Military means must not be an option in this regard. The deployment of you can watch the last few minutes of the u. N. Security Council Meetings on our website at cspan. Org. Right now we go to the American Enterprise institute with remarks from jay powell, remarks from Federal Reserve board of governors speaking about Housing Finance. Some of what jay does as governor is visible to the public serving on open Market Committee and giving talks on the economy and Financial Stability. As i know from my own days from the fed, a lot of what jay and other fed governors do is behind the scenes and not very visible to the public including all the administrative work of running the Federal Reserve board and overseeing the Federal Reserve system which is a big job even when the board is fully staffed. Of course there are currently three vacant seats on the board. Jay tells me is chairing four of the seven internal board committees. He is looking for relief act in the form of new governors to fill vacancies. Before joining the fed jay had distinguished career in Investment Banking and private equity world including as partner at the Carlyle Group from 1997 to 2005. Jays interest in Housing Finance goes back a long way, at least as far back as his service in the Treasury Department in the early 1990s. In preparing for this event i came across a transscript of his confirmation hearing in 1990 to become assistant treasury secretary for domestic finance. I thought it was significant in his Opening Statement he cited treasurys proposals for insuring the safety and soundness of fannie and freddy, noting at that in exchange for federal backing which at that point was only implicit, the gses, and i quote, should be required to be strongly capitalized and submit to appropriate federal supervision. That was good advice which unfortunately wasnt followed and now more than a quarter century later were still dealing with the fallout without insuring the safety and soundness of the gses. Without further adieu, join me welcoming governor jay powell. [applause] good morning. Thanks very much, steve. Thanks to aei for the nice invitation. Thanks to all of you coming out on this rainy morning. So my topic today is the urgent need for fundamental reform of our system of Housing Finance which is the great Unfinished Business of postfinancial crisis reform in my view. I should start saying the Federal Reserve is not charged with designing or evaluating proposals for Housing Finance reform but we are responsible for regulating and supervising Banking Institutions to insure their safety and soundness. More broadly for the stability of the Financial System. A robust, wellcapitalize, wellregulated Housing Finance system is vital to achieving these goals and to the longrun health of our economy. We need a system that provides mortgage credit in good times and bad to a broad range ever credit worthy borrowers. While reforms have addressed some of the problems of the precase crisis system, there is broad agreement the job is far from done. The status quo may feel comfortable today but it is also unsustainable. Today the federal governments role in Housing Finance is even greater than it was before the crisis. Overwhelming new mortgages are issued with government banking in highly concentrated securitization market. That leaves us with taxpayer liability and Systemic Risk. It is important to learn the right lessons from the failure of the old system and we can apply lessons from postcrisis banking reform. Above all we need to move to a system that attracts ample amounts of private capital to stand between housing credit risk and taxpayers. We should use Market Forces to increase competition and help drive innovation. The financial crisis ended in 2009 and economy has just completed its 8th Consecutive Year of expansion. We are at or near full employment. The Housing Market is generally strong although it is still recovering in some regions. To preserve these gains we need to insure the stability of the Financial System. With that goal in mind were actually nearing completion of a comprehensive program to raise potential standards for our most systematically important banks but fundamental Housing Finance reform to address the ultimate status of fannie and freddy remains on the todo list. As memories of the crisis fade, as memories of the crisis fade the next few years may present our last best chance to finish these critical reforms. Failure to do so would risk repeating the mistakes of the past. Ill spend just a couple of minutes on the precrisis system before moving on. Congress created fannie mae in 1938 and freddie mac in 1970 and for years many years, these institutions prudently pursued their core mission of enhancing the availability of credit for housing. Beginning in the early 198s fannie and freddy helped facilitate securitytation market for home mortgages. They purchased and bundled Mortgage Loans and sold the mbs to investors. Fannie and freddy guaranteed payment of principle and interest on the mbs. With this guarranty in place, the mbs investors took risk of Interest Rates and gses took risk of default on underlying mortgages. Thanks to growth in certain securitization, fannie and freddy have dominated u. S. Housing finance since the late 1980s. This precrisis system is did its job for many years by promoting standardization, structuring securities to meet a broad range of investor risk appetites and guarrantying mbs. Fannie and freddy brought greater liquidity to Mortgage