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36–470 PDF 2007

S. HRG. 109–936

NOMINATIONS OF:

JAMES S. SIMPSON, ROBERT M. COUCH,

CHRISTOPHER A. PADILLA, AND BIJAN RAFIEKIAN

HEARING

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON

NOMINATIONS OF:

JAMES S. SIMPSON, OF NEW YORK, TO BE FEDERAL TRANSIT ADMINISTRATOR, U.S. DEPARTMENT OF TRANSPORTATION

ROBERT M. COUCH, OF ALABAMA, TO BE PRESIDENT,

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GINNIE MAE)

CHRISTOPHER A. PADILLA, OF THE DISTRICT OF COLUMBIA, TO BE ASSISTANT

SECRETARY, U.S. DEPARTMENT OF COMMERCE

BIJAN RAFIEKIAN, OF CALIFORNIA, TO BE A MEMBER OF THE BOARD OF

DIRECTORS, EXPORT-IMPORT OF THE UNITED STATES

MARCH 14 AND SEPTEMBER 27, 2006

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

(

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

RICHARD C. SHELBY, Alabama, Chairman

ROBERT F. BENNETT, Utah 

WAYNE ALLARD, Colorado 

MICHAEL B. ENZI, Wyoming 

CHUCK HAGEL, Nebraska 

RICK SANTORUM, Pennsylvania 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

JOHN E. SUNUNU, New Hampshire 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

PAUL S. SARBANES, Maryland 

CHRISTOPHER J. DODD, Connecticut 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

DEBBIE STABENOW, Michigan 

ROBERT MENENDEZ, New Jersey

KATHLEEN L. CASEY, Staff Director and Counsel 

STEVEN B. HARRIS, Democratic Staff Director and Chief Counsel 

MARK A. CALABRIA, Senior Professional Staff Member 

SHERRY LITTLE, Professional Staff Member 

TEWANA WILKERSON, Legislative Assistant 

JONATHAN MILLER, Democratic Professional Staff 

SARAH A. KLINE, Democratic Counsel 

AARON KLEIN, Democratic Economist 

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator 

GEORGE E. WHITTLE, Editor

(II)

CONTENTS

TUESDAY, MARCH 14, 2006

Page

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

Opening statements, comments, or prepared statements of: 

Senator Schumer .............................................................................................. 4

Senator Sarbanes .............................................................................................. 5

Senator Martinez .............................................................................................. 6

Senator Reed ..................................................................................................... 6

Prepared statement ................................................................................... 29

Senator Allard ................................................................................................... 21

Senator Carper ................................................................................................. 23

WITNESS 

Max Cleland, Member, Board of Directors, Export-Import Bank of the United 

States .................................................................................................................... 2

NOMINEES 

James S. Simpson, of New York, to be Federal Transit Administrator, U.S. 

Department of Transportation ............................................................................ 8

Prepared statement .......................................................................................... 29

Biograpical sketch of nominee ......................................................................... 31

Response to written questions of: 

Senator Shelby ........................................................................................... 48

Senator Stabenow ...................................................................................... 51

Robert M. Couch, of Alabama, to be President, Government National Mortgage Association ................................................................................................... 9

Biograpical sketch of nominee ......................................................................... 42

WEDNESDAY, SEPTEMBER 27, 2006

Opening statement of Chairman Shelby ................................................................ 53

Opening statements, comments, or prepared statements of: 

Senator Allard ................................................................................................... 54

NOMINEES 

Christopher A. Padilla, of the District of Columbia, to be Assistant Secretary, 

U.S. Department of Commerce ........................................................................... 56

Biograpical sketch of nominee ......................................................................... 66

Bijan Rafiekian, of California, to be a Member of the Board of Directors, 

Export-Import of the United States .................................................................... 57

Biograpical sketch of nominee ......................................................................... 73

(III)

(1)

NOMINATIONS OF: 

JAMES S. SIMPSON, OF NEW YORK, 

TO BE FEDERAL TRANSIT ADMINISTRATOR, 

U.S. DEPARTMENT OF TRANSPORTATION AND 

ROBERT M. COUCH, OF ALABAMA, 

TO BE PRESIDENT, 

GOVERNMENT NATIONAL MORTGAGE 

ASSOCIATION (GINNIE MAE) 

TUESDAY, MARCH 14, 2006

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC.

The Committee met at 10:07 a.m., in room SD–538, Dirksen Senate Office Building, Senator Richard C. Shelby (Chairman of the 

Committee) presiding. 

OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY 

Chairman SHELBY. The hearing will come to order. 

We have two nominations which we will consider this morning. 

The first nomination is of James S. Simpson to be the Administrator of the Federal Transit Administration. The second nomination is that of Robert M. Couch, to be the President of the Government National Mortgage Association, which we call Ginnie Mae. 

I appreciate the willingness of the nominees to appear before the 

Committee today. President Bush has nominated James S. Simpson of New York to head the Federal Transit Administration, the 

office within the Department of Transportation which oversees Federal investment in public transportation. 

Mr. Simpson will be responsible for implementing SAFETEA, the 

6-year transportation reauthorization legislation, which this Committee authored and which President Bush signed into law last 

year. 

This is the first year of its implementation, and of course, a critical one. We will be closely watching the agency during this period 

to ensure that they are carrying out our Congressional intent. We 

want to know that the provisions of law that are so important to 

this Committee, private sector involvement being one of the many, 

are garnering the attention they deserve. 

Before being nominated, Mr. Simpson served on the Board of the 

Metropolitan Transportation Authority of New York, a position he 

held for 8 years and to which he was appointed by Governor 

2

Pataki. We are pleased to see a nominee for this important position 

who has professional experience in the provision of transportation 

service. Mr. Simpson, I look forward to your testimony. 

Mr. SIMPSON. Thank you, Mr. Chairman. 

Chairman SHELBY. Our second nominee is Robert Couch, whom 

President Bush has nominated to be President of the Government 

National Mortgage Association, or Ginnie Mae. Mr. Couch has 

served as president and Chief Executive Officer of the New South 

Federal Savings Bank in Birmingham, Alabama, the largest thrift 

in my State. He has also served as Managing Director of Collateral 

Mortgage Limited, a large originator and servicer of loans secured 

by commercial and multifamily real estate located in Birmingham. 

Mr. Couch is no stranger to this Committee, having testified before the Committee on several occasions in his role as Chairman 

of the Mortgage Bankers Association of America. In addition to his 

experience in mortgage banking, Mr. Couch is also a certified public accountant and I know is an attorney. 

After we administer the oath this morning, nominees may make 

their opening statement. You can also feel free at that time to introduce any members of your family that are here today. We will 

be joined by Senator Sarbanes in a few minutes. He has another 

Committee. If both of you will stand and let me administer the 

oath to you. 

[Witnesses sworn.] 

Senator, do you want to say something about both of them or one 

of them? Welcome again to the Committee. You have been here before us, too. 

STATEMENT OF MAX CLELAND

MEMBER, BOARD OF DIRECTORS

EXPORT-IMPORT BANK OF THE UNITED STATES 

Mr. CLELAND. Thank you very much, Mr. Chairman. Good to be 

back with you, my dear friend. I am sure that the great distinguished nominee from Alabama has all the qualifications necessary 

to carry out his task. 

Chairman SHELBY. Absolutely. I am sure he does, too. 

[Laughter.] 

Mr. CLELAND. But I am here to speak on behalf of Jim Simpson. 

Chairman SHELBY. I am sure Mr. Simpson does, too. 

Mr. CLELAND. Yes, sir, on behalf of Jim Simpson, whom I have 

known for more than a decade. He has an extraordinary background in transportation. 

Chairman SHELBY. He does. 

Mr. CLELAND. He has been involved in transportation issues all 

of his adult life. He actually currently serves on the St. Lawrence 

Seaway Board, for which he was confirmed about a year and a half 

ago by the Senate. 

But Jim began his career as a commercial interstate semi tractor 

trailer driver. He has done this business from the bottom up. He 

attended, worked his way through St. Johns University, and today, 

he is chairman of the very company he was a truck driver for: Victory Worldwide Transportation, a domestic and international moving and storage company, affiliated domestically with United Van 

Lines. 

3

His company has been honored with an international trade 

award for exceptional international achievement, awarded that by 

the U.S. Department of Commerce. Jim’s honors as an entrepreneur also include receiving the Employer of the Year Award 

from the American Moving and Storage Association. In addition, he 

was selected by Ernst and Young’s Nasdaq judges as one of four 

finalists for the National Entrepreneur of the Year Award, so your 

emphasis on the private sector, Mr. Chairman, is well-placed here. 

In June 1995, Jim began his 10-year tenure with the New York 

State Metropolitan Transportation Authority. He served as Chairman of two committees during this time: Safety and Security as 

well as Planning and Real Estate. The MTA runs on a $9 billion 

budget; is responsible for seven bridges and tunnels and provides 

2.4 billion rides a year through buses, subways, or ferries in the 

State of New York and the City of New York. 

Jim took on many projects during his decade-long service at the 

MTA. He advocated for an automatic fare collection system which 

resulted with the usage of Metrocards on subways, which replaced 

the burdensome tokens. As Chair of the Safety Committee after the 

September 11, 2001 terrorist attacks, he reviewed and upgraded 

MTA’s security policies. He personally guided more than $600 million through in new security projects which helped restore the confidence of riders in MTA safety. 

As the Chairman of the Real Estate and Planning Committee, he oversaw the $190 million Grand Central Terminal restoration 

project. Wow. Jim also served as spokesman last year for the 

project to convert a former Upper West Side rail yard into a $2 billion convention center and stadium. Jim is no stranger to large 

transportation projects. 

He has served as a member of the New York State Job Development Authority, which provides long-term loans and guarantees to 

aid businesses relocating, expanding, and improving employment 

opportunities in the State of New York. As you mentioned, Mr. 

Chairman, Former New York City Mayor Rudy Giuliani appointed 

Jim as an honorary Deputy Police Commissioner for the New York 

City Police Department. He has received numerous citations from 

the Police Department and the Patrolmen’s Benevolent Association 

for his support. 

He has served also as Chairman of the Board of the Staten Island Chamber of Commerce, Vice Chairman of Snug Harbor Cultural Center, Staten Island University Hospital, St. Vincent’s Hospital and on the boards of numerous other nonprofit organizations. 

He has received proclamations from former U.S. Representative 

Susan Molinari and the New York City Council for civic leadership. 

He graduated magna cum laude from St. John’s University with 

a B.S. in managerial science and economics. He is a member of the 

National Honor Society of Economics and the National Business 

Honor Society. He is also a 1995 alumnus of the Rockefeller Fellowship Program and a 1996 fellow of the Johns Hopkins University 

School of Advanced International Studies for its British-American 

Project. 

Jim also is a licensed multiengine, instrument-rated pilot and 

flies both prop and jet aircraft. He is one of the most qualified people I have ever run across for public service, Mr. Chairman and 

4

Senator Sarbanes, and it is my pleasure to introduce to the Committee my friend and a great public servant, Jim Simpson. 

Chairman SHELBY. Thank you. 

Senator Schumer. 

STATEMENT OF SENATOR CHARLES E. SCHUMER 

Senator SCHUMER. Thank you, Mr. Chairman, and I join my good 

friend Senator Cleland, who has every one of our respect for just 

not only his service both in the armed forces and in the Senate but 

also just by being a great human being, so thank you for being 

here, Max, and it is great to see you. 

And I, too, join with him. I am delighted and proud to introduce, 

along with Senator Cleland, James Simpson, former MTA Authority Board Member, Staten Island business leader, and now nominee to be the next Administrator of the Federal Transit Administration. 

I know that Jim will do a great job at the FTA and recommend 

his nomination wholeheartedly. We have a few things in common. 

We were both born in Brooklyn. But a good number of Brooklynites 

moved to Staten Island. Some of us stayed in Brooklyn; here I am, 

there he is, but we do share common bonds as New York City people through and through. 

He graduated from St. Johns University and is even a member 

of the Staten Island Country Club. Everything about Jim is New 

York, and that is why I know he is going to do a great job among 

other things. 

[Laughter.] 

I hope that does not jeopardize his nomination with everyone 

else. 

[Laughter.] 

Jim worked his way up from being a driver at Victory Worldwide 

Transportation to serving as President and/or CEO for the last 20 

years. The company started with only a few trucks, operating out 

of a storefront on Staten Island, and now, Victory is a worldwide 

transportation service provider and an economic engine for Staten 

Island and the whole city. 

Jim will bring that Staten Island tough, no nonsense dedication 

to a job that is critical for the Nation’s economy. New York, of 

course, is one of the economic engines of the country, and Jim, in 

no uncertain terms, kept the trains and trucks running on time. 

Jim served on the MTA Board for more than a decade. He was an 

active member of the New York City Transit Authority Committee, 

which oversees the city’s subways and buses; was Chairman of the 

Safety and Security Committee in the aftermath of September 11, 

so he has a good background in homeland security as well, which 

obviously is very important when you are dealing with our rails. 

Jim has been a New York City transportation leader, in short, 

for more than 20 years. During his tenure as an MTA Board Member, he had oversight over management and operations, budgets, 

capital programs, and as I said, worked with the MTA police to develop and implement new security plans after September 11 for 

what is by far the largest mass transit system in the country. 

