our role in helping people through this difficult cycle. thank you. i will be pleased to take questions. >> thank you. mr. friedman. >> we at american home appreciate the committee's consideration of the complex issues surrounding servicers to implement hamp. is is a non prime servicer, that does not own or have interest in any of the loans that we service. our focus is on keeping borrowers in their homes while balancing our continued cash flow to investors. contrary to popular opinion, servicers do not make money on foreclosures. they benefit no one. there undertaken only as a last result when other foreclosure

solutions are not available. we aggressively pursue any modification possibility in early intervention. all troubled loans are routinely reviewed for hamp. although we have made it through solicitation efforts of ourortfolio, we are again in the process of we soliciting every borrower that has potential for hamp eligibility. to assist borrowers in avoiding foreclosure, we have established a dedicating team of counselors and call center associates. we have invested in the development of iroved proprietary information systems, build relationships with housing agencies, counseling agencies, and housing alliances, participated in outreach events, considered borrowers for proprietary modifications in situations where we are unable to offer a hamp modification. we have offered other

foreclosure alternative solutions. several barriers remain, despite sigficant process by the industry. even with the relaxed standards, the required underwriting documents are too burdensome. many borrowers are unable to provide these documents,r they simply choose not to do so. servicers who experience re- default rates of less than iustry averages should be allowed to rely on their less prudent requirements. others are confused by program enhancements that are prematurely announced. frequent program changes have overtaxed servicer systems.

the newly announced program has increesed the number of so- called strategic the falters -- defaulters who purposely stop paying their mortgages to get hamp assistance. the hamp program has experienced significant issues in converting trial period plans to permanant modifications. many failed to make the original payment and are now permanently ineligible for hamp. the complexities of the hamp reporting system have made it difficult to officially report many permanant modifications. not all borrowers qualify for hamp modifications to the top three factors for denials are

the property is not the borrower's primary residence, or the documents restrict modifications, and the borrower failed to provide a complete underwriting package. we have developed an appeal process. borrowers that do not qualify for hamp modifications are reviewed to determine if other options will prevent foreclosure. we maintain a robust tracking of resolution process that is dedicated to handling borrower complaints 3 take our responsibilities under the of hamp program seriously. we have been audited twice. there were no major findings or enforcement actions. burdens on servicers -- while

performance is improving, the challenges persist even as the program matures. in conclusion, we are firmly committed to hamp and to its goals and standards. we're anxious to see the program succeed. we look forward to working with the treasury and congress to implement any needed improvements. thank you for your time. >> thank you very much. mr. heid. >> i am mike heid. thank you for the opportunity to share the results wells fargo has achieved. because of the choices we have made, are disciplined underwriting, and the manner in which we approach foreclosure prevention, delinquency and foreclosure rates were 3/4 the industry average. just a few examples of the actions we have undertaken to

achieve these results since the january 2009 through may 2010. we have helped more than two 0.2 million homeowners with new loans, either to purchase a home or refinance existing mortgages. we've ested a half a million loan customers with trial or completed modifications. 1/5 of those are through the hamp program. we assisted more than 100,000 unemployed customers with short- term modifications. tarting in january 2009, we lead the industry by permanently for giving more than $3 billion in principal for more than 55,000 customers, which amounts to more than $50,000 per loan. we have begun offering home payment relief to customers

affected by the oil spill. with respe to loan modification efforts, while difficult to achieve, we believe we must continue to balance the nee and interests of homeowners in financial distress with those who hav remained diligent inaking payments. much focused, deservedly, is directed to consumers behind on their payments, we cannot lose sight of the fact that 92% of wells fargo customers are current in their home payments as of the first quarter of 2010. hamp is a good option for people who meet certain criteria. by the treasury department's own april 2010 estimates, only three out of every 10 customers are potential candidates for hamp. as a result, servicers and

investors have additional programs for customers not eligible for likely will not qualify for hamp. taking all of these programs into account, about 2/3 of wells fargo's customers more than 60 days behind on payments are provided an option to prevent foreclosure. finally, with the plan, it is clear the industry was not prepared for the customers facing financial verge of as the economy became more allenging. wells fargo is not always consistent in providing the level of service we expect to deliver. we have committed tremendous resources over the past year. we believe we've come a long way in improving our service. we have hired more than 10,000 people, for a total of over 17,000 jobs. by the end of this month, we will complete the process of assigning one person to manage one loan modification from beginning to end. our customers will know exactly who they're working with from start to finish. we continue to work with other industry participants. we have this done with 27 home

preservation centers in six states where we have concentrations of @ risk customers. we all give wells fargo customers a short sale decision. we continue to have a dedicated one line for your staff to use in the event one of your constituents, our customer, has an event. we will continue to assist homeowners freed we believe very strongly and fl very deeply about our responsibility to help homeowners in a balanced and fair way. we believe our actions demonstrate our commitment to achieving this goal. thank you for your time today. >> thank you very much, mr. heid. mr. lowman. >> thk you for the opportunity to appear before you today. i am the chief executive officer of home lending at j.p. morgan chase. j.p. morgan chase shares your

commitment to helping homeowners and stabilizing the housing market in our country. we're working to help families stay in their homes by making their payments affordable. we have helped prevent hundreds of thousands of foreclosures through our own proprietary modification program, hamp, and other programs. we have refinanced $21 billion of loans under harp. hamp modification performance has been strong. we are completing more than 10,000 permanant modifications per month. on average, home owners see their monthly payments reduced by more than $530, 28%. we are adopting an implementing the federal government's second lein modification program to help more borrowers. actively use temporary

forbearance agreements, similar to the program recently announced by the administration. you asked us to focus our testimony on how wean make foreclosure prevention initiatives more effective for borrowers. from the beginning of 2009 to the end of may 2010, chase offered almost eight hundred 50,000 modifications to struggling to homeowners and made 172,000 permanent under hamp and other programs. chase has offered hamp trials to nearly 260,000 borrowers. of these, over 80,000 are in active trials, and 48,000 have converted to permanant modifications. hamp loans with a meaningful reduction in monthly payment perform very well. once borrowers have successfully completed the three-month trial period, they are completed faster than even we expected. we conduct extensive outreach and have made significant investments in people, technology, and infrastructure.

we have developed a more creative approaches to reach borrowers in ways that work for them. we have opened 51 chase home ownership centers in 15 states and theisict of columbia where 88,000 borrowers have met with our counselors. on top of that, we've launched a national out reach tour. the events last four to five days, and our staff on the weekend, where we can help borrowers. the response has beenvery positive. half of our entire staff in chase are dedicated to helping homeowners. 700,000 deal with only loan modifications for borrowers in

financial difficulty. there are several challenges of implementing hamp the. biggest challenge is that it was designed to help a specific population of borrowers. as illustrated in the department of treasury's recent report, only certain borrowers are eligible for hamp. now that certain documentation is required up front, we expect the conversion rate to increase substantially. failure to make the required payments should be the primary reason that someone does not convert from the trial plan to a permanant modification. another challenge has been the continuing evolution of hamp. we have had to adjust our systems and w train our people asthe program changes. the evolution of the program has expanded oppounities to keep people in their homes. we do not want to miss a chance

to help borrowers stay in their homes, so we individual review each case, and we will exte the trial period. where borrowers are making their payments in hamp trial modifications, but may not qualify for a permanent modificatioo, we belve we are able to qualify those borrowers for other programs. similar to our loan origination business, chase is committed to full compliance with the letter and spirit of all their lending laws. regardless of race, national origin, religion, age, gender, or any other prohibited bias. we are pleased to have this opportunity to share our progress.

we are looking forward to working with members of congress, the administration, banking regulators, and community leaders in implementing these initiatives and help stabilize communies. >> thank you very much. >> thank you for the opportunity to testify today. in discussing hamp, it's useful to rall the original goals. those were to help as many as four million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term. second, to povide consistent loan modification guidelines, third to determine eligibility upfront. i testified last february before the subcommittee of this committee and advised that rather than avoiding four million four closures, hamp at that juncture would likely help just 250,000 home owners stay in their homes. it appears that my estimate from february was close to the mark. the success rate is so low, due to government initiatives mandating looser standards --

its this legacy of government mandates for weak loans that makes it difficult to achieve successful modifications. i expect a 40% -- ixpect 40% of permanant modifications will re-default. there are only two words t describe hamp's guidelines -- numbing complexity. at last count, there were eight hundred requirements. treasury also promised that a borrower's eligibility willbe determined up front. recently in "the wall street journal" -- it has led to many crushed hopes. instead of a quick yes or no, homeowners are placed in limbo. in february, i indicated that the january pipeline of hamp would likely yield only 250,000 holders that would avoid foreclosure under hamp, only 6% of the announced goal. it has slowed in the last

months. the number of new permanant modifications last month was 30% below april. as of may 31, 2010, there were 340,000 active permanant modifications, assuming a 40% default rate, only 200,000 will be successful over the long term. 468,000 trial modifications -- of thess, only 75,000 will become successful, long-term permanant modifications. the current pipeline will yield

about 275,000 successful long- term permanant modifications, with perhaps another 100,000 successes' resulting from future trial modifications. there have been other repercussions freed interest strategic defaults, homeowners willing to default. -- other repercussions. it encouraged strategic defaults. researchers at northwestern university found the percentage of foreclosures perceived to be strategic was 31% in march 2010. that is up dramatically from 22% in march 2009, when hamp started, with more borrowers believing that -- there's a risk that a growing number will walk away, even if they can afford the monthly payments.

