President Barack Obama will nominate North Carolina Banking Commissioner Joseph A. Smith Jr. to be chief regulator for Fannie Mae and Freddie Mac as the administration prepares to overhaul the mortgage firms, according to White House officials briefed on the matter.
Smith, 61, will be named as soon as today as Obama’s choice to become director of the Federal Housing Finance Agency, according to the people, who declined to be identified because the decision hasn’t been made public. The agency has overseen the two companies since they were seized by regulators in September 2008.
If confirmed by the Senate, Smith would replace acting FHFA director Edward J. DeMarco in a post that would also place him in charge of the nation’s 12 Federal Home Loan Banks.
The new assignment would place Smith at the center of Obama administration efforts to restore the financial health and determine the future of Fannie Mae and Freddie Mac, which have been sustained by $151 billion in Treasury Department aid since they were placed under U.S. conservatorship during the credit crisis. About $17 billion of that aid has been returned to the Treasury in the form of dividends.
Together the two companies own or guarantee more than half of U.S. mortgages. The administration has said it will present a plan for overhauling the firms in January.
Before the firms faltered amid losses tied to subprime mortgages, Smith urged lawmakers to encourage Fannie Mae and Freddie Mac to “devote their primary attention to affordable housing for all Americans, particularly in the subprime market.”
‘Find a Balance’
“We must find a balance between encouraging market innovation, product choice and credit availability with consumer protection,” he told the Senate Banking Committee in 2007.
Lawmakers had urged Obama to name a permanent director to watch over taxpayer funds at Fannie Mae and Freddie Mac. In a July letter, Senator Chris Dodd, the Connecticut Democrat who leads the Senate Banking Committee, and Senator Richard Shelby of Alabama, the panel’s top Republican, told Obama a nominee was “long overdue.”
“In light of estimates that the total bailout of these entities could reach $1 trillion, it is imperative that the president nominate an FHFA director who is fully accountable to Congress,” Shelby said at the time.
As state banking commissioner, Smith helped implement laws regulating mortgage brokers and lenders. North Carolina in 1999 became the first state to enact predatory lending laws to restrict high-cost and subprime loans.
Before being named banking commissioner in 2002, Smith was a lawyer with Thacher Proffitt & Wood, a New York law firm.
From 1991 to 2000, he was general counsel and secretary for Centura Banks Inc. in Rocky Mount, North Carolina. Prior to that he was a partner with Poyner & Spruill in Raleigh, North Carolina.
Smith received a bachelor’s degree from Davidson College in 1971 and a law degree from the University of Virginia in 1975.
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