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UTILIZING TECHNOLOGY TO IMPROVE TARP 

AND FINANCIAL OVERSIGHT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 17, 2009 

Printed for the use of the Committee on Financial Services 

Serial No. 111–75 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

DENNIS MOORE, Kansas, Chairman 

STEPHEN F. LYNCH, Massachusetts 

RON KLEIN, Florida 

JACKIE SPEIER, California 

GWEN MOORE, Wisconsin 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

ALAN GRAYSON, Florida 

JUDY BIGGERT, Illinois 

PATRICK T. MCHENRY, North Carolina 

RON PAUL, Texas 

MICHELE BACHMANN, Minnesota 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

September 17, 2009 .......................................................................................... 1 

Appendix: 

September 17, 2009 .......................................................................................... 31 

WITNESSES 

THURSDAY, SEPTEMBER 17, 2009 

Hahn, Gregory B., Principal, Crowe Horwath LLP .............................................. 15 

Horne, Stephen C., Senior Vice President for Master Data Management and 

Integration Services, Dow Jones Enterprise Media Group ............................... 9 

Kimner, Thomas, Risk Manager, Americas Risk Practice, SAS Institute, Inc. .. 18 

Krishna, Dilip, Vice President, Financial Services and Insurance, Teradata 

Corporation ........................................................................................................... 11 

Marlow, Susan, Chief Executive Officer, Smart Data Strategies, Inc., on behalf of MAPPS ...................................................................................................... 13 

Quaadman, Thomas, Executive Director, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce ................................................................ 8 

Schwartz, Ari, Vice President and Chief Operating Officer, Center for Democracy and Technology ............................................................................................ 6 

Zelner, Bennet A., Professor, Fuqua School of Business, Duke University, 

on behalf of the Probity Group ............................................................................ 16 

APPENDIX 

Prepared statements: 

Hahn, Gregory B. ............................................................................................. 32 

Horne, Stephen C. ............................................................................................ 38 

Kimner, Thomas ............................................................................................... 51 

Krishna, Dilip ................................................................................................... 61 

Marlow, Susan .................................................................................................. 67 

Quaadman, Thomas ......................................................................................... 95 

Schwartz, Ari .................................................................................................... 99 

Zelner, Bennet A. .............................................................................................. 103 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Moore, Hon. Dennis: 

Written responses to questions submitted to Thomas Quaadman ............... 106 

Written statement of the Epicurus Institute ................................................. 108 

Written statement of Ann Fulmer, Vice President, Interthinx, Inc. ............ 112 

Letter from various undersigned organizations in support of H.R. 1242 .... 114 

Written statement of SecondMarket, Inc. ...................................................... 116 

Maloney, Hon. Carolyn: 

Letter from the U.S. Chamber of Commerce ................................................. 120 

Letter from Bennet Zelner ............................................................................... 121 

Additional information provided for the record by Gregory Hahn ............... 123 

Additional information provided for the record by Stephen Horne .............. 137 

Additional information provided for the record by Ari Schwartz ................. 255 

(1) 

UTILIZING TECHNOLOGY TO IMPROVE TARP 

AND FINANCIAL OVERSIGHT 

Thursday, September 17, 2009 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:02 a.m., in room 

2128, Rayburn House Office Building, Hon. Dennis Moore [chairman of the subcommittee] presiding. 

Members present: Representatives Moore of Kansas, Lynch, 

Klein, Adler; Biggert, Lee, and Paulsen. 

Also present: Representative Maloney. 

Chairman MOORE OF KANSAS. This hearing of the Subcommittee 

on Oversight and Investigations of the House Financial Services 

Committee will come to order. Our hearing this morning is entitled, ‘‘Utilizing Technology to Improve TARP and Financial Oversight.’’ This is our 7th O&I Subcommittee hearing of the year, and 

our 3rd one that will at least touch on the very important issue of 

TARP oversight. 

I am glad to have a diverse panel with a number of witnesses 

coming from the private sector, and I’ll simply point out that we 

obviously are not endorsing one firm’s technology over another 

whether any firm is represented here today or not. But we wanted 

to start a discussion of what kind of technology is currently being 

used in the marketplace today, and how the government might use 

these technologies to conduct stronger oversight and ensure greater 

transparency. 

We will begin this hearing this morning with members’ opening 

statements, up to 10 minutes per side. We will then hear testimony 

from our witnesses, and after that, members will each have up to 

5 minutes to question our witnesses. The Chair advises our witnesses to please keep your opening statements to 5 minutes. Given 

the size of our panel, we want to keep things moving so we can get 

to members’ questions. Also, any unanswered question can always 

be followed-up in writing for the record, and I encourage you to do 

that. 

I ask unanimous consent that Congresswoman Carolyn Maloney, 

a member of the full committee, but not this subcommittee, be allowed to participate in today’s hearing. Is there any objection? 

Without objection, it is so ordered. 

All members’ opening statements, without objection, will be made 

a part of the record, and I now recognize myself for up to 5 minutes 

2 

for an opening statement. This week marks the one-year anniversary of the collapse and bankruptcy of Lehman Brothers, the moment when the financial crisis really accelerated, requiring the 

need for Congress to respond by creating the $700 billion TARP 

program to stabilize the financial sector. 

I have been pleased with the progress by banks in not only paying the initial TARP investments back to the government in recent 

weeks and months, but also dividends and warrant repurchases 

that have been very profitable for taxpayers. The Treasury Department recently reported that a total of $70.3 billion of TARP investments have been repaid through August of 2009. Total dividends 

and interest payments received by the government in excess of initial TARP principal repayments is $9.36 billion. At our last subcommittee hearing in July on TARP warrant repurchases, I think 

it’s no surprise that due to our raising public awareness on that 

issue, Goldman Sachs agreed to repurchase the full value of their 

TARP warrants at $1.1 billion. It is clear that simply raising public 

awareness and increasing transparency can reap big rewards for 

taxpayers, especially as we continue to monitor the use of TARP 

funds, and we will continue to do that. 

Of the $700 billion of TARP funds authorized, $644 billion has 

been planned for particular TARP programs, with $433 billion of 

that money committed to specific institutions under signed contracts. As the chairman of this Oversight and Investigations Subcommittee, I fully intend to keep the pressure up until every single 

dollar of TARP funds has been repaid to taxpayers. Today, we will 

be hearing from a variety of witnesses with expertise on how technology might be used by the government to increase transparency, 

oversight, and accountability, especially with the unique nature of 

financial markets and activity. I thank our witnesses for being 

here, and I look forward to your testimony. 

One specific proposal we will discuss in H.R. 1242, the TARP Accountability and Disclosure Act, authored by my colleague from 

New York and the chairwoman of the Joint Economic Committee, 

Congresswoman Carolyn Maloney, I am proud to be a co-sponsor 

of H.R. 1242, because it will utilize technology that’s readily available today and will help standardize and monitor TARP data, so 

that not only the government, but more importantly U.S. taxpayers, can know and see for themselves how the funds are being 

spent. 

Another idea that I know Ms. Marlow will raise is the idea of 

creating a national land parcel database and put into use as an 

early warning system that could monitor the housing market more 

closely and provide greater transparency. How can the government 

better utilize these technologies to conduct and prove financial 

oversight? 

Finally, I want to thank my friend and the ranking member of 

the subcommittee, Judy Biggert, for calling for a hearing on technology. I thought it was a great idea, and I hope today is the first 

of many conversations on this important issue so our financial 

agencies can better utilize the latest cutting edge technology to improve not only TARP oversight, but coordinated oversight of all financial services activity. 

3 

I now recognize for 5 minutes the ranking member of the subcommittee and my friend and colleague from Illinois, Judy Biggert. 

Mrs. BIGGERT. Chairman Moore, thank you for holding this hearing. As you just said, I requested a hearing on technology several 

times this year and I am pleased we are finally able to make it 

happen. It is my hope that we can follow-up today’s discussion with 

a second hearing to hear the testimony of the financial regulators. 

A financial oversight hearing on technology may not sound riveting to most, however, I would wager it will become more attention grabbing as American taxpayers learn about how technology 

could help Federal financial regulators detect waste, fraud, and 

abuse, as well as address risk within the financial institutions and 

markets. 

There is no question that with record deficits and debt, we must 

find the best and most cost-effective way to enhance the transparency and accountability of the $700 billion TARP program, trillions in taxpayer funds committed by the Federal Reserve, and 

other Federal expenditures in the financial sector. Perhaps if the 

Treasury used more up-to-date technology to track TARP funds, we 

would know clearly how TARP recipients have used the funds. 

However, the question remains unanswered, and there’s no question that our financial regulators have antiquated IT systems that 

have resulted in inadequate regulatory oversight and enforcement. 

A GAO report concluded that HUD’s 15-year-old IT systems contribute to the Department’s inability to effectively and efficiently 

perform mission critical operations, including those integral to our 

Nation’s economic recovery and investment activities. For example, 

in June GAO, issued a report on reverse mortgages for seniors. 

Among several findings, it determined that certain phone only 

housing counselors are not providing seniors with required information. Couldn’t better technology infrastructure improve the accountability in this program? 

It’s unacceptable for ineffective or inefficient technology to lessen 

the transparency and accountability of Federal programs and agencies, and constituents, the American taxpayers who give their hardearned dollars every paycheck, are rightfully outraged when Federal agencies allow funds to be abused by organizations like 

ACORN. According to a staff report issued by the House Committee on Oversight and Government Reform, I quote: ‘‘Since 1994, 

more than $53 million in Federal funds have been pumped into 

ACORN for services like housing counseling. Yet, how is this 

money spent?’’ 

The report mentions that 70 ACORN employees have been convicted in 12 States for voter registration fraud. The report even 

credits ACORN with helping elect in my home State, Illinois, nowdisgraced, former Governor Blagojevich, but I don’t really don’t 

want to get into that. So all these things are unacceptable, and the 

common theme, that all these funds for TARP, ACORN, and other 

activities are taxpayer dollars, and Americans have a right to expect that each penny will be accounted for properly. 

