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95–624 PDF 2004

S. HRG. 108–583

NOMINATIONS OF: ALFRED A. PLAMANN

THOMAS W. GRANT, NOE HINJOSA, JR.

AND WILLIAM R. TIMKEN, JR.

HEARING

BEFORE THE

COMMITTEE ON

BANKING, HOUSING, AND URBAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

ON

NOMINATIONS OF:

ALFRED A. PLAMANN, OF CALIFORNIA, TO BE A MEMBER OF THE BOARD

OF DIRECTORS OF THE NATIONAL CONSUMER COOPERATIVE BANK

THOMAS W. GRANT, OF NEW YORK, TO BE A DIRECTOR OF

THE SECURITIES INVESTOR PROTECTION CORPORATION

NOE HINJOSA, JR., OF TEXAS, TO BE A DIRECTOR OF

THE SECURITIES INVESTOR PROTECTION CORPORATION

WILLIAM R. TIMKEN, JR., OF OHIO, TO BE A DIRECTOR OF

THE SECURITIES INVESTOR PROTECTION CORPORATION

MARCH 25, 2003

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

(

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

RICHARD C. SHELBY, Alabama, Chairman

ROBERT F. BENNETT, Utah

WAYNE ALLARD, Colorado

MICHAEL B. ENZI, Wyoming

CHUCK HAGEL, Nebraska

RICK SANTORUM, Pennsylvania

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

JOHN E. SUNUNU, New Hampshire

ELIZABETH DOLE, North Carolina

LINCOLN D. CHAFEE, Rhode Island

PAUL S. SARBANES, Maryland

CHRISTOPHER J. DODD, Connecticut

TIM JOHNSON, South Dakota

JACK REED, Rhode Island

CHARLES E. SCHUMER, New York

EVAN BAYH, Indiana

ZELL MILLER, Georgia

THOMAS R. CARPER, Delaware

DEBBIE STABENOW, Michigan

JON S. CORZINE, New Jersey

KATHLEEN L. CASEY, Staff Director and Counsel

STEVEN B. HARRIS, Democratic Staff Director and Chief Counsel

MARK F. OESTERLE, Counsel

PATIENCE R. SINGLETON, Democratic Counsel

JONATHAN MILLER, Democratic Professional Staff

DEAN V. SHAHINIAN, DEMOCRATIC COUNSEL

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator

GEORGE E. WHITTLE, Editor

(II)

CONTENTS

TUESDAY, MARCH 25, 2003

Page

Opening statement of Chairman Shelby ................................................................ 1

Prepared statement .......................................................................................... 12

Opening statements, comments, or prepared statements of:

Senator Sarbanes .............................................................................................. 2

Senator Dole ...................................................................................................... 2

Prepared statement ................................................................................... 12

Senator Voinovich ............................................................................................. 13

NOMINEES

Alfred W. Plamann, of California, to be a Member of the Board of Directors

of the National Consumer Cooperative Bank .................................................... 3

Prepared statement .......................................................................................... 13

Biographical sketch of nominee ....................................................................... 15

Responses to written questions of Senator Sarbanes .................................... 62

Thomas W. Grant, of New York, to be a Director of the Securities Investor

Protection Corporation ......................................................................................... 4

Biographical sketch of nominee ....................................................................... 21

Response to written question of Senator Shelby ............................................ 61

Noe Hinjosa, Jr., of Texas, to be a Director of the Securities Investor

Protection Corporation ......................................................................................... 5

Biograhpical sketch of nominee ....................................................................... 28

William R. Timken, of Ohio, to be a Director of the Securities Investor

Protection Corporation ......................................................................................... 6

Biographical sketch of nominee ....................................................................... 47

Response to written question of Senator Shelby ............................................ 61

(III)

(1)

NOMINATIONS OF:

ALFRED A. PLAMANN, OF CALIFORNIA

TO BE A MEMBER OF THE

BOARD OF DIRECTORS OF THE

NATIONAL CONSUMER COOPERATIVE BANK

AND

THOMAS W. GRANT, OF NEW YORK

NOE HINJOSA, JR., OF TEXAS

WILLIAM R. TIMKEN, JR., OF OHIO

TO BE DIRECTORS OF

THE SECURITIES INVESTOR

PROTECTION CORPORATION

TUESDAY, MARCH 25, 2003

U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC.

The Committee met at 9:25 a.m., in room SD–538 of the Dirksen

Senate Office Building, Senator Richard C. Shelby, (Chairman of

the Committee), presiding.

OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

Chairman SHELBY. The Committee will come to order.

Gentlemen, I want to thank you for your appearance before the

Committee today and your willingness to accommodate the Senate’s busy schedule of roll call votes this morning.

Starting at around 9:30, or so, we are facing a series of stacked

roll call votes on the budget resolution. In the light of the efforts

you all made to appear before the Committee today, we wanted to

proceed as expeditiously as possible.

Any additional questions that we are unable to ask of you this

morning we will submit in writing. We would ask that you respond

as quickly as possible to them so that we can consider your nominations in the coming weeks.

I intend to waive my opening statement other than what I have

said and include it in the record so that we can allow you to make

your statements and respond to questions the Committee may

have.

Senator Sarbanes.

2

COMMENTS OF SENATOR PAUL S. SARBANES

Senator SARBANES. Mr. Chairman, I am pleased to join you in

welcoming the nominees, one for the National Cooperative Bank

and three for the Securities Investor Protection Corporation.

Of course, the bank has a very important responsibility—to help

low-income individuals, particularly in the areas of affordable housing and community economic development.

The President is required actually under the Act to appoint a

representative to the board who, ‘‘has extensive experience in the

cooperative field representing low-income cooperatives eligible to

borrow from the bank and who is expected to be an advocate on

behalf of the low-income cooperatives.’’

I would want to address a question or two to Mr. Plamann about

this matter when we turn to questions.

The SIPC, of course, we know of its importance. It helps customers of failed brokers recover their cash and securities. It has a

very important responsibility not often appreciated. These are parttime positions, but I think they are very important to the workings

of our economic system.

I will forego the balance of the statement because we know that

the nominees have traveled and I want to commend Chairman

Shelby for really doing the best he can to get you up and have your

hearing and try to clear you in face of this vote-a-rama that we are

about to have.

Chairman SHELBY. Senator Dole.

