Rep. Mel Watt has plenty of friends in the financial services industry: The North Carolina Democrat whom President Barack Obama has appointed to oversee mortgage finance giants Fannie Mae and Freddie Mac has received more campaign money from financial interests than any other industry or special interest.
Since he entered Congress in 1992, Watt has received $1.33 million in campaign contributions from the finance, real estate and insurance industries, according to the Center for Responsive Politics, a nonprofit research group that tracks money in politics.
That’s almost a quarter of the total $5.47 million in total contributions he’s received through his career.
Watt’s biggest donors were commercial banks, with the finance and securities industries following at number five, according to CRP. During the last election cycle, the political action committees of Goldman Sachs, Bank of America and Wells Fargo each gave Watt’s campaign $10,000. Bank of America and Goldman each gave an additional $5,000 to Watt’s leadership PAC.
Watt sits on the House Financial Services Committee and he represents the Charlotte, N.C., area, which is home to Bank of America and was home to Wachovia, until it failed and was purchased by Wells Fargo.
If he’s confirmed to replace Ed DeMarco at the top of the Federal Housing Finance Agency, Watt will be tasked with determining the future of the two mortgage giants that were taken into federal receivership in 2008 after catastrophic losses brought them to near collapse.
A freewheeling mortgage market that allowed people to borrow huge amounts with little documentation, combined with a massive derivatives industry tied to the performance of those mortgages led to an almost complete meltdown of the U.S. financial system in 2008 when home prices declined and homeowners began defaulting on their loans.
DeMarco, who has been interim chairman of FHFA since 2009, has been criticized by the Obama administration, members of Congress, and consumer groups for opposing mortgage principal write-downs to help homeowners at risk of default to stay in their houses.
Fannie Mae and Freddie Mac buy and securitize about 90 percent of all new mortgages in the U.S. and guarantee those loans, making them a crucial part of the of the housing market and integral to banks’ business and profitability. Fannie alone has provided about $3.3 trillion in mortgage credit to the market since January 2009, according to its web site.
Since they went bust, the two enterprises have borrowed $187.5 billion from the U.S. Treasury
Fannie Mae’s and Freddie Mac’s PACs contributed $11,500 to Watt’s campaign from 2004 until their 2008 bailouts. Employees of the two companies gave at least $4,250 from 1998 through 2004, with Fannie’s controversial former CEO Franklin Raines chipping in $1,500 to help Watt keep his seat.
Bank of America, Watt’s hometown bank that got a government bailout after buying money-losing mortgage giant Countrywide and troubled investment bank Merrill Lynch, contributed $66,500 to Watt through its PAC from 1998 to last year.
Former CEO, Kenneth Lewis, who spearheaded the money-losing acquisitions, contributed $3,000 to Watt during the 2008 crisis year.