j.p. morgane and blackstone and the other large hedge funds and they're making a small contribution and we think that is reasonable. $1.5 billion goes to help the unemployed to pay their mortgages so they can get their jobs back. the bulk of the cost is from the administrative reforms increase regulation in the bill. that is over a 10-year period. that is $22 billion. we would pay it all off with this in the first five years so there would be no deficit contribution over time, but we would get an advance payment on this so we will be ahead of the game for the first five years. i recognize the gentleman from california. >> thank you, mr. chairman. my first point is that this bank tax acknowledges that the truly massive bureaucracy that will be built here will cost billions of dollars. over time and this bank tax will siphon those billions of dollars out of the financial system to fund yet another government bureaucracy with a very vague mandate. . . >> thank you, mr. chairman. i will finish with t

i am the chief executive officer of home lending at j.p. morgan chase. j.p. morgan chase shares your commitment to helping homeowners and stabilizing the housing market in our country. we're working to help families stay in their homes by making their payments affordable. we have helped prevent hundreds of thousands of foreclosures through our own proprietary modification program, hamp, and other programs. we have refinanced $21 billion of loans under harp. hamp modification performance has been strong. we are completing more than 10,000 permanant modifications per month. on average, home owners see their monthly payments reduced by more than $530, 28%. we are adopting an implementing the federal government's second lein modification program to help more borrowers. actively use temporary forbearance agreements, similar to the program recently announced by the administration. you asked us to focus our testimony on how we can make foreclosure prevention initiatives more effective for borrowers. from the beginning of 2009 to the end of may 2010, chase offered alm

. >> and douglas elliott spent 20 years as an investment banker, mostly at j.p. morgan. he's now a fellow at the brookings institution. douglas elliott, i'll start with you. before we get to particulars, what do you see when you put it all together, major change? >> it's absolutely a major change. as stated, it's the biggest set of changes since the great depression. and i'm quite happy, overall. in the real world, getting to maybe two-thirds of where we really should be-- which is what i think we did-- is a good thing. >> brown: nomi prins, same question, overview. what do you see? >> well, i agree it certainly is a large bill with a lot of context in it, but i don't think it fundamentally changes the nature of how wall street operates, the structure of the banking system or effectively can mitigate the type of immense risk that still exists in the system today, that is still part of the make up of how trading versus doing more plain vanilla business for customers with deposits and lending actually operate. >> brown: all right, well let's walk through a couple of these

j.p. morgan, goldman sachs, bank of america, all of them have huge operations of hedge funds. j.p. morgan is actually -- it operates the largest hedge fund in the world, according to some rankings. so, they would really be forced to spin off their hedge fund operations, separate them from their main businesses, sell them off. and the also have major investments in those funds and the private equity, especially their private equity. they invest heavily, along with their clients. they still have to scale those back, but it is not going to be as much as they steer it was going to be. host: 202 is the area code if you would like to talk about the regulations deal that was reached at 540 -- 5:40 a.m. by the conference committee of the house and senate. all the democrats voted for it at all republicans voted against it. yalman onaran from bloomberg, another contentious issue was the issue of derivatives and senator blanche lincoln of arkansas had a big role. what happened? guest: senator lincoln, who f

i am the chief executive officer of home lending at j.p. morgan chase. j.p. morgan chase shares your commitment to helping homeowners and stabilizing the housing market in our country. we're working to help families stay in their homes by making their payments affordable. we have helped prevent hundreds of thousands of foreclosures through our own proprietary modification program, hamp, and other programs. we have refinanced $21 billion of loans under harp. hamp modification performance has been strong. we are completing more than 10,000 permanant modifications per month. on average, home owners see their monthly payments reduced by more than $530, 28%. we are adopting an implementing the federal government's second lein modification program to help more borrowers. actively use temporary forbearance agreements, similar to the program recently announced by the administration. you asked us to focus our testimony on how wean make foreclosure prevention initiatives more effective for borrowers. from the beginning of 2009 to the end of may 2010, chase offered almos

j.p. morgan, goldman sachs, bank of america, all of them have huge operations of hedge funds. j.p. morgan is actually -- it operates the largest hedge fund in the world, according to some rankings. so, they would really be forced to spin off their hedge fund operations, separate them from their main businesses, sell them off. and the also have major investments in those funds and the private equity, especially their private equity. they invest heavily, along with their clients. they still have to scale those back, but it is not going to be as much as they steer it was going to be. host: 202 is the area code if you would like to talk about the regulations deal that was reached at 540 -- 5:40 a.m. by the conference committee of the house and senate. all the democrats voted for it at all republicans voted against it. yalman onaran from bloomberg, another contentious issue was the issue of derivatives and senator blanche lincoln of arkansas had a big role. what happened? guest: senator lincoln, who f

