autonomous from pakistan and they d plenty of things that were absolutely against pakisti interests. so, it is very possible to find a deal with the border in the idea with neutrality in afghanistan. so because the taliban are part of a government they will obey pakistan i think is --. >> president obama is running out of time because next july 2011 he has to reassess its strategy. there are reports although denied, that there are plans for usaid to go into pakistan and do some operations against the afghan taliban. if america does that order of

the dangers and benefits of that? >> first of all, the pakistani army is not fighting the --. the haqqani network are operating, i agree with that but the taliban as a separate entity and i think you will want him to explain that. the second part of your question is definitely a disaster. if there are boots on the ground from the united states inside pakistan, i don't think any pakistan government or anybody in the -- will be able to sustain that without immediately reacting. the first thing they will do is stop all of the supply routes. i would say to start but that is the first thing they should do. the second thing of course and i strongly feel that there is an attack on pakistan, they will fight back on the issues but i

think that would be a total disaster. that would escalate the situation out-of-control. i think that should not even come -- and i saw that article which came out yesterday in "the new york times." i think basically i mean the little bit that i understand it is confined to the general mass of people and pakistan. [inaudible] and a i say to you that there are pakistani intelligence but the fact that american boots being on the ground, that would be a disaster.

>> well, of course i mean it is not even a rational. i mean it is very strange. i don't know who are the sources in "the new york times" very clearly but i hope it was just an overoptimistic article. the thing is that now we should reassess. the united states should reassess its policy towards pakistan in the sense that it is better to keep the connection between the afghan taliban and the pakistan army at this point because even if the pakistanis are trying to fight the afghan taliban they will not succeed very clearly and you will have a situation where it will be very difficult to find sobody to talk with. at this point i am more afraid of the lack of people to talk with more than the insurgency has such. for example if pakistan changes totally its policy, so -- 24

hours and they can do that of course. so there is no more taliban but you still have a very strong insurgency inside of afghanistan. plusou have afghan, taliban and pakistani taliban working totally together and both sides of the border. what is the worst? i am not sure it is the better situation and honestly i don't think it is a very important strategy being gained. >> let me add to that. i think there is an additional danger and gilles mentioned that in his opening remarks which is but very powerful budding relationship between the afghan taliban, the pakistani taliban and the punjabi military groups which are a far more serious threat regionally and globally now as all the current reports are indicating. they have links in india with bangladesh and with people in

europe and north america. these groups are much more dangerous and can certainly create a very serious problem in the heartland of pakistan where it will be near impossible for the pakistan military to be deployed in the punjab. they can also create a very serious situation with india. if another mumbai attack occurs i think prime minister singh will find it difficult to resist the clamor for some kind of action against pakistan so i would say that is the nightmare scenario. i think when one looks at afghanistan and the taliban situation, quite often military planners do what they do which is they look at the tactical issue. if onli could just g across and grabbed these guys to bring them bk, but this is not a simple equation. is a multi-varied equation and

you need tbe able to look at pakistan, india afghanistan iran, everyone all at the same time. i think that is something that needs cooler heads to prevail. a hope in in the isaf senior command in kabul and islamabad and in washington. >> thank you. could you comment a bit about the success or lack thereof of efforts to build up the afghan security forces and the police and are you confident that they can take a security lead started in july as the obama administration hopes? >> let me tell you first, i mentioned that the national army during the soviet time never fought the majority. the one national army deserted and block the taliban.

and the iran national army is not fighting the taliban. and look at the desertion rate. in the iran national security forces police almost 75% annually and then the iran national army 25%. look at the -- i would say it is a test of whether an army is engaged in battle are not. what is the characteristics of the army? at least i have tried to research them and have not been able to find it. more than 100 in the last 18 months in the iran national army. >> quickly, three points on the afghan mission. first it takes time to train officers and we don't have officers. i mean we have officers usually

but we don't have a new generation of officers so it is not going to be ready in 2014, that is for sure. the second problem we have is that the nctc questioned in the afghan army is becoming really bad in the sense that most of the people fighting in armand or whatever are non-pashtun. pashn are not joining. there are a few exceptions. the -- try because they are doing that all of the time, 50, 60 years. but generally no. you have a situation where the guise of fighting are fighting the in the armand, they are -- and that is a huge problem. the rest of the problem is you

can build an army without a state basically. it is a bit risky i think. what we are doing now in afghanistan, there is no more -- in afghanistan to be clear. the state is losing ground all of the time. they have no control of the population. there is no control of the cotryside and in the south we see that -- there is basically nothing. and there you want to build an army of 300,000 or more people but officers are human beings. they have a political affiliation. they need to fight for a state. they want to fight for something. and what you are seeing now is that more and more -- is acting as a kind of good federation and

the old tradition where he is paying networks of people in and the army is going this way because he wants to put demolish inside of the army and the private security inside the army. my feeling is that the army is not going to be a strong organizational institutiinstituti on with this kind of culture tt you are part of an institution. and for the police i think the basic problem is that we are asking the police to do a counterinsurgency job and they cannot do it. but the basic premise is more that they are not equipped to fight the taliban. that is it. >> gilles mentioned this idea of little bit before and talked about this a little bit before

but it s probably ambassador rockwell who said there should be a de facto partition of taliban but that is the most realistic outcome and perhaps that would reduce the u.s. reliance on pakistan and all that entails. do you see any merits in this argument for de facto partition or do you is unrealistic way of thinking? >> i think it is unrealistic. i think afghanistan is a nation. i think my own feeling is that this even-handed policy, you know when the taliban had a few years of dead ruled they did reach out except for the punjab state did reach out. i think ultimately you have to come to a solution. you cannot -- and that will create more problems. then what is going to happen is

that you have division and they were going to have trouble in some attack inside -- pakistani border. you start one problem at create another problem and then once we have over to stand, they will search sing something and wazirian will start saying something. so what you do is you may start one problem but start many of the problems. >> i agree that -- there is a worse case scenario that we can develop into worlds. that as is things are not going well and for washington politico negotiate with the taliban. so one way to -- out is to quickly with plenty of money

some militia in the north around kabul and you exit. without an argument. that is not likely because -- it is a headache analmost impossible but let's follow this you would have a huge ethnic cleansing because don't forget millions of pashtun are vb and the north and there is an impression in the northwest and it could be much worse. if you have this kind of situation, you are destabilizing of course all of the. the other aspect is that just suggests speaking of attacks, it is putting the taliban in a very good situation because they can say okay we are fighting for the

afghan nation and don't make the mistake. maybe they have been -- but they love their country. and explaining that okay we are going to organize a partition of afghanistan, it is the perfect thing for the taliban. it is absolutely, i mean in and i do not suggest that ambassador black what is -- by the taliban but it is perfect. let's go on like that and the only representative of the afghan national would be the taliban. >> we at the question here and that i have four questions and we are going to end with ambassador pickering. may i suggest if we could move thickly through the questions?

>> i am an american citizen who was born in india and i would like to address this comment and question to our friend from pakistan. i don't know whether -- he is not obviously representing the pakistani government but i do want to defend you against that comments that came that pakistanis and in the business terrorism. if pakistan has been thanks to the united united states, whichy got introduced to the cia during the soviet presidency in afghanistan so if pakistan had to enter the terrism business thanks to cia, which was terrosm business and continues to be in state terrorism business even to this day. so you are no different. the question on this table should be what the united states should do in the near future, and to me it seems the united states should not have gone in

in afghanistan. i was opposed to it when mr. bush made that move. i thought that was a pretty dumb move and since then, after he has gotten us tangled into afghanistan and even our democraticesident mr. obama has gotten into it and it is a shame that he has. it is time for the united states to withdraw and let all the ethnic cleansing that should take place in afghanistan after u.s. moves as this gentleman has pointed out, let afghanistan achieved its equilibrium among its own different ethnic groups and hopefully, and hopefully pakistan a india will not interfere in that process. therefore, afghanistan will survive. ..

>> last night's news indicated the american military managed to obtain a treaty with the local afghan war lord, which they have inialed and signed. for $1 million they will not grow poppies. what do you think of this method of controlling drugs in afghanistan and eliminating it? it appears they are willing to do so. >> i think it's a start. because at least, you know, as long as the money doesn't get for the taliba as long as the money doesn't go to the taliban. i think asically what i

suggested we followed was alternative crops which are brought up. which are brought over. so that the farmers knows whatever he's going to produce is going to be brought over. that would be a better way of going about it. at the same time, i think at least it's a start. at least you are not growing poppy and the poppy i not going to laboratories. one of the things that occurs to me, you know, all of these players which are there in kabul today, they all have housesand links in dubai. and they all want money in bai. they don't want to stick around and wait for the taliban to tak over the country. they are going to take off. not the same north lands that we knew in the massuod.

