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98–386 PDF 2016

S. HRG. 114–162

NOMINATIONS OF: ADEWALE O. ADEYEMO, AMIAS

MOORE GERETY, AND JAY N. LERNER

HEARING

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

ON

NOMINATIONS OF:

ADEWALE O. ADEYEMO, OF CALIFORNIA, TO BE ASSISTANT SECRETARY FOR

INTERNATIONAL MARKETS AND DEVELOPMENT, DEPARTMENT OF THE

TREASURY

AMIAS MOORE GERETY, OF CONNECTICUT, TO BE ASSISTANT SECRETARY FOR

FINANCIAL INSTITUTIONS, DEPARTMENT OF THE TREASURY

JAY N. LERNER, OF ILLINOIS, TO BE INSPECTOR GENERAL, FEDERAL DEPOSIT

INSURANCE CORPORATION

SEPTEMBER 29, 2015

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

(

Available at: http://www.fdsys.gov/


BANKI-41578DSA with DISTILLER
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

RICHARD C. SHELBY, Alabama, Chairman

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

DAVID VITTER, Louisiana 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

JERRY MORAN, Kansas 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana

WILLIAM D. DUHNKE III, Staff Director and Counsel 

MARK POWDEN, Democratic Staff Director

DANA WADE, Deputy Staff Director 

JOHN V. O’HARA, Senior Counsel for Illicit Finance and National Security Policy 

JAY DUNN, Professional Staff Member 

SHELBY BEGANY, Professional Staff Member

LAURA SWANSON, Democratic Deputy Staff Director 

COLIN MCGINNIS, Democratic Policy Director

DAWN RATLIFF, Chief Clerk 

TROY CORNELL, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor

(II)


BANKI-41578DSA with DISTILLER
CONTENTS

TUESDAY, SEPTEMBER 29, 2015

Page

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

Opening statements, comments, or prepared statements of: 

Senator Brown .................................................................................................. 2

NOMINEES 

Adewale O. Adeyemo, of California, to be Assistant Secretary for International Markets and Development, Department of the Treasury .................. 4

Prepared statement .......................................................................................... 17

Biographical sketch of nominee ....................................................................... 19

Responses to written questions of: 

Senator Menendez ..................................................................................... 40

Amias Moore Gerety, of Connecticut, to be Assistant Secretary for Financial 

Institutions, Department of the Treasury .......................................................... 5

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

Biographical sketch of nominee ....................................................................... 25

Responses to written questions of: 

Senator Menendez ..................................................................................... 44

Jay N. Lerner, of Illinois, to be Inspector General, Federal Deposit Insurance 

Corporation ........................................................................................................... 7

Prepared statement .......................................................................................... 32

Biographical sketch of nominee ....................................................................... 33

Responses to written questions of: 

Senator Brown ........................................................................................... 47

(III)


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BANKI-41578DSA with DISTILLER
(1)

NOMINATIONS OF: 

ADEWALE O. ADEYEMO, OF CALIFORNIA,

TO BE ASSISTANT SECRETARY FOR INTERNATIONAL 

MARKETS AND DEVELOPMENT,

DEPARTMENT OF THE TREASURY; 

AMIAS MOORE GERETY, OF CONNECTICUT,

TO BE ASSISTANT SECRETARY FOR FINANCIAL 

INSTITUTIONS,

DEPARTMENT OF THE TREASURY; 

JAY N. LERNER, OF ILLINOIS,

TO BE INSPECTOR GENERAL,

FEDERAL DEPOSIT INSURANCE CORPORATION

TUESDAY, SEPTEMBER 29, 2015

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

The Committee met at 10 a.m., in room SD–538, Dirksen Senate 

Office Building, Hon. Richard Shelby, Chairman of the Committee, 

presiding. 

OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY 

Chairman SHELBY. The Committee will come to order. This 

morning we will hear testimony on several nominations. 

Mr. Adeyemo—is that correct? 

Mr. ADEYEMO. Yes, sir. 

Chairman SHELBY. OK.——is nominated to be Assistant Secretary of the Treasury for International Markets and Development, 

which is primarily a national security position. He has served as 

Deputy Chief of Staff of the Treasury Department since 2012. He 

was also the Chief of Staff at the Consumer Financial Protection 

Bureau for 16 months in 2010 and 2011. 

As the Assistant Secretary, he would directly oversee the process 

by which foreign persons seek approval to purchase controlling interests in U.S. businesses with national security implications. In 

this position, he would also support the management of Treasury’s 

portfolio on international financial services, regulation, trade, 

banking and securities, development, and technical assistance. 

Mr. Amias Gerety is nominated to be Assistant Secretary of the 

Treasury for Financial Institutions. Mr. Gerety has been working 

in the Treasury Department since January of 2009. He has recently served as the Deputy Assistant Secretary for the Financial 


BANKI-41578DSA with DISTILLER
2

Stability Oversight Council and is currently serving as the Acting 

Assistant Secretary for Financial Institutions. 

If confirmed, he will be responsible for managing Treasury’s efforts regarding regulations and legislation affecting financial institutions including systemic risk designations. He will also be responsible, among other things, for coordinating Treasury’s initiatives on financial education policy as well as overseeing the Terrorism Risk Insurance Program and the Community Development 

Financial Institutions Fund. 

The Committee will also consider the nomination of Mr. Jay 

Lerner for Inspector General of the Federal Deposit Insurance Corporation. Mr. Lerner has extensive experience in law enforcement 

at the Department of Justice as well as in other Government oversight and supervisory roles. 

The Committee looks forward to receiving testimony from the 

nominees today and their responses to our questions. 

Senator Brown. 

STATEMENT OF SENATOR SHERROD BROWN 

Senator BROWN. Thank you, Chairman Shelby, for holding today’s nomination hearing. Congratulations to the three of you. I am 

hopeful that as we do this hearing and learn more about you, the 

confirmation can be affirmative and speedy if you earn it, as I 

think you will. 

Last week, we held a hearing on Adam Szubin’s nomination for 

a key counterterrorism post in the Treasury Department. It was 

the Committee’s first nomination hearing of this Congress. I am 

pleased we have three nominations today before the Committee. It 

has been a long time coming. Mr. Lerner and Mr. Adeyemo were 

first nominated last year. Mr. Gerety was nominated in February. 

Before I discuss their outstanding qualifications, I want to express 

my hope that the Committee will make progress in our nominations backlog. We have seven nominees who have yet to receive a 

hearing. Not one nominee has received a vote from this Committee 

in this entire Congress. They all deserve full, fair, and prompt consideration. 

On Thursday, the Committee will hold an executive session to 

mark up oil exports legislation. I have expressed my interest and 

hope that we use that opportunity to act on Mr. Szubin’s nomination. It was clear at that hearing last week that he has this Committee’s support. 

That said, we have a distinguished panel of public servants before us today. 

Mr. Adeyemo has been nominated to be Assistant Secretary for 

International Markets and Development at the Department of 

Treasury. The position he has been nominated for is responsible for 

leading Treasury’s efforts related to CFIUS as well as international 

financial service regulation, trade, development, technical assistance, and climate finance. After the financial crisis and as economies around the world continue to recover, it is essential that 

Treasury engage with their international counterparts to implement strong financial services regulation, fair trade, and foreign investment that protects our national interest. I look forward to hearing about your priorities in this role. 


BANKI-41578DSA with DISTILLER
3

Mr. Gerety has been nominated to be Assistant Secretary for Financial Institutions at Treasury. The Assistant Secretary is responsible for developing and coordinating the Treasury’s policies regarding financial institution legislation and regulation that affect financial institutions, Federal agencies that regulate or insure financial 

institutions and securities markets. As we continue to implement 

and enforce Wall Street reform, this position is key to ensuring 

that strong regulations promote financial stability and safety and 

soundness and robust consumer protections. I think, too, Mr. 

Gerety, as this moves forward, keep in mind what the chief financial services lobbyists in this town said right after the President of 

the United States signed Dodd-Frank. He said, ‘‘It is halftime.’’ So 

it is clear that some interests in this town seem oblivious that 

there was a financial crisis. They seem to suffer from amnesia, 

some of them Members of Congress, many of them lobbyists, and 

the move by many of them will be to delay and dilute and weaken 

these rules. And all of you should have that at the back of your 

mind as you do this job. 

Mr. Gerety played an important role since the beginning of the 

current Administration to help our country recover from the worst 

financial crisis since the Depression. I believe he will continue that 

superb work, Mr. Chairman, if we confirm him for this position. 

Mr. Lerner has been nominated to be the Inspector General at 

FDIC. That job heads an independent division within the agency 

that conducts audits and investigations and reviews of FDIC programs and operations. The IG is required by law to provide written 

reports to the FDIC on why failed institutions resulted in a material loss to the Insurance Fund and to make recommendations for 

preventing additional losses in the future. It is a vital task in understanding both what causes bank failures and how to prevent 

bank crises. 

Steve Linick, the current IG at the Department of State, a frequent witness for this Committee, during his tenure at the Federal 

Housing Finance Agency’s Inspector General wrote that Mr. Lerner 

‘‘not only has a strong background in combating waste, fraud, and 

abuse, which is critical for an Inspector General, but also understands the world of banking and financial regulation.’’ I look forward to hearing your testimony today, too. 

