keep talking about, keeping the elected official to think about it to a challenge for the gun-control side has been most of our supporters are in the areas where the congresspeople and senators are on the outside. it's getting back to the indian and the midwestern states and the southern states and the mountain states where people haven't looked at it that way. i think now is the time since we've had the heller case and the mcdonald case, since we've e seen congress give to block this april that we can get some progress on the senate issue. ..

>> we had a vote several months ago on putting minimal things about gun control in, and it got voted against it. we had congressmen that had 85% of their district that were for this. and you sound like you're hopeful that we can do something about this? [laughter] i mean, i just don't see that this could happen. how do we do this? how can you be hopeful? >> okay, you discouraged me, i quit. [laughter] i guess it's part of, you know, you gotta have hope, you gotta keep trying. things take time, and, you know, i've been discouraged -- certainly, when i heard the news about newtown, i was just so depressed partly because it shouldn't have had to have happened. again, you can't stop all evil, maybe something bad still would have happened, but it shouldn't have had to be this bad of a situation.

and it's just you've got to keep pushing. i believe that right does triumph, that people do come to their senses, that you can make a difference, and if i didn't believe that, i'm not sure i could get up in the morning and keep doing things. you've gotta -- i'm teaching freshmen. of i'm hopeful just seeing younger people. we had a speaker, or we had a fellow here many d.c. who's been in public office, and he was meeting with some of them and basically said, you know, this government shutdown, you're probably so discourageed, you know, do any of you even consider going into politics? and a lot of them said, yes, they want to go into politics, yes, they want to go into government, yes, they want to get involved in their communities because we've screwed it up so much, they want to get in there and fix it. [laughter] and i really think that is the attitude that young people have today. so if we can't make the difference now many our generation or with the folks we've elected, let's hope the younger folks coming up are going to push those things. i think demographics, actually,

is one of the issues that the gun rights side might be facing, which is i know when i was growing up, i never went hunting with my dad, but a lot of my friends did. there was a lot more area to hunt, and now there's suburbs and subdivisions and malls there. you're seeing less and less of that happening. i think you're seeing so many other things that interest people today, hunting and gun ownership isn't part of it. and, you know, so i think there's less of sort of automatic constituency for the nra than they used to have, and that might help give some political balance here too. just one last point, i meant to say this on another point. i read something recently how someone was upset that congress had encouraged some regulation about cars having a rearview camera so you could see, you know, when you're backing up you don't run over somebody, and there had been something like 230 deaths last year from rearview backups, and they were so upset that camera rule hadn't

been adopted yet because there were 230 deaths. you know, that only takes us, you know, a week, basically, in this country to have 230 gun homicides, you know? we need to start talking about it and figuring out how we soft it. and -- solve it. and if 230's enough to worry about rearview in cars, it's enough for this if we keep talking and keep pushing. one other point, and i just remember -- [laughter] i ran into some of my elected officials from indiana last month, and our two u.s. senators from indiana, actually, and i complimented the one for voting for the background check amendment, and i criticized the other one for voting against the background check amendment particularly since he'd supported the brady bill and some of those efforts in the early '90s, and the comment from both of them was, the one who'd voted supporting the background check, and i told him i sent him a note thanking him, he said it must have been 1 out

of 100 or 3 out of -- 1 out of 1,000 because he got so many more criticizing him. and a similar comment from the other senator. and the point is for folks who want to have change, you know, the elected officials are the people who make the change, they need to hear from us, they need to hear from us with thanks and with criticisms. i think sometimes we forget to thank the ones that support us, and we don't need to give up on the ones half voted the wrong way. we need to let them know that too. i'm hopeful that this can be common sense. i hope we can find common ground. i'm always willing to talk to people like dick heller, and i think if we get folks doing that, i think we can make a difference. as a mayor, you work with everybody, you learn to try to make things work in our community. that's what i want to see for our country too, so -- >> thank you very much. >> thank you. [applause] >> and some news from capitol hill today. arkansas republican congressman tim griffin is not seeking

re-election in 2014. he's a former interim u.s. attorney and a white house staffer currently serving his second term in arkansas' second district. and just a note, the house and senate are out today. the house returns tomorrow at noon and the senate back next week. also new jersey governor chris christie says he's dropping the legal challenge to same-sex marriage, first marriages being performed today after a ruling last month by a lower court that new jersey must recognize gay marriages. right now 14 states and the district of columbia now issue same-sex marriage licenses. and a related story on the front page of today's washington post, it says some republican party campaign donors are shifting the party's stance on the issue of gay marriage. according to the article, a powerful group of republican donors who see the gop's staunch opposition to gay rights is trying to push the party toward a more welcoming middle ground where candidates who oppose marriage rights can do so

without seeming hateful. now, the post says this effort's being led largely by gop mega-donor paul senior whose son is gay and also former republican national committee chairman ken mehlman who acknowledged he's gay long after he left the gop leadership. and that, again, from "the washington post." >> this is eleanor roosevelt's typewriter. it's on this typewriter that mrs. roosevelt wrote her "my day" column. what i have here are the original drafts of some of the column that i wanted to share. this first is eleanor roosevelt's first "my day" column, and it sets the tone for the columns to follow. what she's talking about here are the comings and goings in the white house as they're getting back to the regular schedule after the holiday season. this clipping is a "my day" clipping from november 6, 1940, election day. she talks about how at midnight a larger crowd than usual came in from hyde park with a band and torches and wonderful placards. the president went out to greet

them. this was their tradition on election night. the roosevelts would come to hyde park, gather family around and await the election results. when they were announced, the folks from hyde park would march down, and the president would come out and greet hem. >> first lady eleanor roosevelt tonight live at 9 eastern on c-span and c-span3, also on c-span radio and c-span.org. >> one thing that's interesting, it was not that important in '95, i think it's really critical now, was the certifications of mobile devices. because all these devices, the devices that literally hundreds of millions of americans have, they can look and see that little fcc stamp on it because we have to insure that they don't interfere with each other. and back in '95 there weren't that many mobile phones going through the process. but now it's really important, it's really big. you have a huge battle between apple and samsung and motorola and others, they need that sort of certification. they make these plans, they have

literally billions of dollars in advertising, and then suddenly whatever the plans were, they get delayed by a number of days. so that's a real cost. >> we've had several budget disputes, and blair and i were discussing before, i think they stem from the budget empanelment and control a acts of 1974. this occurs almost every year, there's some crisis that goes on. and yet after 40 years of this we still aren't very good at figuring out how to operate the government. >> the effects of the government shutdown on the fcc, tonight on "the communicators" at 8 eastern on c-span2. >> on tuesday the supreme court heard oral argument in a challenge to michigan's voter-approved ban against considering race or gender in public education admissions n. be 2006 voters passed an initiative in michigan by 58% to prohibit discrimination in public school admissions, thereby banning affirmative

action based on race, sex or religion. the argument before the court is just over an hour. finish. >> we'll hear argument next today on case 12682, schuette v. the coalition to defend affirmative action. mr. bursch? >> thank you, mr. chief justice, and may it please the court, the issue in this case is whether a michigan constitutional provision requiring equal treatment violates equal protection, and for two reasons the answer is, no. first, unlike the law of that issue in hunter and seattle, section 26 does not repeal an antidiscrimination law. instead, it repeals preferences and, thus, it's an impediment to preferential treatment -- >> seattle had nothing to do wan antidiscrimination law, it had to do with a remedy, de facto segregation. why isn't this identical to seattle? >> justice sotomayor, it's not identical because of the remedy

issue. in seattle they were trying to, in the court's words, equal educational opportunity by imposing a remedy that would result in -- >> you don't think that the proponents of affirmative action are attempting to do the same thing? one of the bill sponsors here said that this constitutional amendment will bring back desegregation in michigan, and it appears to have done just that. >> well, there's two points to that question, and i'll address them both. first, on the merits under grutter the point of preferences in university of michigan cannot be solely the benefit of the minority, because under grutter it's supposed to benefit the campus as a whole through diversity, which we think the a laudable goal. it's a forward-looking action, not a backward-looking action to remedy past discrimination, and we know that because under grutter you can use preferences whether or not there's de facto or du jour desegregation. two thoughts on that. first, we have the statistics that we discuss in our reply

brief where it's not clear that the diversity on michigan's campus has gone down. but our main point on that is not those numbers, but the fact that there are other things that the university of michigan could be doing to achieve diversity in race-neutral ways. for example, we know -- >> i thought that in grutter all of the social sciences had pointed out to the fact that all of those efforts had failed. it's one of the reasons why the i think it was a law school plan in michigan was yep held. >> well, there's social science evidence that goes both ways, but i want to focus on the university of michigan because there's two things they could be doing right now that would get them closer to the race-neutral goal. the first thing is that they could eliminate alumni preferences. other schools have done that, they have not. that tilts the field away from underrepresented minorities the other one is the focus -- >> always wonderful for minorities that they finally get in, they finally have children, and now you're going to do away

for that preference should -- [laughter] it seems that the game post keeps changing every few years for minorities. >> well, given the makeup of michigan's alumni right now, certainly that playing field would be tilted the other way. the other thing we practice, socioeconomic diversity. and at the university of michigan there was a stat in "the wall street journal" just two days ago that if you measure that by pell grants, the number of students eligible for those, at the university of michigan the number of students who have pell grants is half what it is at more progressive institutions like berkeley and the university of texas at austin. so the university of michigan could be trying harder. but our point isn't to get into a debate about whether preferences are good or bad thing because that's not what this case is about. the question is whether the people of michigan have the choice through the democratic process to accept this court's invitation in grutter to try race-neutral means. >> while you're on seattle, can you -- i have difficulty distinguishing seattle.

