thank you. coming up tomorrow, we take a look at gps and the use of cell phones when it comes to your privacy. we are joined by the for and from the library of commerce -- library of congress, we will talk about campaign posters and how they have changed throughout the years. all that and your calls and a look at the papers tomorrow. the show starts at 7:00 a.m. we will see you then. host: caller[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> these men go through things and have scars that no one can understand. >> the first thing that startled us was the relationship between harry truman and herbert hoover. they were personally and politically different men who ended up forming this alliance that neither of them would have anticipated. it was enormously productive. they formed the foundation of what became a deep friendship. the letters between them about how they had become important to each other were extraordinary. >> it may be the most exclusive club in the world. the private and personal relationships of american presidents. sunday at 8:00 p.m. on c-span's "q & a." >> mitt romney will give the

commencement address at liberty university in lynchburg, virginia. we expect that to begin in 20 minutes. we will have live coverage here on c-span. here are some of the calls that came in this morning about the former governor from this morning's "washington journal." >> the om blog is found on the washington post website. he says the mitt romney bullying story holds up to scrutiny.

here is a little bit of what he has to say about details of the story that made news this week. it talks about one of the original paragraphs that appeared on the online version of the story.

we will need more of mr. paxton's perspective on the story. the numbers will be on the screen. you can reach out to us on one of three social platforms this morning. our first call this morning is from virginia. caller: yes, i am a conservative. the washington post is not an honest newspaper. if you read the story about this and compared them to the local

papers and the washington times, they make things up to satisfy their own agenda. i have not bought a post since the disney controversy. as far as the story about mitt romney, i get it absolutely no credibility. i went to a military school and i was hazed as a freshman. i joined the swim team and lifted weights and became a wrestler. i cannot play football because we had a second string guy and had an exceptional football team for a high school. the point is, it is hazing. it is not believing. it inspires people. when i got in the -- it is not bullying. it is what makes people better. it is part of the whole private school merely you -- world.

they inspire people to do things that are not detrimental to their character and the furthering of their education. host: the story and the reaction to it does not shake your view of mr. romney at all? caller: no. i know exactly what he went through and what he did to that guy. the actual witness to it has passed away. we are left with nothing more than being musing of the lying washington post. host: phoenix, arizona is next. independent line. caller: it reminds me of the john kerry switch to a motion with the swift boat situation.

they will try to bring up -- swift boat situation. kerry had his disagreements with vietnam and what happened over there. the opposition to the basket of that. they got people from the actual time period involved. same thing now with romney. the guy was in high school. he has changed. he is a different person now. he is not the 17th, 18 year old kid running for president. he -- he is not the 17, 18 year-old kid. host: one of john lauber's sisters spoke to abc news.

they say the portrayal of john is factually incorrect. lakeland, florida. democrat's line. caller: the first caller included a term called hazing. hazing and pranks i don't see different things. when you bubbly somebody, that is not considered a practical joke -- bully somebody, that is not a practical joke. romney did not decide -- denied that he did it. to me, what that does -- when he was a late teenager, that goes to the character of a person.

host: you would change your opinion as it stands today? caller: when people bully other people, it goes to their character as an adult. some people do not change. i would like to know what was his punishment? was he punished and what was the punishment? host: johnny, independent line. caller: this bullying does not matter a bit. it was when he was as a child -- he was a child. you can tell the way he answers a question. when he lies, he goes to laughing. there is no way in the world i could all take for someone i cannot trust. lying is one of the worst things

you can do. that is what romney is doing in everything he does. host: it was this week that mr. romney appeared on fox news to talk about the story that came out. here is what he had to say. [video clip] >> i had no idea what that individual's sexual orientation might be. it is not something we discussed or considered. that is simply not accurate. i do not recall the incident myself. i have seen the reports. i am not going to argue with that. i did stupid things when i was in high school. if i heard anyone by virtue of that, i would be very sorry for it and apologized for it. host: if you have comments, you can post on twitter and facebook.

conn. linda, -- connecticut. then on the independent line. caller: my comments on mitt romney and this situation that took place during his high school years. i believe and as does the caller before -- this means ions to his character. the thing you have to look at as well as the that this incident had on the young man who was victimized. he could have suffered from the trauma of it and the pain and the viciousness of the incident, if it took place. then you have your answer. unfortunately, i understand the man is not alive to speak to

this issue. the other thing that bothers me about him is the story about him putting his dog on the car and traveling 6-10 hours. these things lead to the character of the man. i got in plenty of trouble in high school. i never did anything as dishes or hurtful as this incident. i do not see it as a harmless high school part -- high school prank. it speaks to his personality and some deep rooted tendencies that he has and i do not feel i want a man like that in the white house. barack obama is looking pretty good to me right now. those are my thoughts. i am so happy to have gotten through. i am a longtime listeners. host: many comments on facebook.

here are some. again, you can make those comments on facebook or contribute on twitter or the phones. larry is on our republican line it. caller: -- on our republican line. caller: to me, it is just a big lie. the washington post wanted to go and dig up one of these classmates who passed away to was gay. they are trying to say that mitt romney abused this kid or was a bully to them. -- to him.

it is a big lie. they are trying to get more votes for barack obama. that is politics, i guess. host: the washington post ombudsman had this comment when it comes to gay marriage. brooklyn, new york. good morning.

caller: i have been waiting a long time. we all have adolescence things in us. i am not concerned about that. what i am concerned about c-span is you are all of the topic. we have world problems going on and you are concerned what -- about what somebody did in adolescents days. let's talk about fema. let's talk about putting the military in american streets. why do they want to take our guns because they did not want to resistance? george bush -- the first george bush said about the new world order. let's talk about issues. let's get people like tim white and george maxwell to talk about the world issues about what is going on. other matters.

democrat-republican. host: we are trying to stay on topic. there are some other topics in the news today. dimon atmond -- jamie the center of the story. the vocal role -- the bulker rule is set to take effect -- volcker rule is set to take effect in july.

>> you can watch the rest of this online as we take you live to lynchburg, virginia. mitt romney is going to give the commencement address at liberty university. >> 150,000 people. thank you, doctor, for sharing the gospel of jesus christ with us today. [applause] now it is my privilege to officially welcome our veryuy special guests -- very special guest, the class of 2012. will you all please stand? [applause] you have sacrificed and labored for years to make this day a reality.

we are proud of you. congratulations. you may be seated. you do not get your degree yet. you have to wait a little while. there are over 14,000 members of his graduating class. over 16,000 are participating in this ceremony. this is the largest graduating class in the history of liberty university. [applause] nearly 6300 of our graduates will be awarded master's degrees. 147 will be awarded dr. laurel degrees. our oldest graduate today is dolores at age 77. [applause] arkansas roy blunt -- our youngest graduate is 17. congratulations to both of you. the 2012 graduating class

includes representative from all 50 states and members of our nation's armed forces. liberty is proud to be one of our most military friendly universities. please show them our appreciation. if [applause] -- please tell them our appreciation. [applause] thank you to our military students for all you have sacrificed for your country. the schools of business, education, arts and sciences and the seminary have the greatest

number of graduates. there are 875 graduates who have completed their studies with a perfect 4.0 gpa. today is their first year outside the library in four years. i would like to congratulate those who have completed their studies online. as part of liberty's christian mission, we have tried to make christian education affordable and acceptable to as many individuals as possible. liberty university online has achieved that objective like nobody could. i have received messages from graduates who have told me their story. many of them could not have obtained a college degree of not for liberty university online. kathleen is graduating suma cum laude on her 50th birthday. she enrolled as a mother and a

grandmother. kathryn armstrong broke her back while study in 1998. today, because of a miraculous surgical technique, she will be able to walk across the state after being confined to a wheelchair for many years. [applause] mark rhodes, jr. wrote to me and said, i started attending liberty university when it was called lynchburg college. classes were in lynchburg downtown. classes were held at the old thomas road baptist church. back then, liberty was so small that my father would come and eat in the hotel dining room with the students. hearing that history made me

remember that where this football tower used to stand, there was a dairy bar. my daughter turned 12 two weeks ago. she had a slumber party at the new welcome center almost at the same spot where the dairy barn was. when i had a slumber party, i had to sleep in the barn. mark had to leave liberty after his first year and later returned to obtain his b.a. in 2010 and his m.a. in 2012. three members of the same family are graduating from liberty today. three sisters are graduating today. the fourth sister, sarah, is a freshman. then we have a miracle story. patrick andrews entered liberty

in 1994. that same year, he had a car accident that changed his life forever. he spent six weeks in a coma. he was the victim of severe head trauma. after the accident, he was only capable of taking a limited number of credit hours each semester. he followed my father's admonition to never quit. after years of determination, patrick, now 40 years old, will receive his bachelor's degree. [applause] standing up. third row. congratulations, patrick. and then there is ron kaning. his doctorate will be awarded

posthumously. he passed away, but his dear what is here. sharon, we are sorry for your loss. this is not just your husband's alma mater, but your extended family. god bless you. we are so proud of you, the class of 2012, and so thankful to god for your achievements. we have attended sporting events, plays, and during occasions when lives were changed. we toasted 1000 of you at our firm for the annual -- hosted 1000 of you at our farm for the annual picnic. pictures of our closet have been known to show up on facebook. this class is special to us because it is one of the first classes to enroll at liberty after i became president

suddenly when my father died five years ago. mike morris and his sister are graduating here today. he is from canada. he is going to play pro hockey in new zealand after graduation. je and a number -- he and a number of his fellow graduates made a scrapbook of pictures. dusty wrote, i know you both will continue to impact students for years to come. do not forget your favorite ones who were here during the transitional years. dusty is right. my first years as president and those students will always have a special place in my heart. we have no family members among the graduates this year. our youngest son is a freshman. he seems to be in no hurry to

graduate. he is having too much fun. we hope he graduates -- graduates from liberty before my 12 year old. ever since my family's lives were turned upside down five years ago, they have supported me and have adjusted well to the drastic changes in their lives. becky, could you, trey and caroline police stance? [applause] -- please stand? [applause] and my mother is here today. she is right here behind the stage. i hope none of you forget that tomorrow is mother's day, for your own good. no one succeeds in life alone. all of life's great

accomplishments, like the one we are celebrating today -- other family members and friends are always standing behind us. these are the people who carried the slack when you had to study late at night. they allow you to persevere during difficult times and have in paris q. and applauded you. would all of the parents -- and have encouraged and applauded you. would all of the parents please stand? [applause] we started a new tradition last year of recognizing the spouses of graduates and to request -- spouses of graduates at the request of one graduate. he wrote that his spouse helped him obtain a college degree. we realize spouses are the unsung heroes behind me grad

wis. will the spouses of the graduates -- we realize to spouses are the unsung heroes -- realized the spouses are the unsung heroes to many graduates. will the spouses of the graduates please stand? [applause] i finally convinced the doctors that i was right in i am doing great right now. thank you, becky, for that. my father envisioned a fully accredited liberal arts university, not just a bible school, that would be for evangelical young people. my sister graduated from liberty

in 1986, two years after i did. i went on to the university of virginia law school. she attended the college of the university of virginia. she was named chief of surgery at the va medical center in richmond, placing her among only a handful of women in the country to hold that leadership position. [applause] not bad for a little sister. we reported this on the liberty website. one of our quotes was the perfect illustration of liberty's mission. she said one person asked her why she did not decide to go to the minister herself? she replied that medicine was a ministry. you are ministering to the needs

of sick people and those going through tough times. the mission of liberty university has always been to send out men and women into the culture, people in every location to enter every sphere of society to be the salt of the earth and the like of the world. in the 1970's, nobody was founding universities like liberty. my father embarked on what would become an arduous journey. he and commented later that -- he even commented later that if he had all what he learned later, he would not have founded a university. in 1987, i was in the trenches with my father as chief legal counsel try to find the necessary financing to keep the dream of liberty alive. my job was to negotiate with

creditors when liberty was on the brink of survival. there were many times we would issue paychecks on friday and spent the weekend begging and borrowing to cover the checks so we could put them in the bank on tuesday. we will surpass 100,000 students in the the next 12 months. we are the largest nonprofit university in the country. we are the largest christian university. [applause] today, we have 220 programs of study. we will be opening a medical school in the fall of 2014. our campus is in the midst of a $250 million upgrade. it will underscore liberty's

commitment to academic excellence. we are committed to intercollegiate athletics as well. our football stadium is a silent statement to that commitment. our teams have committed at the highest divisional level since 1988. we will our football program to the fbs level. this level was formerly called level 1a. liberty made the decision to move its football program to fbs after completing beria's feasibility studies over the last year. -- after completing various feasibility studies over the last year. this could never have been

realized without the necessary by a resources. it took harvard university 329 -- 329 years to build financial reserves topping $1 billion. it is with great thankfulness to god that i will announce today that in this challenging year, liberty university's 41st year, we will top $1 billion in net assets. [applause] my father announced publicly shortly before his death in 2007 that he was praying for a five- year, $1 million miracle or liberty. many of us thought it would take a generation or more to reach that goal. over the last five years guy has taught us there is no limit to what he can do -- god has taught us there is no limit to what he

