| BUILDING SUSTAINABLE HOMEOWNERSHIP:
| RESPONSIBLE LENDING AND INFORMED CONSUMER CHOICE
| PUBLIC HEARING ON THE HOME EQUITY LENDING MARKET
| FEDERAL RESERVE BANK OF SAN FRANCISCO
| 101 Market Street, San Francisco, California
| Friday, June 16, 2006
| REPORTED BY: LAURA A. REDING, CSR NO. 9711
| Friday, June 16, 2006, 8:45 a.m.
| MR. OLSON: Good morning. I'm Mark Olson, Federal
|Reserve Board of Governors. We are delighted this is the
|third in a series of hearings that we have had on HOEPA.
|It's a repeat of a series of hearings that were held about
|six years ago that led to at that point implementation of the
|HOEPA regs and others.
| Let me -- let me first of all just outline the day
|and what the expectations are. We have three panels. Heavy
|focus on nontraditional products in the mortgage area. By
|design, we have -- we use the San Francisco, essentially the
|west coast, hearing to focus on that.
| Much of the rest of the country seems to think that
|the nontraditional products are relatively new. As we will
|hear today, they're not new products on the west coast, and
|so your experience here is -- I think will be very valuable
|for our overall understanding of the -- of the role of the
|new products in the marketplace, both the positives and some
|of the issues that are created.
| The first panel will go until 10:30. We will then
|take a break and have the second panel that will go until
|12:30. And then break for lunch and then an afternoon panel.
| Very importantly, at about 3:00, hopefully precisely
|3:00, we will have what we call an open mic time. And
|that's -- at that time it will be an opportunity for anybody
|who would like to speak to speak.
| And if you would -- if you would care to avail
|yourself of that opportunity, there will be a sign-up sheet.
|And that sign-up sheet, it will be -- where will they find
| MS. REID: Outside right now but --
| MR. OLSON: Just out the door right here. So make
|sure you've signed up sometime between now and then if you
|would care to avail yourself.
| For the panelists, there will be a -- each of you
|will be asked if you could summarize your comments in five
|minutes. We enforce it.
| MS. REID: I'm your timekeeper. I'll hold up this
|"one minute left."
| MR. OLSON: And what we've discovered -- we didn't
|discover it. It's been coming up. So much of the value of
|these hearings comes out of the dialogue, in the discussion.
|So I think -- and then we will -- a summary for five minutes
|and then we will move on from there.
| Just to introduce my fellow panelists, Leonard
|Chanin, Sandy Braunstein, my colleagues from Washington,
|D.C., and Jack Richards from the San Francisco Fed.
| There are three areas of focus for these hearings.
|Number one has been, of course, the impact of predatory
|lending and the effectiveness of the HOEPA regs. Second has
|been a look at this new phenomenon called the nontraditional
| And that -- in the intervening six years, some very
|remarkable things have happened in the marketplace. And what
|has happened essentially is that we have seen through a
|combination of technology and secondary market appetite and a
|highly liquid market, there is a -- whereas the secondary
|market had for many years focused primarily on the conforming
|product, the Fannie and Freddie conforming product, the fact
|that that secondary market now has an appetite for the
|nontraditional product has had a number of implications, both
|good -- largely good frankly because of the -- because it has
|provided a liquid source for more mortgage product, there are
|more people who have access to mortgage money than ever
|before, and a wider variety of a range of products.
| The difficulty comes because of the fact that
|sometimes there are products where we -- that we clearly have
|recognized, where people are put into products that they
|probably shouldn't be, either -- for whatever reason. And
|that's part of what we are -- we're going to probe today.
|The extent to which those products are, in fact -- how
|they're marketed, how they're used, and the experience that
|we've had with them.
| It is hoped -- the expectation is that there will be
|four objectives or four goals that will come out of these
|hearings: Number one, an evaluation of the effectiveness of
|the HOEPA regs; number two, there is -- we will be at some
|point looking to review a Reg Z, and some of the input from
|here will be factored into that review.
| Point number three, we at the Federal Reserve think
|it's part of our responsibility to focus on consumer literacy
|and financial education. That -- and what we are learning in
|these processes will help us provide direction for that
| And number four, that is also a responsibility of
|the Fed -- one of the responsibilities that we assume for
|ourselves is to look for opportunities for further research.
