the fha is on budget, so congress was limited in the amount that they could actually provide for fha'sunctions by the normal preparations process and the pressures that come to bear when you have a deficit, so fannie and freddie were created and given the same authority essentially that fha had so that they could spend much more money on the same general activities without having any budgetary effect. now they are having their budgetary effect, but while they are functioning, because of their losses, but while there were functioning they had none and that will happen again because all of these things operate kemal of these things operate in the same general way and that is the incentives are always the same. the incentives for management are the same. the incentives for people in the market who are looking for safe investments that they know the government will bail them out that if there is any trouble and the incentives for congress to establish and exploit these institutions are also the same. so nationalization doesn't work. i think the public utility does not work as an idea and i

and the reason that fannie and freddie was established to compete with fha is that fha is on budget. and so congress was limited in the amount that they could actually provide for fha's functions by the normal appropriations process, and the pressures that come to bear when you have a deficit. so fannie and freddie were created and given the same authority essentially that fha had so that they could spend much more money on the same general activities, without having any budgetary effect. now they're having their budgetary effect, but while they were functioning because of their losses, but while they were functioning they had not. and that will happen again. because all of these things operate -- all of these things operate in the same general way, and that is, the incentives are always the same incidents for management, incentives for people in the market who are looking for safe investment, that they know the government will bail them out if there's any trouble, and the incentives for congress to establish and exploit these institutions are also the same. so nationalization doesn'

this is so fha will not blow up. could happen to have removed shareholders from the equation and given these entities a single track mission which is to support taxpayers of the united states and the housing market while we are in trouble. that is the first stage for about five years. the second stage we have got to decide what we want to do. my only plea is, let's not go back to the model of privately owned organizations with government backing. people talk about co-ops and alternatives to investor- ownership. we forget that the farm credit system which was a cooperative, blew up in the mid-1980s because a cold as an incentive to lower its profits to benefit its member-users. you have distorted incentives in co-ops. Ñiall kinds of institutions have failed, banks, thrifts, wall street, building current, all kinds of institutions have failed. my specialty is government organization and design, i would say that g s e'a have special vulnerability. they are dealt with as unique institutions which means that congress can

those are going to apply to the conventional loans, not fha per se. >> if you're one of those peoplehere and you haven't been able to sell your house and it's worth less now than what you paid for it, you might be looking into the short sale, you might get your bank to work with you. look forward into 2010 and as the year goes on here, do you think that people have really got their arms around the fact that, you know, housing values don't necessarily go up forever? >> definitely. 2009 was a huge wake-up call for a lot of people. 2010 will continue to be challenging, but i think more sellers, for example, are going to know that their home values be more conservative and manage their expectations. you know what i mean? because in 2009 as a buyer it's really hard to kind of convince sellers to their values aren't what they used to be. >> thanks for that. we appreciate it. >> thanks for having me. >> thanks for spending part of your saturday with us. "your bottom line" will be back next week on cnn.

host: what is the reasoning behind that -- fha, steady loans. host: what is the reasoning behind that, do you think? caller: these efforts were great programs that got us out of the depression. these lenders that own these homes really need to extend these good borrowers. host: go ahead. caller: everyone says that 0% down is bad. it is not bad. the only problem is the adjustable-rate loan. they are raising the rates when the rates are going down and people are losing their houses. host: thank you for the call. massachusetts, republican line. caller: the thing is, remember the savings and loan? regulators told us about that. the keating five overrode them. we had clinton with whitewater. that is what happens when regulators overturn the congress in government. new york city, rent-controlled in 1973. owners could not raise the rent because of new york city re leaders. hence the bronx was burning. -- because of new york city regulators. hence the bronx was burning. host: ready to ramp up security on u.s. found air travel, we have a look at that as

we requested a witness, at the marker, the acting head of fha to ask a simple question. >> the gentleman'stime has expired. do you want to take more time? >> i yield back the balance of my time. >> let me give you a consent for an additional 15 seconds. >> i was hoping that mr. markham could be your to answer the question why he has spent millions -- mr. demarco could be here to answer the question why he has spent millions of dollars in bonuses to pay people who have lost billions of dollars for the taxpayer. and unfortunately, for whatever reason, that request was denied. >> i read -- i yield myself my remaining time. i think it is 3 1/2 minutes, is that right? >> [inaudible] >> i want to thank both the gentleman from texas about the comments of the fairness of the committee. i think this committee holds the record for the number of amendments that we are debating on the floor and the mark of time. but we do have one difference here. the members of the republican side have made the distinction between private-sector and public-sector entities when it comes to compensation. that is why i

