putting people in cages for the rest of their life for doing a similar thing. guest: i appreciate your reference to the effort tha some of us have undertaken to support the people's muge deane -- mujadin of in. it was declared a terrorist organization under the clinton administration. it was the misguided but hopeful intent that the rein -- iranian government might be more conciliatory in its discussions with us. these individuals are now in a camp. they surrend -- surrendeed their weapons. they were being protected by the american military, and that protection has been terned over to the forces in iraq. we should also know that the e.u., with the several well

respected jurists looked at this case and said they do not deserve to be considered a terrorist organization. the united kingdom did the same thing. there was a court here in the united states that suggested that they do not belong -- they should not be treated as a foreign terrorist organization. right now that designations before secretary clinton. it is eye roon ironic, this is a group of men and women that have fought for democracy in iran for many years. when i visited paris i spent time with older iranian women who showed me pictures of husbands, sons, and daughters who had beein prison and tortured and murdered. there have been hundreds of examples in that regime, and we look carefully at our public advocacy for the delisting of m.e.k. we are quite comfortable we are within the limits of the law, and we will continue toed --

continue to aggressively pursue the delisting. these men and women want to voice their opposition to mahmoud ahmadinejad, and for some reason we think keeping them listed as a foreign terrorist organization improves our position to negotiate with iran. they look with impugnity at the united nations in the u.s. when it comes to the negotiations on their nuclear arming. at least we could support people who want to take the support of democracy to the streets. host: tom ridge, the former homeland security director. an e-mail, "should we stop dictators even if they support us? is it time for the u.s. to have a principled foreign policy?"

guest: it would be easy if it was an either/or. one of the challenges for all administrations is balancing, as i mentioned before what are the legitimate interests of america -- and by the way, sometimes our interests are also global interests. one of the reasons we have been so engaged in the middle east for so long is because of the world's universal tendency -- pendency on oil. that universal addiction means somehow that oil greases literally the internatiol economy. you would have a huge international economic disruption around the world. it would be easy if it was an either/oproposition, but it is a constant balancing act between the interests we have as a country and as aorld leader as

we as the values we want to promote. i think our global engagement in the future needs tosh not just mill -- needs to be not just military, but diplomatic, foreign aid, and development assistance host: from boston, good morning. democrat's line. caller: in 2004 the political purposes that lped bush with re-election, tom ridge raised the terror alert. myueion is actually, why should we believe anything this guy has to say at all? guest: well, you are entitled in this country to believe what you want to believe and say what you want to say. i recall the incident quite well, sir. you may not believe this, but i recall it so vividly i can close

my eyes and actually remember going to the podium and talking about a hard drive that our forces had discovered in pakistan which showed surveillance tapes of five institutions in northern new jersey a in new york and in washington. and i erred, and the mistake was mine, and i am fully accountable for it, while i was making the presentation in talking to the general public about it, i also laweded the president's leadership in the war on terror at the time. and that created an onus pushback from the media and the democratic party, because up until that time you don't pull politics into how you are trying to fight the global gee haud -- jihad and al-qaeda. so i misspoke. it took from what i was trying to explain.

i was lauding the special forces of the men and women that secured the tape. it was a political comment. i ould not have made the comment. i erred, not the president. >> when you announced the color-coded system which we had as part of the post 9/11eriod. then homeland security secretary tom ridge. >> the homeland security is designed to communicate terrorist threfts to the public in a timely manner. it is a national frame work. it is flexible enough to apply to threats made against a city, a state, a sector, or an industry. it provides a common category so officials from government can communicate easily with one another and to the public. it provides factors which help measure the threat. most importantly, it empowers

government and citizens to take actions to address the threat. for every level of threat, there will be a level of preparedness. it is a system th is equal to the threat. >> in 2002, governor ridge, and now we have what is an imminent threat or elevad threat, a similar system to two different warning levels. gelft: one of the biggest -- guest: one of the biggest challenges, in this age of global jihad, ifou believe as i do that we'll be at this for generations, if you believe as i do that america will continue to be a target if not the major target, how do you communicate to the public and how transparent can you be? once you he communicated the threat to the public, they want

to know, all right, now that you have told me this, what do you want me to do about it? so again, whether you have five or two or three, it is not as imrtant as those two elements. specific information about the nature of the threat, and specific directions as to how you deal with it. and i think the big challenge withecretary nalatano, as it has been the entire 10 years, is sh can react and only make the announcement once she has been find by the alphabet agencies who are involved in intelligence and counter-intelligence. so if someone doesn't hit the button so that future secretaries get the information worthy of public dissemination, then any system is in peril without adequate and timely information. guest: a question from

california, "i was wondering if mr. ridge thinks that consolidating fema into homeland security was a mistake. fena seemed to work well before hurricane katrina." guest: i think fe is appropriately positioned within the department of security. it is an all-hazard agency. so whether it is a terrorist attack or mother nature or god forebid some horrible -- god forbid some horrible accident that occurs, i think it is fine. katrina was more a series of decisions. i think the decisions with katrina had more to do with failed leadership than it did with the quality of fema and helping people recover.

host: on the line from palm springs. caller: good morning, and thank you to c-sn. i can tell you straight off i appreciate what you did for the country along with the president during those dar days. you stood very strong, i believe, with the department. i have two questions for you. the first question would be, what is your honest concern about our nearest terrorist threft to our homeland which would be mexican cartels down in mexico? i know it borders a few states. it dsn't bother many people in this nation, but i can tell you, that it is big trouble down there. and napalatano hasn't addressed it much as far as security on the cartel.

isk you that question because i have been dying to know the answer. guest: and what is the second question? caller: wishing michael a big hello, his dad. guest: it is not quite as bad as colombia in the days of narco insurgencey, but i thinkt is bad. i think calderon has tried to stop the escalating violence in the reon. this is something that will require the continued and enhanced collaboration between their national military and our customs and border protection. you know, we have president bush started and i believe in successive administrations there

have been more and more agents put down there. at the end of the day, this is a challenge within the mexican government. we have committed as a country hundreds of millions of dlars in aid, in trading and in equipment to help them deal with it. to date, it has been difficult to conclude that we have seen modest gains, but it is something we will be at for quite some time. to your point, it may seem regional in impact, but it is more national in scope. we need to help the regional governnt deal with it. we are trying to, but there are signs of progress to date. caller: mr. ridge, i am wondering why it is that when osama bin laden was credited with killing about 3,000 americans we went in there and suddenly we stopped looking for him all together and subsequently the president said that he no longer even thinks

about osama bin laden. but when we went to iraq, we turned over every rock we could possibly find to get saddam hussein, and subsequently he was caught, put on trial, and executed, and now the killer of 3,000 americans is still on the loose. guest: i want to make one slight correction. while we did subsequent to our initial incursion into afghanistan withdraw troops and put them into reposition tm in iraq, i will tell you there are a lot of men and special forces and otherin the military that would probably reject e notion that they didn't spend years tireless 24/seven with efforts to findsama bin laden. they may have reduced it in

scale, but it was very intense and continues to be very intense. i think that's something that has been lost in the public discussion abo afghanistan. host: we pointed out peter bergen saying, "the trail has gone cold. this influence remains real." guest: no question. i have not been to that region of the world but i have talked to enough soldiers that have been there. it is a tribal, very difficult terrain. as i said before, almost a cult figure -- not almost. a cult figure. a lot participating in the effect of this massive soviet army from afghanistan. now after 10 years, in spite of the best efforts of the united states and some of oufer allies -- some of our allies to locate them, we can't find them, and it

is not that we haven't tried. i am confident we will find them. time will tell if we are. host: republican line. go ahead. caller: good morning. thank yofor c-span. mr. ridge, i first want to say to you, thank you very mu for thjob you did here in pennsylvania as our governor. you have integrity, and we were proud of the job you did. that's why we elected tom corbitt, because we feel he is the aim way you were. after you left office, we were hoping you would run for president. please give that a thought. we would appreciate it. guest: you are very kind.

i hope you know, i was governor for six years, nine months, and ve days, and i loved every minute of it. it is the greatest public service honor i have ever had, and i thank you for your comments. host: if you look at the republican primary, would it be difficult for someone who has moderate views to get support in the primary? guest: i think it would b it is clearly a challenge for some of us who have. i would like to think we are more caring in our approach on some of the social issues. we are more toll rent in our apoach with those that disagree with us within the party. i have spent -- talking about abortions and gay rights, i spent a lifetime in the republican politics, and when i advocate for governors or politicians or others, probably 90% of them have disagreed with

me on that subject, but that has never impaired our ability to work together, and it never frustrated my desire and willingness to help them, because i do believe in a bigger tent. but i believe at least for the time being those that have that view and frankly those who are toll rent to those with views, i don't think there is a strong enough quarrel for those who share those views. i think it is a challenge for the party. host: taking a looat pennsylvania, if i might. guest: i served with chuck shumer on the banking -- schumer on the banking economy for years, and now our senior senator, bob casey with strong pro-life credentials who in spite of being in the mainstream of democrat party was smart enough to understand that was

the only way he could defeat the incumbent rick santorum. it is one of the qualities that he needed, and he did so. i think it is a challenge, and i think it is a challenge and sowhat regrettable that those of us who spend a great deal of time supporting republicans who have a different point of view, that for one of us to go the other way particularly in a national election is not found too frequently or with enough people in the party, with enough partisans. host: complon we go to huntington, west virginia. good morning. guest: good morning. you talk about american values. i would like for you this morning to denounce the treatment of anyone with waterboarding or torture. guest: i don't need to wait for a c-span broadcast.

i have said it many times. waterboarding was, is, and always will be torture. host: our program tonight is "decision points" with president bush. during the interview he was asked whether he will wade back into the political field, and here is a portion othat interview. >> you are through with politics? >> yeah. >> define that. >> i don't want to campaign for candidates. i don't want to be viewed as a per pep twal moneyaiser, i dot want to be on these talk shows second guessing. i think it is bad for the country, frankly, to have a former president criticize his successor. it is tough enough to be president without former president undermining the current president. plus, don't want to do that. in spite of the fact i am now on tv, i don't want to be tv. >> it's about over. >> it is.

but i tell people that one of the interesting -- sacrifice. i don't think you sacrifice to run for president, but to the extent you do, you lose your anonimity. i like the idea of regaining that to a certain extent. it is somewhat liberating frankly. >> the two of you first met back in the mid 1980's? guest: a couple times we tried to figure out when that first day actually occurred. i think when he was running for vice president and obviously became friends as governors, and the rest is recorded history. i listen to my friend and the fact that he's not going to second guess an incumbent president, it speaks to his strength of character and the kind o person that he is. similar in respect to his faurgetter.

i also can't help but think during the eight years of his presidency he took a beating, and he took a pounding, and i think there is a natural inclination in this country to be critical of the president, constantly commenging the president. but i think given the decemberble -- the descble level that was raised, between the kind of communication, there was hardly a day where there wasn't significant communication between one day or the other, and i don't recall the president ever tking about a netwo that had treated him unfavorably, talking about members of the house or the senate who were not being kind or overly aggressive in his -- in their comments. that's just not his nature. strong character. host: you came to washington when ronald reagan was in the white house, a member of the

house of representatives. the cover story, "happy birthday mr. president." next year will kick off a celebration of the 100th anniversary of his birth. guest: i remember the criticisms he got in not being engaged intellectually in the issues of the day. but i sat down once to have a discussion with him about the mx missile. that was an important and controversial subject, and trust me, he done his homework as well, so even some of the technical questions i asked him he had -- he was really engaged. the other moment was at the white house over christmas one time and i said something to the effecthat, mr. president, you are doing this like 20 nights in

a road. due grow weary at times? he said, well, truth be told i just as soon be upstairs with my slippers with nancy. it was those personal qualities and his humanness came out in many, many different ways. >> tomorrow an assessment of the republican congress and a fourth to create jobs through reagan also a look at the current -- and efforts to create jobs. also alleged occurrence situation in egypt. we will talk about state and federal stalking laws. then begins of and about 45 -- at 7:00 a.m. eastern here on c- span. on television, on radio, and on

line, c-span, of bringing public affairs see you -- it is washington, your way. german chancellor angela merkel discuss the euro zone. she added she firmly stands behind the strength of the euro but warns that more transparency is required to rebuild the european economies. this event is about 25 min. >> i gladly except did your invitation. -- a accepted your invitation.

i think we have learned, and we are mutually dependent on each other. there is a global network of players that are mutually dependent. i think now you just have to look of the collapse of lehman brothers and the aftermath to understand, because we have forgotten about international interdependence seas, close integration. we have decided something like that should not happen again. the last few years have been comforting. politicians have indicated they are capable of working together. we have cut the first meeting of the g-20 in washington.

we have made considerable strides in regulation, so the show's politicians are capable of action. now a positive lesson we learned is the one thing we were able to prevent is the collapse of global economy, but the question is have we learned lesson. can we say we prevented future collapses? i have said we have laid the groundwork for this, but generally, we have to say we are not there yet. now that we feel the crisis is

not something that dominates the headlines every day, we have run a very real risk asset -- that there is perhaps less of a sense of urgency, and i think that is exactly the danger and we need to work against, because we have an enormous job that needs to be done. those questions are not answered. the main question is can we prevent such a crisis from happening again and can we ensure sustainable growth for the world? only when we can get a safe answer to both of these questions have we actually completed our job. we need to regulate more. every financial player has to be

made subordinate. what happens if a systemically important institution is collapsing? how can we avoid the tax payer footing the bill, how can we prevent that from happening? what is more important is how can we ensure sustainable growth bowman -- this marks the transition from a crisis mode into a phase where the world has to work together better and more directly. -- durably. the agenda i think has put the emphasis on exactly the right we agreed on a framework for growth.

a framework for sustainable, strong, and equitable growth. we have to look up at different aspects of the play an important role. first we have to concentrate on currency. i think we have to understand the exchange rate needs to reflect the fundamental data of an individual country, so they depend on the economic situation destabilizing

capital flows, and we have to see to it but imbalances are not allowed to play our role, but imbalances will always happen when there is a. a currency system has to be so robust that it can prevent financial problems. there will be no different germe challenge to look a future -- accepted the challenge. we have to except this is something we will not be able to solve overnight.

the conclusion is the we will have an opportunity to debate this. the united kingdom has initiated a policy were to gather from the basis that allows us to finally reach that goal. if we're not reaching the finishing line, decades will go by without this opportunity ever offering itself again, so the conclusion

we have quite often been criticized for the five that we have said we need to pursue this course.

china, the asian countries will be the big winners, but we with our expert opportunities are given the chance to participate in global growth.