COMMENTS OF SENATOR ELIZABETH DOLE

Senator DOLE. Mr. Chairman, I do have an opening statement

which I will submit for the record in the interest of time.

Chairman SHELBY. It will be made a part of the record, without

objection.

Senator DOLE. I would like to welcome each of you this morning.

I particularly want to welcome Tim Timken, my friend. He is a

man of tremendous commitment and will bring a great deal of expertise to the table.

I am delighted to have this opportunity to see you this morning.

Chairman SHELBY. Thank you. Gentlemen, would you stand and

be sworn. Hold up your right hand.

Do you swear or affirm that the testimony that you are about to

give is the truth, the whole truth, and nothing but the truth, so

help you God?

Mr. PLAMANN. I do.

Mr. GRANT. I do.

Mr. HINOJOSA. I do.

Mr. TIMKEN. I do.

Chairman SHELBY. Do you agree to appear and testify before any

duly-constituted committee of the Senate?

Mr. TIMKEN. I do.

Mr. HINOJOSA. I do.

Mr. PLAMANN. I do.

Mr. GRANT. I do.

Chairman SHELBY. Thank you. Be seated. Your written testimony will be made part of the record. We will start with Mr.

Plamann, do you have a brief statement you would like to make?

3

Mr. PLAMANN. Yes.

Chairman SHELBY. Please make it brief, if you can.

Mr. PLAMANN. Good morning. Thank you very much.

Chairman SHELBY. Thank you.

STATEMENT OF ALFRED PLAMANN, OF CALIFORNIA

TO BE A MEMBER OF THE BOARD OF DIRECTORS OF

THE NATIONAL CONSUMER COOPERATIVE BANK

Mr. PLAMANN. Chairman Shelby, Ranking Member Sarbanes,

and distinguished Members of the Committee. I am honored to appear here today as the nominee to become a Member of the Board

of Directors of the National Consumer Cooperative Bank.

I actively sought this nomination in order to again serve on the

Board of Directors of the NCB. I served as an elected Board Member for 6 years and as Chairman for two of those years. During my tenure, the Bank made over $800 million in low-income loans, which represents a substantial increase, and the

Bank’s commitment to low-income housing was improved.

I am currently President and CEO of Unified Western Grocers,

a cooperative wholesale grocery company in Los Angeles serving six

western States. I am a graduate of the University of Colorado and

a graduate of the University of Pennsylvania. I live in Los Angeles

with my wife.

If confirmed by the Senate, I will bring to the Board of Directors

of the National Consumer Cooperative Bank extensive experience

in the cooperative field in support of low-income communities and

low-income borrowers.

My low-income experience is in three areas. First, as CEO of

Unified Western Grocers. Second, as a Board Member of the

Weingart Center for the Homeless in Los Angeles. And third, as an

elected Director of the NCB for 6 years.

Fifty-five percent of Unified Western Grocers’ business is in

Southern California heavily weighted to the Los Angeles area.

Within the L.A. area, our retailers have catered to the central

urban population, which is predominantly lower-income Hispanic,

approximately 42 percent and African-American, approximately 36

percent.

As a member of the Weingart Center Board of Directors, I serve

on the finance committee. The Weingart Center, one of the largest

and most comprehensive facilities of its kind in the country, is

breaking the cycle of homelessness in Los Angeles. They provide individual housing for 630 clients.

The Center also assists its clients by giving them basic skills necessary to stabilize their lives, secure a stable income, and find permanent housing within 4 months. Follow-up shows 30 percent are

still free from addictive substances and live in their own homes

with steady employment.

As a Board Member of the NCB for 6 years, two of which I

served as Chair of the Board, I strongly supported the Bank’s efforts to expand its low-income business. I was elected to the NCB

Board in 1995, during which the NCB originated $82 million of

low-income loans. During the 2 years I served as Chair of the

Board, 1997 and 1998, the NCB originated a total of $362 million.

4

These activities give me a strong understanding of low- and noincome individuals and issues. I am committed to making a difference in low-income areas, not only through monetary assistance

in my professional capacity, but also in personal time commitment.

I would be proud to serve on the Board of Directors of the National Consumer Cooperative Bank, and I appreciate your consideration.

Please allow me to answer any questions that you have at this

time.

Chairman SHELBY. Thank you.

Mr. Grant.

STATEMENT OF THOMAS W. GRANT, OF NEW YORK

TO BE A DIRECTOR OF

THE SECURITIES INVESTOR PROTECTION CORPORATION

Mr. GRANT. Good morning, Chairman Shelby, Senator Sarbanes,

and Senator Dole.

My remarks will be very brief. I did not write a very long statement. I will read it quickly.

It is an honor to have my nomination confirmed by the U.S. Senate as a Director of the SIPC. Provided the Senate and the President approve this nomination, I feel certain that I can be a positive

force in continuing the careful, watchful role the SIPC plays in protecting investors, particularly in light of recent corporate and market difficulties.

With more than 35 years’ experience in the securities industry,

both with full-service securities firms and a small mutual fund

family, my background should assist me in contributing to what is

essentially care of the individual investor. Aside from my professional background, I feel that the support of a fine family with a

wonderful spouse of 35 years and two great children further supports the values needed in this position.

The SIPC, in conjunction with the existing self-regulatory organizations, has played a significant role in making our capital markets

the strongest in the world. Throughout the past 30 years, more

than 99 percent of all investors have had all of their securities and

cash returned when the firm holding their assets failed. This security for investors must remain firmly in place to continue the rebuilding of investor confidence.

The Committee can also be assured that I understand the responsibility of assuring that the assets we hold are used wisely. If

needed, as time passes and conditions change, I further realize that

a director’s role includes the responsibility to see that the assets remain adequate. To date, taxpayers have not funded the SIPC and

I feel that this is a sound policy for the future. The SIPC has also

initiated an excellent education effort to better explain the SIPC’s

role and I am particularly interested to see that this effort is continued.

In conclusion, I would like to thank the President and this Committee for the opportunity to serve.

Chairman SHELBY. Thank you.

Mr. Hinojosa.

5

STATEMENT OF NOE HINOJOSA, JR., OF TEXAS

TO BE A DIRECTOR OF

THE SECURITIES INVESTOR PROTECTION CORPORATION

Mr. HINOJOSA. Chairman Shelby, good morning. Senator Sarbanes, good to be here. Senator Dole, good to see you again.

