harp. and i think that's an important point, and i don't think it gets talked about enough. >> and i just have a couple more questions, and if we could be brief. the changing of the dates, i mean, one of the problems that we're having right now is a huge reliance on government refinancing, the private sector's on strike, and for good reason. i know all of us want to encourage them back in. but i think there's been sort of an unwritten rule that all loans made prior to to june '09 were fair game, but anything after that, they had a chance to refinance in a low environment, low as best as rate environment, and we would not fill beyond june '09. would it be appropriate to ask on this bill to say that the date should not be june of '10 but should be june of '09 so that we, again, don't continue to rattle the private sector side? the two of you. >> i think that's appropriate. i think june of '09, because,

again, you want a historical record, and you need that to relax the warranties and give up the rescission rights. but moreover, i don't think you're giving up very much because between june of '09 and 2010, the rates were pretty low. i don't think you're going to give up a lot of potential refiers by moving the date back to '09, but i think you get the benefit. >> since i see a yes from the other person, i'll leave it there. again, i appreciate the streamlining of all of this. i know the gses have asked to at least collect data not for underwriting but so they could continue their risk-management processes. would it be appropriate for them to still collect data if they did not use it -- in other words, they continued to streamline these but they have that data available for future risk management opportunities? >> well, actually, i'd be surprised if they wouldn't do that. >> well, the bill prevents them from doing that. >> oh, okay. i'm not sure why that would be the case.

>> i agree. i think it's important. >> i appreciate the input, and i certainly hope the sponsors will consider some of the changes that have been proposed by these questions. i will close by saying the whole junior lien process to me has been incredible, that we have given the mortgage servicers in this country such a home run win with all these programs, and yet, you know, typically junior lien gets extinguished when something happens with a primary mortgage. and i just hope that this bill doesn't address that. and i know you all have talked about some potential changes to make in simpler. but i do hope at some point this committee will look at this whole junior lien process and realize that in many cases these guys have received a huge, huge benefit, i would say unnecessarily so in many cases. you know, there's a big conflict of interest between the servicers and the primary mortgage holders because they hold the second mortgage and they're basically benefiting

themselves. but i thank you for your testimony, mr. chairman, for the hearing. >> thank you. senator berkeley. >> thank you very much, mr. chair. and i've noticed at a lot of these hearings we have a similar collection of senators, and i really appreciate my colleagues on both sides of the aisle continuing to wrestle with this issue of mortgages. certainly the family home has been such a pathway to the middle class for families across america. and through the whole subprime debacle 2003 forward, that was deeply damaged and i appreciate colleagues coming back time and time again to wrestle with how we restore home ownership as a pathway to wealth, equity, a piece of the american dream, if you will, for the american family. a couple of quick questions, and i'll direct these to dr. zandi. in your testimony on page 3, you

note the harp loans just more than 100,000 are families under water, roughly 8%. so you have this other 92% that benefitted from the harp program that weren't under water. the question keeps coming up, did harp need to exist for those families, and if so, what's the short answer why? >> yeah, because there's other criteria other than ltv determining whether you get a refinancing, right? so it's back-end, meaning what are your other debts, which are your credit score, other factors, and many of those borrowers because they were kind of on the edge in terms of equity were getting dinged and couldn't get refinancing. so i think it did help quite a bit. >> have you had any ability to analyze the statistics in terms of families that could or couldn't get refinancing without harp? let me throw something out here. >> okay. >> when i sought to refinance your house, the mortgage agent sent me a harp refinancing.

i called up and said why are you send the harp refinance? this is for folks who have x, y, and z. she said we're just utilizing that to virtually every case. i thought that was very interesting, and it suggests to me there are some sizable number of folks -- and by the way, i didn't get a harp loan. >> may i ask when that was? was that recently? >> that was 2010. >> 2010. >> 2010. >> all right. yeah. you say you're asking for the counterfactual, what would it have been without the harp -- i can think about how i might try to approach that. i don't know the answers offhand. >> no need to dwell on it, but some of the questions that have been raised. second, in your spoken testimony referred to -- that the bondholders have done pretty well by those who are trapped by underwater mortgages. christopher mayer testified here and said bondholders have received $60 billion in the last three years in excess mortgage