one factual difference is that there was a school board there, a directly-elected school board elected for a short term of years. here there's a board of trustees. is that the distinguished, a distinguishing factor in the case in which a principle distinction could be made? >> i think it's a distinguishing factor kind of sticking with how hard is it under the new political process, and i think the chart we have on page 17 of our reply brief explains it's easier to change race-based administration policies now, and that's one basis. but i think the more fundamental basis is to say what seattle is about. and if you can indulge me, i'm going to suggest that seattle could mean one of three things. one of those i think you should clearly reject and then the other two, i think, are possible interpretations that you could adopt. when seattle talks about racial classifications, it focuses on laws that have a racial focus. now, right out of the box equal

protection is about people, not about laws, but even more fundamentally, that cannot be the right test. at a minimum, that part of seattle as to go because if you had a race-neutral law like michigan's equal protection laws which forbids discrimination on the issue of sex, that itself would be subject to strict scrutiny because it has a racial focus. so we know that can't be right. so that leafs you two other choices, and one would be an incremental change to this political restructuring doctrine, the other would be a more aggressive change. the incremental change would be to interpret racial classification in seattle as meeting a law that, one, repeals an antidiscrimination provision as it did in hunter and seattle and, two, remove that issue to a higher level of the decision making process. and because michigan's law requires equal treatment, eliminates preferences not an antidiscrimination law, that would be a way that you could keep seattle and hunter as a viable doctrine -- >> i don't see the distinction.

it could be viewed and was viewed to benefit only one group. it was a preference for blacks to get into better schools. that's the way the case was pitched, that was its justification and to integrate the society. affirmative action has the same aim, we've said that in fisher, it should be to diversify the population. and so it favors diversity as opposed to desegregation. >> but there's a difference between favoring diversity as an abstract concept on campus which grutter clearly allows and remedying past discrimination which was the point of the busing in seattle. and that's why we're really in a post-seattle world now -- >> but there was no proof that there was any dejury segregation in seattle? >> that's correct because at the time of seattle's decision, we didn't have it involved, so there wasn't a strict scrutiny

test that was being applied to that busing program, so you didn't have to go as far as you would today. >> so you're saying there were three things, one, the first you reject -- go -- >> yes. >> and the second wuss an incremental improvement in the democratic process, the democratic responsibility? >> that -- >> responsiveness, i guess. >> right. that plus repealing the antidiscrimination law. >> there was a third, did you saysome. >> well, the third way is really to look at racial focus and say that's wrong, and maybe this whole doctrine needs to be re-examined, and the way you could do that is look at what seat and hunt hunter are really doing which is falling into the washington v. davis line of cases. both of those cases could have been resolved by saying, one, there's a disparate impact and, two, given the facts and circumstances in 1969, akron, ohio, in 1-9d 82 seattle, washington, that there was discriminatory animus based on race. and if you did that, you could

reconcile those cases with the entire line of jurisprudence this court has used since that time. >> there is such a claim in this case, it just wasn't decided. wasn't there a racial animus that the reason for proposition 2 was to with reduce the minority population? the court of appeals didn't get to that, but there was a claim. >> there was a claim, but, your honor, there was also a decision. and the district court was really clear on this. keep in mind that this was a summary judgment posture, and the district court concluded properly that there wasn't even a question of material disputed fact with respect to intent. this is at pages 317 to 319 of the supplemental appendix petition. and that's because the primary motivation for section 26 included so many nondiscriminatory reasons including the belief of some in michigan that preferences are themselves race discrimination. others that race-neutral

alternatives is actually a better way to achieve campus diversity that results in better outcomes for underrepresented minority students. some believe the preferences result in mismatch as -- >> that seems to me as a goodies 2006 for hunter -- distinction for hunter but not necessarily in seattle because seattle you could argue, well, there are other methods that are less racially divisive. >> and i think, and i'd like to come back to reitman because that fit into this framework too. i think if you have any question about what seattle meant, the place to look is the later decision in cuyahoga falls because the court specifically mentions, quote, the evil of discriminatory intent present in seattle, that's pages 196-97 of the opinion. and it also talks about the decision maker's statements as evidence of discriminatory intent in the hunter case at page 195. and so i think if you look at cuyahoga falls, it's already done some of the work for you if you're going to take the more

conservative route -- >> but i don't see how the argument would be any different here. one of the main sponsors of this bill said it was intended to segregate again. the voters in seattle were not all filled with animus. some of them just cared about their children not leaving, not having outsiders come in. i mean, there's always voters who have good intent. >> that's true, and there's always some bad apples, too, we don't dispute that point. but here you have a district court holding that there's not even a material question of fact with respect to animus, because there are so many reasons that could be advanced, legitimate reasons, again, about mismatch and about the benefits of -- >> and in seattle as well? >> well -- >> it wasn't the issue of animus -- >> i think it's much harder in seattle, your honor. but to fit reitman into this discussion and, you know, what i would consider the more conservative way to deal with seattle and hunter, one that would preserve those as a doctrine is to think about how

reitman would come out under that test. of course, you had antidiscrimination laws like hunter at the local level which were then repealed by a state constitutional amendment, and the political restructuring doctrine had not yet been invented yet. and so what the court did is it relied on the california supreme court's finding that there was discriminatory animus in striking down those antidiscrimination laws. i think that if you view hunter and seattle similarly as cases where if you repeal an antidiscrimination law as opposed to one that requires equal treatment, that's the narrow way to cabin those cases and ones that would allow those cases to survive yet distinguish section 26. one point that we haven't discussed much is the democratic process, and it's important that i emphasize that, you know, obviously, the use of race-based and sex-based preferences in college education is certainly one of the most hotly-contested issues of our time. and some believe that those preferences are necessary for

campus diversity, others think that they're not necessary and, in fact, that we would have a much better world if we moved half the discussion about race and based it on race-neutral criteria. >> i'm going to ask you to go back to the very first thing you said because i didn't get your point. the question what impact has the termination of affirmative action had on michigan, on the enrollment of minorities in the university of michigan? do we have any clear picture of that? what effect the repeal of affirmative action has -- >> yes, justice ginsburg, we have a muddy picture. as we explain in our reply brief, the first thing that we have is the actual statistics for the first full year after section 26 went into effect, since 2008. and what we find is that the number of underrepresented minorities as part of the entering freshman class at michigan as a percentage changed very little.

it went from about 10.75% to about 10.25%. then it gets very difficult to track, because following the u.s. census' lead in 2010 the university of michigan stopped requiring students to check only a single box to demonstrate what their race or ethnicity was and moved to a multiple checked box system. and, justice sotomayor, when you see in the briefs there's been a dramatic drop, for example, in african-american students on campus at the university of michigan, those numbers don't take into account that people who before were forced to check a single box now could be checking multiple boxes. and if you fold in the multiple checks box students, the number of underrepresented minorities on campus actually comes out higher. we don't know what those numbers are, because you could have a student who might be white and asian, and they would not be considered an underrepresented minority, and they could be in there. but we know that the numbers are a lot closer when you look at single checked box -- >> so what do we do with the

statistics from if california? the amy chi from california, their attorney general has shown another state with a similar proposition has shown the dramatic drop. >> the statistics in california across the 17 campuses and -- in the university of california system show that today the underrepresented minority percentage did better on 16 out of those 17 campuses. it's not at berkeley. they haven't gotten there yet, but it's better on the rest. and by going to race-neutral criteria, what they discovered is underrepresented minority students have higher gpas, they take more technology, engineering and math classes, and they have a graduation rate that is 20-25% higher than it was before california's proposition 209. you can see similar effects in texas in their top 10% program before it was modified, and not only did it have those positive impacts, but it actually increased minority participation at social economically-disadvantaged high schools where the students said, hey, i can only get into the top

10% of my class to be in the university of texas at austin. and, again, we can all agree that diversity on campus is a goal that should be pursued. what the california and texas cases have demonstrated is that there are good, positive reasons why the voters might want to try race-neutral alternatives. >> so why is it okay to start taking away -- not okay to have taken away the decision to have busing from the local school boards, the people on the ground, but it's okay to take that power away from the people on the ground here, the board of regents who are also elected like the school board was in seattle? >> because -- >> general population has feelings about many things, but the only decision that their -- educational decision that they're taking away from the the board of regents is this one. affirmative action.

