and the non-gse held mortgages. >> thank you. >> thank you, mr. chairman. i want to thank the witness for being here today. i appreciate it. you know, it's astounding to me about the president's budget as i reflect upon it is he manages to propose the largest tax increase close to the history of our country, while still having a $1.3 trillion deficit in '12 and bringing our national debt to $26 trillion in the next ten years. while again proposing this huge tax increase. it's like the worst of both worlds. it's staggering to me. i guess i have a fundamental question for you, which is the medicare, the trustees of medicare, independent group, not republicans, not democrats, have said that medicare's going to go bankrupt in 2024. and so what is the president's plan to preserve medicare? >> well, i think just to come back to your first comment, i think we have to look at the bottom line here and what the bottom line is, is by 2018 deficits as a percent of gdp are below 3% and debt as a percent of gdp is stabilized. i think it's wrong focus on our cur

the reports finds the two gses have paid $109 million for legal expenses for the former executives. and the government's new consumer watchdog agency is launching a probe into overdraft fees charged by big banks. the cfpb says it will also ask banks for information about how overdraft fees affect consumers, how overdraft protection is marketed and what information consumers receive. you got that? what is it -- cpfb. >> we're going to be saying it a lot. >> you want to check the box for the overdraft fee? >> well they may require to you check a box when you sign up for the card or your account. that says i'm willing to pay this fee. that's how this is going to work. >> if it was an overdraft. >> if you overdraft. >> meaning you check the box in advance. and it would be an acknowledgement, whatever, but you would be forced to check the box and the idea is that --

gses are looking at that. that's a positive development. another way to improve originations is to reduce uncertainty about servicing obligations and between the various agreements that have occurred recently and the fed's cease and desist orders, current discussions about national servicing standards and the like, i think some of that uncertainty is being removed. there's a whole variety of things that can be done. none of them as a silver bullet, but many of them can be helpful. >> thank you, mr. chairman. >> time of the gentleman has been yielded back. chairman bernanke, we thank you for your testimony today. the chair notes that some members may have additional questions for chairman bernanke, which they may wish to submit in writing. without objection, the hearing record will remain open for 30 days for members to submit written questions to the witness and to place responses in the record. this hearing is adjourned. >> thank you. >> as the fed chair leaves, he'll be on capitol hill again tomorrow, testifying before a senate committee.

our plan will wind down the gses. the treasury secretary is working with the fha and fhfa to take additional measures to remove unnecessary barriers. also, the treasury secretary pointing out the t.a.r.p., by the way, could result in taxpayer gains of approximately $20 billion. as i said, we're moments away from the treasury secretary. there's a very lengthy opening statement, pretty much dissecting all aspects of the problem. then obviously a q & a session to follow. >> hampton, i've got a quick question for you. the volcker rule supposed to be imme nentd in july, as i remember. but the comment period has been pushed out. so it's bottom line, is it going to be implemented in july or not? >> we don't get that from the treasury secretary's statement on the volcker rule, and other more controversial regulations. treasury secretary saying as he's said in the past, the important thing is to take the time to get the regulation right. no specific timetable on when we're going to get the implementation of the volcker rule. >

even when they meet gse standards. so we have talked about clarifying the representations and warranties that are part of the mortgage contract. fhfa and gses have, in fact, looked at that as well and i think that could be a constructive step. servicing is an important issue. you just made -- referred to in the beginning the servicing agreement. we have, since early last year, we've put consent o

there has been plenty of discussion in this committee and gse reform and covered bonds and other types of structures but there's still a lot of uncertainty about which way it's going to go. >> thank you. and then i go on to another question. the dodd-frank effective date for the volcker rule is july 21st. and we've heard that regulators think that this is a daunting task to complete by that. do you have any plans to phase in i'm me men tap implementatior rule? >> yes, we will certainly be giving institutions adequate time to adjust and adapt to whatever, adapt to whatever rule that's put out. >> okay. thank you. and then i've heard from some of my constituent insurance companies that fed staff has been we pldeployed to insurance companies. what's the purpose of their presence that given that the insurance companies are regulated by the states? is the fed simply increasing its insurance expertise or does dodd-frank give the fed authority to regulators first? >> no, we don't have any authority to regulate insurers unless, in the future, a systematically critical insurance company is so d

the gses should be wound down.e is needed question talk about how to price those. the taxpayers should not be on the hook as they have in the past. this has been a problem for both parties and we need bipartisan support to get rid of they will. >> how do you feel about for example the mortgage interest deduction, another distortion of the housing market. we have neighbors to the north in canada that don't really require interest deductibility of mortgage to have a normal housing market, they don't have a fannie and freddie, although they have some support for housing but much more muted than we have here and given the magnitude of the distortions that have been caused, i mean don't you think it's about time people began to address some of these more basic issues? >> there's no question we've been misallocating capital away from productive business capital t raises our living standards and wages toward housing and the issue is how to change that, that's about tax reform, gse reform, we can do it gradually. >> if you