payments from homeowners trapped in high-interest rate loans. i'm assuming some part, also, though, that folks trapped in underwater loans would then be faulted, bondholders have lost something there in terms of being able to get their full principal back. is there a sense of how these two factors have weighed against each other? the benefits of the higher -- being trapped in higher interest loans versus the foreclosures in that sector? >> well, generally in the prepay models that they use, they also account for default. that's just a form of prepay. and if you look at the models, they were all saying this should have all been prepaid a lot faster. even accounting for the deall the defaults. i think they benefited net certainly. second-order effects, all the things that policymakers did to support the housing mash, stabilize the housing market,

obviously were to the benefit of investors, right? you would have had house falls fall to a much greater degree. i think it's pretty clear on net they benefited enormously from government policy. >> great. thank you, because that issue of also being affected by the defalls is brought up sometimes when the point is made that you had made. you also mentioned in your testimony the rebuilding equity act, which is a strategy i put forward to encourage folks who are refinancing, who have essentially the choice of do they want to refinance to lower interest rate, benefit from lower payments, or is it valuable for them to benefit from lower interest but make larger payments and have a shorter term, a 15- or 20-year term? when you look at the comparison of how quickly people get out from being under water with the 15- or 20-year strategy, it's substantial. folks are 25% under water are

largely out from under water after five years under a loan between 15 and 20 years. does it make sense to help incentivize this option? >> yeah. i think this is a great piece of legislation. i think it's a nice corollary with senator menendez's legislation. basically, you're giving the homeowner an option, you know, either they can go for the lower monthly payment or they can -- but they can get a smaller reduction in their monthly payment and use some of the saving to pay down principal quickly and get out from under it more quickly. i think it's a nice option. and we're incenting them to save and build equity, which is in everyone's i think best interest. now, obviously, there's a cost involved. i don't think we're talking billions. we're talking probably hundreds of millions. it depends on the take-up. but that has to be paid for. you can ask the homeowner to pay for it in the form of a slightly higher interest rate over time. basically, you're taking the closing cost instead of asking for it up front, extending it over a longer period of time and

it's an incentive and you get them towards building equity, which, again, i think is in everyone's interest. i think it's a great idea. >> thank you very much. >> thank you. >> i would like to thank all of your witnesses for being here with us today. senators menendez and boxer very well a substantive bill that seeks to provide relief and assistance to responsible homeowners. and i hope we can work together to move it forward. >> mr. chairman, before you -- >> yes. >> -- close the hearing. what i said to senator corker as he was leaving -- unfortunately, he had to leave. just for the record, the question -- our legislation does not prevent data collection. it simply does not require it. and there's a fundamental difference. but i look forward to working with him and other members of the committee to get to where we want to be. >> this hearing is adjourned.

finishing up this senate banking committee hearing. by the way, you can find out more about this committee or any congressional committee in c-span's congressional directory. there's biographical and contact information for each member of congress along with district maps, committee assignments and more. information on cabinet members, supreme court justices and the nation's governors also included. get your copy for $12.95 plus shipping and handling. order at contraction span.org/shop. else where are in washington, the ethics and public policy center is hosting a day-long event looking at religious freedom and public policy. it includes the unveiling of a plan to launch religious freedom caucuses in 50 state legislatures. you can watch this live right now on our companion network,

c-span. more live programming coming up. later today, authors eleanor clift and matthew spieler will discuss their latest book, "selecting a president." it starts at 7:00 p.m. eastern. and coming up tomorrow night a debate between the candidates running in wisconsin's recall election, republican income dent scott walker, being challenged by milwaukee's democratic mayor, tom barrett. that's live tomorrow starting at 9:00 p.m. eastern. you can see it on c-span. life is incredibly precious, and it passes by far too quickly. so during your time here use all of your unique god-given talents to serve one another as that will be the true measure by which your life will be judged. follow the golden rule. >> memorial day weekend, watch commencement speeches on c-span. politicians, white house officials, and business leaders share their thoughts with the graduating class of 2012.

