>> on friday, the group heard from joseph smith, who is overseeing a 25 million-dollar mortgage settlement reached between 49 states and private banks. the conference featured marc

morial and franklin raines, this is an hour and 40 minutes. >> interloper coming. >> thank you all for coming. [inaudible conversations] [inaudible conversations] i just want to say my name is john taylor. i am the president of the investment coalition. welcome to this discussion about the future of housing in america. i am pleased to welcome our distinguished panel of experts to join us in this critical discussion about housing, the mortgage market, and foreclosure. our panelists include joseph smith. he is the forming banking

commissioner of north carolina. if you hold your applause -- [applause] [applause] [laughter] [laughter] >> if you could hold your applause until we get to the end of our introductions, i would appreciate that. he really received critical acclaim for his work and his work in north carolina anti-predatory lending laws. most important, he has appointed the north carolina monitor. franklin raines to my left. franklin raines is a rhodes scholar. he once served at the omb director under president clinton and is also recognized as a first african american is a partner and the former ceo of

fannie mae. to my left also is hubert van tol, hubert is the director of economic justice for pathstone. he is a member of an organization that provides lending, housing, and job training for services. he is a pilot member of the board of directors and has also served on the federal reserve of consumers advisory council. to my far left is mark calabria. are you laughing at my accent and? [laughter] [laughter] >> he is from the cato institute. he is the director of financial studies at cato institute. before that, he served for six years and is a republican senator for alabama. to my far left, julianne malveaux has served on the

federal reserve advisory council and is currently part of r. dreiser in committee. also we have marc morial, who is from new orleans. [laughter] [laughter] [applause] >> more important for us, he is the president and ceo of the national rotor league, and he is one of the country's most respected and effective influential national organization. thank you very much. please join me in welcoming our panelists.

ncsc is asking the question of whether our country has a continuing commitment to building inclusive society, which includes people who are willing to work hard, play by the rules, regardless of gender, race, age, or physical challenges. those who want to build a comfortable future for themselves and families. the problems of massive debt, high employment, and anemic economic growth have increasingly divided our country into the roaring political camp, if you may, between free-market capitalism and government solutions for economic progress. it distracts us from reaching real commonsense solutions to our biggest economic and social problems. let's consider how big is our challenge. medium wealth is declining rapidly for all classes.

the poor are getting more desperate. first of all, i want to assure you graphically how this can affect us. it's over there, i don't know what the cameras are able to capture it. essentially what you are looking at is how it looks between the haves and have-nots in this country. the big piece of the pie over there, 10 -- 20% of the households, leaving the 90% -- the rest of us, in all of america, to scramble over the remaining 20% of financial wealth. that is a disparity and even more shocking.

it is 18 times the wealth of hispanics. a similar disparity is true when you look at homeownership in the united states. whites, blacks, and hispanics. with 10% of the population, most folks are losing wealth and many at an accelerated rate. i believe that as you can see from this chart, the homeownership rates for whites is about 67%, approaching 70%. blacks and latinos, it's below 50%. a very significant difference. as i said, with the exception of the 10% were the wealth is continuing to grow at an accelerated rate, the rest of the country is losing wealth at an accelerated rate. is it any wonder that movements like occupy wall street, the tea

party, to rebuild the dream movement and other such efforts, all designed to give voice to those who are worried about their financial security to proliferate our landscape. today, our panel will help us understand and offer solutions to alleviating some of the persistent drag on the u.s. economy. our housing industry in crisis. one thing is certain. economic recovery will not occur soon without a housing recovery. the federal reserve bank estimates that american homeowners have lost over $7 trillion of wealth from their homes alone. in the past few years, over 5 million families have lost their homes to foreclosure, creating not only devastating impact, for each of these families, but also for their neighbors and communities. as nearly all property values are diminished. there are around 11 million homeowners underwater on their mortgages. let me say that in another way. one out of four households in

the united states over on their mortgage than their house is worth. in many cases, they owe a lot more than it is worth. the estimates are there are another 500 million -- 5 million households heading into foreclosure. economists leap that we won't see the turnaround in property values until sometime in 2013. as property values decline, the middle-class declines, america declines. yet, we americans seem to be working harder, longer hours, and we are receiving less benefits, fewer pensions, less wages, less job security, and entering the ranks of unemployed are more people. even social security is on the chopping block. people are working harder, earning less, and losing in the process. today, after decades of pain on a mortgage and being a good citizen and responsible bar where, people are finding that

their home has not generated the income that they need. people plan to use a combination of social security and a commendation of their mortgage will not be sustaining. i was surprised to read this. in the third quarter of 2011, american corporations earned $1.97 trillion in just one quarter in profit, that's the highest level of profitability for american corporations since world war ii. all this stuff is going on, and yet, that 10% is still doing very well. once again, the top 10% continued to prosper and build their wealth. as more americans fall out of the middle class into poverty, many only a paycheck away from homelessness. is it not time for national reckoning of sorts in which our federal and state leaders -- our

corporate leaders, set aside politics and find immediate and real solutions that stimulate the housing market and create jobs? [applause] [applause] [applause] [applause] >> so, my fellow panelists, please share your immediate thoughts about this challenge. is it really possible for our political leaders and policymakers, decision-makers for corporate america, to rise above and put america first. is it a two-party system who is capable of having an honest dialogue about the housing crisis? your thoughts. [laughter] >> i was discussing before the panel the settlement which is giving my current employment as a result of working together with the attorney general of the united states. in case you didn't know, and i didn't know until i was told, 25

democrats and 24 republicans. in fact, the 25 democrats and 24 republicans work together with the federal government that is democratic to get the settlement done. some people have different views about the government themselves content itself. i will say the other uses of this process, origination, the origination licensing system was put together by my colleagues and myself. again, we were democrats and republicans, and we worked with the ctd after the safe act. i think there are examples on a practical level of people working together across party lines in the united states. it is nice to see the states taking a lead in all of that. i am proud of that. >> they say hey, we have 25

republican -- democratic ag's and 25 republican ag's to come together and change the settlement. why is it hard for us at the federal level to deal with this discourse and come up with solutions? >> let's keep in mind that we did not get to the settlement very quickly. there was quite a process to it. and we certainly have a handful of things. there are a couple of things. one, we are in an election year and that will make issues hard to agree on. but there is also issues regarding a diagnosis of the problem. part of it is not politics but policy as well. i think when you can have a small number of areas where people can come together and agree him a bike and hope that

they will get a few things done. [inaudible] the whole truth, and nothing but the truth. [applause] >> you can argue about diagnosis, but he can't invent the facts. this town is excellent at getting facts. taking half of it back and putting it out there. [applause] [laughter] >> you just identified what is really a challenge for the country. coming out of a recession. how can there be great disparities of wealth, healthy profits, yet extreme difficulties? for working and middle class people in this country. my take is that we have to reconcile and we need a plan to rebuild the country.

this argument about government versus the private sector is an ideological argument where we need to have government plus the private sector working together. [applause] >> what i learned at the local level, private partnerships are real. people are concerned about results. and i think that sometimes it's important to have philosophy and ideology, the people have to understand we have a challenge. one of the things that history teaches us, when this nation has faced challenges, he it was willing to try new and different things. when this nation faced great challenges, one of the things they put at the heart and center is, is a step going to be important and helpful for the working and middle class americans? we have to push all of these

housing policies to that very important when. >> thank you, frank? >> i am a pessimist on it. i am a pessimist because from the time i was recently working back in seattle many years ago, the big debate was about affordable housing and could we get a consensus about affordable housing? as you know, that has been a struggle for a very long time. but there was never a debate about home ownership. there was never a debate that we had a national policy to extend homeownership to all who could qualify. for all of the reasons that we all know. including the hard-core economic reasons that john was referring to. it is a central source of wealth for the average american. not the average minority american, but the average american, it had more wealth -- they had more wealth in their home than they ever had in the

stock market or what have an outcome of the extraordinary thing, is we have lost our consensus about home ownership. we now hear that the biggest problem that america faces in the financial crisis is that too many people wanted to own their own homes. >> actually, i do want to get into that question. before we jump into that, because that is actually the first question i want to talk about, is what is happening to the notion of being a homeowner -- it used to be a solid tenet and the american dream for most people. that is under jeopardy. i don't want to leave the line of what is it going to take to change the quality of conversation? mark mentioned it's an election year. so regardless of whatever happens, that means someone, whether president obama continues in january or whether there is a change, but that is still the better part of another year that we can expect to see something. we can't live can live with that. i think the movements -- i mention occupy wall street, the

tea party, and rebuild the dream movement, the point of it was that there are grassroots anger about what has happened. people have different solutions and ideas on how we should do something. but it does seem like we are taking this -- kicking the can down the road and we are not creating a solution. >> just to clarify, i'm not suggesting that because it is an election year we should not do anything. i am suggesting that i think -- if i was a betting man, i would put my money on what's happening. that said, it is a tragedy. and i think we should push to try to get something to happen. >> but i also think it is an election year when people can shape what public officials and how they respond. that is why i think people in this room will continue to advocate. i think franklin raines made a very important point.

it is wrong to suggest that home ownership is not essential to the future of the american dream. and it strikes me as an important and puzzling change in america, for which there was a consensus for decades and decades. when that consensus emerged, in the post-world war ii period, we grew as a middle class. we built strong neighborhoods and communities. it was not absolutely perfect, and there were many mistakes made. i challenge those who suggest that homeownership should not be a central part of the american dream for their policy to house the nation. what is that? that everyone that we go to some sort of old south, eastern european, apartment flat?

is that what it is? i think that i called the question. i got a question for those who say that homeownership should not be an essential part of the american dream. i want them to articulate their housing strategy. is it something for rentals? what is that? we have to recognize that this is a nation that has to be housed. there is a growing nation that has to be housed. >> so this is the question that i interrupted franklin about. let's go to that. [applause] [laughter] >> because i think it's a good point. there is the notion of homeownership in america is a fair opportunity for people to be able to use that as a vehicle for building wealth and a secure, safe environment -- it's really in jeopardy now. the conversations we hear.

when an organization like the national urban league are in sync with the national association of real estate and mortgage bakers association on one issue -- and the homebuilders -- that homeownership is important, because we are all concerned about the levels of conversation of what happened in this financial crisis. franklin, sorry for for interrupting you. i piggyback on the floor. >> thank you. the point is, i think, unless we get a consensus, unless we get a consensus, the politicians will not respond. they find courage and get in front of them. [applause] [laughter] >> that my experiences but

someone has to start the parade. there is a very serious argument going on in this town, although i think it's being lost from a housing standpoint. there are many people who say that housing is a bad point economically. it's not a good thing for the country. we put too many resources into housing. if people don't know what they're doing by investing so much of their consumption and housing, this is the standard economic analysis in this town and through much of the country about housing. this is what those of us who have been involved in housing for the last 30 or 40 years -- we've been having this argument for a long time. we want for most of that time, we are now losing. unless the arguments turnaround, congress is not going to do anything to expand homeownership. indeed, we may find in the guise of corporate tax reform, but the largest source is not supporting the low income tax credit, it could be eliminated. that is a credit that is the

biggest source of financial support for housing. we are losing the argument in washington. unless we can win the argument, there will not be a lot of brave souls fighting this fight. that's why it's important to understand the need to make this positive case for housing, particularly for homeownership. [applause] [applause] >> i think that is exactly right. and i think that where we missed, and i apologize for my voice. >> where we are in the organizing movements around the country, we've really missed the boat have the time. there was a time when the people of this country were on fire about the problem. and i think because we lost it temporarily, the tea party took

over and absorb some of that energy, and we lost out. but we have to be preparing quickly for the next time we get that opportunity. again, it might be the coming election. let's be ready to help start this process by working to get the money and doing what we need to do to start rebuilding and making sure that housing is on the top of the agenda as we want it to be. >> one of the things that struck me as interesting is ben bernanke, the chairman of the federal reserve bank, he produced this paper that spoke to the housing issue. usually, the federal chairman,

chairman greenspan producing papers on the housing issue, it kind of surprised us, and when the paper came out, it was very heavily weighted towards what we should be doing with this problem -- is essentially create a lot of rental situations. i refer to this paper as let them eat right. that is not as fair as it should be, but i am concerned about this. homeownership is out of the reach of people. maybe what we ought to be doing is print content promoting rental housing. in a lot of these situations, particularly the segment of the market that is being encouraged and supported to a choir these properties, these investment companies -- who are going to turn these properties into temporary rentals, long enough for them to be -- to wait for the market to improve, which they flip them and sell them.