everything else they leave within the elected board of regents. >> you've put your finger on the fulcrum of respondent's best argument, that only race as a factor alone has been approved. and there their argument is exactly backwards, because it's not michigan or section 26 that single out race, it's the equal protection clause. because, justice sotomayor, if a student wants to lobby for an alumni preference and put it in the state constitution, strict scrutiny is now applied to that effort. but when you try to get a preference based on race or not based on race in the federal -- the state constitution, strict scrutiny is always applied. and the equal protection clause which is making a differentiation between race and everything else, and that's why this court in crawford, again, decided the same day as seattle, that page 538 recognized, quote: a distinction between state action that discriminates on the basis of race and state action that addresses neutral fashion

race-related matters. and section 26 falls into that latter category. >> you've been asked several questions that referred to the ending a termination of affirmative action. that's not what's at issue, is it? >> no. and i'm glad you brought t that up, chief justice rom erik roberts, because -- roberts, because it means a lot more. article i, section 26 only focuses on this one aspect of university admissions. now, another important point to understand is that section 26 is not all about university admissions. this is actually a much broader law that applies not just to race and ethnicity, but also to sex and other factors, and that affects not just universities, but also public contracting and public employment. this was a broad-based law that was primarily motivated by the people of michigan's decision to move past the day when we're always focused on race, exactly

as grutter invited the states to do. and you can, you can see how that decision gets mired when you look at some of these statistics that we've been talking about. someone who has multiple racial boxes checked more or less diverse than someone who has one box checked? is someone who comes from outside the country, say from mexico -- >> something much more, you're basically saying because fisher and grutter and we've always applied strict scrutiny. >> correct. >> all right? so it's, essentially, a last resort within some reason. but what you're saying is if all those other measures fail, you're by constitution saying you can't go to the remedy that might work. >> no, that's not what we're saying. >> well, but you're -- this amendment is stopping the political process. it's saying a board of regents can do everything else in the

field of education except this one. >> well, again, it actually runs the other way because equal protection is what singles out race-focused measures for strict scrutiny. what we're saying is under grutter race preferences are barely permissible. it cannot be unconstitutional for the people to choose not to cruise them anymore -- use them anymore to accept this court's ini invitation about neutral to accept a discussion about a race-neutral future. >> what would you do with a constitutional amendment that said pro-affirmative action laws, and only those, require a three-quarters vote of the state legislature? >> well, under what we're going to call the hunter and seattle, something like that would be unconstitutional because it removes an antidiscrimination provision and moves it to a higher level of government. now, one of the problems with keeping that doctrine is that it could also work the opposite

way, you know? pretend that the political climate in michigan was turned on its head, and the universities had agreed that they were no longer going to use race or sex in admissions, and then it was the state electorate in the legislature or in the constitution which imposed a grutter plan on everyone. well, under hunter and seattle, that would have to go because that law removes an antidiscrimination provision and moves it to the higher level. and so that would be one reason why you might want to take the washington v. davis approach and consider whether there's animus on the case. but i think in either of those cases you can pare down the doctrine or get rid of it entirely and determine our case because of it. ..

would have to be applied under strict scrutiny. their only response to that is that while the supremacy clause takes care of that problem and we all know supremacy doesn't kick in and tell you first determine the federal law itself is constitutional, and it wouldn't be under their theory. so what we're asking you to do is eliminate that portion of hunter and seattle that suggests a loss ratio focus is a sign up

on on of the political restructuring doctrine test and to either -- >> isn't the position that was taken in seattle derived from a different view of the equal protection clause? i mean, strict scrutiny was originally put forward as a protection for minority, a protection for minorities against hostile disadvantageous legislation. and so the view then was we use of strict scrutiny when the majority is disadvantaging the minority. so you do, under the caroling products view, you do focus on race and you add is the minority and disadvantaged?

if that were the do, then i suppose we would not be looking at this, well, the criterion is race and where ever the disadvantaged falls, whether a majority or minority, it's just the same but that wasn't the original idea of when strict scrutiny is appropriate. so if we were faithful to that notion, that it is -- measures a disadvantage the minority that get strict scrutiny. >> two thoughts on that, justice ginsburg. first under grutter from this court made crystal clear that they grutter plan is not about which minority group is being advantage or disadvantage. it's supposed to benefit the campus as a whole. to the extent the claim is that preferences benefit certain classes of minorities and that

others, for example, it benefits african-americans and latinos on but not asians even though they're both discrete and insular underrepresented groups, then it fails under grutter. it can only be something that benefits everybody. going back to a question about the origin of the doctrine, i think it's important to understand why we have hunter. because hunter, remember, was decided before washington v. davis. when you look at the face of law and akron, ohio, in hunter, there's nothing in that it would trigger strict scrutiny. this court was searching for another way to strike down a law that removed an anti-discrimination provision and the more difficult to reenact at a higher level of the political process. it needs something to fix that. our point is you can either construe it to do exactly that, that only anti-discrimination laws being struck down move to a higher level to satisfy a political restructuring doctrine, or you can look at it differently. you can say now that we've got washington v. davis and we all know what the intent was in

akron, that is a simpler way to address this problem and we don't need the political restructuring doctrine at all anymore. but the reason why we have a doctrine in hunter is because strict scrutiny did not apply. >> you said that the district court found it was clear there was no discriminatory intent, but that wasn't reviewed on appeal. >> no, it was not. it wasn't a funny but it was more than that. it was at the summary judgment stage. the district court correctly concluded there wasn't even a question of disputed material fact as to whether intent was the primary motivation of electric. unless there are any for the question, i would reserve the balance of my time. >> thank you, counsel. >> mr. rosenbaum. >> mr. chief justice, and may please the court. let me begin, justice kennedy come with the questions you raised and then come to the question that chief justice

roberts rates. to begin, justice kennedy, there's no way to distinguish the seattle case in this case nor the hunter case. both those cases have to be overruled. here is why the seattle case is identical to this case. old cases involve constitutionally permissible plans which have as their objective opinion diversity on campuses. seattle was a k-12 case. this case is a higher education case, but in both instances the objective was to obtain diversity. no constitutional mandate to relieve past discrimination. rather, in fact, seattle, tacoma and while still were attempting to do with de facto segregation spent is that an accurate description of seattle? i thought in seattle before the school board adopted the busing plan the city was threatened with lawsuits by the department of justice, i the federal government, and by private plaintiffs, claiming that the

previous tuple assignment plan involved de jure segregation. isn't that correct? >> that's correct with respect to lease one of the districts. but in terms of the program itself there's no dispute that it was done pursuant to a plan for de facto segregation. moreover, the question you asked, justice kennedy -- >> i don't understand and to that question. as to seattle itself, is another case they were threatened with litigation? >> yes. >> isn't it grea correct that te district court found that there was de jure segregation? >> that's not correct. there was no finding whatsoever that there had been de jure segregation and was a constitutional imperative to correct that the segregation. your honor is correct that in seattle what we're dealing with was an elected school board, and here as the mission brief says, as the wayne state briefs is, as the court specifically found on pages 326, 3/27 of the record,

this is a political process in which the regions were elected, have at all times maintain plenary authority over the admissions process itself. >> there are two things. number one isn't delegated to the faculty? and number two, there elected only rarely and in staggered terms. >> that is no question that's correct, your honor, but the ordinary process itself is a politically accountable process. that's what the district court found when you look at how the system works. >> what if the board delegated to the there is universities the authority to develop their own admissions programs? >> it couldn't alter -- answer, chief roberts. >> and they did, and after so for years they decided we don't like the way it's working, they are adopting to racial preference programs, were going to vote the delegation. >> absolutely fine. the difference is that in the seattle case com, in this case d in the hunter case, what's going

on is a change from the ordinary political process, which you're on a perfectly describe. they can change it today. they can go to an affirmative action plan today, repeal it tomorrow, comeback. >> so if there were a provision in the michigan constitution that says the board of regents is authorized to enact these programs, in other words, delegated from the people in the constitution to the board, and then the people change the delegation by saying no, it's no longer, we're no longer going to leave it up to the board we're going to make the decision ourselves in the constitution. how is that any different? >> it is different because of the racial nature of the decision. under their theory, the people of the state, of a state could amend their constitution, put in the legislature to rooms. one for racial matters, one for all other sorts of matters. and say to any entrant who wants to enter that first room, you may do so but first you have to pay an exorbitant cover charge

and then you have to mount multiple stairs, flights of stairs, just begin the process of enacting constitutionally permissible legislation. think about it in a desegregation case. a student, ma two students come into the admissions committee. the missions committee says we have one question. century or to talk about a legitimate factor in pursuit of diversity. here's the question, do you want to talk about your race, your race in the context of other factors? and if the answer is yes, that student is shown the door, told go raise between five and $15 million, repeal prop to you and then you can come back to make the case. where's the student says no, i just got another legitimate factor, maybe geography, maybe alumni connections, whatever that is. that person is permitted to make the case. it is a racial distinction. chief justice roberts, you are certainly onto something

insurance of our their race-neutral methods to get this done? of course there are. the state constitution itself could be altered so that a different committee or a different set of individuals could make the decision if they don't like the way the regions are doing a good or they could do the old-fashioned way, the way the political accountable system works which is to say we're going to work at these universities, that's a how affirmative action involving race happened in the first place. that's at pages 270, 282, 293. they worked for years to make that happen. >> i thought the whole purpose of strict scrutiny was to say that if you want to talk about race, you have a much higher hurdle to climb. if you want to talk about something else. you can argue that strict scrutiny should only apply to minority's and not to students who are not minorities, but that the court decided that a long time ago. >> exactly. >> i don't know why that's a hard question that you asked about the student says i want to talk about race. what if it's a white suit who comes and says i want to talk about race, i'm white and,

therefore, you should admit me, you should give me preface. the state can't say no, we don't want to do that? >> mistake and say we don't want to do that whether it's from a white person, black person or whomever. if, in fact, they are not doing on a race specific basis. you're exactly right about strict scrutiny. the programs in this case, the only programs in this case that are effective are those that have passed strict -- >> i don't understand your answer be if one student comes in says i want to talk about how well i play the cello, we'll listen to the. i want to come in and talk about why i as a white person should get a preference. you have to listen to that because you're listening to the talk about the cello? >> you do, your honor, when the program has passed the strict scrutiny test that we are talking about. that's the only sort of program that is at issue in this case. of course, you're correct. if it is a gratz type program, if it's a quota system you don't

