when you add on top of that the changing composition of the population to being families that are going tap -- the number of people who are to married adults living in a household with children is now down to 22% of households with the aged -- aging baby boomers and the growth of the millennial. so we will of a market that will have a very different need for housing. it is going to need different stock, locations that have very

different. my colleagues at the urban institute and done research this shows that where you have, if you will, the releasing a people who are releasing their homes into the market and where you have people who are interested in consuming homes, in some parts of the country there is in excess demand, but in many other places you have a lot of surprises that will be released from older americans without demand for the stock. so we're going to need -- in fact, it is that even though we have enough stock. we don't have enough stock in the places where the demand is command population in those areas will grow, so we're going to need capital to demand a lot more housing of the next 35 years, but it may be for people who can see the path to lower income, parts of the population that grew in the past, and particularly, lower wealth. so we're going to have to do a lot of work to try to figure out how to a creates rental and home ownership house in the works for those people commander going to need capital in that system, and i do not think that we can rely on the depository's to do it.

>> another question. >> hello. calamity observatory group. you had mentioned in one of your answers that you expected to baca to be around for the next couple of years. a ticket from your comments that you are not expected that nomination to confirm. explain that a little bit. >> i do not think that there are 60 goes there. i will leave it that to push that. maybe they are a bit revised, but i don't think there's 60. >> yes, sir? >> roared england with mortgage banking magazine what will this play. can you really conduct and start something that had the market

due. does that require congress? >> well, given that congress had to reduce it, what would you like to see? >> you know, what i would start -- i would get rid of the loan limit altogether and have an income base system. if elected health of rural housing service works it is targeted toward income, not house price. and i think if our objective is to provide a subsidy to middle america, then we should define middle america into the 79. it is not even the american. it is certainly not. i would jump the low limit altogether and go with an income-based system like we do and many other housing programs. >> mark and i agree on the first half of that answer, which is a think that we both think that one of the first place to give private capital to try to attract them into the jumbo market, is time for the loan limits to come down now. congress does need to do it.

i, in theory, would agree with you, but think there is enormous practical difficulties within come because it is the hardest part of the mortgage package to verify, and it is where we have seen fraud most likely, so we are inviting a sort of -- all kinds of new problems. the fact is, home value is a pretty good proxy for income. people have different incomes than people who buy $400,000 homes, people who buy 150,000 alums, so we are getting to a good part of the problem without having to invent all new supplement in something that will be particularly problematic. >> text question. >> yes, ma'am. [inaudible question] >> thank you. and canfields, associates and consumer mortgage coalition. big data and transparency are going to have huge impacts on most major industry sectors in

the united states and maybe across the world. do you have any observations on how big data and transparency will impact the funding of mortgages in the future? >> well, i think, first of all, generally speaking transparency is a good thing, but there is -- there are two things. big day in analytics and the capacity for people to understand much more about the dynamics in the mortgage market. that is kind of the analysis that has, in the past, been often available to investors to the extent that they could pay for aggregation of data and the affirmation. i am hopeful it will be more available to policymakers and the broader public, one of the reasons that at the urban institute we hired morey goodman and others to come and do some of that analytics. having said that, there is a concern with transparency because we also want to deepen liquid tradable markets. to the extent that we have too much transparency about the underlying loans and every security, it is going to be much

harder to make those assets that will trade and provide a liquid market, and there is a tradeoff that i do not quite know how policymakers should result in my mind. think you want to get as much transparency as you can the protect liquidity and there may be different places for transparency in the process. but i think that this is a really tough issue for us in thinking about going forward. >> let me say for starters i have long been surprised at the un awareness of the american public, how much data is collected in the financial system which has been the case for a long time. and so i worry certainly the direction of dodd-frank. quite frankly i as the consumer should not of doubt. if i choose recognizing that they may hire rates, that is the process, but setting that aside one of the reasons why i have generally been more sympathetic to going back to something in a more depository originating hold small keeping in mind all the problems of the to the crisis is

because i think we lost a lot of what i would call soft information. for instance, lead is used to talk about character when the man alone. i don't see that showing up any more. and so, again, having that local knowledge of if this person is likely to shut down, that is in my opinion the loss in securitization process. we learned a lot. you get your model parameters. now you have a very big opporunity to update the model parameters. again, i think a lot is lost in that system of softer formation to my character, someone is willingness to pay the does not show up completely capturing the stores. again, i would rather go back to a world where you do not rely 100 percent on hard numerical numbers and i say this as an economist because i think that a lot as missing in the equation when you do that. >> we have time for one more question, provided it is an easy one. >> and ask the question. >> i.

pinto, ati. i agree with you. pro home ownership. per leverages as many people might be. so i get concerned when i hear this pushed 46205 go and 50 bpi and 3 percent down payment. freddie mac just released along with fannie mae their data going back to 1999 which shows that fully documented 30-year fixed-rate loans performed horribly when you had those attributes. what is your reaction to what you're hearing? >> you know, unfortunately at the grim going to be back in a process certainly with my lifetime we -- this sense is that housing prices come up again and never will need to get into the market today. somebody comes in the door with a 600 or 7f5a0, the conversation would be of help to fix your credit, not how we help get you in a loan today. think that is generally, that prayer repairs should be the

first question. that becomes very difficult to do. people think that housing prices will go up by double-digit rates may be to get in now. so i do think it is important to tell homeowners, and it's interesting, you go back and look. had a couple of years ago better part of some housing counselors. i will do our respective for my friends in the mortgage and real estate industry. the vast majority of housing simply set of glasses for real letters and mortgage brokers to become dominant -- homeowners. that is a system to create loans. it is not a system that says let's stop for many, like your credit and trying to chew in better shape. that is a system we should be going to come in my opinion. >> so i think that on the first part of his comment, i think we do agree that power suit our credit impaired and need to have viable high-quality options. think there are some high-quality options for improving credit. but i think we have lost the concept known as a compensating factor in the underwriting

process. we have learned his lesson. you talk about character not being part of the underlying process. they're is a rigidity. we talked about this. the map being put on the picture frames, multiple maps. and one of the consequences is that there are basically three variables, and there are fixed. dti, income, and ltv. dti, ltv, and down payment. and the borrower ability to offset one of those with higher reserves, there is no ability to develop new products that might test alternative ways for borrowers to get there. we do know that the parts of the population and are growing, the parts of the population are going to have families that will be looking for homes in high-quality neighborhoods with access to schools so that they can create opportunities for the families, that part of the population may need other ways to get their credit in shape, and we need to be able to have -- do that not in a way that we

did before with the blaring of risk or reject five factors and we allowed easy no documentation or fake documentation. none of that. that all has to be gone. but prudent, considered compensating factors could return to the underwriting process again. and when people talk about, we don't want to see a 50 bpi or 580 credit score, my answer is, what else does that loan package and then it? and only then can we decide whether or not that is the we ought to make not. >> please join me in thanking sarah margin. [applause] >> thank you. >> good morning, everyone. nice to see you. my name is nicolas retsinas, member of the bipartisan policy commission, and we are joined this morning by jim locke part, the vice-president of wl ross & co in the first director of the

financing agency. we will follow of little bit of a different format. i'm going to ask him a series of questions to help us better understand the context. thank you for joining us this morning. he is on his way to europe later in a couple of hours. so squeezing the senator think for that. so, this is a meeting about looking forward, but i cannot sit here with you and not look back. it has been almost five years. september 2008 you placed the enterprises in conservatorship. what were you thinking at the time? [laughter] what was going through your mind when you did that? >> i was thinking we had a real mess on our hands at the time, but we certainly did not think, you know, five years later still being in conservatorship. then again, we did not think that lehman would happen the next weekend. we did not know that europe was about ready to blow up in many of their finance ostentations. we did not know that there is a housing bubble in europe and many countries that did not have fannie and freddie come as a lot

of uncertainty. and, you know, everybody woke up monday morning after they were put into conservatorship and thought things would be okay. stock market went up. obviously the -- the problems of fannie and freddie and the housing market were deeper than we thought we put them into conservatorship. and certainly some of the worldwide financial problems were a lot deeper. so it was, you know, something that we did not release trustee. i have handed out a couple of charts year. if you look at them, everybody has talked about what has happened in the market share, fannie and freddie over the time frame. not surprisingly, it spiked up in a 08-09 because there were the only game in town, but surprisingly five years later there still 86% in single-family we don't talk much about multi family, but is a very important market, especially for, you know, some of the lower income people.

their market share of fannie, freddie command fha is 72%. so effectively i never thought that that would be there now. and if you look at the next few pie charts, again, actually, the single-family market has shrunk since when the crisis really started. starting to see signs of a crisis in early 2007. yet fannie and freddie have grown almost 40 percent in that timeframe, some market share has gone from 41% to 59%. and healthy and unsustainable. i agree very much on that. and the multi family actually, the multifamily space has increased somewhat. they have grown almost 19 percent over that time frame, but fannie and freddie have grown 71 percent of the multifamily space, up from 30% to 43%. so, i mean, no, we did not expect that. >> of the follow-up on that. certainly we are thankful and

respecter public service along with secretary paulson and chairman bernanke if making difficult decisions that garner high stress. i do one step help you help us sort of thing through the notion of conservatorship, notion of temporary is as opposed to other options. you did not know what temporary might be, were you surprised it had been almost five years temporary? >> very much. as you remember, you know, you have been there. we kept the boards in place and and one of the reason we kept the boards in place was because we did think that it would be temporary and that there would come out of it in some form or another. certainly the legislation and they agreed with treasury was designed to try to force congress to do something by continuing to shrink their portfolios and raising their dividend rate. we were really hopeful that congress should act, but, you know, that was pretty naive. i have worked -- i ran that peace b.c. in the first bush administration work on

legislation. i don't know how many times the past. none of it sticks to it. for the first four years of bush for three of social security reform, and we have not gotten they're either, so probably pretty now you to think that something would happen if. >> what do you think -- why is it taking so long and why is it low? why is a stuck in a quagmire of conservatorship? >> well, part of it i think is release is the fragility of the housing market in the economy. when the fed is buying a massive amounts of mortgage-backed securities, is probably not a time to try to turn over to the private sector. so, but, you know, we reach the point now that i think it is seriously -- and i am very pleased that congress, particularly the senate, is working on a bill because it is time to start the dialogue. make your to, but think it is time to start thinking about what the future should be. >> what do you think are the preconditions to ' would need to be agreed to as a step on the way up conservatorship? what is the context that would

get us out -- to the promised land of some kind of future? >> you know, there is all series of principles that would have to be discussed. i think, you know, we own banks or investors in banks outside of the u.s., so we are used to seeing banks owning more is in this country. i think we need to get some of those banks back in, and they're starting to buy mortgages in this country, but they're not going to do 30-year fixed-rate mortgages. they're going to 15 at the moment. so we need private capital to comment. banks, investors that will take credit risk. but i think a big decision must be made to merely the biggest decision is if there will be some sort of government support for some part of the residential mortgage market beyond fha. and in my view, there will probably have to be, at least for the foreseeable future, certainly not at the percentage rate that we are today. i would like to see it go back

to the 30% that it was pre crisis. i would also like to see, if there is government involvement, that it is very countercyclical so that premiums go up when we see housing prices go up and also, the government market share falls when housing prices go out and vice versa. i am very afraid that we might end up creating a system that does not do that and we discontinue to have the pros sick fatality of our present system. >> is there any -- can you imagine circumstances where conservatorship would last a long, long time? does it inevitably have to endure can you imagine a circumstance work as far as the eye can see there will be conservatorship? >> it is possible. i certainly would not recommend it. you know, i think slowly but surely we will be building a consensus that we need to do something different. extremely unhealthy to have the government market share be as high as it is. we're a capitalist country. little european countries. none of them have market shares

anywhere near that. so we need to fix it, but it is a -- hard decisions will have to be made. mortgage rates are we have to go up. that will be tough. we have to make the kinds of decisions that lou was talking about, you know, can lower and people, can we get back to the 65% market share for housing? probably not. so, you know, a lot of tough decisions that must be made. >> t think we're ready to have those conversations? >> employees that they seem to be starting in the senate. you know, the house is is somewhat more difficult environment. but i think is very pleasing that senator corcoran and warner and other senators are starting to write a bill that makes some sense. >> what counsel would you give them? >> what counsel would i give them? well, cal keep working on it. the other thing that i think we need to figure out how to get the house involved in a way that -- and so i would encourage them

to work with the house as well. >> is it possible know in the ideological differences between house and senate on some of these key issues? can you imagine a bridge being built work is that wishful thinking? >> well, i have not spent as much time as i have in washington. i should not be a victim of wishful thinking. but i am somewhat of an optimist. i think it is possible. yes. >> and how far can we get during conservatorship by the conservative? i'm not asking you to second-guess because none of us can do that not being in the chair of the person deciding to double what kind of priorities might a conservative give that would accelerate this notion? >> well, i agree with lou. doing a remarkable job. it is a tough job that has got a lot tougher. has gotten tougher since i left. i can tell you that. but because it has lasted so long. my view is to my he has taken some of the right steps.

