WASHINGTON - The Obama administration's pick to run the agency that oversees Fannie Mae and Freddie Mac has decided he doesn't want to be re-nominated after his candidacy ran into strong Republican opposition, a White House official said Thursday.
President Barack Obama in November nominated North Carolina's top banking regulator, Joseph Smith, to lead the Federal Housing Finance Agency. But Smith ran afoul of several Republicans, who voiced concerns about whether Smith would exert enough independence from the Obama administration.
"Joe Smith is a candidate whose background and expertise makes him highly qualified to lead the FHFA," a White House official said. "Unfortunately, there is not a clear path to confirmation for his nomination at this point in time, and Mr. Smith has asked not to be renominated in the 112th Congress. "We wish Mr. Smith the very best in the future and are grateful for his willingness to serve."
A spokeswoman for Smith could not be reached for comment Thursday.
Smith faced resistance from Sen. Richard Shelby (R., Ala.), who suggested he would be "a tool of the administration." Shelby and other Republicans feared Smith would heighten pressure on Fannie and Freddie to slash mortgage balances for troubled homeowners.
Smith, whose term as North Carolina's banking commissioner expires on March 31, would have replaced Edward DeMarco, a career civil servant who has been serving as the housing agency's acting director since August 2009.
The administration is now left without its own appointee at FHFA just as officials prepare a proposal for reforms to the system of providing U.S. mortgages. The Obama administration is due by mid-February to issue a proposal to overhaul or replace Fannie Mae and Freddie Mac, which have been under federal conservatorship since September 2008.
The FHFA is an independent agency, but faces a tough balancing act because the government effectively owns Fannie and Freddie, a rescue that has cost taxpayers $134 billion to date. The housing finance agency's goal to stem losses can sometimes conflict with the White House's agenda of limiting foreclosures.
Some Senate staffers have questioned whether Smith would be a better choice than DeMarco, who has opposed allowing the companies to participate in initiatives that might lead to larger losses.
Smith, who has served as North Carolina's top banking regulator since 2002, helped implement some of the nation's first regulations to protect borrowers from predatory lenders.