of fannie and freddie. and they demand transparency, something that's been missing for a long time in federal government, relative to spending. the congressional budget office estimates that these changes will save up to 30 billion taxpayer dollars. and it's no secret, we can't keep spending money that we don't have. the american people know this and they have goo youcut to cast hundreds thousands of votes over the last three weeks to demand to cut reckless spending out of our budget. we need to do what we were sent to d.c. to do and that's vote for the wishes of the people that we represent back home. and a vote to reform fannie and freddie is a vote to save the american people, taxpayer $0 billion. i yield back, mr. speaker. the speaker pro tempore: the gentlewoman yields back. the gentleman from colorado. mr. perlmutter: how much time do i have? how much time does mr. sessions have? the speaker pro tempore:he gentleman from colorado has 12 minutes. the gentleman from texas has 6 1/2 minutes. the gentlema

the largest bailout in america, fannie mae and freddie mac -- so far, fannie mae and freddie mac for the largest of the bailouts we have dealt with. if you look at the takeover of the student loan system and the auto industry, the $145 billion that the taxpayers are already on the hook for with regard to fannie and freddie, which is expected by experts to go up to over $353 billion before it is done, it is absolutely absent from this legislation. on the senate floor, i have offered an amendment which simply requires that fannie mae and freddie mac be included as part of the federal budget as far as either institution is part of a conservative shirt is a conservatorship. -- part of a conservatorship. the amendment failed on the senate floor could there's still nothing in the bill about fannie and freddie. we told the american public what data they are assuming because weight failed to reform fannie mae and freddie mac. after the u.s. government assumed control in 2008 of fannie mae and freddie mac, two federally chartered institutions, "the congressional budget office concluded that t

not the way fannie mae and freddie mac did it. we have a question, do we want any kind of subsidy for homeowners, now for people at the lowest end, but there is a situation -- are their efforts that could be made in a responsible way to help them afford homes? there is affordability for people on the low-end, you don't want to exclude anybody, but that ought to be the preface. immediately abolishing fannie mae are freddie mac or deciding to do it before we have decided what set of arrangements could be public and could be private would be destabilizing to the economy at a time when it is trying to recover and through the housing market. i supported the first amendment, we should be very clear and i hope it will be put in the status at some point fairly soon, but only after we have lived up to our congressional responsibility to sort out these things. i hope it will be done by next year. i hope we will begin drafting it this year, a new set of housing arrangements without the kind of confusion that led to the palms of fannie mae an

that's what these policies on fred tee and fannie are doing. we need to reform freddie and fannie and we're in the willing to do that. i want to jump forward, past freddie and fannie, we've got the trouble with wall street starting to melt down we do the big bailout of wall street and then the center point of the democrat's plan was the stimulus package. the idea was, they saw unemployment starting to go up, the economy was p, this is a great opportunity for us to spend money on all the things we want to spend money on. so they spent $800 billion which is a whole lot of money, on this stimulus package and the idea was if we spent enough mone it will get the economy going again, in spite of fixing freddie and fannie. what do you think about that eory that if the government spends tons of money, it's going to somehow get the economy going. a lot of people believe that. i yield to my frnd. >> i thank you for yielding this has been described as keynesian economics, which means bigger vernment spending, more borrow, you've got a great quote there, h

the largest bailout in ameri, fannie mae and freddie mac -- so far, fannie mae and freddie mac for the largest of the bailouts we have dealt with. if you look at the takeover of the student loan system and the auto industry, the $145 billion that the taxpayers are already on the hook for with regard to fannie andreddie, ich is expected byxperts to go up to ov $353 billion before it is done, it is absolutely absent from this legislation. on the senate floor, i have offered an amendment which simply requires that fannie mae and freddi mac be included as part of the federaludget as far as either institution is part of a conservative shirt is a conservatorship. -- part of a conservatship. the amendment failed on the senate floor could there's still nothing in the bill about fannie and freddie. we told the american public what data they are assuming bec weight failed to reform fannie mae and freddie mac. after the u.s.overnmen assumed control in 08f fannie mae and freddie mac, two federally chartered institutions, "the congressional budget office concluded that the institutions have effecti

we ought to have a fannie and fddie plan today.et's compel treasury to conduct a study on the issue. with respect to the other issue. again, if it is a concern of the chairman, we all know that what counts here is signatures on a conference report. if he's concerned about the concerns of the big banks, it's his bill, totally within his per view to fix it. and i thank the gentleman from new jersey for yielding. >> thanks, mr. chairman. mr. chairman, i think finally this debate has crystallized. and i think we really -- the core issue of this conference. and that's who pays for -- for two weeks, in fact this bill is called the wall street reform bill. and it's a resolution or a bailout fund for creditors and counterparties. it sets up a fund that you can loan a failing company -- a financial company money. a so-called too big to failure because it would result in destabilizing the economy. now, for two or three weeks if not two or three months, what the american public has heard from my democratic colleagues is that wall street ought

