some of the work that we've done the cascadian fault zone off the coast of the northwest u.s., the earthquake risk which is again a very large risk over large areas. i think we can show where we're going and tell you what we think is the path to get us there. and then that will give you an opportunity to look at are there additional tools that you could give us. the last thing i would like to end with this is the staffford act was oftentimes a constraint seen as what fema was capable of doing. in the past year since i've been at fema we've responded to haiti, we were asked to support usid and we did it. last year we were asked to support the children in the defengs facilities. we supported that. we were asked to support the ebola response. many of these things may not be in the papers. but they capabilities that we

billed. the staffford act however is limited to oftentimes only those natural hazards with limited flexibility. i think the delegate brings up an important point. when you look at growing hazards, such as cyber and others, what is the role of the disaster relief fund in the consequence world. and if it is not in rebuilding in the emergency response cost and the ability to use emergency declaration to bring resource to bear is it worthwhile looking at such things -- it's kind of a question. what is the role in a pandemic? it's not specifically excluded in the emergency declarations but it's not mentioned. cyber. again, we don't look to have the role in the prevention or the law enforcement or even the response to the technical aspects of it. but states and locals will be dealing with consequences of it, many of which will follow similar patterns of cyber

hazards. again the coast guard is the lead agency for that had many tools to deal with the response. but much of the coordination with the local and state governments had to be built -- fema is not looking to grow our role. but we think a better understanding of what the intent of congress is as you pointed out in the homeland security act as amend nd, as a principleeiple adviser to the president. when they fall outside of traditional known disasters. >> the chair would recognize mr. graves for five minutes. >> thank you mr. chairman. mr. fugate i wanted to go back on a few things. one of which is the national flood insurance program. we can go over the waters at length. in south louisiana we've lost 1900 square miles of wetlands. it's 90% of the coastal wetlands

lost in the united states in the continental u.s. it makes the gulf of mexico that much closer to our coastal communities there by increasing their vulnerability. under bigger waters before the changes that were enacted, the actuarial rates in some cases increased rates 20, 30, 40 times what they were previously. this increase in vulnerability whether it's real or not is not the fault of these people. it is largely based on studies actually a result of federal actions tied to the mississippi river and tributaries project dating back to 1928. when you add on top of that some of the fee zone restrictions that were put in place when you add on top of that some of the challenges that i noted earlier in regard to the core of engineers projects that were noted to have a positive cost to benefit ratio but stuck in

development for decades, we're missing opportunities for saving taxpayers dollars by being reactive instead of proactive. there are opportunities here to make communities more resilient and save talks pair dollars. i understand that not all of those are within the purview of your agent.cyagency. there are opportunities here, there are projects here where these communities can be made for resilient to where hurricanes and other disasters are rainy days as opposed to catastrophic losses that we've seen in recent years. i want to correct the record on a comment you made or provide a little more context on the national flood insurance program. you made a comment that the program is $20 billion in debt. i know you've seen the studies. you can justify the program is in the black anywhere from 9 to $16 billion. you and i may not agree on that. but i think it's noteworthy.

you've seen the study indicating that 66% of the premiums have been retained by the write your owns in the form of commissions not going into the fund. and lastly, as i remember from the 2005 storms the nfip program borrowed $17 million the majority of the debt you referenced. u be you had the core of engineers who indicated that katrina was an engineering failure. and so i just wanted to make sure that that was also included in the record to not distort the solvency of the nfip program. i also wanted to be clear that louisiana is perhaps somewhat of an anomaly and that the vulnerability is not as a result of decisions communities have made in most cases it's the result of the changing landscape largely a result of federal actions that have had adverse consequences on these

communities and the environment in south louisiana. >> well, my sister lives there and she's on the wrong side of the mississippi levee system. so when the storms come she's going to get flooded. i also know we did a lot of good work in build back better. plaquer man's parish made some key decisions. when the latest storm hit, their eoc was elevated. they didn't have to shut down. i was with governor jindal driving throw that hurricane. they were able to maintain a full response. they evacuated. where they put in their levees want they were able to protect many parts of their community. they were also making decisions about what was not going to be defensible anymore and about buying out and relocating communities. we know this area. we've worked in it. but the numbers there and how you get to the numbers the fact is that the floods insurance program still owes and has

borrowed from the treasury to pay out. two of the large payouts was katrina but also sandy. it is not able to pay that debt down. it was paying it down slowly africa trina. and again, this is a sense of congress. do we want to have a sound program. which i think the answer is for parts, yes. but other parts we would be putting people out f their homes which i don't think was the intent and that's why congress came back and made the change. but we got to make sure that we set an appropriate level that we can't run it as an insurance company and say it's going to be actuarial sound. we're going to have to understand we're going to underwrite risks because this's no way to keep people in their homes. >> in closing i want to say i agree that taxpayers shouldn't be footing the bill in this case. however, we at the same time shouldn't call actuarial a program that is being run incredibly inefficiently and the $17 billion katrina expense that

the core of engineers admitted was their liability or their fault, excuse me. >> thank wu mr. fugate for your testimony today. your comments have been helpful to today's discussion. and i look forward to working with you on our legislation. your input and support is vital to getting it right and getting it signed into law. so thank you. >> mr. mccarthey, you may

proceed. is your microphone on? okay. [ no audio ] [ inaudible ] >> major disasters, emergencies, all of these appear on the fema website and declarations page. >> okay. >> and they're all funded out of the disaster relief fund. but they are distinct and the

overwhelming amount of spending comes from major disaster declarations. occasionally people tend to con flat all of these together and say we have many more declarations but really that's imprecise and not been helpful. there has been an increased. it's increased four fold from the 1960s to now and there has been a study with that increase, i would acknowledge that last year was the lowest number since 2001. i mention that to reinforce one fact that starts getting lost when we talked about having theories of why a disaster relief occurs. how do we explain an increased number of disaster declarations. in addition to an increased number of weather events during the last 50 years, during the last seven decades the population of the nation has been doubled and it could be argued that the population

density has increased the density in the communities and areas that are vaughn rabble to natural disasters. the critique of thee events is that they're within any state oes upon to respond. but the central point of the declaration process, the use of the per capita amount is that all states are not equal and that larger states do have more resources and should be able to offer more aid on their own. what's the primary source of disaster cost. it's important to understand that the greatest amount of disaster spending is attributable to the large major disasters. as an example we reviewed data from 1989 to 2014 of declarations and obligations. and if we eliminated half of the

disasters over those years we would say 3% in disaster costs. there are a number of options to reduce federal spending. while some of these ideas may be worthy of consideration, it remains to be seen of such a shift would severely disrupt a state oes ability to adequately respond to a disaster. an alternative is to continue to emphasize mitigation, taking steps priesh to a disaster to lessen the impact of the events. mr. chairman your statement last spring was apt. at a time when a bipartisan

consensus seemed to be developed on the efficacy of mitigation and how it could work the last budget zeroed out. later in the year the administration announced a nationwide resilience competition with million a billion dollars that remained for the properappropriations of sandy. all mitigation dollars are now following disasters and not giving states and communities a chance to do the work before they occur. the new resill jens program is based at hud but directed at states that have experienced disasters. i's not clear how it's liked to other mitigation promise, does not appear to have the same cost benefit requirements nor is there any reported collaboration

among them. mitigation is not a panacea for all of the problems created by natural disasters. -- and a process that can involve a partnership in all levels of government with the public and private sector. it would result in less spending. but avoiding or continue to lessen the impact of future catastrophic events may hold a lot more promise in long term savings and protecting our visits. thanks for the opportunity to appear before you doedtoday and i would be happen happy to respond to any of your questions. >> we apologize for the sound system. it was painful for us as well.

