the white house to unveil its plan for fixing lending giants fannie mae and freddie mac. and countdown to 2012. conservatives mulled their and countdown to 2012. conservatives mulled their choices for the coming election. captioning funded by cbs >>> good morning, everybody, and thanks for joining us. i'm betty nguyen. this morning egypt appears to be a country on the brink of revolt. enraged anti-government protesters planned a massive rally today following yesterday's defiant stand by president hosni mubarak. the military says it is securing the country and will have an important statement today. terry mccarthy is in cairo. good morning, terry. give us the latest there. >> reporter: good morning, betty. and the crowds here behind me are still digesting that speech by president mubarak last night. if he thought he was going to pacify them, in fact the opposite has happened. it's 11:00 in the morning here and the crowds are bigger than we've ever seen them at this time. now everybody yesterday was expecting president mubarak to step down. the rumors were going around the

could reforming fannie mae and freddie mac shut the door on the american dream? and a neighborhood goes up in flames in allentown, pennsylvania, after a deadly natural gas explosion. captioning sponsored by cbs from cbs news world headquarters in new york, this is the "cbs evening news" with katie couric. >> couric: good evening, everyone. all day long in cairo, the anticipation and excitement were growing. president mubarak was going on television and the anti- government protesters were expecting him to say he was stepping down. he did not. mubarak said he is staying on as president until the september elections when he promised to transfer power to his successor. in the meantime, he said he is delegating power to his vice president, omar suleiman, and he promised to amend the constitution to make it easier for opposition candidates to run for office. he also made it clear once again he wants other nations to butt out of egypt's affairs, and he vowed again, he will die in egypt. the stunned crowd in tahrir square waved shoes in anger and shouted once again for

we found freddie mac and fannie mae --these were publicly traded corporations.hey followed wall street into investing in risky subprime mortgages but that was to regain market share and get compensation. i don't think you can go back to a model of having privatized gains and socialized losses. the american taxpayers bashed up the losses. i hope we move to a model where we don't have the up side going into the private sector and downside with the tax payers. tavis: you mentioned the report finds the crisis was avoidable. this report also finds government was ill equipped to deal with them period where this mess unfolded. talk about the fact it was unavoidable. talk about the fact that government was ill-equipped to deal with it. >> there are two phases here. we made a set of decisions to allow a shadow banking system to become even bigger than our regular banking system. the fed sat on its hands while predatory lending practices went on. the government tried to stop states from enforcing fair lending laws. when the crisis head, what was most striking was those wh

is that going to put our financial system under stress, even if we have no fannie and freddie? and is there a role for the government to provide emergency assistance when you get that kind of crash of the housing market? or are there -- i think there are things you're trying to build in which would make such a crash less damaging. >> all financial crises have at their center, most of it this real estate bust and bank mistakes. and we're not unique in that context. to make sure the system is more stable in the future, more resilient against the risk of future recessions or house price booms and busts, you need to have a system where again banks hold more capital against risk. people have more equity in their homes. and the government is not creating incentives that magnify the chance you have these huge imbalances -- overinvestment in housing over time. now, i think it's worth noting -- at least my view is even if you get that stuff substantially better -- and we will. i'm sure -- i'm very confident we can do that. we're still going to have resetir recessions in the future. you

fannie mae and freddie mac contributed significantly to the crisis, and that is our view also. these organizations were poorlym managed. they were seeking market share, they were seeking profits and big compensation for their executives. but e want to point out, yes,ri they added helium to the housinr balloon, but they never represented a majority of the purchase of mortgage securitiesl they followed wall street,iu thy didn't lead it. and finally, this is important to note, the value of gse-backed mortgage securities from be january of 2007 to the day before conservatorship never dropped, so they did not cause the financial losses at the big financial firms. they caused huge losses to the taxpayers. that's a fiscal issue. but they were not the cause offi the big financial losses that happened at merrill lynch, at citigroup that began the cascade that led to the bailouts in september. >> could you comment on the lack of knowledge or understanding in be aig? you touched on it, but i recall the hearing we had here, and treasury and many others came, and they asked, first, for 50 b

host: fannie and freddie -- freddie mac was established in 1970. how significant is that figure to you? guest: we would not have a mortgage market if we do not have fannie mae, and the va. what has happened is investors are skittish about coming back into the american economy and investing hundreds of millions of dollars. without those zero government- sponsored enterprises, we probably would not have a mortgage market at all. host: there is that figure on the screen. a number that is sure to get some phone calls. let's take that number and put it into perspective as far as how to move forward. guest: consider the number of nearly 14 trillion. that should not have happened. have the government been ahead, the previous administrations have been ahead of this, come they would have limited the size of fannie and freddie in terms of how much market they could capture. the would have required adequate capitalization. there would have limited the kind of risks they would be taking. fannie and freddie stayed out of the subprime market through 2004. they g

