Former Rep. Mel Watt, D-N.C., failed his procedural confirmation vote today to head the Federal Housing Finance Agency, which oversees the government housing entities Fannie Mae and Freddie Mac. His defeat — so far — is a victory not just for fiscal integrity, but for privacy and transparency as well.
As a congressman, Watt egged on the reckless policies of Fannie Mae and Freddie Mac that got us into the mortgage crisis from which the economy is still recovering. But just as bad, he was on the wrong side of both liberals and conservative reformers on two crucial issues. Watt was a co-sponsor and vocal supporter of the Stop Online Piracy Act (SOPA), which collapsed in 2012 after a transpartisan coalition made the public aware of its threat to privacy and innovation. And Watt was the chief Democratic opponent of a bipartisan proposal to audit the Federal Reserve and helped gut the provision from what would become the Dodd-Frank “financial reform” law of 2010.
On Fannie and Freddie, as reporter Charles Johnson detailed at The Daily Caller, Watt “teamed up with Freddie Mac and Fannie Mae [and some banks]to announce Pathways to Homeownership, a pilot initiative designed to give home loans to welfare recipients” with minimal down payments. A press release from Watt said the loans would require “as little as $1,000 of the down payment to come from their own funds.”
Then, as Johnson pointed out, “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.”
On SOPA, when privacy concerns were raised by critics (including the Competitive Enterprise Institute), Watt pooh-poohed what he called the “hyperbolic charges.” SOPA was soon dropped because of online activism based on legitimate privacy and personal liberty issues.
And during the debate leading up to the passage of the Dodd-Frank financial regulatory overhaul in 2o10, Watt supported nearly all of the legislation’s costly mandates on the private sector. But he thought having the Federal Reserve go through a simple audit of its books by the Government Accountability Office, which nearly every other agency goes through, would place too much of a “burden” on this government entity. So, as detailed by Zero Hedge, Watt helped gut the provision supported by then-Rep. Ron Paul, R-Texas, and Sen. Bernie Sanders, I-Vt., and a huge left-right coalition that included CEI, to audit the Fed.
In our suggested “Questions for Janet Yellen,” I write with CEI’s Iain Murray and Ryan Young that Federal Reserve Chairman nominee Yellen must be grilled on whether she would agree to an audit of the Fed. Watt already made his answer known on this question during his tenure in Congress, so we know he is likely to oppose transparency at Fannie and Freddie as well.
Good government demands Watt’s nomination be withdrawn.