one of the most egregious examples of waington's fiscal irresponsibility, the ongoing bailout of fannie mae and freddie mac. these two failed mortgage giants directly fueled the financial turmoil that has cost millions of americans thr jobs, their savings and their homes. already bailouts of fannie and freddie have cost taxpayers $145 million with a final tab estimated to reach over $380 billion, more than the entire tarp bailout. despite these alarming facts, the democrat overhaul proposal designed to address the financial crisis completely ignore the two most visible and costly contributors to the crisis. madam speaker, there are two 800-pound gorilla named fannie and freddie in this room. they are responsible for over $5 trillion for outstanding liabilities, and they are now owned by the taxpayers. the american people cannot afford the risk, and they are tired of watching congress fail to act. today with the support of over thousands of youcut participants, we have an opportunity to save taxpayers $30 million -- $30 billion or more by taking immediate action to reform the failed mortgage

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

definition of section 201 that would define the term financial company specifically to exclude fannie mae and freddie mac from eligibility under title to's orderly liquidation authority. the amendment would also explicitly state that fannie and freddie are eligible for fdic receivership and orderly liquidation under the title just the same as any other financial company. given that my next amendment also dealsswith fannie and freddie, perhaps we can defer the usual debate until that point, mr. chairman. if you're prepared to accept, i am prepared to yield. >> they're going to be late to the party in 2008, 2007. the house passed a bill giving the bush administration severe powers over them. in 2008, they said that they need at the power of instant conservatorship if i want to do that. the senate and house concurred. secretary paulson under authority given to him by the congress in 2008 put them into conservatorship. since 2008, they have been very different. so fannie and freddie have already been subjected to a very severe form of restriction. what this amendment says is that we have to m

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

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

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

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

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

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

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

this bill, when it comes out of committee, say anything specifically about fannie mae and freddie ac? >> no, it won't, and that's a big disappointment to us. my democratic colleagues say it's too complicated an issue. my goodness. we are dealing with derivatives and credit default swaps. we are dealing with what is called in a book a demon of our own design. we are dealing with a lot of things that i don't think many members of congress understands. we do understand that the government has come in on -- on christmas eve, president obama said we are going to guarantee fanny and freddie's obligations 100%, and we are going to stand behind them. if you're going to beef up regulations, do it on something that the government is guaranteeing 100%. don't go out and assume some other obligations. address that. that really ought to have been the first thing. it and a.i.g. were the first two big bailouts.. 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 d

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

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 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

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: i saw probably back in the late 70's or early '80s and they changed fannie mae and it used to be a conservative loaning process of three per tenth and ten then 10% for the next 10,000 and 20% for the next 10,000. when they departed from that and they raised at least on the government corporations for that are owned by the federal government and they upped it from maybe, a maximum of 70 thousand on up to 125,000 and then it just kept getting worse and then what we had, we had, we allowed some of the savings and loans to invest more than 3 percent of their money into real estate and we had the savings and loan crisis. i think if we pursue a safe conservative policy in the future for home purchases, that would be in a lot better shape and i think the building industry is a large industry throughout the united states and i think that's where the country is taking their hit on the chin and i think we need to put the people back to work and the best way to do that, i believe, is to rehas been all of these old homes that have led paint on them, through some form of government assista

it was the party over there that would do nothing about fannie mae and freddie mac.e are trying to work through this now. rather than this guy blamed bush, let's move forward and do something reasonable for home owners. we are tired of this petty politics. we want to fix this problem not throw some money at it. we want a workable solution, not empty rhetoric. with that, we are happy to yield back. >> the gentleman's time has expired. there is enough blame to go around. we have put things in a certain context. this committee has been on more than three hours on the performance of hamp. now it is the banks turn. we will hear from them today. this is a part of the solution. it is not the whole solution we need the cooperation of everybody across the board, even this committee. one minute from this side. i think the american homeowners greeting right now to not care if it is this program or something else but the bank. i think it is shameful that my colleagues want to point a finger when one or the other. the conflict of interest that exists for there is a mortgage in a

recent reports that fannie mae and freddie mac are responsible for 100% of the new mortgage origination, which means exposure of the taxpayer continues to grow day by day. that's why it is still and has been imperative that reform of fannie mae and freddie mac be part of any regulatory reform in the system. they were a big part they have -- of the problem and must be part of the solution. there are numerous issues being debated such as retention, qualified mortgages, derivatives, hedge funds and the list goes on that could have significant implications for the future of the mortgage market as well as direction for the reform of fannie and freddie. before us today, h.r. 5072, this bill we are considering today is extremely important because it provides the administration with the ability to increase the premiums which will improve f.h.a.'s current financial situation and prevent the need for taxpayer bailouts. i urge my colleagues to support h.r. 5072 and i'd like to reserve the balance of my time. the chair: the gentlewoman reserves the balance of her time. the gentlewoman from californ