Federal regulators need effective tools like state-of-the-art technology and experts to track and flag the misuse or illegal use of 

taxpayer funds. It’s no secret that one of the reasons our country 

got into this financial mess is because there are simply too many 

4 

regulators who weren’t doing their job and were not communicating 

effectively across agencies. Plus, I’m very skeptical that for consumers the answer is making government bigger, by creating a 

new Federal agency as little more than a facade of reform. And 

don’t get me wrong. We need financial reform, and bailouts and the 

government practice of picking winners and losers and restoring 

market discipline. 

We need smart, clear, and strong regulations to get our financial 

system back on track so that our economy can grow, businesses can 

create desperately needed jobs, and American families can secure 

credit. Technology alone is not the only answer to address the 

shortcomings in our financial regulatory system and Federal programs, but it certainly appears that it could be a large part of the 

answer. 

With that, I welcome today’s witnesses and I look forward to our 

discussion. I yield back. 

Chairman MOORE OF KANSAS. Thank you very much, and I now 

recognize Congressman Lynch for 2 minutes. Sir? 

Mr. LYNCH. Thank you, Mr. Chairman, and Ranking Member 

Biggert. 

I really appreciate that we are having this hearing and I appreciate all the witnesses coming forward to help us with our work. 

This is an important hearing in that it not only addresses the oversight capabilities of Congress and this committee with respect to 

the TARP program, which I voted against, but I have the unhappy 

task of trying to track some of this money, which is not being done 

without great difficulty. 

But also, because of the new financial regulations reform that 

we’re considering, our responsibilities will be expanded, as will 

yours. And we have to figure out a way that we can provide transparency and accountability to the American taxpayer. In this one 

TARP program that I opposed, we put out $700 billion in taxpayer 

funds to bail out the banks, and if that weren’t maddening enough, 

we have had a very, very difficult time tracking where the money 

went, what it was spent for, and whether or not the program was 

abused or used correctly. There were no accountability measures in 

the bill to allow us to track. 

It was done in great haste, and I understand that, but now we 

have a chance to reset our capabilities to oversee this type of program and all the others that are being considered. So I’m extremely 

interested in hearing your perspectives, because of the many talents that we have here on the panel today, and I look forward to 

your testimony. I yield back the balance of my time. Thank you, 

Mr. Chairman. 

Chairman MOORE OF KANSAS. Thank you, sir. Congresswoman 

Maloney, you are recognized for 3 minutes. 

Mrs. MALONEY. Thank you so much, Mr. Chairman and Ranking 

Member Biggert, for holding this hearing, and our panelists. 

As you know, I have introduced H.R. 1242, the TARP Accountability and Disclosure Act, along with Peter King. It is a bipartisan 

bill and it is very notable that this week marks the one-year anniversary of the financial crisis. It was on September 15th that Bank 

of America purchased Merrill Lynch; that Lehman Brothers filed 

for Chapter 11; and that the government moved to bail out AIG; 

5 

and also, President Bush signed legislation establishing the $700 

billion TARP fund. 

Since then, much of this fund has been distributed, and I will 

note that over $70 billion has been repaid. And I join the chairman 

in looking forward to all of this money being paid. But, from the 

beginning, the public, the media, and Members of Congress have 

raised concerns that the lack of transparency and accountability 

could lead to massive waste, fraud and abuse of the TARP funds. 

And the complexity of the institutions receiving these funds, combined with the volume of information they report, have made it 

very difficult to capture a comprehensive understanding of how 

these funds are being used. 

Using current, proven technology and readily available financial 

data as contemplated under my bill, it would be possible to get a 

complete picture of the actions of the TARP fund for recipients and 

contractors in real, usable time. Currently, TARP funds are collected in 25 different Federal agencies. I’ll place in the record 

where they are. It is totally unusable. The Administration will say 

it’s available, but it’s not usable. You would have to go to 25 different agencies to put it together, and agencies will say the information is available, but it is not in a usable form. And I have 

raised this in several hearings and in letters to the Treasury. 

Traditional audits provide reporting, but not true transparency, 

and I would like to put it in terms of the difference between an autopsy and a diagnosis. An audit can be thought of as a financial 

autopsy. It may uncover issues and problems, but too late to effectively address them. It is far more effective to diagnose issues and 

problems as early as possible so that they can be addressed quickly. And by using technology and information that is currently available, it is possible to oversee these funds in a timely way and allow 

more time for addressing potential problems. 

I would like to place in the record a broad coalition of supporters, 

over three dozen outside groups from across the political landscape, 

including the Center for Democracy and Technology, and the U.S. 

Chamber of Commerce. Both are here today and both are supporting this bill. And the panelists today have a variety of unique 

perspectives, not only on transparency for TARP data, but on 

transparency throughout the financial services area. 

I would like to thank them very much for being here and again 

commend the chairman and ranking member for their support. I 

look forward to the testimony. Thank you. 

Chairman MOORE OF KANSAS. Thank you. 

I am pleased today to introduce our witnesses. First, we’ll hear 

from Mr. Ari Schwartz, vice president and chief operating officer 

for the Center for Democracy and Technology. Next will be Mr. 

Thomas Quaadman, executive director for financial reporting policy, U.S. Chamber of Commerce. 

I will turn to Congressman John Adler to introduce his constituent. 

Mr. ADLER. Thank you, Mr. Chairman. 

And with respect to the other witnesses, welcome to all of you. 

I am particularly pleased to welcome Mr. Steve Horne, the senior 

vice president for Master Data Management for Dow Jones and 

Company. He has been a resident of New Jersey since age 3, simiVerDate Nov 24 2008 15:39 Mar 29, 2010 Jkt 054866 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\54866.TXT TERRIE
6 

lar to me, and his family enjoys spending their summers in Lovely. 

It is a beautiful, beautiful community in my district in Long Beach 

Island. Please come often, spend money. Master Data Management 

for Dow Jones is headquartered in South Brunswick, New Jersey, 

and houses 1,300 employees. 

Mr. Horne, welcome to the Financial Services Subcommittee on 

Oversight and Investigations. I look forward to your testimony and 

that of your fellow witnesses on this important topic. 

Mr. HORNE. Thank you, Mr. Chairman. 

Chairman MOORE OF KANSAS. Thank you. And next, we will hear 

from Mr. Krishna, vice president, financial services and insurance. 

After him will be Ms. Susan Marlow, chief executive officer, Smart 

Data Strategies, Inc., on behalf of MAPPS. I will let Ranking Member Biggert introduce our next witness. 

Mrs. BIGGERT. Thank you, Mr. Chairman. 

I would like to introduce Mr. Greg Hahn, who actually is from 

Grand Rapids, Michigan, but he is going to be testifying on behalf 

of Crowe Horwath, an international accounting and technology 

company. The largest office is in my district in Oakbrook, Illinois. 

For the past several years, Mr. Hahn has been responsible for 

Crowe Horwath’s anti-money laundering or AML clients in the 

United States, helping these businesses to develop and implement 

and optimize their AML compliance programs, and he has helped 

organizations define customer relations management strategy and 

implement technology solutions that support that strategy. So he 

specializes in areas of governance, risk and compliance program development. He graduated summa cum laude from Central Michigan 

University with a bachelor of science degree in computer sciences. 

Thank you, and welcome, Mr. Hahn. 

Chairman MOORE OF KANSAS. And for our last two witnesses, we 

have Professor Bennet A. Zelner of Duke University, as well as Mr. 

Thomas Kimner, risk manager, Americas Risk Practice, SAS Institute, Inc. 

Without objection, your written statements will be made a part 

of the record. 

Mr. Schwartz, sir, you are recognized for 5 minutes to provide a 

brief summary of your statement. 

STATEMENT OF ARI SCHWARTZ, VICE PRESIDENT AND CHIEF 

OPERATING OFFICER, CENTER FOR DEMOCRACY AND TECHNOLOGY 

Mr. SCHWARTZ. Thank you, Chairman Moore. Mr. Chairman, 

Ranking Member Biggert, and members of the committee, on behalf of the Center for Democracy and Technology, I would like to 

thank you for holding this important hearing today and inviting us 

to testify. 

I am here to discuss two ideas that are before this subcommittee. 

One is the increased oversight of TARP funds, and the second is 

coordination and assistance to better analyze and address property 

vacancy and abandonment, both using technology. Both of these 

ideas offer agencies the ability to create important technology tools 

to provide greater oversight of the use of taxpayer money. 

CDT has a couple of important, but easy to implement, improvements that require the agencies to keep the best interests of taxVerDate Nov 24 2008 15:39 Mar 29, 2010 Jkt 054866 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\54866.TXT TERRIE
7 

payers and property owners in mind that should be of interest to 

the subcommittee in its oversight role. H.R. 1242, Representative 

Maloney’s bill, would require the Treasury Department to establish 

a database that would provide ongoing, continuous updates on the 

distribution of TARP funds. This database is vitally necessary to 

help track the hundreds of billions of taxpayer dollars at work. To 

accomplish this, the bill would create a centralized information repository from private and public sources to track progress. 

CDT, along with Open the Government, the Project on Government Oversight, OMB Watch, and Taxpayers for Common Sense all 

support the creation of the database and urge that H.R. 1242 go 

a step further by requiring the centralized repository of TARP information be made available to the public on the Web. Providing 

TARP information directly to the public online will strengthen 

oversight. In particular, it will provide the media, watchdog groups, 

researchers, and concerned citizens with the ability to analyze the 

data, reuse it, and present it in novel ways, uncovering positive 

and negative trends and anomalies. 

Clearly, there is no prohibition in the bill against online access, 

but we ask that the text of the bill explicitly require that the nonpropriety TARP oversight resources be made available to the public 

on the Web to ensure that agencies keep the public interest and direct accountability in mind. Financial Stability.gov, the Web site 

that is now online, offers a useful start for TARP oversight. However, there are many TARP activities and related public data that 

are not available. H.R. 1242 should help take this important resource to the next level. 

