U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

56–801 PDF 2010

S. HRG. 111–501 

NOMINATIONS OF: ERIC L. HIRSHHORN, 

MARISA LAGO, AND STEVEN L. JACQUES 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

ON 

NOMINATIONS OF: 

ERIC L. HIRSCHHORN, TO BE UNDER SECRETARY FOR EXPORT

ADMINISTRATION, DEPARTMENT OF COMMERCE

MARISA LAGO, TO BE ASSISTANT SECRETARY FOR

INTERNATIONAL MARKETS AND DEVELOPMENT, 

DEPARTMENT OF THE TREASURY

STEVEN L. JACQUES, TO BE ASSISTANT SECRETARY FOR PUBLIC AFFAIRS, 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

NOVEMBER 5, 2009 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

MICHAEL F. BENNET, Colorado 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

MEL MARTINEZ, Florida 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

KAY BAILEY HUTCHISON, Texas 

EDWARD SILVERMAN, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director and Counsel 

JOE HEPP, Professional Staff Member 

NEAL ORRINGER, Professional Staff Member 

BETH COOPER, Professional Staff Member 

DREW COLBERT, Legisltive Assistant 

MARK OESTERLE, Republican Chief Counsel 

JOHN O’HARA, Republican Senior Investigative Counsel 

DAWN RATLIFF, Chief Clerk 

DEVIN HARTLEY, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)
C O N T E N T S 

THURSDAY, NOVEMBER 5, 2009 

Page 

Opening statement of Chairman Dodd .................................................................. 1 

Opening statements, comments, or prepared statement of: 

Senator Shelby .................................................................................................. 3 

WITNESSES 

Stephen J. Solarz, former Representative from the State of New York ............. 4 

Claire McCaskill, Senator from the State of Missouri ......................................... 10 

NOMINEES 

Eric L. Hirschhorn, of New York, to be Under Secretary for Export Administration, Department of Commerce ...................................................................... 7 

Prepared statement .......................................................................................... 23 

Responses to written questions of: 

Senator Shelby ........................................................................................... 26 

Senator Bunning ....................................................................................... 28 

Marisa Lago, of New York, to be Assistant Secretary for International Markets and Development, Department of the Treasury ........................................ 8 

Prepared statement .......................................................................................... 24 

Responses to written questions of: 

Chairman Dodd ......................................................................................... 30 

Steven L. Jacques, of Kansas, to be Assistant Secretary for Public Affairs, 

Department of Housing and Urban Development ............................................. 10 

Prepared statement .......................................................................................... 24 

(III)

(1) 

NOMINATIONS OF: 

ERIC L. HIRSCHHORN, OF NEW YORK, 

TO BE UNDER SECRETARY FOR 

EXPORT ADMINISTRATION, 

DEPARTMENT OF COMMERCE; 

MARISA LAGO, OF NEW YORK, 

TO BE ASSISTANT SECRETARY FOR INTERNATIONAL 

MARKETS AND DEVELOPMENT, 

DEPARTMENT OF THE TREASURY; 

STEVEN L. JACQUES, OF KANSAS, 

TO BE ASSISTANT SECRETARY FOR 

PUBLIC AFFAIRS, 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

THURSDAY, NOVEMBER 5, 2009 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 9:40 a.m. in room SD–538, Dirksen Senate Office Building, Senator Christopher J. Dodd, Chairman of the 

Committee, presiding. 

OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD 

Chairman DODD. The Committee will come to order. Let me welcome everyone here this morning, and I apologize for being a couple minutes later getting underway. We are here this morning to 

consider several nominations. I want to thank each of the nominees 

for their willingness to serve and, of course, to thank the President 

for sending us what I believe to be very, very competent and qualified nominees as well. And I thank all of those who are in the audience here this morning. 

I want to make some brief opening comments. I will turn to Senator Shelby very quickly, and then we will turn to our—we have 

several guests here this morning, one in particular, Steve Solarz, 

my dear, wonderful friend. We were elected to the House together 

just a couple of years ago. 

Senator REED. Me, too. 

Chairman DODD. And Jack served with Steve, so we have all 

served with him, a wonderful Member of Congress who is here, and 

I will introduce him appropriately in a few minutes. 
2 

Well, this morning we meet in open session to consider three of 

the President’s nominees. These critical nominations arrive before 

this Committee at a time of heightened security and continuing 

economic turmoil, as we all know. If confirmed, these qualified, 

highly qualified individuals I believe will play an important role in 

safeguarding our national interests and returning our country to 

the prosperity that we all seek. 

Our first nominee is Eric Hirschhorn who has been nominated to 

be the Under Secretary for Export Administration, and we thank 

him for his willingness to serve. If confirmed, Mr. Hirschhorn 

would serve as head of the Commerce Department’s Bureau of Industry and Security, overseeing the implementation of our Nation’s 

export controls for dual-use products, that is, goods and technologies that have both military and commercial applications. In 

that capacity, Mr. Hirschhorn may be tasked with developing and 

carrying out reforms to our Nation’s export control system, which 

I understand is a high priority for the Secretary of Commerce, 

Gary Locke. 

Additionally, Mr. Hirschhorn would be responsible for implementing certain improvements to the Defense Production Act, as 

authored by Senator Shelby and myself and very recently signed 

into law by President Obama. These enhancements will help the 

United States industry’s ability to deliver supplies to the Government during national crises. 

Our next nominee, Marisa Lago, has been nominated to be Assistant Secretary for International Markets and Development. It 

gives me a great deal of pleasure to note that this position was created as part of the Foreign Investment and National Security Act, 

the FINSA law, as it is called, which was passed unanimously by 

this Committee and signed into law during the last Congress. And, 

again, I commend all the members of the Committee that worked 

on that, including my partner and friend, Senator Shelby. It was 

one of those efforts we did together here to make a difference, and 

we believe it is doing all the things we hoped it would. 

The Assistant Secretary supports the Under Secretary for International Affairs in advising the Secretary and Deputy Secretary of 

the Treasury in the formation and execution of United States international economic policy as related to foreign investment in the 

United States and security policy through the Committee on Foreign Investment in the United States, the CFIUS bill, which, again, 

was a subject of considerable debate and discussions. We reformed 

that law in this Committee as well. And, again, I thank my fellow 

Committee members for the tremendous effort we made during 

that legislation. It was a very explosive debate, you may recall, 

over the acquisition of ports in our country by foreign governments, 

and it created quite a stir for a time, and the Committee responded 

to all of that in a very sound piece of legislation. 

Ms. Lago is a Harvard Law School classmate of our colleague, 

Jack Reed, and I am going to turn to Jack in a minute here to introduce her. 

Our final nominee is Mr. Steven Jacques, who has been nominated to serve as Assistant Secretary for Public Affairs in the U.S. 

Department of Housing and Urban Development. As Assistant Secretary for Public Affairs, Mr. Jacques would be the principal ad-
3 

viser to HUD Secretary Donovan and his staff on public information, opinion, and events. In addition, Mr. Jacques would advise 

the Secretary on public education and information regarding one of 

the most critical institutions, of course, our homes—whether it is 

raising awareness of mortgage rescue scams or ensuring that families facing homelessness know where to turn in their communities. 

The need for HUD to raise public awareness in my view could not 

be more vital. 

I would also like to note that our former colleague Senator Robert Dole and Representative Emanuel Cleaver, among others, have 

sent letters of support for Mr. Jacques that will be entered as part 

of the record here this morning. 

Chairman DODD. I look forward to hearing the testimony of our 

nominees, and, again, I congratulate all of you for your willingness 

to serve and the President for nominating you, and we hope we can 

move you along fairly quickly so that you can meet your obligations. 

With that, let me turn to Senator Shelby. 

STATEMENT OF SENATOR RICHARD C. SHELBY 

Senator SHELBY. Thank you, Mr. Chairman. 

The core mission of the Bureau of Industry and Security is to 

keep sensitive dual-use items away from dangerous countries, organizations, and individuals. Performing this function must be done 

in a manner that preserves the innovative and productive capacity 

of the United States. 

Mr. Hirschhorn, the Under Secretary for Export Administration 

has an enormous responsibility, as you know. Every decision you 

make entails a national security assessment, a foreign policy statement, and a fundamental business decision that affects the bottom 

line of U.S. companies and our workers. It will be your job to objectively provide solutions narrowly tailored to maintain an effective 

national security umbrella over the country’s healthy promotion of 

exports. 

Ms. Lago, the work you have been nominated to perform focuses 

primarily on foreign direct investment security issues, particularly 

as they pertain to the Committee on Foreign Investment in the 

United States, CFIUS, as Senator Dodd referred to. You will need 

to work the CFIUS process in a timely way while remaining cognizant of the national security implications of each covered transaction. This can be a very difficult balance to strike, as you well 

know. 

Mr. Jacques, you are also nominated for a very important position at the Department of Housing and Urban Development. You 

will serve as a key point of contact for a multi-billion-dollar agency 

that plays a role in the lives of millions and millions of Americans. 

As the Department’s public liaison, you will be expected to establish an active and an open relationship with the American people. 

We look forward to hearing how you intend to do so, and I congratulate all three of you on being nominated by the President. 

Thank you. 

Chairman DODD. Thank you very much, Senator. 

I am going to turn, if I can briefly, to Senator Solarz—Congressman Solarz. I just elevated you. 
4 

Senator SHELBY. Well, he would have made a good Senator. 

Chairman DODD. He would have made a very good Senator, I tell 

you, and just a wonderful friend, and I have fond memories of 

being sworn in together in January 1975 and working together. 

There was no more talented and gifted Member of the Congress 

than Steve Solarz. I just recall on countless occasions his inquiries. 

Whether serving in a committee or just in informal conversations 

with visiting dignitaries from other countries, no one was more perceptive and incisive in their examination of people who came before 

us. And so it is a pleasure to have you back. I regret in some ways 

you are not sitting on this side of the dais, my friend. You would 

have been a wonderful United States Senator. But we are honored 

to have you here this morning, so the floor is yours. 

STATEMENT OF STEPHEN J. SOLARZ, 

FORMER REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF NEW YORK 

Mr. SOLARZ. Thank you very much. It is a pleasure—— 

Chairman DODD. Is that microphone on, Steve? 

Senator SHELBY. Put your microphone on, Steve. 

Chairman DODD. You have to push that button there. 

Mr. SOLARZ. Thank you very much, Mr. Chairman. Let me say 

first of all it is a pleasure to see some of my former colleagues in 

the House who have gone on to bigger and, arguably, better things 

in the Senate. But it is a particular honor to be able to testify 

today before a Chairman and on behalf of a nominee for both of 

whom I have the greatest respect and affection. 

As you indicated, Mr. Chairman, we go back a long way together. 

We have known each other for 34 years when we were both elected 

in 1974 as members of the Watergate class. And in the words of 

my old district back in Brooklyn, I want you to know that I ‘‘shep 

naches,’’ which means I derive great pride and pleasure from your 

achievements since then. 

