even in terms of the gse's there's an understanding on both sides that we want to kick that one down road until after the next presidential election. >> don't forget we're also still in the depths of the housing crisis because foreclosures are still massive. people are massively underwater. there's a sense that we can't deal with this right now. >> although, that's an opportunity. >> yeah, exactly. >> that's an opportunity to use as a catalyst for real housing policy and also for the solution to the ongoing crisis to define what the housing policy can transmit or can change into and transform into. >> speaking of the ongoing crisis, i wanted to ask about the programs to help borrowers who are in trouble, and my reason for this is perm knowledge and experience. one is the mortgage we hold on our house in washington which is in the neighborhood where house prices have risen, plenty of equity, we are clearly not the sort of people who need to be helped by the government, nonetheless, last year, our loan servicer called us up -- >> wow! >> because your mortgage is held by fannie mae, you

dodd-frank had one sentence on gses. that the treasury should come out with a proposal by february of 2011. as potentially the most systemic institutions of the country of what would about a bigger role for them in there. and the treasury has a plan, but it has three plants. either primary a private solution with an affordable housing program, a private solution in good times but in equal amount of gst tax that kicks in during a crisis to support new lending, and three, a gse, might not an every but a new gse that takes on the risk of although i don't know what they would call it, maybe humpty dumpty or something like that. but the most important thing is they don't have a plan. and the political forces seem to suggest most likely this would be in march of 2013. i see this as a big problem for two reasons. one, the gses are currently securitizing, helping securitize over 90% of the mortgage risk, new mortgages that are originated. fair share from under 5% in early 19 -- has climbed out in stock, to over 50%. if we don't

and structure for said gse howled mortgages and the servicing of those. the driver of the standards of potential changes you are describing is the added gse and i believe hide and i agree with the implications for community institutions. >> is your answer the same? >> i agree it is a process that had an fhfa to take on those initiatives but be careful the problems we have identified the larger institutions with the economies of scale with different foreclosure and loss mitigation departments and the problems we have seen the right hand doesn't know what the left hand is doing is not the community banks. >> i appreciate your answer i don't mean to be rude but i am cutting-- running at a time but have you considered any measures to help keep a high quality servicers in business? especially those with community banks and other smaller servicers? >> . have you considered measures to help keep high quality community servicers in business? >> with your rules and regulations and orders? >> certainly from most committee banks with those institutions we are very c

you. >> you make a very strong case for the central role of housing policy and the behavior of the gses as factors in the build-up to the crisis. but i have never been able to understand how housing policy leads private investment banks to go bankrupt. it seems to me that when bear and lehman went bankrupt, that it seemed like there was a lot of mere incompetence or possibly malfeasance, and the behavior of those institutions and many others that contributed to the failure of those institutions. i see no obvious causal connection from the housing policies to mistakes in investment banks. i wondered what your theory of those mistakes is. >> well, certainly, bear stearns is a huge player in the mortgage market, and the fact that the leverage that these firms were allowed to take on which was something that henry paulson importuned the sec to allow, it was to increase the leverage that these firms could take on their books. that really led them down the path to perdition because only a small loss really was magnified by the leverage that they had. there was a tremendous amount of profitabi

that's our gse handle that we use to close and open the hatch. they've got that off, and there's protective tile that goes back over those two places that renee and, i'm sorry, chris will put on. once the handle's taken off, it gives you access to where we can go into pressurization. that'll be one of the next things they do, pull the big line off the ceiling and be we'll pressurize the vehicle, kind of like they do in an airliner. when you get ready to go up in an airliner, they pressurize the cabin, and we do the same thing with the shuttle. we've got everybody in the white room now. ray quevas and billingsly and randy. randy's holding the hose. they don't want to leave randy out, they want to give him something to do. the ovcc's telling the guy that's doing the work that they have a go to do certain things. everything comes from the otc or the ntd telling we have a go for this. so that's exactly what travis is telling those guys, okay, you've got to go, two, do the hatch, do the pressurization, do your carrier panels, whatever the sequence of

willg to anecome whatyou they did was@they lost a fortune in terms of long-term -- >> because they were gseovernment spoored entity, that had the implied backing of the federal taxpaye". and that's y they were riskier th they should. >> james, i don't wanto you think there's a tutorial and u're eck clued. you people and feel as though you' been represented enough? >> go to the e0it question. >> i'll defer to your judgment on @@that. >> let's go the e0it qution. should fannie and freddie be yes or no?@ >> no, i@think they should a"e be wound down, privatized. and if a publican ns the presidency i ink th will conservatives el they're at the heart of the entire naial mess, and i don't think that they'll be long for this world if that political >> does@that reflect the president's view? >> no, president@obama @@reflec owners' view, and we also han't mentiod very loose fed policy for many ars. >> what was george w. bush's view today on freddie and -- @@ fannie and freddie? >> well, i'm not surewhat his view would be but o much ownership. part of that. ddie were huge and bill clinton had a huge r