now consumer confidence has returned to germany, and we have a very strong whose debt is given to -- a very strong boost given to us. consumer confidence is a very important dana -- thing. we have to show solidarity.

we also have to be realistic. after all, this is the result of speculation, but these speculations have our roots in reality. it is the trust of the markets that these high debts will be reduced. it is important that there has always been the solidarity. i am saying this on behalf of the whole european union.

it has shown one thing really clearly. it may be also has changed the biggest risk for prosperity in the continents. this has to be linked with charting a new course, for us from member states of the european union.

we need to not do something we have not done, which is to work together in a more coordinated fashion. this will not happen overnight. we will do this in close concert with france. also for boosting competitiveness. we will closely coordinate. there are a number of issues we should work on. there is a common currency and social security, and the demographic system should have some relationship. we need to concentrate on creating competitive job secure a good -- competitive jobs. we are not competitive enough

yet, and we have not sufficiently secured debt. i am absolutely convinced we are able to do this. we also need to give of a boost to the investments and government take-out as compared to consumption, and we have to show all of those in a convincing way, keeping a close eye on europe that we are actually using the best among us, because we do not want to be only similar with each other in europe. the male lead us down a slippery slope. competitiveness must be part of our huge policies and all of our political coordination.

we feel committed, and we should pursue it. we know we need to retain confidence. look at what we have done. we have to prove we can abide by the rules. we have allowed it to be oriented more on macro economic criteria, which needs to be coupled with a more coordinated political and economic policy of. we need as solidarity and competitiveness to the two sides of the same:. -- the same coin. whoever gets solidarity needs to receive this under the same conditions.

this is what we have to do. we will give our contribution to what we can put on the table at g-20. reflect little on those whom we do this for. not only do our citizens have the impression that we were are actually driven the economic crisis, and we should take a break and reflect for whom we are doing. we ought to shape what we are doing. we should do this in the

interest of our people. we know this is not possible without getting closer to each other. we also needed global responsibilities. we need global bodies of tell us this is wrong type of policy, and we have to except -- accept that. that is probably the most difficult, but shared norms are really what is essential to meet the challenges of these new realities. this ought to be our guide lines to do it.

thank you very much. [applause] >> madam's chancellor, and many thanks for that the visionary outline of our way forward.

you said at the outset that our currency really established it. within europe and the outside, there are many different levels of competitiveness. how do you see the balance? if you think it is open for undervalued? >> i do not want to interfere with the evaluation. i feel there is no harmonious space to this period of -- space to this. in the currency union, you do not have the possibility to actually devalue the currency, so it is important not to say indispensable to have a more consistent and coherent international competitiveness period of the euro would be a theoretical kind of exercise,

and it would not reflect the position of countries and competitors. if we look at if -- if we do not look get more competitive countries, we would allow the euro to slip, and that is really at the center. ha i think we all live up to this responsibility >> madam chancellor, when we speak about europe, questions of identity of rise. we have not only of rational aspect but the emotional. my generation had a clear idea of what europe had to be.

perhaps the other prospective was a market economy. if you can almost say your position is still human face. >> i think it has actually proved both sides of industry have worked very well. i think this particular issue is something we must never lose sight of. the origin of europe was that this was a continent where over centuries nations fought a

bitter wars against each other, that this ought to be a thing of the past, and if i look around these days, there are many areas of the world where we would be very pleased, that they had reached a particular stage, but what is important is it is not as if in the present situation of this were replaced, but it is complicated by something of spirited our ideas of shared values -- if it is complicated by something. we wish to fight for economic prosperity and economic competitiveness. we are on the next level, but we would lose everything if we would put a question over these matters of peace and peaceful coexistence in society, and we

would be very surprised about the old prejudices. many countries after result in harder policies. we need to prevent this. >> you have spoken today of industry. over the last two years, politicians have taken very tough decisions. how do you see this role in achieving the goals that have to be achieved? what would you say to the people in the room?

>> my answer would be that people think of creative ideas. many were relieved. anyone interested in long-term success should rally around if we want to forge a sustainable growth policies. we should not only tried to avoid regulation. we should set grows on a continuous and sustainable basis. i would hope that those that work in the economy would bring their interests for word, because real economy was negatively affected, so i think

there is an influence between what is good for everyone. it has brought the world forward. hit it should ideally surf the real economy, because without it, the financial side will be without a job. if only the real economy were to pursue that, it would not work. i think those that are here are already preaching to the wrong church and preaching to the converted already. each and everyone has to be in on this.

>> things for you for having come to us today and making a possibility to discuss further issues. many thanks. [applause] >> tomorrow, the white house launches a startup initiative to spur the economy. you will hear from the commerce secretary on the plan to create the jobs. also remarks from the head of the small business organizations and talks from the white house. that is live here on c-span. special inspector for the troubled assets and relief program called a treasury department program to help homeowners facing foreclosure of failure at a state oversight hearing.

tim massad appeared before the committee. this is an hour and 45 minutes. >> welcome to this hearing. this is a closed hearing, so i asked all of your indulgence as we go through a number of first- time mistakes i will undoubtedly meet. pursuant to the rules, there will not be opening statement.

>> i know this is our first meeting. we had a lengthy discussion -- >> will the gentleman say this? >> i am trying to do that. we had a lengthy discussion, and i thought we had reached a wonderful agreement where the chairman said he would give us notice, and this is our first hearing. i am wondering why we were not opening statements to rioja -- opening statements. >> the chairman is waving.

all members will have seven days to please their opening statements in the record. i thought it was most important to start off by listening to the witnesses. i know this is his 20th visit. i want to start off by listening for us. -- listening first. i understand sometimes we'll hold it an hour. but as a tradition i intend to break. i want to make it clear we are interested in listening to our witnesses first. >> pursuant to what you said yesterday, will you be giving

more notice? we have a wonderful discussion where you said you would give us a proper notice, and i am wondering. >> we intend to give notice. we only organized less than 24 hours ago. i expect there will be greater notice. of this point i am going to introduce the witnesses. >> an inquiry with respect to procedure. i have been in congress for 14 years, and it is unprecedented that a ranking member -- >> did you make now a

parliamentary inquiry? >> i did not. >> the gentleman is no longer recognize. >> point of order. i understand if the gentleman has decided now he has nothing to say, but can you cite one example where a majority ranging member has not been given the respect of an opportunity to make a brief opening statement. >> the gentleman will respond with a list of opening statements. >> you cannot think of one now all? >> the gentleman is no longer recognize. we turn to our witness. he is in charge of the chief troubled us of the relief program.

he assumed the title of assistant secretary on september, 2010 after dr. allison stepped down from the position. until then he served as the chief officer for financial stability. prior to that, he worked of office -- at the onset of the 2008 financial crisis. he was a partner at travis, ceylon, and more, where he had a corporate practice with an emphasis on bank financing, undercutting, and security issues. he received a degree from harvard college in 19782008.

-- 1978. mr. barofsky was a federal officer for the southern district of new york for more than 80 years eureka he was the scene near trial counsel -- the senior trial counsel. he also has experience as a line prosecutor leading white-collar prosecutions during his tenure as a member of the securities and commodities fraud unit. he also led the investigation that resulted in the indictment of the top 50 leaders of the revolutionary armed forces of colombia.

the case described by the attorney general has the largest gold in life history. he is a graduate of the new york university of law. all witnesses will be sworn in before testifying. please rise common and raise your right hand. -- please rise and raise your right hand. the you solemnly swear that the testimony you are about to give this committee will be the truth and the whole truth and nothing but the tructh?

>> as is accustomo this committee, we would ask that your full written statements be plac in the record and that you limit your opening statements as close as possible to five minutes. as was the custom of my predecessor, you will see three lights. green means continue to go. yellow is the warning that you should not run through our intersection and red in all 50 states means stop. thank you, mr. chairman. the normal rule of committee is that we go in order of rank. mr. massed, i believe you would, by protocol, be first. >> thank you, mr. chairman. chairman issa, ranking member cummings, members of the

committee, thank you for the opportunity to testify today about the troubled asset relief program or t.a.r.p., it is commonly nope. i am the acting assistant secretary for financial stability at the treasury, which means i am responsible for overseeing the program on a day-to-day basis. i recognize that t.a.r.p. has not been popular. there is good reason for that. no one likes yood using taxpayer dollars to rescue financial institutions. flun the less, sitting here today, more than two years after a bipartisan congress passed the legislation that created t.a.r.p., it is clear that the program has been remarkably effective by any objective measured. first and foremost, t.a.r.p. helped prevent a catastrophic collapse of our financial system anour economy. in the fall of 2008, we were staring into the abyss, lending by banks had practically stopped. our credit markets had shut down. and countless financial institutions were under severe stress. this the was a crisis not only

for wall street, but also for main street. simply put, wwere at the risk of going into a second great depression. today, people no longerear that our major financial institutions or our financial system is going to fail. banks are much better capitalized and the weakest parts of our financial system no longer exist. the credit markets on which small businesses and consumers depend, auto loans, credit cards, student loans and other finances have reopened. businesses are able to raise capital and mortgage rates are at historic lows. of course, the economy is not yet fully recovered and there is still much work to be done. unemployment is unacceptably high and the housing market remains weak. but the worst of the storm has passed. second, we will not use all the money congress made available for t.a.r.p. and we are exiting our investments and the private sector far faster than anyone thought possible. let me brief summarize a few key facts.

congress originally authorized $700 billion for this progm. we will spend no more than $475 billion. and of the money spend to date, much of it has been repaid. approximately $270 billion. we still have about $166 billion invested in various institutions and i am hopeful that we will recover much of that over the next two years, depending on market conditions. finally, the ultimate cost of t.a.r.p. will be far less than anyone expected. the total cost was initially projected to be $350 llion. that number, however, will steadily decline over the next few years according to the most recent estimates, the overall cost of t.a.r.p. will be in the range of $25 to $50 billion. and the direct fiscal cost of t.a.r.p. as well as all the other interventions to address this crisis is far less as a percentage of gdp than t cost of resolving the snl crisis in

the 1980s. in addition, t.a.r.p. cost will be primarily attributable to what we spend on our housing programs and our efforts to help responsible american families keep their homes. we expect that all the other t.a.r.p. programs and investments, when considered as a whole, will result in very little or no cost to the american taxpayers and possibly a profit. in all of these efforts, t.a.r.p. has been subjected to unprecedented oversight. when congress created t.a.r.p., it also directed four different oversight bodies, including the special inspector general for t.a.r.p., mr. barofsky, cho is sitting with me today to carefully review all of our programs. in addition, t.a.r.p. has be subject to vigorous congressional oversight by this committee and several others. we welcome this oversight. individually and collectively. it has helped us to develop, implement and constantly improve

our t.a.r.p. program. and we have strived to be transparent by providing a wealth of information about the program to the public. in particular, i look forward today to discussing mr. barofsky's most recent quarterly report. i am pleased that the record concludes that t.a.r.p. helps, as he put the it, head off a catastrophic financial collapse. and that the program financial prospects are today far better, he says, than anyone could have dared to hope just two years ago. the other oversight agencies have reached similar conclusions. the report raises a number of concerns about the h.a.m.p. program and the so-called too big to fail issue and i'm happy to discuss the, as well. t.a.r.p. succeeded in what it was meant to do. it was not designed to solve all our problems and we recognize that many americans are still suffering. nonetheless, thanks to a comprehensive strategy and decisive action, our economy is far stronger today than it was

two years ago. both political parties deserve credit for these achievements. congress enacted the program at a time when the finaial system was falling apart. in that moment, leaders from both parties stood up, stood together and did what was best for this country. thank you again for providing me the opportunity to testify here and i welcome your questions. >> thank you, mr. barofsky. >> chairman issa, ranking member cummings, it is an honor to present here once again and to present to you our most recent report to congress. for sig t.a.r.p., we've made great progre in striving to meet our goals of transparency, oversight and enforcement. with this, our niepth quarterly report along with 13 separate audits, it helpedhine a light in some of the darkest are of government's response. it's included some of the important recommendations which

when implemented and adopted have resulted in great savings for the taxpayer which resulted in great fraud and abuse. our investigation unit has been similarly busy. we've been able to secure fraud charges against 45 individuals, 12 different companies and to date, 13 criminal convictions. we've also been able to either recover or prevent from loss of fraud more than $700 million. thereby assuring that sig t.a.r.p. as an agency will more than pay for itself. and with 142 ongone criminal investigations, including those into executive at 64 different banks that either applied for or received t.a.r.p. funds, we still have a lot more work to do. for treasury and t.a.r.p., the results have been more mixed. while it's certainly good news as mr. m assed noted, the estimates of t.a.r.p. costs have declined and significantly it's not the whole story. and too often, with treasury in its statements and in its testimony has too much of tunnel

vision focus on the financial c decline of those, obscuring the very significant and very real nonfinancial costs that will arise out of the troubled asset relief program. first, it ignores the very significant, wholesale damage to government credibility that has arisen from treasury's mismanagement of parts of the t.a.r.p. program. too often these programs have been marked by loose compliance, failures in transparency and questionable decision making. it's those avoidable failures, ago anything else that accou for some of the deep unpopularity of t.a.r.p. the second cost is perhaps the most significant of t.a.r.p.'s legacy, the continued existence and the moral hazard associated with institutions that are still deemed too big to fail. when secretary paulson and secretary geithner spoke to the

financial markets and assured that they would not allow the financial institutions to fail, they did more than reassure troubled markets. they sent a powerful message that these ban would not be left to suffer the consequences of their own folly. as a result, not withstanding the passage of dodd frank last summer, these still envoy an advantage with enhanced cred ratings as a result of that implicit government guarantee. t.a.r.p. has mixed the cocktail of ilicit guarantees that led to the disasters at fannie mae and freddie mac. i agree with treasury that they have met the wall street goals, they did help prevent a collapse

of the financial markets and that undoubtedly had a benefit not just for wall street but for main street. t.a.r.p. has not met the goals set forth for congress formain street. the most significant main street goal of preserving home ownership, its failures there ha had some of the most devastating consequences. the home modification program has to date been a failure with estimates that over the life of this program, we're going to see probably well in excess of 10 million foreclosure filings on 10 million families, when compared with the congressional oversight of panel's recent estimate that no more than 7 or 800,000 permanent sustained modifications, hope is slipping away. treasury's administration of this program gives little cause for optimism. they continue to refuse to adopt even the most baitic metrics and goals and benchmarks to measure success.

