who are involved in all aspects of the real-estate industry will. the realtors believe the gse housing mission and benefits that are derived from it continue to play a vital role in the nation's real estate market. had no government entity existed when private mortgage capital tried up and 2008, america's housing market would have come to a complete halt throwing out -- throwing our needs the commission into a deeper recession. we need only look at the current status of the if affairs in the commercial and mortgage market to see how different things might be today in the tradition -- if the traditional -- if the

traditional regular mortgage market without fannie may and freddie mac. for those reasons realtors believe pure privatisation of the gse is unacceptable. rather, we support a secondary mortgage market model that includes some level of government participation, protect the taxpayers and ensures all creditworthy consumers have reasonable access to affordable mortgage capital. nar is currently conducting research to determine what model for the secondary mortgage market would best achieve these goals. we will share that information with you as soon as it is completed. for now, i would like to briefly outline a set of nine principles that nar's board of directors has adopted and that we are using to guide and our research. one, capital must flow into the mortgage market in all market conditions. number two, qualified borrowers should have access to affordable mortgage rates. three, affordable housing goals

should ensure that all qualified borrowers, including low and moderate income households, have an opportunity to realize the dream of homeownership. however, such goals must also promote sustainable, ownership. number four, financial institutions should be required to pass on the advantage of lower borrowing costs and other costs of raising capital by making mortgages with lower rates and fees available to qualified borrowers. five, conforming loan limits should be based on increases in median sales prices including higher index limits for areas with high housing costs. six, sound underwriting standards must be implemented and adhered to. seven, institutions must uphold the highest standard of transparency and soundness with respect to the disclosure and structuring of mortgage related securities. eight, they're must be sufficient capital to support

mortgage lending and all types of markets. nine, the government must provide rigorous oversight. simply stated, the housing market must work and all economic conditions. at all times, and mortgage capital needs to be available to all potential qualified housing consumers. in conclusion, nar respectfully asks congress and our partners in the industry carefully consider these nine principles when discussing a new secondary mortgage model working together i believe we can create a solution that will serve our best interest now in becoming a model for the global real-estate and financial markets well into the future. i human you for this opportunity to present our thoughts on the current and future status of the fannie may and freddie mac, and as always, the national association of realtors is at the call of congress and our industry partners to help facilitate a housing and

national economic recovery. thank you. >> thank you very much. next we have dr. lawrence, the author professor of economics of the leonard stein school of business. dr. white? >> thank you, chairman kanjorski, ranking member garret. my name is lawrence white, professor of economics at the stern school of business. during 1986 to 1989i served as board member of the federal home loan bank board and in that capacity i also served as a board member of freddie mac. thank you for the opportunity to present my view of the current condition and future status of fannie may and freddie mac. the hybrid private public model that is and was and continues to be at the heart of the operation of the two companies is broken and should not be reconstructed.

before addressing what should be done however it's important step back and remember that fannie and freddie have been just one part of a much larger mosaic of government policies tall levels to encourage the construction and consumption of housing. much of this encouragement is broad brush and focused -- on focused that it mostly just encourages people who would otherwise buy a home any way. so is really not encouraging home ownership but just encouraging them to buy a bigger, better appointed house on a larger lot. i don't see a big social purpose and that kind of the encouragement. instead of doing what social policy should be doing, which is focusing on encouraging home ownership itself.

now, fannie and freddie's structure was just part of and still is just part of this broad brush approach. through the implicit and now somewhat more explicit support for their debt by the united states government. it looked like a free lunch, something for nothing, but we have now found out just how costly this meal has been. so what is to be done? for the short term it is clear, fannie mae and freddie mac need to continue to be words of the united states government, speed of the fha. financial markets are simply too fragile to support anything else. however, for the longer term because the model was broken, fannie and freddie should be really truly privatized. to replace their implicit broad

brush off budget effects and housing finance, there should instead be an explicit on budget, adequately funded targeted program to encourage, and of course including appropriate counseling low and moderate income households who might not otherwise be homeowners, to become homeowners. the focusing on the first-time home buyer in the low and moderate income household category. through targeted help on down payments, targeted health debate, held on monthly payments. this is an appropriate function for government to really deal with that important spillover effect of that everybody benefits when a neighborhood is more stable with more homeowners.

finally, and i think that there are some other things that the congress could do that could well worth the real cost of housing, housing more affordable that would improve the efficiency of markets, benefit consumers, and i would hope all of the people at this table as well as the people on your side of the table could support. this would include making sure that there aren't and pediments to shipments of timber from canada so that we can keep the cost of construction of housing lubber making sure there are not in pediments to shipments of cement from mexico so that we can keep the cost of constructing housing lower. leaning on the states and localities to undo what restrictive zoning, that would otherwise keep the costs of property high year and make it harder to build a lower-cost

housing. leaning on the states and localities to undo restrictive building codes that can efficiently causes the cost of constructing housing to be higher. these are all with things that could really benefit housing, make housing more affordable. thank you again for the opportunity to appear here before the subcommittee. i will be happy of course to answer questions. >> thank you, dr. white. next we have mr. michael berman, vice chairman of the mortgage broker association. mr. berman. >> thank you, mr. chairman. every part of the real-estate finance industry was deeply impacted by the financial crisis which led to the conservatorship of fannie mae and freddie mac. large and small lenders, servicers, investors, multi

family lenders, and most importantly, consumers. a smoothly functioning secondary mortgage market is small only important for our industry, but for the entire economy. despite their financial situation, the gse's currently participate in over to third of transactions and about 75% of all multifamily mortgage transactions. while the fha also facilitates a sycophant share of residential mortgages the gse currently are the prevailing force in the mortgage market. in addition to feeling, housing prices and unprecedented for closure crisis, the gses face severe management challenges. at the same time, they are being used as instruments of public policy. while nda supports the temporary use of the gses in this manner, this is an unsustainable and artificial business model. we are committed to working with you to create a new structure for the future.

before we discuss the future, we must ensure that the current market works as efficiently as possible. for example, the credit facilities established by treasury for the gses expire at the end of this year, as does treasury's authority to purchase gse mortgage-backed security in the open market. we must ensure that these important programs or extended at least until the economy recovers. congress should also help make mortgage credit more -- more available and affordable by permanently freezing the gses loan limits. the higher loan limits have benefited consumers but because they are temporary, investors have been hesitant to purchase high balance loans. this violates the full benefit of the high loan, higher loan limits because liquidity is artificially restricted them. ultimately consumers are forced to pay higher interest rates on their loans. after the conservatorship was announced, mba convene a council

of mortgage finance experts from every part of the real-estate finance industry to examine these issues. the council on ensuring a mortgage liquidity which i am privileged to chair has identified the key ingredients of a functioning secondary market and established a set of principles for you and policy community to consider when debating how to rebuild the secondary mortgage market in the future. our approach has been to xm and the issues so that stakeholders could assess options and a measured and thoughtful way. we agreed early to avoid overly prescriptive approach and instead to assess the market and present alternatives which we plan to refine and the coming weeks and months. i have attached to my testimony a white paper on this issue that has been cited as one of the more helpful compilations of options available today. this paper presents a set of building blocks to aid an understanding of discussing the merits of various market structures. and also lists and begins to

describe nine alternative models for channeling government support to the housing finance system. i've also attached to my testimony is of guiding principles based on the key considerations mentioned in the white paper. dearth the scope of these principles is the entire secondary market including responsibilities of the private market purchase of pence, as well as the will of the federal government. i hope to address of principles and greater length during the question and answer period, but let me close with a few thoughts to help the discussion moving forward. first, secondary market transactions should be funded by private investors, seeking market returns to understand, accept and are held accountable for the risks that they take. next, in order to attract consistent levels of private capital from a wide range of investors the mba believes there is a role for an explicit federal government credit guarantee on mortgage related

investments and the core single-family and multifamily product. there is also a clear government role as a liquidity backstop in times of market distress. finally, a careful measured approach should be adopted so that the current markets are not further destabilize. safeguards should be established to ensure a smooth transition from the present to whatever future model list developed. thank you for the opportunity to appear before you today and i am happy to answer questions that any of you may have. >> thank you very much, mr. berman. next and last we will hear from mr. robson of the robson board of national association of homeowner and builders. >> chairman kanjorski, ranking member garret, members of the subcommittee, mike, too, am thankful for the opportunity to be here and testify today. the housing gses, fannie mae, freddie mac and federal home loan banks are vital components

of the housing finance system, providing liquidity to the mortgage markets and supporting the flow of credit to meet affordable housing needs. fannie mae and freddie mac recently have encountered severe problems and are currently operating under conservatorship. under the new regulator the federal housing finance agency. the federal home loan bank system is also experienced stress, which considerably less intense had affected its capacity for mission pursuit. nh bea believes the housing benefits that the gses have provided in the past and their significant role in dealing with the current financial system problems clearly demonstrate the need for federal government support for the secondary mortgage market. there is broad agreement, however, that fannie mae and freddie mac will not be able to emerge from conservatorship without alteration in the current structure. while nhb believes liquidity and

affordable housing mission must continue with federal government backing, the primary objective is a system that assures the continued availability of affordable housing credit that facilitates help the housing markets and consistency satisfying community housing needs. therefore nhb looks forward to discussing different models for achieving that objective. as a credit crisis has worsened, fannie mae and freddie mac have tightened underwriting standards and increased loan delivery fees at the same time the combined market share has an increase and now represents nearly 75% of the single-family market. the continual ratcheting up of delivery fees and tightening of underwriting standards has swung the pendulum too far, denying credit with a viable buyers. nhb urges the repeal of these obstacles to help to increase mortgage affordability, enhance policy makers attempt to reduce

foreclosures and help the country get back on the road to economic recovery. last year, nhb housing finance recommended a permanent federal backstop to the housing finance system in order to ensure a consistent supply of mortgage liquidity. as well as to allow rapid and effective responses to market dislocations and crises. the current crisis has clearly demonstrated that the private sector on aided isn't capable of fulfilling his role. the task force concluded the enterprises should not be transformed into a fully private companies because such companies could not be counted on to provide liquidity in times of crisis or to consistently address affordable housing needs. and they should not be converted to federal government agencies because such entities would be burdened by government red tape

and what lack the resources and agility to respond effectively to market developments and housing finance needs. nhb's task force recommended fannie mae and freddie mac be recast, retaining federal backing but limited primarily to providing credit enhancement of mortgage-backed securities. some portfolio capacities should be permitted to accommodate mortgages and housing related investments that do not have the secondary market outlook. although the fannie mae and freddie mac should have the flexibility to support the mortgage markets under the types of conditions we are currently experiencing. specific principles for restructuring the housing finance system are outlined in my written testimony. in closing, nhb urges any changes to the role and structure of the gses not proceed until the current financial turmoil passes and that the market's return to a normal condition. it would be extremely difficult

if not impossible to restructure fannie mae and freddie mac when they are so intertwined in the ongoing efforts to address the deepening financial morass. nhb looks forward to working with you to develop an effective, safe and sound and a reliable flow with housing credit under all economic and financial market conditions. again, thank you for the opportunity to testify today and i would be happy to answer questions. >> thank you very much, mr. robson. listening to all this testimony today i have come to the conclusion maybe we should go back to basics. i want to pose basic questions if i may. who says the government should have a role in ownership of real estate? i mean, i hear some arguments sometimes questions or opinions

that the private sector and private marketplace can take care of it. is their anybody on this panel that agrees that we don't need a government involved in the real-estate? unanimous consent. i don't know if i'm going to ask for party registration. [laughter] it seems to me that there's a little bit of an analogy, not clear, but a little bit of what happened in the late twenties and what happened most recently in the real-estate bubble and burst and that is that agreed to an extent caused people to over inflate and create a false value that kept on feeding on itself to the extent that just as a boiler shop date in the 20's with securities that didn't have the financial worth behind them

the real-estate didn't have the ultimate end, and fortunately or unfortunately i sat here and watched this fever and remember quite well having alan greenspan before us now to many years ago, about five years ago and i posed a direct question to him and i think we have a tape of that. i think i will play that at my retirement party. [laughter] and i asked him whether or not he had fear whatsoever of the real-estate bubble and he said absolutely not. 2005, it could not cause a problem, the head of all handled and analyzed. i have a lot of respect for mr. greenspan's economic capacity and ability to calculate but he certainly missed that one and it seems to be the story today that we always mess and somebody in

their testimony uses horrible words this will never happen again. good god, can we knocked out of our vocabulary? it is going to happen again regardless what we do, just in another form or method. the question is do we owe loyalty to the private market that governor should stand behind these things? and in fact it's necessary -- one of the methods i was thinking about, if we pay the average people a few percentage, maybe ten or 20% more the wages and income in this country we wouldn't have a problem. you would think that you'd think that way because there's a difficulty in some of these people honoring their commitment. on the other hand we know some people regardless of the amount of money they have they always over by or over shop. but what is the role of government? are we to put a label with teaching responsibility through government action? yes, dr. white. >> yes, mr. chairman, i've been

thinking about your earlier question as well as this one and i didn't raise my hand before because there is a role for government in housing, but i think it is a much more limited role than in fact we see government playing. it all to be dealing with the true social spillover effects, the positive externalities', to use a common term, that comes with homeownership. there is a role for encouraging innovation, after all it was ginnie mae, an arm of the department of housing and urban development, that was the first securitized of home mortgages. freddie mac was a fast second of your leader, but it was ginnie mae. so there is a role for government to play. but market can be terrifically efficient and allocating resources. i think we are all appreciative

of that. and i believe that yes there is room for government but it is much more limited role -- >> i didn't ask whether there's room for it. that seems to say that we want to compete. as a member of the government i want to compete. for housing i want people to have good housing if they live in and if they can't otherwise would i wouldn't give them a penny. i wouldn't support any. >> there are better ways by finding direct transfers rather than trying to lean on housing markets. all we do is encourage inefficiency and housing markets. we end up investing too much income, too much of our capital stock in housing, not enough in product of physical capital, not enough and social capital, not enough in human capital that could help people durham higher and higher incomes.