The second idea calls for the creation of a regional real property 

data system, tying property records to land parcels. These data systems could tie tax and foreclosure information to location data to 

create new ways to analyze and mitigate predatory lending practices, reverse red-lining and foreclosures. The bill also calls for improvement of these data systems in order to streamline and improve procedures around urban renewal strategy. 

CDT supports the goals of this effort as well, but we urge the 

committee to specifically require privacy and security oversight, 

and improve data accuracy in the effort to create centralized data 

systems. Currently, counties manage their own geospatial data. As 

less localized data systems are created and merged, concerns over 

the differing standards for this data must be addressed. In particular, CDT has seen a wide range of local practices for providing 

detailed images of homes and tying this information to other public 

records. 

In Ohio and Arizona, for example, we have seen cases where the 

specificity of this data has led concerns over homeowner safety and 

even identity theft in several cases. While there is nothing in this 

legislation to prevent the Federal and local agencies from implementing the pilots with privacy and security in mind, we suggest 

the relatively minor and light-handed approach of a privacy impact 

assessment before these pilots are able to move forward. 

In summary, it’s important to recognize the potential power of 

the information coordination and sharing that it can lend to the 

oversight of markets. This information should be made directly 

available on the Web when possible, to provide greater transVerDate Nov 24 2008 15:39 Mar 29, 2010 Jkt 054866 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\54866.TXT TERRIE
8 

parency and accountability to the public. In doing so, we must also 

ensure the quality and the privacy of this data. I thank you for 

having me here, and I look forward to your questions. 

[The prepared statement of Mr. Schwartz can be found on page 

99 of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. Schwartz. 

Mr. Quaadman, you are recognized, sir, for 5 minutes. 

STATEMENT OF THOMAS QUAADMAN, EXECUTIVE DIRECTOR, 

CENTER FOR CAPITAL MARKETS COMPETITIVENESS, U.S. 

CHAMBER OF COMMERCE 

Mr. QUAADMAN. Thank you, Mr. Chairman. 

Chairman Moore, Ranking Member Biggert, and members of the 

subcommittee, I wish to thank you for the opportunity to speak before you on this important issue. And let me say at the outset that 

we are testifying today in support of H.R. 1242 and wish to thank 

Congresswoman Maloney and Congressman King for their leadership and foresight in introducing this bill. 

In the days and weeks following the Lehman collapse, the United 

States and the global economy stood on the precipice of an outright 

collapse. The credit markets were frozen. Consumers stopped 

spending. Businesses started to contract and we saw the first electronic run on financial institutions. To prevent widespread collapse, 

the Bush Administration and Congress took unprecedented and 

dramatic action in passing the Emergency Economic Stabilization 

Act. 

The centerpiece to the EESA is the Troubled Assets Relief Pro- gram, or TARP. With over $700 billion in Federal funding, the purpose of TARP is to stabilize the financial system and help create 

the conditions for recovery. The United States Chamber of Commerce lobbied for the creation of the TARP program and continues 

to support efforts to improve the program to ensure its success. 

Simply put, the financial crisis had driven the United States to its 

worst economic predicament since the Great Depression. In order 

for businesses to function, and for an economic recovery to take 

hold, the financial services sector needed immediate shoring up and 

that vehicle was TARP. 

TARP was intended to purchase toxic assets and take them off 

the balance sheets of financial institutions; however, Secretary 

Paulsen opted to use an alternative provision of the bill when it became apparent that the valuation of toxic assets was too difficult, 

and that a purchase program would take too long to have an immediate impact. Consequently, it was decided the TARP fund should 

be used to inject capital into struggling or systemically important 

financial firms. 

The TARP program has had its problems, but a year later we can 

say that an outright collapse was avoided. The financial sector is 

stabilizing, and the first signs are appearing that an economic recovery has taken hold. That being said, the situation is still fragile. 

While the Chamber has stood by the TARP program, we have also 

supported efforts to improve its implementation. As with any government program, the Chamber believes that there needs to be accountability for taxpayer dollars. This is particularly true with the 

massive expenditure of government moneys through an expedited 

9 

process. Simply put, the American people have a right to know 

how, where, and when their hard-earned money is being spent. 

President Obama recently announced that firms that have fully 

repaid their TARP funds have provided taxpayers with a return of 

17 percent. This proves that TARP can be successful. However, any 

potential misallocation or misuse of taxpayer dollars may erode 

support for the TARP program, undermine confidence of firms in 

TARP, and possibly harm efforts to stabilize the financial sector. 

By building transparency into the administration of TARP, accountability will be enhanced. Taxpayers can have trust in the program and expenditure resources. 

Accountability for the use of taxpayer dollars helps establish the 

confidence that is needed for TARP to stabilize the financial sector. 

Because of this need for accountability and transparency, the 

Chamber wrote to Congress on June 11, 2009, in support of H.R. 

1242. This bipartisan bill sponsored by Representatives Maloney 

and King represents an important step forward in creating and enforcing accountability. Currently, information regarding TARP 

funds are spread across multiple agencies, using incompatible formats and it takes a daunting task for officials and taxpayers to understand how funds are being used. 

The Maloney-King bill would require the use of existing technologies to create a single, publicly accessible database that can 

track TARP funds in near real time. This transparency will help 

avoid the misuse of funds and develop a level of confidence that is 

integral to the success of TARP. The implementation of this bill 

would provide a benefit that would outweigh costs. 

That being said, we also believe that there are some issues that 

need to be addressed with this implementation. In other pieces of 

legislation through the Privacy Act and Gramm-Leach-Bliley, Congress has taken steps to ensure the privacy and careful disclosure 

of financial information of businesses and individuals alike. We 

think that these are important issues that need to be addressed in 

the implementation of this legislation. We also believe that information should be used in a contextual basis so that discussion of 

its context would provide a basis for a better understanding. 

I understand that my time is up, Mr. Chairman, and my full remarks are in the record. Thank you. 

[The prepared statement of Mr. Quaadman can be found on page 

95 of the appendix.] 

Chairman MOORE OF KANSAS. Thank you for noticing your time, 

too, and I appreciate that. 

Mr. Horne, you are recognized, sir, for up to 5 minutes. 

STATEMENT OF STEPHEN C. HORNE, SENIOR VICE PRESIDENT 

FOR MASTER DATA MANAGEMENT AND INTEGRATION 

SREVICES, DOW JONES ENTERPRISE MEDIA GROUP 

Mr. HORNE. Thank you very much. Good morning, Chairman 

Moore, Ranking Member Biggert, members of the subcommittee, 

and Congresswoman Maloney. 

My name is Steve Horne. I am vice president of Master Data 

Management for the Dow Jones Enterprise Media Group. I have 

spent over 30 years building complex databases by transforming 

10 

highly complicated data, and I think that we have all heard that 

this is highly complicated data, into usable information. 

Dow Jones has provided transparency to the marketplace in the 

form of indexes, publicly and privately held corporate information 

and analysis for over 100 years. We are kind of in the transparency 

business. Thank you for inviting me to speak with you today. Since 

the passage of TARP, Dow Jones has been a strong advocate of the 

use of technology to provide transparency to the program that to 

date has been somewhat opaque to both this House and to the 

American people. 

The SIGTARP and the independent Congressional Oversight 

Committee have both made very strong statements that further action must be taken to make TARP more transparent Transparency 

is not just about casting a light and reporting to the institutions 

receiving TARP funds, but in his report to Congress on July 21, 

2009, the SIGTARP noted that we need a systematic program designed to capture appropriate information necessary to prevent 

waste, fraud, and abuse of TARP funds. 

We support the goals of H.R. 1242 and the actions of Congresswoman Maloney and Congressman King in terms of providing true 

transparency to the TARP program. Real-time data-driven reporting and analysis provides the American taxpayer comfort that their 

money is being used as intended under TARP, and, potentially, 

other future programs to be covered under the new financial reform 

act. Proper reporting procedures are not only missing from the 

TARP program, but they’re missing from almost all the current 

programs distributing Federal funds to private institutions. 

There was no clearly established mandate that such procedures 

in place to govern the distribution of funds from any sector of the 

federally-funding infrastructure are in place. Dow Jones’ application as currently in use worldwide demonstrates how transparency 

has been delivered to the commercial sector. And I have been asked 

to show some examples of transparency in the commercial world. 

Dow Jones is well-known for its newswires, Factiva.com, and companies and executives applications that take advantage of massive 

data collection and maintenance efforts that we go through. And I 

have a set of slides out there. 

If you see on slide 2, it talks a little bit about those efforts. We 

have also developed for these applications many capabilities to report on and provide comprehensive visualization of information. We 

give our customers insight into the specific areas concern. 

On slide 3, that shows a little bit about our efforts, but there are 

many firms here that are representing different efforts for visualization and reporting, and geospatial analysis, which is very important relative to accomplishing the task at hand. So for example we 

have every TARP participant flagged in our database, so we know 

who they are. Fine. Now, we can just assemble all the information 

around them. 

For example, our database and tools provided customers with the 

ability to assess risks in respect to prospective customers and partners. We maintain a database of over 600,000 individuals and entities that based upon prior history could represent a legal or 

reputational risk to a company doing business with such people or 

entity. 

11 

We provide anti-corruption applications for tracking State-owned 

companies and other entities around the world that could pose 

risks under the Foreign Corrupt Practices Act. And we also have 

a financial tracking system to trace funding through our sanctions 

alert program for Counter Terrorism Funds Tracking, and nobody 

would want any of this money to end up in that place. These are 

just a few of the types of capabilities a system developed under 

H.R. 1242 could have in order to better manage and track funds 

and understand their use. 

To provide the level of transparency called for in this bill is not 

simple. Currently, the Treasury subscribes to many different 

sources of data, including our own. This data is in distinct formats 

that are not compared or aggregated in such a way to identify 

anomalies as to transform the data into usable information. According to the SIGTARP, ‘‘Treasury has declined to adopt this recommendation, calling any such reporting meaningless in light of 

the inherent fungibility of money.’’ 