Congratulations to the three of you. 

Mr. Chairman, we are all grateful that this Committee is beginning to move on nominations. 

Chairman SHELBY. Thank you. 

Will all three of you stand and raise 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. ADEYEMO. I do. 

Mr. GERETY. I do. 

Mr. LERNER. I do. 

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

duly constituted committee of the U.S. Senate? 

Mr. ADEYEMO. Yes. 

Mr. GERETY. Yes. 

Mr. LERNER. Yes. 


BANKI-41578DSA with DISTILLER
4

Chairman SHELBY. Do you have any family members, any of 

you—we will start with you, sir—that you want to introduce who 

are here today? 

Mr. ADEYEMO. I do not at this time, Senator. 

Chairman SHELBY. OK. Do you, sir? 

Mr. GERETY. Thank you. I want to thank my family and friends 

for being here: my three children, Susie, Pierce, and Jenny; my 

wife, Margaret; my mom, Adelia; and my brother, Rowan, and my 

sister-in-law, Clara. Thank you all for being here. 

Chairman SHELBY. Do you have some? 

Mr. LERNER. I would like to introduce my supporting and loving 

girlfriend, Libby Stern, behind me. Thank you. 

Chairman SHELBY. Thank you. 

Sir, we will start with you. Your written testimony will be made 

part of the record in its entirety. You proceed as you wish. 

STATEMENT OF ADEWALE O. ADEYEMO, OF CALIFORNIA, TO 

BE ASSISTANT SECRETARY FOR INTERNATIONAL MARKETS 

AND DEVELOPMENT, DEPARTMENT OF THE TREASURY 

Mr. ADEYEMO. Thank you, Mr. Chairman. 

Chairman Shelby, Ranking Member Brown, and distinguished 

Members of this Committee, thank you for giving me an opportunity to be here today. It is a privilege to be the President’s nominee to serve as the Assistant Secretary for International Markets 

and Development. I am grateful to Secretary Lew for his support 

of my nomination and his confidence in my ability to serve our 

country in this role. 

While they could not be here today, I want to acknowledge my 

father and mother who immigrated to this country in search of the 

American dream and the opportunity to give my brother, sister, 

and me a better life. They have worked hard, as an elementary 

school principal and a nurse, to give opportunities to their children, 

but along the way they have instilled in us the values that guide 

us every day. They often remind us that this country affords the 

chance to do anything we want if we work hard. And they have 

taught us that we have a responsibility to serve the community 

and the country that has afforded them so many opportunities. 

This desire to instill the value of service in me led my father to 

wake me early on the morning of February 11, 1990, to watch as 

Nelson Mandela was released from prison. Although the images on 

my television were of a reality thousands of miles from my home 

in California, I could feel the hope Mandela inspired not only in 

South Africans but also in my father. Watching Nelson Mandela go 

from prisoner to president and start the process of bringing together a country was more than inspirational; it motivated me to 

imagine how I could use public service to improve the world around 

me. And it continues to remind me that events far from home can 

make a meaningful difference in the lives of Americans. 

Serving in Government is in many ways the fulfillment of my 

childhood dream. I joined the Treasury Department in the midst of 

the greatest economic downturn since the Great Depression. I 

worked alongside policymakers charged with coordinating the 

international response to the global recession. The policies the 

United States advocated internationally played a pivotal role in 


BANKI-41578DSA with DISTILLER
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breaking the back of the global recession and restoring economic 

growth at home and abroad. 

In 2010, I was given the opportunity to help implement a part 

of the Wall Street Reform and Consumer Protection Act. I had the 

honor and privilege of working for Senator Warren as the first 

Chief of Staff of the Consumer Financial Protection Bureau. Helping to build an agency devoted to protecting consumers was deeply 

personal for me. I grew up in the Inland Empire, a region of Southern California where, in 2010, one in every 14 homes faced foreclosure. These were not just numbers to me; they were my friends 

and my family. I know the impact that a lost job, cut in hours, or 

a bad financial decision can have on the ability to stay in the home 

your children grew up in. I am grateful to have played a role in 

standing up an agency that helps consumers better understand and 

deal with their financial choices. 

Before and after my time at CFPB, I have worked on a variety 

of international economic issues, including our trade and investment policy agenda, the Committee on Foreign Investment in the 

United States, and our engagement with the multilateral development banks. I have represented the United States in bilateral and 

multilateral settings, and no matter the destination there is always 

admiration for the strength and resilience of the American economy. Our recovery from the Great Recession is no accident. It is 

the direct result of the determination and persistence of the American people and the policy choices we have made. 

However, we have more work to do. We still face a number of 

economic challenges, and we also have opportunities. Our decisions 

in the coming years will determine our ability to meet the future 

needs of the American people, like my neighbors in California and 

the families across this country. As the global economy becomes 

more complex and interconnected, the policy choices we make now 

will have an impact on our ability to advance our economic and 

strategic interests in the future. While a great deal of the work in 

International Affairs at the Treasury Department is mitigating 

risks, in a number of areas we have an opportunity to advance our 

economic agenda. If confirmed as the Assistant Secretary for International Markets and Development, I plan to do just that, by working to level the international playing field for American workers 

and firms, protecting our national security, and advancing our development agenda. 

It would be my privilege to work with this Committee to advance 

America’s economic interests at home and abroad. 

Thank you for taking the time to consider my nomination. I am 

happy to take your questions. 

Chairman SHELBY. Thank you. 

Mr. Gerety. 

STATEMENT OF AMIAS MOORE GERETY, OF CONNECTICUT, TO 

BE ASSISTANT SECRETARY FOR FINANCIAL INSTITUTIONS, 

DEPARTMENT OF THE TREASURY 

Mr. GERETY. Chairman Shelby, Ranking Member Brown, and 

distinguished Members of the Committee, thank you for inviting 

me to testify today. It is an incredible honor to be nominated to 


BANKI-41578DSA with DISTILLER
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serve as the Assistant Secretary for Financial Institutions and to 

be here today before this Committee. 

I want to thank President Obama for nominating me and Secretary Lew for entrusting me with this opportunity. I have learned 

so much from my colleagues at the Treasury Department, and I am 

committed to continuing to earn the trust that they have put in me 

if I am fortunate enough to be confirmed for this position. 

I believe that public service can make a meaningful difference in 

the lives of our fellow Americans. I was raised in a family that held 

service as both a calling and a career. My paternal grandfather 

served as a senior official in the Eisenhower administration at the 

Civil Service Commission and at the State Department, where he 

assisted refugees fleeing Communist regimes in Eastern Europe. 

My maternal grandfather served as a parish priest in Jersey City 

before becoming an Episcopal bishop in Washington and New York. 

Their examples of public leadership have guided me from a young 

age. 

During the 6 1⁄2 years I have been at Treasury, I have had the 

tremendous opportunity to work with you and your staffs, with others in Congress, with the private sector, independent regulators, 

and other important stakeholders. We have been able to collaborate 

to pursue policies that support the economic and financial wellbeing of homeowners and small businesses, and support firms 

whose lending powers economic growth and the savers who invest 

in these firms. I have been inspired by entrepreneurs who need 

credit to expand and thrive and by local leaders who are transforming communities in partnership with Federal lending programs. 

Over the course of my private sector career, I have helped companies both large and small as they interact with the financial system and seek support to grow and expand. These experiences range 

from a T-shirt company improving its efficiency ahead of an initial 

public offering or helping an insurance company manage and build 

relationships with independent agents and brokers. Each experience has given me a perspective on how a stable and effective financial system supports economic growth and expands economic 

opportunity across the country. 

In Government, I have also seen firsthand the challenges and 

limits of Federal response, when economic confidence is shaken, 

households have been ill-protected, and the financial system is not 

able to support economic growth. If confirmed, I will work to safeguard our financial system and confront financial and economic 

threats, whether from malicious cyber activity or from panic in financial markets. I have learned the importance of coordination and 

open dialogue as we work to reform our financial system, and I am 

committed to continuing this critical collaboration. 

As memories of the most searing financial crisis in generations 

begin to recede, I look forward to engaging with this Committee 

and Congress to move forward on pressing national priorities: 

working to make sure that our financial system is both stable and 

supportive of economic growth; expanding access to credit for small 

businesses and low-income communities; and building on our experience so that financial services act as a ladder of opportunity toward economic and financial security. 


BANKI-41578DSA with DISTILLER
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Thank you again for your time, and I look forward to answering 

your questions. 

Chairman SHELBY. Thank you. 

Mr. Lerner. 

STATEMENT OF JAY N. LERNER, OF ILLINOIS, TO BE INSPECTOR GENERAL, FEDERAL DEPOSIT INSURANCE CORPORATION 

Mr. LERNER. Thank you, Chairman Shelby, Ranking Member 

Brown, and Members of this Committee. It is truly an honor to appear before you today as the nominee to serve as the next Inspector 

General at the Federal Deposit Insurance Corporation. 

At the outset, I would like to recognize and thank my kind and 

caring family, friends, and colleagues for their support. In particular, I would like to acknowledge the contributions of my parents, as I am blessed for the opportunities that they have afforded 

me and the qualities they have instilled in me: honesty, integrity, 

perseverance, responsibility, and hard work. I am also grateful to 

my supportive girlfriend and my three wonderful sisters and their 

families. My eight nieces and nephews have kept me grounded and 

act as reminders of the importance of what we do here today—public service. 

