marco, and fhfa is right in this? >> i believe, congressman, i believe that the decisions that we've made with regard to principal forgiveness are consistent with our statutory mandate. i do believe we are taking all due effort to provide assistance to homeowners, and i do not believe i've been authorized to use taxpayer money for a general program of principal forgiveness. >> mr. chairman, just be unanimous concept for 30 more seconds. mr. dimarco, i'd like you to do two things for the committee, if you would. >> okay. >> first, i read the law, you don't have the authority to do that, so if you would share that with the committee and me. secondly, submit whatever analysis you have done that shows why it's worse for the american taxpayer, if you'd provide that analysis, i'd appreciate it. would you do that for us? >> we can provide information as you suggested. >> gentleman's time has expired. gentleman from texas. >> thank you, mr. chairman. gentlemen, mr. williams, mr. haldeman, i'd like to start my questions with y

i would note that fhfa today is approximately 520 employees. we are still growing, but i would expect we have got quite an examination workforce in our current structure because the current structure is an immense undertaking of safety and soundness examinations of fannie and freddie and this bill would replace. there wouldn't be that function going forward. .. >> and then you'll -- you'd do the service reporting and modification. this is really a very significant government intervention in the mortgage market. that's where i said -- and i said we're told it's more efficient or better than risk retention. i think that has a greater simplicity, and i'm concerned about the capacity of any federal agency to take on the degree of supervision of the mortgage market on an indefinite basis this bill calls for. i yield back. >> the gentleman yields back. the gentleman from arizona. >> thank you, mr. chairman. part of this is also a chance to ask a couple questions. could you walk me through some of the assets that the gse's hold right now in performing

demarco, and fhfa is right in this? >> congressman, i believe the the decisions that we have made with regard to principal forgiveness are consistent with our statutory mandates. i believe we are taking all due effort to provide assistance to homeowners, and i do not believe by unauthorized to use -- and i have been authorized to use taxpayer money for loan forgiveness. >> mr. demarco, i would like to -- you to do two things for the committee, if you could. first, identify anything the statute that prohibits prince or reduction programs. second, i would like you to submit whatever analysis that shows why reducing the principles in some mortgages is worse for the taxpayer. can you do that for us? >> we can provide that information as you have suggested. >> the gentleman's time has expired. the gentleman from texas. >> thank you. gentlemen, mr. williams and mr. holderman, i would like to start my questions with you. first, i want to commend you for being here. if i were taking a salary like you guys were in these times, i

because fhfa owns the gses. that's what we're talking about. is it fair to say the record will reflect that not one person, that would be mr. wallison, you -- >> talking only about government guarantees. that is for the private market for middle-class borrowers. >> exactly spent we don't need the government. >> but you're the only one but i just want the record to reflect this is the case. now, having that in the record, let me jade dash it let me just say this. i will get you, mr. hughes, if i may. my time is limited. i want to go to you, ms. ratcliffe. let's talk about this and i hate to use this term apples and oranges because it's become sort of a term that is not in good standing right now after some recent events and debates. but is it fair to compare the nonconforming with the conforming, if we conclude that, come to some conclusion about jumbos. is it fair to use that for the entire market? >> i think your point is perhaps saying that the benefits of having a government guarantee are able to be quantified or monetized by looking at the

>> yes kollhoff -- yes, we will continue to court at bat with fhfa -- coordinate that with fhfa. >> they have to receive a request from you in order to request to the entities of regulation, in order to get information. >> that is done to get the effect of some of fhfa's activities. they will request information from the regulated entities. i believe we have worked out a very efficient process for doing that and both of the company's have had oversight. >> and -- wouldn't commit to letting the office of inspector general directly request -- would you commit to lead in the office of inspector general director question fannie and freddie the audits that they need? >> where it concerns the audits undertaken by the ig, certainly. >> thank you. with that, i would like to yield the balance of my time to the doctor. >> thank you, mr. chairman. the title of our hearing today, as you all know, is a "paper performance: should the fannie and freddie executives be receiving millions in bonuses?" i will be some time to answer the question directly. mr. williams? >> should we be paid for performance?