hamp has slowed down the foreclosure process. it is likely extending the time until the market corrects. perhaps the greatest shortcoming of hamp is that it has the world efforts of the private sector. the office of mptroller of the currency -- the report that is produced quarterly. one chart demonstrates the private sector had been rapidly ramping up modification efforts in 2008 and 2009. when hamp started, those efforts were derailed. chart two indicates the private sector was having greater success with reducing the re- default re on loans outside of the hamp program. chart three demonstrates the slowdown of the hamp program as new trial modifications have fallen off precipitously.

now the number of permanant modifications has also started dropping 3 the committee should ask the treasury department, where are the modifications the prite sector was on track to produce? this committee deserves an honest assessment as to hamp's future. thank you. >> thank you very much. thank you all for your testimony. i guess the question is, why have there not been more permanant modifications? what is the problem? mr. das, why do think there has not been more? is it the lack of money? what is the problem? >> as we all mention, we put an enormous amount of resources to open this up to as many trial modifications as possible. we oned the door to as many people as we could. >> how long should it take for the trial modification?

how long should that take? >> it takes about four months, which happens to be the fastest in the industry. we have three trial payments. that converts to a permanant modification after that 3 to answer your question, i believe the reason the permanant modifications are not as high as expected, i believe that is because, in many cases, the documents that, and do not match with what was stated at the time of the trial modification. many borrowers are not able to make the payments. those are the two principal reasons. >> under the hamp program, 40% of the borrowers who have been in a trial modification have failed to make a payment.

i think that is reflective of the ongoing stress of the econo on those borrowers. i think it is important to look at the number of permanant modifications holistically. hamp is a small number of a much larger total of the 630,000 modifications. it is one of many tools. >> the same question to you. >> in our situation, we serve as a lot of loans that do not qualify under the guidelines. such as a conforming loan or non conforming loan. we may have certain restrictions, but the vast majory of the real issue is that --

>> we are so limited by this income tax and that in our book of business the borrower must occupy the property as their principal place of residence. and then also the documention issue. we initially, up front, had done all this verification and requested documents up front. so once we have got a borwer into a plan we have a very high conversion rate. but again, a lot of this is on the borrower's side as well, or the complexities of the program itself. >> i would like to add i think context is important here. think about the half a million mod's wells fargo has done. a lot of those are outside of the hamp, and a lot of them are on their way to becoming permanent. inside the hamp program, inside the 20%, the income are the same as in the report -- lack

of documentation because of last summer. that has since changed. what documents are received -- customers are not eligible for the program and go to a consolation -- a consultation -- a cancellation face. the three primary hamp factors -- i would encourage you to keep focus on the fact that the vast majority of mods getting done are happening outsidehe hamp program itself. >> just echoing the same thing that my compatriots here have spoken about, missed payments and no documents returned from borrowers are the major reasons modifications do not get completed. about a third of those that do get -- that do give us documents and do in fact make the payments, a third of the

total population ultimately end up in a mod. >> when you say you do not get documents a lack of communication? >> we have made extensive refinements in our process, including communicating with our hours, writing them letters, knocking them on doors, and what have you. at the beginning of the program, then may have been the case. now, we are equipped to adequately communicate with our hours. >> this communication problem? very qickly, could you sort of tell me? "i think the issue is as to sort of analyze the contact rates it seems to us that at the late stage of delinquency a lot of customers have a very low contact rate, primarily because they may have checked out from the process.

so this needs -- early intervention is really critical. >> is there anything that we need to do? there are people losing their homes. and i cannot see, if somebody is losing his or her house, there will not cooperate with documentation. that is their house. that is the part i do not quite understand. >> a couple of examples might help. there are a lot of customers in fear of losing their home. we are doing everything we can to make sure that does not happen. documents that are troublesome -- the hamp program does

require a tax return. that conjures up fears that it will trigger an irs audit. those fears are real. the hamp modification agreement itself is an intimidating- looking piece of paper. it is five pages, single spaced, and intimidating process that people are reluctant or fearful of what elsmight happen here. i do not think it is the communication between servers are an homeowner that is at issue. i do not think there are additional things you should and can do. this is a matter of working very diligently and very hard with every single customer to make sure that disclosure -- that foreclosure does not happen. >> hamp has not only failed to help people. it has harmefamilies in two ways. one is the comments the "wall street journal" had, related to my opening statement. people were never qualified in the financial implications of going through that process. i think the point mr. pinto raised -- he thought it drilled private-sector efforts to help. i think in two ways it has not only been a failure to help but has potentially cause harm to the families we're trying to get help to come up prey -- trying to provide help to.

the numbers you gave -- i have 900,000 for city, 600,000 for bank of america, 500,000 for wells fargo, and 846,004 jpmorgan. what number of the modifications you have made our hamp modifications? i took those as being the big number? >> since 2007, we have had 900,000 homeowners. we additionally extended hamp to 150,000 homeowners, and 38,000 have taken hamp. >> 630,000 permanent modifications since 2008. 70,000 of them are hamp. >> we have reported out about 8800. weave about 16,000 currently

in trial periods. >> for permanent? >> the 88 is reported out as permanent. >> 88,000? >> 8800. >> we have 500,000 mines. 38 percent of them are inside of hamp. there are probably 45,000 of those in permanent. >> less than 10%? >> to under 57,000 in hamp. >> how many are permanent? >> 47,000. a very small number. we are talking less than 10%. >> the people who qualified for hamp went through this cumbersome process, a hundred dierent rules and all the stuff they had to go through. i describe the intimidating profits. the small number -- how many of

those -- let us as it this way. the people who qualify for hamp -- would any of those not quify for your own modification program? >> let us put it this way. for the people that fell out of hamp, we were able to save 50% more. >> you were able to help? and it is working? >> it is wking. >> i cannot tell you the exact number, but the potential exists because of treasury incentives that have made it made more ense for the investor to be a much hamp vacation. many of those would have qualified, but i do not know the exact number. >> about two-third would qualify for proprietary mods. >> two-thirds of the permanent? what is the number? the question i believe was of the hamp participants how many would have qualified under proprietary modification

programs. about two-thirds of those would have. >> of those in hamp who got into permanent status, would any of those not have been in permanent status with one of your programs? >> only those who would be limited by investor concerns under our servicing agreent. so a very small amount. >> i think a time stamp on this is important. i think right now, with all the programs available, the majority of customers would probably get on. to the other point about customers that are canceling out of hamp, the treasury provided some statistics earlier in the we. in wells fargo's case, 70% to 80% of the hamp cancellations result in some other form of saving the home or avoidg for

closure. >> most wou qualify for the proprietor program. >> we have a program which promised $75 billion that would help 386,000 get into permanent, yet the vast majority would have made it in one of your own modification programs without this big government hassle. those that got kicked out -- we are also finding out the majority of them you could have helped. >> about 60% of the hamp mods are fannie and freddie. that is the majority of it. they do not need to be paid an incentive to do what they need to do. >> a great point. >> the gentman's time has expired. let me go out to miss spier -- she said something i agree with. hamp is fine, but my constituents -- i want to have some kind of relief. so what ever it takes to accomplish that is what we are trying to do. in my district, we hold

foreclosure prevention conferenc. we have done four of them so far. we just did one of them about a week ago. as i listen to your testimony, i understand better now why we are ableo save at least two- thirds of people's houses. a lot of it goes to when you talk about documents. what we found in our office -- a lot of times, it is an intimidating process with regard to these applications. we have to people on our staff.

what they do almost full time is help people with foreclosure. it is a difficult -- it is not the easiest process. one of the reasons why you cannot -- it is so difficult for people to stay in the temporary phase is because they are not getting the proper documen in an are not turning in what they are supposed to. wwat we have found is that a lot of times the mortgage companies are understaffed. i canell you th for effect. it has gotten better. so when people would call in the could not get anybody on the phone. then if they got somebody on the phone they got the runaround. and then if they got somebody and were unable to avoid the runaround the paperwork got mixed up. i have seen instances where paperwork has been sent to folks going to the mortgage

companies four or five times, and some of the same company sitting here now have said to my people, and i have noticed for effect, that they never got it. and we have actually sent paper work from our office. so i am wondering what you all have done with regard to staffing. training stuff -- it is one thing to have staff. is another thing to have a staff that is properly trained. what have you done with regard -- it seems like you are saying that in order for people to move from a temporary to permanent, it seems like paperwork is one of the main things holding them up. i think ms. desoer said some people are not making payments during the temporary stage. us of 40%?

