managi troubled subprime mortgages in the freddie mac and fannie mae portfolios. the people of the united states have through the fed have propped up fanny and freddie to the tune of $200 billion. for the record, can you provide the contract that black rock has with the fed, particularly the one regarding the management of fannie mae and freddie mac's port fort yoes? >> i don't know if i can. we don't run black rock. we have two or three seats on the board, but don't have a ceo or chairman and he doesn't report to anyone in bank of america -- >> you own 49.9%. isn't that a strange relationship. >> we don't own 51%. that would be the difference. >> do you know how much black rock will earn from that contract with the federal reserve to manage fannie and

i do not think the oversight worked over freddie mac and fannie mae. i mean, these people were a so- called government entity, yet they could lobby and make political contributions. i do not understand the point of that. so we need to slow down. everything is being pushed through. we hear joe biden the other day saying that it was anybody's guess as to the stimulus bill, what would happen. there were people who said this is going to have no benefit. i think this is a big push -- to me, it is the biggest power grab ever, and i would not trust an oversight body without really going slowly as to how this is set up. guest: i think she makes a fair point. we should go about this slowly. we want to make sure that we address these issues, and address them well. there is no reason to rush. right now our economic institutions, there is some stability in them, so there is time to look in june and july. i mean, i want to get it done so that we can sign a document in this congress because i believe it is important. fannie mae and freddie mac -- absolutely. look, t

the problem is that we privatized fannie mae and freddie mac back in 1968. and as private existence, they've looked at all the money the banks were going and said we ought to imitate that. and as they started imitating, they actually took off some of the responsibility from the banks, and they imitated what they did, and that had disasterous consequences. but no one ever told a bank to lend to somebody beyond their ability. no one told a bank to be bad in their accounting practices, so bad that the banks themselves didn't know what their balance sheet was and that's why the banks -- they didn't know their own balance sheets, so they didn't know the balance sheets of any other banks and weren't willing to threatened to anybody. no one told them to engage in those kinds of irresponsible lending. even alan greenspan pointed out that he made a mistake. he thought the banks were sufficiently responsible that they would have enough self interest that they would not engage in successive risk taking. but look at the banks. it's happened over and over again. we had t

these two individuals have the responsibility for regulating fannie mae and freddie mac. mr. lockhart, you are recognized for such time as you may consume to make your remarks. >> thank you, mr. chairman. chairman con jurs ski and ranking member garrett and other committee members, thank you for inviting know speak today about fannie mae and freddie mac, the future and federal involvement in the housing and finance system. with almost $12 trillion in outstanding mortgage debt, housing finance is critical to the u.s. economy. as the conservator, fhfa's goal is to preserve the fannie and freddie. as the regulator, our mission is to ensure that the enterprise provides liquidity, stability, and forgeability to the market a sound manner. that is a statutory responsibility as it is the public purpose that congress gave the enterprises. the enterprises own or guarantee 56% of the single-family mortgages in the country for a total of $5.4 trillion. given that massive exposure, the best way to preserve the assets and fulfill the mission is to stabilize the mortgage market and strength

allison, for your willingness to serve and your efforts at fannie mae. i also want to be mindful of what i think we're going to need to do to get out of this economic recovery. we need to be mindful of the successes of this economic turn around will be driven by small business and middle class families. it is important, as i said earlier, to repay the tax payers as quickly as possible and not to just reinvest the funds because we have them. i think this money was specifically put out for a specific reason and we need to keep that in mind as we move forward. and we also need to understand the community banks play a critical role in the life bloods of our small rural communities across this country and they really weren't the cost of the economic problem, at least from my perspective. and maybe most difficult is we need to deal with the too big to fail problem that comes out. and if you can help us in that, i think that the sooner we can deal with that, the better off this country is going to be in general. with that, mr. chairman, i look forward to the te