The FDIC plays a critical role in maintaining the stability of our 

financial system and protects the savings of millions of hard-working Americans. It insures more than $6 trillion in deposits at approximately 6,300 financial institutions and directly examines and 

supervises more than 4,000 of those institutions. In addition, the 

FDIC plays an important role in consumer financial protection, resolution and receivership of insolvent institutions, and management 

of significant assets in the Deposit Insurance Fund. 

The FDIC Inspector General conducts audits and evaluations 

which make recommendations for improving the FDIC’s operations, 

as well as investigations which preserve the integrity of the system 

and protect the savings of bank customers, families, and businesses. In this time of pressing need to improve efficiency and effectiveness at Government agencies and to eliminate waste, the position of the FDIC Inspector General is an extremely important 

one. 

I believe that I am particularly well suited to serve as the Inspector General at the FDIC. I have substantial leadership and 

management experience, and I have conducted oversight and handled complex banking and financial matters. I trained as an accountant and passed the Certified Public Accountant examination, 

and I am an experienced lawyer and prosecutor as well. I am confident that this background has prepared me well to be successful 

as an Inspector General, if I am confirmed. 

I have worked in public service for more than 23 years, and it 

has been a privilege to serve this country. Currently, I am the 

Chief of Staff and Senior Counsel at the Department of Justice Office of the Inspector General, and I have worked in the IG community since early 2011. I have seen firsthand the many challenges 

an Inspector General faces and have learned how to run a strong 

IG office that can achieve results. I have also gained considerable 

leadership and management experience under the guidance of the 


BANKI-41578DSA with DISTILLER
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current Inspector General, Michael Horowitz, as well as other leaders in the office and in the IG community. During my tenure, I 

have been the congressional liaison and have worked with the Justice Department’s leadership, so I can appreciate the importance of 

an IG’s unique reporting responsibilities to keep both Congress and 

the agency head fully informed. 

Importantly, I understand the critical role that independence 

plays in the Inspector General’s mission. The core principles of integrity, objectivity, fairness, and accountability must guide an IG’s 

judgment and decisionmaking. These are essential attributes to 

maintain the public’s confidence in the work of the office. If confirmed, I intend to oversee an office that conducts audits and evaluations in a thorough and comprehensive manner; pursues investigations aggressively and follows the facts wherever they may 

lead; issues fair-minded and impartial reports; and makes recommendations to improve the agency’s programs. 

Prior to my current position with the Department of Justice OIG, 

I gained extensive experience working on banking and financial 

matters and am, therefore, familiar with how banks operate and 

their relationships with regulators. I served as Assistant Chief in 

the DOJ’s Fraud Section, where I worked on enforcement initiatives against financial crimes. I prosecuted banking and moneylaundering cases while in the Money Laundering Section at DOJ, 

and I worked at two law firms on similar financial matters. Much 

of my professional career has focused on conducting effective oversight and ensuring accountability, and this background will form a 

strong foundation to be a successful Inspector General. 

In closing, I understand the challenges ahead and look forward 

to the opportunity to serve the American people in this new role. 

I would like to thank the Committee for consideration of my nomination, and I look forward to continuing to work with you and your 

staffs, if I am confirmed. 

I would be pleased to respond to any questions that you might 

have. Thank you. 

Chairman SHELBY. Thank you. 

Mr. Gerety, you have been the Acting Assistant Secretary for Financial Institutions since March. Prior to that, you were the Deputy Assistant Secretary for the FSOC. This Committee has put forward legislation—that you are familiar with—that would bring accountability and transparency to FSOC’s designation process for socalled systemically important firms. If confirmed, would you commit to working with Congress to improve the designation process 

based on existing concerns? 

Mr. GERETY. Thank you, Mr. Chairman. I appreciate the opportunity to be here today. In my role as Assistant Secretary, if confirmed, for Financial Institutions, I would not have direct oversight 

of the Financial Stability Oversight Council work. Nonetheless, I 

think what the Council has demonstrated in its years is its ability 

to work with Congress to understand those concerns and to modify 

its procedures over time to increase transparency and clarity. 

I think most recently the Council took steps this past year to 

make a series of changes that give people earlier information, more 

public transparency, and also a better opportunity to understand 

the process after designation. So I think those concerns are ones 


BANKI-41578DSA with DISTILLER
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that the Council staff have listened closely to, and I would be glad 

to continue working with Congress to understand those concerns. 

Chairman SHELBY. Thank you. 

Mr. Adeyemo—I am getting close maybe. 

Mr. ADEYEMO. You are getting it. 

[Laughter.] 

Chairman SHELBY. The business of insurance in the United 

States is currently regulated by the States, as you know. Congress 

codified that approach in the McCarran-Ferguson Act of 1945, more 

than half a century ago. Nonetheless, the Financial Stability 

Board, FSB, is now issuing directives on insurance even though it 

is neither a State nor a U.S. Federal regulator. 

Does Treasury develop consensus positions with the U.S. State 

insurance regulators for FSB advocacy on insurance issues? If not, 

do you believe that it should? 

Mr. ADEYEMO. Thank you for having me here, Mr. Chairman. We 

work very closely with the 50 State regulators and the six regulators who represent jurisdictions to develop a U.S. position on 

these issues, and I think that we also consult and actively speak 

with industry about their position on these issues as we work within the FSB and other international organizations. 

We also consult with and work actively with Congress, and if 

confirmed for this job, I look forward to working with you and your 

staff and the Members of this Committee as we develop America’s 

position in those institutions. 

Chairman SHELBY. Mr. Lerner, there have been many press reports of the Department of Justice’s Operation Choke Point, an effort by the Administration to choke off legal businesses the Administration finds objectionable by denying them access to financial 

services. In your current position, did you ever recommend opening 

an investigation into Operation Choke Point? 

Mr. LERNER. Thank you, Mr. Chairman. I am glad you raised 

that issue. Operation Choke Point raises some very serious allegations and some very serious concerns. We were following the media 

and press reports at the Department of Justice Office of the Inspector General, and we received an inquiry from congressional staff, 

a call, in the summer of 2014. At that time, we were not investigating the matter, and the matter appeared to be mostly attorney 

misconduct and allegations of attorney misconduct. Operation 

Choke Point, as you know, was run by attorneys, and Section 8E 

of the IG Act prohibits the IG’s Office from looking into allegations 

of attorney misconduct. Those allegations go to the Office of Professional Responsibility. They have exclusive jurisdiction over those 

matters. The IG’s Office has argued against it and advocated repeal 

of the Section 8E provision. But that is the law, and we have tried 

to comply with the law. So we have not——

Chairman SHELBY. What is the law again? 

Mr. LERNER. It is Section 8E of the IG Act. 

Chairman SHELBY. And what does it say? 

Mr. LERNER. It basically says that the Office of Professional Responsibility, another office in DOJ, has exclusive jurisdiction over 

those matters. There is a pending legislative bill that would repeal 

that provision, and the IG’s Office has argued to repeal that provision for many, many years. 


BANKI-41578DSA with DISTILLER
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Chairman SHELBY. Do you agree with the Department of Justice 

approach in Operation Choke Point; in other words, you are going 

after—withholding financial support for businesses that are legal, 

nothing illegal? 

Mr. LERNER. As I said, I think it raises some very serious questions in terms of prosecution strategies, legal interpretations under 

the FIRREA law. OPR looked at that issue and issued its report 

in July. 

Chairman SHELBY. If you are confirmed, how would you use your 

position, if you could, to ensure that the Federal Deposit Insurance 

Corporation does not pressure banks to cut ties with legal businesses? 

Mr. LERNER. Thank you. That is a very important question and 

a high priority for me, if I am confirmed for this position. As you 

know, the FDIC OIG issued its report about 2 weeks ago and 

raised some serious questions that will require follow-up, including 

the recommendations, which is part of its normal follow-up procedures, as to how those communications are made to banks and how 

the communications are made from the headquarters of the FDIC 

to its regional directors. There is also an ongoing investigation in 

terms of the refund-anticipated loans that were identified in that 

report. I intend to ask a lot of very difficult questions and to continue those investigations and get to the bottom of it. It is a high 

priority for me as an IG. 

Chairman SHELBY. Sir, I will come back to you. The Committee 

on Foreign Investment’s review process is mandated by the Foreign 

Investment National Security Act to preserve a necessary line between uninhibited foreign investment and the protection of U.S. 

national security. In your opinion, where is that line, if you can 

designate it? And if confirmed, how would you fulfill that mandate? 

Mr. ADEYEMO. Senator, thank you for the question. I think that 

our primary goal, the primary goal of CFIUS, is to protect the national security of the United States. As you stated, we do have an 

open investment policy in the United States, but our goal is also 

to make sure that any investment in this country is mindful of our 

paramount national security interest. And our goal is always to 

make sure that we look at the national security interest first in 

terms of does the company that is being acquired have contracts 

with the U.S. Government that are essential, or is it a critical infrastructure component. And in doing that, the legislation that this 

Committee designed provides us with the flexibility we need to 

make sure that we are able to address those national security concerns either by mitigation or, in the very rare circumstance, a block 

of a transaction. I think that over the last few years, as we have 

implemented the law through regulations and through practice, we 

have found the ability to deal with most of the cases during review. 