the gentleman said congress forced freddie mae and fannie -- freddie mac and fannie mae. in 2004, president bush ordered fannie mae and freddie mac to go above 50% in the mortgages they bought that work for people below the median income. i criticized that publicly and said it was not good for those institutions, nor for the people who were getting into that housing situation and joined mr. oxley to regulate fannie mae and freddie mac. mr. oxley put a bill through the house. i voted in committee against it because of unrelated reasons but the gentleman from california notes he'd carried the amendment. he forgot to say he got one- third of the republicans to vote for. the amendment was defeated on the floor of the house. no -- if no democrat had voted, they would have lost heavily. many members voted against the gentleman from california and with mr. oxley. senate democrats offered in 2006 the version of the bill that passed the house under the republican sponsorship and there was an internal republican dispute and that is what led to their not being any bill. a year later

the first one was fanny and freddie. i voted against that bill. i said if we give them this money, we have to do the reform right now, and there are things we have to do them. but we didn't do them. we have passeded the f.h.a. bill, which i think was a great bill, a day or two ago. we passed it out of the house. so yes, there are some things we can do. but it is a disappointment, and it is an awful lot of money. as a republican maybe i couldn't say it, but it is the elephant in the room. >> given what you have said about fannie mae and freddie mac, what would you like them to be in the future? should then private, half public and half private or utilities? what do you think? >> i don't think they ought to be public utilities because that is basically saying the public is going to guarantee them. the private market is not there now, and i think we all agree. so it is going to have to be a slow transition. but i think we can make that transition. it may take 10 years. it may take 15 years. in our bill we had a three or four-year thing. i think that

this very monopoly, fannie mae and freddie mac. we compound problems in this legislation because now -- i'd ask the gentleman to yield for 30 seconds. mr. sessions: i give the gentleman one additional minute. mr. royce: now, what we do with this legislation is we make the largest institutions too big to fail and we do so by putting in a provision that is going to allow them to borrow at a lower cost than their smaller -- to their smaller competitors who i guess are too small to save, right? they are going to be able to borrow at 100 basis points less because the government backstop you're putting in place and you're not allowing them go through a regular bankruptcy process. we'd like to see enhanced bankruptcy on the republican side. we'd actually like to see firms fail. creditors will get 100 cents on the dollar potentially. they are going to loan to big firms. these big firms are going to become overleveraged. you've done the same thing here as you did with the government sponsored enterprises, fannie and freddie, that they force

just fannie and freddie are to blame? not the people that every step of the way made money off of these loans and these high-cost loans? we do not just stop with fannie and freddie, and do we? >> remember what they were asking for. what we want to break the lenders view and the only way to do that was to get fannie and freddie to start having at flexible underwriting, which it is starting in 1993. and it just progressed. it was a progression that occurred over 15 years. >> and like you said, there is enough blame to go around. we should probably look at what the appraiser did, too. >> do not get me started on appraisers. >> ok, i thank you for your response. at this point, that concludes this hearing. without resort -- without preserving the right to object, the record will remain open for seven days so that members can submit information for the record. finally without objection, i will enter these documents and statements for the committee record and the committee stands adjourned. >> coming up on c-span, president obam

the first one was fannie and freddie. i voted against that bill. i said it at that time if we gave him -- give them that money we needed to o the reform right then. we have done some of those now. we passed the fha what are two days ago we passed it out of the house. there are things we can do. it is a disappointment. is an awful lot of money. ps a republican, maybe i cannot say this with the elephants in the room. republicans like to see fannie and freddie become in the future. should they be private entities? should they be split have government and half private lacks -- half private? where do you stand? >> i do not think they should be public utilities. that is saying the puulic will guarantee themm the private market is not there now. i think we all agree. it will need to be a slow transition. i think we can make that transition. it may take 10 years. it may take 15 years. in our bill, we have a three or four years of thing. i think that is oveely ambitious. some of our colleagues felt we could do that. i do think the problem was not in the sec

they keep bailing out the banks and fannie mae. host: week are talking about the idea of reinstating the superfund tax. the president may be proposing to the house and the senate. we are not sure beyond a chemical and oil companies who would be supporting it. the piece this morning is in "the washington post." the presidential push for the restoration of the superfund tax. remember, for republicans, 202- 737-0001. for democrats, 202-737-0002. for independents, 202-628-0205. you can also send us a tweak at twitter -- twitter.com/c-spanwj. you can also send us an e-mail, journal@c-span.org. we put up the addresses for both of those. this is the twitter address, twitter.com/c-spanwj. in the mail is journal@c- span.org -- andy e-mail is

