pretty in fannie. it except these because of a go south on will sam will take care and then the banks sell those to wall street, wall street picks up the commercial paper, they are treating the commercial paper but in order to ensure against a risk the mark and stanley and goldman, the investment house is out there that are taking risks, usually his there is insurance that, for the mortgage-backed insurance. so that insurance company was primarily aig so do you want to talk about that so that aig was insuring the loss of risk for the investment houses. >> guest: exactly, when talking about credit defaults what you were talking about ways of trying to spread around risk. one of the other problems the clinton administration added to this problem was fannie mae developed a situation in the late 90's when they saw that this affirmative action lending as it were was leading to an erosion of lending standards and the agreement had been if you ran a bank that's old mortgages to fannie mae and said that in thi

the problem was so bad by the late 90's that fannie mae actually said we're going to give you all aid to over. because we are finding that which were saying about those is not conforming to what is actually there, we are going to give you aid to over and not ask to take the loans back. that just encourage more of this kind of lending. >> host: more risk-taking. >> guest: what's interesting is people in the prices look at subprime lenders like countrywide and said that the problem with countrywide causing the problems -- countrywide to issue the kinds of loans that they issued to praise the no money down lines because they sold those loans to fannie mae. they didn't actually hold on the books. >> host: they said that there is an implied promise from the federal government to step in. what i don't understand is it seems like along the chain your local bank freddie and fannie, a big investment houses that trade in this commercial paper, aig which is the insurance company for the commercial paper. why didn't anybody along the way say we've got a problem here? especially when freddie and f

. >> are you fannie or freddie? behind the scenes is your loan owned by fannie mae or freddie mac? >> caller: no, sir. >> so your loan as a modification is done or a refi is done, it's up to the individual bank, not fannie or freddie, to say whether they'll do it or not, and amazingly twice -- this is an amazing story you're telling me -- twice you've been approved and each time the rug gets pulled out from under you. >> caller: yes, sir. >> here's what you do. i want to you go to the website nfcc.org. let me repeat that. nfcc.org. you're going to put in your zip code and then it will take you to the closest national foundation for credit counseling office, where you will be able to make an appointment with a housing counselor. and with their help, hopefully you'll be able to get this thing moving for you and your family so that you can keep your home. steve, you are headed to retirement. congratulations to you! >> caller: well, i had things go right, clark. i appreciate that. i'm just laying it out right now. i guess my question is, i've been -- let me back up. i don't know if it'

hank had been getting killed, just killed in washington for saving bear, for not taking over fannie and freddie which by the way is only seven days prior so there is an element that we are getting killed and scream that here. there's also an element of the ceo's and everybody else and we have seen this coming, talking about lehman for a long time, cleared out that it will be okay and there was a bad. you actually will see ceo is effectively saying we know where this is going to end and be prepared ourselves so at some level there was a sense of almost being embolden to think that things would not play out the way they did. "the new york times" by the way, talking about a public opinion, wrote an editorial that to say after lehman goes applauding hank paulson for letting lehman brothers go. so you can really sense where the public was at that point on those issues. had de saint lehman brinkley my neck story would have been they couldn't have saved it for the same reasons. because political pressure at that point would have been too much. the real question was could of they got a resoluti

when government distorted the risk of a fannie mae and freddie mac securities by winking in saying that these are guaranteed. -- and saying that these are guaranteed -- when government distorted the risk of fannie mae and freddie mac securities by winking and saying that these are guaranteed. let's face it, finance and banking are the most regulated industries that we have. you cannot regulate a distortion of markets. to suggest that people were greedy because they were pursuing profits, legally? it was legal to make a profit by selling derivatives. why have an incentive system that makes it more profitable to write up this complex financial instruments that is a bit of whether the european central bank will move on interest rates or the fed, instead of having one unit of account and not playing games with money. why would to set up an incentive system that rewards people for betting on investments that have nothing productive associated with them verses' people that make things or furnish real services? they are saddled with having to pay when a system like that, built on financial air

when you first walk into the paramount, you're overwhelmed with the detail and how fanny everything is it's always been a place that i enjoy to not only see movies in but to have my own concerts. those are my city secrets, now show me yours. go to ireport.com/mycitymysecret. >>> hi there. i'm robin meade. we salute the troops every weekday on "morning express." we're doing it on the weekends as well. today's salute is from the pale of benjamin frank. he deployed to afghan, and his wife being three sons and daughter are waiting. his wife says the kids are having a hard time staying strong, miss their daddy. do you want us to salute somebody you love in the military? go to cnn.com/robin and watch for those salutes every morning "morning express" from 6:00 a.m. to 10:00 a.m. eastern. >>> the parents of a 15-year-old california girl who was allegedly gang-raped are urging people in their community to do something positive. yesterday their pastor read their statement during an event at the high school where the alleged attack happened. police say as many as ten people were involved in the r

