tribal community as cross the country. the 21st century is shaping up to be the century of cities. in america's local communities, partnerships and pragmatism are the key drivers to success. that perspective has decided my efforts. if confirmed, i will look forward to working with you to strengthen opportunities through hud's efforts. thank you members of the committee for consideration for my nomination. it's an honor to appear before you and i look forward to answering any questions. >> thank you. ms. wertheimer, please proceed. >> chairman, johnson. ranking member crapo, members of the committee, thank you very much for the opportunity to appear before you today. i am honored to be president obama's nominee for inspector general of the federal housing finance agency. before i begin, i'd like to

introduce my family who has accompanied me here today. my husband andy, our daughter, kate, my stead fast mother, my inlaws walter and ann pinkas. with that, let me get to the meat of what i'd like to say in my statement. the fhfa plays a crucial role in our financial system. as the safety and soundness regulator of fannie mae, fannie mac, and the 12 regional federal home loan banks. to ensure they operate in a safe and sound measure and serve as a reliable source of liquidity and funding for housing finance. as senator crapo mentioned, since 2008, almost six years now, the agency has acted as

conservator for fannie mae and fannie mac to protect the assets and properties of those enterprises and protect the tax payers investment which is currently $187.5 billion. currently fannie mae and fannie mac guarantee more than $5 trillion in mortgages in this country. three out of over four. congress mandated strong independent oversight of agency programs and operations by the fhfa oig to safe guard taxpayer dollars. to carry out this oversight, the oig conducts and coordinates, audits evaluations of agency activities, and investigations of the agency and its regulated entities. much of my professional career has focused on leading investigations into alleged wrong doing and counseling clients on improvements to internal controls and processes

to protect and detect violations of law. i have deep experience running independent investigations for audit committees, and committees of independent directors of public companies. these investigations have looked into a wide range of areas. financial statement reporting and disclosure areas, alleged accounting irregular larities. misconduct by employees. possible improper payments to foreign government officials. whittle blower claims and other significant issues identified by a host of stakeholders. in each of those investigations, we followed the facts wherever they led without fear or favor. we developed remedial measures, taylilored to the facts found. we monitored implementation of that remediation. another of these investigations

led to dismissal or resignation of high level company oem ploy e employees and adoption of significant new policies and internal controls. if confirmed as fhfa inspector general, i will exercise my duties aggressively, independently, and fearlessly. i have a deep appreciation of the critical importance of conducting rigorous, fair, and thorough audits, evaluations and investigations of communicating the results to stakeholders clearly and holding individuals accountable for their actions. i pledge to be responsive to this committee and to congress as a whole and to develop a good working relationship with the fhfa director. after more than 30 years in the private sector, i'm honored to have this opportunity for public service. my father was a first generation immigrant who came to this

country with his parents in 1938. they escaped with the clothes on their backs and they spoke only german. my grand parents had to reinvent themselves in this strange new environment. any grandmother found work as a domestic house cleaner and my grandfather was employed to scrub out coco barrels on the new york docks. together, they earned enough to rent an apartment, a community populated with german and o austrian refugees. he learned to speak unaccented english and graduated to become valedictorian of his class. thank you and the committee for your consideration of my nomination. i look forward to answering your questions. >> thank you for your testimony. if any members has written

questions for the record for the nominees, i ask that you please submit them by noon this friday, jo june 20. i also ask that the nominees respond to the written questions quickly so that we can move the nominations forward. we will now begin asking questions of our witnesses. will the clerk please put five minutes on the clock for each member. mayor castro, in your opening statement, you mentioned some of your priorities if confirmed. would your priorities also include working to address the fast housing needs and engage in consultation with tribes? >> thank you very much for the question chairman, johnson. i appreciate your very strong advocacy for our tribal communities. absolutely. i'm committed to ensuring that we work closely with our tribal

communities. i look forward to at hud being focused on that. i fully understand that in my experience as a big city mayor, however, that as part of hud's mission we don't just deserve urban areas we serve small towns and tribal communities. i am looking forward to if confirmed, working with you and your staff and other committee members as the nahazda with re-authorization perhaps manufactures forward and an issues relating to our nation's tribal community. >> i have been handed a note that we were presented a joaquin castro is here. mayor castro, about 2012, hudig report found that san antonio

