ridiculous, including suggesting that the president is not an american citizen. what this president is doing is focusing on the issues that matter to the american people. okay? >> what do you say to republican who is say the vice president's comments about putting people back in chains is an example of why he should be replaced on the ticket? >> well, i say a couple of things. they know that what they're saying about this is ridiculous. the vice president was clearly making, as he repeated later, a statement about the republican insistence that if they are able to, by taking control of the white house, they will immediately repeal wall street reform. . .

and to every republican making this the chart that is what the vice president was talking about sali & going back this drives attention from the actual this substance of the discussion which is should we or should we not. they don't want to talk about that because they know that most americans answer that question absolutely definitely yes. but they are opposed to should we or should we not turn to medicare and to a system that

costs seniors an extra $6,400 per person per year. the american people say no one. but they don't want to debate that because they know that is the answer so we are going to keep talking about the issues and there's going to be along the road here when he to distract attention from the issues when one side is losing the debate over the issues to we had a chance to go back. except for those who are trying to make something out of nothing here and distract attention from the policy debates you know that is not what this is about. if you look at what he said in a wall street reform, about the desire of some to put banks and

wall street back in charge of your financial transactions in life. that's not what this president believes is the right policy for the policy debate the other side is losing these policy debates party overwhelmingly but we are going to keep talking about the issues. jake? >> is that part of this important policy debate? >> in three different speeches it was a joke just the romney campaign and others have joked about the fact that it in the president's men more he talked about the boy eating dog meat in indonesia because that is something that's done their. i think it is a lot different

from the ridiculous charges that are being made here. but that is an interesting case of point. the president spent a great deal of time talking about the tax credit, the importance to the renewable energy sector in this country which has dealt with its production under this president because of the investments of this administration has made in that sector, and about the fact that the extension of that tax credit was supported by those democrats and republicans in the states that are principally affected and washington republicans and that is and issue of the jobs and livelihood up to $7 in on your way affect the jobs and livelihood of the 30,000 people, roughly 75,000

people in thiscountry, and it's an industry that has been growing and will continue to grow if we make wise investments that will ensure that as we move forward we rely less and less on the foreign imports of energy and more and more on american energy, and that is a substantive policy issue, and the one built as an aside should not become the focus of the campaign or the coverage of the campaign. by understand republicans don't want to talk about the energy. >> president is talking about elevating that and become cabinet and that will step on the president's own message on wind energy. it was obviously in his prepared remarks. >> let me make it clear that the president's message that day was

on energy, it was not on a joke and meaty ibm nigh eve to think that a one line joke about the dog wouldn't have become the principal focus for the president of the day. i know that in on you what it was in the principal focus. it was on the importance of the wind energy tax credit, but i take your point and i will be less now even the future. >> can we talk about medicare for the second? does the president believed that medicare is unsustainable? >> the president believes and nose, and others have adjusted so that the affordable care act that he fought for and he signed into law extends -- wait, i will answer your question, extends the life of medicare by eight years, the solvency of medicare by eight years. he knows that as outside experts have made clear the affordable

care act is repealed as republican leaders, republican nominee is have ardently expressed their desire to do, medicare's insolvency will come eight years sooner. that is an irrefutable fact. he knows that as he says in the discussions and the debates and the proposals about the steps we need to take to get our fiscal house in order through a balanced approach reducing our deficit that we need to make additional reforms that protect beneficiaries but ensure medicare remains in place as medicare, not a voucher system for future generations. >> so, the fact that he has for his actions despite the republicans extended the life of medicare -- >> we have challenges we need to

address and we need to address them in a balanced way. one of the marvels of the marvelous exciting ryan budget is despite claims to the deficit mawkishness the balances or eliminating deficits until something like 40 years from now because it's so preoccupied with getting dominated by giving tax cuts to wealthy americans about a year ago before they fell apart they asked him what was one thing he was willing to concede on medicare and in those negotiations we said he wouldn't talk about retirement but it would be something he would be willing to. since then we haven't seen any serious proposals to help the sustainability of medicare in

the wrong and plan it does look forward. it is a plan much more like the romney plan. it is an outline their for trying to change the system to preserve it. i understand you disagree with this. >> i think the president meant what he said to you in this briefing room and it remains true today. it's reflected in the budget proposal he put forward close to the super committee here has additional reforms and savings out of the federal health care spending. but what it does not do is attempt to get our fiscal house in order by placing the entire burden and families with disabled children or americans that rely on these health care programs in some cases for their survival. and you know what? the thing is we don't have to do that. the president's plan, other announced plans that have been put forward demonstrate that you do not have to do that. you do not have to voucher

medicare. basically eliminate medicare and return it into a voucher system. if you are willing to on the other side make some compromises on the principle that everyone ought to pay their fair share, that we need revenue to be part of the package when we address our fiscal challenges. it's -- it's a complete inside the beltway conversation, but i am constantly amazed at the willingness of republicans who in one breath will say absolutely no revenue. absolutely no defense cuts. in fact i want defense increases but all i love the simpson-bowles plan. they don't know the talking about. maybe they haven't read it. the simpson-bowles plan has more tax revenue than what the president called for.

it has far deeper defense cuts than what the president has called for. but it has similar discretionary cuts that the president has already signed into law and pledge. so, you know, they're has to be -- i will end here, but there has to be some -- you can't say as governor mitt romney has and lindsey graham and others, it's my plan, says romany, is very similar to simpson-bowles. i think that he made very clear that that is laughable. it simply is not, because if you stand on stage and say i won't ask for 1 dollar of revenue for every 10,000 cut. your plan is very similar to speed. >> the president has put forward the additional savings in the health care programs, not

through cuts in benefits but by providers and insurance companies which is achieved in the affordable care act. the discussion about the kind of challenges we face in our fiscal future but it does achieve the deficit reduction that we need, and it does achieve it in a balanced way that includes savings. a balanced way that includes savings and health care reform which, by the way, demonstrates the approach he took during the deficit reduction talks which was one of a willingness to compromise and make tough choices but sometimes against the wishes of some of his fellow democrats, because he knew that in order to achieve this needed to in a bipartisan way and reach a compromise, but instead there was an absolute refusal to accept the notion that we needed revenue. and there was a role played in the failure of those

discussions. the failure of simpson-bowles and the grand bargain talks. now, running for vice president -- >> yesterday you didn't have an answer. has the president actually spoken to vice president of the changed comments? >> i don't know the president has said. he speaks to the vice president of the time. the president was asked about this in one of his interviews yesterday that, you know, he absolutely understands and knows what the vice president was talking about as does everybody in this room. i'm sure there are exceptions otherwise, but he was talking about wall street reform and you know the president is 100% with the vice president in his commitment to ensure the wall street reforms. >> i understand, but did this

take attention away from iowa? >> not that i saw. look, i think that he understands there are going to be distractions from the important issues of the day. that's part of every campaign and it's often the result of one side trying to change the subject when they are losing the the date on the substantive policy issues that matter most to the american people. and there is no question that when it comes to protecting seniors on medicare, when it comes to protecting businesses small and large that are part of our renewable energy sector especially when the energy that this president has been making very strong policy arguments

come and get a substantive level as low as support from the american people he is running the arguments. >> is there any concern that the vice president will make moving forward? >> i understand this exception of a trivia as i've been trying to discuss the fact of the matter is the vice president was talking about a policy issue which there is an attempt to turn into, you know, and insubstantial campaign issue that is divorced from policy because republicans don't want to talk about the fact that they are ardently in favor of repealing wall street for because they know that the american people are determined to see that wall street reforms. >> does the president had a

reaction to pennsylvania [inaudible] >> i know the campaign has addressed this, and i would point to the campaign statements the broad principle here is 1i talk about which is the president is committed to and i know the commitment to the good part of justice is committed to ensuring that americans enjoy and get to to get the edge of the most basic and fundamental right riches, but in terms of the specific cases i would refer you to the north of justice or to the campaign. >> governor jim brewer issued executive order on the driver's license and other public benefits to get work under this

new obamacare policy. you have a reaction to that? >> i don't. i haven't seen that. >> [inaudible] [laughter] >> you're almost -- go ahead. >> the former governor basically called the inappropriate and said you can't defend it. do you think that you can make something out of nothing in the sense of policy debate -- >> the vice president was talking about will st. reform you know, as everyone who speaks publicly as a living or as part of what they do in this arena,

and i include myself, that every day you go out there and give a speech or ask questions, there's always a possibility that something that you say and the way you say at can be misunderstood or taken out of context and made a big deal of. when everyone knows, and i know you know and everyone here knows the vice president, knows he was talking about wall street reform. >> there's no question there are issues here. there are sensitivities around words but the vice president, president, romney, ryan, others in the arena speak all the time and answer questions all the time and i think it's important to acknowledge in the remarkable amount of time that is being

demoted to the subject that you also make it clear that you know the vice president is talking about wall street -- i understand one person has expressed his opinion and is funded by at. >> the vice president's intention was clear what he was talking about -- was he not talking about will street clocks >> when you use the word change in a crowd of you'd better be careful of what you're talking about. >> at a later event he made clear that his word choice was off and he had been using similar phrases and things with slightly different phrasing. but the focus of that section is to talk about the absolute need to ensure the wall street reform is not appealed, and you know

that that's not like -- this isn't what the campaign is about to get the campaign is the reform or o we continue to implement it? do we turn medicare into a voucher system or ensure that we take the steps to strengthen and preserve it for america's seniors? do we pass $5 trillion in tax cuts that disproportionately benefit the wealthy? think about the size of that, 5 trillion. that is $100 billion a year and that is real money. and do we do that doing incredible damage to our deficits, devastating investments in education and innovation research and development infrastructure growth which is high may schools , ward ytd balanced approach to the fiscal challenges. in addition to the substantial spending cuts the president signed into law with substantial

savings he has put forward in his budget proposal we ask millionaires and billionaires to pay a little bit more. to go back to when it comes to the bush tax cuts the top marginal rate that was in place when a bill clinton was president, and i never cease to marvel with the rhetoric about the doom and gloom that the republicans promise it's similar to the doom and gloom they promise when the budget passed in the spring of 1993, and what we saw is the opposite of what was predicted and promised by the republican leaders including the current speaker of the house. we saw record economic growth, record expansion and record job creation.

>> since you defended the vice president repeatedly once and for all of this regulation on the obama biden. >> yes and those over a long, long time ago and while i appreciate i agreed admiration and relationship with senator john mccain but one place i would not go for the running mates is senator mccain. >> one question on that. >> on medicare a substantive issue in the answer you said that you acknowledge that the president haven't put all the details on. >> there was no question that as we go forward in the country we're going to have to continue to deal with, and that includes, you know, this president and future presidents with our fiscal challenges the the president's budget proposal

creates $4 trillion in deficit-reduction. it does it through a balanced approach discretionary spending, nondefense and defense, but the health care reform program -- his budget plan is where the medicare details are and you said well there needs to be more. >> the affordable care act in addition to extending insurance to 30 million people who didn't have it. in addition to providing seniors with millions and millions of dollars of savings on a prescription drug that was in a doughnut hole and in addition to allowing young americans 26 and under to remain on their parents of insurance. in addition to making sure that those with pre-existing conditions can get insurance and those with the americans that

developed and can't be thrown off their insurance policy. in addition to all that, it extends the life of medicare by an additional eight years and this is a project that we have to address. there are additional statements put forward in the president's budget, and i am certainly accepting the supposition that, you know, we will as a country continue to need to address our fiscal challenges in our federal health care program. what we cannot do is eliminate medicare. what we cannot do is turn medicare into a voucher system and basically tell seniors the way we are going to deal with this do not find savings, do not address the cost of health care summit since relatives are going to have to pay or you when you get older have to be $6,400 per year for your health care there

are a lot of seniors out there that will be able to move forward with that. when does the president put his seals out before the election or after? >> what's on the table now only eight more years. everyone will do more. >> i think we need to focus a little more attention on what is in the budget rule. again -- >> it's not even a role that is counter to that i guess. >> i think it claims to achieve something like 5 trillion in deficit reduction, and the president puts forward a proposal over 4 trillion. the romney and ryan plan if you will asks cut drastically discretionary spending investments in education and infrastructure, department of transportation, everything that

people think of as federal investments to be for not reducing our deficit the economic foundation of the country, but to get -- i understand they believe in their heart is good for the economy has the president says the fairy dust will be sprinkled across the country and everyone will benefit. the question is part of the discussion with policy issues the president sat down yesterday and said that he -- no one could say that he's dividing the country. we've had to bring the country together so you asked why then

was the president saying in that interview or anywhere if you want to focus on these issues -- >> he doesn't dictate or coordinate with -- i know that you are out there with as often. you hear the issues that he talks about and there is no question we have talked today about the issues and as you know, they're has been a relentless critical evaluation of the president's record of his proposals before in hundreds of millions of dollars in advertising and specifically by

the romney campaign and on the issues the president is going to engage and has engaged because he thinks that they are so very high for the american people. he will continue to focus on the issues and continue to talk about his very optimistic view on the american economy and the american people. and he knows that is what this is all about, for him and for the country. and those issues, to go back to my earlier point, i -- the american people want to decide this election, so, you know, a third party had that essentially had no money behind it and never appeared on one station versus its focus on the issue that is backed up by all the efforts

that it's engaged in apples to apples and oranges to paris or pomegranates. the romney campaign as a matter of policy has invested tens of millions of dollars in an advertising campaign that is based on a research on the president'spolicy. you know, i think my feelings on that. >> what should we anticipate? >> i know that you are a reporter but you probably got that from the published schedule. [laughter]

>> you know that since you've been covering this the president and vice president has a standing opposition once every week, right? every week. when they are and obviously it may not be every week but this is something that happens every week as do the president's weekly meetings with secretary clinton and secretary espy geithner. ..

when you're losing the policy issues and debates. >> then we had all the people -- have you ever heard -- [inaudible] understanding what happens and listening, that's right, race was interjected. he says understanding as -- >> april, you heard or saw the vice president said in his next appearance course in there after come explaining the use of his word, his language and how he had meant to phrase it. and i think i made the point that we all, all of us who are

out there everyday giving speeches, taking questions, talking about the issues, sometimes don't use the exact language that without we're going to use or wanted to use. but, you know, what he was talking about. you know that he was talking about a substantive issue and it certainly was not his intention -- >> said he was not trying to use -- is that what you're trying to say? just one second, wait a minute. do you think race was interjected in the campaign as the day paul ryan was announced? how it got into middle and low income programs? do you think race will ever have to be injected in that? >> i think the issue with republicans budget proposal, the romney-ryan plans is that they harm americans across the board,

middle-class americans, low income class americans, seniors. it's just not the right economic prescription. as the president said, vice presidential mommy on the other side is articulate spokesman for governor romney's position. he just happens to disagree with that vision, and that's, that's the debate we're having. that's the debate in many ways we've been having for the last couple of years. and the president looks forward to continuing to talk about why we cannot pursue, we cannot move forward as a country, $5 trillion tax cut, we cannot afford as a country the decimation of our investments in education and infrastructure. we can't attempt to get our fiscal house in order by asking seniors to accept vouchers instead of medicare. and to shoulder the burden of an extra on average $6400 per year

in costs to their health care. that's just at the right economic policy vision this president believes for this country. >> you may want to respond to this. he sketched out the difference between his medicare or and congressman ryan's medicare plan and the president. one of the points he makes is, under president obama's approach are those approaching retirement, 55 and over, would indeed see changes, and that his plant they would not. what you remind us whether the change -- the president would change for those 55 and over? >> i'm sorry, do you mean medicare? >> medicare. >> the president's plan protects medicare. the aarp, let's be clear, has said that the president's affordable care act strengthens and protects medicare benefits and beneficiaries. the ryan budget, the romney-ryan

proposal which by the way i didn't see this press conference but just because it's constantly unclear every day, the answer to this question, governor romney said, actually this is an interview i believe last night in wisconsin, paul ryan and my plan for medicare i think is the same. it's probably close to identical. so we know what that plan is. i mean, we've been debating a. it passed the house. it dries his medicare medicare. it shifts costs to seniors. the president's plan does not. the present plant extends the life of medicare. it has already bequeathed millions of dollars in savings to seniors by closing the doughnut hole. it has given millions of seniors the opportunity for free preventive services, like mammograms and cancer screenings. this is just a different vision. this is exactly what we want to be talking about. these are the substantive issues that will be decided for this country that will have huge

impact on this country, on a america's seniors and others for years to come. i haven't seen, i think the answer is -- spent the obama plan would have a change in the medicare benefits spent i don't know what change are talking about. he has, this agency chiefs to the affordable care act has extend the life of the medicare program by eight years, and they come not from medicare beneficiaries, not from benefits but from providers and insurance companies through savings and waste and fraud. you know, this is a very important debate and the president looks forward to engaging in it. >> one other thing from that. speak we should have had it up here. [inaudible] spent i don't have a reaction. i think my statement to that would simply be that this

president believes that the tradition, for presidential candidates to afford multiple years their tax returns is a useful and valuable one. not only a comfortable one, but one that h is certainly provided by anti-things is one of the americans, american people believe is right and expected candidates to to abide by. yes? >> there's a new immigration order potentially lead all these young people a state of limbo, legal status? and also following up on the question earlier about the governor brewer, the governor issued an executive order last night and it would basically deny driver's licenses to these people who are applying. obviously, very hard to get to work if you don't have a driver's license it is there a concern about how some states are trying to discourage its? >> i appreciate it and she just

called it up on her screen. i have not seen a. i simply don't know enough about it to give you a comment on it. the answer to your first question is yes, this is not a long-term solution. the president believes and fought hard for the d.r.e.a.m. act. and police congress ought to pass it. and the administration action taken by this administration led by dhs, make sure we're using prosecutorial discretion in the way that focuses our resources on criminals, and not on so-called dream act kids who, as the president said, arrived in this country when they were very young, grew up in united states, consider themselves americans, you know, and who are or can

contribute mightily to this country. >> would not be policing what governor brewer -- >> i hesitate to offer an assessment because i have not seen that story. >> any surprise on the turnout, since only people coming out of applying for this? is the administration surprised by this number? >> i don't, i don't how to judge that. i'm not sure what numbers were expected. thank you very much, guys. >> [inaudible] speak i made a statement yesterday, the president was informed about it by his homeland security adviser, john brennan, and he was very concerned about the victim, the person who was shot, and made clear to me and i conveyed this, but he firmly believes violence of that kind has no place in our society. this goes to the greater

discussion we've had about violence in america and the need to tackle it on multiple fronts. >> does he consider it a hate crime? >> determinations will be made by the fbi. i know the fbi as part of this investigation. thank you. [inaudible conversations] >> the white house press briefing wrapping up. speaking to presidential politics, republican nominee mitt romney is fund-raising in south carolina and his home state of massachusetts. no on camera events scheduled. the president is back at the white house today after wrapping up a three-day campaign bus tour in iowa. looking ahead to the presidential conventions, the republican national convention kicks off monday august 27 with life gavel to gavel coverage on c-span. the keynote speaker is new jersey governor chris christie. he is promising some quote very drunk and hard truths.

and the week after, the democratic convention in charlotte, north carolina. the democrats will have their first ever latino keynote speaker, 37 euros san antonio mayor julio castro. every minute, both conventions live on c-span, c-span radio in streamline -- streamlined and archived on c-span.org. on c-span at one eastern watch live coverage of remarks from sister mary hughes, past president of the leadership conference of women's religious. which represents more than 80% of u.s. nuns. sister hughes is expected to address recent criticism from the vatican that the group has undermined catholic teachings on all-male priesthood, birth control and homosexuality. >> last week, the independence institute recently hosted their 10th annual alcohol tobacco and firearms party in colorado. speakers discuss the governments regulation of those products,

what some call that many states including new york city's ban on trans fats. >> psychiatrist will tell us to be as beneficial to brain chemistry of some of the best drug they can give out. even better than the healthy foods which are pushed by "sesame street." that's true. so where did all this mean a state committee control stuff come from? it came from the modern public health statute from the health public movement. and it's more than often than not i think the public health movement is just a complete minutes and an obstacle to our happiness. originally the public health field was all about curing and stopping epidemics are but 100 years later we eradicated palu companies, mumps, whooping cough, stuff that used the tens, hundreds of names of people. that's almost now never heard of. so here in the public health is confident he got to reinvent yourself to stay relevant. there are millions of grant dollars at stake.

