they vanish with the gses brought to the mortgage market. let's not think about the years just before the financial crisis and think about where the gses have been in that period of time and the reason it's worthwhile taking a look at just before the financial crisis is that there are many people who have argued and written that the gses cause the financial crisis whether they cause the great recession coming and as bob glauber indicated i was in doubt freddie mac until we after the financial crisis, so why don't really have a stake in this game the this is a chart i would look at to sort of determine to what extent i thought freddie mac and fannie mae caused the crisis and perhaps we will find a leader contribution but do you think the cause that? and this chart looks at the market shares and the market share of the gse as at the top and the private market, the private secondary mortgage market, so this is the investment bank and the commercial banks issuing the second securities private label securities we call them and will get that radic

to be one of the more characteristic of a gse. the perception that credit town protected. it's something that treasury could have done. i think they could have done. and certainly we would have, i think, in my opinion, . >> would you have done it? >> i would have. impose losses on creditors. absolutely. sphw. >> [inaudible] they can put in a receivership. >> yes. i covered that in the beginning. shareholders out the equation. because until you take them out of the equation they are in the position where the government under law has stepped in to the position of the board and management to try to restore the institutions to financial health. what that means is that fhfa gets whip sawed with the demand we want to you to support national housing responsibility and the legal responsibility is to support the gse that means ticketer credit standards than other policy makers might want. in other words, the public-private mix that made the gse hard for people to deal with in the beginning is continuing to confound me. but i agree with you. i mean, they should be in receivership. a

they were extended above the gse loan limits where you could get an fha loan bigger than any gse loanthose would be two on the table. you sometimes hear about risk- based pricing, that fha should be considering. >> i propose to the seller concession change and i think fha should not have policies in place expose that in that regard. let me talk about the risk-based pricing. i hear it comes up from time to time. one of the mission roles that fha has served is an access point for demographics that otherwise would not gain access to the home buyer market. if you look at the way pse has priced the mortgages today, at the high end of the curve, it gets expensive for no down payment borrow worsers. if you can control for qualification, for documentation standards, credits or the ability to repay variables, the down payment should not be a variable and tell you get into a distressed scenario. you can control the distress by we also know down payment is the single biggest barrier to home ownership. it particularly in packs those borrowers who do not have large amounts of inherited wealth or d

so by the time october rolled around i was forward prepared in order to blast the gses, if you will. the speech of which most of it is there, they're still acute tables missing, it's been passed out to you, and you can see where my criticisms were. that speech was not particularly well received, except among people, a lot of people in the industry who felt that absolutely, i mean, many of them thought i was right on in terms of my analysis. the fannie and freddie people, however, within the first 10 minutes were up and out of their seats and out the door, and went to warn lasko who was the mba president at the time and complaint as to why they would allow someone like me to criticize them, what could i possibly know that would prove to be correct? for several years i was blackballed as a result of that, and the mba took them more like five or six years before the allowed me to come back and make a presentation. in the interim, within weeks of the research that i had been doing and selling to the industry, i got cut off by both danny and freddie mac. big surprise. my partners were not

i was with the other gse from 1990 to 1995. i was directer of policy and became director of regulatory compliance when [inaudible] was formed. i have to say, the stress test were dictated. they wouldn't have caught some of this. they didn't allow for the prefall in the way the assumption was created. i worked on working with hud i'm with the -- how they were going to be implemented. there was concern because people were thinking where are we going find all these people qualified for the mortgages? and we're underwriting efforts to make the guidelines more friendly toward nationalities that might have a different way of dealing with home buying like where you have extended family type of support gift and things like that. but there was concern because it is a public and a private company with market share and country wide was coming in with securization but at that point, my perception was that fraud was really you had criminal, it wasn't until housing really became seen as an investment good that everyone got on the bandwagon a