. >> now, we've seen adjustments to the llpa from the fannie and freddie, gses and congress needed to fund a couple of months of the lower social security tax. so we hit another 10 basis points for the next ten years. do you see us hurting the housing market if we go back to that well again and increase the llpa or increase the guarantee fee that is put on top of what home buyers and home refinancers have to pay when they get a home mortgage? >> here's the tradeoff. the benefits of a higher fee are first the fiscal benefits and reducing increasing the profits of the gses and reducing the call on the treasury. another benefit is that by raising those fees gradually, you may eventually begin to bring in private competitors into the market. that's part of the strategy. on the other side, i should point out if you make more costly to get a mort goth that in the short term that will hurt the demand for housing which is already pretty weak. >> i would think another decline in housing prices or a failure to stabilize them and get them inching upward would be very bad for the economy, at leas

. >> now we've seen adjustments to the llpa from the fannie and freddie, the gses, and congress needed couple of months of the lower social security tax, so we hit another ten basis points for the next ten years. do you see us hurting the housing market if we go back to that well again and increase the llpa or increase the guarantee fee that is put on top of what home buyers and home refinancers have to pay when they get a home mortgage? >> well, here's the trade-off. the benefits of a higher fee are, first, the fiscal benefits in increasing the profits of the gses and reducing their call on the treasury. another benefit by raising those fees gradually you may begin to bring in private competitors into the market. that's part of the strategy. on the other side, as you point out if you make more costly to get a mortgage, all else in the short term it will hurt the demand for housing which is already pretty weak. >> i would think another decline in housing prices or a failure to stabilize them and get them inching upward would be very bad for the economy, at least for the people i repres

as you know, the gses are doing a pilot program to see if that will work. the issues have to do with whether or not there are enough foreclosed homes within a local area. is there financing available for mass purposes of homes? are there supervisory restrictions on banks? i think there are barriers that we can remove that might make this economically -- we might see even the private sector undertaking this. part of that will be refurnishing -- refurbishing and repairing dilapidated homes. >> the biggest barrier i see has been the lack of community banks giving loans to those who want to carry out those programs. but let me move to another question that is of great interest to me. i serve as higher education committee. i'm concerned about higher education and ever increases amount of debt that our students are being burdened with. last year students received more than $100 billion in college loans for the first time ever. and the total outstanding college loans are projected to surpass a trillion. student debt exceeds credit card rate for the first time and

let me just observe that about 60% of all the mortgages are either owned backed by, you know, the gses and perhaps, you know, some people down, the ones we can write down, and yet they haven't been. and there's some resistance to that. is that a feasible solution? and if not, you know, what other ideas do you have regarding the housing market? because it seems like that is the one persistent thing that seems to be dragging the economy down. and it's not just construction jobs. i mean, it's just, you know, it's a loss of equity. it's a general prevailing sort of diminishment of demand, as i see it. let me hand it over to you. that's actually going to be my only question. >> as you may know, congressman, the federal reserve put out a white paper recently that had an analytical discussion of many options without makes recommendations. a whole range of issues,se

i think if you look at it across all the programs, the feds, the fdic's, even with the cost in the gse, alongside t.a.r.p., most independent forecasters think the overall cost of this will be very small, a tiny fraction, for example, of what the country paid to resolve a much smaller crisis, the s & l crisis, which cost us 3.5% of gdp. >> all right. thanks very much. >> senator kerry? >> excuse me. senator cardin. >> thank you, mr. chairman. first, secretary geithner, let me thank you. thank you for your presentation, thank you for your service. i agree we need to have a balanced approach, whether it's dealing with our budget deficit as the administration's budget deals with revenues and spending which we have to do both. it also deals with deficit reduction but recognizing that we're in a recovery and that we need to make investments in education, job training, and infrastructure, which i agree with. i want to concentrate if i might on the middle class, how important it is to grow the middle class. i look at the numbers and see a shrinking middle class and wonder where consumers are g