they appear to be afraid to rein in penalties who everyone agrees has been nothing short of abysmal. as a result, we continue to see spiralling downward participation quarter after quarter after quarter. mr. chairman, ranking member, members of the committee. i thank you for this kpubt r opportuny and i do look forward to answering any questions you have. >> i thank the gentleman and i thank him for the accuracy of five minutes. i now recognize myself for five minutes. mr. massad, since you'r here on behalf of treasury as the person most knowledgeable, can you explain to us the secretary's statement on december 2010 on the subject of t.a.r.p. and related bailouts when he said "in the future, we may have to do exceptional things again if we face the shock that large. you just don't know what's systemic. i repeat, you just don't know

what's systemic and what's not until you know the nature of the shock." does that mean that the secretary expects that if a housing crisis occurs again or some other shock, we're not talking about an external force, but some other shock to the community, that we still have systemic risk, too big to fail and the government will come in and bail out the large and allow the small to fail? >> mr. chairman, what the statement means, in my view, what i believe the secretary was saying was that we cannot predict what the future issues will be in terms of risks to our system. >> isn't that exactly what dodd frank and all these other legislation have done? we were supposed to eliminate too big to fail, systemic risk was supposed to be managed by an analysis, if you will, of vetting of whether entities were robust enough now and in the future, and it's the reason that

some companies are still around and some were folded. isn't that true? >> you are correct, mr. chairman, that that is dodd frank's purpose and that's what we're pleimplementing. it gives us the tools. >> right, but the secretary said this well after dodd frank. for example, we've had bank of america re before us on multip occasions. we've rolled country wide into b of a, i'm not for breaking up companies or taking a heavy hand, but if bank of america is too big to fail, shouldn't we be suggesting that, i'm not suggesting this, but shouldn't we be suggesting that they find a way to not be too big to fail in whatever kind of dw divestitures. rather than putting them in the category of those who enjoy less

expensive costs of assets. >> i think dodd frank gives us the tools to regulate any financial institution, regardle of its size, imposes systemic risks and gives us the tools to shut down such financial institutions. it gives us precisy the tools you're talking about. if i can respond more broadly. i think the ccerns that mr. barofsky raised are those that animated the congress in passing dodd frank. those are the issues congress debated in passing dodd frank. >> as somebody on the conference for dodd frank and somebody who has been there all along, dodd frank was not altogether that bipartisan as you can imagine. i appreciate it can shut down entities after the fact. it has a heavy hand to determine who is a financial entity. perhaps the next timeeneral motors gets in trouble, we can shut them down rather than save them as a bank. moving on to ham, as the ig

reports pretty thoroughly, we cannot get money back from loans to insolvent companies. we have to look at the money we won't get back an th suffering of people who won't g a loan modification if they can't afford a home or an elganltsz exit that won't destroy the neighborhoods as we seek somebody who can afford it. i have december 31st, 2010 results and i would like you to comment on them. the goal of hamp 3-4 million loans. modifications cancelled, almost 800,000. can you give me your view of hamp based on those figures? >> it's remarkably disspiriting. this was the program that was supposed to be to help main street. when t.a.r.p. was originally enacted, when you gave the treasury $00 billion, the idea

was the treasury was going to buy toxic assets. the idea of including a goal was to address the fact that treasury was going to own so many of these mortgages that they be able to do these modifications themselves, being able to have that impact on main street. instead we have a program, the numbers you just indicated, it's just not working. out of the $50 billion originally allocated, only a billion dollars have been spent. i hesitate to use the word only a billion, but the numbers are -- we're running out of hope. there's no way we're going to ever get close to the 3 or 4 million that was the original expectations. even more frustrating is treasury will not give us their expectations. they must know what the run rate of what they expect the total number to be. they must have a goal. if they don't have a goal, they need to have one.

we can't fix this program until we have specific benchmarks as to what the program is trying to accompsh of keeping people in their homes. not people who get trial modifications who fail, which was one of the benchmarks, not the number of people who get fers for trial modifications. how many people are going get modifications who truly keep them in their homes. >> i recogne a member of this panel who has a deep interest in the modifications becoming permanent. >> thank you. the title of today's hearing is bailouts on the financial crisis. we have encouraging news. sig t.a.r.p. has increasingly favorable assessment of t.a.r.p.'s financial successes. is that rit, mr. barofsky? >> absolutely correct. >> here is what it says, i quote "on the financial side, t.a.r.p.'s outlook as never been

better. not only did t.a.r.p. funds head off a financial collapse, but t.a.r.p.'s direct financial cost to the taxpayer have fallen substantially while treasury's ultimate return on its investment depends on a host of variables that are largely unknowingly at this time. t.a.r.p.'s financial prospects today are far better than anyone could have dared hope two years ago." this is great news for the american taxpayer, but the report correctly warns that there is still hard work ahead. it's important that we continue strong oversight. i've lg demanded stringent oversight of the t.a.r.p. program, a program proposed by president bush in 2008 and enact the after improvements by congress. i previously requested, gentlemen, that sig t.a.r.p. audit the hundreds of millions of dollars aig expended on bonuses. i led 26 of my colagues audit the counterparties.

that said, i'm very concerned about the serious allegations of abuse by the mortgage service industry. today's sig t.a.r.p. report calls their performance abysmal and describes daily accounts of errors and more serious misconduct. the sig t.a.r.p. report also says this, "anecdotal evidence of their failures has been well chronicled, from the repeated loss of borrowedpaperwork to the plate apt failure to follow program standards to unnecessary delays that severely harm borrowers while benefiting themselves." mr. chairman, we cannot do a comprehensive examination of the foreclosure crisis without hearing from the industry. that is why i sent a letter on december 21st asking you to hd the committee's first hearing on the widespread utilizati of fraudulent practices throughout the rtgage industry.

this has been my number one priority, as you said. i assume we would move forward. it's the same reason i sent you anotr letter on monday asking you that you add an industry witness. i understand that you were not prepared to do that at this time and i understand that. mr. chairman, and to our witnesses, let me go to you, mr. barofsky, the servicers, what are you all doing about them? i mean, government has a role, the servicers have roles. i'm wondering what's happening with that? i ask you the same thing, mr. massad? >> be brief. >> we have, at sig t.a.r.p., we exercise our jurisdiction as we can. our one area of jurisdiction is one to investigate them if there's any criminal conduct. we do have ongoing investigations in that area. the second thing we can do is use our audit function to do reviews of the servicers, we have that ongoing as well. we're doing a review of their performance under the net

present value tests and other aspects of their performance. what we cannot do is what treasury can do. you yield a big stick as well as the can carrots it offers and yield significant, tough penalties. we have to keep this program from being voluntary, not just in participation for the servicers but in compliance as well. >> mr. massad, what are we doing with regard to the servicers, beuse there have been horrendous stories about what servicers have been doing and what impact do they have on these numbers? >> congressman cummings, i agree it's been abysmal. this is a voluntary program. congress didn't give us the tools to impose fines as mr. barofsky is suggesting. what we have is the ability to withhold payment when they enter a permanent modification. a lot of the problem was, we couldn't get them to get the permanent modifications done. we worked with them to change their performance.

now, therere a number of other things that are going on in terms of the performance of the servicers. interagency task force that is looking at all the wrong things they've done in foreclosures, there is talk about having standards. we can't through hamp change the entire industry's behavior. this is a model, it's an industry that's broken. it didn't work. >> can you tell me this? is the justice department involved in anything you're doing? >> yes, they are. they are involved in the interagency task force, as are l the federal bank regulators and there's a lot of work being done on what types of reforms are needed. there's also work being done by the fhfa in terms of the business structure. they simply weren't prepared for this crisis and aren't able to deal with people. nevertheless, i think we've got to rember that hamp has achieved over half a million

modifications. these are people that make $50,000 a year. to wte it off and say it's a failure i think is not really appropriate. now, the reason we haven't reached 3-4 million is basically, we have eligibility standards. the pool today of the people that are eligible is about 1.5 million. what are those eligibility standards? we don't help people who make enough money that they don't need government help. we don't help people who have million dollar mansions. we don't help people who have vacation homes. when you go through that and realize that's the eligible population, we've actually reached a lot of them, we're continuing to reach a lot of them. we had a thousand people turn out for an event in las vegas. while we've tried t incorporate mr. barofsky's suggestions, other than the one where he said people should thumb print people, we didn't feel that was

appropriate, i think the pgram is helping a lot of peoe. >> thank you, mr. chaman, i think my time has expired. >> the gentleman, from ohio is recognized for five minutes. >> thank you, mr. chairman. gentlemen, thank you for being here and addressing these important issues we have. both of you get sense of the angeof the american people but also the sadness of the issues we're dealing with. when we look at your the "new york times" issued a quote and it says "the greatest tragedy would be to accept the refrain that no one could have seen this coming and that nothing could have been done. if we accept this notion, it will happen again. " "what's sad is we approached this as it was unfolding. these things were knowable. i know i and many members of the congress were sounding the alarm

of the mortgage foreclosure crisis and capital had to be lost as families were losi their economic future and eir homes. when you look at t.a.r.p. and what is happening and how it's progressing, i do really -- i can't understand how treasury can claim its successes when it's had so many undefined executions. i voted against t.a.r.p. i voted against t.a.r.p. because i'm from ohio. ground zero from the mortgage foreclosure crisis. when they came and said they were going to buy toxic assets and they were going to have value, i knew they did not. i walked the neighborhoods and talked to the family who lost their homes. the short t.a.r.p. bill was not defined, as justify said, mr. barofsky. i greatly appreciate that you not only look at what you're trying to unwind but what they started with. this was an undefined bill and process. i think there are billions that have been lost. i'm very concerned about the

hamp program because if we look to what the commission said that this was avoidable, that means families were taken advantage of. that means families were taken advantage of and lost their financial future. hamp came forward as supposedly a government answer that's going to help them. we recognize there was a federal issue here. as the banks, all of the people, due to their greed, had perpetrated this, we were going to step in and help them. but it's not helping them. mr. barofsky, i want to thank you for the detail you provide us. when you get these final numbers and do the division, we're going to have spent an unbelievable amount for each of the loan modifications that occurred while doing nothing to stop the record foreclosures that are still occurring. first off, mr. barofsky, i think, when we look at the ultimate numbers, we want to figure out what percentage of these people who did ultimately get loan modifications could have gotten them in the market meaning there was no subsidy that would have been needed.

two, how many of these are going to fail anyway, because those are lost dollars also. what are the per unit costs in the end? could you speak to that for a moment as to how we're going to actually assess what was spent and -- we can always tell its a failure. thank you for your words on that. how are we going to assess the waste. >> one of the good news aspects of the hamp program, to the extent there is good news, it's reflected in cbos loss estimate is that the program won't spend even close to the amount of money that's allocated for it. money only gets spent when there's actual success. the rerkably low numbers of modifications means that a remarkably small amount of money will be spent. that's why we've only had -- it's only been a billion dollars out of the 45 that's actually been spent so far. to the extent there is good news, it is that it will not

cost 9 taxpayer anywhere close to the allocated amounts. that distinction really bears any type of claim of success for the remarkably modest numbers of modifications that are coming from the program don't match up with what was originally intended. the advantage of not having real goals or benchmarks is you can claim success wherever you want and say that's a success. i do not mean in any way to demeanor say that this program ist very important to those people who are enjoying it and have the benefit of these important sustainable permanent modifications in had any way, but i think the idea the reason there aren't more is because there are millionaires living in mansions and that's why. there are a lot of people out there who are struggling very hard who could benefit from these modifications. >> mr. massad, i believe that the mortgage foreclosure crisis when it's ultimately analyzed will turn out to be the largest theft of history.

now we have t.a.r.p. and treasury isnvolved with this, and we have sig t.a.r.p. looking at it saying you're still managing this without measurable outcomes and are not being very forth coming in how the program is being evolved? >> i'm happy to respond to that. first of all -- >> puck do so briefly. >> as mr. barofsky noted, we only pay money if there's a permanent modification entered into, if we actually help someone enter into a permanent modification. we only pay for as long as that modification continues. there's a built-in taxpayer protection element to this. your question about unit costs, very good question, sir. in fact, it's structured so it is a unit cost program here. we won't spend all the money i we don't enter into enough modifications. that money won't be spent for anything else. it wilgo back to repay the debt. that's number one. number two, as we said, the

eligibility criteria here are another way to protect taxpayers. we only pay for people that we think are greatly in need. as to your overall question here on the mortgage crisis, obviously there's a lot of study of his, fcic released its report today, and i think it noted that there's blame to go around in a lot of places. we must remember, t.a.r.p. was just set upto provide the resources to stabilize the system. didn't change the regulatory structure. we now have dodd frank, which gives us new tools to regulate the financial industry so as to prevent this type of problem in the future. >> the chair now recognizes the former chairman of the committee, long-standing member of the committee, mr. towns of brooklyn, new york. >> thank you very much, mr. chairman. let me first thank both of you for being here.

i get the feeling that we sort of blaming each other. that bothers me because people are losing their homes. i wish you could just come and spend one day in my office. anjust listen to people who are coming in and the stories that they're telling. some of the things they're saying, they made an application, all of a sudden, the application is lost. they call and they say no, we never received the papers when they actually presented the papers. the other one, which is really going becoming a probm is when they call back the third or fourth time, the person no longer works here so you need to find out who you were dealing with and of course, if the person is no longer there, how can you find anything? i noticed you indicated, mr. massad, that the congress didn't give you the power. i understand that as well. but what can we do now to fix the situation that we're in?

i mean, this is a crisis. i'm hoping that -- i want to join you, ranking member, in asking for a foreclosure hearing, where we can bring people in and let them tell their stories. for some reason, i don't think that the message is getting out in terms of the seriousness of this situation. >> congressman, i agree with your concern. i think you're absolutelright. we've tried to do what we can through hamp to put in a lot of borrower protections. we've required the servicers, if you're evaluating someone for hamp, you can't foreclose on them. we put in call centers, escalation centers, and aa lot of calls we get are from people who aren't eligible for hamp. in terms of the overall industry, aot of attention needs to be paid to this. more work will be needed. this congress needs to consider it. a lot of people have talked about whether we should have

national servicing standards. people have noted that the basic economic model of servicing doesn't work. servicing works when you've got performing mortgages. the servicers collect the payments and pass them on to the investors. when it comes to dealing with a crisis like this for foreclosures, ey're not uipped to do it. we've got to look at things like servicing standards, interagency task force is looking at a number of problems, regulators are as well. there's a lot activity here. we'll see it in the coming months. >> mr. barofsky,hat are the penalties you're talking about? can we sort of look again at that? something needs to be done. >> absolutely. i think as mr. massad said, there's discussions of national servicing standards. i think chairman bahr of the fdic have put out great ideas for all servicers.