>> i'm sure that is not at all what chairman ben bernanke had in mind. i am concerned about the tone of that suggestion. other suggestions from well-meaning people that rental is the alternative to a homeownership as opposed to rental is a need that we have in this country and that we ought to have a housing policy and housing commitment. >> the inherent thinking and that is a return to yesterday. he returned to a long time ago. when people who owned homes bought them with cash where they put 50% down because they had the well. also in here and it's that

washington is reveling. it is either homeownership or its rental. the truth of the community level is that unique conference of housing policies. the issue is where we place our value of composition agreement isn't going to be on homeownership or building? i would like a neighborhood and my beloved new orleans, and an eyeball inspection was all it took to see where people owned and where people rented in those neighborhoods. and, sometimes, the discussions are also dominated by an eastern seaboard view of the world. new york is a city with a low homeownership rate. it is a city where people are

used to comfortable living in apartments. no cities in america are like that. people want to live in detached homes, they want to have a driveway, they want to have grass. they want to have a law, even if it's small. we need to say that yes, we can accommodate a conference of housing policy. a combination of rental and homeownership. but we need to reaffirm the value. this is a discussion about value associated with the american dream. what is it going to be? >> i think it is also a discussion of what is -- there are a lot of damage as they came out of this period of nonfeasance and predatory lending practices. there was a time when a lot of mortgage lending was done to people of color, but there were

prime loans, sustainable loans -- i remember in 1994 and 1995, fannie mae, looking at their statistics, they had a 50% jump in originations, home loans to african-americans in 1994. in 1995, they had another 50% jump. in two years, a 100% jump increase in the loans they were securitizing for african-americans. they were all prime loans. they were these things with no documentation, pd backbones, balloon payments, predatory, nonsustainable kinds of loans. somehow, that gets lost in these discussions. [applause] [applause] >> that is the point i have been thinking about. what has gotten lost in this conversation is remembering what those kinds of loans were that led to the crisis and led to the

collapse. that led to financial calamities across the world. it was toxic loans. it was loans made to people, largely refinanced loans without expectation that people would be able to pay them back. when you look at the numbers, african-americans have good credit, they could get a prime loan, those with good fica scores could get a subprime loan. those were the loans. they were sucking wealth out of communities where they have built up well. even before the crisis, those loans lead to foreclosure rates 30 times higher in some areas than prime loans. it is the kind of loans that were made that drove this crisis. we have forgotten that when we have these conversations. [applause] [applause] >> one other -- i think that's

exactly right, and i think that one other point that illustrates that. i am sure that we stretched too far during this period. that we pushed too much. the homeownership rate went up when we did the most stretching that we had ever seen. the homeownership rate went up to 64%. the african-american rate went from 48 to 50. this is what is stretching too much, what it looked like. we never had a policy in this country that everyone was going to own their own homes. we thought it would be a thrill if 70% dead. that would've been something we would have said was such an achievement. the notion that is out there now that people thought that 100% of people would own their own homes, that african-american loans had been up to an incredible number, it was absolute craziness did we made some progress, but where we did not make progress is where we did not have a chance -- if you look at the areas in the country

that mother are most devastated by the collapse, the areas in which you had the highest percentage of loans to investors, some of you might call them speculators -- the official names name is investor. 30% of all loans made were made to people who were investors. that is assuming you believe the people were going to live in the house. i believe it was 50%. you don't have to have a complicated economic theory to understand why it collapsed. if the 30% said that i'm just not going to buy another house, 30% of the demand in the entire market goes away overnight. if they decide that they will lighten up a little, you can see why housing prices collapsed in all of these areas where you have very high. [inaudible] this has nothing to do with the average american woman to own a

home. this was speculations that were being financed by wall street with no questions asked. that is what caused this crisis. blaming people, ordinary people who tried to own a home for this crisis is simply wrong. [applause] [applause] >> i think frank is absolutely right. let's go back to something the future. -- something you shared. many of them, most of them, if my memory serves me correct way, were not for first-time homebuyers. many of them were two people who already own their homes and two were refinancing to take cash out and most of them were white, and many, a large percentage were middle class. what i ask each of you to do is to counteract the false map. counteract the weapons of mass

instructions. that seek to deceive people. let's at least have a discussion about public policy that state the facts. frank pointed out some important facts, so did you. we cannot deal the future without understanding if we allow false narratives, misinformation, spins and lies. to color our understanding of what in fact happened, and i think that is why this panel and what you do, john, is so helpful. it helps to get the real facts out to people in the community. that way they can share them. [applause] [applause] >> thank you. i'm just thinking that one of the challenges for us now today, promoting homeownership in making sure it is available for those who are creditworthy and pay their mortgages, the options

and ways that lenders can go, lenders, of course, keep these loans in portfolios. they sell them to someone, and right now, that somebody is the u.s. government. it is interesting that it is such a monolithic thing of the interfering of fannie and freddie -- if you think we have a housing problem now, that would really collapse the housing market and sent us into a depression. we don't see folks in wall street -- these private-label securities, the ones who buy the mortgages when the government is not securitizing were putting their stamp of approval on them, i just don't see this pent-up demand of wall street firms saying yes, bring us those mortgages. we will buy them. but this is more than information or deception.

it is more a case of where is the physical market that is going to step back into this arena to make sure quality loans that are sustainable and done under proper terms and conditions, that indeed, the private sector of wall street, which was obviously playing a major role, where is the mechanism for them to step in and begin to help alleviate this problem? am i missing a? are all these private-label securities up there waiting to get into this? >> i don't tend to think of it as a choice between freddie and fannie. i think the, i think the discussion we should have is going back to a jimmy stewart world where you knew the local banker, he knew you, and if you need a modification, you went to them. he knew your circumstances and he worked about. a lot of problems we have today with foreclosure modification is the fact that these are not loans on portfolios. they are all in securitization

somewhere. when a bank sells 1000 loans to in a mortgage-backed security, that is not much securitization. you have only made the situation complicated. i want to go back to a simpler time. i want to go back to a time when we have quite a bit available, certainly, there were problems in the past. it's not a perfect model. the assumptions and estimates are that we need a chilean dollars in the next year in originations. well, banks have $20 in cash doing nothing. to me, the debate should be how we get those things to take that trillion dollars and put it into the housing market. [applause] [applause] >> i think it's unlikely that we will end up in a market that is back to the jimmy stewart days. my memory of it's a wonderful life is there are also people bankers in that world.

[laughter] [laughter] >> i think it's not fair to say that there was this time. well are, where we live in eden. we think of things like risk retention and financial liability and recourse for homeowners. all of those things are important. on the other hand, i agree with mark that the dnc had not been for good in addressing this crisis. the fha report from march of this year found that they have pretty much dropped the ball on monitoring services. costing billions of dollars by failing to make sure that the services did modifications appropriately. it is no secret that the gse has really been the major impediment to implementing principal

reductions, which this country desperately needs. [applause] [applause] i think with securitization, i think it is part of our lives. we have to make sure it is accountable. >> i think we need to start a conversation with our friends in the administration as well. some of the happy talk is a little too happy. [applause] >> we still have serious problems in terms of the secondary market. [inaudible] >> also, having the last 50% of the second liens, there is an inherent conflict of interest that is not being addressed. that has to be dealt with at some point. >> i'd like to just add, and i think this is an important point. some of this is also chicken and egg. we have a persistent problem about employment in this

country. a person out of work cannot afford to pay much of anything. not a mortgage, not a rent payment. we have large numbers of people, and there is a debate about a housing comeback. can we get it without a robust job comeback? we have job creations that are just not at the level to bring the economy back. i am always torn as to what has to come first. my sensibilities say that jobs have two primate, and housing can accelerate it. that is a challenge in creating demand. demand comes from certainty that people have. i think it affects both supply and demand for mortgages. we met perhaps, it's not a chicken and egg in a sense that they are simultaneous. we have a housing crisis, according to the gao, some

11 million properties that are either vacant or in need of serious repair. there is a terminus amount of construction and building trade that could put people back to work to bring these properties back online. are we ever going to jumpstart the home building industry in america, which is a major driver of job creation in the country. if we have this pent-up inventory -- some 3 million homes that are for sale. it seems to me that project rebuild is a suggestion from the president that might be a viable alternative, but i would think in terms of a simultaneous act of creating jobs for the purposes of addressing housing, and stabilizing the mortgage market. >> i think that's right. we have to reestablish a stable market at the low letter for. there are ideas out there that make sense.

but there are some perils as well. you mentioned earlier the issue of taking rto and moving it into rental. to me, the more sensible thing, is if you're going to have a foreclosure, to let that family ranch. not have too turned to a business for a hedge fund. but let that family rent the home. if you are concerned about the issue of principle reduction, and if that is the only way that modification can work with that family, 50%, as i understand it, 50% of the homes that are underwater today have second liens. those second liens are called second for a reason. and the largest source of funds for principal reductions out there is $1 trillion of second liens that are there. instead of they are participating, you take 10% and

i will take 10%, i would have a program that got rid of a second liens for the family that would allow them to stay in the home. [applause] [applause] [talking over each other] >> to me, you need a policy that works, but the idea of how it works from another justice macro level, but at the individual family level. then you build the community and housing in a local business. but it is, as john emanated, it was 20% of our economy. 20% at the peak. how can you have a recovery in the overall economy, if 20% of the economy is -- >> lets you. [laughter] >> bless you.

>> laughter, that was a great point. [laughter] when it comes to second liens, he means that the largest banks in this country are insolvent. that has to have been the problem all along. we are kicking the can down the road hoping that those things will come back to solvency. we are too big to fail, too big to regulate, too big to prosecute your what do we do about that? >> i don't think that recognizing that these loans are worthless makes the banks insolvent. i think the fact that they are worthless makes them insolvent. it is not a recognition of reality. you know, if you are looking around for sources to fund a principal reductions, it look at the deals that people made.

this is an old-fashioned, libertarian idea. they all signed these contracts. they all said that this is a second lien. this should not be a surprise to them. if someone says we are going to enforce the contract, trust me, all these families who are being foreclosed upon our being reminded that they signed a contract. and you didn't adhere to it, and therefore you are being foreclosed. washington may be looking for someone to come in and subsidize them. if we simply enforced the contract, all of a sudden, you have the largest principal reduction program you could ever imagine. [applause] >> even if we did all the second liens, i think only back it says about one third of the principal reduction that we need to get to the precrisis lcd level. we have to also look to the first. i agree that the second has to take it, but that is not sufficient.