>> we've got two more activists here so we want to get to them. >> mr. chairman, you will always get that answer from the economists that if you appropriate the money directly and target most narrowly that that will be the best out, and yet our political system doesn't really work that way and we have been much more successful in providing fundamental benefits that work for the society as a whole. when they work for the whole society and it's really you could just compare our successful the social security program is compared to targeted income support that only goes to the worthy were those things most needy. the fact is we gain public support for broad we successful intervention and a necessity like housing when it's brought we shared and that doesn't mean that the targeted interventions dr. white is suggesting on on

good ideas but our basic access to housing for individuals both multifamily and single-family need and the ultimate for liquidity backstop to make it most affordable and available and that can be done with a minimal government risk and maximum private sector operation and risk-taking. it's not the system we have because certainly fannie mae and freddie mac took on more risk and power than they needed to take on but they can be redesigned so that you get minimal government but something that is broadly available and has broad political support as the system has had so i think we should be careful of not facing up to the political realities how we get the best overall result. you and i both have worked for years what goes on in the committee on specific targeted

matters. we have limited success. the broadly available benefits have broad political support. >> doctor and then i've got to get to my friend but we are going to have a lot of time because i don't see how the population. doctor? >> we need mortgages for home ownership. that is obvious. people cannot put down 200, $300,000. we need mortgages. we need government to set the rules for the market. if we don't have a secondary market we will have short-term the real rate mortgages. many crises in other countries have come from that system and of course our savings crisis came from that system. thus we need a secondary market. if we have a secondary market without standards we have a private label securitized system. i'm not calling it a market because it's not a market. we have a market failure in the sense we did not have a mortgage market in order to have a market

that works you need the structure and rules of the game set out for the market player. in the private label securitized market there was heterogeneous market mortgages that were not treated, did not have market discipline that was a way of hiding the true cost and prices both to investors and borrowers. >> another couple of questions -- >> thank you. i appreciate your opening comments as far as basic questions. when you said is there a role for the government i thought your next question -- everybody concurred. is there a constitutional basis for the federal government. i know we have a professor. anybody want to slight the constitutional basis for the federal government intervening directly or indirectly -- >> i am not a lawyer and i never

try to practice law without a license. >> it is a commerce calls. >> with commerce clause we can do just about anything. i'm not sure why we have 50 states any more actively since -- but actually, on a broad note, is there -- we sort of had this discussion back when things were going well in the housing market and the past administration will oftentimes be champion and the fact things are going well in the housing market and the percentage of homeownership was always coming up and some of us would hear from those in the rental community and construction trades and what have you would say there's another trade as well and how about costs. so the question would be is there a target number we should be looking at and say this is what we are trying to get to in homeownership that when we reach 65 or 68 or 69 or 70% we are never going to get 100% homeownership. agreed? that we reached the approximate number we should be striving for

realizing there will always be some people have to rent and always some construction guys out there and investors who say we should be building multifamily housing. >> our view on that would be if you limit -- if you decide once we get to 75% home ownership which should stop pushing them it also says he would stop pushing the button that allows people to create wealth through home ownership. home ownership creates so many other opportunities for people and families and the government because there's higher paying of taxes, greater investment in community and all those things you would sort of limit its capabilities. so in mauney view if you are going to limit the homeownership rate by saying once we get there that's good enough you were also saying he would limit the possibilities of what it could mean -- >> i'm not willing to put words in his mouth, dr. white might say to that that there are other

ways and to create wealth in the country other than homeownership and if we are picking and choosing -- is that something? >> i was going to say the last three years it hasn't been a creator of wealth on on other things. yes it was for previous decades. look, i don't know what that number is. it can't be 100% because it is clear homeownership is not for everyone. it requires relatively steady income, budgetary discipline, it requires understanding of the obligations you are taking on. there are, as ms. martin and ms. myers indicated positive consequences for communities that's why we want to be encouraging its. but within limitations, and for sure the broad brush and approach mostly doesn't

encourage homeownership. it mostly just encourages people who would otherwise by any way to just buy a bigger house with five bedrooms rather than four bedrooms, four bathrooms rather than three bigger lot where is the social value in that? i don't get that at all. ..

>> real quick. with regard to the private-label, i think what i hear is it didn't work because in part we didn't have all the rules and regulations in place so you would have all those problems. but if we come up here with all the right rules and regulations in place for the private-label marketplace, could we see that with one of my pet project before, upon the situation, could we see those combined to basically expand the level that we need for secondary market? i'm sorry. i made a b. understanding of russian completely, but my understanding of the danish mortgages and is actually it is not that different than our gse's.

>> mr. garrett, i am a proponent of record. i think recourse is an important part of a good system. there is no reason you can't have recourse in various structured. records is actually out of our system by bozzo one capital rules which made a transferred asset with recourse look exactly the same as everything as that in terms of capitalization. and that's really why we have a nonrecourse market and we could have a recourse market if we designed the capital rules sensibly to measure the risk. so you can have a recourse market and it is one option for ways for the private sector to bear the risk and it is not the only model. it can be part of them all. it could be a mixed model. so i would support your notion, covered bonds are no magic. vehicle. it is another way of putting certain amount of collateral behind your credit guarantee. and so it's a way for the originating institution to stand

behind it. the question at the end of the day still is where did the liquidity come from in the system as a whole and what kind of liquidity you get for those bonds versus the bonds which have some kind of guarantee on them. and you can do both. i don't think we are really at war with each other on the options. i think the question of maximizing the benefit indian. >> i will close on this then we are hopefully coming up with a solution and in light of your comment on the political realities, someone said don't let any great crisis go to good use. so will try to use this crisis to try and come up with something that actually works. one last comment i know you made a comment to mr. white's comment about as far as i appreciate your thought as far as targeting the money and you're suggesting you can't always target and you gave example of social security being a broader system that really works here as an example, of course there do we know that within a decade or so social security is broke, and so that

may not be the best example saying, giving us a system that is working well across the board in targeting health care systems, tarting things that might -- >> for every system you have to pay for it. >> if i may respond to an earlier part of your question. with respect to multifamily, in that incident and i happen to be in all the daily lit up and he, pretty, f fha, that has become totally reliant on the gses, over 75% of lindi today in the multi-family sector is through the gses. and so in part, points to another role of the government, which is to smooth out times, certainly times like this when we are in crisis. but also it's not just when there's a hundred year flood, but between those times to create a stable system where there's always liquidity in

those markets for both multifamily and for single-family. >> i just wanted to add to that as well. and i guess go back to some of the original questions around the role and why the government should continue to play a role. and i guess when you look at real estate in general, the industry, and we look at it honestly and said all the sectors of the industry combined represent what would you say, 20 to 25% of our gdp? i would think the government would have an interest in preserving and keeping a healthy industry. because it is so much of our gdp. >> mr. manzullo. if you guys don't like to open up to throw questions back and forth and sort of make it a roundtable panel because i think we could get some interesting responses that way. mr. manzullo.

>> i want to thank you guys for sticking around. i had some other things to do but i called my wife and i said these people have been here all day and it's very interesting, and tremendously important topic. i have been listening to the testimony going on here, and this is -- it is very interesting. ms. martinez myers, you want to have this hybrid, and dr. white, you say no hybrid, let the market forces determine everything. the real mass has to do with people bought homes they couldn't afford them in the first place, isn't that correct? >> certainly in many -- that has to have been to. >> that's what made the loans go bad, is they close on these

loans and the so-called cheater loans, -- >> but it was because everybody was tricking the kool-aid that houses prices can only go up and if housing prices can only go up they will never be a problem. >> but even under the bed, the fed had the authority, has the authority to do among other things to things. number one, the fed can govern the instruments. and number two, it can set forth underwriting requirements. okay? so the regulator that could have stopped all of this was already in place. and it wasn't until december of 2007 that the fed did this top to bottom review and came to the

incredible decision that you can't buy a house unless you can't afford to buy it. and i was stunned on the testimony came forth, and then again that testimony came forth in october of last year but the requirement is not effective until october of this year. and i am listening to your testimony and see the tremendous angst that goes on from the builders with mr. robson to the realtors and mortgage folks in between. but i mean, if somebody, if the fed had said look, you can't sell a house to somebody who can't afford it. i mean, the regulatory agency was in place. don't you think that would have stopped this? yes? >> if i may comment, because your comment says that all of this is only because people

bought -- got loans because they loans they couldn't afford to pay. and i know that in the light of our conversation around the gses, i think that we need to kind of step back a moment and say, okay, for many, many years, decades, the gses did a real great job of providing affordable products that was sustainable. and in fact, their foreclosure rate was something less than 1%. so for years they did a very good job at helping to grow homeownership, particularly among low to moderate income folks. now, their biggest crime is probably diverting from that and buying those loans with some assets and loans that were not the kind of loved -- >> under pressure from both parties. >> that's right. so they diverted from what they normally would do. so i think when we are sort of

using the hammer and hit him over the head for that action, i think everybody has to take a little responsibility for that. and i think the industry has to take some responsibility because there is no doubt, and i think chairman kanjorski said there was a lot agreed out there that fuel that hot or. people kept telling. people kept pushing. people thought it would continue. people to close the thing they could flip the house and sell and make a profit. and when it stopped it was not a good story. so i think there's a lot of different factors that contributed to that. a lot of people who have been homeowners for years refinanced their house, took out the equity, used it for things unrelated to their home, and the market changed and guess what, now their house is worse last. >> but you know, there have been in the past 20 years periods of time when people will pay x. amount for their house, and in the houses have fallen into how you. you have seen it happen here and in virginia.

but they just hang on, and then five, six, seven years later, they recover. you know, that's a lot different from whether or not they could afford a house when they bought it in the first place. but what i don't understand, and maybe somebody, somebody here could clue me in. why did the fed sit back and do nothing? does anybody want to take a stab at that? >> i think it is a very good question. i think the fed fed this crisis into a. they fed this crisis by keeping interest rates low for an excessive period of time, and they didn't discharge the regulatory responsibility with respect to the subprime market. those things i think you're absolutely right about, although it doesn't do us much good to be right about that. >> let me break in here a second. >> of course. >> what obligation does the federal government have to do anything. you are the guys on that side.

stay out of our bedroom. now why do you want us to get in all your business? >> mr. chairman, what i'm saying is is we are looking for a new regulatory system that will -- >> not really. we are looking for the answer of why do we get ourselves in so involved, great systems that fail and then we end up blaming the person that wasn't originally part of the. your indication is the federal government had a responsibility to see that prices were too high. >> no, no, no. >> what was the fed supposed to do. >> the federal reserve has the authority, they could have stopped the 220 mortgages and the three, 27 mortgages. the federal reserve could have said look, we have some very basic underwriting requirements that when you buy a house you have to have a minimum of 5% down or some other type of

mortgage insurance, etc. i'm just saying that those -- that the means by which these subprime mortgages could have been stopped, because they were too easy -- the credit was too easy. debt regulatory process was already there it just wasn't used. that's what mr. morrison just said. >> i think you have all convinced me at this point we have to prevail upon the speaker and leader of the senate to convene a committee to determine what the hell caused this thing. if we think 2/28 orbiters cause this thing, no wonder we can't solve this. it has nothing to do with this. is miniscule. you don't testify earlier, mr. locker, about the 200,000, or $200 billion in lost interest on a hundred billion dollars loss. it is minuscule. our problem is why are we accepting the presumptions that

we have a role to play, a committed role, and why are we blind to really what happened? and i had to suggest, as i did earlier, you know, our civilians in the real estate breakup occurred in the last four years. and it is when securitized mortgaging left government regulated interested untrimmed industries and what wall street and wall street discovered a way to sell crap for triple a rating, and it. and they sold it all around the world. and the only reason we don't obliged to go in and buy that crap from around the world is it look like you had a good housekeeping seal of approval of the united states of america. and we were too damned embarrassed to recognize we stole the money all around the world with crap. >> i agree. i mean, crap is crap. >> then why don't we identify who put that crap together? it was the private market.

