chance to get the word affordable struck in the title on the germania fishy because they couldn't see how affordable was germane to the bill in front of the congress, but i wasn't allowed to proceed with that. so we're stuck with what is called. governor herbert, you referenced the need to expedite the supreme court review of the constitutional challenge to this law that was passed just less than a year ago. non-roger vincent -- judgments and issued his position a few weeks ago, he said injunctive relief was not necessary, that is declaratory judgment was all that was required because officers of the federal government would comply with the wishes of the core. now was he not correct in that statement? >> well, you may not be. he may not be. that still yet to be determined. i know some states are taking a position that he is in fact

accurate in injecting relief. others say it's not. for me is the state was speaking to utah is like with sitting on shifting sands. we don't really know. >> because under normal circumstances they would be likely june of 2012 before the supreme court ruling would occur. if i'm to understand things correctly, officers of the federal government are not complying with the spirit of love in that implementation of the lot is still proceeding at a fairly rapid rate so this thing will be down the road another 18. you will be asked to unwind under court order, unwind all of the things that have occurred under the affordable care act and i will be cyclical to strike out what she's been doing to the changes before the law went into effect and now it has been struck down by the supreme court. is that correct? >> i would be correct.

>> there are -- again, i really think both of you for being here. there's so many things that could. in your written testimony, governor herbert, he went to get to a point where you pay for value. now are you aware that donald herbert, medicare and medicaid services has testified that he too wants to go to a system that he pays for value. have you two communicated on this point because he is the federal head of the medicaid program. >> e. n. i haven't. there may be communication with their staff and medicaid people, but is not talked to me. >> seems to me he is the common ground. he talked and written testimony about what the accountable care model may be for utah. and i don't disagree with that. the rules unfortunately that were due last september on accountable care organizations are still pending. it's kind of like the dog ate my homework at hhs. we haven't gotten it to you yet.

how are you able to proceed with that? >> it's very difficult. as mentioned earlier about the high-risk pool we had to wait about six weeks to get questions answered on high-risk and what we should implement. we had one in the state, part of the affordable care act requires a high-risk pool. the answer came back we can answer the question and haven't had a chance to read the bill. >> governor barbour commute interesting comments by the high-risk pool on sunday. could i get you to quickly summarize those about the number of people? >> that's governor herbert's point about the need for a quick decision by the supreme court because we were required to create a second high-risk pool and mississippi to comply with this law, even though we have had one since the mid-90s, and ensure it 3600 people and we were forced to add another one

and now in the course of however long it's been in effect, 50 people have signed up when if they could have just taken our high-risk pool and not force us to have another one. >> the simplicity could be absolutely stunning and not. and actually nathan deal less cheery at legislation that could try to do that, but it didn't flame fortunate with the affordable care act. i may just point out representative weiner's statement on my ability. there is a program called medicare and medicare is equally administered across all of the states without regard to state sovereignty. would it be possible to set up a medical liability system within medicare so they perhaps patterned after the federal claims act is in effect for the federally qualified health centers that can provide some relief to your practitioners on medical liability costs.

>> i think so. it's an interesting idea. i'm not an attorney and i don't play one on tv so i don't know if i can comment on that. >> the dominant time is expired. the chair recognizes mr. ensley for five minutes for questions. [inaudible] >> ms. czajkowski for five minutes. >> thank you, mr. chairman. the illinois governor quinn has sent a statement from illinois that outlines the many benefits of the affordable care act. among other things, he points out that the medicaid expansion will cover 700,000 new adults and will have health insurance coverage, many for the first time in there to life. the affordable care act is helping to make health insurance affordable and accessible to all

americans, while providing flexibility to allow governors to implement policies that benefit the citizens of each unique state. in illinois, we do not see the affordable care act as an alternative for distraction to the urgent need for jobs and economic growth. we see the law as a vital part of our economic recovery. mr. chairman, i ask unanimous consent that governor quinn's full statement be included in the hearing record. >> without objection so what are. >> thank you. governor barbour, you have talked about the reason that infant mortality rates, et cetera are in mississippi and also you are talking about in terms of medicaid, we have people pull up to the pharmacy window in a bmw and say they can't afford their copayment. first of all, let me say that

