there are a number of different ways in which congress could proceed with gse reform, depending on your assessment of appropriate priorities. in my personal view it's very important for congress to decide explicitly what the role of the government should be in housing finance and there are a lot of possible choices available i think many terms of bringing private capital back into the market, we now have a system where almost all mortgages that are being granted in this country have government backing associated with it, and i think to see private capital return in meaningful amounts to the mortgage industry clarifying the rules of the road is important. so i would certainly urge congress to proceed in this area. >> thank you. i agree with you and appreciate your observations at this point. as i stated in my opening statement, i'm very concerned about dodd-frank implementation. i certainly hope that you will clearly communicate with congress if there are statutory ambiguities or obstacles that prevent the fed from doing the right thing when promulgating regulations. in that context, i'd

what he and other investors must think is that congress is not going to do anything substantive on gse next year or for a long time. the issues are too big to get the reform most of for the gst's will be decided in the courts, not by congress. onhink they will double down their losses. and not on their lobbying. that that the same, nela, long-term, there is no prospect for sensible reform of fannie mae and freddie mac because really sensible reform would require an act of congress, and if it is the course that will decide the future for these two gse's, then congress is not going to get involved, at least not to a degree that would make a difference. >> actually, erik, i would differ a little with you on that opinion. i think -- first of all, long-term, congress does not actually have to have a huge role. it just depends on what type of overhauled you are looking for. there were some steps started by dimarco in fha, freddie and fannie's regulator, that looked like a long-term solution to government's overinvolvement in the housing market. that is the monetization of the circuit -- of t

the support of the gse and the use of government enterprises. >> right. for the creation of regulation and most will don't understand this to understand what ever complicit transfers and taxes are involved in this regulation. so that means that if you are an ideologically republican representative who wouldn't want to be associated with a particular transfer, you are safe because nobody knows than you can do your deal in a hidden way. so i think ironically a lot of people that have put faith in the checks and balances of the u.s. system i'm missing the fact that in the area of 19 regulation which is very big and important, but that is an area where we have sort of addressed problems, especially inequality problems. instead of addressing head-on. we have addressed it in this very destructive way of easing subsidies through the financial system which tends to destabilize it is the way to do it. so even if we are looking at housing the, is really a in australia is a populous country in many ways. and they address issues of inequality directly through fiscal

you are treating the gse backed securities in a different way -- you are basically weighing a hair cut of 15% discount of a value of those securities, is that correct? >> well because we think they are somewhat less liquid than, say, treasuries and because they are somewhat less liquid the markets in which they trade, there needs to be some hair cut that they aren't quite as good as cash or treasuries in terms of meeting potential runs on a bank or liquidity drains and to me that is an prooptd recognition -- appropriate recognition in the difference of liquidity between mortgage backed securities and treasuries or cash. >> 15% is a pretty good number though, isn't it? >> it is something. >> does it seem like a high number. is that an arbitrary number that has been brought forth to risk weight something at a discount of 15%? >> there are judgments that have been made throughout about what the appropriate rates of discount -- >> a lot of the smaller banks are concerned about this because they have bought a lot of gse securities and if they are going to be risk weighted adversely in their

. >> host: we will talk with the alternatives but there was more that struck me you got the gse records the description of why you were abroad was reported to private companies. >> this was shocking. >> i said give me the record of a border crossings but easily means waiting three months but that is relevant. it was his incredibly comprehensive what i've learned to from the "wall street journal" you can choose the system with the internal communications i have been online form and my boss would approve it just by the virtue no one paying attention their role swept into the government file. with the offense knowledge so they stopped working with a travel agency but it took all that time. with that data age people don't even know. is secure but they did not know. >> host: the amount of inaccuracies or the glitch it seems hard to get the sense of control of how much is out there. >> it was difficult and i sure i don't because most companies don't have to share an even if they do facebook a nbc in archive but one european got a full set of his data and privacy laws but his file he had delet

