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| TIME | SPEAKER | TEXT |
|---|---|---|
| 00:00:05 |
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MORE NOW ON FEDERAL INTERVENTION AND FINANCIAL MARKETS IN A HEARING ABOUT BETTY MAE AND FREDDIE MAC.... |
| 00:00:27 |
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THE COMMITTEE WILL COME TO ORDER. WE HAVE A HEARING THAT IS SCHEDULED TO EXAMINE RECENT TREASURY... |
| 00:06:01 |
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I WON EVEN TOUCH THAT. THANK YOU. YOU KNOW, I THINK AS WE LOOK FORWARD TO THIS HEARING TODAY, I THINK... |
| 00:10:12 |
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THANK YOU VERY MUCH. MR. SHERMAN, FOR TWO MINUTE. |
| 00:10:15 |
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THIS IS THE SEASON OF BAILOUTS. ONE MODEL OF BAILOUTS WE CALL FREDDIE AND FANNIE AND AIG MODEL WHERE... |
| 00:11:26 |
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MR. SHEAS FOR THREE MINUTES? |
| 00:11:27 |
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THANK YOU. FOR TOO LONG WE, CONGRESS, ALLOWED FANNIE MAE AND FREDDIE MAC TO PLAY BY A DIFFERENT SET... |
| 00:14:49 |
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THANK YOU VERY MUCH, MR. SCOTT FOR TWO MINUTES. |
| 00:14:58 |
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THANK YOU, MADAM CHAIR LADY. SO MUCH IS HAPPENING SO FAST HERE IT'S ALMOST DIFFICULT TO KEEP UP WITH... |
| 00:16:25 |
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THANK YOU, MR. SCOTT. MR. HENSRELING. |
| 00:16:33 |
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WHEN YOU HAVE A WHEEL IN THE DITCH, YOU HAVE TO FIRST GET THE WHEEL OUT OF THE DITCH. IF THERE'S A... |
| 00:17:16 |
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THE CREATURE IS BORN IN A GOVERNMENT LABORATORY, NOT IN THE COMPETITIVE IN GERMOND OF A MARKET ECONOMY.... |
| 00:18:42 |
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THANK YOU VERY MUCH. I SEE THAT MR. JAWORSKI HAS ENTERED THE ROOM. DO YOU HAVE AN OPENING STATEMENT?... |
| 00:18:55 |
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I'LL SUBMIT IT FOR THE RECORD. |
| 00:18:57 |
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HE WILL SUBMIT HIS OPENING STATEMENT FOR THE ERROR. MR. GREEN, FOR TWO MINUTES? |
| 00:19:04 |
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THANK YOU, MADAM CHAIR. AND IN HIS ABSENCE I WOULD LIKE TO THANK THE CHAIR OF THE FULL COMMITTEE,... |
| 00:21:39 |
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MR. GARIN, TWO MINUTES, PLEASE. |
| 00:21:41 |
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I THANK THE CHAIR AND RANKING MEMBERS FOR HOLDING THIS IMPORTANT HEARING TODAY AND IN LIGHT OF THE... |
| 00:23:39 |
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MR. ELLISON? |
| 00:23:42 |
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LET ME JOIN MY VOICE TO THOSE WHO AGREE THIS IS NO TIME FOR FINGER POINTING. IT'S ACTUALLY THE TIME... |
| 00:26:26 |
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THANK YOU, MR. ELLISON. |
| 00:26:30 |
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THANK YOU, MR. CHAIRMAN. IN JUNE OF 2000 I GAVE A FANNIE MAE LOBBYIST THE HEAVE HO AND TOLD HIM TO... |
| 00:28:42 |
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MR. ROYCE, TWO MINUTES. |
| 00:28:44 |
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I THINK FOR MR. GARRETT AND MR. SHEAS AND MYSELF AND MANY OTHERS THIS IS A TIME FOR I TOLD YOU SO.... |
| 00:32:02 |
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I THANK YOU FOR THIS OPPORTUNITY. I APPRECIATE THE SEVERITY OF THE CRISIS THAT WE'RE LOOKING AT TODAY.... |
| 00:35:12 |
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THANK YOU VERY MUCH. ALL MEMBERS HAVING SOUGHT RECOGNITION HAVE BEEN RECOGNIZED. I NOW HAVE A UNANIMOUS... |
| 00:35:33 |
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THANK YOU, MR. CHAIRMAN. FOR THE PURPOSE OF INTRO DUCKTION I HOPE I HAVE SOME TOUGH QUESTIONS FOR... |
| 00:36:53 |
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THANK YOU MR. SHEA. MR. LOCKHART THAT WAS QUITE AN INTRODUCTION. IF YOU WILL, SIR. |
| 00:37:01 |
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THANK YOU, MR. CHAIRMAN. I APPRECIATE THAT AND CERTAINLY THANK YOU, CONGRESSMAN SHEAS AND MEMBERS... |
| 00:45:46 |
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THANK YOU. MR. LOCK HEART. HOW DID YOU ASSESSMENTS OF THE CAPITAL POSITION OF FANNIE AN FREDDIE CHANGE... |
| 00:46:01 |
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WE WERE ASSESSING FANNIE AND FREDDIE CONTINUOUSLY OVER THE LAST YEAR, AND IN JULY WE STARTED AN EXAMINATION... |
| 00:46:43 |
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WHAT WAS THE PRIMARY CAUSE FOR THEIR DETERIORATION IN CAPITAL? |
| 00:46:46 |
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IT WAS A SERIES OF ISSUES, BUT THE PRIMARY CAUSE WAS THE HOUSING MARKET. THE DETERIORATION IN THE ... |
| 00:47:02 |
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YOU ARE NOT SAYING IT WAS THE DEFLATION OF REAL ESTATE, BUT IT WAS THE BAD BUSINESS CHOICES MADE IN... |
| 00:47:10 |
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IT WAS A COMBINATION. CERTAINLY THE HOUSING MARKET HURT ALL LENDERS. IN REALITY THEY PROBABLY HAD... |
| 00:47:30 |
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IF THE REAL ESTATE MARKET HAD NOT DETERIORATED IN THE LAST TWO YEARS, AND IF THE BAD PRACTICES HADN'T... |
| 00:47:52 |
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WELL, CERTAINLY WITHOUT THE HOUSING MARKETS, AND TWO OR THREE YEARS AGO THEY WERE DOING REASONABLY... |
| 00:48:12 |
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SO WOULD YOU HAVE AN PIN DOWN-- IF I RECALL, MY MEMORY SAYS WE DID THE G.S.A. REFORM STARTING IN 2003,... |
| 00:48:44 |
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WELL, IF THE L.J. SLATION WAS SIMILAR TO THE ONE THAT WAS PASSED THIS YEAR -- LEGISLATION PASSED WAS... |
| 00:49:20 |
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SO POTENTIALLY, WHEN CONGRESS FAILED TO ADEQUATELY RESPOND TO EVERYBODY'S COMMENTS ABOUT NEEDING A... |
| 00:49:57 |
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THIS IS A TOUGHER MARKET THAN ANYBODY'S SEEN IN A LONG TIME, BUT CERTAINLY, IF WE HAD STRONGER CAPITAL... |
| 00:50:12 |
