bought your health insurance. why would we do that? it's time for us to make the difficult choices. and the choice doesn't have to be: do nothing or pay for it. the choice can be, we can take care of both. i'll close with this discussion. this is wt weidast year. 43 cents of everything the federal government spent we borrowed from katie rose's. that's who's going to pay it back. we're not going to pay it back. this year,it's going to be over, maybe 46 cents, 47 cents this year, because when you take the real projections for what our addition to the debt this year is in terms of recognizing all the debt, like an accountant would do, not like the government does, we're going to have a $1.8 trillion deficit,

which means externally and internally, we're going to borrow, $300 billion from trust funds and programs and everything we've got. let me give you a little example we talk about. the inland waterway trust fund is a trust fund that's paid for forral our inland water ways. we can't do what we need to do on our navigable waters where we haul freight and barges because we've stolen all the money, and there's hundreds of those trust funds that we've emptied the coffers of. i'll end with this last request when we come back, my pledge is to work with anybody in this body that will seriously work with me about making the appropriate trade-offs of what's important and what's not in terms of priorities. you know, our nature as elected officials is to not to offend

anybody. if we continue down that process -- i'm talking about those that support programs that we can't afford -- we're all going to be offended because every katie rose in the world in our country will have their future squelched out. and the last set of numbers that you should pay attention to, if you are under 25 years of age today -- that means from 25 to 1 -- 20 years from now, you plus everybody that's born in that 20 years will be responsible for debt and unfunded liabilities of 1$1,113,000. think about that. in the next 20 years those under

25 and these born will be responsible for $1,113,000. you're going to have to pay $66,000 in carry costs either through interest on the national debt or direct taxes before you ever pay the first income tax to run anything to the federal government. so what does that mean in terms of opportunity for those katie roses and this little girl? it means they'll have trouble buying a home. they'll have trouble educating their kids. -- to give them opportunity. so i believe we're at a point where we'd have to start making hard decisions and i pledge to my colleagues that i will work with you in a way that's positive to make sure we don't put these people at risk. but i also will work with you to

make sure you understand that i'm going to stand up every time, including the supplemental that's coming forward, and say, "we must pay for it rather than dharnlg it to our children." and with that, mr. president, i yield our time to the senator from oregon, and i would note that we have until 12:30 to finish this discussion. mr. wyden: mr. president? the presiding officer: the senator from oregon is recognized. mr. wyden: mr. president, when i have come to the floor over the last few months, i have always tried to focus on ways to bring parties together, both sides, to work for a common solution: health care, the new tax reform bill that senator gregg and i have introduced, the transportation effort, the build america bond program that was put together by senator thune and i has clearly been a huge success in terms of revolutionizing the system for funding transportation and

infrastructure, senator cornyn and i working on a significant crime bill. so i am always going to come to this floor and try to be bipartisan, bring both sides together, and i want to suggest this question of helping folks who are so desperately hurting today in my state where we have a very high unemployment rate. i want to suggest a bipartisan path forward that i hope that we can look at in the days ahead. i see my friend from georgia here who also wants to work on these major economic issues in a bipartisan way. when you listen ted to colleagus last night and this morning, it seems to me you have agreement on two fundamental principles p. one is, it is absolutely essential to help folks who are hurting now. we've got millions of americans walking on an economic tightrope, balancing their food

bill against their fuel bill, trying to pay for essentials and going to bed every night -- whether it is oregon, georgia, colorado, figuring out if they are going to be able to pay the bills when they wake up in the morning. so there's agreement on both side, you've got to help folks now. there is also agreement, mr. president, that we've got to deal with this deficit. and the spending issue is crippling the deficit for the long term. so in effect we start the possibility of a bipartisan strategy around agreement in two key areas. we've got to help folks that are hurting and, second, you've got to deal with these major deficits, to the spending problem in the long term. what there is disagreement on, it seems to me, is the timing of these particular debates. i and others feel very strongly

that it's just not right to compound the hurt that americans are suffering, even for a few weeks, even for a few days. and that's why we very much want before we go home to have this worked out and get this unemployment extension to them. we also recognize that getting at this long-term budget issue quickly is a matter of national urgency. i sit on the budget committee. we're going to have a chance to do that in april, within 30 days. so what you see is in effect all of the various ideas with respect to extending unemployment so that folks don't go without who are hurting so badly for a short period of time, a week, two weeks, 30 days, a variety of different approaches.

all of those time periods, mr. president, are shorter than our opportunity to make tough decisions for the long term that we have heard democrats and republicans talk about this morning. so i hope that we can get back to working in a bipartisan way around those two areas of agreement that will help folks who are hurting now, help them quickly, not have them suffer anymore, even for a few additional days, and that we recognize that in april on the budget committee on which i serve, where we've got very strong bipartisan leadership between senator conrad and senator gregg, a lot of us thought they were right on their deficit commission. i supported that, supported it for a long time. we've got an opportunity to make those long-term budget decisions -- the democrats and republicans rightly have corrected are so

important -- beginning next month. so let's do both. let's help people who are hurting now and recognize how serious the challenge is with respect to the long term as well. mr. president, the only other point i'd make with respect to the unemployment extension is, again, a point made by a number of our country's leading economists who are advising both republicans and democrats, again in a bipartisan fashion. mark zandi, for example, one of our principal economists who is relied on by individuals of both political parties, has pointed out that for every dollar of unemployment, our country gets $1.64 in return. the folks who are unemployed spend their benefits as quickly as they can get them. and they spend them on essentials. they spend them on the essentials of life.

and it's pretty obvious that consumer spend something a very significant part of -- spending is a very significant part of economic recovery. the economic recovery is obviously fragile, we've got so many folks out of works and folks who are worried about losing their job. they put off spending on anything, bu but the most basic needs. so obviously that slowdown in consumer spending also takes a toll on our economy, and if we're going to make up for the decline in consumer spending, one obvious way, it seems to me, mr. president and colleagues, is to get this extra help to folks who are hurting so badly today in our country. so it strikes me that the decision to not get help to people immediately is simply illogical. it's bad from the standpoint of

economic recovery. it's obviously going to compound the hurt that americans who are out of work are experiencing now -- and colleagues on both sides of the aisle have said they don't want that to happen. so i am very hopeful that even before the end of the day, folks who are out of work, who are exhausting their unemployment and cobra, that there are still discussions here in the senate to try to make sure that folks are denied the bare minimums that are needed to get by and not denied even for just a few days. the fact of the matter is, these are folks who are making $250, $300 a week. none of them are living a life of lee sure. -- none of them are living a life of leisure. none of them are disinclined to

find work as a result of their benefits. they are not part of the lifestyles of the rich and famous. they are the millions, mr. president, who walk today that economic tightrope, always feeling that another big bill is going to push them into the abyss where they can't afford to pay the rent, can't afford to pay the utility bill, can't afford food. it is not right, and i would submit that on a matter like this, which is in my view a question of right and bronc -- and that's what extending -- which in my view is a question of right and wrong -- and that's what extending unemployment benefits is all about -- that we stay at this so folks who are hurting so badly in our country don't lose out if even for only a few days. i will be at my post, mr. president, to continue to work and talk with colleagues of both political parties towards that end, and we've just got to stay at it to ensure that there

is no break in the essential benefits that the most vulnerable of our country so desperately need. mr. president with that, i'd yield the floor. i would note, mr. president, the absence of a quorum. mr. esident, i withdraw the quorum. mr. president, i would ask unanimous consent the senate proceed to the immediate consideration of h.r. 4957, which was received from the house and is at the desk. the presiding officer: is there objection? mr. chambliss: reserving the right to object, mr. president, let me just say that the senator from oregon has made some very good points and he's exactly right. they're points we agree with, on this side of the aisle ... reserving the right to object -- and i do not object, mr. president.

the presiding officer: the clerk will report. the clerk: h.r. 4957, an act to amend the internal revenue code of 1986 to extend the funding and expenditure authority of the airport and airway trust fund and so forth and for other purposes. the presiding officer: is there objection to proceeding to the measure? without objection, the senate will proceed. mr. wyden: mr. president, i ask unanimous consent that the bill be read three times and passed, th the motion to reconsr be laid on the table, with no intervening action or debate, and any statements related to the bill be placed in the record at the appropriate place as if read. the presiding officer: without objection. mr. wyden: mr. president, i would put in a qcall at this point. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

mr. brown: mr. president? the presiding officer: the senator from ohio is recognized. mr. brown: thank you, mr. president. i ask to dispense with the quorum call. the presiding officer: without objection. mr. brown: thank you, mr. president. i've watched the debate in the last few hours, earlier yesterday and then today, but i have heard these debates for years in this institution about unemployment compensation, unemployment insurance. you know, in the end, some of my colleagues in the end vote for extensions of unemployment benefits for hard-working americans, americans who have had jobs and are trying to find jobs but have lost their job and are trying to find jobs, but i -- i think that when i see what's happened, a month ago

when senator bunning time and time and time again single-handedly for a period of time, finally we were able to overcome it, but because of the peculiar rules of this institution, one senator representing a state that's i think about less than 1% of the country can -- one senator representing a state which makes up less than 1% of the country -- granted, the minority leader, the republican leader is in his state, too, but one senator can block extension of unemployment to millions of americans, to people in youngstown and toledo and lima and mansfield and chilicothe. and now we have a handful of his colleagues doing the same thing. sometimes i think, mr. president, they don't really understand unemployment compensation. it's not called unemployment welfare. it's called employment insurance. what's that mean? it means not that people are looking for a handout. it means that people, workers, as virtually everyone does who is working, pays into an

insurance fund when they are working, and the whole point is if they lose their job, they collect employment insurance. it's like you buy car insurance, hoping you don't have to use it, but if you get in a car accident, you use the insurance and pay for it. many people don't ever have to collect on unemployment insurance. those are the lucky ones. but many people need to. it's the same with health insurance. you buy health insurance -- it may be a little more complicated, but you buy health insurance and you hope to not use it, but if you get sick, then you use your health insurance. whether you're a worker in bolder or in pueblo or trinidad or columbus or in dayton, you need that unemployment insurance as a backup. but i think so many of my colleagues on the other side of the aisle, so many conservatives in this country think it's a welfare program. you know, i get laid off, i can draw unemployment and stay on it, i don't have to work, and i can just enjoy my time off.

well, it's not like vacation, number one. look at the articles -- "the new york times" had some articles the other day about the number of people in this country who can't find jobs and how it affects their health. it affects their mental health. it affects their relationship with their children and their spouse. it affects their views of themselves and their self-worth. it's not a welfare program. it's not enough money to get by comfortably on. it's enough money to keep you going with the hopes that you're going to find a job pretty soon. and there are, of course, requirements, too. you don't just sit home and draw your unemployment. you're required in most states to continue to actively seek work. and i know of people -- i'm going to share a couple of letters in a moment, mr. president, but i know of people in my state, as the presiding officer knows in his state of colorado that have sent out ten, 20, 30, 50 resumes a week. and most of them are not even answered in tough economic times or the answers are kurt -- curt

and negative over and over again. people, my colleagues, all of whom dress in suits, men and women both, wear decent clothes, are paid $170,000 a year. many more in this institution come from great wealth. they probably don't experience what unemployment compensation is like. and for them -- and i'm not going to be personal here, i'm not mentioning any names. but for them to stand on the senate floor and they -- i know what they really think sometimes, but for them to come up with all kinds of reasons to block the extension of unemployment benefits, not to mention cobra, the program that the government helps people continue to get health insurance after they have lost their job when they really have almost no money to spend on it, how important that is to people's lives. you know, so i hear -- i hear some of my colleagues say well, i'm voting against unemployment extension because we're not paying for it. well, first of all, unemployment insurance is considered

emergency spending. this is a little bit too much inside baseball, inside beltway talk, inside washington, d.c., talk, but it's always in this country been considered emergency spending, and so we don't have to find a way to -- to compensate for it, to pay for it, any more than when there is a flood in north dakota or there is a hurricane in louisiana or, unfortunately, there is a war in iraq, which always historically have been paid for. in fact, senator -- senator simpson, a republican -- former republican senator from wyoming, said the iraq war is the first time he ever knew about in american history when we didn't pay for a war. so i hear these lectures, and that's what they are, from our conservative colleagues, mr. president, lecture us, preach to us, talk to us like we're children because we're not paying for unemployment extension. in the last ten years, they voted for a war that they refused to pay for. only a trillion dollars it's

cost. they voted for the giveaway to drug companies and insurance companies, all in the name of medicare privatization. that was $100 billion or more. they didn't pay for it. and then they voted for the tax cuts to go to the richest americans. they just forgot to pay for that, too. so we do tax cuts for the rich. we do giveaways it the drug companies and insurance -- tax cuts to the rich, not paid for. giveaways to the insurance companies and drug companies, not paid for, a war in iraq not paid for, yet they are all of a sudden shrinking it down to we're not going to let these workers in this country who are laid off get their sustenance, just get a few dollars for their rent, for their food, for their kids' school supplies. we're not going to do that. we're going to block that. and that's frankly why -- you know, it's why people around the country are angry at congress. they say why can't you just do the right thing here instead of making it political? well, they have made it

political by saying this is where we're drawing the line. we're not paying for unemployment insurance extension. we're not going to pay for it. if you're not going to pay for it, we're not going to do it. it's the same story over and over. put another drug company giveaway or tax cuts for the rich, they will just say where do i sign up? we don't have to pay for that because that will help the country. their way of thinking is a bit peculiar. i know senator kaufman, who has had such insight on preventing another -- another disaster on wall street. if people listened to him a few years earlier, it would have been a much better situation, he will be following me. but let me share a couple of letters. mayor anne from loraine county, the county i happen to live in, says this -- "i am a mom of a 4-year-old. i have been unemployed for over a year. i have never been unemployed before. i have worked since i was 15. it's a terribly difficult situation. i'm at the end of my rope, not knowing what i will have to give up next. i will have to give up my home, my car, my son's preschool.

i'm writing to you to ask you to try to push another unemployment extension, please." how can that not be an emergency? how can they stand on this floor and say sorry, can't do it? just can't do the unemployment extension? this is -- this is exactly the kind of person that so often is afflicted by this situation. that she -- she has worked since she was 15. she has a 4-year-old. she is making the choice do i give up my home -- and what's that do to the 4-year-old and to her? do i give up my car? how do i find a job? i live in lorraine county. i know you can't -- unless you are really, really lucky and you live in the right place, you have a lot of trouble getting to work if you don't have a car. we're going to say you have to get rid of your car but we want you to find work, or she gives up her son's preschool. we know, we know, mr. president, that by any measurement if we are going to get this country competitively economically and internationally and do what we need to do, we need to do a whole lot better with education, and the presiding officer understands that preschool

education is such an important component for children for preparing for the future. let me -- let me read a second letter. steven from a county sort of south of canton, west of youngstown, northeast of columbus, a fairly small county. steven writes -- "i'm a union electrician. i started my apprenticeship in 1992. i have been an electrician ever since. i have never been at a loss for work since september, 2009. as much as i wish i didn't have to collect unemployment, i am terrified that it will run out. i will have no reasons to take care of my family of five. i will have no idea what to do if that happens. i'm the sole breadwinner for my family. my wife has had to have surgery twice in the past year and a half. she broke her knee and currently can't walk." but then, again, she is a mother of five and she is plenty busy doing what she is doing taking care of this family. and like so many, in many families, there are two breadwinners. in steven's case, on a union

electrician's wages, he has been able to take care, to have enough income for a wife and i think three children." i just ask that you take into consideration our situation. we need this extension." mr. president, i will not share other letters. i wanted to share those two letters from a single mother in lorraine county who has worked all her life, an electrician in another county who for almost 20 years has been a well-paid union electrician. we know those are good jobs with good benefits and contribute a lot to our country. but i close with this. that i again -- i again plead with my colleagues, my conservative colleagues put aside your ideology for a minute. put aside your ideology that says that unemployment is welfare, because it's not. it's insurance. people have paid into it. they should collect when they have paid into it when they have done well. they collect from it when they have done badly. it's an american concept of insurance, social insurance,

private insurance, whatever. and put aside your ideology -- or put aside your politics that you want to score points by saying we're not going to do this because we have to --quote, unquote -- in their world pay for it. if they would show us that they cared a little more about the budget deficit, ten years ago when we had a huge budget surplus soon after the presiding officer came to the house of representatives, he was part of that, that put a budget together and had economic growth that we had a budget surplus and then they took that budget surplus and put all that money to their contractor friends in iraq and put all that money into drug companies and insurance company subsidies and put all that money into tax cuts for the richest americans, and now they want to take it out on those people who have lost their jobs. it's unconscionable. it's not -- it's not what the american people stand for. it's not american values. i again ask them to reconsider what they're doing. mr. president, i yield the floor.

the presiding officer: the clerk will call the roll. quorum call:

mr. kaufman: mr. president? the presiding officer: the senator from delaware is recognized. mr. kaufman: i ask consent that the quorum call be dispensed with. the presiding officer: without objection. mr. kaufman: mr. president, i have spoken twice on the floor in the past two weeks on the

problem of too big to fail. this is a critical issue in any financial reform legislation. each senator must ask whether this issue is effectively addressed in the landmark legislation that the senate will soon consider. i will limit my remarks today to the central aspect of the challenge we face -- too big to fail. in particular, does this bill take the necessary steps to reduce the size, complexity and concentrated power of the behemoths that currently dominate the financial industry and our economy? if not, what is the justification for maintaining the status quo? what is the risk that one might fail? if that were to occur, what is the likelihood that the american taxpayer will once more again have to bail them out. the answer is there's little in the current legislation that would change behavior or reduce the size of the nation's six large megabanks. instead, the big invests its hopes in two ideas.