But believe it or not, I know the nominee Eric Hirschhorn even 

longer than I know you, because back in 1971, as a back-bench 

member of the New York State Assembly, a minority within the 

minority, where the measure of my influence was that with an assembly of 150 members, I was given New York State Assembly license plate 152. 

[Laughter.] 

Mr. SOLARZ. Together with several of my other colleagues equally 

situated in the Assembly who had the quaint notion that we ought 

to understand the bills we were voting on, we pooled our meager 

staff resources and hired a young attorney by the name of Eric 

Hirschhorn to brief us each Monday morning when the legislature 

reconvened on the bills that were on the calendar for that week. 

During the course of that experience, I came to feel that what 

Winston Churchill once said about Harry Hopkins when he dubbed 

him ‘‘Lord Root of the Matter’’ could be said with equal applicability to Eric Hirschhorn because he had the ability to go to the 

heart of the matter, the legislation before us. 

Also like Hopkins, Eric has the rare capacity to disagree without 

being disagreeable, and I think that would be an asset in this position. 

After he left us in Albany, he came to Washington, where he 
5 

After he left us in Albany, he came to Washington, where he 

went to work as a legislative assistant for Congresswoman Abzug, 

whom you may have heard of, who was another member of the 

New York delegation. He went on to become the Deputy Assistant 

Secretary for Export Administration in the Commerce Department 

under President Carter. And for quite some time afterwards until 

now, he has been a partner in Winston & Strawn, one of the major 

American law firms. 

And it seems to me that this combination of experiences makes 

him in a way the perfect candidate for this particular position. He 

knows the Congress, its sensitivities and concerns. He knows the 

executive branch, its procedures and politics. And he knows the 

private sector, its objectives and its perspectives. 

And I think that the combination of these experiences clearly 

equip him to balance the competing desire of the private sector to 

export its goods and services and the needs of the Government to 

protect our vital national security interests. And I have no doubt, 

given a clash between those objectives, where national security is 

at stake, Mr. Hirschhorn will do what needs to be done to protect 

our vital interests. 

So for all these reasons, I urge you to expeditiously facilitate his 

confirmation as the Under Secretary of Commerce for Export Administration. 

Chairman DODD. Steve, thank you very much. Could not be more 

eloquent. Case over, I think, Mr. Hirschhorn. I would not say a 

word at that point. 

[Laughter.] 

Chairman DODD. Case made. 

Jack. 

Senator REED. Well, thank you very much, Mr. Chairman, and 

I will confess, Marisa does not have as good a lawyer as Mr. 

Hirschhorn. 

[Laughter.] 

Senator REED. But it will have to do. 

I am just delighted and honored to be able to introduce Marisa 

Lago. Marisa is my classmate from Harvard Law School. She graduated with great distinction and was recognized as such by being 

awarded a clerkship in the First District, which suggests her legal 

skill which she has developed through her extraordinary career. 

Unlike so many people who would have taken that clerkship and 

gone to a big law firm and done big things in some sense, she went 

to New York City Department of Planning to commit herself to 

helping people live better, neighborhoods to develop better, and she 

has followed through in so many different ways in public service, 

at the New York City Economic Development Corporation, and she 

served Mayor Menino in the city of Boston as the chief economic 

development officer. So she has committed herself to making a difference in the communities that are so important. 

And I think significant for the job that she is about to assume— 

I hope—is that she was the chief in the Securities and Exchange 

Commission for International Activities under Chairman Arthur 

Levitt. In that sense, she handled all of the international aspects 

of SEC operations. She prepared herself well for the job that she 

will, I hope, assume, which is looking at complex merger and acqui-
6 

sitions, which are at the heart of security transactions, but involving national security considerations. And I do not think we could 

find a better not only lawyer but, perhaps more importantly, person than Marisa Lago to do this. 

So I think the President has chosen wisely, and I would hope 

that we could move this nomination expeditiously. 

Chairman DODD. Well, that is good. Jack, thanks immensely, and 

that is a pretty good case to be made as well. 

Mr. Jacques, you have a colleague of ours coming in as well, and 

when she gets here, we are going to recognize her to give you an 

appropriate introduction. We cannot have you sitting there and not 

get as good an introduction as you have heard for these other nominees. 

What I would like to do, if I could, though, before we do that, 

there is always a courtesy we extend, and that is, if any of your 

family members are here—I do not know if they are or not. But, 

Mr. Hirschhorn, do you have any family members that are with us? 

Mr. HIRSCHHORN. Yes, Mr. Chairman. My wife is here, Leah 

Wortham. She teaches up the road at Catholic University Law 

School. And my son Alex and my brother-in-law, Henry Howard, 

are all here today. 

Chairman DODD. Terrific. I noticed going over your resume last 

night that each of your children have your wife’s maiden name as 

their middle name. 

Mr. HIRSCHHORN. Yes. 

Chairman DODD. That is not a bad idea. That was a very smart 

move on your part. 

[Laughter.] 

Chairman DODD. Ms. Lago, any family members? 

Ms. LAGO. Yes, thank you very much. I would like to introduce 

my best friend of 35 years, my husband, Ron Finiw. Ron is an architect, and some of you may have seen one of his buildings that 

graces our capital, the new International Law Center at Georgetown Law School. 

Chairman DODD. Absolutely. Wonderful, terrific. 

Ms. LAGO. And I am also joined by my brother, Paul Lago. Like 

me, Paul has dedicated his life to public service. He has been with 

the Defense Intelligence Agency for 20 years, including serving voluntarily as a civilian in Iraq. And my sister-in-law, Kelly Lago, 

who serves with the Bureau of Alcohol, Tobacco, and Firearms. 

Chairman DODD. Clearly, a distinguished family. We are honored 

to have all of you with us. 

Mr. Jacques, do you have—— 

Mr. JACQUES. Mr. Chairman, I am sorry to say that my wife 

could not make it here today, but my wife, Christine, is back in 

Kansas and she will be watching this on your website when it is 

up to make sure that I did OK. 

Chairman DODD. I have a 4-year-old daughter named Christina. 

That is a connection we can make here. 

[Laughter.] 

Chairman DODD. I am going to ask you to rise, if you could, and 

to raise your right hand while I swear you in and give the oath, 

if you would. Do you swear or affirm that the testimony you are 
7 

about to give us is the truth, the whole truth, and nothing but the 

truth, so help you God? 

Mr. HIRSCHHORN. Yes. 

Ms. LAGO. I do. 

Mr. JACQUES. I do. 

Chairman DODD. And do you agree to appear and testify before 

any duly constituted committee of the U.S. Senate? 

Mr. HIRSCHHORN. Yes. 

Ms. LAGO. Yes. 

Mr. JACQUES. I do. 

Chairman DODD. I thank you for that. 

With that, why don’t we begin in the order, Mr. Hirschhorn, that 

you were introduced? By the way, just to let you know, any and 

all documentation and support services or activities, rather, that 

you want to include in the record, we will make part of the record 

here today. And any of the comments and statements by any of the 

members—and I will leave the record open for a few days here for 

them to submit any questions they may have for you as well, and 

I would urge you to respond as quickly as you can to questions of 

members who may not be here this morning but would like to submit a few, if they could. 

With that, Mr. Hirschhorn, the floor is yours. 

STATEMENT OF ERIC L. HIRSCHHORN, OF NEW YORK, 

TO BE UNDER SECRETARY FOR EXPORT ADMINISTRATION, 

DEPARTMENT OF COMMERCE 

Mr. HIRSCHHORN. Thank you, Mr. Chairman, and thank you also, 

Ranking Member Shelby and Senator Reed. I am quite honored to 

be here today. I appreciate the expression of confidence in me by 

President Obama and Secretary Locke, and I am hopeful that I can 

gain your confidence as well. I want to thank the Committee members and staff for making time for this nomination hearing in the 

midst of a busy legislative session. And should I be confirmed, I 

very much look forward to continuing to work with you. 

I want to thank Steve Solarz for doing me the honor of introducing me. He has been a dear friend for many years, and I am 

delighted he could be here. 

I had the privilege of working on export control, antiboycott compliance, and Defense Production Act issues at the Commerce Department in 1980 and 1981, so this would be a return for me. I 

found the career staff who administer that system, those laws—not 

only at Commerce but also the other agencies who were deeply involved in it—to be extremely capable and one hundred percent 

committed to the interests of our country. Should I be confirmed, 

I will be delighted to be working with them all once again. 

As Secretary Locke has noted, the Bureau of Industry and Security ‘‘has a unique mission at the intersection of international trade 

and national security.’’ Working closely with the Departments of 

State, Defense, and Energy, BIS evaluates thousands of export license applications each year to ensure that items proposed to be 

sold abroad are going to suitable end users for appropriate end 

uses. Getting this right is very important. It is equally important 

to have an enforcement program ensuring that those who flout the 

rules are caught and are punished. I am committed to ensuring 
8 

that BIS does the best possible job of performing these important 

functions as well as overseeing its role in ensuring an effective 

treaty compliance system and promoting continued U.S. leadership 

in strategic technologies. 

President Obama has asked the agencies to take a hard look at 

the existing system in an effort to see whether it can be improved 

consistent with our national security. Of course, this Committee 

will be significantly involved in that process, and I hope you will 

give me the opportunity to help carry it out. 

Since leaving the Government for private law practice in 1981, 

I have spent a good deal of my time advising clients whose activities are subject to U.S. export control and embargo regulations. My 

practice also has included considerable litigation, much of it involving railroad issues, and I have served as an internal ethics counselor for my law firm. Outside the firm, I have been an active member of the D.C. Bar’s Ethics Committee and the D.C. Bar’s Rules 

Review Committee. 

Most of my practice has involved explaining to clients how the 

often complex regulations work, analyzing whether a proposed 

course of action requires advance Government permission, and, if 

a license is required, assisting the client in preparing the application. I have assisted clients with their internal compliance programs and have represented some regarding enforcement issues. I 

also have acted as an advocate for clients who believe that our export control system can be improved. I frequently have written and 

spoken in the area, and my writings include not only articles but 

also a book whose third edition will be published early next year. 

I believe that this experience will be of great help to me in what 

I hope will be my new job. 

If I am confirmed by the Senate, my goal will be to perform competently and objectively, and that means to me hearing and considering all viewpoints on the matters that would come before me. 

I recently read the remarks that my law school’s dean delivered 

this fall to the incoming class. He spoke of two ‘‘fundamental 

truths.’’ ‘‘First,’’ he said, ‘‘excellence is its own reward.’’ Second, ‘‘integrity is the bedrock of any successful career.’’ I promise you that, 

if confirmed, I will strive to bring these qualities to everything I 

do. 

Again, thank you, and I would be delighted to respond to any 

questions you may have. 

Chairman DODD. Thank you very, very much. 