can do. liberty will be the youngest university in american history to reach $1 billion in net assets. so many universities on this continent abandon their christian mission when they achieve academic profits -- academic prominence. it was because of the financial needs and the tendency to bow to donors that did not share the values of the institution. this pattern is not repeated here. this day is about our graduates, but i try to retell the merkel story of liberty university at commencement. -- miracle story of liberty university at commencement. you will face trial interpolations in your own lives soon. it is only through prayer, divine intervention, and human

perseverance that this university has become what it is today. we want you to remember that always as you go out from here. we have three special guests with us this morning. the first is worth harris carter, jr. his accomplishments in the business world are legendary. he has made the american dream a reality through hard work, integrity, and decency. he is a quiet and humble man who has shied away from the type of recognition we are giving him today. without first long-term mortgage financing in 1997 -- with our first long-term mortgage financing in 1997, we are honored that art williams and his beautiful wife angela -- his

beautiful wife, angela, are with us here today. wherever you are, could you please stay in? -- please stand? [applause] thank you for all you have met for liberty university. worht harris -- worth harris attended law school at the university of virginia, but for finance to reasons, was unable to finish. between 1973 and 1998, he founded 10 separate community banks. those tend banks merged to fouform carter bank and trust. at 874, -- at age 74, he still works longer hours than anyone

else at the bank. carter bank and trust consists of 123 offices and 1100 employees. it is the largest community bank in virginia. worth carter, jr. has fought the good fight. he has been quietly used to work in the lives of individuals. you would be wise to follow his example of a strong work ethic. would you join me at the podium please? in appreciation of worth carter's faithful friendship to liberty university, with the power invested in may, the director of business degree is

hereby -- in me, the doctorate of business degree is hereby awarded to worth carter. [applause] congratulations. also with us today is a man who is categorized by love for god and for his fellow man. he is the founder of chick-fil- a. [applause] his story is the embodiment of the american dream. from growing up in a family so poor they were forced to leave eighth federal housing project to having a restaurant chain that has -- a federal housing

project to having a restaurant chain where there is never any shortage of chicken sandwiches. he invented the chicken sandwich. -- indebtedt it 00 to him. i started eating more chicken and lost 20 pounds. he is a model of the type of graduate liberty university always tried to produce. he taught a summer school class for 13 year-old boys for over 50 years. he has found over one dozen foster homes for young boys and girls. the most glaring example of his unwavering commitment to his personal values is to close all its restaurants on sunday.

[applause] he believes that being closed on sunday says two important things to people. one, there must be something special about the way the employees see their spiritual lives and there must be something special about how the company treats its employees. would you join me -- already here. ok. for modeling the vision of liberty university to the world, with the power vested in me, the doctor of humanities is conferred with all of the rights and privileges apertaining thereto. [applause]

better biting who eats chicken, raise your hand. -- everybody who eats chicken, raise your hand. i did not get to go to college. i went to the army. it never bothered me because i never did like school anyway. but i did graduate from the third grade. back then, you had the privilege of bringing your bible if you chose. but also, bring a bible verse to the teacher. my name was selected. the other day, a lady brought a

four year-old to me. he said, mr. cathy, he wants to say his favorite bible verse. he got up there and said proverbs 22:1. a good name is rather to be chosen than a lot of money. thank you very much. [applause] >> that was surprised you, didn't it? our special guest is one of the most controversial leaders about our time. governor mitt romney is on the front lines representing and extending the uniquely american ideals that are important to

this institution and the future of our nation. he received his undergraduate degree from brigham young university. he attended harvard law school and harvard business school. he received a law degree and an mba in 1975. during his term as governor, he oversaw the reduction of a $300 billion deficit. he is the nominee for the republican party to run against president barack obama this fall. [applause] at ask the chairman of the executive committee of the board of trustees -- i ask ask the chairman of the executive committee of the board of trustees to give his take on our 2012 commencement speaker. mark is one of my father's closest friends and confidants.

demoss hall was named in honor of his father. he and his wife april -- his wife, april, have 3 children. please welcome mark demoss. >> thank you. in preparing to introduce an already well-known man this morning, i was struck by the difference of knowing about someone and knowing them. you can know about someone simply by reading about him or her. you can only know someone by spending time with them. i first met our commencement speaker in september of 2006. he was a first term governor being talked about as a potential presidential candidate. i was looking for someone special to support in 2008.

after learning all i could about him, i requested a meeting. i met our speaker in his boston home. i had invited one dozen evangelical leaders for lunch and an informal chat with the governor and his wife anne. it was the only time dr. falwell would meet the governor. all of us here today know something about mitt romney. he has been written about in every newspaper and magazine in the country and appeared on virtually every television program. everyone has an opinion about him. most of you probably know mitt romney was a successful businessman, president of the salt lake city winter games.

governor of massachusetts, and is now running for president of the united states. you may know something about his record of turning around big masses and solving complex problems. many of you know him to be a man of strong faith, a husband of 43 years, father of five sons, and grandfather to 18. you could know all of these things without ever meeting him. for the past six years, i have had the opportunity to really get to know mitt and anne romney. not as some people who have known them longer, but better than some in this stadium. i have been with them on the campaign trail from iowa to hampshire and michigan to florida. i have been in their home on numerous occasions. i have observed their lives in

countless public and private moments. i have gotten to know several of their sons and their families. my wife and i have even sought parenting advice from the romneys because their record is so good. over the course of these years, we have prayed together and shared scripture together and talk about life together. here is what i have found. i do not have two better friends on this earth than mitt and anne romney. i have been privileged to work with some remarkable people and the speaker and his wife are two of the most remarkable people i have ever known. i like telling people about mitt romney. for six years, i have been talking about here it to anyone who would listen and, i am afraid, to those who would not.

many people what a president they would agree with on everything. if that is your standard, perhaps he should run yourself. after all, i do not agree with april on everything and we have been married for 24 years. i expect i will not agree with mitt romney on everything. i will tell you this. i trust him to do the right thing, to do the moral thing, to do what is best for our country. i trust his character, his integrity, his moral compass, his judgment, and his perfect decency. finally, i trust his values. i am convinced that the mirror my own. several weeks after the luncheon dr. falwell and i attended at governor romney's home, we received a big ups shipment with

a beautiful chair inside. on the front of that chair was the seal of the state of massachusetts. on the back was a brass plate with an inscription i have never forgotten. it read, "there is always room for you at my table, mitt romney." that chair has been at it fall well home -- falwell home since then. today, it is seated next to you. when you are invited to be the commencement speaker, i began to think about that chair. in politics, everyone wants a seat at the politician's table. many once back seat without offering a seat or anything in return. -- many want that seeks without

offering a seat or anything in return. governor romney, you have always extended a seat at your table and we thank you. this morning, on behalf of liberty university, i would like to present you with the chair you are sitting in, made by the same company that made the chair as you sent us. the brass plate on the back of this one says, you are always -- "there is always room for you at our table, liberty commencement, may 12, 2012." governor and mrs. romney, thank you for honoring liberty

university and our graduating class by being here today. thank you for an example of a life well lived. and thank you for your friendship to april and me. ladies and gentlemen, class of 2012, in a few minutes, you will hear from a man i respect and admire, my special friend, governor mitt romney. thank you for welcoming him to liberty university. [applause] >> thank you, mark. liberty university is a non- profit educational unit to it -- educational institution. liberty university does not endorse candidates. the governor's presence here should not be seen as an institutional endorsement of his

candidacy. the bible teaches us that christians should be good citizens. christians should all take for the candidates who is positions on the issues are more closely aligned with their own, not the candidate that shares years or her faith or theology. we are electing a commander in chief, not a pastor or religious leader. i have got a crack in here about jimmy carter that i will skip. [laughter] i would like to invite governor doctor to thee podium at this time. with the power vested in me by the board of trustees, the doctor of humanities is conferred on governor mitt romney with all of the rights

and privileges apertaining thereto. [applause] now to deliver our 39th annual commencement address, i am drilled to welcome the next president of the united states, governor mitt romney -- i am thrilled to welcome the next president of united states, governor mitt romney. [applause] >> thank you so very much. mark, thank you for that powerful and moving an emotional introduction. thank you for your friendship. what a great man. chester falwell, thank you for

your kindness today. faculty and staff and distinguished guests, parents and friends and graduating seniors from liberty. [applause] 40 graduates, of course, this moment marks a clear ending and a clear -- for the graduates, of course, this moment marks a clear ending and a clear beginning. to the class of 2012, well done and congratulations. by the way, i am told some of you may have taken a little longer than four years to complete your studies. one graduate said he completed his degree in only two terms, clinton's and bush's. [laughter] in some ways, it is fitting that

i share this distinction with mr. cathy. the romney campaign comes to a sudden stop when we spot a chick-fil-a. it is comfort food during the campaign season. and we needed a lot of comfort. congratulations on your honor today. [applause] of course, there are some people here who are even more pleased than the graduates. that would be their parents. their years of prayers and devotions and investment have added up to this joyful achievement. -- devotion and investment have added up to this joint achievement. the american dream is not owning your own home. it is getting your kids out of the home you own.

lately, i have found myself thinking about life in four your stretches. less -- four year stretches. not many have achieved as much in four years as you have. but that is a top for another day. it is not for nothing that you have spent this time -- but that is a topic for another day. it is not for nothing that you have spent this time here. andica needs your time skill. i am convinced we will see a resurgence in the american economy that will open new doors of opportunity for those as prepared as you are.

what the next four years might hold for me might be -- is yet to be determined. things are looking up. i take your kind hospitality today as a sign of good things to come. i want you to know that i consider it a great life honor to be able to be here to address you today. your generosity of spirit humbles me. the welcoming spirit of liberty is a tribute to the christian example of your founder. in his 73 years of life, dr. falwell a marked. he shared that walk with his wife -- in his 73 years of life, dr. falwell made a mark. we remember him as a courageous and big hearted minister of the

gospel. he never hated an adversary. he deserves the tribute he would have treasured most as a cheerful, confident champion for christ. i will always remember his cheerful good humor and selflessness. several years ago in my home, anne and i were posing with a double-posing for a picture with him. he assisted anne be in the middle and he and i'd be on the size -- he and i be on the side. he explained that christ died between two beans. dr. falwell believe liberty would be one of the most respected princeton universities in the world. the first class graduated only 13 students. and year after year christians

would be drawn to the university in ever greater numbers. thanks to what you have gained here, you leave libertine with confidence as your armor. you know what you believe -- you leave liberty with confidence as your armor. you know what you believe and you know who you are. it will be one of the most prized qualities of your education here. the commitment to spiritual ideas will set you apart in a world searching for meaning. that said, your values will not always be the object of public adoration. the more you live by your beliefs, the more you will in dorothy cen -- endure the censure of the world.

it showed in their own way the relentless and powerful influence of the message of you enter a world with civilizations and economies that are far from equal. harvard university historian and devoted his lifelong study to understanding why some civilizations rise and by others falter. his conclusion was this -- culture makes all the difference. not natural resources, geography, but what people believe and what they value. central to america's rise to global leadership is our critic is -- christian foundation. the american culture promotes

personal responsibility. the dignity of work. the value of education. the merit of service. devotion to a purpose greater than self. and that the foundation, the pre-eminence of family. the power of these values, the sculptor, is evidenced by a recent brookings institution study that senator rick santorum brought to my attention. for those who graduate from high school, get a job been married before they have their first child the probability that they will be poured is 2%. -- poor is 2%. if they are absent, 76% will be poor. kolter, what you believe and how you live matters. -- culture, which believe and how you live matters. as fundamental as these principles are, they may become a topic of debate from time to time, so if it is today with the

enduring institution of marriage -- marriage is a relationship between one man and one woman. [applause] the protection of religious freedom is also a matter of debate. it strikes me as strange that the free exercise of religious faith is sometimes treated as a problem. something america is stuck with. instead of being blessed with. perhaps religious content subsets' the designs of those who feel that the highest wisdom and authority comes from government. but, from the beginning, this

nation has rested in god, not man. [applause] religious liberty is the first freedom in our constitution. whether the causes justice for the persecuted, compassion for the needy, or mercy for the child waiting to be born, there is no greater force for good in the nation than christian conscience in action. [applause] religious freedom opens the door for americans that is close to many others. whether we walked through that door and what we do with our lives after is up to us. someone once observed that the

great drama of christianity is not a crowd shot following the movements of collectives or nations. the drama is always personnel. individual. unfolding in one's own life. we are not alone in sensing this. men and women of every faith and good people with none at all sincerely strive to do right and lead a purpose for the life term -- purpose-driven life. i can tell you this much, all that you have heard here at liberty university about trusting in god and in his purpose for each of us makes for more than a good sermon. it makes for a good life. so many things compete for our attention and devotion. that does not stop as you get older. we are all prone to treat the trivial things as all important. the all important things as trivial. little by little, we lose sight of the one thing that endures forever. no person i have met, not even

all-star kasich -- not even the righteous -- the lord words of bring us back to ourselves into something far greater than ourselves. what we have, what we wish we had come ambitions fulfilled. ambition's disappointed. investments one, investments lost the elections one coming elections lost. -- investments won, investments lost. elections won, inf lost. each is subject to the serendipities of light. our relationship with our maker depends on none of that. it is entirely in our control. for he is always at the door. he knocks for us.