administered a 2008 neighborhood civilization program grant in accordance with program rules. can you tell me what happened with that grant and how the city addressed this issue and what your involvement was as mayor? >> yes. thank you very much for the very chairman johnson. the hud id did issue preliminary findings with respect to the neighborhood stabilization program in the city of san antonio. after consulting with the city of san antonio staff, the city of san antonio staff provided back um documentation to clarify those preliminary findings. at the end of the day, about $125,000 was paid back with nonfederal funds, city of san antonio funds. as soon as the counsel and i learned about that issue, we were supportive of corrective measures that were put in place. there was an nsp check list for

instance that was created, kplie compliance was strekth strengthened. i will look forward if i am confirmed to ensuring that we're vigilant with our grantees with the nsp program and other programs as well. >> ms. wertheimer, we have discussed the steps you plan to take if confirmed. to address potential conflicts of interest relating to your past work on behalf of clients as well as potential conflicts with respect to your husband's work. can you please describe these steps to the committee? >> absolutely. thank you, senator. when the president -- when i was advised that the president sought to nominate me, i appreciated the need to get

ahead of potential conflicts of interest. so i spoke at length with the designated officer of the federal housing finance agency and explained my strong interest in avoiding either actual or perceived conflicts of interest or even the appearance of a conflict. so to that and the designated ethics officer of the agency in consultation with the office of government ethics and i accrue that i would refuse myself entirely from my matter in which my law firm, appears before the agency or before the fhfaiog so not just limited to oig matters and that i would also refuse myself from matters in which my husband's law firm, mayor brown

and plat appeared before the fhfa or the fhfaoig so that there was no appearance issue with respect to my husband's law firm. in addition, i agreed to refrain or to reuse myself entirely on any matter with which clients of mine which i had worked with on matters if they were represented by another law firm or example. if they were to appear, even on matters unrelated to matters, i had advised them on that i would recuse myself for a period of, i believe, two years. and last, there were several items in our portfolio that because of potential appearance in propriet issues, we agreed to divest within 60 days of my

appointment if that is to occur. >> senate. >> the fhfa insurance fund fund has been under capitalized sips 2009. fhfa announced it would need 1.6 trillion to cover loan guarantees. last year, this committee moved legislation, the fhfa solvency act with strong bipart s an support to get it back on stable financial footing. if confirmed, will you kplit to help us move this piece of legislation and move the fhfa toward solvency. >> thank you very much for the question. i want to commend you and the committee for as you said very strong bipartisan work on the

fhfa solvency act. i am committed to helping to ensure that if i am confirmed that the fhfa is on a good track and to support legislative efforts to that effect. it's my understanding that if the independent year at least for fiscal year 2015 the fhfa is on a stronger track that it will not need another draw. if i am confirmed at hud, i will look forward to working with you and the committee to support legislative efforts as well. >> thank you very much. that is good news to here. raw sure us that the fhfa will in the do anything to increase its incoming capitol before its met its statutory obligations. >> thank you for the question. of course i'm hesitant to commit to things specifically not having been at hud however i will say that i share with you a commitment to ensuring that the

fhfa has a positive capital reserve ratio. that it is on the right track and that does not need another mandatory appropriation. >> well, i thank you for your attention to that. second, as we did quickly when we met privately. i want to discuss the housing finance reform legislation. secretary donovan has worked very closely with this committee in helping to develop this ledge lace and negotiating and advocating for its passage. if confirmed, will you commit to helping the committee to move this important piece of legislation so that we can get our housing market back on track for long term stability. >> senator. you and chairman jonhnson will o be commended. i share your goals that we have a housing finance system that both proteches the taxpayers in a stronger way that we have had in place and also balancing

access to credit for folks of modest means who are credit worthy. i will look forward it i am k confirmed to being an active participant as the committee and senate continues to work on this issue of legislation. an absolutely. >> thank you. do you believe there are any negative consequences to our inaction on reforming fannie and freddie and resolving the conservatorshi conservatorship. if so, what are they? well, i believer the status we could is not in the best interest of americans. i believe that if he with can resolve these issues that i know the committee is still very much discussing even though this has made it out of committee, that it would be preferable for the tax payers not to be in the position of first loss and that the current conservatorship of fannie and freddie snot sustainable for the long term.