a single platform makes the right sense. and not sure i would go with mark on the receivership. it is a decision that actually -- we looked at, you know, almost five years ago in august. in fact, secretary paulson was pushing for receivership at that point. it was the law was only less than 40 days old. no one really knew what receivership was. we knew that people were very, very concerned about the mortgage market and the u.s. economy at that point. we were afraid that receivership would just, you know, kill the marketplace. so conservatorship was the right decision in my mind. and that think what we need to do is start doing some of the experimentation. i talked about the multifamily market. it works very well. the multifamily market through this whole crisis with hardly a cup.

and so there are examples in fannie and freddie of what works. and so hopefully ed will be able to do some things on a single family side as well. certainly, you know, doing any case in series like they have in multifamily, lower people taking the first risk, certainly building of the mortgage insurer's is not a good sign that things are coming back. you know, i would even think, you know, maybe fannie should try to -- which they had in the past a one. , issue and are in ps without insurance and see what that pricing with no insurance, if you will. one not? cost them a little money. they have a low my despair at this point. >> your current position is looking at investment prospects and working with banks around the globe literally. if you were -- i could get some pre council.

if i were a large mortgage lender in the united states, what counsel would you give to me about how to read engage in best position myself with future housing finance in the u.s. cannot understand you got control of the future is. >> well, first of all, everyone has to continue to work with fha , fannie and freddie. there is no doubt about it because that is the mortgage market now. i think we're starting to see, though, is banks, as i was saying earlier, starting to look certainly in the floating-rate mortgages, adjustable rate mortgages. we're starting to see them come and perry did not have a lot of other places to put assets. and i think, you know, they certainly have a tighter credit box, but i agree with the point that they also know their market better than the securitization, sort of a countrywide type facility. so i think that is important. i think you know, we have to

think about the future of the 30-year fixed-rate mortgage. i think it is a valuable option for many people, but it is not priced properly at this point. >> in your past role as a regulator and they consider of the enterprises, fha was in a different room. i am the sort of curious, your sense, can you truly reform the enterprises without taking on the issue of fha? are they separate issues or should they be linked? >> well, i think you have to reform the housing finance market in this country. therefore, i do not think that you can totally separate them. congress is starting to look at fha and some of the issues there. you know, there is some excess in that market as well. certainly allowing, you know, down payments to be paid by not people that were in the house, are real big mistake.

that has been corrected, but i think we need to look at the interaction of what we want fha to do in the future of what we want the successors of fannie and freddie to do in the future animal we want the private sector. so i think all three have to be looked at at the same time. >> before we open it up to questions and going to ask you one last question, which is an unfair question where i don't know is the only right answer, but i'm open to trick you into answering. what are the odds that five years and now we will be talking about the same issue? >> we will be talking about housing and mortgages five years and now. toughly we will not be talking about the future of fannie and freddie. i give the odds, you know, certainly over 50 percent at this point. >> that's open enough for questions. back here.

>> jim, you mentioned that you made the decision to put fannie and freddie into conservatorship . >> sorry. at mills, at tiara, capital markets. you made the comment you decided to put it into conservatorship or receivership. in recent months, especially with the profitability of fannie and freddie there has been a lot of attention given to the kind of remaining non-government security holders in fannie and freddie. i was wondering if you could make some comments in terms of what you tell those investors in terms of what economic value might ever be given to them? >> well, i can tell you, we are not buying their stocks in the preferred. [laughter] in know, there is this giant preferred of the government sitting there on top of everything. and that is not being paid back, and there is no reason -- there is no way it is going to be paid back. it is hard for me to see much value. no, fannie and freddie stock was

for good reasons. and, you know, again, with all that government prefer not being paid off sitting above it amazing to me that there is not much economic value there. even if they don't put them into receivership. obviously if they did there would be absolutely no value there. >> do you regret allowing those shareholders to still exist? one of the concerns right now is because of the run-up in some of those securities you now have a new constituency with a very big economic incentive to influence this debate that you would not necessarily have had, especially with the changes to the pspa where treasury tried to prevent having that economic value at fannie and freddie influencing the debate. >> now, i don't regret not wiping them out. you know, i am not sure that hedge funds would be a very sympathetic audience on the hill, but maybe it will.

>> bankamerica. from your currency, given the amount of money is flowing into actual real estate assets, given the amount of money flowing into new corporate formation, mias and servicers, especially services and the like, do you actually see sort of the capital still there at higher capital holding ratios for sort of whatever emergence in the new system, both private and particularly government? >> well, yeah. i think over time they come back. they're is a lot of capital, again, slashing through the system looking for returns of this point. we look at investing in each one of the mortgage insurers for a variety of reasons and didn't, but we certainly looked at that. part of the reason was did not think that the returns would

have come quick enough because you had to have a long time before you actually were ready enough business. and that's going to be the problem. some parts of this mortgage market, it's how you get earnings in early enough to make up for all the capitol that you have to raise to support a guarantee system. >> so what of the implications? >> one of the implications is you have to keep some government insurance and they're for a while. maybe a very long term before the private sector can come back in a big giant wave. but over time i think that there will be credit investors and mortgage-backed securities. there already are in the junk market, and that is continuing to grow as you're seeing new issuers all the time in that market. and as we lower the conforming and raise the gp, i believe there will be more investors coming back.

>> any questions? >> mortgage finance. the same question i asked lou. , securitization platform. you need to? what is the pay and if we deal in the one? >> you know, there are a variety of different models the you can go from here. think you probably need more than two issuers actually. fannie and freddie just evolve into issuers a set of guarantors. that could be a future. my view is that probably there should be an explicit catastrophic government guarantee agency, and nationally be one. there can be many issuers, and a common platform makes more sense. but there are a lot of skills and fannie and freddie, of knowledge base there that i hope we don't just totally wiped out. that would make absolutely no sense. >> questions?

>> one of the comments i hear sometimes is -- i'm sorry. a question. sorry. excuse me. >> de and he would. shfa has brought civil suits against in the s. issuers over sales of securities, and there has been a lot of repurchased pushed back the gains lenders. even lou was saying that that is, you know, and the board room that is tightening the credit box beyond what fannie and freddie are saying is they're under wedding -- underwriting criteria. would you be doing something differently along those lines? out the revaluate that policy? >> first of all, i think one of the problems with the policy was it was not enforced when it should have been. and '06 and 07, fannie in particular, but also friday. i remember lots of conversations

on the topic of putting back mortgages to countrywide. already there were showing mortgages. and it should have been in force and then maybe we would not have had as many problems as we do now. i really, you know, the politics made sense. i can't get into the details. we will probably be deposed. and so i would prefer not to a have an opinion at this point. certainly the facts make sense. there is no doubt about it. you know, certainly the pendulum may have swung much to one side versus the other. and that often happens. but to me know, my view is that certainly in many cases there was bad underwriting command it was not disclosed as well as it should have been. >> yes, sir. >> brian gardner. the discussion is really about

liquidity in the mortgage finance system. one of the gst that gets lost in the shuffle of federal home loan banks, you became the regulator of the federal home loan banks when fhfa was created. any ideas on what their role is going for it? to leave them as systemized changes with the home loan banks? >> well, i mean, home loan banks did really great work in the crisis. the advances blew up over a trillion dollars command that was really critical. they played an important role. i think obviously they bought a lot of formerly aaa mortgage-backed securities which was a big problem for some of them. and they're sorting their way through that. whether they're needs to be as many banks as there are, good question. you know, we often hear as another source of capital for the mortgage market in the u.s., the cover bond market which is something that works for well in europe were not only the owner

of the security as the mortgage of the security, but it also has a crest of the bank behind it. and in many ways the federal home loan banks that provided the cover bond market to the u.s. did it successfully. and so they have a role to play, and that think they have a future role to play. the question is really keeping them focused on their mission and not allowing them to limit their balance sheets like they did with the mortgage-backed security. >> questions? let me -- >> i want to follow-up on this question. the question about the home loan bank. much of the talk about whatever we do fannie and freddie in the future of implies that we should not have an unpaid for, implicit guarantee any more. so can you -- does that make sense in the world of fannie and freddie? talk a little bit more about

what would be the logical consequences of that principle? >> that's a good question. i thought a lot about that, but, again, they should be paying for their guarantee one way or another, and it should probably be risk adjusted overtime. and, again, they have an important role to play. they do support the banking system. and, you know, the way that they are protected, then never lost a penny on the advances. there is some concern that there backing the insurance companies now. and without the same kind of protection that they have on the banking side. and that is an issue. and so, you know, a lot of their advances are going to insurance companies. aviation pay more for those advances than they would for a bank of france as an example. >> questions? >> one last question. i will take the last question. >> jim, let me ask you the last

question. some suggest that our housing recovery is still too fragile to do anything now. we should sort of step aside and of the recovery go on. the you subscribe to that theory? >> if we do something now it will take five to ten years to implement. i have no problems with starting now. [laughter] >> please join me in thanking jim for his participation. and please join me in thanking him for his public service. >> the key. [applause] >> i will ask our panel to come forward. our next panel. [inaudible conversations] >> let me introduce our panel. you have their brief biographies in front of you. to miami left is kevin kelly, the ceo of leon aron associates and vice chair or incoming chair

of the association of home builders. this ceo from the mortgage bankers association of america and former federal housing commissioner. welcome. and barry, i dear friend, the consumer federation of america and a member of the bipartisan policy commission. thank you for joining us today. i'm going to lead a little bit of a follow-up discussion to ginger mark in terms of the remarks from this morning, get the panel involved in opening up all of you. if i may, let me start with you. this all morning has been about the and sustainability of the status quo, and how terrible it is. what is not to like? the enterprises are paying lots of money to the treasury. that housing recovery seems to be underweight. why don't we just -- what is so wrong? >> well, i would agree with a lot of the other speakers. it is sustainable and undesirable. clearly it has the benefit for the housing market.

certainly we would not want to see any radical decisions made at the moment that would inhibit or impact this recent recovery that is occurring in the housing market. we believe that it is still very fragile aisle. again, as we mentioned earlier in a number of the other speakers, the credit box is too tight. we survey our builders on a regular basis. one of the things that comes back to us constantly is the fact that buyers simply cannot get approved for a mortgage. and that credit box is too tight because, for a number of reasons, but one of them, of course, is the concern that lenders have with the -- with the put back risk that they take. and we don't see at changing in the near term. we hear that it is listening to

a degree, but, again, we see that as a significant impediments to zero more robust housing recovery. and as a consequence, a more robust economic recovery for the country at large. we also think that, you know, quite frankly there is some reform taking place. that is not necessarily the subject of transparency, the talk about -- there has been a lot of discussion this morning about the single family side, the multifamily side. and some of the things that the conservatives as mandated for 2013 on the multifamily side that are reduced, that footprint , some 10%. and, quite frankly, to my knowledge at least, there has not been a whole lot of explanation as to why that was necessary, how they decided on that, whether or not there is

any coordination. as we know, fha is facing a challenge currently. it has indicated that its mortgage credit authority will be exhausted by early august. as you know, the administration has requested another $5 billion in authority from congress. so, some of these decisions, i think, like transparency. and that it simply is an undesirable thing, i think in this environment. >> so, david, you are the ceo of one of the most potent trade associations. >> i am. >> yes, i am. >> getting more potent every day. but david, i step back and look at it. your mortgage spreads have widened. private capital is backed by the government. was not to like?