that is what the friends of the gse said. imagine the morale of the people because of that i try to spend as much time as i could being visible in talking to them and trying to come up with hope for the future. which was around this notion of us getting ready in some form to relaunch the company. the good news is that people hung in there and they continue to work hard. they are continuing to function quite well. >> hello, my name is josh, i am a student here at the kennedy the kennedy school. i want to ask you for your perspective on -- or your perspective on the book faultlines. it talks about the need for cycle group regulation. he observes that we come up with these great ideas. ideas like you articulated very well. they get this number, political pressures are applied to what he calls credit populism. seeing that we need to figure out ways to build regulation that somehow that won't happen. they are immune to those pressures. any thoughts on how we can do that? >> no, it is a great thought. only partially facetious, one

those are restructuring good gse or discourage investors from coming back to support the housing market. >> talk about $5 trillion of debt we will lead advocate a holistic solution to take invests' concerns. >> and try to get more investment. >> one of the most powerful woman on wall street thank you for coming. thousands of people wrote hurt from superstar sandy up next what fema is up to. and harry reid, the deficit deficit, and if congress can deficit, and if congress can work together. stay top of mind with customers? from deals that bring them in with an offer... to social media promotions that turn fans in customers... to events that engage and create buzz... to e-mails that keep loyal customers comingack, our easy-to-use tools will keep you in front of your customers. see what's right for you at constantcontact.com/try. america of loaded and they chose higher taxes even speaker of the house says maybe they could be on the table. >> for the purposes of the bipartisan agreement we're willing to except new revenue under the right conditions. gerri: the author of who is the fairest o

those are restructuring good gse or discourage investors from coming back to support the housing market talk about $5 trillion of debt we will lead advocate a holistic solution to take investors' concerns. >> and try to get more investment. >> one of the most powerful woman on wall street thank you for coming. thousands of people wrote hurt from superstar sandy up next what fema is up to. and harry reid, the deficit deficit, and if congress can work together. [ male announcer ] do you have the legal protection you need? maybe you want to incorporate a business or protect your family with a will or living trust and you'd like the help of an attorney. at legalzoom, a legal plan attorney is available in most states with every personalized document to answer questions. get started at legalzoom.com today. and now you're protected. america of loaded and they chose higher taxes even speaker of the house says maybe they could be on the table. >> for the purposes of the bipartisan agreement we're willing to except new revenue under the right conditions. gerri: the author of who is the fairest of

in terms of gse bill. i think a lot of this has been pushed out.y we are negative on the homebuilders selling rallies in the home builders. >> we have been watching oil and given the uncertainty in the escalation of the violence over in the middle east. where would you go with energy here and now? >> well, i think -- my big point is -- if you look at ron widen, head of the senate resources committee, first time in 20 years, a chairman of that committee is from the state, oregon, that doesn't have any fossil fuel presence. so he's a real green -- big green posture. i think if that -- with the president, that -- makes me very bullish on bio fuels and renewables and wind. and the -- the -- ecosystem for natural gas. the -- infrastructure of natural gas throughout the country building that out. it makes me less positive or -- on really the oil names. >> it is good to see you. thanks so much for coming on. >> thanks. >> larry mcdonald. fiscal cliff uncertainty has smen stocks tumbling. as washington moves to get a deal done, are there buying opportuniti

they wonder if his next speech might be about the fact that fha and gses are still carrying the burdeng along with those guarantees. back to you, tyler. >> thank you very much, rick santelli. >>> president obama in new york city touring the aftermath of new york sandy right now. meanwhile, the first pieces of data that show the economic impact of the storm are coming out. >> i was on a fishing trip on monday out of long island. i got a tour of some of this damage. it's just unbelievable what's happened out there. the docks are moved and the piers one to the other. there's boats in people's backyards. and in its own way, some of that is beginning to show up in the data. this massive storm that hit this huge area of the country. let's take a look at the data. the first thing you'll notice is the surge in jobless claims. the trouble here, folks, is we don't really know what's happening with the underlying trend. it was very well contained going in in the 350, 360 area. is some of that weakness in the overall economy or as the labor department suggests, a big chunk of that from the storm.