He served as a member of dozens of organizations, Chairman of 

the Staten Island Chamber of Commerce, which is one of the great 

5

business organizations in New York; I am supposed to speak before 

them in a week or so, and the New York City Partnership and the 

New York State Job Development Authority. 

So in short, Jim has gained a unique knowledge of how essential, 

safe, fast, and easily accessible transportation is to local communities and to the economic growth of States, regions, and the whole 

country. I believe that—I am going to ask unanimous consent my 

entire statement—I have so much to say, because I think he is a 

good man. 

Chairman SHELBY. Your entire statement will be made part of 

the record without objection. 

Senator SCHUMER. But in short, he is a thoughtful, knowledgeable, dedicated transportation official, and Jim, I look forward to 

working with you to make our Nation’s mass transit systems the 

largest, safest, and most efficient in the world, should you be confirmed, which I hope you will be 

Chairman SHELBY. Thank you, Senator Schumer. 

Senator Sarbanes. 

STATEMENT OF SENATOR PAUL S. SARBANES 

Senator SARBANES. Well, thank you very much, Mr. Chairman. 

I want to welcome our two nominees this morning. We commend 

their willingness to serve the public. First, Mr. Couch, we are 

pleased to have you here. You have been nominated to be president 

of the Government National Mortgage Association. 

Mr. COUCH. Yes, sir. 

Senator SARBANES. And we know you. You have been in the lending business for quite awhile, and of course, were President of the 

Mortgage Bankers Association, which led to a lot of interaction 

with this Committee, since the Mortgage Bankers are constantly 

before us with respect to policy discussions and deliberations. 

I know you have also been on the Federal Reserve Board’s Thrift 

Advisory Council, as I understand it, and a Member of the Fannie 

Mae National Advisory Council and have taken an active role in 

your community in dealing with low income housing and homelessness, and I certainly commend you for those initiatives. Ginnie Mae 

has been now without a president since the end of 2004, if I am 

not mistaken. 

Mr. COUCH. That is correct, Senator. 

Senator SARBANES. So it went all of 2005 without a confirmed 

president. 

They do important work. I am going to explore some of it with 

you in the question period, but you certainly bring qualifications to 

the job and previous experience which is highly relevant to the 

work that you are now being called on to do. 

I also want to welcome Jim Simpson, who is being considered for 

the position of Federal Transit Administrator. I thank our former 

colleagues, Senator Cleland, for coming this morning to introduce 

you, Mr. Simpson. You will be leading the FTA, if confirmed, 

through a critically important period. We just passed the surface 

transportation law. It provides a record level of funding, a number 

of new requirements for the FTA, some new programs, including 

the transit and the parks program, which is one I have had a keen 

6

interest in; modifications to existing programs, all of which will 

now need to be put in effect. 

You are also going to be, and I am sure you appreciate this, the 

Nation’s leading spokesperson for transit. I mean, you are the Federal Transit Administrator or will be, and of course, that is a very 

important aspect of the job. Your work on the Board of the New 

York Metropolitan Transit Authority obviously has exposed you to 

challenges facing our Nation’s transit systems, and it is obviously 

quite relevant to the position for which you have now been nominated. 

So Mr. Chairman, I look forward to the hearing and then to the 

expeditious consideration of these nominees. 

Thank you. 

Chairman SHELBY. Thank you, Senator Sarbanes. 

Senator Martinez, do you have any opening statement? 

STATEMENT OF SENATOR MEL MARTINEZ 

Senator MARTINEZ. Mr. Chairman, I just wanted to say a couple 

of words in regard to the nomination for the new President of 

Ginnie Mae. I had, of course, as you know, the opportunity as Secretary of HUD to nominate someone to be the president of Ginnie 

Mae, and I was very proud of the work that Ronnie Rosenfeld did 

as President of Ginnie Mae, and I know Mr. Couch, and I know his 

fine background. I also believe it is important that—

Chairman SHELBY. You know where he is from, do you not? 

Senator MARTINEZ. Yes, sir, I understand that he has a great lineage. 

[Laughter.] 

Senator MARTINEZ. In fact, in the course of my work at HUD, I 

got to know Mr. Couch, and I know that he will do an excellent 

job, but I also, in addition, I just wanted to put a statement for the 

record. 

Chairman SHELBY. Without objection, your full statement will be 

made part of the record. 

Senator MARTINEZ. Thank you. 

I just wanted to highlight the fact that I believe a number of very 

important innovations were created by Mr. Rosenfeld during his 

administration. I hope you will take a good look at those and encourage them and further them, because I think what Ginnie Mae 

does is tremendously important to providing one more element to 

making housing affordable, to making mortgages possible, and I 

just really appreciate greatly the great work that has been done at 

Ginnie Mae, modernizing, moving forward in a very dynamic way, 

and I hope that you will very much continue in that path. 

I think we have an outstanding nominee, and I do believe that 

it would be important for the Senate to quickly confirm Mr. Couch 

to this important position, and I appreciate the Chair. 

Mr. COUCH. Thank you, Senator. 

Chairman SHELBY. Senator Reed. 

STATEMENT OF SENATOR JACK REED 

Senator REED. Thank you very much, Mr. Chairman. And let me 

welcome Mr. Simpson and Mr. Couch here today and Max Cleland, 

7

who is a great hero, great friend, great inspiration to us all. 

Thanks, Max. It is always a pleasure to see you. 

I would like to put my statement in the record and make a few 

comments. 

Chairman SHELBY. Without objection, it will be so ordered. 

Senator REED. Mr. Simpson, we all recognize public transit is essential to millions of Americans, and not just in New York City but 

all over the country. And there are two issues that I think we have 

to emphasize at this hearing and in your tenure. First is the overall funding for transit and second, specifically funding for transit 

security. 

The President said, and we all agree, that we are addicted to oil. 

One of the best ways to kick the habit is to have good public transit, and that means spending money. Unfortunately, the President’s proposal this year is $100 million less than what was proposed and authorized under SAFETEA. So one of your biggest challenges, if you are confirmed, and I suspect you will be, is to try to 

drive that money up so we can meet the objectives of the 

SAFETEA Act. 

And second, transit security: we have spent a great deal of 

money appropriately on airline safety, but if we all recall, the two 

major incidents since September 11 involved subway trains in Madrid and in London, and we have not done nearly anything with 

respect to surface transportation. We have only allocated about 

$250 million. We need much, much more, I do not think I have to 

tell you, being someone from New York City, and you have to work 

closer with Homeland Security. So you have huge challenges facing 

you, and I look forward to the questioning to get into detail. 

And Mr. Couch, again, it was a pleasure meeting with you, and 

I wish you well, and you have great experience coming into Ginnie 

Mae. The reality is affordable housing is just getting beyond everyone’s grasp. In Rhode Island, to get an adequate two-bedroom 

apartment, you have to earn $18.42 an hour. That is way above 

minimum wage, even in Rhode Island, and how do we do that? And 

I think Ginnie Mae plays a critical role, because what you are 

doing is trying to ensure that households can finance affordable 

housing, and one of the goals of Ginnie Mae is to provide more affordable housing, and we will talk about it in the questioning. 

But I am pleased that we have this hearing and look forward to 

the witnesses’ comments. Thank you, Mr. Chairman. 

Chairman SHELBY. Thank you, Senator Reed. 

We will start with you, Mr. Simpson. Do you have any members 

of your family you want to introduce? 

Mr. SIMPSON. Yes, I do, Mr. Chairman. I have my wife, Trudy 

Simpson; my niece, Ashley Simpson; and my sister, Maria Simpson 

with us today. 

Chairman SHELBY. You also have a couple of daughters, do you 

not? 

Mr. SIMPSON. I have two daughters that unfortunately are not 

with us today, but one has an illness, unfortunately, and I understand with our modern technology, they are somehow listening in, 

so they are here in spirit. 

Chairman SHELBY. Mr. Couch, do you have anyone you want to 

introduce here? 

8

Mr. COUCH. Yes, Mr. Chairman, I do. 

Behind me on my left is my daughter, Frannie, who is a senior 

in high school, and my wife, Anne, is to my other side, and like 

Jim, I have another daughter who is studying abroad. She is in Seville, Spain, and I think she is watching this on the Internet. 

Chairman SHELBY. She probably is. 

Mr. Simpson, you proceed as you wish. You and Mr. Couch, your 

written testimony will be made part of the hearing record. You sum 

up what you want to say. 

STATEMENT OF JAMES S. SIMPSON, OF NEW YORK

TO BE ADMINISTRATOR,

FEDERAL TRANSIT ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION 

Mr. SIMPSON. Great. First, I would like to thank Senator Schumer for his kind remarks and just let the Senator and his staff 

know if confirmed, I would enjoy having the opportunity to work 

with him on many of the issues facing New York City. 

And second, I would like to thank my dear friend, Senator 

Cleland, who said we have only been friends for 10 years, but it 

is really 15 years, and he has been a true inspiration to me 

throughout my life. 

Chairman SHELBY. He did not want to be 5 years older. Ten 

years sounds better. 

[Laughter.] 

Mr. SIMPSON. Okay; and he has been a true inspiration in my 

life, and I am proud to be able to call him my friend. 

And then, I would like to begin with my written testimony. 

Chairman SHELBY. Go ahead. 

Mr. SIMPSON. Mr. Chairman and Members of the Committee, I 

believe one of the highest honors bestowed upon an American citizen is to sit before a U.S. Senate Committee for a confirmation 

hearing. I am both humbled and honored for having the opportunity to come before you today. 

I want to thank President Bush for having the confidence in me 

and nominating me to another post within the Department of 

Transportation. As you may be aware, I currently serve the President as a Member of the St. Lawrence Seaway Development Corporation Advisory Board. I would also like to thank Secretary Mineta for his support of me as Administrator of the Federal Transit 

Administration. 

Many of my life’s experiences have had a profound impact on me 

as an advocate for public transportation. As the oldest of four children, growing up in New York City, I am keenly aware of how public transit impacts the lives and families of individuals. I have witnessed how public transit moves people who are economically disadvantaged from the home to the workplace. Transit made it possible for my mother to commute to Manhattan for employment, 

which enabled our family to move off welfare. Public transportation 

provided me with the opportunity to travel from home in Staten Island to school in Brooklyn and to work in Manhattan after school 

via five buses, one ferry and subway each day. Without a family 

automobile, I viewed affordable public transit as a necessity and as 

a vehicle that created a sense of freedom. Public transit opened a 

9

world of social and cultural diversity. It made summers possible at 

Coney Island, winters in Central Park, and it exposed me to Times 

Square, the Museum of Natural History, Yankee Stadium, the 

World’s Fair, Chinatown, and Little Italy. All of these influences, 

fostered by public transportation, account for much of the reason 

I stand before this Committee today. 

As a business owner in the motor carrier industry for over 25 

years, I have experienced first hand the economics and social costs 

associated with insufficient public transportation. At one of my facilities on Staten Island, New York, a mere 15 miles from Midtown 

Manhattan, my vehicles and employees waste over four hours a 

day traveling to and from their job site during the morning and 

evening rush on Interstate 278, a commute that is only a half hour 

each way off peak. An expanded public transit system can help 

mitigate highway congestion, lower travel time, and increase productivity and profitability for our Nation’s businesses and individuals alike. 

Additionally, in 1995, as you know, I was appointed by Governor 

Pataki as a Commissioner and Member of the Board of Directors 

of the New York State Metropolitan Transportation Authority, 

which exposed me to a decade of oversight of large-scale, extremely 

complex transit systems. 

If confirmed as FTA administrator, I will work diligently with all 

of the stakeholders to foster economic development, enhance mobility and accessibility in rural and urban communities alike, reduce 

traffic congestion, and strengthen the safety and security of the 

Nation’s transit systems through cost-effective spending on public 

transportation. 

I have made public service an integral part of my life, as I believe it is should be an endeavor undertaken by all responsible 

businesspeople. Serving our country and the President is an immense privilege and honor, and if confirmed, I would apply my 

knowledge and skills to the successful management and advancement of our Nation’s transit systems. If confirmed, I would work 

tirelessly with this Committee, the Congress, and other stakeholders to ensure that all people across this great Nation are wellserved by a safe, cost-effective, and reliable public transportation 

system. 

Thank you. 

Chairman SHELBY. Mr. Couch. 

STATEMENT OF ROBERT M. COUCH, OF ALABAMA

TO BE PRESIDENT,

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 

Mr. COUCH. Chairman Shelby, Ranking Member Sarbanes, and 

distinguished Members of the Committee, I want to thank you for 

the opportunity to appear before you today. I also want to thank 

you, Mr. Chairman, for the kind words of introduction, and thank 

you to all of the Members of the Committee and their staffs who 

have met with me over the past month. Those meetings have 

helped me gain important insights into the position for which I 

have been nominated. 

My wife, Anne, who is with me here today, and I are extremely 

fortunate. We own the home in which we have lived for the last 

10

18 years. Not everyone in this great country can say that. When 

we initially tried to borrow money to buy our first home, we were 

turned down. Luckily, we had a supportive family that was willing 

to back us, and we became homeowners. Other aspiring homeowners may not be as blessed. The job for which I have been nominated, the presidency of Ginnie Mae, has the potential to help 

those families achieve the dream of owning their very own home. 