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I HAVE A LOT OF QUESTIONS, BUT ONE OTHER ONE. HOW WILL THE CONSERVATORSHIP AFFECT THE ATTORNEY GENERAL?... |
| 00:50:26 |
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WE HAVE BEEN WORKING WITH THE ATTORNEY GENERAL ON THE APPRAISAL STANDARDS AND ARE FINALIZING THEM.... |
| 00:51:10 |
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VERY GOOD. |
| 00:51:11 |
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THANK YOU. WHEN YOU LOOK AT FANNIE MAE AND FREDDIE MAC'S BUSINESS, THEY WERE IN THE PORTFOLIO BUSINESS.... |
| 00:51:39 |
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AT THE MOMENT, THEIR MAJOR LOSS IS CREDIT. THEY HAVE CREDIT RISKS IN BOTH. HISTORICALLY, THE PORTFOLIOS... |
| 00:52:41 |
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AND WHEN YOU LOOK AT THOSE PRIVATE LABELS, DO YOU HAVE THE INFRASTRUCTURE IN PLACE TO UNWRAP THOSE,... |
| 00:53:01 |
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YES. WE'VE BEEN WORKING WITH BOTH COMPANIES AND HAVE BEEN ASKING THEM TO DO A CASH FLOW ANALYSIS.... |
| 00:53:18 |
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AND SO DO YOU HAVE ANY INDICATION OF WHAT ACTUALLY ARE, WHAT THE CONTINGENT LIABILITY IS? IN OTHER... |
| 00:53:47 |
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WE HAVE, THE COMPANY DISPLAYS EVERY QUARTER A MARK OF THOSE PORTFOLIOS. AS I SAID IN THE END OF JUNE,... |
| 00:54:25 |
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ONE OF THE ISSUES OUTSIDE OF FREDDIE AND FANNIE IS THE TREASURY GETTING INTO A SIMILAR BUSINESS I... |
| 00:55:28 |
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FANNIE AND FREDDIE HAVE INTERNAL MODELS, BUT ALSO HAVE BEEN WORKING WITH EXTERNAL EXPERTS ON THE FIELD.... |
| 00:56:08 |
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I THINK ONE OF THE KEY THINGS IN DETERMINING FACTORS -- GETTING A FEEL OF UNDERLYING VALUE OF THE... |
| 00:56:57 |
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PEOPLE ARE WORKING ON THOSE KIND OF MODELS TO GET BETTER DETAIL AND IT NEEDS TO BE DONE TO BETTER... |
| 00:57:11 |
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YOU REALLY COULDN'T MAKE A FAIR ASSESSMENT WITHOUT THAT INFORMATION, COULD YOU? |
| 00:57:17 |
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IT'S CERTAINLY VERY HELPFUL TO HAVE UNDERLYING MORTGAGE INFORMATION OUT THERE. |
| 00:57:23 |
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I THINK MY TIME'S UP. |
| 00:57:28 |
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I SAW YOU REACH FOR THE GAVEL. |
| 00:57:38 |
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MR. SHERMAN. |
| 00:57:40 |
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MR. LOCKHART, ARE FANNIE AND FREDDIE CURRENTLY ABLE TO MAKE NO DOCK OR LOW DOCK LOANS? |
| 00:57:49 |
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FANNIE AND FREDDIE DO MAKE A FEW LOW DOCK AND NO DOCK LOANS, ALTHOUGH THAT HAS REALLY STOPPED DRAMATICALLY... |
| 00:58:12 |
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WHY WOULD YOU ALLOW THEM TO MAKE ANY SUCH LOANS? AT VERY BEST, THESE ARE LOANS TO CREDIT WORTHY BORROWERS... |
| 00:58:48 |
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BOTH COMPANIES ARE REVIEWING THEIR PRACTICES. |
| 00:58:52 |
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IN OTHER WORDS, YOU'RE NOT GOING TO ANSWER MY QUESTION EXPECT TO SAY THEY'RE WORKING ON IT AND YOU... |
| 00:59:02 |
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I WILL EXPRESS AN OPINION THAT HISTORICALLY LOW DOCK LOANS HAVE BEEN ONE OF THE BIG PROBLEMS IN THE... |
| 00:59:20 |
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I WOULD HOPE THAT YOU LOOK AT THIS, SINCE YOU DO WORK FOR THE FEDERAL GOVERNMENT, ALSO ON THE BACKSIDE... |
| 01:00:13 |
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WE'RE IN THE PROCESS OF NEGOTIATING CONTRACTS WITH THE TWO CEOs. IN MY VIEW, WE HAVE TWO VERY HIGH... |
| 01:00:29 |
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THEN YOU'VE ALREADY PAID THEM FOR THE LAST TWO AND A HALF WEEKS. ARE YOU PAYING THEM ABOVE OR BELOW... |
| 01:00:39 |
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THE QUESTION IS THAT HIGH QUALITY FINANCIAL EXECUTIVES IN MY MIND CERTAINLY SHOULD AND COULD EARN... |
| 01:00:53 |
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I'M NOT ASKING WHAT YOU THINK IS FAIR BECAUSE I COULD TAKE YOU TO MY DISTRICT AND HAVE YOU. YOU SEEM... |
| 01:01:31 |
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THAT IS THEIR SALARY. THEY PROBABLY WILL HAVE BONUSES RELATED TO THEIR PERFORMANCE. |
| 01:01:36 |
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I NOTICED THEY WERE ABLE TO GET SOMEBODY TO PRESIDE OVER THE FEDERAL GOVERNMENT FOR ONLY $400,000... |
| 01:01:54 |
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ARE YOU TAKING OR DEMANDING ANY LEGAL ACTION TO RECOVER THOSE DIVIDENDS FROM SHAREHOLDERS? |
| 01:02:00 |
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THE DIVIDENDS THAT WERE DECLARED WERE PAID. |
| 01:02:04 |
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HOW MUCH MONEY DID WE LOSE ON THAT? |
| 01:02:08 |
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I AM NOT QUITE SURE, BUT IT WAS $100 MILLION -- NO, SIGNIFICANTLY LESS THAN THAT. I AM SORRY. I WILL... |
| 01:02:30 |
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DID YOU TRY TO NOT PAY THAT DIVIDEND THAT WENT OUT AFTER THE CONSERVATORSHIP STARTED? |
| 01:02:35 |
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NO. WE ACTUALLY FOLLOWED THE LAW. |
| 01:02:41 |
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WITHOUT LITIGATION, WITHOUT -- |
| 01:02:42 |
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NO. WE DECIDED THE APPROPRIATE THING TO DO WAS TO FOLLOW THE LAW. |
| 01:02:47 |
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TO PAY THE DIVIDEND? |
| 01:02:48 |
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OK. THE HOUSING MARKETS. OKAY. THE HOUSING MARKETS IN RETROSPECT SEEM TO BE USING MODELS FOR MORTGAGES... |
| 01:03:56 |
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THERE'S -- THE CHAIRMAN HAS SAID BEFORE THAT THERE'S EXUBERANCE IN MARKETS AND THIS HAD A BUBBLE IN... |
| 01:04:22 |
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BUT THEY DIDN'T CHANGE THEIR BEHAVIOR. I HOPE YOU CAN GET SMARTER PEOPLE FOR $900,000. |