we do not find that. we find people who want to make payments. we have found a lot of people who have made payments and the mortgage company told them they did not. my staff would have the copy of a check or money order in their hand. there is a disconnect here. so the question is, outside with you, mr. hei since i am kind of familiar with wells fargo, what you're doing with yourself and. have you found that with significance? if you did staff up, how did it affect the operation and your results? >> i think your criticism is very fair a year ago. we were not where we should hav been a year ago. we made a lot of progress in the last year. we have attended your events. retreated your events -- we created our own events together documents. our 121 approach -- every single customer will know exactly who they a working with everyone on our side knows which customers they are accountable for in a one to 1 way. we have helped over 10,000

people in the course of the last year. >> it is kind of expensive. would you rather see somebody in the house and the foreclosed upon? absolutely. >> why is that? >> foreclosure is the last result for a lot of reasons. one, iis the right thing to do. beyond the right thing to do, it is always in our shareholders' interests, the community interest, customer interest to keep them in the home or find an alternative to foreclosure. everyone sitting at the table would say to you reclosure is absolutely the last resort. >> i sit on the conference committee for wall street reform. we had an amendment yesterday to make sure there was a fund of $3 billion to help people who have lost their jobs. ery single republican voted against it. every single one of them. i heard some say earlier that enough was not being done by

congress. fortunately, it passed on the house side in the conference. i see my time is up. perhaps i can get some answers towhether you all believe such a thing is very important later. >> mr. turner? >> thank ou, mr. chairman. thank you for all being here. and thank you for being so helpful in your answers, because as you know we a all struggling and trying to figure this out. you have specific expertise not only in your view of the government program but in the issue of wh is happening in the market, what is happening with homeowners, and what needs to be done. i appreciate you have been so

forthcoming. as i said in the opening, treasury secretary geithner, yesterday, when appearing before the congressional oversight panel, hamp said,, "this program was not designed to prevent foreclosures." it was not designed to sustain home ownership. he was then asked about the home ownership rate level. what would be a market- efficient number? someone offered 65%. he tended to agree that was an objective. geithner said he agreed with the assessment that housing will only stabilized as more homeowners becomrenters again. do you guys agree with that? do you agree with our treasury

secretary that the market will only stabilise as more homeowners become renters? that seems contrary to what our whole goal was in trying to stabilize homeowners in their homes. >> congressman, i am not qualified to answer the treasury secretary. in response, i would say that when we focused on hamp as an industry we wanted to create a uniform base line across the couny. there was no baseline modification. there were all kinds of proprietary programs. in the last year, we have done a great deal with respect to hamp get to a uniform baseline. however, there will be followed and there will be defaults. i think the focus needs to move beyond modifications to foreclosure prevention. i believe those are the programs we should focus on. >> do you believe more people need to be renters? >> the hamp program and other modification programs are built to ensure that the payment is affordable. what hamp has done is set a new standard for the industry at that 31% debt-to-income ratio. in that spirit, there are a large number of people who would not qualify. and i agree that at some point if they cannot afford to sustain a mortgage payment a level commensurate with their income than they do need to move on to alternative kinds of housing, and that is what other

programs are attempting. and we are working hard to assure there is a dignified transition as an alternative to foreclosure. >> i disagree with the treasury secretary. it is not that he is talking about the individual decision of a home owner as a borrower who find themselves in an untenable that position and must make the choice of leaving the home, rendering it, going through the process of becoming a renter. he personally believes that more homeowners should become renters, according to reuters. that seems contrary to this program. he characterizes it as this program was not designed to

prevent foreclosures. i could have sworn that was what president obama said it was supposed to be. mr. friedman, what do you think? >> i was not around the secretary when he made the comment, but i do believe it is a fact that not all homeowners can afford their mortgage payments. and as a result, like many of us, if you spent too much money on something you have to cut something else out. that could very well be what he meant. i think as a general policy of homeownership is a great thing, if people do not get greedy and can pay the mortgage and can afford all those things that go along with home ownership. >> my time is expiring. in listening to all of your testimony is about how you have been approaching homeowners i can tell you that the anecdotal stories that we hear from realtors, from nonprofits try to assist homeowners, is that loan servicers are not responsive,

that it is an incredib difficult process even when you have a social worker that is sitting and guiding meone to the process. that in fact you are making decisions that do not model the market. when their a short sales that are offered you allow it to go to foreclosure. one thing that would be really helpful is to have not a panel of loan servicers but have loan servicers on one side of the room and of realtors and nonprofits on the other side of the room and let people go at it. we are having a different story than your telling us today. >> mr. chris image? >> thank you very much, mr. chairman. -- >> mr. kucinicc? >> thank you, mr. chairman. each of you represents lenders that would not exist in their current form if not for the beneficence of the united states taxpayer. i remind each of you that without the continued support of the american taxpayer there would be virtually 0 residential housing market

activity. the issue before us today is why in the world aren't you giving loan modificatns to more eligible borrowers? why are you denying loan modifications to my constituents, despite the fact that we have a federal program which pays you, the mortgage holders, an incentive to modify the terms, and compensates you from any of your costs? i would like to hear some justifications. mr. lowman? >> we are helping all of the people that come to us and that we contact. we have made extensive investments in people, systems, infrastructure, and the folks that do not get a modification. it is genally for two reasons. either they failed to pay us during the trial. or they do not qualify for the programs.

maybe their income is not enough to afford a home. or they do not provide the required documents. >> let me share this with you. at the end of may, my state of ohio had 136,000 seriously delinquent loans. only 12.95% of those loansave been modified. ohio is 42nd out of 51. in early may, i held an open meeting in my district with treasury assistant secretary alison. in that meeting, i want you to know that in cleveland ohio i learned from numerous advocates that your bank is the most difficult one to deal with when it comes to loan modifications. over and over, i have heard that chase has been especially slow to process paper work. i have heard that chase denies

far worse modifications without supplying a reason. i have heard that chastely as far worse facing foreclosure in limbo. -- i have heard that chased leads to borrowers -- leaves borrowers facing foreclosure in limbo. why is the trial modification for chase mortgages nearly 7.5 months? >> american samoa all of us have mentioned, the resource needs for this program have outstripped our ability to have the right number people in seats performing their functions. >> so you're saying you do not have enough people to handle the program? >> we have historically not had enough people to handle the demand for the program.

we were one of the first out of the box when the hamp program was announced. we started accting applications. >> excuse me, because i have limited time. i am sorry to interrupt you. the program has been going on for 19 months. >> that is correct. we have hired thousands of people. >> it seems to me you know the demand. your performance is very weak. if you know there is a demand and you are getting incentivized from the taxpayers i wonder how hard you are really trying. that is the concern that i have. when i get reports from my own constituents that you are denying modifications without supplying a reason in your living bars facing foreclosure in limbo your explanation does not cut it. >> the increased our staff. we have invested in our systems. whave historically had a backlog of loans that are in

trial. and now we are literally looking at a loan -- at every loan that is beyond its original trial. , looking at it loan by loan, making sure we do not leave any stone unturned to give folks a modification. >> what do i tell my constituents when they tell me chase will not work with them? they should call the 1-800 number. >> should i call that number? >> you should call it. >> i can call you, mr. lowman, on behalf of my constituents? >> yes. >> we can chat afterward. >> i would be happy to do it. >> i want to help you do more and better. >> we have a number i can put on the record.

it is for anybody who has constituent complaints. we would be happy to personally do with them. >> i want to make sure it is not like those bumper stickers that say, "if you like my driving, call 1-800." >> thank you, mr. chairman. we have a memo that says more borrowers ve been kicked out of hamp than have received permanent monday petitns -- permanent modifications. 429,000 temporary modifications out of 6300 permanent -- and of 630,000 permanent modifications have been canceled. they estimated that 75% of permanent modifications will ultimately default. i am also told that part set aside $75 billion for this program but only $30 million has been paid out in the first year and a half. in that rate it would take roughly 200 years to get all this money out, which seems to me ridulous that they set ide that much money for what now appears to be a failed or failing program. i just heard in response to the question from chairman jordan that only about 10% to 20% of

your loan modifications are underhe hamp in the first place. we were told before the hearing -- my understanding is that has been confirmed by most of you that almost all of these modifications under hhmp you would have tried to work out through your own private modification programs. so i do not believe i have ever heard of a program that is doing less or working in a worse way, just about. i am wondering. i am wondering if any of you would dispute what mr. pinto said when he estimated hamp estimated will ultimately meet only 6% to a% of its original goal. he used the words numbing complexity. do any of you dispute that estimate, that very pessimistic estimate that he has presented

here today? or would any of you dispute his description of the requirements as being numbing complexity? >> i am not sure i would use that phrase to describe hamp. i believe that we all stood beside hamp and created it together with the treasury department. we wanted to make sure we had one uniform program. we really focused on scale on

that program. i think it is important for us to understand that we all collectively got behind this program and focused on scale. last year that was not the case. more importantly, we got the gses to come when the program. all of our laws and litigators had one program they had to deal with instead of nuanced proprietary programs. i believe mp worked when it needed to. there is a part b to that, which is that this problem is moving foard. i believe we now need to focus on fallouts from hamp. we need to focus onre- defaults. we need to focus on a targeted for closure prevention problem. i think hamp served its purpose when it did. i want to applaud my colleagues for having tried as hard as they did, along with myself, in scaling what was an important response to homeowners at the time. >> before hamp, i think one of

the significant advantages has been the establishment of standards, and in particular the debt to income ratio that was higher than the 31%. to establish that as a standard that is usable and customary, where we can work on behalf of investors, has enabled the results we have with hamp, but equally importantly the result we have in our prop. programs. that is a significant advantage. >> if it was working the way it should, your companies would stand toake a lot of money out of it and become government contractors, at least to the extent for this program. thank you very much. >> following up on that, if treasury had set it at 45%, 55%, would do not have more loans going out today?

>> this gentleman has expired. mr. lynch? >> thank you, mr. chairman. i want to think the witnesses for their willingness to come and help us. t i have to ask. in my state, we have seen the number of foreclosures double this past month -- the month of may 2010 compared to may009. it has gone up 120%. unlike when this housing crisis first struck, when we saw a lot of some prime mortgages out there and poor proct, and maybe people in homes they could not afford -- now we see

the greatest correlation is unemployment, with people not being able to stay in their homes. am wondering if this tool that we initially came up wth, the hamp program, is the right tool to deal with that type of problem. because if somebody is out of work and does not have a stream of income to support a mortgage it does not matter how you design it or how you modify it. if there is no income to support the mortgage is going to end up in foreclosure. i am fearful. i see how this is working out. i see the attempt to are making. i also see that 434,000 people who were kicked out of the hamp trial program because you could not verify income. . .