>> well, it sounds good to me. making money perry this, of course, i think all of us have all sat on panels of various events like this talking about the future is safe. well, let's paint the picture. the gst has served a critical role in refinancing. the program would never have been able to work and refinance all the united states had not been for freddie and fannie because it created a streamlined process to do refinancing. we're almost at the end of it and that a point today where a pilot at the gst going forward, something has to change. 75 percent of all freddie and fannie mortgage production was refinanced. they're average nine harp ltv is 67%. the average non harp fica was 760, and when we look at the purchase market, fha is filling the void for of the demographics that we talked about so far. 80 percent of african-american

home buyers and 70 percent of all hispanic home buyers are getting their mortgage product through a program. so where is freddie or fannie in what is their role today in the future of the purchase market? and for me, i think we are entering into an environmental. as we exit the refinance market into a purchase system, to an environment where it's going to be an entry point. freddie and fannie, if we keep the contract as it yesterday, becomes an alternative for those that don't have to pay the low level of justice and the big down payments and higher ficus gowers and greater net worth. we're going to have a kind of separate housing finance system. that is one reason might think we need to think about this future. where moving into a different business model that does not serve with the gst has done so well over the past couple of years. the second point i would make is ready and danny are two different companies today that where there were before conservatorship.

mortgage-backed securities with a the produces today is far less liquid compared to the fanny and it was prior to going into conservatorship. some would say that it cannot succeed, it cannot survive in a future state without doing something to it, so we no longer have to companies that really compete on an equal level anywhere near -- it's far more of an issue. liquidity construct, the challenge is something that has to be fixed. and so for those reasons, a contracting market, less liquid market, purchased dominated market, you have to ask yourself, how these to function in that kind of environment where we just have institutions serve everybody else. i don't see how we perpetuate the system, so we need to motivate change. >> let me follow up, if i could. it is hard to disagree with your analysis and prediction of the changing profile. i think that is pretty clear. but hal is getting out of

conservatorship make these enterprises or their successors more able to participate? that i don't quite understand. >> sure. as you're getting out of conservatorship. as you're getting out of conservatorship, the ultimate in state is a serious step that has to take place now. we believe and we have been putting an announcement of the past several weeks of a series of steps that can be taken that do not require legislation that can help not make congress to the wide bloggers of the main components can be there. dealing with the security committee with a credit lab, dealing with risk share structures, making sure there is an execution for small lenders and vendors of all sizes to participate in the system assess that we think can happen now with conservatorship being much easier. but if we keep them under the current contract where they stay in conservatorship we're going to perpetuate the current state,

and the current state in my view is very dysfunctional and does not serve the needs that the u.s. housing system has and puts it and has dominated marketplace going forward. so we have to get there and start taking steps now to make it easier for policymakers to ultimately make that change because it's not we will be here two years from now having the same panel talking about the future of the gst will look like . >> do you share their perspective about what is possible and what is not possible within the side? >> i do and i don't. so there is no reason that the companies in my view could not be broadening their credit box, being more aggressive about pursuing a purchase money opportunities commandos are all rapid things that are not serving the public purposes for which there were originally chartered. i think the reason that we have defined some resolution in the current situation is exactly because right now a matter of the enterprises -- aircraft by the burden of the senior preferred debt, so they can operate as private companies

with any prospect of attracting new capital or paying a return on is already in the companies. the conservator is running the companies to conserve them, not with a mandate to advance home ownership and the united states got to create a safe and stable environment for housing. its mission is different, and i think the key danger of more static in the situation here are several. one, we run the risk of losing sight of the whole point of the system. it is not an end in itself. as a means to an end, and we're having much less conversation said about the end to which these are supposed to be means to get to a more about the means themselves, which is a limiting conversation. i think the longer they stayed in conservatorship the more the risk of challenges.

whether they have meritor not does not really matter. the more they're under apple lawsuits and court the less effective they're likely to be, the less above action they're going to have. and i think finally, is important for the government to step back in both congress and the administration and start with the principles, bipartisan policy center commission started its work on this be said, we will have to decide what the principles that guide our work are and then find ways to make taxable debt. the nation is on a single and multifamily finance circuit. we are designed to serve those purposes. it is not clear to me that we have consensus within the conservator or within the agency's or even the congress about what the proposition because of the longer we keep a static situation the more we're going to wind up with a model policy conversation, lack of initiative, and lack of clarity. a lack of transparency is very troubling. fha is not subject to the same regulatory constraints and

requiring the kind of conservatorship there would be as the regular of the entities as they were before which raises questions simply about good governance and how many of the actions that are being taken, which i support and i might also nonsupport how we have access to a public conversation about how they develop the system going for it. i would say, the risk of complacency, calcification of the current system, i don't think it will serve consumers well. think it is a high-risk. hypothetically, i think the question, everything is working fine. people are getting mortgages. was the problem. the underlying issues of the ones i just described. >> of the follow-up but that. on the commission, and large measure passed to your participation, we have had a productive conversations with larger principles. do you think we're ready outside the doors of the commission to have that larger conversation? are we ready for that could face some of those difficult issues? >> well, i think of those conversations don't proceed what

i would call the architectural conversations, then i think we run the risk of creating a solution to the wrong set of problems, so i really hope that off as the conversations move forward we remain focused on the point of this exercise. i think both the senate and the house to try to hold hearings to bring some of that out into the light, and i think that is not diminished. i am heartened by what i think is a growing consensus that the government does have a role to play in the mortgage system and that is, in order to create the backstop that brings in the interest rates, the investors, creates a sense of certainty about the value of the securities, but much beyond that i don't think we have too much. part of the population should be served. the relative role of a full facing credit guarantee like we have. in some are paid for, a specific guarantee that is backed by private capital. jim mentioned big growth in share of the agency's demand that have to say, on page 43 of

the bipartisan policies and to report, not to be too specific, 2006 is the absolute lowest point in almost 40 years of the gst share. when you normalize that there really is the upper end of the historical. the big difference is 3% to 10% to 30%. so we have an odd thing going on. we're focused very much of the entity that does not have full faith and credit guarantee, the size of the market that has ballooned, and this conversation about where the boundary lines go, the purpose of the different levels of guarantee is where we have to start this conversation and not focus so much on the architecture of the agencies themselves. >> so, follow up, you also represent one of the most potent custom trade associations and nationalization homeowners. you and your colleagues ready for that larger conversation which may or may not end up with

the reduced government support of housing? is that a conversation that you want to be part of? do you want to be a part of that? keep thinking should be under way? >> we have been part of the conversation. as you know, we put out a white paper some time ago. and in that paper we articulated that you have to start from a list of principles. we are -- we do believe that, at the moment, you know, there have been some very positive steps taken to my certainly with the recent warner. you have johnson talking about it. there may be some -- some tempering of positions over on the house side, although, you know, that publicly -- i don't think that has surfaced yet.

we are encouraged by that. certainly last week and our board meeting here in town, the secretary camino, calls on congress to begin a bipartisan effort to begin at the reform of our mortgage finance system, so we were encouraged by that. where that goes from here and, you know, who is driving the bus, i'm not sure it is the secretary of housing so much more than treasury that is driving the bus at this point in time, but we certainly are encouraged. again, i think you have to start from the basis of a set of principles. one of those, we are adamant -- adamant about a catastrophic backstop for the entire housing finance system. we think that is critically important.

we also -- one of the elements is that to ensure that there is -- the end result will be a menu of products that will serve a whole host of buyers as well as the marketplace single and multifamily. and, as we all know, secondary and tertiary markets often are left out of and underserved in many instances, and one of the principles we see as being critical as those markets, any reform will incorporate the ability to address those marketplaces. the people that reside there. >> i have been following with great interest is the sixth seven weeks to come up with a suggested number of initiatives. we can do something. we don't have to wait until the final plan is all agree to

overall. an interesting initiative. if should i read into that you're skeptical that it will be a final brand? so why not let's go forward because we may not get to that final plan anyway? >> i mean, we have already aired a lot of people talk today about the likelihood of a final plan, the timing of a final plan, and, you know, this corker warner initiative is being passed about more seriously now that it was a couple of months ago, even a month ago. it will still be on the senate side. there is still a question of what pathway it will be introduced two-tier committee, question on the house side as to whether -- short, you hope for more moderation. the first bill introduced will probably be pretty a stream and maybe it will moderate of the some point. but nevertheless commend the end of the day, you know, the timing of the elections committee of government terms. if it pushes too far past that

into presidential politics. so we could be literally, depending on timing and motivation, we could be looking post presidential election on the next round. [laughter] but you think about this time. and we both served in administrations. you recognize that those first -- the first couple years is when everything gets done and then they start putting a little crazy. jack blum said that this was not going to be his priority at the present time or not his top priority. some my view of this is twofold, one of which is to my view this as a priority. our industry does because it has debt have certainty. both on the single-family residential side and the multifamily side. and i also am concerned that in the debate, policymakers to have less expertise in mortgage finance broadly will be trapped in writing rules. and so the way we're approaching

this today, let's be proactive. let's provide -- let's provide benchmark and rules that they can actually adopted radically that are written by industry experts that can then help design back to the white board scenarios to help avoid sort of a lack of knowledge and basis that we ultimately have to defend against in the legislative proposals. so, i mean, to that end, we are laying out a series of steps. we have laid them out. it will package them together over the next couple of weeks into one overall document law but there are steps that are very common for most of our proposals command will take, for example, homogenizing security. the question was asked earlier about the platform, a single common currency is ultimately the end state. most of our final proposals. that is something we can actually work out today. is something that the fha fe director could do today.

you know, it was interesting. there was a comment made that the director could expand credit today. and not sure that he could. i think that the director under conservatorship is tasked with conserving the assets of the tse's. payments to treasury, i don't see in his mission that need to expand credit. i'm not sure their is a mission-driven roll their forehead given the context of what he is taking on in here in these two tse's that were at the time failed institutions. some my own sense of this is that until we all get our arms around the core fundamental steps for transition that don't require legislation, we are going to be continuing to debate this element of the ultimate in stated that to get there over and over again, and i worry fundamentally that the political timing of things could force our hand into not ultimately getting rid of this conservatorship status, perhaps into the new presidency. >> says the calendar on these

issues, in the sense that if we don't strike while the iron is hot today or tomorrow afternoon we will rape -- wait for more years? >> well, very good friend of both of ours council does of the beginning of our careers. never bet against inertia in washington, and i have never lost money taking that side. i don't know what the timetable is. you know, the congress is uniquely unsuited, to be frank. this kind of conversation, big, complex, lots of conflicting interests and issues. and i think it is exacerbated by the fact that there is no obvious platform here unless you have got an injection to the government taking a large share of the credit risk in the current system. but i do not think we can let the perfect the enemy of the good spirit there are things that not only can be done, but whether we like it or not come fha is beginning to move forward on and it is important to distinguish between the common platform with is -- which is proposed and moving for to be

executed, a jointly owned utility of the two companies. and it will simply be the means through which two different securities or in the future multiple kinds of securities issued. it is very different than moving to a common security which might be something that should be on the agenda, but i am not sure it is as high. let's get the infrastructure fixed because spending money for two new ever structures because both of the gst platforms are pretty old camino, more economic the danger that i think to the situation is that these kinds of advances along the path to some future stage are being conducted by an agency that has one specific mission, is not a subject to public comment, control, and influence as a fully developed legislative solution would be, and over time they're going to foreclose the options, both congress and the administration will create an infrastructure that well, i think, have too much momentum to not become the default. ..

i said, oh, for, should by 2014 this will be of. and i was the most pessimistic at the time. so i'm not making anymore bets on time frame. >> a followup with that. you represent one of the leading consumer agencies in the country. how consumers find a way to par

pace it in this? it's more just technical industry restructuring. not that dave and kevin aren't caring about consumers but you have a special per '. how do consumers participate in the debate and discussion, in the status quo and future. >> we have been trying to refocus the attention of the principles, he purpose hoff the system. we joined with daves about the hold builders and realtors as well. there are regulatory action wes think are leading to a constraint to credit. and more broadly, what we're trying to say to anyone who is thinking about architecting a new system is, the system has neat certain qualifications and outcomes. has to provide access to consumers across a wide range of credit profile. it can't allow secondary market institutions to cream the market, which was the case before the legislation forced the gc ss to broaden.

it has to be aggressive in helping to spread responsible innovation in the system, which is not happening at the gses, they're being con -- constrained. they have been shut down because the don't think it's consistent with their current mission. so we're taking taking taking th regardless of which device you use, the end state has to guarantee outcomes or witness nothing be discussful. >> kevin, we spent this morning talking about the dangers, the challenges of the status quo and talk about the implications for that overall. and we have all agreed the choir here has agreed that we need mortgage finance reform, and we need to address the larger principles that barry and dave talked about. why don't we? if that's what we should do, why don't we address those issues? what are the barriers?

