mr. tarullo and mr. wallace to just respond as to how they see this impacting our financial system in general. >> as i said in my testimony we do not see -- but i think the potential is there and we need proactive action to get ahead of us to make sure it doesn't spin into something that we don't want to see. i think there are two key issues. one is what this does to the housing market which could impact a lot of institutions. we td'd need a functioning foreclosure process. i think getting this situation cleared up so that are worse on the front and are given a fair chance of a rehabilitative loan but if that doesn't work out and foreclosure is unavoidable that there is a process that has terms of ownership and legal rights i think is important. there also a lot of litigation exposures here and law enforcement official potential for law enforcement actions and i don't think we have a good handle on that yet. i think we have asked the institutions to do their own financial risk assessments but i think we

mr. tarullo. >> thank you. let me as an introductory comments.ent of the problem -- i want to first caution that the four agencies represented here or in the middle of investigating -- are in the middle of investigating the firms themselves. we need to be provisional in any observations that we make. i think with respect to the documentation issue, it is pretty apparent that there is significant issues in risk management, quality control, compliance practices, staff training, and third-party providers. the extent of the problems tend to vary across firms. when all is said and done, we will find some problems that all servicers large, medium, and small will be achieved. when we look at those problems in the context of the difficulties associated with loan modification, it seems we need structural changes in house servicers or organized, monitored, and regulated. put-back exposure is something not directly related to the foreclosure documentation problem. documentation problems have drawn attention to the issue and may be motivated some investors t