that is one of the variables that may be considered by the fhfa as well. the gentlemen is recognized. >> i like to yield a few minutes to my colleague, the gentleman from new mexico. collapse to the gentlemen from the other side of the aisle who is talking about the negative impact of drilling off properties. if that was really the case, you would not have any property in my district. we have gas wells in backyards, schoolyards. a you're going to create freddie mae dead zone if you're going to limit loans to private residences in areas where they drill, be careful in new mexico. we do not mind out there. thank you. >> reclaiming my time. [laughter] i have a question on economics and a question about the past. the question is, one of our colleagues talked about how the subsidizing of federal government into housing has helped keep interest rates low. all of a sudden, if it went away, interest rates would climb through the roof. having a rudimentary understanding of the laws of supply and demand, would it not work that the government subsidize the housing ma

you have said that given the calculations of fhfa, fiscal writedowns on freddie mae and fannie mac loans are not

has fhfa ever rejected compensation package presented to you? >> yes. we have had proposals made that said that is not acceptable. >> would you be willing to submit that to the record? >> i will try to find something that appropriate to submit for the record. these are proposals made from the board. i look at them and make determinations. >> has the white house ever been in contact with you about compensation issues? >> under the purchase agreement for treasury support to fannie and freddie, fhfa shall consult the treasury department about executive compensation so this was done as a consultation, with every executive compensation package, it is send to the treasury department, it is a consultation with the treasury. it is most active in 2009 when we were working with kenneth feinberg who is the -- >> has the white house ever reached out to you? >> i have not had any conversation with the white house regarding executive compensation. >> mr haldeman, has the white house contacted you about executive compensation in your firm? >> they have not contacted m

to me, that suggests that the unwisdom of the fhfa is doing what they did announcing it and they tried to explain it differently, but i think it is fairly, it is at least my inference that we wouldn't have this bill up for his today if it weren't for that. i hope the people there will take that into account. i would note by the way, mr. chairman, this is part of a package of bills that passed on april 5. i cannot forbear when every procedural argument about that, some of us walked out, went into a quorum for a while, the chairman of the subcommittee criticized us for holding the bill. we held it up for a day. it's now seven and half months later and the bill, first what has, for us. several of the other bills that were passed that they are still in subcommittee. i don't mean to be critical. i just don't want to be blamed. i take one days playing. somebody else gets seven months and 90 together point i want to make -- >> would the gentleman yield? >> yes. >> with regard to this bill that is before us, it was appropriate then to wait from april till now to get the opportunity for the age

at the request of fhfa.work in partnership with them and the treasury approach to develop their compensation. >> $655,000 in one year to help you determine your pay structure. does that sound excessive? >> it sounds like a lot of money, but there are compensation consultants better -- that are required for the board in addition to the company's compensation consultant. i think that number would include four consultants if i get it right. i think you were pointing out enterprise. >> i agree. it is a lot of money. >> one other point on your testimony -- you said that the 15 highest executives today are paid roughly the same as the top five a decade ago. i do not know that that is something to rave about. james johnson, 1991 to 1998, and $100 million. franklin raines, we remember that name. the earned more than $90 million. i do not know that it furthers our topic. i appreciate the tone you took, that you understand the outrage, certainly, that congress feels. in theory and in practice, we reflect the outrage t

fhfa today has approximately 520 employees. i would expect we have quite an examination of work force and our current structure because the current structure is focused on an immense undertaking of safety and soundness examination of fannie and freddie. this bill would replace that and there would not be that function going forward. with regard to the size, i am not sure how much it would change. i think we'll see a change in the direction and principal elements of work from taking soundness examination to assessing the mortgage market and establishing standards. >> people should not think we would sense -- eventually see it go away. my own concern is it is a very specific set of ongoing government intervention in the market. in addition to that, you have to establish a variety of things. you would do the standards for servicing -- this is a very significant government intervention in the mortgage market. i think risk retention has a greater simplicity, and i am concerned about the capacity of any federal agency to take on the

let's look at fhfa -- >> for the record, i actually directed both companies to work with fhfa on a thorough re- examination of via harp program several weeks before the president's address. >> by you could have said that earlier, could you not? >> we tried it last winter and we made some changes and i regret -- well, i do not regret anything. i would say that we redouble our efforts in august. >> mr. demarco, while you may not have any regrets, i have regrets. i have regrets for the people who are being put out of their houses. and we would like for the goals that were stated to be manifested. ofnderstand you're like regrets and i'm sorry to hear you have no regrets -- your lack of progress and i'm sorry to hear you have no regrets. >> please do not take my words out of context. i did not say that with regard to american homeowners. i believe that myself and the gentlemen to my right have been working very hard to provide assistance to american homeowners. and with regard to the statute that you cited, it is quite right. i actually cited by itself frequently. but the full implementation req

