Nuclear Option Deal Paves the Way for Mel Watt
Surprise! The Senate’s “deal” to avert the nuclear option paves the way for the confirmation of Mel Watt to be the next regulator of Fannie Mae and Freddie Mac, the two taxpayer-backed mortgage finance giants that were at the center of the collapse of the financial system. Though his confirmation is not yet a surety, the détente in the Senate certainly increases his prospects for obtaining this position.
How does the nuclear option pave the way for Watt? The Wall Street Journal explains:
The decision by Senate Republicans to defuse a showdown over five of President Barack Obama‘s nominees earlier this week has Democrats feeling slightly more optimistic about the White House’s pick to head a top housing regulator.
Still, the confirmation vote of Rep. Mel Watt (D., N.C.), who was nominated this spring to run the Federal Housing Finance Agency, is by no means certain. It figures to serve as the next major test of the detente between the White House and Senate Republicans over executive appointments.
The Senate Banking Committee along party lines approved Watt Thursday by a vote of 12 to 10.
Recent events suggest his nomination will be confirmed, as the détente also cleared the path for the confirmation of Thomas Perez as Labor Secretary (key vote), Richard Cordray as head of the Consumer Financial Protection Bureau (key vote), and Fred Hochberg as head of the U.S. Export-Import Bank (key vote).
Republicans are concerned that Watt’s background is political rather than technical. While his technical qualifications were debated, nominations are subject to other important considerations.
Communications director Dan Holler reminded us about a very revealing article on Mr. Watt’s past actions:
— dan holler (@danholler) July 18, 2013
At the very least, Watt’s past actions raise unflattering perceptions and create appearance of impropriety:
[Mr. Watt] proposed tariff waivers worth millions for a textile company whose lobbying firm donated thousands to his campaign.
The revelations could fuel criticism of a program that some say amounts to a back-door means to secure federal earmarks and encourages companies that use imported products to curry favor with key lawmakers.
The political action committee of Baltimore-based lobbying firm Venable LLP made a pair of thousand-dollar contributions to the reelection campaign of Rep. Mel Watt (D., N.C.) in May and September of 2012.
The donations came shortly after Watt authored 56 “duty suspension” bills specifically exempting products headed for the production facilities of North Carolina-based textile and leather company DyStar LP from import duties.
The exemptions, if passed, will net DyStar, a Venable client, nearly $3 million in 2013 alone, according to data filed with the U.S. International Trade Commission. By 2017, the company will save nearly $15 million in foregone tax payments.
DyStar paid Venable $120,000 throughout 2012 to lobby on duty suspension bills.
The Heritage Foundation notes the Miscellaneous Tariff Bill (MTB) process is flawed and promotes exactly this type activity, which reeks of cronyism and corruption:
Businesses often hire a lobbyist to petition their Member of Congress on their behalf. The process encourages a corrupt political system that rewards businesses for spending money on lobbyists and seeking influence with politicians instead of producing the best goods and services.
Holler also explained before:
This type of behavior, and the special interest subsidies that follow, perpetuates a culture of cronyism and continues to alienate hard-working Americans. Any time you can go to Washington—or pay someone to go there for you—to attain a special carve out in the law, something is wrong.
Unfortunately, Mr. Watt has exploited the very flaws in the MTB process that are so conducive to cronyism – and it benefited his cronies financially. As they say in the finance industry, past performance does not guarantee future results, but when it comes to Mr. Watt, it’s not worth finding out the hard way.