the record that would be helpful. you have heard me and others say that it's an abominable way to budget, and it was never intended take effect. we're going to be offering alternatives to sequestration. we will be talking about this new for a long time. working on alternatives for a long time. many tax loophole that is i believe and others believe should be closed. we also have to do something in the entitlement area as well. all of the burdens so far of reductions have fallen on discretionary accounts -- fallen and there's been nothing done on

the revenue side. so we have to, i believe, address that, and i would hope that when we come up with this specific bill that we'll send it to you and your organizations and that you would then indicate to us whether you can support these kind of alternatives to sequestration. i happen to agree with senator king who phrased it earlier today, it may have been senator cain, but one of the two of you have talked about the fact that we talk a lot about getting sequestration. whether or not you could right now, but indicate which of these proposed changes in these personnel accounts are the most problematic. if you are able to prioritize

them. they all have consequences. to indicate if you are able to say which of the ones that are in the budget proposal are the worst or the most problematic from your perspective? why do thank you, mr. chairman. i think from our membership's perspective and that of our chairman, we felt that the cost of living adjustment at one percent was a valid approach, and as general sullivanside, i think we need to look into the out years we can't sustain that over a period of time. tri-care, and other issues are a concern to our members, but none of them rose to the level of maintaining a strong and viable air force. if i could leave you with one point, members don't join the service, at least the air force, for pay, benefits and compensation. they join because of a patriotic duty to their nation and over

time we have seen adequate compensation provided to military maybes. we need to look carefully over the next ten years, what cbo is talking not terms of the rapid growth in some of the programs, like tri-care, but overall, our members want to see a strong, viable, modernized ready air force. thank you. >> thank you. admiral. >> dedid a survey and got back 90% of the respondents had a problem with something. the one that was the biggest impact was the cola for them. second was tri-care. the least was bah. as far as the commissary is concerned, the thing i kept hearing was there are efficiencies to be had but i don't see a force in function that will require the come maries so make the efficient six-s instead of doing the easy thing which is raise prices.

>> general sullivan, you have a priority list? >> we did sign up for the cola at one percent because we felt that general odierno could buy back readiness. we were less enthusiastic about the others, but so -- so our approach was to good with the cola. >> thank you. general tilelli. >> sir, these are a reduction in earned benefits, and to prioritize them prior to what we believe the congress' intent was, the commission who is going to look at this, is preemptive. we can continue to piecemeal

year on year, benefits, compensation, for retirees, service members, survivors, and pretty soon you have created a volunteer force that is no longer viable. so at this point i support the commission and a true vetting of their recommendations before we prioritize anything. and in a real sense, i believe waiting the year is very important to the men and women who serve to keep the faith with them. >> thank you. i take it from your nodding your heads, when i talk about sending you proposals to get rid of sequestration, you indicated your organizations would be willing to look at them. >> yes, sir. >> i want to make one point. i didn't sign up for every year capping pay. >> i understand. >> was one year. >> one year. >> and i reserve the -- >> i think that came through very clearly. thank you.

>> mr. chairman, one observation and two quick questions. i won't take my full four minutes. we got into this mess because here we are 16% of the budget having to take 50% of the cuts. that's the problem. one that is a mitt cal problem i can't -- political problem i can't seem to address. you said it back in january that given the choice between compensation and strong national defense, strong national defense. i assume you agree with that. i look at strong national defense, has to be modernization, training, readiness, and that's where we're not keeping up. i'm going to ask you the four of you if you agree with this statement by chrisin fox who said our men and women are the first to say they're well compensated but the department does not have money to maintain the equipment or supply them with the latest technology or send them to get the training they need and then they're being done a difference service.

do you -- disservice, do you agree with that? >> i do, too. the last thing i'd mention, would you all agree, since we have this military retirement compensation committee, might be presumptionus to do something in this year's ndaa that could constrain the commission with the recommendations they're studying? might have to undo something or that we have done in order to come up with their recommendations. do you i agree with that? >> absolutely, and i hope that we have the opportunity to vet that along with the congress as we look at it for our service members. >> good. thank you, mr. chairman. >> thank you very much. senator reed. >> first, let me thank you all for your great service to the nation and the men and women you represent. one of the issues here is

looking ahead, and regardless of sequestration, frankly you're preaching to the choir. we have to get rid of sequestration. even if we eliminate sequestration there's a lot of analysis that suggests that growing personnel costs will continually erode training, modernization, and we know that's critical also. i echo the chairman, we have to get handle on these numbers. today we heard admiral greenert suggest 50% of every -- goes to personnel costs, going up to 60% and then 70 in a decade. i know a little about numbers to suggests it all depend what you're measuring. so, admiral, you mentioned 33-1/3 percent constant figure. is that active service? >> if you look at over the last 30 years -- that's in my

testimony for record -- over the last 30 years, you look at -- total cost, including the va, it's about 30%. it went up to about 33, but remember, over the last ten years, we have increased the size of the force tremendously. so you obviously will have larger costs. the percentages have stayed the same. and as general tilelli said, have actually seen a downtick in the actual costs for the department. >> let me just suggest -- we can't settle this in the next two and a half minutes but this issue of the right metric, of the right measure, which we all agree upon is going to be absolutely critical going forward, so i thank you for your -- and will ask you again, as we define what we're measuring, we're consistent so we have a baseline we can agree it's going up this percent or that percent. that will help us a lot. another issue we have all

touched upon in our questions and comments, i think we're of a vintage where we remember post support. i was shocked going up to the navy base at newport and having the commander, a relatively young captain, apologize to me because the grass was a little longer because the contractors won't be here as often. i said, contractors cut grass? i was dismayed. but what general odierno and others suggest if we don't get a handle on some of these costs, you're going to see it's going to be sort of mundane initially but you'll see the old issue of one month you don't even see your troops because they're cutting grass and that's not the force we have trained today. these are superb professionals because every day we try to get every bit of training, every bit of -- and that's a cost that we have to look out going forward, and i don't have much time remaining but i just want to put

that one on the record, too. i thank you again for your service, your excellent testimony, for what you do for the men and women who serve and continue to serve. thank you. >> thank you, senator. senator sessions. >> thank you all, appreciate your contribution to this discussion. it's very important. we need an outside view from some former insiders, and i think that helps us. the budget control act includes the sequester, passed in august of 2011. we're projecting to increase spending over the next ten years by $10 trillion. budget control act allowed it to increase by eight trillion, not ten, but as senator inhofe said half the cuts fell on defense, and i think it's particularly -- since it was so rapid, it's destabilizing and i wish we could have done better. one time proposed just

increasing defense at one percent a year every year, stead of a big cut and then going up at two and a half percent a year, which we are soon on track to do. to you for sharing this. the debt threat to america is real and we do not need to break faith with the men and women who say, yes, sir, and good to be deployed to the worst areas of the globe and at risk. thank you. >> thank you, senator sessions. senator king. >> very briefly, mr. chairman. i want to thank you, gentlemen, for joining us today and hope that you can stay engaged in this issue. one question is, are you being consulted, have you been consulted by this commission? have you had an opportunity to testify, provide your input? >> yes, sir. the afa has some we have always been consulted by the department of defense. >> we certainly want that to continue.

