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Obama Nominates Dem Congressman With Ethics Issues Who Helped Cause Economic Crisis to Regulate Housing Finance

Posted By Daniel Greenfield On May 7, 2013 @ 12:05 pm In The Point | 14 Comments

The Federal Housing Finance Authority regulates Fannie Mae and Freddie Mac making it a rather important check on a corrupt system that helped cause the economic crisis that we are still living under.

That means its director should be a person of integrity with a record to match. So naturally Obama nominated the worst possible person for the job. A Democratic congressman with ethics issues who helped cause the economic crisis.

Obama nominated Democratic Rep. Melvin Watt (N.C.) to head the Federal Housing Finance Agency on Wednesday. The agency oversees Fannie Mae and Freddie Mac as well as the country’s 12 Federal Home Loan Banks.

Watt, along with seven other lawmakers, was being investigated for attending a campaign fundraising event held in Watt’s honor just days before the House voted to rewrite legislation regarding federal financial regulation. Present at the event were financial institutions such as Bank of America, KPMG, Ameriprise Financial, and Goldman Sachs.

Watt withdrew an amendment from the legislation that focused on whether auto loans ought to be included in the proposed Consumer Financial Protection Agency two days after the event. Without the amendment, franchised auto dealers would have fallen out of the regulatory agency’s reach.

The ethics office did not formally charge Watt or any of the lawmakers, but that did not stop Watt from holding a grudge against it.

Watt proposed in July 2011 that Congress slash funding for the Office of Congressional Ethics by 40 percent.

Charles Johnson at the Daily Caller points out that the fox is being assigned to oversee regulation of the henhouse.

Mel Watt, President Obama’s nominee for director of the Federal Housing Finance Agency, pushed government programs to help welfare recipients buy homes during the creation of the subprime mortgage bubble.

In 2002, Watt  teamed up with Freddie Mac and Fannie Mae, Bank of America, BB&T, and UJAMMA Inc., to announce Pathways to Homeownership, a pilot initiative designed to give home loans to welfare recipients.

A press release from Watt’s campaign office in October 2002 said that the loans to the welfare recipients would require “as little as $1,000 of the down payment to come from their own funds” and that the city of Charlotte would help borrowers obtain a “down payment subsidy” to cover the rest of the 3% down payment.

Watt, alongside then-Democratic Massachusetts Rep. Barney Frank, blocked Bush Administration efforts to reduce Fannie and Freddie’s overexposure to subprime loans.

In 2007, a full year after the real estate market peaked and began to plummet under the weight of millions of mortgage defaults, Watt and Frank co-sponsored a bill forcing Fannie and Freddie to meet even higher quotas for affordable lending and investing in an “Affordable Housing Fund” for inner city communities.

Watt’s deregulation of Fannie and Freddie came after the government-sponsored enterprises spent billions in his congressional district. “Freddie Mac has purchased $9.5 billion in mortgages made to an estimated 82,000 Charlotte-area residents,” Watt’s staff announced in 2002.

Even the left isn’t exactly fond of Watt’s ties to the banking industry.

In his 20-year career, during all of which he sat on the House Financial Services Committee, he voted for Gramm-Leach-Bliley (which overturned the Glass-Steagall Act’s firewall between commercial and investment banks), the Commodity Futures Modernization Act, and basically every deregulatory bill that led the country into the 2008 financial crisis. During the Dodd-Frank financial reform, he tried to stop the bipartisan Audit the Fed bill from passing, by substituting a toothless alternative. He has received over $365,000 in donations from the commercial banking industry during his career, likes to hold soirees at his house for Wall Street lobbyists, and raised funds from financial interests before key Dodd-Frank votes, actions which drew a formal investigation from the Office of Congressional Ethics. Watt was later cleared of wrongdoing in that case (though he subsequently tried to defund the ethics office).

So another fantastically ethical choice from the most ethical administration ever.


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