Some of them have moved to investigation. And when we have 

been in an investigation, we have used mitigation when needed to 

make sure that we are always mindful of national security. 

Chairman SHELBY. Is national security paramount to commercial 

interests? 

Mr. ADEYEMO. In terms of the CFIUS process, it is, yes. 

Chairman SHELBY. Thank you. 


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Another question to you on political interference in FOIA inquiries. While serving as a high-ranking official at Treasury, you created a new review process for sensitive FOIA requests, deviating 

from prior policy at the Treasury. Such requests were reviewed by 

a special committee including yourself and representatives from 

Public Affairs, Legislative Affairs, and the General Counsel’s office. 

Do you believe it is appropriate for high-ranking political appointees to be involved in the FOIA release process? And if so, 

why? 

Mr. ADEYEMO. Thank you for the question, Senator. My understanding is that before we created this process, there was a review 

process that was used where various officials throughout the Treasury Department reviewed FOIA requests. When we arrived at 

Treasury in 2009, I was charged with working with the International Affairs Office, the Office of Terrorism and Financial Intelligence, and the Office of the Assistant Secretary for Management. 

The Assistant Secretary for Management is charged with working 

with FOIAs. We had a huge FOIA backlog at that point. 

Working with the officials charged with working on the FOIA 

system, we decided to try and create a process to clear the backlog 

and also deal with incoming requests. One of the issues with the 

FOIA process was that we were not getting enough people to pay 

attention to the FOIAs on a regular basis, so we set up a bi-monthly meeting, and our goal was to set up a process and framework 

for dealing with the FOIA requests, not in any way to interfere 

with them getting out but, rather, to help move them out more 

quickly. 

I think that when we look at the numbers, what we found was 

that by 2010 we had reduced our backlog dramatically, and over 

the last few years, we have actually released more FOIAs than 

have come into the Treasury Department departmental offices. 

Chairman SHELBY. Sir, did you or the review committee ever 

override the advice of a career FOIA officer with respect to releases 

or exemptions? If so, explain. 

I will ask it again. Did you or the review committee ever override 

the advice of a career FOIA officer with respect to releases or exemptions? 

Mr. ADEYEMO. In the time I participated in the review committee, I never overruled a career FOIA official or our lawyers in 

terms of making determinations about the release of FOIAs. 

Chairman SHELBY. Thank you. 

Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

Mr. Gerety, I will start with you. The Independent Community 

Bankers, in endorsing your nomination, Cam Fine said—if I could 

read this—‘‘I can personally attest to his intelligence, knowledge of 

financial policy, and dedication to public service. He appreciates 

the critical role played by community banks in our national economy. He has demonstrated his willingness to address the ongoing 

challenge of ‘‘too big to fail’’ institutions and the threat they pose 

to our financial system and economy.’’

Mr. Gerety, describe how Treasury has worked to ensure that 

regulators tailor regulations for smaller and regional institutions 

as they implement Wall Street reform? 


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Mr. GERETY. Thank you. It is a great opportunity for me——

Senator BROWN. And also if you could sort of take that and kind 

of expand in a way to ensure that regulations are not sort of one 

size fits all. So answer that together, if you would. 

Mr. GERETY. Absolutely. I think that one of the very significant 

opportunities that I have had in my time at Treasury is to build 

relationships with the private sector and with community bankers—I was meeting yesterday with a group of community bankers 

from the Northeast—and try to take opportunities as often as possible to understand the perspective that they can offer in terms of 

the granularity of local economies, local businesses, and the local 

way that community banks handle regulation and make sure that 

they run their banks in a safe and sound manner. 

I think certainly when I look at our forward-going priorities, we 

are constantly searching for opportunities to make sure that our financial system is diverse and includes a very healthy role for thousands of community institutions, both banks and credit unions. 

I believe that the Wall Street Reform and Consumer Protection 

Act has a tiered and tailored approach and that in implementation 

we need to continue to build on that approach, both in the direct 

implementation of regulations in the reform effort, but also looking 

back over the course of regulations. I am encouraged by the banking regulators’ seriousness with which they are doing their decennial review, the every-10-year, called the ‘‘EGRPRA process.’’ And, 

also, I am struck by the fact that often seemingly small things like 

simplifying a form can make a very big difference in terms of the 

regulatory approach and the burden associated with being a community bank. So just last week, we saw the banking regulators 

come together and release a proposal to simplify the call report. 

So I think there are opportunities through engagement, through 

understanding the direct experience of community bankers all 

across the country to make sure that our approach in designing 

standards lives up to the principle that the toughest standards and 

the highest scrutiny should be on the firms that are the largest, 

most complex, and pose the most risk. 

Senator BROWN. Is there a way through FSOC, when sending examiners and auditors into, say, regional banks or mid-sized or 

small banks, to sort of collapse their duties into fewer numbers of 

people so that you do not have regulators saying different things 

in different ways and asking for duplicative information? 

Mr. GERETY. Thank you, Senator. I think the issue that you 

highlight is an important one because it comes at a difference between what you might think of as the standard and what you 

might think of as the actual supervisory or regulatory process. And 

one of the things that I have found interesting when I speak with 

regional bankers, community bankers, and others is that they do 

support higher capital, they do support higher liquidity; but they 

often express concerns about the way those standards are implemented or the way those standards are approached. And I think 

our job as policymakers is to work with them to understand those 

concerns and to work with our colleagues across Government to try 

to make sure that the standards are forefront and that we can 

make the process of supervision as clear as it can be so the focus 


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is on the economic and financial standard for a safe and sound system. 

Senator BROWN. Thank you. 

Mr. Adeyemo, the financial crisis obviously made clear how interconnected we are, our financial system is, inside the world’s economies, if you will, and the need for coordination when it comes to 

financial regulation. Share with us the importance of engaging 

with international counterparts to strengthen financial regulation, 

to sort of prevent a race to the bottom, to ensure fair trade, to encourage foreign investment. Talk through your views about that, if 

you would. 

Mr. ADEYEMO. Thank you for the question, Senator. I completely 

agree that the financial system is more integrated, more interconnected, more complex today than it has ever been. I think that 

what we did in this country was that we acted quickly and decisively to address some of the financial risks that were created prior 

to the financial crisis. 

Our goal in the International Affairs Office since Congress took 

steps in the Wall Street Reform and Consumer Protection Act, was 

to make sure that other countries met the high standard that we 

have set domestically. We have been working to do that through 

bilateral relationships but also through bodies like the FSB to 

make sure that our firms and our workers not only enjoy a level 

playing field, but that we are protected from the risks that exist 

abroad. 

As you know well, many of our trading partners have large financial institutions as well, and the economic problems in those 

countries have an impact on our trading relationships and on our 

economy. Our goal has been to make sure that large firms internationally, to help protect ourselves from the risks that they pose 

to our economy as well. 

Senator BROWN. Thank you. 

Mr. Lerner, the FDIC Chair announced significant changes to 

the agency’s information security governance structure. The IG’s 

most recent report, annual report, describes the significant 

progress made in implementing these changes. I know of your interest in that. Talk about your priorities as IG. Expand on them, 

if you would, especially in the area of cybersecurity. 

Mr. LERNER. Thank you, Senator Brown. As you mentioned, 

cybersecurity is one of my top priorities. I think it is critical to the 

Nation’s infrastructure, stabilizing the financial system as well as 

it is a national security issue. In fact, I am aware there is another 

hearing going on before the Senate on this issue. I see it as a critical issue to protect the savings of hard-working Americans, and I 

would like to explore ways that the IG’s Office can participate and 

contribute to that discourse. 

The IG’s Office issued a report in March of 2015, just a few 

months ago, which identified a few areas where the IG’s Office can 

contribute. In particular, the things are like the guidance to the 

banks, the examination process, making sure they have the proper 

staffing, training, competencies, and supervision of the supervisors 

and the examiners, as well as ensuring the safety and security of 

the cyber systems within the FDIC. I see that as a critical, important area, and I would like to explore it further. 


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Senator BROWN. OK. Thank you. 

One more question, Mr. Adeyemo. Do you have any thoughts on 

the CFIUS’ handling of the acquisition of Smithfield by the Chinese 

company a couple of years ago maybe? Congress raised many concerns. Do you know much about that? Do you have any thoughts 

on how CFIUS—how it played out? 

Mr. ADEYEMO. So, Senator, I do not currently have responsibilities for the CFIUS portfolio, and as you know, we do not comment 

on cases that are reviewed by CFIUS. What I can tell you is that, 

if confirmed for this role, I look forward to reviewing cases with our 

national security in mind. I think that the statute designed by this 

Committee gives CFIUS the flexibility to look at cases that pose a 

risk to our national security and attempt to find ways to mitigate 

that risk; and if we cannot mitigate that risk, to block those transactions. I look forward to working with your staff and you to look 

at ways that we can continue to do that in an effective way that 

protects America. 

Senator BROWN. Is the statutory balance about right? 

Mr. ADEYEMO. I believe that the statute provides us with the 

right level of balance. 

Senator BROWN. OK. Thank you. 

Chairman SHELBY. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. 