Ms. Lago. 

STATEMENT OF MARISA LAGO, OF NEW YORK, 

TO BE ASSISTANT SECRETARY FOR INTERNATIONAL MARKETS AND DEVELOPMENT, DEPARTMENT OF THE TREASURY 

Ms. LAGO. Thank you, Mr. Chairman. 

Chairman Dodd, Ranking Member Shelby, distinguished members of the Committee, I am so honored to have my nomination 

come before you today, and I do want to start by thanking the staff, 

many of whom are here today, who took the time this week to 

speak with me about CFIUS, principally, and also about other 

international financial matters. 
9 

I am so honored to have been nominated by President Obama to 

serve as Treasury Assistant Secretary for International Markets 

and Development, especially at such a critical time not just in our 

Nation’s but also in the world’s economies. I am grateful to Secretary Geithner for recommending me to the President. I had the 

pleasure of working with Secretary Geithner when he was last at 

Treasury, so I know what I would be getting into, if confirmed, and 

I look forward to having the opportunity to join his team. 

I would want to recognize two people who are not here today: 

Louis and Maria Lago. My parents cannot be here. After six decades in the U.S., they now live in the village in Spain where my 

mother was born. But my love of public service stems from my parents. My father served in the U.S. Navy during World War II, and 

he then spent the rest of his career as a civilian employee at a Department of Defense facility, Picatinny Arsenal in New Jersey. So 

I grew up in this setting, and I wish they were here today. But 

thanks to the Internet, they will be able to watch the proceedings. 

As my family’s first college graduate, I have lived the American 

dream. As Senator Reed noted, upon graduating from Harvard Law 

School, the traditional route after having a clerkship in the First 

Circuit Court of Appeals would have been to go on to a law firm, 

and certainly those opportunities had been open to me. But I made 

the non-traditional choice because of a mentor in law school of joining New York City government, and I became absolutely hooked on 

public service, the ability to do good, to serve—the word ‘‘servant’’ 

in ‘‘public servant’’ matters to me—to make my home town a better 

place. 

Over the past 25 years, I have had the ability to serve New York 

State, New York City, and Boston in senior capacities in economic 

development. In each of these roles, I have had to strike a balance 

among multiple competing interests—fiscal prudence, the interests 

of the business community, job creation, and neighborhood concerns. And one of the hallmarks, I believe, of my career has been 

forging consensus but also showing the leadership to make tough 

decisions when a decision needs to be made and not all are agreed. 

I have also been fortunate to have served at the Federal level in 

the 4 years that I worked with Chairman Arthur Levitt at the Securities and Exchange Commission. As the head of International 

Affairs, I was involved in issues that ranged from trade in financial 

services to international accounting standards to enhancing the financial regulation in underregulated and uncooperative offshore financial centers. Throughout this time, I held a top secret security 

clearance because of the sensitive nature of the international matters with which I was dealing. 

In the private sector, I headed compliance globally for Citigroup’s 

investment banking, its markets and banking business. In this 

role, I was responsible for compliance matters that ranged from 

anti-money laundering to OFAC sanctions initiatives, to all of the 

regulatory requirements attendant to Citigroup’s investment banking, trading, public finance, and transaction services businesses. I 

dealt routinely with both the securities and the banking regulators 

of not just the U.S. but the regulators in over 80 countries. I had 

a team of over 500 in 80 different countries around the world. 
10 

Turning to the future, if approved by this Committee and confirmed by the Senate, I commit closely to working with the Committee as a whole, individual members, and the staff to carry out 

the weighty responsibilities that are laid out in the landmark 

FINSA legislation and also to being part overall of the senior 

Treasury team that promotes economic growth, financial market 

stability, and open markets for U.S. firms. A critical component is 

going to be open, regular dialogue with the Committee, with the 

other agencies that are members of CFIUS, and with my colleagues 

in the Treasury Department. If I have the honor of being confirmed, I welcome the dialogue. 

Chairman DODD. Thank you very much. Very good testimony. 

Yes, Mr. Jacques. 

STATEMENT OF STEVEN L. JACQUES, OF KANSAS, TO BE ASSISTANT SECRETARY FOR PUBLIC AFFAIRS, 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. JACQUES. Thank you, sir. Chairman Dodd, Ranking Member 

Shelby, Senator Reed, it is an honor to be here today as the President’s nominee for the position of Assistant Secretary for Public Affairs for the Department of Housing and Urban Development. As 

a student of government, I understand that the confirmation process is one of the most critically important constitutional responsibilities of the Senate, so I come to you with humility and great 

respect for this process. 

Chairman DODD. Well, it was just perfect timing here, Mr. 

Jacques. You sit anywhere you would like, Claire. 

Mr. JACQUES. I cede my time to Senator McCaskill. 

[Laughter.] 

Chairman DODD. Very smart nominee there. 

Claire, it is perfect. We were waiting for you, and I announced 

ahead of time that as soon as you arrived, we would take a pause 

in the middle of the testimony, and we are delighted you are here 

this morning to present Mr. Jacques to the Committee. 

STATEMENT OF CLAIRE MCCASKILL, SENATOR FROM THE STATE OF MISSOURI 

Senator McCaskill. Thank you. It is not often that you get to introduce an old friend under these circumstances, and I am honored 

to be able to introduce Steve to the Committee this morning. He 

has a long history in Missouri both in politics, public policy, and 

public service—in all three. He, in fact, volunteered for a South 

Side St. Louis Democratic Club at the age of 11. So he actually— 

I think I was giving out ‘‘Vote for Haskell Holman’’ emery boards 

when I was 11 or 12, but you may have beat me by 6 months or 

so in terms of political involvement. 

His father and mother lived in St. Louis. He graduated from 

Washington U. with a master’s degree in international affairs and 

a bachelor’s in political science. His dad and his family helped 

found a church in St. Louis. They did inner-city service—his dad 

was an optometrist. They did inner-city service for kids who could 

not afford to have optometry services, and his family kind of is responsible for his ethos of public service. 

He was a deputy campaign manager for Representative Jerry 

Litton in his race for the U.S. Senate, a successful race that ended 
11 

tragically on the night of his victory in the primary in one of several tragic airplane accidents we have had in Missouri that have 

taken some of our best and brightest from us. 

He worked in government in various capacities. He was Director 

of Communications for the U.S. State Department, Director of 

Communications and Senior Adviser to the Under Secretary of Export Administration, all during the Clinton administration. He has 

worked in higher education in Missouri and has continued to stay 

very involved with the public in every capacity since he began 

working in campaigns at the age of 11. 

He is going to be a terrific addition to this Department. He is 

going to, I think, bring a trench perspective, the perspective of 

somebody who has been out there working in these neighborhoods, 

working in these communities. While he has been in Washington, 

he has not been here long enough that he has got that insular disease that detaches you from what is really going on out there, and 

Lord only knows we need more of that in every agency of the Federal Government. 

So I am pleased that he has received this nomination. I am honored to be here today to support his nomination, and I certainly 

urge unanimous support from this Committee for his nomination to 

this administration. 

Chairman DODD. Thank you very much, Senator McCaskill. We 

appreciate your being here. I served with Jerry Litton. I think 

Richard may have as well. 

Senator SHELBY. He was right before me. 

Chairman DODD. He was right before you? I often thought that 

had it not been for that tragic accident, Jerry Litton might have 

ended up President of the United States. He was that talented. His 

roundtable things he did in the early days going back, I do not 

know if that was your idea or not. 

Mr. JACQUES. It was not. 

Chairman DODD. If it was, you ought to be confirmed right now. 

[Laughter.] 

Chairman DODD. It was a brilliant stroke for a Congressman in 

a small district in Missouri. I remember he had Henry Kissinger 

and Hubert Humphrey. He would get all these national figures to 

come to his congressional district to be part of those discussion 

groups and forums in the round, or in the circle. Circle in the 

round he would do. Very, very talented individual. Thank you, 

Claire, very much. 

Mr. JACQUES. Thank you, Senator. Appreciate it. 

Chairman DODD. Mr. Jacques, the floor is still yours. 

Mr. JACQUES. Thank you, sir. And, no, that was Jerry Litton’s 

own idea. He was his best adviser on those matters, a real professional. 

I will pick up where I left off. I come to you from the great State 

of Kansas after a long career in public service in both the public 

and private sectors. A considerable portion of my career has been 

spent in politics and government, including many bipartisan endeavors. One of the great honors of my life has been the opportunity to serve as a senior fellow and associate director of the Robert J. Dole Institute of Politics at the University of Kansas. The 

primary mission of this wonderful institution is to show students 
12 

that a career in politics and government is an honorable profession. 

Former Senator Dole is obviously our prime exemplar, but the concept of ‘‘politics as an honorable profession’’ also includes many of 

the practitioners from the world of public service who have graced 

the institute with their wisdom. 

Through my work in government, politics, higher education, and 

with civic and charitable organizations, nonprofit corporations, and 

businesses, I have been privileged to be able to provide timely, useful information to those who can benefit from it. This is my mission 

and the part of my career that provides me with the most satisfaction. 

I view the primary mission of the Assistant Secretary for Public 

Affairs at HUD as ensuring that the people who need our services 

find out about those services and ultimately know how to access 

those services. Specific information that comes to mind are the resources that can help Americans avoid foreclosure, refinance their 

homes, find affordable rental housing, or rebuild their homes after 

a natural disaster. 

My broad spectrum of experience has taught me the difference 

between simply ‘‘releasing’’ information and truly communicating 

that information. How do we reach those who do not have access 

to the Internet or email? How do we inform people who do not get 

newspapers or do not have the time to sit down and watch TV 

news because they are working two jobs and running a household? 

I have been honored to serve as Director of Communications and 

Strategic Communications Planning for the U.S. State Department, 

where I participated in the successful NATO 50th Anniversary 

Summit, and the accession to NATO of the first 3 former Eastern 

Bloc countries—Poland, Hungary, and the Czech Republic. I was 

also honored to serve at the U.S. Department of Commerce as the 

Communications Director for the Bureau of Export Administration. 

My public sector experience also includes two State universities—the University of Kansas, where I served at the Dole Institute, and the University of Missouri-Kansas City, where I served 

as associate vice chancellor for public affairs. At the University of 

Missouri, I worked hard to bring new positive media and community attention to the school’s good works. 

Since 1976, I have served on the national advance staff in nearly 

every Presidential election. I have used the skills I learned in the 

intense working environment of Presidential campaign advance to 

serve both Republican and Democratic public officials in the conduct of their official duties. 

In the private sector, I have worked for numerous nonprofit and 

civic organizations, as well as municipalities. Among those clients 

I was most proud to serve was the Kansas City, Missouri, Police 

Department, for which I developed and implemented a public affairs campaign to increase the number of minorities and women on 

the police force. We were successful in dramatically increasing the 

number of high-quality individuals who applied and eventually became police officers. 