>> administrator paulson, you may proceed. hopefully your microphone will work correctly. unfortunately we're going to have to pass that one other there. thank you. >> your mission is clear. we must find a way to bend the cost conserve of disasters of american taxpayers. in pursuit of this mission i believe we can save additional lives and do a much better job of protecting property. i'm the senior partner of global emergency solution. i was proud to have spent seven years in the federal service of our nation and i serve as a fema administrator from 2005 to 2009. i began my 30 mf year career as a firefighter and rose through the ranks to become the chief of

the miami-dade fire department. while i've seen many tremendous public servants at work, i've also witnessed unfosht naught policy errors and a waste of taxpayers dollars. in most case this is an insufficient investment in the mitigation before the disaster hit. not enough resources are being allocated. i believe this new congress has a golden opportunity to advance a bipartisan national disaster strategy that would better protect american people, property and save taxpayer dollars. with the senate and the house of representatives working together across party lines now is the time to address the failed status quo of waiting for the torms to hit and then passing supplemental appropriation bills. director fugate has done a treem douse job? a community approach to emergency management. however, i'm sure even director few date would admit there's still much work to be done to

build a more resilient country. hopefully understanding the realities of the exploding cost can serve as a motivator. mr. chairman any attempt to change the status quo but begin with an understanding of the program. this is where i believe your subcommittee's work can play a major role. first let me explain the nature of the problem we face. according to fema federal major disasters have jumped from an average of 65 under president obama. as the average number of disaster declarations has risen upper george h. bush, president clinton and george w. bush. the second slide is the lossed over the last three decades. increasing from an average of $33 billion per year from 1995

to 2004 to doubling to $65 billion in the next decade. the federal government and insurers have bore the overwhelming majority of these losses. since 2011, $137 billion have been spent. $400 a house hold annually with over $60 billion spent on superstorm sandy alone. this low predisaster investment is an important factor. fema studies showed that every dollar invested in mitigation it saves the taxpayers $4 this recovery. these are the most preventable with predisaster mitt dpags and resiliency tools. building koez are the most effective mitigation measure we have. yet only 11 states across this country have adequate building codes in place. most of the states without proper building codes are

directly in harm's way when it comes to hurricanes and other natural disasters. it seems to me that the critical question is what can the congress do. as a farmer firefighter i'm always reminded of the advise given by ben franklin. an ounce of prevention is worth a pound of cure. in my view providing the localities to adopt modern building codes is the most cost effective mitigation tool we have. we urge the enact of the safe building code. any future savings that result in the post disaster spending should be reinvested in predisaster incentives like safe building code to facile it modern build codes in states and communities across this county. chairman, i applaud you.

i really applaud you for the announcement of a congressional roun table to begin the dialogue on how to identify and quantify the cost pps and how to use that information to ultimately study and find solutions. it's my recommendation that the new congress pass legislation in short order to commission a blue ribbon panel to explore why disaster reclamation is at an all time high and what is behind the spending. some questions the panel could explore include are tin creases in spending related to population increases, are they related to changes in spending poor construction of homes or mistakes in federal policy. what changes in policy can be made? the panel could also make recommendations concerning the proper role of federal, state and local governments in solve this problem. specific atext should be given to fema, hud, d.o.t.

i believe congress should authorize this blue ribbon panel and use this finding to put in place a comprehensive national disaster strategy to save lives and taxpayer dollars. thank you for allowing me to testify before the subcommittee today and i'll be looking forward to you questions. >> thank you for your testimony. mr. koon you may proceed. >> thank you were chairman members of the subcommittee for hearing this hearing today. the statement we submitted goes into specific details on many issues. wu for now i will cover the current state of disasters. efforts we're working on with fema and ongoing concerns with the management costs and obligations. as you have heard, the number and nature of disasters have varied over time.

in fiscal year 2013 were there 205 gubernatorial declarations and over 18,000 events requiring state assets. in addition to that local and tribal governments responded to 31,000 additional events that year. without a strong emergency management system at the state, local and tribal levels with many of the 50,000 state and local responses would falter or require federal support. that federal support comes in the form of public assistance which amount to half of the total funds allocated to the disaster relief fund. in order to ensure the most effective use of those funds and in response to numerous government audits, last year fema initiated an internal stud ki. in the coming weeks the agency will share the day the from the study.

as a percentage of the drf which average 13% over the last ten fiscal years while less than 2% was apportioned for sub granties. this has been an area of great concern to the states and certainly needs further examination. we hope that an improved pa process will reduce the opportunity for future audits and obligations by simplifying efforts across the country. the current rate of deobligations causes significant economic hardship to the states and communities that have expended those funds long ago and requires significant staff time that would be better spent preparing for future disasters. reducing expen churs from the drf would allow us to explore other options.

we intend to continue conversation on all of these issues at our mid year forum in march to explore alternative and make recommendation to you. the subcommittee and congress as a whole have gone to great lint to improve disaster relief processes. efforts such as the sandy recovery act and hr 3300 which supported programs like emac. but without a comprehensive look at some of our administrative issues at well we'll continue to falter in our mission. only through an effective response and subsequent recovery can we work toward building more resilient communities reducing the cost of disaster to states and federal government and ultimately safe more lives and property from damage. i look forward to your continued

partnership in these efforts and welcome any questions you have for us. >> thank you for your testimony. you may proceed. good morning, chairman, members of the subcommittee. i'm with the san diego fire department. today i'm testifying on behalf of the international association of fire chief where i serve on the wide life committee. thank you for the opportunity to discuss in fema's role. in 2013 wild land fires impacted every state in the nation. there were more than 47,500 filed land fires in the united states. they burned roughly 4.3 million

acres. these fires cost the federal government over $1.7 billion to extinguish. local fire departments responded to most wild land fire incidents. for fires on federal lands, they cooperate with the u.s. department of interior and the u.s. department of agriculture forest service. nearly 97% of all wild land fires are extinguished during national attack. we estimate that local fire departments provide more than $36 billion per year in wild land suppression assistance. the city and county of san diego are no strangers to the threat of wild land fire. in 2003, 2007 and 2014, san diego experienced wild land fires with 10s of millions of damage. the primary fad rale sergeants are the department of interior were the u.s. forest service which are responsible for fires on federal lands. however, fema plays an important

role in helping state and local agencies prepare respond to and recover from wild land fires on nonfederal land. under the fire assistance program fema provides 75% matching funds to help offset the communities for the control of any fire on grassland that threatens such destruction as would constitute a major disaster. fema also provides hazard mitigation assistance. this funding can help states and local communities protect the public and property in advance of wild land fires occurring. today they play an important role in addressing the wild land fires. it does not duplicate or rerace the department of interior or u.s. forest service. we'd like to recommend some policy changes to help fema. number one, in the dynamic wild land fire environment, fema must

use more flexibility. applications must be submitted while a wildfire is burning uncontrolled in a rapidly changing environment. last may the city of san diego submitted an application six hours into the fire incident. the application was rejected due to it being submitted at a point when the fire's growth had slowed and was per cede by fema as less of a threat of a major disaster. had it been received two hours sooner, approval would have been granted. congress should aslow fema funding to be used to mitigate the use of post wild land fire flooding. long after the fire is extinguished, the severity of the burned ground leaves the communities vulnerable to the

mudslides and flash flooding. three, fema should fully reimburse fire departments for deployments. when fire departments are deployed to wild land fires they expect to be made whole. unfortunately this currently is not the case. for example, when a local fire department apparatus is committed to an emergency incident, it is no longer available to that department. fema will only reimburse the department for 16 hours of that 24 hours day for this equipment after the first 48 hours. if fire departments are not fully reimbursed for their expenses, local government policymakers may not be willing to send them to assist in future situations. number four, stabilize funding for wild land fire suppression. the depth of interior and u.s.

forest service has been forced to transfer funding from other accounts. this fire borrowing has depleted accounts aimed at activities like reducing hazardous fuels. the ifc supports congress's efforts to address the wild land fire problems with creation of the flame fund and the fire management strategy. we also have been supportive of the legislation like hr 167 proposed by simpson and charader which would allocate the cost of 1% of the nation's wild land fires to the disaster relief fund. efforts to adequately cover the cost of wild land fire suppression will allow them to support other programs. in closing i thank the committee for the opportunity to address the issue of fema support of local and state governments and wild land fire response and recovery. the threat of wild land fire continue to grow more severe. fema plays an important role.

