now, telme why you believe it's so important to unwind these gses. >> well, gerri, first of all, than having me back on the program. what happened after 2008 we basically have nationalized the housing finance market in this country. nine out of every ten mortgages in this country now are guaranteed by the american taxpayers. if we're going to have a good, strong housing market in the future, we have to have a sustainable housing finance market, and right now the government is in control of the housing finance market. gerri: that's right. ll, you know, i was looking at numbers over the weekend, and apparently when you consider the gses, fannie and freie and the fha together, they're guaranteeing 85% of the market or standin behnd 99% of all the loans. so let's see now, we had all the form from dodd-frank, we had $200 billion to bail out fannie and freddie, and where are we? the government still controlling this marketplace. how do you unwind these two massive institutions? >> ll, what we're going to do is we' going to dohree things here. one, we're going to bring fha back to its more t

when you have investors investing in gse is, the gse at that point in time chases market share to makestors happy. that is not their role. the role is to be countercyclical. but i'm also concerned that if we make a mistake, the government will still be on the hook because we're not going to let the housing market crumble if something goes wrong. we don't have some entity that is self-sufficient and has huge capital to make sure that it can withstand a downturn, we will end up in that situation again. maybe you can respond about. >> either you have to be 100% confident with what you set up, or if you think there is a scenario which the government would come in with, that might be a good idea to make sure the government gets paid appropriately and that the rules of the game are laid out in advance. >> instead of the government, if you could create a facility that was independent of government established by government, let's say, that the prophets were held and they were not abused by congress as a slush fund, if you just look at the prophets of the gse's are making, it was backed by som

the problem we have had in the past is when you have investors investing in gse's, the gse at that point in time chases market share to make investors happy. that is not their role. i am also concerned that if we make a mistake the government will still be there. they will not let the housing market crumble if something goes wrong. you two make sure that it can withstand a downturn. >> well, i think that is right. either you have to be 100% confident or, alternatively, if you think there is a scenario, then it may be a good idea to make sure that the government gets paid appropriately in the rules of the game are laid out in advance. >> said that the prophets were. if you just looked at the profits that gse's are making today, if there is an entity doing that of equivalent, those reserves would be $8 billion minimum. you charge a reasonable fee, that is probably $2 billion. you have a trillion dollars which is six times the risk the government took. would that not add to market stability? >> this new entity could charge those entities if you had competition. >> they are not crowding in t

in terms of gses, the gse mortgage-backed securities have not created any loss whatsoever.at i don't think has been a problem. it's not just the risk weights though, but basel three has significantly increased the amount of high quality capital the banks have to hold for a given set of risky assets. >> but it still seems to me that at the end of the day in which -- with respect to what you are working out as a calculation, you have got a situation where high risk countries like spain or portugal, should they receive the same risk weight as exposures to the u.s., and that's the way that would be handled i think in europe, but it just seems that that should have been addressed in the calculus. >> well, one way to address it is through stress testing where you create a scenario which assumes that certain sovereign debt bears losses and calculate capital into those scenarios. that's a bit of a backstop. >> let me ask you another question, and that goes to this issue of the counter cyclical role in the housing market that the government should play, and such a role obviously wou

well, you know, i was looking at numbers over the weekend, and apparently when you consider the gses,nie and freddie and the fha together, they're guaranteeing 85% of the market or standing behind 99% of all the loans. so let's see now, we had all the reform from dodd-frank, we had $200 billion to bail out fannie and freddie, and where are we? the government still controlling this marketplace. how do you unwind these two massive institutions? >> well, what we're going to do is we're going to do three things here. one, we're going to bring fha back to its more traditional role. today they have higher lending limits than the gses, so we're going to bring them back to the traditional levels of first-time home buyers and low to moderate income. then the other is we're going to wind down the gses and at the same token creating some space for private label and private investment to come back into the housing finance market. doing these three things will make a more sustainable housing finance market. gerri: congressman, how much time do you give them? a lot of people out there, critics of w

