and the saving of $2.5 billion and they'd like to proceed and make some cuts to fan knee mae and freddie mac over the course of the next year and that's something we ultimately have to address. under mr. frank and this democratic congress we worked on reforms to fannie mae and freddie -- freddie mac, unlike my friends on the republican side of the aisle, i remind them what their chairman of the house financial services said about the efforts to reform and revamp fannie mae and freddie mac back when the republicans were in charge of both the white house and this congress. they tried to reform -- there was an effort to reform fannie mae and freddie mac between mr. oxley and mr. frank but instead of getting any assistance, he fumed particularly about the white house. all the hand wring, this was from an article in the "financial times." it was by mr. oxley. this is an article written and voted from mr. oxley in the "financial times" last september, september 9, 2008 where he fumes against criticism that the house didn't try to rerm fannie mae and freddie mac a few years ago. he said all the han

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 the institutions have effectively become government entities whose operations should be included in the federal government budget." if we did that, the debt picture that we have talked about here in congress would be dramatically changed. but at least the american public would know what that we have assumed on their behalf and which we refuse to deal with. -pi am also concerned that the derivatives title does not protect and users. the people of manufactured goods in this untry, the people who provide those things that our economy moves on, and the need to have a properly operating derivatives market, we also have a massive expansion of government. it has been said by many that you should not let a good crisis go to waste. this crisis has not been allowed to go to waste. the creation of large new virtually uncontrolled p

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 former head of freddie mac has said that the government is running fannie and freddie as an instrument of national economic policy and not as a business. ultimately, there is the debate. surely have a fannie and freddie exist with the current taxpayer hemorrhage and ultimately with the potential to serve in that area of perpetuity, or should they go to this orderly liquidation authority that i should add will not happen overnight. under section 202, the appointment of the fdic can last up to five years. three years in a receivership with the possibility of 21-year extensions. -- two one-year extensions. they are not necessary. we know the havoc they have reached -- wreaked. we have to stop the hemorrhage, we have to move to competitive markets, and this bill will achieve that. i yield back the balance of my time. >> i agree with much of what john and said, -- of what the gentleman said. i want to " a man who served in a high position in the reagan administration and both bush administrations. [unintelligible] i have always been skeptical of that. it was not just a monetary situation, i

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

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

-- freddie mac and fannie mae. congress passed the home owner's equity protection at which gave the federal reserve the authority to regulate some prime mortgages -- subprime mortgages. and more of the bad mortgages came outside the banking system than inside. mr. greenspan for ideological reasons simillr to some of those argued here argued the maaket should not regglate and to intervene, refuse to use the authority. in 2004 and 2005, two of my porth carolina colleagues move to try to regulate subprime mortgages by statute because th+ fed would not use the authority. we were frustrated because the republican house leadership sent word not to do it. it was not until 2007 when the democrats came back to the majority that we passed the bill through the house to regulate subprime mortgages. my friend from alabama voted for it and many of the republicans here voted against it. after we did that, mr. bernanke finally decided that it was time to use the authority. the fact is, for all the talk we've heard here, 12 years o

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

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

and there's no cap on the amount of the size of the bailout for fannie mae and freddie mac.the government has made that clear. they will pay whatever it takes to bailout these organizations and the pricetag will continue to go up. host: it's separate from tarp? guest: yeah. it's basically an open-ended garn fee. what's going to happen, of course, is that this ultimately, this housing policy -- particularly if we don't learn anything from it -- is what's going to put generations and forward united states in hock. host: peter wilson says the spark that set off the financial situation. but how so? what did companies do related to what fanny -- fannie and freddie were doing? guest: they were at the vanguard of this market for terrible loans. basically to buy loans up, mortgages up, that were not backed by proper credit that were on these subprime and alt-a mortgages is what they're called. and private financial institutions got into the mix. they saw this behemoth doing this thing and it became part of the culture. this is not to say that any private sector organization was doin

-- 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 nothing to do with housing at all. they were using the government's credit to enlarge the size of this hedge-fund type information -- porol. i figure it d.c. one cockroach, therere probably a lot more in the kitchen. >> if you eat -- did you tolu fannie and freddie enough to find out if they had -- follow danny and freddie enough to find out if they had requirements? >> there were predicated on using the tax credits and bald. of course, they have no income now. thus bece very dubious assets. >> were you aware that they were buying the type of mortgages that they were buying? >> they were mandated in many other activities by congress, no question about that. therwere also tried to serve on wall street. that issa tough balancing act. >> , do i have

-- 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 had nothing to do with housing at all. they were using the government's credit to enlarge the size of this hedge-fund type information -- portfolio. i figure it d.c. one cockroach, there are probably a lot more in the kitchen. >> if you eat -- did you tolu fannie and freddie enough to find out if they had -- follow danny and freddie enough to find out if they had requirements? >> there were predicated on using the tax credits and bald. of course, they have no income now. thus became very dubious assets. >> were you aware that they were buying the type of mortgages that they were buying? >> they were mandated in many other activities by congress, no question about that. there were also tried to serve on wall street. that issa tough balancing act.

