executive producer and managing editor of political programming for fec news. susan page, washington bureau chief, "usa today". larry lippman, executive editor for state news at the aarp bulletin and passed in pc president. [applause] marco rubio has served as florida's junior senator since january 200011. a native of miami, he previously served in the florida house of representatives from 2000 until 2008 to during which time you serve as majority whip, majority leader, and speaker. first term florida senator mark arubia is one of the many republicans positioning themselves for the presidential primary. this past sunday when asked

whether he thought he was ready for the presidency he said i do. analysts point out an obvious advantage. his potential as a son of cuban emigrants to appeal to hispanic voters who. he was involved in passing comprehensive immigration legislation in the senate. the immigration bill did not endear arubia to the tea party line of the republican party. he has been outspoken in issues that are important. for instance, arubia declared the war on poverty and failure. he would subsidize private businesses to pay higher wages and do away with the earned income tax credit. internationally he supports an activist u.s. role, stark

contrast to the isolationist view point of another potential gop presidential contender, senator rand paul arubia said he should be more involved in china, north korea, venezuela, cuba, more involved in the obama administration. and he said the united states should punish russia for its actions in the ukraine. today he will discuss retirement security, including his suggestions about changing social security and medicare and how to make it easier for young americans to save for retirement . please join me in welcoming to the national press club senator mark arubia. -- marco rubio. [applause] >> thank you for having me. it's my first time here in the

three and a half years i served in washington. all of you would be here to talk about initiatives. let me begin by speaking about the night i was elected. the culmination of a year-and-a-half. a was a pretty difficult campaign. from my mother that i wasn't really just an election. as a promise of the country should come to love. when she and my father came to america and 1956 the camera a little more than the dream of better life. but even with the constraints this rural often on. the service jobs they took were not glamorous, but their artwork was dignified. the love my parents turn what they wanted most, life of

security and a great american middle class. that night as she stood on the stage of me what she saw was the promise of america. just a few decades removed from our party struggle her son had been elected to the senate of the most important nation in the history of the world. the number of never been possible without america and ordered iran possible without the years of sacrifices my parents made for me. sacrifice that allow me to pursue my dream. because he sacrifice some much i could pursue my dreams. my father still worked late nights a first job as an attorney. and even then he still wants to work. significant savings our pension. it was social security and

medicare that allowed them to retire with comfort and security . the pity of care he needed to die with dignity and surrounded by the people of. my mother for chile is still with me, but in recent years for health has declined as well. not only extended her life of preserve its quality. social security continues to provide for financial needs, as she now lives with my sister and her husband and the very house my parents moved us to almost three decades ago. my mother was blessed to of come to a country where a life of hard work could be rewarded with a dignified retirement. now almost four years and my service in the senate is a

question and enters my mind from time to time. what would like to have been like for me before,. in 2006 rather than 1956. get paid or committed to the middle class. i believe the american dream my parents lived still possible. but among too many of our people there is now this nagging sense that achieving as become more difficult than ever. the hope of a stable and secure retirement. the troubles of the last few years have forced millions to build retirement on hold indefinitely. it has even forced some to cut their retirement short and re-enter the workforce. each of the three legs of our traditional retirement stole,

personal savings, pension, social security is wobbling. and if we do nothing each of the three will likely cease to exist as we know them well before my generation retires. the instability of each is caused by a variety of factors. they all share one common cause of the gay. the lack of sustained economic growth this prevents wages from keeping pace with costs affecting the ability are middle-class to save. it also affects the ability of states and companies to fill the pension problems. as earnings stall and unemployment and underemployment spreads it contributes to the erosion of the tax revenue needed to finance social security and medicare. economic stagnation, and especially staggering blow to the retirement prospects of those middle-aged and younger.

americans born after 1955 have a good deal more debt than that generations before them. late bloomers and generation actors who already have low levels of assets suffered significant losses during the recession. now, we hear financial experts talk all the time about how we should save for retirement. people were maxima out their retirement and savings for the future that wonder how the afford to do. my car mortgage payment costume loans, the grocers in the kid school tuition, at that summer living paycheck to paycheck and the smile was rising in value and we could one day selig and use the profits to provide for us in earlier years. now we have also have lost much of their value.

even for those a will to put much some money aside for retirement persistently low interest rates, about as useful. our only hope is a social security will give them enough to get by. this charlie truth of that with an aging population, a chronic fiscal responsibility, social security trust fund is driving out. we will be insolvent by your 2033 taken together these factors have created a real and looming crisis. for my generation and especially for my children's generation the future retirement in america is very much in doubt. i turned 43 years old later this month, although i feel 44.

if nothing changes by the tar reached for retirement age for social security and medicare was been solved years. not a doomsday scenario concocted to spur action. a mathematical certainty if things remain unchanged. along the way to address this the harder it will be a fix and the more destructive those fixes will be. there appears to be no urgency. to many politicians, quite frankly in both parties lie in wait for their opponents to raise is true so they can pounce, so they can accuse them of wanting to take away medicare's of security. i have no doubt that my suggestions here to there will be used against me to try and convince seniors, contains the benefits that works hard for. it would not be the first time

that such attacks and then hurled in my direction. let me take a moment to address those year now. first my mother depends on the social security. i would never and will never support anything millard my mother retirees. second, anyone who is in favor of doing nothing allows social security and medicare, i have come here today share a few ideas about what can be done to reverse our retirement crisis. an agenda that cuts government spending and spurs economic growth is the single most important step toward stabilizing the three legs of the retired tool. we aim to create economic growth and as such combined to form step one of my plan.