if you price itself out of the market by being a relevant the money dries up. so the public health people had to find something else to do. it's about aids and cancer and that's fine. good. but public health, a social science instead of the hard science and that's a problem. so we have a lot of philosophy epidemics. so instead of hard science their regulating our salt intake and shaky our dessert portions because that's all they know how to do. so i used to represent and/or possession called the center for freedom and it's a nonprofit food advocacy group a lot of creative messaging. they tell me now that there's a profession at ucsf or cisco, of course, san francisco, who is on tv claiming that sugar, sugar, the stuff, a spoonful makes the medicine go down, sugar is a dangerous and toxic the

government should regulate it like alcohol. yeah, on cnn, sans jacob to notch his great approval. come on, it's sugar for crying out loud. we see people airbrush cigarettes out of the movie. i can't wait for the next remake of willy wonka. we'll all be eating broccoli. >> watch the entire event hosted by the independence institute tonight at 8 p.m. eastern over on c-span. >> panelists at a discussion wednesday on the housing market express concern about access to affordable home financing and talked about how the issues largely been ignored thus far on the campaign trip to the event

was hosted by the center for american progress. it runs an hour and 45 minutes. >> we welcome you out here on a warm august day in washington. notably, it is five years since august 2007 that the financial sector and the global economy began to collapse. foreclosures have jumped the year before by 75% over 2006. bankruptcies of subprime lenders had also shot out. but until that summer, many commentators just talk as if the subprime housing crisis, but in august 2007, what had seemed isolated to the housing sector turn into a freezing up of the international financial sector. banks stopped lending to each other. wall street loans securitization stop. no one was sure exactly who helped junk securities in their portfolios, and which institution would collapse next.

fear and panic spread through the global markets, and everyone in this room knows what unfolded after that until today. today, the legacy of the policy and practices that led up to that systemic collapse remain painfully clear. millions of american families have already lost their homes to foreclosure. millions more are still hanging on a we don't know for how much longer, and have lost all their equity. at the same time, production of new homes, new rental apartments have dropped to generational lows. so with people moving back to the rental market and the echo generation looking for housing as it comes into the workforce, or look for work, rent is rising rapidly and already diminished supply of affordable rental housing is stressed even more. we are still communities that could least afford to lose wealth or to see opportunity for close, have been the community hardest hit.

roughly 25% of african-american and latino borrowers have already either lost their home or are at serious risk of foreclosure. this is double the rate of white families in america. sadly, this legacy of the foreclosure crisis is hardly surprising when you consider that during the unregulated era that included the housing bubble, african-american and latino homeowners with good credit who should have been sold safe prime loans were three times more likely than majority borrowers to be sold risky subprime our high risky loans. naturally the foreclosures followed entire impact. unfortunately, almost since the housing foreclosure crisis began, many in the public arena, including many elected officials, have put forward what i would consider a skewed perspective on the underlying problem to address. it's become all too common to blame the homeowner and that's all the lender.

this perspective tries to minimize or ignore the ways in which the private sector financial community contributes to bring about the crisis. no one sector is to blame but certainly all share some responsibility. and importantly for policy prescriptions, we are told the biggest problem we face in housing going forward is a need to free up the private sector even more. the home for good alliance is coming together and has come together because we believe strongly that we need to look at the whole picture of the housing challenges. it's time to focus back the issues and the housing policy area on where it belongs, on the people affected. questions such as what policies are best to prevent the majority of americans for having a hard time keeping up with their rent, what can be done to help those been holding on to their houses? where's the opportunity for americans are doubting that they'll ever have the

opportunity to own a home, no matter how hard they work or how well they save? we chose to hold today's in mid-august not because it's the best time to hold an event in washington, but because we are entering a critical phase of presidential campaign for the election of president and most of congress. our speakers today would challenge the candidates and others on international office to address in detail where they want to take the housing policy. to accompany this, several of my colleagues at c.a.p. have today released an issue. it's time to talk about housing and you'll find copies in the back and online, which asks questions of each candidate to be addressed. now we're certainly going to hear during the campaigns that americans want equality of opportunity, and this is certainly true. but opportunity takes on many forms. it certainly does not come from building into the structures over housing finance system another era of leaving me behind. as the home for good open for

presidential candidates, despite the progress that we made as a nation, discrimination by banks, brokers and others based on race and ethnicity has met the committee of color are among those hardest hit by this crisis with historic losses and assets and savings. i am reminded this in somewhat personal terms. my father-in-law was a poor kid in chicago who enlisted in world war ii, became a navigator and flew many bomber missions in europe. he tells often of the fact that while he was on bomber missions, he and his crews were saved by the tuskegee airmen more than once. when he got back, he was able to get a low interest, no down payment, virtually no closing cost va loan for a poor kid with no credit. that enabled him to buy a house. that house enabled him to have equity to start a business, and

to grow into a better house. so when my wife and i, when it came time for us to want to buy a house, my father-in-law had equity he could pass on to the next generation. we don't know exactly he was flying for the tuskegee airmen but we do know is largely through the policy and practices at the time, that same airmen probably also who was born in chicago was excluded from the same opportunities. so his generation did not have the opportunity to build wealth to pass onto the next generation, and so one. what we can do is create a new system coming out of this crisis which perpetuates a generational non-opportunity to accumulate wealth. so to help us understand what is needed for effective housing policies and what issues the candidates need to address we've assembled a fabulous panel of experts today. a little later, my c.a.p. college will introduce and moderate the panel. but first i want to turn the podium over to janis bowdler of

the national council of la raza. channes is the other wealth building program, part of the architect of the home for good campaign. more knowledgeable than many in the room and many a round washington on the issues we are about to address. so janis, without further ado please come up and give us the overview. [applause] >> thank you, david. i appreciate that. that sets the bar very high. i doubt that i'm more knowledgeable than many in the room. fortunately, i'm not on the panel so i will have to prove that claim. but i want to thank you as our colleague housing is at the center for american progress of particularly janneke ratcliffe, julia gordon and their team for all the energy that went into today's event. i also want to recognize in the room we have met about a cello from latino economic to government center, a local affinity with her more from them

later but i want to point them out in case anybody in the room has questions about their own home loan or questions about the local housing market. throughout the some of the home for good campaign partner have hosted community events like this one from detroit, sacramento, las vegas, columbus, ohio, miami. we've been hearing from homeowners et al. is that the housing market still needs a lot of work. in fact, our nation continues to face a home opportunity crisis. analysts are telling us that this year we will likely see at least 2 million foreclosures with many more at risk. this means hundreds of thousands of senior citizens are losing the economic security. children and families are being uprooted, and neighborhoods are being blighted by vacant properties. making matters worse, unequal opportunity and discriminatory targeting of communities of color by deceptive lenders means that minority families are among the hardest hit. all of this results in a

continued tracked on the economy and that hurts us all. fortunately, we all in this room know that there are proven and practical solutions that can stop needless foreclosure that can restore infected neighborhoods and preserve fair and affordable lending. we can do this while making sure that homeownership remains a pillar of american opportunity into the 21st century. over the past year we've actually seen some progress on this front by the obama administration and certain states, and by some lenders. and that has actually reduce the number of foreclosures facing american families, for sure, but they fall far short of what we need. and they are not getting to steal. many have not included adequate measures to address unequal opportunity or the discrimination that is happening in our communities. the home for good campaign as david mentioned calls on our presidential candidates to commit to addressing our shared concerns. you can support this effort,

everyone country postcard. i know you got them on the way in. by signing this postcard. together, we're going to tell the candidates to come to a table with real solutions to stop needless foreclosures, expand affordable rental and revived a sustainable path to homeownership. so far the topic of housing has all been but ignored on the campaign trail. neither candidate has laid out a clear strategy for our mortgage system after this election. this is troubling considering the roles that housing place in our economic recovery. the home for good campaign partners are not come to the table. we have offered up her own set of solutions which was gathered in the doctor called the comeback for home opportunity. spearheaded by her partners at the opportunity agenda, the compact for home opportunity lifts up proven strategies for balanced and successful housing system. in it we call them policymakers, industry leaders, and everyday americans to commit to real

solutions, and implementing these in a way that are enforced and accountable makes them as effective as possible. the compact encompasses both immediate remedies and long-term objectives. we invite you to go to my home for good.com or you can catch her cell phone now and text the word home to 6571. for more information about the compact for home opportunity, and the campaign to make a solution to a reality. now it is my great pleasure to introduce vicki schultz. she is the deputy assistant attorney general for civil rights division at the department of justice. we really appreciate your willingness to stand in at the last minute for assistant attorney general tom peres, who couldn't make it. we know her well and we're excited to have her. in her current role, she oversees the division on their housing and fair lending issues, in partnership with several federal agencies such as the department of housing and urban

development, and the department of treasury. previously, she served as a senior advisor to the maryland labor licensing and regulation secretary tom peres. i would like to commend ms. schultz, assistant ag peres, eric and others part of the dg civil rights division for the groundbreaking work to investigate discriminatory lending practices and bringing justice to families swindled by steering and unfair price hikes. ms. schultz, please come to the podium. >> thank you. it is indeed my honor and privilege to be with you today that i want to thank the center for american progress for being the forum in which we can have this important discussion, inserted the national council for la raza for spearheading this important effort, keeping focus on this housing crisis. we know there are many families struggling, and until we can address those issues we should not rest.

i do send regrets from the assistant attorney general tom peres. he was called at the last minute to be part of a delegation to the dominican republic for the installation of a new president, and, therefore, i am stepping in. but i will tell you that i'm absolutely thrilled to be here today because this is a critical issue and we are focused on the issues that you care about, because we, too, care about what's happening throughout our country. the promise of equal opportunity is that the poor of our american values and our ideals from the opportunity to learn, to the opportunity to gain their access to credit, to earn, to live where one chooses, and move up the economic ladder, our laws seek to level the playing field and provide the cornerstone of that economic opportunity. and one of the most basic building blocks has been homeownership. and the administration, our job

is to enforce the law so that every eligible person has equal access to credit and housing opportunity. free from fraud and abuse is, free from discrimination. it would be absent of such enforcement if contributed housing and foreclosure crisis, and led to many of the abuses we are working hard to remedy. this is why in the wake of the housing and foreclosure crisis the federal government under the leadership of president obama has responded forcefully. with unprecedented levels of foreclosures, mortgage servicing practices have not only failed to adequately address the crisis, but have exacerbated the problem. ..

with federally insured mortgages, and filing improper documentation in federal bankruptcy court. as a result, the department of justice veazey as other federal agencies and state attorneys general have reached a landmark 25 billion-dollar agreement with the nation's five largest mortgage servicers to resolve the obligations of mortgage servicing violations and foreclosure abuses. the agreement provides substantial financial relief to homeowners and astana wooshes significant protection for the future. the joint agreement, the largest federal state civil settlement

of four of tanned requires servicers to implement comprehensive new mortgage loan servicing standards in addition to the 25 billion. in keeping with the homeowner's bill of rights, president obama announced the servicing standards require homeowners be treated fairly. for example, establishing a single point of contact, a commitment that homeowners will get assistance before a service or six for closure and that the foreclosure will be stopped only after other options fail. these standards in combination with the vigilant monitoring will help transform the servicing industry. significantly, of the $25 billion, servicers have agreed to pay 20 billion will go towards various forms of financial relief to the borrowers. including principal reduction, refinancing and other types of relief. since time is of the essence for families facing foreclosure

there are incentives sooner rather than later to homeowners in agreement. while that is clear that all over the country they have been devastated by the abuses in the housing crisis, african-americans and hispanic families have been hit especially hard discriminatory lending played a particularly devastating role in the housing and foreclosure crisis drainings sycophant wealth from all communities, but especially from communities of color. i am forced to show that too often african-american and hispanic families paid more for loans because of their race or national origin, not based on their credit qualifications. too often, african-american and hispanic families were steered towards more expensive and risky subprimal loans based on race or national origin, not based on their credit qualifications, and regrettably, some lenders refuse to lend a minority communities

making assumptions based on the rates rather than on their credit qualifications. to address discrimination and lending, attorney general holder created a fair lending unit in the civil rights division housing and civil enforcement section. since the establishment of the fair lending unit, banks to the committed professionals in the division we have brought record numbers of and force reductions in the approximately 24 months the universe was established the division filed and result 16 lending matters by way of contrast from 1993 to 2008 the justice filed a result 29 of lending matters an average of less than two spaces per year. the division produced unprecedented results in 2011 alone. we filed a record eight lending related federal lawsuits and obtained a settlement providing for more than 7,000,003 and

50 million in relief in the legal lending practices. this includes our settlement with countrywide, the largest lending discrimination ever brought by the department of justice raid and the settlement as well as record settlements under the service members civil relief act. no one case sets aside the multitude of unlawful practices in the housing and lending markets that contributed to the nationwide housing for roger crisis -- foreclosure crisis, but the fair lending unit is every possible tool to address the range of abuses seen in the market in both mortgage and non-mortgage lending. collaboration, however, is critical to all that we have accomplished. much of our fair lending enforcement is in conjunction with the banking regulatory agencies and the president's financial fraud enforcement task force. particularly its nondiscrimination working group,

which the assistant attorney general tom prez co-chairs. in addition, from 2009 to 2011 the bank regulatory agencies, the ftc and hud served a total of 100 line matters involving a potential pattern of practice of lending discrimination to the justice department. five of the 109 matters referred involved race or national origin discrimination. a combined total that is far higher than the 40 race and national origin referrals to the decision received from 2001 to 2008. our enforcement efforts have been enhanced by the consumer financial protection bureau and a critical partner. we worked closely with state attorneys general as the countrywide case that was done in coordination with the attorney general's office. from that settlement, that $345 million for a settlement more than 50 times larger than the division's next largest fair lending settlement of the time a

complaint alleged that a systemic discrimination over a four year period violated the equal credit opportunity act and the fair housing act and impacted more than 200,000 african-american families. it's a very simple story of your african-american or hispanic, you likely paid more for a country why the loan than a similarly qualified white marble were simply because of your skin color. and if you are african or american or hispanic you are far more likely to be steered into an expensive and risky subprimal loan than a similarly qualified white borrower. african-american and latino borrowers that walked into countrywide had no idea they could have gotten a better deal. nothing can undo the damage that hard-working responsible families suffer as a result of these types of discriminatory practices. the relief to victims of the discrimination will begin to

address some of the financial losses and make clear that kind of behavior will not be tolerated by the marketplace. in addition to the case we also reached our second-largest settlement against wells fargo for the pricing violations in the wholesale mortgage lending. the minimum of $125 million in direct compensation to the whole sales during the victims and the commitment to provide additional compensation for any retail steering victims found. further, the committed $50 million in downpayment assistance to the borrowers in targeted communities where substantial victims were located. tais will begin ty harm thas consequence of such discrimination. additionally, we've got other pattern practiced discrimination cases since the unit was established including multimillion-dollar settlements with federal service banks and prime lending as well as the first unsecured consumer lending

pricing case that by the division in at least a decade, and a case we filed against a regional lender mortgage bankers incorporated in collaboration with the united states attorney's office in the seventh district of new york. many of the division cases have allowed in part in disparate impact analysis to share a violation of the law. this approach has been unanimously accepted by the court and the division is using all of the tools in our arsenal to root out discrimination including the fair treatment impact analysis when supported by the fact. we settled redline cases in 2011, one of the citizens bank of michigan and the other against midwest bank of st. louis. services agreed to, among others things come invest $3.6 -- $3.6 million, and in the city of detroit. midwest agreed to, among other things come invest $1.45 million

in african-american neighborhoods in st. louis. they seek to expand opportunities for minority communities and individuals to access good sound credit. in areas where lenders have previously denied such services. however, our settlements never require lenders to make a loan to unqualified borrowers. the department settlement agreement repeatedly refers to the extensions of credit to qualified applicants only coming and we know there are plenty of qualified minority borrowers. so the department makes clear that no redline settlement agreement or any of the agreements including any special loan programs or loan subsidy fund requirements allow banks to make unsafe or unsound loans we want to encourage responsible lending throughout these communities and sound products. last year we also got our first fair housing act case alleging

discrimination against women on paid maternity leave and the mortgage insurance against the nation's largest mortgage insurance company and to the underwriters. that case currently in litigation. in addition to the traditional their lending work to protect the rights of servicemen and women to the service member civil relief act moves aggressively to protect service members whose homes were proposed in violation of that law as a result of the settlements the national servicers the vast majority of all foreclosures against service members would be under court-ordered review. recently reached a $12 million settlement with capital one that would address cra violation for what the lending of arms. fair lending enforcement has helped shape and define what access to equal credit means under bill walz for all borrowers. just as the housing enforcement

continues to ensure people have equal access to housing opportunities. the ability to live where one chooses without facing discrimination is the foundation upon which we build our lives. the opportunity to choose is essential to enable individuals and families across the spectrum of waste, ethnicity, disability and sexual orientation the opportunity to have a choice in the schools come access to job opportunities and the ability to engage a fully equal member of the community. for example, the department sold a lawsuit against the city in wisconsin for the discrimination and violation of the fair housing act filed in june, 2011 the loss to the city blocked 180 units of affordable housing project and had proposed the city center area. the city's planning commission initially the pervvijze project that reversed the force and

denied it weeks later after hundreds of residents objected to it. partly on the racial stereotypes and feared the projects tenants would be african-americans. the response to the public opposition the city shows the land-use requirements to barrault affordable housing in the city center in the future. our settlement requires the city not take any further action to abstract or delay the affordable housing project and also requires the city take steps to provide the future affordable housing and putting the requirement that the city communicated commitment to fair housing by establishing a housing trust fund that capitalizes us $75,000 initially to assist such projects. equal opportunity isn't just about individual rights. it's about communities, prosperity and stability. and it's about economic growth.

