>> up next on c-span, "newsmakers" with mel watt. at 8:00 eastern, "q&a" with consumer advocate ralph nader. >> "newsmakers" welcomes this week mel watt. has an enormous influence on the housing market.

you gave your first public shrinking freddie mac and fannie mae. i was wondering if you can talk about what exactly do you see as your mandate at fhfa? >> multiple mandates. we have preserve an conserve mandate. we have a mandate to assure liquid resilient housing finance

market and i think we have a mandate to reduce -- to taxpayers. i try to make the difference between shrinking the current footprint of fannie mae and freddie mac and shrinking their risk exposure. i don't think it's our role necessarily to shrink the footprint of fannie and freddie. >> why wouldn't you want to do that? >> it's not that i'm opposed to it. we will certainly allow it to happen to the extent that the private sector is ready to step into the space. if the private sector is not ready to step into the space and you shrink what fannie and freddie are doing, then you do

damage to housing finance in this country. that does damage to the economy and it does damage to the possibility of affordable housing and homeownership. >> the senate banking committee passed the first major bipartisan legislation to deal with fannie and freddie. >> it's hard more me to answer, because i haven't reviewed the

bill. identify been focused on running fannie and freddie in their current state. to the extent i get focused on things that i used to be focused on in congress. i think i'm doing a disservice to the responsibilities that i have. there's nothing in the statutory mandates for fhfa that gives us a role in forming what will happen next. our role is in taking care of what we're doing now and i take that seriously. i haven't reviewed the bill. a lot of my staff member have reviewed it for the purpose of providing technical input. we've been careful to the say, we don't support this approach

or that approach on a substantive basis. we'll tell you how to carry out whatever your objectives are in a more efficient way because we have the experience in that area. but that's technical advice. i don't even do that part of it because i don't think that's my role. >> i know you said tuesday, you weren't going to get involved in the legislative process. you also said tuesday, you're agency has the power to end the legal process which through the government taking over fannie and freddie. i wonder if congress is unable to pass legislation over the next few years, which doesn't seem like a remote possibility here because it was a close vote on the banking committee. what if any steps do you think you should take to end the

conservatorship of fannie and freddie? >> i don't think about it taking a step to end the conservatorship. the statute will tell us to back out. the statute doesn't tell us to back out. it tells us to continue to create a national resilient housing financial market in this country. this wall is there until congress tells us that it is not there anymore. i never think about it in terms of how am i going to end this. i think about it in terms of how we're going to perform what is our task under the statute today. during the confirmation process, i was asked by the senate banking committee, what do you see as a role. i see the role as the role that the statute has given to this agency. that is to maintain a resilient

housing finance market and that's what we're trying to do. >> are you saying you don't think that it is your role to wind down -- to take steps to wind down fannie and freddie. couple of years from now, congress still hasn't enacted. it doesn't make more sense to spin them off as private entities again or would you be continuing in limbo and not taking any steps in that direction? >> you're asking them about things that are not in the space that have been given to me. i know it's frustrating when i say that to people but i'm totally focused on the responsibilities that have been given to me. i don't think about what might

happen two years from now or five years from now. i'm totally focused on what are our responsibilities today. if we don't do those responsibilities today, there won't be a housing market. people don't understand how critically important the housing market is to the country. somebody has to keep that housing market going and right now the major players in that space are fannie and freddie. now, if somebody says, fannie and freddie are out of business, then they will tell us how to unwind fannie and freddie. i don't think that's my role to make that determination. >> fhfa every quarter allows fannie and freddie to give all their profits to the u.s.

treasury. this is something that creating a lot of unrest among the company shareholders. is that a fair arrangement would you say? do you think shareholders are right in airing aggrieve yenses -- grievances about this. >> my responsibility is to the taxpayer. i don't lay wake in night worrying about what's fair to the shareholders. my responsibility is to think about how i can do what is

responsible to the taxpayers. those responsibilities include doing only what is safe and sound in the lending space and maintaining an efficient housing market in the housing space. walking that balance is sometimes difficult to walk. that's a full time job. i just don't have time to think about what might happen in the future with the shareholders. it's not my responsibility. >> you have talked about how the fhfa's job is so conserve and preserve the assets of the company. how is allowing the treasury to take almost all the profits of the companies every quarter consistent with a conservatorship? >> if will be no fannie and freddie if it wasn't for the

taxpayers. this arrangement was in place when i got there. i didn't create the agreements that set up this arrangement. i don't know whether i would have thought differently had i been there but, i don't have that luxury. i'm operating under a set of agreements that were put in place and they require that any moneys that fannie and freddie are left over, they get swept to the treasury for the benefit of the taxpayers. fannie -- i didn't create this. so it's not my job to worry about whether it's fair or not fair. it's my job to operate in these

constraints. they -- >> your agency last month published stress tests. the worse case scenario showed potential $190 billion in taxpayer. how are taxpayers being protected against future downturns if the profits are being swept away. would you consider changing them to protect taxpayers? >> i don't think it's my role to change them. if i'm invited to have discussions about that, i certainly would have discussions about it with treasury, with whoever is counterpartied to those discussions.