if we add this up, three large banks, freddie mac and fannie mae, chrysler. that's 1/3 swallowed over the management, control of thee federal government. you add to that the student loan program and you add to that the finannial services that are being regulated right now that are being negotiated inthe conference committee between the house and senate that would put the federal government too regulate every single credit transaction in america. i don't just mean one of the large bailed out investment banks is doing business with one of the other investment banks that the federal government regulates that. i don't just mean that when a small community bank is doing transactions with people who are coming in to borrow money for a mortgage that the federal government regulates that. i'll take it down to the question that was posed. would their transactions that are set up to pay for the braces on the tithe of their children be regulated by the federal government and the white house? answer, yes. under this bill that is coming at us under the language we are dda

fannie mae and freddie mac were put into conservatorship. they were the first major institutions to be reformed. we also in this house passed a bill to control subprime lending. the gentleman from alabama had been the chairman of the subcommittee with jurisdiction over subprime lending in those republican years and never produced a bill. he said it was our fault because he wrote a letter, myself, mr. miller of north carolina and we didn't tell him we'd vote for im. i wish i could have it back. i wish i knew i was secretely in charge of the republican agenda. i wish i knew they wouldn't do anything unless i said they could but nobody told me. where were they when i needed thome to be more powerful. the republicans never checked with me as to what they were supposed to do. it's 2007, we did pass such a bill to restrict subprime lending and the wall street journal attacked us. they said it was a sarbanes-oxley for housing. sarbanes-oxley is about as nasty as you can get for "the wall street journal" and here's what they said about subprime lend

what did companies do related to what fanny -- fannie and freddie were doing?guest: they were at the vanguard of this market for terrible loans. basically to buy loans up, mortgages up, that were not backed by proper credit that were on these subprime and alt-a mortgages is what they're called. and private financial institutions got into the mix. they saw this behemoth doing this thing and it became part of the culture. this is not to say that any private sector organization was doing this and you'll get off the hook. in point of fact, a lot of wall street firms were leverrged at 30 and 35-1 to buy up these lousy mortgages, slice them up into these mortgage-backed securities that turned out were highly unstable and horrible for the economy and ultimately were what destroyed the financial system or part of what really destroyed the financial system so there was private sector complicit for sure in this thing. but when the public sector, which is geared to try to help markets succeed, creating the impetus to make markets fail, that's something all americans shoul

bailouts for fannie mae and freddie mac. and unfortunately we're not addressing the structural problems with fannie mae and freddie mac in the government reform bill or rather the financial reform bill, the conference committee of which has concluded its efforts. then we have unemployment benefits due to the recession which have been running steadily until recently and then the remainder is a correction of aggregation of other spending. so that explains how our federal budget has trended the way it is. this was before we passed obamacare. this budget was passed before the health care reform bill which has a huge other component to the debt and the deficit. we know that that bill, if you take the years 2010 to 2020, is going to cost over $1 trillion, half of which is going to come out of cuts in medicare and the other half out of tax increases. but we're only paying out, as you'll recall, six years or seven years of benefit for 10 years of taxes and medicare cuts. when you first combine the first 10 years where we're actually

ormer chief credit office of fannie mae edward pinto notes that f.h.a.'s high-risk lending practices negatively impact the housing marketpla, unquote. you can translate that into increasing taxpayer exposure. if we're honest wh ourselves, when appropriately sizedthe f.h.a. is helpful. at this point, it's another government program distorting the market. f.h.a.'s huge market share is a hindnce to regning equity in the housing market. fannie and freddie's unlimited government lifeline is a hindrance to the hoing recovery this amendment my amendment, wou ensure the f.h.a. longer crowds out the private market for home loans. its a modest first step to cap f.h.a. new originaon market share to no more than 10% of the private market home loans each year beginning in 12 there is significant time to adjust. the arican people are not further exposed to the next bailout. mr. airman that ans the tax payer is noexpoto gater liility. the american people are sick d tired of bailout they see another one of the horizon. it's te for us to act. no more bailouts. what they'r

caller: it seems all roads lead back to fannie mae and freddie mac. $90 million was received as a bonus. barney frank and the other guys would be prosecuted criminally for what they have done. [unintelligible] we need to keep this from happening again. guest: the problem in this bill is when you look at all of the money -- regarding the $300 billion as far as bailout -- look at all of the money that has been spent by congress in the bailout or whatever you want to call them. they will pale in comparison the amount of money the taxpayers will be on the hook for regarding fannie mae and freddie mac. it looks around $400 billion over the next 10 years. to go much higher than that. the problem with the bill we are doing is trying to reform them and fix is. we had a vote on this last week dealing with trying to start the process say $30 billion. the democrats voted no and the republicans voted yes. we have to do something to rein it in. the democrats are not touching this issue. host: independent line, virginia. caller: this is my first time calling the show. when the corporate bailouts were