saturday through tuesday at noon and 10:00 p.m. eastern. the obama administration is pushing congress to pass legislation protecting consumer privacy online. the senate commerce committee looked into the issue yesterday, hearing testimony from federal trade commission chair john liebowitz. in the meantime, republican senator pat toomey was concerned that additional regulation might hurt growth. this hearing is about 90 minutes. >> good morning and afternoon. and i apologize for being five minutes late. every day, tens of millions of americans go online to search for information. they want a shot. they want to pay their bills or they're accessing social networking. to state the obvious, the internet has fundamentally transformed every aspect of our

lives. what is less obvious is the level of information that is collected about us each time we visit a website or watch a video or send an e-mail or make a purchase. now, consumers have had no choice but to place an enormous amount of trust in the online world, trust that their information is safe, that it will be secure, and it will be used appropriately, whatever that means. but the incentive to misuse consumers' information is very great. a consumer's personal information is the currency, in fact, of the web. the value of this data has created untold riches for those who have successfully harnessed it. this is not necessarily bad as it enables an enormous amount of content to be accessed for free

and allows companies to offer a number of services for free. but unfettered collection of consumers aegon line data poses to me very significant risks. right now consumers have little or no choice in managing how their online information the collected and how it is used. whatever limited choices they do have are often too difficult to use and modeled by complicated, wordy privacy policies. it's, again, your classic health insurance comparison. tiny writing. protecting consumer privacy is critical for companies, and i understand that. people need to trust the web sites that they are visiting. but online companies are conflicted. they need to protect consumers' information, but they also need to be able to monetize their users' data. i am afraid that in the

hypocompetitive online marketplace the need to monetize consumers' data and profits will win out probably almost every time over privacy concerns. the administration and the federal trade commission have both recently issued reports on the need for industry to do more to protect consumer data and give consumers control over how their personal information is used. they have worked to bring about industry consensus on voluntary actions. this is an interesting subject which we'll discuss further at another hearing. the administration's and the industry's actions are to be commend in this respect. but i have learned over many years that self-regulation is inherently one-sided. in many industries, many times, in many eras, it's inherently one-sided, and that consumers' rights always seem to lose out to the industry's needs.

i believe consumers need strong legal protections. they need simple and easy-to-understand rules about how, what, and when their information can be collected and used. they need easy-to-understand privacy policies rather than pages of incomprehensible legalese. we should take up strong consumer-focused privacy legislation this year. i do not believe that significant consensus exists yet on what that legislation should look like, but i will continue to work with my colleagues on legislation. as chairman of this committee,ly continue to work with the administration and the ftc, both represented here, to push the industry to develop an adhered-to strong consumer privacy protects. i will continue to oversee

hearings to make sure the trusting is people have placed in these companies is being respected. i call now on the ranking member, my next-door neighbor. >> thank you very much, mr. chairman, and thank you for holding another hearing on the topic of privacy. it is a very important topic. as i have said in this committee in the past, i still remain skeptical of the need for congress to pass privacy legislation or, for that matter, for the ftc to have increased authority to enforce new privacy ruls, regulations, or principles on the private sector. seems to me the neneither this committee, nor the ftc, nor the commerce department fully understand what consumers' expectations are when it comes to their online privacy. consumer expectations of privacy can vary based on the particular application they're using or by the general privacy preference of any given individual consumer. it's important that companies have maximum flexibility to work with their customers to ensure

their customers' needs and preferences are met and that the application of service functions as consumers expect. as the recent ftc report correctly points out, companies are already currently competing on privacy and are promoting services as having stronger privacy protects than what is being offered by marketplace rivals, for instance. this is a sign of a healthy, functioning, and competitive market. this type of competition is something that we should be encouraging. overly restrictive privacy rules and regulations handled down from washington may threaten this innovation by shifting the incentive to compliance over competition. i don't think anyone desires such a result, which is why i caution my colleagues and the administration to proceed with caution. proponents of federal privacy legislation and of granting the ftc authority to regulate online activity really should clearly demonstrate the market failure and consumer harm that they seek to address. the benefits of online tracking and data collection are very

clear. facebook is free. g mail is free. google maps is is free. there are thousands of mobile device applications that are free. it's often said that information is the currency of the internet. a detailed, cost-benefit analysis of a do not track regulation or other new privacy rules would better inform our discussion. but to my knowledge, one has not been completed. we need to fully understand the impact these proposals will have on the marketplace and the many online services consumers have come to expect for free or at a minimum cost. less information available is very likely to result in fewer free online services and an increase in pay walls. i think it's irresponsible for the federal government to require companies to radically alter a successful business model that's provided many consumer benefits without knowing all the facts first. i also question whether specific consumer harms currently occurring in the marketplace is cannot be addressed under the ftc's current statutory