first, that chasing regulators, who we must remember who failed miserably in preventing the crisis, will this time control those megabanks more effectively today, tomorrow and decades into the future. and, second, that a resolution of authority designed to shield the taxpayers from yet another bailout will be able successfully to unwind incredibly complex megabanks who are engaged across the globe. in the midst of the great depression, congress built laws that maintained financial stability in this country for nearly 60 years. through the glass-steagall act, which included the establishment of the federal deposit insurance corporation, congress separated investment banks, which were free to engage in risky behavior, and commercial banks, whose deposits were federally insured. as i described in a previous speech during the last 30 years, that division was methodically disassembled by a deregulatory

mind-set, leading to the reckless wall street behavior that caused the greatest financial crisis and economic downturn since the 1930's. what wall or walls will this billy rect? bill erect? on what bedrock is this nation to rest for another 60 years of financial stability? better and smarter regulators, plain and simple. no great statutory walls, no hard or fast division or limits on discretion, on a set of regulatory powers that already exist. remember, it was the regulators who abdicated their responsibilities and helped cause this crisis. thus far, the central aspect of too-big-too-fail, financial reforrereform consists of giving regulators the ability to simple fire institutions that are already too big and then the ability to resolve those bhangs they are about to fail. upon close examination, however, the former is virtually the same

authority regulators currently possess while the latter, an orderly resolution of a failing megabank, i believe is an illusion. unless congress breaks up the megabanks that are too big to fail, the american taxpayer will remain the ultimate guarantor of an almost certain to repeat itself cycle of boom, bust, and bailout. the first question is: how big must a financial institution be to be too big to fail? let us examine how concentrated some of our giant financial institutions have become. only 15 years ago, the six largest u.s. banks had assets equal to 17% of the overall gross domestic product. the six largest banks today in the united states have total estimated assets to be in excess of 63% of our gross domestic product. three of these megabanks have close to $2 trillion of assets

on their balance sheets. their gigantic size and the perception in the marketplace that they are, indeed, too big for the government ever to permit them to fail, gives them a -- the megabanks a competitive advantage over smaller institutions. it also instills a dangerous willingness to engage in excessive risk taking. as federal reserve chairman ben bernanke recently stated -- and i quote -- "if a firm is publicly perceived to be too big or interconnected or systemically critical for the authorities to permit its failure, its creditors and counterparties have less incentive to evaluate the quality of the firm's business model, its management, and its risk-taking behavior." as a result, such firms face limited market discipline, allowing them to obtain funding on better terms than the quality or riskiness of their business would merit and giving them incentives to take on excessive risks." in other words, with the

taxpayer safety net beneath them, these wall street firms will continue to have an irresistible incentive to keep walking across a financial highwire of speculative investments in search of ever greater profits. some say canada and other countries also have large banks and didn't encounter serious problems, but this ignores the obvious facts that our economy is about 10 times the size of canada's and our financial ecosystem is far more complex. it also ignores that canada's largest banks rest on the bedrock of government-geren teed mortgages and a social -- guaranteed mortgages and a social compact between those banks and their regulators to. adopt a canadian-type model in the us, we would need to merge our banks into even fewer giant banks and then reinflate fannie mae and freddie mac to guarantee some of the riskiest parts of the bank's portfolios. moreover, for every example of a country -- usually far smaller than ours -- that has coped with

megabanks, there are at least as many where this system has failed and failed spectacularly. take ireland, for example, whose largest banks went on a credit binge that ended in disaster. now, ireland's citizens are paying the price through draconian pay cuts and higher taxes, to say nothing of the country's lost economic growth. ireland provides a cautionary tale. these megabanks, whether they are legally in our borders or beyond, are simply too big to manage and too complicated to regulate. there are also those who will argue that we have had financial crisis caused by largely small institutions. that's absolutely true. but these problems were managed without bringing our entire financial system to the brink of disaster, the signature and near cataclysmic event of the last crisis. in the savings-and-loan crisis, more than 700 thrifts, both large and small, failed. many wrongdoers were sent to prison and the resolution trust corporation was created to liquidate the assets of failed

institutions. in short, the crisis was managed and our financial system absorbed the blows. compare that to the last crisis, when our financial system barely recovered from a black hole that threatened to suck into oblivion our entire financial system after the failure of just one large investment bank. the legislation proposes that we must improve the regulation of institutions that are too big. the reform proposals would put in place a systemic risk counsel to monitor for such risk and to identify financial institutions that should be subject to enhanced supervision. next, they would have the federal reserve act as the de facto regulator of those systemically significant financial institutions. the truth is that we've had a de facto systemic risk council for decades. it's called the president's working group on financial markets. chaired by the treasury secretary, it includes the heads of the federal reserve, the securities and exchange commission, and the commodities

future trading commission, and it was established by president reagan following the 1987 stock market cras crash. its track record is spotting incipient financial risk has been abysmal. notably, treasury secretary paulson used the president's working group as a form of systemic risk council but it achieved essentially nothing -- nothing -- to reduce those ris risks. while adding additional members and providing some additional powers, the new systemic risk council is the president's working group by another name. the reform proposals would also give the federal reserve the authority to supervise institutions that the council deems are systemically significant. under the proposed legislation, the federal reserve would have specific powers to impose higher leverage, capital, and liquidity and other requirements upon these institutions. the federal reserve already has the power to impose such standards on most institutions. the proposed regulatory reforms are mainly a redundant statement

of the fed's existing powers. just this week, a moody's report stated -- and i quote -- "the proposed regulatory framework doesn't appear to be significantly different from what exists today." moody's went on to explain -- and i quote -- "the current regulatory regime is already authorized to protect the soundness of banks and the financial system as a whole. in addition, the current banking laws give bank regulators the power to a bank's cease and desist from activities and to require banks to higher capital ratios." no doubt the bill does contain some expanded tools for the fed. for the first time, the fed will have direct supervisory authority for not just bank holding companies but for large, non-bank subsidiaries as well. in addition, the fed will also have authority over non-bank financial institutions and the council deems are systemically at risk. but as moderatey's has raised, the powers -- moody's has recognized, the powers are like the current framework.

federal bank regulators have the responsibility to assure financial stability before the crisis will again bear the responsibility after the crisis. and bank regulators will ton dance the tango with the big banks. interrupted briefly by new legislation which, in fact, includes few substantive changes in safety and soundness banking practices. it is true that under current senate bill, regulators could -- could -- potentially invoke the volcker rule, which would prohibit commercial banks from owning or sponsoring hedge funds, private equity funds, and priewrl proprietary -- purely proceed prior terry training, security derivatives or commodity markets. i applaud paul volcker for his critical work on these issues which the administration has endorsed. unfortunately, the legislation now being considered by the senate requires the council first to study the volcker rule before deciding whether to enforce it. in the end, it could issue a recommendation not to enforce the volcker rule at all. or the council might recommend

simply that regulators mandate capital requirements that are adequate for any risky proprietary activities a particular will undertake, a power regulators already have. the reality is that regulators have long had the authority to prohibit speculative activities at banks but never opted to do so. under the bank holding company act, the federal reserve may require a bank holding company to terminate an activity or control of a non-bank subsidia subsidiary, such as a broker-dealer or insurance company. if that activity or subsidiary poses serious risk to the safety, soundness or stability of the holding company. as we all know too well, in the past, these very same regulators failed utterly. indeed, as the umbrella regulator for all bank holding companies, the federal reserve could have increased capital and other requirements for these institutions but instead farmed out this function to credit

rating agencies and the banks themselves. meanwhile, as a consolidated supervisor of major investment banks, the s.e.c. had similar powferpowers to those of the fe. and it goes without saying that its track record of regulated enforcement is littered with colossal failures. chasing regulators may try in coming years to be harder on the megabanks, to increase their capital requirements and to keep a close eye on the liquidity levels, liabilities and leverage ratios, but even if they do, history has shown us that the tango will reach the end of the dance floor and the big banks will execute the turn and lead again. leaving our regulators hopefully aside in the understanding -- in understanding the complex and opaque transactions that interconnect the giant banks. in sum, little of these reforms is really new and nothing in these reforms will change the size of our megabanks. that is why i believe we must

impose those changes by statute. by statute. i would go beyond even statutorily requiring banks to live under the volcker rule. by reinstating by statute the firewall between commercial and investment banking activities. unless we break the megabanks apart, they will remain too large and interconnected for regulators to effectively control them. and once the next inevitable financial crisis occurs and the contagion spreads too quickly for the government to believe that a failing firm won't take down others as well, the american taxpayer -- the american taxpayer -- the american taxpayer will again be forced into the breech. the proposed plans call for resolution authority to deal with these institutions when they inevitably go into trouble. an early resolution, we are promised, guided by systemic council looking into its crystal ball will prevent the taxpayer from ever again needing to save the day.

it is true that the existing mechanism would task the fdic with resolving failing deposit institutions has worked well, but only worked well up to a point. the problem is that our experience with resolving banks highlighted by the 140 bank failures that occurred last year and their cost to the deposit insurance fund, has shown us that prompt, corrective action is almost always too late. as many commentators have noted, no matter how well congress crafts a resolution mechanism, there can never be an orderly winddown of a $2 trillion financial institution that has hundreds of billions of dollars of off-balance assets, relies heavily on wholesale funding, and has more than a toe hold in over 100 countries. a backstop of $50 billion or even $100 billion resolution fund would come nowhere congress

to being big enough to resolve a $2 trillion financial institution. and the economist notes -- and i quote -- "resolution authority may prove unworkable, of course." the threat of being wiped out in bankruptcy could cause creditors to flee both the troubled firm and any firms like it, precisely the sort of panic the resolution regime is meant to avoid. in a severe financial crisis, it will be too terrifying for politicians and bureaucrats to use the new process, predicts douglas elliott of the brookings institution. instead, he says, "they will resort to ad hoc measures as they did in 2008." not surprisingly, there are many barriers to resolving large and complex national institutions. most notably, there are international did i minkses to the problem with deepening -- depending on any resolution authority. following the collapse of lehman brothers, there was an intense disruptive dispute between regulators in the u.s. and u.k.

about how to handle customer claims and liabilities. while u.s. bankruptcy protection, lehman's operations in the u.k. were halted in accordance with british bankruptcy law. given that there are apparently more than 600,000 open derivative contracts in the u.s. on the day that lehman failed, many counterparties and clients were stranded consequently hampering bankruptcy efforts in the united states as well. to those who promote resolution authority as a solution, i ask exactly what would have happened differently if lehman had been in receivership during those days in september. moreover, the reluctance last string spring to nationalize these banks was because it would have been too costly to the taxpayers to take over or put into bankruptcy the megabanks. why would it not be costly for the u.s.-only resolution authority? the truth is, it would be.

the taxpayer would remain the ultimate guaranteer. the international difficulty of acting quickly before contagion spreads is almost impossible to overcome without a cross-border resolution agreement. unfortunately, there is nothing in the resolution authority that the senate will consider that will help address this problem. and we ail all know that is a problem that will only get worse given the inevitability of further global financial. they will be funding on their too big to fail u.s. banks from increasingly complex transaction around the world. the problems with resolution authority for the megabanks aren't just international in naimplet these institutions use short-term collateralized loans called repos to finance a significant portion of their balance sheet and have massive counterparty exposures that

arise out of their roles as derivative dealers. derivatives are qualified financial contracts meaning that exposures that arise from them are effectively supersenior to the claims of all other creditors. by giving these trading exposures such a position under bankruptcy code, we have allowed a major part of our financial system called the shadow banking system to grow completely unchecked without any market, any market or regulatory discipline whatsoever. as peter fisher, former under secretary of the treasury and former head of the markets test at the federal reserve bank in new york, has stated, "these changes to the bankruptcy code transform the too big to fail problem of our largest depositor ant interconnected problem of our major financial institutions." the proof of that statement is being borne out by the data.

one report estimated the size of the overall repo market in the u.s. and the region in the u.k. totaled approximately $11 trillion at the end of 2507. meanwhile, the total notional value of the over-the-counter derivatives contracts is equal to, get this, $605 trillion as of june 2009. large financial institutions that rely chiefly on wholesale financing and have massive counterpart exposures from their derivatives are clearly combustible. the case studies of lehman and others show how quickly and violently these institutions can implode. and when they do, their interconnected nature inevitably can cause a contagion lead to a collapse in confidence. as a moody report summarized, the question we must "try to

assess whether or not the law could be effective in the stated objective, which is allowing a troubled systemically important financial institution to default on selective obligations while avoiding the larger effects that sucit might have on the broader economy." that was a challenging objective to accomplishing reality given contagion risk and the high degree of connectedness among such institutions both domestically and across border where any such resolution of authority would have no authority." resolution authority is, therefore, a slender reed upon which to lead when it comes to institutions as these. the truth is that we need to split up and break down the largest and most complex financial institutions. as president of the federal reserve bank at dallas richard fisher stated on march 3, "i

think that disagreeable but sound thing to do regarding institutions that are too big to fail is to dismantle them over time into institutions that could be prudently managed and regulated across borders. and this should be done before the next financial crisis because it surely cannot be done in the middle of a crisis." the first step is to separate federally insured banks from risky investment banks. the first step is to separate federally insured banks from risky investment banks, as senators maria cantwell and john mccain have urged, we should break up the largest banks and resign to history too big to fail banks. this will once again ensure the soundness of commercial banks while placing risky banking activities far beyond any government safety net. second, we also need statutory

size and leverage limits on banks and nonbanks. we should set a hard cap on liabilities of banks and other financial institutions as a percentage of gross domestic product. the size limit should constrain the amount of nondeposit liabilities at large megabanks which rely heavily on short-term financing like repos and commercial paper. in addition, we should institute a simple -- a simple statutory level requirement to limit how much firms can borrow relative to how much their shareholders have on the line. finally, we must put in place reforms for derivatives and other qualified financial contracts. listen to this number: the five largest banks control 95% of the over-the-counter derivatives market. we must require derivatives to be centrally cleared, which will

reduce the complex web of counterparty credit risk throughout our system. cftc chairman gary gensler underscores that point by stating, "central clearing would greatly reduce both the size of dealers as well as the interconnectedness between wall street banks, their customers, and the economy." in addition, we should reconsider the legal treatment of qualified federal contract exposures under the bankruptcy code and, therefore, under a resolution regime as well. given the sheer size of cross-exposures arising from derivatives and repos that financial firms have with each other, it makes sense to allow derivative and repo exposures to be netted out prior to any automatic stay. it's not apparently -- apparent why that net credit exposure should come ahead of claims of other secured creditors. this is special treatment, not market discipline. all of these changes taken

together would reduce risk in the system, impose discipline in the market, and break the cycle of obligatory booms, busts and bailouts. in short, they eliminate the problem of having institutions that are both too big and interconnected to fail. if instead our solution is to depend on regulators and to wait with an impractical plan to resolve failing institutions, the financial system will continue on its inexorable path growing bigger, more complex, and more concentrated. and we will only be laying the groundwork for an even greater crisis i the next time. mr. president, in the midst of the great depression, we built strong walls that lasted for generations. the devastation of our most recent crisis challenged us to do it again. these megabanks are too big to manage, too big to regulate, to big to fail and too interconnected to resolve when

the next crisis hits. we must break up these banks and separate again those commercial banking activities that are guaranteed by the government and those investment banking activities that are speculative and reflect greater risk. we must limit the size, liabilities, and leverage of any systemically significant financial institution. given the ever-increasing rate of financial innovation, the need for congress, not the regulators, to impose these time-honored principles has never been greater. the stakes have never been higher. it is time to follow in the footsteps of those great senators who made the tough decisions in the 1930's to pass the glass-steagall act and other landmark reform bills which paved the way for almost 60 years without a financial meltdown. once again, we must ensure that government guarantees of federal commercial banks do not enable financial institutions to engage in the risky activities of investment banks. finally, we must guarantee that

there are no banks that are too big to manage, too big to regulate, and to big to fail. the american people deserve no less. mr. president, i yield the floor and suesthe absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senator from dd: i would ask the call of the quorum be reunderstand ised. the presiding officer: without objection. mr. dodd: i know we're in the waning minutes of going out of session and members have by and large left the city for their respective states, as i'll be doing in a day or so going back to connecticut to spend time with my family and constituents over the easter passover break. but i wanted to take just a couple of minutes, if i could, and talk briefly about my responsibilities as chairman of the senate banking, house, and urban affairs committee on which i serve with 22 others of our colleagues, comprisin comprisina quarter of this institution who sit hon that committee. senator richard shelby is my rank member, former chairman of the committee, i might point out. i would finished our work in the committee last monday, in a rather abbreviated mark jurntion i might note, not that i planned it to be that way. but we ended up with a pretty

short markup of a fairly complicated bill. a week ago today, at about this time, a little after this, we had received aamendments -- had almost 400 amendments that had been filed, so i anticipate add rather elongated markup. but members decided this they weren't going to offer their amendments in the committee, which is their right. i had a responsibility as chairman of the committee to consider those amendments if they were offered, and we were prepared to either accept some, modify some, or reject others. but the conclusion of the committee was to take what changes we had made and move forward. so it is my hope that shortly after our return on the second week of april that we will -- we will come to the floor of the united states senate to debate hopefully in a full-throated debate about how we reform the financial services sector of our nation. in light of the events over the last several years, this is a compelling issue. it mangedse mandates our involvd

participation. we can hardly leave this congress leaving the door wide open again for the kind of abuses that brought our nation to the brink of financial collapse. and those were the words used by the chairman o chairman of the l reserve, mr. ben beer naing yow, in 2008, as they were the words of the former treasury secretary, henry paulson, when they met with the leadership of the house and senate and the respective leaderships of the committees of jurisdiction. they predicted that had we not acted in the remaining weeks of that session before the adjournment in 2008, that, in fact, we might very well be looking at a very different country today. certainly, we avoided the collapse that they have talked about, but at great cost, mr. president. the fact that this country and its taxpayers had to write a check for $700 billion, resources of which went to a handful of financial

institutions to -- quote -- bail them out in order to preserve the safety and soundness of a fragile financial system is something that still causes remarkable levels of anger and frustration, understandable levels of frustration and anger of the american people all across the country, regardless of where one lives. the idea that a firm on wall street could get near brink of disaster, get massive resources to pour into them and then watch someone's home in connecticut or delaware or in colorado or tennessee or alabama, a business closed, a home is closed, a retirement account is evaporating within a matter of hours, despite the fact these larger institutions were getting the resources of the american taxpayer. well, we have made an effort, mr. president -- i don't claim by any stretch of the imagination perfection to try to deal with the reforms. obviously, it's a complicated matter and the complications are

added that we have 23 members of a committee, not to mention 100 members of this body that all have their various views on what ought to be done. to mention the other body, the white house, stakeholders and others to try to fashion a piece of legislation. that will not say that we're going to stop all financial problems in the future. that would be ludicrous to really make such a suggestion. there will be other financial problems. what we're going to try and do with this bill, what we think we have done to a large extent with this bill is to say there may be other financial problems, but never again should a financial problem of a major financial institution put the rest of the country at risk, because that's what happened. because of their abuses, their greed, the failure of regulators or the failure of the government to regulate certain institutions, we saw a system go haywire. now, i don't mind if some firm wants to go to the casino and guam wbl their money, i understand that, but the idea that they would be able to do that with the taxpayers' money or with the well-being of our

economy, that has to stop. and so our legislation is designed to do that. first and foremost, never, ever again should a financial institution get so large, so interconnected, produce products that put the rest of us at risk. and our legislation shuts that door, we believe, firmly. now, others are arguing because frankly they don't want to admit what the real argument is about. they don't like the fact we have a consumer protection agency here for the first time in the history of our country. so the people who buy a mortgage, buy stock here, buy an insurance policy, whatever else it may be will have some place to go if, in fact, they are being abused, and that's exactly what happened. they were abused in too many instances. but rather than focus their criticism on that, they are focusing on other things that frankly we're dealing with very effectively in the legislation. we also set up an early warning system to the largest extent possible so we know what's going on out there with products and

firms to bring us to the brink of disaster as they did only a few short months ago. in that legislation. we're taking some of these exotic instruments, credit default swaps, derivatives, over the counter. an industry, mr. president, that went from around about about $90 billion, and within the space of six or seven or eight years, close to to $600 billion. it exploded, in large measure because it was in the shadow economy. that ends with this bill. it is going to have the glaring light of sunshine on them through exchanges, and all the american people and others can know exactly what these instruments are and how much risk is being taken with their use. now, there are elements in this country that don't like that idea because they would rather not have the light being shown up to examine what they are, but we're determined to see to it that's going to be the case in our legislation as well. now, there are a lot of other

provisions in a 1,400-page bill that deal with other matters related to all of this. i just wanted to inform my colleagues, mr. president, that we have a strong bill coming out of our committee, a fully independent consumer protection agency, bureau of division. it's housed in the federal reserve in our bill which has caused some people to wonder how independent it could be. it is totally independent. its head will be appointed by the president of the united states. that head would then have to be confirmed by the united states senate. the budget that this agency would have is going to be separate from other budgets. it will have its own line of funding to go forward. it has independent authority on rule making and examination and enforcement with institutions that have assets in excess of of $10 billion. and for those that are smaller than that, the examination and the enforcement will be done at the state level or others that would be responsible. many were concerned that this would reach down to the community banks and others.