republicans say it ignores fannie mae and freddie mac. the bad loans helped trigger the melted down. your thoughts? caller: i do not believe that i agree with fannie mae and freddie mac. i think they were a big problem. i think they are largely responsible for the short term crisis. what i talking about is more long-term. over the years, we have had policies both environmental and labor that tried the business out of . things are not going to be quite the way they wear. host: at the ohio, a democrrt. caller: i am really disturbed about the fact that we constantly hear how they low- income mortgages have affected the failure. yes, there for a lot of low- income mortgages made. the fact that standard wars led to the large banks raised the bundle mortgages add chervil and and double insurance they collect on them and raise the price of gasoline so they could insure the failure of the low income fire in their intent to pay down the mortgage has to be looked at more. i am really disturbed and no one i am really disturbed and no one has done an

just fannie and freddie are to blame? not the people that every step of the way made money off of these loans and these high-cost loans? we do not just stop with fannie and freddie, and do we? >> remember what they were asking for. hat we want to break the lenders view and the only way to do that was to get fannie and freddie to start having at flexible underwriting, which it is starting in 1993. and it just progressed. it was a progression that occurred over 15 years. >> and like you said, there is enough blame to go around. we should probably look at what the appraiser did, too. >> do not get me started on appraisers. >> ok, i thank you for your response. at this point, that concludes this hearing. without resort -- without preserving the right to object, the record will remain open for seven days so that members can submit information for the record. finally thout objection, i will enter these documents and statements for the committee record and the committee stands adjourned. >> this gentleman over here. >> i have a

what the fed wanted was the ability to control fannie and freddie for systemic risk. and that is the responsibility that congress would not give them. in 2005, that debate came to a head and under the loordship of chuck hagel and richard shelby, senate republicans moved a bill shorted by the fed -- supported by the fed, through the banking committee, that attacked the heart of the problem. the excessive buildup of leverage and risk within the mortgage port foal yoss. the white house, treasury department, and federal reserve lined up behind mr. shelby. but he was never able to bring his bill to the floor because of opposition from democrats. both in the house and senate democrats were aggressively trying to defeat our efforts under the guise of protecting affordable housing. mr. d.o.d. and mr. sarbanes blocked -- mr. dodd and mr. sarbanes blocked those reforms in the senate. luckily some members from the other side have noted this failure. in 2008 president clinton said i think the responsibility that the democrats have may rst more in resisting any efforts by republic

caller: guess my question was answered about fanny and freddy.did we let them kick the can down the road until after the election? and when are we finding out congress involvement in the housing problem. when we drill down and figure out what they did or didn't do to hurt or help the problem? host: mr. yalman onaran? guest: again, why is it being kicked down the road? i'm not so sure. again, there have been many issues to tackle and administration has chosen not to tackle that one. i think the biggest reason for that is the mortgage or housing market which has already gone down. prices have gone down is still very sensitive if you really try to dismantle fanny and freddy right now or do something differently it could spook the mortgage market more and the practice could go down more and it could really, bring the reception or rec resession back and that's the fear on capitol hill so they have sort of been waiting for the economy to recover is my suspicion. and the second part of your question, i'm sorry, i forgot. host: housing markets kicking th

caller: guess my question was answered about fanny and freddy. why did we let them kick the can down the road until after the election? and when are we finding out congress involvement in the housing problem. when we drill down and figure out what they did or didn't do to hurt or help the problem? host: mr. yalman onaran? guest: again, why is it being kicked down the road? i'm not so sure. again, there have been many issues to tackle and administration has chosen not to tackle that one. i think the biggest reason for that is the mortgage or housing market which has already gone down. prices have gone down is still very sensitive if you really try to dismantle fanny and freddy right now or do something differently it could spook the mortgage market more and the practice could go down more and it could really, bring the reception or rec resession back and that's the fear on capitol hill so they have sort of been waiting for the economy to recover is my suspicion. and the second part of your question, i'm sorry, i forgot. host: housing markets kicki

and fannie were out of control. but that's not an easy thing to do to control freddie and fannie. they were quasi-private agencies that were loaning money like mad to people that wanted to buy houses. the trouble was they had just lost a billion dollars here and there, so things weren't going quite right for freddie and fannie but freddie and fannie had ays to fight back. they had many, many lobbyists in washington, d.c., and they gave lots of money away to senators and other political people. so the president is asking for authority to control freddie and fannie. the president got the bill through because republicans controlled the house at the time, got a bill through the house that went to the senate. but because the republicans did not have 60 votes in the senate, the bill was killed by the democrats in the senate. . in the men time the senate democrats disagreed and congressman frambing who is the one in -- congressman frank saw it differently. he said these two entities are not facing any kind of financial cri