>> mr. ross to clear up the scrap. >> i wish i could pick. [laughter] >> chairman, are we in the informal portion of the hearing now? >> all right. okay. >> there are a number of issues, and i don't want to claim that i an expert on how this whole crisis came. but i think it goes to the point of i think if you have too much government, or too much private side, there can be a problem. there needs to be checks and balances. and i'm not going to get into whether the fed could have stopped it or whether they could or would have or anything else. but i think there are a number of issues. if you look back at the private sector, private mortgage securities started, it was really because there was a failure of fha for -- to a certain extent, that they had

not modernized. they had not kept up with a number of really, the kind of providing mortgages on the low-end of the market, the private sector stepped in and started offering a lot of things that fha was not able to do because government red tape and a lot of bureaucracy that was there. that kind of started the whole ball rolling. certainly -- >> we could cut that redtape will pass by giving, taking away any tax consequences. would you recommend we do that? >> no, i wouldn't. >> why not? >> as far as what? spec i bet i could identify three people that would disagree. because you get an advantage. you buy into an advantage. i vote for a. i think it's a good principle to get private housing out there, but everybody sitting at that table and everybody in this

country is pushing their own self-interest, and have extended to the point that the system is down. now the question is how do we get out of it. i am trying to suggest that maybe, let's not get out of it by revealing what we did before. >> and that is to my point. the gse's, their primary responsibility, it wasn't necessary guaranteeing. it was providing liquidity because those of us who remember the days when you had a savings and loan, you couldn't get a new loan until they either sold them or you got new deposits and. the whole liquidity question changed the finance, mortgage finance system of this country. and the new system, whatever way, forget about how we are going forward. a joint private government system, and i would say start with the federal home loan bank system as a good place to start.

>> that's because the banks are shareholders in it and eventually would be the losers of their loans with bad. >> and they have skin in the game as owners of that bank system. >> dr. white, you are on the board for that, weren't you? >> it was a different time, but that if i. part of the responsibility of being a board member of the federal home loan bank board was overseeing the federal home loan bank system him as well as freddie mac, as well as regulating the savings and loan industry gimmick was that he was the problem we're talking about before, the subsidization that is even more obscure than what we have today? >> well, it's the same implicit guarantee that support the federal home loan bank debt as supporting the fannie and freddie that. is the same. the federal home loan bank system is a gse as well. the mutual ownership, the co-op ownership hasn't prevented a number of the banks from having their financial difficulties,

not as serious as fannie and freddie, but still they are suffering. >> and i get you in trouble. good regulation and open regulation will tend to subside access, is that correct? >> by me, i'm a great supporter of the home loan bank system as you all know. but federal home loan banks that started to really get into serious trouble, if they had been reined in by the regulator at the time we would have been bailing them out if we aren't already. and we have seen that in all of our financial institutions. but the problem really goes to access is the argument i'm trying to make, that you know, if you went back to the bat and you say i'm not trying to get a free lunch, not you, but we, the american people. if we are not try to get a free lunch, if we're not trying to fly a pie in the sky or something that doesn't cost us anything, will start evaluating things, the real value and that

is all we are going to pay. and if you are going to be a cosine or a supporter of that that is all you are quick to support, or cosign for, we are always looking. that was a great story, jonah, this morn on the secretary treasury went to his purchase of his home in westchester county, new york. did anyone hear that by chance? he bought a $127 million mcmansion in a very short period of time had to sell it to show a drop of value was and how it went under water very quickly for him. but dried out in virginia and look at the mcmansions that are out there. and i think start asking the question, what the hell are all of these people making money to buy all these mcmansions? and they are not. they are getting it from institutions that are governmentally supported or underwritten, aren't they? and less there is an incredible amount of the millionaires that i am not aware of in this country. it seems to me they are spending

a great deal more for these real estate than they should in rational terms. do you find that case? >> well, those sorts of homes, if they are mcmansions, wouldn't be part of fannie and freddie anyway. >> i agree. >> those will be the private-label mortgage. >> that's right. and aren't some of those underwater or not? >> sure. and why should they be under? here is a question i'm really going to the private sector really. i am very impressed with all of the homebuilder, the realtors, but i have to ask the question. did you, any of you, see this happening three, four, five years ago? as some of us did. and some of us thought the question that, you know, i remember with embarrassment this committee passing amendment to reduce the requirement, and i think it was the fha required

reducing it from 3% to 1% or zero on the down payment. does anybody remember that just recently? actually doing it at the time demarco was starting to collapse, because of these quote kraft mortgages that were out there. >> some site here and some have a question about it. did any of you in the industry see that? did it bother you? did it bother you? >> actually, the realtors testified before this committee about predatory lending in 2004 spec i'm not talking about predatory linacre does not necessarily predatory linacre predatory lending is a mutt charterhouse then it is work on a piece of appraisal and a high price of interest to be paid that shouldn't be financed. i am talking about just a simple question. didn't you see the real estate excesses that occurred in this

country, probably in the last four or five years? >> we put out brochures in 2005 and 2004 to help the industry and consumers understand how to buy mortgages, and to prevent them from buying unsuitable loans. we talked about -- >> so all the smart people didn't buy the loans and only the stupid ones? >> no, no. i mean, at the end of the day we have to face where people buy homes, people buy homes once every seven years on average i think in this country. and they never become expert in the process. and we know that as people in the industry. and we constantly have to educate them around what is available, what they should be watching for, and to watch out for predators who are out there giving them more mortgage and more promises than they probably should have been involved in. we also tried to push for fha reforms, as mr. robson said earlier. in 200000.

>> and so you also push for higher loan limits so for those people buy those mcmansions, even though a 700,000 dalhausser still a mcmansion. >> but only in high market areas because of affordability was outpacing the ability for a buyer to get into a starter home at that point. incomes were not increasing at a rate that housing was increasing. >> a $700,000 house even in new jersey, there is still pretty darned nice houses. is not a starter home. >> but in the state of california it would be a starter home. $500,000. you cannot get into the state, not today that his economic discrimination. maybe they should be living in california. [laughter] >> but i think the industry, i can tell you the national association of hispanic rosé professionals started to talk to them about the changes that were coming on as well. so the realtors have been very involved in trying to alert the brokers to protect their customers and to push for reforms. >> how about the home builders,

what the hell do they do? they stop building. >> that's a good question. >> it was really the private-label mortgages that funded mcmansions and a lot of this. and the exotic stuff. i mean, fannie and freddie didn't fund exotic mortgages. >> and they ended up buying the private. >> unfortunately yes. they bought the stuff they wouldn't underwrite. >> so that has the same effect to the fha be raising their down payment now? >> down payment? >> from 3.5? >> yes. >> i think in order to promote people to get into a whole, i think they ought to pay something. >> should they be time they should so it should go up, i'm sorry? >> no. i think 3.5. >> should they be tightening up, you made the comment before that part of the reason why people

were going to fha before was because of the darned red tape which some people could construe that as being underwriting. >> it was red tape and not keeping up with technology. i had a meeting with former commissioner montgomerie last year. they were still hiring people who do fortran, and this is last year. >> what? >> fortran. this is forty-year of computer programs, and as of last summer they were still using fortran computer's. >> so after the underwriting, lockhart was here before and i think he mentioned it yesterday, and i guess you probably know the numbers, is the default rate and fha loans is beginning to spike up as well. so some might say that's like our first warning sign that we might have some problems over there that we all should be looking at. and so called red tape, and i understand redtape and what have you. tighten these things up over there before we create a whole new problem. >> i have a legitimate question. >> should be tightening things

up in fha despite the fact it may have a dampening effect, right, if you tighten things up it may have a dampening effect on what you guys do. but would that be a prudent thing to do? >> i'm not sure it would be a prudent thing to do at this time because we are trying to absorb as much of those foreclosed properties in the inventory that is in the markets to get things going again. but i believe secretary donovan has just had that fha is doing great, and that they expect to see a profit of 1.6 million this year. spec that is only because we made the market to market rule. >> mr. garrett, i think you are right to ask questions about where fha is going. so you better look at fha foreshore. >> let me ask you this. are we going to be putting a patch on a tire as we come out of this or are we going to get the opportunity to focus and really make fundamental corrections to the system?

and is that possible? professor, you mentioned nonrecourse loans. i'm not quite up on my real estate law. are you talking about the principle that you can't go back for excess assets against the owner? . .

i've got a question and that i like to ask mr. martinez. i've loved is your testimony of law of the testimony of everybody else including that libertarian two your left there inf and you talk about wanting this hybrid. well, apparently in today's economy the united states any business is subject to being taken over by the federal government. we have had several hearings here on a systemic risk and when secretary geithner testified before this committee i believe it was an not sure when it was,

it was in january and he talked about this great super regulator that would be over all of the company's that could pose a system aggressed moth or perhaps a moral hazard and immoral has earned is a teetotaler who drinks and beer. because now making the chinese terms but i guess what bothers me is the old days you get a mortgage and come and go to the bank and the bank pulled cent and that the mortgages securitized by in a prepared ratio of demand deposits in the money is simply set aside to cover the mortgage his there is a problem on its. and then we lost that a great personal contact that wanton but my question is to talk about having a system that is lewd and

acquitted in the emmy and that works but then you also made the statement as you want to make sure that money is available during tough times and only the government can make that possible as dr. wife gives us his big smile on. would you explain that end could you respond to that price. >> well, i guess if you're asking me to explain why every of that way the government has prevented the the experience of this before with their insistence we're able to have a pretty in the market and and and things are tough and private situations the pull their money back and don't make it available and the market gets us table, we're looking to make sure that we can continue to help people sell their homes in how people buy homes and people are going to have housing needs regardless of whether american history at any given time. we have situations if the the

the big sabot -- if you look at the example and a commercial mortgage scenario and the jaw of a residential mortgage scenario those are not guaranteed by the u.s. government. those folks right now are people who are in trouble in the general market's looking to refinance their how so let me give an example. hear someone who's made a good living, have a printer that loses a job and suddenly you can make this payment anymore. two have one of those exotic loans, you want to try and refinance it. now your house is worth less and is not guaranteed if you don't fit into the program that the president has put out there and if there is no guarantee and you can't refinance because there's no money available son out you are going to be delayed price when you're trying to avoid that and going to lose your house and the likelihood is you will go into foreclosure and there's lots of stories like that. commercial folks looking to get

them refinance they can't kick in the liquidity in the market and there is no funding for them and there is the same boat, the long as his rise and see them go into foreclosure. >> so that -- that is a good answer. dr. white, was off her answer to iraq's. >> we do have in the federal reserve. there are a lender of last resort. there are brighter of liquidity in the scene just how creative mr. bernanke hasn't been able to being over these past years and i applaud his creativity, i really do it and think he's done a spectacular job and at the same time we saw that bet gse's weren't able to step up when hard times hit and, in fact, went into the ditch and it is only because the fha -- sp three now is steering them and try to

get them out of a ditch that now that are part of the solution but they weren't part of a solution and were going into the ditch them soused and so we do have back to my point, we've got a federal reserve. >> you are substituting the private of a partnership that is advocated by mr. frattini as meyers by saying that privatize the gse's behalf of reserve a standby. >> i do believe in and they're being a lender of last resort to the and the financial system. that is terrific. >> he believes the same ratio as. >> well, i think by lending. thank you. [laughter] new focus in a single entity, you don't spread it. >> i always want to ask oppressor presses like that of a given the absence today. >> you just a two switch insurance companies and make it

that the federal reserve, the insurance company's system to be sort of consistent with the free market system of you all should be pressing have to have that the federal reserve as the lender of last resort too. >> no, i'm sorry but we do have financial crises if that is exactly when we do need if the lender of last resort. >> sergey do the government? >> for sure and i said that before we need a federal deposit insurance. >> some of our members heard that and as you're telling me every day they don't the government and we are interfering. >> i am with you on this, let me say for the record a federal deposit insurance corporation. >> also you guys are wrong on that side? >> this hearing has turned out or in. of the last hour or so. >> we have a situation today where have 100 year flood every 10 years and that the government

causes it. what i was suggesting is the government can play a role in helping to smooth out those kinds of crises and there is not only a role the government as a lender of last resort but there's also a role in providing ongoing liquidity for a poor set of products for both single-family and multifamily that can really be the central nervous system if you well for the secondary mortgage market and providing the liquidity stable pricing which is also important for home ownership in this table set of mortgage products that the economy can be built on. >> i agree with you and, of course, i sound terribly radical appear because i want to excite you but the reality is i'm getting very tired of having witnesses come in and testify as some of my friends on both side of the aisle say we are going to pass this special loss of this will never happen again now none