Good morning. My name is Noe Hinojosa, Jr., of Dallas, Texas,

and I am honored to have been nominated by President George W.

Bush to serve as a Director of the Securities Investor Protection

Corporation.

My wife, Marcia, and my children, Mary Elizabeth and Noe III,

express their regrets for not being here. They would have loved to

have been here. But the children’s commitment didn’t permit that.

I was born in Brownsville, Texas and raised just across the border in Matamoros, Mexico. About 12 years ago, when I joined my

partner, Bob Estrada, to start a firm in 1992, we had two employees, a pocket calculator, and a $300,000 loan. Today, we have over

20 employees, over $1 million in capital, and the finest technology

available in the securities market. I am the Vice Chairman and

part owner of an investment banking firm that specializes in public

finance. And as a small business owner, particularly a minority

small business owner, with my name on the door and my money

on the line, I am keenly aware of the need to conduct our business

in an ethical and professional manner.

I am also keenly aware of the important functions that agencies,

such as the SIPC, provide and as such, I can assure this body, as

I have assured the President, that if I am confirmed, I will work

hard to maintain and promote the vital role the SIPC plays as the

first line of defense for investors when a securities firm fails or declares bankruptcy. In the past 30 years, as you well know, more

than 600,000 investors have recovered nearly $14 billion in assets

with the SIPC’s help. That safety net for investors must remain

strong and be prepared for every contingency.

I believe my unique perspective as an owner of a securities firm

and as an individual investor adds value to the policymaking role

I shall play as a Director. My company, Estrada Hinojosa & Company, Inc., is a member in good standing of the Municipal Securities Rulemaking Board, the National Association of Securities Dealers, the Securities and Exchange Commission, and of course, the

SIPC. In fact, my partner recently served as Chairman of the

MSRB.

Since 1992, our business plan limits our involvement in securities to the municipal bond business. Our investor base is limited

to institutional investors, most commonly described as bond funds,

bank trust departments, and similar institutions. Hence, I have a

good working knowledge of the responsibilities and obligations of

securities firms and the great importance of compliance with all

the rules and regulations placed on our industry.

In addition, I have made personal investments over the years ensuring the future security of my immediate and extended family.

I can assure you I have the utmost interest in protecting the integrity of our capital markets, because without an institution such as

the SIPC, the trust element of our financial system would be lost.

The SIPC must continue to maintain sufficient resources to handle its statutory responsibilities and to plan for every contingency

6

in these perilous times. The SIPC must continue its investor education initiatives and its record of reliance on industry assessments

rather than taxpayer assistance.

I look forward to the opportunity to serve and respectfully request your support.

Chairman SHELBY. Thanks. Mr. Timken.

STATEMENT OF WILLIAM R. TIMKEN, JR., OF OHIO

TO BE A DIRECTOR OF

THE SECURITIES INVESTOR PROTECTION CORPORATION

Mr. TIMKEN. Chairman Shelby, Senator Sarbanes, Senator Dole,

it is good to be with you.

My name is W.R. Timken, Jr., from Canton, Ohio. I am honored

to be here today as President Bush’s nominee for the position of

Chairman of the Board of the Securities Investor Protection Corporation. Thank you for your consideration.

With me today are my wonderful wife, Sue Timken, and my sons,

Kurt and Beau.

By way of background, I have for 28 years been Chairman of the

Timken Company, a New York Stock Exchange-listed company

since 1922. I received a bachelor’s degree in economics and history

from Stanford University and an MBA degree from Harvard University. I have served as the Vice Chairman and the Chairman of

the National Association of Manufacturers, a nonprofit organization with 14,000 member-companies nationwide.

Although I have never been involved in the securities business,

in addition to the Timken Company, I have served on the board of

directors of three other public corporations and personally have

been a substantial investor in securities.

I believe effectively functioning capital markets in which investors are willing to invest their resources are essential to our free

enterprise system, which itself is essential to our American democracy. Investor confidence is a crucial factor.

I know that the SIPC, a nonprofit corporation, was established

by the Congress in 1970 to protect the investor for the custody

function undertaken by registered securities brokers and dealers.

Handing over hard-earned money without immediately receiving a

tangible piece of property is a leap of faith that investors must

make. They do need some protection.

The results have been outstanding as the SIPC has served investors as their first line of defense in the event of brokerage firm failures. No fewer than 99 percent of eligible investors receive all of

their cash and securities in a liquidation proceeding under the Securities Investor Protection Act. From its creation in 1970, through

December 2002, the SIPC advanced $513 million in order to make

possible the recovery of almost $14 billion in assets for an estimated 622,000 investors.

My intention as Chairman will be to work with our board and

the SIPC associates to continue to fulfill the objectives of the Securities Investor Protection Act of 1970. I will seek advice from Congress, the securities industry, and the SEC. And I will see that the

SIPC Fund and lines of credit are sufficient to meet the demands

of our charge.

7

I would appreciate your support of my nomination and I will be

happy to answer any questions and listen to any advice.

Thank you.

Chairman SHELBY. Thank you all. I will try to be as brief as I

can. Mr. Timken, I will start with you and move from right to left.

One area of concern that I have concerns the public awareness

of the Securities Investor Protection Corporation’s function. I fear

that many investors believe that the role is to indemnify investors

against trading losses or market swings.

Do you agree that this may be a problem? Do you think there

is a greater need for investor education in this regard?

Mr. TIMKEN. Senator, I agree. We have the results of the study

conducted by the GAO for Representative Dingell which gave us

some additional information on that. And the SIPC responded with

an increased awareness program. I think advancements that Mr.

Hinojosa referred to have been made.

I think we can do a better job and that would certainly be one

of the things that we would definitely attempt to undertake.

Chairman SHELBY. Mr. Hinojosa, in August 2001, the Securities

Investor Protection Corporation was faced with a liquidation of the

MJK Clearing, Inc., a Minneapolis brokerage firm, that cleared

trades from 175,000 accountholders.

By all accounts, the liquidation went smoothly. I understand that

the fund was recently deemed to be sufficiently capitalized with a

99 percent confidence interval.

Nevertheless, are there any lessons that you feel can be drawn

from this failure, the MJK failure, to help avoid such massive liquidations in the future?

What can be done to ensure the fund’s ongoing health, which is

a concern for everybody, especially for you board people?