and the mortgage-backed securities buyback of fannie mae and freddie mac, that ends in march. people are worried about what it means for interest rates and demand and all of these programs are merely prolonging the downturn and not necessarily preventing it. host: an equation between what you describe and what some describe as cash for clunkers for automobiles? guest: what it does is puts demands forward. if i am on the fence and and thinking about buying a house and i got a tax credit that i can use and applied toward maybe the down payment or maybe i know i will get the money back right away, that might spur me to buy now. when instead i might have bought six months from now or a year from now. i will not go by a house and another year or another six months. what it is doing is pulling a lot of people who are on the fence about when to buy and just affecting their buying patterns to buy earlier. ithe national association of realtors, so far 1.2 million people the estimated, the irs estimated claimed the credit. the national association of realtors estimates about 300,000 of

when the government distorted the risk of fanny may, freddie mac security by sort of winking and sayinge are guarantees. these are the same kind of financial bet. they multiply by 30 times over the financial mortgage. it was the government intervention in all of that. let's face it, financial and banking is one of the most regulated industries you have. to suggest that people were greedy because they were pursuing profits legally. it was perfectly legal. why have an incentive system that make it's more profitable to write-up this financial instrument that's a bet whether or not the european interest rate also move or weather this currency will rise or fall. they ever sad willed with having to pay when a system like that build on financial air collapses. that would have provided the system îui meetings a ye. i review our projects. i probably send 20% of my time. >> 80 pefrs of the time >> not working? >> working on a completely different book. more on a religious theme and it is fiction. >> thank you for being here. >> for a dvd copy of this program, call 1-877-66-7726. for free transcr

september 14th we had our executive committee begging the government for help because they had helped fannie and freddie and bear stearns, we wanted help and tim geithner was chairman of the new york fed, one of our big regulators and mysteriously since fox news has recently reported on this mysteriously his cell phone was turned off on that sunday evening at 7:00 o'clock when lehman brothers was really reaching out for assistance. lehman brothers, i just want you to remember one thing -- i hate bailouts, i despise them but lehman brothers was put to sleep. lehman brothers, they took the pillow and put it over the face of lehman brothers. they really did it. >> y? >> because i guess a lot of people say it was a moral hazard moment, they wanted -- there were some people that wanted to make a stand. i think there is a long history of tensions between richard foltz and hank paulson. not lifelong but many years ceo, head of goldman sachs, and these were large competitors and in essence goldman sachs has become an oligopoly because merrill lynch's gone, leamond is gone and bear stearns's gone in

more general market risk of a sort that we have been forced to confront before i arrived tarp and fannie mae and freddie mac. we look at how to take a budget on a cash flow basis and incorporate the effects of financial risk that the government is taking on in a way that it has not done before. that is a challenge we face. >> it is a very astute and pithy description of the problem. if you show this paragraph to many people outside the beltway, they would say that you could make up the difference by going up -- going after waste, fraud, and abuse and the government. members of congress often introduced this as amendments in order to make proposals of revenue-neutral. could you describe ihow the cbo looks at the problem, how big is it, what kind of methods you go -- you used to go after waste, fraud, and abuse? >> it depends on the context. a very important point to understand, those three words, waste, fraud, and abuse, are used as a group. they mean quite different things. let me use one example from medicare. there are numbers about the amount of medicare spending in one year. it does

there's a new program out, fannie mae says it will allow eligible homeowners to rent their homes forp to one year. it's called the deed for lease program. it would allow homeowners to transfer the deed voluntarily back to the lender. then they sign a lease to stay in that home. the program is for people who are just not eligible for modifying their loans. this is not a part of the obama administration's plan when it comes to the mortgage mess, but as you know the white house has been really leaning on fannie mae and also freddie mac to try to help out with this foreclosure crisis. again, the big story right now, again, we have unemployment at double digit figures we haven't seen since 1983. >>> thank you so much. gosh, those are horrible numbers. 10.2%. and for some people, the last month it was 9.8, it's gone up four ticks here. but still it's that psychological level. >>> our breaking story today, the military psychiatrist accused of killing 13 people and injuring 30 others may have been dealing with his own mental health issues. what his family says happened to him during his mili