I believe deeply in the power of homeownership, as do President 

Bush and Secretary Jackson. When a family owns the home in 

which it lives, it has a stake in the community, which in turn leads 

to more community involvement and more community investment. 

Homeownership is also perhaps the best vehicle we have today for 

building personal wealth. 

The mission of Ginnie Mae is to ‘‘expand access to affordable 

housing in America by linking the global capital markets to the 

Nation’s housing markets.’’ We have seen homeownership grow in 

recent years, with a record level of more than 69 percent in 2005, 

and we have seen the gap between minority and nonminority 

homeownership levels shrink. Still, there is plenty of room left for 

improvement. Working with its partners at HUD, the Veterans Administration, and USDA’s Rural Housing Program, Ginnie Mae 

continues to play a vital role in keeping America’s homeownership 

rate going in the right direction. If confirmed, I am committed to 

do all that I can to help Ginnie Mae fulfill this important mission. 

Shortly after taking office, President Bush challenged the Nation 

to create 5.5 million minority homeowners by the end of the decade. Since the announcement of that goal, 2.4 million minority families have joined the ranks of homeowners. 

To fully realize the President’s goal, the secondary mortgage 

markets, and particularly the markets for mortgages secured by 

homes of low-to-moderate income families must continue to operate 

efficiently. Ginnie Mae has been an indispensable element in the 

housing finance sector since its inception in 1968, and Ginnie must 

continue to play an active role in the future. 

I recognize that not everyone in this country is able to own a 

home, but everyone should have access to affordable housing. While 

most of Ginnie Mae’s efforts are focused on securitization of singlefamily mortgages, a growing area is the securitization of FHA multifamily loans. If confirmed, I will continue to look for creative 

ways to improve the market for multifamily securities. 

Mr. Chairman, I am very appreciative of the trust that the President and Secretary Jackson have placed in me by nominating me 

for the post of Ginnie Mae President. I am hopeful that the Banking Committee and ultimately the full Senate will look favorably on 

my nomination. 

I would be pleased to answer any questions you might have. 

Chairman SHELBY. Thank you, Mr. Couch. 

Mr. Simpson, I will start with you for the record. In November 

of last year, the Committee successfully reported the Public Transportation Terrorism Prevention Act of 2005. It currently awaits action on the Senate floor. This is a top priority for the Committee, 

and many of us share the belief that the Administration is not 

doing enough to protect the transit riding public. 

You know what happened in London back in the——

11

Mr. SIMPSON. Yes, sir, I am well aware of what happened in London, Madrid, and Tokyo. 

Chairman SHELBY. And you have to have some concerns. 

Mr. SIMPSON. Excuse me, sir? 

Chairman SHELBY. You will have to have some concerns in——

Mr. SIMPSON. Yes, I do. 

Chairman SHELBY. What is your feeling about the role that the 

Federal Transit Administration should play in securing U.S. transit systems? 

In other words, in what areas should FTA focus their security efforts? 

Mr. SIMPSON. It is my understanding that the Department of 

Homeland Security has the primary responsibility for security. 

Chairman SHELBY. They do. 

Mr. SIMPSON. However, I believe there is room at the table for 

everybody, and it is up to the leadership to determine how far we 

need to go with security. 

Chairman SHELBY. You are not going to be silent if you are confirmed, assuming you are confirmed, and I believe you will be. 

Mr. SIMPSON. If confirmed, I can assure you that I will not be 

silent in the area of security. 

I have a basic understanding of security, and security is very important to me. When I first joined the MTA 10 years ago, I was 

offered a variety of leadership roles, and I chose the Safety and Security Committee because of my natural inclination toward safety 

and security. 

Chairman SHELBY. How many people, in your best judgment, are 

riding transit, subways, trains every day to go to work? 

Mr. SIMPSON. In New York alone, it is over 8 million a day, and 

nationwide, it is 9 billion a year. 

Chairman SHELBY. Nine million? 

Mr. SIMPSON. Nine billion rides. 

Chairman SHELBY. Nine billion? 

Mr. SIMPSON. Yes. 

Senator SARBANES. A year. 

Chairman SHELBY. A year. 

Mr. SIMPSON. A year. 

Chairman SHELBY. And that is cumulative. 

Mr. SIMPSON. Yes. 

Chairman SHELBY. That is in the aggregate, nine billion people. 

Do you know how much money has been spent for security there 

compared to airports? 

Mr. SIMPSON. I have read that it is somewhere about a penny, 

or it is a very low number relative to what has been spent elsewhere. 

Chairman SHELBY. Does that concern you at all? 

Mr. SIMPSON. I do not know if it concerns me, only because——

Chairman SHELBY. What did you say? 

Mr. SIMPSON. Having not served as the Administrator of the 

FTA, I do not have all the facts, and I do not have the information 

available to really tell what is appropriate and what is inappropriate. But if confirmed, that would allow me the opportunity to 

meet with the other departments to get a better understanding of 

how much and what the appropriate levels of funding are. 

12

Chairman SHELBY. Do you believe, or do you have a judgment, 

that our subways, buses, and everything are safe from terrorist attacks today? 

Mr. SIMPSON. I believe that this country is doing the best that 

it can with the resources that it has, and I do not know what the 

correct level is, but I can assure you that if confirmed by this Committee, I will work tirelessly to be an advocate for safety and security. 

Chairman SHELBY. I hope this never happens, but it could. But 

if what happened in London happens in New York? What then? 

Mr. SIMPSON. That would be a very dark day for this country if 

it happened. 

Chairman SHELBY. It would be. It would be. 

Mr. Simpson, the 2006 budget for Amtrak directed the Secretary 

of Transportation to assess a fee on the commuter rail agencies in 

the Northeast Corridor. Are you familiar with that? 

Mr. SIMPSON. Yes, I am. 

Chairman SHELBY. We have heard concerns from the transit 

agencies that operate commuter trains on the corridor that this 

may be an attempt to redirect scarce Federal transit assistance 

from transit agencies to the mismanaged, I believe mismanaged 

Amtrak. 

Can you assure the Committee that if confirmed, you will work 

to assure that commuters are fairly treated in the process of developing a formula to arrive at a fee and then the process of actually 

assessing the fee? 

Mr. SIMPSON. Mr. Chairman, it is my understanding that this 

lies in the domain of the Federal Railroad Administration, and the 

FTA is more of a facilitator. But with my past experience——

Chairman SHELBY. But as a facilitator, you would have a voice, 

would you not? 

Mr. SIMPSON. Absolutely, I would have a voice, and as someone 

who served in an operating level at the MTA and understanding 

the tight cost constraints that we are under to operate, every transit authority has a budget, and things are very tight as we all 

know, that this is a major issue for the Northeast corridor and the 

transit systems. 

I can assure you that if I am confirmed by this Committee and 

by the Senate, that I will work to resolve this so that all the transit 

agencies are treated equitably. 

Chairman SHELBY. Mr. Couch, a few questions for you, sir. 

Mr. COUCH. Yes, sir. 

Chairman SHELBY. The importance of strong accounting; you are 

a CPA by background and an attorney and businessman; I understand that. 

Mr. COUCH. Yes, sir. 

Chairman SHELBY. Other financial institutions engaged in mortgage securitization have experienced a variety of shortfalls in their 

accounting. You are very familiar with this. 

Mr. COUCH. Yes, sir. 

Chairman SHELBY. I believe your background in accounting can 

make a vital contribution to Ginnie Mae. 

Secretary Martinez, we still call him that, Senator, too; we would 

rather have him up here than down there and he is very involved 

13

in these issues. He knows these issues. He has worked with these 

issues, and I know he will be outspoken on this. 

But while we all hope that the accounting at Ginnie Mae has 

been strong, have you had an opportunity yet to examine Ginnie 

Mae’s financial systems and statements? Do you believe a strong 

accounting system should be a high priority for Ginnie Mae? 

Mr. COUCH. Senator, I can answer your last question first, and 

the answer is yes. Accounting systems in all entities are very important. 

Chairman SHELBY. They tell the truth of what is in the portfolio, 

what is going on, do they not? 

Mr. COUCH. Yes, sir, they do. 

Chairman SHELBY. If the accounting is honest and accurate. 

Mr. COUCH. Yes, sir, they do, and under the Sarbanes-Oxley bill 

and those accounting standards have been strengthened, particularly internal controls. I can tell you it was important to me in my 

past job; if confirmed, it will be important to me in my future job. 

I think it is important to draw a distinction, however, between 

Ginnie Mae’s business model of Fannie Mae and Freddie Mac, for 

instance. 

Chairman SHELBY. Tell us a little about that. 

Mr. COUCH. Currently, Ginnie Mae does not buy loans or securities for its own balance sheet, and many of the accounting issues 

that have been in the headlines lately at the other entities have 

had to do with the accounting for the hedges that were placed on 

the balance sheet to address interest rate risk. 

Chairman SHELBY. What they have kept in their portfolio. 

Mr. COUCH. Yes, sir; if you have those assets on your books, you 

subject yourself to some interest rate risk, and that leads you to 

putting hedges on your books to counteract the interest rate——

Chairman SHELBY. And Ginnie Mae is not doing that. 

Mr. COUCH. No, sir; no, sir. We do not have those assets on our 

books. If confirmed, we would not have those on our books. Ginnie 

Mae currently does not have those assets on its books. 

Chairman SHELBY. But you are going to look closely at the accounting system once you get inside. 

Mr. COUCH. Yes, sir. It is my understanding that that process is 

already underway. It is not a process, though, I can tell you, that 

ever has an end to it. You constantly have to be looking at your 

internal controls and making sure that everything is in place. 

Chairman SHELBY. The asset portfolio, I understand that while 

Ginnie Mae guarantees almost $500 billion in outstanding mortgage-backed securities, Ginnie Mae’s balance sheet assets are only 

about $11 billion, three-fourths of which are in the form of U.S. 

Treasuries. 

Ginnie Mae has met its mission of providing liquidity to the 

mortgage market with a minimal portfolio of balance sheet assets. 

Do you see any reason to change Ginnie Mae’s business practice of 

maintaining a small portfolio of assets? 

Mr. COUCH. At this point, no, Senator, I see no need to do that. 

I think Ginnie is serving its mission well at this point. 

Chairman SHELBY. Do you believe there is anything to the idea 

that a small portfolio relative to its business activity has hindered 

14

the ability of Ginnie Mae to meet its mission? Do you believe it has 

met its mission? 

Mr. COUCH. I do not believe that it has been hindered in meeting 

its mission, and I do believe that it is currently succeeding in that 

mission, yes, sir. 

Chairman SHELBY. Thank you. 

Senator Sarbanes. 

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

Mr. Couch, why do we not continue along, and then, I will come 

back to Mr. Simpson. 

Mr. COUCH. Yes, Senator. 

Senator SARBANES. A couple of questions I am going to put to you 

are really directed more toward HUD procedures more broadly, and 

I just want some assurances of how you will be dealing with matters within your own particular bailiwick. 

We have had some history of difficulty in getting data from 

HUD. For instance, in the past, we have had to ask repeatedly for 

data regarding the Section 8 program, and of course, without the 

data, we cannot do our oversight or understand what is happening 

in the program. It seems now that finally, we have resolved that 

problem, and we are expecting some new Section 8 data shortly. 

But we have had a lot of trouble in the past. 

So let me ask you right at the outset: Do we have your commitment to provide data on Ginnie Mae to the Committee or Members 

of the Committee on a timely basis? 

Mr. COUCH. Yes, sir; if confirmed, that would be a priority, yes, 

sir. 

Senator SARBANES. Yes; thank you very much. 

Just to give an example, when the Secretary was here and testified on Hurricane Katrina about a month ago, we submitted questions for the record the following week. We have not yet received 

answers to those questions, and they are relevant to the emergency 

supplemental with respect to the Gulf Coast. That is not a question. I am just making that observation. 

Now, I am looking here at the annual report of Ginnie Mae, and 

it says Ginnie Mae produced a net revenue in fiscal 2004 of $737 

million. And they indicate they earned $815 million, some in fees, 

some in interest income, and then, they had operating expenses, 

they had some default advances, most of which were recovered. So 

the end result was a net revenue of $737 million. 

Despite this, the Administration in the 2007 budget just submitted to the Congress proposes to double the guarantee fee to 

Ginnie Mae lenders from 6 to 12 basis points. And they state that 

the purpose of this fee increase is to pay for Ginnie Mae’s administrative costs. So obviously, the question that comes to mind is why 

increase the fees if the costs are already being met out of the very 

substantial profits of Ginnie Mae? And in fact, they are making, in 

effect, a contribution to the Treasury of well over $700 million. 

Now, you know, our concern is the fee increase will increase the 

cost of homeownership, maybe incrementally but nevertheless. So 

it is particularly puzzling that we have this request to, in effect, 

double the guarantee fee when Ginnie Mae is already producing far 

more than it is costing. How do you explain that? Do you have any 

observation on this issue? 

15

Mr. COUCH. Yes, Senator, and at the outset, I would like to express appreciation for you pointing out that we do make a contribution to the tune of $730 million. 