the federal government has made fraud in medicare and medicaid top priority and has for the first time or resources into doing that. would you say that mississippi uniquely, because other states it's really provider fraud that is the whole cut the fraud that goes on in medicare and medicaid asking for reimbursement of care that really wasn't given. would you say inures date date problem in front? >> congresswomen, my understanding is that's not considered fraud. in the federal rules of the person says they can afford to make a copayment, the provider can challenge it. of course the sad thing about that for a state doesn't save any money. it's the provider who get shorted. i report the providers report to

me. it is not my understanding that his quote fraud under the federal law. we have really done a good job of team beat down our error rate. >> so it's really people trying to treat this -- it's about poor people are not so poor people trying to cheat the system that's been a big problem? >> with a problem when tens of people who are not eligible being on the program. the state was not following the rules. but do we have provider fraud clicks yes, ma'am, we do. we also voice so providers as well. not all of us agree where to go after. in illinois we get a 50% not in federal dollars nmma k. programs. mississippi gets him a 75%. utah gets about 71% match in illinois as a matter of fact i'm federal -- for federal spending,

mississippi gets $2.2 back for every dollar in federal tax that pays. utah gets about $1.7. illinois gets about 75 cents back. so we don't do as well as you do. but do you not think that the fact that 75% of the dollar, for example, governor, comes from the federal government that may be the federal government has some right to set some parameters, or no? >> sure the federal government should set some parameters. i think the federal government over runs the program. by far i don't think that's unique to mississippi. we get 75 cents because for the poorest state in the country. would love to trade with illinois and be a much richer state and be a smaller percentage. for us, the beauty is you always save a lot of money if you'd let us manage a program and reduce our costs. if you get $3 before the

savings. >> actually, i wanted to mention that to governor herber. he talked about your support for federalism and made utah beat utah, the medicaid gives you a great deal of flexibility in designing your program. you can design your delivery system, set payment limits, kocher in minutes and benefit anyone prescription drugs are optional. so what are you saying? completely hands off the federal government should not have the right to set some sort of limit? >> clearly you have a right and i respect that right. is there a better way? i think we ought to be more coequal partners. i stipulate the intention and object to and health care reform act are designed to help the people. we all want that same drive. but we differ about his process. >> both of you say you'd rather see a steel? >> yes, ma'am.

>> i believe partnering comes to national. >> gentlelady's time has expired. our time is limited. the governor's time is limited. we want to thank the governor's for their testimony. it's been an excellent panel. before we adjourned to the couple housekeeping items. the chair recognizes mr. waxman for a request. >> mr. chairman, we have letters from many different groups of maintaining medicaid eligibility we've a statement from the fbi you opposing the maintenance of effort and requirements of the aca for medicaid had a picture that is part of the record. >> without objection. >> i did want to take a second to talk about the citizen documentation. i think the budget report was incorrect. there are two ways to establish.

one could be cementing of the named, date of birth and then go to the social security administration for verification. the social security records match, individual. the social security records match, individual. the social security records match, individual requirements. the states including mississippi and michigan have elected this option. the alternatives they can require that an individual provided their u.s. passport or birth certificate and a drivers license or other photo i.d. and no caveman individual self declared citizenship or legal immigration status. >> without objection so order. the gentleman, mr. bass, would like to have heard a study on how to reduce medicaid chart prices. and mr. gerber has a letter to insert without objection. >> mr. chairman, mr. chairman, i have a letter also found my former colleague from the state

of georgia who has been very interesting comments in his letter here today to submit for the record. >> without objection, that'll be inserted in the record. members will have 10 legislative days to submit questions for the record. i ask witnesses respond promptly to these questions. without objection so order. the hearing is now adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> and a few monarchs, hearing with treasury secretary take down a proposal to phase out government control home mortgage companies, fannie mae and freddie mac. in a little more than two and a half hours