safety net, you are a gse. in the gse should have a lower return on equity. it still brings n. you still have back and you can still make loans. and you can make sounder loans. now, with a corporation go somewhere else? if you allow money markets and other kinds of activities that

that was never meant to be serviced so it has on the outside interface that looks like a satellite gse krin sorted and we designed a unique tools very much like the the hubble servicing mission but now this robot will use these unique tools and cut the blanket away and remove a panel and lot wire and then actually demonstrate the fluid transfer between the two tanks on board so it's going to take us from the space walk generation to start showing what we can do in terms of robotic activities on the board station. >> back on the other side of the room. >> thank you come gentlemen, for today. it will be to with us the rest of our lives. a question and a follow-up for bob cabana. as has been mentioned, those in the past present and future will be launched katibat are there plans to have a significant [inaudible] and also atlantis returns home are there any special ceremonies you have up your sleeve you can't yet tell us about? [laughter] >> jolie i'm working with of the shuttle program to come up with some plaques to put in various places of the landing facility and the launch pad so we w

it is promulgated by the gse's andd the fha. there is no state where falsifying paperwork is the right thing to do. with respect more broadly, there are mechanisms one can use as a trigger point in terms of number of days of giving wednesday. if you are going to proceed to for closure, some other steps should have taken place. one form of that is restraints on dual track processes. >> thank you. >> in our inner agency beat you, we found significant efficiencies around staffing and training -- significant deficiencies around staffing and training. there are larger mortgage servicers that do not communicate with each other well. that can have significance for borrowers. it is important to have a person there who can answer a borrower 's question whether they are in the process of foreclosure or the process of loan modification. that would add a lot to making this process work more smoothly. >> i think you are asking a question that has a couple of dimensions. how the bar wars are dealt with -- how the borrowers are dealt with by t

there are some trade-offs that gse's and congress are looking at. >> senator cook. >> i have three quick issues i want to raise with you. my understanding is that according to richard marcus in "financial review" august 1989, we had a default -- technical default on april 26, 1979 when the united states could not pay individual bondholders holding treasuries on time. their was an increase -- and there was an increase in borrowing costs of60 paces -- 60 basis points to the federal government. when we defaulted last time, 1979. i understand that italy just tried to borrow money twice today. they are a five-year benchmark, -- their five-year benchmark had a 21% increase in the cost of borrowing. it just went out at 4.9%. they set a record on their 15- year borrowing. they paid the highest interest rate ever and we are seeing a real m-1 decline in italy. should we have a kind of greek- style bailout for spain and italy? the congressional research service estimates that the imf is 60 the -- the imf is $50 billion short. lastly, i am worried about long- term finances of illinois and california

and a gse should have lower return on equity. it still brings capital in. and you can still make loans. and from a position of strength even make sound loans. will the corporation go somewhere else? yes, if you allow money market and other kinds of activities that are high risk. and the perception is they would be bailed out. then you will just transfer the problem. >> but if you have banks that are 15% or 20% of credit card lending or mortgage banking, those of core banking activities. that is ok as long as everyone is doing their job? stakeholders, rating agencies, investors. that is okay? but with -- combined with specter to purposes that is when it's out of control. >> not only combining but when you give the state collective activities a safety net so i can gamble. look, if a large bank or any bank can make $100 million offer of a trade, guess what? they lose 100 million of of a trade -- even though they say they can't because they are perfectly hedged. >> jimmy diamond should agree with you, if he wants -- jamie dimon shoul

is that most of your investors are looking at mortgage-backed securities doubt the confidence, the gses are the only ones they have confidence in that they will be paid their investment back and receiver return on it. but it seems like there needs to be a facility available that prioritizes safety and soundness but provide liquidity to the secondary market from the private sector. and we think that has to be done. the longer freddie and fannie goes the larger the losses will be. i yield back. >> thank you. mr. akin. >> thank you, mr. chairman. chairman bernanke, welcome. good to see you. all of us on this side of the table ran for office seeking the jobs that we have. many of us told people who put us here that we understood that the first priority had to do with jobs, and we pledged to make jobs our first priority and to do everything that we could do to improve the job situation and increase the number of jobs and helps you create jobs. jobs are not just a concept. you don't have to explain to people. they understand the consequences of having one, or not having one. many of us also t

the gse friends in congress yanked on its finding leash.ther provisions in the bill replaces a single director with a fine member panel. -- five-member panel. instead of having the buck stopped with one person, authority will be defused over five people. finally, the reform bills would lower the threshold for the financial stability council. bank safety and soundness is a cap -- is a technical term. means profitability. it means a bank can only be safe and sound if it is profitable. this means said any cfpb rule- making that affected bank profitability would be inconsistent to safety and soundness and would be subject to a veto. the dodd-frank act reforms the mortgage lending industry. under this, it could not be implemented. congress created the cfpb to help families. let's let it do its job. thank you. >> thank you, professor. thank you all for your testimony. we will begin asking questions of our witnesses. will the clerk said five members on the clock for each member for their questions. ms. drysdale, in your testimony, you talk about t