i have also heard people make the charge that fannie mae and freddie mac brought down the system. but i want to ask you that question, is that your opinion? i can express mine in that fannie and freddie fail affidavit the credit crisis occurred, and the credit crisis occurred more in the securitization in the private markets, particularly of subprime loans than of fannie and freddie, and they followed in the destruction of credit in the country. is that relatively true? >> well, there are many, many factors and many people guilty over this bubble that we had and in particular the housing market. there was excess liquidity. as former secretary paulson used to say, risk was mispriced not only in the housing market, but across financial markets and across financial institutions. certainly, in the housing market underwriting standards fell dramatically, and in particularly the subprime market and most of it did go into the private label securities, and i have to admit that fannie and freddie were big buyers of the securities and not only the aaa ones, but they and everybody else includ

fannie mae and freddie mac charged them thousands of dollars because credit scores, which they did not do only eight or nine short months ago. guest: well, the fannie and freddie situation is something -- i think it has sort of fallen by the wayside since the crisis began last september. that is one of the first tipping points we saw, is when the government had to take over fannie and freddie. for last fall. so that is one of the things i think congress is going to get back to in the next few months. as far as the broader regulatory look is, what exactly is happening with fannie mae and freddie mac? we focus so much on the big banks. preventing major financial institutions from collapsing, that they have fell out of the public consciousness. but they are still open for business. they are still billing -- in some ways, the only mortgage game in town. so there is a major policy question of what to do with these the two major firms. host: since they are sami- government agencies, are their executives' pay being overseen? guest: yes, that is one of the things when they were taking over, th

to manage the toxic assets of freddie mac and fannie mae. in their collateralized mortgage obligations. it's a mess that he helped to create but now we have hired the same man to clean it up? one question i have to ask is, how can we be sure he isn't self-dealing or covering up what he did in the last quarter century? some might say that relationship is a bit incestuous. the administration's financial regulatory reform proposal includes some consideration for dealing with too big to fail institutions, but rather create an architecture that keeps risk in hand what they are doing is they are allowing institutions like black rock to become too big to fail. in fact black rock's assets on our larger with the purchase of lashingly's than the federal reserve system itself. black rock although not bank is getting too big to fail perhaps? is black rock favoritism an example of how we should be rebuilding our financial system? paul krugman thinks not. i wish to place his editorial in the record tonight in which he states in short, mr. obama has a clea

can you give me some idea of the justification for a company like fannie mae increasing its exposure to derivatives at seemingly the worst possible time by a quarter of a trillion dollars? >> the fanny and freddie had many problems that surfaced over the last year. and, certainly, in their june 10-k of last year they mentioned many issues. the derivatives have note been an issue that actually caused any of the problems -- any significant problems that the two firms. but the derivatives were used to hedge their mortgage portfolios. and what they do, often times, as the market changes, they add a derivative but then rather than closing it out they buy one to counter the one they had before. and so you get this piling up of derivatives. that's an issue we talked to them over the years about. could they close them out rather than buying a counter one? often times they buy it with the same counter party so the actual exposure is not that large. but it's an issue that we've been talking to them about. before the conservativeship and i think congressman garrett asked earlier, there are ways

fannie mae and freddie mac are willing to work with you. you can go to the financialstability.gov website if you're a homeowner who's concerned and get more information and contacts, people who can counsel homeowners about how best to hold on to their homes. >> but the servicers need to do this as well. we carved out the safe harbor for these, which was controversial, to insulate them against lawsuits from investors. and we -- frankly the investor community broke up and said you're breaking contracts here. and they're right. but we understood if we didn't do that, the argument would be, look, we'd like to help out these homeowners but we can't face the possibility of an overwhelming number of lawsuits for investors that will sue us for engaging in modifications. so, we insulated them from the problems. what are the servicers doing? servicer by servicer, what are they doing out there? the homeowner is reluctant, you're right. the servicer shouldn't be reluctant in light of the safe hashers. we want to know what they're doing and whether or n