let me tell you about fanny and freddie. a deeply flawed business model. publicly traded corporation with the implicit backing of the government was a bad model. the fact is, those enties use their political power to ward off effective regulation. theyid contribute to the crisis but they were not prary, they did add to the housing boom, but keep in mind they never represented a majority of the majority of the purchases of sub prime securitizations thatere emanating out of wall street. they did ramp up dramatically their purchases and guarantees in2005, 2006 and 2007, but one of the most -- >> i'm running out of time. can i get a quick comments out of you? >> there's one important point i'd like to add if we have time. >> look. the majority, six votes owned over 400 pages. at the end of each chapter, our commission conclusions on chapter 14. they owned the 400 pages. we were given on a 6/4 vote, nine pages each, total. out of this entire document. they had 400 pages to do whatever they wanted with. what they did was what they wanted. you can't explain away

james lockhart used to head the government office regulating fannie and freddie. he says the last option would do the most to protect taxpayers. >> a direct guarantee is keeping the government too involved in the housing market. at this point, they have almost 90% of the mortgages that are being originated and we really got to start weaning the housing market off the government. >> reporter: as soon as october, the treasury wants to lower the so-called conforming loan limit on mortgages fannie and freddie will buy to $625,500. and as the government pulls back from the mortgage markets in coming years, lockhart says mortgage rates will adjust. >> mortgage rates might go up a little bit, but my sense is for the average home owner, it shouldn't make a great deal of difference. >> reporter: under the reforms laid out today, real estate developers will also find government support shifting away from single family homes and towards apartments and affordable housing. the overall government role will also be smaller says brookings scholar douglas elliott. >> we know direc

if egypt is a story that is change big hour by hour, the fannie mae/freddie mac seems to take eons to change. basically this is somewhere about the second or third inning in this thing. for both economic reaso. they don't want to mess up the housing market when it's farajling, and political reasons, they don't want to give an easy target. they put out this 22-page paper that even has three options. no government, some government, and more government in it. and it's really just a beginning of a dialogue. but it does send a very clear signal that the administration is trying to reduce the role of these government-owned giants, fannie mae and freddie mac in the housing market. >> in terms of the market reaction, we haven't really seen much, and do you think it's because people are really not sure what this means, and how this will actually impact the housing market? >> yes. i think basically the markets are saying, wisely, wake me up when you figure out what you guys are going to do. there will be a few near-term changes, though. for instance, in its proposal, the administration says the

executives like franklin raines and timothy howard and of course fannie mae and freddie mac. ball a lot of these bad mortgages from these banks as well as part of a huge gap because they got a government sponsored entities allows them to play and game the interest rate spread between government securities and government securities here's one prediction i made a list or i'm sticking by it that before the end of this year fannie mae freddie make a five trillion dollar liability on america's balance sheet will be bought by the chinese and the biggest landlord in america will be china well they could end up being good short to short china because if bear stearns is correct about their assessment of what is in these mortgage backed securities those are you sure bet on china now with jim chain oh so i think the guy is short of enron he's short china so that could be the basis of and so is it going to get better or worse well look at the chart of the day the housing double dip is excel orating how home prices dive one point six percent in november so the trend is continuing down it

coming soon, a revamp of mortgage giants fannie mae and freddie mac. on friday, the treasury will roll out a plan that could phase out fannie and freddie and trim back the government's role in the mortgage market. fannie and freddie currently own or hold 9 of every 10 american mortgages. s&p cut new jersey's credit rating because the state has a pension shortfall and a lot of debt. no comment from the garden state on the downgrade. and j.p. morgan chase is blasting charges it knew about bernie madoff's big ponzi fraud. the trustee recovering madoff's assets sued chase, saying the bank ignored warning signs on madoff's accounts there. chase say it didn't break the law, and wasn't required to investigate those accounts. still ahead, tonight's "street critique" has some lessons on investing in small and speculative stocks. hilary kramer of gamechangerstocks.com. >> susie: big merger news here at the new york stock exchange involving the big board itself. the n.y.s.e. says it's in serious talks with germany's stock exchange, the deutsche bourse. no agreeme