I want to start by welcoming Wale Adeyemo. Wale and I worked 

closely together when I was helping set up the new consumer agency, and as he testified, he was the agency’s first Chief of Staff. I 

do not say this lightly. Wale is a miracle worker. He works hard. 

He is smart. He manages people and projects with amazing skill, 

and he understands policy all the way down. 

And here is one other thing I want to make sure everybody on 

this Committee knows. Everyone who works with Wale likes him, 

Republicans and Democrats, everyone, Inspectors General, Secretary Geithner, Secretary Lew, me. He really is a remarkable guy. 

I did not have anything to do with Wale getting this nomination. 

In fact, I am sorry, Wale, I just did not know. I did not know until 

I got the call from the FBI background checkers that he had been 

nominated or was about to be nominated. But he is a great choice. 

Wale knows where he came from. He remembers who he grew up 

with, and he tries every day to make this a better country. So I 

hope that everyone on this Committee will support him and that 

he gets an up-or-down vote from the Senate very quickly. We are 

lucky to have him in service. And I want to thank all of you for 

being here today and thank you for your service. 

I just have one question I will focus on in the time I have left, 

and that is a question around systemic risk. Mr. Gerety, as you 

know, in Dodd-Frank Congress directed the Fed to impose tougher 

standards on banks that have more than $50 billion in total assets. 

That covers about 40 of the biggest banks in the country, about 

one-half of 1 percent of the 6,500 banks that we have in the United 

States, but about 95 percent of all the banking assets in the United 

States. 

Now, this tougher scrutiny is designed to focus the attention of 

the regulators on where the risk is—not on community banks or 


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credit unions but on the biggest banks that can threaten our financial security. 

Of course, among these 40 biggest banks, some are riskier than 

others, and Congress knew that, so it directed the Fed to tailor its 

rules to match the risk that a particular bank poses. 

There has been some talk recently about exempting many of 

these banks from the tougher rules that are imposed on banks with 

$50 billion or more, above that threshold, and there is talk about 

increasing the threshold to as much as $500 billion. 

So what I want to ask, Mr. Gerety, is: As Acting Assistant Treasury Secretary for Financial Institutions, you have gotten a close 

look at the risks posed by banks of different sizes. Based on that 

experience, do you think it makes sense to exempt banks with up 

to $500 billion in assets from heightened standards in Dodd-Frank 

rather than just directing the Fed to tailor the rules appropriately 

for riskier and somewhat less riskier banks? 

Mr. GERETY. Thank you, Senator. I think you raise an important 

principle at the heart of our approach in financial supervision, 

which is that the toughest standards should be applied and the 

highest scrutiny should be applied to the largest and most complex 

financial institutions. 

As the Secretary has said, raising the number that high raises 

significant concerns. It would leave only a handful of firms subject 

to the statutory enhanced prudential standards and raises the risk 

that firms that we saw in the crisis—Countrywide, Washington 

Mutual, Bear Stearns—of course, were significantly below that 

threshold, also demonstrated that they could pose risks to the system more broadly. 

I think the central question for us is: How do we make sure that 

the tailoring is appropriate? It is very clear that a $50 billion institution is different than a $2 trillion institution and also that it is 

different than a $2 billion institution. I think that we have seen 

the Federal Reserve and the banking regulators look at ways to design different standards, even above $50 billion. But I know that 

we continue to hear concerns from firms, particularly at the lower 

end of that threshold. And I think there is always continued dialogue that would be very valuable to make sure that those standards are appropriately tailored and that they appropriately capture 

the risk that may exist within a range of financial institutions in 

our country. 

Senator WARREN. All right. Thank you very much, Mr. Gerety. 

To me, this is an easy decision. We can raise the threshold and cut 

loose half or more of the biggest banks in the country and just hope 

they do not make the same mistakes that they made in 2008 when 

they nearly brought down the whole economy and had to be bailed 

out. Or we can play it safe, keep the threshold where it is, and rely 

on the Fed to follow the law and tailor the risks—tailor the regulations to the risks that are posed by different large financial institutions. You know, since the American taxpayers are on the hook 

when the economy starts to implode, I suspect that most of them 

would prefer that Congress play it safe here. Thank you. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Brown, do you have another question? 


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Senator BROWN. No. Thank you. 

Chairman SHELBY. If there are no other questions, I want to 

thank all the participants here today, and we will try to see if we 

can move your nominations. 

Thank you very much. The Committee is adjourned. 

[Whereupon, at 10:45 a.m., the hearing was adjourned.] 

[Prepared statements, biographical sketches of nominees, and responses to written questions supplied for the record follow:]


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PREPARED STATEMENT OF ADEWALE O. ADEYEMO

TO BE ASSISTANT SECRETARY FOR INTERNATIONAL MARKETS AND DEVELOPMENT,

DEPARTMENT OF THE TREASURY

SEPTEMBER 29, 2015

Chairman Shelby, Ranking Member Brown, and distinguished Members of this 

Committee, thank you for giving me an opportunity to be here today. It is a privilege to be the President’s nominee to serve as the Assistant Secretary for International Markets and Development. I am grateful to Secretary Lew for his support 

of my nomination and his confidence in my ability to serve our country in this role. 

While they could not be here today, I want to acknowledge my father and mother 

who immigrated to this country in search of the American dream and the opportunity to give my brother, sister, and me a better life. They have worked hard, as 

an elementary school principal and a nurse, to give tremendous opportunities to 

their children, but along the way, they have instilled in us the values that guide 

us every day. They often remind us that this country affords the chance to do anything we wanted if we work hard. And they have taught us that we have a responsibility to serve the community and the country that has afforded them so many opportunities. 

This desire to instill the value of service in me led my father to wake me early 

on the morning of February 11, 1990, to watch as Nelson Mandela was released 

from prison. Although the images on my television were of a reality thousands of 

miles from our home in California, I could feel the hope Mandela inspired not only 

in South Africans but also in my father. Watching Nelson Mandela go from prisoner 

to president and start the process of bringing together a country was more than inspirational, it motivated me to imagine how I could use public service to improve 

the world around me. And it continues to remind me that events far from home can 

make a meaningful difference in the lives of Americans. 

Serving in Government is in many ways the fulfillment of my childhood dream. 

I joined the Treasury Department in the midst of the greatest economic downturn 

since the Great Depression. I worked alongside policymakers charged with coordinating the international response to the global recession. The policies the United 

States advocated internationally played a pivotal role in breaking the back of the 

global recession and restoring economic growth at home and abroad. 

In 2010, I was given an opportunity to help implement a part of the Wall Street 

Reform and Consumer Protection Act. I had the honor and privilege of working for 

Senator Warren as the first Chief of Staff of the Consumer Financial Protection Bureau. Helping to build an agency devoted to protecting consumers was deeply personal for me. I grew up in the Inland Empire, a region of Southern California, 

where in 2010, 1 in every 14 homes faced foreclosure. These were not just numbers 

to me; they were my friends and family. I know the impact that a lost job, cut in 

hours, or one bad financial decision can have on the ability to stay in the home your 

children grew up in. I am grateful to have played a role in standing up an agency 

that helps consumers better understand and deal with their financial choices. 

Before and after my time at the Consumer Financial Protection Bureau, I have 

worked on a variety of international economic issues, including our trade and investment policy agenda, the Committee on Foreign Investment in the United States, 

and our engagement with the multilateral development banks. I have represented 

the United States in bilateral and multilateral settings, and no matter the destination there is always admiration for the strength and resilience of the American economy. Our recovery from the great recession is no accident. It is the direct result of 

the determination and persistence of the American people, and the policy choices we 

have made. 

However, we have more work to do. We still face a number of economic challenges, and we also have tremendous opportunities. Our decisions in the coming 

years will determine our ability to meet the future economic needs of the American 

people, like my neighbors in California and families across the country. As the global economy becomes more complex and interconnected, the policy choices we make 

now will have an impact on our ability to advance our economic and strategic interests in the future. While a great deal of the work we do in International Affairs 

at the Treasury Department is mitigating risks, in a number of areas we have opportunities to advance our economic agenda. If confirmed as the Assistant Secretary 

for International Markets and Development, I plan to do just that, by working to 

level the international playing field for American workers and firms, protecting our 

national security, and advancing our development agenda. 

It would be my privilege to work with this Committee to advance America’s economic interests at home and abroad. 


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Thank you for taking the time to consider my nomination. I am happy to take 

your questions.


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PREPARED STATEMENT OF AMIAS MOORE GERETY

TO BE ASSISTANT SECRETARY FOR FINANCIAL INSTITUTIONS

DEPARTMENT OF THE TREASURY

SEPTEMBER 29, 2015

Chairman Shelby, Ranking Member Brown, distinguished Members of the Committee. Thank you for inviting me to testify today. 

It is an incredible honor to be nominated to serve as Assistant Secretary for Financial Institutions and to be here today before this Committee. 

I want to recognize the many people who have supported me—family, friends, and 

colleagues. I especially want to thank my wife Margaret and our three children 

Susie, Pierce, and Jenny. Also my parents, Adelia and Tom, and my three brothers. 

And recognize my brother Rowan and my sister-in-law Clara, who are here as well. 

My family’s love and support has been critical at each step in my career and my 

5 years as a father have taught me much about both patience and joy. 