. >> are you aware of one contract blackrock manages may be compromised, dealing with fannie mae and freddie mac? and i wish to state this for the record. lawrence bank, the head of blackrock, in which the mr. summers who heads the national economic planning council, is a major investor, just got several no-bid contracts from the fed including one to manage fannie mae and freddie mac. does the fed now that he is the person who first created a collateralized mortgage and brought that instrument to freddy mac and sold it to them for over $1 billion? he's now the fed's go-to man through his firm on workouts. i have a question about the revolving door and how do you protect the public against the company's conflict of interest that relate to his own and his firm's historic ininvolvements with those portfolios? >> it's a separate institution. i don't understand your question. >> you have signed a contract with blackrock to manage the fannie mae and freddie mac -- >> not to my knowledge. >> i understand it was one of the four and five contracts you signed with blackrock. >> i'd have to go

why are we further bogging it down with trying to solve problems for fannie mae and freddie mac? page 115, the term energy efficient mortgage means a mortgage loan under which the income of the borrower for purposes of qualification for such loan is considered to be increased by not less than $1 for each dollar of savings projected to be realized by the borrower as a result of cost-effective energy saving designs. i'm sure that will create a lot of jobs. then we get to page 141. the cranston-gonzalez national affordable housing be act as amended. why are we amending the cranston-gonzalez national affordable housing act? i thought we were doing an energy bill here. page 142, use of building materials and methods that are healthier for residents of the housing, including the use of building materials that are free of added known carcinogen that is are classified as group one known carcinogens by the international agency for research on cancer. outlined building materials as well, it appears. then we have a grant program to increase the sustainability of low-income community develop

this president has declared that he doesn't want to own or manage, freddie mac or fannie mae, the financial institutions or the auto makers of america, but he has engaged in all of that without an exit strategy. i call on president obama to come up with an exit strategy to divest the american taxpayers that he makes hugo chave3 that he makes hugo chavez a piker. mr. akin: that is a summary of where we're are. this disease that struck the

in, -- in the day i was sworn in, i started trying to introduce legislation that would rein in fannie mae and freddie mac. if you look at history, when you will see as 95% of the democrats supported fannie and freddie. add that to 15% of republicans, and that made a majority. unfortunately, we were not able to do with the greatest systemic risk. some republicans did not agree with me. but what i find ironic is any time i hear people say you republicans spent too much money, well, the democrats are spending more. the democrats were supporting fannie and freddie even more than republicans. all i can speak to is what i have tried to do. now we have a plan on the table. the republican plan would rein in the federal reserve, have them focus on monetary policy. the democrats' plan would expand the federal reserve, institutionalize a bailout nation. if you agree that bailing out aig, citigroup, and gm at the expense of struggling taxpayers and small business, if you think that is good economic policy, fine, support the democrat plan. if you believe the best consumer protection is less competitio

and to the banks, the financial markets, the takeover of fannie mae and freddie mac, takeover of large insurance companies, our auto industry. you know, people back home and all around the country are alarmed. and as i heard someone say last week, they tried to explain to me they're alarmed, and they threw up their hands and they just said "i'm outraged out," and couldn't speak any more. my question for my colleagues today: is this a good time to create another government program? the answer on the other side is obviously been yes. yesterday they all voted, i believe, to get the federal government in the tourism business, to close off debate and pass a plan that would get the federal government to promote tourism in america all over the world. i think it's like $400 million. in today's terms, a small amount of money. but the tourism industry, while hurting because of the economy, is certainly not in collapse and need of a government bailout. the tourism industry spent billions of dollars on advertising last years. and it's not as if the rest of the world does not know we're here. the p

well in part facilitate bad loans in bad neighborhoods sold up through fannie mae and freddie mac which has been nationalized because of the insolvency in pa created by some of those transactions. and get out the vote democrat drive that took place in many of the cities, chicago, for example, and register hundreds of thousands of fraudulent voter registrations. and in fact by acorn's own admission over 400,000 fraudulent registrations were filed by acorn in that cycle leading up to the 2008 election. and i ask for investigations, i ask for congressional inquiries, i ask for the justice department to look into acorn. and i have no sympathy on this side of the aisle. temporarily had some sympathy from the chairman of the judiciary committee, mr. conyers, for about three weeks was on record as believing there was evidence there that may warrant that we take it up and investigate acorn. three weeks after he expressed the sentiment he concluded there wasn't enough evidence there. there's a lawsuit against acorn that has been won. and a settlement that's been achieved. we have put hundreds of