>> i understand the dynamic that is out there now because we have these people that are unemployed and in some cases you cannot modify that. there is no income stream. and let me ask you, do you think of this program should be continued beyond october? we only have a few months left. there have been very few people helped by this program. as the people that are a minister in this, we see how many people are being held and how much money is being spent. do you think of this program should be extended, october given the fact that we still have streams and streams of

foreclosures coming down the pike? hould be extended until oct. given the fact that we still ha streams and streams of foreclosures coming down the pike? >> i believe the short answer is that i believe this program should be continued as i have said befe. provided a great bass line, and a uniform base line. if we did not have all of the gst's and the banks participating in a these programs there would be confusion in this past year. however, i will submit that these programs need to be enhanced. unemployment is a big issue. not being able to have a sustainable income stream to make the payment -- >> i only have a little bit of time. i just wanted to find if you wanted the program to be continued. >> yes, sir. >> we only wanted payment during the term of the modification, not during the trial timeframe.

io believe that should be extended to allow the new components of the program to allow the short sale program as well as the unemployment and principal forgiveness components of it should be allowed to play out. >> thank you. mr. friedman? >> i think it should be continued now, especially now that you are identifying and verifying items up front. i think that will help us see much more positive results of the program. >> for about 80% of the modifications outside of the government program there is no program of any kind. i would continue the enhancement of ready-mad i would not expand it. -- the enhancements already made. i wou not expand it.

>> i would ask the treasury to provide very clear information that they promised many months ago. they published virtually no information about the faults. -- the faultdefaults. you need to compare it to the way that oec has been tracking for months. >> ank you. i yield back. >> i now yield to the ranking member congressman eisa. >> i think we both have heard enough to know that we need to have treasury back here well before october to talk about lessons learned and if there is to be any modification or extension, to get to a sooner rather than later. but wouldn't you agree? >> it is not something that we have not done. i think there are a lot of questions that should be raised, even with people that are

involved with the terms and services. i will te this off of my time. even people that were put into mortgages, i mean, by folks that are probably no longer working for the bank now. they are gone somewhere. and now they're coming in. you know, what happens to them? there are a lot of things that we need to talk about with these services. people probably got fired because ofthe mortgages that they knew they should not have gone into. i want you to know i did not take that off your time. >> thank you, mr. chairman. thank you for giving us this opportunity today. before coming to -- before i come into this, it could be a

correct pronunciation. . disor. -- >> disor. >> prior to those loans, somebody could have 100% income to actual debt, but certainly, people in your experience had much higher ratios, 45% to 50%, relying on two incomes. is that correct? >> that is correct. here were two incomes when looking at this. >> an artificially high ability to make a loan, often to flip it to government programs, fannie and freddie and so on, but allowing this situation -- if there was any hiccup in the income or if it depreciated or they were not able to pull any

money out, there was a problem and we were heading toward -- now that you have the ability to look back. in the case of mr. kucinich and it was 2006, but other programs -- other districts it was a little bit later. >> yes, we made the mortgage payment more affordable tied to that income. >> 38%, is this the right number of going forward? when i was a kid it was lower. 25% would have been a stretch in many cases. what is the right number to not have a push with normal ups and downs oincome and sti be able to meet your mortgage? >> i believe a 31% ratio is acceptable, but not for everyone. with certain comes it is still high we have been allowing this with borrowers on a proprietary

basis. >> i think that is good judgment. let ask o question to al of you. if we had known 10 years ago what we know now, if the borrowers had known 10 years ago what we know now, wouldn') you assumthat many of them would have bought less house than they are currently in that you are trying to keep them in? what i'm trying to say is you are trying to keep people in the homes that are right on the edge of their 1-- of their ability to afford. wouldn't it be true that they might be very good homeowners, but they might be having a hard time staying in the home that they have? >> based on what it -- what we know now, absolutely. that is one of the reasons we stayed away from

[unintelligible] >> yes, it is the reason bankamerica and -- exited the subprime business in 2000. >> in the debt to income ratio is our strong opinion that you need to look at the totality of the bar or's situation. the debt to income ratio -- the bar werborrowers situation. >> hindsight is a wonderful thing. the key is that we are here right now and the key is a achieving the affordability for those who want to and have the willingness to stay in their home. >> i know you would say that we separate people into too expeive of a home. >> yes, yes. i would also say that the total debt ratio is actually 64%, and that is going up. that is before food, clothing, anything.

knowing what we know now from 10 years ago, where there is hamp or some of the loan modifications, in many cases isn't our real goal of keeping people in a house often keeping them in a house that is bigger and more expensive even after reductions than it would have been right size for them to begin with? as such, if the federal government is going to be trying to find affordable housing for people on the edge income-wise, if we're lucky enough to have the treasury back up here and they're looking at extending component missing from hamp? that is, it kes people in whether or not there is a fact that there is a completely affordable non-renter situation eclipsed by the fact there in this house right now. i know you are not able to say, get out of this house and get in this house in most cases, but isn't that something where we

are bringing treasury up if there is going to be an extension? isn't that an -- a component, which is that before what housing starts will not with the house you pick, but with the house that is affordable? >> i believe you raise a very important and very interesting point. i can go with you. >> yes. >> yes. >> yeah, i think the key to hamp and any modification program is to make sure that it is affordable now. >> yes. >> ok, i will set -- settle for a yes. i yield back. >> i now yield to mr. connolly. >> thank you, mr. chairman. mr. logan, you said that despite some reports to the contrary, hamp modification has been

strong, helping thousands of homeowners. can you explain how hamp augments your modification programs? >> hamp is top of the waterfall. it is the first program that we offer. it is the primary and first point of defense in providing modification. if a person, for whatever reason, does notualify for hamp -- either it is a jumbo loan or it is effective past the date that we did hamp or some reason it has fallen out of hamp, then we use a proprietary program. >> so, one complements the her? >> yes. >> you stated that this has facilitated the ability to

streamline solutions more than ever before. can you outline how hamp has done this? >> when you think about how when hamp was first created, i believe it was 2009, at that time it was individual handling and approval from an investor . with the creation of hamp, i think it did serve as a bit of a mobilizing event to push servicers to take a broader actions at a more rapid pace. i think it pushed investors, including fannie and freddie, to move directly into home loan modifications. that is what i meant by saying there was a broader effect of it. >> so, in a leveraged private- sector programs, but they may be would have been smaller or maybe

non existent. >> we are at a different point in time right now. >> any estimate as to what the member would be -- the number would be that falls in the category of additional modifications or leverage because of hamp? >> i do not have numbers, but i would say there were loan modifications being made throughout. i think national standards, national progrs are always useful. >> thank you. mr. tinto seemed to imply that hamp is just displacing modification programs, which seems to contradict your testimony and that of others in the panel that said hamp complement's other loans.

could you elaborate? >> it gets back to the point of which loans held which customers. there are 478,000 veterans eligible for hamp. leave a waterfall of options and if they failed to meet the requirements, there are other alternatives. for the rest of the portfolio we are doing modifications, but again, for hamp we are doing e modification in terms of the debt to income ratio for customers who are not explicitly eligible for hamp by its definition. >> i understand. in the ivate sector did actually provides a framework for you to build upon and expand. >> that is correct. >> thank you.

mr. chairman, i yield back. >> i now yield five minutes to the congresswoman from california, ms. speer. >> thank you, mr. chairman while i was not in the room i was listening to the testimony and i am somewhat struck by the questioning that was offered by mr. lynch when he asked if he wanted to see the program continue and virtually every one of you said yes. although, my colleagues on the other side of the aisle very much want to see the program does appear. it would be helpful to us if you can -- see the program disappear. it would be helpful to u if you can in the narrative tell us why you think it should continue. mr. losmalowman, i think congren kucinich, said he had difficulties with your particularompany. i would like to echo those.

i have a number of cases that are truly disturbing that are loans by chase. this couple, retired schoolteacher, retired husband, chase has lost four sets of applications. this is a story we hear over and over again were documentation is sent, documentation is lost.. when a consumer sends it in four times, documentations that they send in four times and you cannot find it, that is your problem. it reminds me of the issue with the mineral mines service. basically, if they did not permit the horizon deep water rate wiin three days it was automatically considered -- the deep water rig within three days it was automatically considered approved. now, that it should not be the case, but at some point the lender has to take your responsibility for not having

the documentation when it has been sentver and over again. i have two people dedicated to not only doing foreclosures and modifications in my office. that is a lot of staff. bet every member on my panel would y the same thing. i would ask you to create a legislative liaison individual with in each of your companies that we can call and i would like for ou to contemplate that. if you are going to do it, i would like for you to identify who is and present that to the committee. if you are not going to do that, i want you to explain to the committee why you will not do that. if we're going to get to the bottom of this and keep people in their homes we have to have more accountability everywhere. i guess, mr. chairman, i really do not have a question. i just have a series of statemen i wanted to make. >> and they should not have the 800 number, right? [laughter]

thank you. i now yield to the gentleman -- just a moment. my staff is saying it is ms. norton? mr. davis, ok, i'm sorry. >> i will try to be brief so my colleague has a chance to get his question in. it has been suggested that minority homeowners have been disproportionately affected by the crisis. and i think many people agree with that. secondly, they suggest that some of the reasons have been targeting of subprime loans in these communities and neighborhoods, and of course, higher rates of employment. are your company's doing anythg as you try to do -- are your company'ies doing anythings

you try to help these individuals to look at this when doing loan modifications? >> yes, we have individuals dedicated to working with communities on the ground and we of the office of homeland protection. we actually have the same people twork with communities and help people with the documentation process. as i said in my testimony, we also got very close -- work very closely with hope now. i personally go down and -- >> anyone else? >> at bank of america we take a similar approach where we have dedicated teams. the we did 360 community events. those tend to take place where there is the greatest need and the highest disruptions of income. we have supplemenry letters,