>> i agree -- if you look at the people who had the second, they tend to be more underwater than underwater borrowers who don't have seconds. as we are approaching about 200 billion of these 700 billion plus equities that are solely infected, it is a pretty big bite. these are worth -- if any, they are worth zero. we need to have a process to go through it. one of the unfit things we have seen, and i'm not going to ask anyone else to defend it, when you treat seconds and firsts the same, that's a violation that what was agreed upon in the first place, and second, you take the risk on what is agreed upon. >> you brought up a good point. hubert is not part of the cato institute, but he brings up a good point that this could make the banks insolvent.

that is certainly something we have heard from the financial institutions. if they would have to take it off the books and suffer the loss, but they would collapse. now, i don't know whether that is crying wolf for accurate order -- >> i'm going to say this. one of the positive elements of the banks. those of us who pushed for principal reduction before january 20, 2009, what needed to be done around the house and process is a principal reduction to reformulate the mortgage. i always use the example of donald trump. when donald trump got in trouble with his real estate back in the 1980s and 1990s, the banks not only reduces principal, they gave him four to five years of forbearance. and then give him more money to go do more deals.

[laughter] >> you know, i think, when you think about this from a commercial standpoint. >> and no one is fired her. [laughter] >> after that happened, he came back and he paid the banks that info. and he was wealthier and more successful than ever. i think the average person who sits out there is not immune or unaware of what happens in the commercial space. i think some of the lessons in the commercial space, principal reduction, reformulating mortgages, reorganizing the payments and the combination of principal and interest, we have done some of that early on -- if we would have done that early on, we may not have stopped the crisis. we may have been able to update some of the cascading of the

crisis. the good news is that there is an opportunity for principal reduction. the gentleman sitting to my left is going to make sure that everything for that will happen. [applause] [laughter] >> we will see how much of a principal reduction it is. there are some questions as to how deep that can go. when you spread that money around. we will get into that question in a second. what i don't want to leave is this notion of how we could use the market, whether it is the banks or the market, to reduce principal. one of the things when this crisis first occurred, the coalition went to secretary paulson and secretary geithner, and we propose to something called help now. we propose to go to wall street and by these packages and securities. you can buy them at a discount.

they are not worth as much because they have collapsed. so you buy these at a discount, we thought at the time, 60 or 70%. i remember talking to judge stories about this. i was in a meeting in new york city. he said, that's the craziest thing i've ever heard in my life. who the heck, where does this thinking come from? it was a tough moment. just yesterday i was talking to lou varney, who is a republican citizen and player on wall street. part of his living, he is buying these securities and making a living. my point is -- neither administration listen to us at the time, but lou is buying

these securities and paying 40 cents on the dollar. imagine, if you buy a mortgage, a package of mortgages, each one saves the 200,000-dollar mortgage, you are paying less than $100,000. if you're looking for a principal reduction, there it is. it's in your hands. by the way, investors invest. sometimes they make money and sometimes they don't. somehow, what we are trying to do, especially with this idea of a forbearance where you are setting aside some of the mortgage for a wild, this, of course, is what is advocated by demarco and fha, take a portion of the mortgage, set it aside, and talk about kicking the can down the road -- we won't charge interest, but you will still be liable and responsible for it. if you refinance, you sell your home, you have to pay that back. the entire amount of that mortgage, even though the investor has lost, and i want to point to, you know, one of the

services has figured out that it is actually more in the interest of investors to allow the properties to fall into foreclosure. that helps all properties in the neighborhood, right? i like to hear peoples thoughts about that and why the government should be more engaged in trying to acquire these mortgages? honestly, fannie and freddie, under that conservatorship and the direction that dimarco plays -- it has to play more of a role in principle right down. it does seem to me that that could be something that could stabilize the market, not necessarily sink the banks at the same time. >> i will start with that. despite the fact that i wasn't. [inaudible] at the time, honestly, that's

not what. [inaudible] i do think one of the core problems they testified about is that mortgages on the back of the books of institutions that carry them. 100 cents on the dollar. therefore, they don't want to recognize a loss on it. being in getting these institutions who do buy these added incredible discount, they will modify in a way that i think the larger banks will not. that is an important point. >> we have to hand it -- we have to ensure that they are not just flipping or adding that whatever they save -- >> i just want to say that we are hearing cute stories about people who buy these mortgages and then engaging in debt collectors collection. there is tremendous amount of room to modify these mortgages. if they are worth 40 cents on the dollar, that is a heck of a result.

people don't need that much, but they need some. that money needs to somehow go to the homeowners. the only way whether it will happen is the government standards. >> part of my concern is we would be sacrificing the good by trying to get the perfect by trying to do things that would take longer than if we get properties out there and deal with them. there are bad actors in every part of the market. i don't know if you want to stop the majority of them that are doing good and getting properties out there. again, it is a trade-off. i would rather fix the problems sooner or later. i would rather -- particularly if there's any there is any litigation -- to me, the important thing is to move the profits along. >> mark made a very good point. that is the original bait and switch. the original thing that was prevented by senator paulson was

[inaudible] turned into a cash injection program. i distantly remember because we evaluated and decided to put forth the public statements that have been made to promote it and say this would be a good idea, particularly if you created an entity. some sort of centralized entity to take on the mortgages. then he would have someone as possible for reformulating mortgages. i still believe you can have all the standards, but we need a better organizational mechanism. quasi- government echoed by the mortgages. it would be more organized, it would be a better process,. >> the mechanism used their, and

there was a great fear about too much government. look, the boat was sinking. give me an order. i don't care but has deeper government or p. for private sector on it. we needed a text. the question is could we try something like that at the political level. the political appetite might not be there. but maybe it is one of these continuing examples of good policy. good policy, lessons learned from the past might be helpful to us. >> i was at a hearing recently at the brookings institute where dimarco spoke about principal write-downs and forbearance. i left that session shaking my head, wishing that i could understand why he was so very much opposed to principal

write-downs. and i picked up papers from the next day and it said that he supports principal write-downs. i went back and i looked at the document. he really is pushing this notion of forbearance as opposed to principal write-downs. even though it would save the american taxpayer a lot of money, which he sees as his first objective, forbearance would save more. the problem is whether one is more effective than the other. these other problems -- his other problem is that he thought my principal write-downs, this is a gentleman who oversees fannie and freddie and controls hundreds of billions of dollars worth of these mortgages -- his feeling is that the principal write-downs would trigger this series of strategic defaults where people would automatically go into default because they could somehow get a better deal. i tried to imagine the folks we

deal with in home ownership are people who are waiting on the sidelines to go into default and destroy their credit history. the 85% -- almost 90% of the people in fannie and freddie are current on their mortgages. all of a sudden, there's going to be this plethora of people that will somehow change their habit of living up to their contact and they're good personal policies of paying off their loans and being responsible homeowners. somehow, that will all change. [talking over each other] >> you can back the eligibility data. that is where, you know, sometimes in these discussions, people are not completely intellectual and honest -- you could say the eligibility date is as of this date.

and that prevents someone from being eligible for the day. you can put in standards to prevent that. i just believe that from the beginning, the idea of principal reduction and the reluctance to embrace it has made the problem more hard. you put your finger on the perfect place where the principal reductions exist. ..

of how it is going to work. most of you realize that even u.s. the selected monitor was not official until 10 days ago when the federal court here in d.c. approved the ag agreement. and i don't think everybody exactly knows what the role of the monitor is going to be, but what everybody is most concerned with is what is going to be the impact. is this really going to help in the foreclosure crisis? so take it away, joe.

>> i think it well. and i appreciate you being here today. and i would like to clarify a couple of things. one, there is 500 bucks to cash in not on the a dollar of it. so i hope i can still have lunch. but i'm not the custodian of the cash transfer payments to people who have foreclosed in 2010. what i am the monitor of history major at the agreement, which has two reasons. one is the servicing -- new services standards, at least to a planned across the markets. all of those, not just the london spirit and the second thing is the so-called perceivable relief provisions, the most commonly known has been principal reduction. so my job is to -- it's really a

traditional bank advisory job with the banks are stress, which is to sort consent orders already, which is to set a nickname that the about a structure they are going to set up to monitor their own performance of the servicing standards and move into consumer relief and then i'm going to hire experts who are going to work with me to verify and if we need to do additional testing to confirm what were told and i have every indication the bank will work me to try and get this thing transacted. i do think it is likely you will see a lot of all of you who are interested in the restructuring, there's going to be a front up a lot now. you see a lot of action on that and a lot by year-end. >> qaeda people find out about that and how did it get in touch with you at the groups out there

can -- >> okay. i have a way for them to get in touch with me. i'm so glad you asked. if i were trying to trick me. [laughter] >> you're on candid camera. now, i have a website. www..mortgage oversight.com. that website has a consumer section and it also has a total for experts like all of you to be in touch with me about a couple of things. now first, i can't tell the banks what to do. i monitor what they actually do. i'm going to be working with them frankly to try to get an agreed program to work. but i believe the biggest job i've got right now is to do a monitoring job and have to banks to a compliance shot. some of you at least are going to believe. how do i did not?

well, we'll do a very thorough job in record shop of oversight. but the other thing is i need your help. any confirmation from the real world about which you are seeing out here. and so the professionals website is still two weeks off and i'm sorry about that. i wish i could say here it is right now. we'll be hearing two weeks or another reason why. will be for you to give me information about which you experience out there. it was up for what we do is to banks says they supervise going forward. so i'm then this'll be a new approach shot within regulation. where we incorporate market data, this time market data base on which you all are doing. so i hope you hope this. thank you. www.mortgage helpers.com. either way, the long-term important thing is for the

servicing standards to be uplifted in a way that will continue well beyond my tour, which will be three and a half years, for -- and i think this will set the industry up to be a better steward of people. that's the hope. >> i am waiting for the website. somehow i knew i was going to get -- >> a week after the agreement was reached, one of the large banks in the group and i'm sure they're represented in this room sends a modification proposals to a client on our organization. there is $18,000 worth of irs interest that was put back into principle in the agreement and $35,000 worth of fees. none of those fees were

enumerated or inflamed in agreement with this gentleman. you know, to me what it was was the bank saying, so they think they did something, ha? >> well, the ag state do something. actually i do want to know about that. we're going to enforce this thing as a rule based on what we hear around the country. the other thing it says you know, there is no way to require the client flick all right on just anyone because of what was stopping. we all look like the situation, but frankly this stuff doesn't happen and hopefully will have it soon. i'm not here to apologize and to defend that. i am going to try to work with them so they stuff doesn't happen in the future and that's all i can say. i understand where you're coming from here before it this job,

the banks in north carolina had legislation that was about day to extend. my last great power was to be able to delay for 45 days in our experience was if a distressed borrower could find an advisor of some kind, a lawyer, counselor, somebody who could actually work with and get their stuff together to determine what the problem, the real problems were, there is a lot better chance of getting a resolution, not always come up a lot. the other thing with respect previously. i mean, i've agreed to case studies, right, unless the people are where they were in their lives and of his job was, or domestic. >> it was the holy trinity.

