i am skeptical of great new gses to replace old gses. they become large and hard to control. and i think there are private options to clearinghouses that i would like to see explored. the bigger issue is people is gushing people a focus on information disclosure and the security going up to us like five minutes. the big problem, i mean they were certainly problems at origination. with the recession and so forth where lenders did not follow the underwriting guidelines as closely as they should. so when you look at the prospectus, the issue is a prospectus, some of that information was not perhaps accurately stated. but i think the bigger problem, and it has gotten much less focus, his information production after the fact. these loans, things changed after security issues. if you have sat down and read security's perspective, there's a terminus of out of disclosure at issues. the problem was that there was no tracking post issue is that there was no system step up to track credit quality of the securities after issuance. and that's where clearinghouses can come in that other m

this is a big part of the story of the gse's. it is not as big a gap with 2006, as i would have expected. are a couple of things that could be going down. it does look like it is not as clean a story as you think, because it is obviously partly a house price story as well. so, anyway, where does that leave us? actually, this brings us to what is the mystery. why are they still kicking, and have reasonably positive share prices, but why did the gse's go bust? the big reason is statutory capital verses regulatory capital. the mortgage insurer's were required to set aside contingency and hold it for up to 10 years. that might potentially be a model for a future climate. then, they actually did get some oversight from the rating agencies in terms of stress tests and the like. another factor we cannot discount is recisions. it is a critical element if you're going to separate lending from insurance. recisions' rates normally about 5% to 10%, or less, and according to moody's, it is 20% to 25%. there aa minus rating requirement -- ther

hard to imagine the gses going away of the as phil and i talked about, gse reform is short for macroeconomic socioeconomic housing policy. if we think health reform or dodd-frank touches us directly, g, anything that the gse reform will hit us that much harder. >> just a quick, i mean i think agree with most of what the others have said. the key from where i sit is to try to distinguish between their public policy, or social policy function and the other functions which are to promote healthy, vibrant mortgage market and a market for long-term debt. and i think where the real tensions arose over the last 10 years was the gses were given a much more expensive, costly, risky role in promoting social policies and i think if we can do something in the next year that strips away that responsibility and invests in a explicitly-funded government agency and leaves the gses to do what i believe they were originally intended to do, which is to promote securitization, i think we'll be a lot further ahead than where we are now. >> the only thing i wouldho add to this is, one of the,hg it is a tangential

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for, what role did the gse of larger securitizations play in this debacle? tabare actions contribute to the problem? or or fannie and freddie complicity in any way? finally we need to examine the role of the regulators. where we the in this process? at release appears to be doing and what were they doing and if not, why not? i think these questions have to be asked and answered and to determine the extent of the problem we need to speak with all of the major services. unfortunately, we only have a small subset today. for example, allied financial was the first major servicer to recognize that it had problems with its process. that firm and among others isn't heretoday. mr. chairman, it's my understanding that many if not all of the law firms under investigation were selected by the housing gse. to best understand how and why the firms were chosen by believe we need to hear from frannie mae and freddie mac. unfortunately, they also didn't make the witness list today. perhaps the most complex you involved securitization. it's highlighted in the congressional o

. -- gse goals kick into the left. clearly, a downward sloping.s are concentrated disproportionately in low-income tracks. both of which are -- apply to both of these goals. what about loan growth. this is the loan growth looking between 2001 and 2003. same pattern. downward sloping. for peter, that is enough. this is hard significant data. he can conclude and start giving speeches that b c r a goals caused the crisis. let me look at the next slide. this might give him a little pool. this is the% of loans sold to the gse's. it does not slope downward. the upward sloping. matalin, and higher in, loans are more likely to be sold. -- middle income and higher income. let's not at -- let's look at the next graph. these are loans that originated by a cra covered lenders in their assessment area. the upward sloping, not downward sloping. that might give us some pause into thinking that superficial conclusion is true. if that is true, why do we get this reverse effect here? in an earlier -- my new england mother would be very irritated with me. we looked

