day of february 2012 as arizona centennial day. [ cheers and applause ] >> governor jan brewer in phoenix earlier today, and the u.s. postal service also issuing a commemorative stamp marking the 100th anniversary of arizona becoming a u.s. state, the 48th state in the union. ed mel, who is an arizona artist, depicting cathedral rock, which is one of arizona's red rock formations. it is now one of the forever stamps also unveiled today. happy birthday, arizona. it is not only arizona's birthday, it is, of course, valentine's day. and the president, as he points out, the blue state, he had a decidedly red day in the state house. in case you missed it -- >> good morning, and let me start with a quick public service announcement for all the

gentlemen out there. today is valentine's day. do not forget. i speak from experience here. it is important that you remember this and go bake. that's my advice. >> so you still have a couple hours to get those flowers on this valentine's day or the box of chocolate. the president did, by the way, tweet out this afternoon "hey" at michelle obama. happy valentine's day. b.o. for barack obama. so happy valentine's day. we'll continue the conversation tomorrow morning on cspan's washington journal. a republican from louisiana, both part of the u.s.-china working group, and we'll be talking about the visit of the chinese vice president here in washington, what it means for trade and economic issues, also human rights. your calls and comments tomorrow morning. kelly field will also be joining us, the chief washington reporter for the chronicle of higher education, the white house denouncing a plan that would forge a partnership

between community colleges and businesses to train workers for higher paying jobs in the u.s. just some of the issues we'll be talking about, and of course more politics tomorrow morning. a look at the primaries in arizona and michigan, which will be coming up at the end of this month. so tune in every day 7:00 a.m. eastern time, 4:00 for those of you on the west coast. thanks for joining us on this tuesday. i hope you enjoy the rest of your evening. next on cspan 3, massachusetts attorney general martha coakley talks about the recent settlement with banks over housing foreclosures. then a hearing on the use of presidential recess appointments. there will be more work tomorrow in president obama's 2013 budget request. acting white house budget director jeffrey zients will be back on capitol hill testifying

about the plan. the white house budget committee begins at 10:00 a.m. eastern time here on cspan 3. later on in the day, homeland security secretary janet napolitano will be announcing. the homeland security gets started at 2:30 eastern. five u.s. banks have agreed to pay $25 billion to end the nationwide investigation of abuse of mortgage foreclosure practices. we spoke to massachusetts attorney general martha coakley about the settle on this morning's washington journal. this is 40 minutes. we're back with martha coakley. she's the state attorney general for the state of massachusetts, a democrat, and joining us from boston this morning, talk about that $25 billion mortgage settlement that we heard about last thursday. ms. coakley, let me get into it

a little bit and ask you first, who will this benefit. >> it's going to benefit, frankly, from my point of view, the whole economy. but where it's focused right now is real relief for two kinds of homeowners who have loans with the five banks that were involved in this particular agreement. those who have been delinquent, that is, they haven't been foreclosed upon yet, but they're behind in payments and they are pre-foreclosure. and the second group, then, will be held to homeowners who are under water. that is, they have homes that are now worth less on the market than the value of their mortgage. and so they're not in a position to refinance or, indeed, even to be able to get out from under that. so those are the two primary sets of homeowners who will be helped. but keep in mind, what this does is avoid what we believe are unnecessary foreclosures. it starts to stabilize the market, the abandoned housing,

the kind of things that bring everybody's real estate values down and the taxes go down because those homes are off the tax roll. >> and when will consumers/homeowners start to benefit from this? >> well, we hope very soon. the final inking of the documents hasn't occurred yet. that is supposed to be the end of february. but already the five banks involved have set up the phone calls, the numbers that people need to reach them. those are available on national web sites, on our web site, so we encourage people who are either dealing with the banks now for loan modifications or who think they may be eligible to make those calls to start to get paperwork lined up. and hopefully, even though this is spread out over the next three years on all the states who are involved in enforcing this, the homeowners who are looking for relief, and frankly the banks who is they want to get this done will work as

quickly as possible to modify loans that can be modified, keep people in their homes. one of the things we don't talk about is the stress-free aids for homeowners who don't know if they're going to be foreclosed upon or not, to start to get stability in a real estate market that frankly is still at the root of our ability to turn this economy around. >> we have those phone numbers as well, ms. coakley, and i just want to put them up for our viewers so they, a, know the five banks, but then they also know the phone numbers to call. so we can keep those up as we talk to you this morning and let our viewers know who to call if they've got questions about it. there they are. gmac, bank of america, citibank, jp morgan and chase are the five banks were tayou were talking a. there has been criticism of this deal, and we want to read them. he said, you're hardly skimming the surface of this deal.