It is a distinction that really is not much important, the proposal 

is not to double the guarantee fee, but it is to assess an additional 

fee of 6 basis points, as you point out, that would be designed to 

recoup the costs of Ginnie Mae, and it is a deficit reduction proposal. It would generate about $54 million for the budget, reduce 

the deficit, and it is, in some ways, I guess, a recognition of the fact 

that in order to balance the budget, there are difficult decisions 

that have to be made. 

Now, I would be less than honest with you if I did not tell you 

that that 6 basis points will make the program less competitive in 

the marketplace, and it will make our challenge of reversing the 

market share decline that Ginnie has seen in the past few years, 

it will make that challenge a little more difficult. But there are 

going to need to be difficult decisions made in all areas of Government, I think. 

Senator SARBANES. Well, that leads me to my next question. Actually, it is a very nice lead-in. Ginnie Mae guarantees pools of 

FHA and VA mortgages, correct? 

Mr. COUCH. Yes, sir, and rural housing as well. 

Senator SARBANES. Your securities carry the full faith and credit 

of the U.S. Government. 

Mr. COUCH. Yes, sir. 

Senator SARBANES. But FHA is a small and declining share of 

the marketplace. In 2003, FHA was 9.2 percent of the marketplace. 

In 2004, it dropped down to 4.1 percent. So, I mean, the obvious 

consequence of that is that Ginnie Mae’s business is also declining. 

In 2004, Ginnie Mae helped support about 1.3 million housing 

units. In 2003, it was 2.4 million housing units. 

I mean, it is a drop of almost 50 percent. What is the explanation 

for this? 

Mr. COUCH. Senator, I cannot speak for FHA Commissioner 

Montgomery, but I think he has publicly stated that it is his goal, 

and Secretary Jackson has stated publicly as well that it is his goal 

that FHA take the steps that are necessary to modernize the programs and try to reverse that slide in market share that you just 

referred to. 

Now, I am not suggesting that market share for market share’s 

sake is important, but I do believe that there is an important role 

for FHA to play and that Ginnie Mae’s fortunes, as you point out, 

are tied to FHA and VA’s fortunes. It is interesting to note that African-American families, for instance, are twice as likely to choose 

FHA or VA programs over conventional programs, twice as likely 

as non-Hispanic whites. 

But the thing that is disturbing to me is that African-American 

families are three times more likely to choose subprime programs 

than non-Hispanic whites. So there is clearly, in my view, a continuing role for FHA. If confirmed, my plan is to try and do everything to help, everything I can do to help Ginnie Mae provide support to FHA in turning that market share slide around. 

Senator SARBANES. Yes; the added fees that we just discussed, 

though, will make that problem even more difficult, will they not? 

16

Mr. COUCH. As I mentioned before, it will increase the challenge, 

yes, sir. 

Senator SARBANES. Now, my time has run out, so I am going to 

defer and get to Mr. Simpson on the second round. 

If I could put one final point to you, Mr. Couch, and then, I have 

really concluded my questioning of you. This is not directly related 

to the Ginnie Mae program, but it is an indication of the importance that I attach to an open and transparent regulatory policy. 

Let me just tell you something that has happened at HUD. For 

a number of years, HUD has followed a policy articulated in a series of HUD notices issued from 2002 to 2005 establishing the subsidy amounts for project-based vouchers attached to tax credit 

projects. A proposed rule on project-based vouchers published in 

March 2004 adopted the policy put forth by these notices. 

Unfortunately, a final rule was published on October 2005 reversing the longstanding policy. Now, putting the substance aside, 

I mean, which is very important obviously, but the concern I want 

to underscore is making a significant policy change without ever 

subjecting the new policy to a public review. In other words, we are 

going on along one path. That is where we have been; that is where 

we were continuing to go; that is what everyone’s assumptions 

were, and then, all of a sudden, in the final rule, it completely 

switched. 

I have written the Secretary, asking him to withdraw this portion of the rule and to reissue it as a proposed rule, thereby subjecting it to full notice and comment in the rulemaking period. I 

mean, if you are going to turn at a sharp angle on this, it seems 

to me you should put it back out there and let all of the interested 

parties have an opportunity to comment on it. That is how we try 

to make good policy. 

I mean, this is not your issue, except I would hope that in conducting the affairs of Ginnie Mae, you are sensitive to the requirement of transparency, public notice, opportunity for people to have 

their input into the decisionmaking. I think the consequence of 

that is you get better decisions, and I certainly think you get more 

of a buy-in by all interested parties in terms of the end result. So, 

I commend that to you, and hopefully, the message will get back 

to the Department through you or through others present at the 

hearing. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Martinez. 

Senator MARTINEZ. Mr. Couch, I just want to touch on a couple 

of issues. Certainly, the issue of homeownership that you mentioned, I think, in a very appropriate way in your opening remarks 

and the issue of affordability of housing, which continues to be a 

challenge. In Florida today, we have a situation which is even 

worse than it was a couple of years ago in terms of housing affordability, particularly in the aftermath of the recent storms that we 

have seen over the last couple of years, which has really taken out 

of the marketplace an awful lot of, frankly, marginal housing but 

which today is not available at all, particularly in rural areas, farm 

worker housing. And then, but just in general, just the affordability 

issue is a huge problem for Floridians. 

17

I wanted to ask you, and I know the role that Ginnie Mae plays 

in making housing more affordable, but I wanted to ask if there 

was any thought you had given to ways in which you might weigh 

in on this issue. One of the ways in which I attempted last year 

was by introducing a bill which would make employer-assisted 

housing programs to be eligible for tax credits so we could generate 

more housing with the assistance of employers, talking about down 

payment assistance, closing cost assistance, things of this nature. 

What do you think you can do in the area of affordability? What 

can Ginnie Mae do to be more proactive in the area of housing affordability, bringing about homeownership to more Americans? 

Mr. COUCH. Sure. Thank you, Senator, and I am well aware of 

your record as HUD Secretary and the efforts that you made to 

modernize programs and expand HUD’s role in providing more affordable housing. 

As we discussed, Senator Sarbanes and I discussed, the fortunes 

of Ginnie Mae rest in large part with the fortunes of FHA. But the 

encouraging news on this front is that while the market share, 

Ginnie Mae’s market share in the single family world has declined, 

our multifamily program has continued to grow, and if confirmed, 

it would be my intent that we continue to put emphasis, look for 

creative ways to bundle mortgages to make the flow of capital less 

costly and therefore make affordable housing more reachable. 

Senator MARTINEZ. How have you shifted to more of the multifamily from the single family? And I recall that that was already 

a trend that we had seen in terms of Ginnie Mae financing. What 

do you think is responsible for that trend, and how can that continue? 

Mr. COUCH. Senator, I am not really fully versed in the changes 

that have been made in the FHA programs. I am familiar with the 

fact that the FHA programs have become more attractive in the 

marketplace than they were, and naturally, Ginnie’s business picks 

up as a result of that. I can tell you that we have looked at a number of new structures, financing structures, at Ginnie Mae to make 

the market more receptive to Ginnie Mae securities that are made 

up of multifamily loans. 

Senator MARTINEZ. On the accounting issue, which I know Senator Sarbanes raised, I frankly do not think there are any parallels 

with what we have seen in the other GSE’s with respect to the accounting irregularities that have been there. And you mentioned, 

I think, the use of derivatives as part of the portfolio as being one 

of the main distinctions, but also, I think the fact that you are not 

in the marketplace selling securities to individuals, do you not 

think that also makes a big difference in terms of how the two entities are marketed? And you know exactly the approach, which is 

quite different. 

Mr. COUCH. Yes, it makes some difference, yes, Senator, but it 

is difficult to overstate how difficult the accounting issues are when 

you have large portfolios that are being hedged with derivatives. 

Coming from my background, we used derivatives to hedge our 

pipeline, our mortgage pipeline as well as some of the deposit products that we had. And the accounting world is in flux over—the 

policy is FAS 133; you have probably heard it in some of these 

hearings. The category is in flux. 

18

I remember when I went from being an accountant to being a 

lawyer, many years ago. At that time, in the accounting world, you 

always had a right answer. Every question had a right answer. You 

went to law school, all you had were good arguments. Used to be 

you had right answers in accounting. Increasingly in the accounting world, you have good arguments again, and that makes it difficult. 

As far as Ginnie Mae is concerned, Senator, I have not yet seen 

any issues that concern me, but if confirmed, I believe that vigilance is the watchword. 

Senator MARTINEZ. Thank you. 

Mr. Simpson, my time is up, but I just—not a question, really, 

only a comment to you, and that is that in the State of Florida, we 

do not have a developed transit system like you have in your home 

State of New York, but I do hope in your tenure that you will take 

a good, hard look at what is a developing and a growing move toward transit. We have a many corridors in Florida which simply 

cannot handle any more normal expansion to the Interstates or vehicular traffic, and it really is incumbent upon us to look at ways 

in which we can partner with local governments, with the Federal 

participation, to create more transit opportunities in a fast growing 

State like the State of Florida, so I hope you will give that a very 

close look and a sympathetic look. 

Mr. SIMPSON. Senator, may I comment on that? 

Senator MARTINEZ. Please. 

Mr. SIMPSON. I think you will be happy to know—I do not know 

if Senator Schumer would—I spent more time in Florida last year 

than I did in New York. 

Senator MARTINEZ. Great. 

Mr. SIMPSON. I do have a home there. 

Senator MARTINEZ. You were stuck in traffic, then. 

[Laughter.] 

Mr. SIMPSON. I–95 is atrocious. It is no different than 278 in the 

morning. Not only am I stuck on it on a regular basis, but also once 

again, my vehicle is in the Florida corridor. It is just there is too 

much development, not enough public transit, and I am happy to 

say when I do drive in the Palm Beach County area that we do 

have that rapid transit system. I do not know how far south it goes 

to Miami, but we need more of that. 

And you can be sure that if confirmed, I would be more than 

happy to spend as much time with you as I could in the State of 

Florida, hopefully in the wintertime. 

[Laughter.] 

Senator MARTINEZ. We welcome you. We would be glad to have 

you. 

Mr. SIMPSON. Thank you. 

Senator MARTINEZ. Well, the I–4 corridor is another one that is 

equally dysfunctional, the Orlando to Tampa corridor, really the 

Daytona to Tampa corridor through Orlando but also the I–95 

south of West Palm and south, it is really very difficult. 

Mr. SIMPSON. I–4, yes, the Orlando area. 

Senator MARTINEZ. And, you know, that is only two highlighted 

areas, but I–75 South into Naples is a problem. Not all of them are 

19

amenable to transit, but the truth is that we have got to be looking 

at transit as a partial solution to the transportation problems. 

Mr. SIMPSON. Senator, I am very aware of Florida. I criss-cross 

Florida regularly, all the cities with the exception of perhaps Jacksonville and Tallahassee. But I would enjoy the opportunity to 

work with you and your staff if confirmed. 

Senator MARTINEZ. Thank you. That would be great. 

Chairman SHELBY. Senator Reed. 

Senator MARTINEZ. Thank you, Mr. Chairman. 

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

gentlemen, for your testimony. 

Mr. Simpson, I associate myself with the Chairman’s remarks 

about transit funding and transit security, and could you indicate 

what specific steps you could undertake with respect to transit security if you are confirmed? 

Mr. SIMPSON. I understand first of all that there is a memorandum of understanding between the Department of Homeland 

Security and the Federal Transit Administration. The first thing I 

would do if confirmed would be to take a look at that MOU and 

meet with my peers over at Homeland Security and Transportation 

Security Administration. 

And we are fortunate that the former Deputy Administrator of 

FTA is now, I believe, the Deputy at TSA, which I believe is a good 

thing for transit. But I think what I could bring to FTA in terms 

of transit security is my experience at an operating level for oversight. I am not a security expert, but I have been exposed to it on 

a regular basis. I can bring the insight of the day-to-day operator. 

And if you do not have a secure transit system, you will not have 

a ridership. After September 11, when we were quick to recover the 

system and get the trains rolling, we saw a big dip in ridership, 

and I think that was because of obviously the events of September 

11. But ridership is at an all-time high in many areas, and my personal experience is in the New York area, where we are at 45 percent increase over 10 years in ridership. 

And that is because there is confidence that they system is safe 

and that the system is working effectively. There are a bunch of 

things that have been done in the area of prevention, in the area 

of deterrence, visible things like more police officers, dogs, just an 

awareness. 

And what FTA has brought to the table, and it has helped the 

New York City system so well, is programs like Transit Watch, see 

something, say something. There were early discussions at MTA, 

should we tell the ridership to be safe, be secure, and to look out 

for things? Because then, maybe, you are spooking the riders. 

And it is not so. It has worked out favorably, because as a pilot, 

I know myself, I have had a lot of experiences flying. Early on, 

when I did not have a lot of experience, I almost panicked. And 

then, with regular training, where you do not panic. And when people have an understanding of what the issues are and what the 

vulnerabilities are, I think they do feel at ease, and we have seen 

that at the MTA. We have a regular program where there are circulars that go out or any kind of media that we can see something, 

say something, and it is an ongoing process. 