they could be adopted and put into the hamp program, but financial penalties based on withholding payments to the servicers. treasury negotiated a deal when it obligat about $30 billion for payments and that includes the ability to withhold payme and impose financial penalties. to the extent those penalties are not strong enough or good enough, that falls on treasury for not negotiating a better deal. this is not the most unpredictable possibility, when you have a program of this size and scope, there's going to be problems. treasury has repeatedly cited their ability to impose financial penalties is a stick that they have. we would encourage them to take the stick out. >> if i can reply to that. we are certainly conscious of that. we may withhold amounts in the future. let's remember, we can only withhold the amount that we owe them for permanent difications. if they haven't entered into very many permanent modifications, there's not that

much to withhold. there weren't many permanent modifications, as this committee knows. people testified here in march. there were only 170,000 modifications. a lot of people said then the program was a failure. what we did since that time is we have had a number of remedial actions that servicers took. from that date, from late last march, we have increased the number of permanent modifications substantily now. as i say, we're over 500,000. the redefault rate on those is very, very low. >> mr. chairman, if there's something that we need to do, i think youeed to say it, because we just can't continue to let people lose their homes. thank you very much, chairman. >> the chair recognizes the gentleman from north carolina and the sub committee chairman of jurisdiction for this, mr. mchenry. >> thank you, mr. chairman.

in consultation with the chairman, it's the intents of my sub committee to have field hearings and to hear from those that have been affected. we would welcome the treasury to invite individuals that have been helped. however, in my constituency and the constituents i've talked with, it's easier to find those hurt by hamp rather than helped. my question is, do you have adequate provision under current law to make sure hamp is successful. yes or no? >> congressman, it depends -- >> yes or no. if i can -- >> i've got five minutes, mr. massad. yes or no. let me begin by asking, do you think hamp is successful. >> i do. >> do you believe under current provision of law, you have adequate authority to ensure that hamp is successful. >> i cannot solve the housing

crisis with hamp alone if that is the meaning of your question. i think helping over 500,000 people enter into permanent mod modify indications, people who would otherwise be thrown out of their homes, people who make $50,000 and their neighborhoods would be hurt because they're now living next to a home that could be vandalized, it depress their property values, it's a trag on the economy, i think yes, those are dollars well spen >> thank you. mr. barofsky, in your written testimony today, you outlined that there are 2.9 million homes received foreclosure filings in 2010, up from 2.8 million in 2009 and 3.8 million in 2008. can you discuss your findings on the hamp program? >> yes, again, not to diminish the positive impact it has on those families and those that are able to sustain the program, but you have to look at what the

program was expected to do and the context of the entire foreclosure crisis. the advantage of never actually putting out meaningful goals, means you can declare success, even when you have looking at a total for this entire program of 7 to 800,000, when you originally expected to help 3 to 4 million. this program, it helps five people, that's great for those five people. what about all those millions of people who are not getting helped? the millions of people that treasury and the administration identified the very beginning of this program who they were going to try help keep in their homes by modifying their mortgages to a sustainable level. the numbers don't lie. when i hear them declaring success with these incredibly modest numbers, numbers that are so modest that they can't have enough money to pay to impose financial penalties, it's heartbreaking, it means they won't recognize and make the changes necessary to make this a

better program, because iear from those people as well. >> thank you, mr. barofsky. moving on to the small business lending fund, well, in one of your -- in your port, you requested treasury remove t.a.r.p. assets and equity from the entity's balance sheet for purposes of evaluating its application for the small business lending fund, the intent of the small business lending fund is to increase lending. has treasury been open to your proposal? >> treasury has rejected that recommendation. >> mr. massad, why did you reject that? >> because we wanted to make sure we complied with congress's directives and the law. congress provided in the law that existing t.a.r.p. recipients could refinance their loans into this small business

lending fund. we believe we're acting in accordance with that. >> sure, but it's not a provision of law how you measure the removal from t.a.r.p. into this small business lending fund, is there? >> we did not believe that congress was instructing us to basically penalize those institutions that had already received t.a.r.p. funds. quite the contrary. >> mr. barofsky, under your reading of the law, do they have provision to do this? >> absolutely. congress specifically made a provision in the law that gave the secretary of treasury the ability to fashion certain regulations for t.a.r.p. banks to enter into sblf. there's nothing in the statute that gives you a matter of right by being a t.a.r.p. recipient that you automatically get to apply -- you automatically get converted into sblf. it offers tremendous advantages to t.a.r.p. recipients to convert.

the taxpayer loses out on a lot of those. our recommendation is a simple one. let's make sure the banks you take out of t.a.r.p. and put into sblf are adequately capitalized to meet the goals of this program. we're not saying penalize blanks, but we do think it's important for treasury to be very responsiblend make sure that those that are going to get the benefits of being an sblf are well suited to be able to do the new lending, new incentivized lending from government capital and we believe those banks should be treated as other ap kabtss who come into the program. for example, when a bank applied for the cpp, it didn't get to take into account government capital. that should be the same standard here. the fact that these banks have the benefit of government capita we don't believe that that necessarily -- that that capital should count when making that evaluation. if they can fulfill the goals of

this program, grea they should be brought into the program, if they meet the other conditions. mr. chairman, i know my time has expired. i would ask mr. massad to respond in writing to this very subject. we were interested in this committee and if you have concern that you don't have adequate provision of law, we would like to change that. >> i thank the gentleman. the chair recognizes the chair from new rk. >> first i would le to thank the panelist for their public service and report some good news in that the dow just crossed 12,000 for the first time since june of 2008. that shows capital is flowing again and is very good sign of economic recovery in our great country. from your testimony today, t.a.r.p. played a role in moving us in this good direction. you pointed out that it not only averted a meltdown, but laid the

groundwork for economic recovery which we're seeing today. i must say that during the dark days, i was getting phone calls in the middle of the night and all day long from constituents who were afraid of a collapse there was a run on the money market on some banks and i personally believe that my vote in support of t.a.r.p. will historically be regarded as the right thing to do and good public policy, although all of us who were on the campaign trail, many of us were attacked relentlessly for having supported this important program. i would like permission to put in the record one of the best report that is i've seen on the successes. it's bipartisan from blinder, a democratic economist and zandy, a republican one, on how the great recession was brought to an end. also an article in the american banker which talks about the home foreclosures and a foundation that is working with

hamp and others to he people stay in their homes. >> so ordered. >> i specifically would like to respond to the two problems that mr. paragra mr. barofsky mentioned in his opening. first the confidence in our government, transparency and other management mistakes and i would like to mention that i authored a bill in response to your first cricisms on this that would have computerized t.a.r.p. in realtime so we would know where the finances are. it passed the house backed by the chamber of commerce and labor, and i truly believe we shld do it for the entire system. if we should be able to track our packages in two seconds, we should be able to track our exposure in finances. i think it's an important bill. you also mentioned the too big to fail, the fact that there were concerns that we may not have done enough.

i would like mr. massad to respond to this, specifically in the dodd frank bill and likewise on the conference committee with the chrman, we created a financial stability oversight council to monitor the systemic risk and to set criteria to idenfy institutions that may be heightened risk. i would like you to comment on the status of where that is. we also, very importantly, estaished an orderly winddown, similar to what we had in the fdic. we had two choice, boil out an institution or let them fail. neither was a good solution. we want to be able to wind them down as we were able to do with fdic banks so successfully. i wa to know, are the rules in shape and where does that stand? they'rely, we imposed capital requirements and leverage ratios to ensure that large institutions aren't taking excessive risk. i believe those rules are coming

out in july, correct me if i am wrong and where does that stand? where do you think the leverage and capital requirements will come outn your best judgment? and lastly, we called upon the sec to come up and we gave them actually new powers and authority and resources to go after bad actors so we could find the next bernie madoff and help protect our system. i would like you to respond to where these initiatives stand? what do you recommend, if anything else, we need to do to protect us from too big to fail as pointed out in his testimony, and if you have enough time, could you respond to t.a.r.p. as it relates to the taxpayer? we know it waa great deal for our economy. it was a great deal for averting economic risk. i'm theaughter of two parents who suffered in the depression. their stories were terrible. we averted that in our economy, but was it a good deal for the

t taxpayer? thank you very much for your service. >> certainly, congresswoman, i would be happy to respond to all of those things. let me start with the last point. i appreciate that people that are still suffering from this crisis, and there are many, may not feel that t.a.r.p. did anything for them. mr. barofsky also has asked what did it door main street. i think the study you pointed out, the zandy study -- >> i would ask unanimous condition sent for an additional one minute for the witness to respond. >> it makes it very clear, we would have entered into a second great depression. we could he entered into unemployment of abe 16%. the fact that we averted that is a benefit to main street. the fact that people can now borrow again and they couldn't as a result of this crisis is a benefit to main street. the fact that we have an auto industry in this country and we saved a million jobs, not just at the auto companies but their

suppliers is a benefit to min street. there are a number of benefits to main street. i don't think one has to look very far to realize that. as to the progress in implementing dodd frank, a lot of work is going on. i'm not responsible for that, but i'm happy to tell you what i know and make sure the proper officials of treasury ge you additional information. the financial stability ovsight council has been meeting actively in developing a number of rule makings to address these issues. they have the powers to regulate systemic risk d to look at what are the emerging trends in our financial system that need to be addressed, so i ink you will see a lot of work going on there. as to capital ratios, they ar working on that also. those will be higher. they are already higher. in other words, our financial system today is much better capitalized than it was in the fall of 2008, and many of the institutions are much better

capitalized than their foreign competitors. the other thing i want to note -- >> if you can summarize briefly. >> on small banks, we funded over 400 small banks under t.a.r.p. that's another benefit to main street, because those banks help local communities, small businesses and families and as congressman mchenry's point on the sblf, obviously treasury supported this new fund. the only issue is a minor one that mr. barofsky is raising because treasury does make a new credit decision on whether a t.a.r.p. recipient is eligible. if a t.a.r.p. recipient hasn't paid its dividends it's not allowed to refinance, there is a new credit decision made. he's just raising a particular point which we felt the statute did not allow us to do. >> i thank the gentleman. the chair recognizes the gentleman from ohio, mr. jordan. >> i want to thank the gentleman for being with us today.

mr. barofsky, you and your staff in particular for the integrity and professionalism you bring to your job. we certainly appreciate that. your comments earlier were that the hamp and the making home affordable programs, their performance remarkably disspirits. in today's journal, the foreclosure efforts have been with problems and continues to fail -- fall dramatically short of any meaningful standard of success. it goes on to mention about the fha short refinance program which started last fall and has helped 15 people. i guess my question is at what point do we say this just isn't working? this just isn't getting the job done? would we be better off discontinuing the whole program? after three years, 3-4million goal, a few 100,000 have had

help. the congress talks about the metric that they're using is offering people help. at what point do we say this is not working? let's just end this program. >> i continue to be a glass half full type of person. >> based on your comments, mr. barofsky, you wouldn't be a glass half full, you would be a glass 2% full or 1% full. i'm an optimistic guy too, we live in america. that's stretching it. >> i think hope is slipping away. if treasury couldn't respond to some of these things in a quick maer, your suggestion of ending the program and others''s suggestions is going to be a louder and louder crus. we can't keep clinging for these noncredible declarations of success and be straightforward and honest and say this is where we think the program will be at the end of 2012 or the end of

2017 when the program is done. this is the number of people we intend to have sustainable rmanent modifications. this is how we're going to get to that number. then you and this committee and the congress and the american people can make the evaluation. is it worth it? is it worth it to continue? i think if they fail to do so, you're probably dead on right. >> you got more patience than i have. yeerday, introduced with the co-sponsorship of the chairman and the ranking member of the committe we introduced legislation to end the hamp program, we think any objective look at this, it doesn't warrant continued spending of taxpayer dollars. i want to be clear. you have jurisdiction over the 45 billion in the t.a.r.p. program that affects the foreclosure programs, hamp being the biggest one. there's 25 billion that's available to treasury in the housing and economic development -- recovery act. is that accurate?

>> that money is money that goes to fannieand freddie. >> is any of that money, i understand it's not your jurisdiction, has any of that money been applied or used in any way for foreclosure prevention type programs, if so, are the results similar to what we've seen in hamp? >> yes, when we're talking about hamp, we're talking about both components, the gsc and the t.a.r.p. the gse part of the program is better than the t.a.r.p. part of the program. of this 520,000, approximately or 540,000 of ongoing permanent modifications, more than half of those are attributable to fannie and freddie and the gse. it's about 230,000 modifications that are actually t.a.r.p. permanent modifications. there is activity over there. we detail in our report, we break these numbers down, from gse to nongse, including the money they've reported that they've spent on the modifications. >> the bottom line is, there is

approximately $70 billion that has been appropriated for this type of program, the hamp program, 70 billion, not 5, 70 billion, and 1 billion is all that went out the door for a prram that's hurt people it's supposed to help and in your definition, remarkably disspiriting program, what i would call a colossal failure. is that accute? >> yes, i understand your frustration and share your frustration. i hope the treasury can hear what you're saying and come up and be honest about where this program is going, if it's going anywhere. >> i got 15 seconds. to put it all in context, $70 billion appropriated for this at a time, not helping the people it's designed to help, total failure, the guy who is charged with inspecting it, understands total failure, at a time we have a $14 trillion national debt. at some point we have to say

enough is enough and end thi program. >> the chair now yields to the gentleman from ohio, mr. kucinich. >> isn't it true that hamp's performance is dependent upon the voluntary willingness of mortgage servicers to give loan modifications? >> yes. >> isn't it true that private mortgage servicers have found creative ways to frustrate attempts by distressed borrowers to save their homes? >> there certainly have been problems. >> is that a yes or no? >> i don't know if it's created but it's happened. >> since it's apparent that consumers don't get a fair shake, i can't understand why we don't have a representative from the servicing industry to explain that industry today. the minority requested that j.p. morgan chase, a major servicer appear today but the chairman refused. i don't know how we can have

effective oversight for congress or the american public, how can they can really understand the federal response to the foreclosure crisis, which depends on the private sector without asking the private industry to explain their actions that are impeding this program. >> would the gentleman yield? >> if the chair will let me have my time afterwards. >> of course. the chair made a decision that today would be fully involved with the government side and the special ig's report. we do intend on having, among other, servicers and a review of the hamp program. this is the first of our discovery and the gentleman's yield back. >> sig t.a.r.p.'s report and other reports of abuses byoan services raises serious concerns that these mortgage providers may be engaged in a pattern of abuse. mr. barofsky, i would like to request that your office conduct a specific audit on this issue