what these reforms is done as a target of federal anti-poverty program, higher educational system, the factors inhibiting a secure retirement and the policies keeping us from innovating modern jobs will all lead to growth which will help americans earn more and save more. no plan to avert a retirement crisis will work without robust and sustained economic growth in the years to come. but while growth is essential growth alone will not be enough. for the retirement system we have in place simply does not line up with the needs and the reality of our modern postindustrial economy. in this new century most people will live longer and voluntarily work longer, and many people will change jobs countless times, often in business for themselves are working for companies that did not offer retirement savings plans or pensions.

their retirement programs must be modernized and restructured to address the new economy that is here to stay. today am proposing we do so by three broad reform goals. the first is to make easier for people to save more and work longer. the best way for americans to guarantee security and retirement is to gradually build a nest egg of savings. plan carefully, starred as far enough in advance, simply no substitute for this method in ensuring a comfortable retirement. social security was never designed to be the sole source of retirement come. it was designed to be a supplement. for people in my generation, it will be the really. that can be tricky. the start putting a web money can be check your.

and as growth has slowed in 97 left to languish saving a started to look like a luxury rather than a standard practice. instead of -- in fact, 36 percent of americans of less than a thousand dollars saved up for retirement. this problem, by the way, is especially prevalent among african-americans. one study last year found that 76 percent of americans are living paycheck to paycheck. making matters worse, the nature of work in america is rapidly changing. yet our retirement programs and savings plans have failed to address to adjust accordingly. drop most of the last century you can leave school, go work in a local company factory, stay there for 50 years and then retire with the pension. our retirement programs originally built with this sort

of reality in mind. * unchanged. today there are 75 million americans working for employers that an offer retirement plan. those that to have access to an employer plan probably won't for their full career. that is because the average worker's stays at least up for only about four and a half years let's call him the average worker. 91 percent of the money and generation says the unexpected stick around each up to three years. this means that they can have 15 to 20 different jobs over the course of a career. many americans figured the unpredictability of modern careers is made employer sponsored plans a thing of the past. even with these plans many employees and not made aware or choose not to go. given this is no surprise that a burst into people ages 3254

believe that won't have enough of the bank. ironically and unfairly they have to worry about this retirement savings and investment plan. additional employer sponsored 401k allowing federal employees to save pretax money for retirement. one of the most efficient saving plants in america. it charges fees which are a fraction of those in most private defined contribution plans. that allows beneficiaries to save more. here's the twist of irony, members of congress who are employees of the citizens of the united states have access to a superior savings plan. many of the american people who are often left with access to a planned all. i propose we give americans to do not have access to an

employer sponsored plan the option of enrolling in the federal thrift ratings plan. opening congress's retirement plan to the american people will allow us to bring the prospect of a secure, comfortable, and in the pen of retirement to the reach of millions of people. at after dealing with the savings crisis way to ensure that older workers have the ability to work as long as anyone without being punished for. as the tax code currently is written those it keep working past retirement age continued their pay social security taxes. this encourages some seniors to put the work force before they would otherwise. in order to remove this disincentive we should eliminate the 12 percent social security payroll tax. the seniors have already paid their fair share, and we should

not punish them for choosing to keep working rather than immediately cashing in. a salary savings by letting them keep more of their own money. could also make older workers more attractive to employers. eliminating the social security payroll tax for seniors will likely result in older americans choosing to work wonder. seniors who choose to keep working will improve their personal retirement security and decrease dependency on federalist programs. this payroll tax on older employees is not the only way we discourage seniors from voluntarily continuing to work. those who choose to claim the benefits early while they keep working are subject to what is called the retirement earnings test. under this test benefits are reduced to approximately $0.50 for every dollar a person turn

the ages of 62 and 65 burns in excess of $15,000. this essentially equates to a 50 percent tax on benefits on top of all other taxes being paid to its is the payroll tax budget. americans were credit until the age of 62 and then into retirement before the start incurring this panel that. it does not save us any money because when a senior hit by this tax finally retires, the benefits are hiked way up to make up for any loss, as. the benefits in the being mostly the same with or without the retirement earnings test avoid paying the 50 percent tax on their social security benefit. we should eliminate this test altogether.

early retirees by 5%, a significant increase for reform that has no long-term budgetary cost. why should we be pumping the labor force of more workers? the reason that a senior stops working, we won't have enough jobs for young workers. it's an interesting theory, but it's not our works out and practice older workers actually boost the number of jobs for younger workers. the employment rate for older workers rises these reforms will help more people save for retirement and allow more seniors to choose to work on the

this will foster a balance retirement and the fewer of america -- your american sole dependence of security. all social security should not be our only source of retirement income, it must remain a significant supplement to our post-retirement income if we are to prevent their retirement crisis. our second reform goal for guaranteeing a secure retirement is to enact reforms to save social security for future generations. the basic rules of failed to adjust accordingly. rather than pastor for many in washington think the answers to double down the current program. simply confuse more money into the. but failing to modernize social security is eventually going to lead to an outcome we cannot buy our way out of. my answer is to build this