fannie mae and freddie mac, through the fhfa, are using this to reach more borrowers instead of goingforeclosure. more details will be out later today on that. host: who makes up the alliance? guest: loan servicers, investors, and trade associations who want to help people in brisk and keep them out of foreclosure. we cannot take any funding from the non-profit housing councils, so it is in neutral non-profit alliance. host: 80 of questions about mortgages or the options out there, -- if you have questions, give us a call. outside the united states, -- you had mentioned this is a program that the obama administration had revisited. it was first proposed right after the obama administration took office. why does it need to be revisited? guest: a this point in the game, everyone is looking for every option they can to prevent foreclosures wherever possible. every finance is a fantastic way for people to lower their mortgage payments. a bar were who owes more than the day is worth, it is very difficult to get that financing. what i believe fannie mae and freddie mac has done is look at t

the fhfa approved the bonuses. >> why would you be rewarding this kind of behavior and/or this performance at least in a time when we got all these national economic issues and people across the country are very frustrated? >> reporter: contacted by cnn, officials at fannie and freddie wouldn't comment on the bonuses. the overseer says it's reduced executive pay at fannie and freddie in recent years. that those firms have to pay that kind of money to attract the kind of talent needed to manage $5 trillion in mortgages. the reason they got the bonuses is because they took the right steps to turn things around at fannie and freddie after the mortgage meltdown. a meltdown which triggered a massive bailout from the feds. >> how big was the bailout of fannie and freddie compared to the auto bailout? >> it was about $170 billion so far from both entities, both fannie and freddie. i think the estimated talley from what i understand from the congressional budget office is somewhere in the neighborhood of $250 billion. so from that standpoint, it's large relative to these other bailouts. >> anlives

. >> reporter: that will go to fhfa, tomorrow, let's say? >> we are hoping.kes a while to get as many senate offices as we can, contacted. but we want the senate to be on record that we disapprove of what has been done and we want that action reversed double that this should be part of the discussion, double it may hurt -- do you believe it may hurt president obama? >> i think it's part of the subtext. obviously, we are in a political season. we are heading into a political season, based upon the campaigns that are underway and the way that the president's campaigning around the country on his bus tour, he's clearly in campaign mode. so i think that this is the context in which the 2012 campaign and the campaign issues are going to be debated. and when have you a culture in washington, d.c. that appears to be this far out of touch with the average american and hard-working taxpayers, you have a major problem. i think that the president, if he's smart, will correct this and correct it quickly. >> now, we reached out to the federal housing finance agency, which

a march report by fhfa, obviously ignored by mr. demarco, their inspector general said the agency lacks key controls necessary to monitor executive compensation, nor has it developed written procedures for evaluating these packages. in other words, the beat goes on. business as usual. fannie mae and freddie mac. it's unconscionable. it's been proven time and time again that fannie and freddie are synonymous with outright corruption and fraud and the federal regulator has the audacity to approve $12 million in bonuses to people who make $900,000 per year. this body should be ashamed if we let this happen, especially in these economic times. every day, more and more americans are losing their job and their homes and we're allowing these people to take home annual salaries of $900,000 and bonuses of millions of dollars, all the while they ask the taxpayers for $6 billion more today. you know, it's come to my attention that some of my colleagues are writing letters, calling for committee hearings on this issue. letters are fine, hearing

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they're overseeing, the fhfa says its wree deuced pay in recent years and they have to use that moneynuses was because they did the right things to turn things around ar the meltdown. how big was the bailout of fannie and freddie compared to the auto bailout and some of the others? >> about $170 billion so far for both entities. both fannie and freddie and i think the estimated tally from what i understand from the congressional budget office somewhere in the neighborhood of $250 billion. from that standpoint, it's large relative to these other bailouts. >> reporter: analysts cliff rossy who once worked at bone fannie and freddie says the terms were put in place to clean up the mess from before. they started to do that but haven't done enough to modify homeowners bad mortgages. he's on the fence whether they deserve their bonuses. brian todd, cnn, washington. >>> one guy that deserves a big bonus. reynolds wolf standing by in atlanta. getting trouble from the bosses on that, let me know. i'll put the word in for you. >> i like the way you're thinking today. really do. love this guy. u