Mr. HINOJOSA. I think in briefings that I have had with staff,

there are serious attempts for ensuring that we have the appropriate lines of credit extended. We are working and we intend to

work as a board very diligently with staff to ensure that the proper

lines of credit care in place, that the $1.3 billion in net capital that

the SIPC has is always there.

I wish that we could have 100 percent guarantee, not 99 percent.

That is something we will continue to strive for. We certainly won’t

be bashful about coming before you and asking for your guidance

if you feel that that needs to be enhanced and improved.

Chairman SHELBY. Mr. Grant, just following up on the MJK failure, that was the Securities Investor Protection Corporation’s largest liquidation to date. MJK’s financial difficulties were caused in

large part by its securities lending business. Is this business particularly risky, or did MJK mismanage its activities, if you know?

Mr. GRANT. I am not 100 percent clear on it. But being in the

securities business, I do lend securities myself, I do not think that

lending is the risky part. The dimension is the risky part.

I think lending of securities is a good function for investors. It

is a way to borrow money to buy houses and other things. And handled correctly, that is not the core of the problem.

The core of the problem is the management of the company and

the ill-use of their funds.

Chairman SHELBY. The health of the funds has to be paramount.

8

Mr. GRANT. I think, just to comment further on the first question, we can raise more money. The amount charged of each firm

is very minimal.

Chairman SHELBY. Going to the Board of the National Consumer

Cooperative Bank, as a representative from the community development sector, what special perspectives do you believe you bring

to the service on the Board of the NCB?

Mr. PLAMANN. My company is very active in providing services

to the retailers who are an integral part of——

Chairman SHELBY. Is that the wholesale grocery business?

Mr. PLAMANN. The wholesale grocery business, yes.

Chairman SHELBY. Okay.

Mr. PLAMANN. And we provide goods and services to independent

grocers who are an integral part of many low-income communities,

particularly in South Central Los Angeles and areas like that.

So, we try to bring those services at a price and a cost that can

keep them very competitive in those communities. We have to link

very closely with those communities.

Many times, these grocery stores are the anchor of shopping

areas that are neighborhood-oriented shopping areas. That anchor

sometimes acts as a magnet, if you will, for other services, such as

dry cleaners or shoe repair, or whatever it is, small businesses that

find themselves around those areas.

On a professional basis, I think that is my link. On a personal

basis, I commit a fair amount of time to the homeless problem in

Los Angeles, which I think is a very difficult social problem for us.

Chairman SHELBY. The NCB’s primary corporate mandate is to

support cooperative efforts. What is special about the cooperative

structure here? What is it about co-ops that you believe makes the

structure particularly well suited for the community revitalization?

Mr. PLAMANN. Co-ops, of course, have been around for a long

time, agricultural co-ops and buying co-ops. Our co-op has been

around for 80 years. Its mission today is the same as it was when

it was organized. That is, to allow small independent grocers to buy

products at a price that is competitive with the larger, self-distributing channel. So, I believe that is the strength of it. In addition,

we return our profits back to the small retailer.

Chairman SHELBY. Okay.

Senator Sarbanes.

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

Mr. Plamann, the National Consumer Cooperative Bank Act requires that the Board of Directors use its best efforts to ensure that

at the end of each fiscal year of the bank, at least 35 percent of

its outstanding loans are either, one, the cooperatives, at least a

majority of the members of which are low-income persons and, two,

other cooperatives if the proceeds of such loans are directly applied

to finance the facility activity or service, that the Board finds

would be used predominantly by low-income persons.

Now it is my understanding that the National Consumer Bank

has yet to reach this goal. Is that your understanding?

Mr. PLAMANN. That is my understanding, yes, sir.

Senator SARBANES. In fact, it is falling fairly short of it, is it not?

Mr. PLAMANN. If it is measured strictly in the percentages, yes,

sir. But several years ago, the Board decided that we needed to add

9

some additional incentives and we suggested that we may use some

qualitative measures with regard to putting those assets in those

communities.

I think we have been very successful in accomplishing that, basically through the NCB Development Corporation.

Senator SARBANES. I raise the point because you have chaired

the Board and from all reports, did it in a very competent and efficient way. But 12 of the Members of the Board represent cooperative endeavors. Three remaining seats are reserved for appointment by the President.

Mr. PLAMANN. Yes, sir.

Senator SARBANES. Now you are back before us as a Presidential

nominee.

Two people have been nominated by President Bush and confirmed by us to take care of small business and the agencies. So,

you are going on as the representative of the low-income areas.

I have to say, with all due respect to your past activities, they

are quite different from others who have gone on the Board as a

representative of the low-income areas.

So what do you see as the rationale that justifies you being nominated to us as a representative of the low-income area, since this

is an important goal of the National Cooperative Bank?

Mr. PLAMANN. I agree with you. It is a critical mission of the

Bank. The Bank’s economic equation has proven to be very successful in achieving, I would say, a significant increase in the years

that I was there.

The last long-range plan that we put into place at the Bank set

as a target approximately $600 million in low-income loans over a

3-year period. Last year, we achieved the first such number at $191

million, and there will be over $200 million per year in the next

2 years.

I would like to get back on the Bank board to ensure that that

emphasis is in fact carried out.

Senator SARBANES. That is $200 million out of, what?

Mr. PLAMANN. There are I think about a billion dollars’ worth of

loans on the books at the moment.

Senator SARBANES. So you are running at 20 percent, as opposed

to the 35 percent figure.

Mr. PLAMANN. Well, I think that, given the nature of the balance

sheet, the $200 million are the originations in 1 year. But many

of the loans are sold into the marketplace today.

I think the measure that was used when the Bank Act was set

up is a little different from the percentage you are talking about.

Senator SARBANES. Well, we will be following this very closely.

I do think it is a very important responsibility of the bank.

I would like to ask the SIPC nominees about two studies that the

SIPC commissioned, one by Deloitte & Touche and one by Fitch

Risk Management, after it handled the largest failure in history of

MJK Clearing Corporation, which involved 174,000 customer accounts, over $10 billion in securities and cash.

Are you familiar with those studies?

Mr. GRANT. I am, sir.

Senator SARBANES. Is everyone, all three, familiar with them?

10

They have made a number of very important recommendations.

Do you have any view on implementing the recommendations that

have been made in those studies?

Mr. TIMKEN. Maybe I should start.

Senator SARBANES. We are running short on time, so if you could

give me a brief answer.