our worldly success cannot be guaranteed, but our ability to achieve spiritual success is entirely up to us thanks to the grace of god. [applause] the best advice i can give is to give those worldly things your best, but never your old. reserve your hope for the only one who can grant it. many preachers advise the same. if you as memorably as dr. martin luther king jr. he said, with most of my life ahead of me, i decided to give my life to something eternal and absolute. not to these little dots that are here today and gone tomorrow but the one who is herthe same

today and forever. [applause] the commitments that come closest to forever are those of family. my dad was the ceo, a governor, and a member of the president's cabinet. my wife asked him how what was your greatest accomplishment? without a moment's pause he said, raising our four kids. my wife and i feel the same way. i have never once regretted missing an opportunity so that i could be with my children and grandchildren. among the things in life that can be put off, being there when it matters most is not one of them. the home is the ultimate career. all other careers exist to support the ultimate career.

promotions often marked the high points in a career. i hope i have not seen the last one of those. [laughter] sometimes, the high point, and unexpected ways. -- high points come in unexpected ways. i am embarrassed to recall that when this opportunity was presented to me, i dismissed it. the winter olympics. i was busy. i was doing well. by the way, my lack of athletic prowess did not make the olympics it logical step for me. after iraq accepted the position, my son called and said, dad, i have spoken to the brothers. we saw the paper this morning. we want you to know there is not a circumstance we could have conceived of that would put you on the front page of the sports section. [laughter] the olympics were not a logical choice. but, that was one of the best

and most fulfilling choices of my life. opportunities to serve in meaningful ways may come at inconvenient times. that will make them all the more precious. people of different faiths sometimes wonder where we can meet in common purpose. when there are so many differences in theology. certainly, we can begin service. in shared moral convictions about our nation, stemming from a common world view. the best case for this is always the example of christian men and women working and witnessing to carry got a's love into every life. people like chuck colson. he recounted a story from his days after leaving prison. he was assured by people of influence that even with his record, a man with his connections and experience could still live very comfortably. they would make some calls, get

him situated. set him up once again as them -- as important. his choice at a crossroads would make him, instead, a great man. the call to service is one of the fundamental elements of our national character and culture. it is motivated -- it has motivated every great action of conscience. sometimes, as dr. baker franco -- dr. victor frankel observe, it is what live is asking of us. how often the answer to our own problems is to help others with theirs. in all of these things, family, faith, work, service, the choices we make as americans in other places are not even

choices at all. for so many on this earth, life is filled with orders, not options. right down to where they live, the work they do, and how many children they can have. all the more reason to be grateful. this and every day, we live in the united states of america with a talent god gave us and we can use this in freedom. tt why -- thank god for this nation. [applause] that this great christian institution, you have all learned a thing or two about these gifts and good purposes they can serve. they are yours to have endorsed a share. sometimes, your liberty education will set you apart. and always, it will help direct or path. as you leave, and make for new places near and far, i hope for

each one of you that your path will be long an ally for the kind. -- and life will be kind. the idea that the bride you hear in the friends you have found here, made these blessings be with you always. thank you all of you. god bless you. god bless the united states of america. [applause] ♪

♪ when i think about the love, how he saved me and raised me ♪ the holy filled with ghost. when -- >> you just heard remarks by mitt romney and we want to hear what you think of the former governor's speech at liberty university. the numbers to call on your screen. if you are just joining us via c-span radio, those numbers are 202-585-3886 republicans. 202-585-3887 four independents. mute your tv. if you have an gotten on with us in 30 days, give others a chance to get through.

you can weigh in any time at facebook.com/c-span. we go to helen in greensboro, north carolina. >> hello? >> go ahead. what did you think of the commencement speech? >> i thought it was great. you people in this country need to wake up. we have got a president who said he is a christian. christians do not believe in this homosexual deal -- in the bible, he is doing it for political things. people, wake up. we need to vote him out of office. thank you. >> lloyd on the democrats' line. he is coming from north carolina. hi, lloyd?

line 10? one more chance for lloyd? >> kansas. douglas. >> high. what do you think about mitt romney's commencement speech? >> i think it was very, very good. i am an independent. i look at all points. i would like to understand why his passion was so -- it looked heartfelt today. and why he has had the problems with his other speeches to where it does not seem like it was so heartfelt. he was passionate today. it was excellent. i look at everything. i look at the total picture, not just one person. >> what do you think that will do for him? >> i think it will help him

because i think this was something very, very dear to him today. and, i have had some problems with him in the past with some of the words and phrases he has used off the cuff. today, if he shows this as close and dear to his heart, he will move up in opportunity. >> what douglas is talking about is reflected in an article by talking points memo. the former governor's address was a chance for him to reach out to evangelical republicans after being unable to lock up their support. let us see what mike has to say from florida. a democrat. >> good morning. >> good morning. >> how are you? >> good. what did you think? >> i thought it was excellent. i thought it was excellent.

i am a lifelong democrat. iight have changed my mind when mitt r -- on mitt romney. >> was a the speech or what are you thinking? >> the speech. i had some questions about romney but i thought he was great. i thought it was excellent. it was heartfelt. >> he shied away from policy. you think that helped him? >> yes. he shied away from policy. he had a couple of statements about marriage between a man and woman. i think it was a 10. >> you are a democrat. do you vote according to party lines? >> once. i voted for ronald reagan. twice.

i voted for jimmy carter. then reagan came along and i voted for him both times. since then, i have been democrat. >> will you vote for mitt romney? >> i would say there is a 95% chance. he seems to be positive. kind of like reagan. he has a positive outlook. i feel obama is negative. very negative. we need somebody to lift this country of. that is -- we are the greatest country in the world. >> we go on to marjorie in north carolina. are you there? >> hello. i marjorie. i am from north carolina border. -- i am from north carolina. i think the speech was wonderful. it was a great day for america and for religious freedom in america. i am a christian. i supported governor romney since 2008.

i know he is a mormon and i just -- i am a pca member. i think he is a great man that has a greater calling and he is a family man. he just as strong moral values. i appreciate liberty university for giving him this opportunity. >> will he be able to reach out more to the evangelical voters? >> absolutely. absolutely. i, myself, you know, in 2008, voted for him in the primary. i and evangelical. -- i am an evangelical. and now, i am a presbyterian. i have no problem with his faith. i believe in freedom of religion. i know he is a good family man. i know he is a good father. i know he is a good grandfather.

he will lead our country back to the founding fathers. >> sorry to cut you off. we will move on now to the independent line. joyce is waiting to weigh in. joyce is calling from north carolina. >> yes, ma'am. >> what did you think? >> i thought it was fantastic. >> why? >> i liked the fact, i felt like we need to always put god first. he should be first and foremost in our lives. we need a president to feel that way. >> go ahead. >> i feel like mitt romney is the man for the job. >> will have any problems reaching out to other christian voters? >> well, the only thing about it

is if he does, that is not a very christian attitude. there is not but one god. it does not matter what denomination you are. >> on to pennsylvania. lewis is on the line. >> -- >> are you there? >> la weese. -- louise. >> what did you think? rexene i thought -- >> i thought it was well written. it was not that well delivered. i think that he complains a lot about using a teleprompter, but he uses a teleprompter. i do not understand why there is a discrepancy. >> what did you think about is trying to reach out to evangelical voters? >> i think that is really great.

the separation of religion and state from politics -- i thought he did a good job. i am still voting for president obama for the election but i thought he did a pretty good job. >> we are going to move onto windy -- wendy in west virginia. are you there? >> yes. >> go ahead. >> i thought his speech was fantastic. i am registered as a democrat. i am voting republican because i think mitt romney is fantastic. i think he stands for the good morals and good christian lives that we have. everybody else should see this. i think they need to wake up and look around and see that we have christian man here who will stand for us.

and vote republican because he is the man for the plant. i thank god for him. >> mitt romney, if you are joining us on c-span tv, you some of his remarks from earlier. -- you see some of his remarks earlier. sonya is on the line in arlington, texas. >> hello. >> what did you think about his comments? >> well, the only thing that i think -- i think he has been watching president obama a lot because he is starting to pick up some of his mannerisms. i thought that was very interesting. >> will that help him? >> i do not think so. this speech does not make your policies change. it did not change my mind at all. >> one more call here. jerry calling from texas.

>> i am here. >> what did you think about mitt romney today? >> i am a democrat. i will be honest, as i listen, i have a hard time with the republican argument that we have religious freedom. religious freedom includes those of us who do not have a religion. i think there is too much religious ideology that is trying to beat legislated for our federal government. we are founded on freedom. i think that people need to embrace that as a framework of our country. i think mitt romney's speech was nice and great. if you adhere to those things. it is way off base. >> we leave it there.

i appreciate all the calls today. sorry if we did not get to your calls. you can always weigh in on our facebook page where you can comment on the topics posted and see what other people have on their mind. follow the twitter feed -- twitter.com/c-span. >will show this again this afternoon and tonight at 8:00 p.m. and you can also find the address any time on line at the c-span video library. just a reminder, on monday, president obama will deliver the commencement address at a college in new york city. [inaudible] [no audio] -- >> i thought it was important to

write a book that took people's movements seriously. how did they build over time? obama did not come out of anywhere. -- come out of nowhere. also, the tea party movement. how did it work? occupy wall street. these are important things to take seriously, to look at them as social movements. a. we the people perspective. >> former white house adviser van jones on social movement in america today. tonight debt 10:00 eastern on "book tv." also, modern liberalism is flawed and has no answer for political issue in "the death of liberalism." that is sending night at 11:00 p.m. on book tv. >> i had my ambition to what we're john smith and pocahontas walked. this makes a rectangular space that would be the place where

pocahontas married john rolfe. in 1614. so, i guarantee you i am standing exactly a little deeper than she was but this was where pocahontas stood when she got married. >> later today, to were the jamestown dig with kelso. it has yielded more than 1.5 unique artifacts. take the two were starting at 1:30 p.m. eastern. this of the -- visit the laboratory and join in on the conversation, like it to 30 eastern p.m. part of our "american history tv" on c- span3. [no audio]

>> just a reminder, on monday, we will be bringing you another commencement address from obama. he will be speaking at barnard college in new york city. our coverage will start at 1:00 p.m. eastern here on c-span. -- >> before we start, i would like to ask everybody to please take a minute to silence or cell phones or blackberries. i want to thank all of you for attending today's press conference. today, we are announcing a new strategy to preserve the nation the's smallest post offices. the plan provides a framework for us to achieve significant cost savings to help return the postal service to financial stability. participating in this morning to

techie event are our postmaster general and ceo and our chief operating officer, megan brennan. you'll be given an opportunity to ask questions after the presentation. please welcome the in -- please join me in welcoming the postmaster general. >> thank you. thank you. good morning. nice to see everybody here. thank you. today, we will make an announcement about rural post offices. let me start by saying that the postal service is absolutely committed to providing excellent service across all of america. america's perreault communities play an important role. -- rural communities play an important role. we are part of the social fabric that shaped minty identities. a lot of names are tied to the post office.

we are the meeting place. we are the bulletin board. that is where people meet. we are committed to preserving that role but we play. the plan we will discuss in shores that rural communities in america will be served and what the postal service. rural communities will be served by the u.s. postal service. there are some alternatives to the traditional post office we will talk about today. the bottom line is, any rural community that wants to retain their post office will be doing that. any community that wants to retain their post office, they will do that. most important, we think we have struck a real good balance between reducing costs and our need to serve. given our provincial situation, we will continue to press hard to take costs out of the system and in the plan we are presenting this morning, we will

achieve that end. the plan that we will be discussing today is a result of being responsive to our customers. listening to what they have said. it allows us to meet our obligation for the post -- from the post a perspective while serving communities at the same time. meghan will come up. our chief operating officer. i have some concluding remarks and then we will take questions. >> thank you. good morning. as the postmaster general said, we are making an important announcement about preserving post offices in rural america. last summer, we announced that the postal service was going to review 3700 post offices for consolidation or closure. most of these post offices had, low foot had generated -- had a

low foot traffic or generated little revenue. most were in rural communities. in the past six months, we conducted more than 4000 community meetings all across the country. we listened carefully to our customers in the communities we serve. we also conducted market surveys. we learned that people care about their post office. although they may not use them as much as they have in the past, they appreciate and value them. we took a step back and reconsider whether there was a way to preserve post offices in small communities and at the same time, achieve much-needed cost reduction goals. we believe we have a strategy that does just that. so, we are discontinuing the process we applied to the 3700 post offices and we will begin a new process that gives communities the option to

maintain their post office with reduced window service hours. we believe this will result in very few post offices being closed in rural america. let me what he threw our strategy. i will start by providing a look at our network of post offices. the postal service currently has more than 31,000 post offices across the country. we have a large footprint. we have more locations been walmart, starbucks, and macdonald combined. adding to that, our combined footprint, which represented -- is represented by the red and blue dots, includes more than 70,000 retail partner locations. that is more than 100,000 locations where our customers can conduct postal business. we are working to expand the number of retail locations where our customers can purchase stamps or ship packages.

people may go to a grocery store or a pharmacy or a gas station several times a week. that may be the most convenient location to conduct postal transactions. we want postal products and services to be available where people work, shop come and play. that is why we partner with major retailers like wal-mart, walgreen's, costco, office depot, staples, sam's club, as well as many independent retailers across this nation. the numbers tell a story. today, 39% of postal retell revenue is generated outside of the post office. since 2000, that number has gone from 8% to 39%. this is a significant jump, which reflects changing customer behavior is. where is the traffic going? it is moving on line and to our retail partners.

