aderol now more widely used than ritalin. crack cocaine. a very serious drug in the 1980's is at fairly low levels. several of the cult drugs that at times get a great deal of attention, hpap, ketamin, are at low levels. anabolic steroids is down quite a bit from the peak of 200, and remains low. partly because these drugs have now been scheduled by the d.e.a. l.s.d., halucinogens, are low. l.s.d. is very low. inhalents have not taken off. we warned in the last press conference that some people are

increasingly seeing inhalents as not dangerous to the user. but it has been a long time since there was an anti-inhalent campaign which was effective, by the way. but there has not been any further erosion fl in that belief in the last couple years. in fact, the risk has gone up a couple years. i can't explain that, but it is getting attention. cough and cold me medicine, some of you know, are abused by young people by taking large doses of over-the-counter drugs, which is very dangerous. seeing little systematic change in that since 2006. fortunately, that is not changing. . high-school seniors say they have used these drugs for the ge last year. in summary, there are three drugs decreasing in use,

marijuana, texas, and cigarettes. three that are showing some decline -- alcohol, cocaine, as reflected in, and many that are holding steady including amphetames and inhalants and lsd. thank you. >> thank you to our speakers. we will take questions in just a minute. a little bit of housekeeping. our nida press chief, if you have any questions aft the press conference, stephanie will be happy to link you up with them. where is a rough idea of? he is here with director kerlikowske. we wl open it up to questions in a minute, but i wanted to make a couple of points about

what -- what nida is doing to reach out to teens. we have a very robust website right now. we have a teen blog that is becoming very popular, and we do at least two entries a week. it is a steady increase in users. we just completed our fourth annual drug facts chat day where we sit up for the scientists to chat with teenagers from schools all over the country. if you are interested in finding out what kids are asking about drugs in an anonymous format, it is very interesting to see what they are asking, and we also post the responses. we just completed our first ever national drugs facts week, which encourages community is to

link teenagers what scientists so teenagers can find out scientifically accurate information. there is so much misinformation about drugs out there that this is our effort to put science into the middle of the conversation. more than 100 community is registered events this year. we hope it will grow. finally come away partner for the first time with a grammy fodation with a music video contest, and dozens of kids entered music video is. they have a panel of musical artists who judged. our scientists reviewed the entries for scientific accuracy. you can find the winners on our website and the grammy 365 website, and also on the above

the influence website, the website director kerlikowske's folks put together. all othat information is in your press packet. we have this new booklet. this is unusual. but we went to local high schools. we showed them images. we have long discussions with diverse groups of teenagers to put this together, and the intermission and here is the most popular questions asked. i wanted to make you aware of those initiatives. of course, i am here to answer any questions about those afterwards. so, we can open it up for questions for our speakers. yes. please identify yourself, your name, and who you work for. >> i work for a a.m. media. i see in your topics in brief, the one-page handout on

prescription drug abuse issued this month, when asked about how they were obtained for non- medical use, 59% of 12th graders said they were given to them by a friend or relative. the number of attaining them over the internet was negligible. what is being done to reach the friends and relatives guilty of these crimes? >> who would like to answer that? >> there are two things going on that i think have been helpful. one is the drug enforcement administration sponsored a take back day with 4000 sites that took back over 120 ts of prescription drugs. it was not only getting people to clean out their medicine cabinets in an environmentally safe way, but it was also agitating had people on what exists in the medicine cabinet. another group of people called

drug free communities, 740 around the country, that are funded by the federal government for a very small amount of money. they are truly grassroot individuals who have partnered up to educate people, particularly young people, about the dangers of prescription drugs. frankly, when they think of the drugs as prescriptions, they do not rlize the dangers that occur. there are a number of other things in the national drug control strategy that talk specifically about prescription drugs, but those are two things i wanted to highlight. >> also, early next year, and nida will be launching a series of initiatives to reach out to kids on the prescription drug issue. please be on the lookout for that. other questions? >> richard daley. just a follow-up, there is legislation that would actually

establish or allowed the existing state and local drug take back programs to operate on an ongoing basis in retrieving controlled substances, which right now, legally, they cannot accept. it has been described as a major problem, and the reason why there are tenants all of the -- cabinets all over the country. is there any push by the administration to get that legislation through? >> the legislation was passed by both houses of congress, and signed by the president. that is actually very good news. it allows the attorney general to work to rewrite the rules, so that these things can be disposed of both in an environmentally safe manner, and in a much more convenient way than what we are doing right now. >> there is another point we need to consider.

but did you look at the prescription -- the number of prescription of psychotherapeutic pain medications andimilar medications? there have been significant increases. it tenfold increases over e past 20 years. for pain medications, it has been four-fold increases. we might be over-medicating, or many of these prescriptions are being diverted. the recognition that there is a significant increase in the product and the distribution of these medications brings to life the need to educate health care community is to the proper dispensing of these medications, the need to educate the public about the notion that these medications, while they have very specific

benefits, when your live outside the medical indications, cane as harmful as illicit substances this is one of the recent -- substances. if this is one of the reasons why these drugs are favored by young people, the myth that there are safer. finally, having a better way of surveying prescriptions among the physicians and dentists across the -- across states. that will provide us with structured to allow us to control the over-production of these benefit -- medications. >> in this regard, i wanted to mention a recommendation i made in a recent editorial in a journal in the field. physicians and dentists might think about actually writing the prescriptions in a way that they

give a lower number of doses, especially for pain medication, th is currently the practice. then, they give you a week's worth after you have had a tooth extraction. you might not use any, or you use one or two, then there is a bottle sitting on the shelf, either to be used by that person later for reasons it was not intended for, or to be given, or stolen by someone else. there is a over-prescription. it does not mean they need to write a prescription for a shorter time, they could every noels, but the initial model could have a smallerumber of -- initial bottle could get a smaller number of doses. 30% of kids who say they are misusing narcotics say they are using their own prescriptions. most are either getting it from

friends, or buying it from friends, who may have had over- prescription. there is something that the medical and dental field could do that would help. it is certainly not anyone's intention to give long-term support, but i do not think many users meet the duration they are initially prescribed. >> and molly walker. what you are up there, do you guys know if it is from wisdom teeth procedures? that seems like a common procedure in high school. >> do you know down to that level? >> i do not know the specifics. i just know from personal experience, and the experience of other family members, that they often get longer duration prescriptions than necessary. you can keep the duration as

long, but it will just require someone to go back and refill the prescription if they needed. my guess is that 80% will never go back and we fill the prescription. >> to that specific question, we are calling a group of efforts -- experts to figure out what the prescription practices were. to start with, and there are medical specialties that account for most of the prescriptions which are dentists and emergency physicia. among the dentists, the first perception was related to your question, extracting the wisdom teeth, but then what became evident in a more thorough analysis was that many of those prescriptions could not be accounted for by the needs of

wisdom tooth extraction, and many of these prescriptions were given for several days, where there was the understanding that two or three days would be more than sufficient. there was also the disclosure that for many of these procedures they could b utilized instead. one of the action items we are puing toward is the proper education and standardization of the management of pain. it is particularly urgt to do it for adolescents and children because they are the most vulnerable. >> you mentioned that a lot of people or some people have a perception that marijuana does not have long-term effects. could you go over the long-term effects? >> this has been a discussion back and forth between those that say it will produce --

westing changes, and others say they do not. -- long lasting changes, and others say they do not. there are studies that can go from evaluating narrow psychological tests, and then evaluating long after you've stopped taking it to bring images -- brain images. there is data, and indeed from imaging studies, clearly that there are changes in the functionf the human brain when exposed chronically and repeatedly. the extent to which those changes are not reimbursable -- rersible, at this point, is not clear. when you wage when i say to put it in the most conservative perspective, it is factual but it is interfering with memory and learning. it is factual it will interfere

all with motor coordination. therefore, it will impair your ability to learn, and the effect will be longer-lasting than when you are intoxicated because it stimulates in your body parts that act like a reservoir. if you are driving under the influence of marijuana, it is likely to significantly increase your risk of accident. while we recognize alcohol contributes to a significant number of accidents, this has been easy to track because it is easy to quantify. it is much harder on marijuana. when the studies have been done, they have shown that a significant percentage of occur under the influence of marijuana, and a combination of marijuana and alcohol is also quite frequent. >> i have a question for mr.

kerlikowske. you set ambitious goals some months ago, less than one year ago, a law reducing the use of drugs among young people. how does this report impact that goal? will you have a new strategy? >> the strategy that president obama released in may must be updated every year, and the strategy is an unbelievably good strategy, because it is very balanced and it is comprehensive. it approaches the dg problem, not just as a criminal justice problem, but also as a public- health problem. the presidenhas made it clear that preventing young people from reducing drugs and reducing our demand would be incredibly helpful to people here and throughout the world, a particularly our neighbors in mexico. that is why in his budget request the ss for and over --

and increase in funding and treatment funding because we know treatment works. we have ambitious goals. frankly, dr. johnson's report, and the survey from the drug use household survey did not come as a surprise to was the there was no increased because we saw young people's perceptions of years begin to flatten or decrease. there are two other things that are an important. off the national year's anti- drug media campaign has been completely revise, and it resonates very well with young people and giving them a message about not using drugs that -- in a way that they clearly understand that our partnership -- understand. our partnership has sponsored

two -- and continue to work hard for private funding to give information to young people and to parents about this danger. we are not pleased with the numbers, butt encourages all of us to work harder. >> any other questions? please identify yourself. you, yes. she is coming. >> i am from mexico. do you have any way to find of which are the ethnic groups that are more vulnerable to use drugs se reached? -- use drugs? also, you have mentioned that the excessive use of marijuana

affects the brain. what can a person who has been using for a long time be rehabilitated? >> in terms of what -- accusing repeated -- using repeatedly, the production goes down, so when there is not intoxication, there is a deficit in the brain areas. what are those systems, that involves memory and leaing and motor behavior, and is also important in terms of reaction. in animal models, were you expose them repeatedly, the animals become very spread reactive prone.

the extent to which an animal can recover production is dependent on several factors. the aged and the combination, and ultimately the differences in the biology and are likely to reflect genetic differences. at this pnt, we do not know to what extent those changes will recover or be reversible. with respect to your first question, i will answer it with respect to the research nida has been doing that documents there is not a particular case that is protected from substance abuse disorder. drug abuse does not discriminate. you see patterns of drug abuse -- drug use, that are influenced by ethnic and cultural factors. for example, one thing that is

not recognized as among adolescents, for example, african ericans have the lowest re of use. among hispanics, for example, alcohol use is particularly one that is favored, and alcohol has consequences in that group that are different. it is associated with a much greater rate of dropout in hispanic groups. native american the use of alcohol is quite prevalent. there is no discrimination among the ethnic groups. >> did you want to add something to that? >> we do, in fact, suffer read out three major racial ethnic

groups -- african-americans, white americans, and hispanic americans. we do not routinely look the other groups because they are not in and that -- large enough numbers to make accurate estimates, but occasionally we do a piece based on multiple years and look at a larger number of ethnic groups. american indians were mentioned by dr. volkow, and they tend to have some of the more severe substance abuse problems in general, not just alcohol. hispanics, in our surveys at least, in the earliest grades, eighth grade, we tend to have high rates of use, higher than whites or african americans for a number of drugs. that is not true by 12th grade, and we are not quite sure whether that means because hispanics have a higher dropout rate we are simply losing more of the drug users, where because

hispanic culture is rising to a more precocious trying none of behaviors that is generally more associated with being an adult. whites tend to have the highest usage rate by the time you get to 12th grade and thereafter prepared -- thereafter. that is true for quite a number of drugs. there are differences. if you are interested, look on our website, and you will find all of our publications, including articles that goal and death on the subject. -- in depth on the subject. >> yes, please identify yourself. media. what responsibility do organizations have to run public

service announcements? i regularly hear messages about this on christn radio stations that i know very few young people listen to, yet the popular music stations, which my daughter, and co-workers tha are of that age -- i have not really heard these messages on those of whites. i am wondering what is your knowledge about this, and what responsibility does the media have? >> i think the media has a huge responsibility to not only run those commercials, but we also buy time during the greatest number of young people watching. the other important part of that campaigns using social networks and social media to get the message across, and of course that is oftentimes more

popular with young people then perhaps some of the more traditional channels and others that are out there. >> when you are using paid media, are you able to afford some of the prime-time listening? >> no. [laughter] >> mr. kerlikowske, did think of the campaigns and the billions of dollars spent have failed up until now? are here preparing a new message that might be better delivered and made that the young people could make the decision? >> i wh we could cut the questions off before that.

the numbers are particularly disturbing. the media campaign that was existent in the past was not a particularly good. we completely revised that using some of the smartest advertising minds that clearly resonate with young people. we launched it in the bronx, and in milwaukee, and in portland. we know it resonates wl, but has not been out there very long, so i think we need to deliver that message, and there are another group of messengers the need to say the same things. that is the parents, the coaches, the community groups, and the faith-based community. we need to make progress not just for young people, but quite frankly around the world on the drug issue. this is clearly not just a problem in the united states, but in many other places, has

and if we do not address it and recognize it with the seriousness and the severity that is warranted, i have great concern about where these numbers are taking us. >> i just wanted to make a point because we kno factually, that perceptions among adolescents regarding whether drugs are dangerous or not impacts their probability of taking it. look at that poster, which actually plots the relationship between the prevalence rate of marijuana use and the perception of kids proceeding marijuana as dangerous. you can see there's a greater number of kids thinking it is dangerous, have much lower rates of marijuana use. this is a mirror image. to your question about the

media, i think it can play an extremely important role, but as mr. kerlikowske said, the media has to be well targeted. it can profoundly influence behavior for example, a tobacco smoking, and the same can be applied with marijuana. >> whilee are on the subject of media campaigns, i wanted to mention something else we have seen related to smoking, and that is the young people are not seem nearly as much anti- smoking ad campaigns as they were two years ago. the settlement with the state attorneys general and the tobacco companies gave rise to a foundation that sponsored the national campaign -- the american legacy foundation, but

that had a limited life. the amount of money that has been spent on that -- that is being spent on that campaign has dwindled. the other thing is that many states have their own anti- tobacco campaigns, and this is the pitch to state legislatures and governors. the state's got a great deal of money out of that settlement, and spent almost none of it on the prevention of tobacco use among kids. it is really quite a sme. i know the stakes are very strehed, but ultimately, the states and the federal government play a big price for smoking in terms of health and work performance. i think it is important that those campaigns somehow be reinvigorated. are we look -- or, we are likely to see an incase, which i believe would be a tragedy.