so we -- sounds like you support, we are working closely with the gses, fannie and freddie, fhfa, to encourage them to take another look at the math because we think it is in the taxpayers' interest to do it. >> this is important, i think, mr. secretary, because most of what we have done the last six years has not helped this problem. i would lay before you that just as many as we have helped, a few that we have helped we have had a few more added to that list, and you know that quite well. this is going on and on and on. what help does the taxpayer get if somebody can't meet the nut and then has to get out of his house, bring down the whole neighborhood, if he can't pay his taxes then somebody on the rest of the street has to pay his taxes, and this is dragging down on the entire economy. i don't really see anything tangible. i'll listen, with the minute i have left, in this budget that addresses the deepest problem going on in america. because that's our dream. people worked hard for their homes. and we think it's better to put them out so we lessen risk? that's where fannie and th

and do you think that these quasi public gses, fannie and freddie, which were quasi public. mean even the fed talked about that as early as 2008. do you think that they should -- the banks should be able to push this gse debt off to the public sector? host: we'll leave it there? thanks. guest: regarding fannie and freddie certainly during the housing market bubble one can clearly see that it was a flawed business model where you had a private profit during the good times huge bonus checks for the managers. and then when the housing market goes down somehow that hedge fupped that they had created crashes and the taxpayers are on the hook. this violates any sense of economic fairness. so this return of fannie and freddie in debt mode just cannot happen. but since the government takeover of fannie and freddie fannie and freddie have play it had traditional behind the scene quiet role which is to say that because of the government backing they are able to borrow money cheaply and they are passing on their low borrowing costs directly to the consumers without all this hedge fund

payments, they have been responsible, but they are falling through the cracks because they didn't get a gse backed loan or because they had too much equity in their home which makes no sense or they, and, we are not allowing the kind of competition we need among the banks so they are competing with homeowners to see who can give them the best deal, the best refinancing, that is the heart of this package and it should be quite uncontroversial and it would be putting more money in the pockets of responsible homeowners and it is good for the economy and for the housing market. >>neil: we have been there, done that, tried that, again and again and again so at best mixed results. >>guest: can i challenge you on that? >>neil: what has it produced. >>guest: this is really quite bake. we every american understands the basic notion that if you took out a mortgage at 7 percent and now you see mortgages are at 4 percent, or 4.25 percent, american would like to refinance. it is not about a complicated program but taking away barriers for typical american families who would like to refinance, and they h

is this bill, this legislation the president proposes, makes sure that all americans who have had a gse loan, fannie or freddie mac loan are able to get the benefits of refinancing. but there are mill whereons of americans as you mentioned who don't know or are just learned for the first time their loan isn't guaranteed by fannie mae or freddie mac and they're wondering why they shouldn't have the opportunity to refinance. this should be simple and clear for all families who are responsible. and the cost, there could be a cost in bringing on, helping millions of more families. but it would be very good for the economy to help families with refinancing, and we're not going to make them pay for one penny of the taxpayer money. it just hits the largest banks. but if the speaker and other people want to support this refinancing package and they want to talk to us about ways to pay for it, of course, our door is open. we want to get this done. we want to create this eligibility for up to 14 million families because it's very important for the families to save 3,000 dollars, $4,000, $5,000 a

is this a horrific nightmare that you've brought me in to that we're going to use the gses again to try to stimulate housing, stimulate economy. this is what try to do for the past 25 years which the housing secretary nose very well about that created an absolute disaster. and we're going to go right back down the exact same path? and trust me. no one is making any claim that this is going to keep people out of foreclosure. the secretary is wrong about that. all this is about is juicing the economy by giving people a few more dollars to spend. >> but is it going to juice the economy by jacking up bank taxes? and is that going to dejuice the economy, jimmy, just as a follow-through? >> listen, one, they want to pay through it through bank fax. and what they're not talking about is everybody owns mortgage-backed securities which are banks and all kinds of institutions, funds, they're going to lose money on the deal. next time they try to go to market, they're going to demand higher interest rates. they're trying to hurt housing tomorrow by trying to help it today. >> it's not small point.

