mrs. obama were in attendance as was vice president biden. this was 10 minutes. >> ladies and gentlemen, the vice president of the united states accompanied by susan redick and family and joshua redman. [applause] >> ladies and gentlemen, the president of the united states and mrs. michelle obama. [applause]

>> this is a good-looking group right here. good evening, everybody. welcome to the white house. i want to thank all of you for joining us in celebrating thele second night of hanukkah. happy kahn came, everybody. [applause] >> we are joined tonight by the ambassador of israel. where is he? he is way back there. i want to begin by offering our deepest condolences to the families and loved ones of all of those who have died as a result of the terrible forest fire in northern israel.

the united states is helping to respond to the disaster. we have issued a disaster decoration that has launched something across the united states to identify the firefighters we have. our thoughts are with everybody in israel who is affected by this tragedy? and the family and loved ones of those in harm's way. tonight it an honor to welcome so many friends and leaders from the jewish community and beyond. i want to welcome george mitchell, please give him a

one-third of the supreme court here. justice ginsberg is hiding out. is here. [applause] one of my favorites, justice ginsburg, is hiding out here in the front. it's hard to see. together, elena kagan is in the house. [applause] i want to also acknowledge

somebody who i rely on day in, day out, who is not only a great vice president, but is also -- one of my dearest friends; joe biden is in the house. [applause] and to all the members of the administration, and members of congress, and all the state and local leaders who are with us today, welcome. i want to thank joshua redman for gracing us with his talent and helping us with the music. [applause] and finally, i want to thank the rabbis and lay leaders who have traveled from all over the country to be here. yes, you can give yourselves a round of applause. [applause] now, tonight, we gather to celebrate a story as simple as it is timeless. it's a story of ancient israel,

suffering under the yoke of empire, where jews were forbidden to practice their religion openly, and the holy temple -- including the holy of holies -- had been desecrated. it was then that a small band of believers, led by judah maccabee, rose up to take back their city and free their people. and when the maccabees entered the temple, the oil that should have lasted for a single night ended up burning for eight. that miracle gave hope to all those who had been struggling in despair. and in the 2,000 years since, in every corner of the world, the tiny candles of hanukkah have reminded us of the importance of faith and perseverance. they have illuminated a path for us when the way forward was shrouded in darkness. and as we prepare to light another candle on the menorah,

let us remember the sacrifices that others have made so that we may all be free. let us pray for the members of our military who guard that freedom every day, and who may be spending this holiday far away from home. let us also think of those for whom these candles represent not just a triumph of the past, but also hope for the future -- the men, women and children of all faiths who still suffer under tyranny and oppression. that's why families everywhere are taught to place the menorah in public view, so the entire world can see its light. because, as the talmud teaches

us, "so long as a person still has life, they should never abandon faith." now, the menorah we're using tonight, and the family who -- who is going to help us light it, both stand as powerful symbols of that faith. this beautiful menorah has been generously loaned to us by congregation beth israel in new orleans. [applause] five years ago, when hurricane katrina hit, the synagogue was covered in eight feet of water. later, as the cleanup crew dug through the rubble, they discovered this menorah, caked in dirt and mold. and today it stands as a reminder of the tragedy and a source of inspiration for the future. and that feeling is shared by susan retik. it's a feeling they know all too well. after her husband, david, was killed on september 11th, susan could have easily lost herself in feelings of hopelessness and grief. but instead, she turned her personal loss into a humanitarian mission -- co- founding "beyond the 11th," a group that reaches out to afghan widows facing their own struggles. so on this second night of hanukkah, let us give thanks to the blessings that all of us enjoy. let us be mindful of those who need our prayers. and let us draw strength from the words of a great philosopher, who said that a miracle is "a confirmation of

what is possible." and now i'd like to turn it over to susan, who by the way has been on this stage before, receiving a presidential award for her outstanding work. but she happens to be joined by a beautiful family -- donald, ben, molly, dina and rebecca. [laughter] rebecca is down here. so i want to turn -- there she is. yes, she is adorable. [laughter] as michelle -- [laughter] as michelle said as we were getting on stage, she will be stealing the show. [laughter] so we're going to turn it over to susan and her family for the blessings. >> so happy hanukkah to all of ♪

♪ >> blessed are you, lord our god, you're more of our universe that has commanded us to kindle the hanukkah light. blessed are you, our god, rule of the universe who performed miracles for our forefathers in those days at this time.

♪ ♪

[applause] >> so, happy hanukkah to all of be patient in the line. [laughter] and i just want to let everybody picture. [laughter] happy hanukkah, everybody. [applause]

>> next, a report of the personal finances of members of congress. then, an fcc meeting on the rules and after that, a senate banking committee on mortgage programs. >> visit our sea spans for four months, umbrellas and more. it is all available online.

>> i am the education program specialist here at c-span class ring. each year, the competition asks students grades 6 through 12 to make a video about issues affecting our nation. we chose this topic because we wanted to explain how the federal government has affected an issue in your life. select a topic that issue issue. the goal is, fully develop and research for topic, provide different points of view and include c-span footage in a five-eight minute documentary. can visit our website for more information. the country to see where you can do. >> now, a discussion on the

personal finances and investments of members of congress. from today's washington journal, this is 40 minutes. cspanradio.org. host: we want to welcome dave levinthal, the editor of the opensecrets block. good morning. thank you for being with us. we want to talk about money and politics. the headline this morning in "the washington post," 72 spending almost $84 million. a lot of the numbers come from your organization. can you explain? guest: it is a new breed of political entity that is from the aftermath of a few key court decisions which allows these organizations to raise unlimited sums of money and then spend unlimited terms of money on political advertisements. these are electioneering communications. they ended up spending together

about potentially $400 million in the outside money that was funneled into various congressional races all across the country. host: 1 issue the president brought forth was cut -- was disclosure of the funds. guest: there are some organizations were disclosure is part and parcel of their operations yet there are other organizations specifically nonprofits that, theoretically, are not supposed to have a primary purpose in playing politics yet they are engaged in politics to a very, very high level and do not have to disclose their donors. at the end of the day, we really do not know who necessarily is behind political efforts of various groups both of the left and right. host: looking ahead to 2012, kathleen kennedy is now heading up what she hopes will be an equivalent of what the american crossroads has done in this midterm election for the republicans. what will they see in 2012?

guest: conservative organizations were on the uptick. they are using new tools given to them by the federal government by the supreme court, of course. they did a fantastic job in being able to affect congressional races across the country. the democrats were having a little bit of remorse that they had some part -- in some parts have not played the game as well. if nothing changes for 2012, if the game is the same in 2010 midterm elections, you could potentially have democratic organizations and left-leaning organizations pouring in late tens of millions of dollars in the political process layer on top of the congressional elections. host: you spend time going to the numbers and looking at how much members of congress are worth. why does it matter? why should we care how much a

member of congress is worth? 1% of all americans are millionaires. in congress, it hovers between 40%-50%, meaning elected leaders generally need not worry about the economic pressures that many americans face." guest: you have a congress that elect the people -- that were elected by the people to represent them, but they are necessarily representative of the welfare of americans. they are not necessarily representative of the painful realities many americans are facing weather is joblessness, trying to make ends meet. we have a situation where many members of congress, in fact almost half of them, who have an estimated average wealth hovering right around $1 million. a lot of americans would love to have town thousand dollars to their name or $1,000 to their name. there is a disconnected in people's minds as to the wealth of congress and the prosperity

of the average american. host: leading the list in the house of representatives, the top two are republican darrell issa and representative jane harman. further down on the list is representative jared polis who is worth over $160 million. rep the canon is worth about $148 billion. and rep mccaul of texas is worth $137 million. guest: that is some big, big money. they cannot realize some members of congress are that worthy -- are that wealthy. people are just interested in, "well, how wealthy are these people? what does this mean to the"? then you have the other end of it which is the group practical

land. what are they invested in? constitutes their personal wealth? there are many situations where members of congress are invested in the very companies that are coming before congress to ask for favorable legislation or to beat back other types of legislation that have lobbied the government to the tune of tens of millions of dollars. goldman sachs should be a good one and certainly bp would be another. dozens of lawmakers a personal investments in or at least did it to 2009 who are coming before congress and are truly in the cross hairs of congress and the public consciousness. these are companies that have gone wrong in the opinions of many americans yet as we sit next to the capital here, they're coming to washington,

d.c., and lobbying and try gas the government to get out of a sticky situation. you can talk about all the different banks, bank of america, citigroup, they were very much in the mix when tarp was in play in 2008-2009. there is an interconnection, a very nebulous world where you have people who are making laws, companies try to get favorable legislation, yet you have those very lawmakers responsible for crafting that legislation investing in the very companies coming before them. host: among the wealthiest members of the senate from 2009, senator john kerry of massachusetts who is married into the heinz fortune. senator mark warner is worth