nine of every ten home mortgages are backed by the government, usually through fannie and freddie. one likely goal of tomorrow's proposal is to cut this amount, leaving it up to the market to fill the void. greg mcbride is a senior financial analyst with bankrate.com. >> the whole reason that borrowers can get a 30-year fixed rate mortgage at 5% is because of the government guarantees offered by, among others, fannie mae and freddie mac. if you take that away, there's just not an investor appetite to lend money that long at that low of an interest rate. >> tom: according to reuters, another idea that may come tomorrow is to create an insurance fund, like the fdic insurance for bank deposits. it would act like a type of government guarantee for mortgage-backed securities. whatever changes the obama administration proposes and congress okays, mortgage experts predict they'll be phased in over many years to avoid disrupting the mortgage market. >> susie: here are the stories in tonight's nbr newswheel. the blue chip winning streak comes to an end, as the dow closes lower for the first

fannie mae and freddie mac had overstated its in come. -- income. in the outflow of that, the top executives were onion a big scandal at the time. -- were on in a big scandal at the time. they were producing enormous losses for the taxpayer. this is really years before the subprime thing happened, and yet we are still paying these legal bills. host: and you have written about how the lawyers for these executives have received tens of millions of dollars. guest: the former ceo, the former chief financial officer, and the former controller together -- the taxpayer has paid since the government takeover $24 million in their defense. here are three people who were found by the sec and the office of housing oversight to have accounted improperly for the company's results, and yet here we are years later, still being asked to pony up. host: this graphic is from "the new york times." where the money has gone we can see the numbers here -- the cost for the top executives, also the executives, other executives. former and current executives. even 195 non-exe

is that we put our financial system under stress even if we have no fannie and freddie? is there a role for the government to provide emergency assistance when you get that kind of pressure off the housing market? i think there things that you're trying to build and which would make such a crash less damaging. in all financial crisis at their center this combination of real estate bust and bank mistakes. we are not unique in that context. to make sure the system is more stable in the future, more resilience against the risk of future recessions or house price booms and busts, we need to have a system where, again, banks hold more capital against risk, people have more equity in their homes. and the government is not creating incentives that magnified the chance you have these huge imbalances in housing over time. i think it is worth noting, my view is that even if you get that stuff substantially better, and we will, i'm very confident that we can do that, we will still have recessions in the future. we want to be very careful that you do not leave the country vulnerable

so far we have spent 61 billion on freddie mac and 83 billion on fannie mae.the state is being financed by foreign borrowing with china now number one in our country followed by japan and the middle east oil exporting countries. snug up against them is the major role of the cayman islands and i would like to ask unanimous consent to place in the record a report on foreign portfolio holdings of u.s. securities. >> without objection. >> i think of the chairman. my question, have three. is there a transparent -- i will read all three. is their transparent list of which cayman islands financial institutions hold the lion share of the debt that they are financing? number two, who exactly will lose money if freddie and fannie default on their obligations? and number three, how much interest will our government paid this year to foreign interest to finance our debt? >> on the first, i will get it in writing. >> you don't know cert there's a transparent list of which cayman island institutions hold the lion share of u.s. debt and asset backed securities? it is quite s

the proposals come after the federally-backed mortgage providers fannie mae and freddie mac had to be bailed out, costing $150 billion. treasury secretary timothy geithner summed up the challenge. >> we need to wind down nanny and freddy and substantially reduce the government's footprint in the housing markets. and that's a process has to happen good allly because they are now the dominant source of housing finance and we want to be careful that that process happened in a way that doesn't interveer with or impede the process of repairing the housing market that still has a long way to go. >> holman: many republicans want to abolish fannie and freddie. they blame the companies for fostering reckless lending that triggered the financial meltdown in 2008. texas congressman randy neugebauer. >> the american taxpayers are tired of bailing out all of these entities. they're ready for congress to take quick action on freddie and fannie and show them a plan on how we are going to get taxpayers off the hook and at the same token not having americans making other americans house payments. and

tied for second with freddie couples. the within at riviera in 1990 has a chance to win again 21 years later. also on 11, couples 1-under 7. badley, bird putt on 9. weather permitting, should be a great final round tomorrow. >> a sad note, olli maddison has passed away. insure the giants, back at it in scottsdale. rainy weather, but they can still throw the ball around, batting cages. >> alan: just ahead, san francisco's famomomomomomomomomo >> alan: coming up at 6:00, mother and two children are being treated for carbon monoxide poisoning, and a dog, who turned up 700 miles from home, is back if its owner. we'll tell you about that at 6:00. finally, san francisco's chinese new year parade is just getting under. organizers are predicting nearly 1 million spectators this year. nearly 5,000 people participate in the parade, which includes 26 floats, marches bands, dance troupes and fire crackers. should be exciting. happy new >>> tonight on "world news," face-to-face. that giant confrontation now turns personal as the natio