| And so those are the four that will hopefully come
| In an environment like this, the appropriate use of
|financial products is a shared responsibility. Certainly the
|primary responsibility is for the consumer.
| A consumer in a free society, in a free market,
|there's an underlying fundamental presumption that the
|consumer is responsible for his or her choices and actions.
|However, it is a shared responsibility, and the second part
|of that sharing is with the originator, the initiator of
|those mortgage products.
| There is no question of what -- there's an
|extraordinary knowledge asymmetry, between the knowledge that
|an individual will have when they are taking, especially
|sometimes for the first time, a mortgage product and to try
|to evaluate them in the context of a wide range of products
|that are available.
| I have said before -- and let me say it again
|because it brings it home. Some of you know my background is
|banking. I spent 16 years in the banking industry. I never
|was primarily a mortgage lender, but during those 16 years, I
|was involved in the closing of a lot of -- of a large
|number -- I'm thinking it's roughly a hundred -- mortgage
|loans that I was involved in the closing of.
| And yet every time I went to a closing of my own
|loan, I felt somewhat at a disadvantage in terms of my
|understanding. So I can imagine what somebody that is
|approaching that experience for the first time must feel.
| So there is that clear shared responsibility, the
|consumer and the lender.
| There is a third group that broadly defined that
|has -- we are learning more all the time can make a real
|impact, and that's the community and consumer groups.
|Financial institutions, not intentionally but by their
|nature, I think do not get real close to the broad community,
|especially the low-mod and sometimes the minority
| The financial institutions don't have that immediate
|connection that some of the consumer groups do. And we found
|the consumer groups that have that access, that have that
|credibility can bring an education, can bring an
|understanding, but can also bring to the marketplace -- can
|help focus what some of those important issues are. And
|we've heard from some of those groups and we will continue to
|hear from some of those groups.
| Fourth group is the regulators. We are not number
|one. We're not even number two. We shouldn't be. In a
|sense, we're the referees. And it is our responsibility to
|look at the extent to which -- first of all, it is our
|responsibility to implement the laws that congress gives us,
|and most of what we do is implementing laws that congress
| But it's also our responsibility to look at the
|marketplace to see that the -- that the activity in the
|marketplace is consistent with the expectation of the
|existing laws and the risk taking and appropriate behavior of
|the institutions that we regulate.
| So that's our opener. We have four people on the
|panel this morning. I think we will go in --
|counterclockwise, Paul, starting with you.
| So if each of you would introduce yourselves, your
|organization, and then give us a brief summary and then we
|will go -- we'll leave us plenty of time for questions.
| So Paul.
| MR. LEONARD: Thank you.
| MR. OLSON: Anything else I missed? Anything else
|that we should have --
| MS. BRAUNSTEIN: I don't think so.
| MR. OLSON: We didn't sing "I Left My Heart in San
|Francisco," but we're planning to do that at 3:00 when we're
|getting ready to leave. It's a beautiful city. It is
|just -- it is just -- we're reminded when we come here what a
|great place this is.
| MR. LEONARD: Governor Olson, I hope you meant at
|4:00, after the -- after the open mic period. Right?
| MR. OLSON: That was -- that must have been Freudian
|on my part.
| MR. LEONARD: Thank you for inviting me to testify
|here this morning. My name is Paul Leonard. I'm the
|California director of the Center for Responsible Lending.
| The Center for Responsible Lending is a national
|nonprofit policy and research organization focusing on
|predatory lending policy and issues. The organization is
|based in Durham, North Carolina. We also have offices in
|Washington, D.C. and have recently opened our California
|office here in Oakland, California.
| I want to say that these -- I think these hearings
|come at an opportune time, as the subprime mortgage market
|continues to grow and evolve at breakneck speed. Subprime
|lending totaled more than $600 billion in 2005, more than
|doubling in total size just since 2003. And adjustable rate
|ARMs, both -- and interest only ARMs and option varieties now
|account for well over half of the subprime market.
| Having been called to testify at the last minute and
|replacing a panel member who got sick, and having limited
|time to prepare, what I thought I would do, which I think
|will be enlightening, was to walk through this rate sheet
|which we pulled -- I actually pulled off the web this
|morning. It's a rate sheet for a standard 2/28 ARM mortgage
|that's offered by the New Century Mortgage Corporation.
| I've provided you all with copies. And I think that
|the rate sheet, if you'll bear with me quickly, sort of
|highlights a few of the central problems associated with
|adjustable rate and other nontraditional loans.