>> i can tell you it is difficult to know if your campaign is working because sometimes it takes years to look of the numbers. lloyd talk about the anti- tobacco campaign, and nowhat it has slowed down, we are seeing those numbers level off. in the 1990's, when ecstasy use was going up, there was a lot of campaigns, and we saw the numbers go down. was it a direct result? we have no way of knowing. we have not been talking about ecstasy, so those numbers are now softening. it is very hard to know the direct impact these campaigns have, but i will also cited ad budgets are dwindling, like everything else. we are fighting for theame piece of the pie that everyone else's. certainly, and the private sector groups that want to take on these issues are more than welcome. more questions?

>> my name is martin fox. given that our policies have obviously failed with marijuana, what did not make more sense to regulate marijuana in a manner similar to tobacco, and therefore lead -- keep away from children in a much more controlled fashion? >> no. it was not. we are not very good at keeping pharmaceuticals out of the hands of young people, and they aren't taxed, regulated, and controlled. -- are taxed, regulated, and controlled. we have 38,000 deaths as a result of these tax, regulated, and contlled drugs. we are not successful at that. we have not been successful at of young people.

i don't know why anyone could think we could develop a system where seven 11's would be an outlet for marijuana. >> any more questions? yes. >> heidi with pediatric news. a question for dr. jolson or anyone else who wants to jump in. given the increase in marijuana use among especially the younger kids, what advice do you have four doctors retreat teenagers about things may be to look for or how to talk about this with the teens and parents? >> i think one ofhe things we clearly know and for which we do not need more research in that respect is those of the greatest

resource are tse who may have any type of behavior robust upturn, learning disability, attention deficit disorder or mental illness. and the early recognition of a psychiatric disorder or behavioral problem who may put that kid at risk of taking drugs as a way to try to medicate themselves could be a very important prevention effort. from the perspective of the message to the parents, if they feel that their child might be suffering from excess of anxiety or depression or trouble socializing they should evaluate the possibility that their kid may have psychiatric or psychological problems that may be amenae for treatment. because the proper intervention at that stage could prevent that kid from that use of drugs. the message that we send. with respect to positions, one of the campaigns that neither has been aggressively pushing is

the need for positions to take responsibility for evaluating and screening for the use of substance of this order in their patients and that is relevant for children and adolescents. early intervention could actually disrupt the continuous use of that particular drug and prevent it escalating into abuse and addiction. the physician has two perspective. from psychiatry perspective, proper screening and evaluation of a problem that can be properly treated and in general -- health provider, proper screening may do intervtions that prevented from further escalating into abuse and addiction. >> did you want to add anything? >> i really think that pediatricians and other physicians who treat young people are in quite a unique

position to open up the subject, first of all, and to give advice that is heard. they are trusted. they are seen as not singing a moral song. and they are talking on the basis of one's health and self protection. i think it is very important for physicians treating adolescents to raise the subject of drugs and alcohol and ask whether a youngster has experience with those and to talk about it. i think not many of us in a position -- parents, teachers, counselors, or other things -- to open up the subject and expect honest answers. ithat -- while i realize physicns have a lot of things to ask kids about that is one of the important months, i think, and i expect their advice would carry ight. >> through our centers for

excellent program we are developing curriculum resources on teaching medical students on how to tal to adolescents about this topic. we have existent resources for physicians on how to talk to adults. any more questions? okay, i want to thank everyone so much for coming out today. we will see you next year. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> of the senate has been debating a number of issues today, including the start treaty with russia. you can see and john kerry of

massachusetts, the chairman of the foreign relations committee. tell"on't ask, don't policy and would end the ban on open and gays and lesbians serving in the military. we did talk earlier with someone -- with a reporter about the vote coming up on the "don't ask, don't tell" bill. a final vote will be held at 3:00 p.m. we will go to an interview now. >> the senate is working on "don't ask, don't tell" this weekend. how did the democrats get the votes that they needed? >> they basically extricated

from other issues. in september and earlier this month, they held procedural votes on the issue. it got tied up before the election in discussions about emigration. and other politically-charged issues before the election. earlier this month, the swing republicans that they were counting on would not vote in their favor because republicans had sworn as a group not to do anything prior to the senate acting on the tax cuts and government spending. now, congress has acted on the tax cuts, and they are on a path to do something about overall spending. they took the "don't ask, don't tell" provision out and

considered its separately. there was enough republican support for many weeks to pass this, but because it got ensnared in these other issues -- >> how significant is this for those who are against it, for it, and president obama? >> i think it is a little bit of red meat for each side. for the left, it will help energize their base, and did note for the right. i think it is probably a net plus for president obama because the majority of the public believe this policy should be repealed, something on the order of 75% of the public in most of the polls i have seen. it is kind of a non-issue for most people. i think it is remarkable that in the 17 years the public has shifted on this subject.

i think in the military it is probably going to be largely a non-even. some people might leave the military over it and some might join because of the change of policy. most of our allies have changed this rule without much of an affect. >> what is the timeline now? are there any the joke -- in the legal challenges? >> and there is the possibility of legal challenges from opponents over the repeal. there are several court cases pending right now that, i assume, will be succeeded -- exceeded by congressional action. it is better for congress to enable us to do this in a slow and careful way then to have the court's order us to do this asap.

>> john donnelly, thanks as always. >> thank you. >> we go now to president obama's weekly address. he talked about the package passed by congress, and the nuclear arms treaty. following that, the weekly republican address and legislative issues during a lame-duck session. >> 2 million americans who have lost their jobs will now know with certainty that they will not lose their emergency unemployment insurance at the end of the month. 8 million college students will

continue having access to the american opportunity tax credit. 12 million families with 44 million children will benefit from extensions of the earned income tax credit. millions of our entrepreneurs who have been waiting to invest in their businesses will receive a new tax incentives to help them expand, buy new equipment, or make upgrades. this package, which is so important for our economy at this time, was the product of hard negotiations. it was a give-and-take on both sides. i am heartened by our ability to come together to do what is best for middle-class families across this country. before congress breaks for the holidays, i am hopeful we can come together on another urgent priority -- the new start treaty that will reduce nuclear arsenals around the world and make it more secure.

we have had on-site inspections of russian nuclear facilities. that progress would not have been possible without strategic arms control treaties. during the past year, however, our old treaty with russia expired. without a new one, we will not be able to verify russia's nuclear weapons. without a new treaty, we will risk turning back the progress we have made with russia. which is essential to resupply of our troops in afghanistan. we will risk undermining american leadership, not only on nuclear proliferation but on a whole host of other challenges are around the world. ratifying this treaty is not about winning a victory for a

political party. it is about the safety and security of people living in the united states of america. that is why is supported by every living republican secretary of state, our nato allies, and the leadership of the united states military. the vice-chairman of the joint chiefs of staff, general car right, said this week that the military needs this treaty and they need it badly. that is why every president since ronald reagan has pursued a treaty like start. we have taken the time to get this right. the start treaty has now been under review by the senate for seven months, gone through the 18 hearings, nearly 1000 questions have been asked and answered, several republican senators have come out in support for ratification.

every minute that we dragged our feet is a minute that we have no inspectors on the ground at those russian nuclear sites. it is time to get this done. it is time to show the same spirit of common purpose on our security as we did this week on our economy. politics stops at the water's edge. that's saying was coined by a republican senator, who partnered with a democratic president, harry truman, to pass landmark national security measures at the dawn of the cold war. today, over 60 years later, when we are threatened by an array of other dangers, and that is a principle we must continue to uphold. thanks, and have a great weekend. >>

>> this week, even before these new reinforcements have taken their seats, republicans show the american people we got the message. everyone can see how your choices have changed the terms of the debate here in washington. first, republicans prevented a massive job killing, new year's day tax increase. every american taxpayer was looking at a much higher tax bill in just a few weeks. those higher taxes would have been devastating to millions of american families and small businesses, and it could have increased the risk of a double dip recession. our agreement keeps marginal tax rates low, preserves the $1,000 per child tax credit, extends relief for the marriage penalty, blocks higher taxes on capital gains cannot protect at least 21 million american families from the alternative tax, and reduces

the sting of the death tax on families and small businesses. this agreement was made possible because the voters gave republicans much more leverage at the negotiating table. our leverage forced the white house to abandon their rhetoric, stop pandering to the left-wing base, and do the right thing. republicans delivered even more at tidings of comfort and joy this week by holding the line on reckless government spending. despite the willingness to work with republicans on taxes, senate democrats went their own way on spending by proposing a nearly $1.30 trillion omnibus bill on the american people and by insisting we would have to vote on it before anyone would have the time to figure out what was in it. this was near the 2000 pages long and a combined 12 separate appropriations bills that were never debated or amended.

it included more than $1 billion to feed the beast both obamacare, part of which was ruled unconstitutional just a few short days ago. senate republicans stood together, but we did not stand alone. millions of americans made their voices heard on facebook, twitter, and other social media. you lit up the phone lines across the nation. thank you for doing that. you helped strengthen the resolve of the republican caucus and rattled the nerves of the big spenders on the other side of the aisle. as we approach christmas, it is easy to see how much you have changed our nation's capital. last year on christmas eve, senate democrats passed a $2.60 trillion health-care bill. this year, god willing, washington will give the american people a far better

gift -- a silent night british have a joyous holiday season, keep our troops in your prayers, and remember that the best days for our country lie ahead. thank you. > [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> we take you now to the floor of the senate. john mccain is debating the start treaty with russia. senators are also debating the "don't ask, don't tell" policy in the military. a vote has been scheduled for 3:00 p.m. eastern. if it passes, it will be the first that in ending a 20-year ban on allowing gays and lesbians to serve openly in the armed services. also, failing to move forward in the senate on the dream act, which would provide a path for

citizenship for young illegal immigrants. we have been hearing throughout the day from senators as they break from these debates to talk to the press about their actions on the senate floor. we go now to senator durbin, talking just after the failure of the dream act. >> today, we had a chance to make a dream come true for tens of thousands of young people across america, a dream that they could have a chance to be a part of the future of this great nation. it has not changed our resolve at all. the expansion of freedom and justice to out our history has

required determination, courage, and persistence. these young people or the next generation of leaders in america -- our doctors, lawyers, engineers, congressmen, senators. they must be part of this nation. i want to personally thank all of the people who worked so hard to date for this passage. let me start with the students. i met with a group last night and spend -- who spent 28 hours on a bus to come here to this a vote, to walk the halls in congress, too big a chance to be a part of america. i know they will continue as heartbroken as they may be at this moment. i promise, and will never give up this fight until this act is passed. as long as those young people are determined to be a part of this nation, i am determined to stand by them so they can call america home.

i thank my colleagues, particularly senator harry reid. i thank him for his friendship, his kind words, and for his help breed there were so many words on the floor of the senate today. i don't know where to start. i want to thank my colleagues for stepping up. they believed it was the right thing to do. they have written their names in the history of this institution with their dedication to justice. >> thank you. thank you, senator dorgan, and i want to thank him for his leadership on this issue. i would like to believe that we are a society that places acceptance over the lost for punishment. i believe we are still a nation that would rather well, our promising youth with a warm of race rather than with a cold shoulder because of their

parents' actions. unfortunately, these core values -- this is a vote that will not soon be forgotten by a committee that is growing dramatically in size but also in power and political awareness. since we cannot get justice on the floor of the senate, i certainly believe we will seek to get justice at the ballot box in two years. let me make one last comment. we are where we are today because the republicans insist on a super majority vote. clearly, the vote today demonstrates that a majority of the united states senate would make the dream of these young people to serve in the military of the united states and/or through their intellect serve the country an opportunity.

clearly a majority of the senate believe that with the 55 votes that were cast. it is only because of the insistence of a filibuster, that 60 votes are necessary. it is a shame that these young dreams must be subject to a political tactic, but that is where we are today. i am incredibly disheartened that less than 1% of the republican caucus voted for this, including members who have come from states with enormous immigrant and latino populations. that is why, ultimately, at the end of the day, -- would never. -- whatever. [laughter] at the end of the day, 10% of 42

is 4.2. the bottom line is what happens to a dream deferred? does it dry up like a raisin in the sun or does it explode? this dream is going to explode and it will someday become a reality. for today, it is a shame that politics took the center course of this event. >> to think that some republicans are saying they are not going to vote for the start treaty now because we had a vote on the dream act and "don't ask, don't tell." how is that? there is no excuse for some of our most patriotic americans. how they were treated this morning. i call them americans because that is what they are, that is

all they know. this is the only country they have lived in in their memory. they did not decide to come here. they grew up here. they had gone to school here. they want to continue to contribute to the society of their country. they love this country so much, they want to go to college and become a part of our society. they will volunteer to put their lives on the line and die for a. the military knows this, which is why they support this legislation. senate republicans have spent years demonizing of these children. they have played to people's worst fears. we are not going to give up. the dream act is going to pass. it did not pass today, but it is going to pass.

it is the right thing to do, not just for the future of these young americans, but for our own. it is good for the country's economy. we are going to keep fighting for fairness and for immigration reform. this dream shall never die. i asked to be excused so i can go back to the floor. >> america is a country where dreams are made, not crushed. today, and dreams were crushed. my message to these young people is never fear. we are going to fight because this is the right thing to do. i would ask everyone of you here in this room to think about what it would be like for you if you suddenly found out when you were 17, 16, or 18 that your parents brought you here when you were

six months old or seven months old. just think about it. you would still be the same person that you are today. you would be the same patriotic person. you would still love this country. you would only know this country. what happened here today, to me, is beyond said. because it is a lose-lose for everybody. these young people who find themselves in a state of limbo, for the communities, i can speak for my state where we want these young people to stay in our state. we want them to go to school. we want them to make their families cannot be productive, and contribute. but in closing, let to realize we got 55 votes. that is solid. if not for a republican filibuster, we would have won

this issue. so, i am absolutely committed to working on this project my mother was not born in this country. she was a naturalized before i was born. what is happening to these young people could happen to anyone. we need to stand with them. i want to say to the victor and bob, my deepest thanks for your dedication. i was having dinner with my husband and a group of friends with senator durban. all right in the middle, he said he was going to the floor because he had to speak. i could see that his mind was on this. he was dead -- he is dedicated. this is just temporary.