. >> are you aware of one contract blackrock manages may be compromised, dealing with fannie mae and freddie mac? and i wish to state this for the record. lawrence bank, the head of blackrock, in which the mr. summers who heads the national economic planning council, is a major investor, just got several no-bid contracts from the fed including one to manage fannie mae and freddie mac. does the fed now that he is the person who first created a collateralized mortgage and brought that instrument to freddy mac and sold it to them for over $1 billion? he's now the fed's go to man. how you protect investors? >> the federal reserve is a separate institution from freddie mac. i do not understand your question. >> you have signed a contract with black rock to manage freddie mac. i understood it was one of the four or five contracts that you had signed with black grout. >> i would have to go back and check on that. >> i would appreciate that. >> before you have to leave, i've -- we are going to make to fiscal policy decisions this summer. when talk about capt. trade and health care legislatio

with the horrendous experience the american people have had with fannie mae and freddie mac, i thinkhe last thing we want to do is model insurance reform by creating some sort of hybrid between the federal government and private insurance that would probably alternately end up at the same place as a government-run option. >> talk about the government-run option. when i mention this to people, they say medicare works, medicaid generally works. so why not some kind of program that is more expensive? isn't medicare a model for what you would want to do? >> it is. let me say that if you think medicaid and medicare are working, i encourage you to sit down with a hospital administrator anywhere in the country today. the reality is when the government takes over an area, health care or any other area, it is ultimately operating with scarce resources and rationing is the natural consequence of that. hospitals have been struggling for years with what is called the reimbursement rate that comes through this very same public system today where the hospital says the procedure costs this much and

host: out of the baltimore sun this morning, former fannie mae head to take over bank bailout. the former head of the troubled mortgage jipent fannie mae has been confirmed to oversee the government's $700 billion bank bailout to confirm friday as assistant secretary. alison will oversee the troubled asset relief or tarp program which was established last fall to inject capital into banks hit hard from the mortgage crisis. tampa, florida. >> i want to thank you for taking my call. i want to comment on the last who spoke. i also had the same idea about those who want to sleep with animals. now, if these people are claiming that that is how god made them, like that is who they are, that is how god made them, then no one has any right to say that they also don't qualify to mary the animals. and then also, we have those who want to marry more than one. so if i want to marery three or four women, can the laws prevent mem from doing that? host: more from last night's radio television correspondent's dinner. this is the latest offering by the folks at jib jab. ♪ ♪ ♪

most economists believe one of the major causes besides fannie mae and freddie mac one of the major causeas the fed fund's rate in europe and here in the united states, the central banks setting a negative interest rate when adjust ford inflation for four years running. there's no way that wouldn't cause a housing bubble. but the question about the involvement in fanny and freddie purchasing subprime, purchasing the loans and the instruments that, otherwise, would not maybe find ready buyers out there, that is unique. and that is a part of their role as government-sponsored enterprises, really, that they evolved into. as i said originally in '89, they wouldn't go near a lot of these practices and especially wouldn't go near the idea of buying these things for their own portfolio. but then that process changed and politics took over. what i wanted to ask about -- and i'll mention a couple of other factors as well. i don't think anybody says it was solely fanny and freddie but a number of economists worry about the bullying in the market that went with cra in terms of the direction of loans