| The left half of the page you'll see has a matrix
|for fully documented loans. The right half of the page has a
|matrix for stated income loans with you'll notice a 50 to 100
|basis point premium for the -- for the option of having a
|stated income loan, which will speed up the loan processing
|period but has also been a source of rising abuse I think, at
|least from what I've heard in the community. The far right
|column you'll see lists a series of adjustments to rate that
|might apply to any loan.
| These rate sheets are updated every day and provided
|to brokers who are out there working in the marketplace.
| So I wanted to just highlight one example. Assume
|we have a B credit borrower with a FICO score between 600 and
|620, borrowing with an 80 percent loan-to-value and full
|documentation. The PAR rate for this borrower, which I've
|highlighted, would be 7.65 percent.
| If you look over on the right-hand side of the page,
|however, you can see that a broker can earn an additional two
|points, or $6,000, for that -- for closing that loan in a
|yield spread premium if they're able to sell the loan at 125
|basis points above PAR. This would bring the initial rate
|for that loan in at 8.9 percent.
| If our borrower is taking out a $300,000 mortgage,
|initial payments of PAR would be $2,130 per month. With a
|broker who is maximizing their yield spread received from the
|lender, the initial monthly payment would jump to about
|$2,400. In today's market, most subprime lenders are
|underwriting these loans only to cover the initial payment of
|the loan. So it would be for this $2,400.
| There are two key issues I think that I wanted to
|highlight. First was the yield spread premiums and the
|second really important one is the payment shock component of
| After two years -- the rates are fixed at these
|rates for the first two years and then are reset-based on a
|LIBOR index and the lender specified margin. Today LIBOR
|rates are 5.4 percent. And you can see in the left-hand
|column the margin for B credit borrowers is 6.7 percent. So
|the effective rate of two years would rise to 12.1 percent.
|In that case, it would be a $700 increase. A 30 percent
|increase in the monthly payment after just two years in the
| Now, not many families that I know of are going to
|be able to afford a 30 percent increase in their mortgage
|after two years, especially when the loan is underwritten
|only for the initial payment. If the rates rise by two
|percentage points, the payment shock will be -- the payment
|shock will be a 50 percent increase in their payment.
| The result, many borrowers will be in mortgages that
|they may ultimately not be able to afford. In an
|appreciating market, they may be able to refinance but will
|clearly lose some equity in covering their closing costs. In
|a cooling market, we expect that there are going to be
|substantial -- substantial folks who fall into the
| This isn't just a hypothetical issue. These loans
|were the standard subprime mortgage in 2004 and 2005. And
|since that time, we've seen a 400 basis point increase in the
| MR. OLSON: Paul, can you just wrap up?
| MR. LEONARD: Sure.
| MR. OLSON: And then we'll move on.
| MR. LEONARD: Sure. Let me offer a few suggestions.
| MR. OLSON: No, not a few. Or else just give us the
|topics and then we'll come back to them.
| MR. LEONARD: Recommendations for actions:
|Strengthening the guidance and making it mandatory and in
|using FDC Act authority to apply that, the same standards to
| Second, encouraging congress to opt a suitability
|standard for borrowers to meet the needs in their -- in this
|increasingly complex marketplace which you just referred to.
| And third, we need to fix the incentives that don't
|reward brokers and the system for increasing the rates that
|subprime borrowers face.
| MR. OLSON: Paul, thank you very much.
| Kevin, you're up next.
| MR. STEIN: Thanks. Governor Olson, members of the
|Federal Reserve staff, I want to thank you for coming to San
|Francisco to hold these important hearings and for giving us
|this opportunity to comment.
| My name is Kevin Stein. I'm the associate director
|of the California Reinvestment Coalition. We're a statewide
|advocacy coalition of over 240 nonprofits and public agencies
|that work to promote access to credit and fight predatory
|financial practices in underserved neighborhoods throughout
| The main massage I want to convey today is that
|we're seeing big problems in the mortgage market in
|California, and we urge the Fed to act to protect home buyers
|and homeowners in the state.
| We are hearing more and more atrocious stories of
|abuse. Many groups and individuals have contacted us in
|anticipation of these hearings, and I hope several of them
|will be able to come testify during the open mic session
|today so that you can hear directly from them.
