Bush Friend Eyed For Job Overseeing Fannie,Freddie-Sources
The POLITICIZATION of our FINANCIAL system continues.
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By Dawn Kopecki
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The White House has narrowed its search for a new regulator to supervise Fannie Mae (FNM) and Freddie Mac (FRE), trying to recruit an old friend of President George W. Bush for the job, according to several people familiar with the search.
Social Security Administration Deputy Commissioner James B. Lockhart III, who referred calls for comment to the White House, is said to be the frontrunner to head the Office of Federal Housing Enterprise Oversight. White House spokeswoman Erin Healy declined to comment on the matter, saying the administration doesn't speculate on personnel announcements.
Senate Banking Chairman Richard Shelby, R-Ala., told reporters Tuesday that the White House is closing in on naming a new OFHEO director, saying it could affect congressional debate on legislation overhauling Fannie's and Freddie's oversight. He declined to elaborate further.
Whether Lockhart wants the position, however, is unclear. The White House has reportedly had trouble filling the job since the future of the OFHEO itself is uncertain. Both House and Senate bills retooling Fannie's and Freddie's oversight would also significantly revamp the OFHEO's structure and regulatory authority.
Lockhart, who currently serves as the No. 2 at SSA, has extensive experience as a financial regulator as well as on Wall Street. In his role at SSA, Lockhart serves as the agency's chief operating officer, secretary on the Social Security Board of Trustees and as a member of the President's Management Council.
If nominated, Lockhart would appear to face a potentially smooth transition to the OFHEO as well as an easy confirmation in the Senate, which cleared him for his current job in 2002 without controversy.
He served under the previous Bush Administration as executive director of the Pension Benefit Guaranty Corporation from 1989 until 1993 and as director of the Association of Private Pensions and Welfare Plans, which is now the American Benefits Council, from 1993 until 1995.
He joined SSA in 2002 from NetRisk, a risk management software and consulting firm he co-founded that serves major financial institutions, including banks, insurance companies and investment management firms worldwide. Prior to that, he worked as a top finance executive for National Re and as a managing director for Smith Barney.
On a personal level, Lockhart has an edge over other potential candidates. Not only did he attend the same prep school as Bush as a boy, they shared the same dormitory at Phillips Academy Andover in Massachusetts where they met days after enrolling. Lockhart and Bush were also fraternity brothers at Yale before each attended Harvard Business School. Lockhart graduated with a master's degree in business administration from Harvard a year ahead of Bush in 1974.
When Bush first nominated Lockhart to his administration in 2001, Lockhart told The Baltimore Sun that the two had remained in touch only occasionally throughout the years. However, he said their friendship from school days "is how I got into his father's administration."
Edward DeMarco, who currently works for Lockhart as an assistant deputy commissioner at Social Security and was considered for Blumenthal's job earlier this year, could end up working as Lockhart's deputy at the OFHEO, according to people familiar with the administration's plans.
The Bush administration hastened its search to replace interim OFHEO Director Stephen Blumenthal last fall, following a controversial speech he delivered to bond traders in Hong Kong. Blumenthal, who has been serving as acting OFHEO director since May, opposed the administration's stance on Fannie's and Freddie's investment portfolios. Blumenthal instead endorsed a bill in the House that doesn't limit the companies' assets and is co-sponsored by House Financial Services Chairman Michael Oxley, R-Ohio, who Blumenthal worked with when he was an aide on Capitol Hill.
The administration and Federal Reserve both oppose the House bill and have instead endorsed legislation passed by Shelby's committee last year. The Senate bill would prohibit Fannie and Freddie from purchasing securities for investment purposes only, restricting their holdings largely to mortgage assets that most private banks and lenders won't touch.
"That's where the risk is," Shelby said. The government-sponsored enterprises' portfolios have "nothing to do with the mission. The mission of the GSEs is important. That's why we created them. The risk is in the portfolio. It has nothing to do with housing."
-By Dawn Kopecki, Dow Jones Newswires; 202-862-6637; Dawn.Kopecki@dowjones.com
(END) Dow Jones Newswires
January 31, 2006 17:25 ET (22:25 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.- - 05 25 PM EST 01-31-06 |