Markets, made mortgages more affordable but the system ultimately failed due to fundamental flaws in its structure. In the early days of securitization, the chance that either gs is e would ever fail to honor its guarranty seemed highly remote. But that question always loomed in the background. Who would bear the credit risk if a gse were to become insolvent and could not perform . Would Congress Really allah al allow the gse to fail given devastating on Housing Market more broadly . The law stated explicitly the government did not stand behind the gses or their mbs as fannie and freddy frequently pointed out in order to avoid tougher regulation. Nonetheless, investors understandably came to believe that the two. Gses were too big to fail and priced in an implicit federal guarranty behind all gse obligations. In the end the investors were right of course. The implicit government guarranty met investors, banks, gses themselves and other investors around the world did not do careful Due Diligence on the underlying mortgage pools. Thus, securitization also enabled declining lending standards. Of course this was not just a problem of the gses. Private label securitizations also helped to enable lower underwriting standards. Over time the systems bad incentives caused the two gses to change their behavior and take on ever greater risks. The gses became powerful advocates for their own bottom lines providing substantial support for political candidates that supported gse agenda. Legislative reforms in the 1990s and Public Private structure led managements to expand gses Balance Sheets to enormous sizes underpinned by waver slim capital and overreturn and high compensation for management of the these and many other factors led to, extremely lax Lending Conditions and early 2,000s bam era of at lta and no doc and lowdoc loans. These practices contributed to catastrophic failure of housing system. Almost nine years ago in september 2008 fannie and freddy were put into temporary conserve toreship and received taxpayer injections totaling 187 and change billions. We privatized gains and socialized losses. Build up of risks is clear in hindsight. Many officials and commentators raised concerns long before the collapse. Longstanding internal structural weaknesses of old system led to disasterous consequences for homeowners, taxpayers, the Financial System and the economy before considering the path forward it is important to acknowledge that todays housing sector is healthier in, some respects safe are than it was in 2005. Although there are significant regional differences, National Data show that housing prices have fully recovered from their gutwrenching 35 drop during the crisis. Of the mortgage default rates returned to precrisis levels. Mortgage credit is available and affordable for strong borrowers. There is also been meaningful progress reforming the old system. In 2008 Congress Enacting the housing and economic recovery act hera which modeled under fdic. The two gscs he retained portfolios declined to half of precrisis size and are expected to continue on that downward path. The fhfa and gscs have been working to develop a market for gses to lay off their credit risk. These innovative transactions raised about 50 billion in private capital that you now stands between taxpayers and mortgage risk in the gses portfolios. In addition creation of a common securitization platform should strengthen g. September securitization infrastructure and facilitate further reforms with an eye towards enhancing competition. New regulations have been put in place since the crisis with the goal of encouraging sound underwriting of Mortgage Loans. Today lenders need to make a good faith effort to determine that the borrow has ability to to pay the mortgage. Moreover if the lend der provides mortgage contract to the borrower, lender needs to meet certain other requirements. For example, some contract features such as interest only and interest only period or negative amortization are taboo. Up front points and fees are limited as well. Turning to todays challenges, these reforms represent movement in the right direction but they leave us will short of where we need to be. Despite the gses significant role in this key market there is no clarity about their future. When they were put into conservatorship treasury secretary paulson noted that, this is a quote, policymakers must view this next period as a time out where we have stablizes the gses while we decide their future and structure. Almost nine years into this time out the federal governments domination of the housing sector has grown and is greater than it was before the crisis. Fannie, freddy, the fha and department of Veterans Affairs have combined 80 share of the mortgage purchase market with remaining 20 held by private Financial Institutions. After reaching nearly 30 of the market before the crisis, private label securitization as dwindled to almost nothing today. The two gses remain in government conservatorship with associated contingent liabilities to u. S. Taxpayers. Fannie and freddy remitted just over 270 billion of profits to the treasury, more than paying back the governments initial investment, however, under current terms of the contracts that governor entheir access to treasury funds their capital will decline to zero by january 1, 2018. Today fannie and freddy have more than 5 trillion of mbs and corporate debt outstanding which is widelyheld receives various forms of special regulatory treatment. Because