On a recent afternoon, the nation’s top housing overseer, former Rep. Mel Watt, looked out his office window at the U.S. Capitol in the distance. The majestic dome appears much smaller than it did from his old congressional office, where he could almost lean out and touch the Statue of Freedom crowning the historic building.
He doesn’t miss the view. “This is close enough,” he deadpanned.
The long-time Charlotte congressman seemed to disappear for the past year and a half since becoming a top federal housing regulator as director of the Federal Housing Finance Agency last year. There was no farewell press conference. No district tour back home. No victory lap.
But Watt, 69, has re-emerged from the shadows, though not necessarily willingly. He’s facing criticism in his new role for approving multimillion-dollar raises for his agency’s finance executives while not doing more to slow the tide of foreclosures on struggling homeowners.
In an exclusive interview with The Charlotte Observer, he shared why he never said goodbye to the 700,000-plus constituents he led for more than two decades and how he’s handling the critical spotlight.
One of the real regrets I have is not having the opportunity ... to make a formal goodbye to the district.
Former Charlotte Rep. Mel Watt, director of the Federal Housing Finance Agency
Watt, a longtime member of the influential House Financial Services Committee, took over the little known but powerful Federal Housing Finance Agency, known as the FHFA, after months of congressional wrangling over his nomination. By the time the Senate confirmed him in December 2013, he had only a few weeks over the holidays to start his new job as overseer of mortgage titans Fannie Mae and Freddie Mac.
“One of the real regrets I have is not having the opportunity, because of the timing, the way it worked out, to make a formal goodbye to the district,” Watt said in an interview at his new office, near the National Mall.
He’s remained largely under the radar since. Watt no longer travels back to Charlotte every weekend. He says he misses being home and the frequent interaction with constituents. When he does go home to the Fourth Ward in Uptown Charlotte, former constituents seem confused about what he does and why he’d leave the prestige of Congress.
They stumble with what to call him. Some say “Mr. Secretary,” but he’s not part of cabinet.
Others ask if he’s palling around with President Barack Obama. Watt says he talks to Obama less now than when he was in Congress.
Watt tries to explain that the FHFA is actually an independent body. He’s not supposed to push the president’s agenda.
Since taking over, Watt, a Democrat, has launched a handful of initiatives to help more low-income and first-time buyers afford homes, including allowing down payments as low as 3 percent.
He’s been visiting cities across the country promoting a federal program that allows struggling homeowners to refinance their homes at a lower interest. On a trip to Los Angeles this spring, he announced he was extending the Home Affordable Refinance Program, known as HARP, and another loan modification program until 2016.
But the fact that he hasn’t implemented more sweeping changes, such as helping homeowners reduce the size of their loans, has rankled some allies.
$5.6 trillion in funding is provided by Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks, which the Federal Housing Finance Agency regulates
When he was nominated two years ago, Sen. Elizabeth Warren, D-Mass., called him “a champion for working families” and urged for his confirmation. But during a hearing last fall, she questioned why he hadn’t moved more quickly to lower principals on underwater home loans.
“You’ve been in office for nearly a year now and you haven’t helped a single family – not even one – by agreeing to a principal reduction” she said. “So I want to know why this has not been a priority for you.”
When Watt was in Congress he also pressed for principal reductions. It’s different now that he’s a regulator, he said. He must look at the potential impacts and guard against irresponsible access to credit.
“I kept trying to tell people, even when I was in Congress, I’ve never been an advocate for unreasonable access to credit,” he said. “I wouldn’t make a loan to my brother-in-law unless I thought he was going to pay me back.”
But that hasn’t quieted those who have charged him with turning his back on the housing advocates who fought for his confirmation.
Those same liberal critics, along with the White House, have formed a somewhat unholy alliance with Republicans over Watt’s approval to give Fannie Mae’s Timothy Mayopoulos and Freddie Mac’s Don Layton raises up to about $4 million each – a more than sixfold increase of their current pay.
They argue the raises are inappropriate for companies backed by taxpayers.
“He’s basically become a banker in government clothing,” said Peter Dreier, chairman of the Urban and Environmental Policy program at Occidental College in Los Angeles, of Watt, whom he supported.
Last week, the House Financial Services Committee considered and passed Republican-led legislation that would limit Fannie Mae and Freddie Mac CEO salaries to the current level of $600,000 a year.
But Watt said in his interview that the chief executive officers deserve some semblance of their value if they’re to be retained.
He’s basically become a banker in government clothing.
Peter Dreier of the Urban and Environmental Policy program at Occidental College
Fannie Mae and Freddie Mac guarantee more than $5 trillion in mortgages and mortgage-backed securities. Watt said the CEOs’ new salaries would still be far less than the bottom 25 percent of chief executives at comparable companies.
“You’re saying that’s irresponsible,” he said. “That’s not irresponsible especially when you consider what’s at stake if we lose these people.”
When Watt was nominated, Republicans blocked his confirmation for months, arguing they wanted someone with technical expertise in mortgage finance markets and not a politician.
But Eric Heberlig, a political scientist at the University of North Carolina, Charlotte, said Watt’s political experience has helped him weather this recent storm of controversy.
“He’s used to having stones thrown at him and having to deal with public criticism in ways that many bankers or finance people would really be uncomfortable with,” Heberlig said.
If Watt completes his five-year term, he’ll be 73 when he’s done. He doesn’t expect to be asked by another president to renew his term. And he doesn’t expect to start a new career.
“Don’t ever look for me to have another full-time job,” he said.
He says he decided to leave Congress – though he didn’t announce it – before he got the FHFA job.
“To be truthful, I probably should have left two or three terms ago,” he said.
Watt said that though he misses some of the action of Congress, he’d grown tired of the partisan dysfunction and the inability to get any substantive work done.
Heberlig said Watt’s ability to achieve policy goals is “exponentially more” as FHFA director than being one of 435 House members, not to mention being in the minority party as a Democrat.
The current job may not be as glamorous, but Watt said he was more interested in the substantive part of Congress anyway.
“I don’t think it’s any less important,” he said of hisHnew job. “In fact, from my perspective it’s more important.”
Watt would still like to go on a district tour to say goodbye to the constituents. Unfortunately, he said, his new role bars him from any political activity. He’ll have to wait until he finishes his term.
“Will I ever get to say goodbye?” he joked. “By the time I finish my tenure, they’ll probably have forgotten who Mel Watt is.”