i know that there's let iingation already that has arisen for instance out of this. there have been some negative consequenc consequences. i will say finally that i know it's a balancing act. there are concerns in terms of access to credit and having represented san antonio in seeing these issues on the ground level, i can understand those concerns. if i am confirmed, i would look forward to being an active participant in trying to come to a resolution on that. >> thank you. ms. wertheimer i'm about thousand tiout of time. i will have to submit additional questions to you and mayor castro in writing. one quick question that i did want to ask is another uneveniq situation is the fact that the treasury department is a party to a preferred stock purchase agreement which set the conservatorship which set the terms for funding and repayment for man ee and freddie.

how do you envision the hffaig interacting with the treasury and oversight given this unique situation. >> the president assedecessor i situation devoted a significant effort to developing collaborative working relationships in other agencies including the treasury department. the igs through cross agency work worked extremely effectively in oversight responsibilities where there was shared oversight. i would envision continuing that cross examination collaboration with igs in treasury as well as igs in other agencies as with u.s. attorneys across the country. that's the way we're going to get this job done because there's cross examination responsibility for enforcement

of the laws . thaun thank you. >> senator reed. >> thank you very much mr. chairman. mayor, can you share or elab raet on your vision of housing development particularly based on your experience as mayor of san antonio? >> thank you for that question, senator reed. well, as a local eleked elected course my view point was from the other end working at the ground level. what i have found absolutely essential to ensuring that folks have good opportunity by what hud does is to work across agencies. that's what we did in san antonio very early on in my tenure. we got together. our housing authority with our transit agency, one of our urban school districts. one of our universities, the united way to figure out how we could better make of resources and understanding from being at that local level that housing is an important component of over all quality of life and

providing opportunity but it's not the only component. when we tackle these issues in a more holistic way along with ed indication, along with transit, i believe it was a bigger il pa impact. i will be looking for seconds to do that. one of my experiences as it relates to housing is we need to measure the outcomes. we set a goal early on in san antonio of trying to reate 5,000 housing units by 2020 later we moved it to 7500. it's been my professional experience when you set a goal you're much more likely to stay on track to try to achieve that. finally, i see out there the urgency for more affordable housing opportunities in our urban community and san antonio but throughout the nation. i would work very hard if i am

confirmed to do what we can to create those opportunities. >> well, thank you mayor. shifting to another issue that's going to be vitally important. that is the investigation committed to end veterans homelessness by 2015. we're close in some parts of the country. ro rode island, we think we have approximately 97 homeless veterans at this point. we want it to be zero. can you tell us what are your plans to help states, particularly rode island to reach this goal of no veterans homelessness. >> and i command you for the work that you and members of the committee have done. this, i believe, is a real bright spot for your work, for the investigation's work and for the work of secretary donovan and a very laudable goal to effectively eliminate veteran's homelessness for the end of 2015. one of the primary ways that hud has supported that is through

the vouchers program in close collaboration with the va to help insure that homeless veterans have the opportunity to get housing in local communities. if i am confirmed, i will look forward to bringing a ton of energy to be support of that and to meet that goal. i know how important this is that we make right by our veterans. hud if i'm confirmed, will be a key driefver of that. >> thank you very much, mayor. ms. wertheimer, you have a incredible record and your career has been distinguished by great intelligence and great integrity. i was impressed with your response to senator johnson to the chairman's question about maintaining the appearance as well as the reality of independence. all i want to say is that that's going to be a continuous effort on your part because as you

pointed out so right, many times you'll have firms that you've worked with on the other side of the table, clients on the other side of the table, but i just want to again, emphasize the notion of not just the reality, but i have no doubt that you will be skrup jewcrupulous in y conduct but the perfection that there are conflicts. let me reinforce that point again if i may. >> thank you senator. i agree with you. i think an independent ig is only as credible as the -- not only the actual independence but the perceived independence. so it's critical to me that this office if i am confirmed maintain both actual and avoid any appearance of lack of independence. >> thank you very much. >> senator shelby. >> thank you mr. chairman. >> mayor castro, for years, i

believe the problems of the fhfa have been well known by this committee and probably a lot of other people. during the housing boom, the fha unwisely, i believe, guarantees a lot of risky mortgages with low down payments to borrowers. they weren't the only ones now. these mortgages have resulted in billions of dollars of losses to the taxpayer. in the interest of stable and four to five housing markets, can you speak to your perspective on the reserve ratio of the mutual mortgage insurance fund. what it should be and what about the minimum down payment levels? do you have a perspective on that? >> thank you very much for the question, senator. i want to commend you for your work over the years on this issue. of course, health of the fha has been subject i know, of

