so based on his own data and based on the law our congress passed to create fhfa, mr. dimarco should be doing principal reductions now but has refused. secretary geithner, i know you are in negotiations with mr. dimarco and the treasury has now offered triple incentives for principal reductions. can you tell us why treasury is doing that and why are these inseptemberatives important? >> well, as you point out that under the law, the treasury and the administration do not have any authority to compel account fhfa to undertake specific activities and under the conservatorship mandate they have to make sure they meet a very tough test appropriately so to make sure the things they're doing are in the interests of reducing losses to the taxpayer, maximizing overall returns to the taxpayer. but there are certain cases where we think there's a pretty strong economic case for principal reduction as part of a strategy to limit the future losses to the gses. so we've been having some discussions with him about how to narrow the differences between us. but he'll have to make thes

f fhfa's shows it would save taxpayers billions of dollars. the acting director maintains what happens to be an illogical opposition. it's my hope as we examine the euro crisis we keep in mind what should be our ultimate goal. rebuilding and protecting a strong economy for the millions of middle class americans in the united states. mr. chairman, with that i ask unanimous consents to enter the march 20th "the washington post" article entitled "the man blocking america's recovery" into the record. >> i would reserve -- how is it germain to today's hearing? >> this addresses this issue. >> we can include it as extraneous material but it was germain to the hearing we had in new york and suggest it be placed in the record for that hearing. >> we now go to the chairman of the subcommittee, mr. patrick mchenry for his opening statement. >> thank you, mr. chairman and thank you for calling this hearing today. nearly four years ago americans witnessed domestic and global markets deteriorate. resulting in millions of job losses and unprecedented measur

and how much are fannie mae and fhfa willing to give? >> a still unfolding story. diana, thanks a million. >> meanwhile airline regulators taking a new look at the dreaded ban on using some of your personal electronic devices on planes. our phil lebeau has the latest on this developing story. phil. >> tyler, i think a lot of people who fly a lot, i'm one of those, would agree this is one of those reviews a lot of people are looking forward to the faa taking. it's going to be reviewing the ban on the use of personal electronic devices, not cell phones, during takeoffs and landings. it's important to note they are going to take this fresh look at things like kindles, ipads, et cetera, but not smartphones and cell phones. the faa now allows pilots to use ipads in the cockpit. when they announced this change late last year, it got a lot of people talking, wait a second, how can you use it in the cockpit but not elsewhere in the plane? they determined it does not interfere with the plane when they're using it in the cockpit. for now, tyler, this is a fresh look at wheth

thursday, jobless claims, the fhfa home price index. and the leading indicators. and on friday, new home sales. >> let's take a look at the markets. there are equity markets other than apple. if we can look at the boards. sorkin fair value. down about 16 on the dow, s&p really more or less hugging the flat line. >> hugging the flat line. >> like a sports caster doing play by lay play. >> not a lot of movement in the energy complex, as well. some speculation that there would be some sort of geopolitical events over the week especially. didn't have much. and there it is, the yield on the ten year, 2.274. it was amazing to read all the headlines on friday afternoon. huge move up in terms of percentage on yields on the ten year. obviously when you're coming from one and a fraction, 30 basis points is 15%. but those that look he correlation, kelly, you hear a lot about this, you mentioned 12% gain this year, if you you thought where would the ten year be on an s&p up 12%, you'd be printing something north of 3%. >> and this was the great diver againdiver divergence for

that's run by the regulator the fhfa. and on this program, if you are underwater in your mortgage, in other words, if you owe more on your mortgage than your house is worth, you still may be able under this program if your mortgage is heldfy fannie or freddie you may be able to refinance at a lower interest rate which will reduce your payments. that program is underway anding. it doesn't necessarily work if your mortgage is being held by a bank because they're not part of this program, they may choose you might be out of luck if your mortgage is not held by fannie and ramsike that. the fed is not involved in them. our jo mortgage rate low and hope we can help homeowners. but programs like that, which allow people to get lower payments obviously are going to be helpful to those people because they'll face less financial stress and maybe a smaller chance that they'll end up being delinqnt mortgage. >> hi, i'm michael fineberg. thank you very much. you mentioned in y the dangers of deflags from the great depression and more

