. >> the gentleman from florida, mr. posey, is recognized for five minutes. >> thank you, madam chair. i thank everyone on the panel. you're informative bringing us good information. there's not any of you that didn't enlighten me significantly. did i understand you to say that you think there are currently existing a market sufficient to replace fha, if fha was to vaporize tomorrow? >> well, we're not advocating that the fha vaporize, but we do believe they have a role, and if they return to their historical norm in terms of that role, there is enough private capital in the private mi industry to support the market. >> has it always been there? >> certainly in recent times it has, yes. >> then why do they go to fha if there were private alternatives available? >> well, i think it's a combination of factors. back in 2007 and 2008, the private industry, lenders and mortgagers, and insurers tightened up the underwriting guide lines, and fha moved in to fill a role. as time moved on, what we experience now, as i mngsed in my -- m

. >> i think the -- recognize the gentleman from florida, mr. posey. >> i thank you very much, mr. chairman. first for mr. kobak. both you and mr. giddens in your previous testimony idly stated that no matter the exact size of the shortfall, speaking of segregated funds, it's probable size, significant and will substantially affect the trustee's ability to make a 100% distribution to former mf global customers. is that still your opinion today? >> good. and thank you for the yes or no answers but they are very rare around here, we really do appreciate it. i know that you do not want to speculate why you're investing is still underway, but they saw mr. duffy's testimony and other reports it seems highly probable that customer funds were transferred out of segregated accounts and co-mingled with mf own funds to out of him understand that at this point. probably to meet margin calls on your positions. i mean, is that -- [inaudible] >> okay. assumed for the moment that is, in fact, what happened. it would mean that the missing customer funds will never be found and some overlooked or,

that would put mr. posey next because it is the order they arrived. at this time, mr. posey is recognized. no questions? mr. duffy? >> thank you. i appreciate the witness is coming in. mr. walz i appreciate your passion. i want to run for what is included or not included in the legislation. i know we have a $1,000 trigger for the reporting burden is that $1,000 per trade or is that a threshold amount? if i do to "$950 trades, -- if i do two 900 to develop trade, do i have to report? >> it is portrayed them so i could trade $50,000 in a stock if i kept every trade under $900, is that right? ok, that is one of my concerns. i think the leadership here is fantastic. >> this goes back to our reporting requirements of those zones which are silly but we do them for ease. your argument as well put it. >> i think the american people want sunshine. i think we should let that light shine into every corner. i appreciate your willingness to say that it might not be perfect in your open to suggestions. is there a reason why we picked $1,000? >> it was the same reason we did -- we do

florida, mr. posey. >> thank you very much, mr. chairman. the short fall, speaking of segregated funds, its probably size is significant and will substantially effect the distribution to former mf global customers. is that still your opinion today? >> [inaudible] >> good. thank you for just the yes or no answers. they are very rare around here, and we really do appreciate it. i know that you do not want to speculate while the investigation is still underway, but based on mr. duffy's testimony and other reports, it seems highly probably -- probable that customer funds were transferred and comingled with mf's funds, nobody's doubting that, probably to meet calls on european bond commissions is that -- >> [inaudible] >> assuming for the moment that is, in fact, what happened, it would mean the missing customer funds will never be found or overlooked in an account somewhere as hoped for by many customers when they first discovered that a substantial sum of money was missing from their accounts because if the money was used to back the bond posit

i want to bounce off of something mr. posey said because of a possible exchange error there. i think he touched on what do you think would happen if fha loans were full recourse? would that help your credit quality? would that also help us in some way where, for many of us with a concern if someone gets an fha loan, 3.5% or 5% down, and i'm somehow to get a credit line or stacking a second instrument behind that, there is absolutely no equity. in many ways, you are incentivized to walk away from the loan. should that trigger recourse on my first mortgage or deed of trust? >> the gentleman's time expired, but you can answer quickly. >> we actually need clarification on the question. i'm not sure i'm clear -- happy to follow-up afterwards or -- >> mr. chairman, unanimous consent for 30 seconds 1234 >> without objection. >> okay. right now, fha loan, nonrecourse; correct? >> uh-huh. >> if i go and put a second loan behind that, in most places other than texas, it's still nonrecourse, but i've chewed up what little equity was built in there and actually made it more likely that i

. >> thank you, with that, mr. posey from florida for five minutes. >> thank you, mr. chairman. thank you for coming, mr. donovan. first of all i would probably be remiss if i didn't compliment your buzz osley in the orlando office. >> thank you. >> been a great asset to our office. been a great asset to educating the public in my district how to stay out of trouble and if you're in trouble with your mortgage, how to best handle it. great, great job down there helping educate the public and mitigate losses. >> thank you. i'll let him know. >> couple questions. what are you doing to prosecute the fraud that you've discovered that helped put us into this undesirable position we're in now? >> we are working very closely with the department of justice. we obviously don't do the prosecuting ourselves. the department of justice represents us. we have active cases against a range of lenders. a good example of that is tbw, which was not only one of the larger fha lenders but also a large fannie mae and freddie mac lender. we discovered working closely with our inspector general serious

we made a mistake and called on -- that would put mr. posey next. mr. duffy?> i appreciate your passion and your leadership on this bill. i want to run through the thought processes of what is included and what is not included in the legislation. we have a $1,000 trigger for the reporting period is that $1,000 per trade? is that a threshold amount. if i do two $950 trades, what i have to report? if i trade apple stocks in a day, i don't have to report? >> it is per trade. >> i could trade $50,000 in a stock if i keep every trade under $950. is that right? >> theoretically. >> the leadership here is fantastic. it goes back to the reporting requirements. we do the zones for ease. your argument is well put. >> the american people want sunshine. sunshine disinfects. we should let that light shine into every corner. i am open to suggestions for improvement. is there reason why we picked $1,000? >> i think it was the same reason we do these zones on the reporting requirements. the paper work on this. if we went to the pure 48 hours at ceo's on wall street have to ab