tremendous scrutiny and debate. i believe that there can be action taken to ensure that the fha stays on a positive track. my understanding, my preliminary understanding is that it's on a much more positive track than it had been. of course the reserve mortgage program and also some loans from the 2007 to 2009 time period were problematic as you've mentioned and other committee members have mentioned. this was an unprecedented event for it to need mannmeet mandato proepation. i believe as we move forward there is reason to have more confidence in the fha. i'm also aware on the other end that the credit quality of borrowers for the fha is stronger than it has ever been with the fico score of just under 700.

so my perspective whether it relates to the requirements for down payments or other measures is that we achieve this balance to stay within the mission of the fha, historic mission to ensure that first time home buyers, that folks of modest means who are credit worthy that they have the runt opportunity to reach the opportunity of homeownership but that we have policies in place to ensure that what happened a couple of years ago does not happen again. >> i want to get into the section 8 area. in the fiscal year of 2014 which we're in now, funding for the section 8 programs totalled nearly $29.1 billion. of the $45.47 billion in outlays for the department of housing and urban development. i believe that's about 64%. that is a heavy outlay. can you talk about what if any

plans that you have thought about as policy to try to reign in spending for this program. we know this is an important program for a lot of people but i also serve on the appropriations committee. we have to deal with real numbers, too. >> well, thank you very much for that question. i am fully aware that as you say, the section 8 program does consume a tremendous amount of hud's overall budget and that rents do rise every year. we face that continuing challenge. i look forward to delving into more of the details to look at what ways we can achieve some efficiencies and hopefully stream line. i know that understand secretary donovan's leadership, hud has looked at ways it can be more nimble and achieve cost savings. if i am confirmed, i would look forward to visiting with you about this issue. >> in the years leading up to

the financial crisis, fha's mortgage insurance market share went from less than 5% to more than 30% in 2008. those were the boom years. it continues to hover, i believe it levels around 20%. are they -- what do you think -- have you thought about the area of expanding the private mortgage insurance sector and ultimately moving toward a fully private sector of mortgage insurance market or is that too far out for you? >> thank you for the question, senator. well, i believe that the fha does have an important role to play. of course it played a counter cyclical role during this down turn. as you mentioned, what we've seen arizos the housing market gotten stronger and we need more private capital in the plarket, we have seen that market somewhere go down. i believe there is a strong role for the fha and if i am

confirmed, i will look forward to visiting with you in the committee as we set that. >> mrs. wertheimer my time is turning out, i guess. but i'd like to ask you one or two questions. what's your view of the level of independence needed between the ig and the director of fhfa and his senior staff and how important is it for the inspector general which you've been nominated for to not only have adequate resources, you've got to have those. but also unfetterred access to all of fhfa's records and data? >> we'll take this question and then we will do senator menendez. >> go ahead. you can answer. >> thank you, senator. i think independence is at the core of the ig mission. i have deep experience leading independent investigations.

i value the importance of a working relationship with the fhfa director to report to him on what has been found in a cleejial manner but it is not a collaborative relationship because the ig reports not only to the director but also to congress. therefore, in terms of reporting, what the ig has found either in the evaluations or its audits or its investigations will be communicated respectfully but that will not be a collaboration on the reporting on how to form laulat report. if there is an unfetterred access to the materials, the output will not be worth anything. >> senator menendez. >> thank you mr. chairman.

mayor castro, i must tell you there aren't too many cast rros that i do like but i do like you and the congressman so i look forward to working with you as the subcommittee chair on housing. you know as you and i had an opportunity to discuss. the new jersey faces the worst natural disaster in its history. thousands of lives were effected and many are still effected. if confirmed, you'd have an important role of administering and oversighing approximately $15 billion in disaster relief funding that was appropriated by the sandy emergency release act that i fought to pass. i'm glad to see that we've deviated from an original attempt to spend $2 billion on that. it's now to about a million. new jersey will be eligible for that competition which originally we were told we're not.

