first alliance mortgage company, household finance, ameriquest, countrywide, and wells fargo. and after uncovering and document their predatory lending practices, we sued these lenders for putting homeowners into risky loans that they didn't understand, could reasonably afford, and couldn't get out of. our investigation of these lenders and their brokers revealed a pattern of editorial in the practices that would eventually permeate and destroyed much of the mortgage industry and our economy along with it. the predatory practices were driven largely by the rise of the mortgage securitization process which allowed lenders to bundle and sell off home loans and to shed all liability for their sound is. once lenders were free from responsibility for a loans failure, common sense underwriting standards quickly deteriorated. mortgage lending had been turned on its head. lenders made more money selling high-cost risky loans than sound loads. for the simple reason that wall street paid more for subprime loans and loans with expensive risky features. so we see that in 1999, subprime lo

that's where most of the big mortgage companies like ameriquest and ameritrade -- new century and countrywide. they were enormous in california. the reason they were there because they realize the state legislation was so weak. so that will change under the legislation. mortgages will be overseen by this new consumer product safety commission did so i think that's a good idea. derivatives, they go some of the way towards regulated. bernanke is given wall street a pass on some of it. hytner has given wall street a pass on some of the other counter derivatives. the more competent was that they can still trade those among themselves. i think those exceptions should be i think they should all be forced to trade over-the-counter. if you're asked me basically do i think the regulations go far enough, my answer is no, i don't. i tend to be of the paul volcker view, that we should see a split up of the financial system. not really a return to glass-steagall that sort of a 21st century version of glass-steagall where would you have a save financial sector, which is sort of oversaw consumer deposits, b

regulating the entire mortgage industry and that is where most of the big mortgage companies like ameriquest and ameritrade-- new century and countrywide, they were enormous and california and the reason they inc. was the real-estate legislation was so weak, so that will change under the legislation. mortgages will be overseen by this new silver product safety commission so i think that is a good idea. it derivatives go some of the way towards regulating but bernanke is giving wall street a pass-- geithner is giving wall street the pass on some of them, i.e. the more complicated ones that can still trade among themselves. i think those exceptions, i think they should all be forced to trade over. if you are asking me basically to think the proposed regulations go far enough my answer is no, i don't. i tend to be of the paul volcker view that we should consider a split up of the financial system. not really glass-steagall but it 21st century version of glass-steagall where you have a safe financial sector, which sort of oversight of consumer deposits, brokerage accounts in several. that would

first alliance, household finance, ameriquest and others. we sued these lenders for putting homeowners into risky loans that they didn't understand, couldn't responsible afford, and couldn't get out of. our investigations reveal the pattern of predatory lending practices that will eventually permeate and destroy much of the mortgage industry and our economy along with it. these were driven largely by the rise of the mortgage securization process. which allowed lenders to bundle and sell off and deshed all liability for their soundness. once they already freed for responsibility for failure, common sense underwriting standards quickly deteriorated. mortgage lending had been turned on it's head. lenders made for money selling high cost loans than sound loans. for the simple reason that wall street paid more for subprime loans. we see that in 1999, subprime loans were only 3.8 and a loans were only 1 hadn't 7%. by 2005 at the height of the lending frenzy, almost 50% of the lens originated were either submime or at a. to respond to wall street's

we went after the largest of the sub-prime lenders so at the time we were investigating ameriquest, countrywide. they were the largest sub-prime lenders in this country and we directed our resources toward them. what is also interesting to note is that when we started doing these investigations particularly out of below with countrywide almost immediately they change their originations. they woodville blogger originated under their state charter and remove to find protection under the federal charter, so there are very few within a state chartered entities left out there doing mortgage originations. >> thank you. >> itis have a couple of wrapup questions. you mentioned in your testimony commissioner crawford the national securities market improvement act of 1996. they always have such a nice names. commodities future modernization of. but you talked about hell some of the authority come at the oversight authority over their rating agencies were pulled away from states. no longer registered investment adviser. was there any practical effect to that pre-and post? was there a real level of scrutin