The mortgage-writedown campaign is simply the opening volley in the war to open the money faucets and get funds once again flowing at full force to housing organizations and, not coincidentally, to the banks that stand to profit from a return to the millennial housing-bubble economy. The banks are not in principle opposed to principal reductions — so long as the losses accrue only to Fannie and Freddie, and through them to the U.S. Treasury.
Which leaves us with Mr. Watt, a political creature who would seem odd if he were not so familiar: the race-baiting left-winger funded by Wall Street. Mr. Watt’s top financial benefactor is Bank of America, a firm recently sued by FHFA. (If it has occurred to anybody at the White House that this presents a conflict of interest, they have said nothing about it.) In 2009, about half of Mr. Watt’s campaign funds came from banking and real estate. The usual suspects are well represented: Goldman Sachs, the Credit Union National Association, Wells Fargo, the National Association of Realtors — all make appearances on his top-donors list.
Fannie Mae and Freddie Mac are still very much with us, in spite of the $200 billion or so in federal money consumed by their troubles. Between the two of them, they still hold or guarantee some $5 trillion in debt, much of it questionable. Additional troubles at either agency could put the economy right back into 2009 territory. Winding them down is not the job for a man who dismisses “empirical evidence,” nor for a man whose political fortunes have been for years tied up in those who stand to benefit from a return to the irresponsible mortgage-lending practices of the past. And the United States could use one less cynical practitioner of racial politics in public life. Mr. Watt’s nomination deserves to be rejected.