practically every transaction you might conduct in a post office can be conducted online it usps.com we want to encourage these. -- these trends. it is more convenient and less costly for us. these trends are not limited to the postal service. every retailer similar migration to online platforms. how is this affecting our post offices? in 2005, -- since 2005, the postal service has seen a 27% drop in services, which accounts for 350 million fewer visitors annually in the last six years. people are choosing more convenient options. more people are paying bills online. their purchasing fewer stamps. as information -- over 85% of rural post office transactions are sales. this could easily be ordered online or purchased at a

neighborhood grocery store. we expect the trend in post office visits to continue to decline. this is why we have taken such a hard look at our post office network and the way we provide access to postal products and services. let me take you through the business issue we face. for or 70,000 offices, the average operating cost is $114,000 annually. our challenge is to close the gap between that cost and revenue we bring in. just to give you a sense of the challenge -- the bottom quarter, 4500 post offices, are an average of $50,000 annually. this means we bring in $52 per day, which equates to roughly four. for customer visits. -- which equates to roughly 4 custom.4 a visit. these offices are operated by one employee serving a

community. we operate all of these post offices out of law. our cost of service is increasing and our customer visits are decreasing and these trends will continue. the postal service is committed to rural america. we know that those communities want to keep their post office open. rural post offices are becoming less profitable as customer's use services less often. the postal service is also in an unprecedented financial crisis. it must bring costs in line with revenue. today, we are announcing a framework that balances these competing factors. it is a framework that actually reduces postal service cost by a half a billion dollars annually and gives every community the option of retaining their post office.

there are four options we will be discussing with rural communities. we will seek input on four potential outcomes in rural communities. the first is to maintain the current post office with access to post office boxes and what the services, but with reduced window hours to maximum -- to maximize customer use. with this option we believe that rural post offices can be preserved. in some cases, communities might opt for a different way forward. the other options include providing delivery service using either a rural carriers are highway contract routes. this may appeal to communities that do not currently receive delivery service. next, partnering with the local business to establish a village post office. we think this is a great way forward. the corner store or gas station can provide basic mailing and

shipping services. the stores would be open longer hours and on weekends. it would also help generate revenue in foot traffic for the business. additionally, we could operate in existing post offices for a couple of hours a day and have a local business operated village post office in the same town. finally, despite all the headlines to the contrary, we have actually had a number of communities tell us that they are ok if the post office closes if it means that in neighboring post office remains open 02 hours a day. -- eight hours a day. we might consolidate operations of two post offices into one. however, we will not consolidate rural post offices without first having saw the input of the community and we will only consulted post offices if the community has a strong preference to do so.

oracle is to keep open as many post offices as possible -- our goal is to keep as many post offices as open as possible. that we talk about reducing the window hours. first of all, current access to the law become a post office boxes, will remain the same. -- to the lobby, post office boxes, will remain the same. we will determine the hours of operation based on community input. it depends on what makes the most sense. we heard loud and clear that our customers are concerned about losing their community identity of their post office were to close. with our plan, the community retains its identity and we keep the flag flying out front. this february, we conducted a survey of customers to gauge

their opinion of the four options -- four options. when we had to take some cost reduction, we found the majority of customers would prefer maintaining their local post office with modified hours. and the remaining 46% prefer closing the post office and transferring, setting up the village post office in a retail or community establishment, or expanding and delivery. some communities they wanted village post office. where they could access postal products and services up to seven days a week. still, others prefer expanded delivery services with a voral carrier serving as the post office on wheels. -- with a rural carriers serving as the post office on wheels. at the end of the day, we believe nearly every community will prefer the reduced window

hours and that many will want to supplement their service with a village post office. again, small post offices in rural america will remain open unless the committee has a strong preference for one of the other options described. we analyzed over 70,000 post offices in rural america. based on location, workload and revenue, we have designated over 4500 post offices that will continue to provide 02-hour window services. this post offices are at the center of a cluster of rural communities. we are beginning to review processes for 13,000 more post offices in rural communities. we will ask about service presence. there are actually over 400 communities that we are -- that were told their post office would be consolidated. those communities will not get the option of retaining their post office. -- will now get the option of

retaining their post office. post offices are closed will not be reopened. what is most important about what we are saying today is that no post office will close unless the community has a strong preference for one of the alternatives we have discussed. the implementation of the new plan will occur over two years. we plan to file with the postal regulatory commission by the end of this month. there will be no implementation activity prior to the end of the 90-day review. . then, they will go back to the communities with the four options to preserve small post offices. we are committed to implementing this plan in a responsible and fair manner for the communities we serve. we are projecting the completion date by 2014. now, these changes will affect our postmaster. just a word -- we have the

utmost respect for or postmaster. they are leaders in the postal service and within their communities. for many, they are the face of the federal government. as we work through this process over the next couple of years, we will be working with our postmaster to provide a number of options. these options will include a retirement incentive. approximately 61%, 13,000 postmasters are retirement eligible. we believe that this incentive will be well received. the postal service prides itself on being irresponsible employer. as we make these transitions, we will work closely with our employees and the postmaster association. we want to ensure that our employees make informed decisions about their future. with this plan, we are outlining today, the postal service will be able to reduce costs by half a billion dollars annually. we will not close any post

offices in operation today until we have received community input regarding the four options described. our belief is that very few post offices will be closed over the next few years. our plan achieves many goals. including the preservation of the important role of the postal service in the world marathon. with that, i would like to turn it back to the postmaster general for some final remarks before we open it up for questions. >> thank you. that is a pretty comprehensive plan and again, we will be more than happy to answer questions. let me add a couple of things. this plan response to requests across america to maintain rural services. also, it allows us to take a responsible course on cost. that is credible. the balance between cost and services is an important issue. we think we ended up with a win- win for a rural community plus

at the same time, we are able to take necessary costs out of the postal service. we have listened to customers, the committees that we serve and we will keep listening. we are constantly striving to improve the service that we provide to america and we are committed to moving forward in a very methodical way. it is a two your process. very methodical. we will listen. in the end, we will end up with a good solution for america. let me conclude by stating that the plan we have discussed today is just one part of a comprehensive plan that the postal service needs to undertake to get back onto firm financial footing. our plan for postal -- rural post offices will reduce costs by 40%. to get back to long-term financial stability, the postal service needs to reduce costs by $22.5 billion by the year

2016. this is just part of a way there. part of an overall plan that addresses all of the issues we have from a cost and point in this organization. much of their recent debate around legislation has focused on a small post offices. what we do with them? why do we keep them open? we hope this plan alleviates concern and then we can get congress to get back on the legislative plan and get postal legislation diminished in signed by the president by this summer. america needs a strong postal service. we believe the plan we announced today is an important part of getting us back on long-term financial stability and maintaining our important role across america. thank you again. i would like to take some questions. >> thank you. we would like to take questions

-- each of you identify yourself and your with and try to limit the questions to no more than three minutes. [inaudible] >> we studied over 17,000 offices. the 13,000 will have reduced window service hours. in addition to that, in many locations, we will substitute full-time employees or part-time employees. we are reducing the total work hours as well as the service hours. >> >> any other greater than in terms of -- and the other? >> you said you wanted to close

37 post offices. what is the number you are looking at now? >> there is no plan for closing. we think we have a real good solution to work with local communities. we want to let them work with us in deciding exactly what we do. the options are to maintain the post offices with the log is being opened and access to retail and package acceptance based on the transaction numbers that we have seen. then you have the other options. one of the things that we are stressing is beset keeping them open, there is a good option to continue to contract with local businesses or village post offices, giving people a seven- day access to stamps and packages. >> the village post office -- we have 19 operational. 32 more under contract. hundreds of inquiries. we are working through that

process. we believe adding a village post office is a win-win for both the postal service and the customers in the committee. >> and thank you. let us go over here. john kerry >> good morning -- sean. >> good morning. my name is john. this comes before -- you are not closing any post offices at this time? >> ces. >> regarding processing plants, do you -- we heard from members asking you not to proceed. how we proceed? >> we are finishing plans. >> in regard to rural post offices, is there a definition of they rural post office? >> i would define it as a less centrally populated area. less foot traffic were fewer customers and less revenue. >> finally, are you concerned that you may be perceived as

going down on your plans last year and members will be emboldened to push you to prevent any closures are downsizing? >> this is a win-win. here is what happens -- when we announced the closures last year, part of the problem was having the community meetings. we talked to people. 3700 across the country. i went out and i spent a couple of days in the field in montana a couple of weeks ago. what people said to us is, keep our post office open. if we want the access to our mail -- a lot of us in the room, you get mail delivered to your house. if you are in rural make area, you have to drive to the post office. keep it open. we understand you might have to have shorter hours. we may only buy stamps 1 the month. we do need to get our mail every day. as we look at this, 80% of the cost in these facilities, closer to 90% in a lot of these small towns, our labor-related.

if we shrink labor costs, you can keep the building opened. that is not hard. make sure the customers have access. we think it is a win-win. we think it is irresponsible approach and any company that listens to their -- is a responsible approach any company that listens to their customers will like it. >> the way you describe this, it seems like there will be a drastic change to the work force to have a part-time post offices rather than full-time post offices. it seems you need to make part- time workers out of so many full-time workers. how do you downsize the work force? >> from a complement perspective -- we have reduced the head count in his organization by about 255,000 people in the year -- since 2005.

we think it has been responsible. we have not laid anybody off. we have been very careful as we manage a lot of the issues that we are managing. knowing that the volumes are going down, transactions are going down. so, with that, we have avoided hiring people. today, we employ about 100,000 part-time employees. we are used to that. you have a postmaster that covers monday through friday and then a postmaster associate will be in there on saturday. we have a good long-term history with working with those situations. we have to balance the workload with the work hours out there. we have to be flexible in getting this done. >> we currently have 4000 vacant post offices. i mentioned we have about 13,000 postmasters' retirement eligible. as we work through this transition, we can reposition the work force and in the adjustment -- any adjustments

will work out seamlessly. >> as part of our plan, we have stated we think that by the end of 2015, the postal service has to have about 400,000 people in order to be self-sufficient for financial reasons. that is the basis for reducing that yearly operating cost now. it is not just the $22 billion onetime adjustment. that is how we would operate in the future. we will continue to shrink the work force and work with the unions, look for more flexibility. thank you. >> let us come back over to this side. i will make sure everybody gets a chance. let us start in the back. >> hello. just so i understand this correctly, under the new plan, are you saving more or less than had you gone ahead with these 3700 closings? >> more. we are estimating when we are full up after the transition

the 13,000 post offices, the savings will likely to half a billion dollars. >> ok. therefore, we are looking at 13,000 post offices that will be affected by these changes as opposed to 3700? >> that is correct. we studied 17,000 and we are modifying the window services based on customer use in the 13,000 offices. we are matching our cost with revenue. >> the other thing that is important is that we have always had an intention to look at all of these offices. but it was last november i testified before the senate committee and i told them then that we were looking at 13,000 post offices. we have gone through with a plan. taken a look and come up with what we think is a very good thing. >> lastly, why not talk to people before you announced these closings last summer? i mean, it seems like a no- brainer that if you tell somebody you were going to close

the post office, surely, they may have objected. it seems like you should do that before he made the announcement. why not? >> as you look at closings or consolidating or any changes with the post office or any facility, we are regulated organization. we have to follow a regular process. part of that process is community notification. what happened was, when we went out with a committee to notification and said we were going to review 3700 offices, everybody said, you are closing. as we talk to people, we have learned a lot. we learned that a long -- a lot of the people said i just need access to my mail. i do not get mail delivered to my house. give me access, that is great.

we can work with the hours. make sure that my post office, i can get in there. if we heard what the customers have said, that is what has allowed us to change our thinking. rather than saying that we took the wrong approach, i would like to think that people have taken the smart approach, listening to the customers and try to decide what we can do financially and at the same time, meet the customer's wishes. >> another question right behind. >> again, and to clarify -- are you saying that these 13,000 post offices that you have identified will pick one or more of the four auctions? >> after labor day, we will resume meetings because we will present the four paths or options to the community. they will have options. our history has shown us that many opt for either alternate access -- we will have an engagement with the timidity.

we will make a decision about what is the best way to serve those committees. >> there is no wholesale closure. the option of keeping the post office open does require some negotiations locally as far as the hours they would be opened. we have done studies. we will be putting out lists of what will change from a daily work our -- retail our perspective. we will work with the customers. they may -- we may say we may be open six hours per day and the customers might say that we would like to be open from 10:00 a.m. until 4:00 p.m. that is the flexibility we are looking for. keep them open, at another post office. there are communities that might say that they are only a mile away from another post office. consolidate it and i can go up there. >> the part-time/fulltime switch

will be something that could happen? do you anticipate that happens that most of the ones you are speaking with? >> we will determine the labor force in those respective offices. there are employment opportunities in many of these communities for part-time opportunities. >> would say, you need to reduce your hours to this many part- time? >> we have studied the 70,000 offices end of the 13,000, based on customer visits and sales, we determined the appropriate hours to match the customer use. >> could you say one more time -- i did not catch it. what will be announced next thursday? >> we have networks changing. we will talk about that next week. >> let us go back on this side. right over here. >> a couple of things.

