Scared Monkeys Discussion Forum

Rep. Mel Watt was sworn in Monday afternoon as the new director of the Federal Housing Finance Agency (FHFA). His nomination was originally blocked by a Republican filibuster because of concerns that Watt’s political involvement and close ties with the administration would be a detriment to the mission of the FHFA. When Senate Democrats changed the rules using the “nuclear option,” however, Watt was easily confirmed.

Watt was also one of two congressmen who led the effort to block President George W. Bush’s 2003 reforms that would have limited the liability of Fannie Mae and Freddie Mac. At the time, his partner in the effort, Rep. Barney Frank, told The New York Times, “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis.”

But five years later, these GSEs collapsed, bankrupt. They were taken over by the federal government in what was described by the Washington Post as “one of the most sweeping government interventions in private financial markets in decades.” Put into conservatorship by the Department of the Treasury and the FHFA, Fannie and Freddie ended up costing taxpayers over $100 billion.