and we want your good thoughts as we try to work through this. you understand the box that we're in. i mean, the chiefs presented it very well, that if we don't make these changes, then we have to take the money from somewhere else. we don't have the luxury of saying, oh, well, just add to the budget, unless we are able to do something about sequestration. so, i appreciate the statesman like view that you took, for example, general, saying that you understand that, and it is a tradeoff between readiness, training, and compensation. so, with that, i just hope you'll stay engaged with us and help guide us through this difficult set of decisions. i appreciate your joining us here today. thank you. >> thank you very much. senator, we received statements from outside groups and individuals, including from the following: national military family association, reserve officers association, the reserve enlisted association,

they and other statements which will be submitted to us will be made part of the record. we thank you for your service in and out of government, and we'll stand adjourned. [inaudible conversations] >> coming up on c-span2, a look at proposed reforms of mortgage lenders fannie mae and freddie mac. and buck mckeon talks about u.s. foreign policy, and the senate armed services committee

has a hearing on military bay pay and benefits. >> the house armed services committee meets tomorrow to work on the 2015 defense programs bill. we'll have live coverage of the day-long markup session as committee members craft the $521 billion military spending bill. you can watch beginning at 10:00 eastern time on c-span3 and c-span.org. >> kind of set up our own prison, set up our own trap. we don't know that we're actually contributing to it. when you get addicted to drugs, there's a whole world gets built around your need for drugs. when you get suicidal, every until in the world is, die. a beautiful sunrise, beautiful day, parent and people love you but everything gets closed in. all i can think about, i got to go. and so i think we ourselves get

caught up in those traps that society somehow contributes to, but we take it on personally and we can't see what is really out there. we can't see that the world is really there, beautiful, angels and mentors and people who care for you. >> this month booktv's book club selection is "it calls now back: an odyssey through love, addictions and healing" but lewis rodriguez. start reading and join the conversation with other readers in our book club chatroom. find it as booktv.org. >> congress is considering legislation to reform mortgage lenders fannie mae and freddie mac. on "washington journal" two banky industry members talk about the proposed banking rules. >> joining us now at our table, dwight fettigment the former

staff director for the u.s. senate committee on banking, housing and urban affairs, from 20 to 2013. also joining us, andrew olmem, the topic is, probably known to viewers fannie mae and freddie mac, first of all, to both of you gentlemen, welcome. >> thank you,. >> thank you. >> so a at some bill looking at the future of these two entities. mr. felt fettig, what is being considered and why and. >> great question. so, freddie mac and fannie mae, created by congress, to help with housing finance, and during the crisis it became clear they needed taxpayer help, as did a lot of large financial institutions. the question now becomes does the current structure still work or do need to alter the structure and how does the federal government stay involved in what is known largely as our

secondary mortgage market? what happens to those mortgages after somebody takes out that loan ask after the bank only natesed. >> mr. olmem, part of this deals witch taking mortgagages and packaging them in a way to sell to wall street. >> that's right. the way the process works, after you purchase your house, your mortgage effectively is transferred and pooled with other mortgages, and transferred into a security, which is then sold on wall street and then is eventually purchased by investors, anywhere from pension funds to banks other, financial institutions. >> so under the current model, who takes the most risk? i guess we can use the example of 2008. >> if they were begin teed by freddie and fan. >> they stood behind them and took the losses and that's what we saw during the crisis. those institutions ex-like a lot of other banks and financial institutions that held

mortgages, suffered sufficient veer losses. >> so, under the senate proposal, then, the way it's currently being structured, or at least discussed, who would take the biggs risk then? >> good question. the chairman of the banking committee and the ranking republican from idaho are working on a bipartisan bill that the committee will consider, and the idea is to bring more private capital into the system so the government goes further behind. there still can be a government guarantee provided but it would be done with more private capital up front. the idea is to bring more private capital into the mortgage finance system and reduce the government's role. >> to make the process more privatized, essentially. >> correct. >> what do you think about that approach? >> well, it is a big change. in many ways. and the question for the committee and for the congress is, how do you transition such large market? we're talking trillions of dollars in terms of the mortgage

market. how do you transition from the current system to what be the new system? and that is, i think, the difficulty and the complexity they're dealing with inning this legislation. they started with a 442 page draft that tries to get at those transition issues. how do you wind down freddie and fannie and use their current sort of infrastructure to continue to support our housing finance system while creating this sort of new system that allows for more private capitol to come in. >> mr. olmem. what do you think? >> it is a massive legislative undertaking, and the process is already showing it's a complicated effort. there are lots of moving pieces here. anytime you are dealing with entities guaranteeing the mortgage market it impacts everyone who is trying to buy a house to fortunately institutions that underright in the mortgages and investors who purchase the securities. so making sure this process works for everyone involved and

also making sure that everyone in the country is able to get reasonable access to affordable housing finance as well as making sure taxpayers are protected. so there's a lot of interests that need be considered in crafting a bill. >> i suppose that as hill guys, both of you get to hear from various entities who have a stake in this. i imagine the lobbying will be intense? >> the lobbying is -- i would say it's always kind of something that congress is always looking at when it comes to housing finance. i used to joke to dwight when i fir came to the banking committee can -- the full title is committee on banking, housing, and urban affairs. thought, well, banking committee meeting we'll work on banking issues. most of the work is on housing issues, so housing issues -- because they're so pervasive in the financial system, something that everyone on the committee is familiar with, staff and there's a good background by the

people who are in the process of crafting this bill. but there's one thing about being familiar with the issues. there's another thing when you try to take all of these different pieces and try to put them together in a workable bill. >> that's the trick to make them workable. you both talked about concerns. what's the chief concern in taking the current system and making it into a new system? >> so, several key sort of principles that chairman johnson and ranking member crable laid out. they undertook an -- extensive hearings in the winter, more than a dozen hearings, 100 some odd staff meet meetings and meetings with stakeholders and they're trying to make sure that the 30-year fixed rate mortgage is continued to be widely available. that's the preferred mortgage for most americans. making sure our mortgage market stays nationalized. 30, 40 years ago, very much a regional mortgage market and if