. >> the worry is it sounds an awful lot like the way fannie mae and freddie mac got started. the question is what is the federal government's ultimate obligation? you said there's a proposal that billions of dollars would go in as a startup for a co-op. but really, there's no barriers in the law today with the exception of state regulation of insurance laws, there's no barrier to americans pooling resources and creating association health plans as we proposed for many years. i have to tell you, with the horrendous experience the american people have had with fannie mae and freddie mac, i think the last thing we would want to do is model insurance reform by creating some sort of a hybrid between the federal government and private nurens that would probably ultimately end up at the same place of a government run option. >> talk about -- i want you to talk about the government run option in this light. when i mention this to people, they say, well, medicare works. medicaid generally works. so why not some kind of program that's more expansive? isn't medicare a model for what you

how many contracts has the fed signed with black rock to handle freddie mac paper and fannie mae mortgage securities under your purview and how much will black rock be paid for those services? >> we have hired four asset managers to manage our mortgage-backed portfolio, black rock is one of them. i don't know how much we are paying them. >> will black rock be handling freddie mac paper? >> um, they'll be managing g.s.e.-guaranteed papers including freddy, fanny and begin any. >> i would seriously urge your staff to go back and look at the operations of black rock and mr. fink's operations at first boston before he founded black rock in relation to what they transacted with freddie mac and when they did that. >> gentlemen, time has expired. thank you, thank you very much. let me thank the chairman for his time. and at the outset of this hearing, i said that it is time to shine some light on the events surrounding bank of america's acquisition of merrill lynch. at this point i would say we got a peek, not much, but we don't have full sunshine yet. i would make three observations before we c

and later at black rock who treated billions of dollars of these securities to freddie mac and fannie mae over the last decade. i quote a sentence and we will place in the record from bloomberg news things when it first boston was largely the result of the creative work with mortgage-backed securities slicing and pulling mortgages and selling them as bonds and he took the concept to freddie mac where he sold the company's board on a billion dollar package. that was just the beginning. german bernanke what material can you provide the committee into the record that will plain how the fed will avoid conflicts of interest in self dealing by that firm and besio in the execution of contracts you have signed with black rock? >> we will provide you with the contracts explaining how it works. >> thank you. some lawyers have said rod or control fraud have characterized the mortgage securitization process. will you permit the fbi access to the mortgage instruments being managed by black rod as the fed contracts are executed and fulfill? >> if there is a reason for the fbi to investigate and the fbi

and that's the line of business of fannie mae, to keep people in their homes.i think that this will be an issue debated within congress, the administration will take its viewpoint on this down the road. i think what's most important is that we have a vibrant housing system in the united states, with liquid markets, so that people can access credit in responsible eights to own their home. after all, that's part of the american dream. so at this point, i wouldn't offer any specific prescription. i think this depends on major government policy going forward. this is a pivotal moment, and i think that it causes -- it calls for a debate, a reasoned debate, about the future of the housing market and of housing policy in the united states. >> thank you very much. that was pretty much a nonanswer, and i guess -- i guess during a confirmation hearing when you don't know if you're going to be confirmed or not, it's maybe unfair to ask that. i sure hope as time moves on and you are confirmed, that you will be more clairvoyant and helpful to us as to what you think ought t

of all these failed policies, none loom largely than the created monopolies of fannie mae and freddie mac. they allowed them to swell to unimaginable size and make property that's could not have been gained. and now expose tax aers to over $5 trillion of risk. although current market conditions preclude immediate sweeping action to end the market distortions, the current model is broken. it must be altered. once we've stabilized our economy, the reform bill will over a reasonable period of time transition away towards a competitive free market. any piece of legislation that propourts to by the system and does not touch fanny or freddie. making sure fanny and freddie are rock solid. their conservatorship will set under our bill. the government substidies will wind down. that being fanny and freddie. it is my honor to introduce the chairman of the committee, the gentleman from georgia, dr. tom price. we find out selfs in the current challenge not due to deregulation but because of the structure. the government wants to guarantee more bail outs to establish a permanent bail out agency. t