| 01:04:32 |
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TIME HAS EXPIRED. |
| 01:04:34 |
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MR. RICE. |
| 01:04:38 |
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THANK YOU, MR. CHAIRMAN. DIRECTOR LOCKHART, YOU SPOKE ABOUT THE CREDIT RISK AND INTEREST RATE RISK... |
| 01:05:45 |
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A STRONGER REGULATORY FORMAT AND REGIME WITH STRONGER CAPITAL RULES, STRONGER SAFETY AND SOUNDNESS... |
| 01:06:06 |
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AS REPORTED IN THE PRESS, EVEN AS THE BUBBLE WAS POPPING, THESE INSTITUTIONS DIVED INTO POOLS OF SUBPRIME... |
| 01:07:22 |
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WHAT WAS HAPPENING IN THE MORTGAGE MARKET IN LATE 2005, 2006, 2007, THERE WAS REALLY A FEEDING FRENZY... |
| 01:08:19 |
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DUE TO THE LACK OF ABILITY OF THE REGULATOR AT THIS POINT, DO THEY -- WE KNOW BANKS LEVERAGE 10 TO... |
| 01:08:34 |
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IF YOU LOOK AT THE LEVERAGE IN ONE WAY YOU CAN LOOK AT IT, THE MORTGAGE CREDIT EXPOSURE, THE $5.3... |
| 01:08:55 |
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GIVE AN APPROXIMATE PERCENTAGE. |
| 01:08:58 |
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1 TO 2%. |
| 01:09:01 |
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SO THEY HAD THE CREDIT RISK AND THE INTEREST RATE RISK INHERENT IN THESE PORTFOLIOS ON TOP OF, YOU... |
| 01:09:16 |
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I THINK THAT'S WHY WE KEPT ASKING AND, I THINK I TESTIFIED IN THIS COMMITTEE BEFORE I HAD MY FIRST... |
| 01:09:42 |
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WE HAVE BEEN PUSHING FOR A LONG TIME. THANK YOU VERY MUCH. |
| 01:09:47 |
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THANK YOU VERY MUCH. WE HAVE THREE VOTESPx |
| 01:10:31 |
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THANK YOU, MR. CHAIRMAN. I WANT TO THANK THE WITNESS AS WELL FOR HIS GOOD WORK AND HIS WILLINGNESS... |
| 01:12:37 |
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WELL, CERTAINLY WALL STREET SOLD A LOT OF WHAT IS CALLED PRIVATE LABEL SECURITIES, AND SOMETIMES THEY... |
| 01:14:04 |
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I APPRECIATE THAT. YOU HAVE DESCRIBED THE INTENTION OR THE HOPE OF THE ADMINISTRATION AND SECRETARY... |
| 01:15:43 |
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IT IS A COMPLEX PROCESS, AND CERTAINLY I THINK -- BUT IT NEEDS TO BE DONE. WE NEED TO RE-UP THE BALANCE... |
| 01:16:27 |
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I UNDERSTAND MY TIME HAS EXPIRED. IF I COULD ASK YOU, AND I THANK YOU FOR YOUR FORBEARANCE, COULD ... |
| 01:16:38 |
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OUR PEOPLE WOULD BE HAPPY TO. |
| 01:16:39 |
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THANK YOU VERY MUCH. |
| 01:16:41 |
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THANK YOU. |
| 01:16:44 |
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THANK YOU, MR. LYNCH. THE GENTLE LADY FROM MINNESOTA. |
| 01:16:49 |
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THANK YOU VERY MUCH, MR. CHAIR, AND ALSO TO OUR WITNESS, MR. LOCKHART. MR. LOCKHART, I AM@@@@@@@@@@@... |
| 01:18:29 |
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WE ARE WELL AWARE OF THE LANGUAGE AND CERTAINLY I'VE ANALYZED THE LANGUAGE AND WE WILL BE REVIEWING... |
| 01:19:08 |
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MR. CHAIR, IF I COULD JUST FOLLOW UP WITH MR. LOCKHART. MR. LOCKHART, DO YOU KNOW ABOUT WHAT DATE... |
| 01:19:15 |
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WELL, THEY SHOULD BE REPORTING THEIR QUARTER NUMBERS IN NOVEMBER, SO THERE WILL BE NO FUNDING BEFORE... |
| 01:19:25 |
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MR. CHAIR, MR. LOCKHART, I'M WONDERING, YOU STATED THEN THAT TREASURY WOULD BE PUTTING MONEY INTO... |
| 01:19:32 |
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THAT'S -- AS I UNDERSTAND THAT'S HOW THE LAW WORKS, IF THE HOPE FOR HOMEOWNERS, YES. |
| 01:19:38 |
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AND MR. CHAIR, I YIELD BACK. THANK YOU SO MUCH, AND THANK YOU, MR. LOCKHART. |
| 01:19:42 |
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THANK YOU VERY MUCH. |
| 01:19:44 |
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MR. CLEVELAND. |
| 01:19:46 |
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THANK YOU, MR. CHAIRMAN. MR. LOCKHART, I HAVE ABOUT FOUR QUESTIONS, AND THE FIRST IS RATHER SIMPLE.... |
| 01:20:08 |
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NO, NOT ACTIVELY. WE WERE CERTAINLY VERY INVOLVED WITH THEM WHEN WE WERE LOOKING AT CONSERVATORSHIP... |
| 01:20:23 |
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JUST WONDERING, I MEAN, IF IN FACT THE CRISIS WE ARE FACE INGING WAS LAUNCHED BY THE HOUSING CRISIS,... |
| 01:20:44 |
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WELL, I MEAN, WE HAVE TALKED TO PEOPLE IN TREASURY AND CERTAINLY PEOPLE IN THE FEDERAL RESERVE BANK... |
| 01:20:58 |
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ONE OF THE STICKING POINTS FOR MANY OF US IS THE BANKRUPTCY CHANGE THAT WE'RE ADVOCATING WHICH WOULD... |
| 01:21:41 |
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CERTAINLY I CAN'T ANSWER THAT FOR THE SECRETARY. |
| 01:21:42 |
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RIGHT. |
| 01:21:43 |
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BUT I CAN TELL YOU I THINK THE BETTER SOLUTION IS TO MODIFY PEOPLE BEFORE THEY GET INTO BANKRUPTCY... |
| 01:22:03 |
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I AGREE, AND WE WERE A PART OF THAT, THIS COMMITTEE WAS, BUT YOU CAN UNDERSTAND WHY MOST OF US HAVE... |
| 01:23:45 |
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FANNIE AND FREDDIE HAD ABOUT 35 BILLION IN PREFERRED STOCK OUTSTANDING, AND IT WAS WIDELY HELD BUT... |
| 01:24:22 |
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OF COURSE, MANY OF THOSE BANKS ARE THE SMALLER COMMUNITY BANKS, AND I HAD A CONFERENCE CALL WITH A... |
| 01:24:30 |
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RIGHT. |
| 01:24:34 |
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AND THIS IS ONE OF THE CONCERNS THEY ARE EXPRESSING. |