and i would like to, estimate, ask the chair if you would join with me on this request since you're saying you're willing to go forward with looking at the mortgage servirs. >> i'll certainly consider it. would you give me the request in writing in. >> i'll do that, because i want to point out, thank you, mr. chairman, is while the chair has the unilateral privilege to issue subpoenas, the chair has the privilege not to call certain witnesses. it's comforting to know you'll consider calling witnesses in mortgage service industry, especially since it's so relevant to the matter at hand. the chair also, as we know, has the privilege to deny documents, the production of documents to other members. for example, in this case, i'm not saying this happened, but my concerneld about the policy is thatif there's any communication with the committee and j.p. morgan chase, that the

minority may not know about it. perhaps myself i wanted to address that in my opening statement. i didn't have that privilege. that's one of the problems in not having opening statements. i hope that as we continue down the road, this committee will understand the importance of tradition and procedure that respects the rights of all members because i think what it really does is it enables us to function more effectively. mr. massad, what is treasury doing to retool hamp to require service or performance? >> thank you, congressman for the question, it's a very important question. let me talk about some of the things we have done. we've required the servicers to, if they're evaluating someone for hamp, they cannot foreclose on that person. if they decide the person isn't eligible for hamp, they have to consider other alternatives,

short sales. it's only after they've certified they've done all those things, you can proceed to the foreclosure. we've required the servicers to have a process for appealing the decision. we've also set up our own centers so people can come to us if they feel they've been wrongly denied. we will run a calculation to give them a view on that. we have an escalation center that deals with complaints. >> let me ask you this. would you agree we'll never get to the bottom of this problem or figure out how to proactively deal with the foreclosure crisis if we don't examine the actions of mortgage servicers? >> i would agree, congressman, that we need to look at how this entire industry is functioning or rather not functioning. i think there is a lot of work going on in tharegard. obviously through hamp, which is a voluntary program, we cannot force a change on the entire

industry, but we have learned a lot about what is -- >> mr. barofsky can examine it. >> yes, congressman. by the way, we do have an ongoing audit of the mortgage servicers. i will make sure my staff meets with your staff to make sure we have any concerns to incorporate. >> you have to communicate with the chair on that. is my time expiring or do i have 20 seconds more? >> the gentleman has 20 additional seconds. >> thank you. this is so important to my constituency, because cleveland, ohio has been an epicenter of the sub prime meltdown. people have lost everything they worked a lifetime for. when you get into a situation when they depend on hamp to try to save their homes and the mortgage servicers have a subterfuge to defeat that, it's important w call them to an accounting. >> the chair recognizes the gentleman from florida. >> thank you, mr. chairman. i want to thank both of the

witnesses for being here today. recognizing that we're in difficult times. there are lots of -- i'm sure -- let me say i'm sure it's not easy to sit there and take the questions, but there is a lot of frustration. i wanted to start off by saying this, that my observations so far is that what we're talking about is failed government regulations and programs, and today, what we're talking abut, orome people are talking about is what other government programs can we add on top of that to try to make the failed ones work as if though more government regulation, more government programs is going to be the answer? i'll tell you, i've hrd a couple people from ohio talk about ohio being the epicenter of foreclosures, i would welcome them to come down to fort myers,

florida, to lehigh, tocape coral. i'll tell you what my stilts are telling me, they're telling me stop. we don't want more of this government kind of control. we don't want the idea that government is going to solve all of the problems. when a lot of people feel like government is part of the problem. so if you think about what's happened, government started to push people and mortgage mpanies into making loans and putting people into homes that maybe weren't fiscally able to do that, either the company or the individual. then when we have a crisis, we then turn to more government in regulating. what you get i instead of banks being able to lend, if you talk to community banks, they're afraid to lend, because exactly

what mr. massad just -- you got to think about what you said earlier. you said that we need to incorporate some national standards. when these lenders hear that, what they hear is more punishment. what they hear is more changes are coming. we don't know what the ground rules are. we're afraid to lend. when you bail out the big banks, it disadvantages the small banks. when you talk about the costs of t.a.r.p. or these other bailout programs, what you're missing is the cost of potential from other sectors. so you've got the big nks that you want to claim have, you know, done so well, i don't know that iee it that way, but it's

been at the cost of the small banks. now what we're seeing is lenders do not want to lend because they're afraid of statements like, now we need national standards. so again, what i'm saying is stop. what i want to hear is not what's the next regulation, what'she next program, what's the next acronym thatwe're going to start talking about that is a failure because government can't do it, i want to hear from both of you, if you would, very specifically, what should we repeal? what kind of repeals can we do that will help ignite borrowing and lending that is going to help small businesses or that are going to help families who are trying to put their lives back together, instead of talking about what new programs we're going to pass, i would like if both of you, mr. massad,

start with you, if you could tell me, what do you think we oughto repeal? >> thank you, conessman, i'm happy to do that. first of all, my responsibility is the t.a.r.p. program. not a regulator, but what i would say is this, i'm trying to get the government out of the business of owning stakes in private companies, a telling private companies what todo. >> excuse me real quick, when you say we need national standards, think about what you said and think about what people back home, think about the small banks, think about the people who are trying to make it every day, what they've heard is the rules of the game are going to change again. now you are saying we need national standards. >> i was referring to national servicing standards for the servicing of mortgages, which we already have some. you know, this busiss is mostly dominated by the big banks. the small banks really aren't in it. >> yh, bause they can't

compete because government has sided one over the other. >> i think the -- >> if you come down to southwest florida, the community banks are so important to housing, but they've been pushed out because government has come in and bailed out the big banks. they can't compete. >> congressman, i agree small banks are very important. that's why we funded so many of them under t.a.r.p. again, that was something we had to do. i don't think it was a good thing for the government to have to do that but we had to do it. that's why we're trying to get out of it so quickly. in terms of your comment on failed government programs, i think all we're trying to do is say we still are in the midst of a very teible housing crisis that is a drag on our economic recovery. >> if i could, i'm sorry. >> the gentleman's time has expired. >> if i could ask -- >> i would ask unanimous consents for one additional minute. >> i would say this to the chairman, if you would submit to this committee for us, please,

in writing, specific things that we can repeal that's going to help, instead of submitting to this committee what other regulations and programs that we ought to be performing, i would like to hear what you think we ought to repeal. thank you, mr. chairman. >> if the gentleman would yield his remaining time. >> yes. >> as long as we're doing ask mr. massad, would you commit before the next quarterly special ig comes out, produce an estimate of how many loan modifications you expect hamp to produce, as well as a source of material to the special ig or in the alternative, make available to mr. barofsky the source material so he can bring us an assessment? >> yes, sir. i would be happy to do that. we've been working on that. i think a lot of that data is out there. >> we sure appreciate that. the chair recognizes the gentleman from massachusetts,

mr. lynch, for five minutes. >> thank chair now recognizes lynch for five minutes. >> thank you, mr. chairman. mr. barofsky, mr. massad, thank you both for your great work an thank you for your service to our country. mr. barofsky, i'm more familiar with your work, especially, so, sir, the work that you've been doing. i want to take half a minute to really correct some of the revisionist history here on t.a.r.p. i voted against t.a.r.p. and when it came before the financial services committeend before this congress, the stated legislative goal of t.a.r.p. was to help main street, to help main street, the troubled asset relief program. and when we asked secreta paulson at the time, just before the vote, we said -- actually, i think it was the ranking member of financial services said, why don't you just take money and stuff it into the banks? the $700 billion that you

wanted? and mr. paulson siaid, no, we'r not going to do that. and then ten days after t.a.r.p. passed, they did exactly that. they injected all that money into the banks. thisas the bank shareholder relief program. and for people now to say, yeah, this is exactly what we voted for, this not what we voted for. we voted to increase lending. that was the goal of the congress when t.a.r.p. was put on the floor. and many of us saw the failings of that. and to now say, oh, yeah, we supported t.a.r.p. for all the righreasons, i think you have to accept the fact that t.a.r.p. stuffed basically $700 billion worth of taxpayer money into big banks, helping out these shareholders. we paid 100 cents on the dollar to goldman sachs because we pumped $14 billion into aig.

it was a pass-through. it went right to goldman sachs. 100 cents on the dollar on credit default swaps that shouldn't have been worth half that. we also passed through hundreds of millions of dollars to aig fp employees who mispriced this risk as part of t.a.r.p. they got paid off. they got bonuses from taxpayer money. how you can take credit for that and say that that was a good thing. and it was never a question of, i know people said, well, if we did nothing -- well, we wouldn't have done nothing. we would have done something different. and i think there are a lot of weaknesses in this t.a.r.p. program. i think mr. barofsky, you've drilled down and got to many of them. but i nt to take my last couple of minutes to talk out the service industry, because so much of e servicing industry is menoned in this report. and i think it's spot-on. i want to just talk about -- i'll just list all the investigations that are going on

right now with the services. and we're not going after them in a meaningful way. i n't think treasury is. on october 13th, 2010, the attorney general of all 50 states announced the joint investigation t whether some of the nation's largest financial institutions are using flawed and forged documents to execute wrongful foreclosures. the federal reserve and the fdic and the office of the comptroller of the currency are now investigating whether systemic weaknesses in the industry are leading to improper foreclosures. on january 7th, 2011, the supreme judicial court in my own state of massachusetts voted home citizens, because the folks who were foreclosing couldn't actually prove they owned the mortgages. the united states trustee program has a similar program. the attorneys generals of arizona and nevada doing the same thing. the justice department. what are we doing about the services, how are we going to clean up this city and correct these problems if we're not

going right after the services? that seems to be where the problem lies. >> i'm happy to respond to that, congressman. >> please. >> thank you for the question. you've referred to the activity that is going on by a variety of federal agencies and it's under the auspices of an interagency task force that treasury cochairs. so that is very important work and i think we will see some results of those investigations and i think it will help us figure out what types of reforms are needed, and potentiallyome of those things will be coming before the congress. let me just also, though, respond -- i appreciate the fact that because this program was first announced as a means to purchase troubled assets, and then it became a program where at least, initially, what secretary paulson did under the bush admintration was to invest money in banks, people, were critical of that.

and all i would say to that is a couple of things. one, under the circumstances, we had to make that change. there wasn't time to do the troubled asset purchase as it was originally contemplated. nuer two, we didn't do $700 billion, we actually spent for a less than that. >> $534 billion. >> we -- >> $534 billion. if you wt an exact number that went directly to the banks. >> congressman, if i may -- >> if you would summarize your answer, please. >> sure. about $250 billion went to banks and most of that has been recovered d we will make a profit on those investments. >> thank you, gentleman. the chair now recognizeshe gentleman from pennsylvania, mr. kelly for five minutes. >> thank you, mr. chairman. mr.massad, in your opening comments, you made a reference to the automobile industry, of which i am a prt of. i'm a car dealer in a small business.

so while people talk about small business and their view of it from 40,000 feet, i'm actually on the ground. i can tell you this. the small business loan is not working. the most banks cannot operate out of fear. the regulations that have been posed on these people makes it impossible to get access to these funds. now, why do i say that? beuse i go through it every day. not only myself, but also the people i'm in business with. and while i'm an elected official today, in my real life, i'm a small business owner. i can tell you, with someone who s all the skin in the game, every day, i would suggest to you that while we go on with these programs and we live in this wonderful world of acronyms that really make sense inside this beltway, in real america, it makes absolutely no sense to everybody. and these loans simply are not available. so while we talk about that money that's available to help us survive, the reality of it is that it is not available to us. now, what's changed? it's the rules. to me, too big to fail means that i'm too small to survive.

most of the banks that i do business with are small banks. they are absolutely frozen with fear. the eregulations and the rules have put them in a situation whereas they cannot operate on a day-to-day basis. quarterly, the covents change for me. and as we talk about small business leading the way out of this economic mess we're in, i will tell you, it is the uncertainty that all of us face. and i'm not talking about big corporations, i am talking about main street america. i am talking about the average person. the guy that gets up every day and worries about it, not just during business hours, but seven days a week, 24 hours a day. my only question to you, sir, and i don't know what you can do about it, but there has to be some way that we can free up these funds to make it possible r these people to survive. the people have lost faith in this system. >> congressman, that's a very good question d you raise a lot important points. let me say a couple of things.

one is that what we ied to do under t.a.r.p. was in part restart e credit markets that helped small businesses, the securitization markets on which a lot of them actually depend for loans. and i think we have succeeded there. there's still a lot of work to do to help small business. i agree with you 100%. small business has been hurt in this crisis. small banks have been hurt in this crisis, and they haven't fully recovered. the small business legislation that was passed last year, which set up not only the small business lending fund, but also another program where the states are trying to help small businesses directly, i think, goes -- you know, provides some help. it may not be enough. so i'm happy to explore with you further things that shoulde done in that regard, because i agree, it's a problem that needs attention, and i think the treasury and the obama administration have tried to pay attention to that. >> and i appreciate your comments, but time is of the essence. and we really do not have -- we are that close to the ground right now. there's not a lot of free fall

left. i appreciate you so much for being here and i yield back my time, mr. chirman. >> and the chair appreciates that. the chair now recognizes the gent gentlelady from washington, d.c., ms. norton, for five minutes. >> thank you, mr. chairman. as predicate to my question, i want to note an article fromhe abilene reporter news, describing what appears to be the republican approach to the meltdown of homes. and i ask that this be placed into the record. >> without objection. >> mr. numberburger is the chairman of the association, he's a former banker hills and he's pretty frank. he essentially says that the initiatives aimed at cushioning the blow have all failed. and so he says let the market

take over. to quote him, markets aren't kind, but they're very efficient. should we go cold turkey and leave millions of homeowners out there to suffer the consequences? and i would like a short answer, because i have further questions. mr. massad, and mr. barofsky, who seems to just throw up his hands often. yes, mr. massad? >> thank you, congresswoman. no, i don't think we should just go cold turkey. that's why i would disagree with some of the comments that have been made, that because hamp has not achieved 3 million to 4 million modifications, that therefore we should end it. i don't think that makes sense. i think this program can still help a lot of people. i think it's cnstructed so that we only use taxpay funds prudently and wisely to the extent that we do help people. i think it's helping the right people. people who need -- let me go to mr. barofsky, then. >> i think it's an incredibly

important -- you know, paerp was designed in part, just as much to help the wall street banks as to help struggling homeowners. that was part of the intent of the legislation. and i think treasury bears an important responsibility to fulfill that goal that congress set forth. >> so you don't think we should go cold turkey and just leave millions of borrowers out there? >> i would like to see -- >> to let the market do what the market always does? it does resolve all such as crises, one way or the otr. >> i would lik to see an incredible revamp of hamp, so it can achieve the goals that -- >> let's talk about that. because i'm essentially remedy oriented, and as i'veeen in my own district how hamp has failed so many homeowners, people who work hard for their homes, got caught up in a crisis not of their making, it does seem that the only way out of this is to