>> i don't know the deal. so i comment marginally. we put the taliban in a difficult place from our states -- i mean the individuals from businessmen in pakistan and the international works and international aid which is the main source of money. so opum is not that ridiculous. and if it's not a very expensive insurgency that people are fighting for resolution. and arms are everywhere. so that's the first thing. maybe it's going to work, maybe

not. but it's not going to affect the long term strategic perspective. the second is that we should be careful about local solution for drugs, you know. it never worked. it's structural. why? because you have a great project and i think the british were mentioning that sort of thing in the 1890s. you have a great project in one aspect. you are buying the drugs or doing whatever. so it's working. you have a great report. and at the same time, the people are moving. i mean just the opportunity of the respect. so local solution up, never, never worked in afghanistan. the example -- in north banshi.

you have that everywhere. member the family was trying to make a deal with the american ambassador in istanbul at that time just to buy a solution. so, no, it's not going to do anything. if it's a local man, going out to expand the poor. expect that is not going to change the system. >> you have a brief comment? >> i think it was a lot faster. i have to disagree about the local solution. i think in afghanistan, what you'd have to do, you'd have to have local solution intotrying with each other. because it's such a diverse tribal society, y would have to have local solutions. i think that's a start.

i think you'll have to try matters like that. and if you look at it, there are loca -- there are local local solutions in place or when it was massoud. that was how they managed to control the thing by having sotions. i think arguably, that's what they have tried if nothing else. >> okay. good question here. >> please wait for the microphone. >> i have a quick question for mr. sehgal and shuja. you both talked about india's. diplomacy on p5, but not pakistan. i was just curious as we look at

2011. >> would you lke to go first? >> i think basically, i'm one of those who admires what india has done. i think what one would like to do is indian, you know, take on the responsibility of the power in that area; right? and each out to his neighbors; right? and not repeat, you know, -- or belabor or beat box here this thing is at. i think pakistan definitely realized there is need to engage with india. i think pakistan is looking forward to that. i think every time something comes up, the leadership has taken on. i think perhaps india and diplomacy there has been lacking. india diplomacy has not shown

the maturity. if you remember, i talked about china. china has a lot of problems. you know, et cetera, et cetera, it is an active order problem. but yet it came. and obviously here's the stories about the united states, you know, propping up india for china. yet it moved to establish those economic links between the limited transfe i think that is what we expect from india. if india engages with us. i want to feel that, you know, an agreement or it's not going to be posible in two or three lifetimes. but i think an arrangement is possible. you know, as opposed to an agreement. i think if we have been an arrangement, individuals heading in the direction, i think that goes along with what we said. >> i'll just respond by saying the answer is in economics.

i think pakistan has a shrinking economic buy and india has a growing economic buy. pakistan doesn't have an economic approach. there's a divide between the civilns and military. the best and only way that's currently available is trade with india. there's some resistance among the establishment which is the code word in pakistan for the military to this approach. but there is now growing support among civil society on both sides of the border. the question now is how quickly they can move on. 2010 was a year of missed opportunities. i think the fact this matter was left to the mandarins in the foreign office in both india and pakistan meant that it was ging to die a slow death.

there needs to be an effort at the highest level. in pakistan's case, it means the military. very much so the way they have been in dialogue with the united states. once that stats happening, there have been responsibilities. >> once the last -- i think we are maybe running short of time. if i don't mind, i'll give you a couple of seconds for winding up. two mor questions please. >> you mentioned three or four times negotiang the scenario. you metioned a little bit more lipically than you you'ded, -- than you'd like, the taliban will be back in charge. what will help karzai and the others.

youmentioned you got 37,000 troops in north war -- waziristan, what are you going to do about it? absolutely nothing. or make a deal, or drive them bak into afghanist? what are your choices? what direction do you go? >> okay. very quickly under the negotiation, i want to move the crophone towards you, hanks. >> i think two questions that shouldn't beexonerated. the political and social forces. if you just consider the political forces, you have the taliban and not much else. when i say social forces, it

means so-called society, and the shiite and such. also businessman or so. i mean kind of political deals. maybe a new constitution. but it should be between afghans with outer in the outside as it goes between. it's the 2001 process again. with the taliban. we should let them do most of the job. and behind when you have to push it forward, you went further to the negotiation at theend of the process. and there's the second that's quite different. the international security which where you work in india, you work the united states, and in the country, and everybody is in

charge and it's clear they should be also out of the process. where? we say we can spend the reason if they should be asked and clearly, the afghan government is not going to stop us. because it's a right, it's the united nations. and it's the corrective difference. and in this kind of agreement, you can say, okay, some troop could be in afghanistan on that spot of the negotiation. and also you have togo in details. is there a schedule? if there is, what are we going to do? you need a commission to do that, and so on and so on. so i think this is -- this kind of negotiation is unique. and so it's two different things. of course, it's impossible to to

do just one. you have to do both. you have to be distinguished two different tables. same people are not invited in two different ones. >> i believe we should not have gone in 2003 and into waziristan without adequate forces. without adequate forces, we will come -- we don't have such agreement we are responding to every attack. we have to have the adequate forces, and we have to have the equate government. that includes a lot. because we have the mobility, we can deal with the problem. but you cannot have these treaties within the iran borders with people like this. this is asolutely asking for

trouble. >> we could just extend to the last questioat the back because i don't want to disappoint the gentleman. >> media, has the media coverage about what has been happening economically in south asia been sufficint and mostly accurate. is there anything more any of you think should have been gotten more attention than it has particularly in the united states? >> let me see if i can respond quickly to that, trying to wrap it up too at same time. i think the meia attention on india has been quite adequate and extremely well represented in the sense of recognizing the changes that have occurred on the landscape in india and globally. the attention on pakistan's economy has been much less than it should have been. and this, i think, hastaken the emphasis away from the economy and it's affects o politics in pakistan to the military aspects

of the relationship between the u.s. and pakistan, particularly focused on the western bordered. i think that has created a kind of distortion. and when elections take place inside pakistan, people vote on economic issues. the way they vote on economic issues in the united states. and so, i think there is a risk themedia doesn't recognize the importance of economics in the region as much as they ought to. >> with that i'm wonder if you would like to sum up your view of 2011 in a sentence of two? what you expect? >> two sentences? >> yes. >> okay. so i think 2011 is -- i mean the center of 2011 would be in the key moment for the reassessment of the strategy in the afghanistan. if nothing is done at this

point, 2011, if we wait, it will be impossible if we wait because it will be underground. >> thank you. how do you see 2011? >> i think -- i think 2011 in the sense that i think if we are more responsible, mature policy from india and pakistan's engagement in india will help us becoming more and dealing with the iran situation. at the moment we seem to lock over our back. the second thing that we must -- and i think we are already on the way to having -- dealing with the insurgency to an extent. we still have something left. we need to have a force to deal with the problem in pakistan.

shuja talked about it. the terrorists an affiliates throughout the country scare me far more than the president. the pakistan army cannot leave it. it has to be a separate force dicated. >> thank you. >> i think that's a good point to segue into my last comments. which is just today the gallop international released it's poll on what they call the global barometer on net hope. looking at our region, it's very interesting. they don't see pakistan very favorable this year. in 2011,13% of pakistanis only see 201 as a likely of the property -- prosperity.

much larger, giving it a negative score of minus 31% of net hope. afghanistan on the net hope score of plus 21%, in iraq plus 17%. and in india, there's a net hope of plus 24%. in previous years, it's interesting to note that india scored lower than pakistan on these measures. and eventhough the per capita income is fairly cose in the two countries. in india it's $3,067, in india, $2010. not a great wayin which to end this discussion. but i have to remind you that

secretary of state george schultz once said hope is not a policy. we have to wait for the policymakers coming up with practical soluons to the problems. i thank you all for coming. i want to thank you for >> next, a look at regulating

the home mortgage market. next, we talk about the u.s. 2010 national account. then a form on partisanship. >> on c-span christmas eve, speaker of the house nancy pelosi and other members light the capital tree. then michael dukakis and charles gibson talk about the preparation for a presidential debate. christmas day, former prime minister tony blair on the role of religion. garrison killer it talks about humor in public life. sandra day o -- sandra day o'connor and david souter talk about the high court. >> the 111th congress gaveled out for the last time a ship. before leaving town, several legislative items were sent to the president's desk. among them was the repeal of

don't ask/don't tell. the extension of both tax cuts and unemployment benefits, the revocation of the u.s.-russia nuclear arms deal, and providing over $4 billion for 9/11 first responder health care. the 112 commerce gavels in on wednesday january 5. see the house live here on c- span, the senate on c-span 2. the 112th congress will have many new faces. then quayle will be joined by fred rigo wilson -- ben quayle will be joined by frederica wilson. >> it should not take a constitutional crisis, a terrorist attack, or financial

calamity to summon the bridges of which -- some of the greatness of which we are capable. >> hear from retiring senators on the c-span video library with every c-span program since 1987. more than 160,000 hours on-line all free. it is washington your way. >> a discussion now on the state of the u.s. home mortgage market posted by the new america foundation. will talk about efforts to regulate the home mortgage industry.

welcome everybody. thank you for letting us to this event here today. a special thank you to brie kramer. it could not have gone on without him. the assets program has a lot of great material archived on its website that you should really check out. here today to talk about the mortgage mess, which is tough to define, but it is a return to form. when the financial crisis happened, we must immediately got distracted by what was going on on wall street. the last two years, we have seen a big financial reform effort. but there has not been a ton of attention or enough attention devoted to what is happening on the ground with homeowners, troubled borrowers were facing a huge foreclosure crisis. those problems have not gone away in the intervening two years.

one in four is under water. as many as 11 million more foreclosures will come before 2012. we have already seen 2.5 million. it is a huge issue. it is a costly one, too. out of 91.5 million households affected, the average losses $20,000 in their assets. if you look at the cost to local government, the urban institute reports that it is about the same, $20,000 to process a single foreclosure. this is killing economic recovery. as long as consumers face huge debt overhangs, as long as they owe more money than their homes are worth, they will not have more spending and banks will not have certainty in their balance sheets and we will not see lending. there's a huge shadow inventory in the housing market that keeps housing prices low. in the last six months, we

receive more clearly about a new economic problem. . we have had a lot of anecdotal moaning. but in the last six months, the investigations have revealed what is going on across the industry. the robosigner is the phenomenon of the mortgage industry. it sprung up beside securitization, the way we chop up mortgages and sell them to either a garment agencies or private banks. once it started happening, we did not have this -- either government agencies or private banks. once it started happening, we did not have this oversight.

