WASHINGTON — Congressman Mel Watt (D-N.C.), nominated to head the Federal Housing Finance Agency, maychange his position supporting principal forgiveness at Fannie Maeand Freddie Mac, should he be confirmed.

Sen. Pat Toomey initiated the exchange. The PennsylvaniaRepublican said he was concerned about Watt's support of principalforgiveness as a Congressman, when he signed a letter in December2012 supporting forcing Fannie and Freddie to forgive part of theprincipal owed by underwater borrowers.

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Watt said he didn't think the issue was a relevant today as whenit was first posed to the FHFA 18 months ago, because home priceshave increased and fewer homeowners are underwater on theirmortgages.

However, should Watt be asked to consider principal forgiveness– and he said he suspects he would – he would carefully study howActing Director Edward DeMarco's reached his decision not to implement principal forgiveness, consider anynew information available, and make a responsible decision.

As for his support of principal forgiveness in the House, Wattsaid he signed the letter because he was representing hisconstituents in North Carolina, many of whom were underwater ontheir mortgages.

“I will be as strong an advocate for taxpayers in this role,because I would view them as my constituents,” he said, presumablyimplying he may have a different view if confirmed.

Watt, who was joined on the confirmation panel by NCUA Boardnominee Richard Metsger and three others, received most of thequestions from committee members. In his opening statements, Wattstressed he would cooperate with Congress to implement whateverhousing finance reform is legislated, including more privatecapital, the winding down of Fannie Mae and Freddie Mac, and eventhe elimination of the Federal Housing Finance Agency. Should hefind himself out of a job, Watt said in answer to a question, itwould mean the crisis had been over.

Ranking Member Mike Crapo (R-Idaho) asked Watt if he believedthe FHFA director has the legal authority to use revenue collectedfrom Fannie Mae and Freddie Mac to fund social initiatives, orshould that revenue be used to maximize the GSE's net worth.

Watt said the issue has been statutorily addressed, allowing theGSEs to “do things that don't yield the same kind of return, insome cases.” He noted that the competing directives creates atension in the statute.

“That's not an authority to make irresponsible loans, but it isbuilt into the statute,” he said. “It must be done responsibly, andI pledge to you I would do that responsibly.”

Jason Furman, nominated to be a member and chairman of theCouncil of Economic Advisers, outlined the steps he would take tocontinue the promotion of a broad based economic recovery, shouldhe be confirmed.

Furman said he would increase investments in the country'sinfrastructure, provide tax credits to help small businesses expandtheir payrolls, reform entitlement programs and the tax code to putthe deficit on a more sustainable course, and expand housing creditto continue progress in the housing market's recovery.

Metsger was nominated to fill the NCUA Board position vacated byGigi Hyland, who exited the board in October 2012. Metsger now mustpass a full Senate vote before he is sworn in.

Other nominees taking part in the hearing included Kara M. Steinand Michael Piwowar, both nominated to be members of the Securities& Exchange Commission.