$174 million. senator kohl from kohl's department store. senator rockefeller is worth just under $100 million. then senator feinstein, an estimated worth the $77 million. guest: this fix to the diversity of investments in which the members of congress are involved in. he had everything from basketball teams, retail stores, real estate holdings, on stocks , and a run-of-the-mill pedestrian bonds and mutual funds. it definitely does range from a-z in investments. we see a lot of blue chip companies, companies that do have the names of everyone would recognize whether it be coca- cola, pepsi, apple, microsoft, all the way down the list that

in appearing on the most popular investment list that we have created for a lawmaker investments. guest: in the media, they took in $30 million in debt purchasing. let's look at some of the poorest members of the house starting with a representative solis from louisiana. -- rep. scalise. guest: there are exceptions to the rule. there are members of congress that are being recorded as millionaires and there are a few that are not doing well. host: these are all in the negative. they have no net worth? guest: that appears to be the case. let me explain the procedure. when lawmakers file these annual personal financial disclosure reports, they are not giving specific values for the investments that they make.

by law, all they have to do is give a range. for example, it could be $1,001- $5,000. there is a lot of wiggle room. . have an investment that is worth just more than $1 million, but potentially all we can tell that it could be worth anywhere between $1,000,000.5000000 dollars. the bottom line with that -- between $1-$5 million. conversely if you have members with a lot of liability, they also have to record that in these reports. there is a very broad range to how much they may be in debt. as it applies to those people who are definitely in the red, you can tell from their disclosure reports, even when you calculate the minimum and maximum net worth of a particular member of congress,

the ones you have just mentioned, both the minimum and maximum range, they added to be in the negative range. host: among the poorest of the u.s. senate, senator johnson followed by senator chuck schumer. both worth an estimated $700,000. senator lugar worth $670,000 followed by senator wicker and senator kyl. guest: you have said -- a congressman in the house and senate that will fall outside the norm for members of congress. there is an exception to every rule. what may be the case for most members and be the case for, certainly, the wealthiest members coming you have some people who come from more modest means who have not had the business success that some members of congress have had. host: you can check out his blog @ opensecrets.org.

they check money and politics. he also works for "the dallas morning news" and "the eagle tribune." from akron, ohio, good morning. caller: i would like to think c- span for bringing us news. i but to talk about citizens united. these die-hard republicans know nothing about citizens united, and nothing about reconciliation. from i understand it, we had a contract where we had george bush not veto anything for six years. the first thing he vetoed was a health care for children. now we have republican house, a republican senate, republican committees, a republican president and now have a republican supreme court. as they were leaving, they do citizens united which is unlimited campaign contributions for companies. you, as a citizen, economic and $2,400 but they can give $24 million and not show. i have watched these letters of

disclosure on c-span and i can- someone as long as i say not to vote for them. i can hide behind any kind of name i take. something is wrong here. they elected that supreme court for christian ethics and morals and what do they do? they do the citizens united case. people need to look at what is important. the rich protect the rich and are putting in the laws that the american people have no idea what citizens united is. they have no idea what reconciliation is. they are ignorant. i cannot believe it. i have friends that cannot stand obama. they blame everything on obama. the democrats for the richest nation in two years. i just sit there in awe. thank you for c-span. i will listen to your comments. guest: it is important to note what citizens united actually

did. first, what it did not do. corporations, trade unions, trade associations still cannot write a check and simply give it to a politician and say, "here is $1 million and go do what ever you will do." what they can do is take that $1 million, $10 million, and the dollar amount that they want and spend the money to independently advocate for or against a politician. that is a major change from what we had prior to the citizens united supreme court decision earlier this year. this type of activity, prior to that decision, was illegal. if you are exxonmobil, service employees international union, the u.s. chamber of commerce, you can go ahead on television, the radio, spend as much money as you want and raise this from as many people as you want or as many corporate treasurers, union

treasuries, and try to tear down or promote any political candidate who is running in the federal election, state election, or local election. again, you cannot just go ahead and give the money directly to a politician. as we have seen, we saw hundreds of millions of dollars just in this election cycle alone to absent the presidential election, with these outside organizations be it a corporation or, in most cases, organizations never trade unions, trade associations, non- profit organizations, taking in this money. you did not know who the source of the donor was and still do not. if your house you can make the communication, promote this candid, tear a candid it down, promote or tear down a candidate.

host: we showed some of the poorest members of the senate. senator record is it worth about $660,000. one of our twitter followers says, "forced member of the senate with $600,000? where does that put them with respect to the general population"? guest: a good point. even when you look at the "poorest" members of the senate, they are not for with respect to the americans. i do not know the original of americans "-- relative to the senate, but we are looking at five figures relative to the mid to high six figures. host: the leventhal from opensecrets.org. caller: the biggest cost to the american people are the senators and congressman. we are paying them on god the

amounts of money. they get in trouble, then we paid to take care of them. they want to cut my benefits. i do not understand it. our biggest cost is them. if i did my job like they do their job, i would be fired. i do not understand it. every time i expressed my opinion, i am red flag at the va. host: we will not red flag you. thank you for calling in. guest: every american with the ability to vote has the ability to hire and fire any member of congress that they want to. it is more frequent for members of the house than it is in the senate, two years versus six years, four years for the president. this is why we have the election process that we do. we feel it is critical that people educate themselves to become an informed voter, do their homework, be their own best reporter, and he is

websites such as opensecrets or the myriad of other organizations that do a lot of great work and figure out whether they really, really like what they are getting out of their member of congress who they have sent to represent them. if you do not like it, do not like the person, do not like the actions they take, not happy with the personal investments they make, take this information into account when you go into the ballot booth. use that power and knowledge that you had and take action. host: 1% of americans are millionaires and between average 40%-50% of the u.s. house and senate consists of millionaires. a call from the bahamas. caller: for example, i am not a big fan the congress being multimillionaire's. there have been bought and sold by the lobbyists even before they get there.

they have all of these perks, trips. my question is about a representative from san diego, darrell issa. he was a navy officer. he was much more wealthy before he is now. he was close to $1 billion. he went into public service, but he did not get wealthy before going to the congress. you may want to clarify that. host: darrell issa leads the list. his work is over $300 million. guest: we track this for that very reason. the wealth of the members of congress does fluctuate a good bit. between 2007-2008, it did it.