>> um, -- >> is it politics or michigan more? >> it's politics. i think -- just the very nature of the congress, the beast itself, is -- >> the only congress we have. >> the only congress we have. this is -- as we all have said, this is enormously complex issue. the ability for people to get their arms around it. and, quite frankly, it seems to me that in certain instances, now that fannie mae and freddie mac are making oodles of money, the question is, does that now take the pressure off those members of congress? and people in the administration? >> what do you think? >> i think it has to a degree.

and i think that is unfortunate. i think it behooves us in this current environment to ensure that we don't take the -- our eye off the ball, number one, and number two presents unique opportunities to move forward on this at this point in time. it's taken the conversation away from the drain they've been, to the treasury and the cost to the taxpayer. to now they are making money. now it's a time to reform them. and i think -- so i think you have some cross-currents here, but i think timing-wise, particularly with the conversations that are occurring in the senate, that ought to serve as a springboard for us to continue to push for comprehensive reform. >> david, you share, if not

overarching enthusiasm or optimism, but do you sayre the optimism we're heading toward reform? >> i think all of us who work around the subject know nat for the first time the senate has come alive and has focused on housing policy, which is a good thing. so, yeah, i think we're moving towards reform. i think it's going to be way too slow, and unless there's a ground swell of demand to take steps that can be done in the interim, that -- >> interim? >> i think the interim steps are key. whether it's our list or a few items a broader group can gel around, we're not going to get there for a long time. i go back to the platform which ed is getting a lot of credit for putting together, and i think ed's doing a great job in his role as well, but they talk about timelines for the platform several years out. we can't wait for common platform to derail the need to get real transition going,

because in the interim, there's too much tinkering that can take place. look at the guarantee fees today. one could argue -- the question is, when they produce the kind of profits they're producing today. two firms in kerr dollarship, is that good thing or we're overpricing for credit risk? if we're trying to crowd in private capital, is there real risk share being deployed where we can get private capitol up front to take credit, and i reduce the guarantee fees to offset that. just seems to me this is haphazard stuff. they're creating record profits, literally, historically record profits at these two institutions in conservatorship, yet credit remains tight and builders and realtors are complaining about access to funds on the purchase side. i just don't see the coordination.

i see no reason to be popping the champagne bottles as we look forward. the roll -- role we have done up to this point, refinancing america has been great. that was only after they dealt with representations representat advertise. if we put that effort on the purchase side it would be a different store but today the representation and warranty structure on the purchase side is over early oregon russ, making lenders afraid to make mistakes, and i don't think personally, while we can feel signs of optimism that -- it's probably going to be overall, overall, pretty decent bill with a lot to pick apart on the margins. i really worry that the timeline for that, that one piece of legislation, creating enough momentum to make it through two sides of congress, is too long, and i think we need to be pushing on things right now to

force transition. again, steps that can be done without dependency on legislation, and that can be done with enough groundswell from stake holders in washington. >> barry, you heard david's approach of the transition alsteps and the skin -- skepticism about the ability to come to consensus. are there option wes might have going forward? what's your take on that as a strategy? >> well, i wouldn't characterize it necessarily as a danger. i would characterize it as a near certainty, and whether you think it's a danger or not kind of depends on which direction they take, and whether you think that's a good thing or bad thing for the market and for consumers. this is one 0 of the concerns about the current situation is that fhfa, because of its charter, operates under substantially less public input, transspain si, -- transparency,

than, say, hud would, and that just raises big questions about the ultimate public purpose of the agencies agencies and the cy -- conservatorship. when congress is pressed to do things quickly it can make all kinds of conversations that lead to unintended consequences that have one benefit, which keeps people like me and dave in business because we get to argue over what they really comment what the regulation should read like because it's hard to divine congressional intent but you can get an outcome that is worse than what you started with. part of what we have to get to here is peel away some of the ideology, politics, preconceptions about the system that are driving people's attitudes and get back to first principle it's ironic that the companies today without shareholders, suppose told be the drivers of they're behavior, are now making way more profits

than when they had shareholders. so just means a less generous credit box and less public service than would have been the case in their old state. >> and quantitative easing and a hud program. >> lots of support. the government's role in housing is not constrained to the gs es and the only federal guarantees are not just the gse. they include the federal home lone bank. -- home loan bank. so it's important to look at what fha is doing and what wilt the result be in terms of credit for consumers and the efficiency in the system and the availability of long-term fixed rate finance, and the price of long-term fixed rate finance. secondarily we have to bring congress back to, as you startingerring with this, the

point of the exercise is to make credit available for american consumers so they can buy homes as a reasonable price, and apartment homes and developmental hopes can bement available. if it doesn't serve those purposes we don't need it. >> let's open it up to questions or comments. yes, sir. identify yourself. >> thanks. ethan from the national housing conference. i'd ask all of the members of the panel to speak to how affordable housing providers should enter into and look at this debate in it's really complex. these are for-profit, nonprofit, state and local agencies, housing councils, tenant advocates, folks trying to create housing on the ground and have had a mixed relationship with fanny and freddy over the years. they're not going to dive into the details of the plumbing of the system but the outcome of the decisions are critical for the work they do.

so where is their point of entry? >> good question. david? >> you know, one thing i would just suggest is if you look at any of the constructs or proposals of current behavior -- so take corker westerner -- there's an fee collected that goes somewhere, and if you're focused sew solely on affordable house, that's where the best advice can come from for people working on the bill. as you think about where the focus is when these big projects around gse reform are being done think first try to fix the structure of the single family entity, then they say, okay, let's make sure multifamily work, and then, oh, yeah, affordable housing. i believe it's in that pecking order, and my own experience, even when i was in the administration was, how do you make certain that affordable housing just doesn't become a, we got that covered, line item in a bill that says we're going to collect 10-15, 25 basis

points and give it to hud and they can play with it. does that really solve the problem? that's where i think creating a mind trust of expertise that can really analyze the best way to meet affordable housing needs without saying the world goals, because all of a sudden you lose the whole audience on capitol hill, and come up with some way to make sures there's funding for affordable housing. it's interesting looking at the fha multifamily program. a lot of the focus and constraints on multifamily came out of the new construction, sort of high cost multifamily business that really clogged up the processes at fha. there's been really de minimis focus on multifamily affordable apartment creation in this country and with household formations now reaching a million bus annually. the question is, where is everybody going to live fordable, and i don't see the

ground swell of work being done on that. i think there's an opportunity to create a ground swell on that subject. >> i think it's a great question, one we've been grappling with, obviously hard to bring together a broad coalition of consumer organizations and get them all lit up over the 30-year amortization of a -- forget about it. i've lost the crowd. in the bipartisan policy center commission's report we made a specific effort to call out what think are the key areas that consumer organizations and affordable housing advocates should focus on, looking at access and affordability, and there are key themes that unless there's a obvious outside of the mortgage industry, -- no offense to dave, great colleague -- but outside of the mortgage industry that can easily be kloss you have seen lot office proposals which do take the tact, affordable housing and that's the job of fill in the blank,

and my view is that affordable housing needs to be the job of this entire system. it needs to provide the plumbing through which housing can be made available, mortgage finance can be made available across a wide, responsible, sustainable spectrum. i worked on a task force with the center for american process, putting together trying to bring together the thinking on this and we just released a report last week, and i commend that to everybody's attention. it's a very sound laying out of this idea that there is not just a money obligation on the part of the system, but a functional obligation on the part of the system, and if we lose that in this process, and sort of make the decision that the mortgage finance system by and large is for, fill in the blank, but not for those people, we are going to lose the greatest benefit that system can provide, which is a large-scale, ongoing, not discriminatory system of mortgage finance.

so i say that's where i would focus the energy of people who are not in -- a lot of us are in the weeds. so far in the weeds we can't see the turf anymore. but that will be our lot for the next however many years. i think without a strong voice continuing to remind congress of these obligations, we could end up with a system that fails to serve large, large portions of the population. >> well, as you know, currently fannie mae and freddie mac are very involved in that space at the moment. and i've been -- i develop and own and operate affordable housing and certainly utilize their program. just in terms of participating in the discussion, quite frankly, i'm not sure what the national council of state housing agencies have done at this point in time. i know we have all issued white papers. i'm not sure where they are, to

be honest with you. but it seems to me that they or the national housing conference could certainly act as convenor of organizations that truly focus on affordable housing, to become involved in the dialogue and set forthprinciples that address the need to how -- provide whatever revisions to the system are made. have to provide for decent, affordable housing for all americans. go back to the housing act of 1949. and, quite frankly, the -- my experience has been with the -- if you look at the track regard of the fhas. >> under single family and multifamily side, they have had terrific track record over the last several years, even with

this horrendous downturn. so in terms of looking for people to partner, i would say that would be a place i would start. they have standing in that space right now. they have obviously tremendous contacts through the governors associations and things, and i think they need to be -- those -- your organization, hfas, could add significant to this dough wait and discussion. >> in every one of these kinds of legislative debates i have been involved in since the s & l legislation, this debate between get a fee and go home, versus get the system to serve the largest possible part of the population you can, has been the tension, and i thought one of the big victories in the '92

legislation of this same community of people, was to focus on the fact we're talking about a trillion dollar mortgage market, giving us $500 million through some fee? that's not enough of an answer. we need to be part of the larger system. it needs to have an obligation to serve those housing needs, and i think that's the same opportunity we have here, the same risk we want here. i'm all for the money. but it's not enough. it's necessary but not sufficient. >> any last -- yes, kenneth. >> i'm struck by barry's comment -- i'm kevin at black rock. i'm struck by the comment earlier about attempting to refocus the dialogue on mission and purpose. and mission and purpose being driven by the objectives of the ultimate stakeholders, whether at one end, it's investors, or it's borrowers, and strikes me the dialogue is largely driven by those of us, most of news the

room, who are in some shape, form or fashion in the role of intermediary in the weeds, and so i'm wondering or i'm curious, barry or others on the panel, how do you elevate the conversation in a way that the broader interest drives the outcomes as opposed to the plumbing driving the indian. >> a great question, kevin, and a lot will hinge on it. so i'd say i think the bpc commission tried to take lead in that by setting out in a separate box, right where we thought with the important ac expose fortunatability issues, and the task force work is an important contribution, and the organizations that care about the prospects for low and moderate income home ownership, responsible and sustainable low income home ownership think need to be make that voice heard on he hill and not allow themselves to get distracted so much by the details. i'm worried that the starting point for some of the

legislative draft is have seen floating around focus exactly on those constituents you describe and never mention the importance of of the consumer importance of serving the market and serving throughout different economic cycles. it's about protecting the taxpayer, protecting the investor. great, again, necessary but not sufficient. so i think it's really important for organizations across the spectrum -- and i know we can depends on mga and -- to joint that but they'll have other issues, consumer agencies have to get into this game. we did it in '92 and we can do it again. >> i feel compelled to say, given my current -- you mentioned -- [inaudible] [laughter] >> david, last comment? >> kevin in i last comments? please join me in thanking our panel. >> president obama is in northern ireland to meet with

world leaders at the g8 summit. he spoke about the global trade and the peace process in northern island. >> this transatlantic trade and investment partnership is a priority of mine and my administration. it's important we get it right and that means resisting the temptation to downsize our amibitions or avoid tough issues just for the sake of getting a deal. that makes sure also -- it's important we also make sure that it's part of an overall plan to do what it takes to promote growth and jobs. trade is critical. but it is not alone a silver bullet. it has to be part of a comprehensive strategy that we pursue on both sides of the atlantic. that's what our people deserve. >> you can watch all of the events we cover in our video library at c-span.org. house republicans will bring up a measure tuesday to put more restrictions only abortion. the bill would ban almost all