the gse have to mentioned a trial program to see if the details can be worked out and they've announced a program. of the related point that you elude it too is the heavy cost of leaving home is unoccupied for long periods of time. vandalism and neglect will cause the house of value to decline significantly for the neighborhood or so on, so the efforts to maintain continuous occupation by an owner or a renter is also a positive. the rental programs to that but so potentially might the alternatives to foreclosure like rent to own or other sales in lieu of other things that maintain continuous inhabitation of the house. thank you. >> senator cornyn. >> thank you for being here. if the unemployment rate in america for the fourth quarter of 2012 according to the cbo the projected that 8.9% for the fourth quarter of 2012. do you agree with that? >> 2012 or 2013? >> 2012. >> no, our forecasts are for unemployment to continue to decline moderately. we see growth that something close to the potential under the normal circumstances would mean that we are creating enough jobs to provide the new e

gse. >> dow stocks, disney reported good number. not that affected. so maybe take a hard look at disney. that was a good number. >> guys, it's david back in ec. on the europe question, just a appoint -- mario monti is in town today, i think he will join us later on cnbc. i know his lunch schedule includes having a lunch with a group including the ceo -- where did that come from? and one of course has to wonder whether blankfine will turn to him and say i have a derivatives deal for you you won't want to miss. it helped to shield many people from understanding how much debt there really was in greece. we'll see what mondayi has to tell those assembled, again, a small lunch planned today with a group of heavy hitters, as we like to say. >> david, what do you think about the fact that on a day where people are worried about stretch valuations -- linkedin doing well, it's almost like there's a parallel market of red-hot stocks. >> growth is growth, isn't it? if you show it, i get you'll get paid for it. >> that seems to be happening. >> yes, i think that'

fhsa and the gses have looked at that and that could be a constructive step. issue. you know, you just -- you referred to in the the beginning the servicing agreement. we have since early last year put consent orders on all of the major servicers requiring them to improve their practices to have principal points of contract for individual borrowers, to provide more counsel, better controls and so on. there's a variety of things to be done. not all congressional. some of them are our own responsibility as regulators. but some of them would require some congressional input. >> thank you. thank you chairman bernanke. the vice chairman of the full committee is now recognized for five minutes. >> thank you, mr. chairman. chairman bernanke, in your testimony, you described the recovery as modest relative to historic terms. we note for the record that under this administration, when you add in those who are underemployed, those who have left the labor force due to giving up the true unemployment rate is 15.4%. half of all americans are now classified by the census bu

this has to do with the gse. congressional members and committees were distributed this week and the rest of the folks are being distributed next week because of a difference in mailing. can i get you to say read the one-page letter? host: he has a solution for how to address this. you probably get a lot of these. guest: i do not hear well. i did not ascribe to those kinds of things. i'm a guy that's never signs a petition. host: do you read suggestions from people? guest: i never throw anything away. i read them all. we don't have a staff. we have some moment of truth projects and people that help and the research. if you'll send me that, i will read that. host: next call is from wyoming. this is ray a republican. caller: hello. guest: ray is an old pal. what are you up to? caller: not much. i was pleased to see that you are going to be on c-span this morning. i want to tell the listeners what a great guy you are. we crossed swords in one campaign and you were my honoring german in 2008. it wasn't a good year fo

and they are stuck period they are responsible and current payers and this program would allow those gse's the month those mortgages owned by fannie and freddie and also non-mts sees to refinance to take advantage of the historic rates. . . >> good morning, everybody. the committee this morning welcomes secretary defense leon panetta and chairman of the joints chief of staff, general martin dempsey for the hearing on the department of defense's fiscal year 2013 budget request. the associated future years defense program and the posture of the united states' armed forces. the committee also welcomes under secretary defense controller robert hail joining the secretary and the chairman at the witness table. let me start by thanking all of you for your continued service to our nation and to the soldiers, sailors, airmen, and marines here at home and in harm's way around the globe and to their families. they are truly deserving of the nation's affection and support. your testimony today marks the beginning of the committee's review of the fy2013 budget request for the department of defense. thi

refinancing, to put a program in place to help people refinance, to help not only those under the gse'sbut other areas. to put the programs in place and in some cases write down the principal when they are under water. we need to move these foreclosed properties out of the system. we need to sell them, demolish them, or get them out of the system. they are a drag on the economy. they are basically saying what every other economist in the country is saying. i did not know anyone saying anything differently. host: the key to the housing recovery is mortgage write- downs? guest: refinancing. allowing people to refinance their loans to an affordable rate. if there is a foreclosure, making sure you move it out, you sell it, you do something with it. you don't let it sit there. in some cases it becomes -- and lowers prices of homes, it has the effect on the prices of every other home in the neighborhood. but moving quickly to move the assets and an area that helps the economy and not a drag on the economy. host: this is "the huntington post." sean donovan says he hopes fannie mae and freddie