we have separated that out. my colleagues expressed that view. that's going to be very important, that we have finally someone watching out. we were told for years that our system was safe and sound because they were making a lot of money. we have learned painfully that isn't the only criteria to determine whether or not a financial institution is safe or sound. in fact, they were anything but safe and sound, despite their earning reports. they have subsequently learned, of course, that people were cut into -- were put into homes they could never afford, didn't understand because these institutions were securitizing those mortgages, bundling them together and selling them to unwitting investors, because they had ratings on them that never reflected the reality of what those instruments were worth in our country. and our legislation deals with that as well in a very strong and effective manner. so, mr. president, my only purpose in sharing a few thoughts this afternoon before adjournment occurs is to say that i hope my colleagues in

their visits back to their states, in talking with their constituents will talk about these issues, listen to your -- your businesses on main street, listen to the borrowers, listen to the users and the customers of financial institutions. the institutions are going to call you. they're going to write you. they're going to find you, believe me, because many of them don't like what i have done in this bill. they would like the status quo to be maintained. so you're going to hear from them, i promise you, and you're going to have to work a little harder to listen to the voices out there that may not contact you about this but will tell you what it's like as they try to borrow money, make an investment, get credit, buy a home, get a student loan in order to afford the cost of hire education. and i would urge my colleagues to listen to those voices as well. they deserve to be heard in this debate and discussion, and then we'll have that kind of, i hope, full-throated debate when we get

back, meet with the other body with a final product and hopefully give the president of the united states a bill worthy of the challenge before us. this is the single largest reform of financial services since the 1930's, and it is long overdue, but we must not fail in our obligation to meet the challenges. if we leave here failing to do this, we expose our economy, and the american public will never, ever again write a check as they did last -- in the fall of 2008. you can forget about that. and so we need to make sure that these firms that get in trouble understand the "pardon the interruption" is bankruptcy, receivership. shareholders will pay a price. management goes here. the idea that you're going to be able to count somehow on the american taxpayer pulling your chestnuts out of the fire are over with in the too big to fail concept. and the importance of achieving that goal along with these other reforms i think will have the desired effect. failure to do that leaves us exposed to the kind of financial challenges that we have

witnessed over the last several years. and again, a business, as i say respectfully, in connecticut or delaware or colorado, a homeowner in those states shouldn't have to pay the price because a handful of financial institutions got too greedy, too risky, they were unwilling to examine what they were doing or did, recognizing that the federal government would bail them out if they made a bad choice, which they did. mr. president, i look forward to that debate and discussion and presenting the bill that our committee marked up on monday of this past -- of this past week. mr. president, with that, i yield the floor.e presiding offe senator from colorado. mr. udall: mr. president, i rise today to speak on behalf of the millions of americans who know our nation is desperately in need of health care reform. traveling across colorado this past year, a common theme surfaced as i spoke with families, health care providers and businesses alike. they all want a health care

system that tackles costs, improves quality and puts their needs first. and i have heard like i know the presiding officer has in his home state of delaware, just too many stories of coloradans who have paid a lifetime of health care premiums in order to provide for their family, all to have an insurance company drop their coverage because a wife or a husband or a child became ill. visiting with health care providers themselves, i have heard about the waste and abuse in our system. they have all pleaded with me to have commonsense reforms that get them back to the business that they thought they were entering years ago, the business of caring for their fellow americans beset by illness and disease. and, mr. president, i hear from small business owners continuously double-digit increases in insurance costs. in many cases for the ninth or the tenth or even more years in a row. they want to see relief, these small business owners, not for

themselves but because they don't want to have to choose between laying off workers and leaving their workers vulnerable to medical bankruptcies. decade after decade, we have seen how the fine print of insurance company policies put shareholder interests above those of american families and how partisanship has prevented the kind of progress everyone agrees is sorely needed. mr. president, i have good news. despite all the ugly rhetoric, distortions and misrepresentations we have heard, coloradans and the rest of the country can finally rest assured that someone has put their interests first. this week, i watched as president obama signed into law the kind of reforms that will free americans from the shackles of never-ending cost increases, dropped coverage and unfair practices that put profits above the provision of care. mr. president, throughout this past fall and winter, i joined you and the rest of our freshman

class here on the floor of the chamber repeatedly to talk about the urgent need for health reform. we shot down false claims, challenged the phony reasoning that was out there and pointed out where the rhetoric ends and reality begins. and over the past few days, many more of our colleagues from this side of the aisle have compellingly and eloquently explained how important the new health reform law is to both the american people and to our american economy. the fact is, mr. president, that this historic bill signed by the president saves lives, saves money and it saves medicare. and in bringing this long debate to a close, i want to speak directly to the people of colorado. it's important that they know how these health insurance reforms will benefit their families and the rest of our great state. as a result of the president signing the patient protection and affordable care act into

law, the parents of colorado's 1.2 million children can sleep easy starting this year knowing that insurance companies no longer have the right to deny their kids health care coverage because of a pre-existing condition. also starting in 2010, almost half a million, 500,000 young adults, mr. president, in colorado who would otherwise be kicked off their parents' health care policies can maintain that coverage through to their 27th birthday. this is particularly welcome to me as i know it is to many, many coloradans as i have two college-aged kids who fit into the category i just described. mr. president, we have 575,000 seniors in our medicare program, and for every single one of them, this new law will protect -- i want to emphasize that -- protect their guaranteed benefits and immediately allow them to get preventative care

with absolutely no co-pay or out-of-pocket costs. this added benefit, contrary to what we have heard, will increase, increase their health care coverage under the medicare program so that our seniors can continue to live happy and healthy lives. this new law goes to great lengths to help slow the growth of health care costs, and by doing so, it's projected that these lower costs will allow colorado's employers to hire up to 6,500 new employees each year in our state. and for as many as 68,000 colorado small businesses, health reform will immediately begin providing millions of dollars in tax credits so that they can afford to offer health insurance to their employees. mr. president, yesterday we sat here and cast 56 votes as democrats to make final improvements to the patient protection and affordable care

act, and it will -- in that reconciliation measure we passed yesterday, it will provide prescription drug relief as well for our colorado seniors. more than 100,000 colorado seniors, like my friend frank blakely in colorado springs will pay less for prescription drugs. right now these seniors hit what we know as the medicare doughnut hole. which means they have to pay thousands of doctors directly out-of-pocket for their medicines. but beginning this year, every one of these seniors will receive a $250 check to help offset those costs and we'll begin to close the overall gap in medicare coverage so we completely fill this doughnut hole by the year 2020. and you know this will be really welcomed relief to those on fixed incomes all across the u.s. because it will -- mr. president, it will free up scrace retirement dollars to

visit family members, help pay a grandchild's college tuition or even, in some cases, to help put food on the table. i think one of the overriding features of health reform is the freedom that will give coloradans and hard-working americans. the freedom to change jobs, to launch a business, to even start a family while knowing that health care coverage will be there for them when they need it. americans need to know that their country won't leave them to fend for themselves when an insurance company denies or drops their coverage. they deserve peace of mind and to know that someone is on their side. now, mr. president, over the last few days we've heard a lot of the same misleading rhetoric that we did back in august by those who were dead set on levying accusations rather than working on real reform. well, health reform has become

the law of the land and the american people don't have to wait any longer for these important reforms. the legislation we've passed will -- will establish a sturdy foundation upon which we will build, improve, and strengthen access to health care in america. will there be mistakes made along the way? i don't doubt it. mr. president, i'm a life long mountain climber and i know from experience that any difficult climb includes storms. and you make a mistake, finding your route along the way, but what really matters is you dust yourself off and you move forward. i think there have been a lot of storms on this journey so far, and it hasn't been perfectly smooth, but it's been in the right direction. disspet the stumbles an turns, we are providing afor thible,

quality coverage. every expedition in my experience has a leader and i want to take a moment to recognize our leader, senate majority leader reid. he's literally had the health and well-being of millions of americans on his shoulders. some would say the weight of the world. that's a -- that's a heavy backpack, mr. president. but at the same time he's shouldered that loan, he's been an unwavering advocate for reform and exemplified the american resilience and has helped to make our nation the greatest nation on earth. i'd like to thank my staff including jake who have worked to fight for colorado and make affordable health care coverage for millions of americans. as i close, mr. president, i just want to say how proud i am that the health care bills that we passed this week will modernize our health care delivery system, increase

much-needed choice and competition within the health insurance industry and help put our economy back on track while clearly improving the financial security of middle-class working families. this has been a historic week for colorado and for the american people. the victory, of course, isn't for the senate or the house or the president or for political -- our political party. it's for the american people. and i've certainly be humbled to have been given the opportunity to serve my great state during this unforgettable and sustained and long debate. and i look forward to the important climbs that still await us as we implement this very, very important legislation. mr. president, thank you. i yield the floor and i would note the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call:

mr. kaufman: mr. president? the presiding officer: the senator from delaware's recognized. mr. kaufman: i wish to suspend the quorum call. the presiding officer: without objection. mr. kaufman: i ask unanimous consent that the veterans' affairs be discharged from s. s. 3162 and the senate proceed to its immediate consideration. the presiding officer: the clerk will report. the clerk: s. 316, a bill to clarify the health care provided by the secretary of veteran anays constitutes minimal essential coverage. the presiding officer: is there objection to proceeding to the measure? the presiding officer: without objection, the committee is discharged and the senate will ocee mr. kaufman: i ask unanimous consent the bill be read a third time and passed, the motion to reconsider be laid on the table with no intervening action or debate and any statement related to the bill be placed in the record in the appropriate place as if read. the presiding officer: without objection. mr. kaufman: i ask unanimous consent the homeland security and government affairs committee be discharged from further consideration of h.r. 4621 and

senate proceed to its immediate consideration. the presiding officer: the crk will report. the clerk: h.r. 4621, an act to protect the integrity of the constitutionality mandated united states census and so forth. the presiding officer: is there objection to proceeding to the measure? without objection the committee is dischargedded and the senate will proceed to the measure. mr. kaufman: i ask unanimous consent the bill be read a third time and passed, the motion to reconsider be laid on the table with no intervening action or debate and any statement related to the bill be placed in the record at the appropriate place as if read. the presiding officer: without objection. mr. kaufman: i ask unanimous consent the senate proceed to the immediate consideration of h.r. 4573, which was received from the house. the presiding officer: the clerk will report. the clerk: to urge the secretary of the treasury to instruct the united states executive directors at the international monetary fund the world bank, the interamerican development bank and other multilateral

development institutions to use the voice vote and influence of the united states to cancel immediately and completely haiti's debts to such institutions and for other prpses. -- purposes. the presiding officer: is there objection to proceeding to the measure? without objection. mr. kaufman: i ask unanimous consent that a dodd amendment which is at the desk be agreed to the bill as amended be read a third time and passed, the motion to reconsider be laid on the table with no intervening action or debate, that any statements related to the bill be placed in the record at the appropriate place as if read. the presiding officer: without objection. mr. kaufman: i ask unanimous consent that the senate proceed to the consideration of hj res. 08 which was received from the house and is at the desk. the presiding officer: the clerk will report. the clerk: h.j. res. 08, joint resolution the blind veterans

association on the 65th anniversary of representing blinded veterans and their families. the presiding officer: is there objection to proceeding to the measure? without objection, the senate will proceed to t measure. mr. kaufman: i ask unanimous consent the joint resolution be read three times and passed, the preamble be agreed to, the motion to reconsider be laid on the table with no intervening action or debate and any statements related to the measure be placed in the record at appropriate pace as if read. the presiding officer: without objection. mr. kaufman: i ask unanimous consent the judiciary committee be discharged from further consideration of s. res. 117, and s. res. 412, en bloc, and the senate proceed to the immediate consideration en bloc. the presiding officer: the clerk will report. the clerk: senate resolution 117, commemorating the 80th anniversary of the daughters of pe fell by, designating april 2010 as national childhood

obesity month. the presiding officer: is there objection to proceeding to the measure? without objection, the measure's discharged from the committee and the senate will proceed. mr. kaufman: i ask unanimous consent the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid on the table with no intervening action or debate en bloc. and that any statements related to the resolution be placed in the record at the appropriate place as if read. the presiding officer: without objection. mr. kaufman: i ask unanimous consent the judiciary committee be discharged from further consideration of s. res. 427 and the senate proceed to its immediate consideration. the presiding officer: the clerk will report. the clerk: sense resolution 427, designating the first week of april 2010 as national asbestos awareness month. the presiding officer: is there objection to proceeding to the measure? without objection, the senate will proceed to the measure. mr. kaufman: i ask unanimous consent the resolution be agreed

to that the baucus amendment to the the preamble be agreed to be agreed to, the motion to reconsider be laid on the table with no intervening action or debate and any statements related to the resolution be placed in the record at the appropriate place as if read. the presiding officer: without objection. mr. kaufman: i ask unanimous consent that the senate now proceed to the en bloc considerations of the following senate resolutions: s. res. 471, s. res. 472, s. res. 473 and s. res. 474. the presiding officer: without objection. mr. kaufman: is there objection to proceeding without -- i ask unanimous consent -- the presiding officer: without objection, the senate will proceed. mr. kaufman: i ask unanimous consent the resolutioning be agreed to, the preamble be agreed to, the motion to reconsider be laid on the table en bloc. the presiding officer: without objection. mr. kaufman: i ask unanimous consent that notwithstanding the upcoming recess or adjournment of the senate the president of the senate, the president pro

tem be authorized to make appointments to committees, boards, conferences or interparliamentary conferences authorized by law by concurrent resolution of the two houses or by order of the senate. the presiding officer: without objection. mr. kaufman: i ask unanimous consent notwithstanding an adjournment of the senate the senate -- calendar business on thursday, april 1, 2010, from 11:00 a.m. until 1:00 p.m. the presiding officer: without objection. mr. kaufn: i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

mr. kaufman: mr. president? the presiding officer: the senator delaware isecognized. mr. kaufman: i ask to suspend the quorum call. the presiding officer: without objection. mr. kaufman: i ask unanimous consent that the vote on the motion to invoam cloture on the motion to proceed on h.r. 4871 occur on monday, april 12, that the time from 5:00 to 5:30 p.m. be divided between the leaders or their designees, that the majority leader control the 15 minutes prior to the vote. the mandatory quorum be waived. the presiding officer: without objection. mr. kaufman: i suggest the

absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call: mr. kaufman: mr. president? the presiding officer: the senator from delaware. mr. kaufman: i wish to suspend the quorum call. the presiding officer: without objection. mr. kaufman: mr. president, i ask unanimous consent the senate proceed to the immediate consideration of s. 3191, introduced earlier today. the presiding officer: the clerk will report. the clerk: s. 3191, a bill to re-authorize the satellite home viewer extension and re-authorization act of 2004, and for other purposes. the presiding officer: is there objection to proceeding to the measure? without objection, the senate

will proceed. mr. kaufman: mr. president, i ask unanimous consent the bill be read for a third time. the presiding officer: the clerk willead the title of the bill for the third time. the clerk: s. 3191, a bill to re-authorize the satellite home viewer extension and re-authorization act of 2004, and for other purposes. mr. kaufman: i understand there is a statement regarding the paygo effects of the legislation. e priding officer: the clerk will read the paygo statement. the clerk: budgetary effects of paygo legislation for s. 3191, senator kent conrad, march 26, 2010. this is a statement of budgetary effects of paygo legislation for s. 3191. this statement has been prepared pursuant to section 4 of the statutory pay as you go act of 2010, public law 111-139, and is being submitted for printing in the congressional record prior to passage of s. 3191 by the senate. total budgetary effects of s. 3191 with a five-year statutory

paygo scorecard, $354 million decrease in the deficit. total budgetary effects of s. 3191 for the ten-year statutory paygo scorecard, $278 million decrease in the deficit. also submitted for the record as part of this statement is a table prepared by the congressional budget office which provides additional information on the budgetary effects of this act. mr. kaufman: i now ask that the bill be passed and the motion to reconsider be laid upon the table and that any statements relating to the bill appear at the appropriate place in the record. the presiding officer: without objection, so ordered. mr. kaufman: mr. president, i ask unanimous consent that when the senate completes its business today, it adjourn under the provisions of h. con. res. 257 until 2:00 p.m. on monday, april 12. that following the prayer and the pledge, the journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day, and the senate proceed to a period of morning business until

3:00 p.m., with the time equally divided and controlled between the two leaders or their designees. that following morning business, the senate resume the motion to proceed to h.r. 4851, the continuing extension act of 2010 as provided for under the previous order. the presiding officer: without objection, so ordered. mr. kaufman: mr. president, under a previous order, the cloture vote on the motion to proceed to h.r. 4851 will occur at 5:30 p.m. on monday, april 12. if there is no further business to come before the senate, i ask that it adjourn under the previous order. the presiding officer: under the previous order and pursuant to h. con. res. 257, the senate stands adjourned until 2:00 p.m. on monday, april 12, 2010. adjour

the renovation of the pentagon has made it much harder for reporters just to walk around

because more and more spaces are now behind the doors where i can go, escorted. >> sunday cbs news national security correspondent david martin uncovering the military in the u.s. and and iraq and afghanistan at 8:00 p.m. eastern and pacific on c-span is q&a. >> since president, the economic stimulus bill into law last year making $787 billion available, the federal government has committed almost three and a $53 billion to states for stimulus projects.

now to london where british prime minister gordon brown spoke on challenges to the global economy before taking questions from foreign press association members, the permanent topics, national security, israeli-palestinian relations and the upcoming british elections expected may 6th. >> this is the third time i have been here and i enjoyed our impromptu is and i just should tell you this should be my final visit to before i come next monday as well. [laughter] six months ago speaking at the united nations general assembly, i describe the five great global challenges of our time. two cement a global recovery, to

hold climate change, to fight terrorism, to reduce nuclear proliferation and to determine the tide against poverty around the world. and i think 2010 is a make-or-break here. for the first time in one 12-month time the road will come together before each and all of the five great global challenges. in fact, there are 10 important global meeting several community which could shea-porter we face in the next 10 years, attendance of opportunity and challenge when the decisions reached by the international community will determine the fortunes of millions and our commitment to resolve to work together will be tested. this begins next month with president obama's nuclear security conference. it runs to the climate change conference in mexico in december. in britain wants to see and we have proposals for renewed drive for international cooperation to secure safer and more prosperous world. it's right to take stock of our

collective effort and the challenges we must now confront. my conclusion is stark, at the height of the global financial crisis we came together in an unprecedented cooperation to fight back against the recession. even london almost one year ago then with president obama in pittsburgh who later in the autumn. we force the foundation of a global plan to protect jobs and growth. it was a plan that would also perform the international institutions and foreign banking regulation. that was a new spirits in the international community that was visible for all to see. now i believe we must do far more urgently to build upon that brief, to a collective international well. it's why 2010 must not be a year of thrift dominated by our international differences. in 2010 must be a year of drive and delivery dominated by

guidance of what's uniting as across the international community. and i believe that this will summon us to have a new levels of commitment and leadership. the truth we have learned in the last two years is that global problems cannot be answered by national or even regional solutions alone. global problems need global solutions. and we need more not less global cooperation. plug and that's why i am stunned and committed internationalists and passionate european. there are not easy national solutions to the problems we face. but there are international solutions. and we must turn howard and not in word and to i disagree with those was badly speaking were seeking isolation and anti european options. let me just take the challenge is in turn. on the international economy and we can come together to deliver the largest religious the world

has ever seen. with the potential to save our great nearly 20 million jobs last year alone. we agreed more than a trillion in the resources available through the international community and for trade finance to stabilize the global economy. for the first time we agreed a common approach to cleaning a bank's balance sheets and restoring lending and as a result of decisions we took at the london teetwenty in april the global recession was prevented. but now is the time to take the next ups to complete the task of rebuilding the global economy, to strengthen the international financial supervision and the teetwenty and g8 summonsing can then that end in three of at the spring and in all meetings of the international monetary world bank we must now show a fresh and original collective commitment to fully implement the g20 framework for a strong balance and sustainable growth. and we must do more to

coordinate more effectively the regulation of our financial systems and to build a a coordinated approach to levees on the banks to deliver a fair balance between risk and reward right across the world. and i won the international community that if we do not restore the same level of cooperation, heightened cooperation that we saw in the last year that we may not be able to secure the growth and jobs that every country in every nation around the world wants to see. i do see signs of progress on world trade deal. and we in britain are ready to make our contribution to making that elusive deal real. on climate change despite the disappointment of the copenhagen meeting, we have made more progress than i think has beennt been supported by over 100 countries covering around 80 percent of global emissions. 70 have submitted emissions

reductions targets and plans, if these commitments are implemented they will see global emissions peaking at over 2020 so whenever goals is achieved in these commitments could therefore hold the global temperature rising to 2 degrees as we wanted to do. yet at the same time whether remains much to do, first we must implement the accord and that means developing countries for the 2010 and 12 time to rest the british government has pledged 1.5 million pounds. we must recognize -- raise the 100 million a year agreed is the global financing deal for 2020. so i want to announce on the 21st of march in london and we will hold a first meeting of the global finance group, that is the advisory group on global financing established by the united nations general secretary which i'm cochairing with prime minister of ethiopia. we must also reestablishment your stations towards

internationally binding global agreement. using the important meetings in germany and mexico this year to celebrate the school. now my third proposition is we must drive toward creating a low curve in the economy and that's why in the budget next week britain will announce plans to promote investment in clean energy and the thousands of new green jobs that this can create. i want to say something about security because the challenges are changing. today we face a new kind of terrorism, a potential conflict. over resources, piracy and global increases in illegal migration whole point to problems with that to solve as an international community. we have funded our armed forces fighting iraq and afghanistan but we also continue to increase investment in strong borders and top terrorism at home. for a billion who in 2001 to over 3 billion now and every time we are vigilant in

protecting the national security ever country against terrorists who would cause damage. now this must be combined with acts against pessimism abroad including building up other country's capacity to deal with terrorism themselves. terrorist activity coming out of the yemen and somalia has become an increasing problem. but because of the scale of the activity plan from the region in afghanistan and particularly the pakistan border our priority remains that border area. and we look for to the conference and we will gather in washington next month. in washington and new york to discuss the fourth challenge that of nuclear security and proliferation. now direct military threats to the u.k. both conventional and nuclear have sharply declined since the end of the cold war. cannot yet be confident that such threats will not revert so as read our objective remains multilateral disarmament and

that we have a continuous nuclear determined. as well as strong balance conventional forces. but we must act now with our global partners to reduce the threat of nuclear weapons or nuclear material blown into the hands of rogue states or terrorist groups and that is why we're journey with president obama to secure all this out material across the globe over the next four years. it is why i consider today we will divide the international atomic energy authority to carry out security inspection and we will make funds available for similar inspections in areas of greatest concern. ..

