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[captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] >> the bipartisan policy center is releasing recommendations today for a new direction on housing policy, including housing, finance, and affordable rental housing guwe will have live coverage starting at 11:00 eastern. congress returns from its long presidents' day recess. they consider renaming the california floods center for the first man on the moon. we will have live coverage could the senate gavels in at 2:00 eastern. livel be able to seek senate coverage on c-span2. >> at age 25, she was one of the wealthiest with those in the colonies, and during the revolution, in her mid-forties, she was considered an enemy by the british, who attempted to take her hostage. meet martha washington tonight in the first program of the c- span's new weekly series, "first ladies: influence an image." we will visit some of the places that influence your life, including wins perked -- williamsburg. the part of the conversation with your calls and tweeds and facebook posts. >> u.s. chamber of commerce ceo tom donahue on the economy and deficit reduction. he talked about immigration reform and the role of the private sector in promoting economic growth. the manhattan institute is the host of this hour-long program. >> president of the manhattan institute, it is my honor to introduce tom donohue, president of the u.s. chamber of commerce. [applause] it was in 1997 that tom donohue became president and ceo of the u.s. chamber, and he has built the chamber into an unparalleled lobbying and political powerhouse. has quadrupled the chambers' budget and added hundreds of thousands of new members during his tenure, policy experts and legal advocates have helped influence regulatory agencies and politics and in the court of public opinion and governments around the world. one of his credibility is is the neck to identify key issues will ahead of the curve. he has aggressively against american jobs and growth agenda, a plan that -- advance the american jobs and growth agenda, a plan that includes rebuilding infrastructure, combating an avalanche of new regulations, protecting intellectual poverty, and reforming entitlements and tax system. under his leadership, the chamber has emerged as a major political force. as part of this bipartisan effort, millions of advocates as well as the chamber's federation of the state and local chambers, industry associations mobilize and is the board of pro-business candidates. the manhattan institute itself was worked closely with the chamber on a number of issues over the years and continues to do so. our center for legal policy in joys of particularly strong working relationship with the institute for legal reform. able toad that lisa was join us today. what i admired most about thomas tommy, it's a deep understanding of the issue with ferocity as an advocate gu. tom donohue refuses to stand down for what he believes i did a classic journal said question is asked yourself, if you are stuck in a foxhole, who would you want beside you? please join me in welcoming tom donohue. [applause] >> thank you very much, larry, for not reading the obituary, and for your thoughtful hyperbole. allow me to make one adjustment and what larry said -- 450 of the smartest, most courageous and most really serious, super people that have ever been in this business, and we've done it to other. i will talk for a little while, and then we will do some q&a, and leave a good amount of time for that, so start thinking about what you would like to ask. i operate under pretty simple system. i either know the answer or i will make up. [laughter] most of the time i am close to right, so i will give it a go. thank you for inviting me. thank you for the valuable, collaborative relationship with the organization putting in studies and information together with advocacy. we appreciate that. no one single person has done more to make this institution the valuable place it is then you have. it is different and very much the same. when you put it together, it is a strong team. the analysis and market oriented solutions offered by the institute i needed today more than ever. this is especially true as our policymakers in washington neglect some of the fundamental realities. you have heard the old quip that a gaffe in washington is when someone accidentally tells the truth. it is one thing to differ over philosophical direction and approach. that is democracy. the routine neglect of basic facts and the fundamental reality is something we are seeing more and more at every level of government in politics and in the governance. it should concern all of us. that is why the manhattan institute is so important. you have a philosophical rudder. your research and your conclusion are grounded in facts. they stand up to the test of reason and sound argument. keep doing what you are doing. washington could use a strong dose of reality. let me give you a few examples. first, you cannot do much of anything without economic growth. you cannot create growth and jobs without the private sector. here is another reality -- democracy is destiny. demographics is destiny. there are plenty of folks in washington who are acting like they have never heard this before. they refuse to acknowledge any changes in entitlements to reflect longer life expectancies and earlier retirements and long retirees and a shortage of native-born americans to run our economy. those are facts. there is another reality that most people know is true, but they want to wish it away. that is that there is no such thing as a national economy anymore. that is the truth. at least not like we once knew it. we are all part of a global economy and a very competitive one at that. policies must reflect this reality. any rational analysis of the facts and our history will tell us that of all the things that we believe that make america special, the one that stands out above all others and explains our success and our leadership is the value of economic freedom. the right to give it a go. the right to take a risk and be rewarded for success. the right to take a risk and to fail and to get up off the floor and do it again. the dream of standing on your own two feet. seizing an opportunity and building a self-sufficient system through hard work and personal responsibility. it is something we must reserve for future generations. why would we want to move by design or by accident to a system where we turn over more of our freedom and responsibility to the central government? we can find a way to help the truly disadvantaged without squandering the greatest gift and our greatest strength -- our personal liberty and our self- reliance. at the chamber, the agenda is fashioned around these realities. we call it american jobs and growth agenda. it is more than that. it is an agenda that focuses on our national and our global competitiveness and our need to be fiscally responsible. it is an agenda that understands how vital our economic and other freedoms are to our success, prosperity, and freedom. permit me to tell you a little more about that. let's talk first about growth. growth will not solve all of our problems, but we cannot solve any of them without economic wrote. so many policymakers in washington fail to understand the power of growth or where it comes from. economic growth is the cause that provides opportunity for the young, the security for the old, and allows families to pursue their idea of the american dream. what a powerful force it can be. for example, if the economy grew at 4%, instead of a meager 2% that we have right now, we could create 10 million additional jobs over the next decade. we could return the economy to full employment with no rising government spending. with 4% growth, the government would collect more than $3 trillion in additional revenues over the coming decade. we would see a 30% reduction in the 10 year budget deficit. that means something like $7 trillion would still be added to the deficit. here is another reality. household income would increase significantly. 3 million people would rise out of poverty. charitable giving would increase. here is another reality -- without growth, we cannot get those jobs. why isn't growth the number one story in washington? the president has made jobs and growth a priority from time to time when it should be the major priority. many members of congress believe jobs and growth are the byproduct of government spending. if that were true, we would be living in paradise. growth comes from a robust, private sector that is allowed to innovate and rewarded and punished for success. at the chamber, our priority for 2013 remains strong. we want to compete and win around the world. the big question is -- how do we get there? first, attract global talent. we will not have sustained growth in jobs without attracting the best and the brightest and figuring out a way to get them here and keep them here. this is the one area where washington appears to be finally accepting the reality that a) we cannot deport people and it would tear apart families in a way that is unacceptable to our belief system. we are a nation of immigrants. our immigration system is broken. it does not serving the interest of our economy, businesses, or society. we need a stronger economy and a broader tax base. the chamber has been advocating for immigration reform for years. this year might be the best chance to make it work. we believe immigration reform must have at least four opponent. it must secure the borders. we have made progress, but we have more to do. we must have employment-based visa row grounds that would allow businesses to use immigrant labor. 