>> and sometimes two to three and sometimes the hat trick. and so, i agree with the comment on that. but there are other more systemic issues with regard to people's lives that we have to assess. >> another question you may not be qualified or want to comment on. you begin by correcting me at the 25 million say you are overseeing 5 billion, not 25 million. >> 20. okay. but my point is that this is obviously going to be going to different states. 25 democratically run in 24 republican. the stories we are already hearing is that a number of the ag is working with the governors trying to find all this money into things like infrastructure growth in education and not to do with the foreclosure problem

itself again this may not be a question you want to answer in which case we can point it to someone else. but obviously people work so hard in the ag settlement it obviously has to do with real people suffering to the fraud, abuse and to have them go to another source just doesn't seem fair at all. [applause] >> you know -- yeah, go ahead. >> the only thing i can say to as a former officer of the state government is that the governors and legislatures of the states that democratically elected. you are i like the results or you may not like the results. either way by democracy we don't buy democracy. and so, it's honestly a question. as a former state official and someone who believes in

federalism, meeting including the states and some who go up and down with my colleagues and my friends, what happened at the state level is between state officials and their citizen. and so the important thing for citizens that the state level to take action to prevent this. so i can -- >> this is a very big issue for all of us. [applause] and it goes to the necessity for us to focus like a laser on the actions and activities as state attorney generals. understanding that in some cases state attorney generals have never been near our housing program ever before. in other cases, state attorney generals have been intimately

involved in seeking redress on behalf of the citizens. and i think our message should be at the state attorney general should follow the letter and spirit of a settlement, which was about housing. not about -- not about asphalt, not about planting trees, some things that i'm for, too. but we need to really be vigilant because in the scheme of things, this is an interesting sentiment because it was a settlement before any real lawsuits were filed. so it is parameters where she do the best of the ability of those who happen to be at the table. but we cannot remain silent. we want to see the money that goes to the state invested in

things like counseling. [applause] and so that people can be equipped with the hope you need to take advantage of the program that are going to be created and the opportunities that are going to happen as a result. this is where we can all come together because the ultimate success of the settlement depends on one, the ability and the good faith of the banks, but on the ability of constituency consumers to understand and have the help they need to take advantage of the opportunities and the relief that there is. so we've already as a national secret to every stated general. we encourage you to do the same. we encourage you to have meetings at the state attorney generals in get to know them, share with them that you're thinking, po2 from a state because attorney general asked

as straight legislatures. we've got to recognize we have worked to do to make sure that how those funds are deployed is accountable to the latter itself. >> one of the things is a settlement with the five major banks, but obviously at ncs we know and i'm sure certain the urban lake and m. clc, the field of financial institutions that to sign this agreement and help homeowners and record foreclosures bigger than institutions. joe, any insight on that in your conversations with the attorney general's? will be more signings, more help on the way quite >> right now my hands are full. i've got plenty of business right now. >> we could do it now, but i am not soliciting.

there must be conversations but i don't have any right at all. >> that is one reason why we have to keep pushing for national servicing standards. it's good as far as it goes, but it doesn't cover all banks in the standards are rigorous enough. >> show, which attack a few moments about your thought around the servicing standards. i know you mentioned earlier. >> it's only 37 pages. >> i am hopeful of course ultimately the jurisdiction and the ability to promulgate national standards that the cfp dna banking agencies as i am hopeful frankly it's a settlement and i hope we will begin to generate a record about the implementation of this

that's helpful and also further action at the federal level. i don't intend to think this is going to do it and i don't think these are the final solutions. but i think they're part of the solution. it's the first affordable foot were going to try to do. i do think there is an issue about the 237 pages. you and i know why they have to be requirements for little crazy. that's a requirement. that's a standard. but it is a concern to me slightly that if we have a very complex and expensive system of servicing regulation, and we may need it. they may be required to be sure people are fairly treated. that will influence the shape of the industry itself. how many firms can actually afford to do it and who could actually take the time and spend the money to do it properly. and so, like a lot of other

things come in the first thing you do is build it out. i will be gone, but the rest of you may be here. let's try to pare back and trying to make it efficient. astride a battle and fairness. but i think we can't get back what we have. i also think by the way this does show other institutions act to be looking at them as a way you can pretty much assure yourself of the least -- you can mitigate regulatory risk. >> as a lawyer i'd be looking at any source or didn't follow this and thinking they were sitting back for litigation. [applause] >> let me as a business guys say a word in favor of regulation. and particularly in financial services. i'm hopeful that the servicing regulation full text others

died. one of the problems in financial services is that it typically is very competitive as between the companies and small differences make a big difference in your market share. what happens and i think this is really what happened in overall mortgage crisis. it is one service or pecans to track it off and not use the highest standards and not check to see if the notice really here, if someone really signing the document are not, then they are getting a competitive advantage against the other guys than the other guys say, how are they doing it so much more quickly than we are? they are not checking them out. but maybe we will check them out check for the signing. so you see this race to the bottom and i think that permeated what happened during the crisis that there was this reset the bottom. people know how the service fonts properly. they've been doing it for

decades. it became economically disadvantageous to do it correctly, they followed the back. so there's a benefit and there's a benefit for the businesses and having standards or their allies in the industry and will be the first one to drop the dime on them so they will be stopped rather than becoming the eighth and paul. and this race to the bottom is behind so many financial crises that we've seen and so ordinarily most business people would be say no regulation. regulation is always competing. in this case this could be one of the best things that happen to the mortgage industry is to have some common sense standard that you cannot fall below and so you don't have to worry about competing with someone who is just cutting corners all the time. [applause] >> back when we used to have the distributed model and the mortgage bankers and my guys and

i were regulating that piece of the industry, our best source of enforcement information and competitors, we can't more of these that actually resulted in civil penalties and even sometimes prosecutions from competitors in the marketplace and we did everyone else. that's the truth. >> one kind of question they are, joe. as you develop this database is pretty important information about services and what is occurring and what has happened to biarritz and so on. is that something that might be available for groups i guess he kissed that would be incredibly valuable for us and are now is what needs to be done. >> is a lot of discussion out the lot of people including some agencies about months ago when level of data and i'm interested i've gotten a suggestion when i walked in, which is good. i'm getting a lot of help. i actually and waiting to hear

from a number of speakers about what exactly -- it's going to be -- it's almost desperate on what exactly are we talking about. so i'm interested in hearing about what you think, which you and your colleagues think that is and i can promise you a promise 10, but i will take it seriously. i'll promise you will work on it. i don't promise you joy. i promise you i'll work on it. but i think -- i agree with you that it would be a sad state of affairs if we went through this whole process and did not collect information in a way that is usable. and could be seen in a way that would be credible because it won't be credible if i keep it in a mayonnaise jar. you're not going to believe me. >> so are probably going to have some time for questions. i think there's some cards on the table and if you just write them down. try to write them legibly not

too long of a question. and then we'll have staff pick them out. anytime while we we are doing that, i am going to ask a panel for briefings. so if you were put in charge, what would be the first thing he would do, first two or three things immediately to try to address this foreclosure crisis and to jumpstart the housing economy? will start with you, marc. >> that's a tough question. i tend to think of what is going on in the housing market is a combination of weak demand and excess supply. and i think that i would try to address those issues through various ways. part of the demand equation is going to be the availability of credit. so obviously some of the credit we don't want to come back, but i believe there's some credibility comeback that has not come back. along those lines. >> so you're in charge.

how would she make you come back? >> for starters, i would take a good look and probably outline. >> we agree with you. >> the devil is in the details. i wouldn't even bother to try to fix the qr and. i would just get rid of it. it's going to be more disruptive and i don't think we have the time to figure out how to do it right in terms of credit. so that to me would just go. this is going to be a counterintuitive one, but quite frankly if i was to do a dollop, i'll assume i can direct mr. bernanke to do what i wanted to do as well and counterintuitively we can to start with raising rates because i have to think the rates we have today are discouraging banks are taking loans onto the balance sheet because of the interest rate risk. we have the rates are going to go up at some point, which will depress housing prices then. so i would rather have that pulled off in the mandates and move forward. so those are some of the things i would do to try to do it.

there's a whole other variety of things. for instance, senator schumer and leahy have an immigration bill were you can come in my house is. that's a smart idea. i don't think it's going to be a small number, but it's a smart idea. you see canadians buy homes in south florida and europe people buying homes. so try to figure out ways to get the demand back in. there is a very difficult part in getting back to something franks said earlier. speculators are a very big part of this and the tension is, how much speculation do we want to come back in terms of getting prices. now back to me means there is no speculation that prices are going to be weak for a while. so if you want to look at spending capital gains on some of buying a house for the next five years or something in this regard because i don't know how you fix las vegas without some degree of second home buyers. >> okay. >> should i summarize?

>> i'll take him a magic wand and i'm going to do create an automatic principal reduction resize for all mortgages to every homeowner who was underwater to take those loans and reformat them are people can confidently pay on them going forward. number two, i would take the concept of a comprehensive program to tape the abandoned foreclosed property to work with construction companies, construction union, community-based organization to get those properties fixed up and put them back in the commerce, either as rentals that lead to homeownership for homeownership opportunities. it would be comprehensive. it would be directed with strong leadership and it would be a puppet private collaboration. the third thing i would do is

going forward i would place a renewed emphasis on home buyer education or housing councils. [applause] when people are financially literate and educated, they made good decisions. i'm not out to be part of the dna of the mortgage market going forward. because we live in a complex world and helping people become more financially educated about the counseling and other types of programs has been proven, proven time and time again to reduce bad decision-making and secondarily to lead to more foreclosure rates if you control the job loss. >> it seems to me the financial education really belongs in early education through high school.