>> in education we are succeeding. we have already get 14 more children into school over the last ten years by the collective efforts of the world community. we have so much to further to go. while our determination to meet our target is unpredictable, others including in the g8 has scaled back their commitment in a way that risks destroying the hopes of billions in achieving the millennium development goals. the september poverty summit in new york will be the defining moment in achieving the poverty goals we set ten years ago.

we must rise to this challenge. now, i do not underestimate how far we have, as an international community in confronting these five global challenges in recent years. this is not enough. failure to work more effectively as a global community is not an option. we must better organize ourselves through reforms to the institutions in which we work together building the clouds of t of the g20, shaking up the international finance of institutions, making the united nations security council more representative, but we must ensure far greater collective vigor. historians may look back at this perio d as one in which countrs briefly set aside their national interest for the common good before returning to there old ways or as i recommend they will regard this as a period in which we tentatively and then gradually and decisively laid

the foundations for sustained global cooperation and the first truly global society. i believe we must make 2010 the first year we can see the strength of global cooperation making that truly global society possible. i'm happy to answer any questions. >> thank you very much, indeed, prime minister. now we will take questions in groups of three. if you could please wait for the roving mic. state your name and your organization and ask, please, one question only. thank you very much. >> hello. swiss television. you mentioned banking regulation. excited about getting their hands on the list of the thousands of bridges taxpayers with accounts and hsbc private bank switzerland. what do you think should be done

with this stolen material and what do you think of the attitude of the swiss government who object to stolen material being used for tax control? >> thank you very much. second question, please. >> you defined yourself as a passionate european in your speech. do you think it is desirable to increase the influence of britain and europe, an orderly return of a free-floating exchange rates between the national currencies. if not, what would you advise your colleagues and friends in europe to sort out the present problems? >> the next question right in the back, please. >> thank you. i'm donna harmon. i was wondering if you could talk about, i'm talking about

all these global missions and collectives, how would you respond to some behavior that some call cowboy behavior of the israelis, both in the incidence and dubai and the recent announcement of building settlements. >> prime minister. >> let me deal first of all with the international financial system. the question is raised by our swiss friend and also raised from spain. i would say that at the g-20 we agreed a formula for the exchange of tax information. it should be implemented. we agreed that we would publish lists of countries that were observing that requirement to exchange tax information. there would be reports and then sanctions by the international community. i will give you one example. new agreements with liechtenstein. we have recovered already a billion pounds of money that was due to the british taxpayers that was being left in the

liechtenstein. we appreciate the cooperation that has existed. i think all around the world people know that we will not have sufficient certainty about the future of banking unless we have that exchange of information. so whatever the individual issues with individual countries the general view must be that unless you can have that exchange of tax information than you will have countries undercut in other countries, then undercutting the poor. you will have real problems about being able to deliver a fair and effective regulation and supervision of the banking system. as far as the european community is concerned, the problem in europe is both, the problem is achieving a sufficiently high level of growth to get unemployment which is above 20 million down, and to ensure that as a result of growth each country can reduce its deficits.

when we meet in the european council next week the issue will not be the currency. the issue will be growth. the issue will be how we can agree that europe itself by structural reforms and by action that we take collectively as governments can grow. at the moment every country wants to export its way out of this recession. not every country can export and import. we have got to find a means by which countries accepted balance and the state a policy requires collective commitment to a single strategy for growth. that was the purpose of the g-20 in pittsburgh. the purpose was that we agreed that we would meet as individual groups of countries and work out a collective global strategy for getting the maximum growth and what individual countries would benefit from is the support that other countries gained. as we get to the european council next week and then

before the g-20 and g-8 meetings in canada people will be determined to set apart the growth in the international community and a path that is not upset by some banking failure as a result of our inability to get the supervisory changes that are necessary through the system. on currencies i would just say that our decision was based on the five tests that we set. we understood that dislocation to our economy of meeting these five tests was such that we could not at the moment while the principal joined at that particular time. we have a great deal of faith that people would ensure that growth in europe makes the european union which is probably only going to grow by 1% this year and 1% next year and 1% a year after grow faster than that to get unemployment down.

when you raise the question of israel we want a peace settlement that gives a secure and safe is well within its borders and a viable economic palestinian state. a quartet meeting in moscow today. the european high commissioner on foreign policy. we want these talks to move forward. i think what has happened in the last few weeks is of grave concern. i would want to emphasize the importance of stopping the settlement program if it is a barrier to further talks that should be taking place between the palestinians and the israelis. my support for the israeli community and for the state of israel. i think all of us have got to think carefully about who we can help over the next few weeks in

making sure that the proximity talks and then perhaps further talks are possible and we do not on the basis of one or two instances breakdown. so we will do everything that we can to make sure that we work with other countries toward a peaceful settlement that everybody can see. >> thank you very much, prime minister. second round of questions. >> jerry lewis, israel radio. prime minister, some weeks ago when the israeli opposition leader tried to come to this country there was a little problem and ended up promising rapid action. also given by the foreign secretary. since then we sense have seen

some form of procrastination on the issue of universal jurisdiction. it is impossible for any israeli leader to come to this country until at least after the election. can you give an assurance this will be dealt with rapidly? >> the second question, the lady in the front. >> good morning, mr. prime minister. how do you look at the situation? what kind of intervention has been brought to you from the u.k. foreign minister, which area that you wish to promote and depend cooperation between u.k. and china? >> thank you. the third question. yes.

>> prime minister, i'm from greece. greece basis of its financial problems. is it time for e.u. to do its bit in order to protect the solidarity or the peace in europe? are you willing to take an initiative to send greece and other members of e.u. to remind that at the end of the day the only thing that greece requires is to borrow with the same interest rate as other countries. >> let me first of all deal with this question on international jurisdiction because i think it is important to understand that on the existing role in countries like britain and new zealand the facility for a private citizens to take an arrest warrant out through a magistrate against anybody who is potentially accused of crimes

under which there is universal jurisdiction, we have published proposals. and this is where i have to congratulate you on this. we have published proposals to change these goals. we have set a consultation that in some the next few weeks. i think at the beginning of april. we have said we wish to move to rectify the situation. we are in the basis of information and not the basis of evidence. people are subject to private arrest warrants even though there is insufficient evidence as to be proved later or there may be insufficient evidence for prosecution. so far from doing nothing about it. we have taken action. we have published proposals. we have said they sort consultation timeframe. these matters are part of the traditions of british law, and we are making a big change going

ahead with a new form of doing this. the director of public prosecution to decide on whether this action can go ahead. our commitment to observing the universal jurisdiction on crimes against humanity is absolute, and i spoke saying that. we have recognized the need for change. put proposals to do so we can hardly y be accused of not taking action on this vital matter. on the question of chinese and british relations, i have always valued the very strong strategic relationship we have developed with china over the recent years. our foreign secretary has been in china cementing these relationships. i think it is very important that people recognize that the g-20 is the new organization that is the friendlier

organization for economic cooperation. the g-8 did not include china, india, brazil, south africa. all these very important economies vital for the future of our globe are now part of the premier. all of us are part of the g-20, the progress we made last year was significant. if all you do is prevent a recession turning into a depression which is an important thing but do not rebuild for the future the danger is you are allowing the world to fall again in to the possibility that you may have another financial problem of the mobilization. we have also got to build for the future. i want to make the g-20 a new

organization, not just a group that meets every few months, but a formulated current strategy, a group that formulates a growth strategy. each of us will benefit from the corporation with one another, and it's incredibly important. let me say, i have a great deal of time for the tremendous work that he has tried to do to sort out the deficit which is something that he inherited. he came to london only a few weeks ago. he has visited other capitals in the last few weeks. he has got the message. the group is able to take the action necessary and get the support of the international community. talks are continuing every moment. this will be a subject of next week's european council. i hope we can see the way to making sure that these recent

financial problems are dealt with and we can move to what is the main way that we will, in the long run, reduce the deficits in the european community and the rest of the world, and that is by returning to economic growth. create jobs commended businesses moving forward. moves deficits forward. not paying unemployment benefits. that is the way out for the european union as a whole to get the growth that is lacking over the next few years. >> thank you very much, prime minister. time" magazine. prime minister, in all this vigorous debate about defense funding and this is it specifically, by the way, not a question about the issues that you clarified in your letter. in that debate there seems to be a bigger issue that is being overlooked. if you talk to eminence defense experts are you talk to people in the military establishment

they see an increasing disconnect between britain's sense of itself and british ambition and british military capability. is that something that you recognize and is it something that you would see a kind of a longer-term shift necessary to set right? >> benedict. >> good morning, prime minister. what are your plans for french and u.k. corporation? are you for joint u.k. french sea deterrent and a joint british and french nuclear submarine fleet? >> thank you very much. the lady in the back, please. >> french newspaper. if the next government should be a labor government do you think it will out right to tax and what did you think about that

great britain is to be the next greece? [laughter] >> let me start by saying when the next government is a labor government. we had a decision to make in november about our deficit and about setting out a deficit-reduction plan. we have set out a deficit reduction plan that i asked you to look at in detail. the most ambitious of the g-8 countries. we said that over the next four years we will cut our deficit by half. we will not withdraw from the stimulus until recovery is assured. i believe that is accepted throughout europe and the rest of the world as a necessary means by which the world economy has soared. i disagree entirely with the conservative party in our country to say that you should withdraw the fiscal stimulus now to raise to be quite honest at every point in this recession no matter whether it was worse or better withdraw the fiscal

stimulus as a matter of ideology. would be a mistake at this stage to withdraw the stimulus when we are determined to renew the fertility of the growth we have achieved over these last few months. the deficit reduction plan is a four year deficit reduction plan with the choice about whether we raise a value added tax or health, education, and objectives which is to maintain these front-line services. we made a decision. reaches national and sirens. it will rise, as people know, not this year, but next year as the country moves faster into growth. that is the policy of the government. we have said it out. i will say no more than that people should wait until the budget next week. as far as u.k. and french corporation is at its highest level. our defense cooperation is one that i value.

i was talking to president sarkozy when he was here in london last week. we have agreed on a degree of cooperation that is greater than we have had previously. we will retain, as will france, our independent nuclear deterrent. as i mentioned today, our independent nuclear deterrent, trident, will be maintained. we wish, of course, to see a multilateral disarmament around the world and are ready to contribute toward that, but we do not see in a world that is so insecure, particularly with other countries trying to acquire nuclear weapons at the moment, and i stress the importance of having sanctions against iran. we do not see the case for us with drying the independent nuclear deterrent we have. an independent british nuclear deterrent. as far as the strategic defense posture of our country is concerned you raise a very, very interesting questions. at no point in recent years has

the country being in two wars, first of all, in iraq and in afghanistan. as the chief of the defense staff our troops are stretched, but we are not overstretched. we are trying, as you know, to do in afghanistan, something not too dissimilar from what we did in iraq. in 2007 we decided in iraq that we would move to a situation where in the area of bazrah we would build up the army and police forces. we would ensure that local government elections took place so that politics took over from the insurgency, and we would work very hard, as we did it for economic development in that area. when we left some months ago we had armed forces and police at a higher level. we have local government elections. a very big number of candidates. we were beginning to see signs

of bazrah, a very potentially prosperous area, to starting to develop its economy. look at afghanistan. if we are no longer in iraq. our armed forces are in one major theater, and that is afghanistan. our strategic defense review will be reexamined in the next parliament. we added a chapter a few years ago because of the threat of international terrorism. we have our armed forces in afghanistan. armed forces in total of something more than 175,000. nine and a half thousand in afghanistan. we are finding them to do the operations that that they are responsible for in the helmand province. as we have a future strategic defense review of course we will have to assess that there is this new threat that was not really the central threat of 1997. that is the ability of road and on state actors who are terrorists to cause very big problems. we have, if you like, road rogur

aggressive straight to cause problems with the rest of the world. we will have to incorporate that into our defense review. i would say to you for the corporations that we do our troops are funded for the commitments that we make in the operations they are required to do. i think we must not lose this central fact. we are in afghanistan because three-quarters of the terrorist plots that happen in britain, and we have been following plots very recently, start in the afghan-pakistan border area. if al-qaeda is in a position to run the government of afghanistan through the taliban then we would be even more at risk as a country. >> thank you very much, prime minister. for all of my colleagues, time is running out. with the permission of the prime minister we will take just the final round of questions please quickly. >> we will take two rounds. >> very kind of you, sir.

>> you might invite me back. >> we will, indeed. >> and nobody will leave early. [laughter] >> we are all here, sir. >> jenna hayworth. there are numerous issues which are likely to be central to the election. prime minister, what do you consider to be the single most important issue, and what is your stance on that issue? >> thank you. the lady here. >> if you look at the -- yes. the processes changed over quite a few months. how do you explain that? [laughter] if there is a hung parliament do you see that as a danger to the

british economy? >> on british middle east policy on what level does the u.k. government have to persuade the israeli government? >> let me do with that first. we have very good relationships with the israeli government. of course what happened is being investigated by our organized crime agency. it is a problem, and it has caused difficulties. of course has vice president biden found in the announcement creates difficulty. i believe that our relationships and the government can play a part in getting talks moving again. i no there are so many countries in europe and around the world, but also, of course america that

wants to see these talks moving forward. the problem we have all got is we can see a settlement in the discussions, a peace settlement. we can see that there is not such a huge difference on some of the major areas. we have not found the means to get there. i hope the meeting of the quartet in moscow will make some difference. we stand wholeheartedly behind the peace process. we will help the palestinians with there economic challenges demand we have already promised that we would be part of the, if you like, economic roadmap for peace that would relieve the unemployment in gaza and the west bank. our committment is not that we want to see it. we have a practical set of commitments. turn to our issues in britain. the issue of the coming election will be who is best for the future of our country. two is best to equip our

country. two is best for jobs. to express regret. two is best for the national health service. you is best for tackling the educational challenges of the future? who is best for digitalizing our economy and the internet? who is best for relationships with the european union and the international community? when people ask these questions whether it has been over the past three years, a referendum on what the government is doing day-by-day to a choice about what is best for the british people. i believe it is because people are seeing that there is a clear choice that people are starting to ask very good questions about the conservative party and taking a second look at the labor party. who is best to secure the recovery? there is no way that britain can be growing securely if we withdraw the fiscal stimulus.

it does not matter of ideology. one political party wishes to withdraw the stimulus while the rest of the world knows it is essential to keep the economy moving forward. that is a major point of choice for the british people. do we want to secure the recovery? i just have to say on every major economic commitment we have had to say over these last two years our opposition party has opposed every action that we have taken on the banks come on unemployment, and employment, housing and protecting mortgages, small businesses. then i think people want to ask who is going to be best for the jobs and growth for the future. i am excited. kill a round britain and look at t what is happening in a whole series of different industries. we are changing as an economy. we are becoming a more balanced economy of creative industries and digital industries. low carbon industries.

the advanced manufacturing, medical research, pharmaceutical, biotechnology, the life sciences. go around our country and look at how the different regions are starting to specialize in new areas where, to be honest, it is the volume added goods and services, the high-technology products, the knowledge based industries that a country like ours has that gives us a base for exporting to the rest of the world. we cannot compete in low-cost manufacturing, but we can compete in the quality of our innovation and the high value added products and services we can serve with the rest of the world. where are the jobs of the future and the growth of the future? every country is asking that question. we already have a very clear idea of the million and a half school of jobs we can create over the next few years as a result of the investments that are now being made or are about to be made in these digital

industry, by technology, advanced manufacturing, and low carbon. we have an industry policy. i would just say finally this. the public services revolution that is taking place in our country is about universal public services becoming personalized to people's needs. people will not accept a take-it-or-leave-it basis on which they get health care. we have moved. people want a personal service that is geared to the needs they have, the time they have available, the convenience of family life and also the quality that is necessary with personal care. we are transforming the health service by giving people personal guarantees in a universal health service that they will get cancer specialist treatment within two weeks. they will get a doctor at evenings or weekends and not

just working hours. the maximum time for operations will be 18 weeks. they would get free health checks which are only available now in the private sector and a national health service. urgent social care needs met for the elderly. guarantees the government is getting to people. this is not the old style take-it-or-leave-it top-down health public service of the past. we are doing the exact plans and public education for schools. we are giving parents the option to petition and make sure that they can change the management of schools. the number of underperforming schools in our country has gone down from 1600 to 250. going to go down to is your next year as a result of changes in management or retake over underperforming schools and put them under new. increasing in our country we have more police on the streets than ever before. they are a physical presence. but policing services have got to be personal to people's needs. some people can hire a private

security firm just as some people can go private with their education or their health. we want to give every citizen a chance to have direct access to the policing service and their communities by using testing and mobile phones and the internet and direct accountability of policing force is to the local people that people now have confidence that not only has can't come down, which it has, by equally they can feel that the streets are safe at night. their is a revolution taking place. you just have to ask yourself, who is going to a character that changed for the next few years? a group like us to believe that these front line services are going to be protected while we reduce the deficit in other areas and the conservative party that would not support any of these guarantees that we are not giving to people. but we are talking about answers both questions. there is a choice. that is what elections are about. there is a choice. i will is the agenda to put our propositions about the future and how we build a bridge in

better for the future. i like particularly for to pudding or propositions about person being strong in europe and britain not being isolated as we were 12 years ago. we will not be part of extremist groupings in eastern europe that have linked up with the conservative party in britain. we have got to think internationally. our future lies in looking up words and not in words. that will be one of the central choices that we have got to make when we come to the general election and a few weeks' time. >> yes. the foreign minister is gracious enough to give us one more round. so, please, the gentlemen in lee front. >> the australian newspaper. you expressed some climate change. since copenhagen has experienced it changed and there has been skepticism and countries we have

an election in australia that could lead to a prime minister who has in the past reserved to rred to the concept of global warming as absolute crap. are you concerned about the slowdown of momentum around the world? >> thank you. >> kathryn from swiss radio. prime minister, what is your view on the proposal to create a european passport? >> thank you. yes. the lady there. >> german business weekly. prime minister, you mentioned it is not about currency, it is about growth. i was just wondering. what is your view on germany's current policy? is germany doing enough to promote growth or is it too

focused on reducing deficits within e.u.? secondly, i also wanted to ask about the enormous tax privileges that foreigners and some bridges british-born citizy here in the u.k. can't get that anywhere else in the year. as a labor prime minister when are you going to close this gigantic tax loophole? >> i thought you were about to refer to the case of lord ashcroft. [laughter] i said right at the beginning that the exchange of tax information is the key to resolving these issues of tax avoidance. that is what we are pushing. you know, we had this huge debate about the savings directed a few years ago. people wanted to create a savings tax within the european union. basically germany was losing money to luxembourg where people were putting their savings in another country and avoiding tax. we decided that if we did that

on our own in the european union what would then happen is people would move their accounts not to the european union country but a non european union country. we have to have an agreement about the exchange of tax information around the world. we welcome that because obviously we have benefited already from liechtenstein. that, in my view, is the way to exchange tax information rather than harmonize taxes. at me answer the question on climate change. the standard of debate in your country is rivaling hours. the issue on climate change is, i think that people have agreed on national missions, targets, and plans. all the major countries have been prepared to submit. china, andrea, ia, the national emissions productions plans pretty have to find a way of

financing. what we need for this is an see a moving forward is a global framework that is understood by everyone. the challenge in germany and mexico is to agree on this global framework. that global framework is the basis on which the emissions targets of individual countries and their plans and the transfer of finance can be readily understood as being progress that was made at copenhagen, but not cemented because the framework is not clear enough. what we have to do is make that framework here. i don't believe that most people become climate change deniers. their is a real problem we have got to deal with. is important that we recognize that all the international evidence, despite the controversies, does point to the fact that we have a real challenge ahead of us. it will take any action that is necessary. i also was asked about the european union. specifically asked a question

about germany. it is in everybody's interest that europe grows faster. we have got to look at how each of us can contribute to that. i don't want to make any mention of any individual country. is in our common interests to live in europe on how we can contribute to each other's throats. it is in common interests to work with the rest of the world, particularly in relation to asia to see how we can remove what are clear barriers to growth that exist at the moment. sometimes the barrier is the volatility of oil price. sometimes the barrier is the scale of reserves that are being held by countries. money which it could have if there was a proper insurance policy such as we have proposed for currencies that find themselves in difficulty. sometimes there are exchange-rate issues that must be dealt with, but we have to address these seriously and in detail as individual countries and try and find a way forward. if we were able to do that to

prevent a depression by taking action to protect countries that might have fallen into greater danger as we did in april of last year and in pittsburgh we can do the same thing for the positive agenda of jobs and growth. i do say that this is a vital year for us agreeing that the cooperation that we had last year is not going to fade away and is not going to return to the battle days. a vital year when we agreed to build on the progress that we made rather than that that progress be dismantled in a at a time when the world would then become more protectionist, and growth will be held back and large numbers of people, to be honest, would face unemployment in every continent as a result of our failure to work together the imperative for jobs and for prosperity is that the world is able to work more closely together. the framework is there from the

g-20. implementing that framework is the responsibility of the g-20. all of our g-20, it is important to work together. i leave you with this idea. what we have seen in the last few years is you cannot solve big problems without global action. you cannot solve the problem of terrorism or nuclear security or climate change or economic growth or world poverty without a degree of international cooperation that is heightened, that is far greater than ever we have seen before, and the public themselves through the internet are already creating a global society. the institutions are not capable of delivering the results that we need. we have got to move further and faster to creating these new global processes of working together. otherwise we will be criticized right the by the next generation for failing to seize an opportunity that became available e to us but must be grasped by all countries working

together. thank you all very much. >> thank you very much, prime minister. everyone, would you be so kind as to remain seated until the prime minister leaves. thank you very much, sir. >> thank you all very much. thank you. [inaudible conversations] >> this weekend on c-span2 book tv on after words former education secretary bill bennett examines american at the end of the 20th century and the beginning of the 21st. he is interviewed by walter isaacson. from new york this year's national book critics circle award ceremony. throughout the weekend before highlights from the virginia festival of the book. find the entire schedule online at booktv.org. >> since president obama signed the economic stimulus bill into law last year making $787 billion available the federal government has committed

almost $353 billion to states for stimulus projects. that is up 2 billion from last week. about $202 billion has been paid out for those projects. to find out more about the economic stimulus go on-line to c-span.org/stimulus. you will find a video of events also on our website, links to government and watch dog group is tracking stimulus spending. and c-span.org. >> and today the obama administration announced new help for homeowners with the home owner foreclosure prevention program. recently criticized the program aimed at modifying home mortgages. this first portion is two hours and 20 minutes.