this administration and this department of justice has and continues to be committed to full and fair enforcement of law that protect people from fraud and abuse and keep open the doors of opportunity for all. we remain committed to addressing practices prevalent in the market meltdown, but we also investigate and bring in four sections to confront emerging discriminatory practices in the credit and housing market. we will continue to aggressively enforce law to protect the rights of service members and all who face discrimination to ensure fair and equal access credit and to housing opportunities for all ashbel will require years. thank you for letting me be here with you today, and i look forward to the discussion. [applause] >> thank you. again, thank you for all of your

great work over at doj. it means a lot to the community to see justice brought to our families. now i would like to welcome to the podium radcliffe at the center for american progress and the rest of the panelists. >> good morning. i'm a senior fellow here this inter-american progress. and also the executive director for the center of community capital university of north carolina at capitol -- trouble help. since it is a hotly contested state and we have a nominating convention coming soon, it is nice to be able to get away from politics and come up here to washington today. think you all for coming and welcome to the panel. it's an amazing range of experience and insight that they bring to the question of sort of looking at where we stand today

and how we move forward as david pointed out five years since the financial system really began to unravel. so, for a quick introduction, over here on my right on my far right, david stevens as president and ceo of the mortgage bankers association, and leaving his industry forward in these challenging times to bring an impressive career as a lender with will the savings bank and freddie mac and wells fargo and real-estate president and ceo of foster and most recently on the public side of the former commissioner of the fha to the things you for joining us today. next we have terry ludwig of community interest partners which provide capital and expertise to create affordable homes and rebuild communities. she's previously led the community development company as well as a large nonprofit lender to small businesses. forbes magazine recognized her as one of the world's leading social entrepreneurs. so, welcome. and then come to my immediate

right is jim carr, housing and finance consultant and former chief business officer of the national community reinvestment coalition. he previously headed the house and research of fannie mae, worked at the center for urban policy research at rutgers, served on the advisory board at numerous colleges and universities and is currently a visiting professor of columbia a university. jim is a deeply engaged academic serving many organizations promoting economic opportunity both domestically and internationally. so, thank you jim. janet has described life like you to start us off. let's begin with foreclosures. the paper that kept presenting today reports 3.5 million foreclosures since 2008. notably that is less than the 3.7 million households that are currently either delinquent or in the process of foreclosure. housing economists are starting to talk about a bottom to the

market and maybe even a recovery on the horizon. how does this square with what you observe? is it time to stop working on a foreclosure prevention solutions? >> i think that is an excellent way to start the conversation. i am amazed i've been hearing analysts, particularly housing economists argue that we are seeing the bottom to the housing crisis when all the way back to 2007 before the crisis even really ensued. so we are going back there again. the fact of the matter is just as the economy has shown sporadically glimmers of hope and then lost steam, the housing market continues to show greater hope and then loses steam, so i think many to be careful about being overly optimistic about the current state of the housing market because if we do, if the eight great may lead us to taking actions that will hurt the recovery of the housing market, and that is to stop actually actively working to prepare the housing market. it remains in deep trouble. let me just talk about a few

reasons why i say that. on the positive side, house prices appear to have stabilized in some markets we are actually seeing some of the increases but it's important to remember house prices are still down nationally by more than 30% and as a result of that we have lost over $7 trillion in housing wealth. we are nowhere near having rebuilt lost wealth. in addition, we have more than 20% come closer to 25% house holds mortgages valued at more than the houses themselves. and that translates into about $700 billion of upside down mortgage debt. again, we are nowhere near having wiped that out. now, one of those reasons its fall plan and one of the reasons we have to be careful about celebrating too much of the data is that foreclosure tells it that the country between 2010 to 2011 by about 35%, and that is certainly something to celebrate. but it wasn't due to the fact that consumers are more

economically able to maintain their homes or the services got more effective at modification. the fact is they fell because of legal impediments faced by the service is to actually for close upon. now most of those challenges are out of the way. and as a result, one report that i just recently saw has morgan stanley as the meeting about 7 million homes in the foreclosure pipeline and the services are free to clear out the pipelines to it in addition, if you look at the data regarding mortgage purchases, or new construction, those are numbers that are up and particular look to be on the right path. but if you tease out approximately 70% of the votes which or refinanced, that's good for the economy right now, but that isn't sustainable over the long term. they are in fact still significantly below what we would expect, and the same thing for the housing construction

it's up but still anemic relative to a strong market. a couple of the points i would like to make and that is when you are looking at the housing market it is important to understand how they are linked at the head and so the last four years for closure has been the economy. under the employment or unemployment loss of income. the reality is the economy is still in a very precarious position. anyone that is following the news knows that europe is sliding closer into an abyss and as they do is having negative effects on our economy. but the truth is that we don't need any help from europe to damage our economy because we are on route to doing it ourselves. we are not looking at and debating in washington and its investments in america to bachelet get america back to work. instead most of the dominant conversation those are of the fiscal cliff coming at the beginning of the year which means the focus of that conversation is on deficit reduction.

that's not to say that the deficits aren't important and we don't need to address them. we need to address them in the context of a comprehensive investment program for america because the best way to balance the budget is to put america back to work. and instead, we are really focusing on counting the number stores in fiscal class. so, i think it is premature to say the housing market has bottomed out that we are recovering. we really need to be very vigilant and doing everything we can to mitigate the foreclosure come and we need to not forget the damage that was done particularly to those communities of high concentrations of foreclosure. we need to be addressing those neighborhoods and we need to be rebuilding those communities and get the housing homeownership market street and we need to be really leveraging the fact that we have house price is now better down by more than ten years' worth of loss of value and twice a actually using those and of leveraging that was affordable housing opportunities particularly for low and moderate-income and minority

households. so, i would say the bottom line is we have seen some good news coming and i think that is good. i think we should accept the good news as it is better than bad news but we shouldn't run too far with it and concluded the market has bottomed out and now we can sit back and watch the recovery because that won't do. >> so, as jim points out families are still losing their homes at a great pace. and again, according to the paper, a third of the populations are 100 million americans live in rental housing today and that is probably only going to go up as the new households are either not able or not as eager to step into homeownership. there's a growing shortfall and it's only getting worse. so it seems like a key opportunity to reposition policies around rental housing quality at affordable rental housing. what are the prospects for getting it right this time? >> why would say the perspective

i would like to bring to the conversation is just enterprise someone looking at the national agenda but also the local community. across the country. and so, i can assure our perspective today i think it is important to look into the local communities and think about what is really happening as we talked about. so i think that's right and so i think that, you know, where the enterprise stands today and what we promote on the national level thinking about how we achieve a more balanced housing policy, so, there is no doubt today where we are in the cycle that there is tremendous opportunity for the home ownership when we think that is vitally important for building wealth and critical importance. at the same time as you said the growing need for the full rent was there and i think many of us in the audience read other statistics whether i was just looking at the joint center housing study which comes out each year and i think what we have seen over the last decade is tremendous growth in the for

rental housing and i think in the last six years you've actually seen the demand has more than doubled and depending on which members would like to listen to might think that by 2010, the deficit between those who need affordable low moderate income who need affordable rental and what the supply is, there's a gap of about 5.1 million units which is just enormous. as a, in the absence of a major policy intervention we are going to see this continue and build given the trend we are seeing with rentals, and we know that we are in this process of going through not only reform and facing a potential cliff, so i think we all have to be thinking about how we are going to support the rental specter and also look at the home ownership policy. so i think it is where we would like to put forward our ideas to say how do we look at the program that has really been effective and efficient on the

ground, and so that once can also help was not only produce affordable housing but also preserve the affordable housing that's out there. so, one of the programs that enterprise system in history is the low-income housing tax credit. the low-income housing tax credit is a product of tax reform back in 1986 and was a reagan policy interestingly enough. but how to get program like the low-income housing tax credit and make sure that the efficiencies that we have seen in that program are which i would be happy to argue has been very effective and what it's allowed us to do is create not only 100,000, 100 to 120,000 new homes each year but that are affordable rental properties. but it also helps create jobs which is 120,000 jobs along with that. so, whether we are talking about housing or economic stimulus, i think these all go hand in hand. they are incredibly linked. we want to make sure that the

low-income housing tax credits remain on the agenda and remain a strong tool. it's leverage about $75 billion worth of the capital. as we think it is vital that the protect some of the critical tools that have worked. in addition to the enterprise has been trying to make sure that we have additional programs that also help us address the issues around foreclosure with something like the neighborhood stabilization program. we now have been less than perfect but we also know it has been vital in the communities that have been hard hit to try to restore so what we are trying to do is make sure that dollars are used effectively and efficiently and that we can take those on the ground and get them back to policy makers and mature the next generation continues to strengthen. i also think we will be in a debate. we took about a balanced housing policy and we are going to be talking about how we restructure the homeownership tax benefits to benefit more low and moderate

income people we have the data out in the last couple of weeks which suggests the housing subsidies that are out there over 50% of the subsidies go to people making over $100,000 or more a year. how do we right size the subsidies that exist to make sure folks that are low and moderate income are benefiting from that? slutskiy balanced. we know there's not going to be more money and deficits have to come down to how we do that and the reality where we think we can make progress on the agenda? finally i am delighted and honored to be here today, and i think that the hope for good campaign, the reason we are curious it is about coming together to think about creating a shared message for the issues we care about. i think that is vitally important for us to think about is how to get beyond an individual silo in the sector and really come together around a message with a specific set of priorities so that we do make progress in forward and then we

could see some of the progress we hope for. >> on tough third point looking ahead to help to create path to sustainable homeownership, there's an enormous amount of work in process and probably even more remaining to be done to rebuild our mortgage finance system and the things we do now with the regulators and the lawmakers to will change the way home ownership is financed for decades to come. can we in the with a system that is safe and inclusive? how was it going to look when we are done? what do we do? >> i will start off and i think that we would share the opening point about the politics coming to washington is the first time any of us heard that. [laughter] particularly now. so, let's it's interesting to hear in the dialogue and having been the fha commissioner and

having taken enforcement actions against the institutions starting dialogue on the servicing settlement which left partly in between. you know it's remarkable as we look that hindsight is perfect unregulated, unsustainable homeownership standards allowing the institutions to promote programs that would adjust in two years that have terrible credit histories and high-risk families putting them into programs that ultimately down the road those assumptions and ultimately proved completely on sustainable and we wrap them in programs called subprimal loans which are designed to get access to home ownership. the idea that homeownership is to appreciate the rapid weight ashore to period of time based on a previous history you can cash out, refinance and take the

lines of credit provided by the banking institutions and others across the country all fuelling this fire towards ultimately created health can never be treated again. because extraordinary damage. it's the same industry that i took a measures against. you hear that and to hear that message repeated and it's been repeated multiple times already today. those enforcement actions are going to work through. how old do we get hope back into the housing system? the more we have discussions where you leave one to take the risk you hear the debate and dialogue there is nothing but downside that doesn't do what we need from a confidence standpoint and at the same time, we don't want to create a rational exuberance towards the future because we don't want people making decisions based on

expectations that are too positive as well. but i think the balance is ultimately what we need to think about as we move forward. the first would be a balance and homeownership versus rental. when i worked for sean donovan he talked about a balanced housing policy. what does that mean? clearly we have to many people promoted, too many families promoted into the hope of homeownership, and particularly this perished and destroyed communities, communities of color, communities of low-income levels, communities that were brought up because of the finance, not amortizing mortgages, sold and the private label sector so you can look at detroit, two different entire set of products were eliminated to consumers coming and you have similar outcomes for different reasons. that balance has to shift. local five borrowers who can prove their ability to repay that are fully documented and

it's clearly known that they will be able to perform in the mortgage as a critical component. we also need a balanced retro policy, and there's clearly going to be greater rental demand we are seeing it today with a shortage of the affordable rental in the key urban markets right now. and what is the doing? we are seeing the commercial and multifamily institutions actually having a much better year than they have had in the past years and that's great and it shows that demand for rental housing. but at the same time, how are we going to deal with affordable work force housing and what happens to the work force tenants who get displaced because rent is rising near where they were having to move their kids for their not locations where it's more affordable because rent goes up and mom rent control markets simply because the supply and demand balance. so, these are the things we have to think about collectively together certainly subsidized housing finance whether it comes from hud or elsewhere it is way

to be key to this. but the balance has to ocher. i point shift now to my greatest concern which we can talk about enforcement. i'm very concerned what the future of access to home ownership in the effort to eliminate risk in the market and eliminate the hon affair of yousef practice that existed over the past years that will move too far. and so, if you think of the pendulum small swings in economic cycles work the way the economy has function over the years we have come from a large swing and are we swinging too far the other way? i look at their rulemakings i actually participated in when i was in the a demonstration as part of dodd-frank qualified residential mortgage which as you know it has a 20% down payment. i don't have to talk about that with anybody here in this room, but we all know the don payment is a single biggest barrier to access for first-time home buyers which ultimately

disproportionately affects families of color and the communities of color, hispanics, latinos and african-americans. it ultimately affects these communities the most and the first homebuyer population. there's a study that came up the talks about fha, and at first when i saw that study the fact of the matter is the first time pence fha stands for friends of his men americans, not the federal housing administration. if you have a limited down payment opportunity and your family doesn't have large amounts and that's due to cultural and demographic experience going back generations in this country you are going to have limited access to home ownership without the fha. it's not a matter that it costs more, it is quite frankly low-level craze adjustor insurance and other restrictions on the score and up costing the borrower more than an fha loan. we see in the data if you go back a decade ago to last year,

a decade ago over 80% of all of the loans hispanic americans and african-americans in this country were done for conventional mortgages. last year approximately 80% of the same populations of loans for the latino community and african-americans for them through the fha for the usda ginnie mae program. the shift is remarkable and when you look at the rulemaking that carve out productions, the standards coming down the path, the provision which could have significant constraints due to the debt to income whether defining the ability to repay, we could end up with what i consider to be a disparate impact in terms of access to housing where fha has a very unique sort of ultimately demographically culbert gun-free to it and then the one per cent is going to get, you know, low financing whether it is through freddie mac or fannie mae or the private label market because they will have all of those

access to the economic fortunes that have been passed on hand generated through history in this country. and i am not trying to make this as it should not be enough in a discussion become so simply because of economics and demographics. so, while we are making certain to enforce all of the mistakes made by institutions, lenders, servicers in the past and that work will continue, and i think we have that going on. we can all talk about the things that are happening in to can either accuse them of not doing enough or accuse us of going too far the fact of the matter for me is i am extremely concerned about access to affordable housing finance credit outside of the fha program and quite frankly in the fha program depending on what happens in the political arena over the next couple of years. if we don't really seriously to look at when i do we start reverting our attention to the current rulemakings and in a responsible way that says we are not going to restrict access to

a qualified sustainable homeownership for a large multitude of purchase since the market to create a vibrant and competitive market place so consumers get the best options available to them we end up with what i would call the effect for people on the martian you have the fha or pay lending and in the middle of those that are not going to be infected by these rules anyway. we've got to be careful about what happens on a go forward basis. to me that is the fundamental by a lot riding we really need to be having right now. the inference that is occurring in a very rapid rate. although the data in a foreclosure it's going to be a big for closure because the lack of foreclosure activity foreclosed on about 50% for the expected to ultimately it's going to take its course. but we really need to be having a debate about those impact on the job loss on the credit score. those that have low down payments and need access to home ownership but shouldn't be delayed because of the down payment requirement. simply because we think it is

time to be tough on crime, and we overexert that force and created this huge disparate impact by policy cannot by lending the heater, and that is the core concern that i have that we should talk about further. >> lots of stuff to get into before we get into some of those i would like to stay a little bit more with the question that you've talked about as a housing policy. just to understand this doesn't imply that is at a crossroad or we have to either choose to support one or continue to foster home ownership or is there a way to connect the dots and a holistic way? any ideas about how to get there? >> i would like to comment just to say that i think dave painted a good picture of the balance that has occurred. this isn't a disagreement is just a clarification for people who really don't do this every

single day and that is we need to be careful as we engage the conversation on the balancing of the house inverses rental, and did we go too far? homeownership rates are 50% even at the high end of the bubble we didn't go too far and the reason for these exceptional foreclosures and dave said it but i want to clarify it's not because we went to for pushing the envelope on affordable housing products low downpayment well under the loan, that wasn't the foreclosure crisis, it was exploited subprimal and that wasn't intended to promote home ownership so when we are talking about this it can get a little bit modeled sounding as if they were using these experimental products and high-end financing to try to get people in who really didn't know. that wasn't it. they wertaking people that have the credit score and the income and the job and the financial wherewithal to be good

candidates for long-term home ownership and to 28 or 327 sub prime loan that was intended to require the refinancing to or three years to trigger the fee for the lender that originated that loan and when the price is flattened out, the house of cards fell apart so we go back and start talking about the balance of common ownership, we need to be talking about what do we see as the potential for home ownership using the underwritten documented low-cost fixed-rate loan product called the 30-year fixed-rate loan. since the great depression the loans have been underwritten for the households. low-income not financially sophisticated because the system worked to actually make sure they got in the home they were intended to own and for which we almost forgotten this thing called the market. he would be successful in the

first because he wanted a relationship with you to go to the next homeland that fell apart. we want to stay with you and at one home you keep turning and we keep taking income from you said you never actually generate any income for yourself we just keep stripping that wealth creation from you. one of the things the also emmys is me is when i hear a lot of analysts and economists in particular say we need to rethink, and russia if you ask them are you a homeowner they will say yes. everyone i've heard says that. what they are saying is we need to rethink having minorities and low-income households as homeowners to me to the that the 1950's and 60's the way it used to be and not so focus on that balance. we need to focus on what are the types of loans that have shown to demonstrate the of the kind of products that are sustainable

long-term wealth and see what are the populations that match their criteria for the home ownership market >> you will hear in the debate people look back and say it really wasn't needed if you look at interest rates you'll hear economists talk about the options for the consumer this is the way they describe that and it's interesting from 1980 until now we have seen them go from about 18 down to three and a half with a couple of ticks along the way. if you are ever going to need a 30-year fixed-rate mortgages will be from here going forward as they move the other way. that's why i talked about the subprimal the very beginning to revive it asked the downpayment assistance loans on the fha program artificially inflated values and the single good the

fault right half of our borrowers bought one of those mortgages and in that in some trouble as a result. so, and a third right now are in some sort of a foreclosure with the single biggest adverse impact of the program, so there is a lot of variables in terms of how we determine seat sustainable well underwritten loans to make sure that we are working on access but at the same time not pushing people into homes reasons that won't be sustainable. >> from our perspective and looking in the local communities i don't think i could say anything different than this to just echo what we are hearing which is we have a study coming out probably within the next several weeks which is looking at access to credit in communities where we work and these things will all be present and i don't think it is any surprise how we continue to provide access in the fairly priced credit. it's simply not slowing. yes we have a repeat of history that really threatens to come our way. we know that many of the

communities that we are looking at our minority and low-income communities coming and i do believe we have a tale of two cities. as we have got certainly a recovery in some places and credit flowing i would say the majority of the places that we are working in our really in challenging conditions. >> it's interesting even if you look at the multi family environment, the sources of financing are no different than the single family environment saying in the fha dark it is virtually nonexistent and so, as you think about this demand for the rental housing going forward, you know, we need to have low capital to make sure that we can build plenty of supplies particularly in the urban communities how their places work. >> i would also add that some of the work that we are doing on the ground what we are going to continue to hear. we all have to be really thoughtful about how we

articulate what that means for our economy and how we start to transition to productive uses which i know all of us are talking about setting there is an opportunity to see how to convert some of those single family units productive rental and certainly rent to own and other sort of programs we think can lead to either high-quality rental ownership, but regardless, there is a huge mismatch as we know between where the funds are coming and we're the opportunities for the job schools and the other reasons people choose communities. so, how we think about our messaging and think about that stock in the face of this conversation as we all go to the hills to advocate for what we believe in weak to be front and center on that as well. >> i want to ask that because one of the things it is interesting in your last comment raised for me as as we are thinking about the future of home ownership, we have to remember that a lot of households that lost their homes

to for closure actually be good candidates for home ownership. they were before they lost their home and guess what they still are now. they simply couldn't pay the subprimal and get a modification in an inappropriate way that allows them to keep their home. if we are looking at literally the pieces of single-family and or townhouses or whatever, this basic homeowners' staff of housing, we need to be careful that we do not dragani d.o.t. to what are the challenges in converting? need to ask ourselves what are the challenges in helping those individuals who lost their homes as a result of an export of products to become a homeowner again. in other words, having the -- being on that credit score as a result of having a credit score failing on the predatory is adding insult to injury because it's not penalizing them the second time as opposed to taking advantage of the fact we have these incredibly low house prices in many communities across the country and asking yourself what is the product to

go beyond the standard fixed-rate to look at things like how do we create a new lease purchase program that is national in scale and that is overseen by federal authorities so that we know is not a predatory market and actually get people back into owning homes in which to cut the score doesn't matter because they are leasing it and over the purchase of three to five years of performing well on that lease it can reverse to an older mortgage comes we think about the balance between rental and housing we have to think about what happens between rental and ownership because we are recovering from the extraordinary damage that has occurred is ending the foreclosure and in building the market going forward. there is a revenue of a lot of millions of homeowners who have lost their homes and millions of those homeowners are just as prepared to be homeowners as the current ones today. >> it's interesting this is an

important point because it may not even be deutsch predatory products. it could have been an autoworker that lost his job in the upper midwest and through no fault of his own or her own because of an economic recession has had the credit score impacted how to refine the pathway to get them back based on the way that we are managing credit standards today? this is a really important issue, and to juxtaposed that the current focus on the point of was made in the opening comment, you know, that's great. it puts cash in people's hands. it's not as stimulus to from a pure economic standpoint as a home purchase. so the policy makers found the way to get things done is to eliminate the barriers to access, and i think that is a good lesson with a lunch for stability and practices, the more barriers we overly on the other side of the aisle and the purchase side can have the

opposite effect so that is where this balance -- >> i think that is a really good point because one of the obstacles from a lot of public policy analysts or public policy makers the resistance to doing more to mitigate the foreclosure is a perception out there that somehow people are in the trouble that they are in financially because of their own doing. they bought more housing than they could afford, etc., when they make the point is a powerful and important point that it is not as much in the public mind as a lot of people go into foreclosure these days probably the vast majority now or a victim of circumstance. the economy, soft economy and collapsing home prices. so if we are looking at those as the characteristics driving foreclosure, then envy of devotee of us and the willingness of policy makers to actually legislate more aggressive foreclosure litigation should be greater.