and you can see here are the mandates that it doesn't the gses also what fraction of their portfolios their purchase portfolios have to be devoted to serving particular constituencies in these urban areas. so this was a pretty clear deal. and, of course, it contributed very greatly to the debasement of hundred standards of the mortgage market. you can see here that the percentage of mortgages in the u.s. was effectively zero down payment, 3% or less. in the 1950s zero him in the 1980s it is still zero. by the 1990s, it is still about 10% in 1999. but by 2078 is 40%. this is a huge transformation in underwriting standards. that wasn't the only thing that happened. also underwriting standards changed with the gses not only would erode the 800-pound gorilla and the mortgage market decide what these standards would be, not only decided to allow zero down payment mortgages but also in 2004 they took all the limits off of the undocumented mortgages. they did that very much explicitly, as you can read in the e-mails within those organizations between the risk managers and ceos that are now p

are they still gses, these things?, they absolutely are and they're still functioning exactly as they functioned in the 1980s and 1990s. the first thing should be understood who owns them. the taxpayer owns these two companies. the taxpayer has invested, i will put the two numbers together, taxpayers invested $190 billion into preferred shares in those companies and those preferred shares should be paying $19 billion a year in dividend to the taxpayer. and this bill would wipe out that investment. number two, the taxpayer has through warrants, 8.2 billion shares of stock in these two companies. i estimate that the value of that stock is 155 billion. what mr. johnson and senator johnson and senator crapo are doing, they're taking what is essentially $355 billion, which is taxpayer money, in the pockets of taxpayer and taking it away from them. that doesn't make any sense. >> return it to the treasury, aren't they? where is it going to go? >> they can't, they, how can you return something to the treasury? basically you'r

where the shunt would enter he still had to get is head shaved by specially trained people and his the gse severe enough he cannot carry a weapon and with his ptsd you get us special piece of paper so on his profile it says you cannot carry a weapon and. his leadership said you cannot wear head gear or carry a weapon and you were freaking out the new guys because you are a disaster so stay home. this is not the army that i knew they'd have to a show of for accountability so i was surprised nobody was checking up on him. as the loss is the identity as the leader of soldiers his job, his place and questioning his ability to have a future, he spiralled deeper and deeper into depression, ptsd and everything fell apart. he was not cognitively able to pay his bills or take care of himself for manage his own life and trying to self medicate the profound psychological pain he was feeling with whatever was handy. that did not work but it took a long time for him to figure that out. somehow i stuck with him through this people ask me how and i have to be honest i am still not sure but with a lot of

aircraft, a dozen different countries helping, but no matter how many resources you have, you've got to gse search areas and see if you can spot anything. and that takes a tremendous amount of time, especially when you consider ocean currents can move things so after you've searched an area you may have to go back again just to make sure. the tremendous scope here does not seem to represent the magnitude of effort to find this plane as much as it represents the confusion over where to look. and that, jake, is why so many of the families are frustrated and frankly why some of the countries involved in the search seem to be getting frustrated too. jake? >> baffling. tom foreman, thank you. >>> up next, an faa warning just months ago that the boeing 777 could break into pieces midair. so was the malaysia airlines plane checked before flight 370? now the head of the company admits he does not know. >>> plus a troubling new broader search area has some experts questioning if malaysian authorities have a handle on this investigation. [ chainsaw whirring ] humans -- sometimes life trips us up. som

where the shunt would enter he still had to get is head shaved by specially trained people and his the gse severe enough he cannot carry a weapon and with his ptsd you get us special piece of paper so on his profile it says you cannot carry a weapon and. his leadership said you cannot wear head gear or carry a weapon and you were freaking out the new guys because you are a disaster so stay home. this is not the army that i knew they'd have to a show of for accountability so i was surprised nobody was checking up on him. as the loss is the identity as the leader of soldiers his job, his place and questioning his ability to have a future, he spiralled deeper and deeper into depression, ptsd and everything fell apart. he was not cognitively able to pay his bills or take care of himself for manage his own life and trying to self medicate the profound psychological pain he was feeling with whatever was handy. that did not work but it took a long time for him to figure that out. somehow i stuck with him through this people ask me how and i have to be honest i am still not sure but with a lot of