I view the role of public affairs in government, academia, civic 

and nonprofit organizations as the nexus between policy and action. Not even the best policies have a hope of being implemented, 

or of helping people, without effective communication and outreach 
13 

to those who need to know and can act on the information they receive. You can build the proverbial better mousetrap, but no one 

will beat a path to your door unless they are aware of it. 

I ask for your support, and in return I promise to actively search 

for every opportunity to provide you and your constituents with the 

information you need and want regarding the work of the U.S. 

Housing and Urban Development Department. 

Chairman DODD. Terrific. Great statement. Thank you very 

much, Mr. Jacques. I appreciate it very much. 

I am going to ask the clerk to put on 6 minutes. There are only 

three of us here right now and more may come, but we will try and 

move this along. A lot of questions, obviously, for you and a very 

important hearing. 

Mr. Hirschhorn, the Secretary of Commerce recently gave a 

speech in which he criticized the current export control system for 

hampering American competitiveness and inadequacy focusing on 

certain national security items. The aerospace industry, as I know 

you must be aware, certainly in my State it is a very important industry. United Technologies is a major industrial corporation with 

Pratt and Whitney and Sikorsky Helicopters, the Electric Boat Division. We have a lot of defense work and aerospace work in our 

State of particular importance. 

So my questions are: What priorities should be considered in 

modernizing the cold war-era export licensing system? How can 

limited resources available to the Bureau of Industry and Security 

be better utilized to promote America’s current national security 

needs? And the Export Administration regulations currently provide for exemptions if certain products are readily available overseas, and I wonder if you might share with us in your experience 

how has this foreign availability standard helped level the playing 

field for U.S. companies without compromising our security. Let me 

ask you that, but also let me in the same context—and I will give 

you a chance to respond to all of this. 

This Committee voted just a few days ago unanimously, 23–0, to 

report our comprehensive sanctions legislation targeting Iran. 

Under our bill, the U.S. would assist other countries in halting the 

transshipment of sensitive U.S. technology to Iran. If these countries refuse to cooperate, then under the bill that was passed 

unanimously we could subject them to severe export controls. 

So I wonder if you might discuss your commitment to working 

with our Committee and the Congress, obviously, to combat the efforts of Iran, North Korea, Syria, and others who trawl transshipment hubs for various parts to assemble high-tech weapons, 

which is going on. And what other risks are currently borne by the 

trade-sensitive technologies in the global marketplace and how serious are those threats posed by this proliferation, such as Pakistan 

scientist A.Q. Khan’s selling missile and nuclear technologies 

around the world as an example of what can happen. So the juxtaposition of how we reconcile these goals here of recognizing we 

are in a post-cold war period, and yet there are, as we all know, 

continuing threats to our national security and people who are obviously engaged in the transshipment of technologies that can do 

us great damage. How do you respond to that? 
14 

Mr. HIRSCHHORN. I think this job is, above all, a national security job, and I expect to work closely with this Committee and with 

the Congress on making sure we have a system that is the best 

system we can have for that. 

Diversion is certainly a problem that we have to look closely at. 

I think it requires a team effort among the agencies, because Commerce is not the only agency involved here, but certainly with Commerce doing its part to work with foreign governments to ensure 

that they have perhaps both the carrot and the stick to assist in 

keeping important, critical items out of the hands of dangerous 

people. I think that is what the job is about. I certainly consider 

it to be one of the foremost responsibilities I would take on. 

Chairman DODD. Well, good. You might want to just in time 

want to explore that, because this obviously is a delicate balance 

as we move forward in these areas. 

One of the—as you are aware, the foreign governments oftentimes impose foreign offsets on U.S. manufacturers in exchange for 

lucrative contracts. I recall that back—in fact, there was language 

that existed for a long time, including up to a few years ago—in 

fact, it may still exist—that in an effort to provide help to war-torn 

Europe, is the language, that we allowed for offset contracts. And 

what an offset contract is, if a certain country decides to award you 

a contract, as a business in the United States, you must in many 

cases provide subcontractors in that country a certain quantity of 

work. We actually have some countries where that agreement requires 100 percent or more of subcontract work in exchange for the 

larger contract. 

It is very troubling. This goes on—there is a proliferation of 

these offset contracts, in my view. BIS is responsible for reporting 

annually the tens of thousands of U.S. jobs lost as a result of these 

offsets, and I wonder how you would characterize the process of offset contracts, what steps can be taken to ensure that American 

workers and suppliers are not disadvantaged by them. 

Six years ago, I authored a law requiring an interagency team 

to work with foreign governments to limit the loss of jobs in the 

United States to the defense industry. I wonder if you would like 

to discuss the efforts and tell the Committee, if confirmed, of your 

commitment to revive this body’s work. 

Mr. HIRSCHHORN. Well, I must say that, I know less about offsets 

than I know about export controls, but I am certainly aware of it. 

I am aware of your interest in it and the importance of it. I think 

that it is very important that we maximize U.S. jobs, especially in 

these difficult times, but at other times, as well, and if working 

with foreign countries on offsets, as I understand this interagency 

committee did, will help do that, I think it is something we should 

take very seriously. 

Chairman DODD. Well, I would be very interested in hearing 

back on that. It had clearly been lying dormant, but that idea—and 

again, we are living in a global economy. These things are very important. But there are a lot of antiquated ideas that exist out there. 

We do not provide—we do not have offset contracts. We do not require that at all. 

And I am not suggesting we should, but it seems to me we ought 

to be doing something here to minimize this practice which goes on 
15 

which disadvantages very talented workers, the industrial base, absolutely critical in the 21st century. We have an aging workforce 

in many of these areas, and if we are beginning to lose business 

because of these offset contracts, it is going to be harder to replace 

those workers with the talented young people who can provide that 

kind of work that needs to be done. So I have a lot of interest in 

the subject matter and would hope that you would get back to us 

and share some thoughts with us. 

Ms. Lago, very quickly, if I can, this Committee labored over the 

course of the last Congress to produce the landmark Foreign Investment National Security Act, which was unanimously approved 

by the Committee and the full Senate and signed into law in 2007. 

Again, I want to thank Senator Shelby and Jack Reed and others 

here. A lot of our staff and others worked very, very long and hard 

to get the kind of unanimity on a very complex and delicate issue, 

and I believe that, if implemented correctly, it will achieve two 

principal objectives. One, protecting our national security, which is 

critical, but two, ensuring that appropriate foreign investment in 

the United States is not inhibited, which we don’t want to stop. 

I wonder if you would agree with that assessment and how would 

you help to fill the mandate, if confirmed? 

Ms. LAGO. Interestingly, Senator, in much the same way that 

Mr. Hirschhorn noted that his position is principally a national security position, I think that the position, this Assistant 

Secretaryship that was created by the landmark FINSA legislation 

is principally a national security position—— 

Chairman DODD. Yes. 

Ms. LAGO.——and in your remarks, Senator, I have to echo your 

comment that there is not an inconsistency between having a bipartisan longstanding approach of encouraging—of nurturing open 

markets, open markets that benefit U.S. citizens and U.S. firms, 

while recognizing that a focus on national security on assuring 

through the CFIUS process that no national security risk goes 

unaddressed, those two are not at odds with each other. Actually, 

they reinforce each other. 

Chairman DODD. Well, I appreciate that. Again, we want to work 

closely with you on this and monitor, so stay in touch with us. 

Mr. Jacques, quickly, and then I will turn the time over to Senator Shelby, you have had a wonderful career, and I couldn’t agree 

more that at a time like this, here we all work very hard to come 

up with what we believe are hopefully good ideas that will begin 

to make a difference, particularly when people are looking to see 

whether or not anyone is paying attention to what is happening 

with them, and so you are absolutely correct in your assessment. 

Great ideas, creating that mousetrap you described, and if no one 

knows it exists out there—we saw this, again, Senator Shelby, and 

again, Senator Reed and I, we all worked on trying to come up with 

the best idea we could on mitigation on foreclosures. But you 

looked at it, it was so complex that the ability for an average person going through that, to understand it and how to access it, I 

think was one of the difficulties we faced. There were other problems, but that was one of them. 

I wonder if you might share with us any thoughts you have had, 

and this is just very quickly, on how do you reach—what are some 
16 

of the ideas you would bring to the table on reaching those constituencies? We have listened to all sorts of people talk to us about 

how do we penetrate a marketplace where typically, in many cases, 

because they are holding down two or three jobs, because they are 

struggling to hold things together, there may be a health crisis in 

the family, all sorts of things which make it almost impossible for 

them necessarily to get information about what is available to 

them in the area of housing and related matters. What ideas do 

you bring to the table? 

Mr. JACQUES. Absolutely, sir. Well, I come to this position with 

kind of a private sector mentality. Many, many years ago, in the 

mid-1980s, I believe, there was a study done that showed that people are bombarded with something like 5,000 marketing messages 

every single day and they call that the communications jungle, and 

cutting through that and penetrating with the information that the 

American people need to respond to the crisis, the foreclosure crisis, especially at this moment in time, is a challenge. And we have 

high technology and everybody now is more aware of the technology aspect of things, but also going down that spectrum, down 

to low-technology, word of mouth is still the most effective form of 

communication. 

And to the extent that we can, I view this office within the Department as a service agency, as a service unit for both the Department, for the American public, and for Congress to be able to respond to people’s understanding or lack of understanding in an effective way and just keep bombarding them, really. It is the shotgun approach, repeating, repeating, repeating the information that 

people need so that you can get through to people with what is the 

information they need? How do they access that information effectively? It runs the entire spectrum of communication. 

I remember when I was at the State Department, a professor 

came in to speak about communicating in the electronic age and he 

said that there is no difference between public sector and private 

sector marketing. The only differences are legal and ethical. I bring 

that kind of a mentality to this, that you just have to make sure 

that you are doing every single thing in your power to reach out. 

And certainly feedback from this Committee and from Members of 

Congress, from your staff, in terms of how effective we are being 

in this regard, being a valuable part of that. 

Chairman DODD. Well, one suggestion I would make to you, and 

as the Chairman of this Committee, I have served on this Committee a long time, and when we prepare for hearings, I have a terrific staff, we all do, who work really hard and really know these 

issues tremendously well, I will get acronyms for various organizations. I mean, I am looking at it, and I have been here a long time, 

and I have to go back and review, what does that acronym stand 

for? What are we actually talking about? 

I think, too often, we talk to each other in this town and we don’t 

talk to the people outside. We use language that even people here 

have a hard time understanding. So we need a translator sometimes to be able to talk about what these programs are and how 

they work and language that the average person can begin to understand. And so I urge you, as you look over statements being 

made, testimony being provided in committees, whether it is the 
17 

Internet or being carried on C–SPAN and others, that there be an 

ability to speak in plain English about what these ideas are and 

how people can understand them even better. It is just a thought, 

but as one here who pays a lot of attention to these issues, I find 

myself wondering what we are talking about sometimes with these 

various programs and ideas. 