| Nontraditional loans are being sold aggressively in
|California, and this is contributing to the -- to the chaos
|that we're experiencing. Interest only option ARM and stated
|income loans are being sold to borrowers who cannot afford
|homeownership and who did not understand their loan terms.
| With hundreds of billions of dollars in loans
|scheduled to reset in the next few years, we know that many
|will not be able to make their mortgage payments. As
|payments dramatically increase, these borrowers will have a
|difficult time refinancing into new home loans and those
|that -- those who could refinance will be facing steep
|prepayment penalties, which in California translates into
|thousands of dollars.
| Stated income loans we feel are a recipe for abuse,
|where brokers often inflate incomes of unsuspecting
| Another problem we see is the persistence of loan
|pricing disparities. In a study that we did based on 2004
|HMDA data, amongst many findings of disparity, we note that
|minority neighborhoods throughout the state were four times
|as likely to get higher cost home purchase loans. And we
|estimate that people of color in California are paying
|millions more per month as a result of higher cost mortgage
|loans. This dynamic obviously means that many families in
|the state are facing lost equity and have less resources to
|support their families.
| We are already witnessing an increase in delinquency
|and foreclosure activity in the state as a result of
|nontraditional mortgage products. This is alarming as
|interest rates are expected to rise and as borrowers of
|nontraditional loans face looming rate increases and resets.
| As far as solutions are concerned, we propose six
|that we hope the Fed would implement to mitigate some of
| One, expand the HOEPA protections by including yield
|spread premiums and prepayment penalties in the points and
|fees calculations. We'd also urge that you lower the HOEPA
|threshold so that the rate trigger is set at six points above
|treasury and the points and fee trigger set at five percent.
|The existing thresholds are unreasonable given the high
|housing costs in California.
| Secondly, we'd urge you to promote informed consumer
|choice by requiring key loan documents to be written in the
|same language as the language in which the negotiation is
|conducted. This is a big problem in California where
|contracts are often negotiated in one language but the loan
|documents are all in English and often with less favorable
|terms than the consumer understood.
| We have a precedent in California Civil Code Section
|1632 which we believe could be the foundation for a broader
|and more encompassing federal requirement.
| Thirdly, we urge the expansion of HMDA reporting
|requirements so that HMDA can better help us identify
|discriminatory lending practices as is its stated purpose.
|And I know the governor has spoken to this issue.
| Amongst other things, we'd urge the inclusion of
|credit score information, the age of the borrower, and,
|pertinent to this discussion, whether a loan is, in fact, a
| Fourth, we urge the development of due diligence
|standards for the secondary market. We're currently
|conducting research on the secondary market for subprime
|securities in conjunction with Raphael Bostick, the director
|of the Master of the Real Estate Development Program at the
|University of Southern California.
| To date, we've reviewed 99 subprime securitized
|issues from 2005, and we can see the prevalence of
|nontraditional loan products and other problematic loan
|terms. CRC believes the secondary market has no regard for
|whether it is financing predatory loans. Strengthening HOEPA
|will help and expand importance of liability, but broader
|standards are necessary.
| Fifth, we urge the expansion of CRA obligations.
|The Federal Reserve in its analysis that accompanied the
|release of the 2004 HMDA data noted that there were pricing
|disparities that could not be fully explained, and at the
|same time noted that these disparities were lesser within
|banks' CRA assessment areas.
| And we think that's an important finding. At the
|same time the banking regulators continue to hold on to an
|outdated and overly narrow definition of what constitutes a
|bank CRA assessment area.
| MR. OLSON: We'll ask you to stop there and we'll --
|those are important and we'll have -- we'll want to have a
|full discussion on each of those. But thank you.
| MR. LIEBER: Good morning. I'm Rick Lieber, EVP of
|IndyMac, responsible for managing our company's mortgage
|products. And I thank you for the opportunity to share our
|perspective on nontraditional mortgages. And I also thank
|the Mortgage Bankers Association for asking IndyMac to
|represent them on this very important subject.
| For quick background, IndyMac is a $24 billion
|institution. That makes us the largest in Los Angeles, the
|ninth largest in the nation, and we're also the seventh
|largest mortgage originator in the country.
| For the opening remarks, which are tied to five
|minutes, I'd like to make just three key points.
| MR. OLSON: Some of them have gone to five minutes
|and 15 seconds.
| MR. LIEBER: I get an extra ten?