>> good morning. thank you for being here. there are some small signs that the nation as a whole is beginning to emerge from the worst economic crisis since the great depression. but it is way too early to declare victory. unemployment is still sky-high, and the home foreclosure crisis is growing unabated. for the homeowner who is under water the economic crisis certainly is not over. when you are behind in your mortgage payments, when the bank starts calling you each and every day, when you lie awake at night wondering how you are going to explain to your children that you must move, you can start to feel like you really are drowning. too many people know this

feeling. last year 2.8 million households receive a notice of foreclosure. almost 4 million homeowners are late on their mortgage payment by 90 days or more as this discussion is moving forward. the problem is predicted to get worse. as many as 2.4 million people could lose their homes by foreclosure by the end of this year. it to its great credit the obama administration recognized early on that an important part of the nation's economic recovery is keeping as many people as possible in their homes. this makes sense from both an economic standpoint and a public policy standpoint. the home affordable modification program known as camp is a central piece of treasury effort to carry out that objective.

but a year after the creation only 170,000 households have received permanent mortgage modifications. this appears to be extremely low. we continue to hear numerous reports of boris who want ho want to participate, but it just don't know where to begin. if they do began they often encounter unresponsive lenders, repeated incidents of lost paperwork, phone calls not being returned, and a variety of other administrative frustrations. to make matters worse there is evidence that some of vulnerable homeowners desperate to obtain help are falling victims to rescue scams.

instead of obtaining housing assistance for the free these homeowners are being fleeced by scam artists posing as professionals. in addition a new survey with the national community investment coalition provides evidence that minorities, particularly african-americans may be less likely to receive a mortgage modification. they are more likely to be foreclosed on. this is it just not acceptable. moreover this problem is compounded by the fact that we does not have a clear process by which a homeowner can appeal a denial of his or her application. these problems are reflected in the programs results as reported by treasury. the mortgage bankers association

says that government programs have made significant strides in the stabling the housing finance system and have assisted many people who otherwise would have lost their homes, but clearly we need to do a whole lot better. there can be a legitimate debate over the numerical goals of the program, but the central issue that we need to understand is why fewer than 200,000 tom waters have obtained so-called permanent modifications under the program and what we can do to increase the number. we cannot afford a lot of time to study the problem. we need to have a sense of urgency. for those homeowners who are already behind in their mortgage payments the roof is at the door already. losing your house is a traumatic

event for families, and it is a destabilizing event for our society. i think we have an obligation to extend a helping hand to responsible homeowners to help them get over the rough spots. today i would like to hear ideas as to how we can best make the mortgage modification program work. on this point i note that yesterday bank of america announced that it was instituting a principal forgiveness solution for homeowners who are severely under water. bank of america should be congratulated for leading the way with this innovative proposal. we will be looking for ways to expand this approach and to include other banks. again, i want to thank our witnesses for appearing today, and i look forward to hearing your testimony. i will now yielded to the

ranking member from california, congressman darrell issa, for his opening statement. >> thank you, mr. chairman. this hearing is critical and timely. as you said, mr. chairman, and i join you, bank of america making a decision to reduce the principal down to the value, the current value of the home is both in the homeowners self interest and their self-interest. as it was stated in the example this morning $250,000 home reduced to its current value of perhaps 200,000, and the mortgage reduced to that allows the homeowner at over five years to permanently shed that no longer value, but ultimately to remain in a home that would otherwise be sold to someone else for $200,000 or less. this is a win-win if the homeowner can, in fact, make the ongoing payments at a reasonable

rate that is available in the market. it also allows people who were damaged or taken advantage of it during the earlier time to find themselves in resetting loans, teaser loans, all the other examples we have heard if they fit in this 49,000 person initial pilot program as bank of america is calling its they will be converted to a conventional loan, one that has a long-term ability for the homeowner to plan and to pay. additionally i might note that this plan for bank of america, although not without pressure from other places came without the assistance of the program we are speaking today. can, perhaps, out of frustration for the failures covered by the independent audits. today as we look at the program will look at a promise of the president, a commitment broadly

in both parties that is not being kept. mr. chairman, i would ask unanimous consent that the poster which was actually put up by the special ig be up for the entire hearing because it is, first of all, factual and, second of all, i am sure that all members will be referring to it. >> without objection. >> the projection of providing relief, not promise, not hope, but relief for 3 million homeowners has neared a 96 percent failure. in one year's time as the chairman said, approximately 170,000 homeowners have qualified for permanent loan modifications. many of those have already read the faulted. that is not the story that is most concerning to those of us and particularly to this number. what is concerning is the 1.3 million people who have applied and held out hope that they were going to get a

modification. 1.1 remain today. doing my arithmetic 170,000 were put into permanent modification. 30,000 were told that the word never good candidates. after months of waiting they find themselves without alone and without hope. but beyond that people have waited three, five, six, now as long as nine months with an open end to get an answer. that is simply caused the volume to a swell of people who are making payments in hopes that it will lead to a solution when, in fact, it appears as though a great many of them should be looking for more affordable alternate housing. should be planning for that, and should be given the opportunity to make those plans with certainty. mr. chairman, but you and i have had home loans over the years, and we would be outraged if our application with our income and

other information were not accepted within days of our contacting a loan officer. more importantly we would be outraged if we were not answered within days or weeks as to whether or not at least preliminarily we qualified. most of us have had pre qualifications from banks and other lending institutions. banks and lending institutions without government assistance or interference normally can do this in a short amount of time. clearly this program has done just the opposite. it has created huge periods the uncertainty, perhaps, w ell-intended. we need to make a change. if i could roll this video very quickly of the president so we all reminded of the promise and what the charge is for all of us under the program. >> under the new plan lenders to participate will be required to reduce those payments no lower than 31 percent of the borrower's income.

34 million homeowners to modify the terms of the mortgages to avoid foreclosure. >> to prevent foreclosures for as many as 4 million homeowners at lower interest rates and lift home values for millions more we are implementing a plan to allow lenders to work with borrowers to refinance or restructure their mortgages. >> ladies and a gentleman, it is the is the opinion of this rankg member this is a mandate of our president. it is a program that whether you voted for the t.a.r.p. or not must be made to work and must be made to work dramatically better than it currently is. with that, mr. chairman, i would like to thank you for the opportunity of an opening statement and yield back. >> i would like to thank the gentleman ranking member for his statement. i would like to yield three minutes for the gentleman from baltimore, mr. cummings. >> thank you for very much, mr. chairman. mr. chairman, i am very glad that you called this hearing. i am looking forward to hearing from today's witnesses, not only because it is an issue of

foreclosure that affects every one of our districts, but also because we have an impressive group of witnesses before us each of whom could occupy a hearing and to themselves. we want to thank president and ceo of the national community reinvestment coalition, ncrc. not only bringing dedicated and passionate people together to ensure that public policy functions for the public, but also both an extremely talented group of policy professionals who provide this congress with invaluable assistance. i will briefly address the annual conference earlier this month. as always said came away inspired by the dedication to a cause greater than themselves. president obama arrived at the white house last january facing an economic climate on like that inherited by almost any other president before him. as the administration has aggressively worked to not only

stabilize the financial markets but we sure that recovery is not limited to ball street and reaches of our ur communities te home affordable modification program was designed to make mortgage payments reasonable for homeowners were caught in the economic downturn. a series of factors has rendered the program far less effective than we or president obama would have imagined or hoped. unemployment only exacerbated certain flaws in the h.a.m. process. today's hearing will reveal hard truths about the design and execution of h.a.m.. for that reason this hearing is critical, mr. chairman. it is a critical component in our will of ensuring that government nt operations functin with the highest level of effectiveness and efficiency. we must set aside our preconceived notions about these policies, good or bad and conduct an honest evaluation of

whether this program is accomplishing as much as is absolutely required to get our constituents through this difficult storm. i have often said, that we are the greatest country in the world. this is the greatest country in the world. we will get through this storm. the question is not whether we will get through. the question is who will be living in your house after the storm is over? it will have your job? will you still have your health care and your health, and will your children be able to go to college after the storm is over? that is the question. i thank you again, mr. chairman, and i look forward to hearing from our witnesses. with that i yield back. >> i yield three minutes to the gentleman from ohio, mr. jordan, the ranking member of the subcommittee. >> thank you, mr. chairman. as you know the domestic policy subcommittee has held three hearings on the foreclosure problem. i appreciate the full committee's attention to this

issue. despite the commitment of $75 billion in taxpayers' money the american people continue to suffer from the rising tide of foreclosures which hit an all-time high last month. the ranking member and i continue to point out the failure of the treasury department's technocratic tinkering to alleviate this problem. despite this unprecedented commitment of taxpayer resources and a recurring theme in this demonstration the pile of foreclosures has not been solved and in many ways is worse than ever. the ranking member and i have pointed out treasury's efforts to move the goalposts in an effort to redefine. first they told us their goal with 3-4 million modifications. we just heard the president say that himself that would help keep americans in their homes in a way that is sustainable over the long term. then at last month treasury, last month a treasury official told the committee and administration 's goal was offes of temporary modifications. that does not provide a basis

and will help and is hurting many homeowners by giving them false hope and encouraging them to devote hard-earned resources to mortgages that will ultimately end up defaulting anyway. as i have argued before, mr. chairman, delaying for closure does not help the many americans who are fighting to find their jobs. find their jobs. ..

the foreclosure problem facing is reflective of the larger economic employment problems facing the american people. without a job is almost impossible for any american to afford any mortgage payments and they deserve jobs and an economic recovery which this administration continues to deny your anti growth, big government, interventionist economic policies. the only viable long-term solution is two keep more americans in their home and in their jobs for that matter, a broad base economic recovery that on the foundation of free markets, fiscal responsibility and women in government that major nations strong and prosperous for more than two years and -- 2,000 years. thank you mr. chairman for this hearing a look for to carry to this witness. >> i yield to the gentleman. >> thank you mr. chairman, as we previously discussed and have a

letter respectfully requesting that this committee do as it has done in the past and thoroughly investigate a former boehner intimidation the attacks and threats against members of congress that have been a terrorist is the vote on health care debate. >> first of all, women think the gentleman for his interest and that's and, of course, i must say i have an interest in it too because i think that threats coming from many places something that we need to make certain that we do everything we can to prevent an this committee actually is a committee that would have the jurisdiction over that. so i'm not sure in terms of how we would frame its but i'm interested in it and i will ask staff to look into it and see in terms of what we would do because it's such a broad area, but here again i wanted to know that i'm interested in its and we will talk further as to how my people to pursue it. thank you. >> thank you for your bipartisan support too. >> we will now turn to our first panel of witnesses.

it is a longstanding policy that all witnesses are sworn in so if you please stand. and raise you're right hand. do you solemnly swear to tell the truth, the whole truth and nothing but centro, if so answer in the affirmative they all answer an affirmative, you may be seated. in let me test say before we get started and therefore i interest -- and before i introduce our witnesses, this is a very serious situation. people are losing their lives earnings in their homes. they have paid on it, put their money in and out all of a sudden there are being asked to leave because of the fact that the having difficulty making payments. we have here an example of the

problems that people are encountering. where are they? i just want to show them in terms of letting you know how serious this matter is and how many lives are being affected by it -- i have this whole big thing of keys here that does want to show you. we will move back into that later. coming now? these keys, people in many instances that lived in their house, now the house is being foreclosed and the use keys have been collected. this is a disgrace. we are a better country than this. to be can do better than this so we are having this hearing today to see what we can do to turn this around. this is just too much to take. the families are being destroyed, children that are having to be moved from place to place because of the fact that

mortgages aren't being paid, and a lot of them if they could get modifications they would be able to work it out and they just need a little support, a little help or we will be for the gentleman from maryland indicated out of the house, somebody else will be in but the houses will be filled. and that is the sad parts, the people who have given so much of their lives and then now being asked, being thrown out. thank you very much. i just wanted to show that. the honorable mr. barofsky is here today. a special inspector general for the troubled assets relief program. as the principal overseer of the t.a.r.p., mr. barofsky is responsible for conducting audits and investigations related to the hundreds of billions of dollars flowing through treasury to rescue a troubled economy. including those dollars is the

finding of a jmp. today mr. barofsky will present findings and recommendations based on his audits of hamp. the honorable speak well is the acting comptroller general of the u.s. and the head of the government accountability office, gao, conducting ongoing review of him. today mr. dodaro will present an update on the eye to the use of hamp, to date as well as the preliminary findings of gao current evaluation of loan services and implementation of the program. welcome mr. dodaro. we have also with us mr. john taylor. he is the president and ceo of the national community reinvestment coalition. today mr. taylor will present the findings of a ncrc examination of a rescue stands as well as results of a survey

of distress bar were seeking assistance from hamp. thank you for being here. in and, of course, we also have with us mr. calabria, director of financial regulation studies at the cato institute and we're delighted to have all of you here so why don't we start with you, mr. barofsky, and then we would just come right down the line. >> thank you chairman towns, ranking member and members to have a privilege to appear to testify and to present our most recent audits on the hamp program. i like to think this committee for its support of our office and the leadership and tenacity your sean in bringing transparency and accountability to the hamp program. a program was announced more than a year ago and as treasury has demolished the results have been disappointing with fewer than 200,000 mortgages being permanently modified. in order to assess the success of the program however one must

dart with any government program with what is set out to do, its goals, what it meant to help with respect to the hamp program is been a challenge. when the program was first announced the treasury described as a program designed to help three to 4 million homeowners by modifying their mortgages to sustainable levels so they can stay in their homes. if this was the goal, absent some unexpected or unanticipated change in circumstances it will not be met and the treasury official acknowledged to us it's estimated that half of that amount will occur, one-and-a-half to 2 million permit modifications. treasury is consistently told us a threat this audits and borne out by statements the treasury made back last year in march that his goal was not for permanent modifications 324 million but to make three to 4 million offers for temporary or trowel modifications and it may well be that the program is on case to meet that goal. however, as we detail in our report we believe this goal is

essentially meaningless. this program successful be defined and must be defined as it was testified to the american people. how many people will receive permanent modifications and get to stay in their homes as a result of this program. it's unclear at this point what that number may be. one thing that is certain it will be extremely difficult or impossible until treasury puts out its number of whether its estimate is and that goal for permanent modifications for aid to be able to honestly and accurately assess the success of the program and are more of corley for today's purpose is to make the necessary changes so they can meet those. goals. we believe it's unacceptable that one year into this program treasury is still failed to identify what its goal is for the number permit modifications to actually help people stay in their homes. the there have been some successes, treasury has signed up more than 110 servicers getting 90% coverage to build infrastructure for the program

but as we detail in this audit to the disappointing numbers result of mistakes and played by certain errors, services complaining to us about the constant changes in program guidance from treasury. documentation requirements coming even to the net present values which is a computer model that treasury prepared that was intended to sell the service service can now whether or not a mortgage is a purpose for to be modified or not. these types of changes have contributed to problems with the program. we have noted problems with results of treasury pushing at times pressuring servicers to do verbal gile modifications that is putting mortgages temporarily into the program based only on the work of verbal statements of a borrowers without verify income documentation of income. this problem has led to, we have found it to be essentially

counterproductive. its lead to a huge backlash and from a vacation. and partly diverted scarce resources back and other wise be devoted two permanently to a parting modifications and perhaps may have harmed the people of this program intended to help, borrowers and put into a hopeless modifications with no chance to succeed. we have learned about the dangers every default and that is when borrowers to get permanent modifications but unable to continue because either the payments may have are still on affordable or because there is too hopelessly under water to continue or decide not to continue to make payments. we recommended to treasury to reassess the vulnerability to read it falls, less the billion be lost supporting mortgage modifications that will be doomed to failure. regrettably treasury has not adopted this recommendation. why don't know it mr. chairman to address you're point about mortgage modification fraud, it's a significant widespread problem.

i think t.a.r.p. alone we have two dozen criminal investigations on going into these frauds and i'm pleased to announce we have a recent success. we worked with the ftc to shut down the is and i'm pleased to announce that to the principles of that to agents working with our partners to secure criminal charges filed against them in california. that will hold them accountable for the more than $1 million fraud executed. germantown's, ranking members, thank you for hearing my testimony and i do it for to answering questions to have. >> thank you very much mr. barofsky. mr. dodaro. >> good morning mr. chairman, ranking member, members of the committee. i'm pleased to be here today to discuss gao work regarding the home affordable a modification program. as been pointed out this morning we issued a report last july looking at the program, right

now there's been a lot more trommel modification put in place then permit modifications pointed out so far. 1.1 from modification -- million town on vacation report in place and a hundred thousand of those are still active and less than 200,000 have been achieved permanent modification of but it's also important to look at the trends. if i might direct your attention to our chart to over here. the top line is that from modifications that have been started and as you can see they peaked around last september october timeframe and since then have been declining. the line, the dotted line at the bottom are the beginnings of the permanent modifications that have been started and then converted into the 170,000 that were in place at the end of february. now the challenge boeing foreign

is to take the pipeline of the trauma of applications and have decisions made whether to be converted to permit modifications or not, but also the important than the pipeline for trial modifications has to be replenished for these first lien holder mortgages in order to make sure that of the goals of the program will old simile are achieved. in addition to the first link program treasury needs to establish and move forward on the second lienholder program. there's a foreclosure alternative programming that's waiting in the wings to be started as well and there's the hardest hit housing fund which is directed to five states in particular so you have other programs that have not yet been implemented that are necessary to be able to do this as well as dealing with this first

lienholder modification program. now, like a lot of other aspects of the troubled assets for leave program, the gao along with the ig from sigtarp have made recommendations to increase the transparency and accountability of the program. treasury has taken some steps to address our recommendations last july but has yet to fully implement many of them. first, we recommended that they establish performance metrics and benchmarks which would include the numbers target for permanent modifications as well. they also had not yet to resolve compliance issues associated with remedial actions or penalties for servicers that were not complying with the program. we also suggested they regularly updates the number of people who could be helped the this program because of a falling economic and other circumstances.