>> treasury secretary timothy geithner is calling on congress to phase out the government controlled home mortgage

companies, fannie mae and freddie mac. the administration's plan calls for a sharp reduction in the government's role in the housing market. this hearing is little more than two and a half hours. [inaudible conversations] >> this hearing will come to order. in the interest of time, i will recognize three members -- three of our members for opening statements in the majority. and without objections, all members written statements will be made a part of the record. first the gentleman from new jersey, mr. kerry is recognized for four minutes. >> thank you, mr. chairman. i also want to thank you for your report. i have read it over at early and what might be a little light on some specifics in some areas and without a single concrete

position on a way forward, i believe it does come to a number of conclusions that will be very helpful for members to grasp as we move forward to this debate. the first conclusion is the federal government housing policy played a leading role in the crisis of two dozen eight in the ongoing bailouts of fannie and freddie is ever $150 billion counting. that dwarfs any another bill is that occur during the crisis. the second conclusion is entities a fannie mae and freddie mac must be terminated and should never come back to life. this is important for everyone for members to ministry, community groups to understand up point. i agree with the administration that these entities must be put on a responsible path to does solution that will work closely with the administration to see that is accomplished. the third and most important conclusion is that a purely private mortgage finance market is very serious in an achievable goal.

many supporters of the status quo preach gloom and doom for the housing market without a government guarantee. they would have us believe that any discussion of a purely private argus finance market is completely without merit and return the housing market to its depression area status. i believe the administration plan and this argument once and for all, that no one believes our housing market will ever return to the 1930s. so i applaud the administration for taking this ridiculous rhetoric of the table. so now that there is consensus on these issues to mawhinney to decide steps next to tape. they also see a number of areas that continue agreement between the and myself. the first is a gradual increase of the guarantee. this is an important component to bring in more accurate pricing into the market. any increase in these fields must correspond with an increase in fha premiums in order to not push greater risk over there.

again i look forward to working closely with the treasury and specific legislation we may need to accomplish the goal. the next area of agreement is the need to reduce portfolios currently a $1.5 trillion some of these portfolios poses significant risk and the taxpayers and don't serve any real purpose anymore. i believe the portfolios can be wound down at a fast pace without jeopardizing the housing market. i look forward also be discussing this with a secretary in greater detail and how he must then shape the legislation to achieve that goal. a third area of agreement is in the treasury support for higher down payment premiums. i don't believe down payments are the only factor that should be used to determine credit quality, but am pleased to see that we both recognize the fact that they play an important role in the underwriting process. an agreement on reducing the conforming loan limit. to be able to afford and housing $729,000 from a couple must make

an average of $250,000. this is the same level that some in the administration and some colleagues on the other side of the aisle described as being someone who is rich, making that much money. i'm glad the administration is family decided the government should basically be out of the business of subsidizing those who are rich in order to buy a house. finally, an area that we have strong agreement on this need to create a covered bonds market in the u.s. i agree that it's not a cure-all for this is done, but a covered bond market could provide significant liquidity benefits and help bring private capital back into the mortgage market. so was the ranking member so eloquently stated repeatedly during the former administration when that was the case, i do find it odd that i am here now this morning defending the current administration and their proposals on so many fronts from their own party. i do believe it's an opportunity for us to reach a broad-based consensus on all these issues up

front. finally one final point that i failed to mention above and that is probably the most important that we must never put the american taxpayer on the hook again for the failures in our private market market. without a thank you, mr. secretary. >> this time i recognize ranking member francs for four minutes. >> thank you, mr. chairman. i am struck at what a difference an election makes. i agree we should be moving forward and i am interested that we do have the series of consensus, but i do have to know a great disappearance that perhaps the inspector general can track it down. a year ago my colleagues on the other side do exactly what they wanted to do with regard to fannie mae and freddie mac. the bill was introduced about a year ago in march 2010. we heard during the year constant criticism from people

on the other side that the legislation we adopted on financial reform didn't cover fannie mae and freddie mac. since we have legislation that was adopted in 2007 and 2008 put them eight the dominican governorship of the losses have been largely stand, that we were dealing with the situation in which they were very different than they were before and that it bought us some time to think about what to do. but that was a position which last year when they were in the minority was rejected by the others died. indeed there was a bill filed in march i believe by the gentleman from texas, mr. heckerling. again, were told that should've been included in financial reform at the conference committee meeting. that bill was offered and bill was ready last year. what i guess is we have this question of what does the president know and when did he know it? my question is, what is the minority know something last year that they don't know this