| MR. OLSON: I just took ten seconds of yours, so you
| MR. LIEBER: Can I have 12 for that interruption?
| First, we think the mortgage products have actually
|typically lagged the industry in innovation and some of the
|features and option ARMs that have existed in other consumer
|products are actually better served in a mortgage product.
| Second key point, we think that most mortgage
|originators originate nontraditional mortgage loans,
|including option ARMs, in a safe manner, a sound manner that
|properly address layered risk. We think that solid
|underwriting has brought about very prudent loan products
|that have predictable performance, and we think this is born
|out in the secondary market.
| Thirdly, third point, we think some of the recent
|innovations in option ARMs that have been offered by both
|IndyMac and other major lenders actually further advance the
|soundness of the products and their appropriateness for
| On the first point, option ARMs provide borrowers
|with one very key benefit and that is flexibility in
|payments. And this allows borrowers who have a reduction in
|income or a sudden expense to be able to handle their
|mortgage payments with much lower risk of default and,
|therefore, much higher odds of not having any risk of losing
| And this is a feature of flexibility that's been
|with -- that consumers have had access to for several years
|with different consumer loan products.
| We actually think it's more prudent for a borrower
|to access these additional borrowings against an asset that
|actually rises in value over time rather than assets that
|don't have an ongoing value, such as a meal or a vacation
|that might be on a credit card.
| An additional component, interest on a mortgage is
|deductible, whereas interest on some of the other consumer
|credit generally is not.
| The second key point, IndyMac and we believe
|actually most national lenders do originate nontraditional
|mortgages in a prudent manner. And a key to this is lending
|with guidelines that guard against the potential for layered
|risk and restrict the lending to borrowers who are, in fact,
|in a position to handle that flexibility. An option ARM, for
|instance, we only lend and most national lenders only lend to
|prime quality borrowers who have a history of responsible use
| And additionally, loan-to-value ratios are typically
|five percent lower on option ARMs than other products. In
|fact, the average loan-to-value on an option ARM is
|approximately 70 percent, and that would mean, with at least
|our standard product, that the loan balance could grow only
|to the point where your advance against value is 77 percent,
|which still leaves a significant amount of equity.
| And if you factor in just a reasonable amount of
|home value appreciation, say three percent, over a three-year
|period, which is the average life of a mortgage loan, there
|actually is no loss of net equity.
| The concept of addressing risk of one loan feature
|being compensated with other guidelines applies to all of our
|core products, the alternative A products. And in a recent
|exam by the regulators on the regular scheduled exam, they
|agreed with that premise and concluded that, in fact, our
|reduced documentation loans, primarily stated income loans,
|were, in fact, less risky than full documentation loans as a
|result of those compensating factors.
| We and I think most industry participants also work
|very hard to make sure that borrowers understand the features
|of the loans that they're taking out. We have a two-page
|option ARM disclosure that in very plain English outlines the
|features of the loans and we believe very clearly illustrates
|the risk of a rising principal balance and the risk for a
|potential significant increase in minimum payment.
| This long history has proved to create a very strong
|secondary market, which I believe supports the premise that
|the products are predictable and reasonable.
| And then last point on new products, we think recent
|innovations with option ARMs have advanced the benefit to
|consumers. For example, we recently released a flex pay
|product that allows for fixed rate for up to five to seven
|years, in addition to continuing to provide the payment
|flexibility. We think -- we've also added features that
|reduces the potential increase in the payment and in the --
|an example, that can reduce the payment by up to a third.
| The conclusion that I would like to make is that we
|should make sure as we add different components to regulation
|and different restrictions on innovative products we don't
|forget the fact that many of this innovation does, in fact,
|bring about additional benefits to the consumers and we don't
|overact in a way that can stifle that benefit in the long
| I thank you again for the opportunity and I look
|forward to questions.
| MR. OLSON: My goodness, he didn't even need the
|last 12 seconds. You finished right on time.
| Well, we clearly are seeing the -- from the first
|three where the focus will be on the advantages versus the
|risks inherent in these products.
| We'll hear from Bruce and then we'll go to some
| Bruce Fuller.
| MR. FULLER: Thank you, Governor Olson. I'm Bruce
|Fuller. I work in the financial planning department for
| World Savings is one of the largest financial
|institutions in the nation with over $125 billion in assets.