we continue our work and we have noted the preliminarily some indication of inconsistencies about how the borrowers are treated, when borrowers are communicating with and how early in the process of the lateness on their payments. some are contacted after 30 days hoping to lincoln and others not until 60 days so there's inconsistencies in terms of the criteria that are put forth. there's also problems without compliance with are being dealt with. there's no set process for that too, yet in place. also we had recommended that treasury follow-up to determine whether or not the counseling requirements that were required for some are worse were complied with and they've not yet done that. i think we're missing a huge opportunity here for more consumer education and financial literacy, consumer protections and we won't know whether that's complied with or not going forward unless treasury

implements our recommendation. we are looking at what kind of appeal process would make sense for this program to provide new process for protections for borrowers. i just want to assure this committee that we take this issue very seriously, the t.a.r.p. program help the number of institutions, it needs to have some more help offered to households to afford them and the protections going board. people continue our work looking at whether or not this program is achieving its objectives, whether being managed effectively, and carried out properly and prudently and the best interest of the american citizens. so i thank you for your time this morning and i'd be happy to answer questions at the proper time. >> thank you very much for your testimony. mr. calabria. >> chairman, ranking member, distinguished members, i thank you for the invitation to appear at today's hearing. before i begin i want to emphasize the point that the chairman made about foreclosure scams and these are widespread

and i think we want to commend the work that sigtarp is doing. we want to update you on their efforts and they really are the ones leading efforts among foreclosure scams. my testimony is going to touch on two points. the first point your question rather is why have the current administration and the previous administration efforts along with those of the mortgage industry to reduce foreclosures had so little impact on the flow brochure numbers? i want to emphasize at this point it's not an issue of partisan, if you look at hope now and hamp they are different but the assumptions underlying the structure are the same. in the second question is given what we know whether such efforts haven't worked, what our options going for to improve those. so starting with this will give a short answer what i think the previous efforts haven't worked and that's because the implicit assumption behind these programs that most of it not all the foreclosures are result of predatory lending for exporting

arms is false. the simple truth is the vast majority of mortgage defaults are being driven by the same factors that have juergen is a generally negative equity position on the part of a homeowner with a live event generally most often a job loss. or reduction of earnings and some other point so i would emphasize until both of these components negative equity and -- in come shop are interested in foreclosures will remain at very high levels. i would note to piven shop alone with the town a driver of the faults we would observe most occurred at reset on interest rates but we do not see that, what we see is vast majority of the faults occurring long before reset. obviously the high level of foreclosures have left us frustrated. i think we need to start with asking ourselves if these need to be grounded in solid unbiased analysis and i would want to reiterate and emphasize some of the points which is to gauge the success we need to have a reasonable baseline. i don't believe we have any baseline to establish whether

treasury is doing a good or bad job really and i think if you look at the promises that treasury has made this kind of important to conclude there either making the numbers up or don't have a sense of their metrics are so important part of this is treasury needs to put out metrics upon which we can measure their performance and now whether they're doing a good or bad job. i think it's also essential that treasury put out in front of boa clear analysis of the cost and benefits of this program here if the full 75 billion is spent and if we end up which i expected maybe we will be on the track to modifications of 200,000, if we're lucky that assistance will mean we will spend almost $400,000 per permit modification which is more than twice the median home value so we need to make sure this money is going affectively. before proposals i think we need to start from the clearest reality that almost half of a

50% of foreclosures today are driven by job loss. absolutely no way can adjust the foreclosure situations without addressing this so i would say the most significant thing we could do is try to find a way to foster an environment conducive to private sector job creation and the foreclosure problem will follow that. in addition an increase to focus not simply on homeowners and foreclosure but those who are potentially at risk of foreclosure. for instance i will not about 4 million of the jobs have been lost in this recession have been what are called mass layoffs. mass layoffs present a double shock to our household, not only the loss of your home but to also take a loss to the housing market because of a very big shock to the labor market but as damaging as mass layoffs could be they have won it manages the department of labor collect statistics on them and reports them because their loss of require employees receive notice. so in this important and prevention to help them before they actually hit foreclosure because we know these mass

layoffs are coming. but despite that connection there is almost no coordination between hud and the department of labor so i encourage hud to partners of that they're pretty dollars we have spent in counseling funds can be focused on those workers at the time they receive notice of a layoff because we know they're going to have a high probability six or nine months later is when they will give financial trouble. i would also emphasize we do need to approach this as a former tree ossian my mind we need to put resources who needed the most. several of the program such as those aimed at not have families and foreclosure but simply those who cannot refinance because they're under water should be ended in -- focus on families who donated so in concluding i want to emphasize very strongly we need to do something about the underlying causes and the underlying causes are not arms, they are the employment market,

negative equity and that is to be the focus of this. thank you and i look forward to your questions. >> thank you dr. calabria. mr. taylor. >> morning chairman, ranking member, and distinguished members. my name is john taylor, president of the national community reinvestment coalition and i come to from the front lines of americans foreclosure crisis to tell you the battle is being lost. our economy will continue to be dragged down by these mounting foreclosures if immediate changes not instituted. the federal government's response to the foreclosure crisis comes into forms, hamp home ownership -- home affordable modification program, and the home affordable refinance program. the federal dermas response will improvement is simply failing to make a difference. the goal of hand and heart was to help by million facing foreclosure. how many have they held today?

hamp modified the total of 170,000 permanent loans and harp refinance 190,000 permanent one sell a total of all the five million-plus folks facing foreclosure the government and the total length has done for him desisted thousand permanent modifications and refinances. now consider that just last month we had over 300,000 foreclosure filings alone. in 2009 for the year we had 2.8 million foreclosure filings alone has of that year so when you consider a number like three to 60,000 been modified and refinance you understand what we're saying it's a failure. two points also, according to inspector general special ferocity the treasury department under its current plan will spend 22 billion of this of a 5 billion committed to the hamp program. why sitting on the fun is beyond

belief. as fort harp at 99 percent of the refinancing with less than one-half of 5% meaning they really aren't helping people but helping people were floating on the water. the key to the crisis that the chairman plenitude i want to finance to the members these keys represents a homa, an individual home. every single key represents a family that's losing their home town these keys are just what will happen while we have this hearing. these keys represent 1635 families across america who will lose their homes to us while we sit here talking about one is to be done and let me show you what fannie mae and freddie mac -- the federal derrin it is going to do through the hamp program during the same time. these are the amounts of homes, there are going to help carry out of this lot. that is the entire hamp during

this, all these houses, they're going to be lost and this is what the hamp program will help. let's give the government more credit, what will they do with this before refinancing, the friends at fannie mae and freddie mac. here's what they're going to do in that same time. for the same group of people. if you think this is success than continue the way things are but i can tell you this, regardless of how you do this, we spent trillions and wall street, this is a trickle for mainstream. in and whether you think with a look at this crisis and say i know some members of congress are going to say some of the homeowners bit off more than they can chew and others will say there are a lot of repeople and lenders and brokers looking for a quick feet, let's be clear about two things -- first, subprime lending became the norm for the mortgage industry and

that's the kind of loan that was made to anybody the subprime lending became the norm for the mortgage industry, banks would not have made these loans seven or eight years ago. they simply would not be the norm. subprime was knocked, it was an exception to what the industry did in this became the norm. then this congress in 1994 told the federal reserve to fix it, this issue on the air and deceptive rules and practices that prohibit the kind of activities that land people in this including people who are fighting off more than they can to end all this the bank would have said you can't afford this but because you can get a fee you can get money quick money because it's being guaranteed by paul saint by securitized year that this is what happened. this industry ran amok and the federal reserve did not respond to the crisis until july of 2008 when it finally long after the bombs, they have rotted, the roof fell in the long after

that, they finally issued rules of unfair and deceptive practices that would have prevented this kind of a system. second, for those who thank you know, buyer beware. i got mine, good luck to those, let me just say this. everybody has a dog in this hunt. when it comes to these foreclosures, every foreclosure reduces the value of their neighbor's property. millions of foreclosures cause job loss reduction in tax revenue with dragging down the american economy. foreclosures reduce all homeowner's equity and for many significant portion of their retirement savings. over $7 trillion of wealth loss by american households. so let me -- i'm out of time mr. chairman so i can start now and talk will about the studies, i wanted to make a couple recommendation and is obviously the committee's goal. >> you have an opportunity to do so and the question and answer i'm certain. thank you for your testimony.

levy began mr. barofsky en mr. dodaro, what do you really see here as the problem? the fact that we've only been able to do less than 200,000 modifications. what is the problem? and there are $75 billion i think allocated, 50 and then 25, i think 75. so what is the problem? people are losing -- when i looked at the keys and knowing the fact represent people, they represent folks who poured their hearts into their homes, save and then all of a sudden now they are asked to leave because they missed payments on their home. there are good people, people that want to do right. what do you think there needs to be done that's not been done? >> mr. chairman, what we found in not on it is part of it is doing a program like this is

very retail oriented, on an individual basis and on treasury set this up with a outsourced to the mortgage servicers. one of the problems we have heard and i know in revealing mr. dodaro testimony as well is the lack of planning apprentice. almost a ready fire same type of approach where the constant changes in guidance and documentation requirements and yesterday and other guidance change came down. it's in how the rule change, is good for the program but it will require the services to once again reset their systems, reset their procedures and if there had been or planning a bronze the servicers wouldn't have been constantly having to react to the changes in circumstances and the emphasis on verbal modifications so what happened was that infrastructure was not quite in place and then got overwhelmed by constant changes and lack of adequate planning of front that has created this a

tremendous backlog and in efficiencies. we have heard reports about servicers to lose borrowers paperwork. .. and we read about how you you can see seven or eight times borrowers sending in the paperwork. and one servicer explained to us that it was because they were so overwhelmed, because of the constant changes to their systems, that they hired a vendor and the vendor lost all the documents. that's not in any way to remove responsibility from the servicers, that just wasn't the focus of our report. but i think one of the contributions to why this has been so slow to get off the ground and why it's been so in-efficient is this lack of planning. >> i would add a couple points. frs i would underscore the fact that there's been a number of program changes, so the program hasn't been stable. for example, last summer treasury initially mentioned that it would be okay to approve trial modifications based upon

stated income as opposed to having documentation and verification of the income of the borrowers. then subsequently they changed that guidance and now before trial modifications, you need to have substantiated documentation. the other point and the recommendation we made last july was that you needed program metrics. there's in standard guidance about when the ser investigationers have to contact the bore roer, whether it's 30 days after they're delinquent or 06 days. you need some standards. how quickly should they respond to telephone calls, how quickly should they process the information. all these issues in terms of how the process should proceed. how did they handle complaints. none of these things are yet standardized where you could hold the servicers accountable. and as i mentioned, we made a recommendation last july that they have somealties for those

comply with the requiremen >> secondly, they're having difficulty a number of cases from the servicers we talked with of getting income verification from borrowers. and that's taking some additional time. they have forestalled making decision on some of the trial modifications. the other issue is these other programs which are tended to deal with some of the the negative equity issues like the hardest hit fund hasn't been started yet. second lien holder program hasn't been started yet. so there were some problems with stability and the first program out of the chute for the first link holder won and these other programs have been brought on line yet even though it's been a year into the program. so with those activities, we think you'll see a better outcome but they need to be managed properly. >> so you don't think it's a lack of money? >> i think there's plenty of money.

36.7 billion that they've committed to the hamp program. 58 million has been spent at the end of edward. there's plenty of money. it's not a question of lack of funding. it's a question of making sure you have the commitment of the servicers, the treasury has enough people to accurately manage the program. and that this process and means to hold people accountable for moving forward. and they are not there yet. >> my time has expired i yield five minutes to the gentleman of california. ranking member isa. >> thank you, mr. chairman. to begin i will share just one example of the many i've received. this one comes from a mr. paul who was involved in a trial loan modifications. he has submitted and received approval on the first verbally and then canceled based on a rule change and then in writing and canceled based on some rule

that changed. is now being asked, after the loss as applications twice, to fill out yet a third one. now he happens to be a wamu chase applicant. the survey were going to hear more today about the problems of countrywide, a defunct company that dfa is trying to act on behalf of the acquisition. let me try to be a businessman for a moment. 10 years removed. but let's get to the core of what you have seen, if it doesn't work i read your reports. they are very good. but they tell us that the system at present using is not going to work any better, in spite of that curve under the current situation. 1.3 million people were given hope, 170,000 were given loans. the delta between hope and alone is so great as to be a misery

inflicted by the government and their own program. i think we can all agree that that's not acceptable. so let me just run through, and others that have familiar with this, can win. as i said in my opening statement, if i went out to buy a home today, i would go for preapproval. it would take a matter of days or weeks. i would then have an amount of money based on documentation that i would qualify for. i would look at home that i wanted to buy, let's assume it's my own home and it's in foreclosure. and i will have it appraised, independent and it would come up with an appraisal within days. none of that has changed from the boom era to today. why in the world are we not discussing a change that says, look, anyone can preapproved you for a loan. anyone can qualify into the assessment of the voucher. and at that point, the preapproval process is over and application is submitted with knowledge of what you can

afford, and knowledge what the home is worth. and the system worked for years, relatively well, with a matter of days between the applicants desire and those to be met. can you comment on what are not talking about the change to that system today? and mr. dodaro, i will start with you because you talk about refilling the backlog. i would propose that the worst thing in the world is to have more people into a system that takes six, nine months, or more, to get through while they had this period of uncertainty. >> well, first of all, the mortgage alternative program the treasure has announced but not yet implemented is meant to do with more up front decisions about whether or not there's even a prospect that a trial modifications exist. and if not, you know, move to a short cell type arrangement or other vehicle to help create a smooth exit strategies like we're only talking about this program because if we continue

what we're doing that has failed, then only insanity explained why we would continue doing what we know won't work. >> well, i think in terms of making sure that the program has a fair opportunity it needed to be set up to have some stability to be managed properly. and i still think that if treasury proceeds, they will have to be been decisions made. spoke i'm going to cut you off. because that's exactly business issues around you. i've gotten better from you many times but in this case, mr. barofsky, i want to move to you because your report told us -- we've had enough time to see a trend. and people have suffered for a year under a program that isn't working and is unlikely to work dramatically better. would you give us your comments on those changes or others that you want us to feature? >> we're talking here about from the structural problems from the services. i think it's getting better. and that's the good news. this whole idea of verbal

modifications and, which i think is such a source of so many of the problems. >> we put into agenda front and without hope coming out the back stomach to flood the system in the overcapacity, thankfully that's going to be done. those have been, treasure has changed on that one. and that i think will be very helpful to increase the conversion rate. i think these structural issues, do a final issue guidance to proceed to the various problems. >> were going to ask a question and just a few minutes. >> there's good news that these can be adjusted. i think the metrics which are so important as mr. dodaro recommended in july and we we emphasize today so you can have accountability and make changes to those benchmarks and those goals are important. but the third potential problem is redefault. and that treasury has not shown a willingness to reconsider or re-examine. because ultimately this program will not be successful. >> thank you. the other two just want to climb and quickly if the chairman will

indulge. >> i think the answer is very much in your opening remarks when you mentioned the bank of america is about to to 45,000 principle right after they are encouraged by state ag by state ag's and never used the word encourage loosely. but the point is that is what will make the difference at the end of the day. in defense of treasury, i will say that on paper the plan looks good, but the problem is it's voluntary. and unless and until we have something like what we propose to secretary geithner and secretary paulson, to secretary paulson in february of 2008, you must have mandatory compliance in this program. you're not going to get the principal -- >> let me. >> no may take you to difference. >> okay. thank you very much. thank you, mr. chairman. >> and i chilled five minutes to the gentleman from maryland, congressman coming.

>> thank you very much. i think about with what all of you are saying. we have two people in my office that norman do foreclosure prevention. that's all we do. and it's a big problem. mr. barofsky, what, if anything, presents a lender from deciding midway through the hamp process that the $1000 or whatever might be incentive, payment is not worth the company's resources and just a the heck with it? the reason i'm trying to figure out how do we get to this effectiveness and efficiency? because it seems like we have a program here which we want to work. we think should work. but when we scratch the surface, it's nothing -- it's not working. so we got the money, but we're not spending the money. and mr. calabria said it will cost us, it's costing us

$400,000, thus the active because that means if we spent all the money. but we aren't spending. do we need some kind of different carriage? do we need some type of stick? >> i think to answer your question about the midstream change of harp, it gets to the central point. under the rules, the service or once they start a contract they run the net and go for to modify the mortgage. how do we make sure that they follow those rules? right now freddie mac has signed up to be the compliance agent that our office is about to do an audit. about to announce an audit into compliance. but that will be one of the method which is a vigorous and i think it's very important to have a compliance regimen in place. one of the problems the gao has

pointed out, i'd want to speak for them, is it's taken a while just to get that compliant shop up and running and going to see how effective it is. >> mr. dodaro, other than your office with mr. barofsky's office, where is there, is there any other oversight, and as we know freddie mac is the compliance agent or hamp. has freddie mac met its responsible is in that role? and what about within treasury, have sufficient resources been out here to effectively administer and monitor the program? >> one of the recommendations we made back in july last year was that treasury look at making a determination whether it has the accurate enough resources on board to implement the program. we still think they need to be able to do that. in fact, they went from reduce the number of people that they've had on place from 36 to

29. the only have 27 of the 29 position still. so we still think they need to look at whether or not they have enough people in order to deal to do. we do think there needs to be an overall compliance program put in place that's really not fair that as mr. barofsky pointed out, we're going to continue to follow that up. but really, the oversight is really coming from our office and mr. barofsky's office, needs to come from treasury over the services. and that's why we've encouraged them to put their system in place to ensure compliance. >> mr. taylor, the ncrc has released results of a survey of homeowners seeking assistance of what foreclosure -- what were you looking for in the survey? can you share some of your findings? i understand african-american folks were less likely to be able -- to benefit, less likely to benefit from this program.

can you give us any, should any light on that? >> we were trying to look at the frontline of what was really transpired from people. so we went to 29 counseling agencies around the country, not the entire country but the folks we do work. >> h.r. michaels because it looks like it's on. how about now? >> it's a close as issue. it must be one with the mic. >> one with the my, okay. [laughter] >> can i get the time back that i might have -- so what we discovered was even to the minimum amount that the program is working, that if you're an african-american, your 50% less likely to get a modification under this program. which really is -- we also discovered that if you're at 50 or older and many people looking at heading toward retirement,

many people who are indeed classified as seniors, 50 percent of them are going to also have very -- have great difficulty in getting modification, a permanent modification. not only is the program really just not making the dent in the problem. it's not really being administered in the way that is fair across the board spirit i see my time is up. thank you, mr. chairman. >> thank the gentleman from maryland. give five minutes to the joan from ohio. >> thank you, mr. chairman. this thing is a mess. mr. barofsky indicated in his opening comments that it's tough to have to figure out what the exact goal is. i learned a long time ago you can get anywhere if you don't know where you're going and you have to have a defined goal you are trying to achieve without changing metrics. we've had the promise or the hope of the 4 million people getting their mortgage modified.