When I testified before the Domestic Policy Subcommittee of the 

House Oversight and Government Reform Committee in March, I 

showed that even though the money may be fungible, it’s also volumetric, which means that it can be tracked. This fact has been validated by many top economists. 

The Master Database example shown in slide 4 shows a lot of 

different sources of data and we manage and maintain a good 

many, if not all the sources, to be integrated into a standardized 

single version of truth. This will require a considerable amount of 

effort on behalf of an integrator. The database can be refined based 

upon specific rules and regulatory objectives to be measured 

against the facts presented from various sources of information. By 

doing this and performing extensive analysis, you can identify 

anomalies or issues or problems within the data. 

The analysts can identify these anomalies where the data is incomplete, and when different between different sources, etc., and 

can red flag places where this is a problem. And I realize that my 

time is just about up. I want to thank you that the rest of my information here is for the record, and I hope that the panel will take 

a look at some of the other information we have included to assist 

in their evaluation. 

[The prepared statement of Mr. Horne can be found on page 38 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. Horne. 

I do appreciate very much the witnesses recognizing their time 

limitations because we do have several other witnesses to testify as 

well as questioning for each of the witnesses. So I appreciate the 

witnesses’ cooperation here. 

Next, we recognize Mr. Krishna. Sir, you are recognized for 5 

minutes. 

STATEMENT OF DILIP KRISHNA, VICE PRESIDENT, FINANCIAL 

SERVICES AND INSURANCE, TERADATA CORPORATION 

Mr. KRISHNA. Thank you, Mr. Chairman. 

Chairman Moore, Ranking Member Biggert, and members of the 

subcommittee, my name is Dilip Krishna, representing Teradata 

Corporation. Thank you for the invitation to offer testimony today 

12 

before your subcommittee. Before I begin, I would also like to 

thank Congresswoman Maloney for her leadership in introducing 

H.R. 1242. 

Teradata Corporation endorses H.R. 1242 without reservation, 

and encourages the Congress to pass this legislation as soon as possible. Teradata is among the world’s largest companies focused 

solely on analytics and data warehousing. Our technology provides 

businesses and governments with the ability to leverage detailed, 

level data that’s enabling these entities to recognize emerging 

trends and take appropriate corrective action quickly. 

The problem of comprehensive governmental oversight is immensely important today. The economic crisis of the last 2 years 

has taught us that our financial institutions are truly a national 

asset, the abuse of which is to the detriment of every American. To 

paraphrase Joel Grey and Liza Minnelli from ‘‘Cabaret,’’ we have 

learned that money does indeed make the world go around. Therefore, thorough, effective oversight of the financial system is critical 

to our future success. At the same time, we all want efficient government; and, critically, we need to ensure that any oversight system continues to allow the financial sector to provide the same 

high level of innovation and leadership that has propelled the prosperity of our market-based system for well over 2 centuries. 

Financial oversight depends on the ability to effectively monitor 

financial system risks with a high degree of frequency to detect 

warning signs early. Regulators must have the proper tools to accomplish their mission by quickly establishing the root cause of the 

warnings and addressing them promptly and appropriately. But, 

this alone is not enough. As we have seen in the past 2 years, focusing on known risks alone exposes us to risks that were not predicted. And any financial system therefore must also have a predictive component. 

The technology exists today to combine real-time monitoring and 

ongoing predictive capabilities within the same system, and based 

on the same detail-level data. Additional tools are employed, such 

as statistical analysis and visualization technology, to help quickly 

identify outliers and interpret risks. This analytic technology can 

allow us to develop an effective oversight regime, keep cost constraint, and at the same time allow continued innovation and 

growth in the financial services. 

Already, the financial sector uses data analytics technology in diverse areas ranging from marketing to fraud management. Financial services companies have, for example, employed data analytics 

to save tens of millions of dollars every year by rapidly distinguishing fraud attacks and acting to prevent them in real time. 

Large global firms routinely use such technology for financial risk 

management and anti-money laundering detection. 

In fact, the common framework for creating processed information from multiple sources of data is currently evolving across both 

the financial services and technology industries. Many large technology firms from across the spectrum also utilize essentially the 

same approach, and their customers in every industry are responding by implementing this concept within their enterprise. 

Chairman Moore and members of the subcommittee, this is very 

good news indeed for proponents of financial oversight, because it 

13 

results in the various parts of the data analytics process being perfected at the same time. Keeping with technology trends in general, 

not only are the capabilities improving at a tremendous rate, but 

costs are also dropping significantly. Simply put, the time has 

never been better for leveraging information technology to create a 

strong system of financial oversight. It has proven it is successful, 

and it can be implemented today. 

Again, thank you for the opportunity to testify before you this 

morning. I look forward to answering your questions. 

[The prepared statement of Mr. Krishna can be found on page 61 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. Krishna. We appreciate your testimony. And, Ms. Marlow, you are next recognized 

for 5 minutes. I will remind each of the witnesses again that your 

written statements are received in the record. Thank you. 

Ms. Marlow? 

STATEMENT OF SUSAN MARLOW, CHIEF EXECUTIVE OFFICER, 

SMART DATA STRATEGIES, INC., ON BEHALF OF MAPPS 

Ms. MARLOW. Thank you. Mr. Chairman, members of the subcommittee, my name is Susan Marlow. I am the president of Smart 

Data Strategies, a woman-owned business specializing in land 

records management. And I’m here today representing MAPPS, a 

national association of more than 160 private geospatial firms 

throughout the United States. 

I have the pleasure of serving as chair of the MAPPS Cadastre 

Task Force. A Cadastre is a parcel based register of land or land 

information system. Many nations around the globe have national 

cadastres or national property databases in large measure thanks 

to the generosity of the American people, as these systems have 

been paid for by AID, World Bank, and other taxpayer-supported 

institutions. However, in the United States there are 3,200 counties, and as a result when it comes to parcel data, there are 3,200- 

plus puzzle pieces of non-standard data that don’t quite fit together. While millions of dollars are spent on the creation and 

maintenance of this data at the local level, the investments are not 

being realized at the Federal level due to lack of coordination. 

We witnessed the devastating effects foreclosures have had on 

our Nation—not just financial, but societal impacts on neighborhoods and communities—through a rise of crime, theft, vandalism, 

blight, and unsafe health conditions. Therefore, it is imperative 

that we utilize available technologies such as parcel-based 

geospatial data and systems to monitor and protect something so 

vital to our country’s well being. 

The introduction of Google Earth and Microsoft Virtual Earth 

have shown all of us the power of geospatial information. The 

geospatial market is expanding into every area of business through 

the enhancement of visualization and analytical capabilities. The 

use of this decision support technology is critical to all levels of 

government. We have all seen the infamous John Snow map plotting the incidence and location of cholera in London in 1854, just 

as we have recently seen in the newspapers or on television maps 

showing the spread of the H1N1 swine flu. 

14 

A national parcel system would be a visualization, an analytical 

tool, that would allow us to see the geographic location, distribution, and most importantly, spatial relationships of foreclosed properties. It is unfortunate that today many Federal analyses and decisions are being made using the wrong level of geography. For example, under the Home Mortgage Disclosure Act, HMDA, data on 

mortgage transactions is collected at the census track level, not at 

the individual parcel level. 

The parcel layer is much more detailed. It contains information 

about the value, improvements, taxes, and the physical location of 

the property. Parcel data can provide an early warning system to 

track changes in the market, just as the ones we saw in the recent 

years with mortgage foreclosures. We urge Congress to amend 

HMDA to require the collection of parcel data as a first step toward 

that early warning system. For decades, numerous studies have 

recommended the use of parcel data at the national level and called 

for improved national coordination. 

I summarized some of these in my written statement. It is astonishing to note that the National Research Council, National Academy of Sciences found in 1980 that the technology was adequate 

for the task, but the major obstacles to its establishment were organizational and institutional. The technology is lightyears ahead 

today, but the organization is still a barrier. The National Spatial 

Data Infrastructure, NSDI, called for by President Clinton in an 

Executive Order and later reaffirmed by President Bush, identified 

seven framework layers of geospatial data for use in managing 

Federal Government, including a parcel layer. 

Sadly, 15 years later, little progress has been made in creating 

the NSDI. We urge Congress to authorize and fund this critical information infrastructure. In my statement, we provide comments 

and suggestions on several pieces of legislation to help with this effort. Let me conclude by saying 30 years of reports and research 

has called for the parcel layer, yet it remains unfunded and incomplete. The problem is not technical. It is political and institutional. 

While FedEx can track the location of millions of packages per 

day moving around the world, the Federal Government does not 

track the location of land, and it is stationary. While the Federal 

Government has identified numerous needs for parcel data, there 

is only sporadic use due to failed coordination between Federal, 

State, and local agencies. When one looks at the agenda for this 

Congress from mortgages to climate change, from healthcare to a 

smart energy grid, they cannot be effectively implemented today 

because of the Federal Government’s failure to properly utilize 

geospatial data. 

Mr. Chairman, we commend you for your interest and leadership, 

and we stand ready to work with Congress and the Executive 

Branch to better serve the geospatial needs of the American people 

in financial services oversight and a variety of other national needs 

and applications. The technology exists. A robust, qualified, and 

competent private sector is in place, and the solutions are waiting 

to be implemented. What is lacking is demand-driven leadership 

from the Federal Government. 

Thank you so much. 

15 

[The prepared statement of Ms. Marlow can be found on page 67 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you for your testimony, Ms. 

Marlow. Mr. Hahn, sir, you are recognized for 5 minutes. And 

again, all of your written testimony will be received in the record. 

Thank you, sir. Mr. Hahn? 

STATEMENT OF GREGORY B. HAHN, PRINCIPAL, CROWE 

HORWATH LLP 

Mr. HAHN. Good morning. My name is Greg Hahn of Crowe 

Horwath LLP. Let me first thank the subcommittee for the opportunity to testify today. Crowe Horwath has developed and implemented targeted technology solutions to assist financial institutions 

in compliance and oversight activities related to Federal regulations. We would also like to share how some of those solutions may 

assist the Federal Government in its oversight practices of the financial services industry. 