of these people of that this stupid. so they know is fine to happen again. has happened all the with our history. the path of the matter is if you look at our present situation we ran 50 years minimum wage without having a financial crisis. the first time in our history as a nation and we went out of or perhaps went 75 years and i think everybody would have to admit the reason was we had good regulation until it went awry. our problem is we have to get back to their regulation. maybe we even have to go a little beyond that and say we need to get back to the values and that's what i am digging you all on the theory you and i have a responsibility its use to me that when we see somebody if that is hedging this assignment, to feeding the system and hurting the whole system we've got to realize it hurts us too big as as a they destabilize the

system all will get hurt and the question is what are we doing about it and i don't think the last five years we did a helluva lot is really not enough and if we go right into repairing this practice some of our regulation but we allow these people to function of there is a system until they can find another way to escape responsible regulation in capitalism and it goes critical as it has had the last five years, what to begin franks of we are doing is chasing our tail around the block committee that is how the system is intended to be but i hope after -- there is a lot of pain. and we don't see it down here. quite frankly all of you are probably very suits that exceed the costs of most americans from a year are driving cars that exceed the costs of most americans, your kids are going to universities and it's not -- seriously. washington you don't see the pain that you see when you go back to my district were worth

there. there are people living in this country that can't -- is it this is a disaster. just meals is a disaster and it's a worrisome thing. thought a blessing of educating your children. they needed to actually have them in school because you can't even afford that. we are not making a commendation for that. we're passing pretty acts entering in is that our blessing and covering it up with whitewash if you will. but this time with my friend is right. a disaster should not go unused. we can fundamentally changed some of the system to make it fair from a better and more equitable. and in some respects all of us are born to have to give a little beer and i agree to ask a question because we have to wrap this up but don't worry, we check their plans are five because of the founders of

semirough all set. take a shot at us now. republicans and democrats. banking committee. giving it the worst criticism you can of our lawyers as government and as people. and don't pull any punches. >> and i? >> you seem to like to doodads. >> i'm going to give you to. i think that and have tried to do one better and say with regard to take some responsibility for this to. the fha piece and you talk about this and a limited to this before. industry probably was some pushing the fha rate enormous, we should have been talking about this in 2001 and maybe when i started to see changes and we did not hear it and we got around to it in 2003 and 2004 and presented it to to congress and its lavrov and sat around and we have to ask for a

sauce if we have, if the fha program that have to do that is relevant in the marketplace would we ever have had any for subprime mortgages and would we be here today? i think we all have to take responsibility for that. the second area that i would point out to you is we have seen a lot of moratoriums on of these for close properties. we need to read the band-aid off civic concern of the healing because right data if we keep those moratoriums and now we're by to see a big flood of real estate in the marketplace over the summer, there's something like a hundred thousand foreclosed properties that are going to hit the streets and ask why have an impact on our markets. we've had to get those observed if we're ever meant to read this market in the only shine light on that foreclosed property and it breaks my heart eighth of the businesses myself.

that people are losing their homes by the bright spot is for our lot of first-time home buyers -- on the people that didn't jump into the subprime market and people that sat on the sides and they are in the air here and maybe her home on a ship rate will get back to normal in the process but with that to get that inventory to. and out of here to read those that we cannot save. instead have dragging our feet. with. >> mr. robson, do you have something to and? >> edges happen to know you have a pressing engagement. >> i appreciate that. to fans, i think i would just follow up with tooth this is hate mail. the whole private -- there is a whole credit problem in this fight him. it is not just mortgages.

it is loans on the construction sign that it is commercial bequeath, credit has completely frozen up and what sprouts we are seeing an economy and especially in housing hopefully that looks like we are may be reaching a bottom both on and leases or as close sales are concerned both new and existing but if we don't get credit flowing throughout this country whether in a small business or whether construction or development loans for anything else we will not have a recovery. and then i would just pack of, and some of the other things that have been sent to their earlier some of the questions thaw with mr. law current, the appraisal problems are very big issues. if we don't correct some of the abuses on the appraisal problems will never recover either.

>> very good. >> mr. chairman, if i could come onto issues, one is taking a more holistic approach in that there have been a member of comments about not on the gse's today by fha, the banks, the private-label market and agencies. in i think if we are too focused on just one piece of the regulatory powers so it is unlikely that we will be successful of installing and preventing this from happening again. secondly it has troubled me a little bit that some of the members are eager to latch onto a lay both of a solution. i think that at this stage in the debate it's absolutely critical that we focus on principles and that we drill down on what kind of ownership to we want with entity, what

kind of regulation to we want, look at the products we want and we want the interest rate risk to be at a credit risk to me, what we need to do for liquidity ended jumping ahead and try to put a label on that whether it is a public utility models or co-op or bond model i think is a serious mistake in rather i think if we have a principled approach and start building it up with building blocks from the ground up we will end up with a model and drama of the name is after recreated as opposed to trying to latch on to the model and say that is good or bad so i would encourage us to use his background at principled approach. >> should receive the progress of class? >> thank you, if i were to criticize going backwards

thought one of the consideration of alliance's fha mortgage -- payment to jazeera at that moment to me it was just the 13th got of the clock and related to that although i have never evidence that this is hearsay is out here who that third led gse's were being encouraged by congress as well to move into all day into subprime to help supply that market. the regulator in any case was not, this is hearsay, that congress also had a role in not pushing that and it may be wrong. going for it i think that congress has to be farsighted in understanding the problems of asset bubbles. asset baubles are just as as inflation and recession and it brought japan brought to its knees for 10 years, the issue

and initial prices of benjamin from london 10 years. we have seen one in every consumer of. we have had the housing market protect gays in the u.s. more than that, hundreds of years even in part because we have a lasting supply of housing hysterically. we do not have a lasting supply any more into my dear friend and colleague of dr. white argues for reducing restrictions locally so we have more of an elastic housing supply but i just don't think that is in the currency for a variety of reasons including concern of the empire into and local pedro is simply in anger blooded so i don't think is fine to happen. therefore like europe and ligation at we are in a different world now for housing supplies are elastic and that means we're in a bubble potential world have but i don't think we can do anything ever happened to the basic regulation side. i think that means we need to be attentive to housing bubble's been formed. there were those of us in

academia and i was one of them who said every listed academia lever in a bubble had in 2006 and i was not alone. and pay attention to this endeavor to the potential for a major crisis when even a reasonable loans are being priced at a point where prices are born to decline 20% down payment is no protection of those circumstances and will lead to pay attention span and will stop there because i'm from pennsylvania and i have a great respect for the school. my father and brother were of good people and they do have telephones you do have telephones? >> iris inouye were genworth and i put my papers out there. why wasn't it picked up the ranks and my understanding and this is a question which i do not know the answer. in the starring kind of

question, i gave you econometrics to do the question but my understanding was there ever been models of other people say this that the models were not banned purchase because there was some way of purchasing the models and and where the money was continuing to get the deals done. with. >> did you have absolutely no faith in government? >> absolutely have faith in government. >> why did you take the time and effort as an academic? >> you probably would get priority because i assumed you would increase the time in my time i, i'm fine to talk to about that whenever the issue is. why did you do back there and we've got a lot of lonely people on the committee. >> that's wonderful, i'm thrilled to hear that's an option. we did publisher of tables, we gave our papers at all of these meetings and tabor in newspapers.

there were model sofer have that word in the case schiller had his mind of, he's obviously out there. he was purchased by moody's and prior two that moody's did not use the model. which were excellent models. >> going for ruth use the telethon. >> i will, thank you for the opera. >> i just want to buy new, you were here, why didn't you cure this problem? [laughter] >> i thought i would fix this savings and loan but that i laughed. i think that just to go back to the gse's question, fannie mae and freddie mac were one of oath symbolic battle grounds and the congress. and they either were the devil in france and needed to be dismantled and i read them so that the private market could function or they were the best

thing that was ever done for affordable housing with have them we would have the of housing and off. and they were allowed in to run a model which was totally to unsustainable, and portfolio model of chasing growth stock status in the markets and whenever they had to do to get their and so nobody really wanted to -- the years and years of the regulatory debate roasts surprising to of the participants that there were both wrong. those people who wanted to take fannie mae and freddie mac down a pair i thought that fannie mae and freddie mac ever so powerful that they would never have been taken down and, on the other hand, whenever those who thought they were so apparent of then they would be the cash cow for ever more affordable housing and what it's hearing and it is never house of cards. that collapse for the very model that was the directive which was

that a growth stock model. we can get this capital for the market place and give them propose what ever it takes. i think everybody was applied to the reality behind that. it was worrying party is over symbols and i think i'm missing that yes and they were not the was to permit the private market securities but they created that market place in many ways by finding the aaa of that early on and made in that market go and then everybody else. so i think that if the debate have been honest and 1995i had a conversation with alan greenspan about huge portfolios and the impact that they have and he was very concerned about the federal home loan banks but not at all concerned about fannie mae and freddie mac. because he said jim johnson is the smartest man in town. well, he might have been but his

legacy we seen. with so we should be watching out for smart people and maybe do our own research. >> if i make it wasn't that they thought these early on friday bought them -- what year? >> they started buying them at even americaness and others in 2000 or 2003 by buying their aaa >> johnson was gone by that time and. >> are not blaming mr. johnson, and to send out a lot of people were born into a model that was unsustainable. including mr. greenspan in 1995. >> no question about it. i think dr. white should get a crack at it. >> the district i represent from 1980 to '81 we had 25 percent unemployment. there are more people unemployed and offer it coming illinois wapiti during the early '80s when there were proportionally in the so-called great

depression. the americans weren't a way through in the law had to do with the end version of the dollar and the collapse of the ability to selling pressure in the items including machine tools because of your district is very much like mine by that i will, maybe you with i am thinking too simplistically here is that we would not be in this problem and this time of and that people bought homes that they could afford and first-place. and chairman, to you know some of the people of that were waving a red flag five years ago with the national association of realtors. they would come in the office, of course,, they were thrilled to sell real-estate and make everything but i was questioning of the easy money gone out in you know that as over a lot of your richard colleagues say this is great but you just can't keep on going on my best because summer along the lines something is done to happen.

>> i did hearings in my district into a passive or. >> and these are the types of signals that were being sent out that people like myself and you were saying there is something wrong here, it started with the laundering of of of the books in 2003 and 2004 with a franklin raines and the characters take in this incredible amounts of salaries and other bonuses were predicated upon the fact that they had to get to a certain point of profit and then it got down to the nail. remember that mr. chairman? it will just so they can get the extra amount of moneys priest out and we were screaming here. in fact, fannie mae had hired a 70 lobbyists firms that are out there and getting bogus

postcards from 2500 of my constituents saying don't change anything, we don't want any reforms and that the reforms that we want to relay word to tighten up the lending standards. but i guess we were just like john the baptist, just crying out in the wilderness and nobody was listening. >> i will try to be brief. now it is getting late. if i ever to offer the criticism and that you invited i would say u.s. give way to deep into the whole housing issue. again there is a role for government, but bruce, you and i did occur on this but i've had to speak truth to power. it ought to be a focus targeted rome, the broad brush rolf just gets us with a far too large stock of housing. a large to small stocks have to

end capital of from of physical capital as a consequence. that is a big cost that we have paid. we are paying it now in the crisis as well. let's see, some other thing is, since my face. there is -- >> have that be prevented pranks how can that be prevented? >> the rating agencies. there is lots of blame to go around but clearly they were running of the central party is here and it was no accident that they became a central party. they were a central part because of financial regulation had that whole structure and the gang you can see each step made sense but by the time you went down the road if you had a hand fall -- a handful every agency is.

>> should they be federally regulated? .. of the bank to either demonstrate to the regulator or have an adviser it can demonstrate.

>> something like aig financial products in london, small operation of 400 people that have the bank and regulator come over for a couple of weeks every year to look them over and if they get involved in counter party positions of $2.7 trillion. that's what you'd like -- >> heavens no. >> isn't that what an unregulated system brings us? >> if we are going to let entities get so big with so many counterparties then we've got to have -- >> that is a good point. you would have liked us not to repeal last -- glass-steagall? >> everything that has happened. >> that is what allows entities to become huge. >> merrill lynch and bear

stearns and lehman brothers and morgan stanley were all going to end, and goldman, were going to get huge regardless, and citibank got a little bigger because of repeal of glass-steagall allowed to buy an insurance operation. >> i'm not sure i catch your drift. did you think the government should have had more or less regulation? >> it needed to be smarter regulation. in some places it needed to beat less and other places it needed to be more -- >> that sounds like monday morning quarterback and i'm on the field saturday. we are calling the plays on saturday -- >> in the case of the credit rating agencies i've been there about eight years now, so i could have told you basically this story eight years ago and did -- >> should they be allowed to be paid by their users? >> that's something that the institutional bond market could

really figure out on their own. i don't trust this guy because i am worried about his conflict of interest. i'm going to trust somebody else who is business model i think is a more solid model. that's something that an institute -- >> the bond market is fundamentally an institution market and those institutions can figure that out. >> for some reason i think's -- i am sending you are putting your foot on to icebergs. you're not coming straight with us. give me -- give me an image of what you want the government to do. the big government you have the right to hack at us. tell us what the right direction is in your opinion and then you are going to be held responsible for. [laughter] >> as i said, by what -- we cannot do anything radical at the moment. the financial markets are far too fragile. >> he would clearly give advice to us to go easy, don't speed through this and have unintended

consequences, like let's get back on the recovery stage and then be very serious about it, reforming some of the institutions. >> for sure, and then i would privatize fannie mae and freddie mac. i would have a targeted program to be encouraging first time -- first-time homeownership -- >> if we privatize fannie and freddie, they can do exactly what wall street did with their special securities they privatized; is that when your singing? >> given -- given the size and systemic risk like it or not, we need a system eckert regulator. we simply do. >> you mean you want fannie and freddie privatized, but with a very stiff systemic risk regulator? >> for sure, for sure. yes. >> when you're doing is where the money flows. he won the wealthy institutions to be making more money off mortgage securitization than they are now. isn't that the only difference?