Mr. TIMKEN. Actually, the SIPC’s record has been one of excellence, I would say, in execution in getting securities to the individuals that lose them.

To date we have done relatively little on risk management. It is

the conclusion of those two studies that the MJK situation, with

the securities lending, not only had an issue of management of that

firm, but also, it exposed the risk of the SIPC to variations going

on in the financial markets with different types of actions.

And the suggestion derived from there was that we should work,

first of all, with the SEC and the individual agencies like the New

York Stock Exchange and the Nasdaq to improve surveillance. But

also, that the SIPC itself needed perhaps to either, on an in-house

basis or by contracting, develop a greater skill at the risk-management function to make sure that the Fund is protected and that we

know what kind of problems are out there.

My current understanding is that the Board is considering that.

The decision required is whether to move forward with an internal

capability, which would require some more assets expended, or to

contract it out. But it is a new phase of the SIPC’s career, I think.

Mr. HINOJOSA. I think from my experience with the report, I

think what we need to do is try to enhance or attempt to anticipate

the problem issues in regards to broker-dealers getting into trouble.

I think that the report very specifically makes a recommendation

in regards to enhancing surveillance. I think we need to work very

closely with the SEC in regards to that because in the whole

scheme of things, I think the SIPC did a tremendous job in coming

to the rescue of investors. But, certainly, many instances like this

would be a concern for us.

Chairman SHELBY. Mr. Grant.

Mr. GRANT. I agree with both of my colleagues that the SIPC can

obviously strengthen their role and become tighter in their controls

as to what they see.

But the first line of defense on the regulatory side is still up to

the SRO’s like the New York Stock Exchange, Nasdaq, and the

SEC. And if a firm is going to be fraudulent, the records they file

are false to begin with. We still always have to trust in that first

line.

Senator SARBANES. But the Deloitte & Touche study had some

very specific recommendations, all of which seemed to me to make

a lot of good sense.

You are going to be three additions to this Board now. And so,

you have an opportunity to go in there and really strengthen the

system of investor protection, which is under assault for lots of reasons right now and it is a matter of real concern, and I commend

that to you.

There are other studies. The GAO has recommended a robust investor education program that the SIPC undertake. I presume that

you all would be in favor of encouraging an active investor eduVerDate 11-MAY-2000 11:00 Sep 02, 2004 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 95624.TXT SBANK4 PsN: SBANK4
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cation program with respect to what the SIPC provides for investors.

Am I correct in that assumption?

Mr. HINOJOSA. You are very correct.

Mr. GRANT. Very correct. I agree completely. And they have

made a much greater effort in recent years because investors are

somewhat confused as to what they are protected for. And I think

we will, as I said in my opening remarks, we will try to strengthen

that greatly.

Senator SARBANES. And finally, very quickly, the SIPC Fund has about $1.26 billion reserves. SIPC broker-dealers hold $3 trillion of

investor securities.

The broker-dealers are paying about $150 a year assessment into

the Fund. And the question is, is this fund adequately capitalized?

Now, presumably, the broker-dealers think it is.

[Laughter.]

But to some extent, I think your decision on this question, if you

decide that it is adequately capitalized, goes back to implementing

the recommendations of Deloitte & Touche and of the Fitch Risk

Management review.

I think the system has to be tightened up. I think there are a

lot of stresses on investors right now in the current economic circumstance and it needs to be tightened up.

We do not want you coming in here after the fact, when we really

had a bad event and we weren’t really able to handle it very well

and we had an impact on the economy.

And so, that is the message that I want to leave with you this

morning.

Mr. Chairman, thank you very much.

Mr. TIMKEN. We hear that and understand that, and we will certainly take that into account as we proceed forward.

As you know, the SIPC does not have regulatory powers, so our

work will be very much with the SEC and the SRO’s, to make sure

that the investor is protected.

Senator SARBANES. Thank you.

Chairman SHELBY. Thank you.

Thank you, Senator Sarbanes.

I want to thank all of you for your testimony today. We know we

have been in a rush and in a hurry.

We hope to move your nominations quickly. Members of this

Committee may wish to submit questions for the record, and if they

do submit questions for the record, I hope you will respond as

quickly as possible, and that will enable us to expedite your nominations.

The hearing is adjourned.

[Whereupon, at 9:57 a.m., the hearing was adjourned.]

[Prepared statements, biographical sketches of the nominees, and

response to written questions supplied for the record follow:]

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PREPARED STATEMENT OF SENATOR RICHARD C. SHELBY

Good morning. I am pleased to welcome the four of you before the Senate Banking

Committee. One of the most important responsibilities of the Committee is the examination and confirmation of the Administration’s nominations that fall underneath our jurisdiction. Three of you are here today as nominees to serve on the

Board of Directors of the Securities Investor Protection Corporation. Mr. Plamann

has been nominated by the President to serve as a Member of the Board of Directors

of the National Consumer Cooperative Bank. Both organizations play an important

role in our economy.

The SIPC was chartered by Congress to secure and return the assets of investors

in bankrupt or failing firms. While not designed to be a blanket insurance fund for

investor fraud or losses, the SIPC has a specific focus that is very meaningful—restoring investors with assets in the hands of bankrupt or otherwise financially troubled brokerage firms. Without the SIPC, investors at these firms might never recover their securities or money or face lengthy delays while their assets are tied up

in our judicial system. From its creation by Congress in 1970 through December

2001, the SIPC advanced $513 million in order to make possible the recovery of

$13.9 billion in assets for an estimated 622,000 investors.

The National Consumer Cooperative Bank was chartered by Congress to assist

consumer and small business cooperatives. The NCB provides the resources necessary for cooperative endeavors to achieve growth and success. It serves its members through its lending and financing arrangements and by providing financial and

other technical assistance. The NCB subsidiaries assist cooperatives and small businesses by providing organizational and technical assistance, banking services, advocacy, informational services, financial advice as well as information on capital

sources. To date, the NCB has provided more than $6 billion in financing—creating

thousands of homeownership opportunities and providing other critical services to

our Nation’s communities.

Both the SIPC and the NCB provide an invaluable service to individuals, communities and the economy. As leaders at these two organizations, you will be expected

to address the current issues facing SIPC and the NCB and to adjust to challenges

which lay ahead. As future public servants, I commend your willingness to step forward to embrace this responsibility. I look forward to hearing the testimony of each

of the nominees present here today.