you are familiar with alfred may -- fannie mae and freddie mac operates. do you see their activities as having any role in the growth of this bubble? >> i think they were doing what they were instructed by congress to do to a great degree. they took on weaker forms of mogages in greater amount -- amounts. that has been covered in the reports. they also bought the required 20% down payment, but then they would buy mortgage iurance from other entities. i look at the profiles of some of those loans. frequently, a significant percentage of the time, more than 80 percent of the borrower wasoing to mortgage payment that is not sustainable. they were still, in effect, helping people to participate in something that wouldd to big trouble. >> what did you sell your freddie mac -- why did you sell your freddie mac stock? >> i sold it for a lot of reasons. at one point, it became aarent that they were getting more and more tranched by trying to report increases every quarter. they became quite interesd in having that happen. they also bough some bonds that had nothin

caller: guess my question was answered about fanny and freddy. why did we let them kick the can down the road until after the election? and when are we finding out congress involvement in the housing proble when we drill down and figure out what they did or didn't do to hurt or help the problem? host: mr. yalman onaran? guest: again, why is it being kicked down the road? i'm not so sure. again, there have been many issues to tackle and administration has chosen not to tackle tha one. i think the biggest reason for that is tte mortgage or housing market which has already gone down. prices have gone down is still very sensitive if you really try to dismantle fanny and freddy right now or do something differently it could spook the mortgage market more and the practice could go down more and it could really, bring the receion or rec resession back and that's the fear on capitol hill so they have sort of been waiting for the economy to recover is my suspicion. and the second part of your question, i'm sorry, i forgot. host: housing markets kicking th

it will mail either not the under-regulated. >> what about fannie mae and freddie mac? >> they are the first major element of the financial system to be reformed. bx&>> mike cox is the best exae of these things we are doing. >> he was surrounded by people who voted against it. >> they are playing an important role. more important than they were before. >> when asked about the gge's, we said they were too complex to put into this bill. >> they are connected to reform. >> that is the second thing we did in our bill. study and action mandating it at the beginning of the next congress. that is not as strong as some of us would like. >> we begin that today with fha reform. [unintelligible] [no audio[unintelligible] >> they don't want restrictions on over leveraging. >> the senate vote will help reform this. [unintelligible] c-span.org>> you have tough regs and several agreements. we will have -- we will toughen the volcker rule. they are not a bigger mess than you think they are. >> how will toughening the volcker rule help? >> that is going in a direction that many people

fannie and freddie were in trouble long ago.he too big to fail contracts when it comes out of a push for reform for those two entities -- it does come from these. you have something government sponsored, agreed to buy mortgages from banks and package -pthem and resell them as mortgage-backed securities. it had a lot to do with the housing collapse. host: something likely in the bill as talked about in "the washington post" today, described as a derivatives spinoff plan, gaining support. banks would be forced to spin off their derivatives. the plan seems to be gaining it is championed by centerized.- blanche lincoln. it had been opposed by the administration. some lawmakers in both parties, multiple banking regulators and wall street, but appears to be gaining support. your reaction? guest: derivatives swaps are very complicated. i never worked on wall street. i never worked on the house financial services or banking committee. i never dealt with these issues, but neither have the large majority of congressional members who will

-- fannie does not disclose requested buybacks. are there requests from these larger institutions to buy back these mortgages? >> i think the major banks of the company -- country now old a cap of the larger risks.%% and that goes to reach of the things that you pointed out, each of the potential sources of lost still ahead. again, this is still an unknown. we want to be conservative in making these assessments, as we+ were a year ago. our supervisors will continue on a regular basis -- one of you%- said in your opening remarks that rew do not contemplate stress tests along this -- that we do not contemplate stress test along this basis. i hope we do. aggregator lee, quarterly, difficult challenges and assessments -- regularly, quarterly, and difficult challenges and assessments. carta are you saying that will be ongoing or quarterly? >> -- >> are you saying that will be ongoing or quarterly? >> both. >> you have said that there will not be a new tayy are p program. -- t.a.r.p. program. that no money going to gmac. but we do not an

it was freddimac a fannie mae. and ty in the he business of underwriting people's hoortgages and this grew andrew an. well, by 2003,n whilwe were in e height of the al estate boom and it smed like housing prices were dbling ery few years,eddie c and nnie mae lost millions of llars and that reflted e facthat fredde mac and fannie mae in the president's estimation were in trouble. so the president wanted more authori fm coress to regulate fredd mac a fannie who were lgely private and thpresident d no authority to do that. he is requesting authority. the respon of the democrats in this case, particularly the top democrat in thhouset th time, was representative frank. and he said ese two entities, nnie mae and freddima aren't facing any finncial crisis. the re the exaggerate, the ss we will see in rmof affordable housing. now 20-20 hindsight you lo back and say, this isn't a smart thing to have said because they were in huge trouble. they continued to be in ge trouble. the are ways extended way beyond theve any mns to