>> in vermont, we don't have enlarged immigrant population by any means. vermont believes in fairness. vermonters i go back to the flou are reminded of one thing. we should not punish children for the actions of their parents. giving them a path to lawful status to gain citizenship is just that. it is wrong. it is absolutely wrong. as the grandson of immigrants, i cannot understand how anyone could have a filibustered this. it is a moral question, and it

is immoral to stop their path to citizenship. >> thank you. let me salute dick durbin for his pushing, pushing, pushing so that while we did not succeed, today's vote does represent progress to get that many votes shows its inevitability. second, bob menendez has been such a beacon in your caucus about doing the right thing when it comes to issues, not only the dream act, but immigration issues in general. the reason we are here today is because despite pressure from every direction, harry reid said we were going to have a vote on this because it is the right thing to do. a few quick points. first, the dream act is part of a grand tradition welcoming those from foreign shores to be here. in my state, in the 1700's,

there were concerned because the dutch did not want the british to come. it proved to be good for our state and good for our country when we welcome new groups. immigration gives our country strength. it is one of the reasons our country is in much better shape than europe this is because we welcome the best and the brightest of all foreigners and say, become americans. work hard. learn english. be part of america. it is going to happen with these young people. i know they're disappointed. i saw the looks on their faces when we saw the vote finalized this morning, but they have started something that cannot be stopped. immigration reform is hardly dead. i believe, as chair of the immigration subcommittee, and

senator leahy supports, we can move forward on immigration next year. this is an issue where bipartisanship works best. last year, we're disappointed we did not have republicans, but we are hopeful we can get some this next coming year, and hopeful that immigration, including the dream act, can be part of the things the parties work together on. it will be tough because there are so many cries from every direction to stick to the status quo. most americans don't want the status quo. they know it is broken. they know it has to be fixed. finally, i would like to also salute those young people, both in new york and here, who don't let the dream die. they are in inspiration, and they will inspire us until we

pass this legislation. >> thank you. i would like to thank my colleagues for their leadership. i will be brief. i have a slightly different perspective than a lot of people because i was a superintendent of a large school district in this country. day after day, week after week, i saw young people giving their very best, competing as hard as they could compete on the athletic field, developing new ideas through technology, whose only interest is contributing to our country, and whose only country is this country. i was thinking about them today on the floor as this vote failed. i was thinking about the thathers and the principleals day after day do everything they can to lend encouragement and support, saying, somehow we will

figure out how to get to to college. what i want to say is what i used to say as superintendent to those young people. don't be worried about what this the -- but the senate did today. we will fix it in the future. to the and people from colorado in particular that have called my office, come to my office, walked these calls, were in the gallery today, please don't give up. don't be disappointed. we can get our act together here. we have got to keep this fight going as long as they are willing to continue to work as hard as they are working for the future of this country. we will be back. i want to say, the last thing i said, i come from a complicated state politically on a lot of issues, the people of my state want to see democrats and republicans work together.

comprehensive immigration reform is not a partisan issue, until 20 minutes ago. maybe two years ago. if "the wall street journal" editorial board and "the new york times" editorial board can agree, democrats and republicans should be able to agree on this, and surely the senate can find a way to reach across the aisle to pass immigration reform. thank you. >> i want to thank dick durbin for his leadership on this bill, who has been so impassioned and so forceful in his advocacy. i want to recognize bob menendez, who has been a visionary for us on immigration issues, and plain old fairness. i think them both for their leadership and dedication. our country was founded on immigrant. we are nation of immigrants. everything we believe in is because of our immigrant past. because we have such a rich nation, that is what creates

growth. it is part of economic growth, educational growth, part of the future of this nation. to deny the young men and women who came here through no fault of their around the opportunity to achieve the american dream, to become a citizen, to serve in our military, is a grave injustice. i stand with my colleagues here. i agree with the senior center of new york. we will achieve this. we will make sure we pass the dream act and have comprehensive reform. it is a mandate for this nation and essential for our economic future. it is essential for who we are as americans. >> how do you respond [inaudible] republican said you democrats did not offer any opportunities for amendment. >> it has been up three different times. each of those times, the republicans voted for it. they have been part of the conversation.

what we have tried to do is to accommodate their concerns. they said, don't offer it as an amendment to the defense authorization bill. it should be free standing. we made it a freestanding. they said, tighten up the eight. lower the age. i did not want to do it, but we did. they have preserved -- provisions were they had to complete something before they went forward. they said, don't call this bill until we have considered tax bills. we waited. we have done everything they have passed. each time, they have come up with something new. this bill has been there for 10 years. we have worked on parts of it. they know what is in it. i expect them to come up with some new reason. i don't think it is a valid reason. >> how could you say that we can work on it next year if [inaudible] >> it can only be done next year. comprehensive reform could only

be done this year on a bipartisan basis. i am talking to colleagues on the republican side of the aisle. i believe it is possible. i'm certainly going to try. >> what would be the timetable? how soon? >> chuck chairs the immigration committee. we first need to sit down with people on both sides of the aisle and see if we can come up with a framework. he will be the leader. >> there is no timetable yet. we're talking right now. >> what needs to happen differently to get this issue -- >> we have to have bipartisan support. we don't. it might happen. i think what changes is two things. first, the rightness of the issue. second, many of our colleagues on the other side of the guy all

looked at the election results in three states, colorado, nevada, and california. the hispanic vote was actually higher for democrats in 2010 than it was in 2008 in senate races. i don't think any political party can succeed writing of such a large percentage of america. that why. >> would you be willing to introduce another defense -- >> it would have to be done in a comprehensive way. we showed our goodwill. we are not against closing off the border as part of the solution. it is not the only solution. it won't work on its own. we are looking for comprehensive reform that includes strengthening the border more than we did in the legislation that i introduced last summer.

you cannot just do border. we have done border bills. it does not solve the problem. it helps. >> to get to a vote today on the dream act, senator reid had to give up on the omnibus, which included $1 billion for health care. >> they are not related. senator reid approved the omnibus after it was clear we did not have republican support. we started with as many as nine. they were named republican senators. then, senator mcconnell and leadership on the other side started picking them off one after the other. when senator reid made his announcement, we reached the point where we had no majority. >> are you now concerned about funding for health care? >> i am absolutely concerned.

the cr approach to funding government make dramatic cuts too many agencies observances -- agencies and services. this is a poor approach to running a government. >> [inaudible] >> i am not sure they had any relationship, to be honest. it is more in the core principles. in terms of politics, i think members have made up their minds. >> were you surprised by the five democrats [inaudible] >> i have known the names of most people and how they would vote for a long time. we have been working on the fringes to try to get the five. we hope for a few more on our side and on their side. we did not achieve it today. >> let me ask you about another bill. [inaudible]

is that dead? >> it is not dead. the conversation is still alive on the floor today. >> [inaudible] >> things change in the senate and we are now in active conversation. i worked on this bill for such a long time and had strong bipartisan support. it had strong support in the house. it can be included in our wrapup of this lame-duck session. the conversation is back on track. >> [inaudible] >> senator read it feels strongly about this issue because of problems he has had in his home state. >> you have two of your biggest issues now at stake. you have worked a decade on each? >> yes. >> right now, both of them,

their fate is not assured. what, if anything -- >> what is at stake? >> if you are not patient, don't run for the senate. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> senators are talking about the failure of the dream act to move forward. the bill was voted down earlier today 55-41. it needed 60 votes to progress. currently on the senate floor, take a look. a final vote on the repeal of the military posy don't-ask- don't-tell policy. we expect a news conference on the final vote to follow. until then, let's take a listen to your calls and comments on

"washington journal." host: here is the headlines i was talking about this morning. the death of the spending bill was a set back for the white house.

host: so there it is. specifically when it comes to spending and the spending bill, this is the editors of the wall street journal. they say as for the demise o the $1.1 trillion spending bill, do you believe in miracles? the credit goes to senate leader making the political stakes. the gop senators who change their mind watching for the discovery of the physical principle. there you go.

the idea of what is happening. number also be on the screen as you watch this. if you want to participate on ip put this morning. host: no stranger to these issues, n paul. here is what hhad to say. >> i want the markets to regulates to allow the fed to regulate the congress. the housing bubble came from too much credit and from all the

mandates saying you must have taken these loans. under these circumstances that banks have to make certain loans that are risky. >> you think regulators should be pulling become i don't think the financial chair services subcommittee. let's go to your calls over spending issues good morning.

thank you for holding on. i've been on hold a little while here. i keep hearing so many things about the taxes and tax breaks. it's $75,000 a year or up to $110,000 gets this tax break. over $200,000 gets this tax break. i'm a cook. i was a chemist in school. i haven't heard anybody talk about the people who do the work and don't get paid anything. we work,e sweat we bleed. >> what should that mean for the

next congress coming in ashey ke on money from taxpayers. >> i appreciate taxpayers. i really do -- the tax breaks they are giving me host: paul on the republican li line. there's some that are worthwhile and need to be done. you have your ones that you really don't need. like turtle crossings in florida. what are they going to ? there's a lot of these bills that are just ridiculous. as far as the economy is going

anyways, we have a bigger problem here in the public sector than we do there in washington than in unions. we can't lift everybody up. i think with the legacies and erything else. let's be honest. bus driver, i was making $18 an hour. somebody making $9 an hour is walking to work. it is out of kilter with the unions they don't want to touch

this or that. but you know what, for the untry, i'd give back. >> i have a few issues here. caller: one is how roger has been in on this. second, the bush tax cuts did not create jobs like he was supposed to. there was a surplus that came in. unemployment was double the amount. i don't agree with the way that the tax cuts was handled.

the top 2% of theed population got the best tax cuts. overall tax has been hurt. i haven't had a raise in four years. the company i work for, most of the nurses don't even have health insurance. i don't think the top 2% create jobs the way they say they do

not going to change anything. they are going to cut and continue to take care of their people that put them in office anybody who goes to washington, they get sucked in. in a year, they are like the rest of them. if you make between that and a million or take in $200,000 to

$500,000 a year that's some of the analysis. as you are looking at that. those savings will continue on. jo i wish that there would be an amendment brought up by the constitution in the house. every bill has to be read by congressmen and senators i

believe if that was the case, more of our senators and congressmen would be able to understand what's going on the economy is in the tanks host: as far as the earmarks are concerned. the number is more than three. the average number of earmarks per page in the spending bill.

caller: good morning. the tae party stopped the spending bill. we lit up the senate switch board. the conservative people and tae party members who everybody chooses to attack are the people who say enough is enough. they are the ones saying if you don't pay taxes, you don't have a right to get money back. we are saying pay your own bills, take care of your own actions. leave me alone. the tax cut was not a tax cut. everybody that pays attention knows that host: now you have a lot of these tae party elected

candidates coming into office next year. what will happen to them? caller: i know what will happen. the pressure will stay on them. i'm not going to way. if they vote against my best interest, which is not spending my money. leave me alone and let me make a living. i've been self employed for9 years. i do not draw unemployment. anybody that can sat on their rear end and draw unemploy mroment is a disgrace for this koirpt. when you can sit n your tale three years and not go hunt a job, you need to get out of here host: the associate press this

morning. the unexpected tax bill. social security recipients

austin, texas. go ahead. caller: you got $1,000 for child cost credit. we have 350 million americans if you gave 1 million to every american wake up. how stupi could this be.

