Idaho), the ranking member of the panel, said the FHFA position is a uniquely technical one, as the head must manage the $5 trillion in portfolios of Fannie Mae and Freddie Mac. While he said Watt would be well-qualified for other jobs in the executive branch, he urged his colleagues to oppose the nomination.

So far, the only Republican to support Watt's nomination is fellow North Carolinian Richard Burr.

The lack of GOP support for Watt, a senior member of the House Financial Services Committee who was first elected in 1992, casts significant doubts on his ability to win over other Republicans when his nomination hits the floor.

But it’s not clear if Watt will need GOP support to clear the Senate.

Crapo has declined to say whether Watt will face a procedural blockade from Republican senators that would establish the 60-vote hurdle.

And Sen. Bob Corker (R-Tenn.), another vocal critic of the nomination, said he didn’t know either whether Watt would be blocked by Senate Republicans.

“We’ll see what happens when it comes to the actual issue of filibuster. I don’t know what’s going to happen there,” he said at a housing event where he joined Warner to discuss their bipartisan housing reform plan.

While the deal struck in the Senate only applied to the immediate slate of nominees that Democrats were eager to move, both parties are feeling out how much of the spirit of that compromise will carry forward to future nominees.

Republicans may force Democrats to come up with 60 votes on Watt, stalling his consideration like the prior picks that ultimately led to threats of the “nuclear option.”

Or the GOP could take a softer approach, with some Republicans voting in favor of limiting debate on the nomination and ending a filibuster, but registering their disapproval with the pick during the final vote, allowing the Democratic majority to confirm him.

Whichever path Republicans choose will go a long way toward indicating if the deal hammered last week was a one-time arrangement, or a new structure for certain nominees going forward.

Reid has said he would hold onto his threat of the so-called "nuclear option" if executive branch nominees got jammed up again.

Watt backers are optimistic the new Senate outlook bodes well for his chances.

John Taylor, president and CEO of the National Community Reinvestment Coalition, said the momentum of this week should propel Watt along, probably before the August recess.

Taylor, who has backed Watt since he was nominated and has predicted he would eventually be confirmed, said Republicans have little reason to hold up the inevitable.

"I don't think they have anywhere to go with Watt," he told The Hill on Friday.

“They can't hang their hat on anything he's done or said that would disqualify him from leading the FHFA."

Watt’s nomination has yet to get bogged down like some of the other nominees that finally received confirmation this past week.

President Obama nominated the 67-year-old Watt in May, his confirmation hearing was in June and he received a committee vote on Thursday.

But the spot he is trying to fill has been open for several years.

Ever since James Lockhart stepped down from the director position in 2009, the top seat has been kept warm by Edward DeMarco, a career bureaucrat who has filled in as acting director.

During that time, DeMarco has earned plenty of ire from liberals, who argue he has refused to allow Fannie and Freddie to participate in programs that could help struggling homeowners, such as principal reduction.

DeMarco has defended his stance, saying that FHFA’s job is to conserve the mortgage giants’ assets. Republicans felt out Watt on such programs at his hearing, and Watt refused to rule them out.

One opponent argued that a Republican procedural stall is just what is needed in this case.

"If there was ever a candidate that was deserving of a filibuster, it's Mel Watt," said Tony Sanders, a real estate professor at George Mason University. "Watt is in the chair for one reason — he will push for principal reductions and expansion of risky lending through Fannie Mae and Freddie Mac."

But despite all that pressure, Obama has only tried once before to replace DeMarco.

In 2010, he nominated Joseph Smith Jr., the North Carolina commissioner of banks, for the job.

But, as with Watt, Republicans made their grievances known, warning that Smith would not be independent enough to stand up to the White House as FHFA director. That nomination stalled out and expired when the 111th Congress wrapped up, and he opted not to be re-nominated for the job in the new Congress.