you are familiar with alfred may -- fannie mae and freddie mac operates. do you see their activities as ving any role in the growth of this bubble? >> i think they were doing what they were instructed b congress to do to a gre degree. they took on weaker forms of mortgages in greater amount -- amounts. that has been covered in the reports. they also bought the required 20% down payment, but then they would buy mortgage insurance from other entities. i look at the profiles of some of those loans. frequently, a significant percentage of the time, more than 80 percent of the borrower was going to mortgage payments. that is not sustainable. they were still, in effect, helping people to participate in something that would lead to big trouble. >> what did you sell your freddie mac -- why did youell your freddie mac stock? >> i sold it for a lot of reasons. at one point, it became apparent that they were getting more and more tranched by trying to report increases every quarter. they became quite interested in having that happen. they also bought some bonds that

fannie does not disclose po requested -- danny does not disclose requested by? -- fannie does not disclose requested buybacks. arethere requests from these larger institutions

it would barely cover the $145- plus billion that fannie mae and freddie mac cost. if you look at page 18 of the house offer, it allows for taxpayers to be the backup of the bailout of the fund runs out of money. after the bailout fund, the fdic will tap its line of credit, with the treasury to follow up and finish up the bailout. but experience shows that amount will not be enough. taxpayers will be left holding the bag for the cost of future bailouts. as long as the government is in the business of bailing out institutions, too big to fail, no amount of taxpayer money will ever be enough. the way to protect the american people is to end bailouts once and for all and use the bankruptcy as central to the solution. it will give certainty to the marketplace and discourage risky practices, eliminate taxpayer liability that the house offer will do, and not have political interference. with that, i would like to yield the rest of my time to the gentle lady from west virginia. am i like to thank the gentlewoman. in summary on this amendment that i offered, i offered this

we do not just stop with fannie and freddie, do we? >> we want to break the lenders view of having conservative underwriting. the only way to do that was to get fannie and freddie to ssart having flexible underwriting, which they did, starting in 1993. it was a progression that occurred over 15 years. another is enough blame to go around. we should probably look at what the appraisers did. >> do not get me started on appraisers. >> thank you all of you for your responses. this concludes this hearing. without reserving the right to object, the record shops left open for seven days so the members may submit information for the record. without objection, i will enter this binder of hearing documents and statements submitted by the interested parties for the committee record to the committee stands adjourned. [gavel] >> before heading to canada for the g-8 summit, president obama took a moment to speak about the financial regulations bill. negotiators worked through the night to craft a compromise version of the measure. the vote was along

-- fannie does not disclose requested buybacks. are there requests from these larger institutions to buy back these mortgages? >> i think the major banks of the company -- country now old a cap of the larger risks. and that goes to reach of the things that you pointed out, each of the potential sources of lost still ahead. again, this is still an unknown. we want to be conservative in making these assessments, as we were a year ago. our supervisors will continue on a regular basis -- one of you said in your opening remarks that rew do not contemplate stress tests along this -- that we do not contemplate stress test along this basis. i hope we do. aggregator lee, quarterly, difficult challenges and assessments -- regularly, quarterly, and difficult challenges and assessments. carta are you saying that will be ongoing or quarterly? >> -- >> are you saying that will be ongoing or quarterly? >> both. >> you have said that there will not be a new taye are p program. -- t.a.r.p. program. that no money going to gmac. but we do not anticip

theriskased capital models for fannie and freddie.it's not well understood but those models that were put forward by the regulator did not include credit scores. they did not include documentation. so that if fannie and freddie r to make a 90 fio or vantage score alone with no income documentation, the risk based capital standing on that loan was exactly the same as making a 80 kert is core loan fully documented. and that is still the case in the regulation of the state so that capitalstdards with fannie and freddie aga did not increase the way that one would have expected them for creasing additional risk and finally, the risk culture in the institutions ere appalling in many cases. the mba published a paper couple of weeks ago to read it goes into detail aboutow the credit culture in some of these institutions did ot hold up and look at housing ad america.org for a copy of that paper for a good review. now, what is the issue that we uld face e countercyclical down payment proposal itelf. fit of alli think that he would run into poli