the average net worth for the members of congress to about 5% hit which was right in the middle of the economy going sour and the economics in this country going south. yet, they recovered pretty quickly from members of congress when we saw 2008 to 2009 and the average wealth went up by 15%. and was a very, very different situation just one year to another. while many americans were struggling and it joblessness was hovering between 9%-10%, the average wealth of members of congress was going up. whether it was darrell issa or others, they are still very rich when it comes to the upper crust, but they do definitely take kids or boosts depending on how their investments do. host: looking at the senate, senator kerry who married into

his wealth, senator mark warner who made his money before running for governor of virginia and is now in the senate, senator kohl who is part of the calls department store family, senator rockefeller inherited his wealth. how much of this is before they sought public office and how much is made while in office? guest: many members of congress before elected come in very wealthy. they made their money in business. they made their money in investments. they are coming in as millionaires, multimillionaire's, and in a couple of cases millionaires that had their wealth ranging in nine figures. that does not preclude them from keeping investments in place once they get into congress. while most of them come in relatively wealthy, congressional salaries, while generous, was not earning millions of dollars in and of themselves. members of congress are definitely keeping the irons in

the hot fires that they are in and are generating big, big dollars for them which is why you see the fluctuations, why you see lawmakers who are already very wealthy continuing to get wealthy, getting richer, and richer, and richer. host: from tuscaloosa, alabama, you are next. caller: good morning. i've been like to point out that it is extremely expensive to run for congress. it is no wonder the people who get elected are rich. they could not get elected if they were not. i want to bring out its background question. is not it the dirty little secret of government that most federal income taxes are paid by the rich? if there is only a small number of rich people, then most of the money coming in through the federal income tax is coming from that small number of rich

people. dirty little secret of government that they have to encourage rich people to make more money, they have to support it to make possible for richer people to become richer because it is where their money is coming from taxes? if we discourage people from becoming a rich, there will be less money coming in to the federal government. it seems to me like a basic principle that no one ever points out. host: thank you, nancy. did you have a final point? caller: no. host: thank you for the call. guest: certainly if you are welcome to you will pay more taxes whether you are in congress for private business. if you make millions of dollars, you will pay more in taxes than a person who has a modest salary.

to the caller's first point that she initially made, as a site now, she mentioned that it is very expensive to actually run a campaign. that is very true. the average winner of a u.s. house race in 2008, and we are still calculating the numbers for 2010, was about $1.4 million. it was about 8.5 bunyan dollars on the senate side. absolutely it takes -- it was $8.5 million on the senate side. absolutely it takes a lot of money. one phenomenon we have seen across the years that has played out in grand fashion during this election cycle was when the infinitely wealthy spend millions of dollars on their rahm campaigns, they actually do very poorly. these self funded candidates, the linda macmahons and other people who spend seven figures on their own congressional races

out of their own pocket, only about one in five, at least at the federal level, actually won. yes, money is an essential element to winning a congressional campaign, but you have to consider the source of the money. yet to consider the type of the money. all types of money are certainly not created equal which is particularly the case when you look at self funded candidates who do not generally do very well. host: you can join the conversation on line at twitter. over 40% of congress are millionaires. this is not a representative government. guest: a lot of people have made that point that it is not a representative government. 40%-50% millionaires in congress year in and year out and only 1% or less of americans are saying the same thing about themselves? there is definitely a gap. there is a disconnected.

you can say that is a good thing, a bad thing, we make no judgment on it one way or another, but we think it is important that people do realize that. if you are upset, great. do something about it. host: we are talking about money, politics, and the gulf of members of congress. from harrison, mich., with dave levinthal of opensecrets.org. caller: by may 70-year-old senior citizen that is having problems to survive. the more i watch the news, the more i cried. host: can you turn the television set volume down? caller: turn it off, john. anyways, i am trying to survive in harrison, michigan. my point is that this country is planting so many trees that no one can see the forest

anymore. what is burning me up now on the inside, and i believe i am right, is this trip to afghanistan, again, with the president. he has done this twice and it is no more than a campaign for the 2012 election. is burning me up inside. i believe i am right. i believe is a political ploy that the taxpayers pay for. god bless me if i am wrong. host: you can turn the television back up and dave leventhal will answer your point. guest: with the look of a president's whether it is a barack obama, george w. bush, bill clinton, go back to dwight eisenhower if you want to. presidents have always traveled. they always crisscross the country and in the more recent years have gone on across the world. george w. bush made a lot of trips to afghanistan, iraq, and the war efforts going on. barack obama has done the same. this is not something that is

unique to a republican or a democrat. they have all done it. he is the president of the united states. george w. bush was the president of united states and there are certain travel requirements that are going to happen as a result of being the most powerful leader in the world. i do not know if it is anything that is particularly new or different given that it is barack obama, george w. bush, or any other chief executive. host: another look at the richest members of the senate. from the grove, aloi, an airline for republicans. -- elkgrove, ill. caller: i called on the republican line but i am a liberal conservative. i want to make a comment on the figures you are putting up there about the network. previous callers had made a good point it is important how they made their money, inherited it, worked for it.

even if you inherit it, your family still worked for it. in more poignant figure would be to measure the net worth of of political leaders before they got into political office compared to what they're worth the now because if you look at a lot of poor countries, south america for example, they fear people to get into politics when they are for -- poor because they rate the country for as much as they can. and more poignant figure would be to the difference between -- to note what they are worse before in the congress and after. guest: a very good point, and we have a limited ability to demonstrate that. you can extrapolate with the more wealthy people who have come to congress. when you do get into congress and are a candidate for congress, you do have to file these mandatory federally

mandated reports on an annual basis that require you to list certain aspects of your wealth and a detailed them in these ranges that are provided in these reports. q. do not have an analogy for that when you are just simply a private citizen. the access to that type of information, you would not get the same type from people who have not been elected to congress or are not running for congress. certainly we would love to see and make that comparison because it would be very, very interesting. the caller, in addition to a number people, would definitely like to see it, but it would be difficult to do any practical sense because you do not have the type of reporting for the average american whereas you do for members of congress. host: "i contributed quite a few small amounts between $5.20 dollars. one wonders if you should bother." guest: if you make a $10

donation, a $50 donation, will that compete with the people making the $1,000, $2,000, matching at $2,400 for a particular candidate for an election cycle? some people say now. on the other hand, you see some candidates he had a great deal of success raising the bulk of their money from people we consider to be smaller downers, making those incremental $10, $15 from $20 contributions. some candidates have had a great amount of success as a result of people making those donations. is $10 at the end of the day really going to make a difference? probably not, but when you couple $10 here and there all across the district or state, or all across the country, then you do have power. it is just like voting. one vote will not turn a race on its head, but when you get

tomorrow, a political roundtable with political strategist maps mckoviak on the politics of the one under 12 congress. grover norquist, president of the american for tax reform talks about a proposal and extending the bush era tax cuts. sharry discusses the dream act, which would give individuals who were brought to the u.s. as children and who successfully complete high school and opportunity towards citizenship. washington journal, live at 70 a eastern on c-span. >> next, an fcc meeting on the rules for meeting spectrum for broadcasters. then, a program on mortgage programs and later, live at 7:00

a.m., your calls and comments on "washington journal." >> if i had to put my money on the outcome, it would be that peace in iraq, and it might be a very harsh peace, is ultimately going to be, once again a dictatorship. if that does happen, the new ruler, the new dictator, will be a lot more benign than was saddam hussein. >> john burns, a two-time pulitzer prize winner and a correspondent for the new york times on the future of iraq. sunday night on c-span's 2 n/a. >> find great holiday gifts for the c-span and in your life at our sea expand store from books, two tvs, and more. it is all available on line. >> on tuesday, the chairman of the fcc warned that the growth

of wireless phones is outpacing infrastructure and americans could face a spectrum crunch. at this recent public meeting in washington d.c., regulators voted 5-0 to start writing the rules for reclaiming spectrum from broadcasters. the vote was the first step in implementing the national broadband plan. this is about one hour 50 minutes. >> welcome to the meeting of the federal communications committee. madam secretary, would you introduce our agenda? >> good morning to you. today's agenda includes three items we are -- for your consideration. these proposals are an important step as outlined in the national

broadband plan and will take steps to enable broadband used currently reserved for use by tv broadcasters, including innovation such as channel sharing. second, you will consider a notice of proposal seeking comment on steps to promote innovation and efficiency in spectrum use underpart of -- park five -- under part 5. you also promote more intensive and efficient use of the radio spectrum, potentially enabling more effective spectrum management through dynamic use of this time of -- this technology. he will present an overview of the 21st century communications and video accessibility act and the commission's implementation plans and demonstrate accessibility technologies. this is your agenda for today.

