Republicans Raise Concerns Over FHA Nominee as Bailout Threat Looms

Republicans raised concerns on Tuesday over the Obama administration's nominee to head the Federal Housing Administration (FHA), as a possible bailout for the agency looms.

The nominee, Carol Galante, was approved by the Senate Banking Committee in a 13-9 vote, a step toward her approval to become FHA commissioner and assistant secretary of the Department of Housing and Urban Development (HUD), the FHA's parent agency.

But Republicans said that they remained concerned over the agency's fiscal health and were unconvinced that Galante would do enough to stabilize the agency's finances, as The Wall Street Journal reported.

I think we need people now in the administration with a sense of urgency about the need to turn things around, reduce our debt, and to avoid further bailouts, said Sen. Jim DeMint, a Republican of South Carolina, at the hearing. She does not appear to have that sense of urgency.

All Democrats on the committee voted in favor of the nomination.

The FHA's annual report, released last month, said that its reserves had dropped to $2.6 billion, and further declines in housing prices could cause the FHA to require taxpayer assistance. The agency does not issue mortgages, but guarantees them, similar to Fannie Mae and Freddie Mac, although the entities are under separate oversight. The FHA saw its share of the mortgage market increase as the private sector left the mortgage market, which has exposed it to more possible losses.

Galante has defended the FHA's finances, saying that an increase in premiums and stricter underwriting standards are expected to boost its mortgage fund.

Galante has been the acting commissioner of the FHA following the departure of the previous commissioner, David Stevens, who left to head the Mortgage Bankers Association in March. Galante was formerly deputy assistant secretary for multifamily housing at HUD.

Galante's approval will now go to a full Senate vote.