can we really do reforms to fha, to the gses? can we get away from 3% down? do you see any hope? >> no. i think the issue is i think ed de marco has done a great job with freddie and fannie. in fact, they've tightened up credit to try to turn a profit so much that, in fact, they're not really a player in the game for buying a home and financing it. the fha is the last man standing. this is sort of the perils of having central planning by the government for the mortgage market. fha took over for the subprime market. they can actually improve the fha. all they have to do is put a floor on the fico score. they had fico scores during the latter half of the bubble that were down to 400. but, in any case, it's the down payments that still bother me. that is a politically charged issue. and i can't imagine the democrats in the senate going along with any kind of reform increasing the down payment. >> so you basically see no hope. we have a conservatorship. we have a checkbook. none of these entities need to go to any legislative body. they can basically go right to treasury and say, hey

we've also been very supportive of steps like those taken by the financial -- the housing oversight, gse oversight body to take steps like clarify the conditions under which mortgages would be put bag to lenders, so-called put-back risk or creating programs that convert empty houses into rentals so we've had a lot of influence, i think, in -- from an analytical and intellectual point of view, and we'll continue to try to do that. bottom line is these are challenging problems, and the barriers to more mortgage lending and rapid growth in the housing sector are many and diverse, and there's not a single magic bullet as i know you appreciate. we're trying to work on every margin that we can. >> in discussions of unconventional monetary policies of which you discussed several, the question of lowering the interest rate on excess reserves often comes up, and i'm often asked why doesn't the federal reserve do it? i usually thumb for some sort of an answer, which i don't think is a good answer, but i think you could do better. what would be your answer? >> well, i hope i can do better. i don't

three years considered re-election, i'm just not talking the white house, wants to ever delve into the gseervatorship, the fha because it's costing literally as much as 150, maybe as high as $300 billion when it's all done. the fha is really disturbing to me at this point for several reasons. first of all, they're only underwriting or guaranteeing 1/3 of the mortgages but they're the ones that are 3.5% down. not nearly enough down and it represents a lot of the ills that caused the housing crisis to begin with. when you join them up with freddie and fanny, now you're talking about 90%. fha had 100,000 mortgages 90 days past or in foreclosure than they did last year. they guarantee about a trillion on their own. this is a huge topic and it's even a bigger topic considered that without the white house warrantying or needing to worry about re-election there is this concern again that maybe there's going to be a blanket refi or a big principal reduction. look at mortgage securities. the same mortgage securities whose rates went to all-time lows after the quantitative easing of the fed in terms

currently the administration plans and the gses have frustrated that but, yes, i think it would be positiveised the romney campaign, obviously, on policy. you probably don't advise them on how to campaign, i guess, glenn. is that the story, that was where it was in january and we sit at 7,900 and we're still above where we started? >> those are all good talking points. the way i put it to people, as i said before, you have 23 million americans struggling and looking to participate more in this labor market and we have a jobs gap of more than 8 million from what the president promised in his first forecast from where we are mao. that's not a great record. >> glenn hubbard, thanks for your immediate appraisal of the report. we appreciate it. >>> all right. a programming note. watch "squawk on the street" for reaction to the jobs report from alan krueger, chairman of the council of economic advisers for the president. >>> when we come back, we will have more reaction to the jobs report. the last trading session of an unusual week on wall street. we'll check in with jim cramer after this. >>> t

these subsidies in the housing market, the gses are guaranteeing over 90% of new originations right nowbout capitalism and markets and using markets to allocate resources, the government is far too intrusive right now into those market mechanisms. >> now, as i look up on the board, being that the cme with treasury futures, of course, i see a 165 ten-year and a 279 third-year. would you lend your money to uncle sam for ten years for an interest rate of 1.65%? honest question. what's your answer? >> i don't think -- i think we're in a big bond bubble. i don't think the fundamentals support those rates of return not anywhere close. congress is still struggling to come up with a long-term fiscal package. it's frightening that we have not seen better action out of the congress. so those chickens will come home to roost at some point. i hope we have a few years before it happens. the fundamentals don't support the low rates of return. >> that's why i asked the question. i know that's your stand. i'll take it a step farther. do you think ben bernanke's strategy of massaging rates and that's on