by the United States House of Representatives

“ Do you solemnly swear or affirm that you will support and defend the Constitution of the United States against all enemies, foreign and domestic; that you will bear true faith and allegiance to the same ”

“ RAINES. We believe that the regulator, whoever it is, should have a Congressionally determined standard as to on what basis could they turn down innovation. We have no question that on a safety and soundness basis if it were deemed not to be safe and sound, no question that the regulator, whoever it is, should be able to turn that down.
But that has rarely been the issue. The issue has been more likely that someone doesn't want innovation because sometimes innovation means cutting cost. Sometimes innovation means new products coming in, competing with old products. ”

“ Although the Founding Fathers could not contemplate the size of the geographical distribution of the audience which can be reached by cable they certainly did not contemplate an arbitrary limitation on either of those factors. And it should be remembered that they delegated to the Congress the power to regulate copyright in order “to promote the progress of science and the useful arts”.
Cable has a yet unrealized capability to broaden our horizons and to bring education, information and entertainment to people everywhere. ”

“ We all think that part of the American dream is to be able to own a home. And all Americans think that we should figure out how to solve home-ownership.
So that is much more specific than the CRA requirement. And I think it affects people differently when they think about whether you are meeting that target. If I get on Fannie Mae or Freddie Mac for not meeting the home-ownership, I think people react differently than if I say a bank didn't do 30 percent of loans in some neighborhood, and I am amorphous about whether those are business loans or whatever. ”

“ There may well be cases where it would be in the public interest to deny copyright in the writings generated by Government research contracts and the like; it can be assumed that, where a Government agency commissions a work for its own use merely as an alternative to having one of its own employees prepare the work, the right to secure a private copyright would be withheld. However, there are almost certainly many other cases where the denial of copyright protection would be unfair or would hamper the production and publication of important works. ”

“ It is imperative that our Nation's rail and mass transit lines remain secure from terrorist attack as they are critical to the functioning of our Nation's economy and serve as a means of transportation on a daily basis for millions of hard working Americans. Successful attacks against rail and mass transit targets have been carried out worldwide by terrorist looking to create havoc, economic harm, and kill innocent people. ”

“ SCHULTZ. Sir, as I mentioned earlier, the concern that leads to our wanting to be included with the same regulator is that the market's perceptions are critical in terms of our cost of funds and our ongoing ability to access the markets, both domestically and abroad. And if there is a perception that, well, with the other two housing GSEs, the world class regulator is appropriate but the federal home loan banks do not need that kind of supervision, people may begin to question is it really a GSE? Is it really the same thing as those entities? ”

“ It may seem that a compulsory license is a drastic invasion of the rights of private property. Yet, when we remember that a cable system is passive in its program selection and must intercept and distribute whatever the primary transmitter transmits then we must recognize that it is impossible and impractical for the cable system to negotiate for a license with the copyright owner in advance of transmitting the programing. ”

“ I understand that new programs may raise safety and soundness issues. So if HUD approved the new program, Treasury could then step in and say well, that is a riskier program, here are the reserves that you need. That is the proper purpose of a safety and soundness regulator.
But if the mission of developing new types of mortgages that will help those, say with tarnished credit histories, get financing, if that is moved over to an organization whose mission and expertise has nothing to do with getting people, particularly first-time home buyers into housing, I think that would be a problem. ”

“ And attacks on mass transit--the circulatory systems of urban areas-- can cause widespread fear, severely disrupt economic activity, kill or injure large numbers of people, and alter our way of life. An attack on our freight rail, either the material being transported, such as hazardous materials, or vital commodities, or merely the system itself, could severely impact our national economy. ”

“ Thus, infringement takes place whenever all or any substantial portion of the actual sounds that go to make up a copyrighted sound recording are reproduced in phonorecords by repressing, transcribing, recapturing off the air, or any other method, or by reproducing them in the soundtrack or audio portion of a motion picture or other audiovisual work. Mere imitation of a recorded performance would not constitute a copyright infringement even where one performer deliberately sets out to simulate another’s performance as exactly as possible. ”