ifac looks forward to working with the committee to address these issues. >> i will now begin the first round of questions limited to five minutes for each member. if there are any additional questions following the first round, we'll additional rounds of questions as needed. if we can pass the microphone down to mr. mccarthey. you are analyzed the history of our nation's disaster assistance authorities and the creation of fema. can you explain some of the basic principles that are fundamental of fema's assistance programs and the nation's approach to disaster recovery? >> yes, mr. chairman. fundamentally it begins as a partnership between the federal

government and the state governments. and i think it is written that the staffford act is written in a way that is of interest because it's extremely flexible. i know mr. fugate was talking about some of the ways it works, some of the way it does work. i have occasionally heard it referred to as the kind of act that you could drive a truck through. then i heard it referred to as a straight jacket. perhaps both people are right. but i think it's a matter of interpretation. essentially fema is looking at the states as their partners and i think that in that way it works fairly effectively. and you have state agencies by the way, the state emergency management agencies that have grown in sophistication and ability through the years and are really able to work well with fema and make it work. but one of the things, though, that i think is important is knowing that the state and locals can do well in working together to repair infrastructure buildings repair water services and things

like that. but one of the things i want to stress that i think is difficult is when we say good things about what a great job fema is doing or how great the disaster piece is working we do have -- there's one problem on that, and that is creating expectations for families and individuals. the staffford act doesn't come close to bringing people back to where they were before a disaster. in fact the total amount that can be spent currently by fema on any family is $32,400. now, that can't replace the flood insurance policy, can't replace a homeowners policy and i think at times perhaps i don't think anyone is directly responsible for that but there is kind of an image created that don't worry, the fema dollars are coming and yub eel be taken care of. to an extent for state and local governments there' some truth in that. but certainly for familiance individuals nothing replaces solid insurance and a real kind of culture of preparedness.

but overall i would say that -- what i observed and i did start at fema before it was fema in 1979, is you've seen it really growing and maturing program that does address a lot of the toughest problems that communities face. i think it does it faster. it certainly responds much better than it ever did before. but i think it's left with the question then, what's next? and we can get better and better at respond. we can be faster at responding. but again, as one who is also writ on the predisaster mitigation program i think absent that you are going to be repeating the same, the same work over and over again in the same places until you do try to reduce the risk overall. >> as you testified the cost of natural disasters are driven by just a few events. if we are to look for solutions to reduce the costs, we're going to have to understand what factors are resulting in the few

events being so expensive. do you have a sense of what some of those factors may be? >> actually as mr. fugate mentioned and as in my testimony, the biggest factor -- we've had a sereies of events where it's become -- i think this is what ms. norton was talking about. at fema we would think what's unthinkable. in the '90s, what's unthinkable is a hurricane going directly into new orleans or what's unthinkable is really strong hurricanes hitting the new york city and new jersey areas. we started to have those things occur. the density of the population and the actual value of the resources being hit has driven these costs this high. some of the things we can do is to begin to take steps that begin to protect these structures to do elevation, to move some areas out of where rivers want to go or where

coastal surges want to go. but overall i have to say, some of the biggest disasters we've had, it would be hard to take a big chunk out of that because they went to where the people were and where the valuable real estate was and that ends up costing us a great deal. but there's still much we can do. >> thank you. chair now recognizes ranking member carson for five minutes. >> thank you. i understand failing to proceed adequate sheltering during disasters. but at the same time how do you suggest we provide the same kind of access to shelters for those with need. >> dealing with the vulnerable population in shelters is an issue that we in florida and all other states have been working on for a number of years in close coordination with fema.

and as administrator fugate it is an extreme priority for us. the issue comes down to how do we achieve the vision that administrator fugate laid out given the resource constraints that we have at the state and local level to ensure that we're able to provide that ability for anyone to seek shelter in any location during those times when we will be severely resource constrained. we continue to make good progress on that in florida and other places across the country. that is come in the form of increased coop las vegas between municipalities, between counties and within the state itself helping us to make sure that we're able to apply those resources that may be in another jurisdiction in the area that needs it. we will never be able to afford to have all of the potential durable medical equipment at every shelter location all the

time, but we have the ability to transport those in short order. the same thing for the human capital. in one hurricane in 2005 the state of florida had approximately 380 shelters 0open. we did not have the resources to have 380 sign language interpreters to those shelters. but if we have the partnership and cooperation in place ahead of time, as the needs arise, we can deploy them quickly. we want to make sure we can get the resources available to be shared appropriately and we want to have the conversation ahead of time with fema, with the department of justice to make sure that in fact is going to meet the need and is an appropriate solution to the situation. >> thank you. and to that point, mr. mccarthey, you mentioned the difficulty of measuring state readiness and their capabilities when reviewing disaster declaration applications. what options have been considered and do you have any

recommendations for determining readiness and capabilities for that matter? >> it's something that fema has worked on a few times doing capability assessment reports trying to look at what the states themselves think they're strongest at what they could probably take on themselves. i think it's -- there are a number of pieces that have to be looked at. i would go to report that mentions. there are certainly a lot of other ways of measuring a state's ability beyond the per capita amount. that can be rainy day funds and also the states kpatsty. i think it's an interesting conversation here today about what discouraging states from building at capacity and what encourages it. a lot of states are simply responsible and know they're the ones that have to respond first and do a lot of responses absent federal help. it is interesting to think that there are some states that do a wonderful job because they get hit frequently and know they better be good at it.

but there's other states that because it's a very episodic business, they might not get hit with something substantial for years. you might find that they're no longer budgets towards it and thit makes it all the more difficult when they are hit. i'm not being really responsive to this except to say it's something we would have to study and think about maybe a checklist that fema could go down and look at. i think there are have been a few suggestions on that that would be a better measure of state resources. >> some indicated that too many small disasters tie up fema's resources and inhibit fema's ability to respond to larger disasters. as a former fema administrator, sir, what are your thoughts on this position? >> regardless of the size of the disaster where i see the same damage in every event whether it's a tornado or hurricane or

super storm, we're seeing the same type of damage. i firmly believe if we look at premitigation issues particularly with our building codes and how we're putting or houses together, we can reduce or costs on the other end significantly. 15% of the population of this country lives on 3% of the land. and we're talking about $10 trillion in property that we continue to rebuild back the same way we did. hurricane andrew, we lost a lot of homes and almost 90,000 homes severely damaged in hurricane andrew. and we looked carefully at what damage was caused what caused them to fail, what caused the roof to fail, what kuzed the windows to blow out. we changed our building codes to deal with all of those issues. it was tough. it was not easy to do. we had home builders fighting us

be but we had a lot of political will to make the changes and we did that. so if we look across the country, only 11 states have building codes. regardless of whether it's a small disaster that state handles by itself or a big catastrophic event like katrina it's the same damage. the bigger one may cost more money but the damage to each individual is identical. so i think we need to step back and look very clearly at what we're doing to our building codes and how we're building these things back again. i think that's what's going to reduce cost. >> mr. chairman? >> thank you, mr. carson. the chair recognizes mr. graves for five minutes. >> thank you. i was reading some of the testimony earlier and going back on the same things when we questioned administrator fugate. could you talk, perhaps mr.

