housing policy, and they come back, and today say, hey, our legal responsibility is to support the gses, and that means tighter credit standards than other policymakers might warrant. in other words, the public/private mix that made the gses so hard for people to deal with in the beginning is continuing to confound people. but i agree with you, i mean, they should be in receivership, and at that point you can make a policy decision on what your debt holders, what happens to them or the mbs holders, mortgage-backed security holders. but you can also begin selling off assets and doing other things. >> before i go to the next question, i will say that the receivership framework for freddie and fannie that was put in place 2008 before their failure is in some ways very much mirrors dodd-frank. so if you believe the orderly resolution theory in dodd-frank, you need to explain why it did not explain too big to fail. with that said, the woman in front here who's been very patiently waiting. >> hi. anne stone. and i was one of very few women in the southeast united states that helped start and

. >> you know this is a sweet deal for the gse's that continue to override. you know you hit the nail on the head, 10 billion-dollars, that in the scheme of things, does not seem like a lot. but to the taxpayers who are footing the bill for the bailouts for the morale hazard that the government continues to encourage, that is a lot of money that sets stage for what we'll see. more government intervention, and the banking system. neil: where does that money go? 10 billion, and they have to be a big old fund to make -- who were burnt. i think this is an open box that everyone raids? >> absolutely. this is a slush fund to continue the government-sponsored enterprise of allowing banks to make risky lending decisions, knowing that the taxpayers will bail them out in the end. looking at countrywide deal, no rational person would have taken that deal. bank of america will dive right in they know it is a cash cow for them in the end. neil: you know, ty, leaving aside the hypocrisy of this and everyone taking bows at fannie. that force ibly had to buy something from u

we have basl and qrm and excessive repurchases hitting the lenders across the country from the gses.unknown future state for freddie mac and fannie mae. fha that still needs to be resolved because of their capital reserve problems. we have excessive uncertainty in the housing finance system, and qm just settles one small portion of this. i think the cfpb did a pretty good job on this rule, but we have a lot, many more shoes to drop here before we get the markets settled and really understand what credit is going to look like. >> diana, i mean, i think maria hits the nail on the head, right? it's a question about whether you get to the point of what's restrictive for the banks. banks are already not lending to the level that some people would like them to do. you just rattled off or we just heard rattled off an entire list of the headwinds that the banks are facing. >> yes. >> and yet here's another one. >> but they are already doing a lot of this, and that's the point. what the problem has been is that there's been so much uncertainty in the mortgage market because of regulation that

>> i am interested in your perspective from a former banking perspective what she chatted with the gse right now with what should continue the housing market has not recovered had we not put that back into a tailspin again? >> craig question i remember with a play no role we did not have a problem 20% negative owned you went to the savings-and-loan and that problem was very small but during the '60s and '70s politicians wanted the viet nam war and we got a rampant inflation and tear the '80s they tried to break that savings-and-loan and financing houses and then they paid 13%. that is when frannie and f. brady filled in the gap is developed overnight. one year from now they are closed. there will be markets solutions and capital allocated more rationally it is more to subsidize consumption and it eats the seed corn but the reasons they may and freddie mac is because it is not economically rational and if you want to subsidize home ownership do it with the cash payments ever by a nose what you're doing. i am opposed but there is a certain integrity verses subsidizing wear fha and they c

we're grandfathering in some of the worst aspects of how the fha and gses still continue to fit into. it's grandfathered up to seven years unless they get their house in order, but how much -- about reforming the gses. they are the mortgage market. what he said in particular that's disturbing, at least in the old days you could see the difference between prime and subprime, but now based on the automated underwriter system, is if you don't qualify on what they dr prime, you go on this other exit on the mortgage freeway. that puts you on what used to be considered subprime. that's what goes into the quote, so basically we're just going to continue to have had you high-leveraged people buying houses that may not have the ability to pay back. think about it this way, once they're considered a good risk, there will be claw backs and taxpayers will be on the -- consider what is prime, according to the rules of 43% debt to income ratio, the whole nine yards. once you establish these as now, according to the government, these are given the kiss of approval, what if people lose their jobs, w