fhfa and the gses, we may not all agree exactly on the particular actions, but i think they are trying some things and we'll see what benefits accrue from them. >> a final note that there's two ways of preserving, you know, the corpus of your interests. one is foreclosure and the other one is looking at the whole process of refinancing and where appropriate the private sector has taken about 20% of its portfolio in the banks and said, it makes sense to do, you know, a reduction, the principal. i worry the whole focus is on those entities. >> thank you, mr. chairman, for being here. i know we alternate between the house and senate going first. this is sort of a postgame interview. we thank you for being here today. i want to hone in on the volcker rule, because there's a lot of testimony about the economy and quantitative easing and all those things related to prices and savers and all of that over the last day and a half. i'm trying to make it work now. we understand that it's passed. why were treasuries and mortgage-backed securities excluded from the volcker rule in the first place?

. >> only that the fhfa is running a pilot program. the tradeoff is you need to have enough homes that's economic for the management company to maintain them. but otherwise, you know, i think it makes sense to -- not to overconcentrate the ownership. >> and i think whatever package you have ought to be in the same area. >> certainly. >> now, we've seen adjustments to the llpa from the fannie and freddie, the gses, and congress needed to fund a couple months of the lower social security tax so we hit another ten basis points for the next ten years. do you see us hurting the housing market if we go back to that well again and increase the llpa or increase the guarantee fee that is put on top of what home buyers and home refinancers have to pay. >> first of all, it improves the profits and improves the profits of the treasury. another benefit is by raising those fees gradually, you may eventually begin to bring in private competitors in the market. that's part of the strategy. if you make it more costly to get a mortgage, that will hurt t

so based on his own data and based on the law congress passed to create fhfa, mr.eductions now, but he has refused. now, secretary geithner, i know that you are in negotiations with mr. dimarco and the treasury has now offered triple incentives for principal reductions. can you tell us why treasury is doing that and why are these incentives important? >> well, i should point out that under the law, the treasury and the administration did not have any authority to compel the fhfa to undertake specific activities. under the conservatorship mandate, they have to make sure they meet a very tough test, appropriately so, to make sure the things they are doing are in the interest of row deureducing losses to the taxpayer. there are situations where we think there's a strong economic case for principal reduction as part of a strategy to limit the future losses to the gses so we've been having some discussions with him about how to narrow the differences between us. but he'll have to make these choices. and i think maybe on this question, it would be better for me to come b

and fhfa and the g.s.e.'s, we may not all agree exactly on their particular actions, but they are trying some things and we'll see what benefits accrue from them. >> let me say on a final note that there's two ways of preserving the corpus of your interests, one is through foreclosure, the other is through looking at the whole process of refinancing and, where appropriate, the private sector has taken about 20% of its portfolio on the banks and said it makes sense to do reductions in principal. so i just worry that our whole focus seems to be in those entities preserving the corpus through foreclosure, which at the end of the day has a whole other destabilizing element in the marketplace. >> senator, i'd like to agree with you on that. foreclosure is very costly not only for both rower and the lender, but for the community and the country. what i was discussing was not whether foreclosure is a good thing, i was talking about what are the best ways to discuss the foreclosure issue. >> senator? >> thank you, mr

fhfa is trying very hard to be a part of bringing solutions and stability back to this. i will do so in a disciplined way following the mandate i believe congress has given us. host: this last pieces from your column where you write, -- it is far easier to rail against one man who is preventing the great american housing recovery and, you say, the cries are bound to become even more strident. can pick up the theme from there, please? guest: again, this goes back to the criticisms that are being launched at ed demarco at fhfa. he has a duty. if congress writes a law that says he is a conservator, they can do principal productions even if they reduce taxpayer losses, he will do so. why did is going on here is that they are pressuring him to do so without writing such a law because they are fearful of the types of responses they will get from constituents. this is a discussion we should be having on this dialogue about future of housing finance in this country. yet, instead, we beat up the regulators try to do their job to increase the possibility of losses for the taxpayer