it worked pretty well when there were not a lot of foreclosures. but when the housing bubble popped and a lot of people were delinquent on their payments, foreclosures were happening. people wanted to negotiate with someone. the servicers were overwhelmed and they started cutting corners to speed foreclosure. they started doing a lot of pernicious practices. at the same time, the government's main response was the home affordable program where the treasury ask the servicers, in exchange for bribes, big cash payouts, to modify loans to affordable levels. that program has been a failure and has not met expectations. it has been blamed began on the servicers. in this past summer, we encountered the robosigner. aone man admitted that he was

hired to approve foreclosure paper work. it has become clear that these practices are widespread. how widespread? we do not know other practices like filing "lost note affidavits" it is clear that they're cutting corners across the board. it does not mean that people do not have to pay their debt. but it does mean that we have serious uncertainty over whether or not who owns people's mortgage loans, who is foreclosing into is abstaining payments. 90% of mortgages were securitized. this is a sign of the financial

innovation in a housing market and the mortgage market have not been matched with legal innovation. it is more than just taking care procedure, which is a lot of what the servicers will argue on a basic level. if you're taking away someone's property without due process and standing in a course, that is a fundamental problem for a capitalist system. on a more-reform global, when people pay for their mortgage loans, the -- on a more real form, when people pay for them or bridge loans, -- clearly, on the state level, there are legal penalties and it is clear that they want to try to do something to find a settlement that helps troubled homeowners while accepting the right amount of sanction to

these servicers. there are broader things that are happening. mediation were borrowers and lenders are meeting with a third party, it is an old solution to a new problem. it is perhaps an opportunity for more mediation to scale up to a national and alana will talk about that. it has raised a lot of questions about what they need to do to make sure that is working

effectively. finally, as well as creating problems in the housing market, creating uncertainty there, we are also seeing systemic risk issues where investors who bought these mortgage-backed securities are realizing that, if the chain of ownership of these mortgages are not clear, maybe their securities are not in fact mortgage-back. there will sue the people who created these investments in order to shift the responsibility. it is very unclear how much this could eventually cost those banks. it could be hundreds of billions of dollars. that would be a serious threat to the health of the financial system because these banks are still weak and losses of that magnitude could be problematic. we do not really know the extent of these problems, except that they are pervasive. it is an opportunity to talk about how to fix these foreclosure issues, rebuild the housing market, and look ahead to the future so we do not see these things happening again.

the servicing industry has become more than just a middleman. it is a middleman between our country and an economic recovery. hopefully, the folks who are here today will come up with some good ideas to fix that problem. i want to introduce the panels before they come up and talking a little bit. we have giulio gordon with us. she has worked on all of these

four long time that one of the biggest names in the world the consumer finance. we also have damon silvers. he is the deputy chair of the congressional oversight panel on tarp which just released a major report on the issues in the mortgage servicing industry. he will talk to us about a variety of issues related to systemic risk. he is also the director policy at the afl-cio. we will have everything you a brief presentation. we will have a panel discussion. >> thank you. i would like to thank tim and new america for hosting this panel and for inviting me to speak. i will take 10 minutes and explain three things. i want to talk about the origins of this crisis, where it comes from and what it entails.

i want to tell you why you should care about it. and i want to start outlining some solutions and some of the incentives and motivations of some of the player's right now we're trying to figure out the and goals. i assume that people here and people watching a home have a ide distribution of knowledge in this crisis. mortgage has two parts, notes and a lean. the note is the actual debt. it is the i owe you money. the lien of the note are things that show up in court. the market itself is just the lien. it uses collateral. it's as, if you do not pay your debts, we can take your home.

the node is a negotiable instrument. -- the note is in negotiable instrument. this is a little complicated. but we will walk through it. securitization starts with a mortgage originator, like countrywide. it creates a mortgage with the homeowner. it takes the note and other associated documents with the that note and passes it to a sponsor. the sponsor is often an investment bank like bear stearns. then the sponsored moves it to a depositor. this has something to do with bankruptcy. we want to create a pure and shipment of mortgages. -- a pure investment of mortgages. we turn them into a mortgage- backed security. here is what has been happening. right now, we're trying to get

around how much of a systemic crisis this is. this comes from the kemp case a month ago where it says that countrywide was not passing these notes through. why is that important? it is important for two reasons -- for three reasons. one, they sign things. the original infrastructure, the things that everybody sons, requires the notes to be there as part of the due diligence, as protection from these things being poorly construction. these are safeguards that investors rely on when they buy these things. the second has something to do with remic law. the servicers are a very thin business. they take money in on one side and walked it out the other side. they are considered a passivity. they're not supposed to be doing a lot of things.

they're not supposed to be actively seeking mortgages are looking for notes and buying a said moving notes around. for most of these contracts, -- and buying notes and moving notes around. for most of these contracts, they do very little. antitrust law is very strict law. we wanted to be for very specific reasons. trust law is very sensitive. these notes need to be passed through. the intentions do not matter. the contracts are very strict about this. it is worth stepping back and realizing that this system of organizing mortgages and organizing mortgage debt is brand new. people have had mortgages and a debt and debt of property for centuries. but the system we interact with now is a brand new phenomenon

that comes out of the early '80s deregulation about extending the gst models in the capital markets. as you can see, it has pretty much taken over the market. it has never been stressed or tested like it has been right now. we are finding that it is failing. diane thompson of the national consumer law center has this document. if you can find it. these are the various elements of the servicers. the servicers of the ones who are supposed to manage pass away, taking in money from the homeowners and putting it out as a mortgage-backed security. when things go wrong, it is their job to manage it. we see so much of the structural factors that go into the contracts they sign and the institutional setting that they are in and the incentives they

encounter push towards foreclosure and speeding it up. this is a complicated document. we can talk about it later. but that is the background. we have a system that is brand new. it is being tested and failing. the default note of it is to force people into foreclosure even when there are negotiations to be done. when i say servicers, these are people with agencies and institutions and political clout. it is severely -- it is a fairly concentrated market. why should you care? this is homes underwater verses the unemployment correlation. this is also the same chart if it were foreclosures versus the unemployment rate. there is a lot of debate in this.

there is somethiut our persistently high unemployment rate has something to do with our persistently high among the and foreclosures. debt the government is spending more and taking of some of the debt. there is net leverage where everyone is trying to pay off the mortgage debt up associated with the market bubble and the credit bubble. about two years ago, people realized that there were two policy initiatives that could make it run smoother. having something that allows to correct for defects in our bankruptcy code. then to have some inflation, maybe 3% for many years. neither of those things have happened. we're disinflating. there is no type of relief for

mortgages and bankruptcy. most of this writedown in debt is coming through defaults, defaults and foreclosures. the investor loses because the homeowner can usually pay something to stay in the home. the homeowner loses because he loses his home and is standing in the community or whatever institutional place he had. and then the community loses. there are well documented spillover effects in good times for foreclosure. in great times, exaggerated foreclosures devastate neighborhoods. let's get to the next part. we will talk about different policy solutions. but first let's talk about were the banks are coming from.

one thing that the banks are worried about and should be worried about is that there is no quick legislative fix as far as anyone can tell. there is no equivalent of a weekend tarp were, if you could fix these three or four things, this would not be a problem for the banks. let's pretend for a second that we are bank lobbyists and we have 60 senate votes. we do not have this, but if they did, it is not clear what they could pass to make this problem go away. they could modify the bankruptcy code to said that the note is no longer a problem. but the bankruptcy is initiative by the consumer, not the bank. because some of this is regulated through new york state law, the banks do not have an easy out for themselves. even if they did, it is unlikely that congress would vote for something like a tarp ii.

it is not clear that the banks have a silver bullet that they can use to make this go away. it is also uncertain that the banks understand how to solve the extent of the problem. you may have noticed the many of the major banks put a short-term mortgage foreclosure moratorium in place, which was rescinded about a month later. it is not clear from the internal reviews they did that they got the sense of the scope of the problem that they have, the exposure that they have. the one big problem is that, if these notes were not passed through, you do not have a mortgage-backed security. you have an unsecured debt securities. you have a security bond the does not have any mortgages because there are not any notes in it. the natural protection is to force the banks to buy back the mortgages at par, 100 cents on

the dollar as opposed to the 20 cents or 30 cents that it is worth now. right now, investors are meeting to try to figure out what their options are. some have gone ahead with lawsuits. it will either happen quickly or slowly. it will either be a way of the hundreds of billions of dollars or a trickle of $10 billion or $20 billion a year. federal regulators, from day one, have run under the assumption that protecting the six largest banks has been crucial through the idea of civility toward the idea of our economic growth and coming out of this economic recession. they are running out of time to be able to do that. if there will be a crisis, it is better for them to be in front of it. there is now investigations that will pull random records to make

sure that these notes are available. some of the if payments are being made toward these first, as the general service is rotten and there is a real problem in their through their software and the way they operate, that needs to be at the state level. for the past 10 years, through federal preemption and the creation of mortgage-backed securities, a lot of these were found on the sideline. this is not an accident because the attorney general's are vocal advocates. with this crisis, we will see them put back into motion, investigating servicers and that shows a promise or a possibility

for change in this crisis. >> thank you, mike. i have been a consultant with the center for american progress for about two and a half years on housing issues, specifically having to do with foreclosure mediation. i'm going to give you an overview of foreclosure mediation for a tool like to be useful as a lose/lose/lose the possibility -- proposition into a to be a win/win/win proposition. mediation is a process during which the parties get into the room with a subject matter expert and a person's job is to -- the basic idea of mediation

is you do not have to settle. all we are asking is that the parties walk into the room and have a discussion. this has been interesting settle and the parties get into the room, they settle. we got into trouble with this initially. if the folks to get into the room discuss these foreclosures tend to settle, why don't we tell everyone to do it. folks on the lender and servicer side say -- what we mean more specifically is if you initiate a foreclosure, the body managing that foreclosure, whether it is the court or an organization of hired to do that sent a notice to both parties, you show up at a particular location, mediate the case and see if you can come up with a good deal. the reason mediation is

important is that it is a last best chance for parties to get a chance to discuss this issue. what we mean by last best chance is before you lose your home, before we have to worry about the process from freddie mac, before that moves into place, let's have you speak. you have likely gone to a housing person to go through a process that feels like calling your cable company and seeing if you can change your service. you will talk to different people every time and they will not know your history and paper work will get lost. it has been flipped on its head and to many people's surprise, they have not been able to hire enough people.

the reason mediation is successful is because it is a win/win/win. to maximize the total value of the pool that they hold, which means a modification, a short sale can maximize that, and that is the deal they're going to do. more often than not, they are able to do that. they say why are we going to get involved in this? they quickly see that their tax base is eroding. they will lower their expenditures, when you have additional public services

necessary, they're going to gain to make sure their housing stocks are as stable as possible. it is a paper driven process where you send in information. if you sit in a room with somebody in this process, it is two months down the line. if you get a chance to sit down ahead of time, see if see assumptions about your appraisal are correct, and if they are, you are eligible for a proprietary model and so on. the certainty that was shaken by the multi-state electronics

system, these are things that have a shaken the public trust as to whether it has the right to foreclose. is a mediator since there and says i see they have crossed their eyes and dotted their teas, that person says i'm dealing with the right person and this is going correctly. why do we want foreclosure mediation? because it works. we see a 75% settlement rate. the people stay in their homes and a gauge of what we call graceful exits. it refers to short sales, other ways a foreclosure leaves a home but has greater participation in

that process and gets greater value for lenders and investors and shareholders. we are learning that mediation takes more than one session. the service or or lender needs to get authorization. those mediation sessions take a 110 days but tend to run in parallel with the foreclosure process. the foreclosure process starts to run its course whether it is a waiting period or into discovery. in the meantime, mediation began. that tends to be a much shorter process than in new york where you see a year or a year-and-a- half foreclosure process. this is the example of the day that we're getting at states like connecticut.