Crowe Horwath is a professional services firm with the core skill 

of bringing process, industry, and regulatory expertise blended 

with technology skills, which allows us to develop targeted tools 

that fill the gaps where large technology vendors have not focused. 

As a worldwide professional services firm, the 8th largest in the 

United States and 9th in the world, we are not focused on the development of public policy, but rather, to assist our clients in developing solutions that are compliant and operationally effective. 

We have significant experience working with most State governments, have conducted special Federal projects like working for the 

RTC during the savings and loan bailout, and have one of the most 

established track records of work with commercial banks. We also 

have significant experience assisting clients on issues related to the 

Bank Secrecy Act in supporting anti-money laundering or AML 

regulations. 

Crowe Horwath has worked with over 100 financial services companies to develop, implement, optimize, and test AML compliance 

programs. Our technical solutions have provided automation and 

repeatability to historically manual or non-existent oversight processes. When the Patriot Act was passed in 2001, provisions related 

to financial institution compliance and strengthening for the Bank 

Secrecy Act raised the bar for compliance significantly. 

I would like to walk you through two examples today. In working 

with our clients we found that it was difficult to develop a process 

for identifying higher risk customers, because additional information was needed when an account was opened in order to make 

that evaluation. We developed a technology platform that would 

walk the employee opening the account through a logical flow that 

asks the appropriate questions of customers to maintain a competitive customer experience. In essence, each customer interaction 

was customized or dynamic based upon the information that was 

provided. As more guidance was made available, we added the ability to conduct an annual review of the customer relationship to determine if the risks presented were still in line with the institution’s risk profile. 

A second example of the client need was to standardize the review and documentation process for investigation potential, susVerDate Nov 24 2008 15:39 Mar 29, 2010 Jkt 054866 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\54866.TXT TERRIE
16 

picious activity. We focused on two specific challenges: how to drive 

more efficiency into a process that was repetitive, while continuing 

to leverage the individual’s expertise and judgment as it related to 

identifying suspicious activity; and how to create a robust case file 

that increased the quality of the final work product. 

My firm developed a patent pending solution that models each 

institution’s investigative process and focuses an analyst on collecting information that is specific to the type of customer and the 

types of transaction activity in question. We then collect all the information and reportable fields, which has allowed us to generate 

the case file summary automatically. This functionality alone has 

saved analysts hours in writing up case files. In recent months, we 

have found this application flexible enough to address additional 

areas of risk management, such as fraud and the identification and 

monitoring of changes in credit portfolio quality. 

As we continue to work on emerging and changing regulatory 

compliance issues, we will leverage the platforms we have created 

to give our clients the ability to comply with today’s requirements 

and give them the capability to adapt as the regulatory environment evolves. We believe these cutting edge technologies in the 

world of financial services have merit in application for the Federal 

environment, especially today. 

I want to thank the committee for asking Crowe Horwath to appear this morning. I would be pleased to answer any of your questions. 

[The prepared statement of Mr. Hahn can be found on page 32 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. Hahn, for your 

testimony. 

Professor Zelner, sir, you are recognized for up to 5 minutes. 

STATEMENT OF PROFESSOR BENNET A. ZELNER, FUQUA 

SCHOOL OF BUSINESS, DUKE UNIVERSITY, ON BEHALF OF 

THE PROBITY GROUP 

Mr. ZELNER. Mr. Chairman and members of the committee, first 

of all, thank you for holding this hearing on the use of technology 

to improve TARP and financial oversight. Thank you as well for 

giving me the opportunity to appear before you today. 

I am going to outline for you technology that my colleagues and 

I at Probity Group have developed, a technology known as the 

‘‘Probity Gradient,’’ which we believe can help achieve the twin 

goals of improved financial oversight and also optimal allocation of 

TARP funds, both in general and as embodied in H.R. 1242. 

Just by way of background, I am a professor at Duke University’s 

Fuqua School of Business, and my colleagues at the Probity Group 

including a Wharton school professor as well as several executives 

with extensive experience in risk management. We founded the 

Probity Group to help business executives and policymakers develop strategies and policies for assessing and mitigating high impact risks to complex systems composed of tangible and intangible 

assets. 

The Probity Gradient, the technology that I want to talk about 

today, was first developed to assess and mitigate risks to tangible 

asset systems, primarily infrastructure systems, ranging from stock 

17 

exchanges and computer centers to oil refineries and transportation 

systems. We have also developed a technology known as ‘‘PSI’’ to 

assess and mitigate risks to intangible assets, such as reputation 

and policy; but, it’s the ‘‘Gradient’’ that I’ll focus on today. 

So, the hallmark of the Gradient and the main reason why we 

think that Gradient analysis can be so useful for improving financial system oversight and for allocating future TARP funds is its 

holistic systems approach, like systems of financial assets, infrastructure systems composed of physical assets are extraordinarily 

complex with many interdependent parts that are connected 

through myriad channels. As a result and as demonstrated in the 

financial crisis that our Nation and the world faced a year ago, a 

failure or breach in one part of the system can cascade throughout 

the entire system with potentially dire and far-reaching consequences. 

The Gradient’s systems approach provides both numeric indicators of the total value at risk from a breach or a failure in one specific area in one specific asset category, for example, as well as a 

visual indication of specific areas of the most high impact vulnerability. With this type of analysis in-hand, it’s possible not only to 

quantify and visualize risk consequences, but also to identify areas 

of critical vulnerability before something actually goes wrong. 

The Gradient has its roots in a systems engineering approach 

known as ‘‘Failure modes and effects analysis,’’ as well as ‘‘Trusted 

System’’ technology, has been promoted by the NSA since the 

1960’s. My colleagues at the Probity Group adapted these approaches to the analysis and protection of infrastructure systems as 

I have already said. Although the Gradient’s roots lie outside of the 

field of finance, public discussion and analysis of the devastating 

financial crisis that began last September have motivated us to explore how the Gradient could be applied to a complex financial system when its overall performance depends on the valuation of myriad, interdependent, often very dissimilar assets, and the viability 

of the numerous enterprises that hold these assets. 

In the words of a Washington Post Op Ed written by Sebastian 

Mallaby last March, ‘‘We have a set of overseers who evaluate financial institutions one by one, but systemic risk is created by the 

interactions between institutions.’’ So, in our opinion, the Gradient 

represents a low-cost, highly accurate tool, one with proven reliability that would enable regulators to take the necessary big picture perspective. Gradient analysis would also help policymakers 

and regulators choose the best way to allocate TARP funds by identifying assets or asset categories whose failure or breach would 

have the most devastating and far-reaching systemic consequences. 

Additionally, the systems engineering approach embodied in the 

Gradient could supplement existing financial analysis tools to assess the risk consequences of various forms of financial malfeasance, such as fraud, privacy invasion, insider trading, and valuation tampering. 

So, thank you again, Mr. Chairman and members of the committee, both for the opportunity to tell you why we believe that the 

Probity Gradient can help achieve the important goal of strengthening oversight of our complex financial system, and also for the 

strong oversight that your subcommittee is providing in this imporVerDate Nov 24 2008 15:39 Mar 29, 2010 Jkt 054866 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\54866.TXT TERRIE
18 

tant area. I am happy to take questions today, and also in the future by e-mail. 

[The prepared statement of Professor Zelner can be found on 

page 103 of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Professor Zelner. 

And, finally, Mr. Kimner, you are recognized, sir, for 5 minutes. 

STATEMENT OF THOMAS KIMNER, RISK MANAGER, AMERICAS 

RISK PRACTICE, SAS INSTITUTE, INC. 

Mr. KIMNER. Chairman Moore, Ranking Member Biggert, and 

members of the subcommittee, I appreciate the opportunity to appear before you today. 

By way of background, I have been deploying technology solutions in the financial services area for nearly 20 years in both private and public sectors. SAS itself has been providing technology 

to the financial and government sectors for over 30 years. While 

my written testimony highlighted a number of themes, I’ll only 

touch on a few here. The first theme is the increased complexity 

of the financial markets. 

The financial landscape is more complex today than ever. Markets have become more global and more interrelated. We have a 

whole new set of financial instruments that did not exist previously. These instruments are highly complex and require new 

modeling techniques to evaluate. Our financial institutions themselves have become much more complicated, particularly as they 

begin to enter new lines of business and sectors that they were not 

previously in. 

As a result, many of these organizations are now facing new regulatory and compliance issues. Oversight of these larger, more complex entities and their portfolios of investments is virtually impossible without bracing technology. 

The second theme is the existence of powerful technologies that 

could help both banks and regulators. Financial institutions approach risk management using varying degrees of technology that 

address market risk, credit risk, asset and liability management, 

and operational risk. For regulators, having these technologies 

would not only provide better insights into what is happening within a financial institution, but could help provide a comprehensive 

assessment to cross institutions. 

To illustrate, I would like to mention two specific tools: stress 

testing; and performance management. This year, Treasury asked 

19 of the country’s largest banks to undergo stress testing and established the scenarios under which the banks should be tested. 

Let me offer a few observations about the process. First, to comply 

with the new stress test, banks developed a one-time, manual process. It took many people having many conversations over many 

hours to translate the requirements into a model. Second, the 

stress test conditions may not have gone far enough in all cases. 

Other scenarios and other factors involving liquidity, cost of capital, and the economy could have been considered. 

Finally, individual banks had flexibility in interpreting applying 

the stress test. This creates a potential issue because the perception and perhaps the reality is that different banks receive different treatment. Technology can be of enormous assistance to both 

19 

banks and regulators to streamline the process, provide consistency, assess the impact of additional risk factors, and integrate the 

results. 

A second technology area growing in importance is performance 

management. SAS defines performance management as the process 

of using technology to ensure that a project’s goals are fully aligned 

with the resources and activities needed to achieve them. Performance management tools can help program managers and senior 

agency officials understand whether the right activities are being 

pursued with the right resources to obtain the stated objectives. Of 

course, technology alone cannot solve all the challenges related to 

effective program management. Without a clear understanding of 

the problem and the objectives, it is virtually impossible to assess 

overall effectiveness. The application of technology is no substitute 

for clarity. 