take measus that protect both homeowners and investors. a recent "washington post" article, january 18th, as a matter of fact, suggested that the incentive structure for services is greatly misaligned. let me just quote that. studies have shown that foreclosure is often more profitable for a company known as a mortgage servicer that collects the monthly payments on mortgages and passes them on to investors who own the mortgages. how it is often not the best path for borrowers who lose their home or investors or investors who lose money. mr. massad, is it true that mortgage servicers often have a financial incentive to foreclose on distressed borrowers, and at times of that program, your program actually gives them a financial disincentive to work

with borrers, and what are you doing about it? >> well, what we're trying to do is give them an incenve keep people in their homes. and i think that the structure of the program has worked in that regard. and that's why, also, it has been emulated by the inustry. you know, before this program was started, we had two years of this crisis. nothing was done. why is fhfa considering an entirely new compensation structure if this one is so fine and dandy? >> no, no, let me make sure i'm clear. i age with what the fhfa is doing. and treasury has supported that. they are looking at the basic business model of the servicers. because it doesn't work. it is broken. it doesn't create the right incentives. hamp because also trying to change those incentives with respect to the loans we could affect. and that is, i've said, a limited pool. it's not the entire industry. but one thing that has -- >> do you think the fhfa

measures would have a meaningful impact? >> well, i certainly hope so, congresswoman. what they're doing is saying, look, we need to re-examine how servicers are compensated. because what's happened is, they're overcompensated for loans that are performing, but when it comes to the underperforming loans, they're not set up to deal with people, to resolve -- >> mr. massad, if this is not a win-win, it's not going to work. if it's a win-lose, and it appearoften to be just that, then we're going to be stuck and that's where the borrowers and the homeowners are stuck. >> well, that's right, congresswoman, and that's why i've said wing the needs to be a lot of attention paid as to how this industry has failed us in a lot of ways. we've seen a lot of problems coming out of this crisis. >> and how your incentive structure has failed. >> the gentlewoman's time has expired.

the and chair would note we're expecting two votes at approximately 11:10. we'll work for about one more question after the vote is called we'll leave, we will return, and as soon as there are two people on the dias, we will begin questioning again, as to be respectful of your time. the gentleman may continue. >> thank you, mr. chairman, and mr. barofsky and mr. massad to be here and appear in front of us. i had the dubious distinction to vote on t.a.r.p., to vote against it, i think for all the right reasons. had the dubious distinction to be foreclosed upon in my election. and for the last two years, to hear the response of people that finally awakened to the fact that yes, there was a problem, yes, there was a significant concern, yes, there was a meltdown that was taking place. but frankly, thr opinion was that it was the wrong aproach to take, and it seems to have borne out. mr. massad, i would ask you, and

i hope this hasn't been asked while i was away, but what are the plans for the obligated t.a.r.p. funds that have not yet been spent? >> the only funds that have not yet been spend are those for the housing programs and let me just note, it's not $70 billion for hamp, our portion of hamp, there is a gse potion, our portion of hamp is 29. we've done a number of other housing programs. so there's $ billion allocated for a variety of housing programs. there's still a very sll amount that's committed for the public/private investment partnership. basically, we're no longer making new commitments. we're no longer doing new programs. our focus now is getting the money back, and we've gotten, as i say, a lot of it back, and i expect we will get a lot more of it back, and essentially all the progm programs leaving ade the housing programs, all the programs considered as a whole, will result in a very little cost or essentially even a

profit, because we will get all the funds back. >> can you make a blanket committee here today that those unobligated funds will not be spent? >> congressman, i can make a blanket commitment to you that we will make no further commitment of funds. we do not have that authority. but let me make clear, there are funds that are obligated that may be spent. there are no funds that are unobligated. we will not make any further obligation of funds. >> but you will not spend them? unobligated? >> unobligated funds we will not spend. but i want to make sure we're communicating. we no longer have authority to make obligations. i can't make new commitments of funds. will not, therefore, make new commitments of funds. we do have some funds that have been committed but not spent. and those, you know, we expect at least some of those will be spent. not necessarily all of them. >> thank you. mr. barofsky, on page six of the

sigtarp report, in referencing, in comparing recipients of the federal sistance to fannie and freddie, you make this statement -- in many ways t.a.r.p. has helped to mix the same toxic cocktail of implicit guarantees and distorted incentives that led to disastrous consequences for the government-sponsored entities. based upon that statement, how are big banks who receive t.a.r.p. money similar to those entities? >> well, two of the big characteristics of what happened with the lead up of the conservatorship of fannie and freddie was, one, the implicit guarantee they receed that they had a government backstop. and one of the legacy results of t.a.r.p. is that the market still believes that the united states government is backstopping the largest too big to fail institutions. and that causes a whole range of problems.

it hurts market discipline, counterparties, creditors, investors, they don't do the due diligence that's necessary when evaluating whether to do business with one of the banks or invesng in one of these banks, because they bieve that any type of risk they'll take will be backstopped by uncle sam and the taxpayer. that gives them an advantage. it gives them the opportunity to borrow money more cheaply. s&p recently announced their attempting to change the rating system to make it a permanent aspect that the too big to fail banks will have higher ratings based on implicit government guarantee. and they say the notwithstanding dodd/frank and other countries' sponse to the financial crisis. this is a market distortion. and as a result, the executives of those banks get back into the position where it's, heads i win, tails, the taxpayer bails me out. >> what recommendations might you suggest to go away from that moral hazard? >> i think we are where we are. and what we have is dodd/frank

and the fstock and the committee that's providing oversight. and it does have a lot of tools. they need to have both the regulatory will and the political will to rein in the size of these banks. they have to do two things, which are going to be remarkably difficult. and secretary geithner, to his credit, was remarkably candid with us about the limitations about what they're going to be able to do. but first of all, they have to have a system where they can credibly resolve large financial institutions without bailing out the shareholders, the creditors, the executives. second, which is probably just as important, they have to convince the markets that that's actually going to happen. was if they don't convince the markets, if they don't have the credibility that they will not be bailing out institutions ing into the future, it almost won't matter otherwise, because, again, those incentives will still be warped. that discipline will still be gone, and those risks where with the idea that the taxpayer will bail out the executives, th shareholders, the counterparties will continue a perversion of the system. >> thank you.

in the parent world, we call that tough love. thank you. >> thank the gentleman. the chair asks unanimous consent that a statement for the record submitted by the american bankers association be inserted at this time without objection. the chair now recognizes the gentleman from missouri, mr. clay, for five minutes. >> thank you, mr. chairman, and thank you for holding this meeting. mr. barofy, i understand that you have the oversight authority to investigate mortgage service provided. i wanted to discuss on one specific example of a horrendous abuse against our active duty service member. according to an nbc news report of january 17th, jpmorgan chase and company admitted that they overcharged thousands of active duty military families millions of dollars on their mortgages. they also improperly foreclosed on some of these families. they weren't supposed to do

that, because we passed a service member civil relief act, specifically to protect military families from higher ierest rates and foreclosure action. we recognize the importance of those families' service to our country. mr. massad, have you seen this report? >> i have, sir. >> what can these families do other than seek redress from the company? >> congressman, i'll be happy to look into that. that's really outside of my jurisdiction. but it was a very troubling report, i agree. and i'd be happy to get back to you or get the appropriate officials to get back to you. >> well, and i'm glad to learn that jpmorgan has acknowledged their errors and is working with the families to try to make things right, starting by paying them back $2 million in overcharges, interest. but this story makes me worry for a different reason. the victims in this case

complain that the industry servicer in this case harassed them endlessly, refused to acknowledge legitimate documentation when they presented it, and essentially made their lives miserable. all without any basis to do so. and now i assume that banks don't have one collection agency, just for military service members, and another one for everyone else. mr. barofsky, have you seen similar abuses of this kind, where the banks and their collection agencies harass people without any justification? >> we have. you know, we operate the sigtarp hotline, where we've collecd more than 24,000 contacts since our inception. and a lot of them are complaints from homeowners dealing with mortgage servicers, absolutely. and when we see those, we try to direct them to the right place. if there's an allegation of criminal activity and it relates to the hamp program, we'll take it. if it's criminal activity that's

outside of our law enforcement jurisdiction, we'll refer it out. we'll refer it to treasury, if it's apprriate. if there's some degree of -- thing that they can do. and we also collect them for our review a for our audit function. >> how about the rule abusive servi servicers? can they be removed from the program? >> i'm sorry? can they be removed from our program? from the hamp program? >> yeah. >> they could be. again, you know, because there are some servicers that cover a lot of the market, and if we were simply to kick them out of the program, then we wouldn't be able to reach the people we'd like to reach. so that's why our focus has been to try to, you know, improve the practices as much as we can. let me just say, you know, we will continue to be aggressive in this. we're in the large servicer shops, you know, all the time, and we'll continue to work with sigtarp on practical constructions -- practical suggestions on how to get the servicers to do a better job,

because we agree that they need to do a better job. >> but if they are totally ignoring the homeowner and ignoring the documentation, then -- >> sure. i wouldn't say they're -- if i may, congressman, i wouldn't say they're totally ignoring the homeowner, at least with respect to our program. i think with respect to our program, we've gotten them to pay attention. they've come a long way. when we started this, they said, we can't do this, they said, we're not ready, and we said, you've got to get ready. while we haven't achieved as many modifications as we'd like, i admit that, i've always admitted that, but nevertheless, we're making some progress. we're still getting about 30,000 new families helped a month. that's important. it's not enough, but it's important. >> could either one of the witnesses supply us with the breakdown of state by state modifications? >> yes, we can certainly do

that. we can do that for our program, congressman. we do produce a lot of statistics and metrics on our program, but that only covers our program. there, frankly, aren't a lot of statistics on e rest of the industry in that regard. >> okay. and of special interest to me would, of course, be on missouri. >> certainly. >> okay. i thank you, i thank the witnesses, and i yield back. >> i thank the gentleman. our last for this round before we go to votes will be the gentleman from arizona, mr. gosar. >> thank you. beg from arizona and hearing of the discussion in regards to florida and ohio, i have to say that arizona, which we thought was a leveling of our problems with the housing, is now all of a sudden showing some signs of doub dipping. so this is very troubling. and being from a very poor community from the district, we see homeowners on the very urge -- or the very brink of catastrophe. my qstiotoyou, first, mr. massad is, doesn't the lower cost of borrowing that results

from the implicit government guarantee partially explain the banks' ability to pay back t.a.r.p.? >> yes. it's probably a factor, but i think a more important factor was the process that we implemented of the stress test. because what we did was we put the largest banks through very intensive stress test, because the market didn't have confidence as to which institutions might fail and how much capital they needed. so in the spring of 2009, we implemented the stress test process. and we made the results and the whole process very transparent. and as a result of that, they were able to raise private capital and we were able to get the government out. >> so in a follow-up question, so the success depends on that implicit guarantee? >> no, i don't think i said that. what i'm saying is that we got out of the banks investments, we got the money back through this stress test and recapital

station process. i think if i may, i think the thrust of your question, it really relates to some of the concerns mr. barofsky has raised on too big to fail and moral hazard. and those a very legitimate concerns, and this congress obviously debated them at length when it passed the dodd/frank legislation. we're still implementing that. i think mr. barofsky is raising his views on that, that, in effect, it sounds like what he's saying is that dodd/fran may not have been strong enough or may not be strong enough. maybe we should break up some of these banks. maybe we should take more aggressive action. that's certainly an opinion. you know, and others have voiced that opinion. my own view is, let's give dodd/frank some time to work, because now we do have a lot of tools that we didn't have, so i think it's premature to say, to pass judgment on dodd/frank. it was really the fit overhaul of our fincial system in many years, and it was, you know, it was necessary, or, rather,

t.a.r.p. was necessary, because we didn't have the tools that dodd/frank provided. >> mr. barofsky, how would you feel or would you differ in that opinion? >> yeah, i don't think that mr. massad has correctly characterized my position, to put it mildly. the answer to your question, though, is, yes. the implicit guarantee absolutely enabled those banks to get out of t.a.r.p. on the terms that they did. because though banks enjoy enhanced credit ratings from the ratings agency, part of the conditions that the federal reserve put was to get out of narcotics and raise capital. and the larger banks can raise capital more efficiently and cheaply because of this implicit guarantee, because of the benefits they have. so, in short, the answer to your question is yes. >> thank you. i yield back the balance of my time. >> thank you, mr. gosar. and i am instructed that we are about to be called to some votes. so i'm very, very grateful, both mr. massad and mr. barofsky for

your attendance to this point. i know there are, if you can give us the indulgence, as soon as we conclude the votes, i know there are some members who would like to continue with some questioning. so the committee stands in recess. thk you.

