(Adds details from Politico report, background)
WASHINGTON, July 27 (Reuters) - The director of the Federal Housing Finance Agency (FHFA), Mel Watt, confirmed on Friday that he is under investigation after Politico reported that he was being probed for alleged sexual harassment of an agency employee.
"The selective leaks related to this matter are obviously intended to embarrass or to lead to an unfounded or political conclusion," Watt said in a statement. "I am confident that the investigation currently in progress will confirm that I have not done anything contrary to law."
FHFA regulates mortgage guarantors Fannie Mae and Freddie Mac.
Politico reported, citing documents and partial transcripts of tapes it obtained, that an FHFA staff member accused Watt of making inappropriate sexual advances when she tried to discuss career and salary matters.
Politico reported that the employee, who it did not name, had filed an Equal Employment Opportunity complaint.
Diane Seltzer Torre, the employee's attorney, confirmed the investigation to Politico, and said, “Our preference is to let that investigation proceed."
Seltzer Torre could not be reached by Reuters for comment.
Watt, a former Democratic congressman from North Carolina, was appointed by President Barack Obama in 2014 to head the independent housing regulator. His term is due to end in January.
The regulator has been under pressure from Fannie and Freddie's shareholders, which claim its structure is unconstitutional because the director has too much power and cannot be removed by the president except for cause. A federal appeals court this month sided with the shareholders. (Reporting by Eric Beech, Patrick Rucker and Michelle Price; Editing by Tim Ahmann)