The third theme is that risk management is both an art and a 

science. Risk, quite simply, is uncertainty. Risk management then 

is proactively taking steps to reduce the uncertainty. For financial 

institutions, risk management involves determining what level of 

risk they are willing to absorb and then managing to that risk tolerance. Sound risk management is also about building appropriate 

policies and controls. From a regulatory point of view, risk management should involve reviews to see whether financial institutions 

are adhering to their own policies, as well as their view regarding 

what is an appropriate amount of risk. 

Given their broad market charter, regulators must have similar 

capabilities as banks to make independent assessments of the risks 

within individual banks as well as across all banks. In conclusion, 

SAS’s catch phrase is the power to know. We believe that data and 

technology tools are powerful enablers. They allow decisionmakers 

to draw mathematically significant insights about their actions and 

make better-informed decisions. As markets and financial products 

become increasingly complicated and interrelated, regulators would 

benefit from deploying technology solutions to assist in understanding and monitoring what is happening. But technology by 

itself is not sufficient. Without the right people possessing the right 

skills in the right jobs, technology will not improve oversight. 

I appreciate the opportunity to appear before you today and look 

forward to your questions. 

[The prepared statement of Mr. Kimner can be found on page 51 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. Kimner. 

I thank all of our witnesses for their testimony. Now, I recognize 

myself for 5 minutes for questions, and I will start, Mr. Horne and 

Mr. Krishna, with you if you would, please. As I said in my opening 

statement, I’m a co-sponsor of Congresswoman Maloney’s and Congressman King’s bill H.R. 1242, to better use technology to improve 

TARP oversight. 

With the approach that’s taken in the bill, can you speak to 

broader applications of using technology in a similar way, especially as this committee debates financial regulatory reform. If you 

have any thoughts or observations, I would appreciate it very 

much. 

Mr. Horne? 

20 

Mr. HORNE. Yes, thank you, Mr. Chairman. There’s a whole series, if you think about data being sort of the ultimate extensible 

asset. Anything that’s being done in financial reform, frankly, 

should reflect the results of analysis that come out of what H.R. 

1242’s intent was to provide insight and information in terms of 

the use of TARP funds. 

It’s a shame. I have a letter here that I sent to Assistant Secretary Kashkari on October 7, 2008, basically requesting the same 

thing that Congresswoman Maloney has put together in her bill; 

and, this was a year ago, practically, at this time. And, if you had 

the system in place right now, virtually all of the information that 

would be needed to determine the Financial Reform Acts rules, 

laws, concepts, based upon factual information could be gleaned 

from that system, rather than now having to sometimes shoot from 

the hip. And, I’ll defer to Mr. Krishna on this, but predictive analysis off of this in terms of how to figure out what we should do 

could have been part of our current infrastructure to make the financial reformat the much more powerful capability; so, and I will 

defer to Mr. Krishna. 

Chairman MOORE OF KANSAS. Thank you, Mr. Krishna. Do you 

have any observations, sir? 

Mr. KRISHNA. Thank you, Chairman Moore. 

I will speak from our extensive experience in risk management 

within the financial industry’s space. Risk management and financial oversight is really the other side of that coin. It’s really about 

thought, about thinking through the types of risks and the types 

of events that we really haven’t anticipated so far, but could affect 

in a very adverse way what would happen to the economy. It turns 

out that in the financial institutions that we have worked with, a 

lot of the process of risk management, in fact, is about data and 

bringing data together. 

Something like 70 to 90 percent of the time is in fact taken up 

in that process as opposed to thinking. What we find is that taking 

away the problem of managing data, of aggregating data, in fact, 

leads to a tremendous improvement in the capability to do risk 

management; and, therefore, financial oversight. The last comment 

I will make is that especially financial oversight in this new economy is really about the interactions between financial institutions, 

and that’s something that requires a tremendous amount of further 

thinking and further imagination which have to be tested in a predictive manner; and, we believe that the database as is proposed 

in H.R. 1242 is going to be instrumental in providing that further 

level of capability. 

Chairman MOORE OF KANSAS. Thank you, Mr. Krishna. 

Ms. Marlow, as you know, a constituent of mine is MAPPS board 

member Scott Perkins. I recently toured his geospatial firm in my 

congressional district, Wilson and Company. The way they’re able 

to use this technology is impressive and could have some, I think, 

application to financial oversight. 

In your testimony, you highlighted several bills before Congress: 

H.R. 932, H.R. 1242, and H.R 1520. You also recommended amending the Home Mortgage Disclosure Act so that the Federal Reserve 

collects home mortgage transaction data at the parcel level. Why 

is this change important? And, before you answer, Ms. Marlow, 

21 

since you helped draft the 2007 National Academy’s report on these 

issues—and we have reports going back to 1980—do you believe 

additional studies are needed? Or, is now the time for action? 

I would appreciate your comments, Ms. Marlow. 

Ms. MARLOW. Well, I appreciate you recognizing that 30 years of 

reports have called for it. This is the one that was done in 2007— 

definitely time for action. We have done numerous reports and 

every one of the reports have come to a lot of the same conclusions: 

that our problems are not technological in nature, they are organizational and institutional, and we really ask for leadership at the 

Federal level. 

We certainly believe that this could help with a geospatial component in the database that’s being proposed. We certainly believe 

that would be an incredible enhancement and a visualization tool 

that would help in all areas, and, we believe that the parcel level 

is the right granularity for that geospatial data. 

Chairman MOORE OF KANSAS. Thank you very much for your 

comments, and I thank all the panel members. I now recognize 

Ranking Member Biggert for 5 minutes. 

Mrs. BIGGERT. Thank you, Mr. Chairman. 

How could Federal regulators use real-time monitoring and predictive analysis and coordinate information to prevent the financial 

collapse in the Federal financial programs? You know, you talked 

about other stuff. I’ll start with Mr. Hahn. 

Mr. HAHN. Thank you. In terms of real-time data and the presentation of that data, I think what’s most critical is understanding 

the levels of flexibility that you’re going to need going forward as 

things evolve as the data changes, having the level of flexibility to 

present that data in different ways, collect the data in ways that 

in the future you’re going to be able to report against that data. 

With the CARS, the Crowe Activity Review System that we have 

developed and where we focused on assisting our clients with this 

evolving environment. 

We have repurposed what we did for anti-money laundering to 

deal with issues such as mortgage fraud investigations, especially 

where there have been quick turnarounds in terms of banks being 

acquired in this environment, and then we have also been focused 

on assisting with deposit fraud. And then we have begun the process of internally prototyping a TARP monitoring solution that our 

clients would use as well. 

Mrs. BIGGERT. Thank you. Then, Professor Zelner, how were you 

able to transform a method for analyzing complex weapons and industrial systems to a method for improving the financial systems 

and monitoring for systemic risk? 

Mr. ZELNER. Well, I guess I would make two points in response 

to your question. The first is that the whole purpose of these systems that were developed to analyze infrastructure facilities is to 

take many dissimilar parts, many dissimilar system components, if 

you will, assets in the case of the financial system, and somehow 

compare both the vulnerabilities that these different assets or system components have in the threats. So if we want to think about 

the financial system, for example, threats to a given asset might 

include natural disaster or accounting fraud. 

22 

The vulnerabilities of a specific asset might include the asset’s 

degree of leverage or its ability to be hedged, for example. So, the 

whole idea, once again, is to adopt a standardized way of comparing the vulnerabilities and threats to very dissimilar assets. The 

other point I would make in response to your question is that I 

think that the Gradient, because it comes from an infrastructure 

and system security background very nicely complements a lot of 

the existing financial tools. 

So financial tools, financial analysis tools, are very focused on 

risks and probabilities, and that’s critical. You obviously can’t ignore that if you want to provide effective oversight. But, one thing 

I think has largely been missing from the conversation is the discussion of potential impact, potential risk consequences; and, what 

the Gradient does, because it was originally developed to help us 

think about and analyze weapons systems and physical infrastructure facilities, is identify the areas of most high impact vulnerability. This is very different. The areas of most high impact vulnerability may differ from the areas that are most likely to be 

breached are failing some way. 

Mrs. BIGGERT. Thank you. And with that, I would like to go to 

Ms. Marlow. In one of my former lives, I was a real estate attorney, 

and one of the things that was always worrisome to people was disclosure and privacy. You know, knowing if other people knew what 

the cost of their mortgage was and what payments they were making, and it appears here that what we’re looking at is the disclosure 

in all this land data that everybody would have access to what 

their neighbors paid. A lot of it is all public record, but it’s not that 

easy to find right now. But if it’s on the Web site, there’s also the 

question then that Mr. Schwartz addressed a little bit, and that 

was the security, you know, and the problems with theft or identity 

theft from people having access to so many things that are private 

to people. But then I noticed in one of your pages that you have 

that, you know, you could identify where there were high-cost loans 

that those were actually where the foreclosures were. But do we 

really need as much transparency as is sometimes offered? 

Ms. MARLOW. Well, I appreciate the question and I certainly can 

understand your concern. I would like to note that the data that 

we’re talking about aggregating is data that’s available in your 

local assessor’s office today. And we would call for authoritative 

data meaning data that is actually known to be correct. And so I 

believe that with that kind of data, you not only have the ability 

to have all of your personal data secure—and certainly the security 

should not be an issue at this particular level—but I would say 

that we need this kind of granularity of data so that we know 

where it’s really happening, just so you know, like in disease control or anything else. If you know where it’s happening, then you 

can begin to predict what it’s going to do in the future, and that 

sort of thing, and you can monitor it. 

Chairman MOORE OF KANSAS. Thank you. And Mr. Lynch, sir, 

you are recognized for 5 minutes. 

Mr. LYNCH. Thank you, Mr. Chairman. 

Again, I appreciate the testimony here this morning, and the 

hope of obtaining predictive analysis certainly offers great value to 

us. But, I must confess that I would be happy as a person on the 

23 

oversight committee. I would be happy with a system that just tells 

me where the money went. Another hat that I wear, I am the cochair of the task force on terrorist financing and non-proliferation. 