20

I read that one system actually has auxiliary employees that if 

they get trained properly, they learn how to get on and off a train, 

cross the third rail; if they travel the route regularly, they are 

given some an ID so that it is known they are there in the event 

of an emergency. 

So if confirmed as FTA Administrator, I believe that with continued programs like that to work closely with the Department of 

Homeland Security, and if confirmed, then, to have an idea of, really, how far the Administrator of the FTA can actually go without 

overstepping the Administrator’s bounds. And I think it is a job for 

everybody. 

Senator REED. Thank you very much. Let me make just one 

point, and then, I want to address a question to Mr. Couch. And 

that is, you have pointed out ridership is increasing, and in my experience in Rhode Island to our public transportation system, bus 

RIPTA system; one of the fears I have with the underfunding you 

are seeing in the budget is just as ridership is going up, the resources to maintain the quality, maintain the schedule, maintain 

the training, maintain everything you have said is required will 

start evaporating, and you are going to be stuck with the problem 

of seeing those numbers go down. 

Mr. SIMPSON. Senator, I could not agree with you more. I think 

that the reason why New York and—I can only speak, really, for 

the New York experience, so pardon me if I continuously go back 

to New York, and I can assure you if confirmed, I am concerned 

about the entire country. 

Senator REED. You will never go back again. 

Senator SARBANES. New Yorkers always do that. 

[Laughter.] 

Chairman SHELBY. What about Baltimore? 

Mr. SIMPSON. As you know, the New York system was falling 

apart, and I believe it was because of the efforts of this great Committee and ISTEA and TEA–21 and now SAFETEA–LU that we 

have had a continuous stream. We have seen a really big investment in capital. I mean, New York has—I do not know if you have 

been to New York City, but we have the greatest buses, the greatest subways, and it is a new system, and we have spent so much 

money on capital improvements. Without those capital improvements, you would not have the ridership. 

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

Quickly, Mr. Couch, again, thank you for your testimony. And 

one of the points that you made is one I want to emphasize, and 

that is the affordable rental housing and what Ginnie Mae can do. 

Can you just, very quickly, because my time is all but gone, in 30 

seconds, perhaps, just note what you might do to expand rental 

housing opportunities. 

Mr. COUCH. Yes, Senator; again, we are somewhat at the mercy 

of the FHA. I know that the FHA Commissioner has plans to modernize several of the FHA programs. 

Within Ginnie itself, we are somewhat limited to tweaking the 

structures within the deals that are done with FHA and VA and 

rural housing under the multifamily program there, and I think 

the record is that Ginnie Mae has been pretty creative in coming 

21

up with new structures for those deals, and I would certainly, if 

confirmed, to continue that emphasis there. 

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

Thank you, Mr. Chairman. 

Chairman SHELBY. Thank you. 

Senator Allard. 

STATEMENT OF SENATOR WAYNE ALLARD 

Senator ALLARD. Mr. Chairman, I have some opening remarks, 

and I ask unanimous consent that they be made part of the record. 

Chairman SHELBY. They will be made part of the record without 

objection. 

Senator ALLARD. Welcome, Mr. Simpson and Mr. Couch. 

Let me start out with you, Mr. Simpson, and it has to do with 

having budgets or having projects started and completed on time 

and within budget. And I am one who writes my authorities in Colorado to say make sure that you get your budget, your figures are 

reasonable, and then make a firm commitment to get them done 

on time and on schedule. I do not think all Members of the Senate 

probably take that much interest in local projects, so we have to 

look to the Administrator. 

And so, my question to you, how important do you believe it is 

to keep projects on time and on budget, and what can the Federal 

Transit Administrator or Administration do to improve project performance? 

Mr. SIMPSON. Senator, first of all, I know that your project T–

REX in Colorado is on time and on budget, and that is the way it 

should be. And I believe that the program will break down if you 

consistently have projects coming in over budget. You just cannot 

have that. You cannot budget; you cannot plan, and I do not know 

what mechanisms are in place now at the FTA, but I can assure 

you that if confirmed that I will work tirelessly to ensure that we 

are on time and on budget. And I do know that in reading the strategic plan of the FTA, they have a host of deliverables, and one of 

their deliverables is on time, on budget, or at least within 5 percent. 

So, I know that that is on the mark for the FTA leadership, and 

I can assure you that as in running a private business, you need 

to be on time. You need to be on budget, or else, you are not in 

business any longer. And I can assure you that I can bring my 

background as a businessman to the FTA to ensure that that does 

happen. 

Senator ALLARD. The other question I have also deals with performance, and I happen to be a strong believer in outcome-based 

management, where you set specific goals and objectives, and then, 

you measure those. The Administration has instituted that program with what they call the PART program, and in what ways is 

FTA utilizing outcome-based management, both with the grantee, 

that is the one who is receiving the dollars, and as an institution? 

What are you doing within your own agency to meet those guidelines? 

Mr. SIMPSON. I am unfamiliar with that, Senator, but I do know 

that the President has a President’s Management Agenda, the 

22

PMA. I do not know if that is what you are referring to where 

there are a host of deliverables and——

Senator ALLARD. It probably is. 

Mr. SIMPSON. It is measurement. You know, as a businessman, 

I believe if you are not measuring, you are not managing. 

Senator ALLARD. Yes. 

Mr. SIMPSON. And you have to quantify things. When you can 

quantify things and express it in numbers, you know something 

about it, and if you do not, it is just nebulous. I mean, it is qualitative, and it is soft, and it is not accurate, and I think in an agency like the FTA, we need to be quantitative. It is about dollars and 

cents. The deliverables are pretty easy to see. The parameters 

should be easy, and if confirmed, I would spend as much time as 

I possibly can with the budget people and see how we were delivering these services, what measurement criteria we are using. 

I would also work with this Committee, because I am sure that 

your people have ideas on how this should be implemented and to 

see that we have a successful FTA. 

Senator ALLARD. I am a strong proponent. When we passed the 

legislation out of Congress, we had what was called the Government Performance and Results Act, and then, the Administration, 

I think has characterized it as PART; at least in the budget, that 

is what they describe as PART. And you may have another acronym that you are using within the agency, but basically, that is 

what we are talking about. 

And the President has gone and actually looked to see how various agencies are meeting these guidelines and in some cases not 

giving them the money that they think they should have, because 

they are not setting up their goals and objectives, and if they are, 

most generally, the agency does not bother to do it. 

And those agencies, actually, are getting a cut in the President’s 

budget. So, I would encourage you to bring that kind of accountability if they are not doing it. And you can go into—there is a 

website, Expectmore. 

Mr. SIMPSON. Expectmore.gov, yes. 

Senator ALLARD. And they are listed on there, and I do not know 

whether you have any agencies that are listed under there. If you 

do, then, it would probably be a good idea to kind of get after them 

a little bit and say you need to get going on this program. 

Mr. SIMPSON. Well, in some of my readings, and it was in the 

material on the President’s Management Agenda and also the management for or by results, it is a color-coded system by Department, 

all of the departments and their deliverables, where they are to 

date, going forward where they need improvement, and are they 

meeting those objectives? And it puts a lot of pressure on each—

let us call it a business unit; each department is a business unit, 

and that is, I believe, that is how New York City turned around 

the crime in the City of New York. You had—I do not know how 

many precincts there were—police precincts that were not managed. 

All of a sudden, under the Giuliani Administration, they decided 

to manage each precinct, and when each precinct was managed, everybody knew everybody else’s score, and you saw the results in 

New York City. So, I think that same initiative should be carried 

23

forward here, and according to what I have read, it looks like a program, and I would like to be at the top of the heap with all—I believe it is green; if you have green dots, you are in good shape. 

Senator ALLARD. Good. I would like to move to Mr. Couch. My 

time has expired, Mr. Chairman. I wonder if I could have a little 

more time. 

Chairman SHELBY. Go ahead. We are generous with you. 

Senator ALLARD. Thank you. 

Mr. Couch, I want to ask you the same thing on outcome-based 

management for Ginnie Mae, if you are familiar with that and if 

you are utilizing that, and then, also in relation to that, I have 

heard from lenders that FHA’s technology is extremely outdated, 

and various systems cannot communicate, and if you could also respond to that. 

Mr. COUCH. Yes, Senator; since I have been a consultant to 

Ginnie Mae, I have learned several acronyms: GPRA, PART, PMA, 

they all, I have even learned that you can use them as verbs if you 

need to. 

[Laughter.] 

Ginnie Mae has not been PARTed yet. We think we will be 

PARTed this year. If confirmed, it would be my intent that outcome-based systems be stressed. That is my record from my previous job. 

Under my leadership, we put in place over a series of years programs where incentives were based on objective criteria. We came 

up with those plans at the beginning of the year. I sat down with 

my senior managers once a quarter and went through them. It was 

my hope that any one of my top managers could pull out his plan 

at any point in the year and figure out what his bonus would be 

at the end of the year if he kept on the track that he was on, so 

I am very much a fan of that. 

With respect to technology, Ginnie also has undertaken as part 

of that process or business improvement process, actually, a plan 

to wed all of its systems, update and wed all of its system into one 

comprehensive system that would talk—all pieces would talk to 

each other, and if confirmed, I would be a big proponent of making 

sure that that project continues. And I think the timeline has it 

complete, planned to be completed in June 2007, and I would hope 

that we could meet that deadline. 

Senator ALLARD. Mr. Chairman, thank you. 

Chairman SHELBY. Thank you. 

Senator ALLARD. I thank the other Members of the Committee 

for their tolerance. 

Chairman SHELBY. Senator Carper. 

STATEMENT OF SENATOR THOMAS R. CARPER 

Senator CARPER. Thank you, Mr. Chairman. 

To our witnesses, welcome. We are delighted that you are here 

today, and thank you for your willingness to serve. I understand 

that you have each been joined by your spouses; is that correct? I 

understand each of you have been joined by at least one daughter; 

is that correct? 

Mr. SIMPSON. Not here. Listening. 

24

Senator CARPER. And has one of you been joined by a sister? 

Okay; that is good. Daughter? And this young lady behind you, is 

she not a daughter? 

Mr. SIMPSON. That is my niece; I am sorry, Senator. 

Senator CARPER. I just wanted to say to these young ladies, are 

you both students? I just wanted to say special thanks. We appreciate the spouses, especially your willingness to share your spouse 

with the people of America. But I would say to the young ladies 

that are here, thank you for your willingness to give up a day of 

school. 

[Laughter.] 

Ms. COUCH. It was difficult. 

Senator CARPER. Tough choice, I am sure. 

I am going to telegraph a pitch for Mr. Couch, the question I am 

going to ask you, and you can think about it. And then, I am going 

to ask Mr. Simpson a couple of questions relating to transit fees 

in the Northeast Corridor, capital improvements. 

But what I am going to ask you, Mr. Couch, if time permits, I 

wanted to ask you just to take, in a couple of sentences, explain 

the primary mission of Ginnie Mae, and then, just to tell me what 

you think they are doing particularly well and what Ginnie Mae is 

not doing so well and what you would do as its leader to get them 

back on the right track in those areas that they are deemed to be 

deficient by you. I believe everything I do, I can do better, and I 

think that is probably true of all of us, and it is true of the agencies 

that you have been nominated to lead. 

And just if you will think about that, Mr. Simpson, you have had 

a moment to think about capital improvements in the Northeast 

Corridor, and I understand that there was a notice in the Federal 

Register maybe earlier this month, and I think it provided for the 

FTA withholding transit funds from transit agencies that failed to 

pay any additional funds assessed by the Federal Railroad Administration for the maintenance of the Northeast Corridor. 

My part of the world, I actually rode the New York subways a 

couple of weeks ago, rode the Long Island Railroad; was very 

pleased with the service that we received. In my part of the world, 

we use SEPTA. We partner with Pennsylvania. 

Mr. SIMPSON. Right. 

Senator CARPER. And trains runs right all the way from Newark, 

Delaware, right to the Maryland line. They go up through Delaware into Pennsylvania. 

And it is a partnership that is funded in part by the Federal 

Government and in part by the Commonwealth of Pennsylvania 

and in part by the great State of Delaware. And I just want to ask 

you to explain a little bit your understanding of this policy, and 

then, I want to ask you to think about whether this is an appropriate way to provide for greater capital funding in the Northeast 

Corridor. But what is your understanding of this policy? 

Mr. SIMPSON. I understand that this is from a 2006 appropriations bill that instructed the DOT through the FRA to assess a fee 

for usage on track to help pay for capital and so on. 

Senator CARPER. Yes. 

Mr. SIMPSON. And that the mechanism is still being worked out 

between the FRA and the FTA, and the FTA is a facilitator in the 

25

process and may withhold some funds, I believe, or may not grant 

the full funds if those amounts are not paid to, I believe, the FRA. 

That is the extent of my knowledge on that issue. 

Senator CARPER. Okay; let me just share with you a situation we 

have got, and I will put on my hat as an old governor. 

We work on a fiscal year basis in Delaware, July 1 through June 

30. A lot of States do that. SEPTA has a multiyear agreement with 

Amtrak to pay a cost for using the Northeast Corridor, I think 

through fiscal year 2011. And my concern, and I have not had extensive conversations with people from SEPTA or the Governor of 

Pennsylvania or Delaware, but my understanding is you have a situation with a multiyear contract between the commuter railroad, 

SEPTA, and with Amtrak where each year, the fee is set. 