all three items will be presented by the office of engineering. julia snapp with the introduction. >> congratulations on your hat trick. >> good morning. we will be presenting three items for consideration today. each will consist of spectrum goals and boost the economy and jobs. the first item is the notice of proposed ruling that would lay the groundwork for improving efficiencies in the spectrum currently used for tv broadcasting to make more spectrum available for what looks -- for wireless broadcast. the chief of the bureau along with the associate chief of the bureau and the chief of the video division. the item will be presented by

allen still well, but before turning the floor over, i would like to extend my thanks to the people who have worked on this item. from the wireless telecommunications bureau, several individuals, the office of general counsel. allen will present the item. >> good morning mr. chairman and commissioners. the notice of proposed rulemaking before you will initiate a process to further the commission's going commitment to broadband services and to spur innovation in wireless broadband systems and ensure that america leads the global wireless revolution. the notice would take

preliminary steps toward making additional spectrum available for wireless broadband from a portion of the spectrum that is currently used for broadcast television. at the same time, the notice recognizes the important benefits served by broadcast television and takes an approach that will help preserve that service as a healthy, viable medium. the notice proposes three actions that are intended to set the underlining framework to, that -- to accommodate. it would also provide new options for broadcasters. first, the notice proposes to add new allocations for fixed and land mobile services and the tv bands to be primary with the existing broadcast allocation in those bands. this proposal would make all of the spectrum in the tv dance available for fixed mobile and broadcast use and thereby provide the maximum flexibility

for the planning efforts, including the possibility of auctioning a portion of the spectrum for new broadband services in the future. this notice proposals to establish a framework of rules to allow two or more television stations to share a single channel. that is to operate from the same transmission facilities on the same channel, thereby freeing up one or more of the original channels for use by wireless broadband services. under this framework, stations entering into channel sharing arrangements would retain their rights. the proposed sharing rules will not increase or decrease the rights of any broadcaster on any type of multiple video distribution system. finally, the notice proposes to create value for television viewers and broadcasters by increasing the utility of the

uhf vans for the operation of television services. bands for the operation of television services. this is subject to avoidance of interference of other services and to establish minimum performance standards for indoor antennas. these actions will lay the groundwork for the goals set in the national broadband plan to make available up to 120 mhz on the broadcast television vans for new wireless broadband services. it would pave the way for future actions. this would include wireless broadbent operators. the staff recommends adopting this item and requests editorial privileges. thank you. >> thank you.

we will hear comments from the bench. commissioner? >> thank you mr. chairman. i approach this with cautious optimism. i agree that we need to act in a strong, forward-looking manner to realize the tremendous promise of wireless broadband. there are a number of ways to help accomplish this. we will do this very creatively. i think of this as contingency planning and that applies to the concept. we do not know where the legislative action or economic conditions will allow for implementation of the full range of spectrum recommendations put forth in the national broadband plan, but we do know that we

need to be smarter about the spectrum utilization and that we need to maximize spectrum performance so that it may better serve the many communications needs of the american people. i am vitally interested in the future of broadcasting. at the outset, i commend the recognition that over the air television is a freedom for the american citizens. we have worked hard to turn this value into a reality. i believe in the power of broadcasting. this is not only to survive, but to thrive if they will but recognize their strengths bring to them. not nearly enough broadcasters have pursued this spirit is no secret that i have been disappointed that so much of the

spectrum accrued to broadcasters coast dramatically underutilized. i am not interested in pushing broadcasters somewhere else or in discouraging their enhanced public interest stewardship of the airways. i speak only for myself and saying that had the spectrum been put to such positive views as i have discussed, i would have will interest in contemplating other uses of it. but here we are, trying to define how scarce and underutilized the spectrum can serve. when this comes our way, maybe more broadcasters would see the wisdom of harvesting greater public benefits from the spectrum they are licensed to use. one of the greatest challenges facing us as we were to identify spectrum for wireless broadband and other uses is to make sure that we have a

comprehensive understanding of the current spectrum landscape. surely, our future success will depend on an understanding of our current allocations and assignments, but also its actual use. that is why i am glad we continue to make progress on our spectrum the dashboard. i know from my experience during the digital tv transition that major changes in spectrum use can raise many issues. consumers generally do not concern themselves much about spectrum allocation, nor should they have to, but they have to invade turn on a smart phone that works. we begin a balancing act to meet the requirements of today and tomorrow. i am pleased that we have some difficult questions in this notice.

when need to know the technical implications for broadcasters and viewers and how any changes would affect over the air broadcasting a. we also examine ways to improve tv reception. this will not be easy, believe me. we looked everywhere we could, under every rock and around every corner during the de-tv transition. let's hope that the months ahead lead us to some genuine innovation. we seem to have a consensus of some -- that some spectrum will be required. without additional spectrum, wireless consumers could face degraded service for higher prices. this concerns me. without other safeguards, auctioning off massive amounts of spectrum to wireless providers may not necessarily result in more consumer friendly pricing or service. additional spectrum is to be an

important part of the wireless solution. the whole solution is not and i suppose that is the difference between physical spectrum and spectrum policy. this is a good and necessary item. we are asking questions that need to be answered and if there are questions that are not asked, i hope that they will be answered anyhow. thank you to the team at the office of engineering and technology for the thorough job that they did on a very complicated item. their work continues to amaze me and thank you for all those that cooperated in bringing this to us. thank you. >> thank you very much. >> with this notice, we have launched one key initiative in the larger, ongoing quest to make the most of our resources. the issue of future uses within the television broadcasting ban is part of our overall issue,

but it may be the most prominent one. as we go forward, i will remain mindful of the significant public interest that broadcasters be delivered. we need to ensure that any new rules to allow more must be met with viable opportunities to experiment with their own mix of wireless services.

[inaudible conversations] >> all right. we're going to get started. all right, paul. >> re: the first ave. doublet today, as you know, it talks about a voluntary reallocation. they're still been a lot of

skepticism amongst some broadcasters about whether this will work in practice, whether the technology will allow it. can you address their continued skepticism over this plan? >> well, the incentive options, voluntary incentive options are very important for the reasons i talked about a meeting today. we're facing a real spectrum crunch. you've heard me in the past talk about the numbers, the gap between the supply of spectrum we have coming online. about two and a half we have now as against the demand increase that we project over the next five years, 35 acts. and i feel very strongly that the incentive option idea is a very important policy innovation , that is essential to bring market forces to the use of broadcast back to rome, to free up spectrum, gives broadcasters option analogy, as you said. and i'm very pleased that we

started the preceding today to lay the groundwork for incentive options, which i hope congress will address in the near future. >> we have takers in the market -- the large market where you'll need spectrum for wireless broadband? >> well, i believe we would. i think that is the beauty of bringing market forces into the use of the spectrum. we'll add market forces, helped decide how to make sure that spectrum is used in the most efficient way in the future, how it is put to its highest and best use for our country, especially in an area of mobile broadband has failed to our global >> hi, chairman. paul gallant, dna. regarding the same id. the steps the sec proposes to take would presumably open the door to the scene. assuming there is a delay on the

hill, would a leasing framework be amenable at all as a plan b? >> work, two points. one is in general, spectrum flexibility smart policy. but there is something that is important in thinking about the product and spectra and the historical way in which it was allocated as against the direction that spectrum allocations have gone. and what is important to unlock the value of spectrum for the future. the broadcast spectrum originally was allocated in six megahertz chunks, like a checkerboard across the country with steps between a period where we hope to do as part of an incentive process is recover up to 120 megahertz spectrum and then work to reconfigure the

broadcast spectrum so we can free up significant continuous blocks of spectrum, which is what is most needed by mobile broadband, by current and next-generation for gtech elegies. so leasing, in general, before spectrum possibilities that would consider all options to conceive spectrum possibilities, but it doesn't come close to providing the same benefit to the public as the incentive option model and making sure that we have contiguous blocks of spectrum for mobile broadband. that is what other countries are and will focus on. we have to find ways to free a continuous blocks of spectrum in the united states. >> hi, katy bachman, media week. this is a simple question. how long to expect the comment. to be.