outdated system in the substance wordy of the 21st century and that's designed to sustain all seniors and last for generations this requires taking into account modern realities may now choose to work well past the age a return. if you have any doubts about that i encourage you to come see the united states and of work. that's not going to go over well . people are working longer because people live and want it. if he turned 21 and a hefty 40 a chance of living up to the retirement age is only about 55 to 60%. she turned 21 today your chances of reaching retirement age around 80 percent. this is good news, what this means in practical terms is that whenever a record number social security beneficiaries. for his beneficiaries are living in another five to ten years

longer the social security release recipients. increasing the retirement age by two years from 65 to 67. in the long run this simply won't work. the answer is to gradually increase the retirement age for future retirees to account for the rise in life expectancy. if reaction we can do this without changing the retirement age for people who are currently over the age of 55. we also need to look how we calculate initial benefits. we need to provide a stronger safety net for those of the bottom of the income scale. they leaned heavily on social security to help the through. grandmother still does. many to make sure the seniors like my parents who work low-wage jobs will lives aren't confined to poverty in old age on the other end of the spectrum are retirees with very high incomes.

for wealthy retirees month in social security benefits is a less significant portion of the monthly finances. the answer is to reduce the growth of benefits for those upper income seniors while making the program even stronger for low-income seniors. this is the cut. it is simply a reduction in how fast the benefit will increase for wealthier retirees. it is one of the best ways to save the program. her third and final goal was a most difficult, saving medicare. as i stated earlier medicare is deeply personal to me. when my father got sick medicare pay for his numerous hospital stays. in his life in comfort and dignity by paying for a sauce is

care. like most 83 year-old mother has several age related elements, but without the quality of care that medicare paid for i simply cannot imagine what her life would be like. ..

>> talking about medicare reform was a third rail of politics. it seems more people were willing to discuss serious ideas about having to save medicare. any serious effort to save medicare needs to first take a hard look at recent reforms and what they tell us about what works and what does not. obamacare transporters will old last month and it raises the iconic question, are you better off than you were four years ago. the answer for the nation is an unequivocal no. jobs have been lost on our seven cut, employers have been forced to drop coverage and premiums have skyrocketed. millions have lost coverage they were happy with. obamacare has hurt medicare by cutting $156 billion out of

medicare damage. this cut was a grave miscalculation. medicare advantage is a shining success story the millions of seniors like my mother relied upon. in short, it's a program that allows you to receive your coverage from a private provider using funding from medicare. and this tax on all kinds of value added services for seniors. one of the reasons my mother picked her current provider is because in addition to good doctors coming to pick her up in a drive her to her appointments. this sort of competition in the marketplace invariably leads to two very good things. a decrease in prices and an increase in choices. and this is also at the heart of another medicare success story. medicare part d. this market-based program, seniors have at least 28 different prescription drug coverage plans to choose from. and this competition has worked as a powerful cost control

mechanism, this has made it a booming success by every conceivable measure. the congressional budget office found that the total cost on track to be 45% or $340 billion less than the initial ten-year projections. average monthly premiums are expected to be $31 and 21 -- 2014. 95% of seniors enrolled find it convenient for their needs. what comes to a broad and comprehensive medicare reform plan, let's learn from the mistakes of obamacare and the successes of programs such as medicare advantage and medicare part d. let's dramatically expand health care choices for seniors, spur competition in the marketplace and extend the solvency of the medicare trust fund while making sure that traditional medicaid remains an option. in order to do so i propose that

we transition to a premium support system and to give seniors a generous with fixed amount of money with which they can purchase health insurance from your medicare or from a private provider and the choice would be theirs tonight. my friend paul ryan is a leader when it comes to medicare reform and i supported a couple of key proposals to fix the program that were detailed during my 2010 race. since then he has teamed up with senator wyden to propose a bipartisan plan to institute premium support model. under plans such as these, the government contribution would be part of traditional medicare or whatever it to this. this way the seniors choose the plans that cost more than a benchmark and they would have to pay the difference. but if they choose the cheaper plans they would choose to keep the savings.

and this includes traditional medicare but for less money. the cbo predicts that medicare spending under a premium support plan would be 14% less per person than under the current system. and this extends an impartial hand to all seniors for generations to come and i was standing in the alternative is welcoming our first child home, as these years go by an older i get come in the more i am

reminded at how quickly things move and how it's never too late to start planning ahead for the next phase of life. as a citizen and a husband, this means saving for retirement or add it means seeing what it will take to be ready when the time comes. a member of the united states and i'm sure another responsibility. the responsibility to save the time honored institution that has long been that the service of the time-honored among us. and this includes comfort and peace of mind. the responsibility to aid these programs forms to all who are elected to serve. yet many seem to have forgotten that we are here to pass. not posture politically. they forget that issues such as these are the why of politics. not just optional dirty work. partisan politics in america has

always been contentious. but throughout our history, this issue of importance come our leaders have agreed to put aside politics for the sake of our people. if ever there was an issue worthy of the solidarity, and should we fail to address it, history will point its finger at all who stood aside or stood in the way. today i present an agenda for addressing this crisis head-on and i'm eager to work with anyone, republican or democrat who will work in good faith on these reforms. and ultimately i believe we will solve the retirement challenge before it's too late and we will solve it because rising to challenges is what we have always done. we will solve it, because we must, for the sake of our children and our children's children, we will solve it because once we do the american dream will be brought within