you couldn't get credit from a local bank or regional bank because of the downturn in the local economy, that would affect housing. that's not the case today and we want to make sure we maintain, and also make sure that small originators, whether community banks credit unions, have the same access to the second door mortgage market so they can sell their mortgages and don't have to keep them on their books the same way a large financial institution might have that opportunity to trying to preserve the characteristics of our current system and that freddie and fannie help to facilitate is a large part of what the committee is trying too do. >> what would but you're list? >> taxpayers need to be protected. i agree with everything that dwight talked about. that was a concern, taxpayers in the leadup to the crisis, how much taxpayer exposure there was. now you try to think about how to make sure the taxpayers are never again put in a position where they would have to bail

out and have to pay out for downturn in the economy we saw. that's another really complicating factor. >> the fact they had the result -- and andrew is right -- results in two kind of key points the committee is trying to resolve as the get closer to the bill which may be shortly. that is how much private capital do you require to protect the taxpayers? you want to make sure the entities involved, whether they're -- whatever the private entity is that's providing the capital, they are adequately capitalized to protect taxpayers, and secondly, making sure the capital is not so expensive it affects the affordability or availability of credit which, if we made mortgages more expensive, because of all that capital required, then that obviously could have a negative impact on the knowinger market and we want to make sure we avoid that. so at it that balance between protecting taxpayers and keeping

the system as liquid and as credible as we know it and as we expect it. >> current senate effort to change the way that both fannie may and freddie mac work, two guests joining us to talk about the details and help us understand it. you have questions for them, call them and ask them. >> mr. olmem, is this a bipartisan kind of philosophy when it comes to the approach they're taking? is there support on both sides? >> i think housing finance is an issue that there can be sharp divides and we can talk about those, but there are remarkable variations in people's viewpoints on housing finance, something that you'll find -- because everybody hopes that --

either owns a home or hopes to own a home, that a particular viewpoint and is familiar with the process, and now naturally in the leadup to the crisis, the runs were very concerned about the taxpayer exposure for freddie and fannie, and the democrats were very concerned about affordability issues. so, that typically kind of where -- one of the divides that comes down. but it's much more complicated than that when you take the next delve down you. get interest issues about how should mortgages be financed, how the securitization process should work, making sure that there's a -- what the playing fielding like. make sure that the rules governing the mortgage finance process facilitates vibrant innovative competitive market, and also to make sure that you have a system that works. you can talk a lot about ideas in theory. at it another thing to actually come up with a system and make

sure it works. that's one of the reasons you see so much activity on the bill. they're doing that deep dive into the legislation and talking with lots of stakeholders to make sure that you get a workable bill. >> even now at this point they're trying to get more support on the committee. they want to get more before they pass it out. >> that's right. that's right. and at the moment, both chairman johnson and ranking member crapo have done an excellent job building on existing legislation. the two of them worked together very well on the bill. andrew would agree the chairman and ranking member really took that bill and filled in some of the missing pieces, dealt with transition issues in much more detail, and really tried to improve upon an existing bipartisan product that had five

cosponsors on the republican side and five on the democratic side. so ten members of the committee out of 22. and now the chairman and ranking member having built upon that success and developed an even more detailed bill and a more thorough approach, now you have at least 12 of the ten members supporting it, and the question is, can you get more than 12? that what the conversation is all about. >> that goes to senator reed who wants to see more support from the committee before putting it to a full vote. >> in the senate you want to have as strong a majority coming oust committee. i you've don't have that strong typically bipartisan majority, it makes it very difficult to pass -- to survive a filibuster. and so you need 60 votes. and that one of the most interesting thing about working at the committee, because of the existence of the filibuster it does force both sides to attachment to -- attempt to work together, and dwight and i spent

a lot of time trying to figure out how to work together. so that when you get a bill out of committee, it's something that everyone in the senate can support, and generally the history is that if a piece of legislation passes out of the banking commitee with unanimous support, the chances of it going through the senate floor are very, very high. if it's a more controversial issue or split vote, it tends to make harder. not impossible but it's another hurdle. >> but i'd say one of the differences on this bill is if it turns out to be a 12-10 vote -- may be higher than 12, but if it results in a 12-10 vote that 12 would be supplying between six democratic and six republican supporters. so with the split vote it means the conversation will likely continue eve after the committee

takes the vote, and while there is always time between committee action and potential floor action. so that conversation among the members of the committee, and then members off the committee who are interested in this, will continue and could develop and lead to a bigger and broader -- >> then another -- as if this isn't complicated enough, dwight and i have now spent the tire show showing the complicating issue. another issue that needs to be considered now is even if you have a path to get it through the senate floor, then you have to think about the house. the house is taking a different approach to house finance reform so at some point the two views have to sit down and be reconciled. >> let's take calls. here first up is susan from washington. independent line. good morning. >> caller: to me it's just really disgusting. i don't even know some days if i want to call myself an american.

what they've done to me initially caused a heart attack trying to get my modification through. now i'm just waiting when he sheriff shows up in the official foreclosure. i mean, it just doesn't even get better. just perpetuates the same people who stole my property as i look at it, are the ones that i can't even get rental space of anything because try to live on a social security check of $1,000. you can't even find housing in this area. not on a bus line. it just -- i don't know. i've given up hope. >> gentlemen, ultimately this affects the home owner. >> yes, it does. certainly one of the goals in housing finance reform is to ensure we don't have a repeat of what we saw during the 2008 financial crisis, where housing prices sank and resulted in a lot of foreclosures. and i think one of the goals that is a bipartisan goal is

making sure that housing is underwritten in affordable way and a way that makes sure that home owners are able to pay off their mortgages. it's a complicated issue. underwriting snarleds is important to make sure home owners get a mortgage they can afford, and another way to protect taxpayers. taxpayers are standing behind mortgages, making sure that the home owners are able to pay for those mortgages. the first line in protecting taxpayers. >> i would only add -- obviously foreclosures as the call are highlighted are a devastating thing for those two go through them and one thing throughout the crisis that both congress and the administration have tried to do is figure out ways to help with modifications. many lending institutions have also tried to work on modifying mortgages to try to help with folks who are in trouble, but at