10,000 people in america retire everyday, seven days a week. we have got to be able to attract people at both ends of the scale. immigration reform must have a reliable, national employee verification system and not a system that is out to punish people. finally, it must provide a path out of the shadows. for the 11 million undocumented workers who are living in the united states. to succeed in a competitive and global economy, we have to remain an open and welcoming society. we have all kinds of committees at the commerce that decide on policies. my mother-in-law came to the united states at 11 years of age to join her mother who had another family and my father-in- law came at about the same to join an entrepreneur. they took the risk to come here. she was one of the smartest people i have ever known with four years of education. this country has attracted people like that forever. if you turn them away, you'll wish you did not. i will say one thing -- you can look in the newspaper today and tomorrow and probably sunday and you'll find out that the chamber and a couple of other unions have come to an agreement on most of this. it does not surprise me. union numbers have gone down. they have an idea that they have people who work here that might have a chance to make their business grow. if they do not get them, here is what happens -- if you do not get work on the high end and you do not get workers on the low end, you send your work to where the workers are. this is not compensated. we have got to responsibly develop our extraordinary, natural resources. we have more oil, gas than any other country. we can generate government revenues to tackle the fiscal problem. we can boost manufacturing and exports. it will reduce our reliance on foreign imports. all over europe, people are paying eight dollars per gallon of gas. all over the world, chemical companies that let the united states to get their seed corn, which is natural gas, are coming back here. they can get at a cheap price and they are getting out of the middle east. what a great opportunity for us. we can boost manufacturing and have a stable supply of domestic energy. we can reduce our reliance on foreign imports. some are shaky. we can put a hell of a lot of people to work. in the last two, we put many to work fracking gas and oil. we have been doing it for 69 years. the president hailed the benefit of american energy and crude, gas, and oil. but he did not say is that these sectors have thrived in spite of the federal government and not because of it. the surge in unconventional oil and gas is made possible industry and the development -- if the government wants to help and not hurt, they can start by opening up new plants. the government owns about 60% of our land mass. no problem, but let's open it up. the government can open a predict it will and their regulatory environment. there are on and on lawsuits all about trying to hand her to one political interest group. there are roadblocks. everywhere i go, are we going to get the pipeline? when we left the market, we got a shale boom. we can take full advantage of our energy opportunity from all sources, from all methods of getting it if the public and private sectors work together. it is time for greater global engagement. the majority of people we want to sell to live around the world. president obama called for swift completion of the transpacific pipeline -- not pipeline, partnership. he announced the united states was ready to begin negotiations with europe on a u.s.-eu trade ownership. we could not agree more. let's hurry up and put american business to work. let's get these deals done. by the way, it is not just about asia. it includes all the coasts of the united states and canada and america. it is fascinating. we need to get this going and move that european deal. the working group is about to put out a report. i think it will probably sustain the best teams we can think about. let me give you this in a minute. europe is in a slow economy. europe is our largest export partner. europe is china's largest export your. china is our fastest growing export partner. if europe goes into the can, the whole triangle goes in the can. that is a bad idea. this would be huge on both sides of the pond. there are a lot of big trade agreements that have been talked about for a long time. these would put cash on the table right now. it is important that we welcome global investment. we want people to bring their cash here. come here and invest or come here and visit. tourism is a great way. we like that. most people do not understand how many jobs that creates. millions of jobs. we need to remove regulatory barriers and stem that tide of the huge regulatory tsunami that is being planned for the next four years. you remember we all went to school. we study there were three parts of government -- administrative part, the legislative part, and the judicial part. i'm racking my brain. hell, i do not remember anything about the regulatory part. we better do something. our economy thrives when the hand of government is relatively light and giving entrepreneurs the freedom to innovate and businesses the confidence to invest. a flood of regulations are coming down the pipeline. it is staggering. the new rules and the mandate of the healthcare law could drive costs through the roof and suppress hiring investments. at that healthcare was not going to cost us anymore? then the dodd frank reform law mandates more regulations. regulators have only finalized about a third of them. the new ozone regulation that they are just a getting through will cost $90 billion. we will run out by the rate they are going. there are 4000 regulations every year. is that really necessary? we know we need government. we just need to restore balance -- common sense. we need to bring more accountability to our system. we need to make sure that the costs do not outweigh the benefits and that the rules based on demonstrated need and facts. in the government oversteps its bounds and tramples the rights of business is our individuals, we will use the justice system. we need to stop all of these ridiculous lawsuits around the country. we have another group. we believe in balance. their suits are ridiculous and ours are necessary. [laughter] let's talk about inaction. it is the most inexcusable. government spending levels are unsustainable. you cannot keep it up the way we are going. discretionary, defense, and entitlement spending has to be bent down a little. we do not have to get rid of the defense department or medicare, but we have got to find ways on the parameter of fixing these issues. we need more revenue, but raising taxes cannot, close to fulfilling that gap. i mean, just think about it. you cannot do it the way they are trying to do it. the richest 10% pay 55% of the taxes. and the french have never recovered. did i say that was c-span on? oh, what the heck. [laughter] [applause] you could confiscate the earnings of couples making more than $1 million a year and still not come anywhere close to solving the deficit problem. those that claim that higher taxes can eliminate the deficit or that entitlement programs do not add to our debt either do not understand arithmetic, or living in fantasyland. the day we started medicare we were borrowing to pay it off. it is getting eager and bigger all the time. our growing debt burden will crush the next iteration of americans if we do not do something about it. on this issue, the first step is that we need to address a leadership deficit. [applause] we need to close the gap between rhetoric and reality. we promise far more than we can deliver. because of choices, many leaders that both -- of both parties is unstable. bottom line -- you cannot solve the crisis without serious spending restraint. that requires us to address entitlements first, second, and third. there are vital programs that need to be revised to meet the needs of today's population and match the reality of our changing demographic. we're not talking about cuts in absolute terms. it will continue to grow. we must slow the rate of increase by making reasonable adjustments over a number of years. we will not get in the near future a comprehensive tax reform. our current tax system is antiquated and complicated and uncompetitive. we have made so many commitments in the last set of legislation before the end of the year. i do not think we can get a comprehensive deal. a lot of people will criticize me for that, but let's talk about the facts. the right kind of tax reform that accelerates jobs with criers more revenue -- requires more revenue growth. let me conclude, now is the most thrilling time you'll ever live in. this is the most interesting agenda we have ever faced. does it lend itself to the sensational and media coverage? no. it's boring. but it is real and it is based on fact. it faces up to the challenges that we face. we need a greater recognition and respect for the facts in this country. we can have different philosophies and approaches to solving problems, but we will not get very far if we do not come close to agreeing on the facts. from new york? patrick moynihan? he said everyone is entitled to his own opinion, but not to his own fact. we must deal with reality or reality will deal with us. it will win out every time. the best way to do so is to embrace our founding principles. abraham lincoln once wrote those principles are applicable to all men at all times. i thought i would do that because lincoln is pretty big right now in the movies. to preserve economic freedoms, we have to defend principles and not change them. we must defend against an ever growing and all-powerful but a government that promotes dependency, erodes