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

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

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

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

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

in 2004 after president bush under republican control congress who didn't hinder him order fannie mae and freddie mac to increase the purchase of loans, i changed my position. i joined the republican leadership of the house as a fairly minor player in supporting legislation. he was against it. i just would make that point again. he also forgets to mention that-- the speaker pro tempore: the gentleman's time has expired. mr. mcgovern: 15 seconds. the speaker pro tempore: the gentleman is recognized. mr. frank: i understand the purpose of giving such a partial history. he neglects to mention in 2007 when the democrats took the majority i became chairman we passed the bill he couldn't get passed in 2005 because we worked with secretary paulson. in 2003 i was not concerned. by 2005 i was. the speaker pro tempore: the gentleman from texas is recognized. mr. sessions: we are sitting here arguing on the floor about how gets credit for what. i think we ought to give credit, we ought to give credit to the democrats for taxing, spending, record unemployment, higher debt, and what we are talking

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

caller: i saw probably back in the late 70's or early '80s and they changed fannie mae and it used to conservative loaning process of three per tenth and ten then 10% for the next 10,000 and 20% for the next 10,000. when they departed from that and they raised at least on the government corporations for that are owned by the federal government and they upped it from maybe, a maximum of 70 thousand on up to 125,000 and then it just kept getting worse and then what we had, we had, we allowed some of the savings and loans to invest more than 3 percent of their money into real estate and we had the savings and loan crisis. i think if we pursue a safe conservative policy in the future for home purchases, that would be in a lot better shape and i think the building industry is a large industry throughout the united states and i think that's where the country is taking their hit on the chin and i think we need to put the people back to work and the best way to do that, i believe, is to rehas been all of these old homes that have led paint on them, through some form of government assistance a

caller: i saw probably back in the late 70's or early '80s and they changed fannie mae and it used to be a conservative loaning process of three per tenth and ten then 10% for the next 10,000 and 20% for the next 10,000. when they departed from that and they raised at least on the government corporations for that are owned by the federal government and they upped it from maybe, a maximum of 70 thousand on up to 125,000 and then it just kept getting worse and then what we had, we had, we allowed some of the savings and loans to invest more than 3 percent of their money into real estate and we had the savings and loan crisis. i think if we pursue a safe conservative policy in the future for home purchases, that would be in a lot better shape and i think the building industry is a large industry throughout the united states and i think that's where the country is taking their hit on the chin and i think we need to put the people back to work and the best way to do that, i believe, is to rehas been all of these old homes that have led paint on them, through some form of government assista

caller: i saw probably back in the late 70's or early '80s and they changed fannie mae and it used to be a conservative loaning process of three per tenth and ten then 10% for the next 10,000 and 20% for the next 10,000. when they departed from that and they rsed at least on the government corporations for that are owned by the federal government and they upped it from maybe, a maximum of 70 thousand on up to 125,000 and then it just kept getting worse and then what we had, we had, we allowed some of the savings and loans to invest more than 3 percent of their money into real estate and we had the savings and loan crisis. i think if we pursue a safe conservative policy in the future for home purchases, that would be in a lot better shape and i think the building industry is a large industry throughout the united states and i think that's where the country is taking their hit on the chin and i think we need to put the people back to work and the best way to do that, i believe, is to rehas en all of these old homes that have led paint on them, through some form of government assistance

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

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

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

nationalized, i mean ownership, management, or control of three large investment banks, a.i.g., fannie mae, freddie mac, general motors, chrysler, where am i going? there's more to this. the entire student loan, all the student loan program in america, all of that, swallowed up by the obama administration and that's 1/3 of the private sector activity according to prfsor boyles at arizona state university, 1/3, then along came obamacare which passed. the gentleman earlier talked about that being 17% of the economy. the number i see 17.5%. we're with within half a percentage point. when i added up, i added 18% to 33%, takes us to 51%. the question is whether it's 50.5% or 51% of the private sector activity taken over by this government, three large investment banks, a.i.g., fannie mae, freddie mac, all the student loans in america, chrysler, now the nationalization of our bodies, of our health care, taking away our a person's individual choices on how they'll manage their health care, what insurance policies they'll buy, because after all, the drug choices administration -- excuse me me, the

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

and president bush was right, we should have done something about freddie mac and fannie mae. you start to get this real estate collapse and mortgage problem. and so the economy starts to go down and a lot of people blamed president bush on it, but anyway the economy starts going down and it's because of this congressional policy of allowing these mortgages to be made to people who couldn't afford to pay. what happened was that wall street took them and chopped them up and packaged them in these mortgage-backed securities and sold them all over the world sm the whole crisis was compounded by the different ratings agencies like standard ann poors and moody's. they were not a.a.a. but a lot of trouble waiting to happen. so the real estate crisis drug the financial market in trouble so they couldn't deal with the situation that occurred. following that, president obama's elected and the economy's going down. so he proposes a series of solutions and things that hopefully are going to make things better. and part of the solution was a whole lot of taxes and a whole lot of spending.