so we're moving in the right direction. there's a lot still to be done. many people are hurting. in our state and in the region so i'd like to invite me on a tour of new jersey to see both the work that's been done but more importantly see the work that has not been done and is still left to achieve a full recovery and rebuild stronger. so could i get your commitment as you are moved upon confirmation to visit with us in new jersey, especially as the national resiliency competition is going to take place to inform you of what the challenges are that we have. >> thank you for that question, senator menendez. i enjoyed our visit yesterday. i wand to commend you as well for your very strong and effective ad voebvocacy for folo have been impacted by superstorm sandy. of course, i would appreciate the opportunity to understand these issues even better by

visiting new jersey. >> now the state has some very well publicized issues with administering cdbg grants in this context particularly with contractors and approval process. as hud awaits new jersey's amended plan, will you commit to working with me and the state to ensure proper contracting procedures are put into place and that the housing application process is as efficient as possible. all of these funds do nothing if at the end of the day it doesn't make its way to effected people. >> i agree with you. as a local official this has been my concern ensuring that wherever resources come from, whether local, state, federal that the rubber hits the roads and that the lives that are meant to be impacted positively are impacted. if confirmed, i certainly will work with you to ensure that we do our best job on -- that hud does its best job on its end to ensure success.

>> you know the subcommittee held a hearing on section eight central central assistance. it's an issue for affordable housing advocates. housing authorities, affordable housing developers. according to the national low income coalition. in my state we have a short of more than 200,000 unit as fordable and available for more vulnerable extremely low income households. nagsly it is greater than 7 million. so voucher reform while some elements have been done by congress, do you consider section 8 voucher reform to be a priority and will you work with us to help move the remaining elements of reform. >> i appreciate the question. i certainly do understand the importance of looking at reform

and as was mentioned earlier, the significance of this as a line item in hud's budget. of course, i look forward to getting up to speed on all the details of what's being proposed. however, if i am confirmed, i certainly will work with you and members of the subcommittee and this committee owe do what we 82. >> i appreciate that. it may be a linite ee ietem. this is about millions of people's lives. i may see it a little bit differently at the end the day. from wednesdayhere i come from i represent. i look at the live that's are affected. i hope you will look at the live that's are effected and not just the line items. >> of course, senator. i certainly will. i have done that throughout my time in public service and as a local official i have been primarily concerned with how the residents of my community are impacted by the actions that we take in public service.

so i recognize that overall, we want people to have good housing opportunities and if i am confirmed, look forward to working with you on that. >> i'm sure you will. i sometime need to be the counter vailing force here on some other -- >> senator corker. >> thank you mr. chairman. i thank both of you for your willingness to serve. i will help get you back on schedule here and be very brief. to the mayor, i know that as a former mayor, there's no job that's more gratifying personally than being the mayor of a city. as we change jobs sometimes we have impacts in different ways that may be are not as quite and up personal but this is certainly a very important role. part of what you'll be doing and you've discussed this was members as you've answered questions, you will be involved in what happens with freddie and fannie. it ultimately effects fha. obviously people seek your

guidance. i know we had a conversation about this. i will ask most of my questions in writing. it's my understanding that you do believe that the duopolistic nature with the way things are today with two enterprises being it relative to the secondary market that you believe that that has no place in the american society and you would work with us to end that type of arrangement. i know that you were a little vague on support of the bill and you should be at this point but relative to that one point it's my understanding you agree with that 100%? >> senator thank you for the question and for the visit that we had. i absolutely believe that there are better ult alternatives that we have in place. i agree with you on that point. i know, of course, as with any legislation, that the devil is in the details and finding that common ground if i am confirmed, i will look forward to being an active participant in that.

>> well, to both of you, we will very some qfrs and mr. mayor, subject to those coming in appropriately, i look forward to supporting you in this nomination. i thank you both for your willingness to serve and mr. chairman, i will turn over the rest of my time and hopefully get some points for this. thank you. >> senator brown. >> pl thank y >> thank you mr. chairman. two local concerns i want to raise just not as a question but to thank you for the discussion we had in what hud has been doing and what i assume from our conversation you will continue. one, it involves the city gospel mission in sincincinnati which discussed a religiously affiliated men's homeless shelter operating on hud land.