personal responsibility, and rules the people instead of the people ruling the government. we must defend against the yoke of a government regulation system that strangle's entrepreneurship, innovation, and the fundamental building block of earned success. there can be no liberty or prosperity without peace and security. more than that, we need to go on the offensive. we need to be the focal and aggressive accidents -- vocal and aggressive advocates. for market-based solutions rooted in the reality that it will help reignite the economy that put us where we were and put us back on the path to prosperity. the stark reality of the leadership deficit in washington is that one cannot afford to ignore. in fact, this is a call to leadership. it is a leadership that is unafraid to point out the realities and offers sensible, workable solutions that might involve short-term paying for long-term gain. we need a national conversation over the tough choices that should be made without demeaning people who have a view that might be different than ours. doing so requires us to tell people things they do not want to hear. many leaders in washington do so, so we must. this is our call to leadership, and one the chamber willingly answers with our own agenda for growth reform and freedom and talk about all over the world. i must underscore the need for common sense dialogue. we must draw from the same view of reality and the same set of facts. then we can fight like hell for our positions. even gridlock in the ok on occasion, but we must be bound together a reason and facts and begin again our leadership in this important regard. we must do this because america needs us. our country needs it. it will pay a horrific advice if we do not. thank you for inviting me in and your kind attention and all to do in this organization to press people to see reality, to see the facts, and real solutions. i look forward to hearing your thoughts and what you have to say. even if i know the answer or i will try hard to make it up. [applause] >> just a reminder -- c-span is here. once he picks you, please wait for the microphone to reach you so our tv audience can hear your question as well. >> i will start right there. here comes the mic. we will play a little game. you have to tell me what your name is an sort of who you are so i can know what you really need. [laughter] >> i hope that you will take that i mean what i say. >> good. >> with your reference to the lincoln movie, it is unanimous that you deserve the academy award for setting out the facts and appropriate objective. i went to bring it down to something that troubles me. we had an election not long ago that the public heard the differences between two candidates. one that voiced mostly your views lost. they do not want to repeat romney's mistake of the 47%. there are many people who live off the government and its various revenues that it provides. how is a practical matter in this reality. are we going to convince the american public that they should vote against the hand that feeds them and vote for the stronger future that you speak of? >> you gave me the quick invitation to make a second real quick speech, but look. we do not do presidential politics, but we follow it closely just as we do with the house and the senate. that was the toughest, best run that has ever been run. i was in florida over the weekend. second, i would call to mind that after the election, they went and a -- they went out and did a survey. no matter how you voted, which of the candidates was better suited to deal with economic problems? romney won by about 80 something percent. always better to deal with global challenges? romney by about 70%. which candidate was better to deal with trade and investment? romney by a huge percentage. which candidate understood me and my problems and will help me more than the other? obama with 89% or something. we know where we need to go. we know there are fundamental issues that we have to fix. people think those guys can fix them, but these guys will help me. the second set of things i would say, we did very well in elections in the house. the chamber did. the state attorney general -- we got clobbered in the senate. there are two sets of issues. we got some of the wrong candidates and some are financed to get in by the democrats. great story. fundamentally, what republicans did wrong -- by the way, the chamber is not all about republicans. we would like to support democrats. the middle has gone away. i talked to a lot of people. they are great, but i walked and talked to people about how to sell ideas. they said, tell me what romney said about why i want to be resident and what i'm going to do to help you. you have got to think about it. he was on the defensive from the get-go. he was in a dozen of mickey mouse debates on the social issues. it is a serious issue where we did not get to say, look people, this is what i will do. we will do a lot better on polling and technology and giving the message and i want to make sure we have people that have a shot at winning. next. the boy in the back somewhere. good. >> gene. economics economist. thank you for the inspiring talk. you alluded to the evils of the crony capitalist system sometimes called corporate welfare worker printed them caused by obama and others partnership -- and corporate welfare caused by obama and other partnerships. it is perverted so that profits are -- that causes problem. what is the position of the chamber of commerce on this system and the evils? >> first of all, thank you for the question. i'm very interested to talk to you. i deal with the press all the time. your comments -- i do not think i said that. i do not think i said exactly that. i would be careful how you write that. there is no question there is a long-established relationship between companies and the government. the people in the defense business and the heavy research business and in the medical business are all inclined in the government. we accept that. second, there is no question that lots of companies would like to have tax credit. we all like other advantages that we can get through the government arrangement. by the way, we all do not like the other part. the part that regulates on issues and directs us on issues that make our business more difficult. you are right in the concept that there is a more extensive relationship between government and business than it was years ago. it is absolutely true with small companies. you have to get from big to small. if a company spends about 25 or 30% of its resources on buying services from small companies. there is a relationship. small companies like the deals they get. they like that a lot of regulations -- that certain taxes only apply to etc., etc. it would be less than factual to say that companies do not have a relationship with the government. my suggestion today is that it is getting more significant. it is getting more difficult for big companies to leanne and figure out where they are going -- to plan and figure out where they are going. it is getting much more complicated. yes, the relationship therefore between business and government is much more complicated than they were. there are people who will meet me at the door, that is fine. facts are facts, remember? thank you. we will go over here. >> tom, thank you for your speech and for being here in new york with us. those of us who have been here for a long time and those affiliated with the manhattan institute are often very preoccupied with issues you did not mention, and that is public employee unions. i understand the u.s. chamber is involved in working in that area as well. i do not think you had a chance to mention it yet. >> if you look at my background, i have an interesting relationship. i helped negotiate contracts years ago between the united states government and the than 800,000 or 850,000 postal workers. who by the way at the time were at the top of their game. the postal service was coming along and coming out of the government and providing goods and services. today they have been shrunk because of the issues of new technology. because of the issues in new ways of communicating. because of the new ways of paying bills and spending money. the reason i point that out is because i have a lot of experience and because you need to see what happens. they still have all of those pension liabilities. all of them. if you have half the number of people taking in that you had paying him before, -- paying him before, that is a mountain that is too high. it was done by the old geezers. all of the new yorker guys should know. they went out to look at this. they went out to look at what are the burdens on the state? the federal government can print money. they can go bankrupt, but states cannot go bankrupt. first of all, what are the pension liabilities? the idea is to look broadly and pick six dates. what did they find out? when they first started counting this, states told them they had a liability of about a trillion and a half. when they added it all up, it was 3.5 trillion. this is unfunded. they looked at healthcare. they found generally that no one had approved any money for public employees. fewer of them now. he got a whole bunch of those people that were retiring. they were not eligible yet for medicare. he told them to get on obama's new healthcare system. they continue to study. they said -- remember i told you how big the pension liability is. how bad is that? they gave them three things -- medical questions, the issue of pensions, then the issues of medicare. which was the worst? i will tell you -- the pensions. that is nothing compared to the medicaid costs in the states. it is like a rocket going up. who knows