“ So I guess our only point is, if we are not going to change minimum, do we construct a new regulator like every other financial regulator of every other financial institution who has that tool in his resume, recognizing that we are not going to change the minimum capital standards, but if risk profiles change and there is a need to change it, why should we have to come back to the Congress in order to adopt a minimum capital modification? ”

“ It is my job to ensure that we are able to prevent problems before they develop and to ensure that the enterprises remain safe and sound. And I am asking for the authority that every other regulator has.
We exercise it in our best judgment, and while we have no plans currently to raise capital, if we consider that the condition of the companies, based on our knowledge of their activities through our examination process, ever required us proposing an increase in capital, we wouldn't just do it willy-nilly. ”

“ A library that has acquired ownership of a copy is entitled to lend it under any conditions it chooses to impose. This does not mean that conditions on future disposition of copies or phonorecords, imposed by a contract between their buyer and seller, would be unenforceable between the parties as a breach of contract, but it does mean that they could not be enforced by an action for infringement of copyright. Under section 202 however, the owner of the physical copy or phonorecord cannot reproduce or perform the copyrighted work publicly without the copyright owner’s consent. ”

“ The “best edition” of a work is the edition, published in the United States at any time before the date of deposit, that the Library of Congress determines to be most suitable for its purposes. A person’s “children” are that person’s immediate off-spring, whether legitimate or not, and any children legally adopted by that person. A “collective work” is a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole. ”

“ So whether it is our housing goals, which we have met every year, or whether it is low and moderate income borrowers, or it is borrowers in underserved areas, or whether it is minority goals, which we set ourselves—HUD does not have the authority to set a minority goal, we set that ourselves—in all those cases we lead the market, and we are quite proud of it. ”

“ It is argued that cable merely intercepts the signal which has already been broadcast and then carries it to the subscriber’s television receiver. It is argued that cable is merely an extension of the viewer’s antenna. But the copyright owners and the copyright licensees argue that the cable systems are distributing the broadcast signals to a vastly greater audience than the broadcaster could reach and that this constitutes a “performance” and should invoke a copyright liability. ”

“ Why the African American community? Is there something going on in that community that they are faced with that no one else has? I think we want to know that.
And if you could give us some clarity on how, on one hand, you favor what the Administration is doing, but then on the other hand you are fearful of what it is doing.
Mr. RAINES. Well, if I might start, Congressman. I think you put your finger on the conundrum that we face. We are vitally committed to our housing mission. It is what we do. It is who we are. And it is our number one priority. ”

“ They asserted that the performing rights society arrangements under which copyrighted music is licensed for performance removed any problem in clearing music for broadcasting, and that voluntary agreements could adequately resolve the copyright problems feared by public broadcasters, at less expense and burden than the compulsory license, for synchronization and literary rights. The authors of literary works stressed that a compulsory licensing system would deny them the fundamental right to control the use of their works and protect their reputation in a major communications medium. ”

“ I am concerned that the Finance Board again failed to protect against systemic risk.
Home Loan Banks do not usually either suspend their dividend or dip into retained earnings to pay their dividend. And, Mr. Korsmo, you have seen this happen twice in this quarter.
I guess my question is, should Congress be concerned about this? And should Congress be concerned that our Treasury Secretary Snow and our Federal Chairman Greenspan and our GAO have called for combining regulation of all three GSEs at this time? ”

“ A “transmission program” is a body of material that, as an aggregate, has been produced for the sole purpose of transmission to the public in sequence and as a unit. To “transmit” a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent. The “United States”, when used in a geographical sense, comprise the several States, the District of Columbia and the Commonwealth of Puerto Rico, and the organized territories under the jurisdiction of the United States Government. ”

“ But nevertheless, the regulatory structure was not caught up to it. A regulator was created that took—without the authority to adopt capital standards that every other regulator has always had, and it took eight years for them to issue their first regulation because of the statutory hamstring, not bad people.
So it has gotten to a $3.3 trillion overhang over the nation's economy. And unless strong, independent regulation is provided, the housing goals for Fannie and Freddie will go in the tank because the system will ultimately be in jeopardy. ”