of their scale, these Enterprises Continue to serve as important standardsetters and significant counterparties to or the firms. While mortgage credit is available, widely available to most traditional mortgage borrowers, those are lower Credit Scores face significantly Higher Standards and lower Credit Availability than before the crisis. I imagine we can all agree we do not want to go back to poor underwriting standards used by originators prior to the crisis but it may also be the Current System is too rigid and lack of innovation and product Choice Limited mortgage Credit Availability to some credit worthy households. According to an American Bank are survey, in 2016 only 9 of mortgage originations failed to meet qm contract criteria, down from 16 in 2013. The same survey reported that almost 1 3 of u. S. Banks make only qualified Mortgage Loans despite the fact that fha and gse eligible mortgages are except from the qm requirements until january 2021 or until Housing Finance reform is enacted whichever date comes first. The postcrisis Reform Program for our largest banks presents an appropriate standard against which the Housing Finance giants should be judged. After eight years of reform, our largest Banking Institutions are now far stronger and safer, common Equity Capital held bit eight u. S. Globallysystematically important banks has more than doubled to 825 billion from 300 billion before the crisis. After the crisis revealed significant underlying vulnerabilities these institutions now hold 2. 3 trillion in high quality liquid assets, or 25 of their total assets, which is far higher than before the crisis. Under rigorous annual stress tests these banks must demonstrate a high level of understanding of their risks and the ability to manage them and they have to survive severely adverse economic stereos with high levels of poststress capital. They also have to file regular resolutions plans that make them resolvable should they fail. All measures were implemented to reduce a risk that future crisis will result in taxpayer support and insure that the Financial System continues to function in the event one of these banks were to default. It is ironic the Housing Finance system should escape fundamental reform efforts. The housing bubble of the early 2,000s was essential proximate cause of the crisis. Housing is the single largest asset class in our Financial System with total outstanding Residential Real Estate by households 24 trillion. Roughly 10 trillion in Single Family mortgage debt. While postcrisis regulation addressed mortgage lending from Consumer Protection standpoint, important risks to taxpayers and broader economy and Financial System have still not been robustly addressed. The most obvious step forward require ample amounts of private capital to support Housing Finance activities as we do in the banking system. We should also strive for a system that can continue to function in the event of a default by any firm. No single Housing Finance institution should be too big to fail. Greater amounts of private capital could come through variety of sources including through the entry of multiple private gurantors who insure a portion of the credit risk through risk sharing agreements or through expanded use of credit risk transfers. Although private capital must surely be part of the reform effort, there may be limits to the amount of risk that we can credibly expect private sector to insure. It is extremely difficult to appropriately price the insurance of catastrophic risk, the risk of a severe, widespread housing crisis, an both private sector Insurance Industry and the government have struggled with this, particularly with how to smooth the consistent collection of premiums with the irregular payout of potentially enormous losses that may be needed only once or twice in a send istry. Furthermore, losses can be correlated across Asset Classes and geographies in catastrophic events which can render risk diversification strategies ineffective. Fannie and freddy successfully transferred some credit risk to the private sector but thus avoided selling off much of the catastrophic risk arguing that doing so is not economical. After promising legislative initiatives have moved forward, fallen short of enactment the air is again thick with Housing Finance reform proposals. As i mentioned at the outset, Housing Finance reform has important implications for the Federal Reserves oversight of Financial Institutions and for the u. S. Economy and its Financial Stability. While i would not presume to judge these reform proposals i will offer principles for reform. These principles are based on Lessons Learned from the old systems collapse and postcrisis banking reform. First, we ought to do whatever we can to make the possibility of future housing bailouts seem as remote as possible. Not seem, but be as remote as possible. Housing could be a volatile sector. Housing often found at heart of financial crises. Excuse me one is being. One second. Housing can be a volatile sector and housing is often found at the heart of financial crises. Our housing institutions were not and are not structured with that in mind. Extreme fluctuations in Credit Availability, hurst households reduce availability and affordability and as weve seen can threaten Financial Stability. The goal should be to insure our Housing Finance system can continue to function even in the face of significant house price declines and severe economic conditions. Changing the system to attract