| 01:24:37 |
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I CAN TELL YOU, YOU KNOW, WE ALSO NOW, BECAUSE OF THE NEW LAW SUPERVISE THE FEDERAL HOME LOAN BANKS... |
| 01:25:04 |
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THAT'S ALL, MR. CHAIR. I WOULD LIKE TO EXPRESS APPRECIATION TO YOU, DIRECTOR LOCKHART, IN THE GENTEEL... |
| 01:25:16 |
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THANK YOU. |
| 01:25:18 |
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IT WAS VERY SKILLFUL. |
| 01:25:20 |
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THANK YOU. |
| 01:25:25 |
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THANK YOU, MR. CLEAVER. MR. ELLISON. |
| 01:25:29 |
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THANK YOU, MR. CHAIR. THANKS FOR COMING HERE TODAY. I HAVE A FEW QUESTIONS FOR YOU. FIRST OF ALL,... |
| 01:25:47 |
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WELL, I'M NOT AN EXPERT IN THE COMMUNITY REDEVELOPMENT ACT. |
| 01:25:51 |
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REINVESTMENT ACT. |
| 01:25:53 |
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REINVESTMENT ACT, I'M SORRY, BECAUSE FANNIE AND FREDDIE ARE |
| 01:25:56 |
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I UNDERSTAND. I'M GOING TO GET TO THAT. |
| 01:26:01 |
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SO I CAN'T REALLY SAY THAT IT'S RESPONSIBLE, BUT I -- IT WOULDN'T SEEM APPARENT TO ME THAT IT WOULD... |
| 01:26:09 |
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OKAY. SO JUST TO ASK A FEW BASICS. YOU DO KNOW THAT CRA APPLIES ONLY TO COMMERCIAL BANKS, RIGHT? |
| 01:26:14 |
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RIGHT. |
| 01:26:15 |
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AND YOU DO KNOW THAT MOST -- WELL, NOT MOST BUT THE OVERWHELMING NUMBER OF SUB PRIME LOANS THAT HAVE... |
| 01:26:28 |
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YEAH. I MEAN, CERTAINLY SOME CAME FROM COMMERCIAL BANKS BUT A LOT CAME FROM VARIOUS OTHER CHANNELS,... |
| 01:26:42 |
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RIGHT, RIGHT. SO TO SOMEHOW IMPLY THAT IT'S THE CRA, YOUR SENSE OF WHAT YOU DO KNOW, THOUGH YOU'RE... |
| 01:26:54 |
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WELL, AGAIN, THERE'S -- MY VIEW IS -- I'VE NEVER HEARD THAT TO BE A MAJOR ISSUE AT THIS POINT. THE... |
| 01:27:14 |
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BASED ON YOUR UNDERSTANDING THERE'S NOTHING IN THE CRA THAT SAYS YOU SHALL LOWER YOUR UNDERWRITING... |
| 01:27:21 |
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I ASSUME SO. |
| 01:27:22 |
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OKAY. LET'S TALK ABOUT FANNIE AND FREDDIE WHO HAVE THEIR OWN GOALS |
| 01:27:27 |
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THAT'S CORRECT. |
| 01:27:30 |
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AND CAN YOU TELL ME WHETHER FANNIE AND FREDDIE'S PURSUIT OF THEIR OWN AFFORDABLE HOUSING GOALS CONTRIBUTED... |
| 01:27:38 |
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THEY ARE NOT DEMISE. THEY ARE ONGOING COMPANIES. |
| 01:27:40 |
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THAT'S TRUE. |
| 01:27:43 |
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EXTREMELY ACTIVE IN THE MORTGAGE MARKET AND STILL A MAJOR MAYOR IN THE MORTGAGE MARKET. |
| 01:27:49 |
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THE FACT THAT THEY ARE IN CONSERVATORSHIP. |
| 01:27:51 |
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THEY ARE IN CONSERVATORSHIP AND ARE CONTINUING TO FULFILL THEIR MISSION IN CONSERVATORSHIP. THEY... |
| 01:28:35 |
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BUT IS THERE ANYTHING IN THE MANDATE OF FANNIE AND FREDDIE THAT SAYS REDUCE YOUR UNDERWRITING STANDARDS... |
| 01:28:45 |
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THE MANDATE OF FREDDIE AND FANNIE ARE TO KEEP STRONG UNDERWRITING STANDARDS, FOR INSTANCE, BY CHARTER... |
| 01:28:55 |
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SO FANNIE AND FREDDIE ARE ACTUALLY ENJOINED TO KEEP GOOD UNDERWRITING STANDARDS SO IF SOMEBODY MADE... |
| 01:29:14 |
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YOU KNOW, THEY MADE SOME TRADE-OFFS OVER THE YEAR AND IT TURNED OUT THOSE TRADE-OFFS WOULD UNSUCCESSFUL,... |
| 01:29:34 |
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RIGHT. OTHER THAN, FOR EXAMPLE, GETTING CREDIT FOR TRYING TO MOVE TOWARDS AFFORDABLE HOUSING GOALS,... |
| 01:29:59 |
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IT WAS HIGHER MARGIN BUSINESS THAN JUST PRIME BUSINESS. |
| 01:30:02 |
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YES. |
| 01:30:05 |
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IT WASN'T REALLY ALTRUISM. |
| 01:30:07 |
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THEY THOUGHT THEY WOULD MAKE MONEY. |
| 01:30:08 |
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ALTRUISM ABOUT AFFORDABLE HOUSING WASN'T THE MAJOR FACTO WOULDN'T YOU AGREE WITH THAT? |
| 01:30:14 |
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I CAN'T REALLY GET INTO THE MINDS OF THE UNDERWRITERS OF FANNIE AND FREDDIE. THEY WERE LOOKING AT... |
| 01:30:59 |
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I'M NOT SURE I FOLLOW THAT. |
| 01:31:00 |
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ME EITHER. THANK YOU VERY MUCH. |
| 01:31:02 |
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THANK YOU. |
| 01:31:04 |
|
THE GENTLEMAN FROM COLORADO? |
| 01:31:06 |
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THANK YOU, MR. CHAIRMAN. MR. LOCKHART THANK YOU FOR YOUR TESTIMONY TODAY, AND I DO APPRECIATE REALLY,... |
| 01:31:49 |
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FREDDIE MAC HAD CORE CAPITAL OF ABOUT -- I THINK IT WAS ABOUT $35 BILLION OR $37 BILLION. IT HAD... |
| 01:32:20 |
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SO ASSETS VERSUS LIABILITIES. WHAT WERE THE ASSETS, AND GENERALLY WHAT ARE THE ASSETS OF THESE TWO... |
| 01:32:26 |
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THE ASSETS OF THE TWO ORGANIZATIONS ARE REALLY THEIR MORTGAGE PORTFOLIOS. THEY HAVE AT THAT POINT... |
| 01:33:32 |
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THEY HAD FOR CAPITAL OF ABOUT $47 BILLION. SO THEY WERE BIGGER AND THE HAD SHAREHOLDER EQUITY OF ABOUT... |
