Should a former high-profile derivatives industry lobbyist be put in charge of the federal agency that regulates Freddie Mac ( FRE) and Fannie Mae ( FNM)?

That's the question facing the Senate Banking Committee after the Bush administration tapped Mark Brickell to head the Office of Federal Housing Enterprise Oversight. The issue promises to draw extra attention in light of the growing scandal over Freddie Mac's derivatives portfolio.

Critics say Brickell, while well-versed in the nuances of a complicated market, might be unwilling to take a tough stand on potential derivatives abuses. Given Brickell's long opposition to regulating the industry, one critic likened the appointment of the former J.P. Morgan Chase ( JPM) managing director to putting a "fox in charge of the henhouse."

Swap Meet

The White House formally announced Brickell's nomination last week, just days after the accounting scandal at Freddie began making headlines. The appointment, which must be confirmed by the Senate, had been in the works for months, but the White House dragged its feet in sending the nomination to the Senate Banking Committee.

Brickell is a former chairman of the International Swaps and Derivatives Association, the derivatives industry's main lobbying group. He currently is the CEO of Blackbird, an electronic derivatives trading firm based in Charlotte, N.C., with offices in New York, London and Tokyo.

"This is a nomination the Senate would be wise to look closely at," said Frank Partnoy, a University of San Diego law professor, former derivatives trader and author of a recent book on derivatives scandals. "On the one hand, you need a regulator who understands the industry. But regulators who are true insiders often act to benefit the industry to the disadvantage of investors."

Brickell could not be reached for comment at his New York office.

Ira Kawaller, who advises companies on how to use derivatives, said Brickell, during his lobbying days, did nothing more than serve as a "forceful spokesperson" for his employer. Kawaller said he'd be concerned "if there was some crony appointed who didn't have that kind of background."

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