Joseph Otting, a former business associate of Treasury Secretary Steven Mnuchin who already serves in a key banking policy position, will act as director of the Federal Housing Finance Agency effective Jan. 6.

Otting is the current comptroller of the currency, meaning he oversees and regulates banks chartered by the federal government. He will take over for outgoing FHFA Director Mel Watt, whose term is due to expire on the day Otting replaces him.

As acting FHFA director, Otting will oversee the $5.4 trillion mortgage portfolios of Fannie Mae and Freddie Mac, which FHFA has held in conservatorship since the 2007-2008 housing market collapse and ensuing global financial crisis.

Otting came to government service with a business record in banking and housing finance: Prior to his confirmation, he was the president of CIT Bank in California and co-president of the bank’s parent company, CIT Group, where Mnuchin held a role as vice chairman of the board until resigning in 2016.

Prior to that, Otting served as president and CEO of OneWest Bank, another California bank, which merged with CIT in 2015.

Otting will serve as FHFA director until Mark Calabria, Trump’s nominee to head the agency for the longer term, can be confirmed by the Senate. Trump nominated Calabria, who currently serves in the administration as chief economist to Vice President Mike Pence, last week.

Watt, an Obama appointee and former Democratic congressman from North Carolina, faced sexual harassment allegations from an employee who testified before Congress that he stymied her career advancement because she rebuffed his advances. The employee also provided investigators and journalists with recordings of Watt's alleged improprieties.