fhfa shows that -- the un data shows the principal reductions would save taxpayers billions of dollarsit is my hope that we examined the euro crisis in keep in mind what should be our opening goal. i ask consent to enter this into the record. -- the march 20 "washington post" article into record. >> this addresses this issue. >> we can include it as extraneous material. >> thank you. >> you are welcome. when i go to the chairman of the subcommittee for his meeting. -- for his opening statement. >> thank you for calling this meeting today. americans watched this deteriorates. it resulted in millions of job losses. several banks are propping up institutions. our european friends fight to fend off a wave of turmoil. in december, my subcommittee invited officials from the federal reserve and what actions they would consider in reaction to it and what measures remain. the federal reserve had just authorized liquidity swap lines. -- to buy time for a political solution in europe. the headlines read to the tune of billions and trillions. in december, they held an auction to provide banks with

i think there's a big element here of trying to figure out what works best per dollar of cost and fhfae on their particular actions but i think they are trying to some things and we'll see what -- what benefits accrue from them. >> let me make a final note that there's two ways of preserving, you know, the corpus of your interests. one is through foreclosure. the other one is through looking at the whole process of refinancing and where appropriate the private sector has taken about 20% of its portfolio in the banks and said -- make sense to do, you know, reductions in principal. so i just worry that our whole focus seems to be in those entities, preserving the corpus through foreclosure, which at the end of the day has a whole other destabilizing element in the marketplace. >> senator, i would just like to agree with you on that. foreclosure is very costly. not only for the borrower and the lender but for the community and for the country. and what i was discussing was not whether foreclosure is a good thing. i was talking about what are the best ways to address the foreclosure issue?

fhfa and the gse's, they are trying some pains.t benefits accrue from them. >> there are two ways of preserving the corpus of your interest. one is through foreclosure. the other is through looking at the whole process of refinancing and, where appropriate, the private sector will take about 20% of its portfolio on the banks. it makes sense to do reductions in principal. i worry that our whole focus seems to be preserving the corpus through foreclosure, which at the end of the day, has a whole other mideast -- destabilizing element. "i agree with you. what i was discussing was not foreclosures -- i was talking about the best way to address the foreclosure issue. >> senator mcwherter. >> thank you, mr. chairman. we alternate between the house and the senate. this is kind of a post-game interview. i want to home and on the volcker role. there has been a lot of testimony about the economy, quantitative easing, and how that affects prices over the next day and a half. with the volcker rule -- we are just tried to make it work now. why

fhfa and the gse's have looked at that as well since early last year we have put consent orders on all the major servicers requiring them to improve their practices, their principal points of contact for individual borrowers to provide more counseling, but controls and so on. there are a variety of things to be done. not all of them are congressional. some of them are old -- are our own responsibilities as a ators. >> mr. hand tooling is now recognized for five minutes. >> -- mr. hensley and is now recognized for five minutes. >> you describe the recovery has moderate with his work terms. you add in those that are underemployed, those that have left the labour force due to giving up, the true unemployment rate is 15.4%. half of all americans are now classified by the census bureau has either low-income or in poverty and one in seven have to rely on food stamps. from the perspective of my constituents, then use of the term modest is, indeed, modest. i would like to return to the subject of our structural debt. one of the major players in our economy is "the major driver of our long term

it's why we think fhfa needs to put out a clear policy on buybacks that will allow fannie and freddie lenders to know what to expect. and it's why the servicing settlement was important as well. it created a single, clear, strong set of servicing standards, and clarified foreclosure processes around the country so that the market can move forward with greater certainty. again, it's always hard to get that balance perfectly. i've wouldn't say we're ever done. i sleep on this every night, but it is a critically important balanced and i just thank you and the ranking member for your understanding of that bounced. >> very good, i appreciate that. thank you. senator collins? >> thank you, madam chairman. i want to go back to an issue that senator murray touched on in her opening statement. i'm concerned by the administration's proposal to fund thousands of project-based rental assistance contracts for less than 12 months. and the reason i am concerned is that short funding these contracts may create a diverse incentive for landlords not to invest in maintenance, to cut expenses, to reserve