I also want to thank President Obama for nominating me and Secretary Lew for 

entrusting me with this opportunity. I have learned so much from my colleagues at 

the Treasury Department, and I am committed to continuing to earn the trust that 

they have put in me if I am fortunate enough to be confirmed. 

I believe that public service can make a meaningful difference in the lives of our 

fellow Americans. I was raised in a family that held service as both a calling and 

a career. My paternal grandfather served as a senior official in the Eisenhower administration at the Civil Service Commission and at the State Department, assisting refugees fleeing Communist regimes in Eastern Europe. My maternal grandfather served as parish priest in Jersey City before becoming an Episcopal Bishop 

in Washington and New York. Their examples of public leadership have guided me 

from a young age. 

During the six and a half years I have been at Treasury, I have had the tremendous opportunity to work with you and your staffs, with others in Congress, with 

the private sector, independent regulators, and other important stakeholders. We 

have been able to collaborate to pursue policies that support the economic and financial well-being of homeowners and small businesses, and support firms whose 

lending powers economic growth and the savers who invest in those firms. I have 

been inspired by entrepreneurs who need credit to expand and thrive, and by local 

leaders who are transforming communities in partnership with Federal lending programs. 

Over the course of my private sector career, I have helped companies both large 

and small interact with the financial system, seeking support to grow and expand. 

These experiences range from helping a T-shirt company improve its efficiency in 

preparation for an initial public offering to helping an insurance company build and 

manage relationships with independent agents and brokers. Each has given me a 

perspective on how a stable and effective financial system supports economic growth 

and expands economic opportunity across the country. 

In Government, I have also seen first-hand the challenges and limits of Federal 

response, when economic confidence is shaken, households have been ill-protected, 

and the financial system is not able to support economic growth. If confirmed, I will 

work to safeguard our financial system, and confront financial and economic threats, 

whether from malicious cyber activity or from panic in financial markets. I have 

learned the importance of coordination and open dialogue as we work to reform our 

financial system, and I am committed to continuing this critical collaboration. 

As memories of the most searing financial crisis in generations begin to recede, 

I look forward to engaging with this Committee and Congress to move forward on 

pressing national priorities: working to make sure that our financial system is both 

stable and supportive of economic growth; expanding access to credit for small businesses and low-income communities; and building on our experience so that financial services act as a ladder of opportunity toward economic and financial security. 

Thank you again for your time and I look forward to answering your questions.


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PREPARED STATEMENT OF JAY N. LERNER

TO BE INSPECTOR GENERAL, FEDERAL DEPOSIT INSURANCE CORPORATION

SEPTEMBER 29, 2015

Thank you, Chairman Shelby, Ranking Member Brown, and Members of the Committee. It is truly an honor to appear before you today as the nominee to serve as 

the Inspector General (IG) of the Federal Deposit Insurance Corporation (FDIC). 

At the outset, I would like to recognize and thank my kind and caring family, 

friends, and colleagues for their support. In particular, I would like to acknowledge 

the contributions of my parents, as I am blessed for the opportunities that they have 

afforded me, and the qualities they have instilled in me: honesty, integrity, perseverance, responsibility, and hard work. I am also grateful to my supportive 

girlfriend and three wonderful sisters and their families. My eight nieces and nephews have kept me grounded and act as reminders of the importance of what we do 

here today—public service. 

The FDIC plays a critical role in maintaining the stability of our financial system 

and protects the savings of millions of hard-working Americans. It insures more 

than $6 trillion in deposits at approximately 6,300 financial institutions, and directly examines and supervises more than 4,000 of these institutions. In addition, 

the FDIC plays an important role in consumer financial protection, resolution and 

receivership of insolvent institutions, and management of significant assets in the 

deposit insurance fund. 

The FDIC Inspector General conducts audits and evaluations which make recommendations for improving the FDIC’s operations, as well as investigations which 

preserve the integrity of the system and protect the savings of bank customers, families, and businesses. In this time of pressing need to improve efficiency and effectiveness at government agencies and to eliminate waste, the position of the FDIC 

Inspector General is an extremely important one. 

I believe that I am particularly well-suited to serve as the Inspector General at 

the FDIC. I have substantial leadership and management experience, and I have 

conducted oversight and handled complex banking and financial matters. I trained 

as an accountant and passed the Certified Public Accountant Examination, and I 

am an experienced lawyer and prosecutor. I am confident that this background has 

prepared me well to be successful as an Inspector General, if confirmed. 

I have worked in public service for more than 23 years, and it has been a privilege 

to serve this country. Currently, I am the Chief of Staff and Senior Counsel at the 

Department of Justice (DOJ) Office of the Inspector General (OIG), and I have 

worked in the IG community since early 2011. I have seen first-hand the many challenges an Inspector General faces, and have learned how to run a strong IG office 

that can achieve results. I have also gained considerable leadership and management experience under the guidance of the current Inspector General Michael Horowitz, as well as other leaders in the Office and in the IG community. During my 

tenure, I have been the Congressional liaison and have worked with the Justice Department’s leadership, so I can appreciate the importance of an IG’s unique reporting responsibilities to keep both Congress and the agency head fully informed. 

Importantly, I understand the critical role that independence plays in an Inspector General’s mission. The core principles of integrity, objectivity, fairness, and accountability must guide an IG’s judgment and decisionmaking. These are essential 

attributes to maintain the public’s confidence in the work of the Office. If confirmed, 

I intend to oversee an Office that conducts audits and evaluations in a thorough and 

comprehensive manner; pursues investigations aggressively and follows the facts 

wherever they may lead; issues fair-minded and impartial reports; and makes recommendations to improve the agency’s programs. 

Prior to my current position with the Department of Justice OIG, I gained extensive experience working on banking and financial matters, and am therefore familiar with how banks operate and their relationships with regulators. I served as Assistant Chief in DOJ’s Fraud Section, where I worked on enforcement initiatives 

against financial crimes. I prosecuted banking and money laundering cases while in 

the Money Laundering Section at DOJ, and I worked at two law firms on similar 

financial matters. Much of my professional career has focused on conducting effective oversight and ensuring accountability, and this background will form a strong 

foundation to be a successful Inspector General. 

In closing, I understand the challenges ahead and look forward to the opportunity 

to serve the American people in this new role. I would like to thank the Committee 

for consideration of my nomination, and I look forward to continuing to work with 

you and your staffs, if I am confirmed. I would be pleased to respond to any questions that you might have.


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RESPONSES TO WRITTEN QUESTIONS OF SENATOR 

MENENDEZ FROM ADEWALE O. ADEYEMO 

Q.1. As Assistant Secretary for International Markets and Development at the U.S. Department of the Treasury, you will play an integral role in the Committee on Foreign Investment in the United 

States (CFIUS). As you know, CFIUS is tasked with reviewing the 

national security implications of foreign investment in U.S. companies. In a day and age in which U.S. infrastructure, information 

technology, and intellectual property and innovations are subject to 

almost constant threat of hacking and cyberterrorism, we must be 

particularly vigilant of the acquisition of certain systems and technology by foreign firms.

• How you will navigate the competing interests of facilitating 

essential foreign investment in the United States with the very 

real threats to our national security?

• Based on your knowledge of the CFIUS review process, under 

what conditions might a foreign acquisition of a U.S. company 

constitute a national security threat to the United States?

• From where do you see that threat most likely to emanate 

today?

• Do you see Iran as a national security threat?

• Do you see Cuba as a national security threat?

A.1. CFIUS is focused on protecting the national security. As Assistant Secretary, I would maintain this focus on national security, 

pursuant to which CFIUS clears transactions only when the committee has no unresolved national security concerns with the transaction. Within this national security mission, CFIUS can facilitate 

foreign investment by, among other things, focusing on national security; acting consistent with the timeframes provided in statute; 

using targeted mitigation to resolve identified concerns, where 

mitigation can fully resolve such concerns; and making the process 

accessible, by publishing regulations, guidance, annual reports, and 

having an open door for companies interested in learning about the 

process. 

CFIUS determines whether a transaction poses a national security risk by evaluating the threat, vulnerability, and consequences 

posed by a transaction. Applying this analytical framework on a 

case-by-case basis, CFIUS assesses whether the transaction under 

review poses a national security risk. In conducting its analysis, 

CFIUS considers a variety of potential national security factors, including the factors listed in the CFIUS statute, as appropriate. For 

example, while investments from countries subject to sanctions, 

such as Iran and Cuba, are still limited by law, in reviewing investments from other countries, CFIUS considers, among other factors, the adherence of the subject country to nonproliferation control regimes, the relationship of the country with the United 

States, its record on cooperating in counter-terrorism efforts, and 

the potential for transshipment or diversion of technologies with 

military applications. 

We can, and do, protect the national security while also promoting foreign investment. Foreign investment creates good jobs, 

spurs innovation, and results in lower prices and greater consumer 


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choice. Accordingly, the executive branch has engaged in extensive 

efforts to encourage foreign investment in the United States, such 

as the Department of Commerce-led SelectUSA initiative, and 

Treasury supports these initiatives, consistent with Treasury’s mission.