i think we're close about we're not there yet. they serve an absolute critical need for homeless men in cincinnati without restricting access to service or employment. i appreciate the work that you've done there and thanks for your interest in moving that along. second, was the issue of stream lining multifamily operations. i understand 50 offices will be consolidated into just 12 as of 2016. there will no longer be any multifamily operations and many states, including, ohio, the seventh biggest state in the country, i support efforts to make hud more efficient. i share the concerns of ohio's community leaders though that eliminating on the ground supervision could lower the quality of multifamily residents and reduce compliance. secretary donovan was highly engaged. we had perhaps maybe three or four conversionations about it.

my staff and his staff worked on it. your predecessor ensured that your decision does not negatively impact. so taking care of the service they provide and the workers that are employed there. i appreciate your commitmentment on that. a year ago, hud proposed updates on a rule to ensure that recipients of hud funds are living up to their commitment to fair housing goals but nine months after comments were received, they still haven't released the proposals data tools that would be included for public feed back nor has it finalized the changes that it proposed last july. just tell me if you would tell the committee what steps that you'll take to make sure that state and local recipients of hud funds engage in meaningful discussions about providing equal housing opportunities for people in our country. >> thank you very much for the

question senator brown and for the visit that we had the other day; could have, have not been part of the rule making pros ce before now. however, with regard to affirm tifly furthering fair housing, i do believe that it's important that there be that kind of guidance and comments from local authorities, i know that the san antonio housing authority for instance, provided comments and so what i can commit to right now whether it's this issue or another rule that is on the stable is that we will diligently proceed and take in the comments and consider them and more generally that i consider them something of importance for our local housing authorities. >> chauthank you mr. chairman. >> thank you. seth tells me that we'll wait until 10 after 11:00 but i

apologize for this but if you could abbreviate your questions slightly. senator to me. >> thank you mr. chairman. i will try to abbreviate my question. thank you miss wertheimer and mayor castro. good to see you both. i appreciate the discussion we had in my office. mayor castro. doi need to follow-up on one of the topics we discussed. many members of this committee has alluded to the ongoing work to reform housing finance. while we have a range of opinions about how best to do that, i believe there's a unanimous agreement on this committee that however we do it, it's got to involve bringing private capital into financing residential mortgages. at the same time that we're having this discussion as you know, there is a movement under way to attempt by certain

communities to attempt to use emanate domain as an argument to justify confiscating mortgages from private lenders at a discount, some who knows what discount to what they are actually worth. this -- first of all i think it's a blatant violation of contract sanctity if they go ahead and do this. it's ataking of private authority which i think our constitution forbids but it -- but it cannot have an devasta devastating impact on capital if private folks know they have this kind of risk. will you take steps to forbid this activity. and would you forbid the fha from participating in the financing of mortgages that were confiscated using emanate

domain. >> thank you. as i mentioned, this particular device that i know a handful of cities have employed. it is not something that the city of san antonio has tried. i understand in fact that it hasn't been put into effect actually in any city and that there's litigation surrounding it. i can understand why communities with a whole bunch of folks who are under water might think of this method. however, i do see your point on why it causes concern among mortgage lenders and at this time, i would say that if i am confirmed, i look forward to visiting with you and committee members on what hud's response ought to be. >> well, i appreciate the ongoing discussion but i really think senator's ought to know what your views are about using emenate domain to confiscate mortgages. would you intend to allow the fha to participate in that?

>> thank you senator. i can certainly see your concern and as i said it's not something that the city of san antonio or under my leadership we ever proposed or drew up. i would like, however, if i am confirmed. the countopportunity to get a l bit more detail on the issue. understand it a little bit better and than take that up with you and members of the committee. >> so i see i'm not going to get an answer to my question mr. chairman. and i will yield the balance of my time. >> senator it's good to have you here. along with your wife and brother. i appreciate you being willing to serve. you had talked about taxpayers should not be in first position of loss with fannie mae and fannie mac. don't let me put words in your mouth but that's what i heard. do you believe that the tax payers can be protected without reform of man ee may and fredan

m mac. >> thank you senator the question. i believe that reform would be preferable to what we have in place now if the nation were to experience another down turn, another housing crisis as we just experiences and more that reason, i commend the committee for working toward a housing finance model that takes the tax payers out of their position of first loss and puts the private sector in that position. i fully understand though as well the concerns of folks with regard to the other part of the balance which is access to credit and that we have had a housing finance system in place that seeks to ensure opportunity for americans of modest means who are credit worthy borrowers so i can understand the very real concerns. if i am confirmed, i would look