Mr. JACQUES. Thank you. It is one of the most important aspects, 

simple language. 

Chairman DODD. Well, I thank you. 

Senator Shelby. 

Senator SHELBY. Thank you, Mr. Chairman. 

Mr. Hirschhorn, our allies and trading partners, as you well 

know, do not always share the same export controls. So some of our 

restrictions are, quote, ‘‘unilateral.’’ You have argued before this 

Committee in the past that, and I will quote your words, ‘‘unilateral controls don’t work,’’ and that we should not restrict trade any 

more than other countries do. U.S. unilateral export controls, however, include prohibitions on trade with Iran, as you well know, 

and other terrorist-supporting states. 

My question to you is this. If confirmed, how will you reconcile 

your duty to enforce unilateral U.S. export controls with your opposition, or seemingly opposition, to such controls? Are you just stating the truth in your—— 

Mr. HIRSCHHORN. I think we can’t doubt that there is a cost to 

unilateral controls. 

Senator SHELBY. Sure, there is. 

Mr. HIRSCHHORN. Often, they are important. I would have no 

trouble enforcing the laws as this Congress has enacted them, the 

regulations as they stand. None at all. 

Senator SHELBY. In the past, you have suggested that the Commerce Department should be given more authority for the oversight 

of dual-use exports while the responsibilities of the Defense and 

State Departments in this area should be reduced. Do you continue 

to hold this view, and if so, what makes you confident that under 

this construct American technology will not fall in wrong hands? 

Mr. HIRSCHHORN. I think the team approach that currently exists is an excellent approach that enables the Commerce Department, although it is handling the physical act of processing and licensing cases, to get the foreign policy advice of the State Department, to get military advice of the Defense Department—certainly, 

I don’t think anyone thinks the Commerce Department is an expert 

on military policy—and the resources of the intelligence community, and that is certainly what is missing for a lawyer in private 

practice who is advocating for his clients. It is all behind the curtain for me, and I obviously will have a much better sense of the 

whole picture—— 

Senator SHELBY. You are saying to us you will do your duty 

in—— 

Mr. HIRSCHHORN. Absolutely, Senator. 

Senator SHELBY. Ms. Lago, while foreign investment plays a crucial role in our economy—we all know that—national security considerations, I think, always should remain paramount, the security 

of this nation. Under what conditions might a foreign acquisition 
18 

of a U.S. company constitute a genuine national security threat to 

the United States? 

Ms. LAGO. Thank you for the question, Senator. I think that Congress, this Committee, actually, the two of you, Senators Dodd and 

Shelby, deserve such praise for passing FINSA. That piece of legislation is so finely crafted to address just this concern. Obviously, 

the entire CFIUS process is premised on assuring that national security risks are addressed, and it is the composition of that committee that I think gives a high degree of comfort. 

Looking at the broad array, 16 different agencies that are represented on the committee, the fact that every CFIUS process begins with an assessment from the Director of National Intelligence, 

that has at its core an assurance that those expert agencies, the 

expert agencies that Nominee Hirschhorn just mentioned, are 

bringing to bear their expertise. 

With respect to particular cases, the confidentiality provisions 

that, again, very properly were built into the CFIUS process because of the sensitive commercial and national security information, mean that I haven’t had the possibility—I appropriately could 

not have been briefed on particular matters. But there is one other 

facet of the CFIUS process that I think gives the comfort that the 

proper decision giving proper weight—predominant weight to national security concerns will prevail, and that is the creation of the 

new Assistant Secretary position—— 

Senator SHELBY. That is right. 

Ms. LAGO.——which has someone appointed with the approval of 

the Senate, accountable, and reporting to the Committee following 

the conclusion of every CFIUS matter. And if confirmed, I would 

take that accountability seriously as well as the reporting and communication obligation. 

Senator SHELBY. Generally speaking, how should analysts and 

strategists at CFIUS assess risk and threats to distinguish between the serious and the inconsequential? That is a big job. 

Ms. LAGO. Certainly, Senator, and it is a job. I think, again, it 

is why this Committee, it is why Congress in reforming the CFIUS 

process so recently assured that the right folks were at the table, 

the folks with the level of national security expertise, the full 

gamut, from Homeland Security to the Department of Defense, so 

that on a case-by-case basis the proper experts could be brought to 

bear. 

Another feature of FINSA that I think also assures that the right 

folks are at the table is the provision to appoint a co-lead agency. 

Treasury serves as the chair, but in FINSA, the emphasis was 

placed on choosing that lead agency that would have the most expertise about the particular transaction before the Committee. 

Senator SHELBY. Do you anticipated as a result of FINSA an increase in CFIUS reviews that will generate the need for further resources being devoted to the CFIUS process? 

Ms. LAGO. Thank you for raising that point, Senator. I think one 

of the challenges when one runs a process, an extremely important 

process that has strict time lines, is making sure that there are 

adequate resources brought to bear. The FINSA, the CFIUS legislation calls for strict time lines—30 days, an additional 45 days if 

an investigation is to occur. As there is increased request by non- 
19 

U.S. parties for investment in the U.S., there may be an increase 

in the workload of CFIUS and it is going to be incumbent, not just 

upon Treasury, but upon the other members of CFIUS, to make the 

appropriate and expert staff available to be able to carry out these 

obligations. 

Senator SHELBY. OK. Thank you. 

Mr. Jacques, last, one of the greatest challenges, I believe, that 

you will face, and Senator Dodd has already brought this up, will 

involve making HUD programs understandable to the average 

American. As Chairman Dodd noted, there can be a lot of jargon 

involved in government, especially at HUD. This challenge of how 

you will need to be able to cut through this so the average person 

can understand in simple English what they are getting is important to all of us, is it not? 

Mr. JACQUES. Absolutely. 

Senator SHELBY. Do you look at that as a big challenge, and do 

you think you can be the first one to break through that? 

[Laughter.] 

Mr. JACQUES. I—— 

Senator SHELBY. We hope you will. 

Mr. JACQUES. It is a little bit challenging—— 

Senator SHELBY. It is. 

Mr. JACQUES.——because when you are forcing the issue within 

an agency and trying to simplify things, it is a little bit tough 

sometimes to get through to people, but I commit to you that my 

staff will get tired of hearing me harp on that particular aspect—— 

[Laughter.] 

Senator SHELBY. We won’t get tired of hearing you. 

Mr. JACQUES.——to keep things simple and to reach out to local 

stakeholders, community organizations, faith-based organizations, 

our local field offices to explain these things in simple terms and 

really reach the people with good information they can understand 

and understand how they can access our services. 

Senator SHELBY. Thank you. We wish you well. And I congratulate you all again. 

Mr. JACQUES. Thank you. 

Chairman DODD. Thank you, Senator Shelby. 

Senator Reed. 

Senator REED. Thank you very much, Mr. Chairman. 

Ms. Lago, you have the interesting challenge, if confirmed, to coordinate 18 different agencies under the CFIUS. Could you give us 

an idea of similar challenges you have had in your career, coordinating multiple agencies with different cultures and different viewpoints? 

Ms. LAGO. Thank you, Senator, for recognizing that it is a formidable challenge, but if confirmed, it is one that I would so welcome. 

It feels quite familiar, principally because of the work that I did 

while at the Securities and Exchange Commission. I was the SEC’s 

lead representative in any number of international groups where 

we needed to forge consensus. 

The one example that I would point out is I was the U.S. lead 

in the drafting of the IOSCO core principles of securities regulation. IOSCO is the International Organization of Securities Com-
20 

missions, and there was a recognition that the investors would benefit from having a globally consistent set of principles. 

In these negotiations, we ranged with companies—we worked 

with countries that ranged from the most developed economies to 

emerging economies, and it was critical both to assure that there 

wasn’t a watering down, that the United States approach of fair, 

open markets, of transparency prevailed, while at the same time 

recognizing that other countries weren’t at the same stage of development. 

I was struck by Chairman Dodd’s reference to language, to translation, echoed by Nominee Jacques, and I do think that having 

been brought up in an language other than English—English was 

not my first language—is very helpful. It teaches one to hear and 

to communication, and certainly that is a skill that I think would 

be essential, if confirmed. in the CFIUS process, the ability to hear 

what this multiplicity of agencies is saying, the ability to respect 

the varying viewpoints, the ability to look for consensus, but also, 

as the Chair, to lead and to drive that consensus. And so I do think 

that my work, principally at the Securities and Exchange Commission, but also in my other leadership roles that I have had over the 

years, would serve me well, if confirmed. 

Senator REED. And you are now wondering how I could have 

graduated from Harvard Law School, but I copied from Marisa. 

[Laughter.] 

Senator REED. Sovereign wealth funds—should they be treated 

differently than others who were investing in American assets? 

Ms. LAGO. Thank you for asking about the sovereign wealth 

funds. I found it interesting that 4 years ago, it was a term that 

was a little bit exotic, and now I would think that many average 

Americans are aware of the importance of sovereign wealth funds. 

Again, I would compliment the Committee for the FINSA legislation, which I think lays out the road map for how to treat sovereign 

wealth funds. Sovereign wealth funds are arms of government, and 

under FINSA, there is a heightened accountability when the proposed investment is by a foreign government. And so I think that 

FINSA itself lays out the appropriate approach. 

If a sovereign wealth fund is the potential acquirer, then generally there will be an investigation. That is an additional 45-day 

review. And so this heightened accountability, I think, properly recognizes that sovereign wealth funds are not just any private sector 

investor, but rather are arms of government. 

Senator REED. Thank you very much. 

Mr. Hirschhorn, you have, as you all do, a very challenging job 

with multiple and, at times, conflicting demands. I think you rightly said your primary responsibility is national security, protecting 

our key technologies. But we are in a world where if we don’t increase our exports, we are not going to be economically viable to 

develop the sophisticated technologies. 

How do you—and I know this is a very, very, almost philosophical question—see the balancing? I know the priority is national security, but can we also accomplish that and still encourage 

imports in these areas? Exports, I should say? 

Mr. HIRSCHHORN. I think we can. I think we have been trying 

to do that for many years. When I served in the Commerce Depart-
21 

ment in the early 1980s, we were trying to do it, and people are 

still trying to do it. It is a difficult set of choices, and it is a question principally of risk tolerance. You could say in a sense that any 

sale involves a risk, but you have to make judgments and that is 

why we have a licensing mechanism. We look at this and say, OK, 

what is this technology? How serious is it? We look at who wants 

to use it, what they say they want to use it for, what we can find 

out, perhaps from the intelligence community, about what they 

want to use it for. And if confirmed, I intend to make sure that is 

done carefully and in a way that maximizes both values. They are 

not always in concert. 