can you tell me how you arrived at the savings of half a billion dollars? i am not clear on how you racked up that figure. >> yes. it is a combination of reduced man-hours and a reduced cost of the work hours. in many locations, we are substituting a part-time employee for a full-time employee. >> the reduction of the hours by the employees, is that primarily with the savings is? >> that and the cost of the work hours. the total number of hours utilized and the cost of bad. but and those does a bit of foreclosure -- >> and those designated for foreclosure, now they will have the option to have reduced hours or a village

post office. >> potentially both. >> how do you determine these numbers of reduced hours? is it based on foot traffic? how are you determining what will be there? >> of those 17,000 we study, we looked at work load, customer visits, the revenue or sales to determine the customer use. and we matched that with the hours. >> the other thing we did is we estimated the hours needed higher than what was actually being news -- being used, giving the customer flexibility. the thing that we looked at with the regional 3700 that we were steady in -- that we were studying, most of those offices have less work on that basis. and we -- as we went back and

determine the workload, we established a number of hours provided. >> thank you. >> you said that 13,000 of these postmasters are eligible to retire. is that true as well? but the 13,000 postmasters, that is across our entire organization, not necessarily matched to these offices. >> any details on the buyout packages? >> we will announce incentives. it will be two payments and it will be the end of this year and then next year. $20,000 total, $10,000 each year. for small offices, it would not be the same. it would be prorated based on their salaries. revocable thousand out there now that are open for a few hours.

there would be some adjustment there. >> on the original list of 3700, there were some in urban centers with low foot traffic. what happens to those? >> we continue to look at our entire infrastructure. currently, there are 800. there will be no action taken on those. about 39% of retail revenue is generated through alternate access. that will continue. in urban areas, there is an opportunity for alternate access opportunity. we will balance that as we look at the hours of operation. >> let's go back over here. james. >> what level of consumer push back, of customer push back is needed to save the prices off of it? are you going to take a simple vote at these meetings?

you mentioned that you would then go back and review after those meetings. of what importance with the community opinion take compared to your that assessment? >> customers will vote with their feet. if they continued to increase revenue for more visits, we will be reviewing these on a yearly basis. if we have fewer visits, we will have fewer hours, just like any other organization that operates a retail establishment. the key thing here is, again, reaching out and listening to the customers, making sure that they had access to their mail. that answers a lot of the issues. >> let's go behind james.

>> the labor contracts, they out or do not allow for part-time work? and do you need to negotiate this massive increase in part- time work? thing, these, first of all, are not contract hourly employees. these are postmasters. we have the ability to establish different levels of employment with different types of compensation based on how we work with our postmaster associations. that is what we did in this case. >> you do not need to negotiate this with the union. >> this is not a negotiation. >> to what degree is this decision in response to house republicans who are not happy with the senate bill and have asked the postal service to

find more savings, and who are reluctant to give the postal service what they described as a bailout? >> when we went out last year and we heard the customer's and the issues that were brought up, we set to work back then. this is not something we just came up with in the last couple of weeks. we have been working through this plan. we have sat down with each of these -- as you mentioned before, the labor unions. not labor unions. we have postmasters' association. we sat down and worked with them for solutions going forward. it has been a good work in progress. a lot of thought and communication about seeing if some of these ideas will work. we think this is the right solution going forward, whether it is a senate or house issue. take that off the table. people have said you need to provide service. will provide service.

take that off the table and let's focus on retirement and health benefit issues. let's resolve some of the other issues about first-rate funds, flexibility of new products, so we can get this organization back on firm financial footing. let's address the big items and get this legislation done by this time. >> one last thing. the part-time employment, these people will not have benefits, is that correct? >> in a larger offices they will be career employees and will enjoy some benefits. in the smaller offices, they would not. the two to four hours employees, would be strictly part-time employees. >> in addition to the early out option, you are also moving people -- some full-time work to part-time work. and those are the savings?

>> ees. >> it sounds like you have calculated how much you will save in the hours. how many employees will not be moved from full-time to -- will be moved from full-time to part- time? >> roughly 9000 offices will be part that -- part-time employment. >> how many employees would that be? >> that is roughly equivalent in terms of manpower. >> could you also clarify -- you talk about the range of hours. what would it be reduced to? >> 2 to 6 hours. >> from eight hours? >> garecht. -- correct. 4500 of the offices that we study would retain the full window service. >> and nothing will happen before the 90 day review timeframe. does that mean these post offices have the option of contesting or choosing or not

using any of the options? >> the way the process works is that we take the recommendation. this is what is conservative -- considered a national service change. by law, we have to take that to a regulator to present an opportunity for people to debate back. they will get us rolling and we proceed from there. where we work with the community is at the point of providing the committee with the outcome of our surveys. it is pretty much knowledge of the hours they will be open and establishing what time of day that service will be provided. >> what is a village post office? >> it is a contract with a local company. let's say, -- we have been trying to figure of how to provide additional service in rural areas that we enjoy in urban areas.

today, you can go to cosco. cosco sends -- sells millions of dollars, tens of millions of dollars worth of stamps. the idea was, how do you and send a local gas station, a grocery store that may be the only store, the only existing outlet there besides the post office to accept packages and sells stamps on a seven day a week basis. >> the employee of the village post office would be? >> that is the store owner. it is a small contract to allow the services. >> the plan is to have a village post office clothes and then a local business would take over? >> that is not a plan.

the plan is to have a local business provide service as well. the idea would be, if you need to dance, you can go to the grocery store locally and we work with them to provide the same service. >> anybody else over here? >> i have a couple of questions about the numbers you are putting out. there were 17,000 post offices reviewed, correct? >> correct. >> and 13,000 were designated as needing changes. >> correct. >> and 9000 of those are going part-time? >> no, the window service hours will change. i want to distinguish between the employee tides and the hours of operation. i can get you the actual number at the end of the press conference. i want to verify my numbers. >> ok. and you said 4500 of the 13,000

are keeping the same hours. >> 4500 of the offices we studied will retain eight-hour window service. >> that is 4500 coming from the 17,000. >> correct. >> it is pretty much 4500, -- i'm sorry, 17,000 to 13,000, 13,000 to 9000, and then 4500 at full time. >> why don't we start to wrap up. any other questions here? >> you are offering retirement incentives to all of the 21,000 postmasters. >> yes. >> and 13,000 are eligible to retire or may accept the buyout. >> yes. >> will there be any reduction in force if you do not achieve these savings that you are looking for through work-force

reductions? >> there is always a consideration of reduction of force, but we have been pretty good about finding jobs. besides the fact that a person would take a buyout, there are some other options that a person at a higher level can take a buyout, somebody can get a promotion. there are other jobs that someone may go to also. we work with people and try to provide them as much council as we can to find a good landing spot. >> it is options other than the retirement as a possibility. >> many options. we are very proud of the fact that we work with people to find options. >> anyone else on this side that has not had a chance? let's come back to sean and then we will wrap up. >> a couple of things. one, are you confident of

getting an opinion within 90 days? >> i certainly hope so. we cannot sit and wait on these issues. we will provide the prc with whatever information they need and we are looking forward to wrapping it up within 90 days. >> have you had any discussion with some of the major congressional components? have you gotten input or feedback from them? do you think this will satisfy them? >> i have had a discussion and we will see as far as any other questions they have. i think we've had some good discussion. answering the questions about providing service, that is the key. and the fact that we provide access to mail and we do not require them to drive long distances, especially west of the mississippi. >> do you have the agreement of the two main postmaster associations on this? >> yes. >> have a they objected in the past two closing of outpost?

>> ees. -- yes. we will have postmaster relief in the smaller offices. >> what does that mean? >> these are the people who fill in in the small offices, non- career people on, let's say, a saturday when they are off on saturday. >> any idea of what the cost of the -- the total cost of the buyout will be? >> we have done the math with some estimates, but no idea at this point what the final will be. >> that wraps up our formal questions. they're willing to stay couple of extra minutes if you want to ask additional questions. we will come down onto the floor. thank you everyone for your participation. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> on quoting newsmakers north dakota senator john hogan. he talks about energy and spending issues. that is sunday at 10:00 a.m. eastern on c-span. >> these men go through things and have scars that no one can understand and accept each other. >> the first thing that sort of us was the relationship between harry truman and herbert hoover, who were two such politically and personally different men, and ended up forming an alliance that neither of them would have anticipated. it ended up being enormously productive and form the foundation of what became a very deep friendship. the letters between them later in their lives about how important it had become to one

another were really extraordinary. >> co-authors michael duffy and nancy giggs on the private and public relationships of the american presidents, from dreman and hoover to george h. w. bush and bill clinton. sunday at 8:00 p.m. on q&a. >> an outline of efforts to help homeowners refinanced home mortgages. administration proposals include allowing universal refinancing of mortgages and covering of closing costs for underwater homeowners to refinance. this is just over 90 minutes.

>> while the committee continues to be concerned about the long-term structure of the housing financing system, today's hearing takes a closer look at what the strategies are to improve the struggling housing market. during our hearing on the housing market, several witnesses, including secretary donovan, discussed the need to expand refinancing opportunities for grounders -- borrowers with their mortgage. i would like to discuss this in greater detail. in january, the federal reserve released a white paper entitled "the u.s. housing market: current conditions and policy considerations."

in his paper, the fed contended that continued weekends in the housing market -- continued weakness in the housing market will affect and be a barrier to economic recovery. one of the barriers in the white paper are the obstacles to refinancing at today's low interest rates. the administration housing plan also identifies removing barriers and refinancing opportunities expanded as a solution. a continue to hear from constituents and the housing ministry that more could be done to encourage competition in the refinancing market and give homeowners more options. during the hearing in the

housing and transportation subcommittee two weeks ago, senator mendez outlined legislation he and senator boxer are working on to expand refinancing opportunities for borrowers with the gst held loans. . gsr-held loans. i look forward to discussing that today. i share the concern that's ongoing challenges in the housing market are a drag on economic recovery. as we have heard several times in this committee, there is not a silver bullet solution facing the market, but several options implemented together could provide stability to the market. i hope that this committee can

work in a bipartisan fashion to find practical solutions to help overcome the barriers that are weighing down our housing recovery. with that, i will turn to senator shelby. >> thank you, mr. chairman. welcome again secretary donovan. you have been here a lot. we appreciate it. today, the committee will consider ways to aid our troubled housing market by expanding refinancing opportunities. while this topic is time, i think it is disappointing that four years after bursting housing bubble, the committee has still not produced a comprehensive housing legislation. as a result, little has been done to address the serious problems in our housing markets. fha, for example, still needs to be reformed. foreclosures remain, as the chairman mentioned, at record levels. millions of mortgages are under water and fannie and freddie

continue to lose money at the expense of the american taxpayer. in fact, while the taxpayers have spent almost $190 billion bailing out the gse's, the only work product we have received from the administration is a brief discussion piece that lists three policy options, but does not make any recommendations, mr. secretary. meanwhile, millions of dollars have been spent on programs like camp and the so-called hit fund. none of these programs have achieved the expected results. admittedly, the problems facing our housing markets are very complex, as he reminded us. and there are no easy solutions. finding answers will require careful study and crafting legislation based on facts and rigorous analysis. unfortunately, rather than doing

the hard work required to solve problems, some have chosen to create scapegoats, blaming certain regulators for not undertaking massive principal reductions. it may make for a good one day news story. but it is not an effective means for solving the problems plaguing our housing market. plus, paying banks billions of taxpayer dollars to write down mortgages is another back door bailout for wall street. given how the administration now praises tarp, maybe another wall street bailout is just what it wants. the american people, however, are tired of bailouts. it is time to take a more serious approach to fixing the housing market. as i have stated before, my republican colleagues and i are willing to work with the committee to craft effective bipartisan legislation. the committee is the best form, i believe, right here to facilitate careful deliberations and meaningful

compromises. in contrast, by bypassing the committee and proceeding directly to the floor with any legislation will almost certainly result in partisan gridlock. the majority's decision without it will proceed with any housing legislation will likely reveal whether such legislation is a serious effort to solve problems, or another effort to highlight differences at the expense of real compromise. i believe the american people have already waited four years for housing reform legislation. and i welcome this hearing, mr. secretary. only time will tell whether the american people will be made to wait even longer. thank you, mr. chairman. >> thank you, mr. schulte. are there any other senators who wish to to make an opening statement? senator reid. >> thank you, mr. chairman, for

holding this hearing. i have to go to the floor as part of the debate on the prevention of the increased in city loan interest rates. but i do want to thank the secretary for all of his efforts. let me personally commended senator mendez for his thoughtful proposal. we have been trying over the last several years to do many things to support and revitalize the housing market. i do not think there is one magic solution. it is many things. in that context, i'm very pleased that the administration has finally taken an interest in the rental initiative, taking some of these properties on the books for the banks and putting them back in the market as rental properties. i also understand your discussing project rebuild. i am pleased to work with you in this regard. i think it is important to make the two available as quickly as

possible, deploy them to keep people in their homes, minimize foreclosures. and also to provide a floor, essentially, to the housing market, and hopefully be able to see it appreciate in a thoughtful and measured way. mr. secretary, thank you for all of your efforts and your commitment. and thank you, mr. chairman. >> anybody else? >> thank you, mr. chairman, for this important hearing. and mr. secretary, thank you for joining us again. as i have said many times, we need to fix the housing market now to get the broader economy moving again with creating jobs. it must involve multiple strategies to attack the problem from different angles, and refinancing should be one of those strategies, particularly for borrowers who are making their payments, but whose interest rates are at 4% to 5%. that is why in the next few days

i will be introducing with senator boxer a widely supported bill called the "responsible homeowner act of 2012." it is supported by borrower groups. our bill was held 17.5 million borrowers who are trapped in interest rates above 17% because of a ban on merika -- refinancing. we have a popular and common- sense way to help the housing market. moving a loan from 6% interest to a loan that is 4% interest, for example, would put more money in their pockets, reducing defaults and

foreclosures. i also like to thank senator franken for working with me on the put back list provision, which is similar to a provision he introduced another bill. our bill does not propose refinancing private loans through the fha, or the administration's proposal to agree to a shorter loan terms or paying closing costs. finally, some, but not all, of the refinancing provisions were addressed in the affordable refinance program expansion, also called harp 2. it removed loans for underwater homeowners. fhfa scaled-back liability for representations' and warranties, which was seen as an obstacle for refinancing loans for same

service or refinancing in harp 2. but they did not -- we need to inject competition and market forces into this market, where services have an unfair monopoly on refinancing certain borrowers who effectively have no choice but to use their original lender. one of the best aspects of this refinancing act is that according to preliminary cbo estimates, it will stop bailouts and save taxpayer money because fewer homeowners will default if their mortgage payments are lowered. therefore, we have been told that we do not even need to consider some of the points we were going to add.