how to dilettante? -- who knows how to deal with that? new york went broke. jerry ford was the president. he said that we needed some money. this is when new york was the capital of the headquarters of all of the companies. they changed the law and did all of this stuff. he got a lien on all kinds of assets in new york and worked it out. when illinois and not california was broke and came in and said to the illinois president, we need some cash, which will we do? i know what we will do. we will call and see if we can have an example of how this could be done. public employees are dedicated people. we have lots of them. some of them give their lives to us. public employee unions have sucked the vitality out of the lot of communities and are trying to change the way corporations are run. they are the people that are getting businesses to disclose every nickel they spend dealing with government and policy on the state and federal level because they want to be the people that get the state legislatures and the federal government to support their issues and they want to be able to control the companies and keep them out of doing that. bad news for those guys. ain't happening. we are very involved in that. we won that, by the way. it is a real issue. we have got to do it in two ways. we have not to deal with the economics that we have created. it is huge. yep. >> david. will they get a keystone pipeline? >> yes. you did not ask me when. >> when? know.'t [laughter] >> all the arguments are there. we are building the pipeline from oklahoma to the coast. we have gotten the release from the governor of nebraska that it was ok to move it. the argument that the canadians say if we don't do it they will sell it to the chinese -- they will build a pipeline anyway. the canadians are probably our closest friends. we treat them so badly because their family. [laughter] i tell them that all the time. if they stiffed canadians of the deal, there'll be hell to pay. the prime minister is a very competent guy. i think he would take steps to demonstrate that we have been playing with this for a long time. if you stiff us on this, you will find that what stiffing is all about. i have time for a few more. how about in the back? stand up. you do not want to stand up? stay right there. go ahead. >> i'm a former u.s. department worker. i'm a registered republican. in harlem. >> good for you. [applause] >> thank you. i live in target city. i looked to my government to protect me in times of natural disasters and terrorist attack. is it ok to look to them for that. >> of course. you hear about sequestration. gina will help to create that is the president of the united states. he is -- do you know who helped create that? the president of the united states. the sequestration would consume about 2.2% of our annual spending. 2.4% maybe. two point something. all of these issues that the police force will be laid out and all of the hospitals will close, that is crock. there will be spending cuts are the wrong kind of spending cuts and some places. there might be too many spending cuts in the defense department. let's get something straight. we are not talking about robbing a bank. we are talking about 10 years. sequestration will not last a month. the next thing that comes up at the end of the month is the issue of getting a federal budget. what the administration wants to do is force republicans to close the government. they believe that will help them win the house in 2014. the republicans better get their story worked out. the democrats have also got to run for office. it is time that everyone got together and got over this mickey mouse beating up on each other and realized the facts. how will we go about this? how do we do it over time? that we can fight about everything else. but we will get there. there is a system of checks and balances. to whose benefit it will accrue to? i'm not sure. there is a long time until 2014. that is a good question. this is an issue. just the facts, ma'am. most of you are too young to remember that. i can do one quick question. >> one quick one. >> thank you for your comments. you pointed to high taxes and litigation and regulations of what the economy is suffering. there is a tone from the president and his allies that the top 1% do not pay their fair share of taxes. is that rhetoric? or do businessmen and women shrugged their shoulders and go on with this this? >> is certainly disappointing. we sure pay a lot taxes. who is arguing whether you should pay another 2% or 3%? i don't think anybody's arguing about that. if we were looking at a situation where we said we're going to do a balanced they -- we haven't touched entitlements yet. everyone who makes that kind of money knows how to count. the idea and the meaning of success -- we're starting a new deal at the chamber in our foundation, i don't know how we're going to do it, to encourage and support success and encourage and support risk- taking and encourage and support without the meaning -- whether it's in universities or companies or in the public life, argue the fundamental issues and debate the facts. it is a problem 152% of the people who work in america don't pay federal income tax. -- it is a problem when the 52% of the people who work in america don't pay federal income tax. having cut the payments to social security and when stability is back, we put them back and everyone is talking about a tax increase being led by others. just the facts, ma'am. we don't do presidential politics. i'm all over the world. i can meet with heads of state all over the place and discuss whether we are trying to get rid of the president. there's another reason i don't want to do presidential politics. there are 40 people who want to run sitting in my lobby. . m going to end here let's make an unholy alliance. you get the fact that we will disseminate them. [applause] >> after a year-and-a-half of study, the bipartisan policy center housing commission releases a report this morning on new ways to look at federal housing policy. the group includes former senator george mitchell and former senator kit bond. the recommendations include a new system for housing finance, affordable housing and rural housing. this is live coverage here in washington d.c. this will get underway in just a moment. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> good morning, everybody. it's my pleasure to welcome all of you here today. i was telling my current bosses that i think have six or seven of my former bosses in the audience, so i need to behave for sure. this impressive gathering as proof that housing really does matter in america. i was going to introduce the commissioners. later you will hear from one of our cochairs. i want to recognize four of the commissioners and able to join is due to a scheduling change. we originally scheduled bill launch for the same day as the state of the union and so they thought was a good idea to move the date. i'm grateful for all be sitting here in the front row and for the cochairs for the time and effort to have devoted to this. when we recruited u.s. volunteers, i don't think you were thinking of 8:00 a.m. conference calls on sunday mornings. we appreciate you going above and beyond the call of duty. i want to take a minute to recognize before extraordinary women. i don't see them here, so i'm going to call them out. the associate director, rebecca: -- rebecca:, grace campion and hope richardson. [applause] they are four of the truly most amazing women i've worked with. they're the future of housing, so keep an eye on them. they're not going anywhere because we have another exciting year at of us. at this time, i would like to welcome governor frank keating. [applause] >> thank you and thank you for your leadership role. you are indispensable. i want to thank all of you for being here. i'm frank keating and i serve on the board of the bipartisan policy center and i have been the box, i have served on the debt and deficit panel, and i've been a member of the housing commission as well. the bipartisan policy center was founded just six years ago by four former majority leaders of the united states senate. members of the parties of jefferson, senators mitchell and it-all and members of the party of lincoln, senator baker and senator dole. the purpose of the bipartisan policy commission is to come to consensus on issues of great urgency to the united states. what is the debt and deficit panel or emigration or dodd- frank, no matter where our perspective may be, come together and represent a bipartisan or non-partisan solution so that our policy makers in this country can masticates, massage, had come to a sound, permit conclusion. so this is as government should work and all of us who have had the honor of serving on one of these panels certainly appreciates their role. this particular panel wrestles s,th the future of the gse' the future of single-family housing finance, the fact that it should be limited, the fact that it should be defined and paid for. all of these were the result of a lot of people, 21 people in this case spending six months debating the issues. i think you'll be pleased with the consensus of our panel. thank you very much for being here. i know the commissioners will be introduced individually shortly, but i want to introduce our next presenter from the macarthur foundation who will give us her perspective as well. thank you for joining us today. [applause] >> thank you. thank you to each and every one of the commissioners. it has been an incredible opportunity for the macarthur foundation to support what has turned out to be a smart, sophisticated, contentious but production -- productive conversation about an issue barnacle to