-- fannie does not disclose requested buybacks. are there requests from these larger institutions to buy back these mortgages? >> i think the major banks of the company -- country now old a cap of the larger risks. and that goes to reach of the things that you pointed out, each of the potential sources of lost still ahead. again, this is still an unknown. we want to be conservative in making these assessments, as we were a year ago. our supervisors will continue on a regular basis -- one of you said in your opening remarks that rew do not contemplate stress tests along this -- that we do not contemplate stress test along this basis. i hope we do. aggregator lee, quarterly, difficult challenges and assessments -- regularly, quarterly, and difficult challenges and assessments. carta are you saying that will be ongoing or quarterly? >> -- >> are you saying that will be ongoing or quarterly? >> both. >> you have said that there will not be a new taye are p program. -- t.a.r.p. program. that no money going to gmac. but we do not anticip

you are familiar with alfred may -- fannie mae and freddie mac operates. do you see their activities as having any role in the growth of this bubble? >> i think they were doing what they were instructed by congress to do to a great degree. they took on weaker forms of mortgages in greater amount -- amounts. that has been covered in the reports. they also bought the required 20% down payment, but then they would buy mortgage insurance from other entities. i look at the profiles of some of those loans. frequently, a significant percentage of the time, more than 80 percent of the borrower was going to mortgage payments. that is not sustainable. they were still, in effect, helping people to participate in something that would lead to big trouble. >> what did you sell your freddie mac -- why did you sell your freddie mac stock? >> i sold it for a lot of reasons. at one point, it became apparent that they were getting more and more tranched by trying to report increases every quarter. they became quite interested in having that happen. they also bought some bond

regrettably this big does not factor in -- does not factor in the bailouts of fannie mae and

we also owned freddie and fannie. does or not someone's relatives. what they are, they are the largest secondary mortgage companies in the united states which means today uncle sam, the federal government today, effectively owns well over half of all the private mortgages in the united states. consider that. over half of all the private homes in this country that have mortgages on them which are the overwhelming majority, those mortgages are owned not by a private bank anymore but by the federal government and if america goes in and purchases a mortgage today on a property and it is a great time to buy a home, nine times out of 10 you will getting-- begetting our mortgage from the federal government. this is completely what we were doing 18 months ago. act about the government had taken over control of the private student loan industry, so you don't get private loans from private banks. now you have to go to the federal government to get a student loan and the government takeover of health care. icons from-- calculated if you add all those purchases

fannie mae and freddie mac do not originate loan they buy loans. >> that's right. but they do securitize. tuallyabout $4 trillion in subprime and alt-a loans wer securitized by fannie mae and freddie mac, at the time you're looking at these things in 2007. so did you ake into accot the fact tha they were this number, it turns out to beabout milliony fannie mae and freddie mac, were, in fact, ounding at that time? >> i don't recall tat bein a ctor. that came up in any particular dealcommittee asthma to. >> mr. weill? >> commissioner, on the monitoring side, we would use the infoation. >> i'm sorry stickers on the monitoring side, on the surveillance i'd on the securities, i don't recall that we would use the information. >> and what about the ratings site? i dig at the monitoring ide occurs afterward, but what about thratings site did you have this information at the time that you made the ratings? know is the anser? you didn't? >> commissioner, i answered as to the ratings site. >> i understand. now this basically is my question. hocan you make a rating on te subpr

well, approximately $150 billion later, we know that fannie and freddie did have to be bailed out thatrolling the dice was not a good strategy. we know that we were told these are the same folks who also told us that the national flood insurance program would never go broke, the crop insurance prram, medicare ll never go broke. we've heard it before, mr. speaker. to somehow believe that ultimately taxpayers will not be called upon to have to bail out these firms is asking us, frankly to igne history and to suspend disbelief. again, it is time to end the bailouts in the motion to instruct -- and the motion to instruct would do that. too bito fl. becomes a self-fulfilling prophecy. in many respect the bill ought to be renamed the perpetual bailout act of 2010. it as the wrong scheme. bankruptcy ishe proper scheme. i know the chairman has told us, well, we have death panels for these financial firms. well, what happened on chrysler and their so-called death panels? we know that washington decided to play favorites. certain creditors were benefited at the expense of oths. unsecured credito

the list i've gone through, the banks, fannie, freddie, student loans, chrysler all of that a third of our private sector activity, obamacare, 17.5% of the private sector activity of the health care, swallowed up, taken over by the time this is implemented in 2014. so, now we're at 51% of the former private sector activity, now nationalized. taken over under the ownership, management, or control they have federal government. the gentleman earlier talked about hugo chavez. i saw the picture of the president glad handed a handshake with hugo chavez almost a year ago. i said when it comes to nationalizing companies, hugo chavez had taken over a cargill rice plant in venezuela. but when it comes to nationalizing companies, hugo chavez is a piker, he can't hold a candle to the president of the united states of america. today we've lost 51% of our private sector activity to the nationalization of this federal government and they have nationalized under obamacare, our skin and everything inside it, the most sovereign thing we have, now we can't manage it the way we managed it before. we can o