| 01:33:44 |
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WHAT WAS THEIR PORTFOLIO? |
| 01:33:46 |
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THEIR PORTFOLIO SIMILAR, ABOUT $750 BILLION IN MORTGAGE- BACKED SECURITIES AND THEN MAYBE ANOTHER... |
| 01:34:03 |
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FAST FORWARD TO SEPTEMBER, WHENEVER YOU TOOK THE CONSERVATORSHIP. WHAT WERE THE ASSETS AND LIABILITIES... |
| 01:34:20 |
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WE DID NOT SEE A NEW BALANCE SHEET. THE ONLY PRODUCED PUBLIC INFORMATION ONCE EVERY QUARTER. WHAT... |
| 01:34:55 |
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OK. SO DURING THE MONTH OF AUGUST, IF I UNDERSTAND CORRECTLY, YOUR OFFICE AS WELL AS SOME OUTSIDE... |
| 01:35:12 |
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OUR JOB IS EXAMINERS AND WE ARE CONTINUALLY EXAMINING BOTH FIRMS. ACTUALLY IN JULY WE BROUGHT IN HELP... |
| 01:35:34 |
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IN AUGUST, WHERE THESE ORGANIZATIONS, WHEN YOU TOOK THE CONSERVATORSHIP, PAYING THEIR DEBTS AS THEY... |
| 01:35:44 |
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THEY WERE PAYING THEIR DEBTS AS THEY CAN DO WHEN THEY'RE CONTINUING TO DO SO. THE PROBLEM IS THE MARKETS... |
| 01:36:04 |
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AND THEN APPLY, WERE BOTH IN THE SAME BOAT? OR WAS FREDDIE MAC AND A WORSE POSITION THAN FANNIE MAE,... |
| 01:36:13 |
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THAT IS A GOOD QUESTION. CERTAINLY ON JUNE 30 OF THE CAPITAL POSITION OF FANNIE MAE WAS STRONGER THAN... |
| 01:36:45 |
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I THANK YOU, AND I LIKE TO VISIT WITH SOME OF YOUR STAFF TO GET INTO THIS A LITTLE MORE. THANK YOU... |
| 01:36:56 |
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THE GENTLEMAN FROM COLORADO HAS COMPLETED HIS EXAMINATION, THE GERMAN FROM CONNECTICUT, MR. MURPHY.... |
| 01:37:03 |
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I JUST HAVE A FEW QUICK QUESTIONS BUILDING ON THE QUESTIONS REGARDING DEPOSITORY INSTITUTIONS. I... |
| 01:38:35 |
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THE DIVIDENDS ARE NONCUMULATIVE, SO THE ONES THAT ARE MISSED ARE MISSED. GOING FORWARD, COMING OUT... |
| 01:39:27 |
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THOSE INCLUDE A POSTPONEMENT OF THEIR ABILITY TO MARKET TO MARKET OF THOSE ASSETS, AS WELL AS A DIFFERENTIAL... |
| 01:39:55 |
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WE HAVE CERTAINLY TALKED TO SOME OF THE COMMUNITY BANKS AND WE HAVE HAD SOME OF THE STATE BANKING... |
| 01:40:11 |
|
AND LASTLY, TO THE EXTENT THAT THE ACTIONS TAKEN TO THE CONSERVATORSHIP HAVE LED TO THIS PROBLEM FOR... |
| 01:40:37 |
|
THE GENTLE LADY FROM CALIFORNIA. |
| 01:40:40 |
|
THANK YOU MR. CHAIRMAN. MR. WALKER, -- MR. LA CARTE, THE TAXPAYERS OF INJECTED $250 BILLION IN FANNIE... |
| 01:40:52 |
|
NO, THEY HAVE NOT INVESTED ANYTHING YET. WHAT THEY'VE DONE IS PUT FACILITIES IN PLACE THAT THEY MIGHT... |
| 01:41:06 |
|
SO YOU CONTINUE TO BE A PRIVATE COMPANY. |
| 01:41:10 |
|
THEY ARE PRIVATE COMPANIES IN CONSERVATORSHIP, WHICH MEANS THAT THE AGENCY, AT AGE AT A -- THAT THE... |
| 01:41:32 |
|
ALL RIGHT. DO YOU THINK THAT THE NAKED SHORT SELLING CONTRIBUTED TO THE FINANCIAL RUIN OF FANNIE AND... |
| 01:41:40 |
|
THERE WAS CERTAINLY A LOT OF ACTIVITY IN FANNIE AND FREDDIE STOCKS OVER THE LAST TWO-THREE MONTHS.... |
| 01:41:52 |
|
IS THERE ANY REASON, DO YOU THINK, TO CALL IN THE APPROPRIATE FEDERAL INVESTIGATORS TO SEE IF THERE... |
| 01:42:01 |
|
I AM SURE THAT THE SEC IS LOOKING INTO THOSE ISSUES AND WE ARE PRETTY CLOSE TO THE SEC, IN FACT, THE... |
| 01:42:21 |
|
SO IT IS CERTAINLY THE INTENT OF THOSE IN CONGRESS, IF WE'RE GOING TO ASSIST FANNIE AND FREDDIE TO... |
| 01:42:47 |
|
FANNIE AND FREDDIE, THEIR BASIC BUSY -- THEIR BASIC BUSINESS IS TO PACKAGE OF MORTGAGES INTO SECURITIES... |
| 01:43:38 |
|
SO YOUR EYE IN A POSITION -- SO YOU ARE IN A POSITION TO DO WHAT SOME OF THE OTHER INSTITUTIONS HAVE... |
| 01:43:52 |
|
FANNIE AND FREDDIE HAVE A VERY ACTIVE LOAN MODIFICATION PROGRAM FOR FORECLOSURE PREVENTION. AND IT... |
| 01:44:15 |
|
DO I HAVE ANY MORE TIME, MR. CHAIRMAN? MY LAST QUESTION, I GUESS I AM VERY CONFUSED BY WHY YOU WOULD... |
| 01:44:41 |
|
WHAT THEY'RE DOING IS MAKING A FEW LOW DOCUMENTATION LOANS AT THIS POINT, AS I UNDERSTAND, AND THE... |
| 01:45:05 |
|
I HAVE IN COMMON AND A HIGH FICA SCORE, SO I WOULD ENCOURAGE YOU TO ABANDON THAT POLICY. |
| 01:45:19 |
|
THE DEVIL IN FROM CONNECTICUT, MR. SHAYS. |
| 01:45:28 |
|
THANK YOU FOR BEING-- THE GENTLEMAN FROM CONNECTICUT, MR. SHAYS. |
| 01:45:35 |
|
FANNIE AND FREDDIE WERE NEVER UNDER 40THE33 AND 44 ACT. THOSE WERE PART OF THE FRANKLIN DELANO ROOSEVELT... |
| 01:46:06 |
|
THEY HAVE JUST REGISTERED WITH THE FCC, FREDDIE JUST COMPLETED THAT AND THEY WENT THROUGH A VERY THOROUGH... |
| 01:46:17 |
|
WITH ALL DUE RESPECT, THAT IS UNDER THE 34 ACT. AND LET ME SAY TO EXPRESS MY BAEZ, THE REASON THEY... |
| 01:47:00 |
|
CONGRESS, WHEN IT PASSED THE NEW ACT TO -- WHEN IT PASSED THE NEW LAW, PUT THEM UNDER THE 34 ACT,... |
| 01:47:23 |
|
LET ME PUT IT DIFFERENTLY. SO YOU ARE NOT ADVOCATING. IS THERE ANY REASON WHY THEY SHOULD NOT BE UNDER... |
| 01:47:35 |
|
MY VIEW IS THAT THE 33 ACT WOULD NOT ADD THAT SIGNIFICANT DISCLOSURE BEYOND THE 34 ACT AND IT COULD... |
| 01:47:48 |
|
BECAUSE THEY WOULD HAVE TO PLAY BY THE SAME RULES THAT EVERYONE ELSE HAS TO PLAY BY? |
| 01:47:57 |
|
EFFECTIVELY, BECAUSE THEY ARE THE BIGGEST ISSUERS OF MORTGAGE BACKED SECURITIES IN THIS COUNTRY AND... |
| 01:48:19 |
|
I UNDERSTAND THAT. THE BOTTOM LINE TO THIS IS THE THAT HAD THEY BEEN UNDER THE 34 AT A LOT SOONER,... |
| 01:48:40 |
|
FREDDIE MAC JUST COMPLETED REGISTRATION IN JUNE UNDER THE 34 ACT. AND THAT IS HOW MANY YEARS? |
| 01:48:50 |
|
THAT IS THE FIRST TIME IN THEIR HISTORY THAT THEY HAVE REGISTERED WITH THE SEC, IF THAT IS THE QUESTION... |
| 01:48:59 |
|
NO, MY QUESTION IS, DID THEY NOT VOLUNTEERED TO BE UNDER THE 34 ACT AT LEAST THREE YEARS AGO? |
| 01:49:07 |
|
NO I THINK IT WAS LONGER THAN THAT. |
| 01:49:10 |
|
SODAS TAKEN THEM THAT LONG. |
| 01:49:12 |
|
IT TOOK THEM THREE YEARS TO ACTUALLY GET THERE. |
| 01:49:17 |
|
AND THE REASON THE ACCOUNTING MESS WAS THERE WAS THEY WERE UNDER THE 34 ACT, BECAUSE IF THEY HAD BEEN... |