paulson, a little bit about some of your experiences with predisaster mitigation as opposed to post disaster response and cost savings associated with those activities? >> i think a couple things. one, obviously being on the ground is as a firefighter and fire chief, emergency management for miami-dade county, coming in as a fire administrator and taking over fema in the middle of katrina. i think we saw very clearly very clearly that we were not putting enough money in predisaster mitigation. now we're not going to evacuate florida because it's in hurricane alley. that's not going to happen. so we know that that's not an option for us. so the option the other option has to be okay now that we're here and we know we're going to have hurricanes, what are we going to do about it? you know, we can't just sit there and fold our hands or sit on our hands and wait for it to

come. so i firmly believe and that's why i appreciate so much what this committee is doing, to step back and look at what are we spending our money -- again, the round table issue you talked about. we don't even know how much we're spending on disasters. you know, we've got hud spending money, fema spending money, d.o.t. spending money agriculture spending money. we don't have a clue of what we're spending totally. but we do know that if we do things up front to protect our businesses protect our houses and making sure our government is, you know local governments and state governments have good plans in place it's got to reduce the cost significantly. i think mr. fugate recognizes that also. >> do you have any quick observations over the perhaps different approach to response in hurricane sandy as compared to previous disasters? >> could you repeat that? >> sure. do you have any reaction to perhaps different approach to response in hurricane sandy as

compared to previous disasters? >> we made changes in fema after katrina. the way the staffford act is set up we wait for the local community to become overwhelmed before the state comes in and we wait for the state to become overwhelmed before the federal government steps in. i call it a system of sequential failure. it doesn't work in a catastrophic event. we saw that clearly. we changed our philosophy from a reactive to a proactive system. it worked extremely well in gus taf and ike. gustav went right into new orleans, not one fatality. the budget office and president bush at the time say freed we would do a predisaster.

you saw a lot of resources on the ground at hurricane sandy prior to storm making landfall. even though it wasn't a huge hurricane, not like andrew or katrina, it had a significant impact. as far as changing the response, i think i would have done the same thing as administrator fugate did. some of the other issues in the aftermath, i'm not involved in those so i can't respond to that. but ki tell you that spending money on the ground prior to landfall makes a lot of sense and it works. >> mr. koon, i mentioned earlier when you look at the aggregate of all of these changes in policies everything from the new core engineering standards, you look at the zone policies with, you look at the nfip rate changes and many many other regulatory changes and policies that have been put in place. you're beginning to price communities out of being able to

live where they are. can you react to that statement and perhaps some of the impacts you've seen in florida? >> yes, thank you for the question. in florida obviously, florida has more flood insurance policies than any other state in the countcountry. we're got 37% of the policies. and we saw some of the price increases you referenced in your question earlier. it's impacted the community but it's also given us an opportunity to consider alternatives and ways to improve for the future. in the state there have continuing consideration about way to perhaps prioritize and encourage the market. we are also looking at investing more in the community rating system portion of the national flood insurance program. taking advantage of that program to achieve discounts for our policyholders by improving the readiness of our communities. and so it definitely is something that is top of mine for leaders in the state of

florida but also an opportunity for us to make sure we better prepare for those future disasters by taking advantage of existing federal programs as they are today and fully taking advantage of anything they offer us to help get ready for the next storm. >> thank you. >> thank you, mr. graves. chair recognizes ms. thornton. >> i have a question just one question for mr. mccarthey. you've been given an almost impossible task to talk about reduces impacts. essentially what you were asked to testify was about reducing impacts, reduces costs. and you've gone through various the various options. you say in the conclusion of your testimony -- you mention in the conclusion of your testimony something i'm particularly interested in. fewer disaster declarations

would likely result in less spend ing spending. but avoiding or continuing to mitigate or lessen the impact or future catastrophic disaster events may arguably hold the most promise in reducing expenditures. now, you said that in 2014, you say on page two, there were fewer disasters. but of course we understand trends by looking over a period of years and you cite over 25 years, when there have been an acceleration. mr. paulson offered us a, a graph which was helpful which showed that this is reflected through democratic and republican administrations. there probably was a reason for the greatest rise between

presidents reagan and h.w. bush probably had to do with some hurricane, even less than the rise between katrina and sandy. i also note, in light of mr. hennessey's testimony, that you say, mr. mccarthy, that fire management assistant grants often obviate the need for major disaster declaration because they provide funding that helps states to control wildfires. so, that's something practical we could do. it would mean that the funds would go one place rather than another, but it would probably be viewed less than what happens when you have one of those huge fires, for example, in california. when you get to defining declarations, i say good luck.

that's basically presidential. it's the governor coming to the president and, you know, i think congressmen might be able to pass something to try to reduce it but i don't think i would advise it. then there's a question i asked to mr. fugate about changes in the stafford act or other ways to look at how we run mitigation or disaster relief before and now and what looks like the new era. you indicate there were a number of sections we could repeal. you did what you were asked to do. for example, you said that this -- that there was a suggestion that would have applied, and here i'm quoting

for you, a strict formula to the declarations process. and also would have reduced the federal share of disaster from 75%. disaster assistant from 75% to 50%. then you quickly add through section 320 congress insisted, that a formula not be able to be the sole d he determine yent and i suggest that as long as this is a union of case, it's probably going to be handled on a case-by-case basis. you cite some confusion but also some hope. you quote extensively from the chairman who talked about real confusion between various programs. for mitigating disaster. and then you point to -- and you

call them mixed messages. and one mixed message, or one that would have caused some uncertainty is one from the administration, that introduced what you call a nationwide resilience competition with resources of just over $1 billion through the department of housing and urban development. you said it would boost future disaster mitigation savings but it wasn't clear that this program linked to other programs, it -- you said it didn't have the same cost benefit requirements as fema program. my question for you is if what the administration was doing was saying, you have to compete for these funds in a competition wouldn't the competition build in those various notions that we now use on a basis of whichever

program you apply for and get some type of regularized notion forcing efficiency moving to real mitigation and giving funds based on that competition to who could do mitigation, who needs to do mitigation most, because you would have to compete for them. why doesn't the very fact of a competition build in the very factors that today are resulted in confusion among the various programs that are now used to reduce mitigation? >> that's an excellent point. and i think -- what i would say really, is that i think the competition ends in march. and we'll be able to look at it. in fairness, you know when i say they don't appear to have the same cost benefit ratio in their -- well it is something that could get built in. it may be that some applicants are building it in. and in fairness to hud as they

put it oushgts they mentioned what they were looking for was innovation. and at times, i think probably some team would look at some of fema's mitigation programs and think that it didn't encourage enough innovation. so, it's -- i don't mean to say it's not possible. it is a competition. i guess -- i guess what's difficult, though, is that -- i apologize for having spent a career at fema before my past eight years at crs, but fema has been doing mitigation since 1988. that doesn't mean that's where all mitigation money must go but it is a theme throughout hearing today, is how much koortd nation is there among agencies? how much do they really talk to each other unless they're told they have to do that. and so i guess with resilience program we'll learn a lot more when it's done and when they're making the awards we'll find out whether it's been innovative and whether they have built in the cost benefit pieces into it.

it's just been hard to see this and not know whether or not some of the people that have done a lot of mitigation across the country, both in predisaster programs and post disaster programs have been a part of what hud has undertaken now, or if it's all new. >> yeah. but i was suggestive if we follow the money and the largest amount of money was given for competition, imagine -- i bet one of the factors in competition would be -- i think it was mr. paulsen who testified by the common notion of building codes. well, you know if you apply for mitigation funds and you're sitting there with no building code, i wonder if you could win that competition as against another jurisdiction who might have an equally good -- equally good application but also had taken some self-help initiative on its own to have building

codes throughout the state. that's the kind of thing i think would bring together who wha now are -- what you call mixed messages, and i agree, because have you several different programs trying to do the same thing, and i might add each with a little. thank you, mr. chairman. >> this question is to mr. mccarthy and mr. paulsen. both of you testified to increasing costs and losses associated with disasters. where do you see these trends going absent a shift in public policy? >> i would just say briefly as i mentioned in my testimony, seeing predisaster mitigation withering away seems to me to be the wrong message. i'm not sure i understand -- i don't know if it's a difference in philosophy. i don't know how it got to this point. it seems to me you have to get it up front. have you a lot of enthusiasm after disaster work, after you've spent hundreds of