"sometimes the company already had ties to the government, like frenier -- fannie mae and freddie mac. sometimes the bailout state's beneficiaries are businesses, like aig, citigroup, and bank of america. the wards of the bailout state have more in common in government support." indiana, good morning. caller: is an amazing thing the power that the obama administration is amassing. they have taken over the car companies. taken over the banking industry. it is to the point now that here they are, trying to tell stockholders that we will take care of your money and give you pennies on the dollar, and we will sell it. if i thought that he was supposed to create money and jobs. so far i would say that we lost $2 million with no end in sight. i think that people who voted for him voted for him like a cult figure, with no idea of his policies. now that his direction of america is upon us and people are trying -- shaking awake. host: if the deal follows through, fiat will be exploring china and closing factories. steve is next. good morning. caller: we have to look at this carefully. i rememb

least of which is barney frank which is head of the house of representatives right now encouraged fannie mae and freddie mac to make loans to poor people so they could have a piece of the pie and have a part of the american dream and own their own home. people began to apply for a loan. these houses that may be sold for $200,000 are now worth 400,000 and those were 400 are now worth 800. that is a pretty good investment to go up in value. loans were marketed by mortgage companies they had the incentive to place loans. they got paid a commission on the basis of the loans that they put out. so the more loans that they had in the markets the more money they made. they decided they could enhance that prospect to radically if they could securitize those loans. of the mortgage companies began making loans to people who really should not own house is to begin with then they passed the loans up to wall street where they were bundled together called collateralized debt obligations and once that was done they said these are loans for thousands of thousands of people so they must be good so they gave t

will there be a recommendation for freddie mac and fannie mae? >> the future of the gses, including fannie and freddie is an important challenge for us, but we're not going to recommend in our initial

will there be a recommendation for freddie mac and fannie mae? >> the future of the gses, including fannie and freddie is an important challenge for us, but we're not going to recommend in our initial proposals for reform precisely what we think the future of those should be. we're going to begin a process of consulting with the congress and a broad session of housing experts on what we think the recommendations are. we'll defer recommendations on those things for a bit longer. >> okay. can you give me a time frame that you're looking at? >> i can't yet but we probably will next week when we lay it out. it's just a little early. given the scale of the stuff we're trying to take on. we want to do this carefully. >> no problem. thank you. >> mr. secretary, thank you for your time here today. we're going to allow you to leave, of course and go about your business of saving the american economy or lunch, whatever is on your schedule. but we thank you very much for being here. we'll send you some questions that you might'?'?a >> congress is expected to

own 75% of a.i.g., 5% of general motors, 10% of chrysler, 36% of citibank, 80% of freddie mac and fannie mae, and it goes on and on and on. and so we have all of this spending, borrowing, taxing now on top of that increasing amount of government ownership of our america's private economy. and if there is one thing that americans are clear on, it's that government should not be taking over bigger and bigger shares of the american economy. there was a survey that said 75% of americans agree that the federal government shouldn't take over the u.s. banking system. that was a poll done in february. more recently 60% say that the bailout loans given to g.m. and chrysler were a bad idea. a new poll on may 3st shows that 67% of americans are opposed to providing general motors with $90 billion -- i'm sorry, $50 billion and giving the government a 70% ownership interest in g.m. 56% of voters said it would be better to have g.m. go out of business. none of us want to see that. but most don't want to see the federal government owning american companies. the federal government is inevitably going to use

that, they promoted no money down home loans for people who had no money, and that is what caused fannie mae and freddie mac. they forced the banks in large part to do this. i'm not saying the banks are responsible, but your world of the precious government and how great and righteous they are whoas me away. i would rather have a free market operating and the wealth it produces over time than a spiteful government controlled program that you're mentioning, and sure, every 40 years real estate hiccups and people go crazy in it. i don't know how you ever get around that, but the point is that the glassman bill and repeal of it by clinton was the problem of this thing created by a democrat who deregulated the financial markets and caused the likes of big banks like what cove ya an bank of -- like what cove ya and bank of america to come out of that. guest: you're right deregulation was a mistake. banks are backed up by deposit insurance. the notion that you could run a banking system without regulation sometimes called fro banking is an idea that has been shown over and over again not to work.