60% managed to stay in their home. connecticut is an interesting test case because it shows something we found fascinating. you are getting offers from private people saying we can help you with a modification. amid those offers is a piece of paper that says a check a box and make sure you get your paper done and show up for mediation. that leads to a maximum participation rate. what happened to the increase by going into an automatic system? you get 80% participation.

when you grant that, -- it turns out not to be the case and connecticut showed us that. connecticut light from an opt in program and said give us -- previously, -- previously, 80% of people were not participating at all which means in the raw number of foreclosures, 12% were keeping their homes. if a 75% of people are in, 45% of homeowners are keeping their homes. the only difference is whether you have to opt in or opt out. they have leveraged behavioral economics to their advantage and that is what connecticut is doing and we encourage others to

do. to talk about foreclosure and how one brings about these programs, for closure is a state process. the success of foreclosure mediation is evident -- 11 jurisdictions had programs. some of them did not have mediation and had negotiations. most recently, the district of columbia now has a program. two major regimes of foreclosures are judicial where a case looks like a civil case and clogs up the pocket where you hear stories about the rocket docket 15 second hearings. the other side is non-judicial where there is an agreement that says if we want to foreclose on you because of some condition, we can assign it to a trusty and you never see a courthouse. he majority of states have non- judicial foreclosure.

judicial foreclosure states have a judiciary that does the need to go to the legislature and say the want to preprogram. they divert cases into alternative dispute resolution of the need to. they have done with family law successfully. florida state why did it. they divert all cases into a mediation program. if you are in a non-digital foreclosure state, the head of stakeholders and public hearings and a lot more complicated. this is why only four states have managed to do it. notable among them is nevada. notably missing as california which accounts for 20% of all foreclosures allied country and sorely needs a program like that. we have published on best practices so far. you can read, let's call them

shortcomings. most recently, a center for american progress -- some of the things the federal government can do to support foreclosure mediation is we have worked on this for a while at the middle- class task force came out with an announcement that says block grant funds can be used to fund housing counselors supporting foreclosure mediations. they can go to a homeowner and say let me explain the process. in the new term, they're likely to be unsuccessful to either fund programs at the state level or simply direct -- as a

conservative for fanny or freddie to do the following, something they can do with their own powers, to direct their servicers. they can direct your a lawsuit efforts and have done so already. fannie mae has required in florida that any case going to foreclosure, he must mediate. our message to them is why did she do it everywhere? why did she do it in california -- why don't you do it in california? if we did that, large chunk of cases would go to mediation. thank you very much.

>> thank you for having me here today. this is what i have been working on for the past several years. it's exciting to have an audience because these are important issues. it is important to millions of homeowners who find themselves in trouble and essentially ground up and had no hand in making. i have discussed this topic much publicly, but something to him said struck me -- in his opening remarks, he mentioned the problems we're seeing in mortgage servicing and said we have heard these anecdotal reports from legal aid lawyers. the question i want to pose is when the legal aid lawyers handle thousands of cases and see certain problems over and over again, why is it anecdotal? then, when neither investors or

banks themselves or regulators to our on a very delayed schedule finally look at something report the same problems, those are somehow not anecdotal. the reason i bring this up is that the industry has been going down this road for a long time. these are not problems that suddenly just sprang up that we did not know about. one lesson we can learn for next time because everyone is looking for lessons is listened to the people closest to the ground. there are good early warning systems out there and the legal aid lawyers tend to be one of them. speaking of the servicing system, this whole question of

was the note properly endorsed, what is happening with the title, where there boiler rooms rowboat signing documents, these are big problems. they are emblematic of problems throughout the servicing system. what they do is the attention that has been drawn to them because they are so dramatic, they have taken the focus of the major problem which is servicers are not keeping proper accounts for their customers. in some cases, they are engage actively in practices that will make it more likely for customers to default on their home loans. in any exploration of the problem and its solutions, we have to look to the servicing process. from the beginning, how are the

payments accounted for. in what order are those payments applied is the servicer and properly placing insurance on these loans if the homeowner does not, are they buying insurance at reduced rates because of an arm's length relationship with the insurer. in many cases, if the homeowner is in the fall when something happened in the servicing system

that spiraled out of control and ended up causing their default, there simply exacerbating their default. we saw the housing bubble inflated and we have not seen it deflate, consequently there are great economic losses out there. the question is who is bearing the brunt of these losses. by spending the last four years failing to take on this problem we the people have borne the problem. homeowners, communities and particularly, minority communities, and anyone anyone who has borne the brunt of these

losses, even investors, we have seen the banks protected at the homeowner can only dream of the government protecting them at that level. what i am going to do is talk about what i think is really going to work. in terms of servicing, if nothing else has become clear, it has become clear to everyone that one of the basic functions of the servicer is that those

foreclosures that should be avoided because it is in everyone's economic best interest to avoid them some one has no income or something catastrophic has happened -- the system is not properly is sorting mess. as a result, we are having unnecessary foreclosures. in some cases, the homeowner is not in default or it was servicer cost. everyone would benefit from a loan modifications of some kind. we did that system right right now, once your loan is in

trouble, the computer system is in one part there are different subcontractors involved. at the same time, as the right hand is doing that, the left- hand may be engaging in loss mitigation which means there would be talking to you about how to deal loan modifications, how the foreclosure can be avoided. the problem is the right and left hands are not talking to each other. they are prohibited by contract to talk to of -- from talking to each other. the homeowner thinks they're working out a deal. they think they're getting a legal looking piece of paper in

their mailbox talking about foreclosure they assume their efforts to work out a deal have not worked and they proceed accordingly. this is insane. people have been referring to this as a dual track processing. one really effective way we can make mortgages were -- mortgages work better right now is to stop the dual track. me to stop it in two ways. one way is that a servicer should not be able to initiate foreclosure proceedings until a person has been reviewed for some kind of loan modifications or loss mitigation solution. but many homeowners don't actually contact their servicer until they have gone into foreclosure process.

because of that reality, what is crucial to do is once a homeowner context a servicer which is what all the servicers will tell you they want at that moment, those foreclosure proceedings should be suspended until the review is completed. this is an automated review and should not take that long to do. in a world of foreclosures taking a year-and-a-half, it is not going to move the dial one way or another. it will make the sorting process of lot more effective. one other thing i want to talk about because are running at a time is this is the solution that may be more difficult on a political end, but there is no substitute for it and that is for changing the bankruptcy code to permit bankruptcy judges to modify mortgages on principal residences. that is the only debt bankruptcy

judges cannot modify right now. bankruptcy is america's system for handling debt that has gone bad. we have this system for a reason. that is complicated and restructuring debt is complicated. the bankruptcy system would permit us to handle all the most difficult questions that come up in the loss mitigation process. we would be able to handle the problem of second liens and the problem of very high back and consumer debt. whether different investors would be happy or unhappy with the outcome, we would have a disinterested third party to oversee the process. we have been dancing around this

issue for four years now. every other solution ec but ford is an effort to the last point i want to make is that it is true that the loan modification program has been a serious disappointment. it has not achieved what we had hoped for a variety of reasons, the most important is that it has been a voluntary rather than mandatory. the banks have been treated with kid gloves. we have no other program right now. having hand is an important tool. i do not think we want to see the government dismantle it at this moment. we want to fix its flaws and put these other solutions as a

backstop for borrowers so we can get this right and stop the bleeding. thank you very much. >> it good afternoon. i am the deputy chair of the congressional oversight panel for and the president of the council to the afl-cio. i am required to say my remarks are not the opinion of the body, its staff or the senators, these remarks are mine. i will talk about the work of the panel. i have been asked to address the systemic our oversight panel has

done -- it was our third or fourth report in march of 2009. other programs for mitigating foreclosures. our november -- last month report look directly at the question of irregularities in the mortgage market. because we're the oversight panel for tarp , the statute

known to many americans as the bank bailout, speak to purposes or to stabilize the financial system and specifically address the foreclosure crisis. we have looked at that through both lenses. these reports are with me and they are both very long. this is a two sided copy. they are both available on the web site. we have held numerous hearings and a foreclosure prices, -- foreclosure crisis, including a the end of october where phyllis caldwell testified and juliet

testified at that hearing. we focused on the mediation programs. the oversight panel has consistently recommended that it automatically be a feature of policy in terms of foreclosures and it is quite a mystery, given the data we saw today and what our panel witnessed firsthand as we observed a mass mediation session in philadelphia court's, it is a mystery why so little has been done at the federal level to make this happen.

i'm going to talk about systemic risk. it has become -- people can search through google and see how many times words are used. if you ran the systemic risk all the sudden in 2007, it became as popular as jimmy carter or marilyn monroe. those were two words the new york times reported google like the search. kahane systemic risk is the notion that there is risk, the possibility of events that would destabilize our financial system as a whole.