favors by the work that's been done here in congress going back to failing to reform freddie mac and fannie mae which put us to the brink of economic collapse. complete failure to do that. and then in september, october of 2008 as a potential meltdown began, many people don't know, but there are more homes sold in september of 2008 than in any month in the last five years before that. but of course, once the secretary of treasury went out and said, unless congress gives me $700 billion, there will be a total meltdown, but give me $700 billion and i'll pay off my buddies on wall street and i'll get everything good, basically infering -- and i think he legitimately believed if all the people he had worked with and knew so well on wall street maintained their wealth, continued to get rich or richer, didn't go bankrupt, then it surely would be good for the rest of america. little did he know that that was not the indicates. we bailed out folks -- it's interesting, it also says something about the morality in america because there was a time in america that if you got greedy, a little hasty and drov

it left out any treatment fannie mae and freddie mac which are huge contributors to the housing bubblefinancial crisis. it does not take a strong look at credit rating agencies which were a strong player in the buildup of the housing bubble. i will take all the responsibility for the financial crisis. you can put it all on my shoulders as a former member of the bush administration. we know it was very complex. at this point in time, one year and a half into the obama administration, they have their hands on the wheel and we can take a look at their economic policy going forward and make our best judgments on whether it will help or not. i think it is a mixed bag right now. host: if unemployment babbitt's dol,l not get extended, watch te economy crash over the -- it's a compliment benefits do not get extended, watch the economy crash all over again. caller: good morning. i am confused about the subject of infrastructure spending. i seem to see a resistance. to this spending. i hear that it is difficult politically. i hear pork spending and that sort of thing. people sort of push it asid

capital, there's a problem with too little regulation over the investment banks, no reform over fannie mae and freddie mac, none, not even in this so-called financial reform that's really a financial deform bill. because it has a systemic risk council that allowed the federal government in complete abrogation of what my friends are talking about in the prior hour, about the 10th amendment and the power reserved to the states and people. just complete ignoring of all of that, they're going to pick and choose winners and losers. your company's too big to fail, we will never let it fail. that means they can run in the red, they can run their competition out of business, they'll be the last business standing in that particular area because our systemic risk council from washington, their lofty mount zion realm, said, we pick this one to be the systemic risk. the government was never supposed to have that kind of power. this country never got to be the greatest country in the history of the world by having washington pick and choose winners and losers. and that's what that financial deform bill

fannie mae and freddie mac are in conservatorship. they are playing an important role at the moment in providing a source of securitization for home mortgages. the private label security mortgage market is nonfunctional. we need to get to a more sustainable situation. i would be happy to talk about alternative models and reform, but i think everybody agrees that the current situation is not a sustainable one. we need to reform these institutions going forward. >> one final question -- when you look back on your views up until recently, we have seen catastrophe after catastrophe occurred. it was not fully appreciated or foreseen at that. in time. -- it was not fully appreciated are foreseen at that point in time. or the feds and the other monetary authorities in the federal government -- do we need a distant-early warning system? >> there are multiple dimensions to address this. the financial regulatory reform legislation attempts to look at all the components. first, we need to have a better oversight of the system and a better approa

bond issued by fannie mae, other government entities like that. host: what does this mean for peop people? begin here in the u.s. and speak about the chinese people. what does it mean in their homes and they if out and about? frpblgt in the u.s. we see it mostly consumer electronics. most of them are produced it china. iphones, i-pads. all of that. go to best buy, circuit city, many it not most of them are made in kline. on the chinese side they are buying a lot of capital goods that help their investment programs that discriminate their economic growth. so it is a symbiotic relationship. china has a large surplus in the trade with the united states and has had for many years. host: before we get to calls we know tim geithner the treasury secretary was recently in kline talking to them about trade and monetary type issues. how are the tkpwofpts getting along these days as they talk about the dollar and trade issues? guest: i think reasonably well. i think there was a period four to six months ago where we were hitting bumps in the road. i think th

as we have tragically seen from our experiences with fannie mae and freddie mac, to the detriment of millions of now unemployed americann and trillions of dollars of loss of wealth, conflicting objectives and emissions are perilous to the civility of our system. i believe that distractions from the core mission, indeed, the sole mission of stability would be a mistake. i also believe that the base tax would likely allow a community activist groups such as acorn to hijack the financial stability oversight council as they seek to extract preferential treatment for select groups at the expense of financial institutions. addressing the financial needs of low-income minority and underserved communities deserves our attention. however, mixing these needs with issues concerning stability of the entire u.s. financial system i believe only creates confusion and distract the financial stability oversight council from its core mission. oversight of the financial system as a whole. mixing community activism with financial stability concerns raises serious questions about the objectives of this l