and second, how would that affect the timing? obviously this is very dependent on congress doing something. so, when do you expect congress to take something like this up and how do you like your chances that they will? >> so, the comment. it sells -- at november the comment period, bill or someone can answer that question. what is driving our action today -- what is driving our action today was the time pressure that we feel to get out in front of the spectrum crunch. and so, the importance of laying the groundwork at the commission to be able to move quickly, should congress authorized incentive options, we also believe the record that we will collect as part of this will be helpful as a resource to congress as they consider the possibility. i think this is something that

has been bipartisan. it should be bipartisan. you see a broad consensus on the commission itself. and so, i'm looking forward to being a resource to congress on this and i'll continue to emphasize how important this is for the country. one other point i would make is like other infrastructure issues, if you wait until there is a crisis, it's a serious problem because it takes a substantial amount of time to go through the process of running option, reallocating spectrum, et cetera. that's why we started today. it's also why we took up the other items. complementary and there really there really an ongoing part of our spectrum agenda. we do need to recover a substantial amount of spectrum for flexible use and mobile

broadband. we also need to foster, spar, incentivize, facilitate, drive the next generation of spectrum policies and technologies that will lead to even greater spectrum efficiency and take advantage of cutting-edge technologies that allow for dynamic uses of spectrum. >> when you say this to be a resource for congress, do you mean to say that this sort of makes it easier for them to say okay, let's go ahead and do this? i mean, we've all sort of done the work and that the groundwork. >> that's not what i meant. i meant the information we gather and the information that were already gathering, our work on this at the expert agency, we look forward to being in a resource to congress on this issue. and so, the ongoing proactive work that we're doing a is

designed both to make sure we can move quickly if and when legislation is adopted and also to make sure we're in a position to be an effective resource to congress as we have been it will be. >> so congress doesn't do anything, then what? [inaudible] >> either question. hi, chairman. can you tell us about your commitment to net neutrality and whether you are committed to doing it at the next meeting and doing it with a request by broadband? >> you know, we just came out of the meeting focused on important implementing the new love with people with disabilities. i know that there's interest in the alternate internet topic, but i'm not going to address it until we have something to announce. >> thank you.

>> i just wondered if you were completing comcast interview and if that's even possible to take up that neutrality in december. >> you know, we haven't talked and i don't have comment on the timetable for reviewing the transaction. it's an important obligation to review it thoroughly and were in the process of that. >> did you want more information about the level threes complaint against comcast? >> you know, that is no information. as you know, the premature, not in the facts are we looking into it. >> but you are looking into a? okay, thanks. >> would it be possible for the sec took at the national broadband plan under title i net neutrality order? >> when we have something to announce on that, we'll let you know. >> commissioner mcdowell has mentioned way the strengths and weaknesses of channel sharing and repacking with respect to

the tv broadcast spectrum versus i believe the words used are keeping broadband and broadcast interwoven. what do you think about that and that kind of position with regard to the notice was issued today? >> all a commissioner mcdowell respond to any questions you might have about what he said. the plan for incentive options doesn't assume that all over the air broadcast spectrum goes away. the plan that was outlined in the national broadband plan looks at about 300 megahertz of spectrum that are allocated to broadcasting in every market and sets a goal of recovering up to 120. so under this scenario that we're anticipating will continue to be a vibrant over the air broadcasting. and so, thinking about all the way you heard from various commissioners about the future

over the air broadcasting. as part of the proceeding, something we will look into. i don't see it as an either/or. i see it as above. >> all of my questions were asked. >> tom shields, bloomberg news. some people look at the pattern of meetings in your office on the net neutrality proceedings, saying your strike an opposing deal with at&t and other big carriers. what do you say to that? >> well, i'm part of the process we've run on the commission. it's been a

.

evaluate whether homeowners qualify for other programs. provide a written explanation that any homeowner not eligible for the program and to delay any foreclosure sale to give the homeowner time to appeal. servicers may not proceed to foreclosure sale until they have tried these alternatives.

they must issue a written certification to their foreclosure chert -- their flair -- there foreclosure attorney or trustee. on october 6, treasury clearly reminded services of the existing rules. we have instructed our compliance team to review the processes and procedures for complying with our guidelines. if we find noncompliance, we would direct the servicers to take corrective action which may include suspending the foreclosure proceedings. in terms of compliance, it is important to remember that although treasury administers the making a home affordable program, it does set through a voluntary contract. our compliance efforts are focused on ensuring that servicers are falling

contractual requirements and agreements. we are looking to ensure that borrowers are evaluated before the program. we evaluate loans for eligibility, soliciting or worse, and providing additional training to servicers staff. almost 1.4 million homeowners have started to file modifications. over five of the 20,000 have started permanent modification. these homeowners have experienced the reductions in their mortgage payments of more than $500 per month. in the first quarter of 2009, nearly half of mortgage modifications increased more were's payments. by the end of the second quarter of 2010, 9% of mortgage modifications lowered -- 90% of more jig -- 90% of mortgage

modifications lowered monthly payments. they pay al servicer, bar work, and investment incentives over five years. the investor, not the taxpayer, retains the rest up for payment. we believe these foreclosure problems underscore the continued need to evaluate borrowers for all home retention offers. we appreciate the efforts of the members in this committee and our partners in holding servicers accountable. i look forward to taking your questions. >> thank you. thank you for requesting our views on efficiencies in mortgage servicing and the impact on the financial system. it is unfortunate that the

problems in mortgage servicing continue to require the scrutiny of this committee. the issue is symptomatic of persistent shortcomings in our nation's largest mortgage servicers. while the fdic is not the supervisor, we have a significant interest in these institutions. our examiners have been working on site as part of a review team at 12 of the 14 mortgage servicers. the witnesses that have been identified during the mortgage prices are a byproduct of the rapid growth of the number of loans. the traditional structure of third-party mortgage servicing deals put in place is based on a flat fee and does not provide additional compensation for the proper management of distressed loans.

large servicers aggressively automated systems to maximize short-term returns. the historic rise in mortgage defaults has created incentives to cut corners at a time when servicers needed to be committing more personal attention to problem loans. the problems we are seeing go beyond documentation issues to include questions about private securitization trust. this is damaging to the nation's health and recovery. one implication is the risk of destruction of the foreclosure crisis. it is painful, but necessary for the recovery of our housing market and our economy. mortgage documentation problems cast a cloud of uncertainty on a mortgage borrowers and

investors. there are numerous private parties and government entities that may have claims on the mortgage markets. the clear potential is there for a systemic risk. it is in a unique position to provide clarity to the market. it tells what standards should be applied to the mortgage loans and establishes a private securitization trust. while my written statement goes into more detail, there are principles that should be part of any broad agreement. one, establish a single point of contact for struggling homeowners would go a long way to preventing the complex and miscommunications and will provide borrowers assurance that their applications for modification will be considered in good faith.

