take a look at the gses. the gses have all but eliminating low down payment transactions for an average credit score borrower. access to a home loan at a reasonable price is difficult to attain using a freddie mac or fannie mae loan, for an average credit score borrower. low-level price of judges, adverse market these, mortgage insurance, all of these additions have produced a portfolio that adds -- a report just released by the federal reserve said quote implies no risk-taking. but today the gses are virtually printing money. the excess profits reflect -- put them down in the treasure and this is all coming out of cost of homeownership in the broader economic recovery. it's a classic case of overcorrection, and it's gone too far. it's not an exaggeration. this data supports it or i want to give you just one variable on the data that was just released

>> take the multifamily market, it's become extraordinarily dependent on the gses fannie and freddie. raising questions about what kind of future fannie and freddie will be. which by definition means what's the future of multifamily housing and the role if any the government is going to play in it. again, it comes back to the famous word, uncertainty. uncertainty is the death now of everything. >> things come full circle. we're going to take a break. i checked huffington post. they put a new lead up. jimmy carter making some comments that the middle class is now like the poor of old in the united states. and the reason is years of tax breaks for the wealthy. a minimum wage untethered from the inflation rate. gerrymandering with the districts. what happened was to narrow this, you need to spread

not only inside the fha program but just as prevalent, impediments to credit in the gses base.o it's to make sure that you can break the problem part, move forward on gse reform as a discussion in terms of its own activities that does require congress, but other elements, some of which the narrow version of fha activity is our congressional action but then a lot of the transition steps in the short term solutions that can move no matter what, keeping in mind that this kind of multiple prongs of attack. i think it's going to be important, but also i think people getting vacancies in the discussion around the macro things. >> tom, any comments or shall we move on to the next section? let's talk about private capital. the government is done in 90% of all loans still at this point, and we all agreed private capital has to come back to the marketplace. how do you get private capital back to the marketplace? >> out the back to something i said earlier. i think private capital is around the marketplace. the m.o.i. companies are there. they have raised hundreds of billions of dollars i

to continue to try to move policymakers toward the unfinished business of gse reform so we can move forward and take care of, you know, the future housing finance system in america. i think that's more important than arguing about the past. >> in addition to continued litigation, the big banks are also facing a big drop in

for lenders to be able to feel more confident about the rules of the road with their it is fha for gse process as you know with a group of lenders trying to work together to define the materiality and really put forth a new process moving forward. we are starting with announcing tomorrow a consolidation of a thousand mortgage letters into one single document we are putting out as a draft to get feedback. we are starting a new process that's just a chunk of it by the way, the origination process but those kind of steps can be taken today to create a little more certainty in these uncertain times. >> how do you think about deciding the role in housing finance as we think about the second marketing entities that today we call fri and fanny? >> there is always going to be a role for fha for both traditionally underserved borrowers and that includes first-time home buyers as well as to play the countercyclical role that we did during this crisis. it is not clear how much the future entities since we don't know exactly what they will look like what kind of triggers the will be for their envi

future by helping o develop a securitization infrastructure that is less reliant on the enterprise's gseecuritization model. second, guarantee fees are about were prior to y conservatorship, a key reason to increase guarantee fees is to the pricing for credit risk closer to what would be equired by private sector participants. while that level is difficult to evaluate with precision, i elieve we're getting closer to a level that would encourage more private sector participation and we plan to pursuing gradual guarantee fee increases in the near future. one of the most direct ways to reduce private payer articipation and reduce exposure when is through a reduction of the maximum size of loans that the enterprises guarantee. this summer, the presidents ndorsed a maximum reduction in maximum loan sites. since then, there's been a discussion about the near term loan limits.the as a result, i said that fhfa follow the practice of conforming he 2014 loans in late november at which time further information will be provided on potential reductions n the size of loans the enterprise will guarante