our economy and communities and the paramount importance to individuals and families. some of the might have been in the room a month ago where i made it clear the macarthur foundation's support for this effort was not in search of a particular policy solution. what we were hoping to support was a process that would consider the facts, examine the evidence, and recommend a series of smart policies to address the critical issues in the housing sector and that's exactly what we got. it has been incredibly rewarding to watch the dynamic of this incredible group of leaders. they worked through an absolute illusion idea to come together around a set of principles -- through an absolute dilution of ideas to come together around a set of principles, they engaged in numerous practitioners, thought leaders and policy makers, and during the time of their deliberations, continued to contribute to the housing debate through release of research reports and informative displays of relative -- of relevant housing data. but the most in portent touchdown with it is grounded in our research agenda that with the demographic trend and the demand these trends are going to place on our nation's housing infrastructure and fled as system. -- and finance system. we hope the ongoing deliberations are going to keep housing in the mix of the most important policy debate. it is going to reenergize how we talk about future housing investment priorities. it's also going to raise constructive questions about the future of housing policy and how to get the most at of what's going to be limited resources in a highly competitive environment. i don't expect there will be agreement with everything in this report. i am hopeful many segments of this industry can come together around the key principles that underlie the recommendations to do what i think all of us hope will happen -- to generate a groundswell of interest in this. kudos to the commissioners who engage in a truly bipartisan process to come to consensus. at times, and i saw this first hand, it seemed like an impossible struggle, but it was clear everybody around the table believed in the power of a bipartisan voice on housing and what that in itself can bring to future considerations of the importance of housing, its role in the economy, the role of government in the market, and how to make the system and the market work for the most people. i think that is exactly what they have accomplished. i want to thank them and think each of you for coming today. i would like to invite the chairs and senator george missile. -- senator george mitchell. >> thank you very much. our thanks to the macarthur foundation for its strong support. it has been a great pleasure for me to work with you and with my fellow cochairs who are here and all the members of the commission. this really was an extraordinary commission. as many of you know, i've been involved with more than my fair share of commissions and organizations. this is one of the most effective i've been involved with, and that like to take a couple of minutes to introduce the members of the commission who are present who will not be speaking, but who made it an important contribution and describe a brief bit about their background. i will ask them to stand when i conclude going to the list. karen barth is a private equity executive and chief financial officer at hud during the administration of george of the bush. ed brady is a member of the board of the national association of home builders and on the board of directors of the home loan bank of chicago. rob couch was the general counsel of hud during the bush administration and served as president of the national mortgage association and is chairman of the mortgage bankers association. renee glover is the president and chief executive officer of the atlanta housing authority. frank keating, who you have heard from, is the former governor of oklahoma and served as the council of hud and is the chief executive officer of the american bankers association. bruce morrison is the chairman of the federal housing finance board and served four terms as a democratic member of the house of representatives. the chief executive officer of la raza and executive vice chancellor at that university of kansas. the chief executive officer of the national alliance to end homelessness. ronnie rosenfeld was the chairman of the housing finance board, the president of ginnie mae, the deputy assistant for housing and federal housing commissioner in the administration of george h. w. bush. bob rosen is a partner with washington council ernst and young and was my legislative council when i served as majority leader and served as legislative counsel to senator wendell ford. richard smith is the president and chief executive officer of realg corp. at least i could pronounce your name. he is a member of the business roundtable and a member of the policy advisory board from the joint center for housing studies. barry zegis was a senior vice president at fannie mae and president of the low-income housing coalition. there are a few members who are not here and we thank them for their efforts and would like to ask those who are here who were just identified to the stand and be recognized and all of you join me for thanking them for their efforts. [applause] some of you here today and others around the country may ask why housing commission, why this report, why now? the answer lies in the fact that six years after the collapse of the housing market that cost so much chaos and suffering, the problems in housing remain severe and urgent. today, far too many credit or the families are unable to obtain a mortgage. the credit pendulum has swung from one extreme to the other, blocking the path to home ownership and delaying a robust housing recovery. more than four years after fannie mae and freddie mac were placed into conservatorship, our nation still lacks a clear vision for the future of housing finance. the federal government's overwhelming presence in the mortgage market is unsustainable. rentallso facing a crisis. federal rental assistance is inadequate to meet current needs, with only one in four eligible households actually receiving help. when we began our work 16 months ago, the members of the commission established five principles that guided our deliberations over the past 16 months and led to the conclusions in the report. those principles are first, a healthy, stable market is essential. housing market is essential for a strong economy and competitive america. second, the nation's housing finance system should permit the uninterrupted availability of affordable housing credit and investment capital while protecting american taxpayers. third, the united states should reaffirm its commitment to providing a decent home and suitable living environment for every american family. next, the primary focus of federal housing policy should be to help those most in need it. -- most in need it. finally, housing policy should strike a balance between home ownership and renting policies. these are broad principles, but when we began to apply them, you would find as you approach this subject, that you realize they have tremendous and significant implications for policy making. once you adopt the principles, a guide you to the right conclusions. while the track record has not been perfect, working to meet the people's diverts housing needs has been traditionally a bipartisan enterprise. if history is any guide, i am optimistic the commission's bipartisan recommendations will get a fair and full hearing and i hope will trigger a national debate that will lead to a far- sighted policy in housing. in 1986, republicans and democrats came together to pass the tax reform act. a bill that received the support of a bipartisan majority in congress and was signed into law by president reagan. the key element of that act was the low-income housing tax credit, a program i am proud to have offered. there's a simple explanation for this history of bipartisanship. it is that americans of all political backgrounds intuitively understand that ensuring access to decent, civil and affording housing is a goal central to reach, is central to strive for and won their country must commit to and never abandon. thank you very much for your presence and i would like to call upon my fellow commissioner, former senator and secretary jake secretary of hud, mel martina's. [applause] >> -- >> thank you very much. has been a pleasure and daughter to work with senator mitchell as well as my cochairs and all of the commissioners to come together and work in this remarkable effort i have been proud to be part of. the major focus of the commission's work was developing a vision, a blueprint if you will, for a new system of housing finance that can support both home ownership and rental markets of the future. a strong and stable system of housing finance is critical to our economy and absolutely essential to american families to continue to choose the kind it -- choose the kind of housing that suits their individual needs and life styles at every stage of life. in order to fulfil that mandate, the commission has five key housing finance recommendations. first, a far greater role for the private sector in bearing credit risk. there is no question a greater federal intervention was necessary when the housing market collapsed. but the dominant position of the government unsustainable. more than 90% of the single- family home ownership market remains government-supported in some form or fashion. reducing the government put pressure and encouraging more private resuscitation will protect taxpayers while providing for greater diversity of funding sources. second and next