350 million votes. we'll ge millionaires and we can pay taxes. caller: i'malling about the politicians the foreclosure statements all the rating agencies to allow the bonds they kept selling. i can't remember what it is called. all the banks, the hedge fund

manager. everybody keeps talking about fanly may and all of that they had nothing to do with greece and other things the same hedge fund manager i'm tired of nobody speaking up about what have happened. i'm not a democrat, republican or independent host: you are calling on the democrat line. caller: well you don't have a line for me

host: when you take all that no account tae partiers came in. they are going to get all the laws passed. nobody is thinking about all the fact host: we'll lve it there

running a small business. never mind the tax extras we get. if we are bidding job and i'm looking at employees i can't afrd to try to pay $10. there for, there's no way i can bid projects for money. more than the tax percentage drops. if i can't afford to hire people. i can't bid the job.

there's no tax for that. the house made one gesture to government spending. the 1.9% lawmakers. level proposed earlier this year.

p >> you never hear anydy talking about talking about the poor people. it is always middle class and up. that's because middle class people, poor people like myself and many others wouldn't have a job. i think giving them a tax break

is a great thing host: on the democrat line. caller: good morning. the senate white house proposed a bill >> i wondered if you heard anything about this bill. thank you. >> josh, the republican line. >> we could force the deficit if we forced all the n -- and j --

out of this -- host: excuse. we won't allow that on this show. i apologize to our viewers for that. caller: i watched the dete. the whole thing. the length of time and they yanked it. we watched the debate. then they got up there and talked about how a lot of them put the earmarks up there.

half a billion. i don't get that at all. how is that going to help you. i appreciate it. happy holidays host: i appreciate it. we invite you to use a tool we call c-span library if you want to hear claire's thoughts, you

just type in her name there as you look at it, what do you think about the spending in the new year in congress? caller: i don't like the spending host: what don you like about it specifically? caller: i know my husband here is a teamster. we have been cut 15% then they took a week's vacation from him.

if we could huge et congress like that. they make well more than we do here we don't get help with anything. i really think they need to cut spending from themselves. they get their whole spendg paid for for their whole life. my concern is we do not have a spending problem. the country is revenue starved. president clinton left us with a surplus. i don't even agree with president obama's tax cuts.

we can't afford middle class, upper class or overs. revenues should be raised somehow. th balance is out everywhere. we can't aord

host: would you advocate with spending cuts at all? caller: r caller: efficiency in all departments. we do not have a spending c problem per se. we have the spending now. $1.5 trillion in cash and all. we all spend it there. then it talks about the 20th amendment. p

caller: thank you for your format. calling from sacramento, california. when the obama admintration ran. there hasn't been enough public work jobs at all.

too much regulation, laws on the construction site. we have greater technology it kes too lon to process. when y have a change order,t takes 30-60 days to get the change over we have to get people back working on the

country. look there. they have billions on wl street. it is a false appearance. not working. if we can't proce and build or help the infa structure, what good is this country. you watch that little debt domenici out there we could never catch it. that would take sdz 1 million. i don't have $1 milwaukee.

caller: for that last caller. because of the few conservatives, williams got the trade bills of high-trade jobs. along with those trillions of lost tax revenues which is why the debt is dpelting so big, social security is so short. they keep extending unemployment benefits. the government needs to take care of their deal they are economic traders to this

country. we need people to trade with this money host: separate from spending. christine. i have two things i want to bring up if possible. the first thing is remove the debt in general. they were planning on not approving the extension in the office. it must be approved to raise the

debt ceiling when that happens to us, it will force the entire world's market. you've heard this talked about by television stakes around the worl if that happens to us, it is going to force the entire world into depression. it's an ignor >> we take you live to the

offices of the senate, which just passed a bill to repeal the military's "don't ask, don't tell" policy. you are watching live coverage here on c-span. >> good afternoon and thanks for being here. the events of today that have led to the passage of legislation in the senate to repeal "don't ask, don't tell" by a vote of 65-35 -- 31. four senators were absent. 2/3 of the senators voted for the repeal. it is a thrilling day. it is one of my best days in the senate, not just because i was committed to the cause, but because at teatime -- at a time when the people of our country are justifiably cynical about the partisan politics that prevails so often in washington and stops us from getting anything done, we have proven

across party lines that you can get something done. there were eight republicans who voted for repeal. this repeal would not have happened without the support of our republican colleagues, led by senator susan collins. i feel great about it. it was the right thing to do for our military, for our country, and i stress again that perhaps, as we enter the holidays now, it is also the best thing we could do to say to the american people that we are still able to come together in a bipartisan way to right a wrong and do something in the best interest of our country. >> let me begin by saluting senator lieberman for his extraordinary leadership. he has been steadfast in his determination to repeal this unjust law.

without his persistence, we would not be standing here today. i also want to thank senator yudal and all of those who have worked so hard. i particularly want to thank my republican colleagues who voted in favor of repealing "don't ask, don't tell" it was a difficult vote for many of them. in the end, they concluded, as i have concluded, that we should welcome the service of any qualified individual who is willing to put on the uniform of this country, fight for us in war zones such as afghanistan and iraq, and put freedom on the line for us. so, i want to thank all of the gay men and women that are

fighting for us today in afghanistan and in iraq. we honor your service. now we can do so openly. this is, indeed, an historic day. i am just delighted with the strong, bipartisan vote. >> thanks, susan. senator yudal has been a steadfast partner in this. >> thank you. i am flanked by two enormously courageous leaders. it has been a privilege for me to play a small role in this very important success today. we were talking not much more than a week ago. the senators came up with a way forward, to put a bill in front of the senate after the house considered the same bill. i know we feel very grateful to

the leadership of patrick murphy on the house side, to leader hoyer, and the republicans who joined us today, i echo what senator collins said, important and courageous votes. before i really wish the lectern, i did want to mention the important leadership that secretary gates has brought to this important question, as well as admiral mullen. it was a privilege to hear him. it will go down in history as getting to the core of this matter, which is, if a young man or woman, in some cases, not so young, want to serve, they should not have to live a lie in order to act as a patriot would act. again, i know we are loath to credit what happened -- we will let his story and determine the impact of this.

this is a very important day for those americans who want to defend our freedoms and service. >> we are open for questions if you have any. >> openly gay people will now be getting medals and awards, and held up as heroes. there's a broader social debate as the place the people -- gay people hold in society. how will this impact? >> only 15% of the gay and lesbian soldiers surveyed said they would reveal their sexual orientation. you are right. more openly gay service people will be honored for their service, as they should be. in that sense, two things. one is that we will be true to what america is supposed to be about. we're supposed to be about how you do your job, not who you

are. gay and lesbian americans in the military will not be seen as gays or lesbians. they will be seen as what they are, american soldiers. patriot. when they do exemplary service in our military, they will be seen as american heroes who happen to be gay or lesbian. it is a step forward to a larger societal acceptance, frankly, social reflection. this legislative action by the senate and the house this week, i think, is a reflection of the changing values, if you will, of our society's acceptance of people just based on how they do their job, not on who they are. i think one of the great -- this is a civil rights piece of legislation, in my opinion. is ine're saying here

america, regardless of your race, religion, nationality, gender, or sexual orientation, you know, to play by the rules and work hard, there is no limit to where you can go. the reason i say -- society is ahead of us in this regard. it struck me. i kept hearing this over and over from our colleagues and people who would call me about this. one of the changes that occurred as our society has become more accepting of gay and lesbian americans is that they have felt more comfortable and encouraged to indicate what their sexual orientation was, both in a public context, but particularly among family and friends. we are at a point where there are a lot of families in america now who either have a gay lesbian member of their family or a close friend. when this legislation comes up,

or legislation like it, it is not about them. it is about us. that is the way it ought to be. we are all american. this is a significant day. kirsten gillibrand was part of this. she refused to give up. please. >> i can say that this is really what the american people asked us to do. the last election was about a statement by the american public saying they want public servants to come together to get the people's business done. i can think of no more important piece of legislation then appealing this corrosive, discriminatory -- discriminatory policy, which undermines our security and military readiness. i want to speak about susan collins, who has been a leader and visionary on this issue from the beginning. i can remember the first hearing when we had a hearing on "don't ask, don't tell," and susan

collins asked the right questions at the right time of the right people to make a record of why this policy is so unjust, why this policy undermines military readiness. .

>> what is your message to the republicans that voted against this? >> it takes time to change long-held beliefs. i believe if we had this vote five years ago, it would not have passed. 17 years ago, it was a democratic president who signed into law "don't ask, don't tell." so i think our society is changing and that it is important to remember who was in charge when this policy was enacted 17 years ago. >> strategically, at what point did you see a clear turn when you knew this was going to happen? was there ever any thought of

taking the provision out of the defense authorization bill earlier? >> no. i mean, there certainly was some thought by people that wanted the defense authorization bill passed, and thought this would stop it. but just last thursday, because of the process that was being followed, we talked it, and we decided, you know, we have got 60 or more votes for repeal of "don't ask, don't tell". we have to find a vehicle so that the 60 or more votes can be in favor of repeal. that's why we decided on a sfand-alone -- stand alone bill. steny highwayer -- steny hoyer in the house moved it on rules in the house. in a matter of days we had more than 50 co-sponsors in the

senate, and our republican colleagues, senator brown, senator snowe, all said as this came closer, that they were committed on the principle, and they were really not going to allow any procedural questions to stop them from voting for it. then senator reed, once he knew he had the 60-plus votes, he argued very stren with us -- strenuously to take this up and not wait until s.t.a.r.k. he got upset. some people against "don't ask, don't tell" essentially said, if you move it quickly, you will not get the votes on s.t.a.r., so all that came together in a remarkable bipartisan show of support. >> many republicans said they would support it even last week. had you been lobbying before, or were you surprised that maybe more didn't join on? >> i had been talking to a

number of my colleagues. i knew, for example, that senator boynavich was going to be with us. he made that very clear that once there was an opportunity for a stand-alone bill, that he would support it. that didn't surprise me, because he has been a real leader on human capital issues in our committee and wants to make sure we are tapping the talents of everyone. in addition, i had spoke with senator bentsen, and i talked to a number of my other colleagues as well. i was confident going in today that we would have six to seven votes. i did not expect eight, but i

was happy to see we got eight. i was surprised and delighted by the vote by senator burr. >> senator kerr told us last week he couldn't vote on repeal because he didn't like the process, and in the last couple days, he told us he definitely would. >> his vote was a key vote and it was one we knew going into the vote that we had today. >> what day did he tell you? >> senator kerr i found out defi nitvely yesterday. he was pretty encouraging about

the fact that if it came up on stand-alone, it was likely to be favorable. >> i had a conversation with him as well. we had a conversation. and he, like many of us, was upset with the tactics that the majority leader had used last week, but indicated that he was very open to voting for a stand-alone bill. >> senator collins, can you take us through a timeline? >> it is important to understand that the bill includes discretion for the secretary of defense and the chairman of the joint chiefs of staff and the president to implement this bill, once they realized there would not be an adverse impact on military readiness. what they tolt told us -- what

they told us is that they need to undertake a training session. the comprehensive report and survey done by the pentagon lays out an implementation plan, as well. i am certain that the secretary will begin that implementation plan immediately. but it is going to take some time. it is not going to happen overnight. one of the compelling reasons for congress to act was the secretary's argument that the courts twr likely to overturn -- courts were likely to overturn "don't ask, don't tell," and that would cause an immediate implementation that might be very difficult for the pentagon to carry out successfully. so because we did the right thing today, we'll have an implementation that will be gradual but effective.

i'm sure it will start right away. i will guilt my colleagues about that, but from the conversations i have had, it will be months, not years. >> the important thing to say is that there is no time limit in the legislation by which the repeal has to be implemented. secretary gates was questioned about this a lot by the armed services committee, and he said and admiral mullen would not be able to say right away. >> the length of time is not important. what is important is that there is a process in place to do this right in a way that respects the military's needs to implement across the military. >> one thing that is going to change, no one will be dismissed under this policy ever again.

so the military will take their time to figure out how to apply all the different changes that have to be made to accommodate this change in policy. the reason this vote is significant, is that after today no one can be outed, no one can be dismissed, no one can be asked to stop their service because of their sexual orientation. >> if anyone wants to check the record, senator webb was concerned about implementation and yesterday he wrote a letter to secretary gates asking whether he would phase in and how he would phase in repeal of implementation, and he included his letter and the secretaries in the record today, and it comforted him enough, that he was a vote. >> what is the extent of the 9/11 health bill? are you optimistic you will get closure on that? >> we have had the votes we need. we have had indication from several republicans that they very much want to vote for this bill. they want to vote for a

stand-alone bill. there is a new pay-for that we're going to offer. >> what is the pay-for? >> a fee on procurement contracts for foreign countries. >> senator lieberman, just a question on the actual legislation. how involved was the president in getting the vote for you? also, are you sure or positive at this point that no legal action can intervene? i mean, nothing can change the course of this? >> let me take the second one first. obviously we had free access to the courts, and we are a very litigation oriented society, so you never know. but i think this is a strongly -based piece of legislation based in law, and i find that it is hard to surmount a legal

challenge to this. so we're on the verge of a repeal of this discrimtri legislation. the president's support was very important. president obama is the first commander-in-chief to very clearly say he was for repeal of "don't ask, don't tell," and during this legislative effort, he and his staff were greatly involved. he was on the phone in the last week or two talking to senators who were undecided. i can tell you because one of my staff members was with the white house staff and the vice president's office when the final vote was tallied. there was great jubilation among the white house staff. they very much wanted this to happen. >> thank you very much. >> thank you.

>> after 20 years of allowing people -- gay people to serve in the military as long as they didn't reveal their sexuality. "don't ask, don't tell" is being repealed. the president said he will carry out the changes carefully and methodically but purposefully. he also addressed the men and women in uniform, saying while today's vote is historic, it will take time to implement. again, repeal of the "don't ask, don't tell" policy, heads to the desk of the president after passing a final vote in the senate. we talked earlier with a reporter about the bill. >> so the senate is working on "don't ask, don't tell" this weekend. how did the democrats end up getting the votes they need to approve this repeal?

>> well, the main thing that they did was they extricated it from issue that is had bogged it down previously. september and november they held procedural votes on the issue and it got tied up before the election, it got tied up in discussions about immigration, and politically charged issues before the election. earlier this month, the swing vote was not in their favor because republicans will vowed not to do anything prior to acting on tax cuts or government spending. now the congress has acted on

tax cuts, so that issue is no longer there. they took the "don't ask, don't tell" issue out of the defense authorization bill that it had been a part of and considered it separately. there was enough support for many weeks to pass this, but it is because it got ensnared in these other issues, it delayed it. >> how important was this for those for it and against it? >> i think days little bit of red meat, if you will, for each side. for the left it will help energize their base, and ditto for the right. i think it is probably a plus for president obama, because the majority of the public believes that the "don't ask, don't tell" policy should be repealed. something on the order of 75% of the public in most of the polls i've seen. so it is kind of a non-issue for most people.

i think it is remarkable in the 17 years since the "don't ask, don't tell" law was enacted, the public attitudes have shifted on this subject. i think in the military, it is probably going to be largely a non-event. some people might leave the military over it, others might join because of the change in policy. most of our allies have changed this rule without any deletirious impact. >> what is the timeline to implement this one if the president signs it. >> i assume it will be super seeded -- superseded by congressional action. that was one of the arguments the pentagon made.

they said it was better for congress to enable us to do this in a slow and careful way than to have the courts do it asap. president obama should sign this into law quickly. >> john donnely, thank you. >> thank you. >> we go now to the t.a.r.p. oversight panel that said the treasury department's foreclosure plan would prevent only 700,000 foreenclosures, fewer than the millions the commission aimed to end. this is two hours and 30 minutes.