have to listen to anybody talk about race. why it is impossible, impossible distinguished seattle? this argument about tantra, page 389 of the hunter decision is the reason hunter was decided. it's not a washington v. davis case. >> i'm not sure sure i understd to get to the chief justice's hypothetical. made understood the hypothetical. supposed the board of regents have the rule, it's written, it's a rule, that the faculty makes a determination on whether there should be affirmative action. and the faculty votes for affirmative action. three years later, the board of trustees said we're abolishing the rule, we're doing that ourselves. violation? >> assumed that the regents say that's fine, no problem whatsoever. no problem whatsoever. that's the ordinary political process. >> so the regions can take it away from the faculty? but can the legislature to get away from the regents? >> not under the mission --

michigan constitution because -- >> hypothetical. >> the legislature can take it away. that's not a problem in a situation where that's part of the ordinary process. process. >> at what point is it that your objection takes force? i just don't understand. >> i don't understand the declension here. >> my apologies, your honor. >> or the christendom, whatever you call it. [laughter] >> both our music to my ears. the point is that the people of the state have multiple options available to them if they don't like the way the universe is operating. one option they don't have is to treat racial matters different from all other matters. the example that you gave -- >> that applies in the chief justice's hypothetical or my revision of it as between the board of regents and the faculty, or between the faculty and the legislature. >> exactly. the problem that the restructuring process gets,

because of the concern this court has shown with respect to the political process, the political process itself not become outcome determinative. the process itself be a place where we can end the discussion but not create it in a separate and unequal way to make the decision itself through the process. what is the faculty administration, a faculty position from any less outcome determined have been with the voters would say? >> and i'm not explaining it clearly. when the faculty makes the decision, that's part of the ordinary political process. nobody is allowed to win all the time. no one has to win all the time. no one has to lose all the time. that's the ordinary political process. that's how we use the political process. the problem with mounting a racial classification within the constitution itself is that that takes the ordinary political process to the extraordinary

political process. >> so you could say that the whole point of something like the equal protection clause is to take race off the table. is it unreasonable for the state to say, look, race is a lightning rods. we've been told we can have affirmative action programs that do not take race into account. socioeconomic diversity, elimination of alumni preferences, all of these things. it is very expensive. when it went a racial classification, we are immediately sent. so why don't we say we want you to do everything you can without having racial preferences. if the litigation determines that we are required to have racial preferences, this statute has an exception and allows them. but starting out we want to take race off the table and try to achieve diversity without racial preferences. >> the problem as this court stated as recently as last term in the fisher case, is that under the equal protection

clause race is not all the way off the table. the problem with proposal to is that the substance and the message that it communicates is that because of the separate and unequal political track that is created with respect to the extraordinary steps that have to be taken, the message is that, even where race is being utilized as one of many factors in a constitutionally permissible way, the message that is being communicated is that all uses of race are illegitimate, all uses of race are off the table, race itself is a dirty word. >> why doesn't the fourth amendment violate the rule you're saying -- the 14th amendment violate the rule that you're proposing? i am a minority and i want laws that favor my minority. not just in university, everywhere. my goodness, i can't have that

through the normal legislative process. i have to get a constitutional amendment to do it, right? >> that is correct. >> i guess that on this subject of equal treatment of the races, we can eliminate racism just at the legislative level, can't we? >> your honor, the underlying basis of the entire strict scrutiny doctrine in the 14th amendment is to preclude the government, preclude the legislative and executive branch, from making those determinations as absolute determination. the 14th amendment sets the standards and the criteria by which we measure that. of course you're correct. that's what the 14th amendment does. it sets what the rules are in terms of how race is utilized. but what the grutter case said -- >> you can change those rules by normal legislation. >> that is correct. >> if you're a minority that wants favored treatment, you are just out of luck. >> you have used the ordinary political process.

>> but the constitutional a name is not the ordinary political process. >> but the fact that it's a state constitutional and underscores my argument which is that in order for the minority or in the individual, white, minority, whatever the individual is, to say i want the same rulebook, i want the same playing field, the problem with proposal to is that it creates to plainfield. >> if are bolted been in the michigan constitution before any affirmative action program was adopted, would the result be the same? >> it would because it would be building in this explicitly facial racial classification into the state constitution. the problem are the separate and unequal systems that are being used to do with race. it shouldn't come within 10 feet of race. >> it's not a racial classification. you should not refer to it that way. it's the prohibition of racial classification. >> no, your honor. spent every prohibition of

racial classification is itself a racial classification? >> no, your honor. just as an hunter, it is an explicitly facial racial classification. it singles out race for different treatment. my goodness, this campaign started three days after grutter itself. the author said the purpose of it was to get rid of racial preferences. >> if that's how you're using racial classification i thought it meant it's directed at blacks or asians or -- in that sense, the 14th in itself is a racial classification, right? >> well it said -- >> in that sense the 14th amendment itself is a racial classification? >> i don't agree with it. i nation as a racial classification by the 14th amendment. that comes back to justice ginsburg argued to his revisionist history of hunter, that has nothing to do with the problem in this case. when they ditch the court looked -- may i finish my answer? when the court looked at this

particular issue, the concern was the way that it racially divisive political process itself. what he is saying is that there may be all sorts of motives. that's a rational basis test and that has nothing to do with a racial classification. the definition i'm using is this court's definition of a race of classification for which all sorts trigger strict scrutiny. thank you very much. >> thank you, counsel. >> ms. driver? >> mr. chief justice, and may please the court. we ask this court to uphold the sixth circuit decision to reaffirm that doctrine that's expressed in hunter-seattle, and to bring the 14th amendment back to its original purpose and meaning, which is to protect minority rights against a white

majority, which did not occur in this case. >> my goodness, i thought we've held that the 14th and emmett or tex all races. i mean, that was the argument in the early years but i thought we rejected it. you say we have to proceed as though it's her this is not protect whites, not only to protect minority's? >> i think it is a measured that's an anti-discriminatory measure and it's a measure in which the question of discrimination is determined not just by, by power, by who has privilege in the society, and those minorities that are oppressed, be they religious or racial, need protection from a more privileged majority. >> and unless that exist, the

schuette -- the 14th amendment is not violated? so if you did indeed to give at this minority groups to discriminate against whites, that's okay? >> i think that -- >> do you have any case of ours that propounds that view of the 14th amendment, that it protects only minorities, any case the? >> no case of yours. >> some people think that there's a difference between the plus and a minus, some judges differ on that point. some agree sort of with you, and some of the sort of not. let's think of those who agreed sort of. and then i have a question. you know this area better than i. so think of grutter. router permits affirmative action. -- router permits affirmative action. they permitted affirmative action where it was overcome, the effects of pas fastest termination, but probably not otherwise. that's what i want to know. are the areas other than

education where affirmative action would not be forbidden to achieve a goal other than overcoming the effects? patty got the question? and doesn't have to come to mind? >> i think that affirmative action programs could be permissible underemployment. for instance, -- >> okay. so there are a set. >> that's right. >> if there are a set, what i'd like you to explain, if you can take a minute, is think of how a city is set up. there are a vast number of administrators. that are a vast number of programs. it could be an administrator somewhere says he'd like to give a preference, maybe for good reason. but then the city counsel votes no, because there are other ways of doing it, by first come first served, or some other criteria it doesn't use race. are all of those unlawful? everyone? do you have to leave it up, the

matter what the subject, no matter what -- are you going to draw a line somewhere? is there a line that you could draw that would take your case on the right side from your point of view, but would say we're not giving power to every administrator in the city to decide on his own whether to use racial preferences without the possibility of a higher up the hill, which i don't think you want to say but maybe you do. >> no. i think these are very fact-based determinations. and so, somebody could make a decision that they wanted to use what you are calling racial preferences, and that could mean a range of things and that could be subject to a veto higher up. yeah, i agree with you. >> is there any line that you can say, look you, we were trying to be very helpful, and all of a sudden they put this on the ballot and you can't get it through okay? that your basic point. you have to write something and that something is tremendous effect on over the place.