authority. section 5 of the ftc grant -- the ftc act grants the commission broad authority to investigate unfair or deceptive acts or practice, and the commission has brought enforcement actions using this authority. in fact, the commission highlights a number of these enforcement actions in the beginning of its recently released report. when the commission sees what it believes to be unfair or deceptive practices, it has acted. just yesterday, it was reported that the ftc and myspace reached a privacy settlement that will subject the company to biannual prooich si assessments for the next 20 years. in addition, google and facebook recently entered into consent decrees that subject the companies to outside audits for two decades. i have not heard a persuasive argument why the ftc needs greater authority. lastly, i find it interesting the commission seems concerned about consumer frus from-in the private sector. consumer trust is very, very important. but there's no one for whom it's more important than the company that's hoping to attract and

maintain customers. so i think trust in the marketplace is something that the marketplace tends to sort out pretty well. companies in all sectors of the economy have a powerful interest in building a strong, trusting relationship with their customers. consumers don't trust company a, they quickly flee to company b. in the online space, this incentive is even stronger. the internet has made leaving one company or service provider for another very easy, can often be done at little or no cost. as one major online company likes to say, the internet is where, quote, competition is one click away, end quote. while this is an important topic and certainly worthy of our consideration, i think it's premature to discuss specific legislative fixes or increased ftc authority when we don't fully know whether or not and to what extent the problem exists. i look forward to hearing from our witnesses today, thank them for coming and thank you, mr. chairman. >> thank you very much. i call on the chairman of the

subcommittee that works this, and that is senator john kerry. >> thank you very much, mr. chairman. i appreciate it. i certainly appreciate this hearing. and i think this hearing can help as a couple of prior hearings have. i think the record is already fairly clear, senator toomey, if i may say that a lot of the questions you've raised have actually been addressed in those hearings and i think there's been a pretty powerful showing with respect to both the ability to have a privacy standard as well as the need for the privacy standard without affecting those applications and the free access and all the other things you're talking about. and i think the record will reflect that. i'm delighted that we have the chair of the federal trade commission and one of the commissioners from the commission here with us today. and obviously i'm delighted to welcome my own brother, who carries either the burden or privilege of being so.

but i'm glad that he's here today representing the commerce department. he's been working on this under two different secretaries now, as have many of us here on the committee. so i know that in his capacity as the general counsel together with the chair, they are going to set out today so the final findings of both the commerce department and the federal trade commission with respect to this question. it is not unimportant, i think, that both the commerce department and the federal trade commission frankly together with most of the privacy experts in the country have all come to the conclusion that we need to have a privacy law with respect to providing protection to individuals in commerce. and i think that the distinction, senator toomey, is is that the privacy experts have

all come to that conclusion. obviously, some of the companies have not and don't share it. and the reason for that is very simple. in the information economy, the more that a company knows about you, the more valuable you are to them, whether you have continue sented to that or not. and they are collecting more than simply the information that you type in. and a lot of americans aren't necessarily aware of that. these companies watch your behavior. and they measure your behavior. how long you linger on a site, your specific searches. a lot of people think they're just going in and searching privately. somebody's watching you. somebody's tracking you. you know, you wouldn't feel particularly good if you had a private investigator trailing you through the mall, looking at every single receipt that you get and everything you peruse and look at and ask for. that's slinch what's happening

here. you don't have privacy. they analyze and enhance that data and then they reach a conclusion about you. using that information, these data scientists are creating enormous wealth, often producing innovative products, we agree, and services. but there's nothing to stop them from doing the creation of those products and services with the consent of people who want to be part of that or without necessarily the detail of those who do not. so what's the harm? senator toomey sort of asked the question today. what's the harm of what can happen to you without your knowledge, concept, or active participation, and where there are no limbs to what can be collected and where you have no right to access what has been collected about you? it seems to me the more conservative position here is frankly to protect the individual in america, not to protect the right of people to invade your space without your

knowing it. so if it's not properly secured, that information can actually harm you, number one, through identity theft. even if it is properly secured, it can be used to categorize you inaccurately or in ways that you don't wish to be categorized, exposing you to either reputational harm or to unwanted targeting. for example, by analyzing your buying habits, a retailer may know that you're pregnant before you even tell anyone. they begin to send you advertising based on medical status or on your ethnicity or on your age and corresponding behavior can then be used to target you in different ways than other populations may be targeted. and maybe you don't want to be targeted or analyzed in that particular way. or as in the case of the google wi-fi