and certainly to the folks who have let that money, whether it is through the american taxpayer, the gse's, or the pension funds, the mitchell funds and the like who bought and owned private label mortgage-backed securities. to answer the first part of the question, where are we? that is where i would disagree with stephen. we are not heading towards the maelstrom of the storm by starting to come out of the storm. as an example, at the opening mark it -- remarks, san bernadino was mentioned as one of the areas,the ground zero of negative home price appreciation. what we have seen there, just evaluating the number of loans in default in that county is that in in juen 2009, it was 31,000, and june, 2010, 21,000, june 2012, 12,000. over the last four years, the defaultse change and evolin has gone down 61%. that signals to me that we are not in the middle or going into the heat of the storm. that does not mean that that will make life any better for the person that is challenged to make a mortgage payment. it does not make life easier for somebody who has -- it does signal that as a nation we

unless the government through the gses and fha decide to expand credit, which they might do, we'll not housing recovery. lori: do you think any of the damage done whatever the treasury secretary's role was is behind us and we have transparency on interest rates and what is involved to get a mortgage and move past this and to your initial point, that we'll see a satisfactory recovery in housing? >> we should see a satisfactory recovery in housing. in terms of secretary geithner i read a fed president lacker's comments on that, very amusing. yeah i think that was just kind the out of bounds for geithner and should have been thrown a 15 yard penalty pass but are they going to stop that? lori: right, right. >> would be surprised if they don't. lori: thank you so much. appreciate your knowledge. >> thanks, lori. melissa: so it is a quart heer to. as we do every 15 minutes, nicole petallides on the floor of the new york stock exchange with m&a action. nicole. >> that's right. look at dow component at&t making some moves here. you can see the stock is up more than half of 1%. that is nice one

he may be confusing that with gse loans. there is no ability of a servicer of a fannie or freddy loan to actually write down. so there is a very biggies 2006 there. second, he says that we, mrp, can't figure out a way to get these loans out. well, it's because mrp doesn't actually own the loans. what they're proposing at the core of its proposal is mrp wants to take loans from somebody else. that, in essence, is what eminent domain is all about. the person doesn't want to sell you those loans, so you go can and you take them. you grab them without that person's consent. we'll come back to the legal issues involved in that, i'm sure, throughout the discussion here. but sticking to the policy side of it, there is a reason why you can't get out of the trust. and the reason is the united states government, the u.s. department of treasury through tax law does not allow those loans to be sold out. so when you come back to the legal analysis of figuring out whether mrp's proposal would violate interstate commerce, the very clear an

over the months ahead are the importance of fha reform, credible movement towards xse reform and a -- gseeform. these will help assure stability and certainty in the market. we are looking forward to working with the bureau in the months ahead on the implementation of this rule and commend the bureau and its staff again for its expertise and it commitment to stabilizing the market and assuring the availability of credit across the spectrum. >> thank you, mr. moskowitz. ms. thomas, your statement. and i think we'll probably have better luck with the microphones, i'm told, if you just pull it quite a bit closer to you. >> thank you, raj. director cordray, thank you for convening today's field hearing on mortgage policy. i'm very pleased to be here to represent the views of our nation's 7,000 community banks. community banks play an important role in our nation's economy and in mortgage finance. they are locally-owned and operated institutions, and they have very strong ties to their communities and their customers. in many small towns and rural communities across the country, the local comm

you may be confusing that with gse loans. this mobility for a service or of a fannie or freddie loved. so there is a distinction. second, we, mrp can't figure out a way to get these phones out. it's because mrp doesn't actually on the loans. but they're proposing that the core of his proposal is mrp wants to take loans from somebody else. that in essence is that eminent domain is all about. the person doesn't want to cellulose, so you grab them without that person's consent. we'll come back to the legal issues throughout the discussion here, but sticking to the policy side of it is there is a reason why you can't get out of the trust. the reason is the united states government, tax law does not allow laws to be sold out. so when you come back to the legal analysis and figuring out whether mrp's proposal would violate commerce, the clear answer is because the loans are regulated in the stress, bloggers and allow them to be sold out. in fact it allow them to be written within the trust as long as the service or believes that's