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medicare program. >> stephanie from lansing, michigan, has a question about labeling the legislation or naming the legislation "obamacare." it is scary. [laughter] having the president ogress that label be helpful? that is the question he raises. in terms of how we talk about affordable care, what do you suggest in terms of how we talk about this in a way people can relate to it and how should the advocates deal with the term "obamacare?" >> well, certainly, opponents

negative and as a used it to know this was a government takeover of the health care system. it was not. it strengthens the private insurance system and empowers consumers in the private insurance system. whether or not you all embrace obamacare or not, we will continue calling its the affordable care act because that is the name of the law. [laughter] [applause] we are charged with implementing the law and not renaming it. i would leave it to you all to decide whether to embrace the words "obamacare." certainly this president is very popular with the american

people and has credibility on health-care. if you all feel like that would help you in the course of what you do, then i would encourage you to do it. of all the talent is that we face in the implementing the law and helping people understand what is in it and what is at stake currently through repeal or legal challenges, i don't consider it to be one of those big challenges. >> i think when the president leaves the white house in six years, i think all of us will cherished the term "obamacare." [applause] that was a non-partisan comment. [laughter] one of the questions that is raised often, obviously the court decision in virginia and in florida will focus on the individual responsibility provision, but some people call

the individual mandate. i wonder if you could talk about what is the best way to express to the american public why that is a significant part of the legislation. i think everyone recognizes that the president, during the our early part of the campaign, the primary campaign, not something he actually embraced, help to sort that through, because that's a point to be very visible in the next few days as it already has been. >> well, the individual responsibility provision, often called the individual mandate, is probably a focal point for people caught in what they don't like about it. i think that is because most people don't understand what it is, but the word "mandate" is

against the idea of being american. that's contrary to what most americans believe, the idea of a mandate. you are starting from that vantage point. when you use the term "mandate," that starts from a negative perception. what it actually is -- most americans have private insurance. if you already have private insurance, this does not impact you. for the 17% without insurance, they don't have it largely because they cannot afford it or they have been locked out of the market because of a pre-existing condition. this law takes care of that. it uses tax credits and it increases competition and it takes care of people being locked out ban on discrimination and all other provisions that prevent gender bias.

so put people that cannot get coverage because they are sick or cannot afford it, that's a small population of people that we are actually requiring them to go and do something. of those people, the key argument is that they are not paying for their health care. they are not going and doing what you did and taking responsibility for your health care. they are just going to use the emergency room and require you to pay for their healthcare, which increases your premium on average $1,000 a year for a family premium. this is about responsibility. if you narrow down who this really applies to, it is a very small population of people who should go get insurance so that you don't have to pay for it. increasing number of people in

the insurance marketplace is the only way all americans can get lower premiums and better coverage. it will lower your premiums and my premiums and will help lower the cost of private insurance for everybody. once you explain it to people and that it is like car insurance. the person who explains this the best is senator and claremont paschal -- senator mccaskell. she says you don't get it into an accident and require other people to pay for your damages. health care is a marketplace in which choosing not to purchase insurance is an act. we don't turn people away from emergency rooms in this country when they are sick or injured.

somebody pays for it. so that is aparticipation in the marketplace. this is complicated. if you boil it down to say this does not apply to you because you already have insurance. it applies to a very small population of people who, if they don't have insurance, we are helping them afford it. and if they have been locked out because of discrimination as well. and those counting on you to pay their bill at the emergency room, they need to take responsibility like you did. >> some of the insurance companies are increasing premiums. and has been going on quite a few years. there was a 30% premium increase at one company. we to think we know something about health care. we had a double double digit

increases. the insurance industry says this is the affordable care act. how do you deal with that? people say that the law passed and so anything that happens in the health-care system is because of the law. we knew this would happen. there are a number of provisions that have been implemented that enforce accountability and insurance premiums and how the insurance companies set their rates, and the amount of transparency we have into how they are setting the rates they way they are. there is that peace. and there's the other piece of what we have implemented, all the consumer protections we did our own best cost estimates. for everything that has been implemented, the increase in premiums is roughly 1% to two%. anything on top of that is either there was a cost trend in

insurance that was on an escalating scale before the law was passed. that cost trend will not be broken for some number of years. what we can do is start to chip away at it. when an insurance company sends a notice out that they are increasing premiums by 30%, it is important for people to know about that. it is certainly important for that state insurance commissioner to know about it and for hhs to know about it. we have taken a number of steps to increase premium review on a state level, to make sure that every state has the authority to review premiums and the resources. it is already working. in california we saw what happened. we saw what happened in connecticut, new jersey. a number of states where insurance companies are being held accountable for unreasonable rate increases is growing. the best thing to do and if you

tot a notice like that is sti ask why the rates are going up. the best thing to do is contact your state insurance commissioner to make sure they understand what is in it. because once you start to have some transparency into those rate increases, which will only increase over the course of the next several years, that you get a different answer. you tend to be able to bring those rates down too much more reasonable level. this is going to continually happen as we continue to implement the law. it is a reality. it is a free marketplace. i think that we could expect a private insurance company to do this because they don't want to tell you they are increasing their rates to help pay for their administrative costs or to increase their profits. in many cases, that is not the

reason why they are doing it. it is the cost of health care. it is an easy way out, to say it's the affordable care act and that's the reason you're getting a higher premium. we have found that when we open up the lines of communication with insurance companies when they are raising rates, there is less blame on the affordable care act and then there was even six months ago. as long as those open lines of communication are open and we are talking to them, it is a much more -- you end up in a much more reasonable place. that is something that the president has made clear that he wants to do, that he wants to work with everybody to implement this law. insurance companies are a big part of that. so i guess i would just encourage you, if you see a significant rate increase, ask

questions. if you know someone who is getting a notice of a double- digit premium increase, make sure they are asking why and demands and transparency to that, because there are provisions now that installed some accountability into the marketplace. >> i am being told that we have to cut this short so that you don't miss your meeting. so i just want to say on behalf of all of us, thank you. you have really brought professionalism and thoughtfulness and white house carrying on all of this. we are deeply appreciative for what you do. thank you so much. >> thank you for what you do. we are going to turn the program jeff.to

many of you may be familiar with jeff, he is a partner of a firm which is a premier polling firm that helped to elect barack obama president. it regularly works with the democratic campaign committee, the democratic senatorial campaign committee, and the democratic governors' association. jeff has over 10 years experience in polling. he has spent a substantial amount of time, thankfully, guiding message research for many organizations, promoting and defending the affordable care act. most notably with his work with the herndon alliance that has worked with so many of us. we are thrilled that jeff is

here with us. he is going to share some of his research with a power point presentation. i don't know if you want to -- >> is it probably go up because i think the remote control is up there. >> we have the deck? >> there we go. thanks for having me back. i think this is a significantly more exciting time to get this conference than last year when i was here, which was immediately after the election of scott brown, windy future of the affordable care act was very much in doubt. i think we are all lot more hopeful this year. the challenges that we face, which are implementation challenges, our challenges that i will gladly take in exchange for having gotten this law passed. i want to talk a little bit about where we are now and about

how we talk about the affordable care act. i will run through a little bit on public opinion and then i will run through some of our own research on messaging. as we heard from stephanie earlier, support for the affordable care act has remained stagnant over the past year. at the same time, opposition has declined. if you look at the polling average is now, 44% are opposed to the act and 41% in favor. if that did not happen in a vacuum. that happened at a time when opponents were spending over $100 million to try to brand this in a negative manner. i thing we should view the fact that opposition has declined recently as a positive for us even if we have not been able to increase support for the act as much as we would like. support for repeal seems to be trending downward. you have the most recent new york times poll that shows the public prefers letting the act

stand. the numbers are really different when you look at complete repeal versus giving people the option, of supporting appealing some provisions of the act. it's really gotten only a quarter of the country that wants to do away with the entire affordable care act. so what should we be talking about? i want to stress first that we have had a very hard time moving people's opinions with high following rhetoric. converse is also true. the public gets the more dramatic rhetoric from opponents of the act as well. -- the public begins to need that out -- tuning that out. most people know at this stage you cannot be denied coverage based on a pre-existing condition or being dropped from your insurance if you become sick. that still remains the most

popular benefits of the law and the primary benefit we need to be stressing. something people don't know as much about that we feel can provide a lot of validation for the law is the requirement that members of congress get their health insurance the same way as millions of americans if, through the health care exchanges. that is a benefit most people do not know about and it is something that can provide a lot of validation to a law that people think is big and on building and don't really understand what it in it. so, in addition to reinforcing the things that people know and like, we need to talk about a few other things. we heard from stephanie about seniors and some of the problems we have had with seniors. one of the surprising things we have seen is that seniors actually tend to respond more to the provisions of the affordable care act that crackdown on waste, fraud, and abuse of medicare? then they do to provisions like closing the doughnut hole, which does not affect that many

seniors when you look at the population as a whole. so let's look a little at where public opinion is right now. this is the trend line from pollster.com. you can see that the red line is opposition to the health care reform. the blue line is support. you can see the support line is relatively stagnant. you also see the trend line is pretty good in terms of the decline in opposition. at the end of that line you get 44% in opposition, 41% in support of the affordable care act. that is an average. here are the numbers on perform with intensity. the hidden piece of bad news in the decline and opposition is there still more intensity in opposition to health care reform than there is intensity in

support. one of our goals is driving up the intensity in terms of support. you can see in the most recent poll, 36% on the right are strongly opposed to the affordable care act compared with 25% strongly in favor of it. so the fact that support and opposition are pretty close overall with 45% in support and it% opposed is masking the fact that there is, and 11% difference in opposition. that's one of the things we need to work on changing. although you have the plurality of americans oppo and, here are the numbers on appeal. 48% say let the axe stands and 40% saying repeal the act. if you can see the numbers in support are very good among democrats, 77%. 73% of republicans want to repeal the act. independence in the middle by a 7% margin, 45% to 38% want to

let the act stands. it gets more complicated when you present people with the option of only repealing a little bit of the act and letting some of its stand. when you give people another option the, you could say let it stand, repeal all of its, repeal certain parts, then you have 48% saying let it stand. only 20% say repeal all of it. another 18% say repeal certain parts. the fact that republicans have pushed for outright repeal, i think, is an overreaching on their part and will ultimately help us, i think, with our messaging. let's talk about the desire for compromise. this is a big part of michael the optics of the repeal fight are so bad. -- part of why. the public still believes that they should be pursuing a compromise in congress rather than the sticking to their position. you have 72% overall thinking

the republicans in congress should be compromising. just 21% think they should stick to their position. a 51 point margin, which is as overwhelming as anything you will see in public opinion research. the public clearly prefers compromise and they clearly see the president as more willing to compromise than republicans in congress. 59% thinks president is doing enough work with republicans. that is a much stronger number than the 68% who disagree that republicans are doing enough to work with the president. the optics of an outright push for repeal are extremely bad at a time when voters want people to be working together in washington and not the same partisanship. let's talk a little about messaging around this. we have done a lot of tests of the benefits that are contained in the affordable care act. two things consistently rise to

the top. requiring insurance companies to cover people with pre-existing conditions and requiring members of congress to get their health coverage from the same plan as tens of millions of americans. the numbers that are over on the right-hand side are the percentage of those groups and they are much more likely to support tax after hearing these things and then presented that find these persuasive. it is a clearly defined top surrounding pre-existing conditions. we looked at, also, a condensed list of these things, a list of only five items. is all the same things rising to the top. among important persuasion audiences. the darker purple is the independent, the lighter purple are persuadable. those are people that don't prefer one party or the other. you can see across again, and

the miles o -- and ending denial of dropping coverage. we polled among adults over age 55 as well. we know there are lots of anxieties out there among older americans about what the affordable care act will. mean will tampa surprisingly, as you can see on the left, cracking down on waste, fraud, and abuse in medicare as the benefit of rising to the top tier the thing that popped second for them must members of congress required to get what others get, and then pre- existing conditions. always surprised by the number of seniors that complain about the amount of waste, fraud, and abuse in medicare. if there's a real belief out there that if we were just go after waste, fraud, and abuse in medicare, we could free up a lot

of resources that could be used in a lot of ways that would be more productive. if we have some of those ways in the affordable care act, also, that helps make the second half of that argument. i think part of the reason that it is all-important to talk about the ways in risky affordable care act cracks down on waste, fraud, and abuse in medicare is that it addresses a few core concerns. we know that people are extremely sensitive about the federal debt right now and the amount of money the government is spending, but, also, we know that there is a lot of anger out there about the ways wall street went to the bailout and .he bailout of automakers - the idea that we are cutting waste, fraud, and abuse by ending handouts to insurance companies is indicative that it

helps knock back fiscal arguments people are making about the bill. so this shows awareness of some of the provisions that are in the bill. most people already know that the bill is going to require insurance companies to cover people with pre-existing conditions. 85% know that the bill is law to require people -- require insurance companies to cover people with pre-existing conditions. similar to the 86% who know that the bill is going to provide coverage to mid-american currently uninsured. something like the members of congress provision, only 21% know that members of congress will be required to get their health insurance the same way as millions of americans, the sort of thing we need to increase awareness of. there are significant misperceptions. creates a government-run health care program, 47% of americans believe that is part of the law.

and-panels, 28% of americans believe this law creates death penalty. i would like to transition from talking about numbers to some of the language and how we get this as we talk to people. first, it is the opponent's turn to take bids for focusing on health care rather than jobs. 54 per -- as the affordable care act is winding through congress, opponents got to argue that this was a distraction and that it was taking too long at a time when we should have focused on creating jobs, so they still argue on the back end that the whole plan went through too fast. now opponents are looking at the partisan battles of the past and more focused on that rather than helping middle-class families struggling in a recession. i think it's their turn to be

held accountable. instead of helping middle-class families for people with small businesses, opponents are -- you can finish that sentence in a variety of ways. even though the health care fight is defensive, our language cannot be defensive. it is under assault in congress. just because we are defending something we have done does not mean our language should be defensive and that we should be arguing, wait, look at all the good things we are trying to do. that is not how we want to talk about it. we will have a more believable time if we talk about what opponents are trying to take away from people that if we talk about what we are trying to give to people. suggested language: opponents want approve deny coverage based on pre-existing conditions and give big handouts to companies instead of cracking down on

waste, fraud, and abuse. we are fighting for the middle class and small business, unlike opponents. the longer the act is in effect, a more ownership people take of some of these benefits. a more your protection against being dropped when you get sick becomes one of your rights. a more being protected against denial for pre-existing conditions becomes a right of your. these are things opponents are trying to take away from us. stephanie spoke a little about the mandate. opponents are going to want to debate the affordable care act on a very narrow playing field. they will want to pick out the least popular provisions and go after them piecemeal. it is very important that we don't fall into that trap. we recognize that an attack on the mandate does not need to be met with a response that is the sense of about personal responsibility provision. that in fact what we should do it is put it back to the strongest benefits that we got and talk about how our opponents want to take them away your

protection based on pre-existing conditions and your protection from being dropped when you get sick, and cutting waste, fraud, and abuse. we want to look at any piecemeal attempts at repeal as wholesale. and keeping the most popular provisions, that is a gateway to us talking about some of their hypocrisy. because most of the audience that we are going to be talking to is in short already, we don't want a public debate about whether or not health care is a right or privilege. -- because it most of you are insured already. people pay premiums for years and then get dropped when they get sick and that's not fair.