i think this is a slam-dunk for both homeowners and the taxpayers. we look forward to working with the chair as we move forward. >> are there any other members who wish to make a statement? thank you all. the record will be open for the next seven days for opening statements and any other materials you like to submit. now i would like to introduce a witness who is no stranger to this committee. secretary sean donovan is the 15th secretary of the department of housing and urban development. secretary donna and has served in this capacity since january -- secretary donovan has served in his capacity since january, 2009. you may proceed with your testimony. >> thank you, chairman johnson, ranking member shall become members of the committee. thank you for this opportunity to testify about initiatives to help american homeowners

refinance their mortgages and build equity in their homes. this comes at a moment when our housing market appears to of turned a corner, following the best winter of home sales since the crisis began. indeed, with interest rates at historic lows, more than 14 million homeowners have refinanced their mortgages, putting nearly $27 billion a year into real savings and in hands of americans and into the economy. more than 5.9 million modifications have been started in last three years and the number of families following -- falling into foreclosure is half of what it was in early 2009. because we have helped communities struggling with concentrated foreclosures, places with targeted neighborhood stabilization investments have seen vacancies fall and home prices rise. most of all, our economy has added private-sector jobs for 26 straight months, totaling 4.2 5 million jobs. to create an economy built to

last tonight we need to do more. as i discussed before this committee into eureka my range of barriers keep struggling borers -- this committee in january, a range of various -- barriers keep struggling borrowers from getting the help they need. consider judy from tucson. she is in a mortgage with a 7% interest-rate and cannot refinance, not because she has ever been laid on a mortgage payment, but because her home like half of all homes in arizona is under water. not being able to refinance not only prevents homeowners like judy from refinancing, but also saving thousands of dollars each year and it also keeps our economy where it is. by the end of the year,

servicers war ramping up their operations for harp 2.0. they are processing applications as we speak from 750,000 homeowners who stand to save an average of $2,500 per year, at the equivalent of a good size tax cut. indeed, nationwide refinancing was up over 100% in march compared to a year earlier. and in the hardest-hit states like nevada where i travel last week, they have more than tripled. we expect these numbers to continue to rise when we dramatically cut fees for fha refinancing next month. but it is still not enough. i want to discuss the four legislative proposals supported by the administration to ensure every responsible our work -- borrower an opportunity to access.

-- to act as equity. the program includes features to minimize program costs, including establishing loan to value limits. lenders interested in refinancing deeply under water and loans would need to write down the balance of the loan before they qualify. it reduces the strain on the borrower to the taxpayer. and while it would be run by the fha, but -- it would be completely financed from a separate account. through this, we can eliminate any unexpected cost to the taxpayer. the second proposal, as developed by senators mendez and boxer, but would clear barriers to refinancing for borrowers with gse insured loans.

there remain response of our worst -- responsible borrowers need our help. to insure hot -- to ensure more homeowners have access to the deal, it removes unnecessary hurdles like unnecessary appraisals, which will help borrowers in at less active markets. this will go a long way to save taxpayer money. we also need to ensure our hrs -- ensure borrowers access to the equity in their homes. it is how most people save for their children's college, started business as well as save for retirement. the program would give all under water homeowners who choose to

participate in these programs the opportunity to apply for refinancing to build equity in their home. about $3,000 on average will be paid by the gse's and to be eligible, borrowers agree to a term of no more than 20 years, providing a path to get their heads above water faster. the second thing i want to discuss is the project billed back introduced by senator reed. it would help the places that need it most and create 200,000 jobs. the second a foreclosure sign goes up on your block, your home value drops by as much as $10,000. as the neighborhood stabilization program is proven, we can halt the slide in home values in the start of places. according to data hot off the

presses, three-quarters of those through the first two rounds shourd largely increased prices. it is why we believe project rebuild is not only an investment in jobs to rebuild abandon or vacant homes, but also those who live next door. this is about the millions of families who are playing by the rules and doing their fair share, in many cases more than their fair share. these families have not walked away from their obligations. we cannot walk away from ours. it starts with ensuring every responsible adults and america regardless of the kind of loan they have, has the opportunity to refinance. and rebuild equity not only in their home, but in the american dream. that is what it will take to create an economy built to last. and that is why i look forward to working with this committee and with congress to enact it.

>> thank you for your testimony. as we begin questions, i will ask the clerk to put five members -- five minutes on the clock for each member. mr. secretary, pertaining to fhfa expanded loans that encourage refinancing into shorter-term mortgages. did those changes go far enough? if not, what still remains for borrowers? >> [inaudible] are critical and have made an important difference. as i said, about 750,000 applications judged for the largest lenders being processed right now. the key remaining barriers that we see, one is, we have many

families who are above water on their first liens. in other words, they are at 8% or below, but because they have second liens or other debt or for other reasons, they are being stopped from refinancing. extending harp 2.0 to include above water borrowers will be critical. and there are steps to increase competition among borrowers, that is one of the key issues we have. servicers to do not currently have the loan are being discouraged from refinancing those loans. there are a number of underwriting changes and others that would help create more competition and lower the cost of refinancing. and the third is that because there are certain markets where automated appraisals are hard to do, there are about 20% of

farmers -- borrowers, those that would otherwise be eligible be2.0 have reduced costs because of the appraisal. we want to extend that to those borrowers who are locked out of the market. given that the risk is already there on the gse's balance sheet, we think these are prudent steps that will help the economy more broadly, but also the taxpayer by lowering the risk of read a fall for those loans. -- redefault for those loans. >> what are the steps that regulators can take to encourage administrative authority? >> i think we have taken most of those steps. we believe that many of the

steps i just described could actually be taken under existing authority. and we would urge that fhfa implement a number of them even without the legislation being passed. but we think there are some critical places where the legislative authority is required because of legal uncertainty. the legislation remains critical to pass as quickly as possible. >> i have heard from constituents and many groups across the mortgage industry that the put back risk, the risk that the gse's would return the ,oan to a bank's balance sheet has stifled competition among lenders and community banks. what impact is this having on consumers? and how can this be addressed to encourage competition in the

mortgage market? >> this is an important piece. essentially, what is happening is that the original servicer who may have made that loan, if there were mistakes made in originating that loan, a new servicer is concerned about taking on what we call votes reps and warranties, even though they were not responsible for the original loan when it was made. what we have done through harp 2.0 is removed many of those barriers. however, there continue to be differences between the way fannie and freddie are implementing that, and also differences in how above water loans and under water loans are treated. it does not make a lot of common sense that a homeowner who actually has more equity in their home and is, if anything, a lower risk bar were --

borrower would be locked out of refinancing relative to those other borrowers are also under water. it is a question of fairness to mention that these refinancing opportunities are available across the board. >> you have previously stated that the best way to protect the taxpayer is to ensure that loans currently on fha's books continue to perform. how would expanding refinancing opportunities accomplish this? >> this is a critical point. and this is something that economists across a broad spectrum -- i know you had testimony from chris mayor, lori goodman, and many others recently to this committee about the importance of refinancing overall. the fed has spoken very clearly

about the ways in which reductions in payments that average 2502-$2,500 to $3,000 a year could boost -- $2,500 to $3,000 a year could boost spending. the broad case has been made that this is good for the economy. i would add that for every point, additional point of increase that we see in home prices -- as the economy mit improves, we see substantial benefits to the fha and to the becausecause not just defaults go down, but as the economy recovers, the rates are significantly lower it was estimated a $20 billion benefit the default rates.

depending on the take up, those may be at the high end of the range, but clearly, there are very significant benefits that come not just to the economy more broadly, but directly to the fha and the gse's as the housing market improves overall. >> the administration housing plan would also explained -- expand gse service into non-gse borrowers. you mentioned previously the potential risk associated with these loans. as part of that protection, do you have more specific recommendations for the standards these loans would need to meet? >> absolutely. i would start, mr. chairman, by reiterating that these are

homeowners that are currently paying. they must be current on their loans and have made every payment for the past six months, missed no more than one payment in the last 12 months. they are already relatively low- risk loans, and by lowering their payments, they are even lower risk. in addition, we have a number of criteria in terms of credit scores, employment, and other terms we would put on top of that to help protect this. and then two other things that are critical, one would be to create a completely separate fund different from the mmi fund dedicated to a revenue source to offset any unexpected costs. and perhaps most important, a requirement that deeply under water loans that all the data show would be the most risk of these loans because of the greater likelihood of default

over time. those loans would have to be written down of a loan value of 140% or lower in order to refinance. our information shows that those loans below 140% would be more likely to be sustained over time. riding down anything higher than 140%, we are mitigating any -- a substantial portion of the high default risks. >> the secretary donovan, from your testimony before this committee in february, i submitted a -- a question for the record requesting additional data on the president's proposal to allow borrowers with private- sector loans to have -- to refinance with fha backed loans. yesterday i read a statement that hud does not have official

rates or other performance parameters. since the administration admittedly did not have the key data, it seems to me, for evaluating the proposal, what is the basis for your support of this proposal? and without this data, how do you know is any risk to taxpayers? that is our concern. >> absolutely, senator. one of the issues here, as we have talked about before, these are voluntary programs. we have a broad range of estimates of potential take up. we would be happy to meet with you and share more detail, or with anybody in the committee, on the specifics. our estimate is that there would be with some of the restrictions that propose, the upper end of the potential cost is about $5 billion and we propose at offset that would need that.

we would also be willing to work with the committee on refining, for example, the 140% loan to value criteria. the lower the take up would be, and certainly, the lower the cost. our estimate on the 140 ltv -- but many of these criteria, we are happy to work with the committee to refine that eligibility and overall costs. >> you share my concern about the overall solvency of fha, which is under your jurisdiction? >> i continue to focus on very heavily, as we talked about at the last hearing, on a series of steps we can take to strengthen the fund. we recently announced some premium increases on a range of loans, as well as published a new rule on lender indemnification that will be imported in terms of protecting the fund.

but i do think we are taking a broad series of steps that are necessary and important to protect the fund. >> the latest actuarial report states that the fha capital ratio is only 0.24%, my below. how quickly do you plan to increase the fha capital, and will it be above the statutory required to%? -- 2%? capital is the best way to ensure that fha does not need a bailout for the taxpayers. and do you think a 2% capital requirement is adequate? we are a long way from 2%. to protect the taxpayers from bailing out in the future? >> the fha last year projected that the capital ratio will return to 2% by 2015. since that time, we have had

close to a billion dollars in recoveries through the mortgage servicing settlement, and significantly increased premiums. i do not have a prediction beyond what the actuarial said last year. we will actually wait to see what the actuarial says this year in terms of the modeling. but we have taken a number of steps that would accelerate to the 2% ratio. cdo did score the projected receipts for fha and ginnie mae close to $10 million for next year, $1.8 billion. higher than the administration's estimates. >> if a private mortgage insurer held only 2% capital, that would be adequately capitalized? >> i think given the way our

reserves are projected and calculated, it is quite different from the way the private sector does that. i do not think it is an apples to apples comparison. my sense, and we are evaluating this given the lessons that we have learned. i will not say today that 2% is adequate. it is worth discussing with the committee and looking at whether it should be revised. but i do not think we should make the mistake of comparing the 2% because it requires, for example, 30 years of projected losses. typically, banks are holding against a much shorter window of losses. those are differences that i think are important to look at when you think about comparing the 2% to the way stress test and others are done. >> we do know that capital is important, isn't it? >> absolutely. absolutely.

>> one more question if i can. deborah lucas at mit, in conjunction with the congressional budget office, released a paper into a timbre of last year that models the effects of -- in september of last year that models the effects of the mortgage financing program. it discusses the economic impact that could result in the losses by investors in mortgage-backed securities. are you familiar with this paper? >> yes. >> did you dispute its findings? >> we clearly have modeled into the net benefits, and i think the fed and other economists that have looked at this do calculated in the lost interest payments to investors as part of this. even though there are, as you have said, losses that would be taken by investors, there are significant net benefits overall to the economy from those savings.

