difference and show that this actually is a government that's made some progressive choices in education even though we inherited a mess that we had to clear up. >> bridget philipson. >> thank you, mr. speaker. does the prime minister agree with his business secretary that the scrapping of regional development agencies has been maoist and chaotic? >> given that he is implementing the policy, that is not his view. we all take a view that the rda's wasted a vast amount of money, many of them weren't popular with the businesses in the area and the local enterprise partnerships will do a much better job. and i would suggest instead of complaining about it, why not work with our local authorities to get a good local enterprise partnership in her area to start backing business and jobs in economic revival. >> on a day when employment is the top of people's minds can i ask the prime minister to join me in graduating the saga group on their wise decision to move into hastings with very high public sector -- with up to 800

new jobs for the town? >> i'm very happy to join my honorable friend congratulating saga and the very good work that they do and i'm sure in choosing hastings they made an excellent decision. there is good news in today's unemployment figures. we should celebrate that. there's a lot more to do to get this economic recovery underway. but it would help if we didn't have so many people determined to talk down the performance of the british economy. >> mr. bradshaw. >> doesn't the devastation in cornwall illustrate the economy of his recent decision to slash investment and flood defenses? >> that's simply not the case. they will be spending over 2.1 billion on flood and coastal erosion over the next four years. that's roughly the same that's spent over the last four years. we made some difficult choices in the spending r

>> each week the house of commons is in session, we air prime minister's questions live on c-span2. wednesday at 7:00 a.m. eastern and again on sunday night on c- span. and at c-span.org, you can find an archive of past prime ministers questions and links to the house of commons and prime ministers websites. >> after thanksgiving, the house is expected to vote on censuring congressman rangel which could result in a public reprimand by the speaker. congress has not approved spending for the new fiscal year which started october 1. the senate is also expected to resume work on a food safety measure, expanding the food and drug administration oversight

and recalled 40. live house coverage on c-span with senate coverage on c-span2. >> from today's washington journal, a conversation with newt gingrich. this is about 45 minutes. continues. >> we want to welcome back newt >>. thank you. host: we saw the leadership votes in the house and senate. nothing has changed guest: nothing much. the republicans have a winning team with new faces added. the democrats have a losing team and decided to keep theosing time. a very interesting phenomena. host: what do you think nancy pelosiecided to stay? guest: it's her right to stay.

obviously the democratic caucus agrees. i think part of the difference is that she believes, this is my only guess, that she believes obama will get re-elected by a big margin. the rayburn martin model doesn't work. the second time martin lost in 1954, he bounced back and fourth and the large democratic cause us stand. matthew dowd, it's not 1994. barack obama may not be so lucky. his political future as well as

his party hinges on whether the economy rises. guest: i think that's partly true. the center has moved to the right. you have a country which is more anti-spending and anti-washington and determined to go back to a constitutional apprch. at the same time, the economy is much worse. the problems are much more profnd. as a danger. if the federal reserve continues to print money, there's a real danger, you will end up in the late 1970's, they have to raise interest rates to get money back to avoid massive inflation. there's one other huge difference. bill clinton inherited the

victory over the soviet union. we were theost power military in the world. obama is operating, and i think in a dramatically more dangeus world. this is 50-100 rocketed surrounding israel. the north koreans continue to build nuclear wpons. you have the worst national security and worst economy and the bigger gap between the president and the country than bill clinton had. th's why i think -- the president can recover. nobody should underestimate him. as a partner and an institution of enormous party. he has a harder job than president clinton. host: as a way to kind of show

case its technology or a ploy to try to put in negotiating issue on the table? guest: the north korean dictatorship is a strange regime. their nuclear weapons and rockets. it's a terrible disaster at the human level and economically. it's a pathetically weak country. except for the nuclear weapons. i think they would like to get more money out of west. that's their way of saying, you better pay attention to us. host: karl rove said it's been a rocky month. republicans should sober up. always difficult to beat a president.

guest: when i spoke to the senators. we have to move to complacent conservative. in 1980's, with carter, 1994 with mondale. and in the election of 2010. rejection doesn't solve in the long run. the left gets stronger in the universities, news media, bureaucracy and we need to think of a much more fundamental approach to go to the left. i would say something that chris christi is doing a remarkable job in new jerseyow to solve problems. host: valley forge. you said no episode is more

difficult. thousands of the 12,000 men died. they all plagued the army and threatened to dissolve it. guest: the british occupied o biggest city, philadelphia and the continental congress fled. washington had been promised the continental congress would send food, supplies and money. they sent none. for the 12 or 14,000 people. there was two axis. they had rampant disease which was the real killer that winter. it's a very difficult time. you have in washington somebody

who has such huge integrity, enormous self discipline to solve the problems. by the spring of 1778, created an army to defeat the brith. it's his being replaced by certainly gates. guest: part of the lesson of valley forge. there's nothing new. here's washington who was clearly the dominant figure in the colonies, the man whom around the revolution as evolved. you have a continental congress,

a large rt is frightened of wash. cromwell became a dictator. you have with washington, the requirements to run the army. sustain the morale out maneuver a faction of the continental congress. they wanted him to fail to replace him. all of this is going on simultaneously. george washington is one of the most remarkable men in history. host: you keep bringing back how hard it is today. the problems we have today pail

in comparison. host: to true men's souls about acrossing the delaware on christmas day to rprise the germans and valley forge. we would people to realize. being an american is a strenuous difficult thing. we give certificated who haven't done homework. we think we're going to be able to be slop and he have an entitlementment society and compete with china and germany. the world is real, challenging and have complexity. free people have to be more energetic than slaves. free people have to be able to take on their own shoulders, helping to save their own

country. the lesson of the american revolution. we were fortunate that we have americans and foreignens. we have two important foreigners with whom we might not have won the revolution. host: our role in afghanistan. here's what the president said yesterday in lisbon. >> the whole point of ramping up our troop presence was not because wanted to maintain a large presence in afghanistan. but to immediately blunt the momentum we were seeing from the taliban and create the space for training of afghan security forces.