millions repairing things, then people want to do mitigation. i think the important part is to at least consider getting it on the front end. i'll turn to the chief. >> if you look at the trends over the last 15, 20 years, actually, it's continued to rise and continued to rise and continued to rise, the number of disaster declarations are arising, costs are astronomical -- astronomically rising. we have to do something. we know we have limited dollars. mr. fugate said, we have to respond. we know we've got to respond. so he didn't have the money up front to do the mitigation but he had to have money to do the response side. somewhere along the line, that's why i appreciate your blue ribbon panel stepping back and look at this having a third party takes the politics out of

it and to come up with some good, solid recommendations that allows us to really get a handle on this. if we don't do anything, i see it continuing to rise and rise and may be beyond the capacity to deal with on the response side. >> what are your thoughts on ways the federal government could help reduce costs and losses related to disasters? >> i think it's -- it's a partnership. it's not just a partnership between the federal government and states. it's the states and locals and locals and individuals and it's the private sector working together of how -- how are we going to protect our businesses how are we going to protect our homes, how are we going to protect our xhunlts from disasters we know we're going to have? and we haven't done that. we've had extremely difficult time, and i'm sure mr. kuhn will

tell you this, preparing ourselves for a catastrophic event. we saw hurricane wilma not a catastrophic hurricane. we went across the top of my house. and yes we had tens of thousands of people the day -- not the day, the hour the storm died down standing in line for food because they hadn't prepared themselves. that cost the federal government millions of dollars. it's not just predisaster, it's planning, training educating the public what we expect from them and getting the private sector to protect their businesses also. we lose about 40% of our small businesses in every catastrophic event. they just don't have the wherewithal to come back. that's a huge hit on the economy. we saw in hurricane andrew going through homestead it took 20 years for that community to recover.

it's something we have to work together. you know, we've got a great fema administrator that recognizes that. we just have to give them the resource to make it happen. >> if any of you -- we'll start with mr. mccarthy. are you aware of examples where states have used federal programs to invest in a way that has already shown to avoided additional damage and loss? >> yes, mr. chairman. there's a lot of wonderful examples, best practices we can asee across the country from kens tflt on north carolina, new jersey. a lot of examples where there's flooding every year except there aren't people anymore and businesses there every time. it's the dog that doesn't bark. and it doesn't get head lines but a lot of that is really worked. and i think, too, those are just

a few examples. >> mr. chairman, we've already discussed some hud resiliency program. in addition to that, i think -- also our cooperation with the national voad programs help us meet the needs of our citizens using federal and other dollars as well. >> fema's hazardous -- or hazard mitigation grant program has been hugely successful within the state of california. it allows agencies in the community to fund defensible space, the creation of defensible state that allows us as firefighters to go in and protect those homes and when we're not in front of those homes to pass those homes

without doing very little damage. also allows communities to invest in noncombustible building materials. what we've experienced not just in california, you see it all over the western u.s., is that, you know, whether it be new construction and the building codes, you know, dictating certain types of materials, that's all well and good for the new construction or those communities that maybe have suffered through a fire and have been rebuilt. it's the existing nonconforming structures and the owners that we really have the challenges with and really urging them to get involved in some of these grant opportunities and allow us, you know, to protect them in a better way. >> chair recognizes ranking member carson. >> just last question for chief

hennessey hennessey. what role can assistant firefighters grant program play in helping communities prepare for the threat of wildfires? that was my only question. >> you know, that program has been hugely beneficial. not only for large fire departments but also the smaller and volunteer fire departments. not only by ways of creating grant opportunities for fire equipment but also training. the fire act grant benefited not only our agencies but agencies all over the country in providing a wealth of equipment that we would not be able to afford on our own. the safer grant, which is a staffing grant also assists fire department grants, much needed staffing for large and small departments. so, that program has been hushlly beneficial and just in california alone, there is a number of training programs that would not have been possible had that grant funding not been available.

so we appreciate the opportunity for those grants. >> thank you, chairman, i yield back. >> before closing, i have one final question. what do you think of our proposal to conduct a impressive review of disaster assistance and perhaps create a task force or blue ribbon commission to lead this study and develop solutions? would this effort be helpful to reducing future disaster costs and better protect our communities? >> i'll comment because i've already commented a couple times. i want to reemphasize how important i think that would be. like i said, we don't understand what all the costs are. i do think having a third party review like that is definitely going to help get some good solid answers without the politics in it. and, you know, again, i applaud you for taking that on. >> as you mentioned in your opening statement, it has been at least 20 years since any of this kind of work has been done

and we at crs would be happy to support on you this. >> yes we do and we're eager to participate. >> certainly the international association of fire chiefs stands ready to assist and participate. >> thank you. i look forward to working with each and every one of you. welcome your input as we move forward on this initiative. and i want to thank you all for your testimony, your comments have been very helpful to today's discussion. i've also received written statements for the record, from the interlocking concrete pavement association and national concrete masonry association. i thank these organizations for their input on important topics and i ask unanimous consent these two statements be entered into the record. if there are no further questions, i ask unanimous consent of today's hearing remain open until such time our witnesses have provided any answers to questions that may be submitted in writing and unanimous consent the record remain open for 15 days for any

additional comments and information submitted by members or witnesses -- by members and witnesses to be included in the record of today's hearing. without objection, i would like to again thank our witnesses for their testimony today. this meeting is adjourned.

president obama attorney general nominee loretta lynch is testifying today before the senate judiciary committee. a look here at the committee room. the hearing now in a break and loretta lynch not in the room at the time but the hearing should resume shortly and is expected to last late into the afternoon, possibly into the evening. it's live on our companion network c-span, also c-span radio. c-span will have a full reair of the hearing tonight in case you missed any of it today. also a chance for to you weigh in on facebook and twitter about what the priorities for the next attorney general should be. here are a couple facebook responses we've received so far. anna posts create a division to specialize in the prosecution of police officers involved in brutality and killings. floyd says prosecute those who committed treason by lying us

into iraq. prosecute to the fullest extent of the law those who threaten the president. you can join the conversation as well at facebook.com/cspan. the chairman of the judiciary committee, iowa republican chuck grassley, will be our guest on "washington journal" tomorrow morning live at 7:45 a.m. eastern time to talk about the loretta lynch nomination and to take your calls. day two of the loretta lynch confirmation hearing starts tomorrow morning at 10 a.m. eastern with law enforcement officials and others testifying. among them, investigative reporter sheryl at kiss son who has filed a $35 million lawsuit against the obama administration accusesing it of breaking into her computer and phone after she reported stories critical of the administration, such as the justice department's failed fast and furious operation. she told her story in the book "stone walled." also testifying tomorrow will be katherine engelbrecht, founder

of true the vote, which she said was unfairly targeted by the irs when it attempted to seek tax-exempt status. live coverage tomorrow on c-span. earlier this month secretary julian castro said access to credit and affordability are the two biggest challenge to homeownership in the u.s. the housing secretary answered questions about the rise of condo sales in major cities the future of fannie mae and freddie mac as well as whether he would consider running for vice president in the 2016 presidential election. secretary castro spoke at the national press club. >> good afternoon and welcome. before we begin our formal program, i would like to ask all of to you stand amid silence in memory of the terrorist attack

on "charlie hebdo," the french publication whose editor were among 12 killed at the newspaper last wednesday. we honor their memories and their contributions to their profession and to freedom of the press. as a mark of special respect to those who died, we at the national press club will observe a minute silence in their memory at the start of every event at the club this week concluding with our annual general membership meeting this friday, january 16th. >> thank you. please be seated. >> good afternoon and welcome. my name is myron belkin, i'm an adjust professor at the george

washington university studio of media and public affairs, former international bureau chief with associated press and the 107th president of the national press club. the national press club is the world's leading professional organization for journalists committed to our profession's future through our programming with events such as this, while fostering a free press worldwide. for more information about the national press club, please visit our website at press.org. i would like to welcome our c-span and public radio audience audiences audiences. you can follow the action on twitter using #npclunch.

i would like you to stand briefly as your name is announced. from our audience's right, chief of staff u.s. department of housing and urban development. ed golden senior adviser to secretary of u.s. department of housing and urban development. jerry, washington -- and chair of the speakers committee. skipping over our speaker for a moment, bob cardin who organized today's event. thank you very much, bob. a former three-term mayor of san antonio julian castro stepped into a national spotlight when he delivered the keynote address at 2012 democratic national convention.