two, simplified modification efforts to reduce the number of foreclosures. given the volume of troubled loans and the shortage of resources, it needs to be genetically streamlined. modifications need to be put in place at an early stage and provide for a significant reduction in the bar or's monthly payment. -- significant reduction in the borrower's motley payment. -- monthly payment. 3, maintained resources of well- trained staff. an adequate staffing -- inadequate staffing cannot be tolerated. regulators must ensure that services are held to the highest standards. for, tackle the issue head on. -- four, tackle the issue head

on. all stakeholders must be willing to compromise if we are to find solutions to lay the foundation for recovery in the housing market. thank you for the opportunity to testify. i look forward to your questions. >> thank you. mr. tarullo. >> thank you. let me as an introductory comments. the extent of the problem -- i want to first caution that the four agencies represented here or in the middle of investigating -- are in the middle of investigating the firms themselves. we need to be provisional in any observations that we make. i think with respect to the documentation issue, it is pretty apparent that there is

significant issues in risk management, quality control, compliance practices, staff training, and third-party providers. the extent of the problems tend to vary across firms. when all is said and done, we will find some problems that all servicers large, medium, and small will be achieved. when we look at those problems in the context of the difficulties associated with loan modification, it seems we need structural changes in house servicers or organized, monitored, and regulated. put-back exposure is something not directly related to the foreclosure documentation problem. documentation problems have

drawn attention to the issue and may be motivated some investors to pursue additional arguments for why sponsors should take mortgages back. this results in the interplay of the underlying mortgages which motivate the put-back efforts by investors that hold the security. this liability could be quite significant for some firms, particularly with respect to private label securitization, the losses may be spread over a significant period of time. with respect to putting that liability, we have already started a process of requiring each major holding company to produce to us at their comprehensive capital plan, which we were supposed to get in early january -- as part of that

exercise, we have asked for an assessment by the firm on put- back liability they may be facing. turning to supervisory responses, i never did in my written testimony the range of supervisory and enforcement tools available to the banking agencies. i expect many or all of these tools would be used appropriately with respect to the specific institutions. from the supervisory position of the federal reserve, our rating of management at the holding company level will be influenced by the success of these problems, even if the problems occur in a banking subsidiary. from our perspective, two points or parent. first, we need to use the additional authority given the federal reserve in dodd-frank.

second, we all need to find ways to leverage controlled process audits and to improvements in control processes across the firms. we will not be able to audit every control process in these institutions. i just want to say a few words on the loan modification issue. i think there is a close relationship as many of you have suggested already between foreclosure difficulties and the relatively sluggish pace of modifications. the race that occurs between modification of a particular mortgage and foreclosure proceedings has more often than not been won by the foreclosure process. we know the race was not often being fairly run in the first place. even if this is, there's a

larger macroeconomic point to be made here. while there is no single, simple method for gaining a balance between foreclosures and modifications, i wholeheartedly agree with sheila's perspective that we need to renew attention to measures and it helped create the conditions for a housing recovery which will be important for supporting the new stronger growth in our own economy. thank you very much. >> mr. walsh. >> thank you. i appreciate the opportunity to discuss the improprieties in the foreclosure process and the steps being taken by the officer of the comptroller to adjust them. when i appeared in september, i described early steps to address the foreclosure problems.

i can report to date that we have greatly expanded those efforts to address the critical problems, working with other government agencies. the shoddy practices that have come to light including improperly executed documents are absolutely unacceptable. they raise questions about the integrity of the foreclosure process and concerns about whether some homes may have been improperly taken from their owners. we are moving aggressively to hold banks accountable and fix the problem. as problem loans surged, our primary purpose was on efforts to prevent foreclosures with loan modifications. we sold an inordinate number of modifications initiated in 2008 were revolting. we directed national bank services to take corrective action. we have seen a sharp increase in

modifications at lower monthly payments and created defaults. many families still face the prospect of losing their homes. we owe them our best efforts that they receive every protection provided under the law. questions have arisen about the practices of continuing for closing -- foreclosure provisions even after a modification has been negotiated and enforced. it is confusing for distressed home owners. we are directing national bank servicers to suspend foreclosure procedures for successfully performing modifications where they are not already doing so. it is important to remember, however, that private investors dictate the terms for non-hamp modifications. it is also the case that foreclosures are governed by state law and requirements vary

considerably by jurisdiction. most nationwide servicers hire local firms familiar with those requirements. both fannie mae and freddie mac require services to use law firms preapproved for a given to locality. we determine if they have appropriate policies, procedures, and internal controls to ensure the accuracy of information relied upon in the foreclosure process in compliance with federal and state law. we expect the banks to test these processes through internal audits and their ongoing quality control functions. absent red flags debt indicate systemic flaws in these practices. neither quality control test, internal audits, nor data from

our call centers suggest that document processing was an area of systemic concern. when problems were identified outside of the national bank, we directed the eight largest national bank services to use their operations and take corrective action. we began on-site examinations which are now under way with more than 100 national bank examiners assigned to the task. these examiners are reviewing whether foreclosed bar worse were appropriately considered for loan modifications, whether fees charged were appropriate, documents were accurate and appropriately review, and appropriate signatures were obtained. the occ is heading and examination of the mortgage

electronic reservation system. we are participating in an examination led by the federal reserve of the processing services which provide third- party processing services to banks. where we find errors or deficiencies, we are directing banks to take action. we are -- we expect your complete our examination by late december and to determine by the end of january if additional actions are needed. thank you for the opportunity to appear. i will be happy to answer questions. >> thank you. mr. demarco. >> thank you. the recently identified deficiencies and the preparation for handling real documents to carry out foreclosures or unacceptable.

those deficiencies reflects strains on a system that is operating beyond capacity. they also represent a breakdown in corporate internal controls and management oversight. our goals or two-fold -- to ensure foreclosure processing is done in accordance with applicable laws and to prevent taxpayers from further losses. we expect services to exhaust all alternatives on but closures. my prepared statement reflects the action we have taken. it also provides context for understanding the problems, including consideration for the role of servicers and a description of the diverse range of processing requirements. as i reported previously to the committee, fannie mae and freddie mac minimized losses on delinquent mortgages by offering distressed borrowers all

modifications, repayment plans, or forbearance. these tools produced the enterprise losses on delinquent mortgages and help homeowners maintain their homes. they note that these tools or the first response to a homeowner that falls behind on a mortgage payment. yet for some delinquent borrowers, the mortgage payments are not affordable due to unemployment or other hard ship and a loan modification is not a solution. for these cases, the enterprises offer foreclosure alternatives in the way of short sales. foreclosure remains the final and necessary action in many cases. as we know, foreclosure process deficiencies and have emerged in several major servicers. fhfa provided the servicers a framework for handling these deficiencies.

they are rather simply stated. first, verify the foreclosure process is working properly. second, abbreviate any deficiencies. third, -- fourth avoid delay in foreclosures. the enterprises continued to gather information on the nature and expense of servicer problems. only a small number of servicers have reported back to the enterprise as having a problem with foreclosure processes that need to be addressed. these firms recognize -- represent a considerable number. the enterprises are working directly with the servicers to ensure that all loans are handled properly in collections and refiling of paperwork is completed were necessary and appropriate. we do not regulate mortgage

servicers. the enterprisers relationship with them is a contractual one. fhfa expects any company to fulfill their contractual responsibilities, which includes compliance with the enterprise died and applicable law. also, we remain committed to ensuring borrowers are presented with foreclosure alternatives. it is important to remember that we have a legal obligation to preserve the enterprises assets. this includes minimizing losses on delinquent mortgages. foreclosure alternatives can reduce losses relative to foreclosure, but when these alternatives do not work, timely and accurate foreclosure processing is critical for minimizing taxpayer losses. to conclude, regulatory agencies or carrying out important

examination activities that will better inform the issues, but identification of further actions or regulatory responses should wait for the results of these examinations. thank you. >> thank you. we will try to stick with 6 minutes. we have a large panel here and a second panel to get to. we will try to stick with that time. >> is that six minutes a question? >> that is six minutes a question. [laughter] let me begin with you, dan. i thought your testimony -- i actually read your testimony last evening -- described the and suggestcies

weaknesses in risk management and quality control audits and others. aside from that, there were not too many problems. according to experts these problems have been documented for years. i think you claimed since 2003. there is some background to all of this. i would like to ask you whether or not the other agencies that are at the table with you agree with the conclusions in a testimony.rullo's i want to ask you what the various agencies that do have