i am the chief executive officer of home lending at j.p. morgan chase. j.p. morgan chase shares your commitment to helping homeowners and stabilizing the housing market in our country. we're working to help families stay in their homes by aking their payments affordable. we have helped prevent hundreds of thousands of foreclosures through our own proprietary modification program, hamp, and other programs. we have refinanced $21 billion of loans under harp. hamp modification performance has been strong. we are completing more than 10,000 permanant modifications per month. on average, home owners see their monthly payments reduced by more than $530, 28%. we are adopting an implementing the federal government's second lein modification program to help more borrowers. actively use temporary forbearance agreements, similar to the program recently announced by the administration. you asked us to focus our testimony on how we can make foreclosure prevention initiatives more effective for borrowers. from the beginning of 2009 to the end of may 2010, chase offered almo

whether you call them aig, goldman sachs, or j.p. morgan, we will constrain the leverage and risk that the take on. if they get to a pooition where they couud not survive on their own, we will step in and dismember them safely. we will minimize the risk of loss to the taxpayer, and make sure they can be broken up in a quasi bank like mechanism. that is what this does. the absence of tools is what forced us to take those exceptionally offensive measures in the fall of 2008 and the first half of 2009 it to put up >> the example of long-term capital management will be one where that was not a bank, and the government came into backstop. they did arrange a rrscue that would lead one to think that that is what the government is quick to do for the other ffrms. rescuing became an exxected norm. there are zero entities out there, presumably credit holders' equity holders that are supposed to be regulating these firms. the creditors, who did not experienced the upside, were the ones that had the most to lose. it is not a large stretch to think that

j.p. morgan's position was $78.6 trillion in notional amount. can such an enormous complex parts of your business be successfully managed by han beings? >> i think they are dangerous and i could not manage it. is hard for me to imagine a system or regulatory system that can supervise something like that. one of the ironies is that there were only fourig auditing firms in the united states. i will guarantee you a few things -- tw big firms audited by the same auditor, you will find different prices. it is mind-boggling we lost $400 million in a very benign period with npressure iran. maybe that is why lehman brothers also much money. >> 2 you also pointed out that in your most recent shareholder letter, the 20081 that i am referring to, and bought the 20091, that it is almost impossible for an investor looking at the financial statement of these big derivatives dealers to really know what their financial situation is. >> and if you had 1000 pages of disclosure, it would be impossible. i try to tell the shareholders basically the positions are. i

j.p. morgan's position was $78.6 trillion in notional amount. can such an enormous complex parts of your business be successfully managed by human beings? >> i think they are dangerous and i could not manage it. it is hard for me to imagine a system or regulatory system that can supervise something like that. one of the ironies is that there were only four big auditing firms in the united states. i will guarantee you a few things -- two big firms audited by the same auditor, you will find different prices. it is mind-boggling. we lost $400 million in a very benign period with no pressure iran. maybe that is why lehman brothers also much money. >> 2 you also pointed out that in your most recent shareholder letter, the 20081 that i am referring to, and bought the 20091, that it is almost impossible for an investor looking at the financial statement of these big derivatives dealers to really know what their financial situation is. >> and if you had 1000 pages of disclosure, it would be impossible. i try to tell the shareholders basically the positi

i prefer what we had in our provision, to assess the goldman sachs, j.p. morgan chase, mr. paulsen's hedge fund, that's the way we wanted to do it, we couldn't get it through republicans in the senate. first republicans in the senate said don't do it, other republicans then say why did you do it? i'll make a pledge right now, the economy i chair will bring out a bill that has an assessment on the financial institutions above $50 billion so members who miss it will get a chance to show us they care. we'll bring it there and have that come forward. i don't want to talk a little bit about subprime lending and the partial history we get. the fact is, the republican party controlled the house and the senate from 1995 through 2006. during that period they showed remarkable restraint. as eager as they were to destroy subprime lending, as passionate as they were to reform fannie mae and freddie mac they didn't do it. that's a degree of abstinence unparalleled in political history. they were in charge. whose fault was it? it was my fault. as people said before, people have accused m

whether you call them aig, goldman sachs, or j.p. morgan, we will constrain the leverage and risk that the take on. if they get to a pooition where they could not survive on their own, we will step in and dismember them safely. we will minimize the risk of loss to the taxpayer, and make sure they can be broken up in a quasi bank like mechanism. that is what this does. the absence of tools is what forced us to take those exceptionally offensive measures in the fall of 2008 and the first half of 2009 it to put up >> the example of long-term capital management will be one where that was not a bank,,and the government came into backstop. they did arrange a rrscue that would lead one to think that that is what the government is quick to do for the other ffrms. rescuing became an expected normm there are zerro entities out%% there, presummbly credit holders' equity holders that are supposed to be regulating these firms. the creditors, who did not experienced the upside, were the ones that had the most to lose. it is not a large stretch to think t

whether you call them aig, goldman sachs, or j.p. morgan, we will constrain the leverage and risk that the take on. if they get to a pooition where they could not survive on their own, we will step in and dismember them safely. we will minimize the risk of loss to the taxpayer, and make sure they can be broken up in a quasi bank like mechanism. that is what this does. the absence of tools is what forced us to take those exceptionally offensive measures in the fall of 2008 and the first half of 2009 it to put up >> the example of long-term capital management will be one where that was not a bank, and the government came into backstop. they did arrange a rrscue that would lead one to think that that is what the government is quick to do for the other ffrms. rescuing became an expected norm. there are zero entities out there, presumably credit holders' equity holders that are supposed to be regulating these firms. the creditors, who did not experienced the upside, were the ones that had the most to lose. it is not a large stretch to think that