and, of course, the redefault problem that's been talked about for those who actually get, 40% are likely to default. a total mess. i want to go to mr. calabria? you said it's tough to pay a mortgage if you don't have a job. that's what this in large part boils down to. so we can have come we can continue to have this big government oriented approach, big spending, big regulation to our economic concerns out there. or more frankly my humble opinion, we can get back to create a framework and environment that is conducive to economic growth, actually fosters job creation in the private sector. and i would argue does not create policies that don't create uncertainty out there for the small business owner and the people actually create jobs. my question is a general one to you. what is congress doing right, in

fostering a framework and a context for economic growth and jobs creation to take place in the private sector? what in fact is congress -- we have a lot of things going wrong. but general question on what we can do to get to the heart of this. because again and tell you have a job it's tough to make the mortgage payment. >> i would agree and emphasize, i would say as well to touch of the last question, we certainly have seen during this recession that african-americans have been hit harder in terms of labor market than anybody else. and certainly this is part of the reason it explains why the rates are different because the hamp program does not help you if you lost her job. and it does not deal. that needs to be rethought in that regard. i would say as a broad measure, private sector needs to have some certainty to be able to plan, so despite whatever one might think about any set of

rules or legislation, you need to have a set of rules so that the private sector can plan around them. and i think many businessmen would probably tell you that even a bad set of rules that they know they can play with is better than having rules that change often on. so my own perspective, whether, whatever anyone thinks about the recently passed health care, at least it's done. and that's something the private sector can move forward with an plan around. i do think we need to get our situation in terms of our fiscal situation in order. in a small businessman today has to factor higher taxes into his future plans. that's something that i think we need a path going forward on. i think we also need to find ways to get banks to lend again in a serious way. and this is i think one of the perverse implications of where monetary policy and fiscal policy have worked against us. normally the area of record low interest rates help create

businesses, but in this environment banks are essential able to borrow at nothing, put it in treasury bills for three, three and a half%. that's a very large interest-rate margin for banks, risk-free. if they are doing that they have no incentive to lead to the private sector. part of that is they're trying to make these returns cover up the losses they have on the balance sheet. i think we need to be more aggressive in terms of the bank regulators and making banks actually recognize losses on their balance sheets. we've got to it was probably have a trillion -- >> let me ask this. do you think would be better off seven not having the program? do you think the default home program the problems we've seen the lack of transparency, the lack of a kurd defined goal, everything we've seen over the last year, do you think we would be better off for letting the market and leading, as the ranking member put out in his opening statement, letting banks work with their homeowner, the service or work with a homeowner

or the bank lead institution and work it out amongst themselves was the heavy hand of government coming in? >> i would say as an overall shortage of that is given how few people have been held relative to the universe of it, i think is probably done more harm than good. and that you have encouraged people to, for instance, is on what i hear sometimes people were encouraged in order to get to the front of the lunch stop paying your mortgage. that's going to get your credit so i think some of this you really encouraging probably more harm than good. i will lay out my bias and my perspective is i think taking -- >> i wheeled the gym and an additional minute. >> throwing the baby out with the bathwater here. look, to say it is done more harm than good is ludicrous. it simply hasn't been effective. and also at to start the premise that while the problem is unemployment and lack of equity as he puts it, that's why we

have these foreclosures. it's kind of like saying the house, why is the house gone? it burned out there to stop them without level of thinking. why did it burn down? we have on upon a lack of equity because of a massive foreclosure malfeasance lending practices that put people in unsustainable mortgages. and to reverse that we've got to address that first cleaned it up. but also understand that 8 million american families are not wrong, congressman. 8 million american families didn't set out to put themselves in a malfeasance loan. >> i'm not saying that. >> its early sounds like a. >> i'm using a program that lacks accountability like this one does an extent false hope to people, there is people or try to help is a program that had serious flaws and failures here i want to do one less question if i can in my last minute. why do you think treasure is reluctant, was this just into having a report, in the last

thing we had reluctant to look at the underlying loan to determine if some of the fraudulent things were there in the original loan note, why is treasury reluctant to estimate that suggesting it in your last report? >> as i have explained it, it sort of akin to a resource issue from their perspective. they believe that tracking the original loan, again, this is the explanation they provided. making the original loan file and of the original loan application would be very resource intensive. these mortgages are sold and resold in result and result. and, therefore, they claim that it would be very difficult to obtain the original mortgage file. >> the gentleman's time has expired. and now yield to the congressman from massachusetts. is not a. i now yield to ms. norton of d.c. >> thank you, mr. chairman.

i was daunted and amazed, mr. calabria, notion of the middle of the crisis that have no programs and to take a program where we are essentially dealing with and, not only anticipated, but unprecedented crisis. and everybody knows we are learning as we go along. because we have never done it before. so the notion of saying well, so, leave everybody out there as my friend on the other side, it has blow my mind. i have a question here because -- >> will the gentle a yield? >> a generally will not yield that she only has a few minutes. you had your time. i'm particularly concerned about those, that a very particular he at risk and a program that may need mr. calabria's notion of rather not having that habit.

that you can just leave people out there on their own. when even government can't figure out what to do. this notion about 50% -- we know that 50 percent of the homes in foreclosure had a cycling on the. so now you really have trouble here. a year ago treasury announced okay, we understand and are learning curve and they institute a new component of hamp, the homeowners with multiple links. on their property. now, these figures need to be explained. only three servicers have signed up. we kept that from happening. no second lanes have been modified. that's a lean -- year into the program. that's beyond failure. beyond even fixing. they need to be totally

rethought. although i do not buy into the notion that proper hands and don't do anything. i want to ask mr. barofsky, mr. dodaro and educator in particular, first to get at the root cause. why did this program get off the ground in the first place as a component of hamp? and without such a program, is there anyway to help these people who have second lanes and maybe in the greatest of all. mr. barofsky, why don't we start with you? >> sure. i think that is good news that in the last week they have signed up to additional -- >> what happened in the last week that somebody got religion their? spent we did provide a draft on of a report about two weeks ago, although i think something has been in the works. but your frustration, we share your frustration as we detail in our report. you know, the original draft was one and it's good to see that they have signed three of the

biggest players in the market. but it has been a year since the details of the idea of modifying second loans that it is such an important part of this program. >> was at the lack of people signing up that kept it from getting off the ground, were more needed to make that happen? >> perhaps. we have not yet audited the second lane program. it is something we want to let it get off the ground before we did so. those are very good questions that need to be answered. >> mr. dodaro? >> first of all treasury had not established at a date for when they're going to start the program. and a lot of program details aren't very clear yet. so it goes to the question of -- >> after a year they aren't very clear? >> that's the status of it and that's why we think the program hasn't gotten off running and also the question, the second lien program i think is to be established in addition to what they're doing as well as doing with negative equity, which is the hardest hit housing fund

that they are just now starting to get off the ground in five states. so you need multiple approaches to deal with this problem. all the homeowners aren't in the same situation. >> some are employed for example, and have exactly. summer going down the drain. >> and treasure needs all these different programs to deal with the very situations. they need to get up and running. this is why we suggested they look at how many people they had on staff in order to carry out all these programs. but the basic answer to your question is and to the details are established, services are going to be somewhat reluctant, understandably, to sign up for the program. >> mr. daly? >> under the hit program all the major vendors have signed up and purchased it in this program. there is a invention to do write downs as well as printable right has been we know it's not working. the fundamental reason it's not

working is because its baltic. of all these lenders to they are waiting for you, the u.s. government and the taxpayer to bail them out. and they are waiting for the taxpayer to pay for everything here, and what they are to be doing is at least meeting us halfway. so for that to happen and has to be individually. treasure has to say we're no longer going to fall to produce a patient in this program. everybody is going to do this to give lefties the authority at the top which allows treasury to purchase the loans, or the authority under eminent domain, go and get the love. right now as we sit here most of the problematic loans actually are already controlled by the government. can you save fannie mae and freddie mac? those are no longer government funded enterprises. those are government enterprises. that's where the majority of these loans now said. come on the internet refinance millions of these loans. and if they don't they stand to lose somewhere between $40,600,000,000,000 over the course of the next several years if they don't refinance debt. but you have the capability,

this congress, this government a mandate and if they determine and fix those loans and mandate these wall street and big banks were taking money from the american taxpayer and from this congress, and tell them they are going to participate in this program. it's not that the program design is bad. is the participation is bad. >> the gentlewoman's time has expired. i yield five minutes to the gentleman from utah. >> thank you, mr. chairman, and thank you all for being here. i do appreciate it. mr. dodaro, i'd like to go back to your july 20 recommendations that were made, specific to the personnel. one of the concerns in treasury is lack of leadership. i just want to make sure i understand this right. the president goes out and announces his program in february, march, and they did not hire a chief homeownership preservation officer until november. is that right?

>> yes, that's correct. one of our recommendations you point out was to get ahead of that office establish. >> i think one of the things we want to have a responsibility on, have such an important program. you have people bleeding over there. the president stands up before the american people as this is going to happen. you can even hire somebody until november? my understanding was they made a recommendation they need 36 full-time equivalents into the program, and then they modify that and said no, we only need 29. we need less resources, not more resources. but still haven't filled out 29 positions, is that right? >> that's correct. >> you know, i just don't understand it. we are all these complaints about this program. that taxpayers have set aside tens of billions of dollars, and we can't even find 29 people to administer the program? it takes the administration 10 months to hire a leader over there? that's inexcusable and i hope

will be administered in accountable for that. let me go to the second part of my questioning here. i'm hearing a lot of numbers and i'm not understand the math. clearly the metrics have not been set up at the beginning. we're dealing with a very confusing situation does the leadership is not in place and didn't set these metrics up. help me understand here. we've only spent $58 million of the 75 billion, is that right? >> that's correct, because payments are made until the trial modifications become permanent. and there's a one year anniversary of the trial modifications. then everybody starts getting paid. >> so then they get paid at that point. okay. if you kind of do the math backwards, okay. that makes much more sense that i appreciate the. if staff could put up a slide five. we have that. this is a letter of timothy geithner, chairman towns showing the overdue, vacation. there are 300 -- 536,084,

vacations that have been active for months or more akin to an 87,881, vacations that have been active six months or more. mr. barofsky, what's causing this backlog? >> verbal modification. this is the result of not getting fully documented income verification, full documents at the outset of the mortgage modification process. that decision is what drove up the number in gao's chart their of the spica getting modification, but without being being that the agitation of what you see them like wishing, five, six months. it takes that long for the documentation. sometimes the documentation never will come, there could come because the documents won't match up with the verbal numbers. i think that's one of the primary reasons why you see those types of backlog spirit my tiny sure. we have boats. we need more information if we

ferret this out or. and mr. dodaro, this chart here, i'm looking at the source but at the source to gets its cumulative figures taking from january 10 hamp service or performance report monthly figures our gao calculate using kenya to figures. if it is committed while the trial modifications start to go down? if you could help clarify that for me. i see the permanent modifications continue to go but if they are truly committed numbers i do understand what any number would ever come down. >> monthly figures, okay. you can clarify for that for me. it is tightly back from the cumulative figures but it is on a monthly basis of we can see the past that and i think, you know, the point being even though try modification are going down slightly, because now they have moved back to documenting and come up that you may see a higher percentage of conversions to permanent

modifications. but we will have to wait and see. >> there was an assertion here that african-americans are 50% less likely that why is that? what is happening here? why would that happen? i can't remember who brought that up in the prior. [inaudible] spent i did. you want me to answer? >> yes. >> they start out with disproportionately bad loans. the subprime high-cost lenders really targeted african-american and latino neighborhoods. let me just say on here -- >> i would think the conversion would be -- >> the gentleman's time has expired. >> i understand. thank you, mr. chairman. spent and i yield to the gentlewoman from california. >> the question came up about african-americans. i would like to just let you know, in my district i am los

angeles 33rd, los angeles. i have 2400 cases of foreclosures in my district, because of this subprime market. they would say, well, how much do you make? and then they said, $3500. let's market up to 5000. and then the payment in a few months go up and they can't afford -- afford. this they lose their job on top of it. they played my district, particularly seniors and particularly those at the lowest end of the socioeconomic poll. and it is just one of those situations that is almost bordering on illegal. so we have a big problem, it in particularly in minority communities. because they are the ones that can find jobs if they lose their jobs first. now, with that being said, mr.

dodaro, according to the gao's in july 2009 report, as of the third quarter of 2009, more than half of all modified loans redefault and within six months. and i'm finding within my districdistrict of and it can be documented, we are trying to capitalize the banks, you know, too big to fail. they didn't get out, they didn't give the assistance to the homeowners that they should. however, in the hamp program only borrowers with high levels of household debt must agree to obtain debt counseling, and the treasury department is not adequately monitoring the requirement, despite the fact that financial literacy is critical to ensuring that the mistakes which led to the current economic crisis are not repeated. and it's not all on the part of

the homeowner. and so, what are the most common causes of redefault for hamp barbers, and what steps is treasury taken to prevent it? and should there be counseling for the borrower the four they signed on the dotted line? mr. dodaro? >> yes, of the 170,000 permanent modifications that have been made under the oeste lien holder program and hamp, 1473 have redefault did. so far. now, on the counseling issue, treasury requires borrowers over 55 percent for payment of their monthly income our gross income have to get council. but they are not following up and making sure that that counseling actually gets conducted. i'm very disappointed in their response to that area. they believe it's not

cost-effective for them and the services to do that. there are ways to do it more cost effectively through follow-up activities. i think this is a huge missed opportunity to deal with financial literacy, to deal with consumer education. and i hope that the treasury reconsiders and implements our recommendation. >> let me than address my next comment to mr. barofsky and, back to you, mr. dodaro. according to treasury estimates, up to half of all borrowers at the risk of foreclosure have second lanes on the property. and since having a second link and result in much higher or closure rates, treasury announced that secondly program on april the 28th 2009. however, in the past year only to servicers have enrolled in the program, and no say the

lanes have been modified. why has the to -- program not been effective this are and what more should the treasury department be doing to ensure the program successfully prevents foreclosures? >> on the secondly program, we think treasury needs to make all the specific requirements known that services know what they're signing up for. so we think that that will help move that program forward once that is done. >> you know what is very baffling to me, and i'm sure many of mind -- i will close with this -- my colors, how all this started. you know, i was sitting here when full some and for nike came to help, help, the houses on fire. and, you know, what do you do? you call 911 and you get somebody out there. we are 911 and we got somebody

out there to capitalize and so they could put out the fire, people could save their home. it has not happened. and i think the treasury is trying, but we still don't know, and the risks that were taken is being paid for either taxpayers, and the seniors and the uninformed people are the victims. i thank you, mr. chairman. i yield back the. >> ideal to the gentleman from missouri. >> thank you, mr. chairman. to sit here today, we're talking a program here that is well-intentioned. but it is poorly thought out, thought through, poorly administered. and some of the comments here, mr. brontë, need more planning up front. more stability. program has done more harm than good. mr. barofsky again, the voluminous paperwork cause delays. i think it's indicative of why we're seeing here and wondered

we asked the government to come in and help the jets the government is the one who can solve this problem. the lady from california talks about the houses on fire, you call 911. that's fine. you talk to the local fire department. you don't want. this is frustrating to me. as we sit here, mr. barofsky, in looking at something here that says the treasury has not much of the requirement that borrowers with high levels of household debt i think that counseling.ill try to rewrite their mortgages, that? why isn't the treasury -- is there some sort of enforcement provisions that will force them to start doing it now? what this just be blown off are forgot about like some of these other things we're talking about? >> i will defer to my colleague. >> all right. >> what treasury has told us,

consulted with the servicers and they think it would be too costly to track the provision. and i don't buy that as an acceptable answer. i think it should be followed up on. there should be cost effective ways to find out what the counseling is done or not. i think it is important, particularly if we're looking at trying to reduce the occurrences of redefault going forward to going to make sure that the borrowers are empowered with the best of information that is available to them to make informed decisions and choices. so i would hope, as i said, treasury reconsiders implements our recommendation. and if not, i would encourage the congress to make it mandatory. >> is that something that is included in the charges that the individual face here or do we pay for that? who pays for the counseling?

>> i'll have to get back to you with that. >> taipei for hud certified counselor. some of the banks pay for the counseling. i don't know the program, neighbor works of course is funded by this congress. they found a lot of the organizations. >> there are other outside sources to? they want to the. under the avenue e. seek required, whenever a person goes in for a modification, is supposed to be informed of the availability of counseling. the problem is in a survey which is a, the mr. shopping of 100 services, we found out that 80% are not told about it. >> my staff informs me that i'd pays for the counseling. >> all right. mr. cao very? >> my recollection is would probably appropriated 4,500,000,000 over this course of action for counseling.

so a significant amount of money out there and despite the characterization of my testimony saying do nothing, my testimony suggests that one of the things we do need to do is connect counseling to the labor market that i talk to my testimony that mass layoffs have very large effects, disproportionate effects on housing market because someone loses their job and there is a big impact on the housing market. one thing is connecting counselors to the employers so that the last day of work where you've got 50 people on the factory floor, you can give them financial assistance, counseling, literacy right then and there because you know if you lose your job in a mass layoff you're likely six months, and i must the road to get into financial trouble. we cannot just sort of way the horse at the barn door. you need to get people on the funny before they get into financial trouble and to avoid this. >> you maybe comment about $400,000 per modification. can you explain that figure? >> let me say that was the

assumption in the year we spent a 75 billion potential to help we spend a lot more effectively. so that was simply, this is how much we have appropriated essentially, divided by how many people were likely to help. >> which anticipate helping? >> that i anticipate helping. >> they would be cheaper to write them a check, wouldn't? >> cheaper to buy them out. >> imagine that. mr. taylor you mentioned something a minute ago, you want to banks to meet you halfway. can you explain that comment? >> you know, there are a lot of clean hands in this whole debacle. certainly the role that wall street played cannot be overstated. so the solution to this must be a principal right now program. the answer to solving this crisis is we got to get the monthly payments down. interest alone is not working. you hard representative is a talk about -- excuse me. talk about the bank of america's initiative. i know that citibank is on the

other banks in senator poe folio 90, wells. on the loans they have a portfolio we're beginning to see some principal right now. that's it's going to put people in a position. those were still working to be able to continue to pay on their mortgage. so i think without that kind of initiative, i don't see that we are going to make a lot of progress. >> the gentleman's time has expired. >> who foot the bill for that? >> who foot the bill is the folks who kind of greatest crisis in the first place. wall street and big banks reduce the printable. the government can step in for the ballot paper get it down to some reasonable amount where you can keep the families and the house and eventually the equity appreciation over time will bring value back to the homeowner. so it's the industry stepping up and matching at least the governments initiative here. >> the gentleman's time has expired and i yield to the gentlewoman from california.

>> well, i have a constituent whose parents are in the brink of losing their home to an auction and less than a week. they applied in the hamp plan for three months and entered into that with jpmorgan chase. they submitted their payments time each month, but during that time. they hardly received any feedback on what was going on, any status updates or anything. and then finally five months later they received a letter from chase indicating that they were denied and that the house was going to be auctioned off in 30 days, even though they had faithfully made their payments. the system has to be better than this. here they were put on the string for five months and now it's going to be auctioned off almost immediately. i'm concerned about the lack of notice, and also about the lack of an appeal process. and with the introduction of

borrowers notice, homeowners are unable to see for modification denial. i like to ask mr. taylor, does introduction of barber notices do enough to ensure that hamp eligible notices? >> i think would be helpful. i wouldn't say that it does enough. and i think what you're really getting at, and interestingly enough from both sides of the aisle we heard examples of people who are trying to avoid a foreclosure, are still working, going to the hamp program and then being in the process and still not having any success. so like the example used it, i hate to say, it's not very uncommon but let's really look at where the problem lies. the treasure would love to see those loans become permanent modification. but the service or and the lender has to agree to that. so if somebody feels on the applications and settings all

the information, applies a modification and three months go by, five months go by and it looks that everything is fine and they get a foreclosure notice. again, not uncommon. if we can't get the service or and the loan, the bank itself to agree to make that modification, treasury loses as well as the rest of us. so again it's a voluntary participation program. there has to be a mandatory participation. so that the lender is a sinker going i would just in this along long enough to see whether maybe equity grows in the property, maybe foreclosure is a better option. and for most banks it isn't, but maybe i will just postpone the foreclosure process on this and see if i have a better deal at the end. it needs to be like i have to do this because it's now mandatory. we will get more folks. this doesn't get to the unemployment but there are solutions for unemployment, including what barney frank has

offered and i really urge members of this committee to take a look at the bill that he is put forward to help people are unemployment, that will help them temporarily, remain in the house either to find work or to be able to refinance or to sell their home. so i don't think the notification is enough. i think it will be helpful. i think we could let mandatory participation in this program so we don't have these three, five, six months of string people along only to find that they will still foreclosure anyway. >> ya? >> right now there is no formal appeal process. we believe one is the. there needs to be due process available to people to be able to do it, and you have some standards and remedies for people that are compliant with the requirement. so we're looking at that right now. >> i appreciate that. what recourse to homeowners have if they believe they were unfairly denied a trial or a modification before january 1,

2010? >> very little. >> that's it then. and mr. taylor, can you expand on the unemployed situation? i know in one of the recommendations you talk about the loan program for the unemployed. >> right. mr. calabria is right, you know, one of the major -- i'm not going to sit more than. you have to watch it on the video. but the fact of the matter is that -- i lost my train of thought. sorry about that. >> loan program for the unemployed and. >> the fact of the matter is it is the single growing, single most number one reason we're seeing most of the foreclosures. there are alternatives. citibank, for example, has proposed a six-month moratorium,

what they call unemployment assist which would actually allow the people are unemployment to pay 31 percent of the unemployment check towards their monthly costs for six months. this is a pretty generous, i think, helpful thing that out to be standard in the industry so that people have time to find work or have time to find a way out of that home to be able to sell. barney frank and his committee has proposed, i don't have the build number in front of me, but he says a program that is going to assist people financially to be able to stay in their home for a bit of time again where they can either find gainful employment or be able to sell their home. but both of those i think are reasonable rational solutions to try to deal with a growing contribution to the unemployment problem has on the foreclosure crisis. >> the gentleman from california is recognized. >> thank you, mr. chairman.

mr. calabria, i want to thank you. and a town that we keep hearing people need to be more bipartisan. you are very bipartisan by blending both present and past administrations. on this item. and i just in the spirit of bipartisan i think about is where to recognize wasn't just, mr. taylor, wall street. but we are really at fault, too, i think. the fact that you bipartisan effort here. you have one site feeling that we're going to push this almost as a social program and everybody own their house was going to a great social experiment. and those of us on the other side saying that home ownership is reflected in political activity, different involvement in community, whatever. i think democrats and republicans have a faulty. i guess our fault was the feeling that a good thing pushed too far is not a problem. and i think history has proven,

just as the consumer pushed too far, i think the clinical process and economic people that say you make money doing this by selling this product to this group, we just keep expanding the market. just by lowering the standard in the threshold. i think we're all at fault and get pulled into this. i think as greenspan said, who would have thought? my big question here is no is talking about a flipside on this. i'm hearing in san diego that there are people out there ready to buy and take these sales, take these loans over, take over the home, but because we are caught in the system that takes so long, there are massive amounts of market after that is not available for the free market to take over these debts. anybody got any answers there, any comment on that? we're not talking about, you know, there is the keep the person in the home can't figure out how to make them pay.

you pointed out, the greatest threat is jobs. what do you do with somebody who is not going to have a job in the next year? do you continue to carry this, and is this the way to go? or do we also get the other option that the person with the job who doesn't have a home would like to buy, take over the payments, isn't being allowed to access the market because is basically been frozen by this process. you had a comment about the? >> i think what we really need is we need to process is. we a process that is sustainable, they can fix it. but we need a process as john mentioned, your people who go to modifications, six months later it doesn't last. we don't do favors and keeping them in that situation. we are better off and trying to get that through the process. and lots of places in california it is cheaper to rent. and i would say it's not just me, dean baker, has made his argument that you're better off

to become renters because they pay twice as much. i do think you need a different process for people, there's no way they will be able to stay in that home and we should stop pretending. and for people who can and to take the money different track. i guess i was a as a general overall, i don't think we're doing the housing market if they were trying to blow the bubble back up at the best thing we could ultimately do is to let prices correct. people come into that market because one of the big problems with this is one of the incentives for the bank, for instance, in the present ideas and for the homeowner is not the house price today but house prices to more. even you get it right down to where there are the mortgages at the value of the house, if the house but he declined another 10 percent over the next year, then they are underwater again. we need to make sure these things work the first time rather than continuing to try to chase this. >> i don't know where to begin on this one, but let me first say we have 11 months of inventory, they can housing.