>> this is a continuation of a hearing that started last week, or a week before that, and we had to call it off due to votes a long series of votes. so i appreciate the second panel members for coming today. we'll first hear from senator whitehouse, and senator white house is very busy over in the senate and doesn't have a lot of time, so without any further ado, i'd like to recognize him. he has for more than 20 years

championed health care reform, solving fiscal crises, and investigating public crex corruption. senator whitehouse been a consumer advocate on various issues, particularly in the issue of helping home owners save their homes from foreclosure. we very much look forward to his comments and appreciate his comments to today's hearing. would you begin senator? >> i think you for the opportunity to testify. sadly, the home foreclosure

crisis remains a problem in my state. i appreciate that you are inquiring into this issue. >> would you pull that microphone up a little closer. thank you. >> i look forward to working on this committee with legislation next year. a constituent of mine, larry, attempted to get the home mortgage modification. time and again over a 19-month-period, the mortgage service asked larry to submit

and resubmit and resubmit document after document. despite larry having fedex and fact simile proof that he had sent those documents, the bank continued to say that he failed to send in the paperwork, the bank denied it. never once during his 19 months of many calls reaching anyone who appeared to have any authority to make a decision. after 19 months of this bureaucrat nightmare, the bank finally approved larry for a mortgage modification. the modification papers came to him villa fedex one day after a bank representative told him that he didn't qualify for a modification. while he's cautiously optimistic with those papers in hand, he still isn't certain that the bank won't change its mind again.

larry's story goes to the heart of the bureaucracy might mayor. home owners in limbo. when a home goes to foreclosure, families lose a home, community members lose on home value. often, the foreclosure is not necessary. i met with a group of rhode island realtors the other day, and every single one sitting around the table had the same story. each one of them had had at least one short sale nailed down with a buyer and a seller and had had the experience of a foreclosure notice appearing and interrupting the short sale. obviously that was the worst outcome for the home owner. it was also a worse outcome for

the investors, because the result from the foreclosure sale was worse than the outcome that had been agreed to in the short sale. in the age of securitization, the servicer serves as a processing agent and may not work in the interests of the people who actually own the mortgage. and in the age of corporate bureaucracy, the left-hand may not know what the right hand is doing. while poor performance demonstrated cash incentives alone won't get the banks to operate effectively and in good faith. a different mechanism is needed to ensure compliance. in the past, i have focused on getting bankruptcy judges to increase the principle the way they can for other mortgages on vacation homes, on loans for cars and boats. while i have long believed this is the most fishts and least costly way to keep families in their homes, and many observers agree, the large banks have fought against it with their

full lobbying p might. despite house passage of crammed down legislation in 2009, for which i thank and applaud you, we in the senate have been unable to overcome filibusters. i decided to add a different approach already underway in several bankruptcy courts. under programs adopted in rhode island, florida, and vermont, the court majored the home owner to sit down and negotiate in good faith a settlement that is preferable to foreclosure by all parties. while judges have the ability to appoint a formal mediator if informal talks don't work, in practice it has not been necessary in the vast majorities of cases. for most home owners, the mere chance to speak directly with their mortgage company, with someone who has some authority, is enough to lead to a mutually beneficial agreement.

under the bankruptcy loss mitigation program, the power of the court to compel good-faith talks breaks through the bureaucrat maze of the voluntarily modification program. the court, of course, does not have the power to force a settlement, but it can force the parties to talk to each other. that can avoid a costly foreclosure that will benefit no one. the courts have appropriately implemented these programs under their authority to convene pretrial status conferences. unfortunately one serviceor has challenged the authority of the bankruptcy court in rhode island to require it to come in and talk to the home owner before it forecloses on their home. i have no doubt the court's authority will be upheld eventually, but it could be years before the parties have a final answer. in the meantime, other judges may be reluctant to ad oupt opt

such a program -- may be reluctant to adopt such a program facing such a challenge. i have proposed foreclosure mitigation programs. that they can make someone talk -- make the parties talk to each other before they take away someone's home. it seems plain and noncontroversial. the american people are tired of taxpayer bail outs for banks, and we owe it to them to support a sensible program that comes at zero cost to the taxpayer. brupt bankruptcy will not be the answer for every home owners, but it can help home owners cut short a stalled application process and finally get an answer to their modification or request. one could even imagine the good sense of this could cause it to prop gate outside the bankruptcy process on a voluntary basis. in rhode island, bankruptcy loss mitigation has saved 100 homes

and has the potential to save thousands more across the consumer trifment once again, thank you for the opportunity to take part in this hearing. i commend your good work. thank you, mr. chairman. >> thank you, senator. thank you for the legislation that you have just mentioned. i think it is good in the judicial states. but there are about half the states, almost, that suffer from a nonjudicial foreclosure process. states like georgia, where i hail from. i'm looking at some legislation solutions to that process, some federal legislative solutions to that process which should smeas measure up well with your efforts. >> mr. chairman, it is states like yours and mine which are

both nontraditional foreclosure. the ability of a home owner to seek bankruptcy protection in order to stop the foreclosure and avoid all their creditors problems at the same time. i think it would be helpful in rhode island as well, not withstanding the nature of your foreclosure judicial process. >> thank you for your appearance today. >> thank you. >> now we will call for the second panel. >> i will now recognize myself for a brief statement. these are challenging times in

america. our economy is struggling during an unprecedented housing crisis, a crisis that is devastating american families and neighborhoods. too many constituents have contacted my district offices for assistance because the banks and lenders are losing their paperwork, failing to respond to their request for modifications, and failing to return to their calls in a timely manner. their lives are disrupted and turned upside down by the foreclosure process and by the shoddy procedures. the same bankers who came to congress with hat in hand demanding a bail out, the same bankers who couldn't have survived without welfare paid for by the american taxpayer, those same bankers have no problem summarily throwing the american taxpayer out of her home without due process, without accurate documents, without regard for the human

beings whose lives are being affected. so i submit to my friends from the financial industry, that our constituents, your borrowers are living human beings. they have blood flowing thu their veins. they care about their loved ones. they agonize over what will happen to their homes. they need to be treated fairly during the foreclosure process. one of the major causes of this foreclosure crisis was greed. banks and lending institutions fueled by greed put everyday hard-working americans into mortgages that they knew these americans could not afford. in last week's foreclosure hearing we had a chance to hear from a judge who has presided over more than 1,000 mortgage cases. he testified to the many

problems he sees time and time again in his courtroom, including situations where lawyers representing mortgages failed to know who they represented or they lacked the underlying note evidencing their entitlement to seek foreclosure, or they failed to establish the legal chain of title establishing the standing of their client mortgagers and they submitted to the court in some cases false affidavits attesting to the ownership and the note of the mortgage. preent press reports indicate that lenders have executesed foreenclosures wrecklessly and without adequate review of relevant documents. the practice of robo signing where lenders sign foreclosure

documents with little or know knowledge of the contents of the documents calls into question the legitimacy of hundreds of thousands of foreenclosures. other problems rampant in the foreclosure process include the collection of improper fees, poor underwriting, and improper servicing, not to mention the pervasive predatory lending that set the stage for the crisis in the first place. these are serious issues that do not appear to be isolated incidents but rather a systematic problem within the foreclosure industry. since 2007, americans have lost nearly six million homes to this foreclosure crisis. this issue is of the utmost importance to me because my home state of georgia ranks seventh in the nation for foreenclosures. foreclosure and predatory lending issues have always been crucial issues to me.

as a dekalb county commissioners i offered and passed georgia's first bill against predatory lending which state legislators later used as a guide in passing a state-wide law. as foreenclosures continue to surge, we must ask if mortgage services are doing all that they can to provide sustainable alternatives to foreclosure. how can we ensure that servicers have the training, personnel support, and judgment to properly service loans and interact with customers to avoid foreclosure. this is a time of economic and financial instability, and at the least families should be able to go to sleep at night knowing that they have a place to lay their heads. unfortunately, many americans live under the shadow of imminent foreslows sure and struggle -- foreclosure and

struggle against those often in competent and disinterested. i thank the chairman for all his hard work on this committee during this congress and for taking the time to hold this hearing. the clarme had to depart for a -- the chairman had to depart for another very important meeting and he asked me to chair this full committee today. i look forward to hearing from the winds today, and i yield back the balance of my time, and i will no recognize the ranking member of the judiciary committee and soon to be chairman, my friend, congressman lamont smith from texas. >> thank you, mr. chairman. mr. chairman, i was interested in your opening statement, because i didn't realize what you had done in the georgia legislature to help address this

problem. that was much appreciated and i am glad to hear you say a state law had been the results of your efforts. mr. chairman, let me thank the winds for -- at our last hearing for their patience. i regret we were unable to hear from you the last time, but we appreciate your efforts to be here today. errors in the foreclosure process are inexcuseable and undermine the due process rights of borrowers. there does not appear to be any intent. the documents are related town acceptable but cureable documentation defects. mortgage servicers will be held ablingt accountable for their mistakes, the larger problem is how to end the foreclosure crisis. we seem to be stuck in a dilemma

of the housing crisis and foreclosure process. the housing industry, which amounts to almost one-sixth of the u.s. economy has always been the economic sector that led the united states out of recessions, end quote. at the same time, it appears that jobs are what we need for the housing sector to recover. analysts at moody's have noted that without jobs, fewer house holds are created, and the existing households are unable to avord to buy a home. unemployment combined with an overall lack of consumer confidence is creating a drag on the housing sector. and by all indications, a weak housing sector is constraining the broader economy. so while the mortgage documentation problems that are the general siss of this hearing are important, the more important question is, how do we get the housing sector moving again? at this point, obama administration programs, like the home affordable modification

program, has succeeded in spending large sums of taxpayer money, but have had little success at foreclosures. hopefully we can move forward and create job creation and help the housing sector. i yeelyeel. >> thank you, congressman. in the insurance of proceeding to our winds and mindful of our busy schedules, i ask that other members submit their statements for the record. without objection, other members opening statements will be included in the record, and without objection all members will have five legislative days to submit opening statements for inclusion in the record. without objection the chair will be authorized to declare a recess of the hearing at any point. i will now introduce our second panel. first is mr. james kowalski, jr. he specializes in consumer

representation. he served as an assistant state attorney in florida from 1989 to 1996, where he prosecuted public corruption, sex crimes, and homicides. he's a graduate of the university of california, at berkeley, and the university of san francisco's school of law. he has also practiced in florida, one of the hardest hit states in the foreclosure process. he has also been at the forefront of the foreclose sure documentation scandal. welcome, sir. next is mr. thomas cox. he has been a lawyer for more than 40 years and currently is a volunteer program coordinator at the main attorney's savings homes project.

the project is jointly sponsored by the pine tree legal assistance and its affiliated main volunteer lawyers project. mr. cox brings to his hearing a unique perspective. while he currently represents home owners facing foreclosure, he used to represent lenders seeking to foreclose. i think his perspective will be particularly interesting on the foreclosure documentation issues that we are considering here today. mr. cox received his a.b. from colby college and his j.b. from boston university. welcome, sir. our next witness, ms. sandra hines, has had a flight delay, so they may not get here before we conclude this hearing. next i would like to welcome

vanessa fluker. she's an attorney that practices in detroit, which some consider to be one of the nation's home foreclosure epicenters. nearly every day she is in court representing those at risk of losing their homes to foreclosure. she is a leader of the moritorium now coalition to stop foreenclosures, evicks, and utility shutoffs. thank you for being here, ma'am. over the years mrs. fluker and chairman conners have worked very hard to have the state of michigan institute a state-wide foreclosure moritorium. we will want to hear her explain to us why such a moritorium is needed. ms. fluker received her joint m.a. degree in 2002 from the w.s.u. law school and the department of political science.

our next witness is tom deutsch. he is the executive director of the american security zation -- securitization forum. before that he practiced law in the law firm of katwalader, wickersham, and taft. he earned his b.a. from washington state university and his b.s. from the university of pennsylvania. welcome, sir. our final witness is christopher peterson, associate dean for academic affairs and a professor of law at the university of utah. he has a b.s., an h.b.a., and a

j.d. from the university of utah. it won't come as a surprise, but professor peterson has strongly diverge yenlt views from mr. deutsch on the impact of securitzation on real property law. so we are looking forward to the differing views from both of these experts. now, mr. kowalski, could you please begin. >> members of the committee, thank you for inviting us here to testify on issues related to the foreclosure crisis facing our country. i'm an attorney practicing in florida and a member of the education of consumer advocates. i would like to make a few clear points in follow-up to the comments at the last hearing.