the language of fairness does not work as well for us when we talk about how it is fair for everybody to have health insurance. the reality we're facing right now is that we are in recession and it has squeezed a lot of people who are working very hard who have health insurance and are more concerned with how they're going to make their own ends meet than with how we are going to help the uninsured americans. as we try to build support for the acting general it is important for us to remember that most of the people we are talking to already have insurance. talk about members of congress getting their health care as millions of americans. when you think health care reform, that does not just mean affordable care act in a lot of people's minds. that has become a catchall for lot of complaints that people have with the way the process works in washington, with the partisanship, the bickering, with bills,too long, spending as

well. tied up with a lot of things. one of the things that has penetrated is the bill is so big that nobody knows what's in it. we want people to know what's in it. one of the most important ways we can provide validation that this is not harming people is to let them know that members of congress are under this same law. this is still a difficult argument to make because, as with a lot of things in the affordable care act, there's a credibility threshold. people are going to have a hard time believing members of congress would put themselves in the same boat. flipping the language around and being a little more offensive can work well for us. opponents of all want to give members of congress special treatment. they don't want members of congress to pass to get their health care the same way as millions of americans. so, again. let's see, we need to be telling stories about real people and

real small businesses. especially at the local level. we need real people carrying the message about this. we need people to see that the people who are getting helped by the affordable care act are their friends, their neighbors, people who look like them. it's not a bill that is for somebody else somewhere who may be uninsured. it's a bill for their neighbor not able to start a small business because they cannot leave their current jobs because they need health coverage they have. it is the story of a parent you might know from down the street to styled as a pre-existing condition who is now able to get coverage. -- whose child has a pre- existing condition. people have their bs detectors up high and messages out of washington have very little credibility. we did a focus group looking at who people would trust to give

them information on the act. there is no walter cronkite out there right now. you could ask him about various groups and various people. we were sitting in this focus group and asking people who they trusted. one guy said i trust him. he pointed at the guy who was a complete stranger to him sitting next to him as another participant in the focus group. that is extremely instructive for us as we put together our message going forward. the next frontier is lowering costs for middle-class families. i think that even among people who supports affordable care act, there is an acknowledgment that it's not perfect. i think that we can fall into a trap of defending it although it's perfect. i i think we need also to be the party of continuing to make improvements to it, continuing to do more. if we are universally focused on

defending what we are ready have and its opponents are the ones talking about making it better and doing something better, then we will be in real trouble. the next frontier for that is lowering costs for middle-class families already in short. i go back to the idea that the vast majority of voters even in a presidential year already have health insurance. their only real priority is lowering the cost. it is very difficult for us to convince people that the affordable care act as it was passed is going to lower their cost. i am not saying that we should not be talking about the things we have done to lower costs, because i think it's bringing real competition into insurance and that's a good thing. it's powerful language and it resonates with people. we are going to have a hard time if the center of our message is that this law as it was passed is going to lower people's costs. i think we need to describe what we want to do going forward. opponents want to let insurance companies jack up rates of families at the same time making huge profits and we want to do

more to crack down on big rate increases handled insurance companies accountable, that should be our language. that's a brief overview. donald wuerl question and answer. -- doing a little question and answer. >> now round of applause. [applause] those of you with questions, please write them down on the cards and we will try to get as many of them answered as possible. i just want to open a discussion with a conundrum that i think a number of people in this audience feel. the reality is many people who are at this conference in front of you care very deeply about those who have been left out of america's health-care system. people who are low-income, people who are uninsured, and

you have provided some caution about how the american public looks at the word "fairness" and what context it works and which does not work. you spoke about people like to hear and respond better to those people like themselves rather than others who may be uninsured that they may not be able to relate to. but there is an issue of something so many of us care deeply about. it seems like there's a messaging conundrum in terms of that. how can we navigate that conundrum? >> it is a difficult question. i think that it is important to know your audience. i think that as you are out there -- if you are talking to a

state legislator, you may be able to make a different case about the long-term savings if the uninsured are covered and are not just using the emergency room for health care that you would not necessarily want to make if you were talking to somebody in the rank-and-file. i think that we have a few advantages in this. i think that the public confusion over the distance between medicare and medicaid is something that to some extent works for us. i think it is an important reminder, the people in this room are very knowledgeable about these issues, but the average person feel medicare and medicaid sounds a lot alike and end up getting confused in the public mind a lot. so the optics of big cuts in medicaid may not be that much better than the optics of big cuts to medicare. i think of we are defending something like medicaid, for example, a good place to start

is with the things that medicaid does for older adults. in terms of some of the -- long-term care provisions. if we encourage inflating the two, that is not necessarily a bad thing in terms of how we talk about things. >> next question is kind of flip side of what you said has worked about people wanting to get the same benefits that members of congress have and that the legislation does that. a quick anecdote, i remember in 1994 during the closing of the clinton health reform debate, we were doing the bus trips from hell. we were trying to rally people,

to get the legislation passed. we were reading a bunch of counter-demonstrators. i remember being in idaho and there were counter- demonstrators. they all had these wonderful signs and we started -- in the rally we started talking about we want to have what members of congress get. we went through the list. congress gets three-quarters of its premiums paid for by the american taxpayer. we want help so that we can afford coverage. the counter-demonstrators started shouting, yes, yes. and their leaders or putting their signs down. [laughter] now you have members of congress wanted to repeal the legislation. they want to take away certain benefits and rights that are in the affordable care act for the american public, but they don't seem quite as eager to take

those same benefits and rights away from themselves. how would you talk about that aspect of the repeal, for those leading the charge? >> i don't think it is a stretch to convince the american people that there's a lot of hypocrisy in congress right now. [laughter] i think that one of the things we need to do in our messaging is look for places where the things that we want to talk about intersect with perceptions that are already very deeply held among the american people and the member of congress requirement is one of those areas. there are few aspects to this. number one, there is the idea that members of congress should not get special treatment. that has almost a punitive aspect to it and harnesses a lot of the hostility that is out there towards congress. second, there's the other side of this, which is if this is

good enough for members of congress, it is probably good enough for average americans. that is one of the biggest hurdles that we got in convincing people that this is an act that's going to do something for them, convincing them that this bill which they are probably not going to read in its entirety and probably not even going to skim over at the kaiser family foundation website actually has a lost for them. you're looking for shorthand and a member of congress issue is good shorthand. there's a pretty high threshold of credibility. we are going to have a hard time convincing people that the act as passed will force members of congress to get the same health care as millions of americans. i don't think? that is language we should abandon. i think that is something people don't know about that is in the bill. i think if we keep moving forward, we will have to have some new things to talk about. that's an important one.

but i also think that in the short term it is going to be easier for us to talk about how opponents and people supporting repeal want to give members of congress equal treatment. right now in a lot, and exchanges go on-line, members of congress get special treatment. if you are repealing the law, you want to give members of congress special treatment, you want to take away the requirement that they go into the same boat as millions of americans. this is something that has not gotten a lot of attention. every time we poll, it pops up as one of the two benefits in the new law. as we struggle with how to increase our credibility, it is the sort of thing that is a kind of shorthand that i cannot think of another example of. from mary questioned wem in grand rapids, michigan that

build off of one of the slides. you said, know your audience. she asks the question "what are the messaging differences that you can help us think about concerning differences by region, gender, faced?" -- faith?" >> there are fewer differences than you would think. it is not like people in the northeast like the protection against a pre-existing conditions while people in the south like the competition in the exchange's. you'd see pretty consistent numbers across the country for the top two benefits, which are preventing insurance companies from denying coverage based on pre-existing conditions or dropping people when they get sick, and a member of congress requirement. there are not a lot of demographics or geographic distinction there. i think that with seniors is

especially important to be talking about the ways in which we are going to cut waste, fraud, and abuse in medicare and that we are going to able to offer them better care because we are going crackdown on waste, fraud, and abuse. i think our audience politically un-affiliated in terms of party. i think that our audience tends to be disproportionately female. in many cases the women make health-care decisions in their families. it is not just women who are older. the women who are middle aged and slightly younger are facing a lot of health care decisions that involve their aging parents. so i think that they are an important audience because they also internalize a lot of the anxiety over what is going to happen to seniors under the new law. i think that our audience is generally a middle-income audience.

there is not a lot of segmentation in terms of messaging. i think it is important to understand that the concerns that emanate from the state america are not different from other states appear there's a lot of economic anxiety and they are concerned about what this law will mean to them personally if and financially. there's a lot of anger over bailouts and government spending, which is why talk about waste, fraud, and abuse in medicare as such a powerful argument. so there is not the time of difference. ultimately, that is a good thing for us because it enables us to have more of a unified message as we move forward. >> here's a question from mark from new york city. "how should be, that opponents messaging about job-

killing and budget busting?" this stuff about job killing and budget busting is an absolute myth and we know that and a lot of studies have demonstrated that. many in the public may believe those accusations. how would you respond to that in a way that the public would have -- be more receptive to listing to the facts of the various studies and analysis? >> let's start with a budget busting. we have done a lot of research to try to see how we can move people on some of these budget arguments. what we have found is that right now it is extraordinarily difficult, verging on impossible to convince people that a bill that would cost nearly $1 trillion would save money. that is a very difficult argument to make. so i generally oppose going

right into the teeth of the barded argument and arguing that in fact this will save manipur. -- save money. you get a lot of argument over which numbers you should trust. i prefer addressing the budget concerns by talking about the cuts that we are making in waste, fraud, and abuse in medicare and talking about ending wasteful handouts to big insurance companies. i think that way of getting at it is a little better for us or has a better chance of success and going right into the teeth of the idea that this thing is deficit neutral or even could cost over the next 10 years. as far as job killing goes, i think that the opponents of reform understand that the optics of pursuing the partisan battle are bad at a time when people want bipartisanship and a focus on creating jobs.

so they start they would just argue that they aca is killing jobs. i think that -- i am not sure that has a lot of credibility. i and understand why it sounded like a good idea at the time. but we need to position ourselves as the defenders of small businesses, because this is a law that delivers a lot for small businesses. we have actually found that the ability of small businesses to pull together to get better rates tends to get better numbers in research than the tax credits that would help them afford health care for their employees. so that's wanted to keep in mind as you talk about small business. we are at a time when there are so many layoffs happening so frequently that large corporations don't have much credibility as job creators. the only group that has credibility in creating jobs right now is small business. i'd think one of the things that works for us is arguing that

opponents of reform are on the side of lords corporations like health insurance companies and that we are trying to help small businesses. that is how we should address the jobs argument. small businesses are like the middle class and they are viewed very much like the middle class. so defending them fits very neatly with the frame of defending the middle class, which is also an important part. >> our friend bob from seattle is asking the question, " what is the strongest arguments supporting individual mandate, a personal response ability?" --responsibility?" a lot of the opponents of individual mandate talk about freedom and liberty and they want the freedom and liberty message, to be required to purchase insurance. a number of us have purchased

coverage. we want the freedom and liberty, not to have to pay for somebody else's cost who decide not to pay for insurance if they can afford it. you set to go to the key rights that people talk about that go together. i wonder if you could amplify the cost question, your comments about the individual mandate? >> there are some things that don't work on individual mandate. does not work particularly well to argue that we make everybody get car insurance and that this is no different. people think of health care differently. i think that we have looked at a lot of arguments in favor of the mandate. stephanie's language works a little better, which is that you cannot wait until your house is on fire to get house insurance. i'm not convinced we did first, i don't want to fight this battle on the individual mandate. if somebody talks about the

individual mandate, our response is you want to let the insurance companies dropped people when they get sick or deny coverage based on pre-existing conditions. i think then they will come back and say, no, we want to keep all of those things because those things are good. then we can get into an honest debate about whether or not those are two separable issues. the fact is they are not. the insurance companies are never going to allow appear to be a law that requires them to cover everybody with a pre- existing condition while not requiring everyone to come into the system, in order to give them a big enough pool of help the people that they can afford to cover everyone. it destroys their business model. this sort of new grownup discussion about whether or not the protection based on pre- existing conditions is separable from the mandates is a second level discussion. first, we want to go back at them and talk about how they want to take away these protections that are important for people. then if they argue that they want to keep those protections,

we can make the argument that they are hypocrites. the proof they are hypocrites is that they know you cannot have one without the other. i think the pivot on this has to come back to the most popular benefit because they are the only cover we have on the personal responsibility provision. >> i want to turn to -- we are hearing that stephanie indicated possibly as early as monday that the federal district court in florida and pensacola -- in pensacola may issue its decision on the challenge that this initiated by various attorneys general. a number of us were in the courtroom. this clearly -- the judge anticipated the individual responsibility provision and it's clear that is, to strike it, i think. the key question appears, will be only strike that or strike further. the attorneys general said to

strike the whole thing. at one point the judge said something like, "i have been told that if you have a watch and one little part does not work in it, the whole what it does not work." why would this case be filed in pensacola? we only have three republican judges, a ronald reagan appointee. if a decision comes, as many of us think it might, one might be just for the individual responsibility provision, not having a constitutional basis or something broader than that possibly, which is clearly what he seems to want to do. how would you suggest that folks respond to that? >> i don't think that we are served in any way by getting into a procedural argument

about what is going on in the courts. i think we can say that this is an issue that ultimately it will be decided by the supreme court. we have had this 0.14 rulings in favor of the law and this would be the second one. -- 14 rulings. we could also say there were judges who thought social security was unconstitutional and was ultimately upheld by the supreme court. i don't want us to get are down in this, because it's going to be a lot of process. there will be rulings that go both ways. i think that although this is a clear case of judicial activism and we can say that we thing that the judges should defer to people's elected representatives, ultimately we want to be talking about the benefits that we are delivering for middle-class families. even if we are talking about a court case, we are serving

ourselves ill if we don't make sure we mention the benefits that go to middle-class families. >> one more question. i will just say, i used to be a law school dean and would tell this story. i used to have a sign behind my desk that was a quotation from marx. it went "if you have a problem, get a lawyer. then if you have a problem, get a better lawyer." [laughter] who are-- as we try to reach out to the public to explain what is in the legislation and how people would be affected by it, who are the best alligators --

validators to be trusted? what would you suggest? >> when you show up and say i'm from washington and i'm here to help you, people here you like you are carpeaux marks -- harpo marx. [laughter] i think you should look for stories in your community. there's a lot of people here who have greater experience than mine on how to go out and find those stories from a practical standpoint. but you need to be telling those stories in a variety of forms. those stories need to be appearing in op-ed pieces. we heard yesterday in a panel that i was in, in some ways the

decline of the new industry can work for us because they have fewer reporters and are more likely to print a press release that you send them without editing it than they were an actual staff. it is all about finding people who look like your target arguments. people out there need to know that this is not a bill for somebody else. this is a bill for themselves and it's for the hard-working people in the middle of america. people not at the top end of the income scale and not people at the bottom -- and it's for the people at the bottom of that scale worried about losing the middle class life that appealed to them. as activists and advocates, we are going to have a lot of information, a lot of statistics

at our fingertips about 129 million people with pre- existing conditions and the various benefits included in the law and none of that will ever be as powerful as somebody telling a story about their child. >> i want to thank jeff not just for being here today and sharing your wisdom with us, but your ongoing advice and counsel to us, the terrific work you have been doing with the herndon alliance, an organization many of us have relied on for messaging help. so thank you so very much. please give itself a round of applause. -- give jeff. host[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> today, the current situation in egypt with the u.s. institute for peace vice-president. after that we will chat with mi