it could help some people a lot individually, but in terms of the big picture, overall housing economy and housing market, it's really just a drop in the ocean of the problem. >> i don't totally disagree with him, actually, and let me tell you why. there are a lot of reasons why the real estate market in the foreclosure crisis is where it is today. it has to do with unfair loan origination, it has to do with securitization of those loans, it has to do with -- and let me tell you what this is about and what it is not about. this is focused only on the idea that if the ban-- as the banks acknowledged a few months ago was robosigning. there were unfair practices related to the foreclosures themselves. not as to why this all occurred. that has to do with originalization, securitization issues, but now why the foreclosure issues are a part of

this settlement. it is a small piece of it. not only is this between 40 and 60% of homeowners, there are nine other lenders that we hope will follow suit, but there are also a large number of these loans that are owned by government-sponsored entities, fannie mae and freddie mac, and that is the next place we need to go. let me be clear, by no means is this the whole solution or the end of this problem. first, i think we need to do a lot of work to make sure this agreement itself is implemented. i think we move forward in good faith that we'll be able to get the relief that this agreement is designed to affect, but that's step one here. secondly, it's not everybody and it doesn't deal with -- remember the things that got carved out, all the things the attorney general said we're not going to sign an agreement unless we can carve out some securitization claims, some criminal investigations. in massachusetts, we had very specific claims around holding mortgages before you can foreclose. we carved that out of this

agreement. and so i want to be very clear, this is only one piece of a much larger puzzle. we've done some work in the past, we've brought over $600 million to homeowners in massachusetts in origination claims, securitization claims. this will help for homeowners who are eligible, but there's still a lot of work to do to get this agreement implemented, and i think we still need to look at fannie and freddie. we know that with my colleague in new york, we're going to work with the federal government on a task force that's going to look at some of the open claims. so we're not done yet by any means. >> we'll talk more about fannie and freddie, but first just about the process of getting this deal implemented. here's dean baker, a special to cnn. he writes this. there is no way to determine what the banks will pay through this route because we don't know what debt write-offs they would have done in the absence of this settlement. if the banks are allowed to count every dollar written off as a dollar against the settlement as though they would have made no write-offs

otherwise, then it is possible they won't pay a dime for this settlement. is that true? >> i can't disagree with that. i think there is a real possibility. and we've argued this all along. i think this agreement, reaching this agreement, took far too long. the money at first sounds astounding, doesn't it? $25 billion. that seems like a lot. but when you start to parse out what the banks would have to do, anyway, in terms of writing down these mortgages or writing them off, we don't know that, and we frankly couldn't know that until we move forward with what we think is the best option. it's not the perfect solution here, but trying to get for these mortgages many of which can be saved, can this mortgage be saved is the real question, to keep that homeowner in the home, let the bank move past it. we do have a monitor in place and we do have ways to look at these numbers, but frankly, being able to get the banks to the table, to get them to agree

to do this, to have a monitor in place, we'll see what those numbers look like. i tell you one thing we're going to do, and i know many of my colleagues at the state level will continue to be aggressive on making sure this relief is implemented and looking at these numbers as we go through this. >> it sounds like it was touch and go there for a while as far as who and when people would sign off on this deal. according to the wall street journal blog about it, bank and government officials didn't sign off until 2:00 in the morning, and officials joined this settlement at 3:00 a.m., three hours before it was now to the public. were you one of those last holdouts. >> we were, frankly, and we were always transparent that we had a lawsuit, we had significant issues that we either need to do resolve as part of the agreement or carve out, which we ended up doing, so we did sign on. i do think, though, there is nothing like a deadline to provide a good inspiration, and