abortions at 20 weeks. we spoke with a reporter about the legislation. >> julie is the health policy correspondent for npr. why are house republicans taking up a bill to ban abortions after 20 weeks of pregnancy? >> well, the committee reported last week. frankly not a dui sure they're taking it up on such a quick action when this bill was introduced a couple of weeks ago. they weren't sure it would come up on the floor at all. it was definitely going to be marked up in the subcommittee and then marked up in the full committee, why they're bringing it to the floor with such alacrity is still a question nobody is sure of the answer. >> there's been a change to the bill since it wag marked up and approved the judiciary committee, what is that change and why was this happening added? >> leaders announced last friday, the day after the bill was marked up, they would be adding an exception for rape and inzest. original he the bill would be a ban on virtually all abortions

after 20 weeks of pregnancy, with the exception of pregnancies that threatened the life of the woman. now they're adding language, for abortions in the case of rape and insist, and that was because there was a little bit of a dustup at the marketup. trent planks of arizona, the sponsor of the bill, said that he thought that -- he said that abortions in the case of rape were rare. he explained as the markup went on what meant was abortions after 20 weeks resulting from rapes were rare. but democrats took that language and ran with it and made a fuss so they decided to add that language to the bill, even though an amendment failed actually at the markup. they've also decided not to let congressman franks manage the bill on the floor. instead it's going to be managed by marsha blackburn of tennessee which is interesting because she is not a member of the judiciary committee. >> why do you suppose that's happening? >> i think republicans are very

sensitive. last year, todd aiken, who was running for senate for missouri, also made comments about the unlikelihood of getting pregnant of a rape. he ended up losing his race, even though he was other a prohibitive favorite at the time. so republicans are very sensitive to this sort of thing and when congressman franks made the comment, even though it's been taken out of context, they're sensitive to that and i wondered why marsha blackburn would manage this when she wasn't on the committee. i realized there is not a female republican on the judiciary committee so they didn't have a woman to manage the bill. they had to turn to someone else in order to get a woman republican to pass the bill. >> this is a republican are-are sponsored build. what are the dem cretes reaction? >> they said it is unconstitutional, which republicans do acknowledge. i mean, the supreme court has been pretty clear that abortions cannot be banned before fetal

viability, which pretty much everybody on both sides agreed is around 23 weeks and later of pregnancy, and since this reaches back to 20 weeks, an appeals court just a few weeks ago struck down a similar arizona law, but what they're hoping by pushing this bill forward, in addition to making political statement about how much americans don't like abortions later in pregnancy, but what they're saying is they're hoping that if it should pass, and get to the supreme court, obviously unlikely given the makeup of the senate and the fact the president is unlikely to sign it, but should it somehow get to the supreme court, they're hoping that perhaps the supreme court would use this law too change its mind about this. but as it stands now, this does violate current supreme court precedent on abortion. >> let's go back to the house judiciary committee markup last week. what was that debate like? >> itself was pressie testy. the house judiciary committee has been through this a loot.

there was a similar bill last year that only applied to the district of columbia. a number of states have passed these kinds of laws, and the justification they say is that scientists have suggested that 20 weeks of pregnancy is when a fetus can feel pain. that is a scientifically disputed theory, but that is the justification under which these laws are being passed. the judiciary committee had a bill that would apply this only to the district of columbia, because they can, because congress oversees the district of columbia. they house actually put it on the floor but put it under suspension of the rules, which requires two-thirds majority and it didn't past. didn't get the super majority it needed. this bill was coming with a rule. it only needs a simple majority. so it's considered much more likely this bill will pass, but democrats were at the markup, and we went to sort of similar that we have seen over the years at the judiciary committee, republicans talking about how horrible abortion is and how much the american public doesn't

like it. democrats talking about -- thinking about the woman and how the constitution and the supreme court currently guarantees women a right to choose. and talking about the difficult situations, particularly late in pregnancy when women in difficult medical situations should have this right. >> the bill is coming up to tuesday, and as you said you think it will pass. who are you watching most closely in. >> well, you know, this generally tends to be a fairly democratic-republican split. there are lot of democrats, particularly from the south but not exclusively -- democrats who vote anti-abortion. this obviously was a big issue when the affordable care, a came up. many democrats worried about abortion votes and wanting to maintain an anti-abortion voting record. many of them were voted out in 20010 so there aren't quite as many as there used to be but it's largely a party-line issue but not exclusively.

there are considerably fewer republicans who vote with abortion rights backers these days. that has become a much rarer sight. so i would look to see if there are any of those. but again, i'll be interested in this particular bill because it does on its face, as i mentioned, violate current supreme court precedent. so it will be interesting to see how many republicans are willing to go out on a limb. this is stretching kind of the bounds of what -- how far you can go on an abortion bill, and still be considered within the realm of what i think is public really supports. >> what is likely to happen in the senate if this bill does pass the house? >> it's hard to say. i don't think the senate would take up the bill also it is but i can see someone trying to attach this to some other bill, and try to force a vote, perhaps try to force some of the democrats from some of these state -- democrats in maybe tough races, to have to take a vote on this.

to make this a difficult vote. i can definitely see that happening. >> and very quickly, how about the obama administration? what's they're take? >> don't believe they said but it would be hard to imagine the president supporting this bill or doing anything except promising to veto it. >> julie rovner is the health correspond for npr. thank you for your time. >> the director of the national security agency, ethan alexander, told a senate panel last week the agency's phone surveillance programs have helped stop terrorist attacks in the u.s. tomorrow morning alexander will go into more detail as a house intelligence committee hearing. watch live coverage on c-span 3. and later in the day, president obama's pick to head the federal communications commission, thomas wheeler, will testify at a confirmation hearing. that's live 2:30 eastern from the senate commerce committee.

>> it was essential to remove france from canada for the united states as it became, to have the opportunity to achieve its independence. and the few people led by franklin, recognized the possibilities for america to become a great country. let me put it in different words from what i said a moment ago. the american achievement of people of two and a half million free people, and half a million slaves, for them in effect to get the british to evict the french from their borders, and then the french to help them evict the british, to manipulate the two greatest powers in the world, was an astonishing achievement. >> conrad black on the emergence of the united states as a world power.

>> now, state and local republican officials talk about immigration legislation the senate is working on. this panel is moderated by the university president carlos campo and was part of the faith and freedom coalition conference held last week. [applause] >> good afternoon and welcome. grateful you're here. there's been a lot stated in these past hours or so about colleges and universities across the country. want you to know that if you're losing faith in america's youth, we want you to pay a visit. it's 28 minutes away. regent university and there you can meet people like eric and brandon and members of the conservative union. so, don't lose heart.

you're about to hear from panelists and here this title: immigration, dos and don'ts. and while that title might seem a bit mundane, one of the things i appreciate about it as ang english professor is that dos and don'ts implies an imperative, and we all agree, it is an imperative one, one that is of absolute necessity. why did it become such for me as a professor for many years in the west and now in the east, immigration became personal. it had a face as i began to look into faces of young people who said to me, i have nowhere to go. i'm graduating from high school, america is the only country i've ever known. but now because of a system that is broken, a system that allowed for an unintended consequence that now had a face, is faced --

face looked not too different than mine and might have been named jose or a myriad of other names and i met student from cambodia and africa and el salvador and elsewhere and i said the system needs to be fixed. the second imperative for me became as i began to hear the rhetoric regarding this issue but as a christian person and a person of path i enough it was god's kindness that brought me here, and i knew that when jesus had to travel to galilee, he did not do what other jus were said to have done is walk around and instead he walked through and to a samaritan woman, a woman he did not judge by her citizenship but instead he judged her as a daughter and he made her perhaps the most powerful evangelist of her time. and now you're about to meet other panelists. panelist0s who feel park natalie about this issue -- passionately

about this issue, an issue that needs discussion. you'll hear from them and then we want time for conversation so so we hope you'll join in this conversation. there's something in the magnitude of 40 to 60 amendments to the bill that is now being considered by congress. let's have a moment of prayer and silence just for that alone because that's people need to discern well. this its not an issue of small magnitude for us. help me welcome our panelists here the come right now. let welcome them. [applause] >> i'm going to first bring to the podium steve montenegro. he is in the house of representative and will serve as chairman of the house of reform and human services committee as a member of the house commerce committee. please, let's become.

>> it is truly an honor for me to be here in front of such a select and honorable group of people. thank you for having us. i have to tell you i really enjoyed the panel we just had on the issue of life. i work at congressman trent franks and actually would have loved to have been on that one myself, but i get it. i do -- i can tell you that in arizona we worked tremendously on the issue of life as well. i was a sponsor of the bill that did away with sex selection, abortions in arizona, there are different states that do just one component. we are the first state that did both, and so it's signed into laws' we're getting sued by the alkebulan -- diaclu and that's a balance of honor. >> just to tell you a little bit about myself and getting to the

issue of immigration. first of all people ask me what i'm doing in politics, and i'd like to tell them i fell and hit my head but that's not the truth. i was recruited to run for office in 2007 and 2008 for the state house of representatives, and i'll tell you that never did i expect that i -- in arizona we would be dealing perhaps with some of the things they way the media has dealt with them but we have been at the forefront in many issues. people look to arizona especially on issues like immigration. i was there probably sponsored -- cosponsored senate bill 1070. i voted for it, defended it, became the go-to guy, trying to explain what the bill truly did. i know the media tries to make things into the circus because it's about ratings but the fact of the matter is we have to be truthful to people and we have laws we have to enforce, and i did receive death threats and threats, all kinds of e-mail, but you know what? sometimes you have to stand up and do what is right.

and one of the things -- [applause] >> thank you. >> one of the things i like to tell people, there is a diversity in thought. whether you go into any community, whether it's hispanic community or any other community, i tell you right now-i like to tell people, as i did when i first started off, the fact i can speak in spanish and that i immigranted with my family legally, doesn't automatically make my a protax open border liberal hopelessly addictedded to big government spending. [applause] >> one thing i like to bring to the forefront is the value of american citizen shipship. this is something -- my father is a pastor, i'm a minister, our family emigrated from el salvador, getting away from that civil war that horrible civil war that left more than 5,000

people dead in el salvador in the early, mid-80s. my family emigrated legally and we have tremendous and a deep respect for american citizenship mitchell father always taught me the importance and value this country has, the foundation of the biblical principles and the foundation that gives some value to the individual, personal freedoms and also personal responsibility, and those rights that are inalienable can given to us not by government or our neighbor, but by our god, by our creator, and so when i like to approach the issue of immigration or even citizenship, it's something of great value. citizenship isn't something that -- it's not just a certificate that you can hand to somebody. it's not just a certificate that you earn. american citizenship is a responsibility. it comes with high responsibility.