both those fronts, we have made progress. you have fewer areas of afghanistan under taliban control. you have the taliban on the defense inumber of areas that were their strongholds. we have met or exceeded our targets in recruitment of security forc. the performance has improved significantly. so, thanks to the hard work of people like dave petraeus and others, and obviously, the incredible sacrifices of the troops on the ground, we are in a better place now than a year ago. i am confident we are going to bea -- able to begin our

transformance. guest: i don't understand what his message is. we're going to be there after 2014. but we're going to start leaving next year. what does that mean? i mean, they are all wrapped up in these political gains. we are still iraq. we will be there for a long time. i can guarantee you democracy in iraq and afghanistan, the president is in a balancing act. he wants our allies to come in. here's a very difficult

balancing act. i find myself confused by performances by that. what's the real message? is the dw down substantial ground forces there? we're leaving? from everything i have heard, we're going to have substantial ground forces. host: last weeks news week. the president is doing the balancing act. whyhe modern presidency maybe too much for one person. guest: i broken down laughing with this. we did a movie with six minutes of jimmy carter in there. the question was, can anyone get the presidency to work? eact was, eight years ladder. it would he been an absurdity. ronald reagan got it to work. here's the key. reagan only had three goal

they remember enormous. but only three. beat the soviet empire, cut taxes and rebuild the spirit of american civic culture so people were proud to be americans. th were 6000 things we doesn't worry about. he wasn't the god of all people. he address worth reading, fro the oval office in january of 1989. people said i made good speeches. reagan fell that and understood that. if obama i suggest he take six months to rest. if we could slow down. to com back to asia and lisbon. leadership isn't proving that you can run a marathon 365 days

a year. but proving what really matters and focus on getting done what really matters. host: ann marie joining from maryland. caller: yes, good morning and thank you, c-span. mr. gingrich. i have had the benefit to visit the library of congress and the virginia historical society, the thing i came away with which i hope you'll bring in regards to your book is how george washington complained about the articles of confederation and how strong he was on correcting some of the problems that we had during our revolution, which then of course, was replaced

with the united states constitution. were referring to how much trouble he had a valley forge. guest: thank you. that's actually a very wise call. since you're on the line, i hope you have visited mt. vernon it has a new education it facility. if you can spare an extra day, it will teach you more about george and martha washington. it's a remarkable facility. but your point is right. one of the places i got a comp placement reser

placement. it doesn't replace it. there are two stages. the first is at valley forge where washington creates the modern american army capable of replacing british power with american power. the second is the constitutional conventi where a gro of very wise people reach a conclusion they have to write a new constitution because of articles of confederation are hopeless. they really define modern america. it's a comment. here we are some 223 years later with the constitution still the governing document of the us. host: dianne joining us from arkansas. caller: hi newt. i think that you are one of the

highest -- have one of the highest intellecting of any politicia politicians. i would love to take one of our history classes. please don't consider running for the presidency. the dems are not going to ease up. you got too much baggage and they don't like intellect. they will probably do you like they did mccain. they-- during the primary, the dems crossed over. i don't know who i want to run. please don't. all right. guest: that's a very wise observation on your part. i think you noted whoever we

nominate. we should be aware the left will assault them. nobody had rather get in the race who's not prepared to have left beingemarkable hostile. i think our nominee is going to be the next president. host: you have talked about your personal life. where should the media draw the line in what's their game? guest: the media won't draw lines. there are hundreds of outlets. you have to assume your life is an open book and people have to render judgment. when i said clearly. there are parts of my lifthat i am not proud of. if you look at the totality of my life and my relationship with my two grandchildren, with my two daughters and son-in-law, if you look at the life calista

have, is getting this country on the right track. a person that has been around a lot or do you want to it try somebody else? only people have to have a summary judgment. i think he can help us or on balance, he can't. i don't particularly want the media to decide. but i'm happy forhe american people to render judgment. host: they begin in 12 years, he has been carefully plotting his return for power and goes through your entire life, political and personal.

guest: harry true man said. if you can't handle the heat, get out of the kitchen. they were attacking martha washington for having high tea. it wasn't appropriate f the president's wife to have high tea. washington was so angry he told jefferson and hamilton he was going to serve one term and give up. they both believed the country needed four more years of washington for stability. they went jointly to him and said. we know you're unhappy. but we're begging you to serve your country for four more years. this is a long american history. people who read "valley forge",

actively undermining him in our war of independence. the political system has always had this. if you want to lead the most power military and economy in the world, you have to be willing to go through this and have people decide who are you? i'm 67 years old. i have done a lot of thing if my life. i think people have to render in the end a summary of judgment who i am. host: one more, will the 2012 race be about religion or the big issueses in the country? host: i think anyone who ends up as a candida will have moments that are uncomfortable. you didn't see it from their

angle. i will give you an example. when i first became speaker. i accepted a $4 million agreement to write a book, then i turn today down. i saw ms. clinton get a bigger contract after leaving washington and becoming a senator. if a conservative did it, you have to worry what is the deal? if you're going to it stay in in process of public life, you have to develop a sense of humor and lax. host: >> good morning. steve and mr. speaker.