reached. and history will continue to shine for many generations to come. >> thank you, senator rubio. [applause] >> what you believe would be the consequences of failure to take legislative action? >> programs will cease to exist as we know. the longer we wait, the more disruptive the changes will be. that is what i want is to avoid. the moment of truth will write one way or the other. at some point we simply don't have enough money to continue to offer the benefit. and we never want to reach that point. the closer we get to that moment in time from the more disruptive

and chaotic it will be. and the longer that we wait in the more disruptive this will be, the more significant reforms will have to be in the deeper the climb will be. if you do this with some foresight you will be able to gradually to bee stings and worried it will not impact the current beneficiaries and will be somatic for future beneficiaries. >> you believe that social security finance personal savings need to be enacted together or is it sufficient to take these objectives one at a time? >> i don't office processes conducive to doing anything at one time. but i certainly think that they both need to be done. every year that goes by it will get harder to deal with social

security and the solutions can be more disruptive and painful. and this includes those that don't offer a retirement savings vehicle and they could go into a financial institution and apply for it. so you probably neither have the time or the inclination to go to your local financial institution and apply for this even if you make enough money to be able to say. one trying to do is create an additional vehicle that is easy to access that allows those two keep pretax money aside and compounded over the years. and if we'd ever do have a retirement plan, they could roll that into their new employer's plan. but i think it's critical that we create more awareness and access are people to be able to put money aside pretax way for

their retirement. >> how would you propose making up for lost revenue putting these dollars into it? >> a couple of points, many people who take advantage of this, their income is at a level where they are not a significant part of her income tax system and they are paying payroll taxes. but many people are not making that much money right now which is one of the challenges that they have read the other thing is long-term. this is the cost of government that they can absorb one way or the other. if they don't have significant retirement they will have need and we are a nation of compassion that is not going to allow people to of her. we are going to address in one way or another and i think better to allow people to address it for themselves. but it will be significant enough for us to create another option and just because you were

to wonder where they don't offer offer a pretax savings plan, were not going to make it easier for you to access this. even if you have the legal right. i think it's important for all americans have the ability to not just know about pretax savings for their retirement, but the ability to do it. it's good for our country and our long-term finances. >> why does it take so much legislative attention to improve this were seniors?

spirit partially because it happens on any level. a part of this is due to the people on both sides of you out to say this is a priority for our country and part of it is we are trying to make this nation from the last century to a new century. and this is also true in the private sector and we have so many people over the age of 62 who want to continue to work that are still productive and were quite frankly, not only because they need to but in many cases because they want to. >> averages like to hone in on

the specific questions. do you think social security and medicare benefits will still be offered when you reach retirement age? >> that is actually a choice. if you want them to be offered, we will have to make some changes due to the way that the program works for my generation. i think that is important to point out. i am discussing changes and it will look different because we are going to work longer and longer than our parents generation and we are going to have to make that acceptance. and i think my generation is good about her at that. that's a choice we're going to have to make. if we do not make these choices now, all i can tell you is that from the budgetary figures that are available, these programs will not exist. the question is not if medicare will be reformed that they will be reformed one way or the

other. the question is whether they are performed in a way that is less disruptive and more productive or in a chaotic emergency way as we have that moment of truth. >> earlier this week he rejected scientist assertions that human activity is causing climate change, and how does this work

>> what other conclusions have you done that human activity is not to blame for climate change? >> i have never disputed this and i have pointed out that it never static. but that's not a question before is a policy. the question before me is a policy is we ban all cool in the united states and if we ban all carbon emissions in the united states will it change the

dramatic changes in weather impact that we are reading about. anyone who says that we will is not telling the truth. the truth is that the united states is a country. it is a planet. there are things we can do to become more efficient and develop alternative sources of energy and things we can do to be better in the stewards of the resources that we have like natural oil and gas. but for people to say if he passes bill that i'm proposing, this will somehow lead us to have less tornadoes and hurricanes, that's just not an accurate statement. that's what i take issue with. >> how should the united states prepare itself and its citizens to deal with rising sea levels when the catastrophic one is likely to follow them at.

>> as we pointed out earlier, have no problem with the mitigation action as we did in my time as speaker of the house. we were hit by five hurricanes in the summer of 2004 and 2005 and we took steps to encourage people by finding savings and insurance programs to earn their homes against the occurrences of these storms and likewise we would spend an extraordinary amount of money and drainage programs in florida and especially in south florida because much of south florida is built on a former swamp called the everglades. and we have developed very expensive population centers that are avoidable or natural disasters. whether it earthquakes in the west were tornadoes in the midwest or hurricanes in the southeast or tsunamis in the asia pacific region. the bottom line is that natural

catastrophes have always existed and as we build out population centers, we will have to take mitigation action could account for that. >> turn into another subject, a year ago you were a key figure in shaping a bipartisan immigration bill that passed the senate and was installed in the house. what are the chances that immigration will move in the house this year. >> i'm not a problem encased in business we have in immigration system that is not responsive to the economic realities of today and that needs to be reformed. we have an immigration system that takes our economy and mayor and skills and to mine and quite

frankly we propose is in the senate to do this and it shifts our immigration system from one based on family reunification towards one built on merit and skill. and this includes the hiring here and we have no effective way of tracking visitors to our country and to make sure that someone exits before the visas expire. in the absence of reform, we are going to continue to have an immigration problem and then we have the reality of 12 main human beings that are here legally but they are here. and while we debated this issue there was a lot of opposition to it, not a single member of united states senate filed an amendment that would call for the rounding up the deportation of 12 million people. and the reason why is because as a country we're not going to do that.