but we have to first remove that perception that people are sort of victims of buying too much home and being irresponsible. >> keeping in mind that was triggered by a bunch of reckless funding at the front end of all of this. and bringing that into focus because those of you come several of you have addressed this point are we in danger of losing a fixed year mortgage you talk about it as something that needs to be protective we've been taking for granted when the fha was created to introduce the product and it's sort of become the backbone of wealth building for the middle class in this country. are there concerns about it and what should we be encouraging the candidate to think about? >> i will jump in. it seems almost many that think about this it will never happen. i grew up in this industry several decades ago when i started fannie mae and freddie mac or a smaller percentage of the marketplace and i worked for a thrift we did 30-year

fixed-rate loans and held them on portfolio and had prepayment penalties. we fully documented every loan and locked in the interest-rate the night before the foreclosure because we couldn't hedge forward until today with is a vibrant to be announced market that has been created by the gse for the bar were, the family to buy a home congo under contract for 30 to 60 to 90 days in advance of their settlement and have the confidence and security of knowing that they will not suddenly blocked them out of the asset and it keeps the economy moving. it's extreme if you look at the extreme versions the policy makers have proposed for i think in the absence of a complete elimination of the guaranteed market and sort of an overcorrection on freddie mac and fannie mae will they serve in the market i think he would be to the casitas friction and how the 30-year fixed-rate mortgages are being created because that evolution, the violence created, the securities

market, this interaction is global in terms of how capital comes into the housing finance system all depends on this flow to put an anthology to move the plumbing under the sink. suddenly it will go on to the floor it's not going to get to the cup, and this is where we have to be most carefully is overcorrection, trying to dampen down the more emotional statements that may be made for political campaign purposes and have less of a pragmatic reality. >> i would say i think there is risk to any policy given what we are facing today. and i think -- i do think that 30 year fixed is an essential party to retain. we see the comparisons to the global market that have seen fully functioning housing markets without however i do think it's important and i would say not only in the housing market but i think as you look at the credit crisis for general we get more globally, whether it is in housing war i used to be

in the small business finance, it's important to be able to determine the predictability of pants and if you really want to get down to affordability and predictability particularly for low-income families i think it is essential so i think to have something that is long-term amortizing and has the future that we know access to a broad range is essential. >> that's important for stable renting to be able to finance those projects with long-term fixed-rate. >> i find it to be almost the whole question to the surreal. for 50 years there is a reason why homeownership in the unoccupied housing is the single most important asset of the typical american household and that is for half a century the home ownership was the most secure, most stable, most incredible wealth generating asset and then all of a sudden in 2000, we had this explosive

growth of subprime mortgages. it destroys the housing market. then the housing market we would then come back and say now how do we repair the damage was caused, and rather than looking at the product that caused the damage we say it must be 36 rate mortgage we have to get rid of. it was a 30 year six rate mortgage we got rid of in place of sub prime and the solution is to get rid of it and make sure that it doesn't happen again thank goodness for the consumer financial protection bureau. somehow we need to get rid of the product that for half a cent reproved itself to be the envy of the world in terms of wealth is incredible to me to read when we start talking about this, you end up with conversations that are almost as convoluted and strange and bizarre in the sense that what the leader of the same kind of products, financial engineering that could lead to another collapse of the market

because it's so sophisticated no one can understand it to redesign on the dotted line this is your payment the next 30 years. that's what we need, that's what works. there is no reason to debate whether it should exist. >> let's look ahead several years. by 2015 the country will be the majority minority if not sooner. but his bags lost more than 60% of their wealth during the crisis and what households lost. homeownership has suffered a bitter setback than white households the gap is like 74% homeownership for white households and less than 50% for black and latino. when we look at the fact for example hispanic households are currently accounting for more than half of the home purchases in this country today, and you look ahead of the growing diversity of the country what are the implications for how we design the housing finance in the future?

>> i have it with me but it's the state of the nation as you referred to. 53% of all purchases in 2011 worked to the hispanic households. if you look at household formation over the second quarter in terms of the information, there was about 893 million households formed, but it was more than that in the hispanic and non-hispanic resulting in a net number the joint center for test of you look at the household formation that is going to occur over the next decade the single biggest factor to that is greedy from the latino community and other communities will be growing. we need to be thinking about different forms of information. i grew up my parents where i

grew up we had single income earner, my mom stayed home, steady celery, attention for retirement. if we think about household information going forward we need to think about cultural differences, multiple family members that may decide to live together in any community. cash incomes, multiple jobs, self employment income, these may not fit well particularly in the ability to repay definition or to existing freddie mac or fannie mae underwriting standard, and we need to absolutely make sure we are looking at how to include verifiable or real income that may not be counted in this order traditional sense. it's an important demographic because its way to drive a lot of the u.s. economy and the desire to own a home is extremely high in the new growth communities of this country and we have to make sure we find a way to meet that need. >> to talk about the low down payment market as well. >> absolutely.

>> i think those are important trend is to look at and thinking about how we design our next generation of communities to make sure we are paying attention to cultural differences and we have products that allow us to look at differences and communities and household formations and it also has to do with lifecycle and i think that we are looking at the their generational housing and looking at seniors, there is just a different way that we need to be thinking of some of our housing. we are seeing a lot of folks today also looking at things like for senior housing how we add more density to thus that exists so that if we want to have seen years or intergenerational housing how do we think about that in a more compelling way? and to talk about the future community i think we need to be paying attention certainly the point to make about the products themselves and how we take into account the multiple income dwelling unit in a very fancy way. but what it is is adding more

density and then how you start to think about financing that in a the allows families to be together and have a productive cap and it's important if you start to look at some of the cultural norms as well as the demographics. >> i think it is probably the first time since the department is showing the country would be no longer maturity non-hispanic white but about 15 years ago, and it really didn't get anyone's attention because about a year 2015. so, policy makers as the 2015, that is a long way away we don't have to worry about it. you have a lot of people of long ago when the first report came out to show that in fact the majority of the babies now born in america are children of color. what that means is we don't have 30 or 40 years, we don't even have 20 years, we don't even arguably have 20 years because that large number of minority children who have a profound impact on every aspect of the american economy, not just the housing market but every aspect

so the question is how we integrate those children into the opportunity of america so they can pay the bills because they will be larger share of the work force as a disproportionate share of non-hispanic whites are retiring and they will be retiring doctors and lawyers and accountants and the people who have really good jobs and savings and look at being replaced by kids who can't even get a job as a cashier. ..

the latest data shows we don't have time to wait. the future is today right now. i'll be looking for you give us your name and affiliation. i would remind you you're here not to comment specifically on the platforms of any one candidate. there may not be that much in the housing policy arena but to put things farred for them in thinking about their housing platform. with that i'm going start with the favor toman manual ochoa.

>> good morning. i'm the regional director of hope ownership for the latino economic center. i'm here with wendy, a senior housing counselor and i'd like to take a brief moment to tell you about -- and tell you a real story. lec equips latino and other d.c. area residences with a school and financial tools to create a better fiewf phenomena the family and community. we help people stay in their homes. we provide microlending and help start or expand small businesses. we work for stable housing every day here in the region and more than 5500 renters and home homeowners have turned to ledc to get the support they need to buy the first home and keep the rental housing affordable and fight ford motor company. we provided more than 2300 hours

of foreclosure intervention counseling to over 00 families. just two issues i wanted to highlight with you briefly today to quick off the question, two issues, one of is for underwater borrowers principal reduction is important tool we're glad with the national settlement there is more principle reduction taking place. however, the seemingly similar cases seem to be treated differently what we've seen in the past couple of months. we started to see some agree principal deductions it's unclear how lenders are making the decision. rented decisions we were disappointed with the recent decision by fannie mae and freddie may say would not offer struggling homeowners principal reconduction. more than 50% of our cases are fannie and fred imri loans. and also there's foreclosure scams that continue to target struggling homeowners.

we continue to see this asen issue every day as folks in families come to us needing assistance and further behind because they tried to seek help from banks first and fallen victim to foreclosure staples. we are working with state agents and neighborhood works america to to educate people how to avoid scams. more needs to be done. scam artist seem to be changing their tactics frequently to invest and divert vulnerable homeowners of the emergency funds, college savings funds and we have a responsibility to protect homeowners by reporting the scams as frequently as we can. yet we also find as wendy will tell you that many homeowners are reduck assistant to report the scams. so rather than rush to as

foreclosure as we have heard other policy makers suggest, we believe that it's important to ensure that deserving families work -- deserving working families who through no fault of their own have a chance to stay in their home if it makes financial sense for their families. so wendy, why don't you come up here and tell everyone a little bit about one of the cases we most recently have been working with with. then we'll quick off the questions. >> thank you for having us here. my name is wendy i'm a bilingual counselor at ledc. as housing counselors we see difficult cases every day. i want to share astory with you that just walked into the office last month. -- late last month actually. a few years ago the family falls behind on the mortgage when hector rodriguez, the husband,

gets sick with cancer. by the time he comes in to our office, he's unfortunately already passed away. they're about eight months behind on their mortgage, they have three young daughters, and they're all under the age of 5. her the wife gets a letter in the mail from a scam operation prompting to stop foreclosure and reduce payments as much as 50 percent. desperate she calls the business for help to save the house. they ask for $5 ,000 to try to work out a loan modification. time goes by, now she's fallen about a year and a half behind on her mortgage payments. eventually they tell her that the loan modification was denied

unfortunately there's no paperwork to back that up. these are the kind of stories that we see on a day-to-day basis. there are certain stories that unfortunately touch the heart of all of our counselors and we all try to pitch in. months later the scammer tells mercedes the only option left is to sell the house and put the house on the market as a short sale. the scammer tells her say does they will buy the house in return and return it to her. to do this, they ask for $60 ,000 to be transferred in her their own bank account. her say does, wants to save the little bit that her husband left her which is the house for her children, she agrees. and he makes the money transfers.

and the house is put on the market. her she tells the story to her psychiatrist to tells her to come to ledc. we tell the story -- we tell her that the still to is illegal, you know what they're doing to her is illegal. there is no way that -- because what hay have promised is with the $60 ,000, they will buy her house and give it back to her return it back to her. and she unfortunately believes it. when she comes in as a normal client would come in, and see one of the counselors, the counselor tells her no. there is no way that they're going to do this for you. it's not legal. and the counselor automatically tells her to back to the person and try to get her money back.

she listens. she goes back she tries to get her money back, they give her $40,000 out of the $60 ,000. she comes back to her our office kind of happy kind of sad. at least she has $40,000. at this point all of our housing counselors are involved in the case. and we all feel there is no way we can settle for only obtaining $40,000 out of the $60 ,000 she has already given this person. we continue forward. unfortunately this client does not want to come forward and report the case. but we feel it's our obligation a housing counselor just indicates as any medical doctor would report a case of child abuse, it's our only indication

to report this case. we did so. we reported it to the department of -- sorry maryland department of labor and licensing, and this is where we are right now with the case. that was fortunately -- it got to the point this third person got a little bit threatened and she ended up giving her her back the additional $20,000. she has her $60 ,000 back. she did go back to the person's office, unfortunately the office was closed, the god thing came about it, three other people also that wanted to know followup on their file on their case with this person they started talking to her and she told them what they're doing is not legal. out of the three people, an

additional person did come to ledc who was willing to by this week was given a deadline to deposit $45,000 into this same person's bank account. it's sad. it's sad. there's nothing we can do about this, you know, the scammers they're busy. they're working. the only thick we can do is come forward and share the stories so more people know and go back home with the questions and those people might have friends and the word does along. thank you [applause] [applause] with that we debated about asking a question about principal reduction or the foreclosure scams. we decided to focus today on the foreclosure scamming issue. so many people come to us when it's too late.

if they had come to us earlier like this woman, her options would be different. even though we have highlighted so much the importance of reporting scams it's difficult. bedebated until yesterday until whether or not to use her name. she did not allow us to use her name. she's nervous about if. we wanted to highlight the question and what you believe can be done at the federal, state, or local level to protect homeowners from scam and other foreclosure scams and mortgage scams. the the story shows the department of justice. there are two things that are live and well. that is scammers and people trying to rip people off around real estate and the other thing is the strong desire for home ownership. the drive to preserve the roof over the head and the home for the family. as for the scammers, what can we do? >> this is an issue that president identified early to

his term in the administration made statements about it. there was something the secretary has been focused on, obviously a lot of housing counsels dollars flow through hud, i used to travel to around the country, visit with houses could could -- counselors and hard hilt markets, i spent time in nevada and other communities, the thing i found with those is the shortage of money. it's one of the biggest debated and items of the hud budget every year whether the housing counseling dollars are going to go through every year. as a result the resources no matter how good the work of people like this, the good work being done, there's not enough money to deal with the need, and if the consumer who is being affected by l scam artist doesn't have a resource to go to and doesn't know where to turn, they're going to be exposed. so, you know, you hope there's enough support by good organizations like this out

there. but in the end of the day, you know, it's a difficult one. the department of justice representative here -- [laughter] yeah. it is illegal and the president has been firm on it. the administration talked about it. and anybody who cares. >> thank you. >> the only thing i would add to that, one of the things that is mist fying is that so much of the abuse of consumers and misbehavior of consumers can be pernlged by having good quality testing. and then having those testing results turned over to institutions such as hud or the department of justice. actually calling the scamming artists and establishing a case against them and actually bringing legal action against them. relining on the consumers one at the time to readdress the damage being done isn't a healthy way to do it. i would say that, you know, the fair investigation things that have need to be increased pretty

substantially. but the great thing is if you purge discrimination and purge these abusive behaviors from the market you have much less federal dollars to actually compensate for the financial damages gone to consumers or the lack of economic mobility of households. so i would say my solution, one of them, is just fund greater activity around pursuing scam artist of the actual surveys of them, the testing of them and turning other the results and having federal agencies aggressively pursue them and put them out of business. a lot of that has been done by hud over the last couple of years. i think a lot more could be done and the department of justice. >> before they take their money. >> it sounds like you debated talking about scams versus principal reduction. maybe i'll change the agenda up a little bit and say it's fornlt talk about the scam and to hear the kind of feedback. i guess what i would us to do as a community is to think about

you know what is the back end process of all of this and, you know, we have millions of homes being transferred to new owners today, right. whether it's on trading desks with our selling non-performing loans npl. or whether we have sales going on that are being brought up by private equity players. there's so much activity that is going to be facing individuals that you touch in your offices as well as communities that we serve more holistically. over the next five years so i guess one of the conversations whether we have it today or not, i think it's important to have that other part of the conversation which it to say, you know, as we look at -- we actually established in partnership with the national communities stablization trust, hpn and mercy housing a facility to start buying up nonperforming loans. we felt it was important to have a responsible player that could

come in and do principal reduction being able to look at front end debt, back end debt how do you keep the homeowner there. we're playing in the reo space too. we need people responsible players doing some of that activity so we're actually buying up using hardest hit funds in illinois, the state has sitting that haven't been utilized yet. they have been criticized in the paper for not using. where not use that money for the nonperforming loans and try to do the principal reduction and modification and give them the training or counseling they need to be a productive homeowner. we're doing it at the way where they actually have now equity in their home. and you can actually restructure it in that way. we're also looking at the other end, you know, once we get through and you actually have reo property that is sitting there, vacant, you know, this is

being sitting with the large private equity player yesterday who happens to be a responsible equity player who has been in the markets for the last five years. they are concerned as we are about, you know, the bulk purchasing getting bought up by hedge funds and ores there might be good performing assets in fifty to 70% of those homes they buy, what happens to the other 20 or 30% of those homes that get bowghtd up in bulk purchase? they're sitting in our communities disinvested, resold and the cycle, you know, my point is what we need to think about is what's the next generation of issues that our communities are going to face. as we're looking at front end still let's not forget the back end and colist about the solutions. we're facing the issues again in five year's time. >> i'm glad you opened up the conversation there taken out of the legal conversation. because in fact, probably the best solutions aren't wait ifing for the legal at any rate. for example, one of the

recommendations of the home for good campaign is to mandate mediation. this particular consumer would never have been in the process of losing their home and having to desperately look for someone to help them if they had been required to sit down with the servicer and had legal representation. the scam piece would have gone right through. they would have had good advise. the servicers would have had discuss all the options or alternative. if thereto -- to turn the servicer through foreclosure. but in many of the cases as we know, there would have been ways to modify the loansand allow the consumer maintain their home without being desperate and randomly make phone calls institutions they had no way of validating them. i think if we can come back to send foreclosure budgets requiring mediation, requiring

that the servicers actually meet the standards of the pram which is still not done, there's a whole list of the recommendations in the home for good campaign brochure, if we follow those, a lot of the scamming will never have an opportunity to occur in the first place. >> just one point. is if you read the proposed service and standards cfpb put out a few days. it has two op obligatedded touch points that have to be made by all servicers. the first is a mandatory letter there's a requirement to have an attempt make personal contact with the homeowner by the service that hams on early on. the forced intervention which i think came out of the service and settlement. the standards were mirrored in proposed rule that come out of cfpb. if those kind of provisions can help everybody behave the same way in the marketplace. >> we have time for a few

audience questions. i believe i saw one. thank you. [inaudible] >> yes my name is [inaudible] i'm with a national organization of hispanic real estate professionals. you mentioned one solution mediation. you also made reference to principal reductions and also refinancing. there's a lot of talk out there more about [inaudible] principle reductions including shared equity possibilities. and massive refinancing historic low interest rates are available today. what do you see the process of success for these approaches? >> personally i believe that principle reductioning -- reduction is something that should be done by fannie and freddie. it's not clear that the -- initially the argument was it wasn't cost effective. according to the own revised able nice now that saved the

taxpayers $1 billion it needs to be done. it's not clear why it's not being done. i think there are other things that can be done we haven't talked about. for example, a bankruptcy protection for principle revenues. this is for the center of lending recommended over five years at this time at the same estimated 30% of the foreclosure crisis could be dealt with in the way. as you may know, you know, can get bankruptcy protection on your lucks sei yacht, on your second home, your rennerty property. when it comes to the family home. it's off limits particularly in the crisis period it makes no public policy sense. i think it needs to be put in place. they have indicated more effective servicing standards. i think that is a real piece when we talk about the mass refinancing, i think you're talking about proposal that was recently floated on capitol hill. one of the problems with that, is that if you see how long it takes to get even a rule

written, the idea that you're going to create some new financing structure, to buy mortgages probably would be at best in place in 2015, i think we can can't afford to wait. the flip side i don't think there's a need to wait when we have mediation that can happen immediately. principle reduction that can happen immediately. when we have all of the things to be done to enforce the rules so there are real penalties for not following the rules. these things can be done right now and we can mitigating hundreds of thousand of foreclosures. we're not doing them. i think the nice ideas, i personally think the things we should be doing are things we can be done now. >> i agree. my view on principle reduction. and, you know, i think we seen cases it works very well. and i think, you know, there are been studies talking about the cost of foreclosure and, you know, why this is such a make

sense from an economic standpoint. don't need to restate that, but i guess i would echo the strong comments to say principle reduction is an option i think we should -- you know, we do -- i do believe we need to clear the housing stock in a way to get our economy and the recovery going in more so -- stronger direction. there's no doubt principle reduction could be an important tool in that. >> last point i would make. shout out, an amazing advocate for the hispanic home ownership market. good job on everything you do. the thing i would suggest that relates to the refinance proposals and [inaudible] does have expand the heart harn program to provide more access to consumers. and potentially improve interest rates and speed up the process. i think that's one advantage they happen to go through. there are some issues with it. there are opportunities there.