—————

PREPARED STATEMENT OF SENATOR ELIZABETH DOLE

I would like to express my appreciation to you and to Ranking Member Sarbanes

for agreeing to hold this hearing on the President’s nominations to the Board of the

National Consumer Cooperative Bank and to the Board of the Securities Investor

Protection Corporation, known as the SIPC. The President has indeed nominated

fine individuals with diverse backgrounds.

The National Consumer Cooperative Bank plays an important role by serving as

a key source of financing to cooperative endeavors which serve both the interests

of the consumer and society very well. The SIPC serves a critical need in our Nation

by providing certain protections against losses to customers from the failure of a securities firm. This function gives a floor of protection to our securities markets and

assures investors and pension holders won’t be wiped out due to the failure of a securities firm.

The protections afforded by the SIPC carry greater importance when the market

drops and the economy struggles especially when the fundamentals of the market

are under such scrutiny. While the SIPC does not cover market losses, it does cover

investors when a securities firm fails, especially if there were unauthorized trades

made before the firm failed or if a Ponzi scheme was involved in the failure. However, many investors may be confused as to what protections the SIPC affords and

what conditions must be met to access them.

According to a May 2001 General Accounting Office (GAO) report, investors may

confuse the SIPC with other financial guarantee programs, and opportunities exist

to improve the disclosure of the SIPC’s policies. In addition, some investors who

have gone through the process to receive compensation from SPIC have questioned

what the SIPC appointed trustee’s priorities are: The protection of investors or the

protection of the SIPC Fund. These are important issues, and I look forward to discussing some of them with the nominees.

Our nominees are to be thanked for their commitment to our Nation in devoting

some of their time to these positions. The President is to be congratulated for seeking such qualified individuals with such diverse backgrounds. Their different experiVerDate 11-MAY-2000 11:00 Sep 02, 2004 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 95624.TXT SBANK4 PsN: SBANK4
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ences should bring a great deal to the table when reviewing the policies they will

oversee. I especially want to welcome my friend William Robert Timken, known as

Tim to his friends. He is a gentleman of honor and distinction. The SIPC and investors will greatly benefit from his expertise and dedication.

Thank you.

—————

PREPARE STATEMENT OF SENATOR GEORGE V. VOINOVICH

I am pleased to introduce W.R. ‘‘Tim’’ Timken Jr., who has been nominated by

the President to serve as Chairman of the Board of the Securities Investor Protection Corporation.

I have had the privilege of knowing Tim for many years and consider him to be

a valuable leader and close friend. He serves as a role model for what a corporate

executive can and should be. He has truly made a difference in the quality of life

in his community, state and country.

The Timken Company headquartered in Canton, Ohio, manufactures highly engineered bearings and alloy steels. They are also becoming a leader in providing related components and services such as bearing refurbishment for the aerospace,

medical, industrial, and railroad industries. The company’s mission is to continually

increase shareholder value by strengthening its leadership position in their chosen

markets. More than fifty plants and 100 sales design and distribution centers

around the world provide unmatched product quality and customer service.

Since becoming Chairman of the Board in 1975, Tim has led his family business,

the Timken Company, to become a leading international manufacturer with operations in twenty-four countries employing approximately 28,000 people worldwide.

A former Chairman of the National Association of Manufacturers, Tim has always

impressed me with his consistent sense of civic responsibility and has remained a

leader in many facets of his community. He has been the backbone for many initiatives in the State of Ohio. Tim’s relentless dedication to his neighbors and our

Nation’s leaders has proven his patriotism and compassion. He has a genuine appreciation for all that America stands for and is a tremendous civic leader not only for

Canton, Ohio but also for the United States.

One thing that has remained constant, both in his professional and political endeavors, that will prove to be a valuable asset to the Securities Investor Protection

Corporation, is his insistence on ethical behavior. Tim Timken is a man of unique

character and integrity. His considerable accomplishments over the years have been

made possible, in part, by the reputation that he has built for himself as an extraordinarily honest and forthright individual.

I believe that Tim’s professional experience has prepared him well to serve in the

position for which he has been nominated. In this era of uncertainty about the future, Tim would be a strong advocate for fairness and common sense and will serve

with the vigilance and dedication that this Board requires.

I urge the Committee to quickly report the nomination of W.R. Timken, Jr. so that

the Senate may soon vote on his confirmation.

Thank you, Mr. Chairman.

—————

PREPARED STATEMENT OF ALFRED A. PLAMANN

MEMBER-DESIGNATE, THE NATIONAL CONSUMER COOPERATIVE BANK

MARCH 25, 2003

Chairman Shelby, Ranking Member Sarbanes, and distinguished Members of the

Committee, I am honored to appear here today as a nominee to become a Member

of the Board of Directors of the National Consumer Cooperative Bank.

I actively sought this nomination in order to again serve on the Board of Directors

of the NCB. I served as an elected Board Member for 6 years and as Chairman for

two of those years. During my tenure, the Bank made over $800 million in low-income loans, which represents a substantial increase, and the Bank’s commitment to

low-income housing was improved.

I am President and CEO of Unified Western Grocers, a cooperative wholesale grocery company in Los Angeles serving six western States. My background is financial, and I have worked in diverse companies such as Unified, ARCO, and U.S.

Financial. I am a graduate of the University of Colorado where I earned my B.S.

in accounting and I received by MBA from University of Pennsylvania (Wharton)

with an emphasis in finance.

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As you may know, the National Consumer Cooperative Bank was established in

1978 to address the unmet financial needs of an underserved market—those people

who join together cooperatively to achieve their personal, social, and business goals.

And in 1982, the NCB was privatized as a member-owned financial institution.

Today, the Bank provides a broad array of financial services to cooperatives across

the country. These businesses are large and small, and they serve both rural and

urban communities.

The NCB—in partnership with its nonprofit affiliate, NCB Development Corporation—plays a vital role meeting the underserved financial needs of America’s communities. Over the course of its 20-plus year history, the NCB has loaned or invested more than one billion in the areas of education, affordable housing, health

care, small business ventures, affordable assisted living, worker ownership, and economic and community development ventures.

The cumulative impact is considerable. NCB loans and investments have created

approximately:

• 25,000 units of affordable housing;

• 10,000 jobs for low-income individuals;

• School facilities for more than 4,500 students;

• Nearly 1 million square feet of community health center space serving 100,000 patients annually; and

• More than 1,000 units of affordable assisted living.