some point you have to be able to pay the mortgage, and so as andrew pointed out, it's important to make sure people get into mortgages they can keep and afford. when they do get into trouble, you know, we try to have ways to help with modifications when possible. and the caller's comments speak to the affordability issues, and it's sort of a very important underlying part of this whole debate. keeping our mortgage finance system operating in a way that helps address the affordability concerns, particularly in high-cost markets, as we know. you live here. >> would it change the up-frontman that a potential home owner has to put up if they change goes through? >> it could. that one of the points of debate right now. shoot be the minimum down payment. the numbers that have been discussed between 3-1/2% to 5% down payments. that's always been a tricky issue on trying to figure out where to set that balance, and set that number at, for any

mortgages that are backed by the government. i suspect that will be an issue that -- until the bill i finally passed, will be a subject of debate and probably even afterwards. >> here's william from oregon, republican line. good morning. >> caller: good morning. i'm really confused. i'm wondering all thereof this -- i'm asking the question. i'm confused with the beginning of it as far as -- you're looking for people to invest so that the government won't have to stand behind this. is that hough at it reading so far? i mean, aim understanding that part? in other words, the bill is going to have more people involved? is that how it is? i'm just kind of confused. the whole issue, what i understand, is that you gave these people loans that could not afford it. now you're saying that that's the issue as to whether or not

they can afford the loan, and, therefore, it ended up they couldn't afford the loan. that's why the bottom dropped out. then the government had to good and give the money to fannie and freddie so they had the money, and to compensate the people that you sold the packages to. am i following this correct? >> okay. we'll let our guests respond. mr. fettig. >> i think the best way to answer that is to remind viewers that the question of whether or not the person taking on he mortgage can afford the mortgage is really an underlying extort of central question in any housing finance system, but it's not sort of the -- it's a part of how people are going to qualify for a mortgage. whether or not, though, the mortgage is send sold by the

bank after they originated it and the borrower has taken it on, we're talking more about then what happens to the mortgage after it has been originated. and so we're talking about then the mortgages being packaged together, as andrew outlined earlier in terms of a mortgage-backed security that is then sold to investors around the world. but how and when people qualify for a mortgage as the caller outliered, is real -- caller outlined, has been a key part of making sure we have a mortgage finance system that is safe and sound and we don't get into trouble. obviously we saw with the housing bubble leading up to the crisis that underwriting was not where it needed to be, not writ was historically, where people had to demonstrate they had the down payment, they had the income stream, they could afford a monthly mortgage going forward, had to demonstrate they had the credit score that would allow them to qualify. that process became too easy,

not just because of freddie and fannie. there were many -- freddie and fannie don't only nate mortgages. the originators were willing to give mortgages to people who didn't have down payments, who didn't necessarily have the history or the credit score that would allow them to undertake the mortgage. so i was primarily originators who made those decisions on underwriting, and then it was the purchasers of the mortgages, frayedie and fannie were part of the purchasing of the mortgages, but so were other investors, what we call private label securities. >> mr. fettig hinted at this and we have a viewer asked what happens to the 30 years mortgage if this change is enacted. is there potential change to this? >> that's one of the big issues here, is that there's a debate ruth now about what would happen to the 30-year mortgage-depending on the amount of support that the government provides for mortgages. there's one camp says they government has to guarantee

securities in order for the 30-year mortgage to be widely available. another group will say, still be available, probably at a slightly higher rate but still be out there. and more set by market principles. so you'll likely see a debate that continues about what happens with the 30-year, and i think that's something that is -- one of the -- we keep talking about -- one of the additional issues that makes this such a complicating factor, the 30-year has become -- jurick why is that the magic number? >> it's a great question. and andrew is right, and i think what i would add is when you think back to why we created a secondary mortgage market and created these mortgage-backed security in the first place and why freddie and fanie were createds because banks who originated mortgages for decades, it was not a perfect match. banks traditionally haven't

shore term assets in terms of deposits. those developments come and go, depending own when people want their money. a 30-year fixed rate mortgage, long are term liable. so the assets and liabilities didn't match up. so the goal became to have a more liquid mortgage finance system and have more mortgages be made available to more americans. if the banks could sell the 30-year fixed rate mortgages get them off their books completely and package them into securities that then investors would buy, and then they would take on this risk, that would be better for the system. now the bank can turn around and make more loans. so that's the whole notion behind it, and the 30-year fixed rate mortgage and the ultimate government guarantee behind those mortgage-backed securities is really what many economizes will tell you is what makes our mortgage finance system in the united states of america very different than most other countries in the word, and it is why it's become such an

important part of what people can afford. it's a 30-year mortgage umpow know what you're going to pay every month. no surprises. also in cases prepayable so you can pay it down quicker and save interest, and you can do that without penalty, and you can refinances it as many times as you want. so it's become sort of the mortgage of choice, if you will, for most more thans because it's become not only very known and common but it has the characteristics people like. certainty, and affordability. >> nelson up next from massachusetts. on our republican line go ahead. >> caller: good morning, gentlemen. thank you, c-span and listeners. i would encourage all your listeners to go to the fhm solution, and that basically is dealing with everything that you're talking about, the

solution to the financial housing market, and basically what i see the government leaning towards is they're going to turn our system into a covered bond banking system. bear with me. and and keep the 30-year mortgage, eventually put the power in the hands of the people, investors, be happy to invest because they'll get more of a return than on their savings account, and keeping the 30-year mortgage and considering changing sweet an old fashion evidence simple interest mortgage. there's a lot of -- if someone could read the entire thing, it's a solution to everything that you're talking about. getting rid of the derivatives where. >> mr. olmem, any takeaway. >> a lot of ways to perform the housing finance system. there are a lot of potential ways to address the problem. you see the house take it one

way. the senate is working on one. they've tone out a draft and making additional changes. i don't think there's a silver bullet here how to reform housing finance. >> the senate has one version. what does the house version look like? >> the house version takes a different approach. it would wind down freddie and fannie, and would remove them and not replace them with another entity, and instead would rely more on strengthening fha, federal housing administration, and to provide the government support through that existing agency. you can see they're very different models. the house approach aims to have less taxpayer backing of the mortgage market. i think the viewpoint behind that bill is that right now the

housing finance system is 90 some percent backed by the government. and that is an unhealthy position; for taxpayers and also the market. that much government distortion can potentially set the stage for able crises and distort the efficient operation of the economy. so that bill takes a very different approach. the senate bill coming up was also different so i think for dwight and i -- it's an interesting -- as we continue to think about how this actually gets resolved and the eventual outcome when the two bills get together at conference is a -- at it to be seen. >> i was just going to add, the difference in terms of approach of the house, when the chairman of the house financial services committee decided to push forward on this legislation last year, he did so -- that's

chairman -- he did so working within his own party and when the vote came about in their committee last july it was a vote with only republican support. there was no attempt to reach out to the ranking member, maxine waters and democrats on the committee in the sense they wanted to try to develop a bill together. that is very different and should be compared and contrasted with the senate effort where chairman johnson and ranking member crapo decided really from the very beginning of this congress last year, when they began this effort, to really work together, and so their effort from virtually day one has been, let's work together, let's have our meetings together, work on the hearing schedule together, the hearing topics, figure out our underlying goals and develop legislation based on that process. so it's very much been a bipartisan process from in the get-go in the senate.