so what kind of line is there, in your opinion? >> i think hunter-seattle provides the line. i think it says that if you have a long that has racial focus and that law, part of serving that has a racial focus, is that it takes a benefit that a nurse to minorities and removes that benefit and restructured the political process and places a special burden on minority's do we ascertain that right i think that's a proper role. because -- >> can come back to the question that chief justice and justice kennedy were asking before essentially their question? let's say that the decision about admissions criteria across the board is basically delegated to the faculty, all right? and the faculty about some sort of affirmative action plan. and now that is overlooked in

favor of a colorblind approach at various levels going up the ladder. so maybe it's overruled by the dean, or maybe it's ruled by the president of the university. maybe it's overruled by the regions. maybe, if state laws allowed, it's overruled by an executive department of the state. maybe it's overruled by the legislature through ordinary legislation. maybe it's overruled to a constitutional amendment. at what point does the political restructuring doctrine taken? >> i think in this case, the difference between what other groups can do in order to get preferential treatment for their sons and daughters and what racial minorities are subject to, the level of distinction cases such a high burden on minority. >> well, that really isn't responsive to my question. let's say exactly what was done here is done at all of these levels. at what point does the doctrine

take in? when it comes from the faculty to the dean? from the dean to the president, et cetera, et cetera? where does this apply? >> i think it depends on where it is that minorities faced a heavier and special burden. >> it can't be that, because the normal political process imposes burdens on different groups. i thought the line was a very simple one, which is if the normal academic decision-making is in the dean, the faculty, at whatever level, as long as the normal right to control is being exercised, then that person could change the decision. said if they delegate most admissions decisions, as i understand from the record, to the faculty, but they still regularly, besides race, veto some of those decisions, and race is now one of them, then the board of regents can do that

normally. so could the president, if that's the way it is normally done. it's when the process is, political process has changed specifically and only for race, as a constitutional amendment here was intended to do, that the political doctrine is violated. have i restated? >> you have, you've restated it very well, and i agree with you in principle. >> but i still don't understand your answer to justice alito's question. suppose the dean has authority in the bylaws of the university to reduce what the faculty does much of a dean who just does not like affirmative action. he is dead against it. he makes the decision to reverse the faculty. do you have a remedy? >> i don't think hunter-seattle applies. >> all right. then you have justice alito's question. then it's the president of the university, and then it's the legislature. >> i think you need to think. i think you need that

decision-making body. if the university of michigan regions decided tomorrow to eliminate a prominent action programs and there was no opposition to, they have the legal right to do that. they are the decision-making body. .. >> and they chose to enter this area, i think -- >> i don't understand how that is consistent with justice

sotomayor's answer to my question. don't the people of michigan, don't the people of michigan have plenary authority? >> in this case the particular -- it's, they're applying that plenary authority in a way that is racially focused and creates a political process that is disadvantageous -- >> i'm not saying instead of political process. don't let me put words in your mouth. think what you think here. say where the authority was divided in a certain way, and that's true under the constitution of the state. so the state government lacks the power. and then you have to take the power from the people and change the constitution. and when you do that in respect to a benefit, then in respect of

benefits washington, you know, seattle and hunter kick in. so you're not dealing with past discrimination. >> well, this, what we're talking about in terms of affirmative action are constitutionally-permissible programs that were shown to this court to be the only way to achieve racial diversity and integration at the university of michigan. and whether you, whether you explain that by looking at the reality of the inequality in education for black and white michigan or whatever it is that you come up with that requires that, the university has shown that this is the only way to achieve diversity in which racial diversity is a part of the quotient. and so to take away that right from the university and from the

regents, and i just want to go back to one of the questions that was answered. if you look at the law schools, the medical schools, the professional schools now in the state of michigan, there's been a precipitous drop in underrepresented minority enrollment in those schools. we are going back to the resegregation of those schools because of the elimination of affirmative action. >> to what extent does your argument depend, and i thought both hunter and seattle speak in these terms, that the policies that are more difficult to enact are beneficial for the minority group? >> the -- say that -- i'm sorry -- >> to what extent does your argument depend upon the assumption that the programs that you say are now more difficult to enact are beneficial to the minority groups? >> i think it's an important come appropriate part. because i -- component part. because i think it's in the benefit to the minority group that it's especially

important -- >> well, why do you -- >> -- that the political process be on a level field. >> right. what if the question of whether it's a benefit to the minority group is more open to debate whether it's through the mismatch theory that taylor and sander, i guess, have adopted or other theories. do we have to assume in your favor that these definitely are beneficial to particular minority groups? >> certainly the minority voters of michigan believe them to be, because 90% of black voters in michigan voted against prop 2. and i think that that's a clear indication of the popularity of these programs and the perceived benefit of -- >> there's a difference, there may be a difference between popularity and benefit. in other words, you want us to assume that the programs are beneficial to the minority group. >> yes. and they are beneficial to minority groups. they may, they may serve to provide benefits for the

population beyond minority groups, but they are benefit if they -- >> your opponent says otherwise. he says that minority students have taken tougher courses, they have been better qualified to be admitted and all sorts of other benefits. so, you know, it's certainly a debatable question. >> it's a debatable question in another form in a different case. and, in fact, i think that case was the grutter case. this case isn't about, isn't just about whether or not apirmtive action -- affirmative action benefits minorities. it's also the restructuring of the political process and the special burden that's placed on minorities. it's not -- if you want to go back to debating, the, you know, whether -- >> well, tell me your answer then. your answer to the chief was it does depend on whether it benefits minorities. now you're saying it doesn't depend on whether it benefits minorities at all, it's just

whether it places a greater burden on minorities to change it. which is it? one or the other. >> i think it's a two of part test. -- two-part test. i think the first thing that you look at is, is there a racial focus to the law, and is the benefit that has been taken away something that inyou ares to minorities? and i think the second part of the test -- and that's why i think seattle/hunter is such a narrow doctrine, is whether there also has been a restructuring of the political process and a special burden placed on minorities. it requires both. >> thank you, counsel. mr. bursch, you have four minutes remaining. >> thank you, mr. chief justice. i'm going to start with a sentence from crawford decided the same day as seattle where this court defined what a racial classification is. a racial classification either

says or implies that persons are to be treated differently on account of race. it doesn't say anything about laws with or without a racial focus. and we think that's the test that ultimately should come out of the decision in this case. now, my friends on the other side disagree with that because be that's ooh the test -- if that's the test, section 26 is constitutional. so they draw this false dichotomy between laws that involve race and laws that don't involve race, we'll put them in two separate chambers of the legislature and charge a fee if you want to talk about race. and we know that can't be right because of, chief justice roberts, your observation that the whole point of equal protection is to take race off the table when everyone is being treated the same. that's why -- >> you quoted from crawford. >> yes. >> and there is an opposing quote in seattle itself on page, what is it, 486?

>> yes. >> when the state's allocation of power places unusual burdens on the ability of racial groups to enact legislation designed to overcome the special condition of prejudice, the governmental action seriously curtails the operation of those political processes ordinarily to be relied on to protect minorities. and it quotes -- [inaudible] so, and then the following sentence is, in the most direct sense this implicates the judiciary's special role not of treating individuals as individuals, but the judiciary's special role in safeguarding the interests of those groups that are relegated to a position of political powerlessness. so the rationale of seattle is

that notion that you can't put hurdles in the way of a disadvantaged minority. >> justice ginsburg, there's two problems with that. first, that's where the respondent's theory most closely knocks up against grutter because, your right, under seattle and hunter, you've got to have a policy designed for the purpose of primarily benefits the minority. but if that's the policy, it violates grutter which is supposed to benefit everyone. but the bigger problem is if you treat -- >> [inaudible] but when you take away a tool for diversity, that's what seattle is saying is wrong. >> right. but the bigger problem -- >> you can't take the tool away simply because it may include race as a factor, simply because you're changing the playing field. >> but, justice sotomayor, the biggest problem with respondent's test, with allying the literal language of seattle

is, as i said, the state equal protection law that mentions race, all of these things fall in the category -- >> both in this case involve constitutional -- seattle in this case both involve constitutional amendments. so why can't the law be drawn, the line be drawn there? if you change the allocation of power in one of these less substantial ways, that's one thing. but when you require a constitutional amendment, that's really a big deal. >> because that would still invalidate the michigan equal protection clause which says you cannot discriminate based on race or sex, and yet no one would argue should be subject to -- >> but that doesn't benefit the minority group. go read the cases. you yourself seem to say these cases seem to apply alike to the benefits or to the discrimination against. i mean, there's lots of language in seattle. >> [inaudible] >> now, suppose you take that, say, all right, it was meant in context, but the context includes constitutional amendments.

because with the constitutional amendment you are restructuring -- now, you'd lose on that theory. but there would be a limitation on the extent to which the people have the right to move powers around. >> justice breyer, the limitation has to be not only that, but also that you're repealing an antidiscrimination law, not an equal treatment law. or, again, otherwise the state equal protection clause has to fall. so to the extent that i'm right, that's a way that you can narrow hunter and seattle, and section 26 has to survive. if i'm wrong about that, then respectfully, seattle and hunter should be overruled. either way, it does not violate equal protection to require equal treatment. thank you. >> thank you, counsel. counsel. the case is submitted. >> and turning now to the white house where today president obama talked about the problems with the federal health insurance exchanges that opened on the further of the month. here's some of what he said. >> there's no sugar coating it,

the web site has been too slow, people have been getting stuck during the application process, and i think it's fair to say that nobody's more frustrated by that than i am. because, precisely because the product is good, i want the cash registers to work, i want the checkout lines to be smooth, so i want people to be able to get this great product. and there's no excuse for the problems. and it's, these problems are getting fixed. but while we're working out the kinks in the system, i want everybody to understand the nature of the problem. first of all, even with all the problems at healthcare.gov, the web site is still working for a lot of people. just not as quick or efficient or consistent as we want. and although many of these folks have found that they had to wait longer than they wanted, once they complete the process, they're very happy with the deal that's available to them.