telephone calls and community events that we participate in and nonprofits that we fund to host those events. >> mr. chairman, i would ask that each of those witness respond to that question in writing and i yield back my time so that there may be enough time. >> thank you. also, i would like for you to respond to ms. spears question as well in writing. we will leave the record open for an additional seven days to be able to ascertain that information. the gentleman from ohio. >> thank you, mr. chairman. i'm sorry that my colleagues from the other side have left because i wanted to refresh the memory, especially mr. jordan from ohio, because we serve in thetate legislature in ohio together and we did know about the problems eight years ago because we did an extensive study on subprime lending in the

state of ohio and the democrats pushed hard for legislation that would have cracked down on subprime lending. it was predatory lending and it was my republican colleagues that held that up and they held it up for years. it is the same thing in the congress. stephanie tubbs jones, u.s. since passed away, in 2001 introduced predatory --ho has since passed away, in 2001 introduced predatory lending legislation. for years and years -- and the reason that we are here today talking about loan modifications is not just because of the economy today and the foreclosures due to unemployment, but because of all of the poor underwriting and the securitization of the loans in the subprime market that could have been prevented had we addressed predatory lending legislation in the congress and in the states. but the republicans repeatedly stood in the way of that. and now today, as the conference

is meeting in financial services that might address the underlying problems with lack of regulation and mortgage-backed securits and credit defaults wops, my republican colleagues are again stanng in the way and trying to -- but the fault swaps, republan colleagues are again standing in the way and trying to prevent this. i do not think many of these loans should have happened in the first place because so many of them were in the subprime market. and i appreciate that some of the financial institutions quick writing in the subprime market years ago -- quit writing in the separate market years ago. those that were very active lead to thousands of foreclosures in the state of ohio. i have gotten a lot of complaints as we look at people who are trying to seek modifications. although the discussions have started, and these have not been finalized, these modifications,

the banks continue to proceed with foreclosure proceedings. they are sending mixed messages. i realize treasury has sent out some directives on this recently. but i'm very concerned about sending mixed messages to homeowners who are trying to seek modifications and of the same time sending out letters to the bank of their foreclosing on their property. i wonder if we should stop the practice of the foreclosure if we are in the process of loan modification negotiations so that it does not lead to the homeowners backing out because they fear their house is going into foreclosure anyway. >> let me be very clear that foreclosure is the last and least alternative for somebody. when you offer somebodya hamsomp modification, and it if -- and

if they fail about, we are for them -- if they failed that, we offer them other solutions. >> what i'm getting at is when you enter the discussion of ln modification, you stop the foreclosure process? or do you allow it to continue until the process is finalized? >> we stop the process. we stop the people better in foreclosure and offer them trowel modification. >> assoon as modification is offered you stop the foreclosure process? >> yes. >> we continue the process but we are in compliance with the treasury directed about how that should be handled and we have communication to try to mitigate the concern with the promise that we will not takethat home to foreclosure while we are in the process of loan modification. >> i have got a concern because it sounds as if you are reaching out to the consumer, trying to

work on a modification. but at the same time the hand that is reaching out, you are about to slap it with foreclosure. mixed messages are being sent. wouldn't it be better to back off on the foreclosure since foreclosure is the last thing that you want any way? allow the modification time to work. if it does not work, go ahead and proceed with the foreclosure process. but this is a dual track is very much sending mixed messages. >> we are trying to balance is the interest of all of the constituents, including that of the industrial -- investor. if that does not go through, to restart the foreclosure process is a very lengthy time frame. we are in communication and compliance with the treasury guidance. >> our process is much the same as bank of america's.

>> i believe, for the customer working with us we stop the foreclosure process. the other control we have in place is before the completion of foreclosure, we've looked to see that every opportunity has been exhausted. >> we have a similar process. the we do two quality checks -- we do two quality checks before foreclosure and before the sale to be surehat we do not foreclose on someo thats in the process. >> there seems to be a broad differentiation amongst the financial institutions and the servicers in this case, and it really is a problem " -- for the bars whe getting mixed messages -- for these projects -- for the scrounge youborrowere getting mixed messages.

i think we are sending a very mixed message when we are proceeding with foreclosure actions while at the same time attempting to work on the modification. i would just leave it at that and yield back the balance of my time. >> the gentleman's time has expired. i'm going to ask a question in the absence of the chairman. this program, hamp, has been such a disappointment. perhaps we had our hopes to buy. to the credit of the administration, -- perhaps we had our hopes to hidgh. to the credit of the administration, perhaps the most difficult part of the program, when treasury announced the home and affordable employment program, tt prides three to six months forbearance while

they seek employment. we understand sun companies have provided such forbearance -- some companies have provided such forbearance to unemployed borrowers in the normal course of the downturn, for example, that was not unusual. let me ask all of you, have any of you -- and tell me to the exnt to which any of you have participated in the forbearance program. beginning with you, mr. joyce. >> we launched an unemployment assistance program in march of 2009 when unemployment was rising and they wanted a denominated and calculated debt to income ratios. but we kept it simple. we split the treasury's program, but i believe that the paper might have been a little bit more nuanced than one might have wanted. all we ask for was proof of

unemployment, a document, and we made it a simple payment of $500 per month for three months. we would have liked to have extended it to six months. what it did is a pause of the wolf foreclosure process. it enabled people to get into hamp, which was a very powerful outcome for the program. >> was this on your own? >> this was on our own. >> and are you continuing it with this 326 month forbearance >> absolutely. we are extending -- with this 3 to 6 month forbearance? >> absolutely. we are extending it to the new treasury program. >> we will activate -- actively participate in the government's program ande are looking at  proprietary pt could extend beyond the six month under certain

circumstances because of unemployment programs. >> we have always had forbearance for that to give a reason prior to hamp and post- hamp as well. i know we are considering a longridge situation and that becomes very expensive for us -- a longer situation and that becomes a barracks offensive situation for us -- becomes a very expensive situation for us. anything longer than a three month time frame becomes a very eensive for us. >> we have done about 100,000 such customer cases before. the -- before the hamp modification was changed. the treasury process was very similar to what we were offering before and we will continue to help customers that do not qualify for hamp as well.

>> we have always provided for grants to qualified borrowers and we will under the treasury program as well. >> can i ask that all of you provide to the chairman the number of homeowners, beginning with the beginning of this year to #those in forbearance -- to number those in forbearance. i understand this is something that might have been done before you have a customer -- it was the appropriate thing to do under the circumstances. of course those circumstances are high levels of unemployment. i am interested in your candid view of how successful

forbearance has been in avoiding foreclosure. does it just spread the time out? what is your view based on your own experience? of whether this delay and foreclosure for an unemployment -- an unemployed homeowner, whether it's viewed as a success or what is it affect -- its affect? >> the idea of delay is not as bad as it is made out to be. oftentimesburborrowers need a process so they can focus on getting employment as opposed to also keep in their house at the same time. and i have said before, the fact that unemployment assistance allowed people to get into a very powerful program michael

hamp, that needs to be -- very powerful program like hamp, that needs toe noted. >> there is a vastly different universe out there, but i'm asking a general question. >> certainly, i would believe that temporary relief from the obligations that a ctomer has would enable them to more successfully bridged the economic hardship they are experiencing, yes. >> i would concur with her statent as well. >> i agree. and i think the design of the program where there is some amount of cash flow every month isetter for the customers are there is not a huge shock three or four months down the line when income is restored. >> i concur also. >> if you're looking for quantitative information, you

might want to go to the occ, the ocs or a company that tracks mortgage data. >> this is rather a perfect storm where unemployment rates mortgage crisis. morgan -- normally, the unemployment does not meet that kind of crisis and exacerbating the situation of people who all along have kept up their mortgage payments. do you have -- i recognize that you all want to do the right thing and to some extentou have been doing it. would you hear other suggestions as to developments in the program, as to its structure and what might be done? for example, one of you indicated beyond three months.

and i've seen you do it beyond three months ended creative issues. >> it was i that said that. -- and it created issues. >> it was our debts of that. -- it was i that said that. we have folks that creatively sit around a table. we, because we do a lot of securitization, we do not own the blown out right and we have to -- we do not own bolon out right and we have to make payments to investors -- we do not own the loan out right and we have to make payments to investors. >> i think that allows multiple three-month check in. the purpose of that is to stay current on what is going on in

the customer's life, what are the prospects to get back to where the home is affordable. that is where the three-month extension comes into play. >> i would concur with that. >> the chair has asked me to recessed the hearing -- to recessed the hearing for about half an hour because there was at least one member who did not get an opportunity to ask questions. do not go anywhere. this hearing is recessed. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> the committee will come to order and we will resume the five-minute questioning. let me begin.