>> the senate really does require a bipartisan effort to pass legislation. the house is a majority institution, and very common to see legislation that begins in the house pass on more partisan basis. look back and think of numerous pieces of legislation that were very -- passed solely on a party line in the house, because that's just they way the institution works. senate as long as the filibuster is around, makes it very, very difficult to pass legislation in that manner. >> both of our guests have experience on the senate side, working with the and senate committee on banking, housing, and urban affairs and talking about the future of freddie macand fannie mae. >> laura from virginia up. the. good morning.

>> caller: good morning. from my perspective, i see the banks are going to be the winners again. i have a fha mortgage that's only four years left on it. i got un -- unsolicited, i got applications -- i didn't ask for them -- offering a hud. and so when i called to get some understanding -- if you don't understand, not much you can do. but the replacement they were offering or the no up front cost, the government was paying for all of the fees, but the catch was, my four-year mortgage balance could only be replaced by a ten-year or a 15-year mortgage. so they kept emphasizing you're going to save 200 a month, and i said there's additional interest going to be? and they had to pass it on to

two or three different people there and managers and then they came back on the line and said, oh, another 19,000. so, to me it just seems like the banks again are the winners. >> to that point the banks are the winners again. the callers comments are more about their individual mortgage situation. the issue here in terms of the legislation i what role then will larger financial institutions continue to play in our mortgage finance system and that has been one of the dynamics at the committee, trying to decide is the new system that is being developed by the legislation that would ask for the larger type capital up front and kind of push the government's role further into the backgrounds, does that create the potential, at least, for some of the larger financial institutions in the country to become even large center that's being excuse -- discussed and in fact some apples -- amendments

attempt to address that question. >> they would seven front of the -- who would step in from of the government to take the risk? >> a good question. it doesn't limit who wants to become an aggregator of the loans or a guarantor, a bond guarantor. the legislation doesn't limit which entities can become those, who wants to play a role, but the expectation is that obviously some of the largest financial institutionings are in a better position to take on that role. certainly the early going, and so that is some of these transition questions they're looking at is, who are some of these likely new participants in the system, where is that private capital going to come from, who has the private capital? >> i think he spoke earlier when we were talking about smaller banks, community banks, their able to step in and be able to do things like that because maybe their resources are not as great as a larger bank.

>> it's helpful to step back. we're combining two issues in this discussion because there's -- on the one hand there's the origination. the banks that actually make your mortgage to a prospective home owner so they can buy their house. then you have the process of, once they sell the mortgages and we package them in a security, how does the loss sharing in that security -- how is that allocated whacker percent to the government what percent do we want to have somebody else step in and take losses on that? certainly the investors in the private market who are interested in taking that risk on, that's what investors do. that's their function in our financial system. so i think there are lots of people in the financial system who would be willing to take the risk. naturally, how it's structured

will increase the number of people who are interested, and the available of that risk capital. >> if these change goes through as planned, i'm a current investor in securities held in the previous regime, what happens to me? >> that's another complicating factor. right now, kind of gross simplification but they would move freddie and fannie into a wind-down and allow the current book of business to wind down largely over time. with some other transition issues. but what happens with investors and freddie and fannie is another debate on what happens on the operations, sold off, distributed to investors? how much goes back to the taxpayers because of the government still stands behind the entities? you can see these are big transition issues that the bill is still working on and trying to figure out what the proper steps are.

>> as an investor or a holder of shares of freddie and fannie, that's a possible, yes. >> ron from ohio. good morning. >> caller: good morning. i have some comments and -- i'm an investor, and i'm in a very rural county, and we have probably close to 70% of our loans is fha, and the usda loans. there's a lot of concern about funding. i've -- i did an fha loan about six years or so ago, kind of and it was a -- with the credit score of over 800, i had to jump through some major hoops 'we

kind of went from one extreme to the other, but i was able to get my loan, paid on at it couple years, but i set on self-imposed poverty. what i -- then i refinancessed and lowered my interest rate, which was great -- >> what would you like our guests to address? >> caller: okay. back then there was -- when this whole thing collapsed, i was real concerned about the type of mortgages that was allowed, and how does that -- the originators -- there's a lot of originators that i see should have been penalized in some way

if not gone to jail. >> thank you, ron. >> so, actually before we were -- senate and house have been dealing with what to do about freddie and fannie and the role of government in the secondary mortgage market as we have been talking about today, really attempted to address the caller's question or concern about the kinds of mortgages that were originated and ultimately got the financial system into the trouble it did. and that was addressed through legislation and rulemaking that resulted in what is known as a qualified mortgage or a qm, and so the government was trying to come up with sort of some parameters that outline what is a mortgage that the qualities and characteristics of a mortgage that frankly will be safer for a the system at large. it doesn't mean that mortgages outside of that can't be arm originated. just a way for the government to

outline what is a safer exploring how the mortgages will factor into the government's role in the system. so, coming up with a better defined mortgage, qualified mortgage, is sort of something that it think was a key part of the postcrisis reaction. >> we have a fewer on twitter saying -- you have hinted -- james parker asks it would still become a burden on taxpayers because of too many loopholes in the legislation. >> i'm not sure which loopholes he is referring to. naturally always a concern is where taxpayers will be -- would be vulnerable down the road there was a big debate.the extent to which taxpayers would actually be behind the gses in the leadup to the crisis, and now that the fact is the government had to good in and provide support for the gses, created even more skepticism

about the ability of the government not to provide support in a downturn. that's one of the big problems that the committee is struggling with right now, is how do you provide some kind of commitment that limits taxpayers' expose sure and ensures losses are born by investors and not taxpayers. >> it's helpful for your viewer to add and make sure everybody issue appreciates and understands that, yes, at the time of the crisis in 2008 spend the federal government has to step in under this conservatorship status take over and manage the entities, during the crisis it did require this significant taxpayer support, $188 billion total for the two entities. but as of today, with the mortgage market having improved and the health of the mark improving, freddie and fannie have now returned over 200 bill back to taxpayers and the