| 01:49:37 |
|
CERTAINLY IF THEY HAD BEEN REGISTERED WITH THE SEC THERE MAY HAVE BEEN MORE DISCLOSURES THAN THEIR... |
| 01:49:44 |
|
AND IF THERE HAD BEEN DISCLOSURE, THAT WOULD NOT BEEN ABLE TO HAVE DONE SOME OF THE THINGS THAT THEY... |
| 01:49:54 |
|
WELL IT IS. YOU TO DISCLOSE, BUT NOT DISCLOSE THE TRUTH. |
| 01:49:59 |
|
THEY DID NOT HAVE TO LIVE. |
| 01:50:00 |
|
YES. |
| 01:50:02 |
|
WELL LET ME ASK YOU DIFFERENTLY, IF THEY DISCLOSED AND HAD TO DISCLOSE THE TRUTH WOULD NOT BEEN ABLE... |
| 01:50:09 |
|
THAT IS CORRECT. IT DID NOT HAVE A GOOD ACCOUNTING. AND THAT WAS ONE OF THE BIG PROBLEMS. |
| 01:50:19 |
|
SO IT IS NOT YOUR FAULT, IT IS THE FAULT OF CONGRESS FOR LETTING THEM GET AWAY WITH IT. AND THE ONLY... |
| 01:50:43 |
|
THE GENTLEMAN FROM NORTH CAROLINA. |
| 01:50:51 |
|
I WAS NOT HERE FOR THE ORIGINAL TESTIMONY AND I DO NOT HAVE QUESTIONS BUT I DID WANT TO PUBLICLY APOLOGIZE... |
| 01:51:18 |
|
I APPRECIATE THAT. |
| 01:51:28 |
|
TO TELL THEM FROM MASSACHUSETTS. -- TO THE GENTLEMAN FROM MASSACHUSETTS. |
| 01:51:38 |
|
AT THIS MOMENT, HOW MANY TAXPAYER DOLLARS ARE INVESTED IN FANNIE AND FREDDIE SAID THAT THE CONSERVATORSHIP?... |
| 01:51:44 |
|
NO TAX DOLLARS ARE INVESTED IN FANNIE AND FREDDIE. |
| 01:51:49 |
|
SO IT IS ZERO. I THINK THAT IS AN IMPORTANT POINT TO MAKE THIS WEEK. THE POSSIBILITY IS THERE, WE... |
| 01:52:05 |
|
THERE IS A SENIOR PREFERRED FACILITY FROM THE U.S. TREASURY THAT WILL PUT MONEY IN IF THEY HAVE NEGATIVE... |
| 01:52:22 |
|
THE OTHER QUESTION I HAD, AS I UNDERSTAND IT, OTHER THAN THE DEGREE OR MAYBE SOME OF THE AMOUNTS OF... |
| 01:52:44 |
|
THEY WERE NOT DOING THINGS THAT OTHER PEOPLE DID NOT DO. IN FACT THINK THEIR UNDERWRITING STANDARDS,... |
| 01:53:10 |
|
I AGREE WITH THAT, BUT I AM DISTRESSED TO HAVE YOU SAY IT. ONE OF THE THINGS I AM INTERESTED IN IS... |
| 01:54:04 |
|
WE'RE CERTAINLY AWARE OF IT, BUT WE WERE TRYING TO PROTECT THE MORTGAGE-BACKED SECURITY HOLDERS THAT... |
| 01:54:37 |
|
I UNDERSTAND THAT. IF EVERYTHING WORKS OUT A WAY THAT WE HOPE IT WILL, AND PEOPLE HOLD ON TO WHAT... |
| 01:54:54 |
|
I CANNOT SAY THAT. |
| 01:54:55 |
|
I UNDERSTAND THAT. BUT I THOUGHT I WOULD TRY. |
| 01:55:00 |
|
THE COMMON SHAREHOLDERS HAVE ALREADY LOST A SIGNIFICANT AMOUNT OF MONEY AND CERTAINLY THE PREFERRED.... |
| 01:55:15 |
|
THINK VERY MUCH. INTEREST IN THIS ECONOMY AND GOING FORWARD THERE MIGHT BE SOME VALUE. |
| 01:55:24 |
|
THANK YOU VERY MUCH. |
| 01:55:25 |
|
ARE YOU GOING TO ALLOW MR. LOCKHART TO ESCAPE? HE'S BEEN ON THAT SEAT FOR A NUMBER OF HOURS. |
| 01:55:38 |
|
THANK YOU, AND I'LL BE BRIEF, AND I APOLOGIZE FOR JUST RUNNING IN. |
| 01:55:45 |
|
FOLLOWING UP MY INTRODUCTORY COMMENTS TO YOU AND COMMENDING YOU FOR SOME OF THE ACTIONS THAT YOU HAVE... |
| 01:56:36 |
|
WHAT WE SAID AND WHAT THEY ARE DOING IS THEY ARE REVIEWING THEIR CHARITABLE CONTRIBUTIONS AND THEY... |
| 01:57:10 |
|
JUST A COUPLE OTHER QUESTIONS ALONG THAT LINE AND MAYBE A COMMENT. YOU HAVE HEARD BOTH SIDES SAY AS... |
| 01:58:47 |
|
WE MADE A COMMITMENT TO THE CHAIRMAN ACTUALLY A MONTH OR SO AGO TO PUT OUT A RECORD OF THE HISTORY... |
| 01:59:06 |
|
OKAY. IF IT'S POSSIBLE, AND I ASSUME IT WOULD BE, I DON'T KNOW HOW HARD, BUT IF IT IS POSSIBLE TO... |
| 01:59:49 |
|
SURE. |
| 01:59:51 |
|
WE'LL BE LOOKING AT WHETHER THAT SHOULD BE PAID, WHETHER THEY SHOULD PAY THE -- THE 4.2% POINTS FOR... |
| 02:00:25 |
|
THAT WAS ALWAYS THE ARGUMENT, WHY IT WAS THERE. AND THE BENEFIT THAT THEY GOT AND SO THEY HAVE AN... |
| 02:00:39 |
|
RIGHT. |
| 02:00:41 |
|
THANK YOU VERY MUCH. APPRECIATE YOUR CANDOR ON THOSE QUESTIONS. AND I LOOK FORWARD TO HEARING BACK... |
| 02:00:49 |
|
THANK YOU. |
| 02:00:51 |
|
THANK YOU, MR. KERRY. THANK YOU. IF YOU'RE FAST, YOU CAN GET OUT OF THAT TABLE BEFORE ANOTHER MEMBER... |
| 02:00:58 |
|
THANK YOU. MR. CHAIRMAN, I APPRECIATE IT. |
| 02:01:07 |
|
AT THIS POINT, WE'RE GOING TO ASK OUR TWO MEMBERS OF THE NEXT PANEL TO COME FORWARD. MR. ALLISON AND... |
| 02:01:55 |
|
GENTLEMEN, WELCOME TO THE HEARING. WE'LL TRY MR. ALLISON FIRST FOR HIS OPENING STATEMENT. |
| 02:02:00 |
|
THANK YOU, MR. CHAIRMAN. MEMBERS OF THE COMMITTEE, THANKS FOR INVITING ME TO TESTIFy@ ak@RRRD & " |
| 02:02:36 |
|
OUR JOB IS TO BALANCE THE NEEDS FOR SAFETY, SOUNDNESS, TAXPAYER PROTECTION, WITH PROVIDING THE MOST... |
| 02:06:22 |
|
THANK YOU, MR. ALLISON. AND NOW THE CEO OF FREDDIE MAC, MR. MOFFETT. |
| 02:06:28 |
|
THANK YOU, CHAIRMAN. I'M DAVID MOFFETT. I AM THE NEW CEO OF FREDDIE MAC. I AM PLEASED TO APPEAR BEFORE... |
| 02:09:54 |
|
THANK YOU VERY MUCH, MR. MOFFETT. I'M JUST GOING TO TAKE A FEW MOMENTS SO WE CAN MOVE INTO THE QUESTIONS... |
| 02:10:10 |
|
WE'RE NOT SURE EITHER. |
| 02:10:12 |
|
I'M SURE THIS COMMIT SXAE THE AMERICAN PEOPLE WILL TAKE SOME OUT OF YOUR HIDES BEFORE IT'S OVER. ... |
| 02:10:39 |
|
ACTUALLY, I BELIEVE FIRST OF ALL WE CAN TAKE HEART FROM THE FACT THAT FANNIE MAE HAS A VERY STRONG... |
| 02:11:26 |
|
MR. MOFFETT? |
| 02:11:28 |
|
YES. FREDDIE MAC JUST AS MR. ALLISON STATED, HAS SOME WONDERFUL EMPLOYEES AND THEY'RE VERY DEDICATED... |
| 02:12:39 |
|
I GUESS ONE OTHER QUESTION. IF WE HAD IN SOME WAY TOTALLY PRIVATIZED FANNIE AND FREDDIE, WOULD THEY... |
| 02:13:23 |
|
I THINK WHAT WE'RE CONFRONTING RIGHT NOW IS THE NEED TO PUT THESE INSTITUTIONS ON A SOUND FOOTING... |
| 02:14:23 |
|
YOU REALLY DO BELIEVE IT WAS A PERFECT STORM? |
| 02:14:27 |
|
I THINK IT'S A STORM WE CERTAINLY HAVEN'T SEEN IN MY LIFETIME. AND I THINK TODAY IT'S STILL AN EXTREME... |
| 02:14:36 |
|
VERY GOOD. MR. MOFFETT? |
| 02:14:40 |
|
I THINK THE ROLE THE CONSERVATORSHIP IS REALLY THE TIME AND THE PLACE TO REBUILD FREDDIE MAC AND I... |
| 02:15:46 |
|
VERY GOOD. THANK YOU VERY MUCH. I THINK I'VE EXHAUSTED MY TIME. THE GENTLEMAN FROM CONNECTICUT, MR.... |
| 02:15:52 |
|
THANK YOU. THANK YOU BOTH VERY, VERY MUCH, MR. ALLISON AND MR. MOFFETT. I'M UNCLEAR ON A FEW THINGS... |
| 02:16:11 |
|
WE DON'T AS YET, NO. |
| 02:16:12 |
|
OKAY. SO WHO DO YOU ANSWER TO? DO YOU ANSWER TO THE REGULATOR? |
| 02:16:17 |
|
WELL, CURRENTLY THE REGULATOR IS SERVING AS OUR BOARD OF DIRECTORS. WE DO HAVE A NON-EXECUTIVE CHAIRMAN... |
| 02:16:26 |
|
IS THAT THE SAME FOR YOU, MR. MOFFETT? |
| 02:16:27 |
|
EXACTLY. |
| 02:16:29 |
|
OKAY. NO STOCK HOLDERS? |
| 02:16:33 |
|
WE HAVE STOCK HOLDERS. WE STILL HAVE PUBLIC STOCK HOLDERS. |
| 02:16:37 |
|
SO THE PUBLIC STOCK HOLDERS BASICALLY HAVE NO VALUE RIGHT NOW? |
| 02:16:42 |
|