and feinstein bill which proposes taking private label plornlgs and refinancing those in to fha is very close to the fha short refie program we rolled out when i was in the administration. there are things in the play that could happily fairly quickly if the kinks were worked out of them because as we know, the challenge for legislation you have to take it all or nothing. getting this right to a point where it could potentially move forward is one option. >> harp is working. it has an extraordinary. it isn't a permanent solution. it is clearly improving the cash flow of more thans of medicals and streamlines through freddie and fannie. it takes a village of solutions. gltd -- the response or so the home for good campaign are offering to bring you a card to sign off as well as members of the audience not forget the

channel of the home for good campaign to share the ideas. >> i was not referred to those proposals. i thought you were referring to the one that creates a new trust. and i did my say. i said 2015 it would take a couple of years to put something like that. right. and in addition to that it would distract the focus from doing stuff now. that's what i'm saying. good point. >> good. any last burning questions? one here. make it a quick one. we're sort of at time. if we can keep the question and answers . >> thank you. my name is steve -- executive director of home nonprofit counseling agency in cluck bus, ohio. my question relates to credit issue. there's a lot of folks who have been damaged during the crisis by foreclosures. they declared bankruptcy, they

have high medical bills, my sense are these people ever going to be able to access the home ownership market again? and such a way they're not going to be per pettily punished for things that happened to them. we see folks every day in this situation and it may take some [inaudible] type of innovative programs but i'm curious what your thoughts are and is anything possible for folks like that? >> i'll go back to something i said earlier which was [inaudible] [laughter] what i said earlier which was i think we need to look at credit scores and how they're being used for practically everything these days and understanding how we can tease out of those damaged scores the damage that's caused to a credit score result vulgt of an obviously exploiteddive mortgage project. we have enough evidence from the legal challenges that were discussed early yesh by the --

pursued by the department of justice. the ag49 state settlement that clearly there was a lot of illegal behavior happening in the market. the second thing it goes back to my point about innovative pructd. if you're working on a lease purchase the credit score doesn't matter you know what i mean in terms of ownership. your credit behavior will be determined over the three to five years of being a renner tear in the property. if you perform on that, the loan should be design to the convert to a mortgage. i think there are quas to with the credit score issue. i believe it is essential we do it. >> that raises the question of having a viable and quality place to live in the rent l. that might. >> absolutely. and yeah, i think there's going -- there needs to be products that allow people to rebuild credit history that are very internationally designed to be credit builder products.

there needs to be, you know, policy that allow people to, you know, excuse certain things like medical, you know, things that well beyond someone's control. so and i think that, you know, one of the things we try to do is think about innovation and products. i think it's an interesting idea for the certain sort of set of issues is there a way to think about innovative product that has some kind of, you know, nontraditional funding that actually allows you to do demonstration for some specific needs. i think it might be useful. >> dave, how do we set ourselves up? it's not like the direction we're going have a marketplace to look for the creative ideas and try to provide a way to provide home ownership. how do we duothat way? >> i think the question is key to a really important diagnose we have to have going forward. i spent the weekend in a rural area in southern virginia with at unemployment rate close to

15%. their credit is being impacted and their ability to get, you know, buy a new home if they're a family and e grained employment and gone through credit impairment and you talk about medical liens you talk about predatory practices. you can talk about simple job loss. credit impairment is a huge barrier. the two biggest on a go-forward basis for access is the minimum down payment be and how do we deal with the issue around credit scores and those being able to isolate period of bad credit creation vument as a result of issues that were of no fault of the family and sustainable going forward. and distinguish that from, you know, someone who took advantage of the market, speculated walked away from everything. we have to ways to distinguish those. we need responsible behaviors going forward. managing that is going to be a difficult discussion.

it's a great debate to talk about in the houses industry going forward. >> ending on that note. looking forward ton the upcoming debate. i'd like to take our panelists. it's been a fantastic conversation. [applause] [applause] [inaudible conversations] in a 11 days watch gavel to gavel coverage of the republican democratic national convention continuing our tradition of showing every minute of every major party convention since 1984. coming up former supreme court justice sandra day 0'connor testifies about the importance of civics education. howard dean talking about vice president cool age might offer to the two vice presidential candidates. arthur davis campaigns for romney plob in virginia. each day this week at 6 p.m.

eastern, we look back at some of the easterns luncheon speeches from the national press club. we hear from meteorologist jim on the 25 years covering the weather. and tomorrow film maker ken burns on the documentary on prohibition. and each day at 7:00 we show you interviews from our q & a series with a focus on the u.s. military. tonight historian anthony be, vo discusses his work. he talks about the conflict before hitler's innovation of poland to the aftermath of the war. it's global impact on the major powers of the day. retired supreme court justice sandra day 0'connor teffed before the senate judiciary on the importance of teaching civics in school. she has been an advocate for the issue since retiring from court in 2006 and chairman of the board for iicivics an online

project. it's an hour and 25 minutes. [inaudible conversations]. >> before we get started, i should want to -- of course, it's a delight that justice 0'connor is here. senator grassley is on the way. he was doing a conference call with students at an education thing. i'm wondering, all of you who are students in the room, would you please stand up so the justice can see. [laughter] [applause] not bad, huh? [applause] in the past, we've had justice 0'connor, i was telling her earlier that justice breyer and justice schee ya were here. we had so many schools around

the country now have the dvd of that hearing, and i even -- the state of vermont have people stop me on the street who have seen the dvd, and it's a chance to learn, it's a learning experience. we try to do that with periodically here. of course, justice 0'connor was appointed as supreme court by president region in 1981, she served on court until retirement in 2006. i recall, we talked about this in the back when then barry gold water from arizona came to see me and others to praise justice 0'connor and say that she would make a great justice and he was absolutely right. she's been a leading voice for

the importance of civics education, currently serves board of chairs icivics which promotes civics education in the nation's schools. i hope justice you are pleased to see the number of students who are here. [inaudible conversations] [inaudible] sitting in on a senate hearing.e i think it would be very instructive for young people to have a chance to do that. be >> justice, your bringing a lot of students to washington with this who we are streaming it on the judiciary website. >> good. >> i think that the discussions rvke this serve our democracy as

public officials wee owe it to all americans be transparentwe o about what we do in the official capacities. we just justify that trust by demonstrating how it the government works to uphold thea common values andho guided by te constitution. and now that constitution is by served over the years to make a great nation more inclusive and continuing effort to be a morela perfect union.nd as i mentioned with the studentses just before senator grassley came in, i mentioned senator grassley was doing his own outreach to students in a phone call before we came in here. the number of students in here stood to be recognized. there's quite a number. [inaudible] our constitution which only two of them are political, and intended to be political. the third branch is judiciary is independent by design. both of the political branches

come together and meet judicial conformation process to equip the independent branch with the men and women necessary to carry out as role in our democracy.cy i have had a chance to vote onhe ever justice for the last 37 years. beginning with john paul. stevens. >> oh my, yes. >> justice 0 connor -- has been a subject of two previous>> hearings. with the supreme court justice, justice ken city, scalia about the sitting chief justice i think the public conversation ig jre relevant. i'mus concerned about some of tc rhetoric abouthi the chief juste been called everything from a traitor to having betrayed to

george w. bush. well, i think these tes ofr fo attacks we feel the misguided notion that justice and judges owe some allegiance to the president who appointed them tod the political party. tm i served on the committee for three decades. more than that. of course, in every supreme court justice serve on the high court today at the conformation hearings. i voted to confirm justice and judges nominated by both republicans and democratic presidents. as i did in voting for chief just is roberts, i have long noted i don't vote to confirm individuals who expect to agree with all their decisions. i can find every justice i voted for i can -- i disagree with. a lot ofvo decisions i agree with. my understanding is will it be a fair and independent judge and fair and impartial. i say this because nobody shouli

demandee political allegiance fm any judge whether nominated by y democrat or by a republican. as many see justice have noted is completely appropriate to criticize the rulings of any- court. we have the right as americans.j including the supreme court for example, the chief justice recent health decision which i descree the opinion of justicen ofus begins burgti compelling on congressional authority on the commerce clause and and the spending clause.ause it reveals a complete misunderstanding of our system to attack the chief justicettack saying he is nauticalled a jus a political party or show allegiance here. this is a teachable moment. justice 0'connor is dedicated her life to public service. he's e licted to state government. she serve on the state bench and the highest court in the land.

the last justice not come from baa -- what i call the judicial monostair. she traveled the world to teach emerging democracies about thead importance of rule of the law. those have been teachable of nts. she's directed the considerable talents reminding us of the importants of civics education. our own democracy will continue oo thrive and be protected. d stice conor would yield to myl friend senator grassley. barry barry goldwater was a good friend, i had his request, i moved in to his old office. i've been there for thirtyears. years. you would be delighted to hear all the good things he said about you.ould some in the language i won'tl repeat in the hearing. you know barry.

>> senator grassley? >> thank you. thank you, mr. chairman for holding this hearing, and it yo remember one we had last year that was very valuable with briar and sco lea valuable. juse very valuable to have you here as well. va i'mle glad to greet you for havo coming. >> thanks.he >> you were not only the first woman to serve on the supreme court, you're the first supreme court justice i had a chance tor vote for. >> for heaven's sake. fst >> my first vote for the to vo confirming somebody to the supreme court. and i can say this, looking bac. after your year's of service your performance justified the confidence that the senate placed in you. we would like to believe our ourges who independents is guaranteed by the constitution rule based only on the constitution and not on thewills policy preferences, judicial independents was established to

make the courts independent of the other branches, ando ma t independent of popular view. it is not designed to make judges independent of the constitution so they can impose their policy preferences. we hear that if only our citizens properly understood the role of courts on precedented attacks on judicial rules vanish, this is a view that i believe is at odds with the current reality and the historyt of our country. in fact the leading reason for the so-called attack on judicial independents is judgess themselves. only last week "the new york times" reported and only a few weeks before the health care decision, the supreme courturt s publishs approval of the court performance was 44 to 36 margin. but the article reported that after the ruling, as many americans disapprove of the supreme court as approved of the

performance. that decision, which some have speculated, was issued at least in part to reduce political opposition to court appears to have accomplished exactly theape the opposite result, ifed you wt to go by that poll. the articles states that most t americans believe thepo decision was based mainly on the justice's personal or politicale views. only 30% of the american say the decision was mainly on legaladey analysis. for myself i respect the decision even if i'm esappointed by that decision. and i question no one's by th motives. i do not think that the polltiv, results would be different if only the public had a better pol understanding of the court. if in fact, i think, the poll reflects that the public does have reason to suspect that politics enters into some justs' decision they accept the

decisions anyway as shown by thi polling on 18 earlier majory a presented in that article. two-thirds of which unpopular with the population when they were decided. l though unfortunate, this perception should not be a caush for arm. fo long as it does not lead to threats of violence, threats of impeachment, or threats to imprison judges for their rulings. much more source threat to judicial independents have occurred regularly in our history when the decisions were convinced what court presented as law was not constitutionally sound. such as when andrew jackson -- u constitutional of the bank of the united states or the court's rules on indian rights.agreed t or when abraham lincoln saiden that the dread scott decision l was quote, unquote, erroneous and refused to accept it as a

precedent because it reflected, quote apparent political buyl sis.or or when roosevelt ran the most successful third party candidate h the history on the platform of quote, restriction of the power of the courts so as to lead to the people t the ultimae authority to determine fundamental questions of social welfare and public policy end of quoted. including the ability of voters to overturn constitutional rulings of state courts. or when franklin roosevelt tried to pack the supreme court because the ruling striking down new deal legislation.new lesl let us keep everything? k perspective. it's not aev violation for a judicial independents them to criticize court ruling he or shi believes in.lings at it's not a violation for aon senator to conduct oversight. those are appropriate waysna of

ensuring accountability. that is all within the of checkson concept and balances. you additional independents could be jeep jeopardized when the president of the united i states and the state of the union misstates the holding of supreme court case when they cannot respond. judicial independents can be threatened after the pendingpond case is briefed or argued the president public misat astates the process of jo additional review and claims court's legacy and particular justice's legacy will be tainted unless a court wacideses the president wants ece casent decided. and judicial independents is weak end if justices give in to the attacks weather based solely on the constitution or appear to do so. finally, i appreciate justif do justice 0'connor's work in

advancing civic education. i believe that all citizens benefit from the participation a of informed and acted citizens.i i think icivics site is a good one. although i wish courts told students that citizens can challenge laws on constitutional ncounds in state as well as wderal court, it should also saely that a trial held for violence of state criminal lawtn claimed to violate the federal constitution would be held in ve not federal court and urthough i have supported federal efforts to promote greater understanding of the constitutional system, i do not believe that the federal government should develop andent mandate civic standards i do not think the framers of the constitution thought they had of given congress the authority to impose such standards. justice 0'connor, i look forward to listening to your reviews.d >> thanklo you.oko l thank you. justice 0'connor,te we're talkig

icivics. jusce lkhear one of the copies of that -- iin could not think as i look at this, the young man on the front, looks very much like a grandson of mine. all five our grandchildren get a chance to be involved. please, justice 0'connor, we welcome you here and the floor is yours. >> thank you very much, senator leahy. i welcome questions that you ani senator grassley want toll ask t direct the conversation. you have broughtan up the subjet of icivics.yobr it's a website that relies ona t games toe teach young people hw government works. p we've had a wonderful group of skilled o teachers of middle and high school levels who have

helped advise us on topics that we should cover on the next icivics game and so forth. they helped us throughout the process of developing the website.e help so we have attempted to develop games that enhance the ability of teachers to teach young people how our government works. i went to school a long time ago. i went to school in el paso, i texas. my parents lived on a ranch tha my too remote for many schools. i lived with grand parents in el paso during the school term, and went to school there, and i well remember having a lot of civics classes will mostly based on texas history, and i got pretty sick and tired of it. to tell you the truth, i thought it was miserable.d i'm hoping that today's civics

teachers will be able to make is more interesting than i found it in those days. t that's one ofma the reasons fori developing in the icivicshe reas website a series of games that young people can play that illustrates legal principles we're hoping to teach, and the system has worked very effectively. recently bailor university in texas asked to do a study of icivics through their education department to see the effectivenesses, if it ison dar effective, of the program with students, and their study produced really exceedingly encouraging results. i was thrilled to get the repord from baylor about what they found from the use by students of that website, and the games in it. so i'm encouraged by it and it

shows me that young people need to know how our government workl and how they're party of it.ow it isn't self-evident and in schools today, i don't think it's widely taught. and young people want to know how to be effective.t. they want to know their role as citizens, and how to make thingh happen at the local level, at the state level, and the national level., th and icivics tries to do that and tries to help young people develop their own proposals and programs and learn in the process more about how government works. i think that the effort is being effective and appreciated, i have chair people now in all fifty states including in vermont, and it's doing well, i think. and i welcome feedback from you and others.

your constituents on how they think we can improve what we're doing, and we have kept the program free so schools can use it at no charge. and that's important in today's circumstancings where money is not often available for schoolss to develop new programs. but i hope that your constituents will report back tr occasionally on the effectivenesses on icivics and keep you informed. i welcome your suggestions as you have them when we gos forward. and senator grassley, the same. i hope i hear back from you if you have goodil suggestions for. us. >> thank you very, very much. and again, i appreciate youate doing that. i will make sure we get some feedback from vermont.

>> that's good. tge >> i'll check with the cough try in vermont. >> absolutely. the town where my ancestors settled after the revolution.afe it hasn't grown much, i'm afraid. >> no.rown no. that's an area called the northeast kingdom. various people come from that part of the state including my wife nearly fifty years. justice 0'connor, you have oftee counted how a tax on judges canx be a threat to judicial independents. the red dick to follow the supreme court justice last month. a member of the court was labeled a traitor accused of somehow betrying the president nominated to the supreme court is though >> it is unfortunate.

comments like that demonstrate only too will the lack of understanding that some of our citizens have about the role of the judicial branch. i think the framers of our federal constitution did a great job in understanding themselves that the judicial branch needed to be able to make independent decisions on the legitimacy and the lawfulness of actions at the state and federal level when they are properly raised in court. the framers did a really good job in that regard. it is not every state that has followed the federal model. under the federal model, judges are not elected. they are nominated by the president and confirmed by the senate. in many states, that is the process, but not all.

many states have popular election of judges. the result of that has been the need for candidates to raise money for their election campaign. i think that has a corrupting influence on the selection of judges. it is disappointing to me to see as many states as there are if using judicial elections. i hope more states will follow the federal model and have a system of judicial appointments. many of the states that have these have a process of confirmation or selection that involves public input. that is fine. but i think the federal model has been a good one for the states. >> i agree. that is a model that we follow in vermont. it works very well.

it has taken politics completely out of our judicial system. we recently had a new federal district judge. her name was recommended from our bipartisan screening board. i recommend her name to the president hu. interesting enough -- i am recommended her name to the president. interesting enough, to this day i have do not have the slightest idea of where the politics are.

while a judge might be and should be appreciative, as you were up president reagan possible nomination, your allegiance is to the law and not the president who nominated you. >> the allegiance of every federal judge as to the constitution of the u.s. and the laws that are adopted by congress. that allegiance, i think, enables judges to resolve the cases. they rely on presidents. we follow the british model of years ago in which a case resolved by the nation's highest court, the principles established will be followed by the lower courts in the future until the courts to change the models ordered the rule.

i think the system works quite well. it's served us well in the u.s. through the years, i think. we have a good federal court system over all, in my opinion. >> let me ask you about that. during the primaries earlier this year, there were a couple of candidates who said that those of us in political office should be more involved in the court. one even suggested eliminating the circuit court of appeals. he disagreed with one of the opinions. we have heard others say that we have the power and the courts in the supreme court that any time we have a disagreement, we would have a hearing and we move that.

i remember standing side by side with barry goldwater on the floor to fight an effort by one senator. the case is where the water do you agree with that? >> i certainly do. i think our system is a good one. sometimes a court, a federal court, for example, will resolve simple issue in a way that not everyone likes. certainly in a body like that u.s. senate comprised of republicans and democrats and occasionally an independent, you will have some disagreement among members of this very body

about whether a particular ruling of a federal court is correct or the best ruling that the court could have made. obviously there will be differences of opinion. under our system, and issue that is divisive will sometimes come up again in the courts in a different posture. you have related issues. over time, the courts themselves will have a chance to review the president's and the effective -- the precedence and effectiveness. the system has served the system quite well, i think. >> one last question. let me ask you this -- with all

this question about diversity -- you were the first woman to serve on the supreme court. i praised president reagan at the time for that. diversity is more than just that. diversity of backgrounds. you have had a lot of experience. today diversity in court, we have some wonderful people. they come from the same backgrounds. do you think we should push for more diversity? >> i think over the nation posset history, we have had a very diverse group of judges on the court. history, we have had a very diverse group of judges on the court.

people who have served on the federal district courts and appeals -- that is not a requirement. the president is free to choose the two people with very different backgrounds. there is no requirement that the person appointed be a lawyer. i think it would have it pretty hard time if they do not have legal training, but there is no requirement in the selection of a justice. in the first 100 years, i think we have a lot more diversity on the court. >> thank you. senator grassley.