>> the fact that community groups have to keep doing this are working with banks or churches or others is good because it is not there. it shouldn't just be about mortgages. it should be about compound interest, everything in our well-being while. >> joe, you've got the magic wand. they have asked you as a former banking commissioner, summoned him for his anti-predatory lives in his network of a wg is predicting a bigger job. >> all to you what i was trying to get my friends in north carolina to do before i left. it's an instruction of my former fellow regulators. i go around and we talked to the dictatorships and say look, our banks and all banks, but particularly other banks have a concentration real estate general and there is a regulatory disfavor of real estate lending.

so to have an actual community development plan, look at everything you've got, right click sign up to neighbors the need for. where are they? what are they? adman has -- and then present to the banks and all beings, not just the biggest, local community banks, everybody. he was our local idea but the credit needs on the community. sound familiar? like the cra? so with the credit needs of the community are to prepare to deal with foreclosures, to refinance commercial projects that are otherwise going to not roll over and be foreclosed on next. but then -- yes, some crazy person want to go talk to this college and talk turkey to them -- what should i say, mania about real estate and abuse the

powers the bank having giveback credit for addressing the real credit needs of the community which is addressing these problems. [applause] >> thank you. you're back in charge. >> the first thing i would do is roll back the clock and undo things that were done over the last 10 years, particularly in dealing with the crisis once it happened. i mean, i think the failure to use tart as the basis for principal right now with the tragedy because there is no -- i have no desire to curb the banks. i have with tart money gone, you certainly don't have that tool. but the most important thing i could do and some of the vesalius jumpstart the economy. get people jobs. most problems in most people's lives. and then i think you've got to

begin to attack the problem in pieces. anytime you do with something as big as the mortgage market and how to do with all of it, you have to break it down into pieces and deal with origination it's hard for a credit worthy person to get a loan. it takes so long. it is making it difficult for people to buy homes because of the long period of time for an origination to actually occur. people trying to sell dog whether they've actually soldier not because you've got a contingency. we've got to get over the fear of making a mistake. and originate loans and normal businesslike way. the underwriting standards themselves particularly by banks i'm not skinny friday and fha loan has been jack that to a level which is basically saying we don't want this business. and i don't want to have the government telling them what the rules should be, but they need

to look themselves in a lot of these banks are in shock about what happened to them because a lot of them didn't know a lot about the mortgage business when they brought these countries and so it has been a great revelation to them. the next step in servicing the talk a lot about that. we've got to get a handle on how we can turn the modification process into something much more streamlined comic at the ideology out of it. i understand the moral questions of moral hazard issues. understand the reo, but all we're doing is depressing value for everybody. everybody's welcome on down the funds to hear. we've got to do things to fix the problem and sometimes you're just going to have to swallow and make the problem more at the family level. on the securitization side, we have to find a way to revive securitization. it is bigger than our banking

system. and people -- they lose the context and dance. you know, there is about a trillion dollars of credit card debt outstanding. there's one in trillion dollars in mortgages. it is huge and we can't do it without access to the worldwide capital. we have to make securitization work again. [applause] >> if i was put in charge come in the first thing i do is redesign and rehired before that appointed me. >> that is what i should've said. >> you know, i agree with what mr. raines and that mr. morial said. bizarre parts for the long-term. i think we also have to make sure that the consumer financial protection bureau is strong and

that there is no ways for that to be weak and going forward. we do need wyatt and are. we probably need a holiday to join wider, to govern the financial and detentions going forward. so i mean, does it do the things besides taking the way out of the political system. that is sort of the linchpin. that is corrupting our politics than we have to figure out a way that our federal elections can be federally financed and we can help the corporations pouring in these huge amount of money. into our elections. [applause] >> my focus would be on the homeowners who are risk of losing their homes. and i think the first thing i would do would be to say that

the forest service there can foreclosed, they have to actually evaluate the homeowner for the bug modification and if this is a really radical proposal, if that one modification would return more value to the investors in perceiving that the foreclosure, they have to offer to the homeowner. and if they don't, then they can't foreclosed and that would be my proposal. [applause] >> thank you, diane. i was looking at some of these questions and their tickling me. joe smith, how much have you are relying on self reporting services from enforcement. how would you determine the accuracy of this report click >> welcome set of documents required that i receive reports for the bank to the self-analysis first. the important thing to me is that the banks have internal review groups that are independent enough, big enough,

competent enough to do a job so that we don't have to do much additional. if they aren't, will do more. i think frank lucas is something to leave behind -- i hope will be left behind after the settlement is over, which will say the settlement is over, which will say the settlement is over, which will say better java self-monitoring and will have an industry where the correct air quicker and go on down the road. i'm an optimist and i think that can happen. but we'll see. snack this is a question for anyone on the panel. attila principal reduction for borrowers who are severely under water and not a default? why not allow that? i think we will allow it, right clicks nobody? we're all in agreement. okay. what is financial institutions institutions -- unless somebody wants to say more than that.

what keeps financial institutions from paying their portfolio loans from purging their portfolio learns before the final settlement? purging their portfolio of loans in minority communities before the final settlement. >> i don't know -- i mean, it's not a question. it is a statement. >> anybody? can we call upon banks to voluntarily save foreclosures until borrowers are reviewed for principal reduction made under ddg settlement? is there any reason we can't just call for voluntary foreclosure? >> welcome the standards themselves required -- i mean, that is one of the 300. you like that one? >> it is not as tight as it needs to be.

>> thank you area match. [laughter] it is more than we had, so it is a start. and a number situation, the servicemembers civil relief act and appeal rights and there may be other additional appeal rights. so we are moving that direction. one thing i can do what i know you help me, which is good as we are going to see how the enhanced servicing sanders and fellows worked and we have an at all. is it enough? we can go from there. >> final question, and some unmake make prior to homeowners receiving assistance? [applause] >> i do think counseling in my experience is crucial to discuss. i don't think settlement requires the and i know that industry have been parts of it.

as capital markets have opposed because it inhibited economic efficiency. and it costs money. but i think there is a clear correlation between counseling and results. so it's a good idea to have it on hand. >> you know when we first introduced her affordable housing at fannie mae, we required count only and had terrific support from the counseling industry. and had a lot of resistance from lenders, who wanted to make the loans without counseling. and so over time, those requirements got watered down and became a judgment call for the lenders. personally i always believed someone who'll do the credit background at the counseling was a value add. because it turns out in real life, for example, some lenders

say why do you even require a down payment of 3%? that is so little. let's make it zero. my experience in life is that a little bit of skin in the game goes a long way. people who are not serious don't show up. you say you have to counseling. if they're not serious they don't show up. you don't want them to show up. you don't want them to have allowed if they are unwilling to show up. and so to me, counseling with import name and i believe it's important now. it is for a lot of people their success in homeownership may come from waiting three months in saving a thousand dollars more just in case and homeownership to be successful. we have a significant impact on

credit reform and always has. >> and fha there is a environment and this may surprise you that we spent a number of reviews pushing to have a program. and that will remain shameless. fha is 50% of first-time buyers today and to me that is the market and its counseling. that is why we love. >> there is also an opportunity under the mortgage standards in dodd-frank to push for a cushion of housing counseling their unqualified mortgages. >> so conflict matters, we all agree. so you know, i really appreciate these gentlemen and gentlewomen joining us on the stage to have this conversation.

[applause] and i hope obviously several hundred people mr. enjoyed the conversation. sounds like he did. but more importantly are equally important is that in america through c-span but a lot more people understand the perspective and challenges we have a mini to have have a civil discourse on the strength of the solutions come immediate solution regardless of the affiliations to do a foreclosures and jumpstart the housing market to make sure we get this economy back on track but clearly jobs, housing really matter. thank you diane, to make uber coming franklin comment thank you show and thank you, marc for all your help. thank you. [applause] [inaudible conversations]

[inaudible conversations]

>> tuesday, new york university law school held a panel discussion on the topic of race and policing. panelists included scott thompson, american university law professor, song richardson and university law professor, tom tyler. topics include the recent trayvon martin shooting and racial profiling. the center of the administration of criminal law at nyu law school posted this hour and 25 minute event. >> the center of the administration of criminal law's fourth a major conference, a new frontier in recent criminal justice. for those of you who are veterans of the conferences, you know what important issues they tackled and what great panelists

they get. and actually, very recently nyu press published the first conference last year on prosecutors and the board using criminal lot to regulate corporate conduct. and i know from my perch that was a very influential set of papers in a very influential volumes. i like to think the faculty director, my wonderful colleague, rachel bar-code a founding professor of law and policy and she will speak in a few minutes until you are the important step you should know about the conference. i'm a filler to make sure everyone sits down before rachel talks. and then you'll also hear from rachel in the third panel on race ended being on the problem of mass incarceration. as i believe all of you know, racial subornation criminal law scholars. she has written some of the most important work and seen over the

last 10 years. it has also cast herself and has basically started this new academic field of looking at criminal lot as part of the system of law and regulation. and that has been an extremely powerful paradigm and rachel's work has been enormously recognized for its pat wiki nature. so she runs the center and the center has done extremely significant things, including has retained some of some very important briefs recently, and amicus briefs both on the side of government and on the side of defendants that have been cited and quoted extensively by our appellate courts including the supreme court of the united states recently. i really grateful for all the scholars and practitioners who

are here today into her keynote speaker, michelle alexander is the author of the new jim crow, mass incarceration in the age of colorblind. so, it is a great privilege for law school to host the centering annual conference is said to have all of you here today and now it looks like every city, looks like an appropriate time to turn things over to her later, rachel bar-code. thank you. [applause] >> thanks so much, ricky and all of you for coming today to our fourth annual conference. as ricky mentioned, our center is an organization dedicated to providing good government practices and criminal deficits. we do that in a variety of ways that we participate in litigation. we engage in public policy outreach and produce scholarship and hold events like the one we are holding today in the hope of getting a conversation started on an important issue. we hope that these efforts will

help change the law and a positive direction. read more about us on our website, they have to make a couple pitches while you are here in a captive audience. a couple of recent things we're working on. when we filed in the case at the supreme court today on how to treat the ratio between crack and powder, cases in the pipeline after congress passed the fair sentencing reform act we filed a brief explaining that when the initial 100 to one ratio was asked, no one gave back in a can better reflection and were hoping that helps the court learn how to treat those cases in the pipeline. without an amicus brief but the supreme court of light upon extensively in the recent cases feeling with ineffective assistance of counsel is the plea bargaining stage and those were important cases where the court held just because you get a fair trial if you have an effective assistant counsel at the plea bargain he staged a

fair trial doesn't necessarily remedy the defect. in terms of policy outreach we are currently working on a report right now that highlights the best practices and prosecutors offices for dealing with wrongful convictions. so we are highlighting conviction integrity programs that work and work effectively so i hope will look for the report come early phone. we hope that today's conference will lead to positive changes as well. i do want to thank a few people. and what to thank ricky were bad for his generous support of our center, the ford foundation, also first general support of all of our activities and particularly also today's conference. we are grateful. the public welfare foundation is supporting our conviction integrity project and we think them and also the manhattan district attorney's office for partnering with us on that. i would like to thank the former executive director of the center, anthony barco who is nonprivate pack despite its instruments instruments in tiny today's event and invited all these great panelists to be seen

today. my assistant, laura merritt cd was worked tirelessly to get the entire event running and running smoothly by jo a huge debt of gratitude to you and extinguish group of panelists and presenters i thank you all so much for the time you have devoted to get get two days after. and all of you for coming. the c-span is here and i wanted to tell you that just so you can be excited by it, but also if you choose to ask a question, you are thereby consenting to have c-span show you on television asking that question. you can decide if that affects your desirability to ask that question. in terms of today's event, i've had several people say to me recently, what great timing for you that the trayvon of martin tryout is taking place right now because it brings the issue of race and criminal justice to the attention of the nation. and while i agree that very tragic event has been a wake-up call in terms of talking about recent criminal justice, i have

to say it's a bigger mystery to me why we weren't already galvanized to talk about those issues before that happened. and for all of you who rsvp before that happened i think you had an interest in it that predated the issue. the reason i think it is important to think about in a much broader scale than that one incident is the statistics alone should really call attention to what we are talking about. we'll hear about more as the day unfolds but i will just give you a few. as more than 2.3 million people who are incarcerated in over 7 million under the supervision of the criminal justice system. of those incarcerated, more than 60% are racial or ethnic minorities. one in every 10 black men in their 30s is in prison or jail every day. two thirds of the people in prison for drug offenses are people of color and those pixies, not just the one anecdote that captures the