i think in those last couple of weeks and even in the last few days, many of the states were able to get the banks to come to the table on terms that were really important. my colleague in nevada, my colleague in california, my colleague in new york, my colleague in delaware, being able to say these are things that are important to our state particularly, but to all states, this was an agreement, i think. again, no one is claiming it's perfect, but for the piece of the puzzle it was designed to address, the robo signing, the use of unfair tactics in foreclosing. we just hear from people all the time who were being told they would have a modified loan. meanwhile, they were foreclosed upon at the same time. this agreement, besides the money and the relief, also provides for people going forward, a much clearer, more predictable and frankly fairer way for dealing with people who are pre-foreclosure, who are looking for modification, so it doesn't resolve all past

behavior, there is no question about that. but it does provide immediate relief for some and hope will provide a model both for other mortgage holders, those other nine companies, as well as, as we mentioned earlier, the mortgages held by fannie mae and freddie mac. >> let's get the phone calls on this. nancy is up first. she's a democrat and conquered new hampshire. nancy, what do you think? >> i own a business in massachusetts, so i'm aware of massachusetts laws. i'm curious in ms. coakley was the attorney general back at the time when eliot spitzer basically got taken down by that phone call. but my point is right before he fell from grace, he signed a letter on behalf of all 50 states attorneys general attempting to stop the predatory lending, and like those jumbo loans, the 80/20 loans -- i'm an insurance agent. a lot of people get mortgages by insurance and then go under.

but all 50 attorneys general tried to stop these funky mortgage lending practices. and i believe it was john a ashcroft at the time who shut him down. they said the state laws couldn't supercede federal law, but they cited like an 1800s law or 1700s law. i then heard rick perry while he was on the campaign trail saying that texas didn't allow them, the companies, to do that to the residents of texas. so i was a little confused when i heard him say that, because my understanding -- of course, i don't have the document in front of me. i used to use it on my radio show. however, it implied that the states were stopped from protecting the consumers. >> okay, nancy. martha coakley? >> i was attorney general -- i have been attorney general since 2007. eliot spitzer preceded me because i served with attorney general cuomo from new york, so the potential agreement you're talking about there was not when i was in office.

i will say this, that as attorney general since that time, and knowing what attorneys general have done, particularly the rule that new york can play because of the martin act and other enforcement ability it has, new york has been an important player on looking at states enforcing consumer rights. and in some instances, overseeing banks. but by and large, remember, a lot of the oversight in regulation of banks and securities is done by the federal government, whether it's by the fcc or enforced by the department of justice at the federal level. the banks lobbied for a long time to be preempted by any state legislation. they would rather have one regulator, and frankly they have friends in congress that have allowed them to escape any state regulation that might have slowed the kind of fallout that we now see from the home loan crisis. i will say that the attorneys general, and speaking from massachusetts, we work at the

local level. we started to see an '06 and '07 foreclosure rescue scenes, and then we brought our landmark that said, if you see something that you know will fail, that's a fair and deceptive act. i think a lot of our states go after this on a consumer basis. we do not regulate banks by and large, but we certainly see the problems that unregulated banks and mortgage companies can do. i think when you talk about, with attorney general ashcroft saying, no, this is a federal issue, we're going to take care of it and then not take care of it has been part of the problem all along. i will give credit to our federal partners in this as the state attorneys general worked with the federal housing authority. the secretary really came to the table with us to get the agreement we did. and i think we have a partnership now moving forward in our task force to look at origination claims and some securitization claims as well as

any criminal liability with the state of new york, and i hope that we will continue to both address and provide accountability for what's happened in the past, but more importantly, to provide real relief to homeowners and try and get out of this, get some stability in the housing market and help with an economic turnaround. >> under this current deal, this $25 billion deal, more than 200 million homeowners could receive payment, but we're reading in the paper that's an average of about 2,000 per household? is that adequate? >> let me be clear. that group of people are folks who have already been foreclosed upon. and because this does not deal with sort of origination claims or the fact that the products themselves were unfair to begin with, that payment really is designed to compensate people who have been foreclosed upon for any failures on fairness in the foreclosure itself, not