-- let me begin with m hyde. mr. hyde, according to the research done by the national community reinvestment fund, minority borrowers are less likely than other borrowers to receive trial and permanent modifications. do you believe that this is an accuratessessment? >> it is hard to answer the question. on the surface, i would say only if the home is not affordable would that be the case. there is nothing in the modification process that would cause a difference between ethnic backgrounds or anything of this sort. >> i asked the question because we know that prior to the modification faiz, the african american borrowers -- prior to the modification phase, the

african-american borrowers were steered to the subprime and predatory loans. they were disproportionately impacted by those practices. there is plenty of data to show that. since they were disproportionately affected by being steered into these high- cost loans, i am curious as to what is happening to these minority borrowers now who are in trouble and trying to get their loans modified. do you think that they are being disproportionately affecte still? >> congressman, as far the statement on this hearing, i disagree. as far as the loan modification process and how that works, we have the same process for -- >> what do you disagree about as

far as steering? what do you find disagreeable about what i said? >> you are quoting a particular study and i believe that study does a comparison of information, of partial information to get that data. >> but the numbers speak volumes about how out middle income, upper-income african american families were steered into subprime and predatory loans. you can sit here and denyt if you want, but has happened. and let me say something else about wells fargo. quite a few of my constituents have been impacted negatively by this whole mortgage meltdown. we have gone to wells fargo. my staff back in my district,

asking you to modify some of these loans and we have heard every excuse, like a we have taken t.a.r.p. money ended would be inappropriate for uso try to help these people. what do you say about that? have you use that excuse that because you are a recipient of t.a.r.p. that you cannot help these american stay in their homes? >> that is an absurd statement. our data speaks for the efforts we are putting forth. when you look at every customer, in respect of ethnic background -- regardless of ethnic background, every customer has two or more payments behind and two-thirds of the time they have the process of foreclosure. the person they're dealing with

on the phone have no ethic information on the screens. there's one exception, the hamp program provides voluntary information to that effect. but there is a series of steps one goes through to get them into billone modification they can afford. that is -- into a loan modification they can afford. that is the with hanmp program works as well as others. >> i find it incredulous that you do not think african- americans were steered into these high-priced loans. let me ask the rest of the panel, do you agree with mr. hyde, or do you think these people are disproportionately impacted by a racist policy? have you seen any evidence that people were disproportionately impacted based on their race?

>> i believe you raise a very important point. and i believe that economic downturns, the merger can be disproportionate in the ethnic -- the hardship can be disproportionate in the ethnic communities. let me say this. we do not do anything that would distinguish between reyes, origin, sex -- race, origin, sex, or any of those facts. but i would say that i think that hamp needs to be enhanced for those communities in a very different way than the way it has been established. and i believe some of my colleagues have taken a similar position. >> thank you for that response.

>> bank of america did not -- we exited the subprime business in 2000 and acquired countrywide in 2008. shorabak after the acquisition we entered into a settlement with 44 -- shortly after the acquisition into into a settlement with 44 states that would target hybrid arms, products that might have created the most stress in these economic times for borrowers. and the process, much of which is automated, they are treated equally. there are attempts to reach out to all lavar customers as well as -- to all of our customers as well as those that are calling us. participated in 360 community events last year and we have

stepped up at that number even more this year. disproportionately, we go to and purses paid in events where communities are the hardest hit -- paicipate in the event where communities are the hardest hit. >> and so, you do -- bank of america has admitted that there has been steeriing, that you see disproportionate affects to that. you know, i believe in the adage that fures don't lie, but liars sure can figure. and this is a good example of that. this segment of the population

was disproportionately impacted because of the actions of the banking community, because you do have a human factor involved here. you do have loan officers that look at customers at differently based on their skin color. that is all i am saying. but when you people come here and denied that, i think is wrong and the american people can see through that. >> fortunately, we did not originate in the loans -- any loans. personally, i am a little out of touch on that particular subject, but i do believe that we, like bank of america and others, to go to a lot of outreach programs. i think a good health for the community would possibly bring down -- a good health for the community would possibly to bring down the debt to income

even lower than 31% under hamp. if there was some type of injustice done, maybe it could help more people. that is just a suggestion. >> have the of your institutions created programs that target particularly at risk groups like racial minorities, and that have been adversely impacted? >> i do not know why you could not do such a program. >> voluntarily. >> we do not originate, so i cannot comment on that. >> any comments? >> i would just add that at chase, we have a culture of fair lending and we hav always had a culture of fair lending. we have done our own analysis based on the report that you have referred to in the crc study and our findings were not

congruent with their findings. we have done over 70 of reach the events throughout the country. we have 51 home ownership centers throughout the country in the most troubled of neighborhoods, where we continue to do outreach, and think we are able to serve the underserved. >> look, the facts speak for themselves. you go to a predominantly african-american neighborhood where every third house is foreclosed, i mean, doesn't that stand out and say something to you? perhaps those communities have been targeted? >> i cannot speak to the facts. i cannot speak to it. ko>> not being inlander, i reay have no information to add. >> -- not being a lender, i

really have no information to add. >> just as an observer. >> as an observer, blame is being placed on both sides of the aisle. and fannie and freddie ck in 1941 had a very sound underwriting principles. those underwriting principles were complained about by community groups. they went to congress in 1991 and petitioned congress to change that. what they said was that lenders respond to the most conservative standards and of less fannie and freddie become aggressive in convincing their efforts to expand their narrow underwriting, change their underwriting -- and that was efore the housing and urban affairs committee in 1991. in 1992, the federal housing enterprises safety and soundness made that question the law of the landnd from that point o the under look -- underwriting standards in this

countr changed step by step by step. eventually we went from having down payments on loans to having no down payments on loans. it was a result of a policy that congress put in place, a bipartisan policy that congress put in place. that is where it started and tha is my view. >> but that was not totally the reasoning for this housing collapse. just fannie and freddie are to blame? not the people that every step of the way made money off of these loans and these high-cost loans? we do not just stop with fannie and freddie, and do we? >> remember what they were asking for. hat we want to break the lenders view and the only way to do that was to get fannie and freddie to start having at flexible underwriting, which it is starting in 1993. and it just progressed. it was a progression that occurred over 15 years. >> and like you said, there is enough blame to go around.

we should probably look at what the appraiser did, too. >> do not get me started on appraisers. >> ok, i thank you for your response. at this point, that concludes this hearing. without resort -- without preserving the right to object, the record will remain open for seven days so that members can submit information for the record. finally thout objection, i will enter these documents and statements for the committee record and the committee stands adjourned.

>> this gentleman over here.

>> i have a question for mr. larsen. we applaud during transparency actions. -pthere appears to be a couple f actions you have taken that are inconsistent with your idea of transparency. that is issuing a number of roles, which made it impossible for the public to participate in the rulemaking process. i realize there may be conditions that warned that. my question is twofold. with respect to the premium increase that you mentioned, i have a couple of questions. will they be issued as an so an nprm sos -- as se

that individuals can comment on them? >> in terms of the precise format, i am not sure i am ready to comment on what the legal process would be for issuing them. as you mentioned the time frame that is set out, we agree with them and support the consumer protections, but nonetheless in order to get the regulations found, it has been necessary issue them at roles that we solicit comments at the time that we issue them. some of them may be subject to -- we visitation upon receiving the commons. we are happy to get the comments. >> i have time for one more question. is there anyone from the press that does not have an opportunity to ask a question?

the gentleman in the corner. >> we are concerned with the number of other consumer groups that the rate review disclosure form coming out from the working groups does a poor job of reducing what you have been talking about. some of the concerns raised about the delineation between medical costs for the purposes of the mlr calculation. how much they willing to challenge the recommendations? >> as we pointed out several times during the course of this, and i am committed to it as is the president, i think we view the process with the states as a partnership. on the rate review grant, the statute provides that the

secretary establishes the standards in consultation with the states, which is a little different than the other that defines the man we certify them. we are familiar with the concerns that some of the consumer groups have raised regarding the level of disclosure on those forms. we are working with the nic subcommittee. i think what they have done is an extremely good start on that. we are all learning that in plowing new ground, sometimes it takes a little bit of back and forth to get it just right. we are in the middle of the process. we are very pleased with the work, the hard work that they are doing. it is keeping as busy.

we will continue to work with them on this issue. some of the points they have raised has been very good. i am not sure that they disagree. i think some are interested in revisiting as well. >> we welcome continual discussion. that goes on. i think it is correct it is a federal law. >>, thank you for being such a good audience. i want to remind everybody that we have a paper released that discusses how the competition and consumer protection forces better work with the new federal regulators. we have a paper coming out in a couple of weeks that will deal with the lack of adequate state

rate regulation. keep looking at your web site to be up-to-date on these things. thank you to everybody on the panel for the excellent presentation. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] [unintelligible] >> today on cnn, check -- mike mullen talks about military operations in afghanistan irian james lee witt discusses government believe efforts for

disasters. and then it is "washington journal." . >> president obama is in canada for the g-8 summit. today we will have live coverage of their closing news conference which gets underway at noon eastern. tomorrow, president obama will meet with the heads of the g-20 countries, including leaders from south. -- south korea, india, and china. you can see that beginning live 5:00 p.m. sunday on c-span. c-span is now available in over 100 million homes bringing you a direct link to public affairs, politics, history, and nonfiction books all as a public service created by america's cable companies. >> on thursday, joint chiefs of staff mike mullen voiced the decision -- support to replace general the crystal --

mcchrystal with general petraeus. this event was hosted by the hill newspaper in washington. this is one hour. >> as most of you know his background, he was sworn in as the 17th chairman of the joint chiefs of staff on a sober first, two dozen 7. he was reconfirmed in the position in two dozen 9. he serves as the principal military advisor to the president, the national security council, and the homeland security council.

the way we will work this this morning is the admiral will come and speak and we will open it up to questions and interests. i will run around like phil donahue with a microphone try to get everybody's questions answered. we will adjourn accomplish and about one hour greenback i am sorry. thank you. it will be very important that when i run around with the microphone that everyone state their name, affiliation, so we know who you are. then go ahead and ask your question. i know we want to get right to it. before we do, by what to have the admiral come on up. i want to give this to you. this is a book that carolyn firestone has written.