this conference, the post bubble, post-bernanke world, i was thinking it's been five years since the gses reported to conservatorship and i would've forecast back then the title of this would've been housing finance in the post-gse world, and that just goes to show the accuracy of my forecasting ability which has marked by tiger at the chief economist. [laughter] -- marked my entire career as a chief economist. so what i want to talk about really was for topics generally and then skip around a little bit, the impact of the fed's buying of purchase program going forward, give you sort of a snapshot of what we're seeing in the current lending market, show you a new tool that we rolled out at the nba for looking at mortgage credit, the availability of credit in the market, and then just a discussion of new bubbles since the bubble is in the title so thought i should come up with something on that end. first of all in terms of the federal reserve balance sheet, just a massive growth that we continue to see not only in the total balance sheet with the makeup of the balance sheet. this goes bac

indeed poor logic acknowledges as long as the temporary expansion remains in effect for gse-qualifiedich may well be for several years the impact of the regulation, this is a quote will be minor. second our rule does apply the legal safe hair boar to all prime qm loans which affords protective against legal challenges for loans to satisfy the qm criteria. the key point we left little room we purposefully drew bright and sharp line to define the contour of a qualified mortgage. remaining conservativeship -- a large number of industry commenters asked for these bright lines and we agreed that approach made sense. if those line were not drawn as sharply as they have been, then much would have remained to be fought out in the court for years and years before the deaf nice were made clear. we crafted the rule purposefully to avoid that result which is why critics are forced to crime up hypothetical faction dispute whether debt and income were calculated correctly. the main provision of our mortgage rule will take effect in january and we have a team devoted to the regulatory implementation

of this conference, the post bubble, post-bernanke world, i was thinking it was five years since the gse loss were put into conservative ship -- conservatorship. that just goes to show the accuracy of my forecasting ability, which has marked my entire career as a chief economist. let's see. so what i wanted to talk about really was for topics generally that skipper out a little bit, the impact of the fed's buying of nbs purchase program going forward. give you a snapshot of what we are seeing in the current lending market, show you a new tool that we rolled out the mba looking at the mortgage credit, the availability of credit in the market and then just a discussion of a new bubble since bubble is in the title and i thought i should come up with something on that and. first of all, in terms of the federal reserve's dollars she, just the massive growth that we continue to see, not only in the total balance sheet, but the makeup of that object, this goes back to that sort of gray-blue area on markets backed securities, something that did not hold prior to 2009, but an increasing influence

and the drops that we saw were among banks, certainly the gse portfolio runoff which is part of plan, drops in the holdings of overseas investors, mortgage roots pulling back from their holdings of mortgage-backed securities and finally all other money managers. so a variety of some of the firms investing for pension funds or other portfolios. actually, then the fed pulling those out of those portfolios, forcing them to look to something else to deploy that cash. so when you look at then the growing footprint of the federal reserve in this market, what then is the implication for crowding out private capital? at what point is the fed no longer assisting the market, but at what point is the fed the market? so the fed is now holding roughly one-fourth of mortgage-backed securities outstanding. they have purchased about 30% of all the mortgages originated since last summer. that's not securitized, that's the total mortgages originated. and that unless we see some tapering through 2014, they will be buying more than half of all the mortgages originated. again, not just securitized, but th

be active rather than mislabeling that there really educational problems we're over diagnosing the gse because you can give them a easy transition back to civilian life they have symptoms but we don't have to label it as a disease the only way to get care with an economic recession some of that is a real depression but a lot of it is we don't provide the death of the safety bit. return this social problem in to a medical problem is the only way to pay the rent so we start those problems and appropriately but it is way too important with drug companies that are out of control spending twice as much money on marketing and controlling politicians most of the research that they do is to extend that patent life they're just things from their profile rather than the health of the population. is there eddie chia's this could change in the future? david and goliath. because that it is they're promoting the diagnosis that the best hope comes from the rest the initiatives promoted by the greatest medical journal in the world helped along very much by "consumer reports" in the university's to mak