steve, if you could forebear. i ve a 2-part question. host: okay. caller: i would like to compare and contrasthe people o valley forge and the american people today. the idea of self sacrifice and liberty in those days is without question. i wonder if we have the fortitude today. one recent poll created 72% of erican people and 62% of tea partiers support social security and medicare and like those problems. the other antidote, alaska, the home of the most independent and tough people, you know, re-elected murkowski, a republican back to the senate in order to maintain hopefully

their need for additional federal government. i just don't s how, you know, today you can compare the two. i don't think we're prepared to make sacrifices today to fight the british. that's oururgeoning debt.cato. we are free. guest: first of all, i get this occasionally. there are two parts. one is not romanticizing the past or being cynical of the

president. washgton crossed the delaware had 2500 troops. out of that 25001 third didn't have boots and marched in burlap bags. there weren't many of them. washington has a fairly small army at valley forge. a lot of people in philadelphia were collaborating with the british. americans were 1 third are freedom, 1 third for the british and 1 third to keep out of it. they were hoic individuals. today, the young men and women on point in afghanistan or somalia. ifou look around the world,

the number of young americans, i was just in iowa talking to people from the iowa national guard. there's 2800 people in afghanistan. many for the second and third tours. we have many courageous americans. you need a leadership which looks you in the eye and tells you the truth. i will give you an example. it's going to be a real national base. the average asian student studies three hours a day. the average american student studies less than one hour. the idea that we're more brilliant that in less than an hour a day we can match someone studying 14 hours a week is crazy. do we want to keep up with our

competito competitors? host: our next call. caller: thank you very much. c-span is probably the closest to any tv station can you get. i'm a graduate from 1980. machine technology. and i give you a little of my history. i'm running a 1951 american energy for a world leading valve control process. bp. but, is there any hopehat we can bring back some real trade? i'm not real sure about my fact. 65% of our country is banking.

16% is healthcare. is there any hope for us skilled tradesmiths? thank you. es that's a great question and something i feel deeply about. i was just talking to the head of national manufacturers. german has the lowest unemployment rate in 18 years. germany has worked very hard at manufacturing successfully and exporting around the world. the highest share of e total economy of any country in the world. the german governmentets up every day to think about how to create german jobs. i think we ought to have 100 % write off for any new equipment so american companies with invest and make sure their workers have the best, most modern equipment in the world. if can you write that off every

year, you would have an increase in new technology and expand the american machine tool and the american technology industry in order to supply that. i am told 5 to $700 billion that would come home. that would create more jobs in the united states. there are a whole series of steps we should take it. as a conscious national goal to be the leading manufacturer in the wod. is that the base of our nation security? we can't maintain the strongest national security if we don't have the strongest economy. what you asked was a terrific question. host: how many people follow you on ttter? >> like a million host: john said.

god bless you newt. anybody that drives democratic accurates nuts is a great american. caller: good morning. mr. speaker, i am an american of cuban ancestry. i have been always interested in history in cuband the united states. i understand the contribution of the ladies of havana were very important at the end of the american revolution. i have been proud of that. it's something that is not commonly studied. can you touch upon that in your book? guest: we're going to go yorktown to t about the final collapse of the british.

i suspect it will be there. let me say, by the way, if you're from miami, we have a conference called the amercano, a center right, hispanic-american website to talk about policies. on our conference on december 2nd and third, the miami symphony is coming up. we are honoring the congress man from your city and prime minister from spain coming. honoring the president of columbia. we have a lot from miami. plus my older daughters lives in biscane. host: we will go to john on o

independent line. >> good morning. how are you? can you describe the star of the beast? what it entails? guest: that goes back to reagan's theory. if you quit paying for the bureaucracy, it will eventually go away. i'm not sure by itself that's good. i have come out with something very different. i believe we have to replace the liberal welfare state. weave to replace the radical centralizi centralizi centralizi centralizing bureaucracies. one of the proposals i made it is -- we spent $134 billion on unemployment composition. paying people to do nothing.

we turn that into a training program. it's $134 billion without increasing the deficit. tie it into training tbe table to go to work. i have talked with major employers and gallup how to do an entirenline assessment capability so people could get the skills. you're not waiting for 99 weeks. but improving your ability to compete in the world market. that would be the scale change we need to think about. we need to go through the whole system and think about those improvements to ve us a more rapidly expanding country. host: host our conference is th newt, and valley forge. heather is joinings from tennessee.

>> good morning. hi mr. newt gingrich. i would like so say, in the 1990's, my grand mother was a huge fan. hover, i'm a democrat. i haven't heard you express anything about the war in iraq. there was no weapons in mass destruction found. i have never heard you comment about matter before. i was wondering what your take is on this? host: vice president biden has a piece on that in the "new york times". guest: first of all. when you joint forces came into iraq after the war, they thought

they should weapon of mass destruction. he said. we were right on the edge. the scientists didn't want to get killed. he wanted the iranians to be fearful of them. it was a very strange situation that history will unravel. obviously, the weapons were not there. when they intervied the iraqis they were surprised. they had all been told they have weapons of mass destruction. the biggest mistake we made was not turning the country over as rapidly as possible to the iraqs. i wrote the paper," operation switch". we want to hire the iraqi army. not the security police.

not the enforcers but the regular iraqi army. we wanted to back out as far as we could. we made a decision that cost us years. we became close to a catastrophic defeat until general petraeus turned it around. there's a lot to learn from the iraq campaign and a significant number of mistaked made. host: twitter saying, this is bary gold water. guest: i'm not sure what they mean. the first big step forward defining the modern movement. it's reagan's speech.

you canou get by ing to the reagan library online. in many ways, 25 years later, when we gives his farewell address. can you watch the original speech and his farewell address. reagan hasn't changed much. in that sense, i probably send on both goldwater and reagan's shoulders. i i am trying to replace the left. most governors are in the same position host: john is joining us from san diego caller: good morning. i wanted to make an observation.