and which is a problem, at fannie mae and freddie mac.don't even have a section in the bill, about fannie mae and freddie mac. that's the huge elephant in the room, which isn't even talked about and in the bill, and -- or by the majority side. i believe that's a grave mistake. six, the bill also -- doesn't traci huge problems at the federal housing administration. and their capital reserves have dipped below, well below, the 2% statutory requirement and f.h.a. doesn't seem motivated to do something serious to address that. and i've said this once, i'll say it again. i'll keep saying it. the f.h.a. is a ticking final bomb that on its present course will require another taxpayer bailout. and we should avoid that, and in the just wait for that bomb to explode. seven, title eight on payment and clearing and settlement supervision is particularly confusing and grans prod powers and seems to undo everything that the bill does in the derivatives title by allowing the federal reserve board to determine position, limits. soive concerns in that are

fannie mae says it will allow eligible homeowners to rent their homes.gain, rent their homes for up to one year. it's called the deed for lease program. it allows homeowners to transfer the deed back voluntarily to the lender and then they sign a lease to stay in the home. the program is for people who just are not eligible for loan modification. now, this is not a part of the obama administration's plan but the white house as you know has been leaning on fannie mae and freddie mac to try to help out with the foreclosure crisis. some people are outraged that workers at some wall street companies already got the swine flu vaccine. wall street giants including goldman sachs and citigroup got the vaccine doses for its at risk employees. in order to get the vaccine companies must have medical staff. the city health department says giving large doses of the vaccine to such businesses is a great avenue for vaccinating people that are deemed at risk but the outrage is growing. democratic senator chris dodd says and i directly quote now, vaccines should go to th

when government distorted the risk of fannie mae, freddie mac securities by sort of winking and saying, these are guaranteed, and then allowed those to be sold and resold, and derivatives, which are just these same kind of financial bets, that multiplied by 30 times over the leverage of that small group of bad risk subprime mortgages, it was the government intervention in all of that. i mean, let's face it. finance and banking are the most heavily regulated industries we have. you can't regulate a distortion of markets. and to suggest that people were greedy, because they were pursuing profits, legally -- it was legal to make a profit by selling derivatives, selling them 10 times over. it was perfectly legal. but why have an incentive system that makes it more profitable to write up this complex financial instrument that's a bet of whether the european central bank will move on interest rates or the fed, and they both keep their deliberations secret, or whether this currency will rise or fall relative to that currency, instead of having one unit of account and not playing games with mo

. >> are you fannie or freddie? is it owned by fannie mae or freddie mac? >> no, sir. >> you're not? >> no. so your loan has a modification and amazing three twice, this story that you're telling me, twice you've within approved and each time the rug has been pulled out from under you? >> yes, sir. >> here's what you do. go to the website nfcc.org. let me repeat that. nfcc.org. and then you're going to put in your zip code and then it will take you to the closest national housing counselor. and with their help, hopefully you'll be able to get these things moving for you and your family so you can keep your home. steve, you are headed to retimplt. congratulations to you. >> well, clark, i appreciate that. i'm just weighing it off right now. i've been either -- i don't know if it's once a year or twice a year. social security sends you and statement and says you have so many credits based on -- it shows the credit so many years and if you retire at 62, you're approximately this. if you retire at first retirement, i was wondering if you know or have any idea h

trillion takeover of one-sixth of our economy can work and will not be like the census, like freddie and fannie, like the post office and the highway trust fund and will not be broke. it is -- it comes down to a difference in philosophy. but certainly we ought to all agree that savings that we find in medicare ought to be used to shore up medicare and make sure it's there for -- for people like my and -- and -- and people who are going to -- are going to rely on that program for years and years to come. mr. lemieux: well, i thank the senator for that explanation. that's very helpful to me. what really is disconcerting about the path that it seems that we're on is that we're going to have this governmen government-run health care system, and if already now people can't go see their doctor if they're on medicaid because doctors won't take medicaid, and if it's growing more and more the case that you can't see a doctor if you're on medicare. and i have some information here about 29% of beneficiaries surveyed saying they're having a problem finding a doctor who will take medicare. and there's a ge

we have been forced to confront a few like in tarp, fannie mae, and freddie mac. and how to take a budget that is basically on a cash flow basis and incorporate the effects of financial risks the government is taking on in a way it has not before. that is one particular challenge we have faced. >> [inaudible] >> a very astute and pithy description of the problem. my guess is that if you show this paragraph to many people outside the beltway, they would say they you could make up the difference by going after waste, fraud, and abuse in government. members of congress introduced waste, fraud, and abuse amendments to make a very -- various proposals revenue neutral. how does the cbo estimate these proposals, and how big is the problem? what kind of methods to use to go after waste, fraud, and abuse? >> that is a fair question. what we do depends on the context. a very important point to understand -- those three words are often used as a group. they actually mean quite different things. i will use an example from medicare. ec members in the papers about the amount of