will that put our financial system under stress even if you have no fannie and freddie? is there a role for the government to provide emergency assistance when you get that kind of pressure? i think there things you're trying to build in which would make such a crash less damaging. >> all financial crises have at their center, most do, this combination of real estate busts and bank mistakes. we are not unique in that context. to make sure the system is more stable in the future, more resilience against the risk of future recession or housing prices booms and busts, indeed have a system where banks hold more capital against risk, people have more equity in their homes, and the government is not creating incentives that magnify the change you have these huge imbalances in housing over time. i think it is worth noting, at least my view is, even if you get that stuff substantially better -- and we will. i am pretty confident we can do that. we will still have recessions in the future. you want to be very careful you do not leave the country vulnerable as we were in this cris

fannie mae and freddie mac have been the bane of taxpayers. $150 billion worth of bailout money went into the two mortgage giants. and now the treasury department has some recommendations on what to do about them. they range from completely pulling out the government out of backing mortgages and fannie and freddie back nine out of every ten mortgages out there to reducing the role in only coming in, in times of stress to moving to backing securities put forth by private companies. there are some other recommendations in from the treasury department. and that includes not extending a provision that allows fannie and freddie to back mortgages upwards of $730,000. instead going back to a level of $625,000. that would have an obvious impact in the bay area where home values are so much. it would also force mortgages to have down payments of upwards of 10% on fannie and freddie-backed loans. so obviously, big changes that the government is looking at costing the government a lot of money to back those mortgages but we could see mortgage rates go hi

host: fannie and freddie -- freddie mac was established in 1970. how significant is that figur guest: we would not have an mortgage market right now free to not have them. because what has happened essentially is investors are skittish about coming back into the american economy and investing hundreds of millions of dollars in mortgage-backed securities. without those zero government- sponsored enterprises, we probably would not have a mortgage market at all. host: there is that figure on the screen. a number that is sure to get some phone calls. let's take that number and put it into perspective as far as how to move forward. guest: consider the number of nearly 14 trillion. that should not have happened. have the government been ahead, the previous administrations have been ahead of this, come they would have limited the size of fannie and freddie in terms of how much market they could capture. the would have required adequate capitalization. there would have limited the kind of risks they would be taking. fannie and freddie stayed out of the sub

and fannie and freddie know how to do it. they can do it as private companies. >> but the government has got to be there today, you would concede that, given the fragility of the housing market, the federal government has to be there to back it? >> because the federal government failed in its obligations to have these institutions be sound, we're on the hook. and we're on the hook now for $153 billion. it will be well over $300 billion before we're out of it. but it's time to begin to transition to this activity, to the private sector. >> all right. we're going it take a break here, we'll come back, more with speaker boehner after this. >>> "meet the press" is [ male announcer ] this is the evo 4g. and this is everything people love about it. they're big fans of the 4g speed. and the powerful android platform. ♪ so we took both... ♪ ...and used them to make something new. trouble hearing on the phone? visit sprintrelay.com. introducing the new htc evo shift 4g. only from sprint, the now network. tdd# 1-800-345-2550 if anythin

we don't think fannie mae and freddie mac can be part of that solution. we want to begin a debate in congress how to best enacted that legislation. we want to restore the market but with better protections for consumers, more capital against risk, homeowners holding more equity in their homes, and some protection in a future crisis against picaresque when you have a mild recession turn into a depression. that is a difficult job. we want to make sure these things are phased in gradually because we will not take risk that we will slow the process or damage the recovery. >> one of the statements the president made in the state of the union which i felt was very positive was his desire to address the corporate tax situation. while he did not express necessarily where he felt the rate should be lowered to, it was a very positive statement that that is an issue he wants to work on. do you have a sense of where he was to go from the 35% corporate rate to what level? >> for it to be worth it, you have to move substantially lower. >> into the 20's? >> right now is

and fannie and freddie know how to do it. they can do it as private companies. >> but the government has got to be there today, you would concede that, given the fragility of the housing market, the federal government has to be there to back it? >> because the federal government failed in its obligations to have these institutions be sound, we're on the hook. and we're on the hook now for $153 billion. it will be well over $300 billion before we're out of it. but it's time to begin to transition to this activity, to the private sector. >> all right. we're going it take a break here, we'll come back, more with speaker boehner after this. >>> "meet the press" is sponsored by ge, imagination at work. ♪ work, work all week long ♪ punching that clock from dusk till dawn ♪ ♪ countin' the days till friday night ♪ ♪ that's when all the conditions are right for a good time ♪ [ male announcer ] advanced technology that helps provide cleaner air, cleaner water, and helps make all of us more energy efficient is something the whole world