president obama chose castro to be secretary of housing and urban affairs a post he assumed six months ago. castro was born into politics. both his parents were political activists. his mother helped found the c hichlt. cano political party. his twin brother was elected in 2012 to represent san antonio in u.s. house of representatives. as mayor castro pushed initiatives such as expanding preschool education and establishing a citywide college guidance effort. he also launch aid decade of downtown program meant to attract investment and spark a revival of san antonio's city center. that effort has attracted more

than $300 million in private sector investment. at hud he oversees 8,000 employees and a budget of $46 billion. castro has a b.a. from stanford university and a j.d. from harvard law school. and he his wife erica have two young children. please give a warm national press club welcome to hud secretary julian castro. >> thank you myron, for your kind introduction and thank you for the service do you as president of the national press club. i understand that this is your last event at the helm. and i know i speak for everyone in this room in expressing my gratitude for your leadership. i would like to recognize your incoming president, john hughes.

i know from personal experience how effective he's been as editor of the bloomberg news breaking news desk. last week just a few hours before we were going to make an announcement, we learned that john and his colleagues already had the story. -e while i hope that never happens again, i do wish him well and all the best for a very successful term as well. let me also thank the press club's officers and board of governors for their great contributions. finally, i want to thank the entire national press club. this is the first time that i've addressed this prestigious organization. it's an honor because one of my degrees in college was in communication. there was a time when i thought that i would go into journalism and, obviously, i chose a different path. but i have a tremendous amount

of respect for the work that you all do. in fact, the events of last week in france remind all of us in the united states and throughout the world of the value of freedom of expression and the importance of journalism. for more than a century the members of this organization have shined the light on important issues and enhanced our democracy here at home. and abroad. it's truly a pleasure to be with you this afternoon. we gather today at the beginning of a new year, a time to take stock of where we are as individuals, as communities, and as a nation and in this moment that reflection tells us one thing so clearly. america's got momentum. 2014 saw great progress for our economy. the strongest year for job growth since the tech boom of the 1990s. the unemployment rate has

dropped below 6%. the fastest decline in the unemployment rate since 1984. growth has been highest in sectors that pay good wages such as technology and manufacturing. and most significantly for those of us at hud the housing market is coming back as an engine of economic prosperity. today more americans are feeling confident because year-over-year home prices have risen for 32 straight months. more americans are financially secure because homeowners equity is up $4 trillion since 2009. more construction workers are back on the job because housing starts have doubled in that time. the phones and in boxes of realtors are ringing and pinging with potential buyers and families are looking to the future with renewed optimism. simply put, we're seeing gains across the board and hud stands

ready to take this momentum and make 2015 a year of housing opportunity. for as many things that have changed over the years our nation's fundamental challenge remains the same. to be the strongest and, smartest and safest nation in the world. the totality of that challenge is broader than the scope of our conversation today but i'm convinced the central principle in meeting boils down to one word. opportunity. opportunity is not an abstract contract. it's a path to a more prosperous life and housing often serves as its foundation. t.s. eliot once said home is where one starts from. we call hud the department of opportunity because whether you're rich or poor young or old, a republican or a democrat, black or white housing shapes

the quality of your life. good housing and a source of community -- build a new america that's, quote, more beautiful, more liberating of life and more inspiring of the spirit. the dedicated folks i serve with work from sunrise to sunset to fulfill this mission. they don't do it for the money. trust me i've seen their salaries. and i know they don't do it for the amenities. in fact, not too long ago buzzfeed ranked our hud building as the second ugliest in wash d.c. d.c. i'm not quite sure who was first but i'm glad we were second. the hud team does it because

they care and committed to tackling everyday. in 2015 we're also paving a path to help folks get access to the affordable housing that they need. for many americans, that means homeownership. homeownership is still the cornerstone of the american dream. a fact that you can see in the lives of everyday folks. one of them is kim hartman from des moines, iowa. kim grew up as a foster child and was forced to change homes and change schools on a regular basis. because of that experience she always dreamed to give her kids better, a dream that came true this past september when she became a homeowner. kim's wasn't an overnight success story. she put in years of work as a

pharmacy technician took numerous financial education classes and spent hundreds of hours helping build homes with a local hud partner. the greater des moines habitat for humanity. her dream endured through it all and now she takes pride in the fact that she has a permanent address. that her kids can board the same bus for school each day and that her girls know she'll be there when they arrive home. that's why the opportunity of homeownership is so powerful. it's a source of pride. it's a source of wealth providing both a nest and a nest egg. and it strengths communities and fuels growth in the overall national economy. that's also why it's time to remove the stigma from promoting homeownership. some have been surprised by this focus. a few have even suggested that

this is a return to the mania that fueled the crisis. it's not. our nation is smart enough to heed the lessons of the past without forsake our future. the answer isn't to deny responsible americans homeownership. it's to do it right. since 2009 the obama administration has enacted historic safeguards to prevent our nation from revisiting the wild, wild west lending environment that we saw last decade. for example, the consumer financial protection bureau now requires lenders to evaluate a borrower's ability to repay their loan and prohibits them from receiving bonuses for more expensive loans. in addition, hud has launched an office of housing counseling that served 9 million folks helping them buy a home when they're ready and postpone their search when they're not. these actions are helping folks

attain a place to call their own. now, the challenge is to expand that opportunity. i also want to be clear there's nothing wrong with being a renter. as a matter of fact, my family and i rent here in washington, d.c. but for most americans who may struggle with stagnant wages, a homeownership -- homeownership is a better deal. zillow says renters are spending twice as much of their income on housing as homeowners. costs aren't just going up in new york and san francisco. they're also going up significantly in places like portland and denver and baltimore. some folks feel as if they're misspending money by paying their landlords instead of themselves. we need to provide them with more housing options. that's where the federal housing

administration comes in. as many of you know fha has long been a beacon of home for underserved borrowers. in fact, fha has insured 1.6 million home buyers in the last three years alone. we want more folks to be able to access our services. first, this means expanding access to credit. some believe that a few years ago it was too easy to get a home loan. the fact is that in 2015, it's too hard. in fact, according to the urban institute, the housing market is missing out on 1.2 million loans every year because credit is so tight. and just a couple months ago, even ben bernanke the former fed chair, remarked that he'd been having trouble refinancing his mortgage. so, we've underdone a year-long effort to clarify our policies

so that lenders can feel more confident in working with a wide range of credit-worthy borrowers. this has increased the flow of credit and we'll keep building on this progress. secondly, we want to make homeownership more affordable for those who already qualify for a loan. last week president obama announced that fha will reduce its annual mortgage insurance premiums by half a percentage point by the end of this month. right now fha premiums are at a historically high level. and the cost of obtaining the american dream is too great for a lot of working folks. folks in the middle class. i'm talking about people like brittany coffman from maryland. a dental hygienist, brittany told bloomberg news that she found her dream home after two months of looking and she

planned to use an fha-backed loan to make that dream real. they be she found out that fha had raised its fees. instead of paying $125 a month for it she'd had to pay $340 a month. that's just something she hadn't budgeted for. so, brittany postponed her search. and the thing is brittany's not alone. the national association of realtors estimates the nearly 400,000 credit-worthy borrowers were priced out of the housing market in 2013 because of high premiums. we expect our premium reduction to help more than 2 million borrowers save an average of $900 annually over the next three years. it will also encourage nearly a quarter million new borrowers to purchase their first home. this is a common sense step. fha's premiums will still be, even after this reduction, 50%

greater than they were at the beginning of the crisis. this premium change only makes an fha loan more affordable for qualified borrowers as well. all other fha requirements will remain the same, including verification of a borrower's ability to pay. families still have to qualify for an fha loan, but when they do, they'll find a more affordable path to homeownership waiting for them. both main street and wall street believe this reduction is a win. the center for american progress the national community reinvestment coalition and the mortgage bankers association all agree on this point. by bringing these costs down we're hoping and have confidence that we'll help lift folks up and that we'll expand opportunity for generations of americans to come. when i reflect on the work that

we do every day at hud, i think about folks like myra woodard from just outside louisville kentucky. myra is a person whose determination and talent, coupled with support from hud helped her transition from public housing resident to homeowner last year. in looking back at her journey, she said that it wasn't the services alone that made such an impact on her life. she said that it was quote the torch of support, compassion understanding and encouragement that was passed through each individual and service. this is what we're about. we're about people. we're about making their lives a bit better and giving them a chance to thrive. that's why we're so focused in 2015 on homeownership.