because it was a wrongful foreclosure, but because of uncertainty or other costs. frankly, that amount of money, i know per consumer, is a drop in the bucket, but this suit was never designed to address wrongful foreclosures per se, that is, the claims that come out of origination, the kinds of claims we brought in fremont or option 1 or the kinds of securitization claims. this was just for behavior by banks while they were in the process of foreclosing. some people are always going to think it's not enough. that's always the case with a settlement. i think more people who probably would have been foreclosed on, anyway, some amount of relief is appropriate. this was decided upon by the committee and by the banks, and it's not enough to compensate someone for wrongful foreclosure, but it is supervised relief for behavior during the actual foreclosure, assuming those people would have lost their homes, anyway. >> peter is a republican in port

orange, florida. you're up next, peter. >> caller: yes. i'm sorry, but this is just a bailout. it's another bailout. the feds are getting off the hook, you're profiting up the real estate market. it's a desperate move by desperate people. they're just afraid to see their investments go. everybody -- everyone loved the banks when they relented money. now that they've tightened up the purse strings, everybody is cursing them. my question is right now, how is this fair to a responsible homeowner? how is this fair that every government person out there is using all this time and money to fight for a few people that went under water? >> let's take that question, peter. >> you know, and peter, i appreciate that you believe that, what you're saying. i believe that you are sincere in your belief that so ymehow ts

is a bailout that is unfair. it's unfortunate, i think, that people have looked at one little piece of this. in other words, i was able to make my mortgage payments, so why should someone else get help? and, you know, i look at it totally differently. this is an issue, and you can look at a lot of the facts involved in this. many of the people involved bought homes between 2003, 2004, 2005. if you look at the value of homes at that time before this bubble happened, before predatory lending and the securitization and the fast unfairness of banks and mortgage companies selling products to people even though they knew they were going to fail, no documentation loans, no appraisal. don't worry about this, you can afford this. your house willi go up in value and you can refinance. all of those promises made when people knew they were going to fail. we know that wall street knew they were going to fail. they continued to pump money into this industry to securetize

those loans, to put junk mortgages back into securities. so the banks bailed out, didn't they? i understand we needed to prevent a crash of the economy. the banks got bailed out, they proceeded to foreclose unfairly on people, and all we're saying now is for people who got caught in the law of all of that unfairness, who own homes now that are you under water that they can't pay for, is it better to -- for all of us to say, well, let's let them lose their homes, let's let the banks write it off and take what they want, let's continue to wreck the economy because those homes will now be sold at a lower price than they could have been modified for for people to stay in, and let's let your real estate value go down because we're going to continue to have homes in every neighborhood and block across america, with some exceptions, continue to be foreclosed and continue to be in a downward spiral. if you wanted to say the other side of the coin is, everybody we can keep in their home is a plus because they're not out on

the streets. they don't have the stress of lose ag home. but more importantly for pete's question, they don't then have an abandoned property or a property sold as a short sale or less value that puts everybody else's home values down and makes it much tougher for everybody to recover from this economy. so you can come at that from the point of view that pete has, that, you know, this isn't fair, i pay my mortgage, why should someone else get relief? i don't happen to prescribe to that. i think everybody wins when we do this fairly. by the way, this agreement does not help everybody. part of what it does is clear the way for those foreclosed on. they should not be able to stay in their homes. what we're talking about is a way to make sure we don't have unnecessary foreclosures, that we don't foreclose on somebody who is a principal reduction, could make monthly payments, and we see time and time again, no, we won't reduce your principle to $90,000. they foreclose and the home

sells six months later for $40,000. it doesn't make good economic sense. i appreciate what pete asked. i know the question for a lot of people. in the end the people are going to disagree, but let's make sure we know all the facts of how keeping a person in a home can help turn the whole economy around. >> a tweet came in, 25 billion? the fed gave those same corrupt bankers over 26 trillion in secret bailouts. >> caller: good morning. i just wanted to comment about this drop in the bucket. this is all water under the bridge. the money was already spent. i say we take the bailout money penny for penny back from the bank to receive the bailout, let them go after the appraisers and the realtors to recapture their losses and put it on an even scale. it's similar to what the florida