I work a lot with FINCEN, the Financial Crimes Enforcement 

Network, and one of the things that I have seen is that in the process of gathering—what we do is we establish financial intelligence 

units and we gather data; you know, suspicious activity reports, 

cash transaction reports—we get all these coming in. And I’m not 

so sure that our analysis is that good, because we get billions of 

pieces of data, millions of these reports, and the ability to sift 

through it all is very, very difficult. 

But I do know that since we started gathering the data we have 

pushed a lot of the terrorist money out of the legitimate financial 

system, because they know we’re gathering the data and we’re 

watching. So there’s this sort of prophylactic function here that’s 

pushing the money out of the system. And we can see it happening 

everywhere. I spent a lot of time in Jordan. They just adopted a 

good system in North Africa as well. And, just as an example, we 

did have a situation where Mr. Khan here from Hamas was actually grabbed with about $30 million in a couple of suitcases coming 

over the border into Rafa into Southern Gaza, and that’s because 

he couldn’t transfer the money for a legitimate financial system. So 

we know that it’s causing pressure. 

So I would be happy if we came up with a system that did that, 

that at least put people on notice that the government is watching 

and they were getting information in usable fashion. But Mr. Hahn 

and Mr. Kimner, Mr. Kimner, you hit on a great phrase there— 

‘‘the power to know.’’ And, as someone on the oversight committee 

on behalf of the American people, I want the power to know. And 

I have to tell you it has been a frustrating experience just trying 

to track this money in TARP, and now I’m seeing that we’re going 

to blow out the responsibility of the Federal Government to regulate the entire financial services industry. 

How do we get the power to know? How do we? You know, Congress is representing the people here, the taxpayer. How do we get 

the power to know? How does that translation occur between your 

systems and us? 

Mr. KIMNER. Thank you for the opportunity to answer the question. I think a lot of what we’re talking about and my colleagues 

may agree with this is that data is really at the heart of all of this, 

so collecting data. And as you mentioned, you start to swim in it 

so you can collect it and you have it. And then you get to the point 

where you don’t know what you’re doing with it, you just have so 

much to look at. 

Some of what we’re able to provide at SAS is pattern recognition 

software, so what that will do and what that helps you do is it 

helps you look at patterns across data over time. It helps you recognize where you have outliers, for instance, where you have anomalies to particular patterns. I’ll use an example, in the written testimony about fraud, so you have a credit card. You go and when 

you’re shopping it’s a set of stores and you have gas purchases. 

But, all of a sudden, it’s one hit on your record card for transaction 

for say some really expensive item. It may be a watch that you normally wouldn’t buy. The predictive software that we have and the 

24 

pattern recognition software that we have allows you to see that 

and flag that transaction. 

And what we do in real time in the credit card business is help 

people. So you may get a phone call during that transaction in a 

few minutes. The phone rings. The person at the cash register says 

hey, we want to verify it’s you in this transaction. So that type of 

recognition helps you sort through the information and gives you 

knowledge about the patterns of information. 

Mr. LYNCH. Okay. Let me just ask Mr. Hahn. Right now we’re 

getting push-back. The system that I describe where we get these 

cash transaction reports and the suspicious activity reports, we 

have groups out there like the ACLU who are concerned about us 

gleaning all this data. They’re saying you don’t need it all and 

they’re probably right, but we need a lot of it. How do we address 

the privacy concerns that folks have if we’re bringing all this massive data? 

Mr. HAHN. So it’s difficult for me to talk specifically about policy, 

but I can talk about what we have done with our clients, our financial institution clients, to address this, and we have done that in 

two ways. One, we worked with our clients to implement a dynamic 

on-boarding process, so different types of customers are going to be 

asked different types of questions to identify whether or not they 

present high-risk money laundering attributes. And that information is stored within the bank systems and all the security that’s 

associated with what’s inside a bank is applied to that technology. 

When suspicious activity is potentially found, we have also developed a dynamic process to go through the investigation so that it 

is done efficiently. It’s done in a way that we’re very focused on 

what needs to be reviewed based on the transactions and the customers, and then producing a consistent set of output so that when 

we are reporting into the government through the banks for suspicious activity, the information is consistent and then hopefully is 

easier for the government to use as they do the work that they do. 

Mr. LYNCH. Thank you. Thank you, Mr. Chairman. 

Chairman MOORE OF KANSAS. Thank you. Thank you, and the 

gentleman from New York, Mr. Lee, you are recognized, sir, for 5 

minutes. 

Mr. LEE. Thank you, Mr. Chairman. 

I guess I would start, maybe I will direct this question to Mr. 

Horne. It has been roughly a year since the TARP funds were initially released; and, obviously, I think we are all in agreement. We 

want to ensure that we are protecting taxpayers interest as best 

as possible and get meaningful data. 

I will take this from a different approach. In terms of the usable 

software data in terms of getting this implemented, in terms of a 

timeframe, in your estimation, how quickly could this be developed 

and have staff trained to have a useful system? 

Mr. HORNE. Well, thank you for the question, Congressman. We 

have actually been going through this extensively in terms of trying to figure out how to make this come together and work. And 

we have been working with many different companies, frankly, because we are a data provider. 

Teradata is a data warehousing and analysis companies. We 

have been working with people from IBM. We have talked to peoVerDate Nov 24 2008 15:39 Mar 29, 2010 Jkt 054866 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\54866.TXT TERRIE
25 

ple from SAS. Ms. Marlow’s organization does a different thing in 

terms of spatial data; and, what we found is there are probably 

phased processes that could be used to put this thing in place in 

phases. To answer Congressman Lynch’s question regarding, you 

know, I want to get the answer where the money went. I think 

that’s the start, that’s the foundation. 

So doing the volumetric analysis up-front probably can be completed within 90 to 120 days to get from the point of initiation of 

saying let’s find out where the money went to get to that point. We 

are probably there in that timeframe. Okay? And that means that 

we have to combine all these sources of data and do preliminary 

analytics in that information. 

The next step is then being able to do what I call comparative 

analytics, because part of the problem is we are trying not to force 

the banks. Right now, the banks file 157 different types of reports. 

Mr. LEE. You said how many? 

Mr. HORNE. 157. 

Mr. LEE. And would this require banks then to increase additional compliance, additional task forces? 

Mr. HORNE. No, I’m saying the opposite, because I think we have 

to stop cutting down trees. And part of the problem is that a lot 

of these reports say the same things. You have reports called the 

FR Y–9C report. You have reports going to the FIFEC organization, which has FDIC data, which has bank call report data. You 

have all this information going in, and a lot of times it’s the same 

thing. Show me your balance sheet. Show me your transaction. 

Show me your mortgage information, lending information. 

Mr. LEE. I know I don’t have a lot of time, so in your mind to 

get this thing fully implemented, give me a number. Is it 12 

months, 24 months? 

Mr. HORNE. I think it’s full implementation. We are talking 

about a full 12-month cycle with ongoing whatever requirements go 

beyond the initial implementation of everything. I am talking about 

every kind of tracking. 

Mr. LEE. And I’m not sure whom, anyone, can answer this question. Has there been any projections in terms of what the cost 

would be to develop this in terms, and then also the training aspect, which sometimes can be more expensive than the software 

itself? 

Mr. HORNE. Well, part of the recommendation would be not necessarily to totally train, but to staff, very expert analysts to go 

along with this process; or, you have experience working with the 

data. And there were many people out there who do across these 

organizations as well as others to work with the government. From 

a cost standpoint, basically, if you look at just the standard government waste, fraud, and abuse numbers across all agencies, it is 

averaging somewhere in the area of 4 to 5 percent. Medicare, I 

think, is like 12 percent. If it is just 1 percent here, it is $7 billion, 

so. 

Mr. LEE. I understand, but I am just curious. 

Mr. HORNE. So the whole cost is under $100 million probably to 

do soup to nuts in this thing, to do everything. 

Mr. LEE. I am in the wrong business. I would love to get into 

this. 

26 

Mr. HORNE. Well, probably under $50 million to start it off to get 

the first 12 months done, and then whatever it needs to maintain 

over time. Your issue here is not the data. The data is not that expensive. 

Mr. LEE. Let me ask you one last one. I know I am getting close 

on time. I’m not sure what. This is a database that will be set up, 

a relational database? I’m not sure what ultimately it would be, 

but in doing so, once it is set up and established, what’s the ability 

to modify it is this is going to be very dynamic. We hope that this 

would be an investment long-term. Would this database be easily 

modified downstream to ensure that it is? 

Mr. HORNE. The whole premise is extensibility; to be able to 

change it on the fly, to be able to add new information, to be able 

to add new capabilities, new functionality in real time. Literally, 

also to have user ability to do so as well so a user can go in and 

take data into a secure environment with using just Excel or some 

other type of tool and be able to run a report. 

Mr. LEE. Thank you. 

Mr. HORNE. With security in mind, of course. 

Mr. LEE. Thank you. 

Chairman MOORE OF KANSAS. Thank you. And next, the Chair 

recognizes the gentleman from Minnesota, Mr. Paulsen. 

Mr. PAULSEN. Thank you, Mr. Chairman. 

Mr. Quaadman, I wonder if I can ask, is sufficient oversight of 

TARP being conducted right now by the Special Inspector General 

for the Troubled Asset Relief Program or SIGTARP from your perspective? And how would this database itself really affect 

SIGTARP’s oversight? 

Mr. QUAADMAN. Well, I think, you know, as I said in our testimony, we think that oversight and accountability is really at the 

center here, because a big part of TARP or the intent of TARP is 

to reinstall confidence in our financial system. So the more accountability and transparency than can be built in here the better, 

and that’s why we thought that the database that’s presented in 

Ms. Maloney’s bill goes a long way to providing more accountability. 

The technology is there to do it. The information is there to do 

it, and we should use that so that taxpayers can have the ability 

to see where their money is going. So we think this is actually a 

supplement to what the Inspector General is doing. 