things that we have to as americans understand that the way of life we hold is not something just given to us. too much blood has been shed, people have given their lives so that you and i can sit here today and discuss the different issues in the freedom and the liberty that we do, without fear of persecution, and that's something that my family has told me and we see that happens in different parts of the world. and so understanding the value of the individual and understanding that having american citizenship is something that we need to fully comprehend the responsibility that we have. now, i don't think that when we talk about immigration, not everybody that comes to this country wants to be a citizen. there are people that come here to work and so for us, to even think of a program where a system that forces immigration on somebody is not something we should be looking at. i also would like to say -- i don't want to take too much time

because i want to allow the panelists to speak and then get into questions. i believe we have to be very careful as well because the subject that is brought forward is that we want to reach out to the hispanic community. we want to reach out to -- with that issue of compassion and we want to reach tout the hispanic community, and i agree we need have the dialogue but we have to be careful not to be seen too be pandering, because the truth of the matter is, if you look at poll after poll, even the left with it polls in 2010, the hispanic center did a poll in the middle -- october 20, right in the heat of senate bill 1070 in arizona, and immigration came in figure among hispanics in this country. immigration was the fifth most important or one out of five latinos in the country view

immigration as the most important. not that you wanted comprehensive innings reform but you wanted to do something about it, or that was an issue at the top as well. so one out of five if you look at 2012, in june, gallup did a pole also well, one out of four so if you begin to -- excuse me. one out of five. if you begin to look at pulling everybody, every latino in the country and asking them what the issue that matter it to them, it was 25%. so that's one out of four. 2025% see immigration as the most important subject and that's just in general of latinos. you go to registered voters that are latinos, went down to 12%, so this thing i tell people the media is trying to create, that immigration is the top issue for the entire hispanic community, is simply not true. and we have to be careful because, as conservatives are even as a party, if we are seen to be pandering, trying to be a party that panders, i mean, there's a party that beat us

already. to do that. there's a party that is already pandering to do that and that is the democratic party. we have values and standards and the best way to deal with people, whether they are hispanic or black or asian or any country, is to tell them the truth. it is the truth with boldness. let's talk with love and compassion. let's talk with each other and explain what the issues are. i'm not saying that we are not a party or a country of compassion. i'm not going to sit here and be lectured bay party of democrats that is telling to us be compassionate when they sat by and let 50 million babies be aborted and lose their lives. on the issue of compassion, i'm simply not going to accept the premise of them lecturing us on that. the fact we honor immigration laws, that we respect immigration laws, and the enforcement of immigration laws to me, as an immigrant, to my family, tells me we are honoring immigration in this country.

so i'd like to share that with you. that's just the way i believe that we -- we have to be able to talk to people. we have to be able to connect with them. and sometimes we don't need to change our message. we just need to change our approach. how we deal with this. and sometimes that is -- we have different manners of doing that but i believe we're getting better. the issue of border security, i think, is something that is very important. we're dealing with a bill right now that's going through congress, i think it's -- at this moment it's the 800-pound gorilla lain the -- gorilla in the room. how many people believe that this bill going through congress right out now will actually sece the border. raise your hand. and that is why it's not going to work. [applause] >> because people -- now, people want, as it is written right now, people want to know they

can trust the government. and if we can build that trust, now, how many of-people in this room would be willing to work with almost everything in that bill if you were certain or if you enough that this problem was going to be solved by securing the border and we would not have to deal with this again. raise your hand. see, what people are asking for is to make sure that we secure that border. i live in arizona. i work in arizona so i see this first hand. we are having problems with cartels at our border, problems with trafficking not only of drugs and weapons and humans and children, but we're seeing substance as well and all kind of flow through the border. i think that people with -- this is greater than just immigration. border security is something that people are asking for, for the security of not only our families, our country, but our future office well. so i think that is something that we seriously need to address, and i want to make

shower that we answer some questions as well as we are here as well. but thank you for having me. it is an honor. we want to help and share our thoughts. thank you. [applause] >> thank you, steve. next at the podium is colleen holcomb, the executive director of the eagle forum-founded by phyllis schlafly in 197 2. after graduate from wellesley college, colleen went on to graduate with a j from regent universities and also she received a masters degree at regent as well. when colleen was at regent in law school, she received the national association of women lawyers outstanding graduate award. please welcome to the podium, colleen hole come. >> thank you; at it such an honor to be here. i just want to thank all of you for being here because eagle

farm is a grassroots activist organization and for people of faith to be involved in the political process, motivated by your faith, this is why our country is great and that's why it's going to stay great. so i want to thank all of you so much for being here. i wish i had time. i'm going to talk about 744, the current gang of eight going through the senate right now. i wish i had time to get into the pinks, the costs, ineffective national security, failures and injustices bit we have a web site, www.stopgangof www.stopgangof8.com. and that will give you very specific information about what is really in the bill and most of your senators don't know because it's over a thousand pages and they haven't had time to read it yet. this bill is a classic example of the washington way of doing things. there's a problem, and both parties come together, and in many cases really have -- want

to make a good faith effort to solve the problem, but the solutions to the problems, the actual solutions, get lost in the need to pay a back political allies, and in this case well-funded corporate and liberal interest s and a desire to win over large voting block. so off ol' this comes together and every group gets what they want. a bill gets a wonderful sounding name that would be political suicide to vote against, and then the government gets vast new powers, and and it happens with obamacare, now with immigration. now, as a person of faith i get profoundly offended when these -- when faith leaders, in particular, imply there's some kind of biblical mandate to pass a bill like this. scripture is clear on mean things, we're talking about many of them today, on when life begins definition of marriage, behaviors that a government should and should not tolerate. but a sovereign nation's immigration policy simply ills

not one of them. and there is no biblical mandate for mass amnesty for illegal aliensful the scripture i hear most when i hear people advocate for amnesty, it map debts we treat the sojourner and the stranger kindly like a member of our own family, and that's absolutely necessary but that's a mandate for us, not for government. so, we also have to read that mandate in the context of the chapter 4, leviticus that says both the native born and the foreigner must obey the laws of the land. that's incredibly important. so going back to the mandate for compassion, when a government tries to implement compassion, it can only do so on a political basis which will always end up in injustice. and in this case it's an amnesty bill with a $6.3 trillion price tag and that's just the amnesty section, not the many new

programs that this bill puts into effect. it's also this bill will flood the labor market, where last week's job numbers indicated 11.8 million americans are out of work. this bill will flood the labor market with 11 million people who are in the country illegally, who will not only be competing for those jobs and suppressing wages, although initially they won't be eligible for federal benefits, they will be eligible for untold state and local benefits which will have a terrible impact on state and local economies. so going back to when the government tries to implement comp park always done on a political basis. i want to speed up so see can have time for discussion. i want to give you an example how this happens. i heard this great example, think about a mother who steals to feed her children. she goes to jail. her children end up in foster care. we all have sympathy. it's a terrible situation. but where is the uprise for

amnesty for such a person, where is the outcry for family reunification for someone who broke the law. why? she is not a member of a desirous politicalblock that we have people in washington trying to garner favor for. that is, to go back to leviticus 19 where we get the mandate for compassion, go to leviticus 19, versus 34, right after the man dealt we exercise kindness to strangers, it also prohibits unjust weights and measures. it's an unjust weight and measure. so we need to take these things into consideration. i could go on. this bills al -- another chadn't is not to -- commandment is not to opress the foreigner which this does, keeping the as a very hard-working underclass to make sure they properly learn english, the only opportunity they'll have to succeed in american society and that they assimilate properly into american society so they're not

vulnerable to exploitation. that's at the low skill level temp high skill level this bill dramatically increaseses the number of h1b visas to bring over high-skilled labor and this is incredibly frustrating, specific i companies are allowed to have an increase numbers of these visas and to avoid the requirement they make a good faith effort to find americans who could fill those jobs, and to avoid the requirement that they pay the foreigners the same amount they would pay american citizens. so that allows direct oppression. norman matlock, a professor to university of california at davis, a liberal prefer but a has within extentsively, on our stop gang of 8 web site-about the abuses for these people who come over on h1b visas. this are people treated like

indentured servants. the employers are responsible to keep them in the country so what incentive to ask for a raise or report behave that is not acceptable? those are the injustices inherent the bill, and i'm going to yield the stage. i'm getting the flashing light. so, thank you again. keep doing what you're doing. [applause] >> thank you, colleen, next is -- founded capital gains and works for education reform. so welcome carlos. [applause] >> good afternoon. it is such a privilege to be here with people that i share one of the most special things in common with, and that's a faith. a common faith. and my colleagues left me very little time so i'll tell you about myself for one minute and then maybe talk about immigration for two minutes and then we'll take some questions from y'all so we can have a nice dialogue going.

i decided to run for school board in miami-dade county in 2010. after our first daughter was born. i figured i had something to contribute and i could make a difference. and we have done great things. let me just give you an idea. i heard congressman sanford talk about spending earlier. five years ago, our budget in my miami-dade county public schools was $6 billion. we had 11f schools and we spent a ton on administration and bureaucracy. today our budget is $4 million, zero f schools and we have cut bureaucracy by 58%. so that tells you something about spending. [applause] >> now, since this is dos and don'ts on immigration. the first do, do realize the scat tuesday quo is unacceptable. what senator rubio says is true. what we have now is de facto amnesty, so we need to make a change. in our school system, we spend

over $20 million a year as a direct result of the broken immigration system. so, we have to do something. and republican, conservatives, have to be part of the solution. i remember in the '90s when i first started following politics, our party, republicans, we were popular, we were liked because we were the party of solutions. they would always say democrats only manage problems. we know how to solve them. we need to come together and solve this problem. here's a don't. don't pander to hispanics. i speak spanish. we speak spanish to our daughters at home because we want them to learn another language. they're learning english at school and are better at english already, even though we have never spoken english to them at home. but don't panther the hispanic community. i thought it was deplorable that senator kane delivered an entire speech on the senate floor last week in spanish. english is the language that

unites this con trupp and -- country and we need to send a message to every immigrant they must learn english. [applause] >> it's not because we want them to. it's because it's going to help them become independent and successful members of society. so here's a do. do speak compassionately about this issue. i know we're frustrated that people broke the law to come to our country. okay. and people need to pay a price for breaking the law because we believe in the rule of law in this country. however, remember that most of the people that came, and that still try to come, do so because they want a better life for their families. so, we need to be sensitive to that and while, yes, there are consequences for breaking the law, we do need to find a realistic solution for the 11, 12, 15 million people in our country right now, but, please, let's try to come together. i understand that this legislation isn't perfect.

the one that is being proposed in the senate. but let's fix it. let's make it better because i think we can all agree that the status quo is totally unacceptable. thank you. and i look forward to listen toking to -- listening to your comments and questions. [applause] >> thank you, carlos. we're coming up to a break so we have time for q & a. this is an issue that many of you find near and dear. so let's take a question or two from the audience before we conclude. >> i see hand back there. yes. please, stand. >> i'll repeat your question. [inaudible] -- >> -- israel in the old testament was the a theocracy,

the church and state were one in the same. the new testament references the government in romans and first peter, basically very narrow. government exists, god institutes government as the evil doer. doesn't go any anywhere than that. and so -- any farther than that. so all of the biblical reverends in the old testament applying to a theocratic situation, do you feel there's a big difference there between that and our situation today, just generally in biblical applications? >> a good question. the question was, do we feel there's a big difference between the theocracy of israel and the current governmental form in america in relationship to this issue. sound like a fair representation addition of the question? >> refer to the reverend. >> well, it is a very sensitive subject because, you're right, the bible does talk about the sojourner and how we have to look out for him.