large amounts of private capital would be a major step toward that goal. The question of the governments role in the new system is challenging one for congress. Many wellknown reform proposals include some role for government. Some argue that the government can not bear drop and tail risk of a catastrophic housing crisis. A number of proposals corporate a government guarranty to cover the catastrophic risk to take effect after significant stack of private capital is wiped out and that brings me to my second principle. If congress chooses to go in this direction, any such guarranty should be explicit, transparent, should apply to securities not institutions. Reform should not leave us with any institutions to be so important as candidates for too big to fail. Third, we should promote greater competition in this market. Economics of securitization do not require a duopoly yet there is no way for private firms to acquire a gse charter to enter the industry. It is akin to having only two banks with federal deposit insurance, which would make competition by other banks difficult it not impossible. Greater competition would help reduce systemic importance of the gses and spur more innovation. Greater competition requires a level Playing Field allowing secondary Market Access to wide range of venders and giving homeowners choice of potential lenders and products. Fourth, restructure and repurpose parts of existing infrastructure of our Housing Finance system. We know Housing Finance reform is difficult. Completely redrawing the system i may not be necessary and could complicate a search for a solution. Using existing architecture would allow for a continuing smooth, gradual transition is. Fifth and last we need to identify and build upon areas of bipartisan agreement. In my personal view at this latestage we should not hold out for the perfect answer. We should look for the best feasible plan to escape the unacceptable status quo. In conclusion, i will close on optimistic note, say that i see two reasons why this is a good time to address the Housing Finance system shortcomings. First, the economy in the housing sector are healthy. It would be far more disruptive and more difficult to implement fundamental structural changes during difficult Economic Times. Second, memories of crisis are fading. If congress does not enact reforms over next few years we are at risk settling for status quo, a governmentdominated Mortgage Market with insufficient private capital to protect taxpayers and insufficient competition to drive innovation. There is a serious risk, if not, in fact a likelihood, that this state of affairs may persist indefinitely, leaving Housing Finance system in a semipermanent limbo. Fortunately we are blessed with a growing menu of reform options available for public vetting. There appear to be broad areas of agreement among them. One of those plans or more likely a combination of different features of various plans might well suffice to move us to a better system. Housing finance reform will protect taxpayers from another bailout. It will be good for households and the economy, and it will go some distance towards mitigating Systemic Risk that gses still pose. Thanks very much for listening, and i look forward to our discussions. [applause] well kick off the q a by a few questions i will propose to jay, then well open it up to the audience. Jay, thank you very much for your remarks. I thought they were right on target. I certainly agree with the point you made near the end we shouldnt hold out for the perfect reform or the perfect system in lieu of doing something that takes us in a better direction than we are now. So let me start off by asking, under chairman greenspan, the fed actually took a pretty active role in discussions about the gses, but, in recent years, the fed has really not done that, an hasnt really had much contribution to the discussion about Housing Finance reform. So, first question, really touching on things that you talked about a bit in your speech, maybe can really reiterate, why are you speaking up now . What is urgent about now . What do you see as a fed governor that causes you like you need to speak up . Right. I guess what really provoked me to come forward was this feeling that were almost in now or never moment here. It has been nine years since the crisis almost. It has been almost nine years since fannie and freddy went into conservatorship. It is healthy Economic Times where full employment, all things i stayed in my remarks, if not now, when . Seems like the risk that we settle into this Current Situation for, up for the long run are very great and so, let me say why i think it is inadequate. We have, and i would say weve done, there have been significant improvements but, at same he time we havent really addressed the big issue, which is the Financial Stability around fannie and freddy. These two large government corporations which have monopoly on securitization. Until we address that we have really not addressed the Financial Stability issue which exists now but can certainly grow over time. I also spent the last five plus years working banking reform, going through very difficult, Challenging Program of raising standards for banks and you know, hoping that the same would happen with respect to the gses, and it has to some respect but not on the fundamental issue for the endgame for the gses. I thought about coming forward in 2014 last time legislation was being considered. As you mentioned, steve, these