>> thank you. thank you, mr. chairman. >> senator mendon says. >> thank you, mr. chairman. thank you, mr. secretary for your service. you mentioned in your testimony that lenders in the harp program -- that borrowers are saving as much as $2,500 a year, which is the equivalent of a big tax cut for them. am i clear that it does not include the additional savings if we get the menendez-boxer draft bill? >> there is no question that you would both increase the savings to families that are already planning to refinance, and you would make additional

homeowners eligible, or make it economic if you will, to refinance. you would increase the number of those refinancing, as well as expanding the pool of families we would expect to refinance. >> you have any sense of how much additional borrowers could save? let's just looking at the appraisals, -- >> just looking at the appraisals, we're talking about hundreds of thousands -- hundreds of dollars just based on the borrowing costs. when you add to that some of the fees, for above water borrowers who may already be refinancing, you are looking at adding hundreds, and in some cases even as much as $1,000 a year in potential savings. with the reductions we have announced that go into effect on june 114 f.a. jabr are worse

, the feesborrowers alone are estimated to be about $1,000. >> so if i am attaching the leaky roof in my home, i will be in a position to do so and it also increases the value of the home. am i correct in assuming that fha would actually save the gse's defaults because of laurean mortgage payments? >> all of our modeling suggest there would be significant savings in terms of lowering the default rates. a professor at columbia testified about specific numbers that he expected that exceeded

$20 billion. our expectations of take up are somewhat lower. but still, you are talking about substantial sums that could be saved from lower default. >> we have the professor at our subcommittee hearing a few weeks ago that suggested that the rule resulted gse profit is as much as $27 billion. you are talking about significantly saving taxpayers' money and reducing the size of fiscal challenges in the future. the other question i have is, do you believe that the harp 2.0 policies, some implemented by thegse's and some by services -- servicers themselves, are robbing homeowners of savings through lower interest rates? i think we tried to address

that in the hearing. >> there is no question that while many of those barriers to greater competition were removed by harp 2.0 that your bill targets -- and your bill targets the critical remaining areas. i will give you a quick example of what has happened to this point. because servicers who currently serviced the loan and already have all the data through the gse systems to refinance, they only have to do a verbal confirmation of employment in order to proceed to refinance. other servicers who would want to compete to refinance that loan still have to go through it fuller underwriting in those systems, including, for example, getting all of the documentation not only around employment, but in come. given -- that already exists on the gse books, but do not make

sense here. and because they have already been removed for the existing service are, we ought to go the next and make sure there is competition. i think lori goodman estimated the potential savings was as much as $15,000 per borrower by the increased competition on the refinancing of these loans. >> i think we had about six witnesses representing a wide range of views in that panel. there was unanimity on the view that asking for all of that documentation when the risk is already there was not necessary. and actually added an obstacle toward refinancing. it was interesting to hear that even some of the most conservative members of the panel had that opinion as well. >> mr. secretary, i thank you for your testimony today. it was indicative of the

secretary that i have grown to respect. i appreciate the way you have come in to talk about these bills. i might not agree with every comment, but i think you for your -- thank you for your testimony. i attended the hearing. i thought there were some good witnesses. there are some qualities to the bill, and some things that i think need to be changed. i'm hearing rumors that some of these bills might go straight to the floor and not come to the committee. i'd think you can see people have come to think that not much will happen of consequence. we have not dealt with a technical correction bill, which people would like to see happen. i am pleading with you today to please not let a bill that could

result in changes go to the fore and turned into something that is certainly not that. i hope the chairman will not let the rumors we are hearing become reality. i want to get back to mr. secretary. i know you spent a lot of time on may aig settlement. one of the things that is coming out right now and we saw this on the front-end, but the servicers, the big banks that most have been upset with, including it seems, this administration, the big banks have the ability to get 45 cents in credit for every dollar that day cramdown of private investor money. most understand that is 401ks and other investment vehicles.

i think all of us want to see the private sector back in the business, debt settlement has frosted most of the people we talked with on the private side because they have no control. they have invested in many that did the not-so good things in this arena. i just wonder if you have that much pushed back. i am sure you head for the private sector side. they said they did not have a seat at the table. knowing of your background, that surprised me. >> look. there are key issues here as we have said earlier in terms of the complexity of how you get progress on these loans. it was very important to us as we went through the settlement that we were clear that any of those write-downs that happened

need to be net present value positive, and what that means is they would be a benefit. this is one of the points we have been in discussion about. we went back based on those concerns and got the servicers to agree to use a standard model, and the broader hamp model, which was substantially better than what we had before but we continue to hear concerns about the model. we are working to improve it. the fundamental idea is i agree with you. the investors should not take the losses, but where there are- value positives, those should go

forward. i agree there is a fundamental problem of second liens standing in the way of more progress on these loans. we did require significant write-downs and in -- extinguishment of the liens. we are talking about whether there are further steps to take to go beyond that that would be satisfactory. what i do not think we should do it is allow second liens when there really were not rules of the road. there were no rules written about how to handle those. we have tried to create rules that would force the reduction of the second lien, and we have lenders that hold those that are standing in the way of refinancing that would be good for the homeowner and the

economy one of the key provisions would be to remove some of those final steps, barriers that they are providing. this is a real issue. the problem is, in a world where there were not rules, how do we create world -- rules after the fact? what i do not think is acceptable it is to say we will not try to make progress, not make progress on those simply because perfect is the enemy of the good. >> i understand that. on the second lien portion, i look forward to looking at the details, but it seems the servicers are the second lien holders in many cases. >> that is exactly right. >> candidly, should the sickening automatically be extinguished? why would we did any credits at all to a second lien when you

are writing down any portion of the first lane? do you agree with that? >> there are cases where what you are talking about is a first lien that might be delinquent, and a second lien that is current, right? >> iraq understand, but you know why they are doing this -- i understand, but do you know why they are doing this? >> the loss was the second takes all of a law -- law says the second lien takes all the loss on that. we cannot impose that unless there were legislation. i agree that we are not in a perfect place. on the other hand, we cannot wait for a perfect thing to make progress. >> i understand. i would just say to send a tremendous through the witness, i did not know that i can talk directly with him, that this is

something we ought to look at. the servicers, in many cases, have the second lien, and the mortgage holder is paying a much higher rate and staying current. what we have done is allowed any to exist as an atm machine, and we of created a huge problem for people. i hope that we will absolutely, totally, extinguish any second mortgage before we allow one penny of first mortgage to go away. that is the way a second lien works, and i hope we will clarify that. this is to the benefit of the servicers that have helped create this. having the second lane as the same priority, -- let me ask one

last question. qualified mortgage, that has to be troubling, the way the consumer agency is looking at a qualified mortgage and basically trying to determine whether there will be a safe harbor. if they checked the box is, they have made a valid loan. they are looking at rebuttable presumption, which allows them to come back on originators. that seems to be a huge problem. is that something that troubles you? >> i will admit i am not an expert in the specifics of the rebuttable presumption against the hard test for complete removal of any liability on a

safe harbor. my understanding is, and i think this is true of a number of lenders, is as important as whether it is a rebuttable presumption or a safe harbor, how bright line the testing is. if we could get to a standard where there is a clear right line under rebuttable presumption, i think that would satisfy most of the concerns that i hear about whether there would be liquidity available. it is not the same as a safe harbor, but i think it is as important if not more important to be looking at as just the difference. >> thank you. >> thank you, mr. chair, and mr. secretary, for your testimony in your work on these strategies

to try to address the challenge of refinancing, the. early -- particularly families under water. i appreciated the comments about the advocacy for a way families can choose between refinancing to lower monthly costs, or refinancing to get themselves out of the position to be under water and expedited. the statistics and the analysis shows that half of the families sticking with the same rate would be out from under water at five years, and that is a fairly powerful observation to bring to this. i am pleased to be able to introduce the rebuilding equity act in order to capture this concept and see if we can take this forward in the senate. i wanted to turn to the non- fha, non-gse challenges of the

families under water, and under the fha strategy, one of the challenges we have run into is the 100%-to-15% loan-to value, provision. >> the 150%? for the short refinancing program? >> my understanding, and if i have this right, is that they are not allowed to extend the government guarantee for loans that are more than 115% under water, and thereby we either need -- i'm not sure if it is regulatory or statutory to address that. >> to be clear, we have made a refinancing alternative available for borrowers were their combined low-to-value is

below 115%, but even for those, the first lead would have to be below 96.5%. it is even more restrictive than you are describing if i have the right issue. what we are proposing to do under this broad-based proposal is to allow up to 140% loan-to- value with the clear view that any loan that is deeply under water would have to be written down substantially to get within those parameters. so, that is really the key legislative change that would be required under the proposal, and -- and to create a separate fund in order to make sure that we

protect the mmi fund. those are the key pieces of the legislation that would be required. >> i appreciate that, that separate fund. how do you put the money into that trust? one strategy is an insurance fee. another possibility is a fee of some sort. utilizing a transfer fee as a voluntary opt-in for companies that hold mortgages that are underwater recognizing there is substantial risks that they pay risk transfer fee. in laying this out over 40 years, if you have and you throw in the risk transfer fee,

you end up with solvency. it is now zero risk because dramatic things can happen. an extension of the federal government fee and this has struck me that a lot of these conversations hit the rocks on the notion that there is some risk. we took enormous risk as a nation in helping out major financial institutions and in helping out the auto markets. it is reasonable that we take modest risks starting with spreadsheets that say we will make money.

the upside of helping millions of families be out from under water is a huge upside risk. we have to get the conversation away from saying there is a zero risk. >> you have made an essential point. we did propose a way to pay for this broader base refinancing but we are open to look at other ideas like the one you propose or an additional fee on these loans. there's a number of ways we would like to work with the committee. you have hit on the key point. there is no question that by refinancing these loans into

fha loans that there is some additional risk that we add because of that transfer. how do we minimize that risk? by focusing on current loans that need additional underwriting criteria and by lowering those costs, these are safe loans to begin with. we are offsetting any expected losses that might come. none of that calculates exactly what you are talking about. there is enormous potential upside if we can move house prices a few percentage points to this broad-based refinancing. the benefits and the broader lift the economy would have are potentially enormous.

the benefits of doing this we believe substantially outweigh any potential risk and we tried -- we want to work with the committee to find as many ways to offset the risk as possible. >> thank you, mr. secretary. i look forward to continuing to work with members of the committee and the administration on that issue. >> thank you. >> secretary donovan, thank you for your testimony this morning. i have the utmost confidence -- i think he will do it nice job as the monitor of the global source settlement area. identifying 200,000 customers who may qualify for principal

reduction program. can you discuss where we are and some of the progress that is being made? >> absolutely. and thank you for your support of joe smith. not only have -- is another report that bank of america has begun mailing 200,000 letters to borrowers -- they're a bad principle reductions that have been delivered to families as a result of the settlements. many families were being evaluated for other types of modification our able to get principal reductions.

it is not a huge number. there are thousands of families that have benefited and hundreds of thousands that are getting these letters and not just from bank of america. the other critical piece is implementation has begun around the servicing standards that were in the settlement. the first deadline for implementation of the most critical pieces of the servicing standards is coming up and we would be happy to get you a detailed timeline of when those standards go into effect. we're encouraged by the pace with which implementation is moving. >> can you give us the parameters? >> it really varies by location. california, nevada, those

principal reductions are exceeding $100,000 per homeowner. if carolina, in the range of $50,000, on average. but these are substantial changes for these families. not just the principal reduction happens but demonstrated ability for the family to pay and to remain in that home for at least 90 days. because the family to a sustainable level that will keep them in their home long-term. >> thank you. we want to be supportive of what the department and the fha are doing to ensure the long time viability of the insurance program. tove spoken about how strengthen the enforcement authorities of fha.

can you talk about some of the changes the fha would like to see? >> this is critical and there are two major changes. we're working with your colleagues in the house to be able to get this legislation through. we came very close last year as part of our budget. clarify our ability to hold the -- we issued a rule that makes clear the standards that we have for indemnification. there are certain types of loans and lenders but we don't have the authority to do that. we have a somewhat perverse provision in the way that we can force that allows us to go

after lenders for regional or local violations based on their track records compared to other lenders in those areas. we cannot disqualify entire company in nationally. that does not make any sense and we would like to have that clarified. there are other smaller provisions. we have smaller lenders that today cannot originated loans under their own name unless they have the full ability to issue ginny mae securities and other stats. we have a lot of smaller lenders in the dakotas and other areas where they want that ability and we think that makes perfect sense and that would be included in the legislation, as well.

it is something that i think you'd be interested in. >> thank you. thank you, mr. chairman. >> we will go through a brief second round. is there a time frame within which any -- are losing the opportunity to improve the market if these changes are delayed? >> this is why -- you perhaps heard the president mentioned the importance of this issue as one of his top legislative priorities. he will be in nevada on friday at will talk specifically about the importance of expanding refinancing. there's an urgency because interest rates today are the

lowest level they have ever been for a 30-year mortgage. i think all expectations are this window of record low interest rates may not last a significant point of time. interest -- low interest rates are typically one of the most beneficial things on it macroeconomic level to boost the economy but we're not seeing today the full benefit of these record low interest rates that we should be seeing. the most bipartisan way that we can increase the boost to the economy of these interest rates is to quickly get these proposals enacted. that's something that we can

all agree on and move with real speed in getting these done. >> senator shelton. >> there was a dialogue about first liens and mortgages and the impact on that. deal with fha and gse, there been a lot of proposals by the administration to deal with that. the basic property laws -- you got a first lien and a second lien. if the value of the first lien goes down, then the value of the second lien would go up. >> certainly. generally speaking.