In 2002 alone, the NCB provided or arranged more than $191 million in financing

for low-income and at-risk communities, and over the past 6 years it has originated

over $1 billion of critically needed financing. It is obvious that the National Consumer Cooperative Bank has accomplished much. And I know it has the potential

to do even more, not only as a lender and valued financial resource, but also as an

exceptional example of the type of collaborative and innovative venture we need to

respond to today’s challenging problems and changing times.

If confirmed by the Senate, I will bring to the Board of Directors of the National

Consumer Cooperative Bank extensive experience in the cooperative field in support

of low-income communities and low-income borrowers. My low-income experience is

in three areas: As the CEO of Unified Western Grocers, as a Board Member of the

Weingart Center for the Homeless in Los Angles, and as an elected Director of the

NCB for 6 years.

Fifty-five percent of Unified Western Grocers’ business is in Southern California

heavily weighted to the Los Angeles area. Within the LA area, our retailers have

catered to the central urban population, which is predominately lower-income Hispanic (41.7 percent) and African-American (36.08 percent), with a per capita income

of $10,800. In that base, our retailer members control an estimated 87 percent market share.

Most of the members in that market have been financed from inception by the

corporation through working capital or facility loans. As CEO (and former CFO), I

am intimately involved with the approval process and details of the unique issues

involved in financing retailers. Many, if not most, of these loans are sold to the NCB

or are completed in participation with the NCB.

One example is a company named KV Mart doing business as Top Valu and Valu

Plus, headquartered in Carson, California, a leading independent grocery chain

serving inner-city communities across Southern California. Over the past 24 years,

KV Mart has developed a unique business model designed to cater to the needs of

different ethnicities residing in inner-city neighborhoods by offering a wide range of

culturally specific products and services. The company’s approach to serving innercity communities has been successful partially as a result of its hiring practices that

center on employing residents from each of the local areas in which the company

operates stores.

In 1992, KV Mart had nine stores with sales volume totaling $81,000,000 and 590

employees. Today the company operates twenty-two stores with sales volume totaling $250,000,000 and employs 1,400 individuals. Under my direction as CFO, and

subsequently as CEO, Unified Western Grocers (UWG) and its subsidiary, Grocers

Capital Company (GCC), have been instrumental in providing financial assistance

to help KV Mart achieve this level of growth. Over the past 10 years, GCC has provided KV Mart with over $18,000,000 in long-term loans for store purchases, store

remodels, and capital stock investments. UWG has also provided numerous shortterm inventory loans to support new stores, and GCC has supplied guarantees in

support of $8,000,000 in loans from the National Consumer Cooperative Bank. Finally, UWG has provided lease guarantees/sublease arrangements in support of four

of KV Mart’s locations.

15

During the Los Angles riots, thirty-six of our members’ stores were destroyed,

twenty experienced delayed openings, and twenty were subjected to looting. With

our assistance, sixteen stores were totally rebuilt in these lower-income communities. The corporation helps people who want to get started and have staying power

so low-income people have continuing service.

Unified Western Grocers, under my leadership, actively supports low-income communities. In fact, our bakery and dairy divisions are located in low-income areas in

south LA where we provide employment for 109 in the bakery and 148 in the dairy.

As a member of the Weingart Center Board of Directors, I serve on the finance committee. The Weingart Center, one of the largest and most comprehensive facilities

of its kind in the country, is breaking the cycle of homelessness in Los Angeles.

They provide individual housing for 630 clients.

The Center also assists its clients by giving them the basic skills necessary to stabilize their lives, secure a stable income, and find permanent housing within 4

months. Follow-up shows 30 percent are still free from addictive substances 6

months after completing the program and reside in their own homes with steady

employment. Additionally, Weingart presents service referrals for 6,000 people a

year and offers high school and English classes to 200 students per day. As a member of the finance committee, which meets monthly, I assist with allocating a

$10,000,000 budget, requests for grants, and other significant funding activities.

As a Board Member of the NCB for 6 years, two of which I served as Chair of

the Board, I strongly supported the Bank’s efforts to expand its low-income business. I was elected to the NCB board in 1995, during which the NCB originated

$82.3 million of low-income loans. During the 2 years I served as Chair of the

Board, 1997 and 1998, the NCB originated a total of $361.8 million of low-income

loans. The significant growth of the NCB’s low-income business speaks volumes

about the efforts of the Board and staff to serve low-income communities and to

carry out the public policy mission of the bank.

These activities give me a strong understanding of low- and no-income individuals

and issues. I am committed to making a difference in low-income areas, not only

through monetary assistance in my professional capacity, but also in personal time

commitment.

I would be proud to serve on the Board of Directors of the National Consumer

Cooperative Bank, and I appreciate your consideration.

Allow me to answer any questions you may have at this time.

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RESPONSE TO WRITTEN QUESTION OF SENATOR SHELBY

FROM THOMAS W. GRANT

Q.1. I understand that a number of exchange rule changes are

pending before the SEC that would permit the implementation of

a pilot program for portfolio margining in the account of a customer

with an account equity of at least $5 million for positions in broadbased index options and futures. This pilot program, which was developed nearly 4 years ago, is integral to the consideration of risksensitive portfolio margining for securities customers. SEC Chairman Bill Donaldson recently pledged his assistance in working to

finalize these rules so that the pilot program can finally be implemented.

The SIPC has bean asked to use its existing rulemaking and rule

interpretation authority to determine whether the SIPA will apply

to the securities accounts in the portfolio margining pilot. Will you

work with the SIPC staff to resolve this issue as soon as possible?

A.1. I have spoken with the SIPC staff concerning the subject of

margining an account which contains both securities and futures.

The issues which are raised by such a ‘‘cross-margined’’ account are

new and complex. The complexity arises from the historical separation of the regulatory regimes for securities, on the one hand, and

futures, on the other. Thus, for example, the Securities Investor

Protection Act protects securities left with a stock brokerage firm

for safekeeping, but the definition of the term ‘‘security’’ in that

statute specifically excludes, ‘‘any commodity or related contract or

futures contract, or any warrant or right to subscribe to or purchase or sell any of the foregoing.’’ The SIPC staff informs me that

periodic discussions of the cross-margining of securities and futures

among the SIPC, the Securities and Exchange Commission, the Options Clearing Corporation, and the Chicago Board Options Exchange have taken place over the last one and a half years.