you mentioned it as well. but it also defines the foreigner. talks bat foreigner. i don't believe that the bible directly talks about immigration in how government should establish its policies for immigration. i don't see evidence that the government direct -- excuse me -- the bible directly outlines how a government here on earth should run or establish its immigration laws. i do see that it does give the government the authority to set its immigration laws as the sovereignty that the state has. i think we do have to be careful because it has been mentioned that we have to be compassionate. we have to understand as well that one size fits all policies not what everybody is looking for as well. there are people that are coming here to work. and for us to ignore that and try to just make it a blanket policy to give everybody perhaps

citizenship is not something that is outlined in the scriptures, either. >> well, just quickly, as you mentioned, we don't have a theocracy but what we do have is a representative republic that ensures personal freedoms. so my concern is what is our responsibility? and -- from our perspective, the best thing the government can do is keep us safe and keep us free and then it's up to us to carry out the biblical mandate. >> i appreciate those comments. carlos. >> just briefly. i think as we think about this issue and the people and impacts, which includes all of us, with the way, we have to remember congressman sanford's words about the god of second chances, and as we work through this we have to, yes, on the one hand, people have to pay a price, there has to be consequences for the sins and for the mistakes and the laws

that were broken in the past, but we also ought to give people a chance to thrive and our society and become independent people that are not a public burden on our country. >> let me add quickly, we all agree this is one of many issues one can blind plenty of folks taking a stand in a pull pit or elsewhere and give you strong biblical foundation for either side of this argument. we have heard them all. let me say that perhaps i'm -- i am certainly the oldest person on the panel. i remember the days in the '70s and '8s so when we didn't enforce our laws, we were winking and looking the other way. i lived in nevada and we encouraged people to come across the border because we needed a labor force, and from my perspective, one of the things we want to continue to remind folks is there is a level of culpability on the part of government that not only did not enforce laws but truly

impreliminary addition and practice it was reversal of the laws with encouraged these worker0s come as to the somebody had been driving 72 in 55 for ten years and we never pulled them over now. when we realize -- we have a serious issue. we're going to send you all a bill because we've notice it that fourth last 17 years we haven't been pulling you over but you still have been breaking the law and now the full force of the law will be brought to you. i don't think any person, christian, pagan, secular, religious, everybody person understands that is unfair, and there is a fairness to the issue that must say there isn't one single culpable party here. we have an issue, we have a problem. thinking, caring, chin and nonchristian americans can resolve this in a fashion that is better than the current. time for one quick question. >> what do you think of the commercials we have seen on

television which have some groups probably by being becomes that wants wants to profit fromp labor, that one group is advertising on television, saying the gang of 8 bill is a conservative solution. i think that is outrageously -- acknowledge outrageous lie which should be exposed. >> the question was about the commercial that we're seeing about the gang of 8 being a conservative bill or group. one person things it's acknowledge outrage just lie. >> you are exactly right. it's an outrageous lie and it is paid for by corporate interests, the very one i mentioned, mark zuckerberg, the founder of facebook, the 23 -- 26-year-old billionaire 0 who wants cheap labor. that's exactly right. and just to quickly address the point about de facto amnesty april. true that the situation we have now is de facto amnesty. the current bill would be to codify what is now defact tee

amnesty and give power to the sac health and human services but homeland security whose policy is to not enforce immigration law and legalize as many people as possible. you're right. >> there is a major difference between this legislation and the 1986 legislation. if you run a stop sign and i'm the cop and i forgive you, that's amnesty. i if you have to pay a fine it is not amnesty,, so i think it's important to distinguish this is not what happened in 1986. >> again, i think 2009 things we can all agree on, this is an issue that needs reformation and none of us will be convinced by a commercial we see on television. one of the reasons we're here. so thank you for the conversation. thank you to our panel. thank you. [applause] >> coming up on c-span2 conversation an whether to allow mobile phone consumers to use their sim cards with different

cell phone carriers. then a former vice-chairman for solomon brothers talks be the current home loan finance system, it was essential to remove france from canada for the united states as it became -- to have the opportunity to achieve

its independence. few people recognize the possibility for america to become a great country. le just let me put this in different words from what i said a moment ago. the american achievement of people of two and a half million three people and half a million slaves, for them in effect to get the british to evict the french from their borders, and then the french to help them evict the british, to manipulate the two greatest powers in the world, was an astonishing achievement. >> conrad black on the emergence of the united states as a world power. saturday, on 7:00 p.m. eastern. part of book tv this weekend on c-span2. >> last year, the library of congress, which oversees the u.s. copyright office, decided that when a consumer unlocks his cell phone that could be a violation of the millennium copyright act. this means consumers who try to

take their phones with them when the switch wireless carriers could be breaking the law. the how judiciary committee is working on legislation to change this rule. earlier, an fcc commissioner spoke about the issue at an event hosted by tech freedom. [inaudible conversations] >> thank you all for coming. i'm the president of tech freedom. this is a day of firsts for us. the first event we have had here in our new space. the first time any of you have been in this building. walked past this building for years and had no idea what it was. it was built in 1923 and

represerved and the methodist church is kind fluff to lease the build ought to knopp profits like tech freedom. we are the first technology policy think tank based here at the methodist church. we're looking forward to talking about technology with organizations that are trying to change the world. this is also the first time we have had c-span coverage a tech freedom event so i'm delighted to have them here. our first time with commissioner pai, who i'm going to introduce in a moment, and and our first time with our new format, tech briefing, so we handed these out over at the entrance. this is our attempt to adapt our motto, which is richard epstein -- slogan's simple rules for a complex world. and the tech briefing is really our attempt to do simple bullets for complex issues. so we'll do those on a number of issues in the future. this one attempts to cut to the heart of what unlocking is

about. the hash tag today is unlooking so make sure to join our conversation on twitter, and i will say with compliments to are our methodist friend, this event space has the single best wi-fi of any event space i have been in d.c. and i know that because i ran speed test. so if anybody tells you the business broadband is inadequate, i think that the methodists are leading the way in this respect. so, i would just mention we have another event in july. july 8th or july 11th. stay tuned. on the past, present, and future of the children online privacy protect act. so stay tuned for more on that. without further adew, -- adieu i'll introduce commissioner pai. commissioner pai is my favorite commissioner on the fcc now. and in general a great commissioner. and in particular i like

commissioner pi because he realized the job of the fcc is not merely to cover telecom policy but areas like this one that intersect with telecom policy. this is an example where government can actually reduce competition in markets that other areas people complain about not being competitive enough. so my hats off to commissioner pai for realizing that cell phone unlocking is a way we can empower consumers to choose for themselves. that might be better than some of the other regulatory proposals people have made for governing wireless. so, let me gist ask you to turn off your cell phones, and, again, join us on the unlocking hashtag, and,, i'll turn it oveo commissioner pai. >> thank you far that kind introduction. interspersed with undo praise.

i look forward to this conversation this afternoon as well mass weeks and months to come. it's a little unusual in washington to discuss an issue where republicans, democrats, and independents, can find common ground. but president obama, senators and representatives, fcc commissioners, and the american public, are reaching a consensus on a pretty simple proposition. and that proposition is that consumers should be allowed to unlock their cell phones and switch wireless carriers without being label scoff laws. now to the proverbial man the street it's absurd we're discussing this issue. how did we get to the point where a consumer could be criminally prosecuted for unlocking a cell phone? there are two aspects to the answer. one involves technology, and the other, the law. first things first. most wireless carriers lock the phones they sell so that they will only work on that carrier's

network. so if you purchase an iphone from one carrier and want to switch to another carrier at the end of your two-year contract, you can't do that unless you unlock your cell phone. unlocking requires you to access certain programming within a phone, say, by punching a specific sequence of numbers on the key pad. in order to allow the phone to function on another network. for those of you with refined tastes, i should note that it's not like that scene in the movie wow par games" where matthew broderick uses a pop top on a soda can to make a call only from an unlocked pay phone. completely different. next, enters the law. specifically the digital millennium copyright act or dmca. the dmca was designed to prevent digital piracy. such as when someone distributes on the internet song like blondie's call me, or call me

maybe, or -- to do that the dmca prohibits consumers from deactivating the drm software or other protections designed to prevent access to a digital copyrighted work. now, wasn't until ten years ago that anyone thought the dmca might apply when a consumer unlocked his phone. but the dmca swept up cell phone unlocking through a technicality. lock locking of a cell phone prevents access to software on a phone when it's used on a new carrier's network. so when you unlock a cell phone tech particularly you're circumventing a technological measure, even though nobody thinks it's the equivalent of piracy. the libraire of congress down the road, who oversees the u.s. copyright office, is entitled to

grant three-year exemptions so consumers aren't subject to this dmca anti -- measures. in fact, in 2006, again in 2009, so the consumer could unlock their phones without fear of prosecution. but the third time wasn't the charm. last october, the library declined to extend the exemption for cell phone unlocking and as a result a consumer who unlocks his mobile device now can face civil and criminal permits penaltieser in copyright law ann though the contract to the carrier has been fulfilled. a classic case of a government solving a problem that doesn't exits. the free market was working just fine before the librarian's decision. for instance, i a bipartisan fcc record issues earlier this year found that prices in the wireless market place were down. and that investment had gone up.

similarly, more manufacturers are developing innovative mobile devices and consumers, all of us, are reaping the benefit of that. and wireless carriers don't need the federal government's help. they already have contract law rights. such as early termination fees to ensure that customers live up to the terms of those contracts. ...

>> we should fix this problem permanently. we need to have the exact same debate three years from now, and three years after that like the movie "groundhog day." and to criminalize cellphone unlocking will get stronger overtime. second, we don't need to give the fcc any additional authority. recognize it is not ordinary for the commissioner to asked not to add to its power but they did not to -- create the mess and we're not in a position to clean it up it is of copyright law in congress should fix that problem directly. third, we should not interfere with the freedom of contract. consumers can choose from a wide variety of providers providers, plans, fell as. we should not restrict the

carrier's ability to offer better faster and cheaper options. for, we should protect those to help consumers on lock their phone it can be as simple as dialing a code on your phone cahow. and i could not hold my phone at of a pocket to unlock it and i think others are in the same boat. helping consumers exercise their right to unlock the fund should not be a crime five. this debate was inspired by cellphone unlocking but there is action and much wider swath -- swath applying to pta, and a book, a tablet any mobile device. consumers should not be applied in a position to migrate some electronics but not others from one wireless carrier to the next. was make sure all wireless

communication devices are included. six. keep our focus on the narrow issue at hand. i know many people, in this room pays our broader reform with copyright law and many other people opposed broader reform. but that is a debate that is left for another day. right now there is wide support for removing sulfone unlocking from copyright laws and let's push the proposal across the finish line. my fear is a bit becomes entangled with more controversial issues, the proposal may be stuck. unfortunately doing all six is not complicated. in fact, congress could accomplish with a one-page bill simply by amending the definition of circumvention in the dmca. with that amendment would clarify that the definition

excludes circumvention initiated on behalf of a wireless communication device solely to connected to a wireless network. the basic physics would restore common-sense a market-based approach on toe last october that ruled the day. these are my $0.2 and i live for rigged to know-how hot hearing from our panelists and hopefully we can end unnecessary government intervention in the marketplace and for an important victory for consumers. thank you for having. [applause] >> our panel today includes mike colleague and we have

chris lewis which we never to the number of times we don't agree on everything but this is a rare issue where people of all stripes can certainly agree to. government out of the way to encourage competition. to his right is jerry brito also an expert and tax policy and slightly more academic than we are over here on capitol hill. and finally larry spiwak president of the phoenix center and he has covered telecom policy over many years and is here to push back in a healthy way on the consensus. so i will start with you. you have been a bit of the naysays so what is the deal?

[laughter] >> thank you by the way to allowing me to participate. i had the know-how and dealing with unlocking since 2007 so i think as a was preparing for the debate today, there are three discrete questions that need to be parsed out for the honest discussion. first, that is not mine. [laughter] is the generic concept of unlocking good or bad? people get that confused with everything else. let's assume we have a contract and if i give you a phone and it was not unreasonable for me not to

unlock expects i can do it at full price if i wanted to at the end of might contract there is a lock so there is not a big deal. we have left at the economics and it turns out to with a the is that if you eliminate the ability to subsidize and. >> bet in one quick thing but i want to take my phone this is the gsm and will not work on verizon or sprint. just because i can unlock it does not mean it is interoperable. number two. now we have the copyright decision. if you read the decision which was done all along

what they found was that given all of the amazing traces available for consumers and handsets we do need the non circumvention. the third issue, do we want to have copyright as added enforcement against jail breaking are we worried about the man in the black helicopter? that is a separate issue with dmca but we need to put all three of those questions in two separate categories to discuss each of them accurately. >> just to call attention to our briefing where we try to break down into simple bullets the difference between a routine and jail breaking you will hear the terms a lot today. they're confusing that are fundamentally technologically similar that have to do is different purposes but today we talk about unlocking your phone touse use it on another

carrier's network. to clarify that is something your carrier can do to send a code but also replacing 38 operating system on your phone. so how do you respond? can you give us background? >> but with the exemption of unlocking of self funds was renewed through 2010 however any purchase after january january 26, 2013 cannot be unlocked because of the late 2012 decision. by background to the findings were that carriers generally let them unlock

their phone when they met certain conditions. correct. if you are a customer in good standing after period time, not even after you completed the entire jury shame may be able to walk back. >> that is not the case. for instance some only allow you to a montour device if you are a subscriber. even if you purchased from someone else and the contract may not be willing to help you even tell by preventing people but i think we all agreed that these should have been in force trains subscribers and cheers tuesday on but the question is what if they