regulatory authority had not been taking the obvious action. this is not new information we are getting. why have the agencies not been more aggressive about this early on? we will start with that. >> thank you for the question. i will talk from the perspective of the hamp program. hamp is a voluntary program. we have -- we are in those servicers every month. our observations have been backed -- have been that they were ineffective in sourcing homeowners for hamp. as a result of that, actions we have taken at included sending the servicers back to me solicit

certain schools of borrowers where we identified they were not solicited. we run the present model. in january we instigated a temporary review period. the status had to be reviewed and verified of their documentation and their payments. that gives the homeowner an opportunity to review. we agree that there has not been sufficient capacity in the servicers relative to the magnitude of this problem. >> let's go to the occ. why have we not been more aggressive as regulators? >> certainly it is not new information. there had been capacity restraints going back to 2008. we had been gathering more information, but also conducting

a horizontal exams of the major of servicers -- horizontal exams of the major servicers. we saw a rise in the number of complaints to our own system that indicated problems with mortgage modification. we were in the processing that there were clear deficiencies that were otherwise been reported. we were consistently pushing the servicers to higher, to train, to adopt the succession of procedures that were coming forward from hamp to develop their own proprietary modification programs. but the press that was being made was always trying to get them to wrap, as has been described, a large surge of loans were coming into the system. they were clearly not ready for it. they have made substantial

efforts to improve processing and deal with the problems that are there, but they clearly have not caught up to the modification piece of it. we have seen the surge of cases move through to foreclosure. there was somewhat of a pause going back as hamp and other programs ramped up. the foreclosures that were coming were inevitable piece of this. rely on internal audit quality assurance. we look at the large volume of activities. clearly the institutions failed in their oversight of third- party agents, law firms, and others. they did not ensure quality assurance in their own of activities and the third

parties. we should have seen that it -- we should have seen that the problem would appear in each link of the change. that is where we are focused. >> i ask the same question that you just asked of us. everybody has their own supervisors so everybody has a specific story. i came away with a couple of observations. one, as john has already said, there were a lot to the supervisory resources focused on servicing and servicers, but predominantly focused on the modification or the slow-paced of modification. i asked our folks to pull the records of consumer complaints that we collect through the consumer affairs division.

donnelly, the complaints on foreclosure or complaints from the people who think they should have a modification. that is where a lot of attention was directed. the second train is that -- the second thing is that the control process audit i mentioned a moment ago is one that i have concluded needs to be rethought. you pick out a particular function of the institution where you say there may be some problems, let's dig in. you dig in and once you have finished you find difficulties were you do not. you usually do. then you take some supervisory action. you do not have near the number of examiners you need to audit everything. you have specific complaints about specific processes.

the question is how do you use those to identify or rectify problems elsewhere. i do not want to push this too far because it is pretty provisional. we do have some sense that in institutions where we have modification problems, we had been asking for some changes. we still see and incidence of problems of the document foreclosure side, but they do not seem to be quite as pervasive. we will try to figure out going forward whether there is a relationship between having one kind of control audit on one hand and getting the firm to pay more attention to what it does on the other. it may just be that it was a coincidence. that is my observation at this point.

>> senator shelby? >> i would like to follow up on something you talked about earlier and is risk management and quality control. you related to the fact that there are witnesses here. did the fed realize there were problems in this documentation process dealing with mortgages? >> for may, it was not long at all, maybe a day or so. one of the destitution -- one institution that we have a primary supervisor for came in and told the supervisors of the holding company that they have self-identified these problems. >> what you believe is the fundamental problem that needs to be resolved?

for example, four years and years we had state property laws. you buy a home, you execute a note for mortgage. every time a mortgage was sold -- is this electronic system, is it part of the problem? where are we? we are trying to solve this problem. for example, if somebody is not paying their mortgage, i believe that you have to foreclose unless you agree to modify it or something like that. to foreclose you have to own that mortgage. that is the law is it not? so where are we? what do you think needs to be done? >> i can only give a provisional

answer to that, senator. i have to say that in looking at getting briefed on the extent of the problem, the complexity of national servicers doing not just foreclosures, but servicing in every state and in many counties within states, the differences in requirements and the continued requirement for physical recording obviously is substantially costly undertakings. >> those are state property laws. >> that is right. as regulators, we cannot do anything about them. i suppose you could if you thought it was important to have national reporting. >> that is a strong statement. >> that is why i did not propose

that in my testimony. what i proposed was thinking about national standards for servicers. >> let's go back a few years. et's go back 10 years ago -- 2001 will do. did we have those problems then? for years we did not have those problems. people executed the mortgage, they sold the mortgage, they reported the assignment, they did the documentation. risk management, quality control. did they get too risky, too sloppy, too shoddy in what they were doing although they were dealing in hundreds of thousands of dollars worth of mortgages? does that change the securities in a sense that you sell? >> in all honesty, we do not know what the situation actually was in 2001.

at least i certainly do not. we do not know if an examination was done on servicers. prices were rising and foreclosures were pretty contained. you did not have the opportunity for a potential problem in documentation to show up at the courthouse doors. i do not think there is any doubt that the enormous increase in the servicing operation. huge volume in the mortgages. and more concentration in the servicing. >> where do we go from here? it is december 1, 2010. we still have this problem. senator dodd has had a number of hearings. are we close to solving this problem of where we are? >> from my perspective, i would not say we are close to solving

the problem for several reasons. as i said earlier, i think it is related to the relative balance between foreclosures and modification. two, until you get a more or less integrated approach to get what you mean by integrated approach? >> you need a standard that applies to servicers whether they are in a national bank or an affiliate of a bank or a non banking institution. >> what standards do you mean? you're talking about recording and showing ownership of stuff? >> i do not know we have had clearly articulate standards as opposed to requiring firms to have their own processes that they abide by. i think what this has shown us is we'd do need more standards,

particularly during a time where there is a race between foreclosure and modification within particular services. i think some sense of how that race is supposed to be conducted needs to be set forth by -- on a set -- set forth on a standardized basis. >> thank you, mr. chairman. the hamp program is voluntary. it covers about 25% of loans. as a result, the vast majority of loans, there is no requirement for banks to offer modifications or anything. should we mandate one daughter% of loans -- 100% of loans go to

modification? >> we have suggested that having a global settlement where we can leverage all the deficiencies we are finding and the hurdles that are appearing to foreclosure because of lack of documentation and not following the state and vocal laws pertaining to foreclosure. they need to do that first. it the loan cannot be rehabilitated, they can seek a foreclosure and perhaps law- enforcement officials could waive procedural procedures. legislation would be another option. i guess i am looking for things we could do without doing that. >> process is slow.

we prove that every day. >> you're talking about the bank regulators. >> you are envisioning a regulatory solution initially which would use whatever authority we have to deal with a host of issues. and making sure everyone is evaluated for modification. dealing with issues of quieting title and standard, which may require legislation. you pursue it at a regulatory position. other issues would be the capacity of the institution to do -- to deal with their job service, which she would have to increase. there is the issue of the individualized evaluation and foreclosure process.

you are probably aware that in some districts be bankrupt the trusties become very active about acquiring the paper work. is that something you would like to see broadened? >> it is not just bankruptcy's, it is the courts as well. they are becoming more stringent and exacting in terms of requiring proof of title. i think this is a real issue. we are still collecting the facts. depending on how the case all does, these procedural problems can be cured. we need to think about some kind of safe harbor provisions, using that as a leverage to get loan modifications early in the process.

i think this is getting back to senator shelby's question of how do we do it. when you are keeping your portfolio and servicing your cells, you have every economic incentive to mitigate your losses. when you separate ownership from the loan, the economic incentives are not there. you have a very high volume of troubled or ridges they are trying to deal with. >> it is not going to work. time is of the essence. there are a huge set of issues

here with respect to the legal liabilities of large financial institutions, security violations, tax law violations, etc. the sooner there is a coming together of the financial community and the regulators with a coherent program, the better off we will all be. i am concerned about the people we left out -- the mortgage holders who are struggling to stay in their homes. the people who are struggling. until they are part of the solution, we are not going to get a total solution. that goes to the bankruptcy issue. let me turn quickly -- what you have pointed out can be characterized as severe failure in many of these companies.