you may have seen it before. we thank you for everything you are doing. it is a nice tribute. thank you very much. without further ado. >> good morning. it is a treat to be back with you. about one year ago this time that i was with this group. i am very much -- a couple of thoughts. one is to acknowledge congressman taylor and would only say to a very proud father and mom, i have the privilege of commissioning his son, gary, at the academy just a couple of days ago. in all of the things that we do, we are ofttimes blessed with men and women that continue to serve. i just want to reiterate the

congratulations and say thanks for raising such a fine young guy to come and do this. this. in terms of this morning, obviously is focused on the trigger it to our troops. as i put together a thought for this morning, it is just a few weeks after memorial day. in the most recent piece that i wrote, one of the main themes is to make every day memorial day. i am so struck by these wars. the sacrifice of the men and women that wear uniforms there, their families, to a degree in level that i have not ever seen

before. without that kind of support from our families, we would not be the successful exceptional military that we are. it is setting a critical time in our country. i have tried to understand from the position i am in, the challenges associated with that, the needs that we have. how do we bring the totality of the organizations in our country to meet those needs and quite frankly take advantage of a yen for generation with an extraordinary propensity to serve, whether it is in the military or not. and in a summit cases are returning. this has always been the case. young men and women joined the military, and then they make the decision to return home.

tens of thousands are taking up their future through the new gi bill. they are returning to schools. it is my belief they will contribute to our society in ways that we cannot imagine. a lot of it is based on what they learned as what has been the case through our history since the invention of a military. all of us that our focus on getting it right for them recognize the number of deployments and the whole issue of stress, the extension of the stress from individuals that go to the fight to the families. i travel a lot with my wife, deborah. one of the things she sees routinely is the stress on the families.

certainly, sometimes that a very similar to pds are being experienced -- pts adjust by spouses but also by children. if i were a 10 year old son or daughter and my father and mother went off to war and i am coming up on my fifth major deployment, you almost cannot do the math and find any time at home. the family has been in many ways holding it in, working to support, meeting the challenges in ways that we never imagined. there has been a resilience shown on part of our military as well as our family. there are huge needs that we have. both for those in the military and those in transition.

we are working much more closely with the v a then we used to work. i think that is important. possible leave that to the department of defense, the va, and the communities throughout the country have to figure out a way to work together to meet the needs that are there. probably more importantly to take advantage of the resources and the potential and the future that includes so many of our veterans that will return home and make such a difference locally and in their community in service of some kind in the future. so many of them are going through or going back to school. how do we bring all of those together? we have a system that we built up over time that focuses heavily on compensation, particularly tied to disability.

i struggle with that and recognize where that comes from. it is not about disability, but ability. it should never be about veterans returning and seeing them as a burden. it should be about veterans returning in seen them with great potential to make a huge difference. that is a whole different mindset. deborah and i spent some time focusing on homeless issues. when this war started, i do this because my generation, my first war was vietnam's. i still see my counterparts, my colleagues sleeping on the streets throughout the country. we really left them behind after the vietnam war. it's about 10 years to generate

the population. there are those in the veteran homeless war that say we are generating them at a much higher weight -- rate, more quickly. four times the number. we meet with them. not too long ago, we sat down with about 30 homeless vets. one of them said to me, i gave 100%. all i would like is 100% in return. this gets to my belief that these are extraordinary young people. we have asked them to go off and fight our nation's war. they have done that without question. they have done it exceptionally well. they come back into their families also have some challenges as they returned to families throughout the country. while they have this potential,

it is my view that we need to figure out a way to meet their needs for the rest of their lives. what has not changed over the course is their dreams. they still want to raise a family. they want to incomes and like to own a piece of the rock. but i am trying to do in conversations i am having with communities throughout the country is a large them to the opportunities that are there. i have done it in denver, los angeles, and in pittsburgh. you have seen the inability to connect the need to those that want to help. i was recently out in los angeles.

a woman stood out in the back of a group and said she was a very active community leader in los angeles. when they are making decisions about veterans, she did not have anybody in the room that knew anything about veterans. they did not know anything about the family challenges. while there is a great desire to make this connection. -- we have to figure out how to make it so that communities. how to make that connection? it is not as simple as it might seem to be. sometimes people ask me, how time -- how come you are involved in this? in a very critical way for me, our veterans recruit for this. if they have had a good experience and they believe in

us, and they go home and tell others. that ambulances others to come back in. it is really a very strong part of our recruiting program, even though it is not actively stated as such. one of my goals is to figure out a way to work the department of defense with communities throughout the country. there is a huge appetite to help. i talk to community leaders all over the country all of the time. what we are about over the next year or so is to figure out a way to make these connections. we want to try to understand who the really good organizations are that to really do this. there are some. i deal with organizations that i consider to be the gold standard level.

one of the things i see organizations who want to do this struggle with is they are terrific at their main competence. they also need resources. oftentimes, they have to spend a lot of their time trying to raise resources, which is not their main competency. i would much rather figure out a scheme where they can be underpinned with a funding stream from a large foundation or something like that. instead of 50% of their time, they can spend 100%. i am working on what some of my friends say is a defense issue. i do not know the extent of the outreach from the defense industry to those that are returning. i know it is a very active issue at the senior level in defense

contractors' side. i have addressed it in spoken with senior leadership about it. these are young people who, when all is said and done, they look to a future that includes improved education. they also need employment. the care a lot about our country and making a difference. even though they may not be in uniform, as is -- the case in so many industries, they still want to serve in care a lot about those. how do we make those connections? i have incredible admiration for her in particular as she has been able to focus on the family needs in the army and having a bigger impact on that. as we travel and continue to meet with the family member -- i

tried to do that to stay in touch with what is going on where they live. we still struggle institutionally to make sure those that have families of the fallen are still well-taken care of. one spouse said on monday i was in the army ended tuesday a was a civilian. the whole system changed overnight. we have improved dramatically in that regard. we have to make sure that transition in the connection, should the family want to stay connected is sustained. for many of these young widows, that is all they know. they got married when they were young and have a couple of children. all they know. it should only be cut off at

their request, not institutionally. we are working our way through those kinds of things. i think we underestimate the impact of deployment. we are working hard and we will get to a point where we will be home twice as long as we will be gone. we should not forget this fits the plummet that i was talking about was preceded by a six month and a month a 15 month, and other deployments that is out there. i have been so impressed with the resilience and the attitude. we are on path to transition in iraq. we are able to do that for many reasons. the main effort was the united states military.

we have increasing challenges in afghanistan. this has been already and will continue to be a very tough year there. that said, i believe the strategy is right. the approach is right. we are in combination of what we are doing in coming out of iraq and also the troop levels in afghanistan. we will be able to create a case that is supportive of this increased level at home. how many are from the hill?

>> we also work in silos in this town. one of the challenges is i have got inside my own building, and part of it is we are living at a time when we are more interdependent in ways that i am unable -- that surprise me. we are rather it is global independence from countries -- much more interdependent in average structures. as i look at the hill, what are the future structures in the hill that make sense. how do we join the end to work? multiple times, i have testified with secretary gates in front of my authorization and appropriations committees and also in front of hers.

i have reached out to individual members in the va world, because i think there is a need to connect so that's we can understand how to move forward together. it is because in some cases, we are to scioto here as well. we will continue in these. we will continue to have challenges associated with them. i go back to where i started, the tribute to the troops. as i travel throughout the country, i am really uplifted by the american people who are so supportive of our men and women and looking for other ways to

improve, increased, and make an impact on their lives in terms of support. i find as needing to reach to them in ways from a military perspective that are really important in terms of communicating. this is what we are about in who we are. these are the treasured individuals that can make a difference in your communities. they are twentysomething. they are going to contribute for another five or six decades and make a big difference. i look at the gi bill, which is a very robust bill. a look at the that as such an important investment in our country into the future. we will get a return on that that you cannot measure by these numbers. using a number would not do its

justice. it will return some much to our country over the next 70 years and beyond. you would not be here if he were not supportive. i appreciate that. people ask me about our future in the military. i think our future will be superb in many ways and principally because we have the best people. we need to make sure we not just recognize that, -- they are the treasure we protect, invest in, and depend on for the future. if we get that right, we will be just fine. the matter where we go or what we buy. if we do not, it will increase challenges. as for your support. i am happy to take your

questions. [applause] >> could you walk us through the thinking the pentagon has made as to who would replace general petraeus and with the big changes that have happened this week? >> i would not say much at all about that. we recognize the general petraeus, and i would not presume, assuming he gets confirmed, he will leave that job, and we will have to find a replacement. i am hopeful we can do that as quickly as possible. we also have an extraordinary deputy commander out there.

i have all the confidence in general allan to lead until this transition is complete. in terms of process, is will be the normal process. someone will be nominated by the president, recommended by secretary gates, nominated by the president and then be confirmed by the senate. [unintelligible] [laughter] that is all i will say. >> i would like to go in a different direction. you are very supportive of one effort. can you tell us what you think would be the biggest challenge in the pentagon to find that much money? what would be the hardest?