right now, that's not my role. that's not my responsibility. in a sense, most corporations would fight for the chance to have the taxpayers saying, you don't really need any capital because the taxpayers are standing behind you. that's really where we are at this juncture. capital is important for a private corporation but this is conservatorship with the taxpayers having committed to back it çreotbzkñrin conservat. i said in the question and answer session after the speech the othery taxpayers are back there. i don't think that's a bottomless pit or a bucket that could never be drained.

i don't think treasury thinks of it that way. but right now, it's not creating problems for them to operate under this structure. i assume that the treasury believes that this is reasonable compensation for saving fannie and freddie when they did it. that's the and rangement they set up. it's the arrangement that i inherited and it's an arrangement i'm comfortable operating under. >> we have 11 minutes left. in your speech you talked about would -- one would be -- to qualify people for loans. how do you make the public feel comfortable that we aren't heading back into the same scenario that created that bubble in the first place in 2008? >> well, i try to make them feel comfortable but always starting

the sentence by saying we're going to do this in a safe and sound way. if you look at the main goal that we put in the strategic plan right after the word maintain. you see that phrase. i'm committed to that because while i advocated for people to have access to credit, i was also the first person to introduce a bill that said don't issue irresponsible predatory credit to people. that's the balance that we've been walking this country. every time a lender makes a loan to anybody, they are thinking about safety and soundness on within side and the availability of credit on the other side.

it's a delicate balance. you want to be able to repay the loan. but you want that borrower to have the benefits of that loan. that's the availability of credit. that's the balance that we operate in our banking system. in our housing finance system in our entire credit system. our credit card system. nobody should want to make a loan to anybody who's not going to be able to repay it. that's the way i think about it. i don't think those two things are inconsistent, but they do have to be carefully balanced and calibrated. >> there are a lot of folks who were hoping that -- were happy to see a democratic nominee get

into your job. thetted to see some -- they wanted to see policy changes that fannie and freddie treat borrowers and pay for affordable housing. one of the things you talked about the affordable housing trust fund is for fannie and freddie to pay for low income housing. your predecessor didn't allow for companies to fund it? are you going to fund that? >> he's smiling because he knows what my answer will be. i'm going to say something and the first question that's going to be asked, why didn't you talk about what you didn't talk about. your question falls in that category. doesn't mean we're not working on those things. there are a bunch of things that

i didn't talk about. i carry around and i still have my sheet. i have a list of things that's very long that we are working on and housing trust fund is one of those things. we'll make it and we'll articulate the reasons we go one way or the other. i can't make a decision in the first 120 days. we'll get to it. >> what are some of the other issues you're hoping to tackle soon? you want to share your list with

us? >> there are things like -- we can talk about principle reduction until somebody asked me a question. that wasn't in the speech anywhere. not directly. we didn't talk about housing trust fund. we didn't talk about the stress test. we did all of that in the lead-in to the speech. i said there's a bunch of things we've been working on. we didn't talk about transactions. there's a rule that -- there are multiple issues that we have to make judgments about and we have to do it responsibly. sometimes the longer you take to evaluate something, the better the result is that you get.

i don't have a particular timetable to rush to a judgment on any of these things. which is why it took me 120 days to give the speech. i'm sure people thought that was counterintuitive for a member of congress but had been somewhat outspoken. not shy of the press. i haven't had a press interview. i probably won't have another one after this. not that i'm afraid of it. i don't think that's my role. c-span in all honestly serves a slightly different purpose than some of the other news program. we'll get to owl of -- all of those decisions. i'm comfortable with the pace we're going because i think it's a reasonable pace. >> how much consultation did you have with the white house about

the announcements you were making on tuesday? >> none. >> have you had discussions about any other policies that you're looking at since that speech? >> i meet regularly with other regulators. i meet periodically with treasury. i'm sure -- there has been multiple discussions. a regulator doesn't report to the white house. i didn't i think had any responsibility to have a discussion with the white house or anybody from the administration. we were congress what we were told to do by statute and we're doing it. that doesn't mean that we are operating in a vacuum, i don't

think. >> why did fannie mae and freddie mac in your view failed? >> well, i think fannie mae and freddie mac probably failed for the same reason that the whole melt down occurred. this was a bunch of irresponsible things going on. i think everybody shared in the responsibility for that. whether you were an appraiser, broker, lender or fannie and freddie. everybody kind of lost sight of the objective to provide responsible housing finance in this country. it became, okay, can i make money. can i make money. so everybody wanted to make money. everybody was making money but it was unsustainable.