break that agreement? we could have common-law style approach to allow for what is known in contract law as the breach but today we have a regime where if you on montour sulfone you have not only violated the contract, but the digital and copyright act rigged are this is a decision you made was desirable. likewise a view among care phone for financial gain you could be subject to criminal penalties and you cannot get help unlocking your device anyone who facilitates is violating digital millennium copyright act prevention's. so i think we agree customers should be able to run like -- a law of the device but the remedy should be early termination fee or whether -- whatever else is

specified. if you move overseas no problem nation a microphone it should not violate federal law whether on the civil side or not. >> to early to eat -- to use another big word which is the anti-circumvention provision. can you take us back to the '90s? i was trying to think of jay clever musical reference but >> i think this is what the commissioner was getting at but if you have a digital file or content and it can be whether musec or words or video budget is so easy to

infringe so why copy files when you have the easy dissemination files on the internet. is very easy to preach you to even put a lid digital locker and a somebody on locks that, it is a crime. a violation of the law in itself so that is what the dmca is about the whistle funds it is not clear of the content protected. some will say it is the software but when americans overwhelmingly over 100,000

ask for the right to how they're so phones with their not ordered to of faye h'm but that was not what the dmca was supposed to do. i totally agree it is good. >> you here and have that option or you could buy it for $200 or $100 and promised to keep them on over the years sanders had a choice and it can exist without the contract with a

view on of the fun to go to another carrier, verizon will keep sending you the bill. >> she operates said cheat and set them network if you moved to france they basilican to use the bill they don't care the move to france. they use the contract against you and a kid, . >> before you jump then of course, there are networks that are compatible. to make this simple lives say that i am switching from

at&t to t mobil. what is the problem? why shouldn't i be able to on lot of phone? >> so let's say either i want to end my contract to pay the early termination fee or the penalty, or i want to stay on the contract but lake -- like the phone overseas. >> i think in use our subscribers and i have heard >> if you want to pave the early termination seattle have a problem with that. the question is, in terms of copyright one can make a legitimate argument that why

are reading with copyright instead of on locking? i don't a project that's that may be kaput this mess behind us.

when the office greeted the exemption in 2006 there were already on to the nurse and an individual's unlocking their phones and being sent dmca notices of they were in violation at that time. i don't know the intention was to do that or it should be with that business model but now that being said it is hard to understand why the idea of a walking a phone can be compatible together. consumers should have a choice when the contract ends of if they want to get out. also no reason why they can

locate tussaud their phone zero or to me, this is about the ownership of the device and consumers should have the option to use the things that the purchase how they like. the right to own locks is not contract law but in fact, it gives consumers greater choices if a consumer enters the contract and they paid $200 for the iphone, one years later the consumer may change their minds so to take advantage of the early termination fee to go to another carrier is part of the contracts it as

their right to. just the tools and services that allow ordinary customer to unlock their cellphone just seems like common sense >> since we have stacked the panel against you i will jump in on your defense to say that i very much agree that there is a larger current of people trying to turn this into a conversation about subsidization of phones and for some people, this is about a broader issue like you shown your phone period. there was quite a controversy because you are

the with the subsidies that launched phones but just like the iphone to get launched in the first place it was not even an at&t but actually apple. i am with you to defend but some people may think they may be better off buying fully subsidized devices. >> also don't forget we have paid to get those sees pro rated. also this is a message of contract enforcement by way of analogy. if i want to buy a car i take a pledge of gmac it is

actually repossess but nobody will do that for the handset you try to find ways to mitigate. we hear about individual people, what this is really about is developing the black market to take these and pay. we could construct mathematical example where you could still walk away and sold them around the world which is what happened. so the overall copyright enforcement, i have no problem thinking that commissioner pai with his proposed legislation we should not revisit but it is not worth going through its every three years but that is why you have to parse out the difference between the question if we should subsidize hand said and copyright enforcement. >> i am curious. the contract that is currently written to it is possible to pay the early

termination fee and sell its. if you can do that and the carrier is getting out and the person resells overseas, i don't see a problem with that. but why not to right the contracts and a ray of florida. >> i am trying to get my hand to on lot. >> we don't want to use the bird contract law. >> the people better buying phones in a way that is profitable that is the problem there is a business model that is subsidized to lock the networked but the

buyers do not promise to stay on track but they expect people will stay on the network but some people are buying up track phones and then selling them and i agree this is a problem but the question is if we need that dmca. we may need though lot or some access but if you look to the cases that there is a laundry list of claims and senior towards interfere in -- a difference and so forth. so if indeed this was happening, companies should have remedies but. >> do you disagree?

why should legislation whether copyright to or others that you write about the sec to discourage early termination fees, trying to get separated why should the government interfere? why can't wireless companies sort out whenever arrangement in terms of the early termination fee or other penalty under a contract? cement take the world we live in with the world that we like. it is what it is progress and listen to the conversation talking about this from a policy perspective asking fundamental questions. i keep going back but we have to fuse the debates in this context. is on not being a good idea or a bad idea? so was the registrars decision correct?

sure. but do we want that society? the third issue that i picked up on the panel, do we need data dmca? talking about a very important lot and complex issue price that might father's day weekend curled up with his book i paid for it. [laughter] and with the internet and technologies that cost of duplication is o what we ask is of the dmca it is a loaded question if you have to think about it because as i was reading through your book. and when i picked up there were two schools of thought and the first one is copyright's is not a full right to so we will deal

with it than the second is it is a victimless crime and and every time i got these panels there is a brady that says the black helicopters will swoop down for my mother on locking her phone but broadly moving off the heat and set issue for a moment is that it we have copyright to protect works of intellectual property. there is a lot of debate but there is a tremendous cost as the supply slopes upward so if we don't have the of way of more output we need more revenue. these are the battles that we talk about. the whole copyright debate keeps coming back in my mind

what about the reinforcement mechanisms? some say it is the cost of compliance but there are costs involved in that is where we need to focus the conversation. >> this is about unlocking and not about the entire copyright debate we did have that event last year those were their review one more information on that. copyright unbalanced excuse me and one might fairly say the book is on balance. [laughter] there are people who believe in copyright and think it should modify to unlocking and a larger debate about copyright should not be the issue here so before we get into the larger context i apologize for this light on your book. when it is a great book that there is a lot to be said

about copyright when the issues never talked about is copyright at the end of the day only works if we respected in to criminalize sulfone unlocking even if he is right and has been exaggerated with the practical effect, to criminalize copyright certainly helps to demonize the system for content creators i think they have gone too far but you want to respond? >> when you said it was unbalanced i thank you meant it gave one side of the perspective and that is fine. it is to give one side. i don't think the book says anywhere copyright

infringement is victimless but i think it says that it does have cost to infringement at the same time there is how cost of over regulation where you can go too far. so take for example, burglary we could get rid of it with the death penalty but we don't do that because of proportionality because the cost would be too high and we need to strike the right balance. i believe been property rights that should be protected but in some cases sulfone unlocking we have gone too far so we had unintended consequences so we need a balance we need to strike that better and maybe unlocking is a place to start. >> i greet and i want to add

the broader discussion not just hand set budget devices generally is important to have and i am hopeful that congress will have it in the future. but with the world we live in with digital media you can put that protection measure that is discussed. you can put it on anything these days and what does that mean to know something in the digital age? one of the best examples right now is cars they are computers on wheels and you will find it in your car if you want to change your oil and the car you should be able to do that but with a car these-- you have a light that tells you the wheel is

low and sometimes you cannot turn the lights off, as you have the coach to circumvent that on your car. there are a number of things now end in the future where we will see manufacturers putting locks on devices it is important to look at them and see if it is worthwhile and for someone to do change your real is common sense. there are others out there. >> we're not asking that you eliminate copyright law totally. we just ask the targetted six to update the lot and balance for new technological use. >> how do we separate that from the larger debate?

>> you can download the kara [laughter] -- the car but there is the distinction expressive works you could duplicate at zero or middle cost review have been made via with a re wireless carrier or car manufacturer what congress needs to insurer the of the digital millennium copyright act stops copyright of the expressive works and distinguishing that the right now that house judiciary committee is taking a careful and close look at reform i am sure in ty circumvention will be

part of the hearings with the remaining parts of congress. but the notion we may not think it should be tussaud from locking but a dozen male pretensions are bad but that they need to be tweet that permits some type of circumvention in cars but not other context so striking a balance is difficult simply because you can circumvent for infringement purposes. it is a big debate but that could have been over the next few years where today you can't without getting into the other. >> so when you said that are you saying you think the

immediate issue of cell phone or tablets should be dealt with legislatively to do with the larger problems later? >> yes. >> what does everyone else think? >> i think the answer is yes but let's get the bills introduced so far some do not give you that. so just overturning said decision to kick a kid and down the road three years from now to allow them to revisit that decision does not give us the permanent fix. >> you want to make sure whatever happens with the library of congress simply cannot reverse what congress might do legislative stage today? >> with the cellphone issue itself ferris is a bipartisan consensus to have

an exemption and written in for mobile devices. >> including tablets. >> i avery except i think when you write into wireless devices to go to communication networks then what is a wireless network what is the communication network? what about maybe it is your car with the will change? i think representatives has an elegant way to do with where she says in her bill that circumventing the law is a crime if it is done to breach copyright. that makes sense that is the purpose of the dmca you don't have to define a if that is your car or your tabloid you're not trying to

infringe copyrights. >> what could you live with? >> i will tell you what i cannot live with. >> and to raise the very good point* it is interesting i have a copy to take a different approach the highlight of what we are on the panel. so we will repeal the most recent ruling to put this to bet. every betty -- but it seems to work. and looking at the bill whether the sec is involved.

shaw have direct providers of mobile services to a mock the device for such services. so we talk about it as a right then do say by the way signed a contract but any enforcement is gone. so there is different approaches to this. >>. >> also share respect private contracts. >> so you try to find some mechanism. >> so we talk about the epstein concept to have simple rules for the complex world. so to take those roles that are already complex so the

point* that jerry was raising how do rewrites the simple rule that will hold up when talking about unlocking other devices? with those tools that should be covered by a the dmca or that is a separate issue and to talk about venture copper ability purposes that we all agree that users should pursue that is consistent with the goal of copyright to promote free tuition -- innovation and creativity? >> i like the approach that the representative takes the predicate is copyright infringement that is aquantive dmca if you are

circumventing the law to infringe but it is for all lawful purpose to increase the font size because you cannot see very well you want to change the oil yourself that is a lawful purpose that is very simple and elegant way to do it. >> i agree. you should be able to write the law. that allows for general of locking for non and fringing purposes. that should be extended for the individual agent who is offering a service seta have to be the us offer engineer to unlock the phone or your car to get access to the it evokes. without that sort of lot it becomes much more complicated if we are stuck

with the copyright office for exemptions there are many things that could be fixed with the idea for example, each review every three years does not take into account previous decisions by the copyright office probably harmed sulfone on mocking exemption when it came up in 2012. with the exemption has been there for several years 2006 and 2009 then it goes away, that regular review can cause innovators not to want to create services or tools that allows you to unlock if they think it will be outlawed in three years. >> if the cost of enforcing sub provisions were zero if we could make sure everyone was circumvent and everyone who's circumvents i think

the bill would be a no-brainer but i have reservations. what if the company invest that circumvent the drm like to lew.com or netflix to allow you to extract a 302nd and piece of video but they say they will use that in a transformative manner? that talks about the distribution of the other actors come along to repurchase that to take the source code to reverse engineer the platform and build on the circumvention to make a tool. of the distinguishing between circumvention and the measures of protecting the fat content creates real

challenges when it could have been for those purposes but the owner of the content enables users to make fair use so there is no need for anyone to come up with a circumvention because there is already ways to make a fair use but we should raise sat approach with the cost of distinguishing between the two. >> just to add to that, going from a policy idea is a difficult thing i know lots of policy ideas but what we have to understand is as we start to craft legislation, firms are not recipients of regulation. as soon as people know what rules there are they want to exploit them, they will.

the idea seemed like a good idea at the time. perhaps that was too short to the we have to be exceedingly careful in this space we start to tread. >> here is a question on twitter. when the lawful purpose is fair use how does the standard applied given the analysis? talk about users certifying what they we're doing was fair use. how do you respond to content owners to be concerned cell line might be drawn to open the door to the circumvention tools? >> i respond that is a fair point*. . .