issues, i go way back with these issues, the reason i came forward now because i feel like were losing a chance to move forward. Okay, good. I agree with the sense of urgency, but given partisan divisions on capitol hill these days, it is hard at least for me to see a legislative solution actually being enacted in the next few years. So, what role do you see for yourself in moving the process forward, and what do you personally hope to add to the debate . I would say i dont consider myself an expert on, what will happen in congress but i do think there are i do see a bipartisan discussion going on. I hear people from all sides saying that they find the current status quo unacceptable and i see constructive movement. So, you know in terms of what i can do and what the fed can do, i think really the first thing is to emphasize that message that the current structure does expose the taxpayer and does carry substantial Systemic Risk over time. That is really in the heart of what we you know, heart of what we do. It is not a current risk. It is not, economy is healthy. Housing system is healthy, but if we dont get off of this then, we will find ourselves i believe in time back in a bad place with a lot of exposure to the taxpayer and financial instability issues. Second thing we can do, traditionally the fed has, we have a lot of really good staff as you will certainly agree, steve, having worked there, and we do provide technical help on a range of issues that congress has request. We do a lot of that back and forth behind the scenes working with evaluating effectiveness of different programs on the economy. We would certainly plan on doing that here. Thats great. The fed staff has tremendous expertise that could really help. Do you envision the fed as an entity, rather than you as a single governor becoming involved in any official capacity in the housing reform debate . That is hard to say. I do speak only for myself here today. Well have to see how that evolves over time. I would imagine the answer will be yes he but time will tell. In your remarks you encourage congress to address housing reform, do it relatively soon but definitely people out there who would say, why do we really need to do anything . Why risk the unknown . Fannie and freddy are making money. It is getting turned over to taxpayers. Their book of business now is a lot less risky than it was during the runup to the financial crisis, and as you noted in your comments, theyre beginning to transfer some of that risk to private sector investors. There is still a lot more to be done but theyre moving in that direction. Given all of this, and i think you have touched on it but let me just come back to the point, why not just leave the Current System as it is . So let me start by saying i do agree that credit risk transfer, transactions and common securitization platform these are very positive moves and i think are moving us along the right path but i think your question is right in the bullseye really. The risk is that enough people say, oh, this is working why should we change it, that we never really do address the status of these large governmentcreated corporations that have a monopoly on securitization that are in conservatorship on the federal governments balance sheet. Dont go back to a system where we are relying on one or two players. It would be i would be sorry to see that happen at the end where weve done so much to move away from two big to fail with respect to the banking system. So one of the topics they didnt say much about was Affordable Housing. Since 1990 to come the geocities have had Affordable Housing goals and they still do. So, any Reform Congress will pass almost surely will have some Affordable Housing elements to it. So let me ask, what are your views in this area . Let me just say in my speech i did stick to kind of the feds homeland. I didnt feel like i have a license to have opinions on things that are well less connect did to what i have here, which is Financial Stability and the economy. Theyre a number of things i didnt talk about in the speech which connect less well to that and i do understand them as realities first of all, which i totally agree with what you said. Affordable housing is significant and will of course have to be addressed in a bill that has a hope of passing both houses of congress. There are other things i didnt talk about the fact that the tba market in a 30 year mortgage are things that are almost certainly going to be a reality Going Forward. But again, i dont see the firstorder for what i was trying to accomplish. So come your talk really focused on fannie and freddie, but of course there is another entity comment the fha, which has a substantial share of markets that operate with full recovery guarantee. Fhas book is a lot riskier than the gse. A. I. Does stress test on all the government loans come extensive lowlevel data. Our estimate is if we were to have an unfortunate replay of the financial crisis about a quarter of fhas of home purchase loans with the fall. It does focus the need thinking about fha and a unified comprehensive view and what do you think fhas mission would be. Icy fha is having an Important Mission with respect to firsttime homebuyers. As you know, different plans and incorporating fha plan. There are so many housing agencies, i really dont want to speculate about where it should wind up in the end. Theres many, many housing agencies in the United States with related agencies. I would just say i would default to