we should also ado a reform of fannie mae and freddie mac that is the most glaring piece missing from the legislation.. government intervention run amok with fanniend freddie is at theoot of the financial crisis. if we leave them and reform, we increase the risk of " rigid financl calamity the future. we should eliminate all provisions that let political leaders choo the winners and losers in our economy. crony capitalism can only do us harm. the right reforms including bankruptcy reform will set us rmly on the path to a long- term financial recovery. alo -- rolle reforms will kill credit, jobs, and our onomy -- the wrong reforms will kill crit, jobs, and our economy. let us choose to reforms. >> i want to comment on only five of the large number of important priorities that i would like tsee in any financl services reform conference report that we adopt. first, i wa to thank chairman frank for correcting center er who made the statement that we have done nothing in this billo deal with underwriti. hepparently was not aware that my north carolina coli, brad ller, d i started to believ

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

. >> you were once an owner of freddie mac. 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

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

. >> given what you have said about fannie mae and freddie mac, what would you like them to be in the future? should then private, half public and half private or utilities? what do you think? >> i don't think they ought to be public utilities because that is basically saying the public is going to guarantee them. the private market is not there now, and i think we all agree. so it is going to have to be a slow transition. but i think we can make that transition. it may take 10 years. it may take 15 years. in our bill we had a three or four-year thing. i think that is overly ambitious, but some of my colleagues felt like we could do that. i do think the problem was not in the securitizing particularly. it was that they were buying so many mortgages. and i think the benefit that everyone argued was where they wwuld come in and stewartize them. there was also a benefit in the implied government guarantee. the chinese loaned money because they felt the government was backing them up. we said we didn't, but when they got in trouble, the government backed them up. so with that arrange, the

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

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 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

the problems with the f.h.a eerily similar to the debates we have had leading up toannie mae and freddie mac. as taxpayers now puming hundreds of billions of dolrs into fannie and freddie now, story has shown, history has shown that we were on the right side of the debatehen with fannie and freddiehen, and i want to ke sure that when this h.a. bill es through now, at the conclusion of this debate as well, i want to make surehat myself and all my colleagues are on the right side of this debate as well. i would urge my colleagues to be all on the right se of this debate in histrynd support my amendment. -- history and suort my amendment. i reserve. the chai for wh pse ds the gentleman from massachusetts rise? mr. frank: to take the time in opposition. the chair: the gentleman is recognized. . frank: i yield mys thr minutes. the chair: the gtleman is recognizedor three minut. mr. ank: m. chrman, there are several aspects of the debate of the using during the period leading up t t crisis. part was fnie mae andeddie mac, b i ink it was oer subprime loans being made laelyver the unregulated bankin

i mean i don't hear a question, but there is discussion about what to do with fannie mae and freddie mac as discussed earlier and there's debate whether there should be a second stimulus bill and that hasn't gone too far. depends on what the economy does in the next few months. the practice in euro might effect the u.s. economy as well. if that happens and then i'm sure congress will start debating more closely whether or not we should have a second stimulus bill and if that, maybe some of the things the caller might mentioned might be in there who knows. >> any new taxes placed on banks or hedge funds in the compromise deal? >> i'm not so sure about that one. i think there was debate until the last minute but i didn't wait until everything was finished and when i looked at thing this morning quickly, i don't remember that part exactly but there was debate on a bank tax which the u.k. just recently passed and france and germany said they supported and u.s. was also saying they supported but didn't make it into this one. i didn't see it this morning and i'm not so sure. host: how will the

and these institutions, fannie mae, freddie mac were the center of the housing market and they were largely responsible. for some 70% of subprime mortgages throughout our financial system. in order to reach the affordable housing mandates that congress enacted in 1992, fannie and freddie became the largest purchasers of these junk loans ending up with $1.8 trillion. in essence they made the junk loan market. knowing of the systemic threat posed by these institutions, the federal reserve actually came to congress, came to us a number of times, over a dozen times and asked us to rein in those excessive risk taking. when you hear the arguments back and forth about at one point or another we tried to have legislation to address this, ask yourself this, i'll remind you of this, what the fed wanted was the ability to deleverage these portfolios. what the fed wanted was the ability to control fannie and freddie for systemic risk. and that is the responsibility that congress would not give them. in 2005, that debate came to a head and under the loordship of chuck hagel and richard shelby, senate re