treasury so it's already been a net plus for taxpayers in terms of the investment they made in salvaging our mortgage februaries system by supporting freddie and fannie with taxpayer support. the question long term is, do we want to continue to have the taxpayers potentially face that kind of exposure again even though when the market is good, it also can mean significant benefits. >> you can ashe money by changing. >> it's a little more complicated. the analysis there. and that's the moral hazard. if the market participantses know that the government ultimately is going to back something and cover them for losses, they're not going to have the proper incentives for making sure they invest properly. doing the necessarily due diligence, making sure that homes are underwritten in a way that are, one, good for home openers so they can afford them and, two, also good for investors. mortgages that are going to be paid back. that is really the big problem that we -- that is going on that

needs to be addressed there, how do you correct for the moral hazard that already happened. once the government intervenes that set as precedent and market participants then factor that into their decisions going forward. it's not an easy thing. but it's also one that with the government backing, 90 some percent of the mortgage market the committee is struggling to get our markets to operate in a competitive and nondistorted fashion without the government interference. >> you just heard from andrew olmem and quiet fettig who are joining us, both with senate experience can talking bet the future of fannie and freddie. miriam from connecticut good morning. sorry- -- >> caller: a couple of comments. not really any questions. first of all, i would suggest that given the landscape of the

congress today, i think this entire conversation is an northwester futility. -- an effort in futility. i'm sorry. we have major elections coming down the road, everybody, i guess, in d.c. and the local states are scrambling around to raise money for their future roles in the congress. i think what has to be done here, this would be a good example of where i'm coming from. you continually remark about the american taxpayers. well, where is tax reform in this picture? because initially i would suggest that this entire process has to start with tax reform,

and so far as i know, our congress has failed to act on any piece of legislation that would reflect a positive view on tax reform. >> host: thank you, miriam, from connecticut. mr. fettig. >> i don't profess to be a tax expert in congress' involvement in tax issues. thates are two different committees. but die know that as we have seen with the chairman camp, house ways and means committee chairman, his efforts coming forward with a comprehensive tax reform proposal, the downside and the difficulty is -- we haven't had major tax reform since 1986 and the reason is there are winners and losers. so you take away one tax credit that affects some industry or some group of americans, and if you alter tax rates in some way that benefits someone and

doesn't benefit someone else. so the winners and losers of tax reform makes it a very difficult process, and everybody likes the idea of taksim -- taksim -- tax simplification. >> tax reform is complicated enough. add that to housing reform and you have a complicated situation. that's one of the reasons congress is divideed the way it is in terms of committee structure. it allows members members and tr staffs to specialize and focus in on issues. tax issues can be dealt with by the finance committee, house and banking issues are done by the banking committee. it's a more efficient way for congress to operate and actually i think increases the chances of legislation getting done. i sense the caller's frustration with the legislative process, and i can definitely elm thighs

with that, have -- empathize with that, having worked on bills but one thing i would say is that it does work reasonably well, and it can be very frustrating, but these are complicated issues. they're not something that you conclude just throw out there, an idea, and quickly pass. usually the best bills are the ones that have been thought about. we have tried to address potential unanticipated consequences. you get input from as many people as possible. that's all part of the legislative process. it takes time. and it can be, again, very frustrating, but in the end, that's how you increase the chances of actually getting a better bill. >> she mentioned elections and you have experienced electoral process and how that might complicate this going forward. >> no question. elections and people keeping an eye on the calendar has an

impact. affects the amount of time the house and senate are even in session. but this is a system we have. so we have to be able to legislate and that's why the committee system helps the members focus and staff focus on the efforts at hand. at the same time, we have a electoral process and it's a system we have. we have to do both things simultaneously and, yes, there's sometimes getting in each other's way a little bit but historically we have been able to work through those things and that's elections have consequences, and election results affect who may chair a committee, who may control a -- the house or the senate, but at the end of the day, the legislative process has its own sort of ability to continue to move forward, and as andrew and i know in the time we were together on the banking committee, some of the bills the house and senate have to work on don't get as much tapings, but whether it was issues we dealt with on sanctions on iran,

issues like dealing with the transit programs of a larger surface transportation bill, issues around flood insurance, issues around the re-authorization of the expert-import bank, all bills we were able to work together and cheryl johnson and then ranking enemy shelby from alabama were able to work together so the committee approved the bills with a strong consensus and ultimately not only did they pass the senate, they all four became law. so the ability to get these things done is still there. the elections are certainly a complicating factor. but there are plenty of examples, even in the last few years, of the committees being able to do their job. >> here's jim from missouri. hello. >> caller: responses -- to the tax reform. the lady is right. when she said tax reform. that part of it. and of course, they're going volley back and forth. i'm telling you, i want to

respond to a couple of your questions. it's big spin. the biggest rights and assets grabs and thefts from the american people. of course they're going to spent back and forth again and again, and the regulations, they're fouled. i'm telling you, they're in the direction of the rich. here who is going to lose, the american people. consistently we have seen that tens of thousands of people have been thrown out in the street, in the -- how are you going to say recognize the problem. tell that to them poo we have their kids in the stretch when the rich bankers have literally stolen the american people's dream from them. tell that to them. >> i think the caller certainly indicates the problems our current housing finance system and the need for reform, and to put it on a better basis. the foreclosure process has been a difficult thing for many

families, and the hope is here that eventually by reforming the housing finance system we won't have a -- have this repeated again. >> yet no question, a shared goal among policymakers to try to prevent the problems we endured during the crisis, particularly the sort of foreclosure crisis that was part of all of that. and really the goal is to limit foreclosures as much as possible. >> a viewer asked about if privatization of fannie and fedie again -- puts that quotes -- includes privatizing all of hud low-income housing. >> that's another issue that is going to get discussed as part of this. the current senate bill establishes a housing trust fund and uses fees that are allocated on -- levied on the securitizeddations that are guaranteed under the new bill, and allocates them towards the

housing trust fund to make grants and other funding available for affordable housing. that in past has been something that there's -- has generated some controversy on what this government's role going to be in providing housing finance, not only in supporting the secondary market but also directly, and that's something that is a 60-year-old debate about how much the government should step in and provide -- replace the market for housing, and how much and where is the -- if they are going to subsidize is, how they do it. >> the notion of an affordable housing trust fund has been really something that has been -- has had bipartisan support in the senate and is part of the bill and that really is to supplement and augment hud's public housing programs. not to replace or in lieu of. it's to augment and support those program. >> up next, mark from