does that mean that bank of america does not have that issue or j.p. morgan chase? >> i am not trying to win an argument here. what i'm trying to do is convince you, chairman, that the federal reserve board members are concerned about a specific type of institution. investment banks. they're concerned about these firms that are too big to fail. >> i accept that. what i am saying is, i don't think this is the right approach. if it was, there is no basis. i am not just trying to make argument points, but apparently, the problem of too big to fail, assuming the moral hazard is too big to fail, i don't understand if this is the right approach. why applied only to non depository institutions and not to them? i am willing to work with the gentleman on this. there are three aspects of this resolution and i think we are in agreement on a couple of them. one of them is that the institution dyes. no taxpayer money should be involved. the third question to talk about is, does it create moral hazard if you say that in some circumstances, the death of one of these large institut

off basically meaning, senator blanche lincoln of arkansas pushing for it, taking a company like j.p. morgann cutting off their swap desk and making them recapitalize somewhere else. that will cost some of these companies billions, some of their most lucrative businesses. companies like goldman sachs would be greatly affected. america basically has a corner on the market with swaps and derivatives with about 97% of the market. there are many foreign banks like the royal bank of scotland salivating at that prospect of them americans giving away their market share. leave it to congress to make a mistake and do this. host: the phone numbers are on the bottom of the screen for our guests, at one time or legislative director for a republican congressional member from florida. he is the director of senate dilutions of heritage action for america. how is that related to the heritage foundation? guest: the heritage foundation has been a 5013c for more than 35 years, a conservative think+ tank mainly focused on limited government, a free economy. things like that, strong national defense. through the

j.p. morgan's position was $78.6 trillion in nional amount. can such an enormousomplex parts of your business be successfully managed by human beings? >> i think they are dangerous and i could not manage it. it is hard for me to imagine a system or regulatory system that can supervise something like that. one of the ironies ishat there were only four big auditing firms in the united states. i will guarantee you a few things -- two big firms audited by the same auditor, you will find difrent prices. it is mind-boggling. we lost $400 million in a very benign period with no pressure iran. maybe that is why lehman brothers also much money. >> 2 you also pointed out that in your most rect shareholder letter, the 20081 that i am referring to, and bought the 20091, that it i almost impossible for an investor looking at the financial statement of these big derivatives dealers to really know what their financial situation is. >>and if you had 1000 pages of disclosure, it would be impossible. i try to tell the shareholders basically the positions are. i

done and they're not being done for the reasons i stated earlier, that most of the 1i78 big banks, j.p. morgan, wells fargo, bank of americaing they hold a lot of second mortgages on the loans and they're not willing to work with the servicer to do a principal writedown. that would be the way we would normally resolve a loan on the books in past decades. but that isn't the system we have today when wall street holds the power system of it's a bleak picture right now for main street and to gain a true picture of the cost of the financial crisis, much more needs to be added to the ledger, not just this little simple discussion they have here saying it's just paying back the troubled asset relief program, the tarp money. the ledger is much longer than that. and the banks have to pay back more to the american people because tarp doesn't even make a dent in what is actually owed. one of the most disgusting practices of wall street involves their use abuse of salary and the bonuses that keep getting bigger. in 2000, the standard and poor's 500 average pay for a c.e.o. on wall street was $13 million

i have 900,004 cities and 846,004 j.p. morgan900,000 modifications you have made. >> since 2007, we have helped 900,000 homeowners. recently, we offered h.a.m.p. to 50,000 customers. >> a small percentage. >> 630,000 modifications since 2008. 70,000 or through h.a.m.p.. >> we have about 60,000 currently in trial. . period. >> wells fargo? >> we have 500,000 modification. 20,000 of them are inside h.a.m.p. 45,000 are in permanent modification. >> 2507000 in h.a.m.p. >> how many are permanent? 10%?s than the people who qualify for h.a.m.p. went through this process. i just described the intimidating process they had to go through. how many of those -- the people who qualify for h.a.m.p., would any of those not qualify for your own modification programs? >> for the people who fell out of camp, we were able to save about 50% more. >> and it is working? >> it is working. >> the potential does exist. and the treasury enabled it to make more sense for the investor. >> manning? >> many, but i do not know the exact number. >> the question

whether you call them aig, goldman sachs, or j.p. morgan, we will constrain the leverage and risk that the take on. if they get to a pooition where they could not survive on their own, we will step in and dismember them safely. we will minimize the risk of loss to the taxpayer, and make sure they can be broken up in a quasi bank like mechanism. that is what this does. the absence of tools is what forced us to take those exceptionally offensive measures in the fall of 2008 and the first half of 2009 it to put up >> the example of long-term capital management will be one where that was not a bank, and the government came into backstop. they did arrange a rrscue that would lead one to think that that is what the government is quick to do for the other ffrms. rescuing became an expected norm. there are zero entities out there, presumably credit holders' equity holders that are supposed to be regulating these firms. the creditors, who did not experienced the upside, were the ones that had the most to lose. it is not a large stretch to think that