>> i am very supportive of this. i have seen it come in number of years. in my previous life as chief in the navy, i had expectations 2009, things't 8, in the budget would turn. historically throughout our country, it is amazing to go back from 1935 until now, it is almost a perfect sign curve, a 19-year cycle. through war and peace -- and the resources that i have, from my perspective, we have to fund the operations we are in. we have to make sure we restores our people. we have to get right the equipment and the systems we need both now and in the future. i think what secretary gates is

undertaking is critically important. i have said several times publicly, the biggest threat we have to our national security is our debt. i was shown a figure the other day by the comptroller and the pentagon. the interest on ever debt is $571 billion in 2012. that is the size of the defense department budget. it is not sustainable over time. while we have to be resources to meet our national security needs, there is no question about that. we need to stay whole. i have been through this a couple of times. it is important that we are resources with what we have and what ever missions are and who our people are and that we do not in any way shape or form go

hollow. not from a leadership stand point, we are not going to do that. i am also encouraged by the main thrust here which is to look at our overhead and put it where we need it and the fighting end of the forest. having done some of this when i was chief in the navy, one of the most difficult things to do is incentivize. too often is given away. why should i do this? it can be done. i have seen it done. we did it in the navy very effectively. it does not happen overnight. but you can see the resources come back and put them where you need them. you were not able to do that before. i am confident that we can get at this through a couple of cycles. it is a message to all of us. it is not just for the uniform

or the civilians, were contractors, direct support contractors. it is an important message to understand. the best way to get there is to gather as opposed to everybody fighting each other. where money is concerned, too often, the first thing that comes out is all of my defenses. you can take someone else's money, but not mine. we all have to contribute to make sure we are whole and well positioned for the future. that is what it is about. i know it is hard. i understand that. having watched secretary gates over the last couple of budget cycles, i would not under estimated ability to get this done. >> i would like to ask a

question about yesterday's decisions. given that we have seen a couple of removals' from a couple of commanding officers, what can you say to the troops in afghanistan about the purpose between the military and the intentions? >> we are having a press conference later today. i will reserve the time of that press conference to speak to all issues associated with what has happened last night. i am very supportive of the president's decision. we have a position we need to move forward on. beyond that, i will not make a comment on this.

>> there seem to be reports that general much crystal said the operation will slide for. is the operation on going? >> i of said for many months, my expectation has been it will take until the end of the year to understand what needs to happen. i testified the other day the jetblue i believe can they are is these center of gravity for how we are moving forward on this strategy. are -- as those -- as goesbelieve

es the rest of sthe rest o afghanistan. there is another 10,000 or so that will arrive over the course of the several months. what you are seeing is recognizing the complexities of its. there are shaping operations that have been going on for months. they will continue to go on. from that stand point, this is not going to be starting at one position in the field or start on the east side and move

comprehensively to the west side. i think how gen. mcchrystal talked about this was a rising sense of security. it is all of those things as well to think about it in terms of how the operation is being undertaken. it is very important to have the afghan security forces involved. and they will be. is complex. there are some challenges associated with moving through this. it has been exceptionally well planned. it is an operation that has been discussed at great length the president car side, the

leadership -- karzai, the leadership. >> thanks for doing this. i wanted to ask about don't ask don't tell. there looked like there was a great breakthrough, but there have been some hiccups in questions about whether the bill may be affected. will it be appealed the sheer? how you see things planning now from your perspective? >> you're asking me to predict what congress is going to do. chairman taylor, would you like

to come up here and try to do that? those pieces of legislation has moved rapidly over time. it is very difficult to predict them with legislation. i just cannot do that. what is really important from my perspective and what i would reemphasize is it is really important that we get through -pthis reveal reach -- review. the people that it will affect the most, it is important that their voices are heard. that is the main purpose of this review. we are still very focused on that. the council and a general have been with thousands of government and women to meet with them to get their views.

we will also have a survey here of several hundred thousand to one -- to understand the impact. the most important part is to make sure we do not impact at a time of great stress on their militaries, that we do not impact their ability to execute to the mission. that is the military readiness peace. -- piece. as i testified in february, that was my personal view. it needs to be informed by a level of knowledge. data collection just does not exist. that is why this review is so important. as a senior military officer in our country, i feel obligated

that should this change, i have to lead it. i need it this kind of input to understand what is going to take to implement it in how we mislead its as a very broad and high level, but additionally add a level fed gets its -- what about this policy in that policy? that is why a review is so important. as i said, even as this legislation was moving through, my preference would have been to wait until a review is through until the legislation got put through. >> of want to talk to you about

the don't ask don't tell. i want to thank you for your amazing testimony faction february and your leadership on this issue interpersonal comments. i want to go back to the review. as an advocacy group that deals with helping out those a gay and straight service members who are under investigation and under threat of being discharged for don't ask don't tell, we deal every day with those clients did go through the same stresses that we talked about earlier. suicide, stress on the family, losing their job, and become homeless as well. i want to talk about in this review process, the pentagon is setting up a confidential fox said that gay and lesbian service members can put forth their views on the repeal process.

we are worried in net because it is a confidential system, the possibility is high. the family members are not giving the ability to give a fourth of their views as well. can you speak to -- does the pentagon go through a hurdle going through this review process? >> part of what i think is very important in the totality of this issue is responsible leadership from everybody. i have tried to do that from my position. i have talked to irresponsible leaders on both sides of this issue. that is really important. i was here in 1993. i was in the military during

that time. that does not mean that there will not be extreme views which are out there. responsible leaders throughout this are really important. in order to allow us to get this. there is internal to the process that we have very significant focus on this issue and trying to make sure that we have an opportunity to understand the views of those that are gay and lesbian and serving now said that their future -- the law is the law. we are still complying with it. the changes that secretary gates made a few months ago have eased that somewhat. the same time, it is the law and we will continue to comply with it until it changes.

having met view, is a very critical part of this. insights that you and others might have s to the best way to do this, the confidential path that you talk about is one. i had not thought of the term infiltration. we are trying to get this right and are trying to be as objective as possible. we want to understand the views from every single corner, if you will, of the universe, with respect to where we are and how we should move ahead.

>> there is reporting that suggests that general petraeus may not be in a thicket of troop withdrawal that president obama had specified. do you lend any credence to that? >> general petraeus is fully in support with the policy that is laid out there. >> i want to ask you about the state if military operations.

>> i will not address issues associated with that until this afternoon. >> of want to follow his question and go back to [unintelligible] is tapping down the violence key to moving forward time wise and do you see the additional troops arriving to make a difference or will they maintain the status quo? >> i missed it. >> is the tapping down the

violence related to kandahar. >> it is not going to impede what we are doing there. in terms of where we are, it is complex. there are things happening in pa dot margin that has not happened in the last two -- marcia that has not have been in the last two to eight years. this is part of classic, insurgency. it is not a surprise to us. it will continue to be ongoing. when i spoke with gen. mcchrystal in recent weeks and others, they have been there. there are teachers out there now.

there were none in not too long pgo. there are leaders stepping fortune the local communities. that was not the case before. the indicators are moving in the right direction. this is -- a its darkest just before the dawn. in these kinds of operations. we know where we are. we have increased the number of local government leaders -- they are increasing in number. we think we have it about right. it is just going to take some time. we are progressing in a positive way. i do not want to paint it for a look at it through rose colored glasses. it is a very tough fight. this is an area owned by the

taliban in some parts for almost a decade. they are not there anymore in terms of that kind of ownership. there is a complete change in terms of what that village or community is going to be in the future. they do not like that. they're doing everything they can to prevent it. it is a tough fight. i think it takes time to do that. we have taken an extraordinary number of leaders off the field and around there. it just takes time to do that. i think more than anything else, you stay with it. as long as we continue to make progress and that violence will eventually be tapped down.

>> he spoke about the importance of time in certain operations. i know there was a lot of talk about this, but it has created a sense that the united states is leaving and they need to align themselves and to the fact that the americans are leaving. some say the deadline may have created urgency, but in some areas it may have backfired as some people are operating under the presumption that the united states will leave? >> the strategy has not changed. the policy has not changed. we are very focused on the time between now and july 2011. it is not yet july 2010. many people are asking for

predictions as to what is. to have an 13 months from now. there is a long time between now and then. there will be a whole lot that occurs between now and then. we will know by the end of the time in terms of the indicators of how this strategy is working. that is still seven months away in july 2011. there is this desire to focus on time lines and to do so in a way whether it is these countries. it can create a sense of urgency in my perspective. i certainly recognize the various views about what it means.

very specifically, it will begin a process where the troops will start to withdraw. that will be based on conditions on the ground. we do not know the case or the place. we will not snow for a considerable time frame. that policy has been clear. that is what we are doing and that is where we are heading. there is a lot of time between now and then. i will let you speak to the pros and cons. it is very clear what is and what we are going to do. i supported that and continue to

support that. we are very much on track. it is a very difficult fight. we know that. >> i have worked for used and the department for about 11 days. a brief comment. i represent an organization called the employers support periods of represent the third leg. you have talked about this. as you move about the country, can you speak and will you speak to the degree of employer supports that we face? >> the employers have an unbelievable. i was very taken by that.

when this all started, my insight into this was minimal. it says expanded dramatically since i have been in this job. they have been unbelievable. we have needed that support so that we have places for those extraordinary men and women to return and continue to be employed and the members of the community that make a difference as well as continue to serve. we have had to adjust policies over time. there is more to learn. i cannot say enough good about that. i was taken recently in a meeting of about 100 spouses at

fort benning about one month ago. i learn every time i do this. i will take this as a target of opportunity in a two-step. one of the things that we do -- medical is a big deal. it is a big deal for all of us. for some it is a bigger deal than others. in families, it is a huge deal. we have a policy that when i call you up, and you're working for whomever, you come in to try care. what it forces a family to do is change options. if we like our doctors, none of us want to change doctors. it is from my perspective we need to put a first principle out there that says we

sustained the medical relationship. we sustained the family care and figure out a way to work with employers -- i do not have this soph. figure out a way to work with employers through try care. but they do not have to change their doctors. in the end, it is who pays the bill? how do we pay that? this makes all of the sense to me. i have medical care, doctors. thinking through things ike that -- would we are asking to sacrifice so much, it is medical, schools, the kinds of things that we cannot assist handle on a peace time basis. that is an area we have to work on. last question. last question.