|We operate savings branches in ten states and originate
|residential mortgages, almost entirely option ARMs, in 39
| We have been making adjustable rate mortgages for 25
|years and have never had a default because of loan structure.
|And the reason is very simple. We have very, very careful
|underwriting and our meticulous ongoing service after
| Our overall loss rate, even taking into account the
|deep recession in Southern California in the early '90's, in
|which we saw rapid price appreciation, followed by the
|implosion of the defense industry, high unemployment,
|declines in property values up to 20 percent, has averaged
|less than five basis points since 1981.
| So now some background on adjustables having talked
|about us a little bit. For some time before ARMs were
|originated in 1981, we and other major financial institutions
|in California and throughout the country, together with trade
|groups and others, studied the various forms of adjustables
|that were made elsewhere in the world. The research took us
|to Great Britain and other parts of Europe where ARMs had
|been used for quite a long period of time.
| At the end of the day, when we were deciding which
|type of adjustable to choose, there were basically two
|choices, the option ARM that provides protection against
|payment shock by features such as annual payment caps and the
|borrower's ability to defer interest or what we term the no
|neg ARM that does not allow deferred interest and then is,
|therefore, more likely to result in payment shock for the
| Our experience I think proves the case for the
|option ARM. Contrary to some beliefs, the option ARM loan
|was really never offered only to high-income, wealthy
|professionals. We and other lenders have been offering the
|option ARM since 1981 to the exact same types of borrowers to
|whom we and others are offering fixed rate mortgages during
|the same period of time.
| Over that period we funded over a million and a half
|option ARMs, with an average loan size of 175,000. And our
|company's delinquency rates are well below industry averages,
|including those for institutions who offer only fixed rate
| And again, indeed, we have never identified a single
|delinquent loan in our portfolio, much less a foreclosure or
|loss due to the structure of our option ARM product. Our
|option ARM because it's designed, priced, and underwritten
|reasonably is successful by definition.
| Now, what's changed recently? Obviously in recent
|years, the option ARM is being offered by a much wider
|spectrum of lenders, facilitated by the new securitization
|market, technology developments, implementation of automated
|underwriting standards, appraisal monitors, and credit
| While our version of the option ARM has been around
|a long period of time, these new technologies may not be
|fully tested, especially with alternative mortgages. And I'm
|sure we'll get into that more soon.
| We're clearly not here to defend all the practices
|in the marketplace. We have long supported a regulatory
|regime that encourages lenders to provide full and fair
|disclosure to customers and prudently manage their lending
|practices. And that includes the following:
| Avoiding lending practices that can be predatory or
|abusive, providing consumers with clear and timely
|disclosures, maintaining strong underwriting appraisal
|compliance and risk management functions, avoiding diluting
|underwriting standards just to get volume, actively managing,
|monitoring, and controlling risks of default, and regularly
|and continually interacting with customers so that they
|understand what they have and how they should act.
| Of course, these sound practices really are relevant
|to any loan a bank may offer, and we certainly support the
|reemphasis of these principals in the pending interagency
|guidance and the marketplace.
| As one side note, I would also note that other forms
|of equity that people -- ways people use equity such as
|getting fixed rate mortgages and piling equity lines of
|credit on top of it have some of the same risks as
|nontraditional products we're discussing with maybe not all
|of the protections.
| In conclusion, we applaud the agency for issuing the
|close guidance and as in our letter we think the guidance
|needs to more fully address certain emergent practices that
|may put customers in jeopardy, particularly loans that are
|offered with deep initial payment discounts.
| We do not support overly prescriptive underwriting
|rules or mind-numbing stacks of disclosures that no one would
|ever want to read or need to read or will ever read, but we
|look forward to working with the Federal Reserve and other
|agencies to develop appropriate consumer protections.
| Thank you.
| MR. OLSON: We have 200 people on our staff that
|would read every single one of those mind-numbing statistics.
| MR. FULLER: Unfortunately, Herb and the rest of us
|would, too. But I'm not sure the consumers will; that's what
|I'm worried about.
| MR. OLSON: Thank you. Thank each of you.
| Let me go back and ask a couple of follow-up
|questions. And I'm sure my other people on our panel would
|want to do the same.
| Paul, the rate sheet that you handed out would
|show -- obviously the people would want to move into the
|upper left-hand side I would think of -- in each category,
|and would certainly rather be on the left-hand side of the
|page than the right-hand side of the page.