nation attention, it's those mass statistics that will be talking about today and how the different institutions of government lead to the statistics, what they can do about it how they want to think about it. we caught this new frontiers to address racial imbalance in the united states because our hope is we'll talk to you today about the best research out there, the best of what we know it can be doing about these problems and we will start out with the first panel in policing and after lunch we'll have panels on prosecution and then mass incarceration and sentencing. and then her keynote comes at the end for scheduling reasons, michelle alexander was wonderful to make time for us even my personal circumstances that may scheduling difficult. so he's going to close at her event at the end of the day. as you know the author of the new jim crow and in that book, she says the book itself is intended to stimulate a much-needed conversation about the rule of the criminal in creating and perpetuating a racial hierarchy in the united

states. to this day as they were re-immerse ourselves in a conversation and to get us started is this panel in policing. is going to be moderated by david clancy, professor of law at berkeley and one of the country's leading experts on policing. he clerked for the d.c. circuit harry blackmun on the supreme court was an assistant u.s. attorney in los angeles and has served as a special counsel to the independent review panel investigating the l.a. police department's rampart division scandal is just an all-around brilliant and wonderful human being and i am so glad he is moderating today's panel. without further ado, join me in welcoming this panel and i look forward to your discussion. thank you. [applause] >> thank you racial and taking a call for coming today to join us in discussing these very important questions and issues. we have a wonderful panel here this morning to talk about the issues of race and policing. let me introduce them all

briefly and then we would've started the discussion. to my immediate left is lisa daugaard, public defender in seattle and supervises the racial disparity project, which works to reduce bias in the criminal justice system and focuses particularly on drug arrest in seattle. to her left is song richardson, former public defender coming up or university of iowa and leading scholar of the world faces social cut -- do not force it. to professor richardson factory kami chavis simmons and a nationally recognized scholar of police accountability. professor cements leftist scott thompson and came in new jersey since 2008. she concentrated carbon in 1994 and has received repeated recognition and awards for exemplary service and leadership. anti-chief thompson's leftist professor tom tyler, professor of law and psychology at the élan school, who is world famous

for his research on the way police crack the third and conduct of other officials hope to shape the legitimacy of law and legal institutions. so over the last two months, much of the country has been transfixed by the shooting death of a 17-year-old teenager, trayvon martín in sanford, florida who was unarmed, walking back from a convenience store when he was killed. much of the attention to the case is focused on the role of race, not just in the shooting in the police investigation and the initial decision again george zimmerman and charging with any crime. last week said the man was arrested and charged with second-degree murder in this morning as we speak the senate judiciary committee is holding hearings on any racial profiling in america. so professor tyler, let me start by asking you as a psychologist and law professor, what do you make a controversy of the trayvon martin shooting? how does it relate to the long-standing debate about the

world of race? >> let me begin by saying that i agree with rachel that we need to put this latest incident in context in that context is a whole series of incidents of this type over the last several years and really over our entire history of the united states. and this is just one example. but it is a good example of the tension over race and policing, both in terms of the decree about pride, prolonged nature of the public outcry about this latest shooting and also the evidence of the clear difference in the way of this shooting is understood in the light of the minority communities. that is as was true with the incident heard a while back. when you do public opinion surveys coming to discover that

the white community and majority committee understands these% and really profoundly different ways, that the motivation of the people involved are trusted law enforcement are really noteworthy and they are certainly far beyond the most recent event, although that is a good example. we have to ask basically, why is there this gap? and i think the thing that we should recognize is that we are just looking at the tip of an iceberg because if we look at national level public opinion data in the united states, we see a gap up 20% to 30% and the level of trust and confidence that the white and minority community expressed in the police. furthermore, we see that this gap has persisted over time. there is no evidence that the gap is closing.

in addition if we look at the entire population of the united states, we see that trust and confidence of the police is not terrible, but it's not great either. it is around 50% to 60% of the population expresses confidence in the police. and again, that is not in creasing. but the look of the last 30 years, for example, we see no evidence that trust and confidence in the police nationally is improving. we might ask a general question, why is trust and confidence low? why is it not improving? and why is there this large racial gap that leads to the kinds of things that we see when there isn't a hint of this type, we receive vastly different understandings of the event in vastly different levels of confidence in the authorities to deal with whatever is the particular incident. but i would emphasize is one of

the reasons we see this persistent gap as we do not see that the strategies, policies and practices police are using are focusing on legitimacy that police have in minority communities. they are not focus on trust and confidence. if we look at what the police are using unfair framing strategy, there are two concerns that are typically addressed. one concern is awfulness, police looking to see if the actions that they are engaged in are consistent with the law to go to a police training academy he see the cadets around with big manual full of laws they are learning so they can try to make their conduct lawful. and the other is the fact nice. police officers trained to do the things that they think arafat did in terms of lowering the rate of crime, suppressing violent gun crime.

there are other issues that for example in the earlier area are called community policing issues. it is really a strong focus on lawfulness and effectiveness. the interesting thing about lawfulness and affect this is that these are not the issues that we find that people in the public are concerned about when they evaluate the police, when they think about it, they trust the police sent in police are legitimate force in their community. what the public is concerned about and in particular minority community is extend about is whether they feel the police exercise the authority fairly, whether they make decisions in fairways, treat people fairly and when there are these incidents, we see that the concern of the community is often framed in terms of these issues of fairness. i'll in the trayvon martin case, an immediate question of consistency approval application

, would this have been handled the same way after the time had been wiped and the shooter had been black, for example. it's the law consistently and fairly applied? what we see when we look at discussions with the police about a whole series of issues in recent years is that they are thinking about these issues from a different point of view, this point of view of lawfulness and effectiveness and not for the point of view of legitimacy. we talk about racial profiling, there've been endless discussions about when is that legal and its effect give?

>> and they are focusing suspicion on the application of force, threat of force on those people. communicating suspicion about their character, undermining relationships with people in the community. focusing, basically, on risk and sanction of the definition of the relationship between the police and the community. i think the point i would make, is that if the police would address issues of legitimacy in the community more directly by focusing on how their policies and practices shaped legitimacy, and if they do not, will be so that they discovered that the principles of fairness, such as allowing people to explain decisions, being respectful of people and their rights, if the police do those things, then they will be addressing the

underlying problem that is causing the kind of reactions that we are seeing in incidents like the trayvon martin situation. >> lisa daugaard, based on your work in seattle, does it seem to you that the issue of race and policing is really an issue of fairness and legitimacy? >> yes. [laughter] [laughter] >> let me just give a little bit of background about the context in which i am working. i have this surprising privilege and opportunity to work with the police department and two prosecutor offices which are voluntarily discontinuing techniques which are long established to delegitimizing to

people of color. these measures that i'm going to sketch out at a very rough outline form were instituted by a commander tried to the doj investigation and independent of that. it truly was a voluntary ship. we can talk later about why this came about. what am i talking about voluntarily surrendering techniques that have been legitimized? i will give two examples. first, those of you in new york are familiar with the program operation clean halls and it enforces are trespassing program. police agencies entering into agreements with private property

owners to check and purge public areas of private property -- privately owned property. a people who are determined by the police not to have business there. in an apartment building, this could be a kid who lives there who cannot prove that he lives there. he went out to get a carton of orange juice and he doesn't have an id, and the police don't believe he lives there. the nypd has instituted a lawsuit about this. in seattle, trespass is a transitive verb. it is something that people have done to people. you've been trespass. [laughter] >> what happens to grammar when we do this to people? [laughter] >> so anyway, the police have made agreements with private businesses. but they become the agent and

then they get to determine that someone is no longer allowed to use this property. then they are banned for a week or a month or a lifetime. if they come back, they are subject to arrest for criminal trespass. probably more important, many people don't come back. they alter their use of the space permanently because they think the police can and do regulate where they can go throughout the city. similar programs have been in place elsewhere in the country. notoriously in cincinnati. recently, and legally, this is very problematic. this is from depriving someone of liberty. we said we would litigate that. if we had one process where an individual could seek a hearing to determine whether or not they

could be banned from the parking lot of the stop and shop or something like that. then people would not use it, even if they did, they would probably not purveyor -- prevail. what's remarkable is that the department had said that we are going to bring this program down. if you want to talk about doing things differently? they said yes, they did. they said that because there have been a series of publicized videotapes documenting encounters between police officers and people of color. it was highly embarrassing. they recognize that this enforcement program was contributing to that. they took the opportunity to say that you could remake this program in court, but we want to meet remake it voluntarily. it has been completely revamped. now, police officers don't decide who can go in to the city

of the seattle. at least they are not supposed to. inflammation has been spotty at best, and that is an important question to investigate in any discussion of law enforcement reform. translating decisions and law enforcement decisions to the streets. the major work we have done has been with the seattle police department and county prosecutors on moving towards laying down arms on the war on drugs. although we are still working under our criminalization paradigm, nationally, law enforcement and prosecutors choosing not to file felony charges against people who have committed felony drug crimes, and instead taking those people directly to voluntarily dashed directly to a social services

intervention program where resources are provided to those individuals to address the underlying issue that led them to a this point. this is a job that people can do and make money for rent or whatever other obligations they have when they can't access jobs in the labor market. this program is called the law enforcement assisted diversion program or lead. he came out after years of litigation in seattle drug arrests. seattle is not only typical, it is an extreme outlier in terms of racial disparity. it is an extreme instance among cities in the country over the last 10 years. when we came from -- just to wrap up -- in the course of this

litigation, we would win some preliminary trial level decisions, and the prosecutor would dismiss charges against her their clients and we would start over again. after a few rounds of that, what we we had a sitdown with the mayor's office and the police department and prosecutor. but one was already all on the same page when there is a problem with racial disparity and a drug. >> the answer was no. there was no agreement. besides the fact that as one judge said, this question passes beat any idiot test. any idiot can see that any idiot that is charged with a drug crime is black, even though it is well-established that the number of people selling drugs are white. coming from that discussion, a guy who i know who is a

visionary who is the head of the police department of seattle narcotics team, he said what we put that question aside and try to agree on interested in doing something different for drug enforcement. what should that be? it was interesting because we have no answers. my favorite was arrest all the white people. and our aclu partners were not thrilled about that position. [laughter] to more important, the more realistic position that we throughout was a moratorium on covert gangs. the problem with that is that our partners were not enthusiastic about this. by and large, they were not supportive in decriminalizing.

paradigm. the individuals out selling drugs on the street and communities, we did not want laissez-faire, they did not mark this. what we tried to engineer with lead is that a recognition that for the time being, deputies will be asked to do with these problems, and to a significant extent, their deployment will be racialized. this is a bigger problem and a more long-standing pattern than we can take on with a single policy change. however, could we reduce the harm in those patterns of interaction, by making it so that when the police are called, it is not the beginning of a harmful interaction that destroys the person's life, that we could put out resources that

would help their life plan to not sell drugs on the street. that is what we are trying to do. there are all kinds of challenges, and this model is obviously a very partial solution. there are things like racialized deployment. please contact is going to be the mechanism that we used to use to inject resources into certain communities and populations. because we don't dare to do that any more public approach that is not on the criminal justice system. that is all very problematic. >> song richardson, if the police want to build trust in minority communities and they want responses to the concerns that lisa daugaard said in the minority communities in seattle, are their there psychological mechanisms having to do with the way the people i'm including police officers, think about race that need to be taken into account? >> yes. i will expand. first i just want to thank

rachel and the nyu center on the administration of criminal lot for inviting me to participate in this conversation. in response to david's question, what i want to talk about is the ways in which race is discussed. so often, when this conversation or when this topic is raised, we tend to focus on issues of character. are the police rational, or are they racist when they stop african americans or other nonwhites at much higher rates than whites? is george zimmerman a bigot or a concerned citizen? is trayvon martin an innocent victim of of a shooting or is he troubled. what i want to focus on is conscious racial bias. they actually mask the way we can still achieve racially

disproportionate consequences, it even in the absence. the reason for this, in my view, is something called suspicion testing. the service systematic and predictable errors that occur because of the way that we all think. i just want to talk about that very briefly. the way that our minds work, we tend to make associations between concepts. in order to process information quickly. you can imagine that if i had to figure out how to use this pan every time i came across a pen, i wouldn't be able to function. we make these automatic associations. if we see the word doctor, we automatically think hospital and other related concepts. these things will become activated and our brain. unfortunately, the same thing occurs when we think about race.