I will work with the SIPC staff to determine the best approach

to resolve promptly the issues raised by the proposed pilot program

for portfolio margining.

RESPONSE TO WRITTEN QUESTION OF SENATOR SHELBY

FROM WILLIAM R. TIMKEN, JR.

Q.1. I understand that a number of exchange rule changes are

pending before the SEC that would permit the implementation of

a pilot program for portfolio margining in the account of a customer

with an account equity of at least $5 million for positions in broadbased index options and futures. This pilot program, which was developed nearly 4 years ago, is integral to the consideration of risksensitive portfolio margining for securities customers. SEC Chairman Bill Donaldson recently pledged his assistance in working to

finalize these rules so that the pilot program can finally be implemented.

The SIPC has been asked to use its existing rulemaking and rule

interpretation authority to determine whether the SIPA will apply

to the securities accounts in the portfolio margining pilot. Will you

work with the SIPC staff to resolve this issue as soon as possible?

A.1. I have spoken with the SIPC staff concerning the subject of

margining an account which contains both securities and futures.

63

The issues which are raised by such a ‘‘cross-margined’’ account are

new and complex. The complexity arises from the historical separation of the regulatory regimes for securities, on the one hand, and

futures, on the other. Thus, for example, the Securities Investor

Protection Act protects securities left with a stock brokerage firm

for safekeeping, but the definition of the term ‘‘security’’ in that

statute specifically excludes ‘‘any commodity or related contract or

futures contract, or any warrant or right to subscribe to or purchase or sell any of the foregoing.’’ The SIPC staff informs me that

periodic discussions ofthe cross-margining of securities and futures

among the SIPC, the Securities and Exchange Commission, the Options Clearing Corporation, and the Chicago Board Options Exchange have taken place over the last one and a half years.

I will work with the SIPC staff to determine the best approach

to resolve promptly the issues raised by the proposed pilot program

for portfolio margining.

RESPONSES WRITTEN QUESIOTNS OF SENATOR SARBANES

FROM ALFRED A. PLAMANN

The National Consumer Cooperative Bank Act requires that the

Board of Directors, ‘‘use its best efforts to ensure that at the end

of the each fiscal year of the Bank at least 35 per centum of its

outstanding loans are to: (1) cooperatives at least a majority of the

members of which are low-income persons and (2) other cooperatives, if the proceeds of such loans are directly applied to finance

a facility, activity, or service that the Board finds will be used predominantly by low-income persons.’’ It is my understanding that

the NCB has yet to reach that goal.

Q.1.a. As the low-income representative on the Board, how will you

ensure that 35 percent of the Bank’s loans are made to low-income

cooperatives and cooperatives that directly service the needs of lowincome persons?

A.1.a. During my past tenure an the Board there was a dual effort

to spur and support low-income, cooperative development both

through the use of the NCB loan portfolio and through the use of

the NCB’s other resources. I will continue to be an advocate on the

Board for low-income cooperatives by setting higher and higher

standards and expectations for increasing low-income loans and

measuring best efforts based on out willingness and ability to invest increasing resources to deliver capital and technical assistance

to low-income cooperatives.

My focus, however, and what I hope to achieve on the Board,

goes well beyond the resources we have available through the NCB

loan portfolio and balance sheet. The NCB is a relatively small organization and the needs of low-income cooperatives are substantial and growing. I would hope to leverage the expertise of the NCB

and its balance sheet to access other capital that can be directed

to low-income cooperatives, For example, in 2002, the NCB used its

resources to arrange over $100 million of low-income transactions,

which involved other sources of private and public investment. As

a low-income representative I will advocate raising the bar for deploying these critical resources to low-income cooperatives. I would

also advocate for capacity building and technical assistance programs for low-income cooperatives. For example, the NCB’s affilVerDate 11-MAY-2000 11:00 Sep 02, 2004 Jkt 000000 PO 00000 Frm 00067 Fmt 6633 Sfmt 6601 95624.TXT SBANK4 PsN: SBANK4
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iate, NCB Development Corporation, is operating a program in 10

States directed at revolutionizing the use of Medicaid resources for

affordable assisted living recipients. I would push to increase the

resources that the NCB is directing to these kinds of programs.

Q.1.b. It is my understanding that the NCB staff bonus structure

provides an incentive for staff to originate low-income loans. Do

you support the bonus provisions for employees that takes into account the Board’s efforts to reach the 35 percent annual goals?

A.1.b. When I was Board Chair, we increased the weight of lowincome activities in the incentive plans. The plans provide for an

increased reward for achieving the low-income goals, but the plans

also have a penalty that substantially reduces the overall award if

the low-income goal is not achieved. I feel that these plans provide

an appropriate incentive for management to reach even higher to

achieve the mission of the Bank.

Q.2. How do you plan to use your board seat to represent low-income consumers at the NCB and assure that the Bank continues

to help finance consumer-owned cooperatives that serve poor people? Would you advise the Bank to do anything differently?

A.2. My job will be to promote the needs of low-income cooperatives, even in circumstances where these needs may appear to be

in conflict with the NCB’s requirements to operate a viable, financial services organization, I understand the bottom-line requirements of running a business, and once I think those requirements

can be met, I will be pressing to use as many resources as we can

to serve low-income cooperatives.

Q.3. What are your plans to work with the various national and

regional advocacy groups that represent underserved populations to

ensure that their views are represented on the NCB Board?

A.3. The NCB, and its affiliate, NCB Development Corporation, are

involved in a number of partnerships and programs with national

and regional advocacy groups. As I understand it, there are also a

number of advisory groups in various sectors like community

health care, education, and housing that have been convened to assist the NCB to determine how best to deploy its resources in these

areas. I expect to be personally involved in these discussions to

learn fast hand what the views of low-income constituents are.

Q.4. Congress specifically directed the NCB to, among other things,

‘‘encourage the development of new and existing cooperatives eligible for its assistance by providing specialized credit and technical

assistance.’’ As the low-income representative Board Member, how

would you encourage the creation of now cooperatives owned by

low-income individuals?

A.4. Vital to the creation of new, low-income cooperatives are programs that are focused on providing higher risk, nontraditional

financing and that are directed at building the capacity of low-income residents to form and operate their own enterprises. I intend

to use my Board role to continue to advocate for and expand the

resources that the NCB directs to these areas.