first, the matter of significant documents to the courts is not a recent practice by the servicing industry. it is widesfread spread and longstanding. the use of robosigners, more accurately called robopejerers, where an individual submits testimony in the form of an affidavit, an affidavit relied upon by the courts in evicting a home owner, where the person has no idea of the substance of their testimony is not a recent practice by the servicing industry. these abuses are not the work of a few individuals or a rogue out-sourced unit of a servicer. the systemic use of manufactured documents and fams affidavits is a business model. it has been the business model of the servicing industry for years. i've been an attorney in florida for 40 years, starting fourth

judicial circuit in 1989. i served as the division chief and as the senior trial attorney in the special astault salt units and the repeat offender court unit. i was a member of the on-call homicide team, and i put three men on florida's death row. after leaving the state attorney's office in 1996, i entered civil practice and began representing individuals in wrongful debt collection, in wrongful mortgage foreclosure cases in the early 2000's. i took my first robo-signer or robo-perjurer deposition in 2003. as a result of handling wrongful foreclosure matters i have reached five general conclusions. first the servicing industry as a business model is irretrieveably broken. the application of servicing procedures to loan modifications or to that matter, to any issues whatsoever with the foreclosure

itself, has been counter productive. the clearest evidence of this is in the duel-track process where a borrower who might not be behind at all, who calls his or her serviceor to inquire about a loan modification or wrongly-forced place coverage or a posting error by the servicer will often end up months down the road with one unit of the servicer continuing to deal with what by then is a horrific customer relations issue while another unit of the same servicer proceeds blindly with foreclosure. the various branches do not communicate, are not permitted to communicate, and do not even have access to each other's computer systems. at every turn, the goal seems to be the diverting of servicer fees. the examples of everything i whether testify about are in the exhibits i've filed with my testimony. number two, affidavits and assignments of mortgages filed

in foreclosure cases are, for the most part, worthless. the overwhelming evidence in florida and around the country consists of proof that affidavits are committed by persons that not only do not read the file, they do not have access to the critical portions of the file. it is also now evident that signments -- assignments are created after the fact to attempt to show a chain of ownership, and many critical facts, such as the day of a transfer are not based on any evidence at all. the date often used by the assignment is the date the file was transferred to the law firm, not the date the servicer purportedly took ownership or the trust took ownership. i listened to a federal district judge last month describe affidavits as all surface and no anchor. i have never taken the deposition of an affiant or read or reviewed a deposition taken by another lawyer in more than seven years where the

application was wholly truthful. many law firms are overwhelmed by the demants demands placed on them by the industry and as a practical effect have complied with whatever has been asked for them to do. this includes law firm employees signing affidavits on behalf of their clients. the lawfirm employee had no personal knowledge and was acting outside the scope of whatever authority they might have had. number four, legal aid groups and h.u.d. counselors are a critical part of the solution and must be funded to provide support at all levels. number five, local counsel, unfortunately, has no connection to these issues. in conclusion, i would respectfully suggest that major servicers should not be believed when they assert borrowers are deadbeats and that speeding up the process and rubber stamping m.i.r.'s is the course we should follow. at some point we have to stop accepting the ever-changing excuses offered by the servicing

industry. if we are to restore trust in our institutions, we have to start at some point to restore the servicing industry. the duel-track concept needs to end immediately. fanny and freddie need to be incentivized. m.i.r.'s need to end. the servicors do not need a truth bail out to go along with the financial bail out that we gave them for abusiness mall practices. -- for abysmal practices. >> i would ask that you sum up at this time. i knee -- neglected to mention to the winds, each -- i neglected to mention to the winds, each of you have five minutes as indicated in front of you. there is a green, yellow, and red light. the green light cuts off arve four minutes. it goes to yellow, and then it

goes to red. so if you would, sir. please. >> lawyers will always say, i just have a few more points, but i do just have a few more points. as members of the national association of consumer advocates, we would appreciate the opportunity to form a bipartisan partnership to confer as regularly as you want with the members of this committee, with your staff, with o.c.c., with treasury, and with others to work through the short and long-term solutions to these problems. but at each step, the interests of american home owners needs to be considered first. thank you. >> thank you, sir. next we will have mr. cox give his statement. thank you, sir. >> chairman johnson, members of the committee, thank you for this opportunity to be here today. i am retired from the private practice of law where for many years i represented lenders in

loan mitigation matters. i have been working full-time as a volunteer with pine tree assistance in the maine attorneys savings home project. i have come to know this problem well from both sides of the street. at the hearing conducted on december 2, 2010, representatives from treasury, the federal houst housing finance agency, and the controller of the currency each said their agencies first learned of the issues related to dishonest foreclosure affidavits when the news broke in the press in september of this year. those were stunning admissions. these issues have existed for years and have been widely known to those of us representing home owners. there was a ma massive failure in the jove sight of these issuers. the issues we are talking about today should have been parent from a diligent application of foreclosure operations. because the time allowed to me to speak is so brief, i am going

to keep my comments solely with gmac mortgages. problems with gmac were first exposed back in 2006 by attorney kowalski whether he was dealing with a robo-signed affidavit that was executed in 2004. so we know these activities go back at least six years. the florida court sanctions gmac for that conduct in 2006, but gmac rewarded its employee, who was the cause of those sanctions with a promotion. she became the supervisor of gmac's document signing department where she is the current -- supervisor of the current robo-signer, jeffrey stephan. it was his dishonest practices that forced gmac to halt sales and evictions on foreclosed homes on september 17 of this year. stephan who signs 8,000 to

10,000 documents a month testified that when his affidavit states he has personal knowledge of the facts stated in them, he does not. when his affidavits state he has custody and control of loan documents at issue, he doesn't. when his affidavit stated that he is attaching true and accurate copies of loan documents to his affidavits, he has know idea if that -- no idea if that is true because he doesn't even look at them. he admitted that when there is a signed affidavit, he doesn't even bother to do that. further more, he testified his practices are fully in accordance with gmac mortgage practice and procedures. when gmac mortgage realized the damaging admissions in the deposition i took, rather than moving to correct the problem, gmac sought to cover it up. they sought money sanctions against me personally for sharing that deposition transcript with other foreclosure defense lawyers around the country.

they sought an order from the court that it be used in no other case, and they sought an order from the court that it be retrieved from my lawyers who had received it from me. in the end, the maine court denied the motion for sanctions that gmac sought and imposed sanctions against gmac for its bad-faith practices and ordered them to pay fines in that one case alone of $12,000 to $27,000. very recent actions of gmac shows it is not prepared to cease its practices. at the hearing on housing -- in november, 2010, the parent corporation of gmac mortgage testified that gmac is no longer proceeding with foreenclosures based upon stephan's affidavits

without first going to the court and determining whether they can use them. this fall we noted that gmac was proceeding with foreenclosures based on false affidavits. we brought a maine court class action against gmac seeking to stop it from using these offensive practices. gmac has vigorously opposed that effort. to prevent the maine courts from considering our request, gmac removed our court to the united states district court where the anti-injunction act prohibits that court from enjoining any state proceedings. in light of these efforts from gmac to avoid consideration of injunction, the district court ruled this past friday that even though we clearly had a right to a hearing on the merits in the state court, that court was powerless to grant any relief. i submit to you that there has been abuse of our judicial

systems on an unprecedented and truly massive scale. economic interests are driving this abuse. until these perverse economic interests are addressed, until regulators start monitoring these loan services, and until the force of the criminal justice system is brought to bear upon the dishonest practices, including just the robo-signers, including those aware of and ordering this conduct, there is not likely to be enduring change in this industry. i thank you for allowing me to be here today, and i welcome your questions. >> thank you, mr. cox. next we will hear from sandra h einz. she is a life-long detroit resident and social worker. she brings to this committee her

personal experience of being evicted from her family home. she has turned those painful experiences into valuable resources that she uses to assist others facing foreclosure. she has been a tireless aed vow indicate -- advocate on other important issues and concerns to the citizens of detroit. we welcome you to the hearing, and we would like to hear your testimony now, if you would. >> thank you. >> thank you. >> i want to first thank the honorable men and women here who can make a difference in our lives for the men and women in america. i lost my family home to foreclosure and eviction, and i don't know if anybody here knows anyone or has had anyone in their family lose their home, but it is an uprooting. we were uprooted.

i still have a hole in my chest every time i think about it, because my mother and father worked real hard to get that house. we moved 1635 detroit michigan in 1970. when we moved into that home, we were the second black family on the block. my mother was seeking a better way of life for us and a better environment. my mother put in a new furnace, a new hot water cooler and heater. she had the porch redone, she had-on-ings put around the house. she had, before my father died, central air conditioning added to the home. my sister and my father were g.m. workers. my father worked for g.m. almost until the day he died. he contacted -- he contracted cancer from working in those

foundaries. lead and everything else. i am here to say we believe in the american dream. ploft of the -- most of the people that bought homes in america believed in the american dream. now we are afraid of the american nightmare. none of us would have thought the government would have turned their backs on the american people, and the bazz decided to trick and rob people out of their homes. we can sit -- i'm disappointed the room is not full. i don't know, maybe this is a special committee, and this is the only committee that's listening to people that are really trying to save their homes, but i wish every chair was filled in this room so they can understand the pain associated when you do lose a home of 40 years. we lost 40 years of memories in the calm snow on a day like we had in detroit where it snowed all day, the ice was covered over, they threw us out in

conditions like that. they took my mothers antique furniture and threw it over in the dump center. the baliff out there with his gun to tell us he would kill us if we tried to come into our -- if we tried to stop them from coming into their house. it was the most horrible experience i have had in my life to lose a home i lived in 40 years. where do we go on chris palace now? we stay in apartments. where do you go on easter when you don't have a home anymore? what can we call home now after all the years that my father worked at general motors and my mother worked for neighborhood service agencies, helping people all her life because she was an investigator for j.d.o.? and my mother -- our house was paid for. the part that hurts me so much,

my mother told us, my mother said, don't remortgage the home. if you remortgage the home, the bank is going to steal it. she was telling my young friends who were first-time buyers who were buying homes at that time that were coming to my mother, didn't understand what was going on, and i'm talking about like in 2004 and 2003, they didn't know this was the beginning of foreclosure and eviction. my mother encouraged them and begged them, don't remortgage your home. a couple of them didn't, and they have their home today because they didn't. the ones that did don't have their home. they experienced foreclosure and eviction just like we did. i just don't know why we have to come and beg people that we put in office to work for us to work for us. what has happened to america? i mean, i don't get it. i don't get it why you-all are sitting here and making these in

our lives and throw us out of -- and you can see if you throw us out of our home, we don't have a life. your life changes. you got a home. you got money. you got health care. you got the best insurance that anybody can have. you problem -- probably have the best homes that anybody can have. don't you think us americans want that, too? isn't that what america is supposed to be about? the land of the free and the home of the brave? the people want, the people have worked and built america to what it used to be. because america ain't what it used to be no more. my mother said you-all will turn america into a third-world country. well, you are just about to see it. come to detroit and see the neighborhoods ravaged by foreclosure and eviction. you drive down 367, houses on one block, 10 on one side, 10 on

the other side, seven or eight of them have been shut down because of foreclosure. i don't know where those people are at. i came here to tell a story of the people. maybe if the people tell the story, you-all will get it, because ain't one of you being able to affect the other one. i see people argue on behalf of the people. they get shut down. it is not like they are not saying anything that anybody else is listening to. so we have to come now, and i'm going to tell you, i wasn't on the roster to come from detroit. once i found out you were having a hearing, i asked my friends to send me money to come here. .

stealing everything that is not nailed down. people in office are not doing what they were elected to do.

>> ms. hines, i want to thank you for your statement. >> i know that my time is up. i know that i seem as mad as hell. >> thank you. next we will hear from ms. fluker. is it fluker? >> yes it is. >> if you will pull the microphone up. is it on? >> it is. >> i don't think it is working. perhaps, if you will grab one of the other microphones, that will be good. >> is this better? >> that is much better.

>> i would like to thank the committee for having the opportunity to come here today on this important issue. i am from the city of detroit michigan. we are almost at the top in foreclosures leading to evictions because we are a non- judicial state. hertz, i would like to address the perspective of -- first, i would like to address the perspective of the media perspective that we have all these media reports that people bit off more than they can chew and moved into homes that were beyond their reach. this is not true. the majority of people in subprime mortgages are the working poor, minorities, and senior citizens. that is what makes up the

majority of my practice. unfortunately, the scenario is such that these subprime mortgages were marketed and pushed on the working poor, minorities, and senior citizens. to give a real life firsthand perspective, my client works every day as a legal assistant. another had cancer. she fought for two years to get a modification from bank of america, who got $7 billion from january to do that. no go. they are proceeding on the eviction on that matter right now. the only reason the eviction has not occurred is because there are some problems with the documentation. i have a client who was diagnosed with the mid in 19 -- in 2000.

he died one half weeks ago. we did not even have a firm in michigan and was put in a subprime mortgage. they are foreclosing and trying to take the farm. my client who is in active duty in iraq serving his country. he comes back and is in itself -- in foreclosure. they say they cannot work with him and modified the loan. this is a sampling of what i deal with every day. it is voluminous. what makes the situation outrageous is that after the $700 billion bailout, approximately 75% of the subprime mortgages are insured

and underwritten by the government. why has that become so significant? is a mortgage is underwritten and guaranteed by fannie mae or freddie mac and the lenders throw them out into the street, they get paid the full market value. that is why it is a bonanza in michigan. michigan profit values have dropped in some areas 70%. i had a client who's fair market value is between $12,000.15000 dollars. the market value on the home -- $12,000 to $15,000. the market value of the house is -- why incentive for anybody to work with anyone if they are

getting the full mortgage value. there was an article in the paper on october 18 of a six year period it talked about resuming the foreclosures after the robo-signing issue. it talked about the 14 million mortgages that bank of america holds. then in may and freddie mac underwrite half of them to the tune of -- and in may and freddie mac underwrite half of them to the tune of $1.50 trillion. that is why my clients in -- send paper work in two and three and four and five times with certified mail. that is why that occurred.

people have paid three months, six months, nine months. they say after paying the trial modification or nine months, we do not modify. next thing they know, they have sale notice tacked to their door. i challenge this committee and congress to do this. i think this will be a telling statistic aspect. i know my time is running out. fannie mae and freddie mac talk about how many houses they have sold. this is true. in between, you can buy a beautiful house for $10,000 or $15,000. someone needs to compare the numbers of how much money was paid to the bank versus how much money was made from those homes. in michigan, it would be an outrage.