the think the government, specifically our federal government. they try to be everything for everody. it basically ends up being worthless to anyone. i think what we're missing here is in the form of our leadership, senior statesmanship and less political activity. i think the president, unfortunately, as used the office of presidency to forward the agenda. i want to get your comments on the statesmanship part and also the juggling act of the president on his focus, and that should have been jobs, reuniting dc and making it work for the people. establishing a firm foreign policy.

host: thank you. john. guest: there's a lot to that. when we want to the inaugural. i saw speeches in virginia before the election as the winner on election night at grant park, which i think is truly a great speech. and it was a very solid speech. i said on the way out from the capitol. if we will governor from the center like eisenhower. he would split the republican party. force a substantial number of republicans to cooperate with him and be a very formidable president. i think he had that potential. within two weeks, he dided to allow speaker pelosi to write an

entire left-winning budget. witho republican in the room. with the members of congress not thinking what was in the bill. i agree with you. i think second, there's no question in my mind that jobs and paychecks are the key. what we have gotten out the democrats is bureaucracy and food stamps. we are going to send a certificate, what am i doing today to create jobs and paycheck america only works with amicans are working. that will be the number one step we ought to take. number one approach to the public welfare i't giving you unemployment or food stamps.

finding a way for you to find a job so you can be a contributing citizen and not a taker. host: let me conclude. please stop asking newt if we will run for president. i will ask you, i just want to ask you, what y're thinking of as a time line? guest: i think we have a tentative target to run. if we decide. we will aounce in april. i agree with mit romney who said, let's not rush into debates before september. let's not get all involved in tangled up in campaigning for campaigning sake. we have a lot to do as americans and lots of time between now and iowa caucus when really starts

the dance in012. : there's no possibility that i would ever go to a debate and have chris matthews asking

questions. i watched the debate and it was an embarrassment because they were so hostile and so left wing that every question they asked of the republicans was designed to embarrass and divide, and every question they asked the democrats was designed to look good. host: would you do it wit a moderator? guest: with a time keeper. lincoln and douglas debated seven times for three hours and they had a time keeper. that's all they had. and i would feel very comfortable, i'm not saying if -- if we got to that point. people like mitch daniels, sara palin, mike huckabee, governor romney, i would feel very comfortable having an agreement to behave like adults and observe the time, and just figure out what the topics ought to be and actually have a dialogue not a debate. how are we going to solve our country's problems? and i would be glad to do it at the reagan libebri but without

the kind o micky mouse questions asked by hostile news media. >> host: if you're a candidate would you participate? guest: i would see what the terms were. but i would not participate i >> the house is expected to censure congressman rangel. that is because congress has not approved spending for the need fiscal year which started october 1. the senate is also expected to resume work on the food safety measure, and expand food and drug ministration oversight and authority.

from barack obama to george washington, where more about the nation's president online at the c-span of video library. interviews, historical perspectives, and more. searchable and all free. it is washington your way. a senate banking hearing started with the peter diamond becoming part of the their reserve board of governors. the attorney general is leading an investigation into flawed chip foreclosure documents. this is about two hours and 35 minutes. their with patience and adults the various meetings that unfortunate not at the same time to try to schedule him the hearing but you've come

a long way might have friend tom miller from iowa as well as i wanted to make sure we could have the hearing and yet accommodate the interests of all members of the committee so we moved to this time. bob and i and senator shelby will be here at some point shortly. and the idea being that our -- against the democratic caucus this sort of wrapping up, but there is a republic caucus which is going to start in about an hour. and so i'm going to try but i'm going to do is have already made a brief comments, senator shelby will do so a well and ask the witness is if they can to abbreviate their comments even further so if they can accommodate to accommodate the republican colleagues who are here who still have an obligation to get to that caucus in which caisse our own members will be sherman appear so it's a little different than we would normallproceed but i want to

make sure we get all members a chance to be heard and the witnesses come a long way ad for her testimony are going to get a good healthy discussion. on the federal reserve board as my colleagues will recall pheresis per koza nomination under the law we had to be sent back to the white house and resubmitted therefore requiring another vote by the committee even though we've had a hearing and voted on the dimond nomination once before. so when that time comes i will interrupt the hearing to perform that function knowing that a quorum could slip from time to time. with that in mind i woul like to begin. i will make my opening comments and then turn to senator shall be your senator benet, which first year, with whatever thoughts they may have and then return to our witnesses. again i thank all for

partipating. >> the hearing today as you are all aware of the roblems of mortgage serce for modification to foreclosure. obviously received a great deal of attention over the last number of weeks in the media and we thought it was appropriate even in this lame duck session we invite those involved in putting attorneys general represented by tom miller and others including the institutions involved to share their thoughts as to where we are with this matter and give us an opportunity to move forward and obviously as i've prepred to leave tim johnson, richard shelby and other members will pick up this issue involves the traveling out the door and then move to respond to this issue accordingly. i want to thank the witnesses appearing and for their testimony about the problems in mortgage servicing for modification asset to foreclosure. as many of us know or all of us know we've had numerous hearings the problems of the mortgage industry in fact the second

hearing i held as the chairman of this committee and the first week of february, 2007 was on the residential mortgage markets and problems. during that year 2007 we have almost 80 different hearings on the subject matter at one time or another including informal gatherings in this very room with a leading servicing companies in the nation to talk about plans they have to minimize the fallout from the mortgage crisis. it's a subject matter of the last four years the committee spent a great deal of time and attention on. in addition to today's hearing on the intent to have another hearing and i will consult senator shelby about the timing to do this. we are only here for aouple of weeks we have to break on thanksgiving but if we can we want to fit that into in by the regulators to come before us as well to share with us their thoughts on the subject matter. first let me explain what we mean by mortgage servicing people that when a homeowner takes on a mortgage that loan is