recommendation is a continued the limited role for the government as the insurance backstop for catastrophic risk. there is insufficient capacity on bank balance sheets to meet our nation's mortgage finance needs. a strong, vibrant, secondary market for these securities is essential to freeing up additional capital for mortgage lending and connecting our nation's local housing markets to investors around the globe. with taxpayer protection as a central goal, the commission recommends the federal guarantee the number one, explicit and fully funded. number two, it be triggered only after private capital in what we call the predominant loss position has been fully exhausted. thirdly, apply only to the securities themselves. in many respects, the model we have endorsed is very similar to the role of ginnie mae place today. third, the elimination of fannie mae and freddie mac over a transitional time of 5 for 10 years. the commission believes the business model of the two government-sponsored enterprises publicly traded companies with an implied government guarantee , and other advantages, should not be replicated. the commission recognizes that a dynamic and flexible transition time will be necessary. as for steps, we support the continuation of current efforts to reduce the government footprint through reducing the gst load limits and scaling back the portfolios. we also believe the pricing structure should move closer to what one might find a private capital markets. fourth, ensuring access to safe and affordable mortgages for all borrowers. this is a core principle for us. the housing finance system of the future must be one for which all can benefit on equal terms. finally, the federal housing administration should return to its traditional mission of primarily serving first-time homebuyers and bar worse with limited savings for down payment. recent concerns over the solvency of fha single-family insurance fund only goes to underscore the urgency of what we propose -- a far more risk bearing private capital should flow into our finance system. a system in which private capital is plentiful, will reduce the pressure that's sometimes placed on the fha to ask -- to act as the mortgage credit provider of last resort and allow it to perform its traditional mission more effectively. our proposals for reforming the multifamily finance system are rooted in the same systems as single-family reform, a greater role for at risk private capital, a continuing government presence there a limited catastrophic guarantee, the gradual wind down for many may and freddie mac and to improved administrative efficiency -- wind down for fannie mae and freddie mac. this will insure this system primarily supports housing affordable to low and moderate income households. our report provides considerable detail about the individual components of a housing finance system we envision. it describes the structure and responsibilities of the new government entity we call the public guarantor. that entity will administer the limited catastrophic backstop and it outlines the roles of the other actors in our new system, the originators, mortgage servicers, issuers of securities, and the private entities that will credit enhance these securities. unlike many proposals that call for special congressional it started entities to issue it and credit and hands mortgage securities and to carry a government backing, we call for a wide range of entities without special government charters but subject to rigorous approval standards and capital requirements to participate as issuers and private credit and answers. a final note -- the commission report identifies several factors that continue to stall a housing recovery in the more immediate term. these include an over correction in lending standards which now go well beyond those in place before the housing bubble ever came into being. we believe these issues must be solved before the housing market campbell recover. now it is my pleasure to call to the podium by senate colleague, kit bond. [applause] >> thank you very much. i was thrilled to join this group of the steam colleagues on an issue that is near and dear to my heart. some of you may know i spent 24 years in the senate trying to help insure americans had stable, affordable, decent housing. the last 16 months, i have learned from my fellow commissioners a whole lot more than i learned in the 24 years plus we heard from the people who came out for our hearings. we know that millions of americans continue to view home ownership as a critical cornerstone of the american dream, with benefits will be on their initial investment. unfortunately, about five years ago, that american dream became the american nightmare when families homes were foreclosed, communities suffered, and financial systems experienced great loss. we have really seen the consequences and know it must not happen again. one of the best ways in our view to help ensure families keep their homes is their housing, counseling, and financial education. for homeowners who have a loss of a job, medical emergency or some other crisis, housing counseling can help identify options before they fall behind on payments. through pre purchased counseling, families can gauge whether they are financially ready for home ownership and be better prepared to manage the financial birder -- financial burden of homeownership. we know that housing counseling repurchase works. we recommend refining the research and counseling and finding better data from networks and counseling agencies across the country. we also recommend continued federal support for housing counseling as well as bringing in all of the parties to benefit to help pay for this program. it is critical we continue to invest in housing counseling and financial education to keep families in their homes and keep our neighborhoods safe and our states and countries strong. some of you sure know, i come from a very rural part of the state of missouri. one-third of all americans live in rural america. yet rural america often struggle to have its voice heard. the needs of rural america i will tell you are great, persistently low or opportunity for employment and higher poverty rates, and these communities make housing increasingly difficult to afford for many low-income rural residents. recognition of the unique needs in our rural communities, the commission recommends of rural housing programs remain at the u.s. department of agriculture. the one agency dedicated to and present in rural america. they live there, they know what the problems are, and the people there trust them. we also recommend extending the current definition of rural areas through 2020 to ensure rural communities continue to have access to the critical assistance rural housing programs can provide. next, we urge funding for rural housing programs be carefully examined and their operation be examined for modification. these programs are currently under funded despite an impressive track record. they need for example slightly more resources to modernize the loan application process and we need to look at the underwriting as well. we know it's a difficult time to talk about spending. these recommendations will be no small stump to jump. but stable rural housing is an important element to the strong housing system. with that, i thank you and turn it over to my good friend whom i was named by the "wall street journal" many years ago as the odd couple because of our ability to work across the aisle when he was secretary of hud. [applause] >> thank you. it has been a -- it has been an honor to work with you again and an honor to work with these distinguished cochairs in these hard working group of members. i'd like to thank the staff led overall by jason from a bipartisan policy center and housing commissioner. as hard-working and capable a group led people i've ever seen working anywhere. i know we all want to thank julia again and the macarthur foundation. the macarthur foundation has played an extraordinary role in funding this as well as other major public policy endeavors. julia herself was once the housing director for the city of chicago as a special place for housing in her heart. thank you very much. i would like to recognize jimmy camp who is here, who is the head of the foundation named for his father, jack kemp, who was secretary of hud. his father was a good working definition of bipartisanship. a -- was jack kemp by himself. [laughter] jimmy attended the hearings across the country which were really important in gathering information from across the nation. thank you for your involvement. when the commission began its work, one of the first action was to examine key demographic trends occurring across the country. an effective housing policy not only response to today's needs, but also anticipates those of the future. our nation is undergoing a profound transformation. as a society, we are becoming older, more likely to delay marriage and child bearing, and more racially and assets the -- ethically -- ethnically diverse. 