broke, whether looking at general motors or aig or lehman brothers or bear stearns or freddie and fannie. when the biggest and the best in the industry can go broke, that shows the days of buying individual stocks are gone. you need instead to buy baskets of stocks. that's what a fund is. don't buy retail mutual funds. buy exchange traded funds. as you pointed out, gerri, they are dirt cheap. you can buy them for practically nothing. and it's the way to go. >> okay, rick, one word answer. is the stock market going to end the year higher or lower? >> yes. >> higher? >> we're very optimistic that the stock market is going to continue to do well. >> okay. rick, thank you. appreciate your help today. >> any time, gerri. >>> now, investing isn't the only way to grow your money. if you're looking for extra cash, there's things you can do right now to pump up your income. don donna, great to see you again. >> great to see you, gerri. >> you had really interesting ideas here. one of course is go to class. teach a class. but what does that take? >> well, you know, often either a lot of life work

and every day the following week on the front of our local papers, whether with aig, fannie mae, freddie mac on a merrill lynch, washington mutual, and a bunch of others, every day someone was falling apart. and so unfortunately the citizens began to understand our in. we were about to elect for the first time an african-american president. we on the other hand, the city government, were trying to figure out which day do we tell the citizens that we now have a billion dollar deficit. to interfere with our playoff run and world series and parade, or do we do have a before the most historical election and most of our lifetimes? and we decided to do neither. two days after all the joy and excitement i got to announce to the citizens that we have a 1 billion-dollar five-year plan deficit in the middle the fiscal year. this has never happened in the city's history, but we got a variety of services, some layouts, stopped 13 straight years of wage and business talk reductions in order to save money. and actually fill that hole. and on january 15th among the following year i announced we had a n

this is, i believe, a fundamentally flawed construct that was clearly demonstrated when fannie and freddie went under. to the extent that current regulators failed to protect consumers, we should hold them accountable, and we haven't. instead of doing so, the dodd plan creates a massive new bureaucracy. in a hearing held just yesterday, chairman dodd indicated that it was unreasonable to expect congress to act every time a commercial practice needs to be addressed. i would argue that it's unreasonable and unwise to delegate our constitutional responsibilities just because it may take longer than some would wish. finally the dodd consumer proposal before us would give the new bureaucracy a dual mandate "to protect consumers and ensure that they have access to credit and financial products." an agency that requires financial firms to provide products to consumers repeats the same dangerous practices that led to unqualified consumers receiving mortgages they couldn't afford. i think two failed gses are enough for now. our substitute at the right time would propose a construct. but at the same

he is currently the executive vice president of general counsel and secretary of fannie mae. mr.n was the general counsel of bank of america from december 10, 2008, until january 2, 2009. he is the president of consumer and small business lending at bank of america. mr. gifford and mr. may are currently on the bank of america board of directors and were on the board last december when the bank received its bailout. they are both also on the committee that is selecting the replacement for mr. lewis. please give your opening statement. you have five minutes and the light starts out on green. then it turns to yellow and then it turned to red. when it gets to red, we ask that you stop which will allow the members an opportunity to be able to raise questions after all of the witnesses are finished. thank you. >> chairman townes, ranking member issa, members of the committee, thank you for the invitation to appear before you today. bank of america recently waved its attorney-clint privilege with respect to the merger and has instructed me that i am free to answer questions the committe

meltdown and every day the following week on the front page of our local paper, whether was aig, fannie mae, freddie mac, merrill lynch, washington mutual everyday somebody was falling apart so unfortunately the citizens began to better understand our circumstance. in the midst of all that the phillies were on their way to winning that world series, and we were about to elect for the first time an african-american president. we on the other hand in city government were trying to figure out which they do we tell the citizens that we now lite bit of a disconnect. i have no complaints of it than the fact that i can use a dime for our budgetary challenges though on one day we can announce that 10:00 in the morning in new grand opportunity from the federal government and later that afternoon announce more layoffs and service cutbacks. the public is confused as to what in the world is going on and that is a major challenge for us. last point. banks, investment banking firms, auto, all too big to fail. cities in metro areas all to import mcphail. we cannot and we will not the wadah business. w