it represents family and community. it leads to stability and to security. and it is the cornerstone of the american dream. over the years, through decades of economic downturns and wars, the american people have always held onto this dream. and i'm confident that they always will. it's part of the fabric of our nation. it's what we do and who we are. we try, we seek, we aspire. and for many folks who are working hard and saving that as spir rags leads them to their own home. for them, the time is now to buy buy. the time is now to invest in their future. the time is now to make their dreams of homeownership a reality.

every day at hud we report to the robert weaver building and put in the hours to help match their aspirations and dreams with hard work on our end to make those dreams a reality. in my five months on the job the biggest transition that i have made is going from city government to the federal government. i'd be lyinging to you if at the bit of that transition i said there weren't a bit of growing pains and it took a bit of getting used to. but five months later i'm convinced of this much, that at hud and throughout our federal system, we have a core of folks who are passionate and committed, ready willing and able through their efforts to help ensure those dreams of homeownership become a reality. hud stands ready. to help and to make 2015 a year

of housing opportunity. we're confident that families will seize that opportunities and we believe that in so doing, that we will help make that american dream more real for millions of americans and help make this 21st century another american century. thank you very much. >> mr. sect what is the biggest problem in helping people secure homeownership? >> thank you very much for the question. i think one of the biggest challenges and one i address in my remarks these days is access to credit. another is affordability. the goal behind the fha premium reduction that president obama announced a few days ago was to

principally address affordability. and the national association of realtors has estimated that there are about 400,000 potential borrowers that were priced out of the market because of high mortgage insurance premiums. the other end of it is access to credit. this is something that fhfa is working on. it's something that the fha is working on. to try and create the business certainty that is good for fannie and freddie that is good for fha, is sensible, also good for the lending community and is good fundamentally for the american consumer. and so the biggest challenges, i would say are this issue of access to credit and affordability. both of those are challenges we're prepared to meet head on with sensible policies that are prudent, but have the effect of expanding opportunity.

>> you're generating a lot of questions, mr. secretary. are there any steps you have not taken yet in your first five months on the job that you would like to take to increase homeownership? >> well we're -- you know, we're taking a number of steps at fha. last may we announced the blueprint for access to credit. we are looking at ways that we can make that morrow bust in the future. those are not fully cooked right now. they're still being worked on. and so i'll reserve for a later date if we do expand that blueprint for credit. but homeownership is very much

on our radar screen. let me also address this point because i feel like every time we throw that word out of homeownership, the first response that you get is well, aren't you just turning back the clock to what we went through? the straightforward answer to that is no. in my remarks i mentioned several of the checks and balances that have been put into the system so that we don't go back to where we were before. from the work that the cfpb is doing to new policies at fha at fhfa as well the landscape of lending has completely changed since that time. and you can see that most clearly in the credit scores of borrowers today versus the credit scores of borrowers from a few years ago. and case is that the pendulum has swung from one extreme where it was too easy to get a home loan to the other extreme, where it's too difficult. and what we need to achieve is a

sensible and strong middle. where we have the right safeguards in place they remain in place, but we also have good opportunity for hard working americans to be able to own a home. >> how did you reach the decision to cut fha premiums and will you consider cuts to up-front fees and/or dropping the requirement that premiums must be paid for the life of the loan? >> thank you very much. it's a very good question. on the annual fees these annual fees have escalated significantly. fees overall have gone up by about 145% at fha since the crisis began. we made a decision about reducing the insurance premiums based on the latest actuarial

report, the report we got on mutual insurance fund. y'all may know, those who right about housing, that we said at that time that we were back in the black and we would take a step back and analyze whether or not it made sense to reduce these mortgage insurance premiums. after that sober analysis, and really understanding the numbers, listening to those numbers, we made a decision to go ahead and lower it by 50 basis points, 0.5 points. and as to the question of any further reductions right now there are no further reductions on the table. >> a somewhat related question. fha is the starting gate for most first-time home buyers. is there any concern that fha

home buyers are already upside down the first day they move in? >> well, we want to -- we're always generally, of course concerned about ensuring folks who take out a loan are able to repay that and that homeownership is a positive experience and not a negative one. the goal is to help build wealth out there and not to detract from it. and so we believe that some of the policies that have been put in place, the checks and balances, during the housing crisis, have helped to ensure that borrowers who qualify and get an fha loan are in a better position to actually pay off that loan and to benefit from homeownership in general. we also as i mentioned in my remarks embraced housing counseling, both prepurchase and

post purchase to ensure borrowers fully understand their responsibility and how to budget out, for instance, in their monthly household budget that house payment and what the true cost of owning a home is. that it's not just about the mortgage payment. it's also about the upkeep and maintenance and so forth. so through some of the sensible policies that have been put in place at fha and also through things like housing counseling we're confident that borrowers will have a positive experience. >> in the context of a new condo building, there are thresholds for sales that need to be met before any one new loan may be closed. in other words, the building has to be 50% sold out before fha will lend in there. it stops projects from moving forward, according to the questioner. are there any plans to review

some of those rules in order to help facilitate the orderly sale of new urban dwellings? >> i want to thank you all for the question. this is a question that comes up from time to time and he know i have been to a number of cities where the condo market is very much an important part of the real estate market, a growing part of it. i think of places like miami, for instance. this is an issue that is on the radar screen. we have heard a variety of perspectives from different groups, business groups and other interest groups. and so it is on the radar screen. and we are looking at what's possible there. but have not come to any kind of conclusion whether there will be significant changes. >> the fha waiver of its regulation prohibiting home flipping expired on december 31st of 2014, two weeks ago. is there really any benefit to

the market to restrict fha home loans to borrowers from accessing these newly renovated homes? it would it be better to impose guidelines to ensure quality work? >> thank you very much for the question. let me put this in a little bit of a broader context. one of the concerns that we hear out there is that to the extent that fha has ahold of properties in communities folks in local communities are concerned that we ensure that we have an eye toward not just the -- what's right for the fha and the fund but also how do we help keep the character of that neighborhood in good stead? and so with regard to the rule that you cited, i have not looked into that in the last 11

days. but when we think through how we approach these confess, we wanted to ensure we strike a balance between the health of the fha and its business needs as well as the character of the communities that we're serving, that we do right by those local communities and their neighborhoods. and so that's how we'll evaluate those types of rules. >> thank you. peter wallace said from the american institute enter surprise writes in his new book the affordable housing goals of the new administration are leading to underwriting and this will lead to an economic downturn. your thoughts, please. >> in that question was there a -- said they're leading to -- is the questioner suggesting that it's leading to

underwriting that is too lax? i felt like there was a -- something missing in the question. but i think that's the question. >> right. >> and the answer to that is first of all the proof is in the pudding that that is not the case today. if anything the underwriting standards are too strict. as i mentioned before, we went from one extreme where it was too easy to get a home loan, to another extreme today where it is too difficult to get a home loan. and what we want to be able to achieve is a strong sensible middle ground where we have good safeguards in place so we don't slide back to the past. but at the same time, folks who are ready and responsible to own a home can get access to credit and the housing goals that the administration has -- has set i don't believe those are playing the kind of role that the questioner suggests.