THE STOCK TODAY OF BOTH COMPANIES IS SELLING A LITTLE OVER $2 A SHARE. |
| 02:16:45 |
|
OKAY. EXPLAIN TO ME THE DIFFERENCE BETWEEN CONSERVATORSHIP OR -- YOU'RE A CONSERVATORSHIP. IS THAT... |
| 02:16:54 |
|
THAT'S CORRECT. |
| 02:16:55 |
|
OKAY. EXPLAIN WHAT THAT MEANS. |
| 02:16:58 |
|
THE COMPANY REMAINS IN ITS CURRENT FORM, BUT ITS BOARD HAS BEEN REPLACED BY OUR -- OUR REGULATOR,... |
| 02:17:26 |
|
IN THE CONSERVATORSHIP, THE CONSERVATIVES ARE IS CONCERNING |
| 02:17:28 |
|
THANK YOU. I THANK YOU FOR NOT SAYING THIS TWICE. NEITHER THE A CALL UPON THE MONEY AVAILABLE TO YOU.... |
| 02:17:55 |
|
LET ME ASK YOU THIS WAY. IF YOU COULD GO TO THE PRIVATE MARKETPLACE WOULD THAT BE PREFERABLE THAN... |
| 02:18:04 |
|
WELL, RIGHT NOW WE HAVE A FACILITY FROM THE TREASURY WHERE THE TREASURY STANDS BEHIND US |
| 02:18:12 |
|
RIGHT. |
| 02:18:13 |
|
IN RETURN FOR THE PREFERRED STOCK ARRANGEMENT. |
| 02:18:16 |
|
AND DOES THAT ENABLE YOU TO GO TO THE PRIVATE MARKETPLACE WITH CREDIBILITY OR WHEN YOU NEED FUNDS,... |
| 02:18:30 |
|
WELL, FIRST OF ALL, WE CAN GO |
| 02:18:32 |
|
RIGHT. |
| 02:18:34 |
|
AND WE ARE EVERY DAY. WE'RE EXTREMELY ACTIVE. IN FACT, FANNIE MAE -- |
| 02:18:45 |
|
AND THAT'S TRUE FOR YOU, MR. MOFFETT? |
| 02:18:46 |
|
YES. |
| 02:18:47 |
|
I'M SORRY TO KEEP INTERRUPTING. I'M LEARNING A LOT. IS THERE A POINT IN TIME WHEN YOU DON'T THINK... |
| 02:19:03 |
|
WE'RE ACTIVE IN THE DEBT MARKETS TODAY. IN FACT, FANNIE MAE ISSUED A TWO-YEAR NOTE ABOUT TWO WEEKS... |
| 02:19:17 |
|
SO THE FACT THAT THE FEDERAL GOVERNMENT IS THERE IS MAKING THE DEBT MARKET MORE COMFORTABLE? |
| 02:19:20 |
|
YES, SIR. |
| 02:19:22 |
|
SO IS IT CONCEIVABLE YOU MIGHT BE ABLE TO AVOID HAVING TO TERN TO THE FEDERAL GOVERNMENT FOR ANY OF... |
| 02:19:32 |
|
WELL, SPEAKING FOR FANNIE MAE, WE ARE NOW IN THE MIDST OF AN INTENSIVE EXAMINATION OF ALL OF OUR ASSETS.... |
| 02:19:39 |
|
GIVE ME THE SHORT VERSION TO THE QUESTION. |
| 02:19:41 |
|
WE ARE NOT SURE AT THIS |
| 02:19:42 |
|
OKAY. |
| 02:19:44 |
|
IT'S GOING TO TAKE A MONTH OF MONTHS TO REALLY UNDERSTAND THE RISK COMPOSITION OF THE ASSETS AND TO... |
| 02:19:50 |
|
RIGHT. SAME WITH YOU, MR. MOFFETT? |
| 02:19:52 |
|
YES. I THINK THIS NEXT SIX MONTHS IS GOING TO BE VERY TELLING BECAUSE WE'RE BOTH SPENDING A LOT OF... |
| 02:20:02 |
|
AND THE QUESTION WILL BE ALSO THE CONDITION OF THE MARKET AS WELL. |
| 02:20:06 |
|
I -- WELL, FIRST OF ALL, I THINK THE NEXT SIX MONTHS WILL DETERMINE WHETHER WE'RE GOING TO NEED TO... |
| 02:20:13 |
|
IT'S CONCEIVABLE THAT THE PLAN THAT WE ARE TRYING TO WORK OUT WITH THE TREASURY DEPARTMENT AND --... |
| 02:20:28 |
|
IT'S CONCEIVABLE. |
| 02:20:30 |
|
OR CERTAINLY LESS RELIANT ON IT? |
| 02:20:34 |
|
IT'S CONCEIVABLE THAT THE FACILITY YOU'RE DESCRIBING COULD HELP AND IT COULD HELP IN SEVERAL WAYS.... |
| 02:20:51 |
|
SO IN SOME WAYS WE MAY BE DOUBLE COUNTING WHEN WE SAY WE'RE GOING TO HAVE TO SPEND 200 $200 MILLION... |
| 02:21:05 |
|
IT'S JUST HARD TO DETERMINE. |
| 02:21:06 |
|
FAIR ENOUGH. FAIR ENOUGH. THANK YOU BOTH VERY MUCH. THANK YOU, MR. CHAIRMAN. |
| 02:21:15 |
|
THANK YOU, MR. CHASE. THE GENTLEMAN FROM NORTH CAROLINA, MR. WATT. |
| 02:21:21 |
|
THANK YOU, MR. CHAIRMAN. MR. ALLISON, MR. MOFFETT, GOOD TO SEE YOU. MR. ALLISON, YOU'VE DONE A GREAT... |
| 02:21:35 |
|
THANK YOU, CONGRESSMAN. |
| 02:21:37 |
|
WE ALWAYS APPRECIATE THE FINE CITIZENSHIP OF THAT CORPORATION THERE. |
| 02:21:39 |
|
THANK YOU. |
| 02:21:41 |
|
I PRESUME YOU'RE NOT RELATED TO THE ALLISON WHO'S NOW THE HEAD OF BB & T. |
| 02:21:47 |
|
SIR, ACTUALLY THAT MR. ALLISON AND I HAD DINNER TOGETHER A FEW NIGHTS AGO. OVER THE YEARS WE HAVE... |
| 02:21:55 |
|
DISTANTLY? IS. |
| 02:21:56 |
|
MY OWN FAMILY COMES FROM |
| 02:21:57 |
|
ALL RIGHT. WE WON'T PURSUE THAT IN PUBLIC. I MIGHT EMBARRASS SOMEBODY. PERHAPS I SHOULD HAVE ASKED... |
| 02:25:19 |
|
FIRST OF ALL, THE COMPANY TODAY IS SEEKING TO FULFILL ITS MISSION. IT IS SEEKING TO PROVIDE STABILITY... |
| 02:26:25 |
|
NO, I DON'T THINK THOSE THINGS ARE MUTUALLY EXCLUSIVE. I'M JUST -- WELL, GO AHEAD. |
| 02:26:32 |
|
WELL, WHAT I'M TRYING TO GET TO IS THAT I THINK THE CONSERVATORSHIP PROVIDES THE TIME IN ORDER TO... |
| 02:27:10 |
|
LET ME JUST ADD, IF I MAY, THAT WE'RE TOTALLY COMMITTED TO STRIVING TO MEET OUR HOUSING GOALS. AND... |
| 02:28:22 |
|
THANK YOU. |
| 02:28:25 |
|
WE HAVE ABOUT SIX MINUTES LEFT UNTIL OUR VOTE. THERE ARE THREE VOTES. IT WILL TAKE ABOUT 25 MINUTES... |
| 02:29:19 |
|
IN THE INTERESTS OF, WOULD LIKE TO RECONVENE THE HEARING. WE APPRECIATE THE FORBEARANCE OF THE WITNESSES... |
| 02:29:35 |
|
I'M GOING TO ASK A COUPLE OF SHORT QUESTIONS. BOTH OF YOUR STOCKS ARE TRADING, ARE THEY TRADING AS... |
| 02:29:49 |
|
ROUGHLY TWO DOLLARS NOW. |
| 02:29:51 |
|
AND WHAT WAS THE HEIGHT? |
| 02:29:54 |
|
I AM NOT SURE I KNOW. |
| 02:29:56 |
|
IF YOU NEED PRIOR TO THE CONSERVATORSHIP? I MEAN I THINK OURS WAS $60 OR SO. |
| 02:30:04 |
|
I THINK CARS WAS $70 OR SO. |
| 02:30:06 |
|
LAST SUMMER? |
| 02:30:07 |
|
YES. |
| 02:30:10 |
|
AND A LOT OF MEMBERS OF BEEN CONTACTED BY COMMUNITY BANKS AND E-MAIL ADDRESS THIS IN YOUR STATEMENTS,... |
| 02:30:47 |
|
I THINK AND TELL THEM THAT AS THE DIRECTOR SAID THIS MORNING THE REGULATORS ARE WORKING WITH THESE... |
| 02:31:13 |
|
MY UNDERSTANDING IS THAT THE CONSERVATOR MADE THE DECISION TO SUSPEND THE DIVIDENDS AND I THINK THE... |
| 02:31:39 |
|
TO BE SUSPENDED DIVIDENDS NOW IN YOUR CURRENT CONDITION? |
| 02:31:46 |
|
- COULD YOU SUSPENDED THE DIVIDEND NOW? |
| 02:31:53 |
|
I AM SPEAKING FOR FANNIE MAE. WE'RE LOOKING AT OUR ENTIRE FINANCIAL SITUATION. WE'RE ABOUT TO EMBARK... |
| 02:32:21 |
|
I WOULD AGREE. WE'RE IN THE MIDST OF DOING A PLAN FOR 2009 AND A LOT OF THE ISSUES WILL BE FOCUSED... |
| 02:32:41 |
|
ONE FINAL QUESTION. I THINK IT KIND OF BOGGLES THE MIND OF THE MAN ON THE STREET. THESE FINANCIAL... |
| 02:34:24 |
|
OKAY. THANK YOU BOTH. |
| 02:34:32 |
|
FOLLOWING UP ON MISS CAPUTO'S QUESTION WITH RESPECT TO THE COMMUNITY BANKS, THERE NEEDS TO BE SOME... |
| 02:36:43 |
|
CONGRESSMAN, AGAIN, I THINK BOTH OF THESE INSTITUTIONS ARE TAKING A FRESH LOOK AT THAT BALANCE SHEET,... |
| 02:36:59 |
|
IT COULD BE BAD, RIGHT? |
| 02:37:01 |
|
I WOULDN'T DRAW ANY CONCLUSIONS AT THIS POINT. WE WILL BE DISCLOSING THIS FALL WHAT WE THINK THE POSITION... |
| 02:37:35 |
|
OKAY. I UNDERSTAND THAT'S THE PROCESS, AND YOU'VE EXPLAINED THAT QUITE WELL ON SEVERAL OCCASIONS.... |
| 02:37:50 |
|