or also not going to blanket blink at the honesty. somewhere along the line we have to adjust that and there are 12 million people here and we have to ensure that never happens again and we have to deal with that reality and i'm obviously open to those suggestions and that has to help in as well as part of the reform. i think the impediment is that people are concerned that we will only do the aspect of this legally but never we will you do the reforms to the enforcement programs of what they fear in a decade for now we will have a repeat of this problem as happened after the 1986 reform. so critical is achieving medical reforms on the front and to not just modernize our immigration system but to put in place verifiable enforcement mechanism so that americans have confidence that we are dealing with the problem that we have now and this palm is not going to happen again.

this is the impediment that we are facing right now. >> your participation in these negotiations cost you some supporters and conservative republicans of you have any regrets? >> i regret that we did not get more support for it because it's an important issue that we must tackle. i ran for office to make a difference. i understand politically and i knew about the perils of this issue go in an unfamiliar with its history and the reason why it hasn't passed over a decade and quite frankly, much of the opposition that we faced was legitimate objections of people hot and real concerns that need to be addressed. the flipside, of course, is i came here to do something and i understand that politically

easier thing for me to have done is to let someone else the most propose a bill and file a bunch of amendments on how i would do it if i was i was in charge of some of them in and say this is what i would've done and i get that politically that would've been a smart thing to do and i actually want to solve this issue and i came here to make a difference. i didn't come to his sign-on for letters and give speeches. i try to propose ideas and one i have those ideas to move forward. and this is just not a theoretical issue, this impacts my state dramatically and i have seen every aspect of this issue including the good and the bad and the ugly and i believe that this needs to be solved and needs to have a legal immigration system that allows us to have this for talent. this includes our national security and we did have immigration laws that we can enforce and we need to address the fact that we have 12 main people living in this country illegally and this includes one that is responsible and reasonable and their are some

political perils. i made a decision when i got involved in public service that i would do so in order to make a difference come and not something to score points and sometimes that makes you well-liked and sometimes it makes it controversial. but the only thing that makes it worth it. >> i do have a few questions in the area of politics. >> i wouldn't would just say someone decides to run for president of the united stated, i don't believe you can run effectively for an office of that magnitude and others may disagree and choose a different route, but that's my feeling of someone decides to run for an office about important to do so because that's what you want to do and we are not simply trying to find some kind of project

button to get out of it but that is your personal opinion. >> i think that governor bush would be a formidable candidate and i know that he is going through his situation but what he wants to do. i think when someone contemplates running, you do so based upon this great care to establish yourself in this includes the exact same thing.

>> to in your estimation is the strongest democratic candidate for 2016, and why they matter. >> probably harry reid. [applause] [laughter] >> i'm not really an expert on democratic primaries. so i don't know the answer to that question other than to lay that we certainly have our own process. and i think any presidential campaign would be highly competitive in both parties are well-funded. >> we are also almost out of time. but first we have a couple of housekeeping matters to keep maternity care. i'd like to remind you about our upcoming events and speakers. on may 27 and this includes

doctor ben carson, neurosurgeon and author. and next i would like to present our guest with the national press club mug. [applause] >> senator toomey mention this was the first time you've spent at the national press club and we hope that you will be back. [applause] and one last question, if you do become president, which democrat will you invite to your first summit? >> that is a good question. >> the current president has had a few.

>> probably joe biden because he always tells good jokes. >> how about a round of applause? [applause] >> thank you for coming today. i would also like to thank the national press club staff including the journalism institute and broadcast center for organizing today's event. if you'd like more information about the national press club, >> i am the vice president and

director of economic studies in the brookings institution. i am pleased to introduce keynote speaker and director of the federal housing finance agency. we are thrilled to have the director here today to give his views on finance. are now approaching six years of fannie mae and freddie mac placed into conservatorship. ways, there are fundamental structures that are unchanged.

the regulator and conservator of fannie and freddie and the , prior to that, a member of the u.s. house of representatives representing the home state of north carolina. lawre that, he practiced for 20 years specializing in minority business and economic development law. the director served on the subcommittee on government-sponsored enterprises and financial institutions and consumer credit on the house financial services committee. he also introduced anti-predatory lending legislation to combat the mortgage lending market. with that short summary, i am glad to let him take it away. question andve a answer session and we will open it up to you.

that panel will be nominated discuss fannie and freddie's role and the roles pending in congress. please join me in welcoming director watt. [applause] >> good morning. good morning. that's good. let me start by thanking the folks at brookings for hosting us. his kinding ted for introduction. a number ofand that you have been waiting to hear from me. and that some of you have been expecting me to say

something sooner than now. i was sworn in on january 6. except for speech last week federal home bank system you have not heard a word for me. not a p. not a press interview. not a speech. not a word. so some of you are probably wondering has this guy made a cold turkey transition from member of congress, outspoken to policy wonk regulator? what is up with this guy? morning toou this talk for a little bit. you have not heard much from me but it has -- does not mean that we have not been working since

january. fha has continued to carry out its responsibilities as the regulator of the federal homeland banks and as the conservator and regulator of and freddie mac. many of these decisions and responsibilities are often considered routine and may go unnoticed but they are absolutely critical to the effective and efficient operation of the housing finance market. i cannot touch on all of my responsibilities in my remarks today but i wanted to give you a we have beenat working on since i arrived and i you some will provide insight into the direction we

will be headed in the future particularly with reference to fannie mae and freddie mac. in addition to overseeing our day-to-day operations, my work has also involved an overall asessment of fha as well fannie and freddie. witnessed theme i of fhtion and expertise at face staff at all levels as well as the tenacity and indication of the employees of fannie mae and freddie mac who continued to stay the course during these most if a cold and uncertain times. i would be remiss not to acknowledge and thank the staff's for their hard work.