we are bailing out the banks. it is a silent bailout with these guaranteed mortgages. there is no incentive to work with the borrowers. thank you. >> thank you. >> representative johnson and members of the committee. i am be as addictive director of the american securitization form --executive director of the american securitization forum. we trade bonds, service loans come and invest capital for hundreds of residential mortgage-backed securities in the united states. in my prepared statement, i will highlight some key aspects of securitization. in point lead for this hearing, there are nearly 55 million 55

first lien mortgages. $7 chilean resign -- resides in penton funds, -- $7 trillion reside in pension funds. securitization trust may not all in the mortgage is contained in those trust. a recent congressional oversight report suggests that these issues could create systemic risks to the banking sector if the loans were not badly assigned to the securitization trusts. there are signs of systematic failure in the process for the claimants. the origin of these concerns is not clear. they are not from court cases,

are the result of novel academic theories. even the congressional oversight panel reports that the panel takes no position on whether any of these arguments are valid or likely to succeed. all of these consequences flowed directly and solely from a single mistake in core premise, that is the trust and the institutional investors. they did i actually only $7 trillion in those trusts. this premise is incorrect. therefore, the dire consequences of this faulty premise will not follow. last month, there was a white paper issued on this subject as part of our written testimony that this to rest questions that were raised about the ownership of mortgage loans. in that white paper, uniform commercial code for study and

substantial case histories that everyone of the 50 u.s. states and the district of columbia. it was found that traditional u.s. legal principles were consistent with complex holdings, a simon, and transfer methods of mortgage loans. 15 -- assignment, and transfer methods of the mortgage loans. they believe the executive summary is contained therein represented -- the white paper answered many of the concerns that corporate presented. some new concerns have been raised since the white paper was published. someone has proposed that securitizers did not meet the contractual proposals. in our written statement, would challenge this in great detail.

in particular, this argument overlooks the fact that each separate step in the transfer of ownership by each partner from the originated to the securitization trust is documented by a separate contract. the securitization legal professional has opted out of applicable laws to set an even higher bar for transfer. subsequently and subsequently ignored -- subsequently ignored the higher bar. this demonstrates something that is patently false. mistakes occur in a market where 55 million mortgages are being serviced. those mistakes need to be addressed. the contractual provisions of the cooling services agreement allowed for those mistakes to be corrected over time. in conclusion, we appreciate the

opportunity to be in front of this committee today. i look forward to entering any questions the committee members will have. thank you. >> thank you. if the panel will allow me a couple of seconds to consult.

ok, mr. peterson. your testimony please. >> mr. chairman, ranking member smith. >> i believe the microphone may not be on. [no audio] >> mr. chairman, a ranking

member smith, thank you for the opportunity to testify. the long scope of history teaches us one single lesson it is that sooner or later, the powerful folks in society will try to come and take the land from the less powerful folks. that is an immutable lesson from history. that is the truth about the human species. that is what we are seeing today. one of the first thing that the european colonists did before freedom of speech, before separation of church and state, before any of our constitutional principles, all 13 original colonies passed land owning statues that established property records in the control and custody of democratically elected county officials. the people who got to decide who owned the land was the first thing they set up. they did that because in europe, there was an understanding that sooner or later, the rich people

would come and try to take the land from the poor people. that legacy of certainty and real property ownership has been in our country for a long time and something we have come to take for granted. we have that in many countries do not. in the mid-1990, the mortgage banking association decided they no longer wanted to pay the fees that were required since the beginning of the republic to the court documents of county officials. they decided to create a shell company that would pretend to own all of the mortgages in the country. that way they would never have to pay another 30 or recorded an assignment as those mortgages changed hands -- pay another be our record an assignment as those mortgages changed hands. they did this without any permission from the state legislatures or with any authority from appellate courts

that said they could do that. this was as radical a fundamental change -- the name of the company that does this is the mortgage registration system. it is one of the parts of the foreclosure crisis that has not been played out in the press to the extent that i think it should. my testimony is going to focus on that particular company. i believe it is an anti- democratic institution. it undermines the democratically elected recorders and circumvents be adopted land titles statues. it also circumvents state rights by creating a chattel company owned by a wall street -- chateau company owned by a wall street bank. -- shadow company owned by a wall street bank. it does not work well. because there is so much legal

uncertainty because they have created a legal system without cooperation of legislatures, it is not clear that their claims of only mortgages are valid or would be ratified over the long term in appellate courts look into it further. the system stymies modification of mortgages. families that are in the foreclosure process get a notice from this company and do not understand who is or whether or not they can negotiate with this company. it makes it more difficult and more confusing for about or worse at the time that are most vulnerable on the eve of foreclosure. a couple of solution i would suggest for this committee to consider. it seems that fannie mae and freddie mac and other federal housing finance agencies should stop buying mortgages that are recorded through this exotic and unprecedented system. we still have a system that is safe and reliable. why is the federal government still buying mortgages that are

recorded in untraditional ways? not only does it ratified the on democratically motivated incentives of the financial services -- undemocratically motivating incentives of the financial-services industry, but there is no way to know how this will be worked out. we ought to consider some new ideas in trying to incentivize modifications. why don't we create a one time emergency home exemption of $15,000 that allows the first $15,000 in proceeds up a foreclosure sale to go to the family as opposed to be servicer. it is like a compromise between the cram down legislation considered earlier, but it would be easier to administer. it creates incentives for the hall and not to drag their feet and i longed for closure -- or the home owner not to drag their feet and prolong

foreclosure battles. it creates real incentives on servicers and investors to really get serious about not buying mortgages. unlike the h.a.m.p. program, it does not cost taxpayers a dime. congress can do this with the commerce clause authority. it would be a fuel injected into the foreclosure system that might do some good. the current programs are not doing any good and are feeling. thanks for your time. >> thank you, mr. peterson. this hearing has released to the public some spectacularly devastating information about the mortgage industry in this country as it works. mr. kowalski, having put three people on death row in florida as a criminal prosecutor, who is

now handling mortgage fraud, foreclosure fraud cases, discovered that in 2003 the robo-signing phenomena, which has been quietly permeating the foreclosure process for perhaps years prior to that time. no telling how long. mr. cox having uncovered from the uncovered -- having uncovered from the master robo- signer his practice is and ms. hines to put the human face on

how this drama of facts real human beings and real families and ms. fluker coming forward with testimony about ready may -- freddie mae and fannie mac -and how they tax payers are on the hook for the full value of these mortgages even though the collateral value is not worth the paper it is written on in some cases. and then our other speaker having some expertise in how the system works and mr. peterson coming forward from the early annals of the history of america about the importance of title to

land to the settlers and how important that was and bringing us up to date now on how we have -- how the mortgage industry has fought to ebay recording that -- evade recording fees for assignment of mortgages and have put in place this concept of the mortgage electronic registration system inc.. mr. peterson, can he tell us a little bit more about that entity? and cut that mic on, please. >> the company operates a data base. think of as a big microsoft

excel spreadsheet. and bush -- information about the ownership of the loan can be entered. the tricky part that makes it legally problematic is that in order to justify not recording those assignments as the promissory note gets transferred to various companies, the mortgages merge as the mortgagee. it is controversial from a legal perspective whether or legal this company can be a mortgagee. they do not make any loans. three state supreme courts have held back the company is not a mortgagee. it is inconsistent with the trustees that manage the pools of loans.

they also claim to own the mortgage. they need to do that. otherwise their mortgages -- there shareholders would be upset. >> let me interrupt you. who are the participants? does this company have the ability to cut through the stuff that the attorneys, mr. kowalski, mr. cox and ms. fluker have to deal with to establish a chain of title. does this company have the ability to be of assistance in terms of running the title down? i would like to hear from each of the witnesses about that? >> it is a great question. murs is owned by fannie mae and

freddie mac. that is who owns this. can they cut through the stuff? my answer is no. may exacerbate the stuff. they did not have many employees. they have about 20,000 vice president. these people become vice presidents by getting a boiler plate resolution. they get this corporate resolution of of the internet. these are corporate customer service representatives. they present to -- they pretend to be vice presidents. vice presidents --employees are pretending to be vice president s. i do not think it has helped clear up the system at all. it creates confusion.

>> thank you. mr. kowalski. >> if you look to exhibit six that i filed with the committee, you will see a murs assignment. it is an assignment that was assigned by first horizon home loans. it was signed by an office manager of the law firm that is our closing in this case. when i finally received the purported power of attorney that allowed the office manager to sign hundreds of these without knowing whether any true transfers took place because it is not part of her law firm /office manager job description, i received a power of attorney, which is the last

document in your exhibit. it makes clear that she does not have authority to have signed the affidavit that she knows nothing about. in the short answer to your question of whether murs helps make the process more transparent and solve these issues on the court, the answer is clearly no. >> thank you. mr. cox? >> thank you. murs has proven to be a significant problem. they have admitted that they do not own any loans and has never owned a loan. they have no right to collect payments on loans and and it's that. -- and admits that. we went to the state of maine's supreme court. basics -- they explicitly held that murs is not have the right

to seek foreclosures. they seek to get around that problem by subterfuge. what murs tells people is that when they want to foreclose in their own name, a man can call himself a vice president. he can take possession of the promissory notes and hold it in his hand. at that moment, murs owns it. from their own out, they can go forward and workload. the-they can go forward and four close. this is -- they can go forward and foreclose. this is a subterfuge. >> thank you. i will be vacating his seat

perhaps during ms. fluker's response to the question. i would also ask you to respond as well. the chairman is back. thank you. >> murs is a problem in michigan. i stated earlier that michigan is a foreclosure by advertisements state. in michigan, in order to have a valid for closure on a property, you are supposed to be able to show that you have an ownership interest in the indebtedness. murs cannot have an ownership interest in the indebtedness because if you look at the title of every mortgage, murs is the

nominee for the mortgagee. because of the changing of hats of the affidavits that are submitted, it has become a split issue in michigan. there are cases up on appeal right now. there are judges who say, this does not make sense. there is no ownership interest. there are others who say that because of the contract relationship with the ownership of the document, they could have some standing. the bottom-line is that murs a shell corporation. if you look at their web site, they hold themselves out to be a reporting agency. case law from nebraska and kansas has indicated that they do not do any servicing on the loan. they do not accept payments. they do not hold the mortgage. almost seems common sense and

that they do not have ownership issue -- ownership interest in the long, but they continue to foreclose independently. this has exacerbated and complicated the foreclosure matter even worse than it already was. thank you. >> in 2010, we had 50,000 men -- we have 55 million mortgages transferring through the system. i cannot give any kind of significant detail for that. i am guess we were in the hundreds or thousands of things being recorded. the speed at which mortgages move through the system has been expedited. it is a complex system that has enabled a massive increase in home increase -- in the home ownership in america over the past 40 years. murs played a part of that as

the securitization process has played a critical part of that. murs ax as a transfer of the title of the mortgage loan. they can sell to a sub in purchaser who may sell to a subsequent purchaser who may securitizer it. you are able to link the process of originating the loan with institutional investors such as pension funds and mutual funds who are looking to invest the money to lend through the securitization process. money from the mutual funds and pension funds go to homeowners. there is a recording agency that will track the ownership of the mortgage from the originated to the ultimate investor who owns the loan. the process of doing that allows for the additional creation of credit. murs ax on behalf of the trust. in the majority of -- acts on

behalf of the trust. in many jurisdictions or in jurisdictions that have been cited, servicers are transferring the names out of the ownership interest and into the name of the trust. who is the beneficial owner? this is a question of a technicality as to who can foreclose, not a question of its foreclosure can occur. >> thank you. thank you, mr. johnson, or stimulating all of the witnesses to give a response. i would like to move to the distinguished gentleman from arizona, congressman franks. >> thank you, mr. chairman. that all of you for being here. let me start by suggesting, mr. peterson, or your statement. it is a old saying that says

clarification is a valuable. i want to ask you some questions about that in the course of the moment. i was also touched deeply, ms. hines, by your testimony. i want to be careful about how i respond to that. it seems to be that for 40 years, your family did well until the government came along and messed things up. i want to suggest that ms. fluker's comment were compelling. we have created a disincentive for banks to work things out with the homeowner because they , for understandable reasons -- we have a lot of major pension- fund people who have contributed or invested in these

things. we are trying to hold the system together. the end result is correct. because of government involvement here and the lack of market discipline that comes with government involvement that seems to hold the system together, we are in a situation where banks have an incentive to foreclose rather than work things out with the homeowner. i think there is something desperately wrong with all of that. it is ironic that when this republic was first put together, one of the comments of the founding fathers when someone asked what had been given us, the response was that, we have given you a republican you can keep its. . we forget that the founding fathers knew that the government has the power of wasting the substance of its people in the process of taking care of it. with all of the good intentions, the government has caused a great deal of chaos and lack of

specificity and a lack of market discipline that has created many of these problems. i am afraid that the government as -- the government is as much a part of the problem as part of the solution. i want to speak to some of your comments related to murs. the mers system has been talked about a lot. about 60% of the nation's president toward is our record in the name of mers, inc. the legality of this entity should be established or address. you lay out the tool or conflicting claims of acting as both agent and -- dual or

conflicting claims of acting both as agent and originator. your clarity here is lacking. i understand there was an effort to do something good. the clarity was lost in the process. can you elaborate any more? is there anything else you want to say that you have not already said? >> thank you for the respective comments. i think that i would like to add that mers is significantly depriving, the government of revenue. nobody likes taxes. i do not like taxes. if we are going to no longer

require or no longer facilitate recording assignments between mortgages and mortgagees down the chain of securitization, it needs to be the legislature that the site we are going to do that. speaking to the legality issue, there was no state legislature that adopted a statute that said they could do that. they are going to drag out some cases here and there from this era for that era say that there was some nominal form of recording that allows them to perfect a mortgage. there has never been a situation where the facts arrive before an appellate court that replicate these facts. we never tried to have one shell company owned all of the mortgage loans in the country. there is no case that says that is legal. the reality is that we are willing to have some uncertainty about whether or not these loans are perfected or even whether mortgage loan are enforceable.