and it was alan greenspan who became a big foe of the gses who referred to that as the big fat gap. >> so what did david -- is he still alive? >> yes. >> have you -- did he talk to you on the record? >> he did, yes. >> and what did you -- what did he do over those ten years that was -- specifically that saved fannie? >> well he took a company that in fact -- that was -- the washington post had an article that said it was heading toward the biggest disaster in modern financial history you know going broke at a phenomenal rate. it was run kind of like a government enterprise without a lot of focus on its -- on its -- on its bottom line at all. and it, like many of the s&ls, had bought mortgages and at a time of rising interest rates and so was stuck with fixed- rate mortgages paying one thing while it's cost of funding was going through the roof and so money was just going out the door every single day. and maxwell started to run it more like a business, demanded accountability on the part of -- on the part of managers, changed some of fannie's policies and procedures so that they no lo

for, what role did the gse of larger securitizations play in this debacle?abare actions contribute to the problem? or or fannie and freddie complicity in any way? finally we need to examine the role of the regulators. where were the in this process? what release appears to be doing and what were they doing and if not, why not? i think these questions have to be asked and answered and to determine the extent of the problem we need to speak with all of the major services. unfortunately, we only have a small subset today. for example, allied financial was the first major servicer to recognize that it had problems with its process. that firm and among others isn't here today. mr. chairman, it's my understanding that many if not all of the law firms under investigation were selected by the housing gse. to best understand how and why the firms were chosen by believe we need to hear from frannie mae and freddie mac. unfortunately, they also didn't make the witness list today. perhaps the most complex you involved securitization. it's highlighted in the congressiona

for, what role did the gse of larger securitizations play in this debacle? tabare actions contribute to the problem? or or fannie and freddie complicity in any way? finally we need to examine the role of the regulators. where were the in this process? what release appears to be doing and what were they doing and if not, why not? i think these questions have to be asked and answered and to determine the extent of the problem we need to speak with all of the major services. unfortunately, we only have a small subset today. for example, allied financial was the first major servicer to recognize that it had problems with its process. that firm and among others isn't here today. mr. chairman, it's my understanding that many if not all of the law firms under investigation were selected by the housing gse. to best understand how and why the firms were chosen by believe we need to hear from frannie mae and freddie mac. unfortunately, they also didn't make the witness list today. perhaps the most complex you involved securitization. it's highlighted in the congressio

it took a full year to get close to 100 non-gse servicers signed up for hamp. >> let me build on thatish of your comclean about hamp thatt has set a standard. it changed the way people are doing business in the market. -- much of your claim is that. you have swn servicers there's a better way to do business. what you need to keep doing anything? what are you accomplishing now? everyone recognizes a standard you set. great. but we still need treasury involved in this once you have set the standard? >> the hamp program does a couple of important things. one because of a servicehat participate are required to about a week homeowners first four hamp. it keeps consistency across the industry. second, as this panel has indicated to treasury a number of times, there is intense as this and see -- and consistency in reporting, and this during the time of crisis provides a standard platform on which other modifications can be based. >> once the standard is established, the platform, i'm struggling to understand what there is left to do? everyone should be doing it like the treasury says. >> for

. >> this particular measure might be seen as temperate on gse for a year. >> i think it has come to straight point of disagreement. >> this is just from a constituency point of view. mixed community is undoubtedly the case of capital that you will reduce by a housing benefit changes. it means that people where you live, where i live, westminster, they will be forced out two areas like i represent, where there is already social unrest caused by the very rapid changes in populations and black of affordable housing. is the social unrest a price worth paying? >> putting it down together, asking the people in your constituency whether or not they're happy to pay for the people living in central london, that is more likely to lead to social unrest, if people find out how much money they are paying in taxes for people that live in houses that could never dream of. >> order. >> is not helped by that. >> order. >> this wednesday afternoon, we all should comedown. [laughter] yesterday there was a robust exchange over police numbers. today the constable in manchester confirm that if you cut th