Q.2. Last month, the Departments of Treasury and Commerce announced the broadest easing of restrictions to Cuba Sanction Regulations we have seen yet. And shortly after, the Department of 

Commerce announced that Secretary Penny Pritzker would travel 

there next month. Opening Cuba for business by easing restrictions 

and legitimizing a totalitarian regime is a lavish reward that is 

earning us nothing in return. I completely reject the notion that it 

is the United States that has created hardship on the Cuban people, not the regime itself. 

With regard to the Department of Treasury’s recent announcement, changes to the Cuban Assets Control Regulations were undertaken with little notice to Congress. There was no opportunity 

for the American people to comment on the proposed changes, and, 

I suspect little consideration for the second and third order effects 

of funneling new cash-flows into the Cuban regime’s coffers. As I’ve 

said before, the U.S. policy in Cuba should be guided by one, single 

principle, and that is supporting the Cuban people’s aspirations for 

a democratic future. This was the intent of the Libertad Act, which 

I helped author. Providing the regime the funds it needs to continue its repressive rule is not the way to support a democratic 

transition, and it’s not consistent with the intent of the law. 

Despite the Administration easing restrictions on everything 

from travel to telecommunications to banking and commercial 

transactions, the fact remains that the Cuban regime controls most 

of the country’s economy, and it is highly unlikely that any financial benefits will make their way to the Cuban people.

• As Assistant Secretary of International Markets and Development, what role will you play in ensuring that the Administration’s easing of these crucial sanctions will not be manipulated 

by the regime to further disadvantage the Cuban people?

• What do you expect the impact of sanctions relief to be on your 

work?

• If—in spite of this inappropriately generous easing of sanctions—Cuba continues to act as a ruthless, totalitarian regime 

without regard for the needs of its people, does the Department 

of the Treasury plan to reassert restrictions?

• Will the Castro regime face any consequences from the Department of the Treasury if it continues to jail dissidents, silence 

political opponents and harbor American fugitives?

A.2. Along with the Commerce Department’s Bureau of Industry 

and Security, the Department of the Treasury’s Office of Foreign 

Assets Control administers and enforces the Cuba sanctions program, in consultation with other relevant agencies of the U.S. Government, including the Department of State. I understand that colleagues at the State Department are engaged in multiple lines of 

negotiations with the Government of Cuba, including to address 

law enforcement cooperation and issues such as fugitives. I would 


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refer you to the State Department for further details regarding 

these negotiations.

Q.3. The position of Assistant Secretary of International Markets 

and Development was created by the Foreign Investment and National Security Act, the FINSA law, passed by this Committee and 

signed into law in 2007. While foreign investment and development 

is in our economic interests, the foremost consideration of the person who holds this position should be national security.

• Do you agree with that statement?

In this position, there may be pressures—pressure by those 

above you to consider political and economic interests about national security interests. And with these pressures, you will need 

to work through the CFIUS process, coordinating numerous agencies under the fairly strict timelines the law prescribes. This can 

be a difficult balance to strike and a significant moral and professional challenge.

• Can you give us an idea of a similar challenge you have had 

in your career, coordinating, under pressure, multiple agencies 

with different cultures and viewpoints—and how you responded?

A.3. By statute, the focus of CFIUS is national security. If confirmed, I would exercise my responsibilities with respect to CFIUS 

consistent with FINSA. 

In July of 2015, Secretary Lew led the U.S. delegation to the 

United Nations (UN) Third International Conference on Financing 

for Development (FfD) in Addis Ababa, Ethiopia, signaling strong 

U.S. engagement and support for the global sustainable development agenda. Both in the lead up to the meeting and during the 

meeting itself, I coordinated intensively with multiple agencies as 

the point person from Treasury. This included working closely with 

colleagues from various agencies and the NSC to resolve issues and 

priorities as we prepared for FfD. Negotiations over the FfD outcome document required intensive interagency coordination within 

the United States Government as well as coordination with other 

U.N. member states. I responded to the challenges that arose by 

working to identify viable options, helping to develop a process for 

reaching a conclusion, and collaborating with colleagues in an attempt to reach consensus. Ultimately, our efforts resulted in approval of the Addis Ababa Action Agenda, the outcome document 

for the Financing for Development conference. The Action Agenda 

represented an expansion of the development agenda, moving away 

from an exclusive focus on official development assistance toward 

a more holistic approach that includes countries raising their own 

resources and leveraging private sector financing to address development challenges.

Q.4. In December 2014, the Administration announced major 

changes in U.S. policy toward Cuba, including the restoration of 

diplomatic relations, a review by the Department of State of Cuba’s 

designation as a state sponsor of terrorism, and an increase in 

travel, trade, and the flow of information to Cuba. This third step 

required the Departments of Treasury and Commerce to amend 

sanctions regulations. Treasury implemented changes to the Cuban 


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Assets Control Regulations (CACR) on January 16, 2015, and again 

on September 21, 2015. 

On September 21, 2015, the Office of Foreign Assets Control published the following in the Federal Register:

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) 

is amending the Cuban Assets Control Regulations to further implement 

elements of the policy announced by the President on December 17, 2014, 

to engage and empower the Cuban people. Among other things, these 

amendments further facilitate travel to Cuba for authorized purposes (including authorizing by general license the provision of carrier services by 

vessel), expand the telecommunications and Internet-based services general 

licenses, authorize certain persons subject to U.S. jurisdiction to establish 

a physical presence in Cuba, allow certain additional persons subject to 

U.S. jurisdiction to open and maintain bank accounts in Cuba to use for authorized purposes, allow certain additional financial transactions (including 

removing the limit on donative remittances to Cuba and unblocking certain 

previously blocked remittances and funds transfers), authorize all persons 

subject to U.S. jurisdiction to provide goods and services to Cuban national 

individuals located outside of Cuba, and allow a number of other activities 

related to, among other areas, legal services, imports of gifts sent to the 

United States, and educational activities. These amendments also implement certain technical and conforming changes.

• Did the Department of the Treasury conduct a legal review of 

the amendments to the Cuban Assets Control Regulations? 

What is the process for this legal review? What entity or individual makes the final legal determination that amendments 

to the Cuban Assets Control Regulations do not violate other 

legal provisions?

• Under what legal authority did the Department of the Treasury make the January 16, 2015 and September 21, 2015 

changes to the Cuban Assets Control Regulations? Do these 

changes conflict with any portion of the Cuban Liberty and 

Democratic Solidarity (LIBERTAD) Act of 1996 (Pub. L. 104–

114, 22 U.S.C. § 6021 et seq.) or other Cuba sanctions laws, including the Cuban Democracy Act of 1992 (Pub. L. 102–484, 22 

U.S.C. § 6001 et seq.), and the Trade Sanctions Reform and Export Enhancement Act of 2000 (Pub. L. 106–387, 22 U.S.C. § 

7201 et seq.)?

• How does the Department of the Treasury interpret the legal 

limits for changes to Cuba sanctions under the Cuban Liberty 

and Democratic Solidarity (LIBERTAD) Act of 1996 (Pub. L. 

104–114, 22 U.S.C. § 6021 et seq.) or other Cuba sanctions 

laws, including the Cuban Democracy Act of 1992 (Pub. L. 

102–484, 22 U.S.C. § 6001 et seq.), and the Trade Sanctions 

Reform and Export Enhancement Act of 2000 (Pub. L. 106–

387, 22 U.S.C. § 7201 et seq.)?

• What additional actions does the Department of the Treasury 

feel it can pursue without violating the Cuban Liberty and 

Democratic Solidarity (LIBERTAD) Act of 1996 (Pub. L. 104–

114, 22 U.S.C. § 6021 et seq.)?

A.4. The Department of the Treasury’s Office of Foreign Assets 

Control Office manages the department’s policy with respect to 

Cuba sanctions. My understanding is that the Cuban Assets Control Regulations (CACR) were originally issued pursuant to the 

Trading With The Enemy Act (TWEA), which affords the President 

and his designees the authority to revise the regulations. The 


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President continues to exercise his authority to adjust the regulations consistent with and subject to limitations in certain statutes 

subsequently enacted by Congress with respect to Cuba, including 

the Trade Sanctions Reform and Export Enhancement Act of 2000 

(TSRA), the Cuban Democracy Act of 1992 (CDA), and the Libertad 

Act. My understanding is that attorneys in all relevant agencies 

have confirmed that the amendments to the CACR issued by the 

Department of the Treasury’s Office of Foreign Assets Control are 

consistent with these existing statutes. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR 

MENENDEZ FROM AMIAS MOORE GERETY 

Q.1. I am deeply concerned that the current economic crisis in 

Puerto Rico threatens to destabilize the island. Together with 

seven of my colleagues, I recently sent a letter to Secretary Lew 

urging the Department of the Treasury to move beyond simply providing technical assistance and take an active leadership role to 

immediately resolve this crisis. 

To be clear, this crisis requires assistance from both Congress 

and the Administration. It is essential for Congress to approve the 

pending legislation I introduced with Senators Schumer, 

Blumenthal, and others, which would allow the government of 

Puerto Rico to authorize its public utilities to rework their debts 

under Chapter 9 of the U.S. Bankruptcy Code. But taken alone, 

this action is simply not enough. 

The Department of the Treasury is best suited to take a leadership role to bring creditors and debtors to the table to resolve this 

crisis immediately.

