mr. demarco touched on a. what we're talking about looking at the hamp programs and the fact that you need to get out a certain number of years to see if these things actually work. .. just that comparison. there are other ways to get rid of this problem. i mentioned a shared appreciation mortgages which mr. demarco deflated rapidly. i'm a big advocate of that, but in his defense i did a study of bank of scotland programs over there, and the problem with those programs is the forecasts are -- if you forecast 2% rise in housing prices, they go up and down 20% or up 20%, the game is over and everything just turns on its head is a there are problems with that and one reason they were hesitant to do that. but there's also other programs, like bank of america announced a pilot program on the mortgage to a ranch where they are trying to look at households in trouble on the foreclosure and transition transition to the rental market. they believe keeps the asset for media to two years and sells about in the market. bu

mr. demarco is the conserve water in charge of freddie mac and fannie mae. there's also a lot of concern that of the borrowers who have mortgages from fannie mae and freddie mac who are under water, three out of for paying. if you begin to forgive debts of people who are not paying that the 75% of people who are paying may actually default and drive up costs for the government? >> the vast majority of homeowners don't operate that way. they know that their home is where they will raise their kids, they are part of a community there, the home as much more than an investment. we really know this from studies we have done that the vast majority of folks are not going to just put all that at risk to default on purpose on their homes. what we are talking about is a small group of folks, maybe demographically single folks who are not giving up those same things to see that there may be, from defaulting, that they could move across the street. there is a small group but we should not punish the vast majority of folks where strategic default is not a risk just to fi

mr. demarco. on the moral hazard issue, the change of behavior -- the way to deal with that is to base it on historical delinquency. if you were dealing with previous to the day, you can qualify -- qualify. the incentive payments are much smaller for people who have not paid their mortgage payment in one-six months. the implication there is that they may be beyond help. there might be an incentive payments going for nothing. i am wondering -- and this is for all of the panelists -- does that leave it with a lot of people? that have to be delinquent as of today or yesterday. that is 75% of those. it will not help people who have not paid more than six months. more than 40% have not paid in two years. how many people are left and what kind of a that does this have? >> just structurally, it still makes a lot of sense. we need a lot of tools to solve this problem. for as many reasons as there are people, we need as many solutions, potentially. to categorically say principal reduction will not be consi

mr. demarco touched on it. we are talking about looking at the programs that you need to get out a certain number of years to see if these actually work. we have no idea of this works. we are guessing. what i am saying is, this is a major shift in economic policy. do we really want to go out on the edge based on a few anecdotal assumptions that this might work? i would argue more -- i would argue know. we need more studying. i agree with mr. demarco about forbearance. i will still take the marginal over zero. the point is that it is not just that comparison. there are other ways to get a run the problem. i mentioned shared appreciation. mortgages deflated rapidly. i did a study of bank of scotland shared appreciation mortgage programs over there. the problem with those is the forecasts -- 2% rise in housing prices. houses go up 20% or down 20%, the game is over. there are problems with that. i think that is one reason they were hesitant to do that. bank of america just announced a pilot program on a mortgage to

mr. demarco currently opposes that idea. you can watch his comments live tuesday morning at 9:30 eastern on cspan-2. tuesday, u.s. institute of peace holds a panel discussion on afghanistan's transition peace process. we will hear remarks from former national security adviser and the former afghan ambassador to canada and france. see the event at 10:30 a.m. eastern on c-span. >> all this week in primetime on cspan 3 it is american history today. tonight a look at history and lives of african-americans, in 18th and 19th century washington, d.c. a look at the rise of a free black family residing near president's park in downtown washington and difficulties surrounding their lives. followed by a discussion on when the first invitations to the white house were extended to african-americans and the circumstances surrounding their visits. this is 1:10. >> as we learned this morning, many did not enter service at lafayette square vounl taele vv. jefferson, madison, monroe, jackson, tyler, polk, taylor, owned slaves and brought them

mr. demarco say we need more analysis of this. what i want to guard against and a host of you want to guard against is anecdotal economic policy. the fact the we hear tales. i have heard them all. this will die down salvage the housing market. principal reductions will end up helping out households which of course it would. the problem is we don't have enough observations yet. mr. demarco touched on it. we talk about looking at the h.a.m.p. programs that you the ticket take a few years to see these things work. we have no idea what this looks like. we are guessing. what i am saying is this is a major shift in economic policy. keeping it fairly small. do we really want to go out on the harry edge based on a few anecdotal assumptions that this might work? i would argue no. we need more studying. let me also pause that something else. i agree with mr. demarco and forbearance which is dominated by will take a marginal over the zero. the point is it is not really just that comparison. there are other ways to get around this problem. i

mr. demarco, acting director, not crazy about the idea, he's there to protect taxpayers, hey abowh aboutrope? a story in the telegraph, germans aren't happen. another end-around game going on. >> through the balance of payments called the target system in europe, the financing that's been going on is a little odd and has pumped up some of the balances, everything's gone through the bank through the balance of payments through the banks and through the printing system on local level. they can't handle the clat real. >> so if i was looking at this, the point is, when i read the newspapers about how much germany is on the hook, that number according to this article in the telegraph, might not -- it's much bigger? >> much bigger than everyone has been talking about. it comes down to the collateral stresses. they'll trade treasuries and they'll trade bunts. >> on that, let's show a chart. it's 170. you have 28 basis points difference. ours is still under 2%. the reason that we see both the credit markets where they're at is because of this topic in europe, isn't it? >> it's all under stress.

mr. demarco is the career civil servant who drew the short straw and ended up as the acting chief of the federal housing finance agency. and so director demarco "cq" today at the center of a controversy, having been labeled the nation's top obstacle to economic recovery, as well as being called america's most dangerous man. with some liberal members of commerce in calling for him to be fired. director demarco also had a tied to brookings but i think is interesting. he was a doctoral student in economics at the university of maryland, and his visor wasn't my colic and hank aaron, a longtime brookings senior fellow. when we asked hank for his recollection of demarco, he said, and was the kind that any father would want his daughter to marry. [laughter] hate when on to say that when you saw at demarco was the name of the person is in the crosshairs of berries groups, he went and checked whether it was the same person he had known, and he thought quote, it would've been hard to have anticipated that a person as quiet, nice and mild as an demarco would ever become the center of the sort of con