>> i don't know if you can quantify this, but the questioner asks how many homeowners were needlessly foreclose? did you see it happening in san antonio? did the feds do enough to help? >> i do believe that communities across the united states saw the impact of foreclosures. san antonio was no different from that. it was not as pronounced in some markets san antonio like other places, i was thinking of phoenix and las vegas at the depth of the housing crisis places like florida who were strongly impacted. from day one the administration took very aggressive action to help folks stay in their homes, make it more affordable for folks to hang onto those mortgages and be able to actually pay them. the announcement the other day in phoenix was suggest because

we went back to a housing market that had been very hard hit with the housing crisis but has seen significant uptick. and i believe that the obama administration took very strong important measures to blunt the force was that foreclosure crisis. because of that, millions of americans have been able to stay in their home. the administration continues to be committed to helping people stay in their home. at hud, we embraced grants like the neighborhood stabilization program grants, nsp and nsp 2, as well as partnerships with local communities and the usage of home funds, cdbg funds, to make homeownership possible in communities throughout the united states.

>> will congress pass housing reform in this new congress coming -- taking office this week? >> the straightforward answer to that is, i don't think anybody -- anybody can tell right now. the administration's position has not changed on housing finance reform. the administration supports housing finance reform that gets the taxpayers off the hook were we ever to experience the type of housing crisis we did just a few years ago. we believe there is a sensible way to accomplish that. we're pleased to see johnson make it through the senate banking committee. that did not get broodzerader senate approval and did not get approval in the house of representatives but we remain committed to the principles underlying that legislation.

and we look forward to seeing what comes forward in this new congress. my hope is that we can find a good sensible way to address this in 2015. >> will fannie and freddie survive? >> that's a great question. and the fact is that depends on what happens in any potential legislation. and i think that folks along the ideological spectrum and partisan spectrum believe there is a better way out there. there's -- there's a way that we can accomplish having a government backstop, but do it in a manner that doesn't leave taxpayers on the hook the way that they were a few years ago. and i know that director watt is doing fantastic work over at fhfa, and they're very much a

part of this conversation. but i believe that we can accomplish this balance between getting the taxpayers off the hook getting good, sensible housing finance reform and also creating more opportunity for homeownership. the fact is right now the congress has just begun its work in earnest. and i have not seen anything that's been put out there yet. so, nothing is swimming through the process that i know of. we'll address it as it comes along. >> red lining is racism in the housing market. is red lining more prevalent than it was ten years ago? and do you have any plans to crack down on this practice? >> the department is committed to ensuring that everyone in the united states has an opportunity to have a good quality of life

and where they live, and opportunity for homeownership. and we have a robust fheo, federal housing and equal opportunity office, that is committed to enforcement as well to ensure that no matter the color of somebody's skin or if they have a disability or their religion or national origin, that they're able to live where they want and where they're able to afford. and that includes looking at situations where folks engage in discriminatory lending practices. of course, this issue of red lining is one that -- that has had over the generations a profound impact our ban growth patterns and the location of different communities within cities. and it's one that we continue to

be attentive to. and fheo and hud is committed to doing what it can to eliminate that discrimination. so, every year they take on cases that cases that impinge upon those obstacles and seek to make the united states a place where homeownership and freedom to live where you want is possible regardless of the color of your skin. >> how does the credit quality of loans made in fiscal year 2014 and early 2015 compare to fha's historical norms? >> thank you for the question. of course, this is january 13th so we're only 13 days into 2015. i don't know we have any analysis for this very new year, but in 2014 the credit quality was still one of the strongest

for fha's history. i mentioned this earlier that what we see today is that the credit score is traditionally much higher than it was certainly in the time period it was easier to get a loan. 15 years ago to 2000 or o 20 years ago, the credit quality is very strong. at fha for instance, we have also done things like put in a credit score floor of 500 and have required if you have a credit score 580 or underneath you need to put 10% not, not the traditional amount. so all of those things as well as the credit overlays that the private sector the banks have put on have created borrower

credit quality for the gse's that are very strong compared to the norm. >> as senior population grows does hud have plans to expand hud rental demonstrations and add more affordable housing for seniors? >> that is something on our radar screen. i know that, for instance, aarp and the joint center for housing studies have done fascinating work on this issue and if you just look at the demographics and what's happening in the united states, when we talk about cities we often talk about millennials and this young generation and how important they are to enlivening up local communities, but the fact is it's the fastest growing population are folks over the

age of 65. so that is something very much on our radar screen. we are looking at how to be more robust in the support that we provide out there for those kinds of housing opportunities including section 202. >> your focus seems to be on housing. do you plan on any changes in the urban development side of hud? >> as a former mayor, a recovering politician, one of the things that i have enjoyed most about hud and certainly when i was mayor are programs like h.o.m.e. and the 40-year legacy that cdbg has had in helping to rebuild communities and investments in infrastructure. so we like to think of hud now as fully as the department of housing and urban development as a former may r your i'm very focused on the urban development

component of that. under the leadership of former secretary donovan, we did great things like the choice neighborhood grants and other departments. we have invested in these place-based strategies for rebuilding communities. what i see is that we need to continue that trend. how do we orient the department in a way that is aimed at serving individual communities better with more agility, more of a place-based way? how do we make place based not just a name of a policy but truly something that is embedded in the organization. these place based strategies really are about urban redevelopment. i would be remissed if i didn't

say as well that it's not just about cities because hud also serves tribal communities it serves smaller towns and some rural settings as well even though we're called housing and urban development as a matter of fact housing and community development would be more accurate. my first love is cities, as a form former may r your, but i recognize that the work is more dwi verse than that. >> two more questions regarding renting and then we'll go to more general questions. had hud needs expand its rental housing construction lending and ease underwriting standards on apartment loans. do you have any plans to do that? >> we're not announcing anything on that in the near future.

the multifamily market has been a relatively strong market in the united states compared to the single family market over the last several years. there are reports that that may be cooling going forward in 20 2015. however, there's a strong commitment on hud's part to making investments in multifamily housing. so we're not ready to announce anything new in that regard, but we do have very full throated commitment to the investments that we have made in multifamily housing. one of the ones we're excited about is something called the rental assistance demonstration or rad program. rad, which was started a couple years ago, is about taking private sector investment into public housing and making the renovation of public housing units more possible. so i'll give you an example.

there was a gentleman from housing authority i believe in the midwest a couple months ago that i spoke to that said that in their community, they had been able to make renovations improvements in public housing units in two years that would have taken 18 years just through traditional funding. we had our first peek at what this demonstration project has meant for multifamily housing in different localities. we had third party study the first 57 rental assistance demonstration deals. it found that for every $1 of public money there was $19 of private sector investment. so this is making possible the

renovation and renewal of public housing units that otherwise would not happen or happen over a decade or more. that's important because we're losing as a nation 10,000 public housing units to disrepair every year. rad is one way we can enhance our multifamily housing stock. and the fact is that often times now there are mixed finance deals. . this has been the case for quite some time that include different types of financing and rad introduces one more element into that. with the overall goal being to address rental affordability out there and the fact that today a greater number of families are paying more than 50% of their household income toward rent. we want to change that. >> will hud establish a renter's

bill of rights for what renters should expect to be entitled to? >> i'm all ears on that. i grew up in my own life in the household of a mother, a single mother who was renting. i bought my first house at the age of 25, 26 something like that. but today i'm a renter. i know that that is, for many folks, the predominant experience of their lives. they see costs going up in some situations i know as a mayor in local government i remember many cases on the nightly news of landlords that were notes a

responsive as they should have been and that that's fairly common out there. so when you talk about a renters bill of rights, that's intriguing, and i'm all ears. >> mr. secretary, although you said you're a recovering politician, i do have a few questions in the political area. when you accepted the appointment at hud there was much speculation about what it would mean for your long-term political future. to get right to the point do you think serving as hud secretary offers a kind of experience necessary for one to serve as the vice presidential nominee? >> i'm trying to do a great job at hud. i think it offers great experience for being hud secretary and that's really what i'm focused on. i believe that in anything that you do in life, as y'all have seen i'm sure in your own