>> you did bring up the election of state justices. is what you said leaning more towards the federal system than what the states do? >> well, many states still have appointment system for state judges. it includes a system where after many years on the bench, the judge goes on the ballot in the state where voters can decide whether to retain the judge, yes or no. that is the system we have in arizona. that is the system that i helped develop in my prior years in arizona. voters have a chance to look at the record of the judge and say, do you want to keep this judge? yes or no? not many have been turned out of office in that system.

i think it is a perfectly balanced system for a state to adopt. the federal system does not have that. you did not have a system where after a few years on the supreme court of the voters in america can have a chance to say whether justice should be retained or not. i think the federal system has worked very well. i am not proposing any change. but those states to use retention elections have had pretty good luck with them. very few people are turned out. >> i want to refer to an article from 2008 that you wrote, "i regret the threats to judicial independence seemed to be recurring with a record frequency. for their decisions on various issues." i do not find fault with what you wrote, but i want to explore

with you some situations and see whether they could pose threats to judicial independence. could judicial independence be threatened if the state had a state of unit address in front of justices who were not in a position to respond and criticized supreme court decisions? >> i do not know if it threatens judicial independence. it is not something as citizen expects to here in the president of's state of union message -- president's state of union message. it is unusual. >> another question -- could judicial independence be jeopardized if the president

misstates a doctrine of judicial review and claim a particular ruling would harm the court's legitimacy and claim that a particular justice's legacy would be tainted unless he decides the case in a manner that the president presumably wants? >> if there is a pending decision at the supreme court and a president were to express views along those lines, it would be surprising. it is unusual. to speak out at some higher political level either at the state and national level about a decision on a pending case. i guess it will happen, but it is not what we expect and it is not ideal. >> last week, could traditional independence be jeopardized if a justice decides it is in a different way than his original

and you do to presidential pressure or that the court would sustain political damage? >> i am sure that many things go through the minds of a justice in a pending case were a tough issue has to be decided. the justice may learn things that cause the justice to shift the tentative outcome in some fashion. you can continue to learn up until you have signed on to some decision. i would not preclude that. i think it is always possible. it is not often that it occurs. >> since i still have time, what would you think are the most important elements of the court system as students should learn?

it corrects the system needs to give -- >> this is dumb knees to give some independence of the judge making -- >> the system ne some independence of the judge making decisions. to do so, fairly and independently. that is the concept. that is what i think the average citizen should be able to understand is the concept and trust that is what is going to happen. >> i will make a comment. i do not know where you are on this. the chairman and i promote cameras in the courtroom. we do it because we think there is a lot of mystery about the judicial branch of government and the education of the people

by having more people have access to the court room would be a very good thing to do. i would like to take my last minute to advocate for cameras in the courtroom. >> i would advocate for that. i am all for it. >> i yield back my time. >> only speak if you are in favor of it. [laughter] >> and then i'd better keep my mouth shut. [laughter] you andustice o'connor, i have noted the other for a long time. it is refreshing to have you here. i respect your view anyway. i have a soft spot in my heart for former prosecutors as you know.

>> thank you for being here. to the appreciate it. when we have a confirmation hearing for elena kagen, i spoke about your background. before the age of 14, you were able to use a rifle, a herd cattle, and ride a horse. >> absolutely. i lived in a very remote land. everyone had to be able to do everything as soon as they were old enough to do it. >> you came from such humble beginnings. you were able to achieve so much in this country. i wanted to start with that. where did you think the reason is that we are seeing such a decline in civics education? how do we improve it? >> frankly, part of it is because we have learned to our dismay that our american

students when tested on math and science are not doing as well students of an equivalent age for many other countries. i think that distresses us because our country has been pretty advanced in math and science. we do not want to see our students lag behind. we need an effort to increase education in those areas. it has resulted in the dropping of civics courses. there are only so many hours in the day and schools have to concentrate on something. they might do more math and science and less on civics. i would like to be sure that we continue to teach civics distance. my own concentration has been at the middle school -- teach civics to students.

my own experience at the middle school -- i think it is important. students want to know how government works, how their city, county, state, nation works. the want to be a part of it. icivics teaches them by way of games. the young people play a role and they learned. it is very effective. in many cases, it is being used in 50 states. students using it can learn how to take a project and get it through some city council level or some kind of county level or even a state legislative level. it is great when they do. the earlier you learn how government works and how you can be part of it, the better it is.

>> i agree. my daughter is 17. one of my favorite project she did is that she interviewed a senator for an hour. i think it was about a 50-page power point presentation for her class. >> that is great. >> it is very good. i come from a state where we have very high voter turn out. it is such a value in our state to get involved. i think it is a major problem of the distance the public feels from the government. as a former prosecutor, we would find that it was not always the result in a case that matters to people, but how they are treated through the system. if the understand what is going on, they trust the system. we did a survey on this.

if you're not feeling them in on what happened and they have no understanding, they feel mistreated by the system. i appreciate your emphasis. i look forward to working with you on this. i have some other questions. one is on a supreme court nomination. think we can do to improve them? i think there are still important for the public. what can be done? perhaps it is miserable from the point of the nominee. -- >> it is miserable from the point of the nominee. for the public, it might be the only chance for them to see a nominee and have some appreciation of their style and their manner and how well the answer the question and to have

some understanding of the process. it really does matter to the public. i think the system in that regard works very well. >> what did think of the nominee asking questions s? to me, i know people want to have a chance, but it seems very political in terms of it. >> it is. that is that nature of it. you are the political branch of government here. >> my favorite one was one of the people that came on. he had known her when she was 12. what was she like when she was 12? he said, she was very judicious.

[laughter] maybe we could change that part of the process. it seemed very pro and con. >> it would be hard to do. you have a vote at the end. members expressed their view. that is hard to change. >> one last thing. i know you have been a vocal advocate on the judicial elections. in we have seen elections in recent years. are there any reforms you could suggest? >> this is very important. i think the federal model of federal election is the best model. some states have followed it, but not all. in a number of states, they still have a totally elective process for selecting judges. i think that is very unfortunate.

it means raising money for campaigns. there is no way to be comfortable with that in the judicial scheme of things. it is not good to have judges that you know who have had to take campaign contributions from certain interests. it is a worry. i hope that more and more states will follow the federal model of not having judicial elections. many state, in fact my own, have intentional elections periodically. they are there for some time. the judge's name goes on the ballot. the voters can vote on whether they keep the judge on the ballot. they're not running against anyone. that seems to have worked fairly well. not many judges are removed in that process. but it is one way of having the voters involved to some degree. it seems to have worked to some

extent. >> very good. thank you for being here. >> i am glad to be here. >> thank you senator lee. >> i did not say you come in. i'm sorry. >> i am easy to forget. it is a pleasure to have you with us. i remember when you would ask my father questions from behind the bench. i never thought i would be sitting behind a different bench and asking you questions. >> your father did a really great job. we miss him. >> thank you in. >> i agree with that. >> we miss him. he was a proud arizonan. >> i used to see him in the state senate and in committee hearings. he would come in and present

materials on various issues affecting the state. he was effective in that regard as well. he really was an amazing man. >> that is good to know. thank you. i want to follow up with you on the economy made about retention elections. you indicated that the impact -- the tendency to politicize the state judicial system that those elections would have is limited that they tend not to result in the removal of the judicial officer. >> not very often. >> is there a possibility that they might nonetheless have some politicizing a faeffect? is there a chance there might affect the judge's decision making process? >> well, i guess there is always

a chance. i prefer a system that does not have elections at all, but many states have the retention election. at a minimum, it gives the voters the opportunity to say, yes, i am satisfied with this- and i vote to retain this judge, or the reverse. not many are removed. >> one critical difference between the retention election and another type of election is that it is not tested. >> that is right. there is not a lot of campaign contribution being raised. >> it typically require something of a supermajority vote. >> it depends on the state. >> that is right. >> what about the judicial nominating commissions that are within states? i believe you have been an advocate in what has sometimes

been referred to as the missouri approach. members meet and give advice to the governor on whom to appoint. do you support that model? >> yes, i do. it is a model that i help support in my home state of arizona. it has worked well. i think it is a pretty decent model. >> is there an argument to be made that elections like that might insulate the governor from the political process in a way that is not helpful and less accountable to the voters? >> i have not seen it that way. the governor needs to make the appointment and say, yes, i will consider these names and this is who i will pick. i think it has worked out all right. >> yes. in my state, i believe the governor has the option to

reject entire slate. >> that is true in my state, too. if the governor believes he did not get any good names, he can reject the whole batch. >> i think i heard to say a minute ago that you think the federal system is the best model. just for the federal or for ou - >> that is up to each state to decide on the level of voter participation that you need to have to make this system work for your state. there are some mixed models that most states seem to have where voters have a retention election. we do not have that at the federal level. >> right. >> but if the state thinks it helps, fine. it does not seem to do much

damage. it is ok. if the voters in a state approve of that, i think it is all right. >> ok. but you are fine with the federal model the way it is? >> that is correct. >> with a state system gets bad -- i know of your concerns with the states that have contested partisan elections to fill the vacancies at the onset. i think it is difficult to reconcile that with the need for judicial independence. when you have a state system that follows that approach and a state system that apparently is in a properly influenced from time to time in a destructive way, do you think there is ever a reason for the federal government to consider intervening? or is it up to the state? >> it is up to the state.

most states, if you are going to consider something that affects a stick at large, they will have an opportunity to hear from voters on the proposal and have some debate at the state level. that is good. >> but you would not regard that as a due process concern of the sort that would warrant federal legislation requiring states to do it one way or the other? >> no, i do not think so. we left the states free to choose their own method of judicial selection. >> right. i certainly agree with that. finally, you were a long time advocate of federalism while on the supreme court. a strong believer in the fact that there is a difference between state power and federal power. >> yes. >> we have to respect that for our system to operate correctly.

what would you advise to federal lawmakers about how best to protect that system? and the distribution of power between state government on one hand and the federal on the other? >> well, all members of this body, the senate, come from one of the 50 states. you're all representative of your states. you have experience in the allstate on what the borders care about in terms of judicial election. i am sure all of you have had that. i do not think i need to give any advice on this. >> we do get advice from time to time. >> all right. >> thank you, the justice. >> thank you. >> mr. chairman. >> thank you, senator lee. i told you privately before, i

agree with justice o'connor's reference to your father. we have a senator from connecticut, a former general attorney of the state. >> thank you, mr. chairman. as a former attorney general for some 20 years, i am a very strong believer in federalism. i would agree with senator lee that we get advice, but i would also say that we need advice. any ideas you have on that score -- but also, i want to focus on a point senator grassley made in his earlier remarks. we dismiss poll numbers when the

results do not suit us, but they're still reflective of something happening. the reason we are here is because of the need to educate the public about what you did for many years with such distinction and dedication in serving on the u.s. supreme court. we have a reverence if not respected institution and the need to preserve the legitimacy and credibility of the institution. i wonder if you can give us your assessment as to why there has been this decline in the public's approval or respect for the institution? >> i wish i knew. i did not conduct the polls. i am not sure. i have read some articles about

the polling that took place and the argument being made that perhaps the decline -- the percentage of u.s. voter approval of the supreme court historically has been hired then of the other two branches. in a very recent months, it seems to have declined rather substantially. this suggestion has been made that that began with the bush- gore decision. i have no idea if that is correct in the assessment of the polling. it was a very tense case that involved holdovers from a very close election. people felt deeply about it. perhaps that was the tipping point of the decline.

i hope it will be temporary. the supreme court functions extremely well. as a look worldwide, we can be proud of our court. it has served the nation well. by and large, it is a marvelous institution. i would think over time opinion would turn upward again. i certainly hope so. i would expect that. >> i would agree with to certainly in the assessment of the supreme court's work and in the hope that public approval will increase over time. as somebody who has done arguments in the court and has been a law clerk in the work and watch and observe the court, i think the public often simply does not see the work that the court does. by and large it, it is day to day work that is much more

mundane and complicated. i wonder whether increasing public access to the courts -- court? cameras in the >> i know you were asked that. [laughter] >> it is important to remember every word said in that court is transcribed and available that same night. if anyone paris it is. you have it, in hand. it is not that there is a lack of ability to know what is going on. is there. it is just, do we have to have it on camera and on the television, or is it enough that it can be available that very

night and you can read it? i guess it boils down to that. i am a reader. do not ask me, probably. i tend to read more than i watch television. >> i am not going to comment on reading of versus television. everyone has his or her own style of learning. in light of the prevalence of television and the the impact, the powerful effect, the visual portrayal, i wonder whether you think that it might be worth considering opening at least certain arguments to a broader view and, if not that, whether there is some way of increasing the potential attendance at supreme court arguments?

after all, the numbers of people permitted in the courtroom is very small compared to the -- >> it is limited. the courtroom is not all that large. you'll never have a huge crowd that will fit in the courtroom. there are some adjacent chambers where you can hear it. but not see it. i guess this is a discussion that is going to continue for a while. you have members of the quartet present who are not at all comfortable with televising the proceedings. i think that if and when a change is made it will probably be more likely to be made when members of the courts are willing to accept that. >> some members of the court have sat where you are right now and said, in the fact, and i am taking great license, with their

remarks, in effect, not over my dead body. that is how he meant they were in opposition to televising the court hearings. i think that, if i may respectfully suggest, you are in a unique position because not only are you a highly respected member of the court, but you also have the perspective of many years in different branches and at the state level and so forth. your opinion would carry great weight if and when you are willing to set forth. >> my opinion is there should be general agreement that that is a good move to make. if there is severe opposition coming from the court itself, that is a source of concern, i think. it is best if everybody is in it sink on at that kind of move. >> i want to thank you for being a year today, for honoring us with your presence, and for your

many years of extraordinary work for our justice system. my time has expired, but i really think that your presence and your testimony have jobs to enhance education. >> thank you, senator. i have been spending enormous time on my civics effort to educate young people how our government works and how they can be part of it. i will say that i think that the method we are using with the games is extremely effective. we had a test at baylor university -- they came back with extraordinarily good reviews of the effectiveness, which is encouraging in the extreme. we will continue to develop additional games on somewhat different topics to keep people informed and engaged. it works with young people. i am excited about it.

it would be wonderful if, when you speak to schools in your state, you could encourage them to use it. it does work. >> i would be honored and delighted to do it. very much so. i hope that we can follow up as members of the committee and then more about how we can do that. >> i have managed to keep it free. with today's costs and changing programs, that has been important. >> free is good. >> i think so to. >> mr. chairman, i want to note that one justice who came before this committee, justice kagan, said they wanted it televised. so maybe we will see that change to refer to over signed -- time. a thank-you. >> we had the debate of televising -- i do not know if you were here or not.

we had some who were vehemently against it. somewhere in favor of it. others who could go either way, i think. notwithstanding some grandstanding since then, it has been a good thing for the american public to see how we deliberate. thank you for being here. before you came, you know there were a lot of students in the room. that is no doubt in relation to the justice and civil courts. we have a lot of students in the room. go ahead, sir. >> justice o'connor, it is great to have you with us. -- i.s.o. tree believe, having trouble around the world -- i so truly believe, having traveled around the world, i am more convinced of the precious nature

of the rule of law in america than i have ever been. >> absolutely. it matters. we have been promoting that since the breakup of the soviet union. i think that the american guard reserves -- deserves some credit. when the soviet union began to break up, lawyers gathered together and serve as unpaid volunteers in many of these countries to help develop judicial systems and the notion of the rule of law. >> i could not agree more. i would just say, i will remember, after the i iraq invasion, being with general petraeus, he had established a court, found judges, appointed lawyers and have trowels like we

do. >> yes. >> -- trials like we do. >> yes. >> you know that it takes many years, decades, even centuries to create the kind of legal system we are blessed to have in the united states. >> it does. you cannot do it overnight or in a year or even two or three years. it takes long term development. >> i am of the view that the court needs to maintain its independence, its attachment from politics, as much as it possibly can. to the extent that justices are concerned, cameras might be load that -- a road that even a little bit and put more political spin on the careful legal work they do -- i support the court in not having cameras in the courtroom live. i would just say that i

fundamentally think it is a decision left to the judicial branch, not the legislative branch. i remember being in the chair when robert byrd spoke. he would come down on friday at 11:00 and make speeches pretty often. that was my time to preside. he made a speech about textbooks. he discussed democracy and the republic, and the differences between the two, and how the text books had not properly delineated the difference. his closing line was that it was touchy-fee lee twaddle in our textbooks. the extent to which you are working to help our young people understand this magnificent legal system that we have, i thank you very much. i would pursue this a little

further -- to me, the most pernicious thing that could be taught to young people is that the courts are not independent adjudicator is of discreet legal problems. that they are somehow a part of the political process and their rulings are based on political stresses and pressures and views of justices -- this could erode the kind of respect that americans should give to the court. is that a concern for you? >> very much so. i agree with you completely. it is best to maintain the independence of the judicial branch. that is what the framers designed. it has worked quite well out the federal level. we need to try to maintain it at the state level as well. i happen to think that holden judicial elections in states is

not the best way to go. that gets too much political influence in there and campaign contributions. that is dangerous. we do not need to do that. >> i can see that concern. i'm not sure i share it, but i certainly understand it. it is a valid concern. the constitution contemplates that the courts would be independent adjudicator is. i was pleased when justice roberts referred to it as an independent, neutral umpire, like in the ballgame. the umpire does not take sides but does its best every day to call strikes. i think that is a image or metaphor that is valid and that we should push. there are times when people on both sides think the court does not do that. >> i am sure. >> they think the court has

allowed personal, it is logical, or political insights to impact -- ideological, or political insights to impact decision making. do you agree that justice is should guard against that and live in the oath to be a judge under the constitution and the loss of the united states? >> of course i do. i served on that court for 25 years. i entered it without a lot of inside knowledge, but with respect for the structure the framers developed. i left after 25 years with the knowledge and understanding that it works remarkably well along those lines. i think we have been fortunate. >> i think, my personal view is that the great danger to the

independence of the american judiciary would be a belief on the part of the american people that it is not adhering to that role, but is using the power to interpret the words of statutes in the constitutions to rejigger the constitution to advance an agenda. that would be a great tragedy if that were to happen, if people were to lose confidence. with regards to criticize in the courts, i believe, an american citizen has a right to question the court, but i believe we should do it respectfully. some of the criticism i have seen from the congress has been over the top, but i would set that, in my view, if a nominee comes before this judiciary committee for confirmation and

the they are not philosophically committed to the limited role of a judge or the record indicates they are not, i cannot give them license -- that is my standard. in the range of disagreement on how to interpret laws, if you are outside that, i should not give you a lifetime appointment. good people can disagree. sometimes we agree, sometimes we do not about where that line should be drunk. i do agree that congress has a role to try to ensure that the judiciary remains a neutral umpire, would you not agree? >> yes. the senate plays a key role in the overall process in terms of agreeing that the out set who will be serving and who will

not. >> i would conclude by saying how much i appreciate your interest in educating the next generation. >> yes. >> i am convinced that we are not fully appreciative of the uniqueness of the wonderful legal system we have and how it is unlike almost any nation in the world. it has served us magnificently. it has treated our growth, prosperity, and freedom. if we have misconceptions about how the legal system works, i think it could endanger -- thank you, justice o'connor, for sharing your thoughts with us. >> thank you. supreme court justices have come before us. it is partly a educational sen.