>> i don't -- congressman, i don't see it that way. i think it makes -- i think it makes a difference. also, i could not have the kind of implicit guarantees that were everybody knew that fannie and freddie -- >> you think if we have a private institution the size of 5.6 stockley in dollars but there's not an implicit statement the government has to come in and rescue and it feels or as it brings the system down? you don't think we made that hard vote going back to september of last year because we wanted to, quote, bailout wall street. you know the circumstances of that vote, don't you? you know what the secretary of treasury and chairman bernanke told us, that famous meeting were several meetings? that we are 24 hours away from total meltdown of the american economy, and 72 hours away from total meltdown of the world economy that it would take us

back several hundred years that we did not have even the security to feed america if it happened. i could go on to other scary things. i'm not about to do it now. but you don't think we did that because we just didn't want some rich people on wall street to lose their banks? >> for sure. >> i didn't do that. [laughter] i didn't believe it. it was $700 billion to buy the bad assets. they still haven't been bought up. >> anyway, i would be happy to expand on these, and i hope i can take up the invitation you offered -- >> absolutely, all of you. the other to left already we will send them a letter. [laughter] really, if you have ideas on the subject, regardless how wacky they may sound, or about the normal configuration is, don't hesitate to tell us. we are going to try and do the best we can to do some management of what has been of

relatively disturbing and stabilize system that we now have and we are going to do our best. we are looking for the best process in the world and that is why we ask dewaal to testify today so that wind to become one, we could keep you entel 7:30 at night and -- i am actually leading the seminar for divorce lawyers. anybody have spouses, you know, potential catastrophes at home. no, we are going to close now. i want to human you all very much. i hope you didn't mind going informal like this. >> thank you, mr. chairman. thank you, mr. chairman. >> i am supposed to be something in the record. the chair notes some members may have additional questions for this panel they may wish to submit in writing. without objection the hearing record will remain open for 30 days for members to submit written questions to these witnesses and to please their responses in the record. before we adjourn, the following

items, statements will be made part of the record before this hearing. a statement from the manufactured housing association for regulatory reform. a statement of the independent community bankers of america. a letter from the national association of federal credit unions, and the letter requesting by congress and campbell from mr. cox to mr. lockhart. [inaudible conversations] an article by david goldstein entitled "private sector loans not fanny or friday triggered a crisis," without objection is so ordered. the panel was dismissed and the hearing is adjourned. [inaudible conversations]

you've been watching the house hearing on the regulation of fannie mae and freddie mac, both companies came under government control in 2008 in the wake of the collapsing housing market. now, an update on the latest housing related legislation making its way through congress. donner of bloomberg news, why is congress continuing to hold hearings of fannie mae and freddie mac? >> because the mortgage companies right now have taken more than $85 billion in federal aid, and commerce is trying to figure out what to do with them. they said what ever they do with fannie mae and freddie mac they are not going to look like a look today. they are going to restructure them. they could remake them as a public utility. there's a number of options on the table they are considering. >> does appear lawmakers are interested in writing legislation to address these issues and so could you give some of the specifics of what might the legislation do?

>> they are not writing legislation yet. they are holding a lot of hearings, and they are starting an internal debate about what to do with the companies. there will be legislation sometime early next year. a couple of the options include placing the companies into receivership and replacing them with a public utility model, kind of like the white companies, but for your mortgage. another option is going with something called covered mortgage bonds, which is something that's used widely in europe, and then another option is creating a sort of bad bank for the bad assets of the companies and then rolling off their good assets either into one of the companies or something else altogether. there are a number of different things they are looking at right now. >> hauer the agencies sharing since the troubled asset relief program and other related legislation that got congressional approval? >> well, with t.a.r.p. the troubled asset relief program, they never did what they said they were going to do which was

to buy troubled mortgage assets. what they did instead was the treasury extended $200 billion lifeline to each company, its 400 billion, and they've already used up about $100 billion of that. they are not fearing very well. the redefault rates on the loans there modifying as part of president of the bomb's helm affordable loan modification program are somewhere around 60 per cent. so for every ten people getting the modified loans, six of those people are falling behind and the program has only been under way for a few months so they are not hearing very well. fannie mae lost $15 billion they reported on thursday, and freddie mac just reported a profit but most of that profit was stemmed from accounting, changes, different gains. actually, they were paper gains, they were not actual games, and so even though on paper the company books like it did okay

because it booked a profit, it really is very financially weak. >> has there been a reaction from officials at fannie mae and freddie mac about what lawmakers are talking about giving? >> no, there hasn't been. the only action is there going to cooperate with, chris farley. they don't have a choice in the matter. the companies are being run by the u.s. treasury and the ousted any managers there that might have -- might have put up a hard fight. right now they are busy executing the president's plan and they don't have a choice in the matter because as they say in their earnings reports they are completely dependent on the federal government for the financing otherwise the companies would survive. they actually wouldn't produce enough cash to meet their obligations and they would default on their bond if it were off for the treasury. >> we talked a little about the house. but about the senate? what can we expect from them? >> the senate is always slow were to act. chris dodd has a bit of a

conflict because he had one of the vip mortgages through countrywide that may have had ties back to the fannie mae. so the senate is always a little slower. but i think you will see, you will see shelby and dodd, it is an issue senator shelby, the ranking republican on senate banking, he cares very deeply about. and i think chris dodd will probably go along with, or with a lot of what shall be wants. >> in the few seconds we have left, what about the obama administration? what do they say about the status of fannie mae and freddie mac and the overall industry? >> the same things are on the table for the obama administration as are in congress. the fact we -- they are going to roll out a comprehensive regulatory plan for fannie mae and freddie mac when the president submits his budget in february. so they are on the same table. everyone -- everyone in washington pretty much agrees these companies cannot go on, cannot continue to exist in

their form right now so you will see dramatic changes to their structure sometime next year. >> dawn kopecki of bloomberg news, thank you for joining us. >> thank you.

how is c-span's on did? >> donations. >> federal funds or grant funds. spinet may be private contributions. >> honestly i don't know. >> i would say commercials. >> advertisement. >> something from the government. >> how is c-span funded? 30 years ago america's cable companies created c-span as a public service. a private business initiative, no government mandate, no government money. now, patrick coyle, vice president of young america's foundation. this is part of the organization's annual conservative student conference held in washington. it's about 45 minutes. [inaudible conversations] >> good morning, everyone. if you could please quiet down. my name is warren, an intern

with the young america's foundation. >> hello, laurin. >> thank you. young america's foundation is the premier organization that educates students on principles of limited government, individual liberty, strong national defense and traditional value. if you like to learn more information please visit the web site at www.yaf.org or call 1-800-usa-1776. named as one of the top activists in the country patrick coyle as vice president of young america's foundation. patrick works hard to help thousands of students bring high-profile speakers such as an colter, john ashcroft and michelle malkin to the campuses. he also helped it to the conservative guide to campus activism and wrote the campus conservative battle plan, which i have used time and time again to help get the conservative message across at my school. patrick has also -- a target of radical leftists having his home

address and phone number posted on website and attempt to intimidate him. fortunately for us, those actions by the radicals have only emboldened patrick to continue to fight for the conservative movement. i personally do not know of any other individual more dedicated to promoting conservatism than patrick coyle. patrick till to walk me through bringing my very first speaker to campus, george allen, this past fall. the event was an absolute success and i know i could not have pulled off it fit were not for patrick and young america's foundation. i look up to patrick and admire him for all that he has accomplished in the name of conservatism. please welcome patrick coyle. [applause] pushback >> how are you guys doing today so far? of some. well, i hope you all are in joining the conference up to now and obviously everyone at young america's foundation is excited to have you here. but personally from my

perspective it's actually a shame you have had to be at this program. it's a shame when you think about it that you had to take five days out of your summer vacation just to learn about conservative ideas. it's a shame that some of you had to fly from across the atlantic or come from california or the west coast just to hear the ideas presented at this program. and it's a shame that you can hear these ideas when you are at college and high school campuses, and it is unfortunate that the faculty at your school, the administration and so on feel that they don't have to provide you with a balanced education. so, the goal of everyone here at young america's foundation for this program is basically to provide you with the balance. to simply give you the opportunity to learn more about conservative ideas. so, this week -- instead having to hear from people like michael

moore or barack obama or nancy pelosi you have been hearing from new gingrich, senator dent, burke fulsome and many others. instead of being forced to more obscure subjects like the feminist perspective on marxist thought or, you know, the paradigm of lesbian eskimos living in brazil -- [laughter] [applause] at this program you can actually or about the virtues of free market, god forbid. and instead of having to witness your classmates, you know, attacked an air attack and attack the troops, and having to see that everyday, at this program you are surrounded by hundreds of years all of whom support conservatism. now, you know, unfortunately we at young america's foundation will receive this conference a success until we see increased activism on campuses. and this program should be a springboard for further activism

on your part. so, what i hope to do in the course of this session is basically provide you with specific activism ideas that every single one of you can take back to your college campus and organize this school year. the reason why we are having this session is obviously we need you now more than ever to be advocates for conservatism. i mean, not only has obviously the conservative movement lost ground nationally to the left but how it has directly impacts you is that not only does the left control of our major institutions in the country, but of course over the last few years, you know, we've seen increased attacks on free expression on college campuses. i know some of you have been firsthand witnesses to these attacks. let's be honest the left has never been for open debate and discussion. in the past they have done things such as burning bible's outside of lecture halls featuring conservative speakers. this is what's going on here.

they also shot racial slurs when black conservatives have appeared on campus. but never before have we seen a more consistent pattern of the left as conservative speakers and infringing on students' rights. you know, instead of liberals, god forbid actually challenging the speakers with thought-provoking questions we now see them resorting to basically throwing food or screaming down the speaker so he is unable to give the speech which is what happened with donner fetter at the university of massachusetts at amherst this spring. and what is sad about these attacks is campus administrators do very little to actually punish those responsible. in fact as you all know, faculty and administrators routinely work against conservative students and do their best to insure only one view plight is hurt. and to try and hammer that point home one thing i would like to talk about that happens all college campuses is something i called the liberal speaker per day in.

this happens at every college campus, happens at high schools. essentially what this entails is for example at bowie state univ. the conservative activist on the campus were having a tremendous difficulty trying to bring speakers to the college campus. they couldn't get funding whatsoever to bring a conservative to speak at their school. swetnam america's foundation we suggested they go back to the student activities office and research every single dollar and every single speaker who has been to the campus and figure out how much money has been given to liberal speakers and how much has been given to conservatives and actually went back over the last six years and they've discovered over a six year program more than $300,000 of state and public money was given to liberal speakers and $0 was given to conservatives. at lehigh university in pennsylvania this school gave more than $190,000 to liberal

speakers over a four year period and only $15,000 to conservatives. and finally at emory ever see in atlanta, this school over a four year period brought in more than 35 liberal speakers to only five conservatives. what is interesting about lehigh university example and emory university example is yeah, these schools did bring conservative speakers but they were hosted through the conservative group on campus and young america's foundation. they were not invited by the dean or, you know, the student lecture committee. we had to rely on conservative activists to make these events happened and if it wasn't for the conservative activists and young america's foundation helping fund the event the imbalance on campus would be even greater. but what is worse than just those examples is help administrators eagerly work to impede conservative activity when it actually occurs. and there is a number of examples that i could point to,

but probably one of the most egregious examples that has happened over the past few years happened right here at george washington university. at of america's foundation we have a grip on this campus the young america's foundation club at gw and they were working hard one year to host david horowitz to speak on radical islam, the threat of radical islam. a typical campus leftist felt david horowitz didn't have the right to speak on campus, so in an attempt to undermine the event with the decided to do, the left, is created fliers that read hate muslims, so do we and they attributed to the young america's foundation club at george washington university. and here's the actual flyer. it says hate muslims so do we. you're typical muslim has eyes, venom for now, hatred for women, with an ak-47, it says brought to you by students for conservator fascist awareness,

no self respecting conservative would use that phrase and at the bottom you might not appeal to read, it says p.s. come seriously to a google video search for the power of nightmares. if you can find this film easily on google it is actually a bbc documentary, not surprisingly, and basically what this video show in the first two minutes is it focuses on how the bush administration had inflated the threat of radical islam and it's not as bad as we proceed to be. now this flier was plastered all over campus and of course the administration got ahold of it and if the administrators spent all of five minutes actually examining the flyer they probably could have figured out this was not an attack on muslim students it was an attack on conservatives. but they didn't. the had the typical knee-jerk reaction and immediately called the young america's foundation club president whose name is sergio and demanded he immediately come to their office and explain his actions.