The State of Delaware has passed a budget, Pennsylvania has 

passed a budget. They are providing support to SEPTA in accordance with the budget. And if the Feds step in, say the FRA steps 

in or the FTA steps in and says to SEPTA, by the way, you have 

to pay greater fees in order to cover this additional maintenance 

cost, even though you have a contract that goes through 2011 that 

says this is what your costs are, even though the States have already, through their budget process, allocated the money that they 

think SEPTA is going to need, it has the potential for creating, for 

lack of a better word, a train wreck, and I do not think that is what 

we want to do. 

Now that you have had a chance to think about this, my question 

of you is does this sound like a reasonable policy? 

Mr. SIMPSON. I am not certain, and I do not know enough about 

it, but if confirmed, I know that this is a high priority for the 

Northeast Corridor, not just with your State but all the way up the 

line, and budgets are very important to the authorities. They are 

working in tight budgets, the funding, all those issues. And now, 

to have this potential liability out there, it is a big issue. 

Once again, if confirmed, I would work with this Committee and 

the FRA and the other stakeholders to come to some resolution 

that would be appropriate for all parties involved. 

Senator CARPER. All right; and Mr. Chairman, my time has expired; I do not know if I can go back to my original question to Mr. 

Couch and just ask him——

Chairman SHELBY. Go ahead. 

Senator CARPER. Just give us a truncated version of a response: 

Primary mission of Ginnie Mae, let us just say what are they not 

doing as well as they might? Where do you see some area for improvement? How would you go about improving it? 

Mr. COUCH. Sure, Senator, I will try to make it brief. Ginnie 

Mae’s mission is to provide access to affordable housing by linking 

the global capital markets with the national housing markets. 

Overall, the program is running exceptionally well. There is a lot 

of respect for Ginnie Mae in the marketplace. It has a great team 

working over there to further that mission. 

I will give you two examples of things that I think, if confirmed, 

I could help on. One, I told you in the mission statement, it talks 

about the global capital markets. I do not think we have done a 

very good job internationally telling the central banks of other 

countries what great investment Ginnie Mae securities are, and we 

26

could perhaps improve the cost of capital in this country by making 

our case overseas. 

A second area which is, I think, illustrative of some of the demographic changes that are taking place in the country today, I spoke 

in my opening statement about how a home is the best vehicle 

today for building personal wealth. Well, that is great if you can 

get access to it. Ginnie Mae has an opportunity, the FHA has a 

great home equity conversion mortgage, a reverse mortgage that allows people who have built up a lot of equity in their home to extract that equity. 

Well, we at Ginnie Mae could do a better job, and this is underway, by the way; we are already having conversations about it, to 

securitize those mortgages and bring down the costs to Americans 

of extracting the equity back out of their home when they need it, 

generally after they are retired. So those are two examples. 

Senator CARPER. Those are good examples. Thanks very much. 

And Mr. Simpson, we look forward to getting to know you better 

and really bearing down on the issue that I have raised. 

Thank you. 

Chairman SHELBY. Thank you, Senator Carper. 

Senator Sarbanes. 

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

Mr. Simpson, in recent years, some members of the transit industry have raised concerns about program requirements being 

changed by the FTA without advance notice to stakeholders. This 

is a little bit along the lines of an issue I was discussing with Mr. 

Couch. For example, I understand this has happened on several occasions in the New Starts Program. 

Now, in response to that problem, the legislation we passed here 

in the Congress, the SAFETEA legislation last year, included language to encourage more transparency at FTA by requiring advance notice and an opportunity to comment on any FTA decision 

that imposes a binding obligation on grant recipients. 

If confirmed, what steps would you take to ensure that the substantive and procedural requirements of FTA’s grant program are 

not changed in midstream without adequate notice to grantees? 

Mr. SIMPSON. Senator, if confirmed, I would ensure that we 

would not change the rules or the programs without adequate notice. 

My goal, if confirmed as Administrator, would be to implement 

SAFETEA–LU as written. And I would work with this Committee 

to make sure of that. Communication is very important. There are 

stakeholders, and this Committee is a very big part of that. You 

are the other side, and we are all in this together. 

And my personal philosophy would be to work with this Committee and inform them of everything I am doing before it is done, 

because we do not operate in a vacuum. It is very important that 

we all operate together. 

Senator SARBANES. I am encouraged by that answer. I am even 

more encouraged by a statement you made in the course of it 

where you saw your responsibility as implementing—and these are 

your exact words—implementing SAFETEA–LU as written. It 

seems to me that that is your responsibility as the Administrator. 

27

I mean, your mandate is given to you by the legislation as passed 

by Congress, is that not true? 

Mr. SIMPSON. Yes, sir. 

Senator SARBANES. Well, now, we are having some trouble down 

there with FTA, because there are a number of provisions in that 

legislation that they are not implementing. The Chairman and I 

brought that up at the hearing with the Deputy Administrator 

here. I hope you have had a chance to look at that transcript. 

Mr. SIMPSON. Yes, Senator, I took your advice, and I got my 

hands on the transcript, and I did read it. 

Senator SARBANES. Okay. 

Mr. SIMPSON. Thank you. 

Senator SARBANES. And we thought the agency would move in 

the interim to address those matters, but they have not yet done 

it. 

Now, this is a serious matter. I mean, you know, the agency people are not free to pick and choose what they want to implement 

out of the statute. And there, it seems to me, we are headed toward 

a real crisis and a confrontation if they do not carry out the provisions that were contained in that legislation. Otherwise, why do we 

pass this legislation? It cannot be ignored willy nilly. 

And the Executive Branch cannot pick and choose out of it. So 

this is quite a problem, and it really needs to be addressed or we 

are going to have a kind of stormy relationship here, Mr. Chairman. I just want to underscore that. 

Chairman SHELBY. I agree with you, Senator Sarbanes. 

Mr. SIMPSON. I understand that, Senator. We have spoken about 

it. And I know this may not be the answer you want to hear, but 

if confirmed, I can assure you that I will work with you to see that 

things like that do not happen in the future. 

Senator SARBANES. We can take care of this now. I mean, we are 

not quite to the future yet, so we can take care of the present, you 

see; that is what I am trying to get done. 

Well, Mr. Chairman, that, I think—oh, just one final point. I do 

want to commend to you the FTA’s role in the Gulf Coast recovery. 

In New Orleans, the transit system was carrying 125,000 people 

every day. They had a fleet of 375 buses and 65 street cars. The 

Mississippi Coast Transportation Authority was carrying thousands, and these systems are in bad shape right now, and they 

need a lot of help. 

Now, you are working with FEMA, but FEMA’s authority, apparently, to pay for operating subsidies is scheduled to expire. There 

is hardly any local tax base there to pick up, so we are going to 

have a real crisis coming in very short order, and I just commend 

that to your attention. 

Mr. SIMPSON. Thank you, Senator. 

Senator SARBANES. Finally, Mr. Chairman, I would say both of 

these nominees have impressive records in the private sector, for 

which I commend them, not only in their businesses but also in 

terms of their community involvement, and you both now are going 

to positions in which there is a real opportunity to exercise some 

leadership. That is not the total picture, but within the big picture, 

you have a defined responsibility and a certain amount of authority 

to carry out that responsibility. 

28

And that can make a difference in the lives of our people, and 

I, for one wish you well, and I for one am prepared to move these 

nominees along, Mr. Chairman, and I thank both of you for——

Chairman SHELBY. As soon as we can. 

Mr. SIMPSON. Thank you, Senator; thank you, Mr. Chairman. 

Chairman SHELBY. Thank you, Senator Sarbanes. 

I, too, want to thank you, Mr. Simpson, Mr. Couch, for your willingness to serve. We know you both have had great business careers, and we think you can use a lot of that talent and education 

that you have for the greater good. 

Thank you very much. We will move your nominations as soon 

as we can. 

Mr. SIMPSON. Thank you. 

Mr. COUCH. Thank you. 

Chairman SHELBY. The hearing is adjourned. 

[Whereupon, at 11:32 a.m., the hearing was adjourned.] 

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

29

PREPARED STATEMENT OF SENATOR JACK REED 

Mr. Chairman, thank you for holding this hearing today. I want to welcome Mr. 

Simpson and Mr. Couch. 

Public transit is essential to millions of Americans who use it to commute to work 

and get to school, and it is a lifeline to many Americans who do not have access 

to a car. I look forward to hearing from Mr. Simpson about what he believes is the 

Federal Government and his role in working with Congress, public transportation 

organizations, and public transportation users. 

I briefly want to mention two issues that I believe need to be priorities for the 

Administration and Congress for transit—securing full funding for transit and increasing funding for transit security. 

In his State of the Union, President Bush said that America is addicted to oil. 

I could not agree more. In the United States, the transportation sector is the largest 

user of oil so transit is essential to ending our addiction and putting us on the road 

to energy independence. Unfortunately, the President’s budget cuts the Federal 

Transit Administration’s budget by $100 million below the level authorized in 

SAFETEA. With high gas prices facing Americans now and into the future, congestion on our roads, and more Americans riding transit, now is not the time to cut 

funding. 

I am also concerned with the Administration’s funding for transit security. Subways, light rail, buses, and ferries are designed for easy access and to move large 

numbers of people. We know that transit systems and their riders are by their very 

nature prime terrorist targets. 

To date, the Federal Government has allocated only $250 million for transit security. We need a greater investment in transit security to protect the millions of 

hard-working Americans who take public transportation every single day. I urge 

FTA to work with the Department of Homeland Security to place a higher priority 

on increasing the security of our public transportation systems and work to ensure 

sufficient funds for this purpose. 

With respect to Mr. Couch’s nomination to be President of Ginnie Mae, I would 

be remiss if I did not talk about the lack of affordable housing in this country. 

In my home of State of Rhode Island, a family must earn $18.42 per hour to afford an average two-bedroom apartment. For families to afford the average home, 

priced at $275,000 in Rhode Island, a family needs an income of $87,210 per year. 

In the last 6 years, home prices have more than doubled in Rhode Island, while 

incomes lagged, increasing a mere 6 percent. This situation is not unique to Rhode 

Island. 

For this reason, last year, I offered a proposal to create a National Affordable 

Housing Trust Fund. The Fund would be used to provide much-needed money for 

creative strategies to provide affordable housing. 

Indeed, at a time when we are debating a proposed cut of $622 million to the 

HUD budget, and in an era where many teachers, firefighters, and police officers 

are paying more than half of their income on housing, we must use all available 

tools and innovative measures to increase the stock of affordable housing in this 

country. 

Ginnie Mae plays an integral role in this process. Acting as a guarantee for loans 

for low- and moderate-income families, Ginnie Mae enables many households to find 

and finance affordable housing. Without its guarantee behind FHA- and VA-insured 

loans, we would have an even greater affordable housing predicament. 

But, I believe Ginnie Mae could do more. I am anxious to hear Mr. Couch’s proposals for increasing Ginnie Mae’s affordable housing assistance, as well as the 

ways in which Ginnie Mae can increase affordable rental housing. 

Mr. Simpson and Mr. Couch, I look forward to hearing your remarks this morning. Thank you, Mr. Chairman. 

—————

PREPARED STATEMENT OF JAMES S. SIMPSON

ADMINISTRATOR-DESIGNATE, FEDERAL TRANSIT ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

MARCH 14, 2006

Mr. Chairman and Members of the Committee, I believe one of the highest honors 

bestowed upon an American citizen is to sit before a U.S. Senate Committee for a 

confirmation hearing. I am both humbled and honored for having the opportunity 

to come before you today. 

30

I want to thank President Bush for having the confidence in me and nominating 

me to another post within the Department of Transportation. As you may be aware, 

I currently serve the President as a Member of the St. Lawrence Seaway Development Corporation Advisory Board. I would also like to thank Secretary Mineta for 

his support of me as Administrator of the Federal Transit Administration. 

If confirmed, I would work tirelessly with this Committee, the Congress, and the 

other stakeholders to ensure that all people across this great Nation are well-served 

by a safe, cost effective, and reliable public transportation system. 

Many of my life’s experiences have had a profound impact on me as an advocate 

for public transportation. As the oldest of four children growing up in New York 

City, I am keenly aware of how public transit impacts the lives of families and individuals. I have witnessed how public transit moves people who are economically disadvantaged from the home to the workplace. Transit made it possible for my mother 

to commute to Manhattan for employment, which enabled our family to move off 

welfare. Public transportation provided me with the opportunity to travel from home 

in Staten Island to school in Brooklyn and to work in Manhattan after school via 

five buses, one ferry, and a subway each day. Mobility through public transit contributed to the richness of my quality of life. Without a family automobile, I viewed 

affordable public transit as a necessity and as a vehicle that created a sense of freedom. Public transit opened a world of social and cultural diversity. It made summers possible at Coney Island, winters in Central Park, and it exposed me to Times 

Square, The Museum of Natural History, Yankee Stadium, The World’s Fair, Chinatown, and Little Italy. It brought families together from diverse neighborhoods and 

communities. All of these influences, fostered by public transportation, account for 

much of the reason I stand before this Committee today. 