-- educational think. -- thing. the views the here and some other countries are kind of unopened -- i opener. one nation had a very totalitarian former governor and -- a government that moves towards democracy. a group of their leaders came to see me. they said, is it true that in your country sometimes people sue the government? i said, yes, it happens all the time. they said, is it true that sometimes the government loses? i said, it often happens. they said, did you replace the judge -- and do you replace the judge? when i explained, it was like the cartoon where a lightbulb goes on. they realize that we really are different. you and the icivs web site --

the majority of supreme court justices in the game supreme a decision are women. >> that is my fault. [laughter] family camey wife's from canada. in canada, the majority of the supreme court are women. >> the chief justice in canada is a woman. they have historically had more women than we have. >> that is right. to what extent do you think diversity on the court or anywhere in the top of our branches increases public confidence? >> i think it does. our citizens like to look at the u.s. senate and see some diverse faces, skin color, etc. -- they

like that at the judicial level as well. four courts of record that have multiple members. i think it gives the citizens some confidence. >> in an interview a few years ago, you noted that statutes and constitutions do not protect judicial independence. people do. >> wright. >> what people are you referring to? >> the judges, for one thing, and the voters to in the states put in a system that enables the citizens to have confidence in that system. >> describe the system -- i will describe the system in vermont. the governor appoints the judges. the legislature votes consent. after a period of years, the legislature has a vote on a

retention. >> yes. >> i -- most of the time they are retained. a system like that, where the legislature -- >> is one step removed with the public. it can work if the state is status -- is satisfied with it. if you can set it up that way, it would be preferred. most states that have retention elections are for the people to the voters. >> that would be the time where people raise money for campaigns, is it not? >> normally it is just one name up for retention, without being contested at some level. there would be no need for campaign money. >> that is a good point. the a few years ago you

interviewed justice john paul stevens. this goes back to some of the questions on the confirmation -- you said that it came out that sometimes the confirmation hearing, you are answering questions and issues come up and you may have a different view at the time the issue comes up. is that a fact? >> that is a fact. >> had you had that happen to you? >> 's. i do not remember specifically. >> -- possibly. i do not remember specifically. >> would you agree with me that it would be a mistake in the confirmation process that we should be able to expect that we will get a very specific answer in how you will vote on a case

five years from now? >> yes. i think that is probably not a very good question to even asked a prospective justice. >> is it valid to ask questions of one's judicial philosophy? >> absolutely. >> and their background? >> absolutely. >> center blumenthal, did you have anything else? >> no. >> again, the two of you, would all of the students who are here stand up? i think this is great. >> you still have a lot to are listening. that is good. [laughter] >> justice o'connor, i thank you. i want to thank all of u who are here. justice o'connor, i thank you very much. >> thank you, senator leahy.

thank you, senators for iinterest and presence. it yet suggestions of telling people in your state to use the civics program, i hope you will. i think it will help us. >> i have some grandchildren who will get a chance. >> i do, too. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] [inaudible conversations]

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former governor, howard deen, and a panel of economist, discuss what advise president coolidge might have for the candidates now running for president. hosted by the calvin coolidge foundation, this is just over an hour and a half. >> gosh, i have not followed so many professors since i graduated. thank you, all, for coming. you know, we were going to call this panel what mr. coolidge would tell mr. obama, but then it struck us that mr. coolidge was singularly short on his words. you probably heard that famous story that this reporter went up to him and said, mr. coolidge, i

made a bet that i can make you say three words. he looked at him and said, you lose. [laughter] we thought if we had mr. coolidge talking to mr. obama, our president would go into a big explanation of why he was doing what he was doing, and mr. coolidge might just say, not. [laughter] or me might say, my man. so let me -- i'll take just a few minutes to frame this distinguished panel we have, and as david mentioned, what's unusual about the panel is we have some of the best minds in the country, but they are not just experts in their fields, but they playeded a role in public policy so they know what it takes to make public policy so that's what i think will make this panel so exciting, but i wanted to tell you that if you went about an hour from here,

you would come to the village of plymouth notch where coolidge was born, and if you go there on the 4th of july, which i urge you all to do, you would find a crowd gathering by the general store in this village surrounded by hills as it looked 100 years ago, and there would be visitors and tourists, and they would be gathering at the store that was run by president coolidge's father, and after awhile, you might notice a small collar guard from the vermont national guard that appears carrying a wreath that the white house sent. as you know, calvin coolidge was the only president born on the 4th of july, and after awhile, the color guard leads this group across the road into this cemetery where there are a line of tombstones, and you'd be hard pressed to know which of the

coolidges' tombstones belong to calvin cool ledge unless you saw the wreath from the white house there, and a buick lar plays taps, and it's a moving ceremony. i mention that only to give you an idea that this president became president when president harding died. it took him four hours to know that the president died. his father swore him in with a karosene lamp. there was no internet, no radioh no interstates at that point. coolidge sent marines to nick raw gray and had to use a second hand german planes to provide air support. it was a very, very different time. the tools he had to work with were rudimentary, coast-to-coast

radio was a novelty then, but the country had come out of a war. it had come out of recession,t h and what i wanted to tell you was that during the coolidgewhat years, he turned that economy around, and it started to grow at 4% a year. real wages growing significantly. national unemploymentfuls -- national unemployment was peaked at 25% in some cities. it came down to 4%. the stock market was rising, the national tax rate was hammered down to 24%, and think of theinl tools he worked with.nded no radio, no internet, no facebook, no twitter. how can anyone work withoutwork twitter? [laughter] so let me take you forward now u to today; right? so we have, again, a situation where the economy seems to be in a dull drum, but now the worldtb is interconnected. the 7 billion people of the world are interconnected.inte

nothing can happen anywheref th without something happening elsewhere. we have all the tools of instant communications, the twitters,ele the facebook, the internet, the tools coolidge used were prehistoric comparedded to the tools we use today. why is it, then, that that president was able to do these things and we're struggling?pr right? this ises the question that the calvin coolidge memoriala foundation thought we'd try toqu answer, and that's the question we pose to the panel that i'm about to introduce you to todaya that's just to frame the topic of them panel the . matthew

slaughter. professor matthew slattery's associate dean of the mba program and professor of management at the tax school of business. he's also currently a research associate at the national euro of economic research chemist senior fellow at the council of foreign relations. member for the academic advisory board for tax policy forum and academic advisor to the delurk center cross investment from a member of the u.s. department of history committee on tax policy forums. served as a member of the national council of economic advisers and executive office of the president affiliated with the federal reserve board, international monetary fund from the national academy of sciences. he received a specialist degree summa cum laude phi beta kappa from university of notre dame

and doctorate at the massachusetts institute of technology. governor howard dean, who all of you i'm sure no, six term governor of vermont, which by the way is the second longest turned than any governor served in vermont. he currently works as a part-time independent consultant , focusing on areas of health care, early childhood development come alternative energy and grassroots politics around the world. as a former dnc chairman of presidential candidate. dean is founder of democracy and also serves on the board of the national democratic institute where he focuses in southeast europe and china. dean created and implemented the 50 state strategy and is credited with helping democrats make historic gains and of course he used the internet in

the tools and pioneered a nose. he graduated from yale and a ba in political science and received his medical degree from albert einstein college of medicine in new york city. he cracked this internal medicine and shelter, vermont. mr. roger brinner is partnering chief economist of the parthenon group, global strategy consulting firm headquartered in baltimore, london and bombay. he spun on its expert economists come articulate analyst at the u.s. international economy. he has he has many long-term relationships with corporate clients on issues relating to the strategies, market growth in the pricing equity valuation. dr. brinner extras include positions at businesses, academic and government institutions. dr. brinner received a ba from

kalamazoo college and phd in economics from harvard. and last but not least, professor douglas irwin is the robert e. maxwell professor of arts and sciences and department of economics at dartmouth college. and that economic historian and he will open our panel and a moment. he's the author of trade policy disaster, lessons from the 1930s can't particularly pertinent to the topic today entitling protectionism, the great depression and other books. he's also working on a history of u.s. trade policy from colonial days to the present. as a research associate at the national bureau of economic research, also served on the staff of the president's council of economic advisers and the board of governors of the federal reserve system. he has a phd in economics with distinction from columbia

university. so what we ask these tenement gentleman to do is take a few minutes and give his opening remarks. at 10 of which we may engage in some discussion amongst ourselves or we may open it up to questions from you. so professor irwin, me ask you to start. if you come to the podium, it will make it easier for c-span. [applause] >> well, good afternoon. my role is to set the stage for the panel that will follow and talk a little bit about the economy of the united states the 1920s, presidents coolidge role in the economy during that period and perhaps raise one or two analogies that the economy of the 20s versus what we have today. you might've heard the phrase, the roaring 20s as a description of the economy during the 1920s and actually that's largely true. it is untrue with respect to one sector come to in a moment.

as the introduction ofa, economic growth is really strong during the 1920s. 4% or so. there was a major recession in 1920 and 21 but for the rest of the 1920s and was fairly smooth sailing. also technological change. a lot invented in recent decades really became imprinted on the u.s. market. for example, the number of houses that had electricity rose from 35% in 1922 mike 70% by the end of the decade. the number of cars in the united states returned 6 million in 1919 to 23 million by the end of the decade. newspaper -- radio became widespread in american households and this is thought to be the death of newspapers, something we hear about today. now, president coolidge presided over this economy, not to say he was possible for it. in fact, he did little to

interfere during this period, but there was a few blips in the road. one was a mild recession in 1927 and one of the reasons, not the only, but the one with the henry ford decided to shut down all the ford plans for six months during the one year to retool them to transition from the model t. to the model eight. i was wondering what would have been today a major u.s. corporation or shutting down for six months while we retool? what would be as a comic as she "silent cal." we've already heard one story about "silent cal." my other true story of a "silent cal" was in the white house he was asked once, how you chose pressures of the office like so many people asking for favors, ask you to do this and not. you just can't do it all. how do you cope with all these demands? said well, i listen. i don't say anything am eventually become so uncomfortable they leave.

last month while i've never tried this myself, i've often thought when students coming to ask for a re-create, maybe i should invoke the "silent cal" treatment. i have yet to do so. it went as far as i know unremarked at the white house did produce a little bit of a downturn in the economy. they henry ford was not adequate for steve jobs to this day because he didn't want to do it no model changes. he resisted coming out with the model a pose for us to buy the market. one thing that did happen is people were so excited in anticipation that a million people turned out to get a glimpse of the new model. i don't know whether that's a half the people turned out to get it clumps of it. when i think about people waiting overnight to get the new ipod, the same thing was happening in the 1920s, owners

automobiles of the time. now of course i was not the only stretch for the economy with rabid technological change. the caveat to the 1920s was of the roaring 20s is agriculture. agriculture at the time was 20% of the force was not doing well at all during this period. the story behind agriculture was turned over one demand during record levels and farmers respond to higher prices by buying more farmland, buying more machinery and equipment, investing in firms and expand output as they naturally would. surprisingly, prices to collapse at the end of the war and this kept the going on. he reached. what happened in 1920 and 21, farm prices collapsed by 50% and they didn't come back. it was a permanent flow. what happened as farmers very much in debt with through the

entire decade of the 1920 during the massive foreclosures on property, second mortgages, high rates of indebtedness that they just couldn't deal with it and tremendous political pressure to do something about farmers during this period. some of you may have seen ken burns recent documentary aired here at dartmouth on the dustbowl. as a wonderful documentary that i do quibble with implication left in 20 minutes his films to the 1920s as agree. relative to 1930s. it was not agree. for agriculture. farm tek was very hardheaded. the labor force being hit with hard times i'm summer farm prices edge in combat, what to expect them them to do? asked the federal government for assistance can exactly what they did. twice in congress during 1920s, congress passed and

from supporters for american farmers to target prices back to the prewar level. what do you think "silent cal" thought about this? he would give them the silent treatment because he didn't think government interference was warranted. but of course this is a nonpartisan or bipartisan effort. it was a midwestern republicans, southern democrats represented that wanted us to come of the calvin coolidge twice vetoed the legislation. what is interesting or ironic is that in vetoing the groundwork because the farmers said we had rejected twice, won't get anywhere with resident huger in the 29th and 30, so instead of asking for price, and for his spirit daily deceit for seeds for what later metastasize 1930 which had a lot had a lot to do a trade wars of the 1930s.

so there's perhaps a lesson there up unintended consequences if you don't help at the sector, they're not going to wait. he's going to come back in the form data to support could be detrimental to the economy overall. that is a very brief sketch of what was going on in the 1920s. let me conclude by talking about two perhaps analogies with our current situation. what can we learn from this. the issues coolidge dealt with. the first one is agriculture. as we speak, congress is debating trying to pass a new farm bill which they do every five years. lo and behold we do with the legacy of the 1920s and 1930s because even though the farmer scott the terrace, which they later said repudiated insane to give too much to manufactures and not enough to the farm. and could help exporters as well, what we do with president roosevelt new deal was priced support and age reproductions, were third of the crop in 1933

was flouted as our notion that we somehow reduced supplies that could increase the price. the problem is not the generalized assertion. dude is overproduction, no evidence for production from past years. price supports of the 1930s was a legacy of today. we are still dealing with and this is what calvin coolidge had to say about price support at the time. government price-fixing when started is no justice in no one. it's an economic fallout from which the country has every right to be spared. in the 1920s and 30s come in the sector was poor relative to the rest of the economy. because they were redistributing from the rich to the poor. but there's a situation today? we are helping out agribusinesses and redistributing income from the port of the rich. that is one thing i hope congress keeps in mind in terms

of the farm bill is who's getting the subsidies? of course ethanol policy is the most egregious example. as governor dean can attest, most presidential candidates had to go to iowa. i'm what you have to say? faced with farmers i support the ethanol program even though it doesn't make economic sense, environmental sense, doesn't make agricultural sense. $6 billion tax subsidy to refiners and blenders. we have massive tariffs on imported sugar ethanol, which is much more environmentally friendly coming from brazil. this corn farmers in dealing with that legacy. where's the other point which made, no and appeared it would be an end to subsidies. but congress is now instituting is not direct payments for farmers, the crop insurance. if you know any other commodity prices, they've been a high

levels. what this means is if those prices fall as they probably will at some point, guess who is on the hook? everyone in this room and everyone watching this broadcast. so no justice, no end. coolidge was present in predicting not. second point, just as in the 1920s, we have some economy and society to his difficulties for structural change. here are things easier in the 1920 sickest most structural change between agriculture and shrinking the culture of moving labor into the manufacturing sector and services sector. coolidge had it easier because the economist karen rapidly. much easier to transition from one sector to another when creating jobs and you can facilitate the transition as difficult as it may be. were faces today is another transition, not from agriculture and services.

the sector is small in terms of employment, as is the manufacturing sector. that is good news because that comes out because of privacy sectors. we produce more manufactured goods than we ever have before. we produce more farm goods. we just don't need people to do it because we advanced to launch a time intensive methods. consider structural changes within the structure to more certain jobs are obsolete because of new technologies, weatherby bank tellers because of atm machines, or readers because of kiosks that will soon appear because of tables for your order by tapping the screen, rather than telling a person what to get for you. not making this transition will be very difficult one with a stagnant economy that's not creating jobs. so i think the challenge for current and next president is much more difficult than the one by calvin coolidge in the 1920s. on that rather somber note, alternate over to the next panelist.

[applause] >> that was pretty somber. i also did a little research about president coolidge and he's identified with small government conservative. he backed that up by keeping federal spending fairly flat. now, our next president is likely to reside where the federal databases by 40%. that is even with some action taken that congress is currently envisioning. we're in a path that everyone but washington does is unsustainable and we don't seem to find a bipartisan middle that can tackle it. we have commission after commission that's bipartisan, that comes out of sensible recommendations have been against torpedoed by both parties. part of the reason why we can't have any bipartisan agreement i think is fair at dean in

washington on the basis and it does rather facts. there are things they believed they just simply aren't true. i have two daughters, both of the science background, once a pediatrician was a phd organic chemists. and they told me the internet first became popular that if you searched for roger brinner, but you found us a quote, plural and anecdote is not big on. last night i set that up to cut sometime in the early 80s, just made it up and that scientists use to bash one another when their presentation actually isn't exactly. so let me bash some populist myths that are not based on fact. one theme of this election coming up this certainly class warfare. in the end of the american dream. there is this feeling -- the assertion that middle-class incomes are shrinking and that

this middle class is doing far worse than it has in the past. precious absolute falsehood. not a shred of evidence from many statistical agency in washington. they just make it up in the media and the politicians read the media and follow it. another myth is that the tax legislation reagan, clinton and bush benefited the rich and the expense of the middle class in the lowest income groups. nothing could be further from the truth and i'll share with you facts are not. first of all, let's talk about this poor middle class. it turns out that their incomes if you look at the u.s. divided from top to bottom, turns out the groove three from business cycle peak to business cycle over the last 40 years has been almost identical. 1.5% per year compounded annual growth year after year, decade

after decade, no deviation maker of the citizen power, republicans, democrats, would we are talking about would translate into higher pay, higher income and the middle class is doing just fine. those numbers i cited are for the second, third and fourth of the five quintiles. what about the bottom? they do have the lowest growth, but it's still positive. and the growth over the last business cycle is about the same as the previous. they only had incomes rise by about half% a year. and the top portrayal or quintile as always is rising at about 4% a year. so the gap is getting bigger. the pie is being displaced in similar proportions and the pie is growing. this notion i've heard the president talk about 50 issue

today is not about growth, but about redistribution. it is clearly based on this false premise that the middle class is suffering and the rich are the beneficiaries. part of that of course is a story about personal income taxation. it turns out if you do look at the bush and reagan tax cuts with some changes in the middle by president clinton, what you find is the bottom to quintiles of the population, that people with the lowest 40% of taxable income actually remove from the taxpayers to net recipients of the earned income tax credit, both quintiles, not just in total, both the bottom and second from the bottom quintile went from being taxpayers to check recipients. returns are filed, they get a check back a notch in the

government. but about the middle class? actually had its tax burden cut by 40% to 50%. what about the top to quintiles? or tax burdens were almost unchanged in total. what was done first by a bacon and then amplified by bush was to create this very large zero bracket because taxable income to get it to a certain level and then a smart piece of bipartisan policy, instead of raising the minimum wage, they created an earned income tax credit, which says the market isn't really working to generate a living wage at the bottom end. rather than raising the minimum wage and forcing people out of work because of create automated teller machines and parking lots in new dispenser of soda at a convenience store with a fast

food restaurant, both are going to do is say the government, if you're working hard enough and you're trying because you've got the wage, we will match part of that. that's it the earned income tax credit is. smart bipartisan legislation, but that is the reduced and taken it so that now and 2010, 45% speed zero federal income tax actually cut a check back here before the break in years his 19. at the end of the reagan years who is 25%. at what the bush tax cuts, which expended vast, it went up to 40%. so, it would be useful within these debates in washington there is actually a fact, just now and then. i look at the ibm can see the shocked looks, like how could i've been told so many lies for so many years by reputable

newspapers? .. they are in recession, and it's' impacting us. when i talk about the need for a move to budget balance, what i have in mind are gradual adjustments, coupled with the long term fixes, and entitlements. we have too realize that the current promises we've madeth can't be kept. on one of the vice chairman of

thea conquer coalition started y two senators, and from different parties, and they said in the reagan years this doesn't make i sense. we've got to do something aboutd it. finally, in the 90s, we got the surpluses again. i am an anti-deficit hawk . ay, my grandchildren's standard of living is at risk and less we do -- it's the only responsible thing to do so we do need to address that.