Senator REED. Let me just make a point from my perspective on 

the Armed Services Committee. So much of the technology transfer 

there is off-the-shelf in commercial or not the traditional military 

platform, a jet plane or a sophisticated computer. I wonder, would 

you be considering sort of—or how do you deal with this other 

trade? For example, the fertilizer that is used in IEDs? This is a 

rather extreme example, but in some respects, the competition in 

the old days was between the Soviet Union trying to get a hold of 

a very sophisticated device, and now the competition is people, 

guerrillas, who are trying to get a hold of fertilizer or priming cord 

or mining equipment. Is that something that you are going to be 

concerned with in your role? 

Mr. HIRSCHHORN. Absolutely. That is a lot of what BIS does, because the State Department, which handles military exports, 

knows that what they are being asked to license is for a military— 

ordinarily for a military purpose. It certainly is something that was 

designed with a military purpose in mind. 

BIS handles dual-use items, which could be like fertilizer. It 

could have a perfectly benign civilian use in agriculture, or it could 

be used to make a bomb, and that is true of many of the items that 

are controlled under the Commerce Control List. That is why there 

have to be judgments made about how sophisticated is this item, 

how available is it, who wants it, and why? 

Senator REED. Thank you very much, Mr. Hirschhorn. 

Mr. Jacques, good luck in your endeavors. You have got a great 

story to tell, but it hasn’t been told, so good luck. 

Mr. JACQUES. Thank you. 

Senator REED. Thank you, Mr. Chairman. 

Chairman DODD. Thank you, Jack, very, very much. 

Senator Corker is here. Do you have any questions at all? 

Senator CORKER. I don’t. I think you all have done a really good 

job of ferreting out background and questions. I know we have 

some other business coming up right after this, so—— 

Chairman DODD. Yes, we do. 

Judd, any comments or questions at all? 

Senator GREGG. No, I am all set. 

Chairman DODD. All right. Thank you. 

Well, listen, all three of you, I appreciate immensely your willingness to serve. You are very talented and accomplished people. 

This is going to help us tremendously. This is a complicated area 

and I appreciate, Ms. Lago, your strong comments about the effort 

this Committee made over many, many weeks in crafting CFIUS 

legislation, including obviously the FINSA piece of it, and to adopt 
22 

it unanimously as we did and then unanimously by the Congress 

in a very delicate area. As I said, it was an explosive issue. This 

was, Bob, was in the foreign ports. That was the Dubai—I think 

it was the Dubai port. It really became sort of a major headline 

story day after day, and we went back and tried to wrestle with 

the conflicting goals, obviously, of expanding exports and increasing economic opportunity and simultaneously having an opportunity to make judgments about when the national security of the 

country might be jeopardized. Not an easy path to walk. And the 

staff on this Committee, both Democratic and Republican staff 

members, did a fantastic job and it was rewarded by our colleagues 

outside of this Committee adopting unanimously the efforts of the 

Committee. So I appreciate your strong comments. It was a major 

accomplishment in the midst of everything else that was going on. 

So we wish you well. 

I am going to leave the record open for a few days because other 

colleagues of ours who could not be here this morning may have 

some additional questions for you, and I would urge you to get answers back as quickly as we can. 

We would like to move along and get you confirmed, if we can. 

I strongly support your nominations. I think they are very exciting 

nominees to have working with us in Washington on these issues. 

Thank you. 

I should have noted, by the way, and I apologize, I saw Steve, 

but I didn’t see Mrs. Solars, who was in the audience. Good to see 

you being here this morning, as well. You were hiding behind him 

and I didn’t spot you and I apologize to you, and a great friend, 

as well, and an honor and a pleasure to have both of you here with 

us this morning. Steve, welcome back to the Congress. You are welcome any time to be here, as well. 

Senator CORKER. Mr. Chairman, I do want to thank each of you 

for your desire to serve in this way. We do very much appreciate 

competent people coming forward like you, so thank you. 

Mr. HIRSCHHORN. Thank you, Senator. 

Chairman DODD. Good. Thank you all. The hearing will stand 

adjourned. 

[Whereupon, at 10:43 a.m., the hearing was adjourned.] 

[Prepared statements and responses to written questions supplied for the record follow:] 
23 

PREPARED STATEMENT OF ERIC L. HIRSCHHORN 

NOMINEE FOR UNDER SECRETARY FOR EXPORT ADMINISTRATION, 

DEPARTMENT OF COMMERCE

NOVEMBER 5, 2009 

Chairman Dodd, Ranking Member Shelby, and Members of the Committee, I am 

honored to be here today. I appreciate the expression of confidence in me by President Obama and Secretary Locke, and I am hopeful that I can gain your confidence 

as well. I want to thank the Committee members and staff for making time for this 

nomination hearing in the midst of a busy legislative session. Should I be confirmed, 

I look forward to continuing to work with you. 

At the outset, I’d like to introduce my wife, Leah Wortham, who teaches law at 

Catholic University here in Washington; our son, Alex Hirschhorn; and my brotherin-law, Henry Howard. Our two daughters, Elizabeth and Anne, and my sisters Victoria and Jessica, are out of town and so cannot be with us. My family’s support 

is very important to me. 

I had the privilege of working on export control, antiboycott compliance, and Defense Production Act issues at the Department of Commerce in 1980 and 1981, so 

this would be a return for me. I found the career staff who administer the system— 

not only at Commerce but also the other involved agencies—to be extremely capable 

and one hundred percent committed to the interests of our country. Should I be confirmed, I will be delighted to be working with them again. 

As Secretary Locke has noted, the Bureau of Industry and Security, or BIS, ‘‘has 

a unique mission at the intersection of international trade and national security.’’ 

Working closely with the Departments of State, Defense, and Energy, BIS evaluates 

thousands of export license applications each year to ensure that items proposed to 

be sold abroad are going to suitable end users for appropriate end uses. Getting this 

right is very important. It is equally important to have an enforcement program ensuring that those who flout the rules are caught and punished. I am committed to 

ensuring that BIS does the best possible job of performing these important functions 

as well as overseeing its important role in ensuring an effective treaty compliance 

system and promoting continued U.S. leadership in strategic technologies. 

Further, President Obama has asked the agencies to take a hard look at the existing system in an effort to see whether it can be improved consistent with our national security. Of course, this Committee will be involved significantly in that process. I hope you will give me the opportunity to help carry it out. 

Since leaving the government for private law practice, I have spent a good deal 

of my time advising clients whose activities are subject to U.S. export control and 

embargo regulations. My practice also has included considerable litigation, much of 

it involving railroad issues. I also have served as an internal ethics counselor for 

my law firm, and as a member of the D.C. Bar’s Ethics Committee and Rules Review Committee. 

Most of my export control and embargo practice has involved explaining how the 

often complex regulations work, analyzing whether a proposed course of action requires advance government permission, and, if a license is required, assisting the 

client in preparing the application. I have assisted clients with their internal compliance programs and have represented some regarding enforcement issues. I also 

have acted as an advocate for clients who believe that our export control system can 

be improved. I frequently have written and spoken in the area; my writings include 

a number of articles and a book whose third edition will be published early next 

year. I think this experience will help me in what I hope will be my new job. 

If confirmed, my goal will be to perform this job competently and objectively. That 

includes hearing and considering all viewpoints. 

I recently read the remarks that my law school’s dean delivered to this fall’s incoming class. He spoke of two ‘‘fundamental truths.’’ ‘‘First,’’ he said, ‘‘excellence is 

its own reward.’’ Second, ‘‘integrity is the bedrock of any successful career.’’ I promise that if confirmed, I will strive to bring those qualities to my work. 

Again, thank you. I would be pleased to respond to any questions you may have. 
24 

PREPARED STATEMENT OF MARISA LAGO 

NOMINEE FOR ASSISTANT SECRETARY FOR INTERNATIONAL

MARKETS AND DEVELOPMENT, 

DEPARTMENT OF THE TREASURY

NOVEMBER 5, 2009 

Chairman Dodd, Ranking Member Shelby, distinguished members of the Committee, I am honored to have my nomination come before you today. 

I want to thank your staff for meeting with me to discuss CFIUS and other international financial matters. 

I am honored to have been nominated by President Obama to serve as Treasury 

assistant secretary for international markets and development, especially at such a 

critical moment for our nation’s—and the world’s—economies. And I am grateful to 

Secretary Geithner for recommending me to the President. Having had the pleasure 

of working with Secretary Geithner when he was last at Treasury, I am looking forward to having the opportunity to join his team. 

Before I begin, I would like to briefly introduce my family members who are here 

with me today. My husband, Ron Finiw, is my best friend of 35 years. Our nation’s 

Capitol is graced by one of Ron’s buildings: he was the principal architect for the 

international law center library at Georgetown Law School. I am also joined by my 

brother, Paul Lago. Paul shares my passion for public service. He is a senior intelligence officer at the Defense Intelligence Agency, where he has served for the past 

two decades. 

My parents, Louis and Maria Lago, cannot be here today. After 6 decades in the 

United States, they now live in the village in Spain where my mother was born. 

But, my love of public service stems from my parents. My father served in the U.S. 

Navy during World War II, and spent the rest of his career as a civilian employee 

of the Department of Defense at Picatinny Arsenal in New Jersey. 

As my family’s first college graduate, I have lived the American dream. Upon 

graduating from Harvard Law School, I made the atypical decision to join New York 

City government, rather than the more traditional path of joining a law firm. I became hooked on public service, because of the ability to do good, to serve, to make 

my hometown a better place. Over the past 25 years, I have had the privilege of 

heading the economic development arms of government in both New York State and 

the city of Boston, and serving as the general counsel of New York City’s economic 

development agency. In each of these roles, I have had to balance competing interests—of fiscal prudence, of the business community, of neighborhood concerns. 

I have also been fortunate to have been able to serve at the Federal level. For 

4 years, I headed the Securities and Exchange Commission’s Office of International 

Affairs. Working closely with then-Chairman Arthur Levitt, I played a key role on 

numerous international initiatives involving trade in financial services, international accounting standards, and enhancing financial regulation in offshore financial centers. Throughout this time, I held a top secret security clearance. 

In the private sector, I headed the compliance department globally for Citigroup’s 

markets and banking business. In this role, I was responsible for compliance matters, including anti-money laundering and OFAC (sanctions) initiatives, for 

Citigroup’s investment banking, trading, public finance and transaction services 

businesses. In addition to securities regulators, I dealt routinely with both domestic 

and non-U.S. banking regulators, as I had members of my team in over 80 countries. 

Turning to the future, if approved by this Committee and confirmed by the Senate, I commit to working closely with this Committee to carry out the weighty responsibilities laid out in FINSA, and to being part of the Treasury team that promotes economic growth, financial market stability, and open markets for U.S. firms. 

A critical component will be open and regular dialogue with this Committee, with 

the other members of CFIUS, and with my colleagues in the Treasury Department. 

If confirmed, I will welcome this dialogue. 

