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How about some accountability, finally? There was none for key players in the Financial Crisis from Tim Geithner to Ben Bernanke to Barney Frank to Wall Street executives. And now we have Rep. Mel Watt, the NC Democrat whom Obama has appointed to oversee Fannie and Freddie.
Former Bush White House economist Keith Hennessey argues that Watt should not be confirmed:
For GSE reformers the most important vote was on a bipartisan May 2007 House floor amendment by Rep. Randy Neugebauer (R-TX) and Rep. Melissa Bean (D-IL). … Before Neugebauer-Bean passed, the regulator would have been required to consider the risks these two firms’ multi-hundred billion dollar portfolios posed to the financial system. After it passed, he had to consider only whether these portfolios caused risks to the firms. A weak or captured regulator could, if he wanted, ignore the risks posed to the global financial system by $1.4 trillion of housing finance assets held by these two firms. …
This amendment passed the House on a huge vote: 383-36. Blame here is solidly bipartisan: House Democrats voted 221-3 in favor, and House Republicans voted 162-33 in favor. Such was the pre-collapse political power of Fannie Mae and Freddie Mac … There are few floor votes that can be linked directly to the financial crisis. Members who voted aye on Neugebauer-Bean contributed to the crisis, members who voted no deserve credit for trying to limit this one contributing factor to systemic risk. Along with most of his colleagues, Mr. Watt voted aye, to weaken the authority of the regulatory position for which he will now be nominated. … No member of Congress who voted in May 2007 with Fannie and Freddie and against a stronger FHFA regulator should head that agency now. That includes Mr. Watt.
KB Washington Research is out with a note today putting the odds of Watt being confirmed at “less than 50/50 because we expect Republicans to try to block his nomination on the grounds that FHFA needs a technocrat to run the agency, and that Rep. Watt lacks the experience and skills for the job.” Looks like Hennessey just gave them a more substantive reason.
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