often bundled with a pulled similar mortgages and saved in the secondary market as a rtgage-backed security. commonly known as mbs. all processing related to the loan is managed by a mortgage servicing company. the four largest banks, jpmorgan chase, wells fargo, bank of america and city are also the largest mortgage servicers, mortgage servicers bill and collect monthly payments come operate customer service centers, maintain records of payments and balances and distribute payments according to the terms of the trust. principal interest distributed to the invesrs of the mortgage-backed securites through a trustee, taxes and insurance are paid to local government and insurers, servicers retain a servicing fees. it's a brief description of how this is supposed to work. it is the problems that we have arisen with the process that have led me to call the hearing today. hasn't been my habit to call

"the wall street journal" editorials in my committee status by the falling from a column last month captured perfectly the essence of the issues we will eamine today. the column is entitled a foreclosure suit, it starts by saying first we learned america's biggest banks couldn't properly planned. it goes on to say then we learned they couldn't keep themselves solvent without taxpayer assistance, then we learn they couldn't effectively work with troubled borrowers and the bursting housing doubled but now we've learned they don't even know how to foreclose. this is more than just a little paperwork problem. ohio attorney general richard to put it best this is about the private property rights of holders and for closure on the integrity of our court system which cannot enter judgment based on fraudulent evidence, and of quote. this editorial provides a short description in my view of the situation in which millions of americans find themselvs today. whether we are talking about a homeowner facing possible eviction, and investor and nds

or simply an average american family. watching the value of their home dropped as more and more homes went for closure around them. i want to provide a bit more context of a can to today's proceedings. in april, a 2007 after holding a number of hearings on predatory lending as my colleagues will recall and the foreclosure crisis which would leave, to which would lead a tuesday meeting of large mortgage servicers in this very room including regulators come civil rights and consumer groups and others to discuss ways we can prepare for the wave of loan defaults and foreclosures many expected. that summit we held resulted in a statement of principles to which all participants agreed may 2nd 2007 among the items to which the service agreed with the following. early contact and evaluation, modification o create long-term affordability and providing dedicated teams or resources to

achieve the kind of scale many new would be necessary to face the coming tidal wave of foreclosure. unfortunately rather than living up to these commitments many in the industry wasted a lot of time denying the culpability with a mortgage problems or are doing the problems wouldn't be as severe as they turned out to be. as a result we see even today more than two years later a number of points. servicers toeep up with demand, numerous and repeated cases of lost paperwork, ceres allegations by investors including the new york fed, federal reserve and advocates of self dealing some of the largest mortgage servicers in the country. and people needlessly move losing their homes according to some reports people who have no mortgages on their homes all. more than a month ago, the signing scandal of course the press. many in the industry were to put in my view to call the problems tactical alone and to insist that nobody is losing a home to foreclosure without cause.

however the focus of the road cosigning problem is limited in my view pitted many believe that the signing errors are simply the tip of a much larger ieberg and they are emblematic of a deeper problem and the mortgage servicing business. problems that have resulted in homeowners of course losing their homes and unjustifiable foreclosures in fact servicing practices may be putting homeowners at risk. even the industry now acknowledges the current mortgage servicing business model is broken an is not equipped to deal with the current crisis. many observers put out the interest of third party mortgage servicers are not aligned with the interest of the homeowners or investors. so for example a permanent modification might result in a homeowner keeping the family's home and the investor being assured of a better return but the same modification could cause a servicer to lose money. the shot is that there would b extensive problems without the servicing process.

that may have led to in the words of the federal reserve board and i quote her pandora's box of predatory servicing tactics. according to the governor these tactics include adding of fees, strategic misapplication of payments which can sometimes cause the loan to be considered in default which some people call service durbin defaults, and the inappropriate assessment of the insurance which is extremely costly to the homeowner. let me a list others including failure to transfer nd a charge of notes and mortgages become a failure to maintain proper custody of titles, failure to properly and the minister of the home affordable modification program, a failure to meet the requirement of the foreclosure process such as by the use of the signers and failure to establish read mr. the market's trust in accordance with applicable wally or contractual agreements. this hearing will explore these potential problems and the

implications. in addition the congressional oversight panel has raised concerns today that the feeling of services to correctly handle mortgages and documents could create systemic risk for the financial system. the professor will also discuss this in his tesimony this afternoon. it's a very important issue to explore both here today with the regulators of the next hearing. in my view we treated the financial stability oversight council to examine exactly this kind of issue. it needs to really drill down in my view and find out the scope of the problem and determine the steps tat may need tobe taken. if they conclude that their artistic implications in fact let me assure i don't want this hearing to be simply about casting blame. it's extremely important to lee of the problems and chllenges in today's hearing designed to do exactly that. i also hope we can work toward

solutions as we do need to keep in mind that mortgage servicing, that mortgage servicing is far more than a tactical issue. at the same time we must all acknowledge that not all every delinquent borrowers ought to be saved or can be saved. in my view me to strike a balance, we need to be more robust loan modifications including loan modifications the result in real principle forgiveness that will finally help put an end to theousing crisis. the same time i hope wean agree we should expedite foreclosures that cannot be prevented and example a significant portion of homes awaiti for closure are vacant in the country. there's no reason in the world to slow down the process on these homes. we need to put together going forward if we hope to finally put an end to the housing crisis and i look forward to the witnesses and comments and quesons raised by my colleagues.