WE'RE GOING THROUGH EXACTLY THE SAME PROCESS, BUT ONE THING I THINK IT'S IMPORTANT TO THINK ABOUT... |
| 02:38:06 |
|
FAIR ENOUGH. |
| 02:38:08 |
|
AND I THINK THAT'S ONE OF THE THINGS THAT WE'RE ALSO TRYING TO DO, IS NOT JUMP TO ANY CONCLUSIONS... |
| 02:38:20 |
|
AND I DO UNDERSTAND THAT YOU WERE MORE LIKELY TO HAVE AAA OR TOP TRENCH SECURITIES AS OPPOSED TO WHAT... |
| 02:39:26 |
|
I DON'T THINK I COULD GIVE YOU AN ESTIMATE. I THINK ONE OF THE WAYS THAT THE GOVERNMENT MAY TRY TO... |
| 02:39:54 |
|
OKAY. |
| 02:39:56 |
|
BUT HONESTLY, I CAN'T TELL YOU HOW THEY WOULD VALUE THOSE SECURITIES. |
| 02:40:02 |
|
ALL RIGHT. MR. MOFFETT, COULD YOU ENLIGHTEN US ON THAT AT ALL? |
| 02:40:07 |
|
NO, I THINK THAT'S EXACTLY RIGHT. I THINK WHAT THE TREASURY'S TRYING TO DO IS CREATE A MARKET SO THEY... |
| 02:40:21 |
|
ALL RIGHT. THE CHAIR RECOGNIZES MR. GARRICK FROM NEW JERSEY. |
| 02:40:29 |
|
THANKS, GENTLEMEN. REALIZING YOU'RE JUST NEW ON THE JOB, SO TO SPEAK, I APPRECIATE THAT AS FAR AS... |
| 02:41:09 |
|
THAT'S EXACTLY -- WE'VE BEEN INSTRUCTED BY DIRECTOR LOCKHART TO GO THROUGH IN DETAIL AND GIVE HIM... |
| 02:41:20 |
|
OKAY. SO THEN YOU HAVE TO GIVE HIM -- I SHOULD ASK THE QUESTION, THEN. WHAT'S THE TIME FRAME THAT... |
| 02:41:29 |
|
WELL, WE HAVEN'T SET A TIME FRAME, BUT IT'S A HIGH PRIORITY OF HIS. AND WE'RE WORKING TO MEET THAT.... |
| 02:41:35 |
|
ALL RIGHT. AND YOU HEARD ME SAYING -- |
| 02:41:37 |
|
AND YOU HEARD MY OTHER QUESTION TO HIM ALSO WAS IS IT POSSIBLE TO DO A RETROSPECTIVE LOOK, TO GO AND... |
| 02:41:55 |
|
I DON'T KNOW YET. BUT WE'RE GOING TO TRY TO DO THAT. |
| 02:41:59 |
|
YOU'RE GOING TO TRY TO DO |
| 02:42:00 |
|
YES. WE'LL BE GLAD TO RESPOND TO ANY INQUIRY FROM A MEMBER OF CONGRESS ABOUT THAT. I DON'T KNOW WHAT... |
| 02:42:12 |
|
IF YOU COULD BOTH CONSIDER THIS A REQUEST AS OPPOSED TO HAVING TO PUT IT IN WRITING, I'D APPRECIATE... |
| 02:42:17 |
|
WE WILL. |
| 02:42:18 |
|
BECAUSE YOU SEE MY CONCERN. THE ARGUMENT IN THE PAPER SAID THERE IS JUST A HAPPEN SANS CORRELATION... |
| 02:43:08 |
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WELL, MY VIEW IS THE MOST IMPORTANT ISSUE AT THIS TIME IS TO FIGURE OUT THE VALUES OF THE SECURITIES... |
| 02:43:29 |
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WELL, WHEN YOU COME OUT WITH YOUR PLAN, I GUESS, GOING FORWARD, WILL YOU COME OUT -- AND MR. ALLISON... |
| 02:43:53 |
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I THINK THE INTERIM STEP IS IT'S REALLY GOING TO BE DIRECTOR LOCKHART'S CALL BECAUSE HE'S THE ONE... |
| 02:44:00 |
|
YOU'LL GIVE HIM PROJECTIONS |
| 02:44:02 |
|
BOTH WAYS. |
| 02:44:03 |
|
HE'S BEEN DOING ALL THE TALKING. I DON'T WANT HIM TO -- |
| 02:44:06 |
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MY UNDERSTANDING IS THE RULES HAVE NOT YET BEEN PROMULGATED. AS SOON AS WE HAVE THEM WE'RE GOING TO... |
| 02:44:15 |
|
AND ANOTHER QUESTION FROM THE OTHER SIDE OF THE AISLE, I DIDN'T KNOW IT WAS STILL GOING ON, WITH REGARD... |
| 02:44:28 |
|
LET ME TRY TO BE CLEAR ON THAT FROM FANNIE MAE'S STANDPOINT. |
| 02:44:31 |
|
SURE. |
| 02:44:33 |
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WE'RE NOT ACTIVELY ENGAGED IN ANY SIGNIFICANT NO-DOC OR LOW-DOC LENDING TODAY. I THINK WE HAVE TO... |
| 02:45:04 |
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I APPRECIATE THAT CLARIFICATION. LAST QUESTION. I'M IN THE YELLOW HERE. THIS WAS BROUGHT UP BECAUSE... |
| 02:45:54 |
|
ON MY STANDPOINT AS I SAID IN MY PREPARED RE MARKS WE HAVE TO BALANCE THE NEED FOR SAFETY, SOUNDNESS,... |
| 02:46:19 |
|
HE WAS ALSO COMPARING WITH REGARD TO AT THAT POINT THE EQUITY HOLDERS IN THE COMPANY AS WELL. |
| 02:46:27 |
|
WELL, TODAY THE TAXPAYERS ARE IN EFFECT INDIRECTLY EQUITY HOLDERS. AND WE HAVE TO KEEP THEIR INTERESTS... |
| 02:46:56 |
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I THINK ULTIMATELY THE TRADE-OFFS WILL HAVE TO BE MADE BY CONGRESS. WE WILL HAVE TO DEAL WITH THAT... |
| 02:47:18 |
|
IT IS THE PROVERBIAL ABOVE THE PAY GRADE. THANK YOU. |
| 02:47:24 |
|
THE CHAIR RECOGNIZES THE DISTINGUISHED GENTLEMAN FROM COLORADO FOR FIVE MINUTES. |
| 02:47:30 |
|
THANK YOU, MR. CHAIRMAN. ORDINARILY I AM THE GUY THAT SEES THE GLASS AS HALF EMPTY AND YOU ALL SEE... |
| 02:48:21 |
|
WELL, IF YOU LOOK AT TOTAL CASH FLOWS FROM FINANCINGS AND THE CASH FLOW IS OUT THROUGH LOANS, ET CETERA,... |
| 02:48:33 |
|
OKAY. |
| 02:48:35 |
|
AND WE'VE BEEN WAITING, AS I MENTIONED IN MY EARLIER REMARKS, TO RAISE OUR ALL-TIME RECORD, TWO-YEAR... |
| 02:48:56 |
|
SO YOU'RE MAKING A MILLION? 2 MILLION? 3 MILLION A -- |
| 02:48:59 |
|
THE DIFFERENCE BETWEEN CASH FLOW AND EARNINGS. AND AGAIN, THAT'S SOMETHING THAT WE'RE LOOKING AT TODAY.... |
| 02:49:06 |
|
WHAT ABOUT FREDDIE MAC? |
| 02:49:08 |
|
EXACTLY. FREDDIE MAC IS ALSO POSITIVE CASH FLOW. IT'S TOO EARLY TO DETERMINE WHAT THE EARNINGS ARE... |
| 02:49:21 |
|
WHICH THEN BRINGS ME TO THE QUESTION YOU BOTH TALKED ABOUT, WHICH IS CAPITAL. HOW MUCH CAPITAL DOES... |
| 02:49:46 |
|
LET ME -- ALLOW ME, THEN. ONE OF THE REASONS WHY WE'RE CONDUCTING THIS EXERCISE TO VALUE THE PORTFOLIO... |
| 02:50:36 |
|
OKAY. BUT MY QUESTION TO YOU TWO IS MR. LOCKHART SAID THAT BACK IN JULY THERE WAS 1% OR 2% CAPITAL.... |
| 02:50:55 |
|
WELL, AT THIS JUNCTURE I'M JUST GOING TO NOT REPEAT WHAT MR. ALLISON SAID, BUT I THINK WE HAVE TO... |
| 02:52:02 |
|
ALL RIGHT. AS -- WE'VE GOT THIS $700 BILLION THING WE'VE JUST BEEN KICKING AROUND FOR A COUPLE DAYS... |
| 02:52:52 |
|
WELL, WE FIRST OF ALL HAVE TO DETERMINE WHAT WE BELIEVE THE VALUE -- THE ECONOMIC VALUE TO LET'S SAY... |
| 02:53:40 |
|
DITTO? |
| 02:53:43 |
|
YEAH, I THINK JUST TO ADD TO THAT I THINK ONE OF THE ASSESS ASSESSMENTS WILL NEED TO BE SHOULD WE... |
| 02:54:12 |
|
SORT OF ON THE POSITIVE SIDE NOW, I KNOW MY TIME'S UP, IN THIS CONSERVATORSHIP YOU |
| 02:54:18 |
|
THAT'S RIGHT. |
| 02:54:19 |
|
THANK YOU. I YIELD BACK. |
| 02:54:20 |
|
OKAY. I THANK THE GENTLEMEN. I WANT TO THANK YOU BOTH FOR ATTENDING THE HEARING AND FOR HELPING THE... |
| 02:56:26 |
|
WE WILL DO THAT AND WE LOOK |
| 02:56:27 |
|
GREAT. |
| 02:56:29 |
|
WE'LL ABSOLUTELY DO THAT, AND FURTHERMORE, WE'RE LOOKING AT HOW WE CAN COMMUNICATE THESE ISSUES IN... |
| 02:57:00 |
|
THANK YOU. WE APPRECIATE THAT. I KNOW WE HAVE A LOT GOING ON TODAY, THERE ARE MEMBERS IN VARIOUS COMMITTEES... |
NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.
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