indianapolis. good morning. >> caller: good morning. my question is, the gentlemen talk about the -- formerly these were guaranteed by the government. securities 101 is that fannie and freddie were quasi-political agencies, implied they were guaranteed by the government. the people took on more risk and wall street took on more risk, they weren't supposed to be paid off. now conveniently these loans are going to be bottom bottom line,d by the government. so i can say to an investor, return of the mark they're going to be high single digits. we can take 50% of your portfolio, put it in bonds and oh, by the way, they guaranteed by the government. so i can get you five to six percent yield on these bonds riecks free. so they moved it from what

should never have been guaranteed by the government. i it was implied, not guaranteed. now they're guaranteed under this bill. so, it's a shell game to move it from what was never guaranteed by the government, to a guarantee by the government. >> well, the issue here is, then, if the government is going to continue to have this -- rather than the implied guarantee -- that was accurate -- under the system we had, there were shareholders, private capital as part of freddie and fannie's existence, but now we're talking about having the federal government have an explicit guarantee of these mortgages but, fifth, and only if, this private capital outlined in the legislation is trying to determine -- only if that private capital is in front of the guarantee, and you have to qualify for that government guarantee. and legislation creates a

federal mortgage insurance corporation, patterned after the federal deposit insurance corresponding, the fdic we're all very familiar with that guarantees or deposits in a bank, and the fmic is designed to provide that guarantee after assessing, as andre highlighted with the trust fund, provide though assess. s on the institutions in the same way the fdic assesses banks for the insurance to protect deposits, and that government guarantee and the assessments that will then pay for it only are in line if people follow the originators and ultimately the securitizers of the mortgages, follow the rules that would be set out by the fmic and provide they private capital in front of the taxpayers. so yes it's now becoming a an explicit government guarantee as opposed to implied, but under the legislation as drafted it would ensure you have to follow

these very explicit rules, including the empty of private capital in front of that -- the amount of private capital in front of the guarantee. >> wall from marylander. good morning. >> quick question for both your guests. originally when t.a.r.p. was voted on, it was the vision that money would be given to american consumers and would trickle up into the mortgage markets. it was actually implemented. money went to the banks and was spoked to trickle down but never trickled anywhere, and many people think that in fact is one of the roots of the problems that we face today. i really appreciate hearing their comments. >> mr. olmem? >> well, t.a.r.p. is still -- the most controversial government program of modern times, and i think what the caller irgetting at, what impact

did it have on the markets, did it -- there's a belief sometimes that money was supposed to be gone to be banks and then lent out. most of that money went to the banks to provide some equity capital for them. most of it has been paid back now. and the -- so gets into the question then about, i don't think there's a strong connection to t.a.r.p. right now. the programs is in the process of winding down there. were a lot of other regulations added soon thereafter in dodd-frank and that's more what he is referring to, about the new regulatory regime for banks, which is a whole other subject for us. >> as far as the future, say, the senate bill aligns with the house bill, we get a wine-down, what's the time frame to make this happen? >> very good question and that

is part of the transition issues that chairman johnson and ranking member crapo have been working on extensively, to create a wind-down period, an amount of time that allows for the markets to continue to fashion u function and is not too disruptive. we need to avoid any kind of market disruption that would make mortgages more difficult to obtain or reduce credit availability. we're talking anywhere from five to nine years under the bill. there's different periods where the new regulator, the fmic, would have additional authority to extend periods. so there's a range, and depends on how quickly the mark would adjust and how quickly everything would fall in place but there is a need for an extended period of time, even the house bill has a five-year window, but the way the current senate draft has been put together, it's in that five to nine year range.

>> i suspect there could be bumps? >> the legislative process is underway. it's very difficult to predict. you can very easily get agreement that provides the bipartisan majority they have been searching for and the bill moves quickly, or it could take time. it's almost impossible to know at this point. it's something that we all follow it right now. it's a complicated issue. but there's certainly making alet of effort and you just never know, in part of the legislative process, when things all come together. sometimes it's things happen right when you think the bill is about to die, there's a change of heart and a member changes their mind, or sometimes when you think a bill is about to be passed, people get cold feet, reconsider something, and the bill doesn't happen. >> andrew olmem, dwight fettig,

also was the former staff director over the u.s. senate committee from banking and housing and urban affairs 20, 10 to 2013. thank you for your time this morning. >> thank you. >> pleasure, thank you. >> on our next "washington journal" we'll get disperspectives on the white house's recent climated change report. we'll talk about theodicean oil pipeline proposal. then california congressman henry wax many will join -- waxman will joan us, and then later, dennis from national geographic will take your calls. "washington journal" live every morning at 7:00 eastern and you can join the conversation on facebook and twitter.

...

>> we have made the global commons safe for trade and prosperity. we have reaped a tremendous windfall for our efforts. but played the we have a strong military and presents a broad because it is in our interest to do so.

the military is unique in this regard and what of the few federal programs where we have a return on our investment. we will always have the debate what the foreign policy should do and where our ability reid should be. that debate is welcome and healthy. this is my final defense bill and my final year in congress. if i can sum up by have worked for it is this. i don't want america to be a product of the world. i want the world to be a product of america. i will be happy to take a few questions. [applause]

>> please identify yourself. >> mr. chairman. you talk about efficiency and reducing waste and overhead for example, and by a understand mr. smith dropped the language this morning to get did with the caveat with the conditions from the 2005 round. what are the odds and to get back into the ndaa? why is that not a priority when he desperately try to find money? >> we always ask the dot to give us information on savings from previous grants. the information we have ever received is sketchy at best

we have not finished the last one now talking about another round as a money-saving venture and everybody knows it cost money before you reach any potential savings. via understand the concern it i applaud him for his courage but it is not with the defense bill this year for sure. what i really tried to do is hold on as much of our defense as we can. if something happens in one of these countries like the wart hog if we were to find ourselves with the confrontation could have been easily with a moment's notice we would want to have

everything we could bring to bear immediately. i want to make sure we hold onto as many things as we can and to get back into a fight if we are in that position. hopefully there is some rationale. and after the next election we can sit down to see what we can do to fix this sequestration to get us back on a more sound footing of our national interest. >>. >> you mentioned diplomacy.

the balance is my first question. >> i am not hearing too well. what was the first question? >> you said the government is weak overseas. it sounds like an attack against the west -- the united states. like you are the indicator of the attack against the united states. >> you mean the characterization of the president's policy? >> that the government is working against we the people. >> is the president intentionally weakening.