that is something we will have to deal with for the foreseeable future. >> you believe it has become an anti-democratic institution and that it has fundamentally weakened or diminished the clarity of property rights itself? >> yes, i believe that. increasingly, they're title insurance companies, especially the independent -- their title insurance companies are coming to the recognition. it decreases the certainty of property rights in our country. property rights are a function of law. if you have the new oracle or the new the final of who owns something be an institution that is created by an industry trade association as opposed to a legislature in a country that purports to be a democratic republic, you have introduced all sorts of uncertainty in the

system. it is not clear if the system they set up without permission is going to be recognized as legitimate. that is not just a bleeding heart liberal comment. that is an economic resource that industries and consumers have relied upon. there are a lot of countries where nobody knows who owns the land. it makes us less likely to invest in the land. it makes us less certain of whether or not we want to build homes or start businesses because we did not know if 10 years down the road someone might come along to take that from us. we have lost some of that certainty by losing our state and county -- the effectiveness of our state and county real property records. >> thank you. if i could ask our next speaker to respond to that. i know we had some potential distant. -- put gentle descent. >> for the record, i have done

dissent with mr. peterson's comments. in 46 states, the ability of mers affect our closures have been upheld in the judiciary. it has been some question as to whether mers itself can initiate the foreclosure. in those instances, the mortgage loan can be transferred into the beneficial owner's name. that can be a trust or an investor who can initiate before closure. there is a clear legal property rights for mers or any other system to be able to foreclose. there is no question as to the property rights. the second question of recording fees. there is a strong reason why we do not want to pay recording fees that do not do anyone any good. it pertains to dodd-frank that was just passed. there is a provision that allows

any bar where to find out who owns their loan. that has been addressed -- by our -- borrower to find out who owns their loan. this helps keep ownership costs as low as possible. >> thank you for the interesting line of questioning. does anyone want to make a comment about this discussion so far? mr. cox or mr. kowalski? >> with regard to the issue of whether issue of -- issue of whether or not mers transparent -- mers is transparent, one of the things that are being asked

is whether the investor guidelines have been seen. this is a service id from last week. the servicer is gmac mortgage. this investor has chosen not to display their information. for assistance, please contact the servicer. if you are trying to find out who don't -- who owns your loan from the mers system, you cannot do it anymore. >> with all due respect, the state of maine is one of the first state supreme courts to address the legitimacy of mers' right to foreclose. it says they have no right to foreclosed mortgages. there has been a number of

lower-level trials that are going both ways. when he suggests that 46 states have blessed the concept of mers our closing on mortgages, i suggest he is not be accurate. >> your silence is not pulling me one bit. -- is not fooling me one bit. >> the emphasis has been on recording and assignments by m ers. that is what the problem is. mers can assign it back to the service are who can or close. for all of those assignments, they are not establishing who has ownership interest in the debt. who actually owns the mortgage and the loan. that is the problem. you can go all the way through litigation. i have a case right now.

we have been to that report. we are back in state court. at the end of the day, we found out when they foreclosed that there was not even a be. deed. an affidavit was filed signed by the same person who has been the corporate resolution person for many other countries -- many other companies and mers. there is a question of the legitimacy of that. that is one of the problems with mers. you cannot find out who has an ownership interest in the debt. when you challenge it, there is no way to track that because mers is a recording agency and not a service or lender. >> the chair now recognizes the distinguished member of the

subcommittee on crime and the member of the budget committee. >> when someone buys a mortgage, who do they buy it from? >> it is not clear. the title to the land -- the ownership of the land is still deeded by mers. it is never clear whether or not the person that is acting on behalf of mers -- this is a vice president of some of the country. -- some of the company. -- of some other company.

but who transfers the title? >> the home owner buys the title from the previous homeowner. >> the homeowner is being foreclosed on. if you are doing a title search and you see for closure in its anti see the owner -- foreclosure and you see the owner on the title, who owns the title? >> the foreclosure of this transfer is the title to the bidder on the sale. in florida, we typically see servicers were closing in their own names. to make this issue even more

confusing, instead of the investor trust transferring, you have the servicer transferring on behalf of the investor trust through the local court office without true transfer is being recorded as a headache for the title company down the road. the perfect storm of that is in have toit 1, you securitized trust both alleging that they own the same notes or closing on the same house at the same time. >> two different buyers? >> it is too different -- two different securitizers trust. a file with the court. in one case, in a recent civil procedure amendment, they each allege they on the same nodte ae

foreclosing on the same house at the same time. one of our appellate courts reversed on the same that pattern. to add another layer to this issue of what exactly the clerk is transferring when they transfer the title. >> mr. cox? >> i have to address some of the testimony. i would say that in 20-30% of the cases -- 20% to 30% of the year, mers t assigned an account to a financial institutions.

the occ had closed the bank 18 months earlier. mers had no power to act for the bank at the time they had made the assignment. >> i want to get to another issue. that is on the accounting principle and whether or not there is something in the accounting principles that creates distance or the banks to work with people. i understand that it is a short sale, the bank has to realize the loss right then and there. however, with a foreclosure, they are pointing in up with less money and they do not have to realize the laws and counting -- an accounting principles until much later. they want to keep their books as fat as possible. they are better off going into foreclosure because they do not

have to realize the law rather than a short sale, which is in everybody's best interests. are there disincentives in accounting principles that we want to address to encourage people to do what is in everybody's best interests rather than allow the bank to have on their books assets with values that are not realistic? >> i would like to take that question first it is ok. one of the major problems that i a ticket is somewhat, but did not go into detail on -- articulated some what in my testimony but did not go into detail on is that there are loans a in short by fannie mae and freddie mac. under the hall affordable mortgage program, there are lost mitigation procedures that need to be followed.

you should be looking at the loan to see if the borrower is eligible for modification. if, for some reason, there is not the financial possibility of modifying the loan, you are immediately to go to the next foreclosure alternative, being a short sale. that, just like the modification, is even less of a possibility from the fact that -- i know in michigan you are looking and 70% property decrease. even though the property decrease may not be that significant, there is a decrease so that every incentive is to move forward with the foreclosure if you are being paid the full mortgage debt plus the foreclosure fees, plus the cost, plus the attorney fees

that the foreclosure attorneys charge to foreclose on the these properties. >> on the short sales, the federal guarantee on the loan does not kick in to make the loans all -- loan whole? >> it is much more lucrative to get the full mortgage debt at the foreclosure. at the short sale, the purpose is to sell the property short of what people mortgage debt is. there is not going to be the same level of possibility. the way the structure is set up now with the way the law is set up is actually more expedient to send someone out two modification letter saying they did not receive the documents le. send them to a shsa

to show you how disingenuous this process is, i had people i started representing at the eviction action still getting form letters from their lenders and servicers saying, call us. we can help you. we cannot buy your long. why are they still getting those letters? because under the supplemental guidelines, they are mandated to reach out with solicitations to borrowers to remain eligible for those programs and to receive incentives. they get two or three bites of the apple because you get paid people value of the property that is significantly better or more than the mortgage balance. >> there are servicers the

incentives that are the fundamental basis of this problem. suppose a lender or a servicer is considering a short sale today versus carrying the property to foreclosures six months from now. if the servicer approves the short service and today, if he stops today. if they keep that on their books for six -- if they keep that on their books for six months, they get other fees that can t to accrue until the house is finally sold at -- that continue to accrue until the house is finally sold. the investors suffer is the consequence. the servicer incentives are to block short sales and to keep the property earning a fee revenue for them. >> in michigan, there are

thieves and criminals. the people are thrown out and they see the dumpster roll up and the thieves go into the home to steal a thing of value. the bank still gets money from the home also value. it is all homes that were appraised at $100,000 are reduced to $15,000 because thieves went in and stole everything that was not nailed down. >> mr. chairman, it seems to me that we want to look into the financial incentives and how a foreclosure -- people doing foreclosure have an economic

interest in doing -- in getting less money than they could have with a short sale. everybody is this advantaged. people have incentive to carry this phantom value on the books creating another disincentive. that is an area we need to look into. . .

>> thank you, mr. chairman. what did the creation of fannie mae and fred fred have in the creation of m.i.r.'s? >> they played a significant role. the origin of mers was at

mortgage banking trade associations where they cooked up the idea and fannie mae was a big part of that. i also think that fannie mae helped legitimize the agency. people saw that as a stamp of approval from the federal government. back in the 1950's, they were creating business. in the end, they were profit-oriented businesses, and their support of fannie mae, in my mind, was because they were trying to safe a few -- shave a few dollars and cents off their mortgages. that's what i think happened. i think fannie mae and fred fred

bears some responsibility in creating this mers problem. at the minimum, we ought to get fannie mae and fred fred to stop digging that hole deeper, and at least for the time being, not purchase anymore mers loans because of the risk that will place on the united states treasury. currently they have an ownership stake. >> mr. deutsch, several members of congress have proposed a nationwide foreclosure moritorium in response to the foreclosure documentation scandal. how would such a moritorium affect the mousing market? -- affect the housing market? >> i think it would be a disaster. if you allow foreenclosures to occur in a situation where the short sale doesn't work,

ultimately the capital markets will freeze up. mortgage funding will no longer flow to new originations of mortgages. the capital markets will not put money into a process if they have paid back that mortgage and they can't exercise the underlying collateral. >> thank you, sir. >> mr. cox, mr. kowalski, either or all of the three, you testified about alleged abuses by servicers in some cases. courts, however, procedural rules in place to punish those quho -- those who swear out false affidavits, mislead the court, or engage in other unethical behavior. why are these mechanisms not sufficient? >> we have a state judicial system that's in deep trouble.

we have vacancies in the court house. courthouse hours are being curtailed. the system is being overwhelmed. the problem that we face is that the court system has enough problem dealing with its case flow and with a huge increase of foreclosure cases that so far the states have been unable at the state level to deal with this problem. i respectfully suggest there is a solution here in washington. attorney attorney -- attorney general holzer talked about this on october 26, and he has not been heard from since. i would respectfully suggest that if criminal charges were considered across the country, you would see a significant change across the servicing industry in snetches for getting away with what they have been getting away with. so i suggest that a solution country-wise, because this is a countrywide problem exists here.

if somehow the attorney general's office can be led down this road -- i met with the attorney general of maine a couple months ago, and i sense from him he's waiting for word from washington. >> thank you. >> thank you for your question. so much depends on not just fraud leapt or false paperwork, but i'm from michigan. michigan is a non-judicial foreclosure state. therefore, technically, there is no paperwork until the person gets the exvix. you have a sheriff there. a posting is put on an individual's house. the first time they see paperwork regarding the foreclosure is during eviction. evictions in michigan are handled by the state court. you get the eviction notice.

you say you must appear within seven days of that notice. so literally you are looking at documentation, if in fact the borrower has representation, which 99.9% of the time they don't, but if they have documentation, only at that point you have the ability to review those documents, and as mr. cox indicated, you have an overwhelming scenario with the court system. many times they are unable or unwilling because their case loads take time. so literally you are going back and reviewing the whole chain of title. it puts borrowers at a disadvantage. >> i see my red light has illuminated. why mr. kowolski. >> in florida, yes. our state attorney general has not been active at this level, although i understand there is a collection of 50 states attorney generals that have been looking at it. but p part of the problem with

the federal government's response is this -- the banks have always come here and said we do not want to be regulated by the state. we do not want to face 50 different regulations. we do not want state regulatory agencies to regulate us because we're national concerns. they have come to congress and said, make us immune under the national bank act and other acts, make us immune from the mediterraneanaling of individual -- of the medaling of other banks. so in many cases, the need for transparancy, which has been addressed over and over again today, is a federal issue. [captions copyright national cable satellite corp. 2010]

>> we have only a few moments before voting. >> do we know how much time we have? >> well, i'll just take my time, and you cut me off whenever you get ready. they haven't called votes, so we would have at least 15 minutes after they call votes. so i think we can get through in regular order here. let me thank my colleague from north carolina, howard coble from starting down a chain of questions that i wanted to pursue related to fannie mae and fred fred's involvement with mers.

i notice the finance minister is here in the room. maybe he should be at the witness table. let me just ask mr. deutsch, what is your understanding of fannie mae and freddie's involvement with mers? >> i don't know the percentage of that ownership. >> how could a private regulatory agency take the place of state laws that require establishment of a chain of leins and ownership through title transfer records? >> i don't think mers takes the

place of the state laws. mers operates within the state laws that have been held up. >> so when a mortgage comes to mers, does it record that mortgage in the state registries? >> when a mortgage is originated, it will be filed by mers as an agent, as an owner of the mortgage in the state registry. >> how does mers -- how is mers an owner? >> they are acting as the beneficial owner. >> they are an agent, but they are not the owner. >> the beneficial owner. >> when they transfer ownership, my state requires that that be documented on the public records as to establish for everybody in the public, the owner and

everybody else, the chain of title, what would happen when that transfers from mers to somebody else? >> well, a transfer can be affected, and in particular, the capital markets, they are efeck -- effectuated -- >> i'm not talking about the capital markets. i mean the state land registry title. >> there is a critical relationship between how it is done villa contract, and how it is done -- via contract, and how it is done otherwise. >> is the former director with you? >> director falcon? >> yes. >> did you find out from him -- can you find out from him while i go onto the next question what finance fanny and freddie's formal relationship with -- he is with you, right? >> he is advisor, senior advisor. >> would you turn to him and

find out from him while i go on to another question what the fanny and freddie's involvement with mers was and its origination, if he was involved in it at that time? let me go to another question. this whole thing has been frustrating for me in particular because i served not only on the judiciary committee, but also on the financial services committee, which has jurisdiction over the jse's and the pre-empt shun -- preemtion issues that get raised, so ms. fluker, there has been a lot of talk recently about standardizing these foreclosure procedures by having the federal government take them over