these non-conscious stereotypes affect all of us. there is research, for example, that demonstrates that police officers who think about crime automatically trigger non-conscious stereotypes of blacks. as a result of that, they pay more attention to black citizens than they do to white citizens. this can happen even if an officer is attempting not to be affected by race. in fact, if you tell an officer, do not use race in your judgment, that will cost the association to come to the forefront of his memory, and affect his behaviors even more. it was like if i told all of you not to think of a white elephant. the first thing you do is to think about a white elephant to avoid thinking about it. just thinking about the concept of crime triggers these non-conscious biases of blacks. the reason i only speak of blacks is because of the science

upon which my research is based, focuses primarily on the black, white, relationship. i want to share one quick study before i end, which is particularly lower than judgments of criminality. there is a study. it is a famous one. researchers wanted to test whether or not stereotypes would affect the interpretation of ambiguous behavior. they have subjects watched two men who were on a video engage in a discussion that grew increasingly heated. eventually, one of the individuals shoved the other. the subjects have the option of being dramatic, aggressive, or violent. the researchers manipulated the race of the pusher and pushy to see how they would affect the behavior of the raider. it did. when both were white, only 13%

thought that this shall was aggressive. 69% thought. >> let me start again. when the two individuals were white, only 13% combat shove to be aggressive. when both individuals were black, that number went up from 13% to 69%. in the interracial pairings, visit statistics and findings are even starker. when the white individual was pushing, only 13% on that to be aggressive. when the black individual was the one who was pushed -- when he pushed the other person, that number went up on 17 to 70%. you can imagine an officer who is on the street thinking about crime, which triggers a

non-conscious stereotype. his attention will be drawn to nonwhites first, regardless of his conscious racial attitude. then when he is attempting to determine the behavior suspicious, he is more likely to review it as suspicious if the individuals are nonwhites. the study demonstrated that this is likely to happen. the final thing i want to add is something called stereotype threat. if we don't actually focus on the victims of stereotypes, and yet, psychological studies demonstrate that people who are stereotypes in a negative light, have reactions that are difficult to control. like lack of i -- eye contact. increased heart rate. this is because of the fear of being judged or confirming a negative racial stereotypes about your group. so you imagine, when an officer approaches and you are aware of the stereotype, you will

uncontrollably act in ways that the police are trained to view as suspicious. we can understand how implicit our thoughts and non-conscious stir types can explain the racially disproportionate stopping of nonwhites. even in a conscious police offinwhites. even in a conscious police officer. in order to deal with this, we should engage more with the social psychology of contemporary bias, and also likely send others on this panel have done, collaborate with police departments to figure out ways to deal with the effects -- the non-conscious effects of stereotypes. thank you. >> thank you. let me ask you song richardson said that unconscious discrimination can lead well-meaning officers in harmful

ways and leaders of minority communities to act in ways that the police might end up thinking are suspicious. is that something that a police department can and should address? >> absolutely. let me start by saying that i'm going to relate my experiences. my city has about 77,000 people and it is 97% minority. over the past decade, with the national rankings with most violent cities, we have never ranked lower than five. we've been number 13 times. we are presently one of the nations most poor cities. we ranked lowest in the state with regard to graduation rate and dropouts. although we might be an anomaly in many regards, the challenges are in some terms, even that much more exasperated with what we are dealing with.

the issue of race in an extremely -- especially in an urban environment and challenge community -- it is at the forefront. if it's not something that is part of the daily conscious of an organization -- whether it be a trayvon martin or some type of civil unrest. whether it is legitimacy in and even went some of the things that alicia was saying, the enforcement act specs, i think it is absolutely accurate that one of the things we do find, and then come on those challenged communities are, number one, what we have seen is that the tactics and strategies in the 1970s and 1980s into

thousands, with regards to the low level by by its operations -- it has not had an impact on the folks engaging in criminal activity or changing the criminal patterns that are taking place. the fact of the matter is that when you're looking at a street-level drug operation, the most expendable component of that is the dealer. at the same time, you are dealing with the challenge of addressing the concerns of the community. the community doesn't want the open air drug market existed. it is negatively defining their lives. it is not so much the drug dealing itself. but it is all the issues that come with it as well. which end up turning into violent crime. in dealing with these aspects, and with raised in an urban city and a setting such as mine, the

fact of the matter is that we constantly see and are dealing with -- even in our own officers -- the racial disparity of policing, and the fact that when you have a densely populated area of minority communities, and you see tremendous amount of caucasian individuals in high-end vehicles driving throughout the city, the community is saying that they don't belong here. they don't look -- see that white guy, go stop them. officers see the same thing. we can't be naïve to think that number one, we don't have an implicit bias. furthermore, i do a full heartedly believe that there cannot be an older reliance upon formal social control to have a

profound impact within communities that we want to have. the reality is that please should act as a facilitator, a convener, to get back collective efficacy that research has shown to be productive. we have seen it work in smaller segments of our city. but it is trying to get that transition into the much larger application. all the while, realizing that the solution to a challenge community do not lie in a pistol and a pair of handcuffs. >> we are hearing a lot about operating fairways that are illicit trust for minority communities. is there a law for legal institutions ensuring that the police do move forward in these ways? >> yes. and i do have more.

i just want to go on the analogy that some of you might be familiar with. the miner's canary. this alerts minors to danger -- it alerts miners to danger. we have a broken system that needs improvement over all on competence. i am confident that we can make improvements. to that end, i would advocate a swift army approach. it takes everyone. it takes the federal government, state and local government, and communities working together to

address it. i have a little less faith in the role of court. because when we are talking about the exclusionary rule in some of these judicial remedies -- this can only -- these remedies can only affect adjudicative conduct. much of what happens on the ground with police officers is on adjudicative. if it doesn't get to a court of law, that doesn't mean that it is still not a problem. we need to have a multifaceted approach, and we need more transparency in police departments. that will go a long way to solving some of the problems that the communities have with trust and legitimacy. i want to talk specifically about the united states department of justice and the pattern of practice. the united states department of justice has the authority to sue

and seek injunctive relief against police department said are engaging in patterns of unconstitutional behavior. of which racial profiling is one. it is one of many things that police departments can be doing. one of these -- and the doj has used this authority in washington dc, pittsburgh, los angeles, and a lot of the reform that has been gained through this are reforms that the department is seeking to gain -- they are focused on examining an early-morning tracking system. if there is one thing that we know about police agencies, is that when there is a problem, there is generally a problem with a small number of officers who have repeated instances of misconduct. if we can implement an early-morning tracking system to identify these officers for

training or retraining order and discipline, that might help our department. we can see how that would also -- by making those officers accountable -- might also make them part trust and legitimacy among the community. other reforms have involved implementing a fair complaint process. that makes sense. if citizens have complaints about the police department, they should know the proper procedures in order to make a complaint, and they should feel some confidence that those complaints will be handled and acted upon on a fair manner. also, there are other reforms related to put racial profiling as well. all of these reforms are an attempt to gather information so that we can have additional remedies. but the federal government -- they can't do it alone.

obviously. the special litigation section of doj may have -- i'm not sure the number of attorneys -- but let's say it's 20 or 50 attorneys. they can't be in every police department that might have a problem. state and local governments are going to have to step up and get here. they will have to make some changes. also there has to be contribution from the local community. the local community realizes the problem in their communities and they should have a role in identifying those problems and developing solutions that are tailored to the local needs. again, the federal government can incentivize state and local government. there are millions of grant dollars that are available each

year to local police departments. i would have the radical view of you should maybe withhold that money and see if they can't be brought into line. or maybe we could do competitive grant programs and give money to a police department that has experimented and has developed programs that are working. again, i just think that we need a multifaceted approach that is aimed at changing the broader culture of police departments. if we can fix some of the broader issues, then certainly, we will fix some of the issues related to racial minorities. >> if i could push back a little bit on this idea that we need a multifaceted approach and we need to take account of fairness and that there are all kinds of different ways that we need to be thinking about this.

why isn't the answer just to say, the police should not be making decisions based on race. and then to put in place structures so that we can find out whether that is happening. this morning, the senate judiciary committee is having hearings, not just on the general problem of racial profiling, that on a bill introduced by senator ben kalman of maryland to the end racial profiling act. this act bans racial profiling by federal state and local law-enforcement. it enforces that band brunch and then. there are awards of attorneys fees and also cuts off funding for state or local law enforcement agents that don't

comply. it also commands that data should be gathered so that we can tell whether they are making conscious or unconscious decisions. it's not the way forward? >> there have been bills introduced many times. there are a lot of states and local governments that already collect this information about 21 states -- 21 states are under statutory mandate to collect the information. about 20 -- 25 states are collecting it already. i think a federal law is a good way to ensure that we have more uniform collection. the problem is that once we collect this information, what are we going to do with it and how are we going to develop

programs or remedies. there are a lot of states that are collecting it. they have found, for example, missouri collects information, for example, that black motorists were likely by 70% than white drivers come in twice as likely as hispanic motorist to be stopped by law enforcement officers in 2009. we know that. we know we can look at new jersey and maryland and we know a lot of this information. but there are a lot of limits to simply collecting the data. i would be interested to hear what she says as well. the burden on officers and how do we -- how do we determine a person's race, this has been in other thing that has been difficult for some officers to

do. also, just developing benchmarks for comparison. what groups are we stop more often as motorists? honestly, we stop more african-americans in this area. there are challenges there. i think it is a good start. i think that it is always great to have more information. but what are we going to do with the information. >> would it be a good idea to direct all police agencies to stop discriminated so that we can check to whether they have done a? >> i believe that things do get measured are the things you can perform. but if we are going to have a meaningful step in the direction of trying to address this issue, i am for this.