as we've discussed at this subcommittee, there was an implicit belief in the market that should fannie mae and freddie mac get into trouble, they would step in to save them. in part it was that perceived federal lifeline that enabled these firms to borrow cheaply and take on so much risk. as we discussed reforming our regulatory structure to address firm that are too big to fail, i'm concerned we run the risk of bifurcating our financial system between those we designate as systemically significant and everybody else that's in competition. as our experience with the housing government sponsored enterprises demonstrates, this would be a big mistake. and it would provide competitive advantages to companies in a have implicit backing of the taxpayers and they would be incentivized to engage in higher risk behavior. that's what economists who look at the model tell us when they fret about what we're doing here. in the context of systemic risk regulation, do we run the risk of distorting market by labeling those institutions too big too fail as such and more effective to focus on potentially hi

influencing management decisions, and be required to submit a plan on how will and its interest in fannie mae and freddie mac. senators john cornyn and spoon are expected to hold a news conference later. even though the use of charter flights does not violate senate ethics rules as long as paid for by the members office, some senators been more than others. office account records show that senators chuck schumer and john cornyn are the biggest spenders, but are not the only ones to use charter flights. in the first half of the fiscal year, three others spent more than $100,000 each on transportation. following a decision by the united nations security council to move ahead with sanctions on north korea, defense secretary robert gates says he does not dismiss threats of retaliation. speaking in brussels, the secretary also says that it does not appear that the capitol has made any military preparations to follow through on the threats. officials from scotland, indonesia, and thailand, and from the missions in geneva expect in announcement of a global swine flu pandemic to be imminent. the worl

because, the fed could conduct monetary policy by buying and selling fannie mae, freddie mac and gmac debt instruments! [laughter]. >> and as it turned out, the economists were half right. we haven't paid off the federal debt, but we are conducting monetary policy, by buying and selling freddie, fannie and gmac debt. so, this illustrates the fact that five, eight years from now the gloomy outlook i have just given might be very, very different, should health reform and a -- in a constructive way be enacted. thank you. [applause]. >> thank you, bob for those excellent and somewhat sobering remarks. and, for your very kind words about nihcm's anniversary, appreciate that. next we'll hear from cleve killingsworth from blue cross/blue shield of massachusetts and is a leader of health reform in massachusetts and is also participating very much in the day-to-day way in that health care reform as well, and he has been an out spoken advocate for quite a bit of time now, on payment reform and he is doing some very interesting things with his own company. joining him will be andrew dreyfus, who

carter, strengthened in the clinton administration, resulting in the irresponsible behavior of fannie mae and freddie mac. it is not a republican phenomenon. the man is off base. furthermore, this problem is the result of the fear of obama's socialistic policies that kick in before the election as the rich -- as we realized he was going to be elected. this needs to be emphasized. this whole focus on ben bernanke is off base. we need to look at these policies and realize what we have done and what the democrats with their social leftist policies are doing to this country. host: on the independent line, we have ritchie. caller: how are you today? on ben bernanke,, i believe with the woman who said that when these people say they cannot recall and -- you know they are lying through their teeth. we should be careful who we put in, but we have no say. the american worker like myself, we have no said. they can put in who they want. no matter who you vote for, that will put in who they want, not to the public wants. i do not trust bernanke as long as i could throw him. have a nice day, now. host