our major federal health care health care programs in 1972 were 1% of gdp. they are 5% headed for 8% of our total national income. we have got to have some incentives that are put in place. douglas was referring to coolidge's philosophy and that the quote from this farm legislation period. he said business must stand quote on an independent aces because quote government controls cannot be divorced from political control. talking about agriculture, but today i am sure he would extend it and say we should modernize and reduce costs read and regulate prices. that it sounds like what we need to do in health care. in fact, if you look at our post-war experience in health care, and i'm actually going to post the charges or you can go to the coolidge web site to see. and when you look at national

health as a share of our national wallet, it goes up -- it's not a steady movement. it's every three to five five for sometimes 10 years. the federal government decides to get more generous, and the subsidization of our youth and guess what? if somebody else is going to pay for it we are going to take another pill every day and we are going to go along with what are doctor says. but let's do things that aren't really necessary. we need to as they say then the cost curve, the smart about what medical tools and services we use and pay for them to the extent is affordable out of our own pockets of those are the kinds of things that i think cal might have thought about in today's environment. thank you very much. [applause]

>> well, thank you roger. there's a lot to disagree with in the question period. i do want to say couple of things before i start out talking about president coolidge. it is very introduced that i was introduced as a second longest-serving governor in vermont which is actually true. most people make the mistake and entries me is the second longest sitting governor in the history of the state of vermont. that is not true. i served 12 years. many of you may know that, because you are vermonters and i'm particularly delighted, vermont is an independent republic for 14 years before it joined the nation. it's seeded from great britain and we were not allowed to join the state until 1791 and of course very much of that time new york claimed half of us in

new hampshire claimed the other half of us. it's a little-known fact we could have course agree and what our capital for the 14 years and we played twice our capital in what is now new hampshire figuring that if we put our capital in new hampshire than new hampshire would stop trying to get our land. we had one in charleston and i frankly forgot where the f1 was so i served as 12 years as the government of vermont. thomas chipman who was the governor for a lot of the time during the republic served 17, when you're terms that aid in the republican nine as a state governor in vermont. so just a little piece of vermont history. i have actually, what i was called to ask to do was some passion to defend calvin coolidge because he is after all a vermonter and the homestead is actually beautiful down in plymouth which i have been to a couple of times. and actually he is not as hard to defend from a progressive democratic -- as you would expect. it is true that he was actually

a free-market kind of guy and said a lot of those things but there were some other things about him that many people don't know. he had an illustrious political career, a very decent person. he was known probably as breaking the boston police strike and ronald reagan quoted him when he broke the air traffic control union in 1981. but what is not known about coolidge is that he once said this about industry. we must humanize industry or the system will break down. he was also when he was in the state legislature president of the state senate he was asked to lead a committee to broker and to mediate the strike and he did so and both sides agreed to the proposal that he championed as the chairman of the committee which was essentially a significant wage increase for

the workers. he was extremely pro-civil rights both for catholic, jewish and african-americans. all of them of course were persecuted at that time. that was a time in america when the kkk was very powerful and most of us here in yankee land think the ku klux klan was designed as an organization to persecute african-americans. the truth was the kkk was first invented in the midwest to persecute catholics and then jewish and african-americans and calvin coolidge, and they also played a big significant role in politics in the united states. people were afraid to publicly contradict them and coolidge had no problem supporting and being very clear about the rights of minorities. one of the extraordinary things that he did in 1924 was giving a american indians full citizenship rights which doesn't sound like much today but given that in our history of what we

did the american indians that was a major step forward. he was also a very big supporter of women's suffrage which was quite an issue at that time as well. if you know anything about grace his wife who is exactly the opposite of calvin coolidge who is outgoing and the life of the party, i suspect she probably had a fair amount to do with that. but if you think about this -- how many of you are for -- from vermont, residents of vermont? about half. this is part of the vermont character. people don't understand much about vermont. that understandably we are so liberal today and labor were so conservative. we didn't have a -- 109 consecutive years. i don't think we have changed that much. what we really are is a libertarian with a very strong feeling of communitarianism which sounds like a contradiction in terms. how can you be a libertarian and a communitarian at the same time? even today you see that where people argue for three hours

about whether they should lay out $150,000 for a new greater or can they share it with the next town over? we are used to making our decisions. we are not used to having government tell us what to do but we are used to doing things for ourselves together. we never could have recovered from what happened a year and a half ago with irene had it not been for that communitarian streak and libertarian streak and that's what made calvin coolidge what he was. i think health and coolidge has anything to say today to our president or president -- i would say get with the program. it was basically that when you get into politics people will call you a demagogue. don't pay any attention but don't demagogue. and don't be afraid to do what you have to do. basically his tenure was marked by willingness without as it

says in the oath of office for anybody serving in vermont without fear or favor of anyone. that was the kind of person he was. so this is almost going to be coming up fairly soon on the 100th anniversary. he was an extraordinary guy and he really was a son of vermont. i quoted this in one of my non-girl addresses first i really urge you to read the quote on the net that he said, the angst he said about vermont and extraordinary courage of the people there. it's a wonderful quote, bit of a long quote at when you go home i wish she would google calvin coolidge and that quote will come up, calvin coolidge in vermont or calvin coolidge and vermont. he said what i think is the truest thing that anybody has said about the state of vermont and is consistent with the matter who is run the place were of the last 200 years. the ellen brotherson were very colorful had lots of --

[inaudible] a lot of interesting things about vermont. the last one before eyes stick it to roger ever so gently to get the conversation going. there is an overwhelming factor here. frank smallwood served in the legislature as a state senator. he wrote a book called the biography of -- should be mandatory reading for anybody interested not only in vermont that the american revolution. thomas chipman like many immigrants from connecticut and we still have a lot of those but their incomes are higher these days, he had an eighth grade education and like any of the people want to see if they could make a better life. land prices were getting pretty high in connecticut and that many people as an eighth-grade eighth grade education he was very crafty and very smart and every time the hampshire the new

york assembly would claim that they were going to exercise the governor to hampshire -- would grant to grants for each piece of land so that they could double up on the money and this was the way things went and colonial america. so when the new hampshire legislature and the new york edges later started to begin to exercise their claims, chipman would send a few of his buddies to montréal to go out drinking and make sure the revolutionaries spies found out and of course montréal at that time was british territory. the british tactics of the revolutionary war were to split new england off from the rest of the colonies by coming down the hudson valley which is what the saratoga and the battle of bennington and all those campaigns were about. so when word got back to washington that chipman's dragging buddies were in

montréal carousing with the canadians the word would go to albany to knock off the nonsense and stop talking about land claims in vermont because otherwise the vermont makes a deal with the canadians the country is in big trouble. and they did. what chipman did was carefully maneuver these two much more in port and states to either side of us and in those days they might. so they would eventually give up their claim in the interest of the greater unity of the united states. it was an extraordinary thing and it's a wonderful thing to be able to look at what washington and all the players were doing through the eyes of the very small state with a group of very determined people. so let me just conclude, and we have to kick this off with a good controversy. i do disagree with roger. it is true he did not make up any statistics and he and i agree that the media often --

in the way of a good story. but it's also true that warren buffett secretary pays a higher percentage of taxes than he does. why? roger did not mention payroll taxes and they don't go down. they have gone down recently because of the 40-dollar, two-week payroll tax that obama put in but if you could put payroll into that equation, in fact going come people still pay a higher percentage of income, certainly not more taxes. the he other thing that is interesting, i took a bunch of print notes, the errant income tax credit with i completely agree with roger about is a good way to read -- to redistribution. it started by a guy who today would be a conservative business democrat and he couldn't get anywhere near the republican party and his name was richard maxon pat moynihan at the table. two more things. i am actually, i do agree with

the notion that we have to be careful. i'm also very much of a hawk on the deficit. those of you from vermont when i served well remember when my great friend from across the river mccormick the senator from windsor was quoted in the paper as saying why do we need a republican governor en we have got being? i think those were the days before the -- so i looked at that slightly differently. [laughter] but i am a deficit hawk. i think however we have to go over the fiscal cliff. horrifies almost everybody in washington but i will tell you why. there's no chance we are going back to the clinton tax rates unless we do that and we need to go back to the clinton tax rates. secondly there's no chance we'll cut the defense budget unless we do that and we need to cut the defense budget. yet they are some things that will be very painful for those of us on the progressive side and it will tip us into a recession according to the congressional budget office, the

most nonpartisan people in the country look at the budget and we will see a 1.3% decline for two can set of quarters in a 2.3% increase over the years. it's a very tough price but as the -- there's going to be no agreement in washington and i also agree with roger completely on it. the fact is we need to do these things. he cannot go on with the kinds of deficits we have and we have been saying that since the coalition was put together by warren buffett and paul tsongas. that was a long time and with the exception of bill clinton and gore the recession has gotten worse. we cannot afford it. i'm telling you that as a liberal democrat. the reason we had so many programs and when i was running the state, all the school changes and all these things, the environmental and northeast kingdom land deal is because we are a stable budget and these things were not treated as one-time expenditures that were somehow going to go away magically. when we cut taxes we cut expenses and we also played a

framework for gradual expansion of the role of things that i thought needed to be done particularly in health insurance for all children. you can't do that if you don't care where the money comes from and if you're fiscally responsible. you can only do that if you have a basic fiscal responsible it sees to pay attention so when you do these things that the programs are sustainable. i think that is important i think we cannot continue to run these kinds of deficits and i don't think anything is going to get done with a harmonious agreement. i don't blame the democrats for this. they're not going to continue to allow tax breaks while we are cutting social security medicare. i think you can get entitlement reduction but you are going to do it by significant tax increases as well as cuts. that's only fair way to do it and i still don't think you will get bipartisan and i'm happy to see us go to the fiscal cliff to get the defense cuts. the defense contractors are very smart and out of four and 35 congressional districts they have planned, 420 of them, there

a lot a lot of job so we have to do with all the problems we have with the budget. it's not just medicare and social security. social security is not that big of a problem that medicare is an enormous problem. the last thing i want to say is this. we talked a little bit about health care and i can go on about that all my. i'm not going to put if you could only make one change in health care come if you could only make one, you want to control costs, the biggest drivers in all of health care is the fact that you pay -- whether you like it or not. if you continue to have a fee-for-service system in this country you're never going to get health care costs under control. the republicans are talking about the market force. there are no market forces in health care. the market forces in the health care drive costs up because we get reported or doing as much as we possibly can. the more often we do the more we get rewarded. i don't think doctors are anymore -- then lawyers or teachers but incentives to infect work in all the incentives in the health care system that we are part of our to spend more and more

money. the way to deal with this is to have, to get paid by the patient, not by the procedure and then left the health care system decide how they will do that. and it's happening. is happening often enough and mitt romney pioneered obama carried massachusetts and it's true in five years down the line massachusetts is doing very adjusting things including having hospital -- insurance companies. want to get integrated care into the hospital with massachusetts being one of the greatest metal their countries, once you have vertically integrated care and you have a payment by the patient and have actuarial from the insurance company inside the hospital you now have a mechanism to pay hospitals by the number of patients they have not been a by the number of procedures they do. the entire medical system changes to begin to report the whole medical system for wellness instead of illness and that's the only way we are going to become a grade -- if the great health care costs under control. thank you.

[applause] >> you so, i've had the pleasure of listing my three distinguished panelists and i want to get into the conversation so i want to share and i appreciate the kulisch foundation for inviting us in participating tonight. spent more about the economic performance of the united states in the time of president coolidge and trying to connect that with where we are today. and it does -- there was this roaring period in a lot of basic indicators we looked at and there is a juxtaposition, a jarring one from where we are today in the kent. today in the ide we have about 23 million under an unemployed americans. the number of private-sector jobs we have the united states today is a little over 111 million. that's a same number of private-sector jobs we had 12 years ago. we have had no net growth of jobs in the u.s. private-sector

during a period in which the labor force has grown by 15 million. and we today are sitting in the wake of a dramatic world financial crisis. we are still struggling with trying to figure out how to stabilize the economy and our financial system and we do that while we -- across the atlantic ocean while we see what is happening this hour today with greece, spain and portugal and other countries tomorrow. as a reflects a little bit on where we are today in contrast that with a period of president coolidge, i think if we can magically bring him to earth here and ask what wisdom would you impart to us today for the challenges the united states basis, i came out with one word which is humility. humility in two dimensions that i want us to think about. in terms of the broad issue of the political economy and i dare say the labels change and its

governor dean has wisely pointed out to us where today we would replace someone like governor coolidge and which party is quite unclear given what's happened in this country. so my word of humility that president coolidge might have today is for democrats, independents and republicans and people across the aisle both at the state and local level. so i will explain this with a quote. we have heard a few quotes from president coolidge. in early 1925 he gave the speech to a press association, a u.s. press association and the quote was a fun. the second half of which i think a lot of people may be familiar with. he said the following, it is probable that a press that maintains an intimate touch with the currency of the nation is likely to be more reliable than it would be if it were a stranger to these influences. after all, the chief business of the american people is business. they are profoundly connected

with buying, selling investing and prospering in the world. fast last segment i want to unmount before couple of minutes to get us to the humility. one of the striking things is president coolidge stated those words coming from background that had little to do directly with business. he studied as an undergraduate at amherst, another fine school where his main course of study was philosophy and economics. not long after that he went to the study and practice of law and spent a lot of his career rising in public service. so he is not someone who had spent a great deal of time directly in the private sector and yet i think the quote of the chief business of the american people is business is actually very profound for this notion of humility that he brought to his office in terms of thinking about his stewardship of the u.s. economy so i want to think about humility first of all in terms of what drives economic growth. wintuk united states today are struggling with slow economic growth as rogers and others have

pointed out and creates a lot of -- in terms of virtually no sustainable job growth. you look at the 1920s, and one of the reasons it was boring what was happening in economy was how innovation and technological change and new in new products and industries work so he said of the acid we didn't have twitter and the internet in the high-tech industries of them were things like electricity, automobiles, remember air travel was becoming more of a viable thing in commercial so both households and the business sector, the 1920s was an astonishingly innovative period in american history in the way economists look at it. you can't find any quotes of president coolidge traveling around the united states laying claim to that innovation, laying claim to that economic activity. the macroeconomic activities were a lot of basic ways we care

about. gdp growth averaged 4% per year and the unemployment rate has fallen to a quite low level of around 5% so there's a regional aeration. for the overall economy things were going quite well. a a lot of what that tends to mean when economies grow quickly, innovation, we tend to get searches in income and tax revenue. part of the recent tax cuts were able to be made during that period in an environment of federal budgets were balanced during surplus for most of coolidge's period it's easy to do that when you have surges in tax revenue soar more recent pitt maine if you look at the late 19 '90s we had balanced budgets for a few years, the last few years of clinton's administration. part of that had to do with him and republicans as well in congress raising some marginal tax rates in some ways earlier in the 1990s. an awful lot of that had to do at the unexpected surge in productivity and united states and therefore growth in income that have to do with the i.t.

revolution. that was the period where the spread of computers, netscape the first internet browser had its initial public offering in august of 1995. the second half of the '90s was was up reluctantly unexpected period were productivity growth and income growth surged and that was a big piece of what allowed the united states to come into fiscal surplus for a few years. the first thing i want us to think about with humility is an awful lot of politicians on both sides of the aisle at the federal and state level lay claim to a lot of economic activity that happens during their period in office and i suggest that we economists don't know a lot that one of the things we don't know a lot about is how you sustain economic growth. >> economist, scholars and practitioners have tried to unbundle this clear it has some things to do with basic federal government support for research and education infrastructure. that has an awful lot to do with the incentives given in the

third, entrepreneurs, small businesses and large businesses and when you look at the united states and some of the sobering things that explain slow economic growth there is a dramatic slowdown in new business startups in america. it has to do with the global economy with a lot of global corporations more and more pictures after thinking about where they want to hire people into innovative activity and make investments is not just what we are are doing in america. is in the beyond countries because part of what has happened in the past generation we have a few billion people that have succeeded in the global economy and we are kidding ourselves in the n if we think we have this ordained right to good jobs and good wages. humility is one theme in terms of economic growth and i want us to think about and the historical record for president coolidge proves that. the second dimension of policy humility i want us to think about is more speculative but speaks to the financial crisis that came after the rain of president coolidge and we are living in the aftermath of today. president coolidge said the

american people are profoundly connected with buying, selling, investing and prospering in the world. one of the dimensions of that is what happens in asset markets and capital markets and i think one of the lessons i take from president coolidge at the time is during his period the u.s. stock market, the dow jones industrial average that measures equity prices rose dramatically and he left office kind of on the cusp of the peak of u.s. stock markets and in 1929 dadar came black monday in the crash and that was a peaceable contributed to the financial calamity in the real damage that we have come to know today as the great depression. we have had financial crises for centuries and we probably will continue to have financial crises for a long period after that. so i think when we think about what government can and can't do humility about how capital markets work i think is warranted today.

that is not to say we don't need to have sound, aggressive regulation of capital markets but i think when i hear a lot of the policy conversations today starts from a couple of places that i don't think you're quite accurate. one is that financing is inherently evil and individuals when you think about is not to say -- but it is bowling alleys and banks and you name the industry i can find it. and the other is there's a sense today at least in the united states a lot of people are thinking about reform of capital markets. they speak as though all sort of crises and capital markets can be done away with if regulators are smart enough and trusting enough and that is one message i take away from president coolidge's time and again i don't know if you would read, is to have a little humility there and realize capital markets and definitions are hard things to predict and a different way to think about it from a regulatory perspective is how can we try to reduce the risk of those things when crises arrive and reduce the damage they do in the

broader economy. it's a fundamentally different way of thinking about how they want to regulate capital markets. very for people and if we just get the right way of doing regulation we will do away with it forever. so that is the second dimension of humility i would want us to think about which is our country and any other struggle with the aftermath of yet another financial crisis. i don't like this back but the reality of how capital markets work is we have had crises like that for centuries. in the future we probably will have future financial crises and we will see what happens in europe in the coming days and months. hopefully we won't have another one but humility in terms of thinking about what drives economic growth and humility in terms of thinking about how you regulate capital markets or two things that i think are present in what i see in economic history during the presidency of coolidge have to do a lot with what we are facing today. [applause] >> thank you very much.

i have one question and then the moderators prerogative i think, and that is a that the u.s., we are the most productive country on earth from what i understand and in that basically means we do more for less. the criticism is often made that companies are making all this profit that they but they are not hiring anybody. where the most productive country and we don't need all those people. so can you just sort this out for me? are we going to have to go through a whole generation before people start getting wealthy again and everyone is project if and what? can you help me out anyone? >> i would be much more optimistic than that. productivity growth since 1900 the u.s. has averaged 2% a year. we had a surge to around 4% of

your during the information technology revolution and that matt was talking about but it's really surprising, if you go back and look at the historical statistics in the u.s., and they are actually actually reliable facts about 1870. 2% is the magic number and we managed to take the higher income with a more productive per person and by more. by buying more we created more demand. so it's not the notion of there is a fixed of demand and each employee is more productive and more people would be unemployed. demand keeps rising and as we are in a dative we sell not only to one another but all around the world. if you had told people that 20 years ago, looking ahead 20 years, that manufacturing jobs would be reduced by 60%, they would have said that would be a gross recession and the u.s. but

in factor in that period be an employment rate in the business cycle still averaged about 5%. as you look around the world to try to understand why some nations are high-growth and some nations are loathe road on a continuum, not just year by year but over 20 or 25 years stands. what you find is that the distinguishing characteristic of bottom versus top poor tile countries and you can see it in the middle quartiles as well, is if you invest in people through education, more primary and secondary and more tertiary, if you invest in research and development and more capital goods, better machines and better tools for the people to work with, there is a perfect correlation between the level of investment in people, machines and knowledge and the growth rate of the country.