year? they knew last year was to do. they were very critical of us for not doing it. they talked about the urgency. lo and behold, been in the majority has appeared in just a form of legislative forget ernest. they say the power corrupts. apparently in this case it hasn't corrupted. it is taken away memory because again i don't understand why the committee is not now dealing with our second hearing and that though they were so insistent on passing last year and so critical of us for not passing teams to have faded away. and it is no longer there. i understand that position. with them are complicated subject. because we have put this into conservatorship by legislature in 2007, 2008, the urgency was gone in a sense the losses have

been sent to fannie mae and freddie mac are operating and have been operating since they were put in a bipartisan effort in 2008 in a very different manner and not this year was the year in which we should begin looking seriously at it. i did say at the time it was my intention to file a bill last september to get it dirty, when control of the house seemed to be the reasonable thing to do was to give an knowledge the fact the majority was in control. but again i have this question. where's bill? it was already tico last year. last year there is this insistence on passing something that wouldn't pass. today we have a very reasonable attitude to work with the administration. i think the explanation is this is a harder issue to deal with than the minority thought when they're in the minority. i think it's also the case that they don't have to vote for the bill they were pushing last year. it's one thing when you're in the majority and have to get something done. it's another when you're in the

minority. but i would say this, the urgency does appear to have helped a little bit because people who are now in control and who knew since early november they were in control have decided not to go forward with the bill they had last year, which they would insist it should be passed and apparently are now awaiting the administration. i have thought very hard to think of another ratio on which this particular group of republicans has awaited the leadership of the obama administration. i haven't thought of one yet, but maybe if this is the beginning of a trend. thank you, mr. chairman. >> you are recognized for two minutes. >> thank you, mr. chairman. welcome, secretary geithner. thank you for joining us this morning. page two of your written testimony says, and i quote, the administration and congress others want the ability to look forward and reconsider the role government has played in the past and work together to build a stronger and more balance system of housing finance, and

quote. i can agree with you more. as for where we should start, it's very clear that we should report to congress the administration only laid out options for reform, but has chosen to avoid the very top decision for setting a single course of action. having reviewed the administration's report to congress, it is clear to me that option one most closely resembles the kind of plan that the taxpayers expect from us. and i asked that today you work with our committee to not only establish a clear framework, but put in motion reforms that facilitate private site or reentry, eliminate the taxpayers risk and generate a vibrant housing finance system that serves creditworthy americans. for many years, it seemed like republicans on this committee have pressed her reform fannie mae, freddie mac and the fha. it is my hope today you can confirm your commitment to work

with us. housing is one of the most important cornerstones of our economy and we have get it right. so with that, i would yield back the balance of my time. >> thank you. he's still a 33 seconds left in our claim that time. i do want to say that former chairman frank who was the leading advocate for fannie and freddie just give us a history lesson. in 2003, he said neither of these gics were in crisis than they do not need more regulation two years later he said they have to be pushed to make more affordable loans, i.e. subprime loans, not us. so that part of the history lesson was missing in our time of six hired. >> two minutes, mr. chairman. i'll take two. >> well, we've just heard a serious distortion. in 2003, i didn't think and freddie needed reform.

in 2005, the chairman joined in chairman mr. oxley and passing a bill, which was derided as insufficient and senate republicans rejected the house republican bill. in 2007, the democrats a majority to the bill, which mr. wallace then said with a very good bill and that bill which led them to be putting into conservatorship. but then go back to john and from illinois. the republicans press for reform and they were unable to achieve it. when they're able to achieve if they don't press for her. they were in power from 1995 to 2006 and passed a bill in the house, which mr. wallace and president of the united states drive isn't sufficient. lasher they pushed hard for a bill we were told was the answer in this year it appears they're now waiting for the administration.

the gentleman from illinois said the administration has avoided the tough choice is. if that's the case, resembles the republican who are making tough choices either. what is stopping them? the fact is that n-november it became clear to republicans who had controlled the house and i'm still waiting to see the bill. i guess i won't understand what happened that bill. but flaws were discovered? waif enough for? the fact is in 2003 underestimated the need to reform. by 2007 we adopted the bill the result that the bush administration and it's why we now have a time where republicans have taken advantage of note during the maturity to deal with. >> we have two minutes left on our side. i'll claim the time in opposition. >> are no longer an opposition. you've got to get used to that. >> that's correct. i'm in