this is not the risk that a particular firm might fail. what is the risk of contagion in the financial system? historically, looking back to the great depression, there has been a lot of talk of systemic risk as a domino effect? what we saw in 2008 is there -- it is very much a threat and it's also the systemic risk that comes from a collapse of confidence in the financial system both as people learn things and as participants in the financial system learn what they don't know, meaning that when doubt comes into play as to whether or not major financial

institutions depend on short- term funding that is uninsured, what does this have to do with what we have just learned about we're talking about systemic risk. this is about probabilities there is no way to look at what you just heard about not conclude that it raises issues of systemic risk as one of the speakers noted, we have a quite concentrated banking system compared to what most of us got our banking system was or what we thought it was when we were growing up.

that is a high level of concentration historic plea. those four firms serviced 56% of all outstanding mortgages. they originated 57% of all mortgages during the bubble. particularly during 2005 and 2007. those four firms service mortgages with principle of the close to 6 trillion dollars. they are originated mortgages just during the 2005 and 2007 years of close to $five trillion. how have the numbers involved can be mind-numbing.

the total tier one regulatory capital which is one of the keep measures of the solvencies of banks the total is $535 billion, approximately one-tenth of the principle of the mortgage they ever originated and serviced. what are the implications? long before you get to that capital, the bank will be to stabilize. these large as we learned during the class -- during the crash of 2008, long before you 20 regulatory capital, you will have solvency problems with banks. those four institutions are each endowed in systemically

significant. if anyone of them were to be destabilized, it would create both domino effects and it would create doubts about the viability of other institutions that could not easily be answered. in addition, the nature of the irregularities of the mortgage market is hard to -- it is very hard to determine with illegal meetings of the facts are given the legal meaning is going to be subject to separate proceedings in all 50 states and potentially within the 50 states, differ proceedings in the counties. it is a classic situation that will lead someone to conclude i don't know what is going on with these firms and these irregularities and i'm pulling my money.

whatever the real systemic risks are, the issue of uncertainty layers on top of that and exacerbates it. that type of uncertainty with respect to the mortgage crisis was critical to the way in which the financial crisis of 2008 evolved. so that you have a hard numbers to the extent we can figure them out and then you have the risk you have to many unknown unknowns here. i will conclude by walking you through a little bit of mass to explain the nature of white i believe this is undoubtedly a risk -- undoubtedly an issue of systemic risk. there are different measures of capital. if someone can figure out how to

do without triggering a run up in the stock price, you could buy bank of america for about $120 billion. that's about all of the stock is worth. that is an approximation of what the markets think the equity is worth. if bank of america starts taking losses that no one in the markets expect, you would start subtracting from that value. bank of america is the biggest of the servicing banks with about 20% of the market i just described. it's close to two trillion dollars that they have in terms of originated in [inaudible] securities. ae at a group of bond investors began the process of trying to

force bank of america to buy back from them mortgages that bank of america had securitized and they had bought the securitization. $47 billioning for and the pool of mortgages. the bondholders believe that $47 billion pool as a whole is worth on the market today about half of its based belly. if you imagine you took all $47 billion worth of mortgages and were forced bank of america to buy all back, and -- but remember this is not being done. it is being done mortgage by mortgage. it is likely to be the bad ones.

how many such cutbacks to -- could bank of america absorber? maybe a hundred million dollars worth of put backs? maybe more, maybe less. how many pullbacks will you be able to force on bank of america? analysts have looked at this using bank data using smaller estimates. just taking that one block which the bondholders view as not particularly remarkable, it doesn't take many multiples to get to a really big capital problem. bank of america has the two trillion dollars in originated and serviced ones. that is why there is an issue of

systemic risk. how big an issue? what is the percentage likelihood these events would produce a systemic crisis either across the system more because of the weakness of one systemically significant institution? we were able -- we were unable to assign a percentage of likelihood, but we concluded that we got hundreds of pages of the explanations as to why we concluded this, but we concluded that the risk is there. to running over and going say to more things. two more thoughts. the first thought is it has been troubling to me and i think to our panel that it has been very difficult for the bodies assigned to manage and prevent the growth of systemic risk, particularly the bodies created by the dodge/frank act to speak candidly about this trade -- dodd/frank act. we have built their regulatory structure to try to prevent

systemic risk from escalating. we have empowered them to take a variety of actions to restrain financial market participants from building up systemic risk. all of those powers dependent on being able to identify issues and practices that increased systemic risks. when faced with a clear matter that puts these issues in play, the regulators are afraid to say the words. how can we manage risks we don't admit we have? the second and final point -- as several other speakers have mentioned, the irregularities are not the only source of systemic risk here. it may be true that the irregularities are not a source of systemic risk. but, if they are not, here is

what is -- 200,000 plus foreclosures every month as far as the eye can see. why is that a systemic risk? because it will eventually force the write-down of assets that are currently being carried on assumptions that housing prices are going to rise, housing prices are not going to rise until as extraordinary levels of foreclosures stop. second, it is a systemic risk because of what it does not to our financial system, but to our economy and consumer demand, the social fabric of our country, and in certain respects, to the confidence of our citizenry in fairness and effectiveness of our legal systems which has consequences of our ability to manage economic policy. the systemic risk several is arguing about -- and then there are risks no one is arguing about that are equally real and in some ways more clearly evident and unavoidable.

i'm going to wind up by talking about tarp -- the notion that has been space success is hotly debated. i think on a bipartisan view is that was fairly effective in dealing with a crisis and stopping a panic, but much less successful in its purposes of leaving us with a healthy financial system or addressing the mortgage crisis. those two things appear to be deeply intertwined. that issue of the long-term health of our financial system and economy is turning out to have quite a bit of light. it is long overdue that more aggressive and focused actions be taken. certainly the suggestions around mediation are part of those actions, but there is a punch line to this that we have to face which is the losses are

real. there are very large and very real. as long as there is an effort to not a sign or pretend they don't exist, the more paralysis we will have both in our economy and housing system. they're not be any way of dealing with these issues that divide without dealing with the fact that one way or another there have to be consequences for financial institutions for the mistakes they have made. whether or not those mistakes include massive abuse of the legal system is a question of whether it gave rise to trillions of dollars of losses in our economy which we are continuing to pay for. thank you. >> thank you to our panelists for talking about their perspectives on this.

we're going to have a brief panel discussion before we open up to audience questions. we had a few references to the dodd/franc bill that passed this year. from a regulatory perspective, who is going to be in charge of monitoring the servicers under this new regulatory regime and what are the first steps they should be taking to address these problems going forward? >> right now, servicers are not regulated class servicers. there are regulated if they're part of a commercial bank, which many of the mark. they air has essentially been no regulatory action against the servicers in the past 10 years. occ in particular has not taken any action. the sec right now is looking at

will writing about the securitization process. there is a letter that just went back today. this servicer as cats part of the risk profile as we see the put back issues, that will be relevant. i want to add to that that definitely false to the new consumer protection agency to write industry-wide rules for services to abide by. we believe that priority list when the agency comes on line in july. july is very far away. the time to start looking at this is right now. there is a joint rule making

going on with respect to the mortgage risk retention system set up by the dodd/frank act where in securitized ears of mortgages have to continue to hold some amount of the risk of that which they securitized. there is a broad-based tougher right now to put servicing standards into that system. they are very much needed industry-wide, but in particular, we know servicing securitized loans carries a variety of difficulties, even more so than servicing portfolio loans. the robust oversight of servicers is long overdue and should certainly be on the agenda of any regulator that touches the system in any way, including the provincial regulators. >> to put a finer point on that,

i think it is important to understand the answer to that question is there are at least three distinct regulatory jurisdictions over services. one is the consumer jurisdiction, the second is the sec, which mike talked about, which is focused on investors in stocks and bonds of the banks themselves, the servicers, but also investors in publicly- traded mortgage as backed securities cat service the servicers, ted -- serve as the servicers, so to speak. the least focused on are the bank regulators whose purpose the fdic and the federal reserve, each of which have a jurisdiction over the large servicing companies. their purposes the solvency of those institutions.

they have a variety of risk- based capital requirements. these issues clearly intertwine with them. the federal reserve is going to be running stress tests on the big banks again trade the results are not going to be public, but they will be looking at the mortgage irregularities as a contributing datapoint to this test. >> of want to ask a bigger question -- mike showed a graph that demonstrated this is a new model for financing and it's grown exponentially and not living up to its first test. in the next year, congress is expected to take up gse reform. can this continue with all the risk that is inherited or a

threat for way to approach it? what should we look for when we talk about fixing the gse where this process originated? >> i will answer this by admitting it by a -- by saying i will answer it sideways. if you believe and what they were set up to do, namely promote homeownership, then he should keep them in a modified version of what they are today. are an believe the gse's improper method by which to do this, he should get rid of them altogether. that is the basic split. right now, they have been a punching bag and they have not done everything correctly. but if one defaults them,

they're faulted for doing that which they were set up to do. if you're going to attack them as to their fundamental purpose, what do it and be honest about it. the other suggestions coming to the fore here are what do we do instead of a gse? let's forget about government subsidy of mortgage finance and was good to private mortgage rates. my colleague did some work on going back and simply saying let's look at what was being done when you have purely private mortgage finance and look at the homo -- look at the home ownership and the rates people are paying and the rates people are able to buy homes. when we take a hard look at this and our own expectations about participating in the economy as consumers and homeowners that we do not like that world. we come down on a notion where if we asked them to do something and do not like the world

created, let's move them in a direction that we like but let's not get rid of them altogether. like s said, i just addressed the question sideways. >> there is a number of very ironic things about this discussion. the first is you might think there is evidence that they caused the mortgage crisis. actually, the evidence suggests they were a secondary actor. it doesn't just suggested, but it proves it pretty much definitively. the subprime bubble got going in the private, non-gse supported markets. they had the type of incentive structures for themselves that other financial institutions had.