62% of americans born between 1991 and 1995 are beginning to form their own households. millions of baby boomers, on the other hand, are heading into their retirement years. the number of americans aged 65 or older will rise from 40 million in 2010 to 90 million in 2060. during that time, the number of seniors aged 85 or older will more than triple from 6 million today to almost 20 million then. unfortunately, many of these homes and neighborhoods were designed at an earlier time before the demographic changes now transforming the country or even recognized. for many seniors, their homes, whether rental or own, lack the necessary structural features of support systems. many communities failed to provide the services and amenities that would make aging in place a realistic choice. as a nation, we need to think more creatively and strategically about the homes in which we live and issues like health, longevity, and the cost of caring for an aging population. in addition to this dynamic, minority households are projected to constitute one- third of all u.s. households. according to some estimates, hispanics will constitute nearly 50% of new households formed between 2010 and 2020. these demographic trends -- these demographic trends will profoundly impact housing demand and the types of housing americans will need and want in the coming decades. the commission had these trends in mind as we look at the affordability of rental housing. currently, rents are rising in many regions of the country. the resort is -- the result is our lowest income renters are spending larger shares of their income on housing than ever before. rising rents forced many of our lowest income households to make the difficult choice of spending less on health care or food or other essentials in order to cover their rental housing expenses. our nation's most honorable house holds, those with extremely low incomes of 30% or less of area media -- area median net income which is $19,000 for a family of four -- imagine living on that -- they number more than 10 million households. in all, household currently held only one in four of households eligible for federal rental assistance. in some areas, this is allocated by lottery and through waiting lists that continue to grow. in analyzing the dilemma, the commission started from the premise that we first need to do a better job with we have a place today. we are recommending a new performance-based system for delivering assistance that will evaluate housing provider success in achieving outcomes, improving housing quality, and enabling elderly and greater economic self-sufficiency for households. this system would devolve responsibility from the federal government to state and local decisionmakers as well as reward high performing providers with greater freedom to innovate, departing from standard had practices and rules. it would be subject to competitive process these and potential replacements. they also recommend additional reserves to serve the most vulnerable households. a voucher program that serves the lowest income households that 30% of area median income would replace the current lottery system. given the resources-constrained environment in which we're operating, the commission believes it's appropriate to target assistance to the household at the lowest end of the income scale. we recognize this deeper targeting to shrink the pool of eligible beneficiaries, but it has been our judgment this trade-off is worth making if it means a greater number of our nation's most vulnerable households would be able to access the help they require. instead of spreading resources below 80% of median income and only one in for being able to access the assistance on a haphazard basis, the commission recommends targeting more greatly at 30% of median or below so 100% of those folks are able to get the help they desperately need. in addition, the commission recommends the availability of short-term emergency assistance to low-income renters between 30% and 80% of income. people in danger of losing a job, have lost a job, have wage issues, or others that endanger them but could push them into chronic poverty or chronic homelessness would get help. with rental demand increasing in many areas of the country, there's an urgent need to increase the supply of suitable and affordable rental housing as well as to stabilize and preserve the existing housing stock, including the valuable investment we already make in public housing. to achieve these goals, the commission recommends preserving and expanding the low-income housing tax credit by 50% over current funding levels. the commission is currently aware of are difficult financial situation -- we are all familiar with that nine letter word, sequester. any proposal for increased spending must be offset either by reductions in federal outlay, savings from system reforms, the adoption of new revenue sources, or a combination of these various approaches. the commission also recognizes a transition time of some length will be necessary before our recommendations can be fully implemented. the commission's proposals focus on where we want to go over a longer time. the commission supports the continuation of tax incentives for home ownership. in the ongoing debate over tax reform and budget priorities, the commission recommends consideration of modifications of those incentives to allow for increased support for affordable rental housing. the great recession started in the housing sector. the housing sector is critical to the economy is full recovery. a new housing finance system, reforms to rental programs, and more effective use of existing resources are all essential to putting the country on a sustainable path forward. the commission of 21 members stand ready to help in this effort. we are now pleased to take any questions, first from the press. if you have a question, raise your hand and a member of the staff will bring a microphone to you. if you would please identify yourself and the organization you might represent. i would be happy to refer the question to my fellow cochairs, members of the commission power staff persons who may be appropriate to answer the questions. [applause] this gentleman over here. >> i'm with tax credit adviser magazine. i'm wondering if you can explain your proposal for performance- based subsidies in the rental housing area. >> the emphasis is to focus on the outcomes of the housing programs by a series of measures that would include things like self-sufficiency outcomes for residents themselves. that is one set of measures -- outcomes for residents. another set is the actual housing providers themselves. so we can now we are focusing on the best providers. those who are not measuring up will be subject to competitive process these. that is a quick overview of the kind of structure we're suggesting. if any commissioner would like to add a sought or -- senator bond? >> one of the things we discussed extensively and i see renee glover here have made it very clear to us that the very prescriptive rules and regulations written by hud required a lot of time and effort to write them, a lot of time and effort to read them, a lot of time and effort to fill out the reports, but nobody really looks at are you delivering good housing -- public housing or voucher- support of housing. we say shift that focus and get rid of the prescriptive rules, start setting performance standards. in conjunction with the state and local entities who really know what the needs are and can judge it and make the decisions of bonding based on the performance. >> other members of the commission may want to add a word. renee is the award winning director of the atlanta housing authority which, to my knowledge, as the first housing authority in the country to have demolished all of its old-style traditional public housing and replaced with new public housing as well as section 8 vouchers. she wins every award there is to win in the field. >> i think the summary senator bond gave, it's about the quality of the housing and we talked about amenity-rich housing, better schools, low impact areas in terms of poverty and those types of things. by giving the opportunity to the provider to actually solve the problem in the locality, that will yield better outcomes. >> another question? >> george mccarty from the ford foundation. i'm wondering if the commissioners talked at all about the valuable housing stock in the manufactured housing space. 8 million units of housing that serve people who earn about $29,000 per year. this is largely done subsidize and i'm wondering if there's any attention paid to preserve that housing stocks so we don't add to the roles of people waiting to get into other kinds of subsidized housing. >> the commission report as the two manufactured housing. i will ask the commissioner who raise that in our deliberations to say a word in a second. both in home ownership and rental section speaks to new approaches, shared equity for the dollar shipside and efforts to support both the existing stock of manufactured housing and innovative, new approaches that allow for the use of innovative building materials and manufacturing technologies to get affordability into workable ranges. >> the commission dealt with a wide range of possible issues in the report. manufactured housing is one that we highlighted in a couple of other sections and deserves more investigation and is a rich area for further work. we highlighted the lack of long- term fixed-rate financing that many owners, even when they are on lots, they own, but they lease. the difficult rebid -- the difficulty for the most affordable financing. a rural context, we talked about how important a resource that is. this is one of the areas we highlighted as being very important but beyond the scope of what we were able to get too in depth. we have highlighted of for further work and we're grateful for bringing it up. >> some of the work in the manufactured states has required new investments such as working with localities and zoning restrictions that make manufactured housing difficult to place. it would be a great boon for affordability if it could be added to the stock of housing even in medium-sized cities. would any cochair like to add a word? since it focuses on rule approaches, any thoughts? >> we need to have you get there. manufactured housing is the best way, roll it