if you look at the gse flows in terms of treasurys you have an outflow from our foreign central-banking problems with the way we conduct our business. then you will begin to see something that is just a trickle today but with that in mind i would raise some cash to be cautious thinking bonds are not adequate diversification for weakness. if you hope that is enough to diversify you may find on the front. >> interestingly segue out of that but the vix index a measure of volatily, people our nervous, does this get worse ? especially with everything coming forward? do you see more volatility in the market? becker suspect as long as we talk about but the mix will continue to rise and all three of this is mentioned that we are abou to report earnings they will be okay but not great. the uncertainty is pretty high my guess is we will do consolidation. i would not run away but i would be cautious but i take my time. gerri: washington is also wrote -- running in our portfolios and have sought. think you for joining us. time to look at the stories your clicking on fox business.com. taking a no

schools where eight out of ten children didn't get five decent gse's. they were relaxed about people getting rich but they were intensely relaxed about people staying stuck on welfare year after year and children leafing school without proper qualifications so they couldn't hope to get a job at the end of it. that was what they left. the casino economy meets the broken education system. a country for the few built by the so-called party of the many. and labor, we will never let you forget it. \[applause] these past few years have been a real struggle. but what people want to know is this: it was struggle worth it? and here is the honest answer. the struggle will only be worth it if we as a country finish the job we've started. and finishing the job means understanding this: our economy may be turning the corner and of course that's great but we still haven't finished paying for labor's debt crisis. if anyone thinks that is over, done and dealt with, they are living in a fantasy land. the country's debt crisis created by labor is not over. after three ye

i would forecast that this would've been housing finance in the post-gse world and it goes to show thatthe accuracy of my forecasting ability has marked my entire career as a chief economist. [laughter]. so what i really wanted to talk about is, and i'm skipping around here little bit, is the purchase program going forward. what we are currently seeing in the lending market and show you a new tool rolled out looking for mortgage credit and the availability of crediting the market and a discussion of a new bubble since bubbles are part of this title and i thought i should come up with something on that end. there is a massive growth in the makeup of that balance sheet and this goes back to may with the gray and blue area being mortgage-backed securities, something they did not hold prior to 2009. but increasing with and influence in the market. and if you look at this, this is a topline and you can see where we are, the change is about 11 months, 170 billion outstanding is the total growth in the nbs. of that over this. maximal we have picked up about 480 billion, which meant that other

is completely in the control of congress come completely in control of the fha and the combination gse is. so there's been good work done in this case. there's been some progress already in terms of getting the problem size come some of the solutions more clear-cut. the step carol mentioned earlier is a step in the right direction so i think very short term that body of work bringing it to a practical conclusion would be a key step in the right direction to think that credit would become more available in a broad fashion. >> well-defined credit. can we think of anything else? i totally agree there is a big piece of this -- >> we are talking today about shrinking the government's role in this certainly applies to how we think about interacting with fred p. and fannie but how we think about that framework in a private world as well really defining what that looks like. you also tough on the side it's great to have this agency but we are going to move beyond that. it's one thing to have the build concentrated on the high credit quality market. that's another thing to talk about in that si

to continue to try to move policymakers toward the unfinished business of gse reform so we can move forward and take care of, you know, the future housing finance system in america. i think that's more important than arguing about the past. >> in addition to continued litigation, the big banks are also facing a big drop in origination volume. now jpmorgan and wells fargo and others have laid off a lot of workers. i asked mr. heid if he expected wells fargo to lay off more workers in the origination area, he could not rule it out, they would continue to look the at where things look next year. we expect mortgage rates to rise next year which would take away from refinance volume. back to you. >> thank you very much. will there be any blow back from europe and beyond over the nasdaq spying revelations? that's coming back. coming up after the break. could american businesses be hurt? reputationally because of this. two big problems for obama care and another big website problem and a new round of sticker shock. after this short break. . >>> welcome back to "power lunch." ten neco moving higher