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

freddie mac believed it. fannie mae to the debt. congress believe that. the media believe that. believe that. very 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

so freddie mac and fannie mae were very popular anit was quite a nuer of people, particularly democts said no, there no real problem with m. as know, freddie mac and fannie mae did have a problem anthey aren a tremdous crisis and as that crisis developed, what happe then is not only does acorn d the social enneing thre just the housing mket, but it affected noonly just our economy,ut ei world economy andreated is cisis ich stard inoing,u unfortunatelyid not stay contained just te housing market. soe see beginning ofhe econom problems that we're experienci now started with acorn,tarted in housg market now threople o -- theare pple whsay this is evidence he flu of free enter price. rile at thecau this isn't a failure offree enterprise but governmential engineerin the loans thatidn't rk, suppose thathosens made in the name of compassion, although i n't know what's cpassionate about asking someody to take a loan and givinghem a an that they can't afford to pay and slowl they get farther and farther behind idebtnd get evicd from their house. that i comssiote. but it was the social enneerg

this story was in 2007, but if you go back to when -- i understand the penalty came in 2001 for freddie mac. at the time, rahm emanuel was on that board of directors. >> that's right. >> he was appointed by bill clinton in 2000. i say that only because they do not do that like they used to. they used to have some members appointed by the company itself and some by politicians. what did you see? what is the lesson from this story? >> i think the lesson to me was that there are more and more people giving money to campaigns, to presidential campaigns and regular campaigns. the amount of money donated to politics just goes up and up and up every year. there is a lot of wrongdoing. this was one of hillary clinton's top campaign fund- raisers. hillary clinton was no unknown presidential candidate. at the time, she was the presumptive democratic nominee running against some guy named barack obama. she had a guy breaking the law right at the top of a campaign. mrs. clinton's fund-raisers and staff said they did not know that this fund raiser was breaking the law, and i agree with them. the point i

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

i mean i don't hear a question, but there is discussion about what to do with fannie mae and freddie mac as discussed earlier and there's debate whether there should be a second stimulus bill and that hasn't gone too far. depends on what the economy does in the next few months. the practice in euro might effect the u.s. economy as well. if that happens and then i'm sure congress will start debating more closely whether or not we should have a second stimulus bill and if that, maybe some of the things the caller might mentioned might be in there who knows. >> any new taxes placed on banks or hedge funds in the compromise deal? >> i'm not so sure about that one. i think there was debate until the last minute but i didn't wait until everything was finished and when i looked at thing this morning quickly, i don't remember that part exactly but there was debate on a bank tax which the u.k. just recently passed and france and germany said they supported and u.s. was also saying they supported but didn't make it into this one. i didn't see it this morning and i'm not so sure. host: how will the

, 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 health choic

i mean i don't hear a question, but there is discussion about what to do with fannie mae and freddie maciscussed earlier and there's debate whether there should be a second stimulus bill and that hasn't gone too far. depends on what the economy does in the next few months. the practice in euro might effect the u.s. economy as well. if that happens and then i'm sure congress will start debating more closely whether or not we should have a second stimulus bill and if that, maybe some of the things the caller might mentioned might be in there who knows. >> any new taxes placed on banks or hedge funds in the compromise deal? >> i'm not so sure about that one. i think there was debate until the last minute but i didn't wait until everything was finished and when i looked at thing this morning quickly, i don't remember that part exactly but there was debate on a bank tax which the u.k. just recently passed and france and germany said they supported and u.s. was also saying they supported but didn't make it into this one. i didn't see it this morning and i'm not so sure. host: how will the fm s

i mean i don't hear a question, but there is discussion about what to do with fannie mae and freddie mac as discussed earlier and there's debate whether there should be a second stimulus bill and that hasn't gone too far. depends on what the economy does in the next few months. the practice in euro might effect the u.s. economy as well. if that happens and then i'm sure congress will start debating more closely whether or not we should have a second stimulus bill and if that, maybe some of the things the caller might mentioned might be in there who knows. >> any new taxes placed on banks or hedge funds in the compromise deal? >> i'm not so sure about that one. i think there was debate until the last minute but i didn't wait until everything was finished and when i looked at thing this morning quickly, i don't remember that part exactly but there was debate on a bank tax which the u.k. just recently passed and france and germany said they supported and u.s. was also saying they supported but didn't make it into this one. i didn't see it this morning and i'm not so sure. host: how will the

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.

done them any 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

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

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 does and i hope

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

s, whe theyailed out fannie mnd freddie mac and accordg to the federal budget office, taxpayers ve now lost $145illi headingo $400 billn. don't wt will be pa back. what'sely to happen to $3billioput risk by this ll? won't touch is money, ty es don't ed it and they d't the federal ealement to come with it. only those banks whosfinances unsoundill aept these fus wi nchance they'll actually be paid back. in fact, by removinghe eclinspecr genel from risk isht of these funds,at and ju tbe clear,he's graee that a me of this money will ly be lent to sm binesses in th fit place. in fact, any comrcial or industrial loawill cot toward the requiremes this not necessarily stoans to sml businesses now, after a failed $700 billion tarp, $30 bli mht t sod like a lot of money, but let's pu it in perspective. the combinedlean and econic costs of the gulfil ill are currently estimaed ound $17 billi. so in term of econom dmage th bill could actually cost more than cleaning u the entireess in the gulf. that'srue, small businesses are having greifficty geing loansso are ho buyers . why is that? publisector

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

exact same tools that were used to rescue the creditors of bear stearns, a.i.g., fannie mae and freddie macwith 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 financial insti

. >> 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

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