[inaudible conversations] >> let me do this and if we have the quorum, mr. diamond, the want to -- let me turn to senator shelby. >> thank you. i ask enemas consent my full statement, mr. chairman of the big name be -- be made part of the record. it's to examine the qualifications of the nominee in terms of their technical proficiency as well as the underlying policy philosophy. professor dimond is a skilled economist and it's not axiomatic however that every skilled economist is the best qualified individual to serve on the federal reserve board there are many factors to considered before we can perform any particular nominee professional accolades is just one. but before we even begin to consider the psonal and professional qualifitions of a nominee that the federal reserve we should stand for and must

derminwhether they are eligible to serve. in this particular instance it's come to our attention recently that professor dimond's nomination does not comply with the express language or the implied intent of the wall. according to section 10 of the federal reserve act, and i quote, in selecting the members of the board, not more than one of whom should be seected from any one fedel reserve district. the president shall have regard to a fair representation of the financial agricultural industrial commercial interest and geographical divisions of the country. that's the federal reserve act. that is the law of the land. the requirement across the district and across the sector representation has a rich history stemming from the american tradition of questioning, concentrations of power and since the founding of the federal reserve system the congress recognized the need to protect the interest of the country's diverse economic

regions. such concerns help shape the federal resrve act in geographical balance is required on the board. it appears professor dimond and his nomination papers indicate he is, and i quote from of massachusetts and current board member whose nomination paper also indicated he was of massachusetts cannot serve the same time and comply with section 10 of the federal reserve act. understand that the white house, whoever that may become a stated that professor dimond will be representing the chicago area for purposes. i think we know however that the geographical diversity requirement of the federal reserve act, the law is not an expert facto this occasion. the nominee also according to the law has to be, quote, selected from that district, and

the only one in the white house who matters in ts instance is selected professor dimond from massachusetts and would be the second one from massachusetts. i realize that the committee has reported nominees in the past who should have been disqualified for thesame reason it did have been raised. i'm not aware, however, the committee didn't so knowing that the nominee had virtually no nexus to the relevant district. in this instance, we are all fully awe of the conflict, and i don't believe that we should or can receive of the nomination in the willful violation of the law. we certainly shouldn't. i and a stand that the chairman has recently referred to such an objective as men's decius because the requirement has been disregarded in the past. i don't believe it or your failure to adhere to the law is insufficient basis for ignoring it aga today. therefore i move that the

committee, mr. chairman, disapprove the nominee and inform the president thathe must select a candidate comports with the geographic diversity requirement in the federal reserve law. in fact, he should encourage, we should encourage the president to select individual from know how your kentucky because they lie in the federal reserve districthat has been historically the least representative and would be proper in this case. >> let me respond. and i can appreciate senator shelby's plight on this. we anticipate to thievenas was raised, and so i appriate getting an early warning in the sense this argument may be raised and let me briefly briefly respond to the first regardin section 10. it was not drafted until my colleagues as a residency requirement. the first cause in the sentence of section ten states no more than one member shall be, selected fr anye federal reserve district the remainder of the sentence instruct the

president to, quote, have to regard to the fair representation of the financial agricultural industrial and commercial interest in the geographical divisions of the country and have congress intended to impose the domiciled it could have done so as it did so in other statutes instead instructed the president to seek nominees who could represent a fairly the diversity of geographical and other interests with in this country. second, this reading of the statute is supported by the following explanation of section section 10 from the house report language of the time. quote but the provision, the house report goes on to say the provision that the president in making his selections shall so far as possible so let them in order to present a dierent geographical country has been inserted in ery general language. i'm quoting now in order that while it might not be minute for mandatory it should be the expressed wish of the congress that no undue ponder vince should be allowed to a portion of the nation at the expense of

other portions. the provision however does not bind the president to any slavish recognition of giving geographical sections, and of quote. third, dr. dimond's nomation as consistent with precedent established by both democratic and republican administrations. i have several examples. didn't go back to the history 100 years of the federal reserve but i have one, to commit three, four, five, six, seven examples just going back in the last decade of nominees within disqualify if we had originally applied the language of section 10 which the framers of the language never intended to be the case. obviously in the case of bin bernanke the chairman is designated in the atlanta district also born in augusta roger, his family moved shortly thereafter to south carolina which is in the richmond district educated at harvard, mit, stanford, princeton, nyu and mit. his appointment from the atlanta district is based on its place of birth which the only lived

every briefly. elizabeth duke, again i think my colleagues supported that nomination who was presently there, nominated in 2008. designated inhe philadelphia district of virginia native and a point that she was the vice president of a virginia-based community bank and virginia is located in the richmond district. her connection to philadelphia and appointments in that area as based on the service as an instructor for two weeks sections each year at the stone graduate school in banking. from to those into to the intent from the kansas district court in philadelphia educated to the college and the university of michigan he worked as a financial economist in the kansas city fed from 70 to 75. from '75 he worked in the various positions the federal reserve in washington until his appointment to the governorshi in 2002. his appointment from the district is bsed on his work experience.