>> i cannot get into somebody else's mind with intentions i just looked at the facts and results from what happens from the policy. i am not condemning somebody for their intentions but we have weakened ourselves militarily and our defense posture has been weakened. l -- almost every day around the world i hear where is america? what is happening? will you be here? we have commitments around the world and i did not even mention tie one. china is pushing us harder and harder away to carry out commitments we have made there. and other places around the world that is happening constantly.

>> somebody else needs a chance to ask a question. >> with acquisition reform the procurement was funded through service contracts so early on in the process are you confident these contracts will not cause too much harm in what happens is they cannot be reduced? >> i have a written response to that one. [laughter] somebody already asked that question. but the service contract we save $800 million cojones -- dollars. they make up the acquisition budget but we have not had

the time or the ability to give the proper oversight. we have been announced to do the inventory since 2008 and have not received all that information. is piecemeal. the ndaa cuts service each by 5% savings over 800 million. if we cannot find five% savings then shame on us. we can do that very well. have given speeches but the biggest concern i have had is we take away from readiness. that means lives. so i watch this very carefully and we will do our best to get the readiness out of the budget but and if

they don't have what they need to fight to give them fancy tools to fight with. it is a tight rope to make sure every dollar is spent wisely and that is what we are attempting. >> with the americans national security, hw a deal with iran? doesn't over affect the size of the budget? >> you're asking about iran?

month saying i wish i could do when i leave congress is to put something to my ears so i could hear better. but iran is one of the problems. we're trying to talk can negotiate but they consider moving forward on whenever there long term plan is with nuclear energy or weapons it is something we have to be constantly vigilant. i know when i met with the assent, commander -- the commander he said three things keep me up that night. are rand. iran. iran. iran. and he said the same thing

and then when he retired we had a meeting and he said the same thing because it is something that we really need to be aware of and as we cut back our ability around the world we weaken our cells. that is why i was talking about doing that internationally 95% of commerce travels overseas. there are seven chokepoints of day are shut off there would have the immediate impact on our economy. that is taken for granted and recut the navy down. i was talking to the ceo and i asked the question because the secretary said how many

ships do we have now? how many next year? 273. how does that grow the fleet it is something we need to constantly be looking at. recut the navy back smaller since world war i now granted the ships are more powerful and can do will bob bork than of battleship from world war i but still we have not figured out how to have them in two places at one time. so numbers to count in that regard. >>. >> to reduce the armed forces now do you think it is a program for congress as part of ndaa for standalone

provision to tell illegal aliens they can apply for the of military to get amnesty that way? >> as a way to fill the numbers in the military? >> got it. >> no. we are cutting fees are made. the secretary laid out the budget this takes the army down at 450,000 on less sequestration and comes back i said wait a minute it is the law it comes back if nothing happens it is the lot and it does come back the actual number is 420,000. the marines now 184,000 the

175,000. and asking general avis' i said what is the plan if the north invaded the south with korea? he said no 175,000 gives us 21 combat brigades and the plan calls for twice a that leaves one to take care of the rest of the world. it is absurd to cut the force is this much the army is smaller at any time since before world war ii. i think we had 280,000 with the army then pearl harbor and hitler going to africa and europe said an army of a

few million. it at that point we would take everybody we could find. but your question was specifics that you might think we should put on the defense build the amnesty iii]f' serve in the military. the answer is no. but i wanted to get in the other stuff. [laughter] >>. >> retired government. with the general pricing of the aircraft or the ship do you think thel( prices today are beyond inflation with a current rate to or are the profits to great? how to read not ruffle too many fathers? >> there was a period when

we went to war in the iraq and afghanistan where we were building up the defense budget. but it was more gradual. what we see right now is the most drastic short-term cut back we have had since world war ii. we could get into a debate should we have a certain percentage of gdp to have that much spending on defense? i would rather see the real qtr2 lookout 20 years and whether the threats? what do we need to meet those threats instead of only have this much money to

spend and hopefully to defend against potential problems. i think it is a backwards way to come to the problem. i don't know of the answers your question. >> i am from "politico." border you doing to convince republican leaders stayed need to negotiate new budget caps fiscal 2016 and what compromises should they be willing to make to get to that? >> this is a need to town. i announced i am not running for office this year so i will be leaving town at the end of the year. as a consequence not a lot of people are listening to anything else i say. i am comfortable with that.

i think we will have goods leadership they will work to solve problems but my concern is getting the national defense authorization act done and we will start the process and move it forward tomorrow with a markup of cover bill. and i am hopeful they will move it very quickly in the senate did we both get it done before we leaf town for others to campaign. >> and p.r.. the pentagon wants to retire but your authorization bill calls for restricting funds to put toward retiring it. why not have the unmanned aerial vehicle also?

to make their sit-in capabilities they hugh to has that henhawk does not and vice versa. we had the general in town a few weeks ago but he also gave us a classified briefing to members i will not get into anything else other than to say in my opinion it is very important that we keep a the u2 flying. >> i am an affiliated. regarding the potential for military amnesty provision with ndaa. >> wait a minute. there is not. answered her question the answer was no. there is none.

>> but the potential for it to come up as a bill in the senate as an amendment. because they lacked proper documentation for then how do you verify the entity? i tried to freeze it as a question. >> it will not be in our market will not be our market. our committee doesn't have jurisdiction. that would fall under the senate judiciary committee if they wanted to bring that forward if leadership wanted to let somebody offer an amendment on the floor then i guess we would work the process. but that is out of my hands. >> we have checked they

informed us it comes under the judiciary committee. it is not in our bill tomorrow. >> i am with inside the pentagon. you do have a book and what have you been hearing what the administration may turn to for her finding and what works out? >> nothing. that is why it is a place holder. we think we know enough about what has been talked about for a mission that we collect. but no decision made, and

when i was in afghanistan last year i thought the most important thing to do was get the bilateral security agreement signed immediately. that did not happen. so dash year with the general he indicated we have time we can still work this out. they held the election with a good turnout and things seem to be moving along well. they have two candidates in the runoff in july both said they would sign the bilateral security agreement that gives protection for a continuing forced to stabilize to help afghan forces. we have already turned the fighting over but it to where they can handle things

that they are not yet able to do for themselves. this comes under logistics' and medevac that this point are not able to do so i am hopeful as we move forward they will hold their election and they will make a decision how many troops with the stabilization that will all be done before september or october. at that point i think some time there will have the number to submit. we will put the number in.

>> thank you. my question is about asia. what about the role of japan especially in terms of self-defense? right now it's government is getting hard. buddies think about that? . .