. >> on a slightly different, but i think related note, when does the administration returned fannie and freddie toothh private sector? >> i'm not sure when it is framed quite that way, but let me answer it this way. we are deep into a process of examining what set of reforms should replace the current system that we have in the housing and finance market. those required -- those would require somethiig well beyond the basic problems then prevented the gst's. -- the gse's. i have said publicly that we expect to recommend senate broad reforms sometimes -- sometime next month. a and i would point out that thh losses that we still face in these institutions are losses that we inherited. at our assistance, they have put in place much more conservative uuderwriiing standards. they're bringing down riss and restitution quite significantly. institutions today are being run much more conservatively, as you might expect. i think we're going to find -- i hope we will find broad support in the congress. this is the kind of reform that these institutions and the housing market needs. >> thank yo

it says the costs are searching for freddie mac and fannie mae. for all the focus on the historic federal rescue of the banking industry, it is the government's decision to seize it freddie mae and freddie mac that is likely to cost the most money. the tab stands at $140 million. the story is about freddie mac and fannie mae buying homes in foreclosure and reselling them for 60% of the original cost. that is the front page of "the new york times". sacramento, arnold, on the republican line. caller: hi. my comment is yes, the states -- the federal government should help states because of the state's help the federal government paying taxes as well. i think we should all just try to hang in there and get out of this by helping each other. host: iowa. joe on the democratic line. caller: how are you doing, man? host: doing well. caller: you know what is hurting the country the worst? we are paying 30% of our paycheck. and that does not include health care, which is another 8% of our paychecks. even the people who are working are giving up such a large

the government sponsored mortgage lenders fannie mae and freddie mac will no longer be trade on the new york stock exchange. an announcement today said they're being delisted after their average stock price fell below $1 a share. as for the rest of the wall street, it was a relatively flat day. the dow jones industrial average gained more than four points. the nasdaq rose a fraction of a point. a federal judge in san francisco heard closing arguments today in a landmark challenge to california's ban on gay marriage. two same-sex couples are suing to overturn the proposition 8 ballot measure that voters approved back in 2008. regardless of the outcome, the case is expected to go before an appeals court and will likely reach the u.s. supreme court. those are some of the day's major stories. now back to gwen. >> ifill: the president has received mixed reviews for his handling of what has become an unprecedented and chaotic trang dee with no end or clear solution in sight. he acknowledged as much last night. >> all right this oil spill is the worst environmental disaster america has ever fa

rules and that procyclical effect they have or are rating agencies not really being uch much and fannie a freddie are not mentioned in the lislation so i am just wondering whether we will survive the political and poli fix we are facing in 2010? >> somebody want to take that one? hn. >> well, i think the answer is, i don't think, not only is the legislation not addressing the problem of the response to the problemsince the lehman crisis , probably has reinrced the determination of those who take isks in the real estate market tcontinue to do so. again, you know, the baward looking 's very hard to do but it is arguable that some of the people who are supplying insurance and i don't want to be too eser here, but basically people involved in keeping i run-up heaven billy-- real been punished and i don't thk you have to meet out punishment, but if i am running that kind of an organization, i think my sort of pragmatic dgment is we should get back tohis whole thing quickly as we can. the rating agencies are another issue. we have had a session on that that alex design. i am amazed that they

still to come, credit fannie and freddie, credit card crash." of general stanley mcchrystal, tuesday will bring the confirmation of general david petraeus. dozens of commanders have cycled through the top jobs in the u.s. command overseeing both wars. three of the commanders, including the recently dismissed general stanley mcchrystal, had been fired or resigned under pressure. history has a judge to many of them harshly. only general petraeus and general or the year note are widely praised as having mastered the complex mixture of skills that is required in running america's wars demands. next, a caller from oakland, california. what is on your mind? caller: good morning. i would like to say a few things. i hope i can get it all out. number one, i am black. i am a democrat. you can call me a socialist or whateever. -- whatever. i do not know why race had to be an issue. republicans always say it is not their issue. nevertheless, i am black. i just wanted to say that -- there was a person in the last administration that succ deficits did not mat

fannie mae to the debt. congress believe that. the media believe that. i believe that.ery few people could appreciate the bubble. that is the nature of bubbles. the become massive dilution. i am much more inclined to come down hard on the ceo's of institutions that cost the united states government to come in and necessarily bolster them. >> let me prove that a little. i just want to sit for the record, i do think around the country there were people who thought the bubble was unsustainable. there were a number of experts. robert schiller, the real rub been a, a dean baker. -- nouriel roubini. this was something we had never seen hhstorically. moving beyond that for a minute, the rating agencies did play a fundamental role in accelerating the securitization and therefore some would argue that the origination of products intended to be highly efficient. we are talking about low teaser rates,-and a transition. there was a warning in 2004 from the fbi that mortgage fraud became so epidemic that if unchecked, it would result in a crisis as big as the s and l crisis. there w