the fact that is a question for congress. Well, why do we turn now to questions from the audience. I will service the traffic cop for the questions. Why dont you raise your hand if you would like to ask a question. If you do wait for the microphone, identify yourself by name, give your affiliation and please actually ask a question. No speeches, please. Please wait for the microphone and identify yourself. Hi, governor. Paul lang with the Governor Services roundtable. Have you thought about structure organizational structure for new entities and a reformed system, like for example the private guarantors and could fannie and freddie be rechartered perhaps by regulator, not by congress in the new system . Give us your thoughts on what you think might be structural components of the new entities that the new system. That would take up more of the risk. Im afraid im going to disappoint you. Theres a lot of great ideas and new ideas coming forward. There so many ways to get there. You identified one of them and theyre a different plans at different endgames for fannie and freddie, different ways to share the risk. Im familiar with all the plans and how they all work. I wouldnt want to pick a winner for say that there is a winner. At this point i wouldnt want to let them make the perfect enemy of the good. I dont think it is for us to say take this plan. This is the one i like. I dont really think that its our role. It is more to say theres a lot of commonality here and, you know, pick the best things come and try move forward, negotiate and come up with something that is better than the current approach. I know thats not what you were hoping to hear. Gentleman in the second row. My name is karl pulls her with the center on capital social equity. Is the microphone on . Karo pulls her [inaudible] i was just wondering, and looking from the outside in, what specific changes in incentives and controls could be made to gses to encourage or incentivize then giving a facilitated greater confrontation . If you are over 60 of the market share come you have to give part of your prophet would have to go to subsidize longterm housing. Are there certain things you can incentivize that way . Incentivize to what . To function in a more competitive market. Well, yes. I think the answer is there are lots of things. Mainly the way to do that is the two gics have their duopoly. So they set standards. Everyone deals with them and its hard to its hard for new mortgage products to find a home if they have to go through fannie and freddie. More clearly competition and lead to more innovation. We definitely raise the standards in this country for mortgage availability after the crisis to a very high level by most measures overall Credit Availability is not good. If you have a fica score at 750, but not great if you are ballistic cd. Again, nobody wants to go back to that era and gave anybody who walks in the door, whether they want it or not. At the same time, we need to explore whether weve drawn the line to high i think. Competition can be a big weapon in that game. I wouldnt want to see us go to assist them with it to gics are the only source of the securitization. It would be better to have multiple sources of competitive capital and market share of more broadly spread. It would address your concerns. Gentleman right back here. Pc analytics. My question is can you go into details on why you believe security level guarantee does a better option than entity level guarantee. Sure. The idea of catastrophic risk is to detect, you know, the market appeared i think you do that by protecting the securities, even protecting the investors in the securities or to protect the actual entity, which is operations of the entity, management of the entity, salaries and bonuses of the senior executives, and the entity itself. I think that as a whole different thing. That really is too big to fail. I think if you have i havent said that we do, but if you need a catastrophic risk guarantee, it should be of merit possible in my view and should be on the actual mortgage default risk. Thats the problem we are solving. We are not only the problem of saving individual and the two shins from the consequences of their risky action. Gentleman in the front. John heldman, American Banker. Just a question, you mentioned the postcrisis reforms for banks have been largely successful in increased and are much more stable than they used to be. What may be the easiest way of solving this problem with the gics beat to fly with the same kind of principles to the gics and making it 75. Up an interesting question. I do think you also need structural reform of the industry. We need to get away from government countries which dominate and are duopoly. Its not just a question with higher capital standards in that kind of thing. There needs to be legislation that would restructure those entities and come to a place. Hi Camille Hagerty with analysts marketing site. Senator crapo has said numerous times that housing financial form is a priority for 2017. Im curious to know your thoughts about whether this is a realistic priority and think any reform can actually happen this year. Again, nobody should pay me to handicap the possibility of legislation on the hill. Its not something i consider myself an expert in. It isnt just 2017. Its really this congress. These next few years that i think are the keystone. Its not essential to get something done by the end of this year. I think it can because i do think if you watch the