>> the property values are there. you have a first lien. fannie and freddie had a first mortgage and you had a $50,000 second mortgage. and if you lowered the first lien, wouldn't it follow that the value -- assuming the property was worth so and so -- the value of the second lien would be enhanced? >> if there were not be a requirement. >> do you know of any requirement? >> we have implemented that

requirement in the settlement. >> explain what you mean. if you deal with the first mortgage, you do not deal with the second mortgage. >> exactly. this is a real issue. i think we have learned our lesson. these are the kinds of things we have to have clear rules on. if you write down a first, you have to write down a second. these things need to be implemented. the problem is there were no rules except when you get to foreclosure. in foreclosure, you have to write off the second loan first.

we did not have rules for the road of what happens with the modification, particularly in a world with the first lien is current. for half of the underwater loans, there is no second. the issue is clear. >> basic property law. >> in foreclosure. we should have had rules of the road. we shouldn't get fooled again. >> do not get fooled three times. >> i don't think we can throw up our hands and say we cannot do anything because there were

not rules of the road. we try to create them. investors may think they are not perfect. we have made this a priority. you have to write off the second lien at least as much of the first. >> i can see the rationale in negotiating with a lender has a mortgage on a house that is precarious and could be foreclosed. they want to avoid a lender -- they're not in the housing business. a lot of my concern is, we do

not want the taxpayer to take the hit. if we could see a lot of the owners of second mortgage securities could -- there could be a back door bailout and we do not want to do that. >> we do not. i think we should work on a provision that we could include in the legislation that would focus on second liens. >> how would you do that? >> we could require any servicer -- we could require that if they controlled the second -- there would have to write down the second, as well. we could do something like that.

>> you cannot make them do with it -- do you want to make it mandatory? >> here's the issue. what you have oftentimes is a first lien holder with a servicer and the second is controlled by a third party. even if they write down on the first is beneficial, are going to cut off your nose to spite your face? that is the problem with not having these rules. you can basically blocked whether it is 8 refinancing or principal reduction even if the principal reduction it is good for the first lien holder.

that's the dilemma we are in. we have tried to break that by putting in place rules and we could do that in the case that we're talking about with the universal refinancing proposal. >> i want to go back to the gse's for a minute. what would concerned some of us up here, the gse's would take the hit. the taxpayer is holding the gse. you see what i'm getting at? >> because any write-downs will be done to the program, their requirements for the second liens would apply to that.

any institution choosing to write down a first would have to write down the second as well. we have a way to deal with that particular issue. there is more evidence that for deeply underwater loans, those principal reductions benefits the taxpayer. we think it is important to move forward where there is evidence that these are net present value positive. the benefit the hallmark and the taxpayer, as well. a do you think we'll have million foreclosures this year and next year? >> the number of foreclosures is down substantially. last year there were less than a million foreclosures.

we are on track to be lower than that this year. we have seen a slight increase following the servicing sentiments but i substantial job. >> california, nevada, florida -- those are the big -- >> we have seen significant improvements in california and arizona. 80% reduction of foreclosures in nevada. florida is a judicial state. we have not seen as much improvement. the timeline for foreclosures is much longer in florida. it has tended to be -- the effects of these foreclosures have lasted longer. more families have the ability

to stay in the home. >> i have a last question. the proposal has been adopted -- menendez-boxer. how many additional homeowners do you estimate would be helped by the menendez-boxer legislation that are not already being helped? >> these kinds of predictions where you have a voluntary program are particularly hard to make. i will not give the a specific number. i will tell you a range. at the high-end, christopher mayer thought it could increase refinances by close 12 million.

our expectations are lower. some say as low as a million. we think that's probably too low. millions of home owner would be able to benefit. we do not think all of them under the criteria that were laid out -- >> how do you get them to do that? interest rates are at historic lows. the best thing anybody could do was to lower their house payments from 5.5% to 3.6%. that would put money in their pocket every month. they can refinance without

penalty. >> they are not allowed to refinance. they may be above water on the first lien but have a second lien that makes it impossible for them to refinance. this would allow that family to be able to refinance. they may be able to refinance but the costs are too high. they may need an appraisal. whoever holds their current loan, they can charge them very high fees. as much as $15,000 in additional costs because there was not competition between servicers. we're trying to remove those barriers.

that would take a family who says it doesn't make sense to spend $50,000 extra to refinance, or the eight men have that -- or they might not have it. >> what would the $15,000 be for? >> appraisals, additional fees being charged by that servicer for the refinancing. there's a range of those fees. we can do tell them for you. >> your comment about the window of opportunity that exists with low interest rates -- i want to accentuate that.

i recall many years ago i was involved in a project called project down payment. that was an effort to put together a matching down payment fund to help stabilize a low-income areas in portland. it took us two years to raise the funds at home prices went from $60,000 to over $100,000, and we missed the window of opportunity. i want to turn back to the issue about how to help homeowners who do not have gse- guaranteed loans. so many families, and to talk to my team about the challenges they are facing.

i feel like it is a lottery. if family rarely knows and we don't know whether we look up in the data base. "sorry, you are stuck with no program." in the proposal outlined by the administration -- i don't think you have a name on it. the additional strategy -- that you envision this in terms of refinancing of first mortgages or first and seconds to gather in how the write-downs would occur?

>> let me echo your point. this is not just an issue of the economic benefits that broad-based refinance it would have for families, neighborhoods, the economy overall and for the taxpayer through improvements to the performance loans. this is about fundamental fairness. anytime you talk to a homeowner, it is rare they would know what type of loan they have. it seems inherently unfair. a family is doing all the right things, paying their loan despite whatever challenges they may have, cannot benefit simply because they have a different kind of loan. one issue is the importance of fairness.

in terms of the question that you ask in addition to that -- >> first and second mortgage -- >> that is an area where you would be open to working with the committee to specifically add some language to the legislation on that. we have done that in the other efforts and i do think it is important where a servicer has control over a second lien, that there would be a requirement not just that it right down the first lien but that there were be a requirement on the second lien, as well. >> we are wrestling with it looking backwards.

we should fix it looking forward. >> it is not a reason to not move forward. half of all the loans under water don't have that second lien. opportunityge outside of the second lien program to make problems. >> in the modeling that we have laid out to try to understand whether a fund would remain solvent, a huge issue is the% of families that in the first couple of years essentially default either strategically or financially, lose their job or cannot make payments.

at that point will get extended the federal guarantee. it is offsetting through insurance or risk transfer fee. that leads to a conversation about what type of restrictions there are on a family in the first few years after the government picks up this guaranteed. do you put in place a rule that says, first you cannot basically walk away from this. a legal requirement, if you will. normally the issue of recourse is determined at a state level. some states have recourse and some do not. recourse serves as a fact that may reduce the number of folks

that say, "our circumstances have changed. we want to move across town and we will walk away from this house and we are going to rent." >> what i would say is that those are particular issues where we have a family that may be delinquent or where there is significant principal reduction happening. that is the right focus in those types of situations. what we're talking about is families who are current and where they are not getting principal reduction through the refinancing itself. there may be a decision by the lender to reduce the balance,

but they still have a significant payment. these are families that are paying and are current on their loans. we did not see a need to go beyond that given that these families are responsible and have been doing the right thing and paying and are not getting a substantial principal reduction. to give them an incentive to be responsible on reducing their principal balance. the power of these low interest rates is such that anyone who is below 125 loan to value can get back above water in just a few years. if they are choosing to use

those savings to shorten their term and be able to reduce principal faster, they are giving themselves a light at the end of the tunnel which makes it less likely for them to default. on the investor side, there is some concern that these families coming down to a low interest rate -- investors have been generally supportive of these efforts. will we see a continuous cycle of refinancing? once you refinance to this porker low level, you will not see a refinanced and that loan quickly. that is a protection for investors and we have been open to doing.

>> i take your point about this for families being current. many families who bought these homes in 2006, 2007 before the bubble was at its height -- they have been making payments from four to 10 years or sometimes longer. they have children this to the deepest point of this recession and they have good credit. walking away does have a cost in terms of impairing their credit. this has led to this conversation i've had with a number of housing experts and analysts about the assumptions of how many folks would default per year in that situation.

the key risk is in the first couple of years, as we wrestle with the exposure of the u.s. government. this issue over recourse was one idea that has been raised. thank you for your testimony. i join you in considering this is something we should be working on a day and night until we can put in place for families and the economy. >> i would like to thank secretary donovan. this committee will continue -- this will require a multifaceted approach and i look forward to working with my colleagues to continue that effort. with that, this hearing is adjourned. >> thank you. [captioning performed by national captioning institute]

[captions copyright national cable satellite corp. 2012] >> c-span, the congressional directory is a complete guide to the 112 congress or you'll find district maps and assignments. also lists cabinet members, supreme court justices, and you could pick up a copy by ordering online at c-span.org. the house is back in session tuesday. on the agenda, the violence against women act, and defense policy for next year. the house is live on c-span at two o'clock p.m. eastern. the senate will be in session monday.

senators will consider judicial nominations. live coverage on c-span to. -- c-span two. >> over the past year, the local content vehicle city tour has taken "american history tv" on the road to to oklahoma, north carolina, and then june 3 watch for programming from wichita, kan.. >> wednesday, the chairman of the senate banking subcommittee on economic policy said a long- term extension of the national flood insurance program was imperative. he proposes a 50% increase and for giving debt to the program,

most from payouts from hurricanes in 2005. the program expires of the end of the month. the plan -- this portion of the hearing is about 50 minutes. >> before we start, i would like to give the ranking member a chance to share a few words. >> i wanted to underscore my last point. today is may 9. the program expires in slightly over three weeks. we really need to act for the good of the country in the economy and in a longer-term why, not just another band aid, and other short-term extension that creates and continues to an unhealthy level of uncertainty.

i appreciate the chairman feeling the same way and working closely with me and others in this regard. i will be doing two things this week that i hope get widespread support. i will pass around a new letter addressed to senator harry reid and mitch mcconnell, urging this be put on the floor as soon as possible. we have that plead dated february 14, three months ago. it is even more urgent now. i am going to propose as a floor amendment after the next bill on the floor to the present one, whenever that is, and authorization bill with noncontroversial amendments that have been worked out. it looks at the next bill will either be an fda user-fee

reauthorization, or a small business tax bill, neither of which is highly partisan or controversial. whichever comes up by will propose as a floor amendment with the perfecting amendments incorporated into it. i hope we can get bipartisan cooperation and effort attached to that bill. thank you, mr. sherer prepared by the ford to the second panel -- thank you, and i look forward to the second panel. >> flood insurance impacts everyone. i want to get to our second panel, broad support for reauthorization reform of nfip parent dr. simpson is the president in ceo of bci, which

represents more than 1000 owners and insurance companies. he also served in the george w. bush administration as deputy secretary of the u.s. office of commerce. what compared -- welcome. >> it is a pleasure to be with you today. i appreciate your leadership and the invitation to be here. pci and its members, they're right about 52% of all flood insurance, believe the nfip is vitally important. it does not just affect one part of the nation. it happens all across the country. we support efforts to pass bipartisan legislation. i would like to briefly

emphasize three key points. it is vitally important to avoid a collapse in the nfip, as they have-, real-world consequences. second, there has confirmed by the government accountability office, the program needs structural reform, and third, privatization is not feasible under current conditions. let me expand on those. the first priority is to avoid a lapse in coverage. you have documented your concern. you have documented how the policyholders rely on this program leading to lapses in coverage, in 2010 alone, they left for a total of 53 days.

each time the program lapses, and expensive series of transactions as required to set aside policy purchases, creating cost for the marketplace and for americans to rely on this protection. it was critical to authorize the program. needs central reforms address in the senate banking committee. nfip is in debt and needs to transition. if it. -- if it had bet on an annual revenue stream, for six years running, regulators would immediately shut it down, and

the ceo would be fired, if that is the situation we face with the program. pci studies revealed nfip is providing a government- subsidized plans of 1/3 of what the cost to be in the private sector. the subsidies for high-risk policies are even greater. 1% of the properties insured by the nfip have accounted for one- third of the claims and an ongoing basis. the previous panel spoke of the eloquently. while the program needs to be authorized and reform, it is important to note that discussions on authorizing the program -- privatizing the program are not feasible. current rates would be to be closer to true market rates before meaningful discussion related to the private industry taking them flood risk could

take place. a 2011 study estimated if a private market were to underwrite flood peril, we could see rises of up to 300%. the unwillingness to purchase in high-risk areas is present even when men did. we applaud your efforts, and we stand ready to work with this committee to do anything we can to help this overwhelmingly bipartisan piece of legislation making it through the senate in time to avoid the lapps and to pursue the structural reforms you have proposed. thank you, mr. chairman. >> thank you. we appreciate your testimony, and we will have questions after we have testimony from the other panelists. thank you for your perspective and your testimony.