there has been a constant urgency since the financial crisis. want to thank ed dimarco for his lifelong career in public service including the time as in thedirector of shf ap face of general great economic collapse, the biggest one since the great depression, fhfa director for event an extremely bad situation from getting much worse. it is hard to imagine things being worse gives -- given the depth of the housing market collapse but i very much

believe and add dimarco's leadership prevented an even deeper financial collapse by stabilizing fannie mae and freddie mac. at fhfaut his time director was ensure mental in establishing the foundation for all that we will do going forward. notice for myay comments today certain changes in focus, you should know that i firmly believe that we will be building on a very solid foundation. as part of an overall assessment of the agency we have been very focused on the numerous policy decisions that were and are in the pipeline. in making decisions about the future strategic direction of

the enterprise conservatorships the principal we are following is how best to fulfill our current obligations under current law. this means first and foremost that we must ensure that fannie and freddie operate in a safe and sound manner. it means that we will work to reserve and conserve fannie and freddie's assets and it means aat we will work to ensure liquid and efficient national housing finance market. fhfa directorat and sees obligations and that is a message i will come back to throughout today's remarks. another way of stating the principle that will be guiding us is that fhfa director is

focused on how we managed the present. the present conservatorships of presentrprises at the housing fight market. under the present statutory mandates. let me say that again. is to manage fannie undereddie in the present current statutory mandates. one topic that is not on the agenda because it is not part of our statutory mandate is housing finance reform legislation. my guess is that they are many people who would expected i would talk about gse reform,

legislation, the minute i got to fh fa. aware and regularly express my leaf that conservatorships should never be viewed as a remnant condition or as a desirable in state. and that housing finance reform is necessary. our task is to continue to fulfill our statutory mandates to execute our strategic plan and to manage the present status

of fannie and freddie. so today we're releasing a new for thec land conservatorships of fannie and freddie along with their 2014 scorecard. aroundcuments are built three strategic goals. maintain, reduce, and build. i would like to walk through each of these goals and discuss how they build upon and in some fa passedrmulate fh conservatorshiph goals. maintain in a safe and sound toner foreclosure prevention

foster liquid efficient competitive and resilient national housing finance markets. goalirst strategic maintain, require standing -- fannie and freddie to carry out in strength and where possible three aspects of their core operations. we expect fannie and freddie to take actions that the presentidity in single family housing finance market. second, we believe they should continue to improve servicing standards and foreclosure prevention actions. and third we think they have a

critical ongoing role in the multifamily sector particularly for affordable multifamily properties. areas ourse three overriding objective is to ensure that there is broad --uidity in the phones housing finance market and to do andn a way that is safe sound. the maintain goal is not a new one for the agency. increased placing an emphasis on it. we are leading with maintain as the first goal and our strategic plan and scorecard. we have doubled the scorecard

from 20% 40%. let me begin my remarks about single-family liquidity by discussing representation and warranty standards and when these trigger repurchased demands. repurchase risk remains a top concern for the mortgage industry. lenders believe there is still uncertainty for this area to ease their credit this undermines the goal of improving access to mortgage credit for credit worthy errors. with extensive discussions fannie, freddie, and lenders over the past several months we of making a number

refinements to address some of these concerns. as we authorized and as fannie and freddie announced yesterday they're going to relax the payment history requirement for granting representation and twoanty relief by allowing delinquent payments at the acquisition. levels also get loan confirmations when mortgages meet performance benchmarks and when they pass a quality control review. the enterprises will also eliminate automatic repurchases when a loan's primary mortgage insurance is rescinded. work refinements build on

in 2014. process worke better for one. we now that more of prevents are needed to provide additional clarity. one area we are proud -- prioritizing is addressing the scope of life of loan exemptions. we know that lenders are concerned about how these exemptions apply to loans that have passed quality control reviews or have met the 36 month as work and we will work toward clarity on this issue. over the course of this year, we will also explore the following. establishing an independent dispute resolution program when lenders believe it repurchase is

unwarranted. mechanisms for loan defects rather than relying solely on repurchases and providing additional clarity on fannie and freddie underwriting rules. there are two other issues i want to comment on that relate to the overall scope of single-family mortgages guaranteed by fannie and freddie. the first one involves loans with debt to income ratios above 30 -- 43%. current fannie and freddie guidelines make some of these loans eligible for purchase when the borrower has other compensating strengths.

our ongoing safety and soundness obligations we will of course continue to monitor performance data relating to these factors. the second issue involves loan limits. as market participants are hfa released a f proposal last year suggesting that the agency might use this conservatorship authority to lower the mortgage amounts eligible for guaranteed by fannie and freddie. many groups and individuals submitted feedback in response to their request for input. i am announcing today that fhfa

will not use as -- its authority as conservator to reduce current loan limits. this decision is motivated by concerns about how such a impacton would adversely the current health of the housing finance market. the next part of our maintain goal involves continuing to he -- and improve service servicing and foreclosure prevention standards. experiences in recent years have revealed serious weaknesses in the servicing industry and in the foreclosure or mention alternatives offered to borrowers.