sergio of course having never seen this flier said we had nothing to do with it and to give administrator and the will of credit, they actually believed him but they actually forced sergio to basically sign a statement saying that he does not condone hate speech. while all of this is going on of course, you know, student government leaders and administrators are eagerly waiting to talk to the local and city-wide press, the campus press to talk about those responsible for these flyers to be punished. one student government leader went so far to say those responsible for this flier should be expelled. well, of two days later, the leftists who were actually responsible for posting this flier, they cannot and admitted yes, it was us, the left on campus, not the conservatives that posted this flier. and as soon as it came out it was actually the laughter that was responsible, you know, the

intensity to punish those responsible completely diminished. and all was that the foundation of course were trying to follow-up like o.k. what is the punishment going to be, let's the punishment and they would respond simply by saying we are still investigating. what is there to investigate? those that cannot and admitted they did it, what is the problem here? it took a few weeks and finally, we learned that those who put the flyers were punished with a single 25-dollar sign. a parking ticket at gw is $45. so this just shows you the tremendous hypocrisy that exists on most college campuses today towards conservatives. when this fire was originally thought to be an attack against muslim students the punishment was possible expulsion. when it is determined it is actually an attack on conservatives, it is a 25-dollar fine. and so none of the schools where students and speakers have been attacked administrators made any

calls for a leftist agitators and protestors and tolerant profs to take free-speech sensitivity training if the same thing happened to a liberal speaker or liberal student if they were attacked by some conservative which never happens of course. and obviously the failure of campus administrators to take action has obviously created a hostile what is your towards more conservative students. and they're weak response of course only emboldens others and tolerant leftists. why should they bring themselves when they know there isn't going to be strong repercussions for their actions? now, what i think all of us can learn from these attacks is i think it just underscores how determined the left ase to maintain their monopoly and keep the concept from being challenged and i think we can learn a little bit from that. obviously the left is not for balance, they are not for diversity, they are for intimidation and indoctrination, and despite having control of

the white house, congress, the media, high school and college campuses, there are administrators and professors out there at your schools that you know full well are somehow threatened by the fact that there are students like you who simply want to promote conservative ideas. at some schools, it is so bad that there is just the mere presence of conservative students is a threat to their leftist sensibilities. and to me, i've always thought the reactions were strange. to me, i always felt the leftist response to your activities should be go ahead, start your conservative club, bring in your one conservative speaker. we have liberal ideas and liberal programs and liberal speakers going on a reading on this campus. we know our ideas can withstand everything you have to offer. but they don't. they try and show you down with intimidation, bureaucratic maneuvers and other dirty tricks. and obviously these methods that are used on college campuses are

not simply limited to college campuses themselves. the same determined methods weren't by leftists on college campuses over the years has now of course been applied at the national level and even though there have been times the left has seemingly been defeated the have always pressed forward with advancing their failed ideas. ..

the reason why don't go back to senator george allen is because it all relates back to student activism and the some of you may remember senator allen was followed at the time during his campaign by a university of virginia leftist basically take his every speech and center ellen's mistake of calling this to the basically ended up costing him his senate seat in moving control of congress to the left. this would not have happened if that university of virginia student just sat in some liberal discussion group at his school. i certainly don't respect that students ideas but i do respect the tenacity and the determination he showed to get afic 34 his cyberfadi did what he needed to do and we need to be just as determined as the

left. clearly president obama has to take the time to consider conservative ideas or consulting with conservative leaders. he has quickly pressed forward with the socialists seems. so we obviously can't become complacent hordes of the defeatist attitude. ausley if you want to be an effective leader i know some of you in here want to run for congress later on in your life. if that is what he wanted to come in now with a time when you are in college to develop your activist mentality and to develop your own determination. i can assure you that if you speak out on your college campus you will be attacked. the left is more aggressive than ever and more eager than ever to attack conservative ideas. i see it happening all the time. the left always makes a point to beaches by conservative speakers to undermine them, to join protests, disrupt the senton stop it from happening. but rarely do we as conservatives to this.

we need to be going to events featuring the liberal speakers and asking tough questions. we should be as disruptive as they are but we should be there to challenge their ideas and i certainly understand that for some of you, beckham beecher early, is a truly intimidating topoff but what you should remember is that even if you go to what he may feel is the most liberal school in the country what you should always remember is that yeah you may not represent the majority of opinion on campus but you to represent the majority of opinions in society at large and essentially you need to see your role as the campus community that there is the real world outside the campus boundaries that feels there academic milieu system is ludicrous and you need to see yourself as the sane ones in the asylum. don't forget there are a lot of moderate and undecided students on campus who can be swayed in your direction if they see that the left is not totally

dominating the campus debate. however, if the incoming freshman class at your campus goes to the next four years without ever hearing conservative ideas, they are going to become liberal bias, so it is important step up now promote conservative ideas as much as possible. i know some of you have already. many of you have in this room but for those of you who haven't been acted to this point if you do step up, if you become aggressive, if you have a tremendous impact. i have seen a huge impact happen on even the most liberal college campuses and i know anyone of you can have the same result. the key to your success again is the boldly challenged the left. in is not to get along with them, it is not to god forbid appease them but to boldly challenged what they are trying to do and perhaps more importantly you want to aggressively advance your own ideas. unfortunately, this doesn't always happen. i have noticed during my time a

young america's foundation that our activists aren't as aggressive as they should be and i have noticed that our students tend to follow one of two approaches when they try to promote or try to be acted on their college campuses. on the one hand their students to follow what i call passive activism. that sounds like an oxymoron. basically passive activism is as follows as i see it, yes these students are active but they focus a lot on socially bens, which are not bad. they play touch football with the college democrats or have voter registration drives and so on and again there is nothing inherently wrong with these activities than they should be a component of what any group does but these activities do very little to promote our ideas to other students on campus. it is almost like these groups have adopted a live and let live philosophy. and other words as long as the left never directly attacks the conservative group, the

conservative will leave the left alone but in turn in doing that the left get whatever they want. they get all the programs they want and so on. more importantly the other method is a lot stronger and more effective, like some of you in this room follow, you follow what i call aggressive activism and that you make a point to promote conservatism each week whether to posting of that, having a petition drive, whatever it may be and it is the students, are students who follow the more aggressive role of the activism that have a much broader impact on our campus than those who follow the pass of model. i always like to compare these two approaches to campus activism with how to past republican presidents dealt with the former soviet union. on the one hand you have president richard nixon. richard nixon's philosophy and approach towards the soviets was détente. you want to maintain the status quo. even though the soviets were determined to destroy our way of

life he wanted to get along with them and it was this policy that he followed along with president ford and carter that we slowly saw communism gaining ground and freedom losing ground. on the other hand of course there with the president like ronald reagan. reagan made a point to confront and defeat the soviets. he called them an evil empire. the challenge gorbachev to tear down the berlin wall and it was because of reagan's confrontational approach that he is often credited with ending the cold war. so you will want to follow what i call the ronald reagan model of campus activism in that you want to follow pagens methods and style of confronting in defeating the soviets to confronting in defeating the lefts on your college campus. how do you you do this? first of all real basic and i know some of you have the club but if you are not involved on your college campus and you want to be you have to join the conservative club or start one. if one doesn't exist top tier student activities office and start a club.

having a club is extremely important because it gives you a vehicle to promote your ideas, to attract like-minded students and will give you resources, access to resources that you won't have as an individual student. now, once you get beyond that point of course, talking more broadly, one of the most basic problems that i see a lot of groups have whether they are new or they have existed for years as they sometimes struggled with how they maintain interest in their organizations and just maintaining membership with their club. following the reagan model, i hope you solve this problem because increasing membership in maintaining interest in your organization really boils down to how often to other students to your group actually out there on your campus promoting conservative ideas? copresence are you on your campus? students are not going to be encouraged to join your organization or join an organization that they perceive

whether it is right or wrong, that they don't think does anything so you always have to think about how you are going to maintain your group's presence on campus. along with falling the reagan model in being aggressive in promoting your ideas should have a few basic goals, a weekly call and an organizational goal. basically your weekly goal is to simply figure out a way to promote conservative ideas and the need to do this in one of two ways. you can simply go out and attack the left and obviously the left you a lot of opportunities to do this. you can have a lot of fun doing so. you can do things like go to an earth day fare or something like that. you can get your group together and scream of knox's-- like burn the rain forest and shoots the manatees. [applause] i don't advocate actually doing that. you will have a lot of fun and you cause a lot of controversy but you are probably not going to bring a lot of people to our

side. and you know, so don't do that. i'm not recommending that, but i bring that up because sometimes we get caught in that trap of just reading controversy for the sake of creating controversy. that is not what i'm advocating. if you think about reagan and how he was successful reagan didn't go out and attack every leftist program. what he did was he identified with their greatest weakness and he discovered are figured out that the berlin wall with the soviets' greatest weakness of the exploited and you need to do that on your campus. honestly if all you do is simply a tax you are going to lose. it is more important to try to start your own programs to take the offensive and really forced the left to respond to you and i will give you some specific ideas and activities you can organize on your campus in a minute. following a weekly goal is to bring you to your organizational goals. this should be pretty obvious in he what your group to be the most prominent conservative club on your campus, or the most

prominent club period and you want to get to the point that when a faculty member, professor maybe importantly a local reporter sits back and things hey, i need the viewpoint of the young conservatives in my area, you want him to automatically think of you and your organization but the only way you get to the point is by focusing on your beatley goal because it is our weekly goal of promoting ideas that maintain your presence shows you are serious about promoting our ideas. when i say you want to promote conservative ideas each week and not saying you have to go out in protest like the left us. even doing small, simple activities can be very effective. sometimes we think about flyers is being old the distribution methods and all technology but sometimes doing something as simple as a fire can be very effective. obviously i talked about the g.w. incident that the lefties to attack conservatives on campus with their flyer going to share with you an example of how

conservatives have used the fire effectively. i graduated from penn state and a few years after i graduated, the student government on that campus wanted to start with they called the tolerance and equality committee. that sounds great, what could be wrong with the tolerance and equality committee? the goal was to basically monitor so-called hate speech at penn state and unfortunately this committee to find hate speech so broadly in that if you were a conservative activist and you want to talk about how racial preferences are wrong or talk about why do you are against marriage or whenever the topic it may be that can be as-- but what was worse is that say you witnessed the hate speech by their definition and you didn't turn to the student that said the hate speech, you were just as guilty so the conservatives on campus felt this was a true attack on free expression. they could have responded in any number of ways, put up a

facebook's, posted a blog post, brought in off at about it but what they decided to do was to issue a flyer and phyllis the five-- big brother is here, and called those in favor to the committee tyrants in training. it had several points as to why the committee was wrong. they actually quoted one of the students senators who was in favor of this tolerance and equality committee who was quoted as saying-- so they put that on there and distributed it all over campus and actually went to the campus newspaper and gave a copy to one of them, to the campus newspaper. the next day there was a front-page article in the campus newspaper repeating a lot of the points that were brought up in this fly air and because of this fly air and the continuing controversy operated by this flightier the following week the student government decided to

scrap the tolerance and equality committee. [applause] i am just trying to underscore that sometimes again going back to this small sample activities can be very effective and don't underestimate the small activities to get your new members involved. obviously we as conservatives are not nash electiveness. we don't naturally want to go out and separate-- and a lot of times the members are not going to be used to doing that and sometimes having them do simple test like setting up a flyer will get them involved with the organization and make them feel you appreciate their involvement. i will never forget my first meeting with my conservative group that my school. i went there skeptical in not knowing what to expect and the group leaders were talking about bringing in speakers and so on. i said, that sounds great but i doubt it is going to happen. afterwards they said let's go handout some flyer.

do you want to go a long? i said that sounds great. to the seasoned activists handing out flyer is not a big deal but to me as that the elected this, that new member at the time i was like wow, i am doing something to promote conservative ideas selee gann don't overlook these small activities to get your members involved. also with every activity that you organized on your college campus, first always think through whether you will address the specific issue, think through to other students actually care about this topic? your goal is to have the broadest possible audience at gurief and, so for example i don't know why but say for example you love transportation funding or are passionate about it. i want to bring speakers to talk about transportation funding. if u.s. speakers talking about transportation funding nobody is going to be there. the same thing in a way with taxes.