forward to hopefully bringing some fresh energy to this and to working with members of the committee who are willing to work to find a resolution. so just to answer your question, i don't believe that the tax payers are nearly as protected as they could be under this different model. that's a positive of the legislation. >> okay. do you think that access to credit versus taxpayer protection -- do you believe we can have both. >> i absolutely believe we can have both. i command the members of committee for working toward those duel goals. if i'm confirmed, i will look forward to working with you to achieve both of those goals that i need to be apart of my legislation. >> housing conditions are in terrible shape. we visited about it when we were in my office. i appreciate the work that hud has done in indian country. there is some word that the agency might be looking at

different data sources and could potentially change the funding for tribes. it would have a negative effect on the tribes in montana. could you give me assure aances that my new formula that they would use in the future to try to allocate housing funds would not duly disrupt the ongoing trail housing programs. >> thank you. i want to commend you for that with the strong advocacy that you've shown in our conversat n conversations with respect to tribal communities. i absolute lay gree with you that what we want to do is provide -- hud wants to provide more housing opportunities, not less. wh hud would seek to work with our tribal communities awe traditionally do and with you senator and the committee tow achieve a good balance. >> i look forward to that. ms. wertheimer, could you talk

about what exactly would be required of the federal government if additional assistance were required and what option -- obligations the enterprises would have to the taxpayers? >> you mean worthy enterprises to -- >> that's correct. >> operated at a loss and need to draw down. >> yes. >> the formula for when additional moneys can be accessed has been set in the afwree agreement that's are in place. i think the taxpayers are already investments to the tune of $187.5 billion. additional draws would further increase the risk to those taxpayers. it seems to me that the mission of inspector general's office which is independent rigorous, thorough oversight doesn't change because the fact that the

taxpayers's burden has increased, heightened, if you will, the mission of the oig but doesn't change what it will do in terms of its audits, evaluations and investigations. >> thank you mr. chairman. senator, we have a cup ouple of minutes. i will be as brief as i can be because i want to make sure sthaetor warren gets her two cents in. mayor castro great to see you. i see you enjoyed our visit. i simply -- i know you will get up to speed on reform, i would commend you under secretary miller's reasons comments pointing out that the current profitability of the gses is unsustainable with their shrink

requirement of 15% of their portfolio on a regular basisafr all-time low. the question senator tester asked, the recent stress test shows potential vulnerability up to $190 billion of additional. others have been working how we improve this legislation. i would ask the fourth or fifth time. my hope is you will be confirmed, get up to speed very, very quickly and gse reform will be first out of the box on your list of priorities. do you want to add a quick comment to move to senator warren? >> thank you for the comments.

if i am confirmed, i do look forward to working with you and the committee to hopefully bringing some fresh energy to this and to helping to move housing finance model that i think works for americans. >> there are improvements on the legislation, senator warren and others have been working on. i would commend the urgency how vulnerable taxpayers are as well as awful access to credit for low-income people at this moment in time. thank you, mr. chairman. >> senator warren. >> thank you very much, mr. chairman. thank you, senator warren for your speed. thank you both for being here for your willingness to serve. i'm going to submit questions for the record but i want to make a point. you've been asked about gse reform repeatedly because it is so important. important to our economy. we've talked about different problems we mays right now. i would emphasize the problem of

access. in 2001 before the housing bubble, when fannie and freddie were operating normally, the average credit score for a borrower receiving a fannie or freddie-backed purchase money loan was 711. by 2013 the average credit score jumped to 756. in the wake of the financial crisis of 2008, more american families are struggling with damaged credit, but fannie and freddie have raised standards by nearly 50 points. keep in mind that nearly 50 million americans lie between those two points on the credit score continuum. the story is much worse for african-american families, for hispanic families. we have got to change what's happening with fannie and freddie. we have got to make reforms. a large part of that is because

of access. any kind of reforms we do have got to be reforms that make mortgages accessible to middle class families that make mortgages accessible to families trying to build the american dream for themselves. i'll stop there and submit my questions for the record. thank you, mr. chairman. >> i thank all the nominees for your testimony and willingness to serve our nation. i will remind members to submit questions for the record by noon this friday june 20. police submit your answers to the written questions as soon as possible so that we can move your nominations forward in a timely manner. this hearing is adjourned.