they became very concerned about market share and profitability and chased the private lenders. so that you see big private lending in subprime in 2003 and 2004 and the come in for fannie mae and freddie mac. if there is a notion that the gse's set this in motion, it's not true. it is not true this crisis was caused by a v gse's. they have existed since the new deal and we only have this kind of situation in our mortgage markets in the last five-seven years. what does that tell us? does it tell us there is something fundamentally problematic about a financial institution intermediating for mortgages? it tells us there is something

fundamentally problematic about the institution having its executives compensated and having them play catch up to a completely unregulated private system. the conclusion -- the whole narrative out there about them being a central cause here, a second cause, simply has no fat for support. second, there's a great political irony. the major wall street institutions spent a lot of money over the last 20 years and therethe gse's was plenty to attack them for. they spent a lot of time attacking them because they wanted to be able to operate in that space without competition. when the financial crisis

happened, the politicians that bought into free-market fundamentalism were looking for an explanation that did not slip their own throats for what does happen, they happened upon the gse's, and i thought that would be something the banks would like and supported financially. ironically, what then happened is that the market investors walked completely away from private leak -- from privately- issued mortgage-backed securities. starting in 2009 and it is still true today, private financial institutions cannot securitized mortgages without the gse's. there was no longer an appetite for dismantling them. we are now in this funny context in which the rhetoric and ideology and power politics are completely at cross purposes with each other. >> one way to think about what do is to go back to

the -- this is for the whole definition of subprime comes from. all of the early '80s deregulation came from removing state laws that interfered with the private creation of securitization. one way to think about them is what goes into securitization and it turns out that if you stuff them full of really bad loans, you have bad outcomes. exist to put in prime loans and stamped them as being prime. that is how that comes about. it doesn't seem like that can exist on a sound. every industrialized country as a mechanism to regulate housing lending. it seems that housing will not be a very good way of building assets or any type of equity without some sort of government backstop. they look a lot shorter and a lot more like a bullet loan.

do we want to build equity through home ownership in the future is the real question. >> ought to bring this back to the foreclosure problem in the servicing issues we have been -- i want to bring this back to the foreclosure problem and the servicing issues we've been talking about. no matter what kind of housing finance system we have, what we have learned from this crisis is that we need to do a much better job of understanding how the incentive structures work and in what places there are incentives that may not be very transparent that cause us to be pricing risk incorrectly. the predatory lending we saw was a big part of our end up with this housing crisis came because we took a system of mortgage lending where it had been in the bank's interest to locate borrowers capable of locating

their mortgage -- capable of paying their mortgage back and turned it into a system where independent mortgage brokers got paid at closing table and where originated lenders sold the loans out in a matter of weeks and where as you saw from the chart, there was a long process designed to strip off every bit of liability. there were very few incentives there for good mortgages to be made. what we are learning about now is the other side of that how and mortgage servicing and there are other incentives built in that do not aim toward the maximize asian -- the maximization of the there the investors or homeowner, but just the anti that is actually doing the work there. that is why we need real oversight, real transparency,

and particularly i would suggest we pay particular attention to anything we do that purports to throw away a land titles system that has been there for thousands of years. when you do something like that, it needs to be done what serious thought and attention. >> one of the things the people have not talked about is the second lien problem. >> and number of us can talk about it. estimates differ, but probably around half of all mortgages are troubled and have an additional lean on them. -- additional lien on them. many it of them are piggyback

loans, taken out simultaneously at the time of origination to avoid any requirements for private mortgage insurance. some of them is the home equity line of credit that you would get to fix your room for things that you do. you will recall that those banks are the same banks that own the servicers that service the majority of the mortgage loans out there. you might think that that is a conflict of interest. it turns out, yes, it is a conflict of interest. exactly how the conflict workers differs depending on who you ask. essentially, an investor in a first lien mortgage, which is supposed to have priority, that is why they call it a first lien, does not want to see there

being impaired when a second lien on that mortgage, something that should be a junior lien was something that will take any hit first, when that lean is remaining unimpaired. that has been a major obstacle to everything we have tried to do from the government's point of view to salt the foreclosure problem. ranging from -- to solve the foreclosure problem. ranging from any program to reduce the visible for borrowers who are already in default or for borrowers for current as well as for solutions where the homeowner needs to exit the home, a short sell or a deed in lieu. that is where much of the most

-- let's say optimistic accounting is going on in that banks continue to hold many of these second liens on their books at their original value in this hope that, if we just stick it out, these prices will go back up and we will not have to take that large mark down. in the case of second liens, there has been a big problem. they have been a central problem to addressing this issue. it is an interesting situation where policy is being driven by accounting rules. >> we are running out of time a little bit. just briefly, in one or two sentences, say what the top priority should be for policymakers in the next six months to deal with these problems. then we will take a few questions from the audience.

>> i will not suggest any specific policy other than that cramdown addresses all of these specific problems. i know that's something we do not have a handle on is the foreclosure cost municipality which is $20,000. three foreclosures is a teacher's salary. at the point where municipalities are contracting and shutting down schools, cutting power, cutting salaries, they will have to pay the largest banks for these foreclosures. that is an abomination. >> from the beginning, i have had a particular policy position regarding foreclosure mediation. from the get go, this is a piece of the solution to the housing crisis. until next july before a

thecfpb gets going, we're talking about a year and a half- hour before the rubber meets the road. federal support cubes you the last best chance for a homeowner whose tragic federal support gives you the last best chance for homeowner -- fedele support gives you the last best chance for a homeowner who is in foreclosure. we have proposed, if you were to do a federal matching funds legislation, about $800 million, you should be able to fund 50% of a program in every metropolitan city in the country. i do not think that is getting done in the next six months. but that is the level of funding we are talking about. the $800 billion and the scope of the discussions we have been .aving

>> for a long list of potential solutions, i would refer you to testimony i have given recently to the congressional oversight panel and the financial -- and the house financial-services committee. here's what i will say about any solution. we know what we need, which is -- in order to get this right, any program that we put out needs to be mandatory, needs to be industry-wide, and needs to give the homeowners some level of control or have a third party involved so that the decisions are not entirely being made by the service or without the homeowner having in your right to appeal or any ability to bring someone else in for help. by way of money, i would suggest that one of the best ways to make a very small amount of money go very far is to fund legal aid attorneys. i realize you are shocked that i just said that.

but there is an enormous multiplier effect of that money. just a few million a year, these are the attorneys that have brought you all of the information about roadway signing and the title problems and who are doing some of these innovative lawsuits in the courtroom now. these are attorneys who work for their clients for free, who practically work for free themselves, in some cases, actually work for free themselves. there was money authorized in the dodd-frank ask for this, but it was not appropriated. it has not been pulled from any kind of settlement or any state or municipal program. i would suggest that legal aid lawyers be part of the mix. >> if you look at the policy notions on the table this afternoon, what they are all about a different risk to principal modification, to rewriting loans so that people

can stay in their homes. there ought to be a policy goal associated with this, getting the rate to a level where there is not meaningful pressure on housing prices. to get markets to do that, we have to stop being confused about 2 fax of the foreclosure -- about two facts of the foreclosure crisis. there should not be any confusion on the policy maker that foreclosures are bad. they are bad for our economy. they are bad for the citizenry, generally. they're bad for the country. secondly, there should be no confusion that the foreclosure crisis is a serious source of both financial and economic systemic risk. >> all right. i think we have time for to

questions. -- for two questions. please raise your question as a question and quickly, please. the gentleman with the blues leave. -- with of the blue sleeve. >> what are the best practices so far? >> there have been bills in the senate and the house that have gone into committee and stated to me. beennk thosboth bodies have dealing with higher priority issues. there has been tremendous response of illness from the --

responsiveness from the initiates. to be perfectly blunt, if you raise your head above the weeds here, it will be chopped off. we said mediation, they said mandatory. if you're finding a state program, the state can act and the contract will not apply there. there are talking point objections that are not true objections, the people are concerned will not see here. with new leadership coming into the house, i think the position of the mortgage bankers association, the banks in general, it will be such that, given their state-by-state objection to this, for this to pass caromed to their credit, in the states, including philadelphia, connecticut, florida, maryland, d.c., once

the process is up and running and foreclosure mediation is on going, as stakeholders in the creation of it, they have often times embraced it, and seen the savings it creates for them and are active participants in the process. that creates the mystery as to why there his rejection in every new state. regarding the dual track system, i think the description that a former colleague of main uses is the octopus. when you have an organization of this large, what one part is doing and what another part is doing are totally unrelated. they sit in different geographic locations. they know nothing different. there's dislocation between the people who are acting in tennessee or wherever it is an hour pose whereas someone acting in florida is ford because they have seen it on the ground. >> this gentleman appear.

keep it brief -- this to implement up here. keep it brief. >> do any of you have statistical or anecdotal information on incidents involving violence during foreclosure mediation or foreclosure situations where no mediation has taken place? >> the way our research is done is of systematic and anecdotal in that we will go have conversations. i have not heard -- i believe i have seen one mediation report where there was an altercation. i believe it was related to foreclosure, but not foreclosure mediation. but i have not heard from many of the people that i spoke to in any program. where is homeowners under tremendous stress and so is the services council, the person often has 100 cases, 200 cases,

300 cases they are dealing with and they have to get them taking care of as quickly as possible -- that is a system that should be a pressure cooker. yet, when you bring it into a formal context in a mediation, that system, that process is meant to alleviate those tensions and they tend to be very amicable. >> the only thing i know of in that vein is suicides. >> on that note, let's hope it does not come to that. thank you all so much for coming today. enjoy your holiday. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> tomorrow, a conversation

about the repeal of the don't ask/don't tell policy with christscience monitor defense correspondent, followed by sally quinn from the " washington post" website. headlines and your calls. it all starts at 7:00 p.m. eastern on c-span. >> to join us tonight for a look at what is called hyper- partisanship. speakers include former correspondents and evan by and west virginia senator gerald mansion. it gets underway at 8:00 p.m. eastern here on c-span. on c-span christmas eve, speaker of the house nancy pelosi and other members of congress like the capitol christmas tree. president obama and the first family attend the pageant of peace.

christmas day, a former british prime minister tony blair and author christopher hichens on the role of religion. garrison keeler talks about humor in public life. sandra day o'connor and david souter discuss life on the high court. >> this weekend, we visit the museum of the confederacy in richmond, va. and find that many of today's christmas traditions, including santa claus and decorating homes and trees began during the civil war. also, from the nixon presidential library, former astronaut frank borman on the early space program and his role as liaison to the white house for the apollo 11 lunar landing. and anita blair, director of the eleanor roosevelt piper's project reveals the first lady. see the complete schedule online.

you can also press the c-span alert button and have our schedule e-mail to you. this weekend, q&a continues with interviews from london. saturday, diane abbott on the government's plan for budget cuts and her experiences as a minority in parliament. then comparing the american and british forms of government. the power of the prime minister, taxes, social issues, and the cost of living. the u.s. census bureau this week released the 2010 national account. the director of the bureau join us on "washington journal" to discuss the findings. this is about 40 minutes. >> "washington journal" continues. host: robert groves, director of senses. .