would that be a conclusion? >> as i said earlier, i want to withhold a final characterization. we have already seen a lot of problems. we see a lot of problems. there is some degree of management failure. i would expect that some institutions have a significant degree of management failure. >> i would have to suck at that. when banks are self reporting that they -- >> what steps are you taking to make sure the resources are available? from the very top all the way down and in terms of the compensation arrangements that are doled out -- it is a critical national goal of stabilizing the mortgage market.

the model longer works. what are you doing? >> as i mentioned earlier, we have certainly lean that in hard on the modification part of this. we have done a series of exams and have been focused sense 2008 on shortcomings in stamping and process and the rest. the banks have improved. they have not improved enough. they have not improve fast enough. the problem has migrated onto the foreclosure process where they have been caught short. there are clearly deficiencies there. we have to be clear that the deficiencies are -- that were laid bare by the surge of problems are ones that, should these problems passed through and the system returns to normal, it may look like its old self, but these problems will now have been exposed.

the question is how do we do with them over time. >> thank you. my time has expired. >> thank you, mr. chairman. i want to thank you for your leadership on this committee. i have been on the committee three of four years as chairman. i asked about 10 senators when i had the option of coming on this committee and nine out of 10 said not to go on the banking committee because it is the most boring committee on the senate. it has been anything but that. [laughter] i thank you very much for the way you have handled this committee. i thought your comments yesterday on the floor were outstanding. for a person who sometimes scratches his head and asked if this is work a grown man's time because of some of the issues we get involved in, i want to say that it has been expiring. i know we live up to those

inspirational comments that were made yesterday. i hope you'll give me another minute. >> if you take as long as you like, senator. in [laughter] we have a number of difficult issues. i think the way the committee members have interacted with each other as been a reflection of your outstanding leadership and i thank you for that. >> my colleagues have done a tremendous job. i would be remiss if i did not point out the work of senator bob corker, working with so many people on this side over here made a major contribution to the effort. the effort made a far better product than would otherwise have been the case.

i will be eternally grateful to bob corker for your efforts. >> i plan to attend the latin america here today is having traveled with you to central america. you could run for president of any of those countries. with that, i will move on to our wonderful witnesses. i thank you all for being here. [laughter] thank all of you for coming today. i wonder as it relates to the macro issues of the institutions and the servicers that are involved, we have not really thought much about that. we talked about some of the issues. all of us are being flooded with phone calls over problems with this. you have been very helpful to us as we try to navigate that. as it relates to the macro prudential issues, the strength of these organizations, what may happen over time to them

financially -- just respond as to how you see this impacting on financial system in general. >> we do not see a systemic impact at this point. we need a concerted, pro-active action to get ahead of this to make sure it does not turn into something we do not want to see. there are some issues. the housing market could more broadly impact other institutions. the foreclosure process is the unfortunate fact of it. getting the situation cleared up so borrowers are given a fair chance of rehabilitated loans. there is a process to proceed if that does not work out. i think it is important. there are a lot of potential litigation situations here.

law-enforcement official -- a potential for law-enforcement action. i do not think we have a good handle on that yet. we have to allow the institutions to do their own risk assessment. we are continuing to collect information. we do not have a good handle on it yet. >> i am aware of a number of those issues. do you have any sense of the order of magnitude -- i know you do not know exactly -- is this something we should be concerned about as it relates to large servicers ander organizations? >> i think it could be very significant periods -- it could be very significant. a lot has to do with legal issues and how they are resolved. we get taken a lead in

analyzing. we do not have all the facts yet. >> as you are answering, in the servicing contracts, is there typically recourse back to services? >> let me echo what sheila said on the issue of the housing market and just add to that something i never did in my written testimony, which is until we get a handle on any reduction in the overhang of the foreclosed inventory in the housing market and we have a process that is moving is loosely -- moving smoothly, there will continue to be problems in the housing market.

obviously that affects the rest of the economy. with respect to put-back risk, it is a function of several things. one is the default rate that one anticipates because security holders only want to put back securities when there are enough defaults that they are not playing well. that is a model based on certain macro assumptions. second is the legal set of issues. those are harder to pull apart right now, at least. mr. demarco could probably give you a straightforward answer about the-back liabilities with respect to things the gop is involved in. private security agreements vary enormously. even f. their is litigation over one, that may not tell you what

the liabilities in others may be. the third factor is the configuration of the defaults and the legal exposure at a particular institution. you could have an institution that secures out a bunch of mortgages that are not doing well, but has a set of qualities that are very weak or which they met. it will take time to disentangle that. we are going to take a first stab at getting the firms themselves to do it in the capital plan, but that may not be final. in terms of magnitude, i do not want to give you a number. senator dodd noted that the order of magnitude in public or non-governmental assessments differ by a factor of three or four. we do not have better numbers than that, but i do think that with respect to some institutions, this could be a significant exposure.

>> my time is going to expire. if all of you could respond to whether pricing and servicing -- obviously it was priced with no problems. what length of time is an appropriate length of time for foreclosure? in some states it is one length of time. how long should a foreclosure process take? is it 90 days? 100 days? it is probably not 492. in that we have been talking more about the mechanisms of servicers, we had an amendment on before we were unsuccessful in passing over the last 1.5 years, but there is a built in conflict with servicers to deal with home-equity loans and others. that, to may, is a huge issue we

have to deal with. i think in many cases they are putting their interests ahead of the first mortgage holder. that greatly changes property rights. thank you for the latitude, mr. chairman. >> the what to quickly respond to that? -- do you want to quickly respond to that? >> there is a systemic risk here. it is unlike the market crisis in 2008 or 2009. it appears to be something that will be drawn out a was we sort to the problems. on the light of the foreclosure process, it tends to average eight or nine months. now it is averaging 15 to 18 months. it takes a long time by designs. it is not easy to take someone's house away from them. the question is, do we need to streamline that in some way. >> i completely agree with your

observation on the first and second liens. they are the reasons we need to have a more consolidated set of standards for servicers. there is an inherent conflict there. when you observed a second lane at doing quite well and a first lane moving towards default, you raise your eyebrows. >> she looked. >> we do our securitization said as part of mortgages, we have tried to implement servicing reforms. we also included part of our securitization. i think there is a sack at lie

-- i think there is a second lien problem. what will happen that that person gets into trouble? >> center mendez. >> thank you, mr. chairman. i mentioned in my opening statement that 17 of my colleagues joined with me in a letter to the secretary. it is our concern about hamp. it was originally projected to take care of 7:00 a.m. to 9 million home owners. it has fallen short to 495,000 permanent modifications since january of 2009. at the same time in 2010 we are estimating there will be 3.5 million homeowners who will receive foreclosure notices and

less than 2% of the funds dedicated to hamp have been used. there is something wrong with that. we have outlined a series of actions that can be done, not with congressional approval, simply administratively by the secretary including the process of police servicers accountable. the treasury offers incentives for their participation, but no consequence for mistakes. the issue of an office of a homeowner advocate, the issue of automatic conversions, do you have a successful trial modification, the issue of revise eligibility requirements, the document in of investor based denials, the release of present value analysis -- why can we not get that done by the

treasury? >> i heard a lot of suggestions there. i think it is important to remember that when we started the program 18 months ago, people said servicers would never sign up for a voluntary program. we went from 0 to over 100 servicers signed up. we set a goal of getting 500,000 home owners by november. we got that. we reach the conversion challenge. at the beginning of 2010 we had about 31,000 permanent modifications and a backlog of close to 700,000 miles. . . .