2006 to those in a designated born in new york city attended college in boston began teaching at columbia 1983 when he returned after a service on the board in 2008. his appointment based exclusively on his college education and that community. randall, susan, roger ferguson, all of them and if you what i will take the time to read the every single instance it was relatively sort or in significant periods of time in the area for which they were appointed. it goes back to the intended congress and drafting section ten. so with all due respect to think there may be other reasons people don't want to vote for this nominee but on the basis he's not from the district of qualified doesn't seem to be valid. i would point out as well sinc we first met on this nominee and again having been the president of major economic association's, highly regarded as an economist by many people in mainstream economist in many ways i think it's appropriate move forward. it was endorsed by the committee when he first came up and

obviously since then he's been recognized by the nobel committee to think the highest honor of mght disagree but certainly qualifications ought not to be an argument against this nominee. i would urge we vote on the nominee. mr. dimond served on the board and i would ask the clerk to call the roll. [roll call] [roll call]

[roll call] >> the clerk will report. >> the lotus 16 in favor, seven opposed. as i know you have a caucus to go to so we will do this above differently. and i'm going to turn to my

republican colleagues for questions you can get your questions in. >> we like u.s. chairman right now. we are going to miss you. [laughter] thank you. >> thank you, mr. chairman. i will go back to the subject matter now. on october 60 called for an investigation into the growing controversy surrounding the home foreclosures. at this point, they're appeared to be a number of issues senator dodd has raised a lot of them that need to be examined very thoroughly. first, we need to determine the extent of the problem. it appears thousands f so-called robosigners working for banks signed the foreclosure related documents, swearing that they had personal knowledge of the facts of each foreclosure case. it now appears that few if any of these people had such knowledge if this we to it. second, we need to determine whether the flaw in the process led to the and proper results. in other words, were any

homeowners foreclosed upon when they shouldn't have been. i think that is a big issue. third, we need to examine the activities of the law firms that work for the servicers. many questions have been raised regarding the conduct of the firms during their engagement in foreclosure proceedings. for, what role did the gse of larger securitizations play in this debacle? tabare actions contribute to the problem? or or fannie and freddie complicity in any way? finally we need to examine the role of the regulators. where we the in this process? at release appears to be doing and what were they doing and if not, why not? i think these questions have to be asked and answered and to determine the extent of the problem we need to speak with all of the major services. unfortunately, we only have a small subset today.

for example, allied financial was the first major servicer to recognize that it had problems with its process. that firm and among others isn't heretoday. mr. chairman, it's my understanding that many if not all of the law firms under investigation were selected by the housing gse. to best understand how and why the firms were chosen by believe we need to hear from frannie mae and freddie mac. unfortunately, they also didn't make the witness list today. perhaps the most complex you involved securitization. it's highlighted in the congressional oversight panel most recent support the most severe potential fallout from this will be found in the securitization market. according to the report this could have a devastating effect on our broad financial system. on this critical topic, we have

a professor in georgetown university, the iowa attorney general and the ceo. each witness has an important viewpoint to share with the committee but none of them represent the views or perhaps the expertise of the securitized terse. given the complexity of tis issue, perhaps the committee should have invited others and perhaps as the chairman said have another hearing regarding the securities securitization communy to answer our questions. finally, the regulators are also significant players here or should be. each of the major services have regulators on site in their operations. w did those regulators missed the widespread foreclosure problems at the firm's there was supposed to be regulating? that's the question. we could ask them but unfortunately, they, too, are not here today. senator dodd said he was having

another hearing. i expect this to the focus on the foreclosure process. as've already stated and you've mentioned it, too, there's a great deal examined on this topic alone. it appears that this hearing has also become a foreclosure litigation hearing. mortgage modifications is an important topic to be sure it is certainly one that warrants its own hearing. but if we are to examine the issue of foreclosure litigation we should examine the extent to which bar where fraud has distorted the modification process and inflated overall foreclosure numbers. this is a critical issue considering the u.s. taxpayer has spent more than $50 billion on forclosures mitigation programs. we need to know where our mitigation efforts are best directed and where our money is being wasted as a result of fraud. understand there are no witnesses today that can address thtopic of the bar were fraud,

but we should have that. mr. chairman, i call for a full investigation on this matter in early october because i believe that those who face for closure showed at the very least know that the process is being handled fairly and legally according to the law. weigel i believe the we will learn a great deal from this hearing i hope that it does not represent the committee's complete examination of this important issue, and i commend you for saying you will look into it some more. >> thank you very much and obviously this is amatter the will go beyond the time constraints we have over the next couple of weeks in the lame-duck session and i will be watching c-span from hopefully some comfortable spot in january as tim johnson and richard shelby, this whole extensive hearing. bob net will be joining me along with evan bayh. [laughter] and watching you move forward. let me turn first of all to the attorney-general fallujah dewitt

tom, we think a very much and i know you fort on this isue with others. in fact, my new senator from the state of connecticut of course, mr. blumenthal, the last 18 years i know has worked with you on this issue as well as i am anxious to hear what you have to say and we will move right along. i'm not going to the extensive inoduction of all of you. i will put that on the record so your children and family to make sure you were recognized for your contribution to mankind. [laughter] attorney general pete >> thank you, mr. chairman and members of the committee. this hearing m a lot of sense. these are very important issues that have difficult, difficult questions and difficult resolutions, but hour are very important to america. the housing market, the home to individuals, the report to everybody. we have 50 attorney general's working together on this issue. we have more than half the banking regulators working with us. we've developed the last ten years a remarkable working relationship with the bank

regulators. we've gone through three cases together, and we have worked since 2007 on the foreclosure prevention task force. it's a very important relationship and we work together. what the 50 of us and banking regutors are looking at is a series of issues. it was triggered bythe robo signing and let me say we don't do that as a technical issue. it is an affront to state courts signing an oath to produce a judgment of foreclosures and it is a very serious matter. we are following the sort of outline the chairman, senator dodd in terms of looking at other aspects that have appeared in our investigation it we think are important. the include other surfacing issues, the whole issue of the paperwork the income lt and people having to start over and over again not hearing from the services for two or three months. that's an issue. the modification,the decision

concerning modification is an important issue. i think that after three years to servicers, whoever is making the decision on modification, there should be a rhythm, there should be a pattern. they should see patterns developing and quickly people fall within modification are out or marginally. it's more ad hoc we think, and that just hasn't come together. we are concerned about some of the fees that are charged and on assignment issues, those are some that we are looking at. the so-called dual track issue is something that's important as well and by that we mean a person is working on modification and all of a sudden the foreclosure process starts at the same time. it is the enormously frustrating second lignes prieta problem when the banks hold the second volume and also to the servicing there's a dynamic that doesn't work as well as it showed.