we have a bill to deal with the gse. the entities that deal with housing finance. we have worked together to create this piece of legislation. there is that. there is immigration. i was part of a group that helped figure out a way to get that crossed the finish line. as you mentioned, we are moving into an election time. i know it is difficult for me to ago that every two years by, one is an election year. one creates obstacles for us to solve problems. is that as one senator, i get up every day trying to solve these problems. i cannot speak for others resolved. there are good people here that care about this nation. we will deal with the issue of immigration. hope we will deal with tax reform. you are right. we have a very full plate of things that need to be dealt with. we do not have a lot of time before we get back into the political season, which has a tendency to slow these things down. senator bob corker joining us. thank you for spending time with us on c-span. >> that was from today's edition of washington today. moving over to channel 120 as of this frida

what are the prospects of bipartisan fha reform and gse, fannie, freddie reform? speaking i'm more optimistic about those prospects than other prospects. clearly the senate seems to be moving in that direction. the white house indicated they're interested. we passed a bill out of the committee, we hope to get it to the floor soon, in order to be a member of congress you have to be an optimist. >> chairman hensarling, house financial services committee. thanks for joining us. we'll be watching this. lori, adam, we'll stay here a few more minutes and do an additional series of questions for the chairman for five more minutes. post exclusively to the website, foxbusiness.com. look for that on the website a bit later. back to you. lori: peter barnes thanks for bringing us that. adam: small business, big burger. from zero to 22 locations in just four years. coming up in next hour of "markets now", new miami burger founder, adam fleishman. when we made our commitment to the gulf, bp had two big goals: help the gulf recover and learn from what happened so we could be a b

i think that there has been surprising but promising opportunity on gse reform in the senate.f and shaun donovan and jack lew, the three of us have been working very closely often behind the scenes, but to work with those who are trying to forge bipartisan progress on juicy reform. i think there are areas along with immigration reform where, you know, if we could, if washingtwashingt on could get itself into better shape we could make progress. but there's also areas where we are working with members in the business community or other stakeholders to make progress where you might not need, where legislation would be most helpful but you could still make progress. let me mention very quickly, we have done an immense amount, the president, first lady have, and mrs. biden on veterans in a very serious way. reforming the way the military deals with people coming out, reforming credentialing. verthere he says things that wil affect hundreds of thousands of people. the overwhelming majority has been done without new legislation to we proposed a manufacturing innovation institute, we

>> take the multifamily market, it's become extraordinarily dependent on the gses fannie and freddie.fannie and freddie will be. which by definition means what's the future of multifamily housing and the role if any the government is going to play in it. again, it comes back to the famous word, uncertainty. uncertainty is the death now of everything. >> things come full circle. we're going to take a break. i checked huffington post. they put a new lead up. jimmy carter making some comments that the middle class is now like the poor of old in the united states. and the reason is years of tax breaks for the wealthy. a minimum wage untethered from the inflation rate. gerrymandering with the districts. what happened was to narrow this, you need to spread everything out. you need fair taxation, equity of taxation and treating the middle class with a great deal -- but the classic thing here is we are taking now economic tips from jimmy carter. >> one of the greatest economic presidents since milliard fillmore. >> i don't want to be snarky about it. but the idea -- >> don't be. >> no, i'm no

carefully assessed but do not meet the 43% debt to income ratio or are not eligible 's but arese by gse on solid standards and routinely perform well over time. lenders that have upheld standards have little to fear from the ability to repay rule. the strong performance demonstrates the care they have taken in underwriting to ensure borrowers have the ability to repay. nothing about that traditional model has changed. they should continue to offer the same kinds of mortgages to borrowers they evaluate as posing reasonable risk, whether or not they meet the criteria to be classified as qualified mortgages. another steptook to address concerns about their lending risk associated with offering only qualified mortgages. with other banking agencies, we explained our joint viewpoint that we do not anticipate a creditor's decision to only offer qualified mortgages would elevate an institution's fair lending risk. is whetherue raised the law and our rule will deliver the assured and predictable legal protections. we strongly believe they will do so. there are two key points. the size of the spa