chairman, for the hearing you announced on fhfa. i think ultimately in the end we have to have the people here to get to the bottom of why those bonuses were given out and get some accountability, but i appreciate you and your staffs scheduling that hearing. i think it's critically important. >> anybody else? >> mr. chairman, i just also want to put in a request. i think we're in a very dynamic situation with regard to u.s. exposure to the european banking system. i think you should probably call for an update on that because i am concerned that we may see a fairly bleak prospect of the current european stablization facility meeting its goals. i'm concerned about reports that u.s. bank exposure now is considerably more than it was, and activity and transparency led by this committee would help u.s. markets. >> mr. chairman? >> senator akaka. >> thank you, mr. chairman. i want to add my welcome to our witnesses today. i look forward to their testimony on the matter that many of us in the senate are deeply concernedded about. making s

the fhfa approved those bonuses. >> why would you be rewarding this kind of behavior or this kind ofre very frustrated? >> reporter: contacted by cnn, officials at fannie and freddie wouldn't comment on the bonuses. their overseer the fhfs says it's reduced executive pay but those firms have to pay the kind of money to attract the talent needed to manage $5 trillion in mortgages. officials tell krb the reason those executives got those bonuses is because they took the right steps to turn things around at fannie and freddie after the meltdown that triggered a massive bailout from the fed. how big was the bailout compared to the auto bailout? >> yeah. it was about $170 billion so far for both fannie and freddie. i think the estimated tally from what i understand from the congressional budget office, $250 billion. >> reporter: one analyst says current executives at those firms were put in place since the bailout to clean up the mess from before. he says they started to do that but also says they haven't done enough to modify for moment owners' bad mortgages so he's on the fence about wh

also, the fhfa is standing securitizations for this place.re no securities will be available for exemption from sec registration. it will allow for a futures market as well in these qualified securities. with credit risk appetites will then be able to buy securities next, legislation removes one of the biggest impediments to private capital reemerging. it does so by striking risk retention provisions from the.frank at. i agree with retention has benefits and i talked about that. the way this is implemented, we will create multitude of negative unintended consequences in the marketplace. i must ensure what good the risk retention world we have well to if we exempt fannie and freddie and loves it down payments of 5% or more. that sounds like just about everything that's made up there. it has risk retention and recovery that. a better format is an improved representative warrant system includes a structure that ensures investors claims will be honored at the end of the day. the legislation provides a much-needed fix to the? outcome of a qualifie

chairman, for the hearing you announced on fhfa. i think ultimately in the end, we need to have the people here so we can get to the bottom of why those bonuses were given and and get accountability, but i appreciate you and your staffs scheduling that hearing. i think it's critically important. >> anybody else? >> mr. chairman, i just also want to put in a request. i think we're in a very dynamic situation with regard to u.s. exposure to the european banking system. i think you should probably call for an update on that because i am concerned that we may see a fairly bleak prospect of the current european stablization facility meeting its goals. i'm concerned about reports that u.s. bank exposure now is considerably more than it was, and activity and transparency led by this committee, i think, would help u.s. markets. >> mr. chairman? >> senator akaka? >> thank you, mr. chairman. i want to add my welcome to our witnesses today. i look forward to their testimony on a matter that many of us in the senate are deeply concerned about -

the fhfa which actually regulates fannie mae and freddie mac is begging congress for direction but in their words is only getting mixed signals. today we've introduced a bill to really give a very clear direction as to what ought to happen to these major g.s.e.'s, both of them together -- together they sit atop $5 trillion in obligations plus hundreds of thousands of our r.e.o. properties. in other words properties that they've taken back and are now overseeing throughout america. with a $5 trillion book, any mistake they make is very expensive and obviously the taxpayers of this country know full well that billions and billions of dollars continue to flow in these organizations to keep them afloat. and yet these organizations today are lame duck organizations with no clear guidance on their future. they really have no idea what the future holds, the organizations themselves basically are treading water. over the most recent decade, fannie and freddie became in part corporate welfare schemes for mortgage banks. there's no question that what was happening is the governance balance shee