>>> today, president obama presents congress with three options for the future of fannie mae and freddie mac. the proposals would reduce the government's role in the mortgage market by scaling back or shutting down the companies. bailing them out has cost taxpayers over $150 billion. >>> overseas markets are mixed to end the week. markets in japan were closed for a holiday. hong kong's hang seng rose 0.5%. in london, the ftse opened lower. the dow fell ten points yesterday. the nasdaq ticked up one point. >>> blockbuster is expected to put up the forsale sign soon. the movie chain could not reach a deal to exit bankruptcy protection. it could sell for $300 million. >>> lines for verizon's iphone were not as long as expected on thursday. many customers appear to have skipped the store in favor of internet presales. analysts think the sales will top 1 million iphones by sunday. >>> a new stamp marking the 100th anniversary of ronald reagan's birth has been unveiled in his hometown. crowds gathered to get a look. the stamp depicts mr. reagan during his second term as president at his califo

either insolvent or pretty close to insolvent we've allowed the banks to turn the c's fannie and freddie into their dumping ground for bad mortgages all the big banks and some of the mid-size banks are taking mortgages that should be. discounted thirty forty fifty percent or more and they're selling them for near parts of fannie and freddie so they're taking bad loans and dumping them off on the public it's a classic example of privatized gains and socialize losses then you take the artificially steeping yield curve it's hard for anyone with a straight face to say yeah these banks are in great financial health they're standing on their own there's no government subsidy there's no taxpayer support let's allow them to write big dividends though the whole conceit is just based on a fantasy these banks in my opinion should have been put through a prepackaged bankruptcy should have come out of the bankruptcy with the bad debt sold off the pennies on the dollar with taxpayers owning the bulk of them and eventually spun out recapitalized and better health but we didn't go that route we're allow

i would mention after the freddy's massacre, who was a story in "the times" sharpton buoyant in a storm. [laughter] >> we have jesse jackson's love child. now the double standards there are pretty vivid. i think if ralph reed had fathered a child out of wedlock and had used his organization's funds to support her, that would probably be bannered on the front page of the paper. instead jesse jackson's similar actions were buried on page 27 in a single column. obama, "the times" is in bed with him since the beginning. they delayed for an entire year stories about his relationship with the reverend jeremiah wright that they should have gone into and shamed into it. abc news got video, and it was after that jodi canter started writing what wright was all about. they allowed obama to get away with his relationship to the former weather terrorist, bill ayers, david axelrod said he was just somebody he knew from the neighborhood that kids go to school together. they had a relationship over ten years in several venues and a couple of foundations. they were closer. i would like to switch to immi

the implicit guarantee of fannie mae and freddie mac is a guarantee where now we have got a statutory guarantee. to be clear which businesses are too big to be allowed to fail, determining which ones will go into receivership and who would receive them, and i have not seen anybody introduce this legislation. [applause] >> another question that has come on line, i am not sure where he is from, but we heard this repeatedly throughout this town hall tonight, is when will the 112 congress take on the issue of defunding of the departments that are not included in the article one, section 8, of the u.s. constitution? [cheers and applause] >> i think it is too long and too expensive. >> i talk about this a lot back in the home district, and a great example, the department of education, back in the 1970's, when we celebrate the education from welfare, there were about $18.10 billion for their budget. the department of education know is closer to an $80 billion budget and 5000 employees. but what has happened to education? it has been an inverse relationship, so i think now is the time we have

here's a look at freddy in action. on the field in scottsdale today. you know, he's been working hard to make sure all is good to go for opening day. last year it was mid-may before we saw him in action after operations on his left shoulder and one of his knees. this time around the surgery went a bit deeper, remaining suit tour -- sutures from his shoulder. here's what he had to say about getting healthy. >> i just want to be out there every day and play. where i am this year as opposed to last year is night and day. last year i was well, well -- you know, way, way far behind and this year i'm -- i might miss a week of spring training, maybe less, we'll see. but i'm light years ahead of where i was last year and i'm hoping for a big year this year. >> reporter: all right. now to a's camp to bring us to third base. billy bean tried real hard to bring adrian beltre to third base. he ended up going to the rangers. here's the scene today, you've got kevin kouzmanoff back at it, getting ready for his second year at third base for oakland. they really did t