we have -- we are talking and working in what the federal people level of cooperation with the federal agencies particularly justice and treasury, like never before i've been around for awhile and worked with a lot of the administration's, democrats and republicans. we've never had a group working relationship is good and this productive as with the this administration. we've opened a dialogue with the investors. we think they are an important part of the solution of this whole problem and have started productive meetings with them. we've had sessions with bank of america, two sessions recently to get they've been roductive to be a we view this as a chance to assault some or much of the problem that has hung on for over three years as senator dodd outlin. it started as a mess in the robo signing. we want to figure out a way that leaves the whole situation much better than when this mess started coming and there is a number of things that we are

working on, trying to make sure that this is never repeated again. that is the simplest and for the basic that there is some redress to consumers are harmed, but then how do we develop a way to change the paradigms in the system so that works and much more productively? because as i said before there is so much at stake for the homeowner, for the investorome for the community and the overall economy. >> thank you very much, general. i appreciate your work an those of your colleagues around the country. barbara desoer -- the bye pronounced correctly? ishe president of the bank of america home loans. she oversees the business ecomy for almost one the five mortgage originations. and if america home loan tet $2 trillion in the serving portfolio that serves 13 million customers dewitt s also manages the bank's home-equity business and insurance service organization. thank you for joining us. >> thank you and a ranking member shall be and of the committee. thanks for the opportunity to

testify. the economic downturn and the sustained high unemployment coupled with the housing market collapse has challenges for more profound than anyone anticipated. important become a more than 86% of bank of america customers are current on their mortgage. unfortunately others are in distress. at foreclosure sales one of three properties are vacant and there are far too many abandoned properties in our comunities the drive down home values in neighborhoods across the country. helping customers remain in their homes wherever possible remains bank of america's number-one priority as evidenced by were over 700,000 completed loan modifications. we reached the crossroads in to the modification efforts and reality of the foreclosure. despite our best efforts on the numerous programs, for some customers for closure is unavoidable. that is an increase in the

concerns that y and we are hearing from our customers. it's our responsibility to be fair and treat customers with respect as they transition to alternative housing. we have an obligation to do our best to protect the integrity of the proceedings of for clochard and when that hasn't happened we accept responsibility for it and we deeply regret it. we are the only service and who stopped the sales nationwide to review our procedures. we know the concerns are not just technical issues. we have confirmed the basis for the forclosure decision has been correct and accurate but we didn't find a perfect process and are already moving forward with the needed improvements. as a servcer we have responsibility to follow the guidelines established by our investors leading to modifications and other foreclosure aternatives. where we can't asktomprove the process alone we have and

will continue to innovate. we also need to work with others and we are committed to further improvements first to improve the communications with our customers. a frequent source of customer frustration is they can't deal with the same person to times during the process was alone three or four. we agree to freeze on the of success in process to offer a single point of contact to the customers and be of more than 140,000 customers who are experiencing this today. we are in discussions with key stakeholders lik the state attorney general to determine how that approach can e expanded. second, we need to provide greater liquidity to customers who are going through the process. and attorney general miller reference the parallel foreclosure do von trapp process of modification and for closure. we want to partner with you and other stakeholders to find a way to eliminate that track to improve the understanding of

where a customer is in the process. third we are making and profsed to the foreclosure process. we determined during our ongoing review our process for preparing affidavits of indebtedness and the judicial f closure state did not conform to best practices in some cases to date we've introduced an affidavit rm, we've added additional quality controls and are implementing new procedures for selecting and monitoring the performance of outside counsel. we are carefully restarting the affidavit process with these and other patrols in place our commitment is to ensure that no mistaking into a sale unless our customers get a fair opportunity to be evaluated for all of the programs that exist under modifications or ashort sale or solution to it for closure is of last resort. thank you. >> thank you very much. appreciate.

mr. arnold is the president and ceo of the subsidiary mortgage electronic verification. it's created by the mortgage industry president as a central electronic register with the help of streamlining the mortgage process by eliminating the need to prepare and record keeper assignments of mortgages. it's not registered as more than half the mortgage loans originated in the united states. mr. arnold has been there since the inception in 1996. thank you for joining us. >> chairman dodd, ranking members of the committee, i appreciate the opportunity to be here today. if it's all right with you, mr. chairman, i would submit my remarks for the record. >> to all of you by the way any documentation you want to add to your testimony we will include as part of the record so consider that done. >> thank you. i'm ready for your questions. >> that was the testimony. [laughter] stomach makes me want to do the

same. professor levitin -- is that correct? levitin. thank you for joining. mr. levitin is associate professor georgetown specializing in bankruptcy, commercial law, financl regulations, he's done extensive research in the role of financial institutions and business transactions inluding mortgage finance payment systems and bankruptcy organizations also served as the special counsel of the congressional oversight panel and is currently a fellow at the center of what we george washington university. thank you for joining. >> i hope i can keep my comments as brief as mr. arnold. i'm re to testify with academic and not on behalf of the congressional oversight panel. the mortgage world has been run by issues the discovery that meter believe the major mortgage servicers have faulty fraudulent affidavit case is the emergence of concern over securitization chain of title and mortgage backed securities investor