in 2005, in the state of new jersey, our attorney general had an issue -- he issued a directive banning racial profiling. race cannot factor in two and -- he cannot focus into an officer's decision. or it is part of specific crimes reported and follow-up investigations. race cannot factor into the discretion of an officer of whether they are going to initiate a stock or not. furthermore race cannot factor into the determination of how that stop is handled once they are stopped. the litmus test is really how would this stop be handled if it was a person of the a different race? packets to be very difficult to

manage. that gets to be very difficult to manage that. what is key is that we don't have that directive operating. but we have that coupled with a system such as early warning systems. my perspective in the jurisdiction that i'm charged with -- if i was to look and see statistics and i was going to stop primarily minority folks in that district and where we work, i do believe that when we start to get complaints of demeanor and complaints of excessive force, and improper search and the like -- but now it does become a key variable in our analysis of what is going on in that individual officer, so that we can have some type of intervention and either use the

activity, groovy officer from the line of work, or provide the training that they may need to get them on the right road. i am a proponent. >> it is easier to measure the the raids in which people are stopped in the ways to which they are treated. in seattle, is a disparity in the amount of kind of people stopped or is it how they are treated that is the problem, and would a mandate that collects statistics to help stop discrimination be helpful? >> i think it is all about who gets stopped. much more than how they are treated after the stop. stop itself, regardless of courtesy or procedural fairness after the stop, has done something to the individual who

was stopped. it has communicated that they are a subject of interest. but they are suspicious. but they are someone who law-enforcement looks at in a particular way. it's not that it is irrelevant. after-the-fact that young black people and blackmun grow up knowing that they are going to encounter law enforcement come and why people know that they won't unless they are the victim of a crime or driving at fast speeds. i just want to say that i think that there are a number of limitations to this mechanism. the first is the problem of benchmarking. collected data on what law enforcement does has very limited value. unless it passes that any idiot test. everyone knows. usually, it is not so obvious. the background that may not be a

reality -- in seattle, when our projects started, the seattle police department was in counting the cars of people driving with suspended driver's licenses. when that law went into effect, we got the city council to collect data on the race of cars impounded and driving with license was suspended. shockingly, about 52% of the cars that were being taken were african-americans. some of you might think of that passes the any idiot test. 55% were black, white? because traffic stops are correlated with race, and not paying your ticket is correlated with poverty. it was incredibly racialized. in fact, police officers were using discretion to not take cars of people to a marginal

extent. the point is, it is that if you look at that statistic, you would totally misunderstand the problem. the problem wasn't the weight that this was being implemented, it was the criminalization of being a poor driver in a society where people have to survive. the other problem -- the benchmarking problem is an enormous one. we have to dedicate time to creating benchmarks than to collect data. otherwise i think it's useless and can send people in the wrong direction. the other problem is based on race. it is so easy to attend to the mentality of the individual officer. usually much more important to focus on is deployment choices and incentive structure. what are the areas of emphasis?

where are people sent? what policy directors have commanders been given? i think it is very important to bear in mind that police departments are floating on top of a river of social consciousness and consumer pressure for policing. a quick example. it is all of us. not just the police. seattle, like many cities, has done undercover driving things. back in 2001, the first and only time, the department did break up a rave. almost everyone in attendance was white or asian. it was like shooting fish in a barrel. right before that, there had been a couple weeks where the police had set up about how

ecstasy is the new crack. it is very dangerous. anyway, so they made these 43 arrests. all kids -- most of these individuals had no criminal record, they were from a good family, they were all going to med school -- [laughter] >> and of course, they still are, because they got favorable treatment. they got first-time offender waivers. the point is, the department came to the city council to breathe on the operation. there was a firestorm of a program. don't we have better things to do with the police resources. you really have so many officers that you can do this undercover sting at this race? are you kidding me? of course, some of those are not bad questions, but they are questions that should be asked every other year and every other day and every other drug enforcement operation in the city. what did the department took away? they took away that there will be no resistance to the normal course of action in gentrifying

areas where poor people are black and on the streets and why people are in the condominiums, but not between med students. they are not to be enforced against. it is very difficult to focus solely on law enforcement. >> do you agree with lisa daugaard that a hard legal command to stop racial profiling and mandatory collection of data would be a helpful way to move forward, or do you think it would be a distraction from the issues, fairness, and procedural justice that you emphasize? >> i think we all like to see racial profiling stopped if it is in fact motivated by racism or prejudice as people have mentioned. one of the difficulties in the actual operationalization is that it gets complicated in practice because there is a connection between race and

propensity to commit crime. in many communities and neighborhoods. it is not as simple as keeping statistics on the race of the people that the police deal with. the police have very reasonable arguments in many cases that they stop particular kinds of people because of who is committing the crimes in the community. i don't think, therefore, we shouldn't try to do this. we need to recognize there have been efforts over the years, and they have been difficult to enact because they get complicated very quickly. but i still would say that we should do them. what i would argue is that we should do them, that also we should recognize that to the people who are dealing with the police, irrespective of whether the please have a valid reason for stopping them or not, the first thing to do is to make sure that the people are going to react how the police treat them.

how they are treated when they deal with the officer. it is true that it can be stigmatizing. we know from research that the main way you are stigmatized is the way you are treated by the officer. i think there needs to be training for the police where they recognize that one of the goals that they should want to achieve is to build support in the minority community, something that the chief mentioned. they should always be thinking when they are dealing with members of any community, especially the minority community about how their behavior affects the way they are perceived in that community. we certainly know that when you have a civilian review board, the primary reason that people complain is rudeness or disrespect. i think that is typical of what we find when we interview people. to the degree that we can empathize to officers the importance of building legitimacy and the importance of treating people well -- toward that objective, i think that when it is necessary for the police to intrude into people's

lives, any harm is minimized and there is the potential for some gain. >> professor richardson, containing address the problems of unconscious racism that we were discussing earlier. and what would that training look like? >> there is some hope, simply because we are all affected by these biases, it doesn't mean that we can't take proactive steps to address them. before talking about the different training, i do think that in terms of data collection i just have to say something quickly about that. we are in new york. we know that the nypd has been collecting this data for some time now. i think data collection is important. however, the actual behaviors of officers on the street have not changed. data collection is fabulous, but we need to figure out what to do with that data once we have it. in terms of training, what is interesting is that i think that we all, scholars, activists,

citizens, we need to engage more with the police departments. i know that i'm guilty of stereotyping the police that i talk to. david hasn't mentioned it, but there is an article called seeing blue, which are ways that we think about the police prevent us from engaging in collaboration with the police. one specific training that i will mention that is my understanding that officers are often trained to approach citizens of certain ways. approach them to gain control over the situation. activists -- one might say, is aggression. problematically -- i understand why that exists. you do want to take control. on the flipside, when we are dealing with situations, whether we have communities that already don't trust the police and to our already put concerned about

being perceived as criminal, the reactions can escalate the situation. >> to backpedal a little bit, stereotype threat affects officers to. what's counterintuitive is that if those officers who are concerned about being judged in terms of their negative stereotype that they are going to be viewed as racist when they are not, that causes them to interact with citizens in a way -- and there is a psychological study that demonstrates that -- causes them to interact with citizens in a manner that actually escalates the violence portion of the interaction. there is a study done by phil goss who has demonstrated that a stir type of officers that affects them, the officers were trying to do the right thing,

they end up in situations where the officer shoots the suspect more often. i think that engaging with the social psychology of bias, and the way that all of us are affected by it and collaborating with the police department to do that, it is the way forward versus acting on her own stereotype about what the police are and how they act and giving them solutions without understanding the concerns that they have. >> we have about 15 minutes flat. all of you have been sitting very attentively. one state of psychological research i am aware of as a law professor, is that it is easier to listen if you can sometimes ask questions and interact. if there are questions from the audience, we can take them now.

>> thank you. i am a former deputy police officer and director of the civilian complaints department. this question is for anyone. do you have an opinion that might explain why minorities minority police officers often exhibit the same unconscious biases based on racial stereotypes when interpreting ambiguous behaviors? >> i will respond first. i am happy that you mention that. so often there is an assumption that it is only white officers who act in this way. but these non-conscious stereotypes, we all have them. it doesn't matter what our genuine conscious police beliefs are. we are taught in our society through tv shows -- watching the news and the way that crime stories arbitrated -- we have this automatic association between nonwhite and crime.

and it simply doesn't matter what race you are. there are studies on implicit bias that indicate whites have higher levels than nonwhites have, but we all have them. what is important is how you categorize yourself in a particular situation. if a black officer in a community might not be as affected as a black officer in his role as officer. it is how you view yourself in a particular situation that affects your actions based on these non-conscious associations that we have. >> i just want to add. i think it is a fabulous question. we are thinking about, for example, what happened in new orleans. several of the officers that were committed of a shooting, they were minorities. in los angeles, the rampart scandal. several minority officers. i believe here in newark city, the shooting of sean bell.

several of those officers. what should we be thinking about this in addition to implicit bias that is going on -- these are officers who are still in institutions that can benefit from institutional change. going back to my point earlier, we can fix some of these problems -- broader institutional problems -- these same officers can hopefully be affected. >> do you agree with that? >> absolutely. i think that we tend to not wait on organizational culture of police departments. there is the same that officers are not black or white, they are blue. i think with that -- what it means is that when they go to the academy and they come out on the street and they have mentors, they learn a set of cultural views and beliefs. those are what guide their actions. that is what people are saying. >> yes, if i can step out of my

role as moderator for a moment, i agree with all of this. but i do think that sometimes people hear stuff like this anything that it doesn't matter whether they are a minority officer or not. that, i think, isn't true. it is an important point to make because we have made a lot of progress in departments along lines of ethnicity and race and gender. but there are still ways -- and even longer waits to go over integrating departments with sexual orientation. there is a fair amount of research that suggests that although people of all races are subject to the same kind of unconscious bias, it does change the culture of the department when you integrate it. it matters to white officers if there are black officers that they are patrolling my. there has been a change in the

internal culture of police department over the last 20 or 30 years. police departments are much less monolithic places. there is much more room for disagreement and debate and engagement with people outside of the department. my own view is that that owes a significant amount to the integration of police departments as much as possible -- under court order. it would be a mistake to lose sight of that and allow backsliding. especially in places in the country were police are feared in the communities in which they please. other questions? >> some of what has been said suggests -- i'm sorry. i'm a retired professor. some of what has been said, particularly by professor richardson, suggests a law

against racial profiling. stand by mark [inaudible] [inaudible] [inaudible] [inaudible question] [inaudible question]

[inaudible question] [inaudible question] >> i agree. i don't think that we shouldn't have those lost. it is important to make that statement. data collection, i think, is important. once we figure out the types of data that we want to collect, i think it's important to collect data from individual officers. some officers are actually able to overcome the effects of these non-conscious biases. as a daily general matter, when you look at officers, generally, officers are just not that good as a group. by that, i mean that the rate of success when you stop someone. how often are you correct when you assume that they are engaged in criminal activity. whites are often more successful than with blacks, but the race

for whites are remarkably low as a group. contrast that to individual officers. there are individual officers who are extremely good at making these intuitive, skilled judgments of criminality. then there are officers who are remarkably bad. the problem is that most police departments don't collect the data to know who did that officers are into that officers are. in terms of sexual reform, the promotion process of two if you are a good and skilled officer in judging criminality, or are you not? i agree with people on this panel that focusing on police department structures and perform is the way to go. >> when you think about the massive streets program that is going on in new york city, where the police almost never find anything illegal on the people that they are stopping, it is

hard to make the argument that there is a pretty sophisticated decision-making process going behind the stops. and i think that you might argue that it is more just a strategy of indiscriminate mass stops as a form of social control. to me, i think the point would be that we need to communicate to the police they have something to lose by a strategy like this. they have arby's we figured out that they can do it in a way they can't be effectively controlled by losses. war by similar legal procedures. i think the point is to emphasize the damage to the relationship between the police and the community. .. ..