outstanding that are important results over the months ahead are importance of fha reform, credible gse of those issues. these will help assure stability and certainty in the markets. we are looking forward to working with the bureau in the months ahead on the implementation and to commend the bureau of its staff again for its expertise and commitment to stabilizing the market and ensuring the availability of credit across the spectrum. >> thank you, mr. moskowitz. ms. thomas coming your statement and i think that we will have better luck with the microphone i'm told if you put quite a bit closer to you. >> thank you. directors khator, thank you for convening today's field hearing on mortgage policy. i'm very pleased to be here to represent the views of the nation's 7,000 community banks. community banks play an important role in the nation's economy and in the mortgage finance. they are locally owned and operated institutions, and they have a very strong ties to their customers. it's a reliable source of credit for home purchases. community banks have a vested interest in the economic

mortgage general 43% debt-to-income ratio requirement for loans that meet the of the requirements of gses. we really appreciate that as well. and however, we remain concerned there may be instances where higher debt-to-income ratio may be appropriate for certain borrowers, especially with us as we deal with our own members and what the credit unions do and what did you for the members. so we will be closely reviewing this aspect of the final rule. the rulemaking set a penny at the agency we wanted to reinforce our members concerns and again urge the agency to do all it can to contain new regulatory requirements for credit unions. some of the issues stressed by the committee bankers as you well know are the same issues that we have, especially with some of our smaller credit unions as being able to adapt to the myriad of regulations that will be thrown their way. cuna commits the efforts of the bureau and the work of the credit unions that you, director cordray and your staff continue to prep it were greatly appreciate the time that you spent with us and your willingness to listen to how w

i know freddie mac -- the gses were off the table. they settled with freddie mac in 2011.hasn't happened as of yet, correct? >> that is currently $8.5 billion settlement that has gone back to a judge. they're trying to figure out whether the ruling that was made was actually something that both sides can agree on. we're still waiting for a ruling there. $8.5 billion is what the previous settlement was. now, there's a question over whether it could be more than that, whether the judge will let that settlement go through. but if it is more than that, and if they do need to go back to the drawing board, that could be a long and winding road and the bank could end up reserving more for that. we don't think that will be something that's a big lingering question mark. that's something that the bank has already reserved for on the private side, david. >> got it. all right. kayla, thank you. >> the s&p rallying to levels we haven't seen since the financial crisis. with the new highs, how much longer can we hold. tom lee over at jpmorgan, he joins us this morning from new york. hap

other factors still are standoutstanding that are import to resolve -- credible movement toward gse reformand a prompt resolution of the q issuem is. this will help ensure stability in the market. we're looking forward to working with the bureau on the implementation of the role and we commend the bureau and its staff again for its expertise and commitment to the market and ensuring the availability of credit across the spectrum. >> thank you. ms. thomas, your statement -- we will have better luck with the microphones to pull it quite a bit closer to you. >> thank you. director cordray, thank you for convening today's hearing on mortgage policy. i am very pleased to be here to represent our nation's 7000 community banks. community banks play an important role in our nation's economy and mortgage finance. there are locally owned and operated institutions and have very strong ties to their communities and their customers. in many small towns and rural communities, the local community bank is the only reliable source of credit for home purchases. community banks have a vested interests in the

may be confusing that with gse loans.there's no ability of a servicer of a freddie or fannie loan to actually write it down. there's a distinction there. second, he says, we, mrp, cannot figure out a way to get the loans out. well, that's because they do not actually own the loan. what they are proposing at the core of its proposal is mrp wants to take loans from somebody else. that, in essence, is what eminent domain innocent domain is all about. the person does not want to sell you those loans. you go, you take them, and grab them without the person's con b sent. eel come -- we'll come back to the legal side, but back to the policy side, there's a reason you can't get out of the trust, and the reason is the united states government, the u.s. department of treasury, regulation, that is tax law, does not allow loans to be sold out so when you come back to legal analysis whether the proposal violates interstate commerce, it's a clear answer that's because the loan's already regulated in the trust. the law does not allow th