"usa today" headline. the subheading is, the nation sees the slowest growth, 9.7%, since the great depression. why? guest: if you look at many decades of the last hundred years, like a lot of developed countries in the world we are gradually reducing the rate of growth. still growing but the rate is slowing. two exceptional decades -- the decade of the great depression had the lowest overall growth rebid, then the decade of the 1950's that saw the baby boom had the huge growth rate. you take bid two points out, gradually reducing. a 9.7 over the past 10 years. we are still growing. the why of that generally believed to be the combination

of the aging of the population -- as we see in this society, but also the lower fertility rate of developed countries. all the countries are experiencing immigration but the net effect is the slowing of growth. host: in the growth, how much ease immigration? guest: we do not know exactly. if we look outside to other data sources, are best best in this decade would be maybe 60% of the growth was natural increase of resin and population and maybe 40% migration. host: if you look at this knapp from yesterday, it looks as if michigan is the only state that lost population in the last 10 years. guest: in the 2000 census, no state lost population but in the 1990 census, four states lost population. it goes up and down and changes over time.

host: what surprised you about the senses this year? you come i think there are several notable things. this is the first time we have gone over 300 million. the last senses was 208 1 million. that is a bit of a threshold. the second, the slowing of growth. and then the third that you can see on every map that we produce is a reduction of of the growth rate in of the northeast and midwest regions. so, your example of michigan shows some of that. and then higher growth rates in the south and the west. this has been going on for some time. host: will that continue? guest: who knows? you first have to ask why it is happening. it is really quite complex. we know the midwest was the heartland of the manufacturing sector. we know what happened to that sector recently. we also know the aging of the

population is producing retirement mobility to the southern areas. so, there are a lot of different regions. host: 202 is the area code for all of our numbers. roves is our guest -- demographically, how does the u.s. now breakdown by race? guest: we don't know that from this census yet. the reason that we did a couple of days ago was to fulfill the constitutional purpose of the senses, which is to guide the reapportionment of the house of representatives. we based that on state population totals. starting in february, all of the details of the data will start

coming out. host: any other details that you released yesterday or that you have that you can share? guest: i think some things are kind of interesting. we tracked the population center -- what do we mean by that? imagine the united states was on a balance beam and everyone weighed the same amount and we try to find that point that balances the country. it has been moving west and south for decade after decade. in fact, in 1790, do you know where the center of the nation was? kent county, maryland. so, it has gradually moved west and south. right now it is sitting in the state of missouri. we have not calculated this yet, but we've speculated it may have slipped to arkansas. that it is going to go south and west a little more. we have not seen it yet. host: you have quite an interactive web site.

guest: thank you. we love our website. it's could tell us about it. guest: it is 2010census.gov. i think you will enjoy it, and history buff or anyone mildly curious about their state over time for their region. it is interactive and it allows you to click through the years to see how the country or your state change. it also allows you to look at apportionment figures over time. host: do we have economic data yet? guest: not yet. i need to remind you we had a very short questionnaire. we did it deliberately to keep the burden down. so the amount of information will be less than the prior decade. we have this wonderful new sample survey, of the american community survey that annually will pump out estimates on

socio-economic issues and housing and so on. host: ok. so, you released the apportionment data for reapportionment. we know who gain seats and who does not. we have that information out there. texas is the big winner. new york and ohio, the big losers. california didn't change for the first time. guest: that's right. california did not change the the first time. it is remarkable. california in the last century had the momentum of the largest single growth. in 1960, california got eight new seats based on the senses because of its gigantic growth. but it is not that california is not growing. it is indeed. it is not growing as fast as other states in the region or country. for host: have you made any predictions regarding politics with regard to the senses? guest: that is the thing i know least about, as it turns out.

one of the things i am very proud of about the census bureau is that we are a nonpartisan agency. we, like you, are devoted to getting information out to the public and letting them decide what it means. so, there will be tons of political scientist who will comment on the politics. host: february of 2011 is when we can see a more and more comprehensive information. guest: let me tell you how it works. the next step in the political or governmental process is the redistricting. they do that on their own. we have nothing to do with that. but we supply them the data for doing that. that starts in february. that is very rich, block-level data. population counts broken by race and ethnicity. so, jumping on those data, which millions of people do, will allow description of things as small as school districts and other things. later on we will produce other products with richard deyton.

host: west palm beach, florida. kathleen, democrat. you are on what the director of the census bureau. caller: good morning and happy holidays first and foremost. i wanted to find out -- in social science we say that there are too many variations within any group to constitute a true race. how as americans are we supposed to identify ourselves if we are interracial or hispanic -- black-hispanic. how is it done? or is it whenever you feel? it's got i think we got the point, kathleen. guest: that is a great question. let me give a little history. in the year 2000, for the very first time all of us were able

to check multiple boxes for our racial identity and ethnicity. not too many people did it. we, again, gave ourselves the opportunity of doing that in the 2010 census. now, what has happened between 2000 and 2010 -- the decade of tiger woods and barack obama, we have had tons of discussions about combinations of racial identity. so, one of the very interesting things i think sociologically as you referenced is how many people check multiple boxes on the race question. we will know that in a matter of months. the second thing that you raised is how we measure race. we left that to the individuals. that is, we self-identified our racial categories, and that is how we have done it for

host: we are going to go to california, and dana, caller: independent line good morning and merry christmas. i was just wondering if with all of the anti-government, anti- incumbent air, if you notice a drop in the amount of census forms returned because of that? was it more or less, compared to other years? do people seem more cooperative or less cooperative? guest: great question. something i gave daily attention to a few months ago, because of all the press about this. first, i want to remind us that throughout history the census, during the taking of the senses there is often the controversy of one sort or another, so that

is not unusual. second, the data analysis could not pick up that trend. we don't have any evidence. there were press stories on this and did dividual comments made by folks around the country, but it did not seem to have an effect on the bulk of the american public. despite -- in other surveys and those done throughout the country, and the lowering of participation rates year by year, we ask the american public achieved the same rates that we did in 2000 -- we as the american public. we came through. host: robert groves. and the estimates of the illegal population? guest: we don't have that. we released on december 6 another way of estimating the

population, which is based on birth certificates and death certificates and estimates of migration. dare we brought in the best stenographers in the country to help us do that. there was an agreement that we cannot estimate the immigration write very well as a community because of the lack of documentation on some illustration -- immigration. we had a range of numbers between 306 million and 313 million. when the census came in at 308.7 million, that is just a little higher than the middle of that range, so that makes us feel good about the census. we never know the answer to your question from the measurements we do. host: does the census bureau estimates that in any way? guest:no, but the carefully

estimate the total number of immigrants. piecing those two things apart is a really hard demographic problem. host: one of the states with the biggest population game was idaho. barrie, on the republican line. caller: good morning. i would like to wish those unfortunate people in this country a very merry christmas and i pray for them every day. my second point is i was wondering if the "dream act" is passed, what effect will this have on our census? thank you. guest: let's go back in history. maybe that is the best way to do this. in march of 1790, the first house of representatives passed a census act of 1790. a lot of the founding fathers

were members of that first congress, by the way. they specified that we count everyone in the country whether they were citizens or not. although this is, a controversy that comes up every 10 years, for every census since 1790 we have counted everyone, whether they were citizens or not. so, unless there's a change all a part of congressional action with regard to who we count in the census, which by the way the constitution gives as a responsibility to congress, we will continue counting everyone who lives in the country. the "dream act" would have no effect on who we attempt to account. host: robert groves, people are moving to the south and the west. where are they moving? guest: we can see the big gainers. texas received four states

because it grew at a rate of 20.6. the biggest percentage growth is nevada where a 35.1%. nevada is not a really large state in terms of overpopulation, but that is an enormous growth rate. in the year 2000, nevada in 10 years grew 66%. clark had a good growth rate this year as well. -- florida had a good growth rate. the south and the west are growing with each decade. for the first time, the west region has larger population than the midwest. this is a shift, a turning point. those states that came to the union at the last point are

gradually filling up and getting more balance in terms of the population. host: city's growing, rural areas growing? guest: we don't have that yet. we will in a few months. host: ohio on the line. caller: i am the owner of a property in ohio and another in florida. i got in the mail the florida property house. i called the post office. i never received the ohio property. they said they returned it to the census. they did not afford that mail to me for my ohio property. i have many friends that filled out the one for florida, but they don't live in florida. they live in ohio. guest: it's a great question.