so our responsibility now is to not worry about making money. we want to make sure we don't lose money. we want to provide housing finance in a sustainable way until somebody tells us to do it in a different way. that's the way i view this. >> does the fact that fannie and freddie are now making record profits, make your job a little easier in terms of doing things to help the mortgage market that might have been tougher to do when the government was regularly sending them bail out checks? >> it always makes life easier if you're making money. it generally does. you also should be sure that you're aware what's sustainable and what's not sustainable. the record level of profits that

fannie and freddie have had over the last couple of years certainly are not sustainable because they result in large part from large settlements of litigation that had been in process. from tax adjustments that were made, reserves set aside for major losses. when those losses didn't occur and housing prices went back up and things looked better, then you bring those reserves back on to your books, doesn't mean you made a bunch of money this year. it means you did some things to hedge against losing money. the bulk of the practice they've made have been had those categories. they hadn't been from the regular housing finance

operation fannie and freddie. >> how do i feel things are going at the company. are problems fixed or they are shaky? >> there are substantial things that we're still working on. fannie and freddie's infrastructure needs a lot of work. which is what the build part of the strategic plan is about. you know, we worry about losing employees in this kind of market. if you had alternatives and your news agency you didn't know what the future of it was or you didn't have confidence in the future of your news agency, you'd be looking at other alternatives a lot more aggressively. i think that's natural. there are a lot of issues that we're dealing with that are

ongoing issues. we're trying to deal with them responsibly. >> time is up. i had ask a question i hope isn't too big of one. after 20 years as a lawmaker, where banking and housing policy was often on the plate, what's the most significant thing you've learned now as a regulator in the housing market? >> i've learned that every single win of -- one win -- one of these issues is a lot more complicated. which means members of congress have to be really studious and understand what the territory they're operating in. i really had that challenge. we all had that challenge when we were putting together

dodd-frank. i had that challenge in judiciary. these are very difficult issues and unless you do them everyday, i couldn't walk in and do your job. you know more lot more about camera and camera angles. you don't really understand the depths of complexity until you get on the inside. which is why i never argue with the senate banking committee when they say you don't know everything about this. you're absolutely right. i need to surround myself with people who know it and i have done that. i think we're going to be successful running this agency. >> dr. watt, thank you for being here this week. when you're ready for your second television interview come back.

>> thank you. >> "newsmakers" is back. after a conversation with mel watt who is new director of the federal housing finance agency after 20 years on capitol hill. let's start with the legislation because in your questioning, you both suggested that it doesn't seem to be going anywhere. this is the fannie mae, freddie mac reform legislation. why not? >> it's a tough issue. it's a very heated partisan issue. the banking committee did have seven republicans and six democrats on it. it's going to take a while. >> now that fannie mae has freddie mac has stabilized financially, there's growing

ambivalence in congress on to remake the system. particularly among democrats if you do it wrong, the system broken as it has been, it's working okay right now. why not mess with it. i think that feelings like that are stacking some of the current momentums. there's no crisis anymore. >> wondering aboutp$h@hñi the constituencies of the federal housing finance agency. obviously wall street, the banking industry, fair housing advocates. are there other issues thato;m i missed? >> basically theg< federal housg financeagency is a very powerful agency. mel watt is very powerful. he doesn't answer to a board, agency or president. he's governing the mortgages that fannie mae and freddie mac. affect about two third of

american mortgages. that's how many mortgages are touched by fannie and freddie now in the mark. if he puts in place a policy that might change mortgage rate or might mean you can't get a bigger or smaller loan, that's going to affect people who are trying to buy a house. >> it's difficult for the public to react to his speech. there's other constituencies have voices. how did they react to the thing he laid out? >> i think people were generally impressed with the thoughtfulness of the speech. there are areas he didn't go into. some people may have been disappointed about that. people hoped he will do more to help troubled borrows. i think the interesting question here, if congress can't get to an answer which increasingly look like while they won't, while barack obama is president these companies are out there. they have employees. there's a lot