PREPARED STATEMENT OF STEVEN L. JACQUES 

NOMINEE FOR ASSISTANT SECRETARY FOR PUBLIC AFFAIRS, 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

NOVEMBER 5, 2009 

Chairman Dodd, Ranking Member Shelby, members of the Senate Committee on 

Banking, Housing and Urban Affairs, it is an honor to be here today as nominee 
25 

for the position of Assistant Secretary for Public Affairs for the Department of Housing and Urban Development. 

I come to you from the great State of Kansas after a long career in both the public 

and private sectors. My work in public affairs and communications has taken me 

throughout the United States, where I have been blessed to become part of communities from the smallest of towns to the biggest of cities. The one constant theme 

throughout my career is that it has always been an invaluable education. All of you 

are state-wide elected officials, so you have seen the diversity of communities and 

people even within your own states. As national figures, you have witnessed firsthand the incredible diversity of our country, as well as the common bonds that 

make us all so similar in so many ways. 

A considerable portion of my career has been spent in politics and government, 

including many bipartisan endeavors. One of the great honors of my life has been 

the opportunity to serve as a Senior Fellow and Associate Director of the Robert J. 

Dole Institute of Politics at the University of Kansas. The primary mission of this 

wonderful institution is to show students that a career in politics and government 

is an honorable profession. Former Senator Bob Dole is obviously our prime exemplar, but the concept of ‘‘politics as an honorable profession’’ also includes many of 

the practitioners from the world of public service who have graced the Institute with 

their wisdom. 

Through my work in government, politics, higher education, and with civic and 

charitable organizations, non-profits corporations, and businesses, I have been privileged to be able to provide timely, useful information to those who can benefit from 

it. This is my mission, and the part of my career that provides me with the most 

satisfaction. 

I view the primary mission of the Assistant Secretary for Public Affairs at HUD 

as ensuring that the people who need our services find out about those services, and 

ultimately know how to access them. Specific information that comes to mind are 

the resources that can help Americans avoid foreclosure, refinance their homes, find 

affordable rental housing, or rebuild their homes after a natural disaster. 

My broad spectrum of experience has taught me the difference between simply 

‘‘releasing’’ information and truly communicating that information. How do we reach 

those who don’t have access to the internet or email? How do we inform people who 

do not get newspapers, or do not have the time to sit down and watch TV news because they are working two jobs and running a household? 

I have been honored to serve as Director of Communications and Strategic Communications Planning for the U.S. State Department, where I participated in the 

successful NATO 50th Anniversary Summit, and the accession to NATO of the first 

three former Eastern Bloc countries, (Poland, Hungary and the Czech Republic). I 

was also honored to serve at the U.S. Department of Commerce as the Communications Director for the Bureau of Export Administration. 

My public sector experience also includes two state universities—the University 

of Kansas, where I served at the Dole Institute, and the University of Missouri-Kansas City, where I served as Associate Vice Chancellor for Public Affairs. At the University of Missouri, I worked hard to bring new positive media and community attention to the school’s good works. 

Since 1976, I have served on the national advance staff in nearly every Presidential election. I have used the skills I learned in the intense working environment 

of Presidential campaign advance to serve both Republican and Democratic public 

officials in the conduct of their official duties. 

In the private sector, I have worked for numerous non-profit and civic organizations, as well as municipalities. Among those clients I was most proud to serve was 

the Kansas City, Missouri Police Department, for which I developed and implemented a public affairs campaign to increase the number of minorities and women 

on the police force. We were successful in dramatically increasing the number of 

high quality individuals who applied, and eventually became police officers. 

I view the role of public affairs in government, academia, civic and non-profit organizations as the nexus between policy and action. Not even the best policies have 

a hope of being implemented, or of helping people, without effective communication 

and outreach to those who need to know and can act on the information they receive. You can build the proverbial better mousetrap, but no one will beat a path 

to your door unless they are aware of it. 

I ask for your support, and in return I promise to actively search for every opportunity to provide you and your constituents with the information you need and want 

regarding the work of the U.S. Department of Housing and Urban Development. 
26 

REPONSES TO WRITTEN QUESTIONS OF ERIC L. HIRSCHHORN 

FROM SENATOR SHELBY 

Q.1. For many years, you have been executive secretary of a group 

of major trade association called the Industry Coalition on Technology Transfer (ICOTT). On behalf of ICOTT, you have advocated 

several steps that would weaken U.S. export controls—including 

abolishing controls on items that are not controlled by our major 

trading partners. 

If you are confirmed, wouldn’t you be required to enforce controls 

that you have spent a major portion of your career opposing? 

A.1. If confirmed, I will act solely in the interests of the United 

States and will enforce the rules vigorously. During my prior service at the Commerce Department, I enforced the controls that were 

on the books and did so forcefully. This included unilateral controls, such as the embargo on grain and other agricultural products 

that we imposed on the Soviet Union in the wake of their invasion 

of Afghanistan. 

The role of a lawyer in private practice is to advocate his clients’ 

positions. Moreover, a private practitioner is not privy to all the 

foreign and military policy considerations, or to the intelligence 

data, that often are critical in deciding what items should be controlled, to which end users and countries, and for which types of 

end uses. I recognize the difference between the role of a private 

practitioner/advocate and the role of an official whose sole ‘‘client’’ 

is the United States and the national interest. If confirmed, I will 

act solely in the interests of the United States. 

Q.2. The United States retains jurisdiction over re-exports of U.S.- 

origin goods abroad, beyond their initial export from American soil. 

Such ‘‘extraterritorial’’ application of export controls helps the 

United States prevent and punish diversion of American goods that 

might be used against U.S. soldiers, or to help Iran build weapons 

of mass destruction. You have previously recommended that this 

Committee ‘‘should consider terminating (or greatly limiting) the 

extraterritorial application of United States export controls.’’ Without such application, however, it would be impossible to thwart 

companies like Mayrow General Trading, based in Dubai, which diverted U.S.-origin exports to Iran, exports that wound up in IEDs 

used against our forces in Iraq and Afghanistan. 

If confirmed, how would you reconcile the need to maintain 

‘‘extraterritorial’’ U.S. export controls with your opposition to such 

controls? 

A.2. If confirmed, I will enforce our country’s embargoes and export 

controls, including those that may have extraterritorial application. 

Q.3. The Iran Sanctions Act is a tool adopted by Congress for the 

purpose of pressuring Iran to abandon its dangerous nuclear ambitions and its support for terrorism. The Act authorizes penalties 

against foreign firms that invest in Iran’s energy sector. Congress 

is now working to strengthen this statute and to expand its reach 

to also penalize Iran’s refined petroleum suppliers. You have previously criticized this statute before the Committee as a ‘‘secondary 

boycott’’ and an example of ‘‘unacceptable extraterritorial controls.’’ 
27 

If confirmed, how would you reconcile your opposition to the Iran 

Sanctions Act with the possibility that the administration might 

need to enforce it? 

A.3. As noted above, if confirmed, I will enforce the laws under 

BIS’s jurisdiction vigorously, regardless of arguments I made as an 

advocate in private law practice. 

Q.4. This Committee has just approved a bill which would authorize state and local governments to divest from companies which invest in Iran’s energy sector. This bipartisan proposal has already 

been overwhelmingly endorsed by the House. The proposal is modeled on the Sudan Divestment and Accountability Act of 2007. That 

statute was adopted by Congress and signed by President Bush 

after the National Foreign Trade Council (NFTC) sued to prevent 

the state of Illinois from divesting from Sudan over the genocide 

in Darfur. You represented the NFTC in that lawsuit. Your firm, 

Winston and Strawn, became a member of NFTC, which is opposed 

in principle to ‘‘unilateral’’ and ‘‘extraterritorial’’ controls and sanctions. You became the NFTC’s point of contact at your firm. Today, 

the NFTC continues to oppose Iran divestment legislation and 

other Iran sanctions measures in Congress. 

Do you still oppose allowing divestment from companies dealing 

with Iran and Sudan? 

A.4. I have never opposed allowing public pension funds to divest 

from companies dealing with Iran and Sudan. The NFTC, along 

with eight Illinois fire and police pension funds and nine individual 

retirees, hired my firm to challenge a law that imposed Illinois’ 

own version of an embargo that already had been imposed, in substantially different form, by the Federal Government. The plaintiffs 

in that case did not take the position that the conduct of the Sudanese authorities was humane or worthy of support. Instead, the 

plaintiffs argued that the Illinois embargo conflicted with and undermined the Federal Government’s policy. 

The Federal district court in Chicago agreed that the Illinois law 

was preempted by Federal law. Rather than appeal the ruling, the 

State of Illinois repealed the law and enacted a substitute that, so 

far as I am aware, has not been challenged. 

Q.5. Commerce Secretary Locke recently proposed to eliminate license requirements for dual-use exports to a large number of countries which are our ‘‘allies and partner nations.’’ Although this proposal appears to be in the conceptual stage at present, it raises several troubling questions. Nearly all direct exports from the United 

States to Iran are prohibited by our embargo. But Iran’s WMD and 

military procurement networks routinely seek to acquire U.S. origin dual-use goods through third countries. The United States exercises controls over such re-exports, and prosecutes foreign entities 

who re-export U.S. goods to Iran without U.S. authorization. 

• If export license requirements are removed for items sent to 

the European Union, for example, how will the United States 

be able to stop re-exports? 

• How will BIS deal with suspect entities located in these suggested license-free countries? Will additional resources be allocated to maintain and expand the Entity List for this purpose? 
28 

• Has the Department of Justice been consulted on this proposal, 

and if so, what was the response? 

• More generally, how will you ensure that any proposals to decrease controls on sensitive U.S. exports will not make it easier 

for Iran to acquire such exports? 

A.5. While I am aware of Secretary Locke’s proposal, I am not employed by the Commerce Department as a consultant or otherwise, 

and did not prepare the proposal or any regulations that would implement the proposal. I share Secretary Locke’s view that implementation of the proposal, as well as any additional reforms, must 

include strong, effective protections against reexport of United 

States-origin items to unauthorized parties or destinations. 

REPONSES TO WRITTEN QUESTIONS OF ERIC L. HIRSCHHORN 

FROM SENATOR BUNNING 

Implementation of the Iran Sanctions Act 

Q.1. Mr. Hirschhorn, in June 1999 when you were Executive Secretary of the Industry Coalition on Technology Transfer (ICOTT), 

you testified before the Senate Banking Committee on the reauthorization of the Export Administration Act. In your testimony, 

you said the Committee should ‘‘consider terminating (or greatly 

limiting) the extraterritorial application of the United States export 

controls.’’ One example you cited was the implementation of the 

Iran-Libya Sanctions Act of 1996. You noted United States insistence that 

origin goods and technology remain subject to United States export controls 

forever—no matter how many years may pass or how many different owners the items have—are but two examples of unacceptable extraterritorial 

controls. 