the fhfa federal housing finance agency that oversees the gses like freddie and fannie.at will facilitate renting. here's the issue. even though they may be blowing out some of this inventory, these foreclosures in bulk, investors can do it right now. why aren't they? it's an issue of price. used to be an old adage in the bond market, there are no bad bonds, just bad bond prices. the real issue is going to be if you can't get these inventories and foreclosures moving at the real price, this program's going to set a price that isn't necessarily the real price. we want to see why the rental part of this can't be facilitated by investors on their own. if the rental markets are so hot, then why don't they do it on their own? we're going to wait and see. the other program is a little bit different. there's about 3.5 million homeowners that could benefit from low rates. second program is going to be announced by the president as kind of this mass refi. the issue there is cost. $5 billion to $10 billion. if you raise taxes on banks for certain transactions or financial ongoing

i think a lot of people, fed, sec, the gses, congress, will have a lot to answer for.the moment of crisis, i think you did a terrific job for the country and i appreciate it very much. >> thank you. >> you laid out pretty compellingly the fiscal challenge we face going forward and i think that's what we wrestle with more than anything else. and let me positi posit a coupls and get your opinion if it's appropriate. first, you mentioned spending restraint and that's actually beginning to happen. the appropriation committee has cut it two years. we have an agreement in the budget control act going forward that will let out the belt a little. but in the context of federal budget, not a lot. we can argue whether it was a good policy or not, but we did tie long term spending cuts in some fashion to the debt ceiling increase. so lots of signs we're beginning to see discipline and it's likely to stay here for a wheil. on the revenue front, the president extended the tax cuts. he had the ability not to do that. because we couldn't possibly have yoefrp riddoverridden the . he to

. >> the president has really not been able to reign in the gses who continue to put road block after's way. >> this is a year where some companies are doing better, others aren't and yet people want to -- it's not working. i still think this is a positive market where a lot of people don't believe. a lot of people don't believe. >> you like that? >> yes. >> you do? >> i like that very much. >> you're watching the opening bell there and the s&p 500 at the cnbc realtime exchange. >> this is a manufacturing error that they recognized, they know the source of it, have corrected that process. so subsequent aircraft shouldn't be affected. >> some of the revenues that they have been generating in the fourth quarter didn't show up in the facebook filings. i think zyng really is able to monetize unlike facebook. >> good morning, 90 minutes into the trading day. want to run you through some of the number ozzen this monday morning, the dow, the nasdaq, the s&p and the russell are all lower, coming off the second biggest gain on friday by the dow. on the commodity beat we continue to watch thing

the housing market, many americans time to buy a home and making -- finding it hard to do so even for gse-backed mortagges. we have been working closely to take additional measures to remove unnecessary barriers. they are making some progress. we expect those two agencies to outline additional reform in the coming weeks. i want to conclude by emphasizing the u.s. financial system is getting stronger and is now in a stronger position than it was before this crisis. we forced the larger firms to raise new capital, to reduce the size and scope of their business. and to build much stronger more conservative christians of liquidity. we move quickly to wean the, -- conservative amounts of liquidity. banks had increased common equity by more than $350 billion . we have shut down or restructured the weakest parts of our system, those that played a central role in causing the prices. banks with more than $5 trillion in assets have been shut down, acquired, or restructured. we have been able to dramatically reduce the expected cost of the financial rescue to levels that were unthinkable in 2009. the finan

this has to do with the gse.ongressional members and committees were distributed this week and the rest of the folks are being distributed next week because of a difference in mailing. can i get you to say read the one-page letter? host: he has a solution for how to address this. you probably get a lot of these. guest: i do not hear well. i did not ascribe to those kinds of things. i'm a guy that's never signs a petition. host: do you read suggestions from people? guest: i never throw anything away. i read them all. we don't have a staff. we have some moment of truth projects and people that help and the research. if you'll send me that, i will read that. host: next call is from wyoming. this is ray a republican. caller: hello. guest: ray is an old pal. what are you up to? caller: not much. i was pleased to see that you are going to be on c-span this morning. i want to tell the listeners what a great guy you are. we crossed swords in one campaign and you were my honoring german in 2008. it wasn't a good year for