students don't work so they don't pay a lot of taxes, so what we do believe taxes should be kept as low as possible, we as conservatives the average student and not care so you have to think through a few want to talk about that issue how are you going to related to them? that is the key can you want the broadest possible audience. you don't want to conserve this members at your then. you also don't want the radical left who aren't going to be convinced. you want the average moderates foodnet ury offence. when we think about politics on a daily basis or conservative ideas and your goal is to get that student anted this on every college campus who after class all he does is go back to his dorm room and plays-- or waldeck for craft or whenever your game of choice may be. your goal is to get that student to leave his dorm room and a direct with like human beings. that is your goal is to get that student to come here to conservative ideas. to help you do this, young

america's foundation has created a number of programs and activities that you can organize on your campus that is open to any student in the country to get involved with these programs. first, later this month we will be sending you a free copy of our latest edition of our conservative battle plan. what this book does is give you specific activism ideas he can organize when a college campus and i'm going to give you a few examples here in a minute. we also try and provide you to free flyer and's toka you can distribute on your campus. some of these are downloadable from young america's foundation web site. the recess beaupre-- posters can be sent free of charge on your campus so if you are trying to recruit for your club, at the beginning of august you can have these resist posters. i would be happy to send these to you. for specific activities let's talk about september. i know some of you guys been involved with this before september all of you should think about getting involved in

the 9/11 never forget project. this is a program we started in 2003 when we noticed as the second anniversary of 9/11 was approaching most colleges and high schools were pretty much ignoring the day. yeah they were excited to celebrate caesar chavez day but here it was the most monumentally that in recent american history and they weren't doing anything to recognize those who were murdered by erratical jihadist, so we created the 9/11 never forget project to help you encourage your school to properly remember the terrorist attacks of september 11th. the primary activity as part of this program is the american flag memorial and basically has to can see it entails a flag display of 3,000 american flags to represent each person killed in the terrorist attacks and it really has a strong visual impact as a strong visual reminder of how our country was impacted on 9/11. for october, i am sure many of

you know who this guy is. unfortunately, in light of your classmates do not. they have no idea. >> either no he is a worker for the port or they just think it is a cool image but what they don't know is this guy was truly a brutal individual who is a terrorist in the murder. he murdered children in this terrorist camps were simply accused of stealing food. he murdered his friends who didn't completely reject democratic ideals and he is quoted as saying that the solution to the world's problems can be found behind the iron curtain, the same iron curtain that lost hundreds of millions of people into a gulag existence so what we have done is create a program called no more-- and this is something that occurs on the anniversary that he was killed and bolivia. [applause]

we like to save the day he received justice using the left terminology, and what we have done is we have again, a number of free downloadable fliers with "i am saying things like i like killing in things like that. we also have this poster of course, the victims of what arra which is a photo masaic of the number of individuals he had a role in murdering in cuba and we can send these to you free of charge and you can distribute them on your college campus on october 9th, no more jay the. let's talk about freedom week ago this week is importantly important, number ninth of 13 and as you well know the left always says their own program of college campuses coming out weekend patrick coyle. freedomite is an opportunity for you all to celebrate the ideas that you hold dear and freedom week celebrates november 9th

anniversary of the collapse of the berlin wall and veterans day and we have compiled a number of activities that you can organize during this week. this year is particularly important because it is the 20th anniversary of the fall of the berlin wall and the idea behind this is not just for historical purposes to remind people about the fall of the berlin wall. that is not really the point. the point is to question those who are out there whoever got no lessons from the cold war. the cold war showed the socialists and communists ideas are failures. they did not work. they just made everyone in their countries for and just spread misery. and so the idea behind freedom week is not to just celebrate the fall of the wall but the question those in our country, college leftist and professors and of course the obama administration, who was always advocating for more government control as to why they think these ideas are still workable

and still can be successful. again we provide you with free posters and materials you can distribute the onyah campus. this poster drives the left crazy, explains how progressive ideas have murdered more than 100 million people. they can't stand that poster. they get in a tizzy about it. we can show you how to treat activities like-- the berlin wall is not to treat the berlin wall for the sake of creating it but to make the point about the lack of intellectual diversity on campus as well. when you are off campus as a conservative student obviously you have the same rights as any normal american citizen but on some college campuses across the boundary you are treated as the second question. you can learn about conservative ideas, you don't hear any conservative speakers so the point is to show when students crossed the boundary they are being oppressed and not getting a balancedification. honestly overall one of the most effective ways to get your ideas

out to the greatest number of students is by bringing in a conservative speaker to your school and again with seven number of times but never a single speaker at this program can come to your campus and one of the best parts about bringing in a conservative speaker is that it gives you the opportunity to reach hundreds if not the alsands of students with conservative ideas and market them properly and the best part about bringing into a conservative speaker is the theater that is involved or the like interaction and this is something you cannot give with any other campus activity. there is nothing better, nothing better than during the question and answer session than watching some ignorant liberal student or even better, and arrogant liberal professor get up and ask what they think is a tough question to an culture, and she tears down their arguments in front of 1,000 people. it is just awesome. dislikes something you have to witness at sometime during your college career.

it is amazing. you are not going to change everyone's mind at the event itself but you will plant that seed of doubt in liberals minds because you will have successfully challenged their world view and for the moderates there, the next time some liberal professor goes off in class as to why he hates conservative ideas or doesn't like ann coulter or whoever it may be, those students will think twice before they blindly accept what the professors are pushing so i just want to conclude that following this program regardless of what you do, just make a point to be active because when you look back and your time as the college, on your college campus, it will be your time as the conservative activists that he will chairs and remember and again now is the time to be active. it is not when you graduate because when you graduate college, they were going to be confronted with the 3m's, mortgage, marriage and munchkins.

all of these things are going to take time away from doing what you like to do. nevermind your hobbies of playing multiplayer. that time is going to disappear but certainly your time to promote conservative ideas is going to be tougher with all of these other obligations and now is the time to promote conservative ideas and really when you think about it is really up to all of you in this room to ensure your classmates are it least exposed to conservative ideas because no one else is going to do it if you really think about it your professors are not going to promote conservative ideas because they are a bunch of radicals from the 1960's. nbc, "time magazine," they don't promote conservative ideas and obviously you can't depend on a lot of older conserved is because most of the conservatives are running for conservative candidates so obviously this up to all of you in this room to ensure that your classmates at least have an opportunity to consider conservative ideas. again, i would encourage you to

please make a point to be active. you know because when you look back on your time on your college campuses going to be your time is in active this that you are going to cherish and remember. it is not going to be your professors and it is not going to be our classes. i know all of you were sitting there thinking i'm crazy and i know he will all go back in say this professor insulin but once you graduate once you are several years removed all that begins to fade. take it from me i can't remember most of the classes spytech. the only cluster remember taking was the class in beaurocracy because i was like, i can't believe i have to take a class in beaurocracy but what i remembered is yesterday my time is an activist. i will never forget the morning when my friends, brian,, frank in my club members went to my political science class and handed up leaflets to 300 plus attending bat class to explain why my professor was a buys less

than they should not listen to him. these are things you will not forget and they are a lot of fun. i appreciate all of you being here this week and thanks for listening. [applause] i think we only have time for one or two questions before the next session. >> carolyn from humboldt state university. euna manuel. in the past election barack obama basically won the election by taking advantage of the most modern technology. he literally had paid people on his campaign whose only job was to go into the internet, check

grams and sow seeds of discord in doubt into the minds of moderates and conservatives. i think that was one of his greatest coups definitely during the campaign and it kind of made the conservative movement or the republican party look old-fashioned because we failed to take advantage of the modern technology in the way he did so can you address both howie as young conservative activists can use that kind of technology on our own campuses and how you see the future of that working into the national movement as a whole and hopefully winning some elections? >> obviously young america's foundation, we don't endorse candidates or try to win elections. our goal is to promote conservative ideas. as conservatism leni to get strong greg using new technology. certainly technology as it exists today is a power to promote your fans and to

document and what is going on your college campus. the biggest frustration to me is when we will have a speaking of then and there is the disruption, whatever it may be in the conservatives failed to get it on video somehow, and really to not do that nowadays is outreaches. there are so many methods and ways to capture video nowadays whether it is through a video camera or even on your mobile device. it is kind of, you ought to be prepared to do that. but you also cannot overlook-- it has to be, you have to blend the two together. you can't completely overlook the more traditional means of promoting our ideas. talking last night at our dinner table, and we were talking about how the san diego state the most effective way to get members to their club is by being active at the move in day and freshman orientation i believe in just

being there, being present in having the materials in front of the students, so i think you have to blend both of them together and use them effectively and wants to get your members from being in front of them, use facebook and twitter and so want to notify them about your programs and activities but also be prepared with all of your activities to have that vehicle ready to capture anything that happens. >> thank you.

>> how is c-span funded? >> by donations. >> federal funds are grandson's. >> maybe private contributions. >> honestly i don't know. >> advertising? >> something from the government? >> how is c-span funded? 30 years ago america's cable companies created c-span as a public service, a private business initiative, no government mandate, no government money. >> no randolph babbitt head of the federal aviation administration. this is part of a conference hosted by the airline pilots

association which represents 54,000 pilots in the u.s. and canada. from washington, this is about half an hour. [applause] >> thank you very much. john, thank you for that very warm and kind introduction. it is a pleasure for me to be here. my ten year in short. i have been the administrators for now my 66 the day so i am not exactly a seasoned veteran here. i have been quite busy, but i did have a chance last week to finally get a little bit of a break if you would. i got a chance to go to oshkosh and i don't know if any of you have ever been to oshkosh, the great air show out there. but if you ever want to see the roots of aviation, thiele the passion live in the close it is the greatest show on earth. it also gave me a chance to do something, i got to ride out there in an faa airplane which i don't get to do very often but i got to go and go up in the

cockpit and i got to say a phrase that for 40 years would put a tingle in my spine. i got to walk in the cockpit and say hi, i am from the faa and i'm going to be riding along with you today. [applause] now, as far as my schedule goes i have been busy. i had for congressional hearings, as was mentioned, in my first three weeks. in the middle i had a call to action coming off the ntsb hearing and that brought in 50 aviation players from around the industry. broaden the regional management and of course the union representation to all to take a good hard look at safety. i have been back and forth to capitol hill more times than i would like to count and i have been called to the white house four times in the midst of all of that but my schedule really is only a reflection of our issues and when i say our issues, they are your issues. i want to say when we talk about

these issues first john, thank you for calling this form. i am really pleased you invited me, i am happy to be here. i have had a chance to look at the agenda and i think you all are covering the right stuff that the right time. this is a very important for met and a lot of progress can be made here. i would like to make a few observations if i could. when we talk about the things that are going on, there is a lot going on and in the midst of things like the inspector general looking at things, the omb, j. aeo, the "new york times" and "usa today," it occurred-- katie couric, brian williams and why can't i fix that? it is kind of easy for us sometimes to forget something that has become very close to west and that is the issue of professionalism and the fact is we cannot simply cannot regulate professionalism. no matter how many rules, no

matter how many advisers, mandatory training sessions, voluntary training sessions, pull them all together and yet the end of the day it comes down to one thing, it is us and by assigning every pilot. each of us has a responsibility here and each of us knows, as professionals, it is up to us to earn their respect and to operate the aircraft professionally. the tools are there. we have spent a long time building in refining those tools, cockpit resource management and things we have let our disposal but the chief pilot can make use them, the line check pilot can make use them, i can make you use them, none of us. only you can make certain that those tools are used and applied properly to enhance our professionalism. now, if you haven't read the transcript of the cockpit voice recorder i would encourage you to do that. the professionalism that flight crew has been raised as an issue

and this isn't the first time we have had that, as an issue. the accidents we have seen and the call to action that i made at all really focused on the need for all of us to be focused on professionalism and that is the theme that runs through all of those investigations. don't get me wrong, i am not saying that pilots as a group are in professional. quite the contrary. what i am saying is it is time for our veterans in the people with experience to take the extra effort to mentor the young pilots that are coming up in this industry so that they have instilled in them the need and the demand to maintain the highest levels of professionalism all the time they operate aircraft. this not only deals with safety, but this needs, this deals with for all of this in you in particular to help the new pilots learn how to adapt, how to change things you have learned over the years with your experience picked up in the cockpit.