kind of complicated answer, but let me talk you through its. first of all, the folks like you that have multiple properties do get multiple forms often. we ask that they report on the form where they usually live. the second -- so i don't know your personal circumstance, but the second thing to notice bais that on all the houses whee we don't get a return form, we go back and knock on doors. if we knock on the door and no one answers, then we get information from a proxy respondent, which could be a building manager in a condominium development or it could be a neighbor. many times, people who don't

remember getting interviewed face-to-face are correct in their memory, but we have obtained the information from other sources. at the end of this process, i can promise you that for every address that we had on our list, over 135 million addresses, we have a disposition that came either from the mail questionnaire returned, a face- to-face interview, or the reports from the and knowledgeable other person. host: census 2010, 380 million, 745,000 people in the u.s.. -- 380.7 million. when it comes to

reapportionments and redistricting, texas got four new house seats. florida got two. arizona, nevada, south carolina, utah, and washington state all got another seat. new york and ohio each lost two seats. losing one seat are louisiana, michigan, missouri, new jersey, and pennsylvania. guest: indiana grew at a lower than average rate, 6.2%. its population was suspect in the algorithm, they retain their same seats. the same in minnesota, which was on the edge. the very last seat was assigned to minnesota, under the algorithm. that allowed them to keep all of

their seats. the state that just barely lost out, you could think of that as they 436th seat, if we had one, was north carolina, which would have been a jump for north carolina. the difference between those two states was about 15,700 or so population, so that's a pretty big gap. in the last decade that was less than a thousand, much smaller. host: alabama did not do as well. guest: alabama grew at a 7.5% rate. the way that the assignment of seats goes, it is a function of the relative size of the state, but also the population count. the first thing that is done is that we assign one seat to every state and then we rank the

states after that. and we start filling out the other seats. in that ordering, the big states get all of the nice seats and then gradually you get down host: california has 37 million people, so you do a 37 million/500,000? guest: actually, it is the harmonic mean. it is the square root of the population over the rank, times the rank minus one. we have done this in baseball. it's a fascinating thing the this is in law since 1940. the 1920 census was a unique one in that the legislature did not reapportion itself in 1920. this was the first year that it decided to be 435 total.

suddenly there was a zero sum gain. it was also a massive movement from rural areas to urban areas before that. so they went 10 years without reapportioning themselves. finally agreed on these terms that have stock since 1940. host: in 1920, did some of the longtime rural districts have a lot more power than they should have? guest: yes. the 1910 reapportionment, we were a more rural area. also, in 1910, we went up to a larger town. the nation was growing. restarted with the hosts of rep with 65 members and they kept expanding -- kept expanding overtime. that made it easy. as soon as you say 435 and no more, then it becomes a zero sum game. host: this will take effect

in 2013. so the 2012 election will be the old? guest: the congress that begins in january, 2013, based on the election of 2012, will do the reapportionment -- will reflect the reapportionment. the states have a lot of work to do in redrawing boundaries. even though the states have not changed in numbers, internally, the population distribution might have shifted and they are redrawing boundaries as well. host: next call from mary on the independent line from minnesota. thanks for holding. caller: good morning. i have two questions. one is for c-span and one is for the gentle man. tryinging a good job in

to educate the americans, but since the early 1900's there has not been that much change in terms of representation. because of that and since up to the 1960's, we are not getting civics lessons. americans don't understand how things are different up -- divied up. wyoming has less than 600 with one representative. states like california or minnesota, we keep getting shafted. that is why the founders made it possible in the early days so that it was 30,000 41 representatives, and 30,000 population -- for one representative. please help educate the americans that they need to push

congress to make it more representative so that you don't have smaller states all the time micromanaging what happens to this country. host: thanks for the question. what is your question for the census bureau director? guest: i know that he cannot change it because i listened to what he said a few days ago when the report came out. could he help educate americans so that they can know what things are so they can get congress to change because we are a democratic republic after all. role in this is to supply to the congress itself these numbers as honestly and as professionally as we can. then it is the role of congress to make these decisions. i remind us, for brief time there were 437 members of

congress when alaska and hawaii came in before the census and then it went back down to 435. the problem of equal representation across the states is a been shoveling problem. if you agree that every state gets at least one representative, then by definition no matter what, your population size is you are going to have at least one. there was the wyoming case in that regard that you cited. the only way to make this work in terms of arithmetic is if we have many, many more representatives and then we could make things a little more equal. returning to the days -- and you correctly cited -- that very first congress where each representative was attached to about 34,000 people. we are now over 700,000 per rep.

there is no end to this process unless we increase the numbers of people in the house. that is an issue for congress and the voters. host: this is a tweet. now to annapolis, maryland on the republican line. caller: i worked for the census in annapolis. guest: thank you. caller: i have some questions. one of the things we did was we went to soup kitchens and counted the number of people. people do not live at soup kitchens. in some cases when a few days later we would go to another soup kitchen i would see the same people that i already counted. it's about three blocks from the other soup kitchen. what is that about?

guest: thank you. you are one of our heroes. there were about 1 million people like you who, as a public service, even though we did not pay you very much, you helped america to count itself and you are one of my heroes. let me go to your question. the difficulty of counting people who are homeless is enormous. we do the best we can, but we admit we are not perfect. how do we do this? on march 29, 30, and 31, we had three days of operations, which was the culmination of months about reached to community organizations, working with them to find out where homeless folks congregate. we went to where they get services.

soup kitchens, shelters. we also identified the outdoor locations where they sleep. over those three days, we reached out and tried to account folks. when we had full identities of folks, for example, you encounter the two people at two -- the same person at two superstitions, we tried not to duplicate cases when we had identifications of people enumerated multiply, we did that. we added goes to the aggregates. the number of 308.7 million includes all of the homeless folks that we counted in that way. let me tell you, we admit imperfections in that. i know that there is probably somebody in florida living out in the woods in a tent and i suspect we did not count that person.

we did not count people who want to evade the account that are homeless. we do the best we can. we tried to improve with every census, but it is a challenge. host: how did it out meyers of the hawaii and alaska do -- out ?lliers guest: alaska grew at a higher rates, 13.3%. to 630,000 people. the population density of alaska remains the lowest in the country with 1.1 persons per square mile. host: the highest census? guest: on the east coast. d.c. is the highest for sure.

host: but of the state's? guest: it could be rhode island. i don't have in front of me. host:paul from massachusetts. caller: two questions. first, with respect to residents of the united states who are undocumented, how did you reach out to try to count as many of those people as possible? second question, on the map you showed, the largest increase in members of congress, the shift was to the southwestern part of the united states, which many of the governors of those states have indicated that they have the largest population of undocumented residents. i was wondering if that -- those

undocumented residents -- has contributed to the increase in population there for the increase in the number of house seats? guest: two great questions. first, how did we go about counting the undocumented? we counted them the same way as all other people. what did we do to reach out to them? this was, i think, one of the most heartwarming stories of this census. we had over 250,000 partner organizations, small community groups, sometimes these were things like residents associations in an apartment building or it could be a community group, the ymca or community center. they got the word out. these or all volunteer activities. no money exchanged hands. they helped us get the word out

to their communities. in the immigrant communities, especially the latino community, the energy and activity countrywide was just enormous. all sorts of activities were going on especially in the southwestern states. we worked with community leaders to convey the message that the way we do a census in this country is completely separate from any enforcement agency activity. when you answer the questions in the census, the data is kept constaand confidential. your group, your community, benefits through those counts. to the extent that message got out, we feel good about the the results. it's a tough problem. consistently getting the message, we do the best we can. over the next few weeks and

months, i think, instead of expressing my opinion, we will have real data to evaluate so we can compare to the benchmarks. host: tina tweets this: guest: it is an important responsibility that is shared by state governors. in some states, under the voting rights act, the department of justice, the u.s. department of justice, oversees the construction, the boundaries of districts in order to make sure it is fair for minority representation. host: the next call for the census bureau director robert groves, milton, from new york. caller: good morning. why does it cost $13 billion?

you just said that you cannot count the immigrants. if they are undocumented immigrants, this documentation, so you should be able to count them. if they are not documented, why are they not sent back? all ice and send them back. -- call ice. guest: economy reiterate, we count every resident. we count people whether they are documented or not. by the way, remember, on the census questionnaire, we never ask whether you are a citizen or not or whether you have documentation. so we really don't know the breakdown of the immigrant population. in terms of estimating the immigration, because of the undocumented portion of immigrant populations, it is

very difficult for us to use records along to estimate. your first question was about the cost of the census? the census is an expensive activity of the federal government. i think the final tally will be about 13 billion. the-- when i came into my appointment in 2009 our estimate was it was going to cost 14.5 or $13.7 billion. since i've been in, some wonderful things have happened. we have a budget this year, this fiscal year, a $7.4 billion. we were able to return $1.8 billion of that to the treasury because we did not need it. since we did not need it, we returned to the treasury.

host: how did that happen? guest: $800 million of that was a contingency fund in case that things happened likes hurricanes. we were reported about age the h1n1 epidemic. none of those bad things happened. we saved $800 million on that. the rest of the money, kudos to the american public for returning the forms, which means we did not have to pay salaries to people to knock on as many doors as we were prepared to do. the other thing that happened was we hired people in this recession with job skills and experience and with desire to work that need the money that were so productive that they finished the work at very high quality levels faster than we thought. that yielded savings. i am worried about the cost of the census.

i believe in these economic times we have to plan for the most cost-efficient sense as we can. we are working on that and try to be as cost-efficient as we can in 2020. tweet:here's a guest: i would guess new york or california. whenever you have 600,000 people on the streets, a lot of things happen. we had over 700 incidents when our folks knocked on the door, they were greeted with a gun in their face. 600,000 people on the streets. people knocking on 50 million households doors. out of 100 million knocks on the

door, 700 times of guns in the face. we had one shooting death and another due to a traffic accident. each of these things are real tragedies. it hurt us as a family, but it is a relatively rare event. 700 over 100 million. host: last call for robert groves, from baltimore. caller: i have a question regarding redistricting as it relates to the 2010 census. look at the states where the population might have shifted. if you can answer this, why are the district's gerrymandered? could there be a case uses for the results of the senses to make the case that the district's need to be more square and true and truly represent the people?

guest: this is truly out of my domain of authority. i do know that the data we are given can be analyzed by anyone. in some states, citizens commissions have been appointed for the redistricting process, in an attempt to address the issues you have raised. in other states, this is a straight political process, it would be subject to negotiations. the ability with cheap computers now to form geographical boundaries to achieve all sorts of desired ends is almost unlimited. this will be an interesting decade redistricting, but it is not part of our job. host: robert groves, director of the census bureau, how much longer will you be in this position? guest: i serve at the pleasure of the president.

i may have a memo on my desk tomorrow. if not, it will be in

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