hearing last week and look at the transcript, you can see there is really significant agreement on both sides of the aisle as the Current System needs fundamental reform. Many good things that happened, but we have to grasp the difficult issue of what will happen, what should be the structure of the gics Going Forward in the overall market structure. I think you start with partisan agreement come a bunch of plants which are out there that have significant common areas that they cover and agree on. I want to take the optimistic point of view that the alternative is so unattractive and well just have failed to address one of the major causes of the crisis. I just think that will be a case and so i want to take a constraint debut and not the mystic view that we will get something done before memories really do fade and it just becomes the new normal. I dont see any questions right now. This woman in the back. Christina, commercial Real Estate Finance council. Given your interesting competition in the private sector, the private iran ds and also may be family in private cmts. I was wondering if you had any views on the potential impact of the fundamental review of the trading book. Those standards, having impact that market here. Said the questions about the fundamental review of the trading book. Yeah, i think we are fairly far out from even proposing not. As you know, we are still looking at bat in basel and it would take some time to take the proposal and translated into the u. S. Context and then put it out for content. It cannot be long away to be speculating about the effectiveness. We would understand and hear any concerns about further availability that could arise and what we do propose. It is a good way on the calendar the way that happens. Well, thinking of questions, ill followup on 11 thing you mentioned before. You are planning to be personally involved trying to push this process along. Do you envision involving more than speeches the type youre going through today. Going through testimonies on the topic. As i mention we dont have a formal role in this. I spent a ton of time up on the hill and questions about gse reform about Housing Finance reform all the time in those conversations just in general. Talk about a range of things. This is one ill certainly talk about. I would like to do whatever seems to be broadly helpful. That is all. I dont expect i will personally drive this forward. Play a constructive role and would really like to. I was very pleased senator crapo and senator brown coming and outcome are holding a series of hearings and again a constructive process id like to help in anyway i can. The specific proposal, but they are currently consultation visiting the board, do you see that happening Going Forward . And a treasury, theres always a series of contact going on at all the time and that is the case now as well. I know that they are working on the white house treasurer are working on principles or some kind of something. Im not sure exactly what they are working on. The full report on now would be a natural thing for them to, you know, consult with experts. As you mention we have a number of really top housing experts, several which are here today, one of which has jury duty. Naturally there will be a discussion of that nature i would think. Other questions . Well, thank you very much and thank you for being with us today. Really appreciate it. [applause] [inaudible conversations] [inaudible conversations] we have more from the American Enterprise institute coming up later today here on cspan2. The beats were despairing veterans of the Great Depression and world war ii, the holocaust and the atomic age. The hippie is where the optimistic children of the baby boom generation and the rising affluence of the postwar consumer boom. The American People ought not to be led to believe by the way youre asking that question that we intentionally deceived the American People or had the intent to begin with. The effort to conduct these covert operations was made in such a way that our adversaries would not have had knowledge of it but every could deny American Association or that the association of this government does and that is not wrong. The people who like authoritarianism to tell people what to do, and they know its illegal for an individual to go into your house and take what they want. Fortunately, that moral standard still exists. You can personally take from people and her people. It happens, but most people recognize you cant do it. But its not illegal for the government to do it. Someone like steve jobs can come and sell this product and forever be associated with it when that is just a shade of the story. He was certainly handson, had a lot to do with it. But the truth is insofar as it was developed at apple never wouldve happened without scores of people working around the clock. Part of this story is the iphone was born as the software interaction paradigm was born sort of behind steve jobs back. This crew of guys called the Honorary Team which i documented in the book started basically experimenting. It was freewheeling research. It was fun. What kind of stuff. This crazy trajectory that we were doing to hack different products together and create what would become the iphone. Up next on cspan two comment conversation on Charter Schools in developing countries. Labor and Education Minister talked about the pros and cons of his experiment with Charter Schools and the American Enterprise institute. This is about 90 minutes