plans to purchase $1.25 trillion in mortgage-backed securities, $200 billion in freddie mac and fannie mae debt, and $300 billion in treasury bills this year. since not enough people apparently want to buy the treasury bills at lower interest rates the federal reserve is stepping in and buying them in an attempt to keep the rate done. so far, the fed has purchased $481 billion in mortgage-backed securities, $130 billion in treasuries. the intense of the program is to reduce the treasury yields and interest rates but some say it may be backfire. a "forbes".co forbes.com articls could have a different impact, could actually cause inflation rather than -- and even cause a rise in treasury bond yields. this is what he said: -- quote -- "this can become counterproductive to the extent that you stoke inflation fears and you get an inflation-risk premium built in to the bond yields, you can't ease that away. you do have to be careful and more measured than that." in other words, when there's a perception which may be reality that not enough people are willing to buy these treasury bonds at lower

fannie mae and freddie mac over the weekend basically with a graft without claiming it and came out of bankruptcy on monday morning without going in and creditors got paid $0.100 on the dollar. the creditors 1.6 trillion dollars for the creditors, 500 billion held in china were paid off whole. how? u.s. government taxpayer gave them 400 billion and the clock is still ticking and we could eventually pay $1 trillion program makes no sense all of the bill strip out -- bailouts, wall street and auto six cetera and they are not punishing the shareholders but also the debt investors it is not fair. >> that is my second question i read about the debates about why the banks were nationalized and by the bondholders were protected. what in your opinion is the reason for that? why did that happen? >> in a complex world it is an easy answer. because they lobby our government. they lobbied your government when they had market valuations of 100 or $200 billion. for a while when citibank stock without water $2 they had a market cap of 10 billion i thought that would take muscle away but they were not

the government incentivized it, whether through the community reinvestment act -- fannie mae and freddie mac got involved in this, and that allow wall street to get involved in all these financial instruments. everybody was happy, and all this was happening because home prices kept going up and everybody was making money. my state was one of the state's, nevada was leading the bubble. when the bubble burst, we suffer the most during that period time. the rest of the company -- rest of the country got dragged down with us. barack obama coast office, and his answer to fixing the problem is basically what fdr did. it is like we do not learn from history. it was not fdr's polities that brought us out of the great depression. if it did, would you like to stay in it for 11 years? the only thing that brought us out of the depression was world war ii. it was not the policies of spending. it was a war that brought us out. by the way, the economy was still not good. the stock market did not recover for 26 years. do we want to see wall street not recover for 26 years? i do not think that is the pol

four contracts and maybe five to analyze and handle the troubled assets of freddie mac and fann fannie mae, making black rock the dominant player in pricing these distressed assets. i am concerned that black rock and its chief executive officer mr. fink may not be fair and impartial in conducting these responsibilities because they in fact have been heavily involved in inventing, creating and trafficking in those instruments for most of the last two decades. indeed, doing the risk analysis associated with them and selling billions of them to the government of the united states. so one of my questions, mr. bernanke, is do you know in what year mr. fink sold his first trench of mother-backed securities? the first was a girlon dollar. do you know what year that occurred in. >> i do not. >> do you think that's important for you to know? >> no i don't because arrangements we have with black rock and other asset management companies are carefully set up to prevent conflicts of interest, to set up fire wals between the portion of the company that is working for us and the portion that is engaging

failed policies, non-loom larger than those eckert did the government sanctioned monopolies of fannie mae and freddie mac. the expectation, the implicit guarantee of the federal government behind those to gse allow them to swell to unimaginable size and make profits that couldn't have been gained in the marketplace and now expose taxpayers to over $5 trillion of risk. in the 21st century, our housing system can't exist and prosper without fannie and freddie being allowed to monopolize and the market, privatize profits and socialize their losses. now ought current market conditions preclude immediate sweeping action to end fannie and freddie market distortions, the current gse model is broken. it is broken, it must be altered. once we have stabilize our economy, the republican financial system reform bill will over a reasonable period of time transition with the secondary market away from government sanctioned monopolies towards a competitive free market. any piece of legislation that purports to reform or financial system and does not touch the any or freddie cannot be taken seriously and