as part of the focus in this stabilizerking to communities hardest hit by the foreclosure crisis. launching a we are neighborhood stabilization initiative with fannie, freddie, and the national community stabilization trust. phase one of this initiative is a pilot program in detroit, michigan. we are pursuing pre-foreclosure and post-foreclosure strategies that include deeper loan modifications and partnering with nonprofits earlier in the real estate-owned sales process.

fhfa believes this will be a win-win for hardest hit communities and for our conservatorship objectives. we have also received a number of inquiries about changing the eligibility requirements. because the number of borrowers we could add by extending the eligibility date or by changing performance requirements is relatively small, we have decided not to alter eligibility promoters. working to reach our good our outreach efforts to the

borrowersely 750,000 who already qualify and would financially benefit from refinancing. we are exploring outreach efforts designed to gain the trust of these in the money borrowers so they will take action to refinance. it is already in their financial interests to do so. the goal extends to fannie and freddie's multifamily loan businesses. the is a critical part of way 14 strategic land particularly in light of the increasing number of households who are renting and pseudo-phoning in recent years

and the fact that the affordability continues to be a significant concern for many households. our way 14y, strategic plan does not require a reduction in fannie and freddie's multifamily production levels and it provides additional capacity for affordable multifamily projects. consistent with safety and soundness our affordability focus will include multifamily lending for small properties and manufactured housing rental communities, much of which takes place in rural immunities. expect market competition in

2014 to actually result in lower multifamily levels for the fhfa will nott mandate that the enterprises prematurely shrink their multifamily footprint. i am on to the second goal. [laughter] strategic goal number two. educe taxpayer risk through increasing the role of private capital in the mortgage market. reduce taxpayer risk through

increasing the role of private capital in the mortgage market. 's second strategic goal, reduce -- it is focused on ways to bring on additional private capital into the system in order to reduce taxpayer risk. we have reformulated this goal so that it no longer involves contract thes to enterprise's market presence which could have an adverse impact on liquidity. , the reduced goal focuses on ways to scale back fannie and freddie's overall risk exposure. this approach allows us to meet our mandates of upholding safety

and soundness and ensuring broad market liquidity. while fhfa has reformulated the strategic goal, our strategy is to reduce taxpayer risk, build on much of fhfa's past work in this area. this includes having fannie and freddie conduct additional for theirk transfers single-family guarantee business. these transactions have opened up private capital to share and credit losses which protects taxpayers from bearing all of the potential losses. scorecard requires each

enterprise to triple the amount of risk transfers in 2014. fromwill be an increase balanceion of unpaid transfers last year to billion inly $90 2014. on top of increasing the amount of credit risk transferred, the we also expect each enterprise to try new risk transfer structures to assess sustainability in different all of thistions. is consistent with the commitments i made to the senate banking committee during my confirmation process. in addition, we are requiring ongoing reductions in the

enterprises retained portfolios. the senior preferred stock purchase agreements with the treasury department require the enterprises to reduce their portfolios to no more than $250 billion each by 2018. fannie and freddie must develop plans to meet this target even under adverse market conditions. we are also requiring them to prioritize selling their less liquid assets to reduce risk and take advantage of current investor interests. as their portfolios continued to effect is to transfer interest rate risks and liquidity risks from these portfolios to the private sector.

multifamily purchases we are requiring the enterprises to continue sharing risks with the private sector which freddie mac does through a capital market fannie mae does through risksharing model. both approaches transfer a significant risk to a private rocket and have had strong through theeven economic crisis. we expect these models to continue. reductionother risk priority in 2014 involves insurancertgage counterparties. this work will strengthen master policies and eligibility standards for private mortgage insurers.

mortgage insurance is a critical source of private capital in the mortgage finance market. however, as we all know, the crisis reveals severe weaknesses in the system. ensure thate is to private mortgage insurer counterparties to fannie and freddie are able to provide adequate credit loss projection in times of market stress. onto strategic goal number three. strategic goal number three. build the new single-family securitization infrastructure for use by the end prizes and

adaptable for use by other process appends in the secondary market in the future. single-family securitization infrastructure for use by the enterprises and adaptable for use by other participants in the secondary market in the future. 's final strategic goal is to build a new infrastructure for the enterprises securitization functions. of this effort is the common securitization platform and i want to talk about two aspects of this today. first, after extensive and theon within fhfa

enterprises we have clarified that the agency's top objective for the common securitization that it is to make sure works for the benefit of fannie and freddie. over the last four months we have identified the risk involved in transitioning to a common securitization platform and reviewed how to manage those risks. cause of the the many variables involved, the csp effort to the would be preserving too many objectives at the same time. waye any stumbles along the could have ripple effects in the $10 trillion housing finance stake, there is a lot at

in getting this right. as a result, our decision has been to de-risk this project. moving forward, we will focus our efforts on creating a common securitization platform that can undertake fannie and freddie's current securitization outcomens. a successful would be a seamless transition from the current in-house systems that issue new securities for each enterprise to a future joint venture owned by fannie and freddie and operates one system with updated technology. defining the scope in this way building a cspat

for a future housing finance system that is not yet defined is extremely risky and could add needless cost. this scope does not mean that oddssp effort would be at with the future -- future housing finance system or that our process will take place in a vacuum. to the contrary, we are requiring that the csp leverage the systems, software, and standards used in the private sector whenever possible. this will ensure that the csp will be adaptable for use by other secondary market actors including private label securities issuers when the future state is more defined.