just like janice is. second, i want everybody to remember that we're only three weeks into a six month open enrollment period when you can buy these new plans. [applause] keep in mind the insurance doesn't start until january 1st. that's the earliest that the insurance can kick in. no one who decides to purchase a plan has to pay their first premium until december 15th. and unlike the day after thanksgiving sales for the latest playstation or flat screen tvs, the insurance plans don't run out. they're not going to sell out. they'll be available through the marketplace -- [applause] throughout the open enrollment period. the prices that insurers have set will not change, so everybody who wants insurance through the marketplace will get

insurance. period. [applause] everybody who wants insurance through the marketplace will get insurance. >> you can watch all of the president's remarks from earlier. we'll have the video posted on our web site, c-span.org. we've also posted a poll op our facebook page -- on our facebook page. you can let us know about your experiences with the health insurance exchange. just log on to facebook.com/c-span to weigh in. and on thursday we'll have live coverage of a hearing on the health care law, the problems and the challenges. again, that's live thursday at 9 a.m. eastern right here on c-span2. >> this is eleanor roosevelt's typewriter. it was on this typewriter that mrs. roosevelt wrote her "my day" column. what i have here are the original drafts of some of the columns that i wanted to share. in this first one is actually eleanor roosevelt's first "my day" column, and it sets the tone for the "by day" columns to follow.

so what she's talking about here are the comings and goings at the white house after the holiday season. this clipping, a "my day" clipping from november 6, 1940, election day. she talks about how at midnight a larger crowd than usual came in from hyde park with a band and torches and wonderful placards. the president went out to greet them. this was a tradition on election night. the roosevelts would come to hyde park, gather family around and await the election results. when they were announced, the folks from hyde park would march down, and the president would come out and greet them. >> first lady eleanor roosevelt, tonight live at 9 eastern on c-span and c-span3, also on c-span radio and c-span.org. >> every weekend since 1998 c-span2's booktv has shown over 40,000 hours of programming with top nonfiction authors including dee dee meyers. >> i thought that, wow, you know, that's the answer. if there were more women if politics, if there were more women across public life, things

would change. and that's, so i called my editor and said i'm going to write a book called "why women should rule the world," and she basically said, okay. >> all of us in the working class are subjected to paying punitive taxes, being ignored by the elite media, not getting special interest help in washington like the fat cats get no matter what color we are, and that's the real problem. >> we're the only national television network devoted exclusively to nonfiction books. throughout the fall we're marking 15 years of booktv on c-span2. >> the american enterprise institute hosted a discussion about another possible housing bubble in the u.s. and the role the federal reserve plays in the securities marketplace. you'll hear from representatives for the mortgage bankers association and the national mortgage news. their discussion is about two hours. [inaudible conversations]

>> good afternoon, ladies and gentlemen. it's my pleasure to welcome you this afternoon to our conference on housing and government finance in the post-bubble, post-bernanke world. hope you all enjoyed the alliteration. it's hard to believe that the peak of the infamous housing bubble in mid 2006 is already more than seven years ago. the extended crisis and accompanying panics of 2007 to 2009 ended four and a half years ago. in the inevitable cycling of financial ideas and beliefs, the burning lessons of the collapse are already starting to fade. for example, we had a clip today. quote, investors turn attention to flipping high-end houses, unquote.

well, we had six years of falling house prices from 2006 to 2012, and now a strong rebound over the last year with, of course, different views on how that will continue. the vivid bubble then shriveled adventure is over, but with its effects, indeed, live on. among them, the federal reserve finish as we all know -- has practiced an unprecedented and previously unimaginable credit allocation to housing and monetization of mortgages. they now have about $1.4 trillion in mortgages on their own balance sheet. making the fed, as i have previously said, the world's largest savings and loan. the fed's goal is to push house

prices higher, and in my view, they have now overachieved. so i want to look at house prices in a much longer perspective. i hope you can see some of this chart. this is a 60-year history. it goes from 1953 to 2013. a slide of the consumer price index versus average u.s. house prices both indexed to 1953 equal 100. and what you can immediately see even if you can't read any numbers is that there is an extremely strong correlation and mean reversion of house prices to general inflation which makes sense if you think about it. obviously, with the bubble we went far off that underlying trend, and then with the shrivel house prices came right back.

if you can look over on the right-hand side, they came right back and touched the trend but now have bounced up well over the trend again. indeed, as far over the underlying inflation trend as house prices were in 2001. here's another way of looking at the same underlying data. this is the over the same 60 years the percent deviation of house prices from the general inflation line, in other words, the previous slide expressed as percent differences. the trend deviation is about zero, but now, as i said, we're back to the deviation of 2001 when the bubble, being stoked by the fed, was taking off. and we are now, if you look at

the very end of that line, in terms of this deviation from general inflation over the previous house price peaks of the 1970s and of the 1980s as we are about to enter the post-bernanke world. well, what will the post-bernanke, post-bubble world bring for housing finance and for government finance, a very hot topic of late? not to be forgotten for the ongoing travails of european government finance. luckily, we have an excellent panel to give us the answers. and let me briefly introduce them in the order in which they will speak. which will be right down the dais from me. first will be jay brink mann, the chief economist and senior vice president of research and education at the mortgage bankers association. jay joined mba in 2001 as the

head of its research group after having worked in portfolio strategy on the dark side for fannie mae. he's also been deputy chief of staff to the governor of louisiana and taught financial institution regulation at the university of houston, and we wonder, jay, if in teaching you ever imagined the extent of regulation that you would actually experience later. next will be mark fogarty, the editorial director of source media's mortgage group and of national mortgage news. mark has covered the mortgage business since 1984, so he's now on his fifth real estate cycle. and brings us wisdom accordingly. mark directed the news team that won the george polk award for financial journalism, and his editorials have won awards from the american society of business press editors and the native american journalists' association. third will be desmond hackman, a resident fellow -- lachman from

aei known for his accurately-pessimistic forecasts. laugh a laugh previously, he was managing director and economic strategist at solomon smith barney and a deputy director after -- at the international monetary fund's policy development d.. focused on global currency issues, desmond has written extensively on the international economic crisis, the u.s. housing bust, the u.s. dollar and the strains of the euro area which he'll touch on again today for us. next will be chris whalen, an executive vice president and managing director for carrington llc which operates in a wide range of real estate businesses. chris is also the co-founder of lord whalen which provides customized risk management tools and consulting on banks and the financial services industry. he's the author of the book "inflated: how money and debt built the american dream," and

he is the co-founder of this series of bubble conferences which go back to march 2007 when the bubble was just starting to turn into a shrivel. finally, we'll hear from john makin, a resident scholar at aei and former consultant to the u.s. treasury, the congressional budget office and the international monetary fund. john specializes in international finance and financial markets including the u.s., japan and the european economies. the author of numerous books and articles on financial policy, john also writes aei's monthly and insightful economic outlook which i recommend to you. each panelist will speak from 12-15 minutes, we'll then give them a chance to respond to each other or to clarify points, and then we'll open the floor for your questions. unless the questions run out sooner, we will adjourn promptly at 4:00.

and, jay, you have the floor. >> thank you, alec. when i was -- alex. when i was looking at the title of conference, the post-bubble, post-bernanke world, i was thinking it's been fife years since the gses were put into conservatorship, and i would have forecast back then the title of this would have been housing finance in the post-gse world, and that just goes to show the accuracy of my forecasting ability which has marked my entire career as a chief economist. [laughter] let's see, i keep going this way? there. so what i wanted to talk about really was four topics generally that skip around a little bit, the impact of the fed's buying of mbs, the purchase program going forward, give you a sort of a snapshot of what we're seeing in the current lending market, show you a new tool that we've rolled out at the mba for looking at mortgage credit, the availability of credit in the market and then just a

discussion of new bubbles since bubble's in the title, so i thought i should come up with something on that end. first of all, in terms of the federal reserve balance sheet, just the massive growth that we've seen, continue to see not only in the total balance sheet, but the makeup of that balance sheet, this goes back to may but sort of that gray-blue area being mortgage-backed securities, something they did not hold prior to 2009, but an increasing influence in that market. and if you look at this is a chart from the hour rah, if you look at the top line from where you are, the change over -- this is about an 11-month change in the mbs market, 170 billion outsanding is the total growth in mbs, of that the fed other this period -- over this period picked up about 480 billion which meant that other sectors had to give up their holdings. and the drops that we saw were among banks, certainly the gse

portfolio runoff which is part of plan, drops in the holdings of overseas investors, mortgage roots pulling back from their holdings of mortgage-backed securities and finally all other money managers. so a variety of some of the firms investing for pension funds or other portfolios. actually, then the fed pulling those out of those portfolios, forcing them to look to something else to deploy that cash. so when you look at then the growing footprint of the federal reserve in this market, what then is the implication for crowding out private capital? at what point is the fed no longer assisting the market, but at what point is the fed the market? so the fed is now holding roughly one-fourth of mortgage-backed securities outstanding. they have purchased about 30% of all the mortgages originated since last summer. that's not securitized, that's

the total mortgages originated. and that unless we see some tapering through 2014, they will be buying more than half of all the mortgages originated. again, not just securitized, but those originated. so i think that raises the question then what happens if the mortgage market tapers and the fed doesn't? do we want the federal reserve to have that outsized a role in purchasing this many of the mortgages that are originated, and i would defer to my colleagues here to say, well, what would happen if we saw similar behavior in greece or some of the other countries if the central banks said we will step in and then be making these purchases for such a large share of the lending that takes place. finally then, what is the fed's exit strategy from this. are they, in fact, then going to start selling these at some point with upward pressure on

interest rates? i don't think so. that would defeat some of the purposes of what they've been doing. but there has been discussion to the extent they need to begin withdrawing some of the liquidity they could do it in another fashion such as with repos. and if we suddenly saw something on the order of a 500, $600 billion fred repo book -- fed repo book, what does that do the rest of the repo market more other dealers who rely on this form of financing? the issue is that the federal reserve has issued a lot ofly quaidty to the market, but as it moves around, does it realize the impact of the existing private structure such as the repo market? and i keep thinking it's not unlike, perhaps, filling up a kid's backyard swimming pool with a fire hose, that you hold on to the kid, but by the end of it, the pool's probably missing, the dog, the cat and half of your backyard just because of the impact of what this can have

on the different markets, and we'll see whether or not that is then observed and how carefully they go through it. let me just then go through a little bit of what we're seeing in the mortgage market. first of all, re-fi applications as indicated by that black line absolutely have collapsed since chairman bernanke's now-famous press conference and the tick-up in rates so that we are now down to index levels back to about 2009. purchase market has not declined as precipitously because we do not see the same runups. the difference here if you look at the blue line that represents existing home sales, that has continued to go up even though purchase applications have gone up very slightly. couple of drivers behind that -- >> you just clarify, you mean applications for mortgages to make a purchase? >> applications for mortgages to buy a home. thank you. i slip into the jargon here.