caller has said, but it's already water under the bridge, and this 25 billion is just a drop in the bucket for the flowout cost of money that this has caused in the last three to, you know, five years. that's all i have to say, it's a bailout in disguise, but it's a double bubble. the water is already under the bridge, the money is already spent -- >> all right, rick, got your point. let's let martha coakley respond. >> and again, i don't totally disagree with that caller about this. i've always thought that this is one small piece. the banks need to adjust their books on this. they need to adopt the service standards so they treat people more fairly and we will move quickly with modifications and for people who need to be foreclosed upon, but that's precisely why we said and many of my colleagues said, we're not giving you broad releases for

other behavior that we think requires accountability. we're going to continue to go after fannie and freddie. we've got the task force that we're going to look at behavior, so i think that people can look at this as a glass half full or a glass half empty, or for some people it's less than that, but we needed to do this piece. and i think we and the banks will have to be held accountable for how successful it is. that's why the implementation of this agreement is important. the agreement is just a first step. we've got to make sure this works, and i hope the callers are wrong, that it won't make a difference, but i think for some folks and in some places, it will, and it will help those, as i said earlier, the group of people who are in the delinquent or under water, but it's just a piece -- it's a small piece of the puzzle. there is no question about that. >> miss coakley, here's another tweet from mike murphy, and he says it's not so much a bailout as a copout.

the criminals who broke laws, falsified documents belong in prison. make 'em produce documents. you talked about this a little bit, but what's new for you to produce banks maybe on criminal activity? what are you looking at? >> one of the things my colleague in new york has said for a long time is that -- and keep in mind, this was never going to be a release for any criminal behavior. this was only about relief for loan servicing agreements and getting people loan modifications. it was not a release for criminal behavior, and this task force of which new york is the co-chair with our federal partners. eric schneiderman will head that up with several of us, including massachusetts. i'm looking forward to serving on this task force to look at criminal behavior. look, i've been a criminal prosecutor for a long time. criminal cases can be tough to make. i'm not saying we can't and shouldn't make them, but putting

people in jail, unless we're also keeping people in their own homes, don't solve the economic problems here. so i think we can and will proceed on both tracks to hold people accountable when and where we can. but given what i said earlier, remember, most of the regulation, most of the information around potential criminal behavior is going to be with the sec, with the department of justice. we at the state level will work on this task force to do what we can, and if there is criminal accountability here, so be it, but i think we cannot pursue criminal charges without also understanding the need for the kinds of civil actions that are bringing financial accountability and helping address the issues that have been created by these predatory loans, the securitization of them, the foreclosure that's been holding the banks accountable for their behavior that created this economic crisis. >> martha coakley, forgive me for interrupting. what constitutes criminal activity? what's the smoking gun?

>> often in white collar cases, literally there is no smoking gun. it is about action that is done knowinging inly knowingly, intentionally to defraud, to commit a larceny. one of the issues always is, with something that has been this broad and tolerated so long with the housing bubble bed starred in '06, '07, through '08, and then we saw the crash or potential crash with the bailout. some of the behavior in this was so widespread, you can look at the hollywood movies, you can read the books. it was so widespread that everybody seems culpable, and so one of the tasks is finding, are there individuals or corporations that we can actually hold accountable for criminal behavior, knowing inte intent. for individuals to be held, they have to be individually behaving. i'm not saying we won't find that, but it's tough work to do.

>> on the issue of culpability, here is a tweet from stel la. why didn't dodd frank bill address fannie and freddie? that's not a question for you, but i want to know what your plans are when it comes to fannie and freddie? what would they be held accountable for? >> and they're not essentially in business anymore. we sent a letter to the head of fifa two weeks ago saying, you need to address this fannie/freddie issue in the first instance, that we need the same kind of relief for those loans that fannie and freddie and now in receivership can be modified, can have principal reduction. we're working with california and the united states ask working with homeowners in those states. but we need ultimately to get