on out. >> there's a question right over here. >> robert england with american banker. did you consider what types of institutions would hold mortgage servicing rights given some of the banking regulations coming out that leave many large financial institutions? >> there is an extensive section in the report that speaks to the nature of financial institutions that would play the various roles in the proposed system from our origination, through credit enhancement and other steps. securitization and the emphasis would be on decentralization from the centralized system to private sector financial institutions. let me see if senator martina's would like to say a word or any staff person who wants to say anything. i wish neck was here. he was our point man. but rob couch is. >> this is a symptom that -- this is a situation that's going to remove us from government and the government position as a last place guarantor. i think there could be some confusion on that issue as well. i was a partial small regulator of the gse and it was clear more regulation needed to go into the system. as much as how we would look at how we might place that, it did not occur. the implied guarantee which was always hanging there, and the crises hit, there is no question it would be a guarantee and the government would be their. no matter what happens with entities considered too big to fail or whatever, there ought to be away in which we can have a clear-cut, written out guaranteed by the government, but in the last position and after all the count -- after all positions have gone first and but the government only being a catastrophic risk outcome. but what's important in this scheme as we look for that to be funded. there will be a portion going toward funding of this catastrophic funding so that when and if another crisis were to come and the government has to step in, it would not be doing so at of appropriated dollars, but out of this fund that would be set aside for this very purpose. the participation by the private sector entities, we hope to create a very competitive environment in which all players can participate. >> the guarantor would clear, if you will, some of the private sector participants. but it looks for a much broader range. >> and there would be a look to capitalization and make sure we have a efficient -- sufficient capital standards. it would make sure we are dealing with entities that can fulfill their role appropriately. >> while it is unfair to refer you to the document because you haven't received it, pages of roughly 56 to 62 spell out the specific roles of the different financial players in the proposed system. >> -- rob from alabama, you will be able to tell where he's from. >> the only thing i would add is that we do endorse the concept of national servicing standards in the report. we also mentioned the consultations basel 3 may bring. when you take out a mortgage, you have a legal and more, -- legal and moral obligation to pay it regardless of the property value. >> governor keating is the president of the american banking association. >> as a postscript what several of my colleagues have said, i'm not trying to suggest the public guarantor would be the maytag repair bat and not really be called on depending on how to qualified mortgage is to find. 43% loan -- debt to income issue may well mean a lot of people would say the pay will has been satisfied, why do i need another insurance policy from uncle sam? we have walked that middle ground very effectively, encouraging the reintroduction and aggressive reintroduction of the private sector in this process. >> it is clear the country needs a secondary market mechanism. it's also clear that the one we have focused on fannie and freddie has not worked well and brought us to this point, with an element of bringing us to this point in the crisis and a more balanced system has to emerge. that's with the commission has threatened to build. something that brings private capital and puts the taxpayer in a less vulnerable position. hopefully in the spirit of this center, the bipartisan center, it will strike a chord with democrats, republicans, left and right as a way to rebuild housing fight it said -- housing finance system. >> it is important to note that our proposal, there's a transitional time to take it from the current system to the future system. there is not going to be a radical change. we know the need for the fragile housing sector to continue. for the gse to become more competitive as it would be to the private sector. it's a gradual time, from 5 to 10 years, to get us where we need to be. it >> i'm from the national association of hispanic real estate professionals. last year, the loss of approximately 800,000 older households, mainly among white and black households. at the same time, there was an increase of about half a million owner household among asians and hispanics, the majority of whom were hispanic households. can you talk further about the implications of these demographic and economic trends? >> as i said earlier, we focused on the demographic changes in the country. we are rapidly changing country and among the two most important demographic realities is the aging of traditional population than the growth of minority populations to where they become a truly meaningful part of household formations and demand for housing. it is hard to imagine a housing sector going forward, private market housing, for sale housing, that doesn't include in major ways the dynamic of hispanic, asian, and other minority growth. the report spends considerable time in various places in the introductory chapters that deal with demographics and the chapters that deal with home ownership as well as the chapter that deals with rental as a platform to prepare people for home ownership. at every stage, we talk about this. the commissioner is the president of the national council of la raza. an important way to think about what we offer is they create a system that includes liquidity, money is available for credit at prices average families can afford for the long haul, 30- year mortgage instruments and other features of the system -- all of this is designed to keep that going. that is part of but the federal government will guarantor is about. all of that is designed to deal with the availability of adequate for sale housing for this minority surge we expect to happen. that's a really important part of this report's conclusions. >> i would just add when you look at those demographics, they are hard to ignore. by the year 2020, 50% of home buyers, first-time home buyers will be hispanic. and other demographic we focused on it every year for the next 25 years, 900,000 american citizens who are hispanic will turn 18 years of age. you are seeing a demographic wave that is coming that's going to be interested in looking at not only having access to housing, but affordable housing or housing opportunities. for us, home ownership, part of that has been getting great counseling services. we have had a very successful effort to provide counseling and what we have found is when people get that objective advice in terms of their housing options, they can be successful. having great underwriting rates and an opportunity to get a 30- year mortgage and getting that counseling is what has proven to be most successful and we want to make sure we can keep track of that. >> we want to keep it in place in spite of the fact we had to redesign the sector to do it. ed brady is a home builder and officer of the national association for home builders. he may have a thought on the connection between demographic trends and the business side. >> thank you. what we articulate in the research shows that home ownership is still, a majority of people aspire to home ownership. the cultural side of home ownership, the benefits from the socio-economic, education, crime rates, wealth building, all of that was highlighted in our research and in our home ownership section. as we suggest, the accessibility as a home builder, the accessibility and mortgages, the affordability has been great because the interest rates are low, but the accessibility to financing has been hurt. the pendulum has swung way too far and it's even more exaggerated in the minority community as access to credit, which is a huge population growth and opportunity for home builders, the homeownership possibility in america. we highlight that in the report. >> i'm trying to swing from side to side. we will come back here in a moment. let's take someone from this group over here. >> mortgage bankers, community bankers, thank you for work. my members here too big to fail bank which dominate in the primary mortgage market will over time dominate in the secondary and it will take a balance sheets to achieve economies of scale. can you please allay the fears of small mortgage bank numbers? >> would you like to say a word about this? >> the report goes on at some length to divide the system that's very decentralized and speaks to community banks, credit unions, and a whole mix of institutions that will participate as originators in various roles. you are a designer. >> i could not have said it any better. good job. [laughter] we understand that concern. we went through a great deal of trouble to stress throughout the design of the system that should be open to a wide variety of players and particularly in the credit risk of the assumption of credit risk, we were fairly agnostic as to whether credit risk would be covered by capital markets solutions. we did want to make it as broadly available as possible. that is one of the reasons we went to the ginnie mae model, if you will, where issuers
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