Mr. PAULSEN. Supplement, okay. And I want to ask a question 

of Mr. Kimner, if I could. 

Given the size of various financial institutions of all sorts, and 

the varying complexity of their operations, is it really possible to 

come up with a single detail test that would be applicable to all 

businesses or all institutions? 

Mr. KIMNER. Thank you for the opportunity to answer that. I 

don’t know that a single test is the right answer. It may be that 

there is a variety of tests given the complexity of the institutions 

and the type of risks they take on. So it may not be a one-size-fitsall stress test, for example. There may be varying degrees of complexity within the test. I think part of what we are looking for is 

consistency, both in the application of the test, the information that 

gets collected and how it’s used. So that if two institutions of simiVerDate Nov 24 2008 15:39 Mar 29, 2010 Jkt 054866 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\54866.TXT TERRIE
27 

lar risk profile and similar size are tested, that they have the same 

type of test being applied as opposed to having very different tests 

being applied to them. 

Mr. PAULSEN. Thank you, Mr. Chairman. I yield back my time. 

Chairman MOORE OF KANSAS. I thank the gentleman and I next 

recognize for 5 minutes the gentlelady from New York, Ms. Maloney. 

Mrs. MALONEY. Thank you again, Mr. Chairman, and ranking 

member, for holding what I think is a very critical meeting that 

can help business, help the financial industry, restore confidence in 

our financial institutions, and move the regulation and oversight 

into the 21st Century. I first would like to welcome Thomas 

Quaadman at the Chamber of Commerce and comment on his work 

in a prior job to provide affordable and available healthcare to the 

9/11 heroes and heroines. I wanted to compliment your work, but 

I do have limited time, so I want to jump on several areas and ask 

if you could get back to me in writing. 

Mr. Horne, your statement that banks have to file 157 different 

reports, that is staggering. What a waste of paperwork. If we had 

one centralized system, they wouldn’t have to do this. I would like 

you to get to the committee all of the 157 different filings. I know 

about 20, but I didn’t know there was 157. That is absolutely staggering. 

Mr. HORNE. But there are subfilings within; in other words, 25 

different things. 

Mrs. MALONEY. Get us the list. 

Mr. HORNE. But you have paper coming out the wazoo. 

Mrs. MALONEY. Get us the list; and I think we need to provide 

relief to financial institutions too that are overburdened with unnecessary filings. One of the problems that many of you raised in 

your testimony was the privacy challenge; and, I don’t want to get 

into that now, because that is a difficult challenge. But if you have 

any ideas of how to handle that, if you could get back to us, the 

original bill is written with Mr. King and myself, has it only to regulators, Members of Congress and government, because of the proprietary information, and I thought that the privacy concerns 

would absolutely kill the bill moving forward with opposition. 

So that’s not part of it, but it’s something we could do in the future if we could figure out how to handle it. But I would like to 

say that when I first put the bill in it was in the midst of the financial crisis and money was being infused into the financial system 

at alarming speeds, and there were allegations of misuse of funds 

and corporate junkets, and so forth. It was undermining the 

public’s support for this program or for stabilizing our financial institutions, which I support and think was necessary. 

Now we’re at a point where the funds are no longer available 

from the TARP fund and the deadline has passed to apply for the 

funds, which is very different from when I first introduced it. So 

I would like to ask Mr. Krishna. Do you believe this is still necessary? And why is this still necessary? 

Mr. KRISHNA. Thank you, Congresswoman Maloney. 

Whenever government has spent hundreds of billions of dollars 

of taxpayer funds, I think it is relevant to think about where those 

funds have gone, even if there are no more funds going out. So I 

28 

think that question is absolutely relevant, even today, to know 

where the funds went, how they were applied. But, beyond that, 

the bill that has been put forward allows us to create an asset that 

keeps on giving. 

So some of the comments made here were relevant, and not only 

TARP oversight, but financial oversight going forward. And I think 

that is where this bill will allow us to build a system of financial 

oversight with analytics and the use of technology in the appropriate way that will stand the system in good stead for many years 

coming. So I do think the TARP is very important, but I think the 

technology can help us move forward very effectively as well. 

Mrs. MALONEY. I think that is well stated, and very briefly, in 

New York City, we had several scandals. We needed a Federal bailout at one point, and what we had was a system of separate 

bookkeepings, separate accounts. No one knew what was going on. 

I think AIG showed us that government regulators had no idea of 

what is going on, so any tool that we can put in place that helps 

us better analyze is going to be very helpful. 

New York City created a central database on our budget, on our 

contracts, on our whole economy, and we have been better managed since then, knowing when we are getting in trouble and able 

to prevent it—not after the fact—but before the fact. So I believe 

that this is a very strong and important tool. I believe it should 

have passed yesterday, and I am committed to working hard with 

Mr. Moore and others to bring it into a reality. I would like to ask, 

really, Mr. Horne, Mr. Krishna and others, anyone who would like 

to comment on what elements you would begin in capturing in the 

system. And if my time is expiring, I would like to invite all of the 

panelists to put it into a memo to the committee, because I think 

it is important to clarify exactly the elements that we need to capture; and, again, I want to thank the Chamber of Commerce, which 

speaks for business in America, for being here today. Your presence 

is extremely important, so do you have a quick response? 

Chairman MOORE OF KANSAS. I thank the gentlelady. Her time 

has expired, and we would ask that the witnesses comply if you 

have comments to make with her request, because I think that 

could be very valuable for the record. If you would supply your 

written comments for the record, that would be appreciated. And 

I thank the gentlelady for her question. 

Mrs. MALONEY. I thank you, and I hope you will reply with elements you feel should be part of it. I think we should have some 

elements in the core bill to begin with. Thank you. I yield back. 

Chairman MOORE OF KANSAS. Thank you. And the gentlelady 

from Illinois has asked for an additional 2 minutes for one question. 

Mrs. BIGGERT. Yes, thank you, Mr. Chairman. I appreciate it. I 

just wanted to go back to Mr. Schwartz on the land data issue, and 

I just wanted to clarify that when I was talking about disclosure, 

I really was talking about the importance of transparency. And I 

think Ms. Maloney’s bill is a really good bill and probably doesn’t 

have some of the problems, I think, that the land data bill—the 

other one that’s in Congress—because I think it is really important 

from a consumer point of view that consumers’ data is protected. 

29 

I worry about such a bill where everything is known about the 

transactions, and is available. You can go to Zillow or if you’re an 

attorney you go out to the county seat, or anyone can really go out 

and find out all that information, but it is harder than if it is posted on somebody’s Web site for everyone to see. And I just wondered 

with some of the problems that have occurred in that area with security and identity. 

Mr. SCHWARTZ. It is an extremely important question and I 

thank you for asking it. I think one other distinction I would like 

to make with Representative Maloney’s bill that Mr. Quaadman 

also made was that the Privacy Act clearly applies to data that is 

collected by the Federal Government. We have a law for when that 

information is collected—brought into the Federal Government— 

and you are searching it on individuals’ names. And there is also 

another law, the Government Act, has a provision for privacy impact assessments to be created in that situation. 

The problem with the land records issue is that information is 

collected by counties right now. As you start to manipulate it and 

use it in different ways, remember the Privacy Act was written in 

1974. The guidance for it was written in 1975, and has not been 

updated since then. They didn’t have the idea that we were going 

to have geo location systems, so it’s not clearly covered by the Privacy Act, and that’s where this problem begins. 

If it were a centralized database where we were looking up individuals by their name or by their Social Security number, we would 

have a law in place that covered that. The problem is with geo location data, that’s not necessarily covered. 

CDT has been working on trying to update the Privacy Act so 

something like this would be covered if it were centralized. There 

were questions about how this database will be set up and whether 

it will be distributed or whether we will actually reside in an agency, which raises other questions as well. But I think that what we 

have seen and I think to back-up some of the issues that Ms. 

Marlow was talking about— 

Chairman MOORE OF KANSAS. The gentlelady is recognized for 

one additional minute. 

Mrs. BIGGERT. Thank you. Please continue. 

Mr. SCHWARTZ. —that Ms. Marlow raised is that we have seen 

counties do protect privacy. Some counties have done a very good 

job in protecting privacy and looking at the security issues. And 

many of the companies have as well: Google Earth only goes down 

to a certain point; you can’t look into people’s backyards, for example. And so we have seen some companies do a very good job with 

this kind of data. Some of the counties have done a very good job. 

Others have not done a good job. 

They have made it, so they put the land records data right next 

to a court data, where we have seen some identity thieves go in 

and try to match up the information and use it to take people’s information. So what we are trying to drive to with the suggestion 

of including privacy impact assessments is that as this database is 

built, we are looking towards the best practices of what we know 

is out there. 

Mrs. BIGGERT. Thank you so much and I appreciate that. 

30 

Mr. Moore, I really thank you for having this hearing and I hope 

that we can have one that has the Federal regulators. I would also 

like to recommend that we invite HUD representatives and other 

Federal agencies that granted funds to such groups as ACORN and 

have the ACORN representatives to testify at a hearing. 

Chairman MOORE OF KANSAS. Thank you to the ranking member, and again, thanks to all of our witnesses for their testimony 

this morning. I believe today’s hearing helps us understand what 

technologies are available today, and what might be possible if the 

Federal Government can take full advantage of these technologies 

to provide better oversight of TARP and other governmental programs. 

I look forward to working with the ranking member and other 

members to make sure we are better utilizing these technologies to 

strengthen financial oversight. I ask unanimous consent that the 

written statements of the following organizations be made a part 

of the record: Epicurus Institute; SecondMarket; and Interthinx. 

Without objection, it is so ordered. 

The Chair also notes that some members may have additional 

questions for our witnesses, which they may wish to submit in 

writing. Without objection, the hearing record will remain open for 

30 days for members to submit written questions to these witnesses and to place their responses in the record. Again, I thank 

all the witnesses, and this hearing is adjourned. 

[Whereupon, at 11:32 a.m., the hearing was adjourned.] 

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A P P E N D I X 

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