As a business owner in the motor carrier industry, I have experienced first hand 

the economic and social costs associated with insufficient public transportation. At 

my Staten Island, New York facility—a mere 15 miles from mid-town Manhattan—

my vehicles and employees waste over 4 hours a day traveling to and from their 

job site during the morning and evening rush on Interstate 278, a commute that 

is only a half hour each way off peak. An expanded public transit system can help 

mitigate highway congestion, lower travel time and increase productivity and profitability for our Nation’s businesses and individuals alike. 

If confirmed as FTA Administrator, I will work diligently with all the stakeholders to foster economic development, enhance mobility and accessibility in rural 

and urban communities alike, reduce traffic congestion, and strengthen the safety 

and security of the Nation’s transit systems through cost effective spending on public transportation. 

My qualifications to serve as Administrator of the Federal Transit Administration 

derive from lifelong leadership roles in the transportation field, from my tenure at 

the Metropolitan Transportation Authority—the Nation’s largest transit system—

and from my experience as President of my own company, as well as from my personal interest in the aviation industry as a licensed jet and multiengine pilot. 

In 1995, I was appointed by Governor George E. Pataki as a Commissioner and 

Member of the Board of Directors of the New York State Metropolitan Transportation Authority, which exposed me to a decade of oversight of large-scale, extremely 

complex transit systems. For most of my two terms at the MTA, I simultaneously 

served as Chair of the Real Estate and Planning Committee, Chair of the Safety 

and Security Committee, Member of the New York City Transit Committee, Member 

of the Finance Committee, and Member of the Corporate Governance Committee. I 

have been exposed to a multitude of responsibilities and issues including oversight 

of MTA management and operations, budgets, financial plans, procurement contracts, capital programs, Federal and State grants, collective bargaining agreements, fare and toll changes, service changes, public hearings, disadvantaged business, and minority and women business enterprise plans and goals, corporate governance, conflict of interest issues, and safety and security issues. 

In the private sector, I have spent over 20 years running my own company. I believe my knowledge and experience in the realms of management, leadership, finance; planning and organization of my own company have prepared me for many 

of the challenges inherent in the administration of the Federal Transit Administration. 

I have made public service an integral part of my life, as I believe it should be 

an endeavor undertaken by all responsible business people. Serving our country and 

the President is an immense privilege and honor and, if confirmed, I would apply 

my knowledge and skills to the successful management and advancement of our Nation’s transit systems.

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RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY

FROM JAMES S. SIMPSON 

Q.1. SAFETEA made a number of changes to the Capital Investment Grants program, including the creation of the Small Starts 

program. However, FTA has said that regulations are not ready to 

implement the new Small Starts program which was both an Administration and a Congressional priority. What is being done to 

ensure that regulations are issued in a timely fashion? Additionally, SAFETEA requires that the process of navigating the Small 

Starts process be simplified and streamlined, while still protecting 

the integrity of the process by maintaining the requirement that 

projects be cost-effective. Has the construction of a flexible process 

contributed to the delay in implementing the new program?

A.1. If confirmed by the Senate, I can assure you that I will make 

sure the process of issuing regulations is performed on a timely 

basis with adequate input from Congress, Members of this Committee, and other stakeholders. Additionally, I am not aware if creating a flexible process contributed to the delay in implementing 

the new Small Starts program, but can assure this Committee that, 

if confirmed, I will work to get the Small Starts program implemented as quickly as possible.

Q.2. A recent GAO report recommended that DHS and DOT work 

to evaluate the feasibility of maintaining an information clearinghouse of security best practices (both domestic and foreign) for U.S. 

transit agencies to learn from. Do you agree with the GAO’s recommendations, and if so, how might FTA help facilitate the creation of a best practices transit security clearinghouse?

A.2. I believe DHS and DOT should work together to evaluate the 

feasibility of maintaining an information clearinghouse of security 

with best practices for U.S. transit agencies. I believe that by FTA 

assisting DHS, standards on transit security, some of which are 

recommended in the GAO report, could be established to benefit 

the entire public transportation system and its riders.

Q.3. If confirmed as the Federal Transit Administrator, what steps 

will you take to ensure that the safety and security of the transitriding public from terrorist attacks? Would you advocate for a more 

active role for the FTA in carrying out the Federal responsibility 

of protecting riders and transit assets and infrastructure? Do you 

believe that the most appropriate Federal agency to handle transit 

security is the Department of Homeland Security or the Federal 

Transit Administration?

A.3. As I stated at my confirmation hearing, I look forward to 

learning more about how FTA can contribute to the fight against 

terrorism. It is my understanding that the TSA under DHS has the 

lead responsibility in the area of transit security. However, if confirmed, I pledge to work with this Committee, DHS, and other 

stakeholders to make public transportation as safe as possible from 

terrorist attacks.

Q.4. SAFETEA changed the funding of FTA’s Job Access and Reverse Commute (JARC) from a discretionary grant program managed through FTA to a formula program providing funds to States 

and urbanized areas with a population of 200,000 or more. Given 

49

that the funds will be available to all States and urbanized areas 

with a population of 200,000 or more, how do you envision FTA will 

ensure that the States and urbanized areas provide grant funding 

at an appropriate level to help JARC projects be successful? And 

how do you anticipate FTA would evaluate the impact of this program? Will FTA make extra efforts to ensure that the projects 

funded with JARC monies go to those projects that have potential 

to be self-sustaining, as was Congressional intent when the program was first authored as part of TEA–21?

A.4. As a manager, I believe it is my goal to ensure all programs 

at FTA including JARC are successful. If confirmed, I would apply 

my past experiences to ensure successful implementation of FTA’s 

plans and programs as intended in TEA–21 and SAFETEA–LU.

Q.5. Administrator Dorn was strongly committed to improving the 

coordination of social services transportation provided by FTA 

grantees, and grantees of other Federal agencies like HHS and the 

Department of Labor. She created the ‘‘United We Ride’’ program 

to provide financial and programmatic support for this coordination. Subsequently, Presidential Executive Order 13330 mandated 

that agencies work with the Interagency Transportation Coordinating Council to advance human service coordination. 

SAFETEA also contained a number of provisions designed to improve the ability of transportation providers to coordinate their 

services. These provisions include (1) allowing State and local 

grantees of DOT’s Special Needs for Elderly Individuals and Individuals with Disabilities (5310), Job Access and Reverse Commute 

(5316), and New Freedom (5317) programs to use funds from other 

Federal programs for the required matching funds, thereby explicitly allowing and encouraging the coordination of Federal programs; and (2) requiring projects funded through the 5310 and 

5317 programs to be developed through a coordinated transportation planning process that includes human service providers and 

the public. 

How successful have FTA’s efforts been in improving coordination of social services transportation at the Federal, State, and 

local level? What challenges are service providers facing in using 

and complying with the SAFETEA provisions? If confirmed, what 

will you do to ensure that this important mandate is successfully 

carried out?

A.5. I am aware that FTA has been focused on improving coordination of social services transportation at the Federal, State, and 

local level. I am also aware that over 60 various governmental 

agencies are attempting to deliver various levels of specialized 

transit service to the riding public. With my background at the 

MTA and in managing my own interstate transportation company, 

I know firsthand the problems inherent in the transportation planning process for this important service. If confirmed, I will work 

with all the stakeholders to ensure this mandate is successfully 

carried out.

Q.6. The FTA is proposing in its fiscal year 2007 budget an increase in the Federal match for hybrid buses to 100 percent. Please 

explain this FTA policy, and the benefits to be derived from the introduction of hybrid buses for city transit systems.

50

A.6. I am not familiar with the development of FTA’s policy on the 

Federal match for hybrid buses. I am, however, an advocate of hybrid and alternative fuel buses. Hybrid buses have been very successful in New York State in reducing emissions, saving fuel, and 

reducing noise pollution. If confirmed, I would work to encourage 

the use of hybrid and alternative fuel buses for our Nation’s transit 

systems.

Q.7. I am concerned with the progress made to date on the Cooperative Bus Procurement Pilot Program. Congress passed this program to determine the benefits of encouraging cooperative procurement of major capital equipment under Sections 5307, 5309, and 

5311. As an added incentive to grantees to try this innovative approach, Congress authorized a 90 percent Federal share for this 

pilot program. The legislation called on the Department to conduct 

outreach to the transit industry for the purpose of educating grantees and others. To date, we have not seen FTA taking an active 

role in communicating with the industry regarding the potential for 

cost-savings associated with this approach. Can you report on the 

status of FTA’s actions thus far and plans for the future to comply 

with this dictate?

A.7. If confirmed as Administrator of FTA, I would work to implement the Cooperative Bus Pilot Program as directed in SAFETEA–

LU and would conduct outreach to the industry and report regularly to this Committee.

Q.8. Further, please report to the Committee on the FTA’s compliance with the provisions requiring the establishment of the pilot 

programs and the current status.

A.8. I understand the importance of pilot programs and, if confirmed, I pledge to work toward compliance with requirements and 

regularly report the status to this Committee.

Q.9. In SAFETEA–LU, Congress enacted significant labor protection reforms. What actions will you take to fully and fairly implement those reforms in regulations to ensure that transit can move 

toward being as efficient as possible?

A.9. I am aware that SAFETEA–LU includes significant labor protection reforms and if confirmed, I would make certain that they 

are carried out fairly and as intended by Congress.

Q.10. Since 1964, there have been statutory provisions that mandate and encourage the utilization of private transportation operators to maximum extent feasible. From the mid-1980’s through the 

mid-1990’s such definitions and guidance existed to educate public 

transit planners and operators how to comply with these requirements. What actions will you take to again give meaning and guidance to the private operator participation portion of the Federal 

Transit Act, and when?

A.10. I believe there is an important role for the private operator 

in public transportation and if confirmed would advocate a role for 

private participation in public transportation and work to implement the law. 

51

RESPONSE TO A WRITTEN QUESTION OF SENATOR STABENOW

FROM JAMES S. SIMPSON 

Q.1. The FTA’s background documents for the fiscal year 2007 

budget request notes that hybrid-electric drive bus technologies are 

recognized ‘‘as an appealing clean fuel option, with good performance, low emissions, and lower fuel costs without costly infrastructure investments often required by other clean fuel technologies.’’ 

Please outline the steps you plan to take to encourage more extensive use of this technology by transit agencies, particularly to address the difference in initial purchase cost between hybrid and 

traditional buses.

A.1. It is my understanding that FTA is taking several steps to encourage the use of hybrid-electric vehicles. Transit agencies are deploying hybrid electric buses into revenue service operations across 

the Nation in significant quantities. My experience is limited as a 

board member of the New York State Metropolitan Transportation 

Authority where we have purchased both CNG buses and hybrid 

electric buses. New York City Transit has been a leader in developing this technology. Although the addition cost of these buses is 

significant—I believe is about 35 percent more than a traditional 

diesel bus—the benefits, however, are enormous. There is a fuel 

savings of about 30 to 35 percent and there is less air pollution and 

noise pollution. I personally believe the environmental, social, and 

economic benefits of hybrid electric buses outweigh the costs and 

if confirmed, I would be an advocate of this technology. 

(53)

NOMINATIONS OF: 

CHRISTOPHER A. PADILLA, 

OF THE DISTRICT OF COLUMBIA, 

TO BE ASSISTANT SECRETARY, 

U.S. DEPARTMENT OF COMMERCE AND 

BIJAN RAFIEKIAN, OF CALIFORNIA, 

TO BE A MEMBER OF 

THE BOARD OF DIRECTORS, 

EXPORT-IMPORT OF THE UNITED STATES 

WEDNESDAY, SEPTEMBER 27, 2006

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

The Committee met at 10:12 a.m., in room SD–538, Dirksen Senate Office Building, Senator Richard C. Shelby (Chairman of the 

Committee) presiding. 

OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY 

Chairman SHELBY. The hearing will come to order. 

This morning, we are considering the nominations of Bijan 

Rafiekian to be a Member of the Board of Directors of the ExportImport Bank of the United States, and Christopher Padilla to be 

Assistant Secretary of Commerce for Export Administration. 

The Administration has placed a high priority on expanding exports to both facilitate economic growth and to help address our 

trade imbalance. The mission of the Export-Import Bank is to facilitate that goal. The nomination of Mr. Rafiekian to the Board of 

Directors of the Export-Import Bank will bring to that organization 

a unique background and perspective borne of his experience in the 

corporate world as a chief operating officer and chairman of the 

board. In addition, he has served as Director to the State of California’s Office of Foreign Investment, a position whose title may not 

fully illuminate the scale of that position’s importance given the 

magnitude of California’s export industry. 

Despite early expectations that the end of the Cold War would 

allow for a dramatic loosening of this Nation’s laws and regulations 

governing the export of technologies with both commercial and 

military applications, the opposite has proven true. Even in the age 

of globalization, controlling the export of certain technologies to 

specific countries and end-users remains as important as ever. 

54

The proliferation of technologies associated with the development 

of weapons of mass destruction and sophisticated conventional capabilities poses a threat to the security of the United States and 

to U.S. interests abroad. Therefore, administering this country’s export control laws and regulations remains a vitally important responsibility. For this reason, the current absence of key officials at 

the Department of Commerce with responsibility for export controls 

represents a serious weakness in our regulatory regime. The nomination of Christopher Padilla to take over as Assistant Secretary 

of Commerce for Export Administration is intended to address this 

weakness. 