11 months of using normal, the economy is two or three months of they can housing. we are tiled full of housing. that is a viable and sensible option for many people. but remember, what let the market correct and put this more inventory out there. first off it kills the building industry. that's when things. that's one reason why that's such a high job loss. the second thing is remember that every one of these keys represents a family of household who thought they were getting into a feasible loan. less than 10 percent of the people who got these bad loans, less than 10% would two people getting new homes. most of the stuff was refinancing, or taking money out -- >> let me interrupt. you are right. a lot of this was, there was the market, it was sold as a way of making money. it was a way of this is a great investment. you and i know that doesn't exist in the foreseeable future.

>> all these other things. >> are we politically brave enough to say there's a lot of people that got into this looking to make a profit. that profit is not going to be out there, and the fact is it much more cost-effective for them to rent than to continue to grab for something that will never have the profit that they originally made. and basically cut losses, move forward and be ahead if they don't continue. on our we politically brave enough to admit that? >> i think the political bravery as also to recognize that there are millions of american families who are hard-working, blue collar families, who simply suffered from, for whatever reason you want to believe, what do you think the either bit off too much or whether the market gave them a loan they shouldn't have gotten. it doesn't matter. >> i think it's both. i think we can agree it's probably both. >> doesn't matter that we try to keep as many of these homeowners in their homes as possible, does

it matter to us as people, as members of congress, does it matter to the economy? is absolutely, the answer is yes. as we continue to watch these housing, and it undermines -- foreclosures mount and become >> i think they missed the point more rental properties the. i being told quite openly that available, we will continue to there are individuals who like watch a devaluation of property to get into this market, but values for all americans because of the way we are dragging this on. this gets back to this not getting answers. not being able to close it a yes or no in the line that the other option of being bought out of the whole is not be made available. it's the government programs, delay, but you're talking about mr. taylor asked leading to the other option we go into. . . witnesses today.

i have a little statement i want to make, but my question to all of you will be what would be your top recommendation to president obama and secretaries geithner and donovan to address stabilization and recovery in our housing market and banking system? so you made a lot of recommendations. i'm asking you to sort through them for me. but let me just make a comment that those wall street speculators who rigged our the speculators who raped our housing market to earn huge markets for a very long time to securitization got congress just what they want us. they've got us play with twigs when the force is burning and the perpetrators are still making huge profits. taking up seen bonuses and laughing all the way to their brokers and i have no doubt laughing at all of us. some of our colleagues are trying to make this a partisan issue. i don't look it that way. i am very critical of the mass of wall street investment houses

in cahoots with the federal reserve that led us this abyss. and our federal government was full of top-level appointees, over several administrations who came from those very same institutions making all the money. this crisis is due to a revolving door of influence peddling of extraordinary proportions. it goes back two decades regardless of who is president and regardless of who sat in this congress. wall street simply used his power with a vengeance and they still are. mr. taylor, i want to thank you for your testimony. you speak for the american people who have been harmed. you speak for the people of my district, your voice is very clear and it's very important one of the questions i have of you and then will open up to the other witnesses here, you produced the key is this

morning. and let me ask you this -- to your knowledge, could each family who had one of those keys, with the institution that financed their loan. a foreclosure proceeding be able to produce the original note to in that proceeding or only a copy or some sort of a facsimile of it? and what is your opinion about the legality of that in foreclosure proceedings? >> well, the courts have ruled that they do need to produce those documents, several state courts in several states and they ruled they need to produce a certificate of ownership and some of the as -- many of these five institutions have had difficulty doing that because -- well, here is a loan the new century made in coming years alone that option one made, years alone that america west made, here is a loan that countrywide made and it goes on and on, all these businesses which no longer exists and as

they sold off these things through this, you know, ponzi scheme involving wall street to move all this paper out from local communities and brokers and lenders, the certificate of ownership did not trail them. a just and moving the paper and profits and everybody taking these along the way. so generally if you or i were suing somebody for anything in we were claiming that, you know, i have the right and ownership over this we would have to produce something for the courts that, in fact, signifies that and the fact that they can't ought to stop the proceeding unless they're able to do that. >> why aren't our judges during that across the country? do they not know the law? >> why are they doing it? some are i'm happy to say in different circuits, but for those states where governors and elected officials looking to try to prevent the level of foreclosures the continue to rise in their congressional districts, they might want to send a letter to the judges to

inform them -- >> i hope you go address the national sheriffs association. i think there is a job that your organization can do to get this word out because i think we have to write back. with every weapon we have. there is a much time for the other panelists to a master at this point, but i very much would appreciate top recommendation you say to the president right now to redress the concerns you brought before us today. >> well, our adopted recommendation is re-examining the vulnerability 3-d false and i do think that's essential in treasury, they will not without doing so the program is going to be vulnerable to what where mortgages are even semipermanent modifications may drop brought with a total waste of taxpayer money and hiring some of the homeowners so reassessing in evaluating and coming up with ideas to address the vulnerabilities to read default would be the unanswered

recommendation. >> mr. barofsky, i would appreciate an evaluation of the home owners corporation, there are many asking to take a look at that and i hear which were sing about existing programs as a failure. we have to look at other structures that we need to recommend and i would be happy to get your knowledge if you're able to do that within your authority. >> i would say because economic circumstances are different in different parts of the countries, borrowers interim circumstances top recommendation for treasury is to institute the other assets of their program and secondly modification, mortgage alternative program, the hardest hit program which begins to deal with negative equity and deal with people who have lost their jobs so you need a range of alternatives and right now the only one is the second lien -- the first clean program and you need more options.

>> the gentleman's time has expired. the gentleman from north carolina is recognized for five minutes. >> thank you chairman, mr. barofsky, you're on it is very forthright. this is a familiar. this program is a failure and it's a waste of taxpayer dollars but there is interesting insights. what did you discover about this modification program? in terms of homeowners to get temporary modifications but then fell to get the permanente work out? >> we believe a lot of this is being -- one of the problems about three default and the reasons is treasury hasn't been collecting data, they will in 2010. but we believe one of the primary reasons was the absence of documented -- fully documented verification of income at the outset of the program. treasury is encouraging in order to meet certain milepost for trial modifications to encouraging the use modifications and i think that

has fueled a lot of what you're discussing. the reason why they're not converted and dropping out. >> so verbal modification, the stated in,. >> yes. >> which is i believe from the rhetoric of this administration which is exactly what got us into this with a subprime marketplaces, how much you make you're what ever you say you make and sell in essence the government policy has been able to take private sector subprime loans and make them public sector subprime bonds you're. >> there is a similarity to the lighter loans that i investigated as a prosecutor. >> very similar? >> similar in entering into the top portion of the program just on stated in town. it's not working now or then and the treasury has identified it's not working. as of april 15 they will no longer excepting verbal modifications poet was one of the driving causes of the low

numbers. >> you're audit also says that those that get a permanent workout have it is very high risk of default. >> we don't know what the risk is but we think is vulnerable for re defaults. there are several aspects of the program that make it all verbal and as a danger of this program has long term success. >> such as? >> for example, negative equity is one of the highs predictors' every defaults and the average hamp modification, the loan is under water and and as its left unaddressed along with the other factors there is the statistics show that -- equity can lead to high areas every default. also the amount of whether these payments will ultimately still be affordable. the percentages in the milestone account for other debt to, crushing credit-card debt and other debts that may modify payment of affordable and also the structure of the program is

we call them from the modifications but they aren't, the last for five years and then the interest rates start to restudy a lot like some of the subprime loans and we just give one example where within a couple years of the end of the program the payment can go up as much as 23% which again will put pressure on potential reader falls if the income doesn't go up in a commensurate amount. >> what did your audit find about treasury's pressure on servicers to modify these laws? >> we have one here responded that based on the public pressure that was the treasury exerting to increase from modification that they changed the way that they did business, they went from doing fully documented modifications to verbal. in the mr. dodaro testimony in gao, he can speak on this but it indicated similar types of patterns and i will defer to my colleague to explain that.

>> certainly. >> basically the ratio of high debt to end, is a predictor of three defaults and part of the requirements in the treasury was to get those particular borrowers with high ratios like that into counseling to help them understand the situation and this is one recommendation that we've made the treasury that they haven't yet implemented and we think it's important and really will help address as best as possible this question of trying to minimize the every defaults as long as well as having this mortgage alternative program available. so up front the decision made to going forward in that the trial modification doesn't make sense there's a smooth exit strategy for short sales or other purchases to move -- help of our work and get to allocated. >> that's not a part of current policy? >> the program has been in the works but not yet implemented. that program, the second lane

and the second on hardest-hit areas are not operational and dtv. >> thank you mr. chairman and thank you for your testimony. >> thank you. we will allow recognize this. of california for five minutes. >> thank you mr. chairman and thank you to all the witnesses. listening to this testimony is very discouraging. i think this program as a program of death by a thousand cuts. it has failed. it has failed miserably and unfortunately we are incapable of saying this was an experiment, it didn't work, let's try something else and we just hours later and more and more regulations, more and more elements to it. half of all the foreclosures and negative equity loans right now. half of them have already read defaulted, half of them have

second liens, and in this program we don't consider non mortgage debts as a factor in the modified payment. we're setting ourselves up for failure. the program doesn't work. now, on top of everything else is voluntary and let me give an example from my district. this is a home owner in daly city, he had an indymac loan of six and 9,000 with a 6.75% interest, a payment of $3,500 a month. he works at fed ex, had a steady job but they have reduced his hours. he lives and takes care of his 89 year-old mother, lives with her with a survivor of three breast cancers, he qualifies for making home affordable and has made all the trials planned payments on time confirmed delivery and contacts bite weekly die to make sure that they have everything they need and yet to they're still not converting his loan to a

permanent modification and they have set a date for sale of at home for april 7th. now that is a travesty. an absolute travesty. in i'm suggesting that we scrap of this program, put all of these people who are in foreclosure in a rental status in their home with the banks, create some kind of a lease with option to buy, take the money we've set aside for this program, subsidize the banks as necessary to keep them in their homes, with this out for a year are to come and see if we can create a means by which they not only continue to live in their homes but they can recreate some kind of equity in their homes moving forward. now that's just one idea of what there may be many and my question to all of you is, if this gentleman in daly city who is doing it right through senate provocation program who had made the payments on a hefty loan is

having his home put up for sale in a matter of weeks, how can we say this program has any positive effect at all? >> i thank you hit the nail right on the head that whether this program can be saved or a new program is to be instituted there has to be reevaluation and some reflection, the treasury is to take a look at why these problems are occurring. with the dangers are and make informed decisions and that's a lot of what we've been talking about today whether there is a refusal to reevaluate three default recommendation or something as simple as having goalposts. meaningful goals and measuring performance against those here because if you don't do that you can't have that type of self reflection that's all the assessing of how to fix so i think that the concerns you raised are similar to concerns we raised. treasury is going to need to take a good hard look at this

program and look at the concerns and decide if they want to continue this program if it's fixable or try something in the alternative. >> [inaudible] first, you need to explore other alternatives and we agree with that and we think some of the other alternatives treasury has been planning are viable and should be tried as well. but you have 800,000 people in these active gile modifications right now that need to be dealt with equitably, they entered into this in good faith and they need to be dealt with. they don't have appealed baja -- process and we think they need of the process. there needs to be good communication and there needs to be servicers help for compliance. we sort of set the motion and we can't abandon it without properly treating these people in this time, but union other alternative programs and certainly that means to be addressed. your idea among others need to

be explored. >> you're point about the appeal process is helpful to this constituent of mine but again the whole system is so arbitrary is voluntary and arbitrary and it's not working. so i can see real need to take care of those inter-island modifications but this gentleman is in the and his house is being sold from under him. >> all i can say is that's why we made recommendations to treasury last july to put these processes in place and to make sure there was compliance program with the providers. i'm not sure what the specifics are here, obviously but there needs to be a process in place and dealt with in a due process fashion and get good answers. they have a summer to go for help. there is a hot line now the call but that hasn't proven to always work effectively. >> the gentleman's time has retired -- expired. the gentleman from illinois

mr. davis for five minutes. >> thank you remind mr. chairman and i want to thank our witnesses. you know, coming from a large midwestern city with much of it being inner-city, i can't tell you the number of foreclosures that exists in many of the communities that i represent. but as i have listened to the testimony i was struck by the recommendations that the gentle lady from california made and i thank you would have been an excellent secretary of the treasury or at the very least a secretary of housing and urban development. that's because i believe in. it in -- three strongly in the concept that if you start with the false a promise to are going to arrive and a fall to conclusion. and i think many of the concepts in this program were faulty from the beginning and so it was

inevitable that it becomes the failure that people are expressing or that we're not experiencing any more success with it then what we are experiencing. i also don't believe that you can defend the indefensible that two simply get are going around and around and around in circles one lme ask mr. barofsky, who is the typical hamp participant, who is the typical homeowner facing foreclosure which tends to make use of the program? >> i'm not able to answer that question but i think that is a question that many have raised to congressional oversight panel raised in october report to and it goes to the question is this program designed, who is a design to help. is that the homeowner who signed up for a predatory alone with a

resetting option on that resets 28 or 9% and increased $3,000 a month or is it the hard-working family that perhaps had even a private fixed rate mortgage but lost their job and are unable to make necessary payments? but i think it's an important question. we have the media and information, how much this medium loan and was the medium interested in the median deduction but i don't think that's really what's your question is asking. >> are there caelian floors? i know people who got mortgages of $350,000 who earned a 65 or $70,000 a year. and, of course, for the sake of me i could not imagine how they managed to acquire that and the

question and is there any salvation for them to salvage whatever it is they put into this and get out of it to. mr. taylor, would you respond? >> yes,. and the average, let me just say the typical person going to the program is all ethnicities, mostly modest income, disproportionately older, older being 50 and older, and most with families with children. on your second question, -- >> the high mortgage -- >> yes sorry. the way the program is designed is to get to the housing costs down 231 percent of the household income, that's the

goal so the two methods for that too, is for the servicer and the lender to reduce the interest principle of both. the problem is most of what has occurred has been interest deduction and now and december not going to get far without principal reduction. the other alternative for the family you presented with some sort of a patient on foreclosure scenario where they have time to be able to either sell their home or to find additional employment which could ratchet up their income to handle that size mortgage but those other two methods available. >> when the prices hit, one of the recommendations that some of the community groups and people are really attempting to deal made it was that you try and keep people in a property because if you actually foreclose on its everybody loses in that transaction.

that is the property loses its value whatever value and had relatively short time and many of the communities i represent somebody moves out of one in two weeks it is decimated. i mean, whatever was there is gone. so this question of working out agreements where people might be able to rent until they reached the point where they can actually pay a mortgage or if there is in the possibility of not only salvaging what they have put in, but the property, the assets itself. how does that idea approach? >> i think you're right, i think we are all impacted by continuing mounting foreclosures. we all lose, people pay on the mortgage to have a primer of which have no problem, they watch their household value,

their house now continue to deteriorate every time there's a foreclosure within a block of their house. then when you have multiple foreclosures there's a rapid decline in value so we are losing. as i said earlier roughly $7 trillion in home-equity has been lost by the american public. so i don't agree with the congresswoman from california about let's let the ball fell in a year later picked up the pieces, let's find rental situations. i think if we allow another 8 million homes to go into foreclosure it will have a devastating affect on our economy and the job losses will continue to rise. >> thank you mr. chairman and i agree with you because i believe that whenever there is a wheel there is a way. and that if we would have been encouraged to make the kind of decision that need to be made we could, in fact, saw lynch many of these properties, turn them around, and sell which everything that people have put into them. so i thank you for this hearing

mr. chairman and i yield back the balance of my time. >> thank you. you know, every day i hear from constituents who are among the over 4 million americans who are going through foreclosure and are facing pending foreclosure and suffering with underwater home values, just this month foreclosure rates in an all-time record high in st. louis in my home town. mr. taylor, just this week the national urban league reported that the blacks and other people of color are suffering from the housing crisis at far higher rates than whites and yet according to your research your report racial disparities in that minority bar worse are less

likely than whites to receive a trial and permanent modifications. can you explain your message in these findings further? >> yes essentially we have a dual system of mortgage finance in this country. one for whites and one for blacks. and it's really unfair and if most people really understood just how unfair it is, most americans would really think we should not tolerate. i mean, make no mistake about it, contused black around for targeted by subprime high cost lenders after the banks had left and abandoned those neighborhoods and closed their branches so that's -- let's face it when we're talking about minority whether black or brown we're talking about people who are working and people perhaps their income isn't as high, with their people were working, they have families and all the same hopes and dreams of any other family in america but the

available basic pay you services of the population, pay the lenders, check caches and pawnshops, that's a disgrace. the available mortgage lenders of these 5i9 options, fly by night independent companies that set of little shops and advertise low rates and whatever and teased into these rates, only to give them loans totally inappropriate, that they know are unsustainable. that is what really happened and now people are trying to get out of those situations even now under the mortgage modification programs available are still even now being disproportionately driven along racial lines. >> inconnus surmise that from this data from the theory that occurred, steering people of color into subprime and predatory loans contributed to it the housing crisis that we are experiencing now? >> yes, i mean, the average -- a typical neighborhood seven years

ago in america would see one or 2% subprime lines here but she would go into african-american and hispanic communities in unc i'm not exaggerating, 30, according to mr.% of the mortgages made in those were high cost subprime a un sustanon bonds. >> and i see it in middle-class neighborhoods in my district in north st. louis county. i see that and these people are pretty much middle income earners. do you have any suggestion as to how we close the racial gap? >> first off, there's nothing like the sunshine to show what is occurring and being a very crystal clear about the difference in treatment and who's getting one, was being offered the types of loans, so there's no question that the ability to produce data has elevated the conversation and ability to make assessments but

a lot more needs to be done even in the hamp and harp programs is difficult to get data which drives me crazy because these are government agencies. why are they sharing with this committee and everybody else? the gao so they can analyze what's going on. that's one of the things that ought to happen but the recommendation i would make first we really need to done of brief visit judicial modification to help people losing their homes and secondly take away the voluntary aspect of hamp make it mandatory but lenders have to participate in the house and the principle right down and interest write-down. striped or fanni