The Senate Banking committee is expected to begin confirmation hearings today for Mark C. Brickell, President Bush's nominee to head the Office of Federal Housing Enterprise Oversight (OFHEO), which regulates Freddie Mac and Fannie Mae.

Citizen Works opposes this nomination for several reasons:

Brickell is the former managing director of J.P. Morgan Securities, Inc. and chief lobbyist for the derivatives industry's trade group ISDA (International Swaps and Derivatives Association, Inc.). According to today's Wall Street Journal, Brickell "at times helped advise Freddie Mac on some if its derivative hedging" while he was at J.P. Morgan.

OFHEO, which is part of the Department of Housing and Urban Development, has been criticized for not catching Freddie Mac's manipulation of earnings from derivatives trading operations. Although Freddie agreed in 2002 to abide by the same disclosure rules as other Fortune 500 listed companies, there is clearly a need for increased disclosure across the board. Treasury Secretary John Snow has called for tighter regulation of Freddie Mac and Fannie Mae, but Brickell, who was nominated before the derivatives trading scandal broke, is too conflicted to insure that such reforms come about, particularly as they relate to derivatives.

"President Bush should withdraw Brickell's nomination before he's stuck with another Harvey Pitt and public confidence in the markets is further undermined." said Charlie Cray, of Citizen Works' Campaign for Corporate Reform. "What we need is a tough public-spirited regulator, not an industry lobbyist."

For over a decade, Brickell and ISDA have successfully quashed any attempts by Congress to regulate derivatives, including forcing companies to explain more clearly what impact these complex financial instruments would have on companies' balance sheets. Disclosure is particularly important when it comes to derivatives, which can be highly risky. (Warren Buffett has called them "ticking time bombs.") ISDA has consistently argued that regulating derivatives is unnecessary and too complicated, despite the fact that they have played a key role in many of the big financial scandals of the past decade, including Long Term Capital Management, Orange County, Barings, and Enron.

In Infectious Greed, his book on the role of derivatives in Enron and other financial scandals, Prof. Frank Partnoy describes Brickell as a "pit-bull Wall Street lobbyist," a friend of Enron board member Wendy Gramm, wife of former Texas senator Phil Gramm (who Barron's once called "Mr. and Mrs. Enron").

"Brickell falls short of possessing the leadership qualities necessary for so demanding a job," said Randall Dodd, Director of the Derivatives Study Center. "Brickell has no experience in public service and has never worked in a public office. He is a long-time lobbyist for the derivatives industry and is inextricably linked to one of the narrow private interests in the conflict. As such, he will never be perceived as a fair minded policy maker that will respect the various competing private interests."

For more information: Citizen Works: http://www.citizenworks.org

See also: The Derivatives Study Center (at the Financial Policy Forum): http://www.financialpolicy.org/

To contact Randall Dodd, call 202-533-2588