“ As a class of subject matter, sound recordings are clearly within the scope of the “writings of an author” capable of protection under the Constitution, and the extension of limited statutory protection to them was too long delayed. Aside from cases in which sounds are fixed by some purely mechanical means without originality of any kind, the copyright protection that would prevent the reproduction and distribution of unauthorized phonorecords of sound recordings is clearly justified. ”

“ It doesn't do anyone any good to put someone into a home and then as soon as they get into a little bit of trouble, foreclose on it. And it doesn't do any good to have a bunch of foreclosed houses sitting abandoned in a community. That is why Fannie Mae fixes up houses before we
sell them back so that people are getting a house that is in good shape. And we do that very quickly.
But it is absolutely a critical part of what we and our lenders do, is to ensure that people who get into homes can stay there and to take whatever steps we need. ”

“ Copyrighted works move across national borders faster and more easily than virtually any other economic commodity, and with the techniques now in common use this movement has in many cases become instantaneous and effortless. The need to conform the duration of U.S. copyright to that prevalent throughout the rest of the world is increasingly pressing in order to provide certainty and simplicity in international business dealings. Even more important, a change in the basis of our copyright term would place the United States in the forefront of the international copyright community. ”

“ I think the combination, frankly, of safety and soundness with mission compliance are not mutually exclusive, that we can take actions that are not only good for the enterprises and their shareholders, but we can take action that is also beneficial to the taxpayer. There is a net win to this process and the mere examination of the subject has not caused the housing market nor interest rates to go anywhere but down. ”

“ Although limitations on the term of copyright are obviously necessary, too short a term harms the author without giving any substantial benefit to the public. The public frequently pays the same for works in the public domain as it does for copyrighted works, and the only result is a commercial windfall to certain users at the author’s expense. ”

“ We should be enhancing regulation, not making fundamental change.
Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals.
What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100 percent loans. ”

“ As a form of property, copyright is also afforded the protection of the Constitution and our laws, including the injunctions of the Fifth and Fourteenth Amendments which declare that no person shall be deprived of property without due process of law, nor shall private property be taken for public use without just compensation. ”

“ Would you, based on your operational experience and your ability to make credit available to your customers and your ability to move in the markets, have you found that capital standard to be an inhibition to your success—either one of the Home Loan Bank folks—and would you recommend to us that if we were all together, everybody would have the same capital standard? ”

“ The definition in section 101 provides that “creation” takes place when a work “is fixed in a copy or phonorecord for the first time.” Although the concept of “creation” is inherently lacking in precision, its adoption in the bill would, for example, enable a scholar to use an unpublished manuscript written anonymously, pseudonymously, or for hire, if he determines on the basis of internal or external evidence that the manuscript is at least 100 years old. ”

“ And in private corporations, I know they do that on a regular basis, but whether or not with your special feature, having at least in the marketplace the implication of full faith and credit of the government, whether we like the idea that there is so much attention being paid by the board or the corporate family as to what profits look like and for reasons that I am trying to determine in my mind, why is the board so worried whether or not there are spikes in income. ”

“ The term “made” is intended to be broader than “manufactured,” and to include within its scope every possible manufacturing or other process capable of reproducing a sound recording in phonorecords. The use of the phrase “made and distributed” establishes the basis upon which the royalty rate for compulsory licensing under section 115 is to be calculated, but it is in no way intended to weaken the liability of record pressers and other manufacturers and makers of phonorecords for copyright infringement where the compulsory licensing requirements have not been met. ”

“ SPRIGGS. Well, again, because I think the reality is that the housing problem is complex, and it can't be solved only pointing at mortgage bankers or only pointing at Fannie Mae. And if a regulator has the responsibility of soundness primarily and comes from an institution that looks that way, I fear it would be like CRA. And those of us in many organizations have big struggles over getting the Community Reinvestment Act meaningfully enforced.
It is very rare to see a bank get a bad grade on their CRA. And it is not as if they are doing fantastic things. ”

“ As I mentioned, the hearing we held a couple weeks ago, as Chairman of the Housing Opportunities Subcommittee, I have a keen interest in the strength of our nation's housing market.
GSE regulation is an incredibly important issue for all Americans. One of the only things that held this economy together as we all know in the last two years was housing and automobiles. Right now, it is housing as an important part of the recovery.
The United States mortgage and credit markets are the envy of the world. ”