host: what is the reasoning behind that -- fha, steady loans. host: what is the reasoning behind that, do you think? caller: these efforts were great programs that got us out of the depression. these lenders that own these homes really need to extend these good borrowers. host: go ahead. caller: everyone says that 0% down is bad. it is not bad. the only problem is the adjustable-rate loan. they are raising the rates when the rates are going down and people are losing their houses. host: thank you for the call. massachusetts, republican line. caller: the thing is, remember the savings and loan? regulators told us about that. the keating five overrode them. we had clinton with whitewater. that is what happens when regulators overturn the congress in government. new york city, rent-controlled in 1973. owners could not raise the rent because of new york city re leaders. hence the bronx was burning. -- because of new york city regulators. hence the bronx was burning. host: ready to ramp up security on u.s. found air travel, we have a look at that as

of the gse of fannie mae and freddie mac providing access to the sustainable mortgages through the fhafederal housing administration. treasury as well as federal reserve board purchases of mortgage backed securities and a program, part of the making home affordable program which increased flexibility for home refinancing. and all of this has led to lower interest rates as well as three high volume of refinancing activity. second, the administration has sought to make it affordable for people to stay in their homes. the research suggests that for someone to walk away from home you need to things, one for the house to be underwater and secondly the payment to be unaffordable and that is typically required just for defaults. the administration focused on making it affordable for people who are responsible homeowners to stay in their homes. we have the goal of supporting three to 4 million homeowners to modify their mortgages to lower their payments. so far over three-quarters of the million homeowners have modified their mortgages under this program. this is a program which gets a tremend

of the gse of fannie mae and freddie mac providing access to the sustainable mortgages through the fha federal housing administration. treasury as well as federal reserve board purchases of mortgage backed securities and a program, part of the making home affordable program which increased flexibility for home refinancing. and all of this has led to lower interest rates as well as three high volume of refinancing activity. second, the administration has sought to make it affordable for people to stay in their homes. the research suggests that for someone to walk away from home you need to things, one for the house to be underwater and secondly the payment to be unaffordable and that is typically required just for defaults. the administration focused on making it affordable for people who are responsible homeowners to stay in their homes. we have the goal of supporting three to 4 million homeowners to modify their mortgages to lower their payments. so far over three-quarters of the million homeowners have modified their mortgages under this program. this is a program which gets a tremen

we requested a witness, at the marker, the acting head of fha to ask a simple question. >> the gentleman'stime has expired. do you want to take more time? >> i yield back the balance of my time. >> let me give you a consent for an additional 15 seconds. >> i was hoping that mr. markham could be your to answer the question why he has spent millions -- mr. demarco could be here to answer the question why he has spent millions of dollars in bonuses to pay people who have lost billions of dollars for the taxpayer. and unfortunately, for whatever reason, that request was denied. >> i read -- i yield myself my remaining time. i think it is 3 1/2 minutes, is that right? >> [inaudible] >> i want to thank both the gentleman from texas about the comments of the fairness of the committee. i think this committee holds the record for the number of amendments that we are debating on the floor and the mark of time. but we do have one difference here. the members of the republican side have made the distinction between private-sector and public-sector entities when it comes to compensation. that is why i

we requested a witness, at the marker, the acting head of fha to ask a simple question. >> the gentleman's time has expired. do you want to take more time? >> i yield back the balance of my time. >> let me give you a consent for an additional 15 seconds. >> i was hoping that mr. markham could be your to answer the question why he has spent millions -- mr. demarco could be here to answer the question why he has spent millions of dollars in bonuses to pay people who have lost billions of dollars for the taxpayer. and unfortunately, for whatever reason, that request was denied. >> i read -- i yield myself my remaining time. i think it is 3 1/2 minutes, is that right? >> [inaudible] >> i want to thank both the gentleman from texas about the comments of the fairness of the committee. i think this committee holds the record for the number of amendments that we are debating on the floor and the mark of time. but we do have one difference here. the members of the republican side have made the distinction between private-sector and public-sector entities when it comes to compensation. that is why i

their are going to look at whole which includes fannie freddie, fha, and what we do in the mortgage market. obviously it wasn't mentioned today because it's not commercial bank in this circumstances. >> but you haven't come up with any proposals since. >> i dentistry any comment on that. >> you have taken pains to say this is not re-imposition of glass-key gal. why not? >> the spirit of this -- which is separating risky activities from banks which is trying to eliminate some conflicts of interest and trying to limit the amount of subsidy or backing from the american taxpayer that's getting translated into their bottom-line profits. those are themes that people were trying to address back in the depression when they passed glass-steagall. but the specifics of glass-steagall which were created in 1934, underriding securities and trading insecurities are no longer in the current financial system. but things that pose the greatest risk. i do think that if you re-impose glass-steagall and it's entirety, you would put some very severe restrictions on u.s. financial institutions that would put th