Now that the President's first pick to be the new GSE regulator has bowed out due to Republican opposition, the White House will likely appoint an administration official who has already been confirmed by the Senate to run the agency.   

Possible candidates to head the Federal Housing Finance Agency include Treasury under secretary Jeffrey Goldstein and Federal Housing Administration (FHFA) commissioner David Stevens.   

Acknowledging that North Carolina banking commissioner Joseph Smith had withdrawn his name from consideration, the White House said he is "highly qualified" to regulate Fannie Mae and Freddie Mac. "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 re-nominated."  

In December, just before Congress adjourned, Sen. Richard Shelby, R-Ala., and other banking committee Republicans blocked Smith's nomination over the way the administration wants to run the Fannie and Freddie conservatorships.

At the time Sen. Shelby said that Smith would be a "tool" of the administration and approve its plan to permit principal reductions on underwater GSE-guaranteed loans.

It appears that Sen. Shelby wants to keep career regulator Edward Marco as the acting FHFA director because DeMarco has resisted the Treasury Department's initiative to funnel underwater GSE loans through an FHA principal reduction program.

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