so plainly it might make sense to put it gse in the security agency but then split from the faa, and gestation all the other functions. with the fsa it was important that the fda be transferred from agriculture to the new super agency. some of roosevelt's advisers felt the new structure created would be more amenable with the pharmaceutical industry yet of course, by separating the fda from the department of agriculture so how much does the fda do about farming? it doesn't make sense to give them the authority even that involves technical decisions. >>host: how did fianna become part of the vhs? it was not at all going there and there was a debate in the right thing to do was have fema report directly to the president in the middle of a crisis but in the and the combination of white house decision making how big they wanted the department to be a and congressional decision making with the decision of jurisdiction and put it under dhs. when katrina hits new were linns the question of who is in charge is a difficult and complicated question. military, national guard, a government, pres

so the projects are so clear the president himself is projecting $240 billion of profits from the gsesg the heart of the financial crisis? >> certainly it was not the case in 2008. but by 2010 things had turned r around and entities were going to be profitable. so it is just simply unfair to the investors in these entities who treasury and other agencies of the government had encouraged to invest in entities to shore them up at their greatest need. it's unfair to them for the government to come along and say we're going to take all of the profits out of the companies and your investments have been destroyed. >> ironic hedge funds are protecting community banks from the government rather than the government needing them to protect them from the hedge fund. ted olson, your partner, one of the most successful lawyers from the supreme court ever. why your decision to take on the case? >> we think it's an important issue for the rule of law in this country and we do believe that this is an issue that might have to be settled in the supreme court of the united states. >> really? you believe

as you might guess, on gse reform, i would love to get some ourther information from year perspective on that. i will submit the questions in light of the fact that we do have a vote. thank you. >> chairman bernanke, i would like to thank you for your ex ordinary service -- for your extraordinary service and for your testimony. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> a couple of live events to tell you about this morning. the house veterans affairs house subcommittee holding hearing looking at veterans administration and defense department efforts in a treating items of sexual assault. that is on c-span2 at 10:00 eastern. although a 10:00 a.m. eastern on c-span3, the bookings institution holds a forum looking at the nsa david -- data collection and surveillance program. in a few moments, today's headlines, let's your calls and tweets live on "washington journal." in two hours, the houses back in session to continue continue consideration of a bill that would eliminate national educat

a lot of discussion today about the future of the gses.hink some of the congressmen are suggesting that we should fully private advertise fannie and freddie and we should have that private entity have schz 10% capital. that's a fine idea but practically there's a challenge. fannie and freddie guarantee $6 trillion in mortgages. we'd need to raise $600 billion in capital. and we've had five years of great performance among mortgage hedge fund managers, not just oursds, but many other names in the space, and main the whole sector has raidsed $30 billion. to raise $600 billion to a daunting task. >> you have been investing in fannie and freddie preferred. >> we have at times. i know it's a topic of controversy right now. richard perry -- >> you have some hedge funds suing the treasury over that very issue. >> we definitely have an opinion. our opinion would be that the real area where -- the first time where the mistake was made or where there might have been a wrong to investors really happened in 2008, not in 2011 which i think is the basis

in terms of the gse, the mortgage-backed securities have not created any laws whatsoever. not to the holders of those securities. and i don't think that that has been a problem. it's not just the risk rates, but it has significantly increased the high amount of capital that they have to hold for a given set. it seems like to me, at the end of the day, with respect to what you are working out as a calculation. you have a situation where high-risk countries like spain or portugal, should they receive the same risk weight. .. the extraordinarily careful look back over the greatly ballooned bubble and subsequent bust that was developed as a result of housing policy and law of the actions taken. title two of the path act has several provisions meant to allow fha to play that countercyclical. legal obviously is to really expand eligibility. which you agree to play an expanded role in times of crisis will help ensure continued access to the mortgage learned from the great majority of borrowers regardless of conditions. i not advocating as sufficient land but not pointing out that