but, so it's who's actually buying these, are they investors, what's behind some of these cash purchases. but we really think this market in materials of the mortgages to purchase homes will continue into next year not as sensitive to interest rate changes. but there are a lot of people, apparently, if the realtor numbers are correct, buying homes without a mortgage. what do the applications look like? now, it's a lot of numbers here, let me just walk you through quickly august 2011, august 2012 and august 2013. the shift in share in the jumbo market. a lot of concern about what's happening with jumbos is the gse market the be-all, end-all of what's taking place? in fact, when we look at the demand for mortgages, this is to buy homes. this is just to purchase homes.

between '11, between '12 and between '13 some of the fastest-growing segments, albeit still small, is in this jumbo market. the jumbo market is now up to about 12.5% which is right in the range of the traditional 10-15% that we've seen this that a market year in and year out. this is a new index that we've created at mba to try to measure market credit availability. this was something i had thought of a few years ago when we were looking at some of the different measures and people kept talking about a credit box, and i said, well, you know, if we think of it as a multidimensional shape and we can take each index as sort of a vector index to one, and if we to take this -- we can take the inner product and get the measurement of how this thing would expand and contract and these different things, and my staff looked at me and said, well, jay, what if we just count? i said, okay, that'll work too. [laughter] so what we do is we actually

have a count of all of the lenders, what they post in terms of the credit criteria they would use for core responding lending. and we count for things like low credit score loans, longer duration, interest-only, short-term arms and sort of what combination, and we bring together and look at, okay, what is the outer boundary that's being offered in this measurement that we can get, and we get pretty regular feeds ten from all of the major correspondent lenders in the country. if you look at we had generally been going up, and the index sort of peaked in, i guess, that's june/july, that period, the downturn coincided exactly with when the qualified mortgage regulations were finalized. people were sort of speculating up to that point what is it going to be, what are the regulations going to be on debt to income ratio? as soon as those regulations came out, we immediately started

to see this downturn, and we expect to see a continued tightening as we approach the effective date of january when all these will go into effect. we also look at builder applications, builder-affiliated mortgage companies, what's going on with their applications for new construction, where is the new activity taking place. because this is a relatively new index, we don't have adequate coverage in a number of parts of the country to give a year-over-year comparison, but of those states where we do have the volume, the states in green really show the highest activity in terms of new construction taking place with loans to finance those new homes. those areas that have still held back. but one of the things that then stood out when i looked at in this is what's going on in nevada. because nevada still was running a fairly high percentage of loans in foreclosure as well as florida, yet we were seeing

fairly decent increases in loans being made to build new homes. but if you look at sort of the inventory of the loans that are in foreclosure, the loans that are 90 days or more past due but haven't really entered compared to the actual number of loans for sale as we've had pickup in sales and as new home building has come back, that inventory of homes actually listed as dwarfed by those in foreclosure, does that make sense in this sense? if you've got long-term demand and supply and if you have regulatory constraints that limit your ability to get those foreclosed loans to leave the, to get out of the legal system and get back on the market, you would expect them sort of thinking ahead, you'd expect new construction to be lower in those states that still had higher foreclosures.

the problem is potential buyers can't see what that inventory is. they go out to buy a house, they say what's available right now, sort of a limited for sale supply as you could see on that previous chart, the numbers, not really knowing what the inventory is, so they're then buying new homes. the long-term equilibrium then once those foreclosures come onto market may be a case that long-term demand is going to be less limited supply that's on that market. could we then see a price decline. so i plotted just rank order that red line what are the states in the terms of their loans in foreclosure and then plotted what is their rank in terms of the year to date permits for new construction. i guess it comes out of commerce and the home builders have it up on their site, and i would have expected something of a crossing pattern. in fact, it's random. if you tried to plot a line across that, it's just flat. but there are if you look at

that lower left-hand quad rant states -- quadrant states that have high percent of loans in foreclosure and high percentage bees of new construction. percentages of new construction. potentially, an area where you would see a bubble. so i am not sitting here predicting that now we have a bubble in these states. what i'm saying is if you were looking for one, you've got to get beyond the state numbers. you've got to really look at local communities because it could be a case in new jersey maybe the foreclosures are in newark or someplace like that, and the new construction's along the beach that hurricane sandy took it out or similar stories in other states. but simply on a state level, the states that are in that circle are states like oregon, nevada, new york, maine, states that have judicial foreclosure systems, systems that have this regulatory impediment to clearing the foreclosure inventory out of the court system and being delivered back

into the market, yet high levels of new construction. are we now seeing a negative effect of the i judicial and other -- of the judicial and other regulatory hold-ups to the system? in nevada it was a new law that put additional restraints on foreclosures. in comparison i'd say sort of florida, new jersey, illinois, states with high foreclosure rates we have not seen the same level of new construction staying there. so, again, i'm not saying these are bubbles, but i'm saying if one were to rook for a bubble like the title of alex's conference here, you might want to start looking at some of the individual communities in these states w. that -- >> thanks, jay, very much. mark? >> thanks, alex, and tanks for inviting me -- thanks to inviting me back to this symposium again. i also want to thank my fellow panel u.s.es, a distinguished group of people that we've worked with before, and i'm looking forward to everything that you guys have so to say.

so the title of my presentation -- oops, try it again. okay, a new metaphor for the fed. now, i hesitate to say anything even faintly critical of the fed because i know it won't really play in this room. [laughter] but i had a couple of annoying things. now, those of you who know me know that i like to go to literary sources to shine a light on today's financial trends, and what i came up with this time is the push me, pull you. if you remember your children's story dr. dolittle, the push me, pull you was one of the characters in that story. and it was, i find from wikipedia, i didn't remember this, a combination of a baa civil and a unicorn, and it had heads on both sides of its body. now, one of the advantages of this is that it could talk and eat at the same time without being rude, but the heads didn't

always agree on which direction to go in. so i think that the fed has been a little bit of a push me, pull you in recent months. a little as jay has described it, the little do-si-do that they have done on buying down interest rates, i think there's a technical economic term about you can check me on this, jay, it's i'm in, i'm getting out, i'm back in, something along those lines. [laughter] but anyway, you know, the earnings have started to come in, and we've seen, you know, the effects of, you know, the talk about tapering and rates going up and, you know, the third quarter numbers are in, and jpm and chase, jpm, chase and wells have reported really, you know, kind of devastating reductions in mortgage revenues; chase down 67%, wells fargo down 63. i think i a few of the smaller regional banks reported yesterday, and their loan

falloff is great. but those numbers certainly give you pause. why is that? well, you know, refinancings, as jay said, have really dried up, and people were hoping that with sales prices increasing that purchase mortgages where you actually buy a house would replace the lost volume in refinancings. that hasn't really happened. the reason, you know, jay had mentioned this in june that the fed started talking about saying they would taper signaling an end to buying down the market, rates went up. and, you know, why am i slightly annoyed at this? because the result was that big companies like the ones i just mentioned, thousands of people got faired. so -- fired. so, you know, at the top of the market when the mortgage market was at its peak, the mortgage market employed just a little bit over 500,000 people. at the bottom of market, less than 250,000 people.

so you can see what a tremendous devastation, you know, that has been. in more recent times, you know, since the bottom it's come up to, i think, somewhere around 260,000. jay probably has the numbers on these. but now we're seeing lots and lots of more firings. and, you know, i think that's just, you know, this kind of a whip saw where people lose their jobs, i think it's a bad thing. you know, when i first started in the business, i used to refer to something called mortgage city, and what i would do is i would plot how many people worked in the business and what city in the united states that population would correspond to. so back 20 years ago it was, you know, it was closer to 500,000, it was albuquerque, new mexico. now the most recent one that i've done it's east lansing, michigan, is the closest match to to the point that i was plotting at that point.

you know alex is a great statesman of canada, and i'm thinking if we ever get down to the population of moosejaw, saskatchewan, we're going to be in big trouble here. [laughter] hopefully, it won't go that far. all right. so what did the fed do? it, you know, reversed course. it didn't actually begin easing, but it said it was going to think about, you know, doing it sooner. and so rates dropped. in more recent times, you know, after they indicated the easing again, the rates have dropped slightly. freddie mac number today, i think, was 4.23 was it on the 30-year? but it's lower than the recent high. so is that going to indicate we're going to see more refinancings in the fourth quarter? so we'll have to see about that. stay tuned. but to me, this is a classic push me, pull you, a whip saw for the industry. so let's talk a little bit about the purchase mortgage business.