. >> we're going to be talking about gse reform.oing to have the ranking republican on the senate banking committee, senator mike crepe to talk about what might be released tomorrow in the form of a bill to accomplish what seemed like the impossible. all after the break. (vo) you are a business pro. seeker of the sublime. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental customer satisfaction by j.d. power. (natalie) ooooh, i like your style. (vo) so do we, business pro. so do we. go national. go like a pro. ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ released a blueprint for winding down. government-owned financiers, fannie and freddie. r

second, gse reform, which most americans don't really care about, which is fiscal policy very important. third, potentially tax reform. and this fertile ground for agreement there and i think we can get it. >> what changes the political dynamics? let's assume that the election does yield a republican senate as well as house. is the tea party gone? is it on the run? i think ted cruz would disagree with your assessment he's about to leave the stage or has left. >> i don't think he's left the stage and i don't think that that segment of our party will or should leave the stage. they're a very important influence on policy. but i think those folks who understand that you cannot speak to the american people unless you explain to them how you intend to do something positive. you can't always be postured in the negative. you have to be at some point posturing yourself on the positive on issues that affect everyday americans in their everyday lives. those folks within our party are going to take the basically the dominant role. i do, as i said, i see three issues where you have opportunity to h

congress lakes the 70 plus billion a year they're getting from the gses.osed to do something. i think that's a debate we need to have, we need to fix the mortgage situation in our country. >> bitcoin. >> what are you -- >> bitcoin. >> what do you think of bitcoin? i ask everybody what they think of bitcoin. >> he's awe ba banker! >> what do you think of bitcoin. >> i would not be buying bitcoin. it's kind of a ponzi scheme. it's not a currency. what is it? this is how we got into trouble with mortgages. we do a mortgage say it's worth $100, sell it to joe for $200, sell it to you for $300. somebody woke up and said a subprime mortgage isn't worth the paper it's written on. >> what is the younger gubernatorial candidate have to say about this? >> everything you just said you could say about gold. gold has no intrinsic value. the difference is i can't invent gold. i can't invent bitcoin two, you bitcoin three and you bitcoin four. to me the fact there could be a thousand bitcoins tomorrow means that it's not gold. it's not scarce like that. some of these eco

>> early on, they have a big mortgage company and the gses have been going back against the banks andback for loans that went bad. we worked through the issue with pulte. we like them for two reasons, one they re-engineered their business and their margins will continue to improve regardless if we continue to get home price appreciation. second, you know, you look at the consensus view right now and pulte has guided to down orders. and that expectation of orders and i keep going back there because the builders trade on orders there's an expectation to do positive order growth so that's cooked into the valuation here so there's only up side i think from that perspective if they -- if they put up, you know, a more flattish order comp. >> do you have a price target for pulte? >> we think pulte is worth about $25 per share. >> it's trading under $20 a share right now. let's talk about kb homes. that's your other top pick? why do you like kb? >> because they've been remixing their business and over the last year or so they've been moving from a lower price point builder to a higher price p

had senator crapo on yesterday about actually seeing the text of this reform bill, the reform the gsess going to be in there is some form of a government guarantee of the securities but the private sector on hook maybe for the first traunch. but it really harkens back to a book, okay, that i've been reading. it's called "economics in one lesson" by economics. the neat thing is and kind of amazing if you read it, that this book was written in 1946. he died in 1993. why is that important? because this morning warren buffett, maybe the smartest investor t in the world, was talking about reading timothy geithner's book and how the u.s. government maybe saved the world. that's a debate for another day. but could it have been avoid sd the real issue. now, in chapter six of this book there are some interesting material that mr. haz lrk et wrote. that it, being the government, will make loans to people who could not get them from private lenders. this is only another way of saying that the government lenders will take the risk with other people's money, the taxpayers, that private lender also