our second objective for the common securitization form is to singleterprises toward a common security which we believe will improve the quiddity in the housing finance markets. it would also reduce costs to the enterprises gingerly freddie security hasddie's historically drew -- traded at a this is compared to fannie mae. adding a common single security willnent to the csp scope and the enterprises partners security along with shared contractual and disclosure acquirements.

along with fannie and freddie have made great progress on developing the common securitization platform. but all the components of the cst including the common single security will require a multiyear effort before final and -- implementation. defined the parameters of -- as i have described today we are well-positioned to move forward. throughout this process we will provide opportunities for decisionsr input our along the way. and releasing the 2014 strategic plan my goal today has been to

provide a clear sense of direction for the enterprises ongoing conservatorships. implementing these objectives will require ongoing analysis, evaluation, and input. will proceed with these steps in a transparent way that correlates the feedback of the public and stakeholder groups wherever possible. one example of this approach is our upcoming request for input on the guarantee peace -- fees charged by fannie and freddie which we will release very soon. as many of you know on my second day as director, i issued a directive to fannie and freddie that they delay the increase

announced in december of last year. in our quest for input we will pose a number of questions the agency is considering and we solicit and encourage your feedback. we will review your responses and we will announce a decision later this year that is consistent with the goals that we have outlined in our strategic plan. .e this concludes my remarks i want to thank you for your time today. i look forward to working with all of you as we implement our strategic plan and is fannie and freddie and fhfa implement the 2014 scorecard. thank you. [applause]

>> thank you again. that was a true fix each and -- there.ots in their by, you do not want to talk about housing finance legislation which i can

understand. there is something that intrigued me after that. conservatorship should never be it is permanent. i guess my question is i think increasingly likely we might not have a housing legislation or at least not for a number of years and so then my question is, what happens to conservatorship where we are approaching six years, you say it should not be permanent. do you have the authority to and conservatorship and if so what does that look like, at what point do we say it is over and what conditions have to be met? >> we have the authority to and the conservatorship. the statute gave us the authority to start it. and i think it goes with that. the authority to end it but the alternatives would not be will --e so i think i our role and the reason we worked so hard is to make sure we have a solid plan for

continuing the operations of fannie and freddie and the soeral home loan mortgage that there will be liquidity and efficiency in the housing market we continue to operate as we have operated without interrupting housing finance in this country because housing finance is such a critical part or standonomy to stop in place is simply not an option. we will continue it and our goals are consistent with continuing the operation of fannie and freddie in the here and the now.

we will do that until there is legislation passed. be have answered this. the end of conservatorship, you can see the different things being debated on the hill. is they getomes wound down and the other is they get -- exist as they currently are. that final outcome, you do not do you?he end of, >> all of my focus for the last four months has been in the present and doing what we are doing in the short term letting theress run its course and we will see what happens after that. >> there is a lot in your

speech. there is one thing you did not mention. that is principal reduction in principal reductions, the benefit was too small. is stillomething that considering. this past. know we have evaluated in the short term and found other things that we need to focus on at the present. we continue to study not only that issue but a number of other issues that i did not talk about in today's speech. i told one of their reporters earlier that it would be interesting if all of the things we talked about today, the focus would be on the things we did not talk about.

i keep this running list of issues that i call my water hose issues. they started out coming at me as one big fire hose and we have separated them into individual water hoses. there are a bunch of them on a list that i did not talk about today. principled rejection is one of those. that doesn't mean that we are not considering it. it means that we are not ready this point.t it at and that is the same category that a lot of other issues fall into. chris lovett -- let me take this back to the multifamily caps. i would like to get your sense of it seems to me like you started your speech by acknowledging your predecessor and mentioning a shift in focus or maybe priorities. does this substitute one of the

shifts in focus? lowering the cap and giving additional flexibility, if so, what is your thinking on the role that fannie and freddie play in affordable housing? >> i have not thought about this whole focus issue. good,e tried to make reasoned decisions create we tried to understand the history of how every decision was made and why it was made. i'm not focusing on whether we did not shift focus. everything that has taken place in the past has created the foundation that allows us the flexibility to make good decisions in the present. we actually think that competition in the multifamily sector will decrease the role of

fannie and freddie. mean they willl not reach the caps this year. the more important part of it is there seems to be a lot less competition in the affordable incentivize want to fannie and freddie to continue to play that role in the affordable space because people need housing and they have played the role successfully and with minimal risk through a very difficult time in the economy. it is not as if there increasing risk but for us to arbitrarily decrease your footprint without knowing that somebody is

stepping into this space was not we thought was a prudent thing to do. >> in your strategic land newly out a lot of your statutory responsibilities and there are many. so do not envy the task. one of them is you are responsible to insure that fannie and freddie maintain adequate capital. that is a little bit of a challenge. i am curious what your thoughts on that is, is that something you spoke to treasury about or will this be current policy and how do they build their capital space? >> i cannot control that i do is think. the taxpayer providing significant capital. so capital has not been an issue

that we have had to focus on for some time. it was a major issue because fannie and freddie were making draws. their financial conditions have stabilized and while a lot of their income in the last two or aree years has been recoveries, financial recoveries, tax adjustments that will not be sustainable in the future to my we want them to continue to operate in a sound that.d we are focused on we do not spend time fixing .bout things we cannot control i am sure i would think that