• At the time of your comments, you were representing the interests of industry. However, you have now been nominated to fill 

a position with responsibility to enforce export controls for the 

United States. Do you still stand by your comments about export controls? 

• If confirmed, will you support full implementation of U.S. export laws? 

A.1. As the question recognizes, my testimony of a decade ago was 

on behalf of a group of trade associations and their many members. 

I recognize that the role of a lawyer/advocate is far different from 

that of a government official. Moreover, my role as advocate was 

not informed by foreign policy considerations or by intelligence information, to which private individuals are not privy. If I am confirmed, my sole ‘‘client’’ will be the United States and the national 

interest, and I will fully and vigorously implement our country’s export control laws. This includes regulations requiring that foreign 

companies seeking to reexport U.S.-origin technology abide by U.S. 

rules, including obtaining a reexport license where warranted. 

Diversion of goods to Iran 

Q.2. The transshipment of sensitive technology to Iran continues to 

be a problem. The UAE has been a major hub for illegal transshipments of goods to and from Iran. We have seen reports that 
29 

Dubai has been working to prevent these transshipments from 

going through, but it seems that the activities have moved north 

to the Emirate of Ras al-Khaimah. Also, Malaysia and Oman continue to be key intermediaries for Iran to illegally acquire U.S. 

technology. 

• Will Iran and the enforcement of our export control laws remain a priority for the Commerce Department if you are confirmed? 

• If confirmed, how do you intend to work with Oman, the UAE, 

and Malaysia to stop these illegal shipping networks? What 

steps do you think should be taken by these countries in order 

for them to successfully control items from being diverted to 

Iran? 

A.2. Iran and the enforcement of our export controls will be a priority if I am confirmed. Countries that are diversion points should 

be pressed to prevent such conduct. I am not now in a position to 

recommend specific actions but would consult with appropriate enforcement and diplomatic personnel about what steps would be appropriate and likely to be effective. 

Q.3. When Daniel O. Hill testified before this Committee in October, he indicated that the Bureau of Industry and Security only 

had five agents overseas working on issues related to the diversion 

of sensitive goods to Iran. 

• If confirmed, will you increase the number of agents that are 

stationed abroad to monitor this problem? 

• How will you cooperate with other U.S. agencies in stopping 

and prosecuting illegal export schemes? 

A.3. My outsider’s impression is that cooperation among the agencies enforcing our export control and embargo laws, including the 

Departments of Commerce, Justice, and the Treasury, is far greater than when I previously served in the Department of Commerce. 

If confirmed, I will be committed to such cooperation. 

Before offering specific recommendations about the placement of 

enforcement resources, I would have to consult with BIS’s career 

enforcement staff and others in the executive branch. I have no 

hesitation, though, in agreeing that rigorous enforcement is important in improving compliance with our export control laws. 

Boycott of Israel 

Q.4. The Commerce Department is responsible for enforcing U.S. 

anti-boycott laws which discourage, and in some circumstances, 

prohibit U.S. companies from furthering or supporting the boycott 

of Israel, sponsored by the Arab League and certain Muslim countries. 

• If confirmed, will you fully enforce U.S. anti-boycott laws? 

• In dealings with countries that participate in the boycott of 

Israel, will you make it a priority to encourage them to end 

their boycott? 

A.4. Though it occurred nearly thirty years ago, I still take pride 

in having personally negotiated the first six-figure settlement 

under the Commerce antiboycott regulations. If confirmed, I will 
30 

fully enforce those regulations and will follow U.S. Government policy, which I understand encourages boycotting countries to end 

their boycotts. 

REPONSES TO WRITTEN QUESTIONS OF MARISA LAGO 

FROM CHAIRMAN DODD 

FINSA Objectives 

Q.1. Ms. Lago. As we noted, this Committee labored over the 

course of the last Congress to produce the landmark Foreign Investment and National Security Act (FINSA), which was unanimously approved by this Committee and the full Senate, and 

signed into law in July 2007. 

• I believe that if implemented correctly, it will achieve two principal objectives: (1) protecting our national security and (2) ensuring that appropriate foreign investment in the United 

States is not inhibited. Would you agree with this assessment? 

How would you fulfill this mandate, if confirmed? 

A.1. Yes, I agree that FINSA provides CFIUS with a set of tools 

necessary to safeguard national security in a manner consistent 

with the United States’ longstanding policy of welcoming foreign 

investment. In addition, by focusing CFIUS reviews solely on national security, FINSA provides foreign investors with confidence in 

our open investment approach while making clear that we will take 

any necessary action within our authority to protect national security. If confirmed, I will work to ensure that CFIUS continues to 

conduct rigorous and comprehensive national security reviews, 

seeks to resolve or mitigate any and all national security concerns 

so that transactions can proceed (and recommends that the President prohibit a transaction if the threat cannot be mitigated), and 

processes reviews fairly and expeditiously in accordance with statutory requirements and deadlines. 

Control 

Q.2. Ms. Lago. For over a year after FINSA was enacted, we 

worked with the Bush Administration to issue satisfactory CFIUS 

regulations. Of particular concern was the definition of ‘‘control.’’ 

Ultimately, we were pleased the regulations recognized that even 

foreign entities holding less than 10 percent of voting interest, may 

still exercise control and thus prompt a CFIUS review. 

• Please discuss the definition of ‘‘control’’ under this new set of 

regulations. What do you believe to be the various factors constituting an exercise of control, even if a foreign investor was 

acquiring a 5-percent (or less) stake in a U.S. company? 

A.2. The regulations provide an illustrative list of important matters for CFIUS to consider in determining whether there is control. 

These include, for example, the total outstanding voting interest in 

an entity, board representation, proxy voting, special shares, negative rights, contractual arrangements, and formal or informal arrangements to act in concert. The facts and circumstances of each 

case vary, of course, and CFIUS must consider them in their totality in making this determination. Therefore, this list is not exhaustive and is not dependent on any particular numerical threshold 
31 

ownership interest. Instead, the regulations permit and expect that 

CFIUS will consider any ‘‘other means’’ by which an investor might 

exercise control. 

Mitigation 

Q.3. Ms. Lago. As you are aware, the CFIUS process is not simply 

an up-or-down vote on investment in the United States. Under 

FINSA, Treasury and other Departments often-times negotiate 

‘‘mitigation agreements’’ with both foreign investors and U.S. entities, to address specific national security concerns. 

• What priorities and principles would you adhere to in developing such arrangements? 

A.3. As required by FINSA, any such arrangements must be based 

on a risk-based analysis conducted by CFIUS of the threat to national security posed by the covered transaction. Executive Order 

11858, as amended in 2008, implements this statutory requirement 

by requiring that any CFIUS agency proposing risk mitigation 

measures must provide CFIUS, for its approval, with such an analysis and proposed mitigation measures the agency believes are reasonably necessary to address the risk. The Order also makes clear 

that, before using a risk mitigation agreement, CFIUS should determine whether any national security concerns that it has identified can adequately be addressed through the exercise of other existing legal authorities. If confirmed, I will work to ensure that the 

framework for use of mitigation measures defined in FINSA and 

the Executive Order continues to be implemented faithfully in each 

case, including ensuring that all national security concerns are resolved or mitigated before CFIUS concludes action on a transaction 

and that mitigation is used only when justified by, and proportional to, the national security risk posed by the transaction. 

Q.4. How will you work to ensure that these agreements are continually monitored and enforced? 

A.4. I understand that, as required by FINSA, CFIUS has developed and agreed upon methods for evaluating compliance with 

every risk mitigation agreement entered into or condition imposed, 

allowing CFIUS to adequately assure compliance. In addition, I understand that the mitigation agreements themselves generally contain provisions that facilitate compliance monitoring. I further understand that Treasury, as chair of CFIUS, convenes a quarterly 

meeting for agencies designated as lead agencies for monitoring 

any agreement to report to CFIUS on the state of compliance with 

such agreements. If I am confirmed, I will work to ensure that 

CFIUS as a whole, and each lead agency for mitigation monitoring, 

continue to be actively engaged in monitoring and ensuring compliance with mitigation agreements. 

Reciprocity 

Q.5. Ms. Lago, During the previous Administration, many trade 

discussions focused on the United States commitment to remain 

open to foreign investment. But I remain concerned that there oftentimes seemed to be a reluctance to promote reciprocity—that is, 

to insist that countries remove their barriers to U.S. investment. 
32 

• Under your stewardship in the Office of Investment Security 

and as manager of the Committee on Foreign Investment, 

would you undertake bilateral discussions on these matters, 

particularly with China to advance mutual economic interests? 

• How should the United States use multilateral forums to advance such an agenda? 

A.5. The U.S. open investment policy emphasizes openness both at 

home and abroad and, if confirmed, I will continue to push for robust open investment policies in other countries, including China. 

I understand that Treasury is already very engaged in this effort, 

both bilaterally and multilaterally. With regard to other countries’ 

investment review processes, Treasury strongly supports the 

OECD’s current program of peer review to ensure that its members’ processes are—as I believe CFIUS is—consistent with the 

OECD’s open investment principles: non-discrimination, transparency, predictability, accountability, and proportionality. 

The Administration is also engaged in bilateral investment treaty negotiations, including with China. One objective of these negotiations is to lock in open investment policies such as non-discriminatory treatment of U.S. companies and increased market access. 

Multilaterally, the United States is an active participant in the 

OECD Investment Committee’s pursuit of open investment policies 

among OECD members and observer countries, as well as the 

OECD’s investment liberalization outreach efforts to developing 

countries. 

Sovereign Wealth 

Q.6. Over a year ago, the Bush Administration participated in an 

IMF forum in Santiago, Chile to develop the ‘‘Generally Accepted 

Principles and Practices’’ (or GAPP) for Sovereign Wealth Funds to 

observe when investing in various economies around the world. 

• What is your assessment of the GAPP? 

A.6. The GAPP aims to help maintain a stable and open global financial system by encouraging sovereign wealth funds (SWFs) to 

establish sound institutional and operational practices. The GAPP 

is credible in that it responds directly to the key macroeconomic, 

financial market, and investment issues raised by the rapid growth 

in the size and number of SWFs, and helps to demonstrate a significant positive shift in SWF practices. 

Q.7. What sorts of principles and practices should the United 

States government be promoting regarding sovereign wealth investment? 

A.7. The United States government should promote the principles 

and practices identified in the GAPP, which will help allay concerns that SWF investments may be politically motivated and reduce potential uncertainty and volatility in financial markets. 

Key principles include: 

• SWF investment decisions should aim to maximize risk-adjusted financial returns in a manner consistent with the SWF’s 

investment policy, and based on economic and financial 

grounds. 
33 

• Financial information, including asset allocations, benchmarks, 

and historical returns, should be publicly disclosed. 

• Investment policies, including policies for voting publicly traded equity shares, should be publicly disclosed. 

• The governance framework for the SWF should be sound and 

should establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue 

its objectives.