to democratic colleagues to join us in supporting this week's winning youcut proposal to reform fannie maend freddie their key issues on the financial regulation bill. what should we be looking for? >> this is one of the biggest point of contention with this conference committee. the city bill is far tougher on the to limit his market than the house bill is brita the author asks that the senate language is blanche lincoln who won reelection are a bit this week. she won it earlier this week. she will be looking to keep that derivative proposal tough in the senate bill. >> and a tough version -- house version is not as tough? >> yes. it would require banks to get rid of most of their derivatives. you have to move it into a separately capitalized entity. the idea being the you get these derivatives that carries certain risks away from the banks that have the insured deposits that you and i keep. >> what is the financial industry? what led thehave they been saying? do they want to keep in? >> it has been pretty intense on many parts of it. they are concerned with an amendment that richard durb

before the nba, he worked at fannie mae and jay rks onall aspects of mortgage fance as well as bank regulation and capital requirements and is frequently and widely quoted on real estate and real estate financing topics. next will be allan mendelowitz, who is a founding member of the commite to establish the national institute of finance, which in fact looks like it will likely get established, althoh under anotr name as allan will discuss. previoly, allan was on the federal housing finance board from 2000 to 2009 and shar that ward in 2000 and 2001. he was executive director of the trade deficit review commission, vice president of the economic strategy institute and executive vice preside of the export-iort bank as well as being a managing director at the gao, which was the government account team office at that point when it had an older and more honest name. our fourth speaker will be mark zandi, the chief economist of moody'analytics where he directs research and conlting. marks research interest include macroeconomics, financial markets and public policy. he has recently focused on the d

on the fdic the exact same tools that were used to rescue the creditors of bear stearns, a.i.g., fannie maeand freddie mac with a taxpayer price tag today of over $1 trillion. this would continue the misguided too big to fail bailouts that allowed u.s. regulators to pay goldman sachs and other large european banks 100 cents on the dollar at the expense of smaller institutions and companies which were considered too insignificant or all to save or to pay. the democrats like to call their plan a death panel for large financial firms. but if you read the bill, in reality it's nothing less than a taxpayer-funded life support to pay off the creditors of the failed institutions but not necessarily all of the creditors. they could pay some of the creditors and let others hang out to dry. we saw that with a.i.g. and other bailouts. and don forget the so-called too big to fail institutions have only grown larger and more dominant through the regulator directed taxpayer-funded bailout process, a process this leslation institutionalizes. a better, more equitable approach to dealing with failed nonbank

. >> what is theerole of fannie mae and freddie mac as we go for? >> we are in a transition. freddie and fannie are in conservatorship. they are playing a very -pimportant role in the moment - at the moment and providing securitization for home mortgages. the market is pretty much non- functional going forward, we need to get to a more sustainable situation. i would be happy to talk about alternativv models of reform. but i think every videe aggees that the current situation, the status quo, is not as sustainable. we need to go over those institutions going forward. >> as you look back, we have peen catastrophe after test chesterfield her -- we have seen catastrophe after catastrophe occur. is the fed and other monetary authorities in needs of a better distant early warning system? >> they are multiple dimensions of had to address these financial regulatory reform legislation -- ddmensions of how to address the financial report for reform legislation. we need regulation to identify gaps before they lead to a crisis. the philosophy underlying the creation of a systemic risk cou

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 caa 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 journal@c-span.org -- and the e- mail is journal@c-span.org. good morning. caller: not only does the need to be funded, but the companies need to be charged. it is more than facilities. i am a veteran that was stationed at a facility. it was affected by the fund, the superfund site. i had contracted the

it was the party over there that would do nothing about fannie mae and freddie mac, which added fuel to the fire. rather than blaming bush, let's move forward and try to do something reasonable for homeowners. we want to fix this problem, not simply throw money at it. we do not want empty rhetoric. >> time is expired. >> thank you. >> let me just say to all of the members of the committee, there's enough blame to go around. we have just put things in the proper context. we have had the the treasury department and the gao testified at the first hearing on this issue. treasury was questioned by the committee for more than three hours on the performance of hamp at the first hearing. now it is the banks turn. we're going to hear from them today. more importantly, hamp is not the only way to address this problem. hamp is just a part of the solution, but not the whole solution. we need the wholehearted cooperation of everybody across the board, even this committee. on that note, there is ooe minute for the gentlewoman from california. >> thank you, mr. chairman. i think the american homeow