and i'll digress just a tiny bit. i was at a conference this summer in detroit, so i've been thinking about detroit. and a little bit about new orleans because, you know, ten years ago i don't think i could possibly have conceived that, you know, that we could have suffered, you know, the grievous damage to two of our greatest cities. but we did, obviously, with new orleans it was the storm and detroit was more of an economic storm. so i'm happy to see and you've probably seen in the recent week or so some green chutes there -- green shoots there. detroit was number two in september for home price increases, it was up.3% finish finish -- 4.3% for the quarter. and prices are still down two-thirds from the market high. average price in home sale there is $107,500 which is really,

really low. but, you know, the increases in the sales indicates to me that, you know, there are going to be more home sales in detroit and around the country, and that will lead to an increase in the purchase mortgage market. i was thinking about, you know, what could we do in the mortgage business to help, you know, the city of detroit, and the thing that i came up with was there was a group that invited me to come out and speak there. he were called mortgage builder, and they were based just outside of detroit. and as a sign of faith in the city, they decided to have their meeting downtown. so i wanted to give a shout out to kevin smith, the ceo, and to suggest that as a model. jay's group does meetings, my group does meetings, you know? let's meet in detroit. a beautiful city. you know, really one of the crown jewels of america. and i hate to see its, you know,

how much it's been hurt. so the purchase mortgage business, traditional wisdom is that the purchase business rather than the re-fi business is the key to success. in the waxing and waning of re-fies are what causes the mortgage booms and busts. now, the jackpot is when you have both markets gaining at once with. so could that happen? you know, re-fies could come up again if rates drop or stay, you know, steady or drop from what they are now, and prices are up in just about every msa in the country, so, you know, i think if there's no more push me, pull you there might be a small chance of that happening. so i wanted to share with you what i'm looking at now. i just got a cut of the humda numbers, and i'm always fascinated by that that data. the percentage of mortgages to

minorities, 16.6% in 2012. that's down slightly from 17% in 2011. i think it was 16.7% in 2010. and you might say, yeah, those are really low numbers, but, you know, in the kind of markets that we've had over the past few years, treading water might be a good response to that. so who knows. the total mortgages for 2012 and the humda numbers are always a little funky, but they came to up to 50% from 2004, so i think that's probably the re-fi effect going on. i just got a sort yesterday afternoon by loan approvals and denials. i think this is going to be really interesting. but i haven't been able to analyze these yet, so watch for next week's newspaper.

all right, a final thought on the metaphor of the fed as a push me, pull you. i think this is quite wise. if an animal has two heads on either side of its body, it must sometimes talk out of its rear end. so with that, i will yield back the balance of my time to the chair. [laughter] >> thank you, mark. desmond. >> thank you, alex, for inviting me again, and what i want to talk about is europe and the outlook in europe. and i'd just start by saying that there's a great sense of complacency about the europeans' prospects both amongst european policymakers and in the marketplace. in fact, at this weekend's meeting of the imf there was a clear sense of saturdayen freud

on the part of the europeans that the meeting was dominated by problems in the united states with very little mention about the problems in europe. what i want to do is indicate in my remarks why i don't share that complacency and why i think that basically certainly in the markets what is happening is the liquidity being provided by the federal reserve's printing, the bank of japan's printing together with the outright monetary transaction program of the ecb that the markets think have removed the tail risk has really made people not really focus on europe's what i think are very poor economic but as important political fundamentals. and i think the process still goes on. so just what i've said at

previous seminars is the fundamental reason why i don't think europe can work in the end, because basically the economics doesn't make much sense, and the ideas that that there are two kind of disequilib rah that they're trying to deal with in fixed currency arrangement. the one is budget deficits are too high, public debt levels too high, so they've got to engage in fiscal austerity, and the other is because they lost competitiveness, they've got to have what they call an internal devaluation which is basically means wage and price deflation that complicates their fiscal problems. so i don't think that the austerity can really work, and that's where they headed going forward. so i think it's good to, just to take stock of where we are just to see how much damage has already been done by those kind

of policies. so the first chart i'd put up, you know, just indicates the blue line is the united states recovering from the downturn at the lehman crisis 2008-2009. you see that the united states has fully recovered production, the united states' recover is not particularly strong, but they're above where they were in 2008-2009. the europeans have yet to recover that. now, the situation gets a lot worse when you consider the individual countries. so germany seems to be doing okay. so the green line is germany's above where it was in 2008-2009. but forget about small countries that are real basket cases like greece or portugal or ireland. you know, just take a look at italy and spain. so we see that italy and spain

are now something like 7% below where they weral -- were at the peak of the crisis some five years later. so the upward gaps in italy and spain are really very high. and the point that i'm trying to make is that even if you get a recovery, unless the recovery is very strong it's not going to change how badly those economies really feel they're faring. we see this in terms of the unemployment numbers. unemployment in europe is now overall 12%, but in places like greece and spain we talk about unemployment levels of 28%, youth unemployment is really horrendous in europe, something like 24% overall, but places like greece and spain you've got more than 30% out of work. so in short, i don't think that the austerity has really worked.

that's caused very deep recessions. public finances still aren't in very good shape, and what you've really had is a political process that has been going on, and it strikes me that across the european periphery, you know, you can take whichever country you're wanting to look at, what we're getting is we're getting an emotion of support -- e rose of support for the centrist parties, we're getting populist parties arising, extremes are rising which means that it's very difficult for these countries to stay the course of budget austerity and structural reform which they still have to do. now, there are a couple of reasons why one could be optimistic, and i think that these are the reads on which the european policymakers are already hanging their case. the first is that finally the

longest recession in overall europe has come to an end after six negative quarters. you've had a little bounce in the second quarter of 2013, and if you look at the pmis, the purchasing managers indices, they're showing a modest increase. so there's hope that maybe we're bottoming out, that there's some recovery. but when i look at this chart, i don't think that that gives support, you know, for very strong growth. the second reason, you know, on the optimistic side is that be you look at the bond -- if you look at the bond spreads, they've really come way down from the peak. and, but as i said, that is really a function of a lot of liquidity and the ecb's outright monetary transaction program when that comes to an end, you know, something might change. let me just list the reasons

that i'm skeptical about the outlook in europe. the first point i'd make is that basically what they're doing is they're following very much the same policies as before, and this is the case after the german election. the germans have made, are making it pretty clear that they're wanting to stick to the playbook of budget austerity, structural economic reform, not so much of a hurry to get a banking union going. so the problem that i've got is if budget austerity, banks cutting credit and deleveraging of the private sector really got us into the deep recession, why do we think that application of the same policies are going to lead to a meaningful recovery? so i don't really see the basis for a strong recovery in the periphery, and i think that that

is really very problem mat call. problematical. the point just in terms of the credit restriction is you're just seeing places like spain, the banks are cutting credit by something like 6%, italy cutting credit by 4%, and there's absolutely no sign that the germans are going to move towards banking union or allowing the use of the esm money to prop up the banks. they're not really rectifying that problem, so what you see is you see very much higher interest rates for those who can borrow in the periphery that countries like italy and spain, they're paying something like three percentage points more than you would in germany for a loan which is hardly the way to get an economy moving. the imf, as you see, has really got negative growth forecasts for all of these countries for

2013 or a sizable amount. italy, i think that they're now at something like 1.8%, spain -3.1%, but recover in 2014 which, as i say, i'm not sure i see the basis for that. a second reason why i'm very skeptical about europe being out of the woods is if i just look at the debt to gdp ratios of the sovereigns that, you know, forget about greece which is a special case which they'll fix by terming out the official debt, i look at italy, ireland, portugal, all of these countries are above with 5% of gd -- 25% of gdp, and they're running very large budget deficits that are driving it. another problem one's got is if you look at the price data, europe is disinflating at a

really very rapid rate that overall inflation now is about 1%, but if you look at places like greece, prices are falling. look at places like ireland, prices are practically flat, and if you don't get a recovery, you're going to go into deflation, and we know that if you've got deflation and no growth, it's very difficult to get out of those high debt levels. so as soon as the liquidity dries up, i think that we could see something that has occurred with many of the emerging markets right now as the talk of tapering is occurring in europe. another reason for skepticism is that much of the improvement in the external accounts has come through import depression because the economies are very depressed. but if you look at the competitiveness side of places like italy and spain, that's the purple and the red line, they haven't gained much against germany over the this period.

so there's still a lot of disinflation to occur. i think that the main problem of the euro is going to come from the political side that these countries, the political and social conditions of these countries are deteriorating. you don't get a recovery. i would think that that process continues. and the problem's really going to come from the peripheral countries just not being able to do the adjustment that the germans are requiring of them in order to get the loans. the last point i would make is that the ecb, the backstop that they have put in place, this monetary transaction program where they indicate that they'll buy as many of the bonds as they need with a maturity of one to three years, that really still has to be tested, that what

markets aren't paying attention to is those commitments by the ecb were made conditional upon the countries applying for economic programs. italy and spain aren't in a political position to apply for imf-style programs that would allow the ecb. and what we've also got to watch is the constitutional court in the germany is supposed to be delivering a ruling soon as to whether unlimited amount of purchasing by the ecb is consistent with the bank's obligations under the german constitution. and i think we could get a surprise in that the constitutional court could put limitations on what the ecb could do. ..