• In addition to resolution of the island’s public debts through 

Chapter 9 bankruptcy—an option not currently available to 

Puerto Rico—what other interventions are necessary to solve 

the economic crisis there?

• Will the Department commit to bringing creditors and debtors 

to the table to resolve the outstanding debt issues?

• What specific tools will the Department utilize to resolve this 

crisis? What steps will it take to intervene, beyond continuing 

to provide ‘‘technical assistance’’?

• What is the timeline for implementing these actions?

A.1. The U.S. Treasury remains committed to finding solutions 

that support the people of Puerto Rico. While I do not work directly 

on those issues, Treasury has a dedicated team that is closely monitoring the situation and sharing its expertise with the Commonwealth officials who are working to manage through these difficult 

times. However, any meaningful response to assist the U.S. citizens 

living and working in Puerto Rico requires Congressional action. 

To that end, the Department believes a central element for any 

Federal response to Puerto Rico’s fiscal situation must include an 

orderly legal process built on the tested principles of Chapter 9 of 

the U.S. Bankruptcy Code. Without Congressional action, Treasury 

is deeply concerned that a protracted and disorderly restructuring 

process will cause long-term damage to the health, safety, and fiVerDate 0ct 09 2002 16:16 Aug 01, 2016 Jkt 000000 PO 00000 Frm 00048 Fmt 6602 Sfmt 6601 L:\HE3E8B~1\09-29N~1\HEARING\98386.TXT SHERYL

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nancial well-being of the families living and working in Puerto 

Rico. 

If you have further questions regarding the Department’s work 

on this important and urgent issue, I would be happy to ask my 

colleagues to follow up with you directly.

Q.2. Over the last 6 years, you have worked extensively on addressing systemic risk to the financial system. As we saw in the 

financial crisis, sources of risk can build anywhere in the financial 

system, regardless of the types of entities involved or the jurisdictional boundaries between regulators. So it’s crucial to have tools 

for identifying risks to the financial system and properly addressing them.

• What tools have been the most helpful in identifying potential 

risks and areas of weakness in the financial system?

• From your perspective, 8 years from the start of the financial 

crisis, what are the greatest unresolved systemic risks to our 

financial system, and how would you go about addressing these 

risks?

A.2. One of the critical lessons of the financial crisis is that no single entity had responsibility for monitoring the overall stability of 

the financial system. In response, Congress created the Financial 

Stability Oversight Council (FSOC), which brings the financial regulatory community together with the mission to identify and respond to potential threats to financial stability. The FSOC now provides an important forum for member agencies with supervisory, 

examination, data, surveillance, and policy expertise, to collectively 

gather and analyze information to assess risks that affect financial 

markets and institutions. The Dodd-Frank Act also gave regulators 

additional authority to impose more stringent prudential requirements on the largest, most complex financial institutions so that 

they employ sound risk management practices, are more resilient 

in the face of stress, and, if necessary, are able to be safely wound 

down in an orderly manner. 

FSOC continuously monitors for threats to financial stability and 

issues annual reports that highlight emerging threats and make related recommendations. The 2015 annual report identified 11 key 

areas, including potential incentives for greater risk-taking in a 

low-yield environment; the need for continued progress to reform 

benchmark rates, such as LIBOR; and the continued reliance on 

short-term wholesale funding. I also believe that more work needs 

to be done to improve our financial system’s ability to address 

emerging cybersecurity risks, and that we must continue working 

with our international peers to implement reforms necessary to facilitate effective cross-border resolutions. If confirmed, I will continue to make sure that Treasury is doing all it can to monitor 

these issues and to take action where appropriate.

Q.3. As part of your responsibilities at the Department of the 

Treasury, you will oversee the Community Development Financial 

Institutions (CDFI) Fund. By providing funding and technical assistance to local organizations that work to expand the availability 

of credit for families and for small businesses, the CDFI Fund 

plays a critical role in community development for some of our 


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most distressed neighborhoods. In my State of New Jersey, CDFIs 

have used funding to build multifamily affordable housing and 

community facilities, offer small business and commercial real estate loans, and to increase food access and create jobs in low-income communities, in addition to many other important community 

and economic development projects. Funding for CDFIs is particularly important, as communities throughout the country continue to 

struggle with the longstanding effects of the foreclosure crisis and 

high household debt.

• As Assistant Secretary for Financial Institutions, what will you 

do to ensure that the CDFI Fund has the tools and resources 

it requires to continuing providing funds and technical assistance to CDFIs throughout the Nation?

A.3. This past year Treasury celebrated the twentieth anniversary 

of the CDFI Fund, a celebration I was proud to take part of because of the critical role CDFIs play in supporting one of Treasury’s core objectives of promoting economic growth that is inclusive 

of all communities and Americans. In the 20 years since it was created, the CDFI Fund has awarded more than $2 billion to CDFIs, 

allocated $44 billion in tax credit authority through the New Markets Tax Credit Program, and has guaranteed $857 million in 

bonds through the CDFI Bond Guarantee Program. In many cases 

CDFIs are the only sources of capital for borrowers in the communities they serve.If confirmed, I will advocate for keeping the CDFI 

Fund’s programs fully and adequately funded, as reflected in the 

President’s budget requests. I will stand ready to work with Congress to support legislative changes to deepen the impact of existing programs, such as changes to the CDFI Bond Guarantee Program to enable more CDFIs to participate in the program and more 

communities to benefit from low-cost, long-term community development capital. And I will work closely with the Director of the 

CDFI Fund to develop the 5-year strategic plan that identifies the 

key priorities for today and for the CDFI Fund’s future.

Q.4. The Department of the Treasury plays a crucial role in coordinating the Federal financial regulators. As Assistant Secretary for 

Financial Institutions, you will oversee the coordination of policies 

that affect financial institutions of varying size, scope, and activity. 

Of utmost importance in the development of these policies is 

crafting rules and regulations that are responsive to the experiences of institutions of varying size.

• In your opinion, have the Federal financial regulators been 

successful in formulating policies in such a way?

• What are the challenges to formulating policies that are responsive to the experiences of institutions of varying size? 

What do you plan to do as Assistant Secretary to mitigate 

those challenges?

A.4. A key objective of financial regulatory policy should be to scale 

regulations appropriately so that our financial system is safe and 

resilient while remaining innovative and dynamic. The Dodd-Frank 

Act codifies this principle by providing for regulators to adopt a tailored regulatory framework that focuses the most stringent standards on the largest, most complex financial institutions, such as enVerDate 0ct 09 2002 16:16 Aug 01, 2016 Jkt 000000 PO 00000 Frm 00050 Fmt 6602 Sfmt 6601 L:\HE3E8B~1\09-29N~1\HEARING\98386.TXT SHERYL

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hanced capital, liquidity, and risk management requirements. Our 

regulatory approach must properly account for the fact that smaller 

institutions, such as community banks and credit unions, present 

a different set of risks than larger firms. I spend a lot of time talking to representatives of financial institutions of all sizes to better 

understand the challenges they face, and, if confirmed, I will continue working with regulators so that rules and supervisory expectations are calibrated in a manner that enables firms to thrive 

while remaining safe and sound. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM JAY N. LERNER 

Q.1.a. The Department of Justice’s Office of Professional Responsibility and the FDIC’s Office of the Inspector General recently completed reports regarding DOJ’s ‘‘Operation Choke Point’’ and the 

FDIC’s supervisory approach to institutions that conducted business with merchants associated with high-risk activities. OPR 

found no wrongdoing by the DOJ, and the FDIC OIG found the 

FDIC’s role in Operation Choke Point to be inconsequential. The 

FDIC OIG determined that the FDIC’s supervisory approach was 

within its authorities, and that there was no evidence that the 

FDIC used the high-risk list to target financial institutions. The 

FDIC OIG also determined that the five officials at the FDIC did 

not play a role in the development or implementation of Operation 

Choke Point. The FDIC OIG provided recommendations to the 

FDIC to review and clarify, as appropriate, existing policy and 

guidance pertaining to the provision and termination of banking 

services; assess the effectiveness of the FDIC’s supervisory policy 

and approach after a reasonable period of time is allowed for implementation; and coordinate the FDIC’s Legal Division to review and 

clarify, as appropriate supervisory policy and guidance. 

Do you have any concerns about the completeness or conclusions 

of these reports? 

A.1.a. I have reviewed the ‘‘Operation Choke Point’’ reports written 

by the Department of Justice’s Office of Professional Responsibility 

and the Federal Deposit Insurance Corporation (FDIC) Office of the 

Inspector General (OIG) (as referenced in the question), and I do 

not have information at this time that would cause me concern 

about the completeness of or conclusions contained in the reports.

Q.1.b. If confirmed, you will be responsible for monitoring the 

FDIC’s implementation of the OIG’s recommendations. What will 

you do to carry out this responsibility?

A.1.b. If confirmed as FDIC Inspector General, I would follow up 

on the recommendations made in the FDIC–OIG report on ‘‘Operation Choke Point.’’ I intend to learn more about what has been 

done by the FDIC with respect to the issues identified in the report 

and encourage the FDIC Chairman and other FDIC officials to implement remaining recommendations. If confirmed, my goal as Inspector General would be to make recommendations to improve the 

FDIC’s programs and operations, and to ensure implementation in 

an effective and efficient manner.


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