the actions right now that the f -- and as you might guess, i'm gse reform. get further information from your perspective on that. ly submit those questions, mr. chairman, in light of the fact we have a vote pending. thank you. chairman bernanke, i want to thank you for your extraordinary service to our nation. i want to thank you for your testimony. this hear is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] president obama made an unexpected appearance at today's white house briefing. the chief executive wanted to talk about the trayvon martin/zimmerman case. we'll show you his complete remarks at 8:00 p.m. eastern on c-span. but here is a brief look. there are very few african-american men in this country who have had the experience of being followed when they were shopping in a department store. that includes me. there are very few african-american men who haven't had the experience of walking across the street and hearing the -- on the -- locks click on the door of car. it happened to me

and we can expect more lawsuits as the gses continue to make money. funds now lobbying congress to go back and put fannie and freddie in their original condition, make them independent of the conservatorship. sometimes you have situations where real life is stranger than fiction, and no one could have predicted these things. >> go back to the future. okay, shari, stay there for a second. although ben bernanke's term ends at the end of january, plenty of speculation on who's going to replace him. morning, hampton. what's happening? >> do yhow you doing, ross? it looks like september is looking to be a big month for the fed. not only are they setting their taper target, but president obama saying over the weekend that's the earliest he could announce a successor for fed chairman ben bernanke. janet yellen and larry summers are emerging as the two front-runners. now, congressional democrats have been circulating a letter praising yellen and former vice chairman of the fed also endorsed fellen. blinder wrote, quoting now, i can't say that janet yellen is

beyond the physical wounds victim's psychological reaction, common reactions include the gse, fear, anxiety, lack of concentration, depression, t he wrist drawl and other issues. military victims are unable to perform there assigned duties due to medical treatment or counseling were relocated to insure their safety. they continue to serve in the same units are likely to have diminished abilities due to concerns over personal safety. whether the service member or civilian to violate the discipline did trust trust, selflessness and honorable conduct. the military services must fully integrate strategies and training the right to have the appropriate and legal process in the military culture. we have to recognize and a range of service options and in addition it should be available on the ongoing basis to each survivor so they'll be ready for a particular service at a different time. there should not engage in any process for example, they should have access to mental-health services even if they are not interested in pursuing a court martial. all members of the armed forces of associated pers

the underwriting standards have improved dramatically, both on the private market and gse market. >> it do anything? have real impact? >> i think it does. why? because mortgage rates are up very significantly. so let's say you have 100 basis points or 75 basis points increase in mortgage rates. you will also have an increase in, you've had an increase in house prices. you've had an increase in mortgage rates. you've had an increase in guaranteed fees. you have an increase in downpayment requirements. all this is going to have a moderating effect on home building and the sale of new homes, i think. >> you are doing a lot of construction in new homes? >> we have about 50% of the low priced housing market in houston and we confine ours to first home buyers. the reason we do that is because they don't have a home to sell. so that when rates go up and people have difficulties getting rid of their existing home, that's a problem if you want to sell them a used or a new home. >> it's a question i asked during the break, there is a lot of equity firms out there, colony capital. we had them a

> well, i mean the reality is, i mean, it looked as though there was no appetite at all to hand him gsee is more traction about people putting lanes in motion in ord to resolve the disposition with fannie and freddie, but the rally is we're not getting rid of a 30-year fixed any time soon. it appears the americans love it, it is a unique institution, few other nations have that. i think we can survive without it. americans want it. i think the legislators will find a way to keep it? >> stan, in what markets would zillow be pervasively positive. how has that manifested itself? >> i think zillow is about empowering consumers an creating transparency in the marketplace. it's our view that, you know, there is enormous amount of data floating aroundment went to make sure all participants, consumers and professionals alike have access to that information. we think they make better decisions having access to that information. we feel as though we see that impact in all markets, really. >> okay. all right. guys, stan humphries, thanks, thanks for your time today. david, see you later. >> we alw

in light of the fed's large portfolio increases the dominant role that the gses play in today's mortgageket and recent increases in the level and volatility of mortgage rates, will the fed revise its balance sheet exit strategy principles in particular will the fed revise the time period over which it expects to eliminate its holdings of agency securities? it is my hope that this hearing gives us additional insight into the fed's plan for the additional reduction of asset purchases and roadmap for return to normalized rules-based monetary policy. thank you, mr. chairman. >> thank thank you, senator cra. . .