let's face it, a number of us who back in the day as you might say, came up in a different environment, he couldn't find an airplane that didn't have somebody in alexei that have a least ten years of experience when you came on board and does captains, very mellitus williband hearing tablets of stone right down direct from the mountain. if they said you did it come and he listened and learned. somewhere with our expansion we have lost a little bit of that. the actually, a number of this year, i am sure some of you aren't even familiar with the airplanes that have flight engineers but if you started in that area you actually got to watch to pilots flying for your first couple of years and that was great experience of we need to find a different way because that is not happening today. there airlines today with the senior pilots have three years of experience and on like back then they are going right into jets and their flying into some of the busiest air space in the

world with three years of experience in new co-pilot for do we have got to offer them better tools. i'm not saying that you've got to have 10 or 15 thousand hours under your belt, that it's not what i am saying but there is something tuesday said for having been flying around the system for a few seasons as you develop your experience. but ain, havi not enough. the people who have the experience need to make certain they are changing it. we need to make certain we are mentoring the ones who don't have it. this needs to become part of our professional dna. this transfer. if you look at experience and you are not sharing it you are doing a disservice to the profession and this is not the time to be a man or a woman of few words. no, these new pilots need to hear from you. you need to point out the things that you have learned and have those experienced. this is about safety and safety is about saving lives. right now there is a rulemaking

committee that john alluded to and i'm sure you will have further discussions on studying fatigue and that is a huge issue for all of this. i know personally how big of unissued is because i tried to have it addressed back in 1992 and a lot of people, every predecessor of mine has worked on it. we are at a point now where we have a timeline of 45 days in that rulemaking committee and that brings us to september 1st. we will vet that rule unsighted dfa a by statute and by process and we will then turn it over to the department transportation. they have a period of time up to 90 days to look at it. call on be looked at it and that new rulemaking will allow for public comment. i would note that i have asked in the interest of accelerating this that both the omb and the department of transportation accelerate the review of this important role. why did this takes the long? people's said it seems like an exceptionally long time.

this audience appreciates just how complex this particular rule is but rulemaking in general is celebrative and edith celebrative by its very designed. the last thing we want is some sort of a knee-jerk world that does not answer the question at hand and i can tell you that this committee is giving all of it a very good luck. just as an example, let me give you a question. what person do you think is concerned more with the tea, the pilot he was flying from detroit that night with a backup crew and bunks for rest or the pilot who has got eight takeoffs and landings, is going to or she is going to make those with a whether never gets better and they are going to do with all without leaving the east coast. at the end of the day who was going to be the more fatigue parlett? the regulations don't reflect that difference and that is what this team is looking at. that is why i am on the

rulemaking committee. i want to make sure that the answers that we get as working men and women aviators are actually the right ones and rulemaking, not only does one size not fit all, but it is absolutely insane to think that it can. therefore, we have a pretty close scrutiny in this rulemaking process. the early look at the flight time in duty times so far is progressing well. they are looking at the subject of fatigue science which is something new, bringing science into the rulemaking which i highly a plot. they are also looking to see the difference in our limitations, again based on scientific data as they go through this process. they have presented physiological concepts of time and flight time, to be and rest limitations and how they vary. we have not definitions of duty and rest. all being considered by this

committee. the scientists who specialize in the fatigue have made presentations about sleep opportunities when their bets capture. all of these things including circadian rhythms and schedule changes will be absorbed and commented on by this committee. regarding regional safety, john mentioned and i am happy to have so much participation and contribution by the pilots and other union pilots around the nation along with the industry. we are holding a series of 12 nationwide airline safety forms and that started on july 21st. the goal is to stimulate the safer and more professional environment at our regional carriers. i am pleased to report that the airlines and the unions have all responded incredibly well to that call. the meetings will continue through august and they are around all over. they are going to be in places like detroit, chicago, seattle, twin cities, miami, denver, st.

louis, las vegas in boston so everyone should have an opportunity. people have said to me i missed the first and i wish i could have come. trust me, you up a lot more opportunities. the discussions are focusing on air carrier management responsibilities and i would say to some degree our own responsibilities, crew education and support. some of the very things you are going to be talking about at this very conference. professional standards, training standards, performance, all of these are going to be discussed and as you would expect the term i have used a lot, mentoring and experience transfer are coming up over and over again. so we plan to collect the best practices and innovative ideas and i will be sharing the results of that with the airlines and the unions and we can maximize what benefit, and how we take that information forward and put it to best use but the bottom line is i'm expecting all participants to make commitments to ratchet up their approach to excellence and

taking us to the next level of safety. i can say this any more directly than i'm going to say right now. we all have to take on additional responsibilities whether we are required to legally or not. this is about safety and again, safety is about saving lives. recently i spoke to the tilts the-- and a pilot told me not to set the bar too low for start-ups. led debris peak now what i said then. i absolutely agree. we are working to revise training rules. i think we had some discussion on that here. we are working in several areas and talking about raising the requirements higher and ordered to be the first officer in a multicrew pilot operation or an airline operation. now, i might not be in the cockpit every day like i used to be but it is certainly a perspective i called for the safety is what got me there and michael is faa administrator is to make certain that safety is

paramount in everything we say and everything we do. i will leave you with this. if you think right now that the safety bar is set to high, your standards are set too low. it is time for you to step up and without that, without all this in this room stepping up, we will not reach the next level of safety. with that i thank you, and i applaud you for the wonderful opportunity to come and visit with you today. thank you. [applause] [applause] captain vet debt has graciously asked to spend a few more minutes with us. if there were any questions. i told them at the end of the

week, we might have questions and we might also have statements and actions ready to go, but at this time if there is a pressing question, let's take the opportunity. if you stand, you will have to come up here. ida one of we have a microphone and not. it looks like we do have one here. >> my name is and i am captain out of chicago for united. just about the fatigue, i understand we are looking at the base which is probably quite the improvement. dhea sometimes find themselves on opposite sides of something and wild lit service generally comes out from agreements about fatigued, we are going to be taking likely a different look at it than the '88 is. in fact they have come out saying more studies need to be done, we need to slow this thing down basically. is the faa kind of your

political body and so the reality of the situation is they get to wield a pretty big stick in trying to be you about the head and shoulders with that. are you guys prepared, dino this is coming in you know this is going to be something you are going to have to address, the difference between the operators and airlines themselves. >> that is a very good question and let me answer in this fashion. in the past we have made this attempts before, and using the rulemaking committee process we have tried to bring the parties together let them resolver come to the conclusion. that always leave somebody the opportunity to sit in the catbird seat or if we couldn't come to consensus where you have just walked away from the process and said we are better off where we are. and a believe we are going to be better off than where we are today. we have too much science at hand. we know too much about the teague, the recognition of the tea, the management of fatigued. we are looking at rule said or written in the propeller era for

aircraft that could fly longer in further than we dreamed airplanes could stay in the air so the answer to your question is they have got 45 days. they will either come to an agreement and they will have a rule or weevil take whatever they have, as close as they have got and we will close the gap and we will have a role. [applause] >> good afternoon members of the panel. good afternoon captain babbitt. i'm the first officer for safir airlines and a full court kiki for. i have a pisa proposed legislation for the senate which mandate part 121 operators to implement asap, fuld was and lows of programs into their system. there is one per-- paragraphic caw my i which i will quote from here. the administrator of acting in

collaboration with aviation interested parties shall consider the merits and feasibility of incorporating cockpit voice recorder data and safety oversight practices. my question to you is, how you view this? how could this benefit safety and do you support this? >> first of all, let me back up if i could to about a 30,000 food you of what is being proposed there. some caution needs to be used and how we do this. for example of this is mandated one of the reasons that asap programs are voluntary is by not mandating them the faa has no requirement to have that data and therefore does not discoverable. one of the things that makes asap programs work and by the way i am a huge proponent, the very first agreement with david hinson, which by the way was heavy lifting by my colleagues at alpha at the time, but i

think we found it is proven to be in a credible source of gathering data, trends and spotting things. but by mandating it, by legislating it we need to be very careful that we maintain that immunity because my concern is a lot of people want but their hand up anymore. i think the idea of a spot check on the voice recorder, that is even been recommended, i heard it first from an alpha group. why couldn't we do a spot check to make sure we have a sterile cockpit occasionally but my concern is the same thing. again, we want assurances, you want the assurances that this is not discoverable data, so well that paragraph caught your eye, so it caught my eye, but when we look at that we need to make certain that every but he all the interested parties aren't unduly exposed or we don't do unintended consequences by damaging another program, and so we will work as closely as we

can with congress and of course with the representatives from all that to make sure that what we get is the best collection of data to enhance safety and that would be its sole purpose, so he were going to insist on those protections and i think we are going to have some explaining to do to make sure that people appreciate the unintended consequences of writing something not well but again we will work with congress and i'm sure we will come up with something that in the end enhances safety. yes, sir. any others? >> good afternoon. not quite sure whether to address you as captain babbitt or mr. administrator. >> or brandy. >> appreciate your coming here in the comments you have made on fatigue. i know as a whip, the ntsb has on several occasions mentioned that reduced rest was never meant to be a scheduling tool and we have tried to get

legislation found that, as mike peers mentioned ntta has thought that on numerous occasions. and some of your comments at oshkosh you mentioned about voluntary compliance and i was wondering how you were going to address the situation between the tea, reduced brass scheduling using the minimum allowed and airline voluntary compliance. >> let's separate the issues. first of all the fatigue issue is a very valid one and i think what you are going to see addressed is one i talked about the differences and i try to side in my remarks the difference between someone who is on the long-haul, 18 hours in writ with the bunk and someone who's going to delay 12 and have our duty. , all in tied approaches. there is a huge difference there. there's also a huge difference between going to work at 10:00 at night and getting through it 8:00 in the morning which would appear to be a-10 our d-day.

there is a big difference between doing that in going to work at the clock in the morning and getting finished at 8:00 tonight. right now the regulations do not recognize what's where the difference between those two dooby. speak what i am hoping will come out of the fatigued and flight time in duty time rest requirements, which is in consideration, is the recognition that those are different duty times and they do need different things. these are reduced, to be used as a scheduling tool because when you are on the back of the clock is a different environment so i hope those are dress. when we talk about voluntary compliance some of the things we are talking about and again understanding that we have the constraints, if we mandate the information become czars and therefore becomes discoverable. what i would like to see and what i suggest every major carrier was you as the major carriers when you make an agreement with the regional carrier, you have the right to say i don't want you carry my

passengers unless you have in place a program and unless you have in place asap and unless you have looked into some of these things. aqp has proven to be a tremendous benefit. this is all about taking the best practices and embracing them as opposed to making us mandate them and possibly losing some of the benefit that we get by compliance, so that is the way i separate those two things, if that answers your question. may be time for one more. yes, sir. >> i'm delighted to hear your support for asap. obviously those luby an important part of reaching the next level of safety, but realizing the potential of those programs however sometimes we find that realizing that potential is in a heated by some dinosaurs within the administration his thinking is more in keeping with the law enforcement organization than a

safety culture, and i would like to know what you plan to do to address the culture of the faa and to enlighten those that just don't get the yet or if they refuse to come around? [applause] >> i missed the ntsb part of that question. [laughter] bfa culture one, let me address that. i think that is sort of a misnomer sometimes. i think there has been, and i want to emphasize, i have said this in public speaking before and i will say it here. i just have a windshield. i am not spending a lot of time in the rearview mirror. what we want to go-- two going 478 culture within the faa and they are great people that work there. and the two months that i have

worked there i'm absolutely dazzled with the professionalism, the willingness to work. given the tools and given the signals and a clearance to go forward, every time i turn around i am saying the folks that the faa working in collaboration with alpha, with the flight attendants, working on rules and the feedback i get is terrific. i don't know, and it might be of some benefit to me to have some background but i know what i am saying going forward is very positive. you have got somebody to complain to you don't see it happen that way. i am certainly going to do my best. i tried to meet all the people in the faa and i am very excited about what these folks are doing. they have huge challenges in front of us. we have got a full navigation system, separate airplanes, how we do, we have to have regulations, we are going to have approaches, the climate

whenever dream of ten years ago. we need every but he pulling the wagon and i can assure you we are going to have the horses that dfa a polling card and if that is not the case, you have my phone number. >> captain-- i commend you on the caressive sade the agenda since you have been an administrator. my question is what is your plan to balance that with promoting air safety? we know the two primary missions are both to promote air travel and to promote air safety. how you plan on balancing that to a better degree than your predecessors? >> congress all the little of that for us. they took away the promotion part, they truly have and they wanted to focus more on the safety. it is not an obligation for us to promote. in trustingly it is for space travel but not commercial and i'm not making that up. [laughter]

what i want to do and i think this is an area you are going to see me working there and i'm going to ask you to help me work there. it always troubles me. it troubled me when i sat in the sea. it has troubled me when i sat in the seat and john i'm living proof a keys the brent yearlong enough, it is like the airline, you get to sentinel the seats but it troubles me that last year and in the year 2008 we carried 753 million people. we conducted 70,000 operations every single day. we did not scratch anybody. we did not hurt anybody. we had one accident and it was a tragic one and it made the front page and if we kill one person, that is one too many but 49. at every day in this country we killed 49 people in rush hour before 8:00, every day. 90,000 people are going to die in hospitals this year of staff infections.

we take an incredible amount of front page spectacular that press for something that is a tragedy. i have met with those families. it is terrible and all of us wished no accidents ever happened but i think what we have been guilty of four charges guilty of this the kiff let pastore of the incredible things that we do, this incredibly state system that we have come up there i think a significant amount of undue scrutiny and we sort of look past all the wonderful things that we do, so we are going to need to work together better to make people appreciate or like the hit, it is your profession. you are the professionals in it and we have a lot of colleagues, flight attendants, mechanics, all the people at the faa, everywhere from accounting to regulatory writing, all of those things make the system work. i don't think that we have quite given enough credit for what a great system it is.