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Mel Watt, President Obama’s nominee to oversee government-sponsored mortgage giants Fannie Mae and Freddie Mac, is a liberal Democrat fond of big government. He is also longtime politician, intimate with K Street and Wall Street.
With his faith in government and coziness with big business, Watt personifies Obamanomics.
Obama has nominated the 11-term congressman as director of the Federal Housing Finance Agency, which oversees Fannie and Freddie. Created by government, Fannie and Freddie were private companies until the federal government took ownership of them in the bailout bonanza of 2008. They subsidize the mortgage industry by buying mortgages from banks.
Back in 1994, when Fannie Mae was a private company, Congressman Watt co-sponsored a series of housing fairs with Fannie, according to the Greensboro (N.C.) News & Record. This was part of Watt’s efforts to “increase the number of lower income residents of Charlotte who can go on to become homeowners,” as he put it in a press release.
The banks have been friendly with Watt. Bank of America, Wachovia, and the American Bankers Association were Watt’s second-, third-, and fifth-largest sources of donations over the past decade, according to the Center for Responsive politics. Bank of America’s PAC has given more to Watt over the years than any other corporate PAC.
Watt is also connected to big banks through the revolving door.
Hilary West was Watt’s legislative counsel, and now she is a lobbyist for the largest bank in the U.S., JPMorgan Chase. The bank’s lobbyist disclosure forms show her lobbying Congress, the Treasury Department and the Federal Reserve this year on banking issues, including “the impact of GSE reform and other proposed changes to the housing finance market” — in other words, what to do with Fannie and Freddie. West also lobbied this year on “home mortgage loan modifications, foreclosures, servicing, and refinancing,” according to the disclosure forms.
Joyce Brayboy worked for Watt for 12 years, including as his chief of staff. After Watt moved into the majority in 2007, Brayboy joined the Democrat-heavy lobbying firm Glover Park Group, where her clients included the American Bankers Association. Today, Brayboy is a lobbyist for Goldman Sachs, where she lobbies on “housing” issues, among others, according to Goldman’s lobbying disclosure filings.
Brayboy, while serving at Watt’s right hand, played a cameo role in one of the scandals of the housing crisis.
Subprime mortgage giant Countrywide was found to have extended VIP loans to powerful political players. In an email made public in 2009, Countrywide lobbyist Jimmie Williams wrote to a colleague, “Could you please assist Joyce Brayboy, Chief of Staff to Congressman Mel Watt with a loan?”
Brayboy was seeking “100 percent financing,” Williams explained, noting pointedly that she “reports directly to Congressman Mel Watt who introduced predatory lending legislation to address unscrupulous lending practices, and they do view Countrywide as a trusted advisor.”
It’s unclear whether Brayboy ever received such a loan.
Watt has voted for bailing out banks every chance he’s had: In July 2008, he voted for a mortgage bailout bill, and a couple of months later he twice voted for the Great Wall Street Bailout.
While being very close with the banks, Watt is also a big-government liberal. His career score from the free-market Club for Growth is in the bottom 10 percent of the House of Representatives.
To his credit, Watt called for a stronger regulator of the two government-sponsored enterprises when George W. Bush was president, while top Financial Services Committee Democrat Barney Frank objected.
So what does this all mean for Watt as regulator of Fannie and Freddie? It means he’s pro-bank and pro-government. This is confusing if you listen to President Obama’s rhetoric, but it makes perfect sense if you’ve been following the bailouts and subsidies for mortgages and banks.
Watt talks of wielding a big government hammer in the name of the poor. He’s spent two decades demanding more homeownership for the poor. One way to do that is resume Fannie & Freddie’s subsidizing of mortgages for the poor.
His liberal fans hope Watt will push “principal writedowns” — using Fannie and Freddie to reduce the amount struggling homeowners owe on their houses. Some principal writedown proposals involve haircuts for the banks. Others involve subsidies for the banks.
Big government and big banks — Watt is the perfect fit for Fannie, Freddie, and Obama.
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