Mr. Padilla brings the experience in areas of international trade 

and corporate export licensing. Most importantly, his most recent 

position as Senior Adviser to the Deputy Secretary of State has 

given him a perspective on the nexus of trade and national security, as did his time as a Member of the President’s Export Council 

Subcommittee on Export Administration. 

I look forward to hearing from both of the nominees, and we will 

try to move these nominations along because we are going to have 

a vote at 11:30. 

Senator Allard. 

STATEMENT OF SENATOR WAYNE ALLARD 

Senator ALLARD. Mr. Chairman, thank you for holding this hearing. As always, I appreciate the opportunity to hear from the nominees, and I would like to welcome both of them to the Banking 

Committee. 

First, I would like to comment on the nomination of Christopher 

Padilla to be the Assistant Secretary for Export Administration at 

the Department of Commerce. In this position, he will be responsible for an important component of national security and foreign 

policy through implementation of export controls. While there is a 

careful balance between commerce and security, national security 

must always be primary. Mr. Padilla’s experience in both the private sector as well as at the State Department will help guide him 

in finding the appropriate balance. 

Next, I would like to turn to the nomination of Bijan Rafiekian 

to be a Member of the Board of Directors for the Export-Import 

Bank. I appreciated the opportunity to meet with Mr. Rafiekian 

yesterday. He is both personable and has strong credentials for the 

position. 

Unfortunately, I am unable to support his nomination at this 

time. As I outlined in last week’s markup of the Export-Import 

Bank Reauthorization Act, I am extremely disappointed and frustrated by the lack of an Inspector General at the Export-Import 

Bank. Creating the Office of Inspector General at the Bank was a 

high priority for me during the last reauthorization of the Bank 5 

years ago. After repeated delays by the House, the IG funding has 

now been in place for nearly 1 year, yet since that time, the White 

House has not even announced an intention to nominate, much less 

formally submit a nominee to the Senate. Until such time that the 

Senate receives a nomination for the Export-Import Bank Inspector 

General, I intend to place a hold on Mr. Rafiekian’s nomination to 

the Board of Directors. 

55

I have allowed recent Board nominees to proceed so that the 

Bank will be able to maintain a quorum. However, I cannot allow 

additional Board members to move forward while another equally 

important position at the Bank remains vacant. 

As I indicated at the markup, I will also explore other options 

to further emphasize the importance of the Inspector General position. I intend to make further delays increasingly uncomfortable if 

a nominee for Inspector General is not quickly forthcoming. I am 

hopeful that an Inspector General nominee will be forthcoming, at 

which time I will be pleased to support Mr. Rafiekian’s nomination 

to the Board of Directors for the Export-Import Bank. 

In closing, I would encourage both nominees to become familiar 

with the Government Performance and Results Act, the GPRA, 

which has been named as PART assessment by the Administration. 

The Results Act is a key tool in giving them the focus and vision 

to carry out effective and efficient programs. In both of your instances, I think this is extremely important. Whenever you show 

up before the Committee, you can usually expect me to bring up 

the PART Act and make sure that you are following it. As you 

know, it is at least on the intergovernmental intranet, and I think 

it is a very important program to bring accountability so those of 

us in the Congress know what the various agencies are doing. If 

you have not had an opportunity to familiarize yourself with it, I 

hope that you will take time to do that. 

I would exhort the nominees to become familiar with the appropriate strategic plans, the annual performance plans, annual accountability reports, and financial statements. If properly utilized, 

they can help you achieve success in meeting your mission. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Thank you. 

Both of you, if you will stand and raise your right hand and be 

sworn. Do you swear or affirm that the testimony that you are 

about to give will be the truth, the whole truth, and nothing but 

the truth, so help you God? 

Mr. PADILLA. I do. 

Mr. RAFIEKIAN. I do. 

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

duly-constituted committee of the Senate? 

Mr. PADILLA. I do. 

Mr. RAFIEKIAN. I do. 

Chairman SHELBY. Thank you. 

Mr. Padilla, we will start with you, if you want to introduce any 

members of your family. Your written testimony, both of you, will 

be made part of the record in its entirety, and if you would sum 

up, and if you have any family members here you want to introduce for the record. 

Mr. PADILLA. Thank you, Mr. Chairman. I would like to introduce family and loved ones here today: Mario and Arlene Padilla 

and Christina Espinoza. And I would also like to mention, Senator 

Allard, my sister, Leslie, who lives in Colorado, happily so, I might 

add, for many years. She could not be here today. 

Chairman SHELBY. And I will give him a chance to introduce any 

members of your family that you would like to here. 

56

Mr. RAFIEKIAN. Yes, Senator, thank you very much. I have here 

today with me my wife, Gissou, my wife of 25 years; Christine, my 

daughter, who is attending American University; and Alexandra, 

my daughter, who is in eighth grade. 

Chairman SHELBY. Great. 

Mr. Padilla, we will start with you. 

STATEMENT OF CHRISTOPHER A. PADILLA,

OF THE DISTRICT OF COLUMBIA,

TO BE ASSISTANT SECRETARY

FOR EXPORT ADMINISTRATION,

U.S. DEPARTMENT OF COMMERCE 

Mr. PADILLA. Thank you, Mr. Chairman. Chairman Shelby, Senator Allard, Members of the Committee, I am deeply honored to appear before you today as the President’s nominee to be Assistant 

Secretary of Commerce for Export Administration, and I would like 

to thank President Bush and Secretary Gutierrez for the trust that 

they have placed in me. I would also like to thank Senators and 

members of your staff who have taken time to meet with me prior 

to today’s hearing. And if confirmed, I will work to build on the 

good cooperation that we have already started. Most importantly, 

I would like to thank my family and loved ones here for their support and encouragement. 

Mr. Chairman, my former boss, Ambassador Bob Zoellick, often 

said that America’s future security and prosperity will depend on 

how we deal with four key questions: The threat of Islamic radical 

terrorism, the proliferation of weapons of mass destruction, the 

growing power and influence of China, and the economic and social 

challenges of globalization. 

The Commerce Department’s Bureau of Industry and Security 

deals with all four of these issues, but the primary mission of BIS 

is to protect our national security by keeping sensitive technologies 

away from those who should not have them. And this would be my 

primary mission, if confirmed. 

The focus of our export control system continues to evolve. It was 

sufficient 20 years ago for our controls to focus on countries. But 

the 21st century demands that we also be able to focus on individual customers. During the Cold War, sales were broadly restricted to the Soviet Union and the Warsaw Pact, regardless of 

who the customer was. But today, as President Bush has said, and 

as you highlighted in your opening statement, Mr. Chairman, ‘‘the 

gravest danger our Nation faces lies at the crossroads of radicalism 

and technology.’’ In response to that threat, we must target our export controls increasingly against individuals and entities such as 

terrorists and proliferators who operate across borders or even 

within friendly countries. 

I think, we also, need to be able to differentiate between customers and end-users in large and diverse economies like China, 

where we are actively seeking to promote peaceful development 

and to encourage legitimate civilian trade, even as we hedge 

against the uncertainties created by that country’s rapid military 

modernization. 

So to help focus export controls on today’s new needs, if confirmed, I would work to provide information to exporters regarding 

57

who both the trusted and the suspect customers are, to identify 

countries or areas of trans-shipment concern, and to try to increase 

cooperation between BIS and the intelligence community, which 

provides us with valuable information on individual customers. 

To be most effective, export controls should be as multilateral as 

we can make them. If confirmed, I would work to support and 

strengthen the four major multilateral export regimes that are at 

the heart of our counterproliferation strategy. I would also seek to 

cooperate with other Nations, such as China and Russia, to try to 

strengthen their national export control systems to prevent onward 

proliferation. 

Effective multilateral controls protect our national security while 

also leveling the competitive playing field. But, importantly, just 

because someone else is selling something does not automatically 

mean that we should, too. In some cases, the United States may 

impose controls on its own, either for reasons of foreign policy or 

as a first step in building international coalitions and consensus. 

Clearly, technology is key to our economic competitiveness. I 

learned this when I worked in several high-technology companies. 

If confirmed, I would work to ensure that BIS stays up-to-date with 

new technology, monitors our defense industrial base, and is alert 

to emerging threats. I would also work to ensure that our licensing 

system and treaty compliance programs are transparent and efficient and that they operate with good performance metrics, as Senator Allard has suggested. 

To these important responsibilities I bring nearly 20 years of experience in international trade. Most recently at the State Department working for Deputy Secretary Zoellick, I worked on export 

control issues related to China, Sudan, and North Korea. From my 

days in the private sector, I know from personal experience what 

it is like to apply for an export license and run an internal control 

program. And during my years at USTR, I worked closely with 

Congress and appreciate your central role in regulating foreign 

commerce and trade. 

Mr. Chairman, in recent weeks I have had the opportunity to 

meet many of the people at BIS. I appreciate their patriotism, their 

dedication, and their professionalism, and I hope to have the opportunity to work with them in the near future. I thank you for holding this hearing today during what I know is a very busy time for 

the Congress. I appreciate your prompt consideration of my nomination, and I would be pleased to answer your questions. 

Yes, sir, Mr. Rafiekian. 

STATEMENT OF BIJAN RAFIEKIAN, OF CALIFORNIA,

MEMBER, BOARD OF DIRECTORS,

EXPORT-IMPORT BANK OF THE UNITED STATES 

Mr. RAFIEKIAN. Thank you, Senator. Mr. Chairman, Senator 

Shelby, Senator Allard, it is my distinct honor and pleasure to testify before you this morning regarding my nomination to serve on 

the Board of the Export-Import Bank of the United States. 

I am deeply grateful to President Bush for nominating me for 

this position. It has been a wonderful and amazing journey from 

that sunny afternoon in October 1979 when I landed in Los Angeles 27 years ago, Senators, to serving some of the largest financial 

58

institutions, founding small companies, creating new jobs, and having the great honor of serving the people of the State of California. 

I have also had the pleasure of teaching great young minds at the 

California State University, Fullerton, but most importantly, I 

have served as a parent to my two daughters with my wife, Gissou. 

So my story, Senators, is the story of an immigrant who comes 

here with hope, works hard, and catches the amazing great American spirit. My story is the story of America. It is the greatness of 

this country. It keeps me humble and grateful and gives me the 

motivation to do more for my country, the United States of America. 

I came to the United States from England in 1979 after graduating from Brighton University, having left Iran, where I attended Tehran Industrial College. Shortly after my arrival in the 

United States, I started working for Great American Federal Savings, one of San Diego’s oldest financial institutions, where I held 

various positions and was promoted to help run the Consumer 

Lending Division. I later held positions with American Express/

Shearson Mortgage Corporation, and co-founded Lenders Technology, a small full-service banking, consulting, and risk management firm. 

In March 1994, I was appointed by the Governor of California to 

serve as an Economic Development Commissioner, and a Member 

of the Governor’s Economic Development Advisory Council. I was 

reappointed to that position and later appointed to serve as the Director of Foreign Investment for the State of California, where my 

office was responsible for attraction, expansion, and retention of 

the State of California’s foreign investment portfolio through offices 

around the world. Later on, the Governor appointed me to serve as 

a Member of the Board of Directors of California Housing Finance 

Agency. 

Mr. Chairman, Senator Allard, if confirmed, I will work hard to 

use my financial and management experience in aggressively serving the best interest of the Bank’s customers with prudence, supporting and creating U.S. jobs, while exercising to the fullest extent 

a director’s fiduciary duties to the Banks owners—the taxpayers of 

the United States. 

I thank you Senators, Mr. Chairman, for your time, for giving me 

an opportunity to be testifying at this hearing. I look forward to 

answering questions. 

Chairman SHELBY. Both of you are well-qualified for your jobs by 

academic training and also the business community and your Government service. I just want to reiterate something that Senator 

Allard said, and I think he made it clear that he is not against 

your nomination per se. He is against a policy of the failure for 

them to bring an Inspector General forward. Is that correct? 

Senator ALLARD. That is correct, Mr. Chairman. 

Chairman SHELBY. Because this is important, and we have to 

deal with the Administration. Although we support the Administration, we do not always agree. And I think he made that clear. 

Mr. Padilla, before his departure, former Under Secretary 

McCormick oversaw the drafting of a new control regime targeting 

military end-users in China. The intent is to eliminate licensing requirements for certified civilian end users while strengthening conVerDate 0ct 09 2002 17:16 Jul 16, 2007 Jkt 000000 PO 00000 Frm 00062 Fmt 6601 Sfmt 6601 S:\DOCS\36470.TXT SBANK4 PsN: KEVIN
59

trols when the exporter knows the items in question are destined 

for the military. 

The Defense Department’s latest report on the Chinese military 

emphasizes the PLA’s increasing integration of the civil sector with 

the military procurement system. According to the report, ‘‘Under 

this scheme, the People’s Liberation Army in China will acquire 

common and dual-use items on the market.’’

The report goes on to note that despite its divestiture of many 

of its business enterprises, the People’s Liberation Army in China 

still directly controls as many as 10,000 civilian firms. This is not 

new to you or to us. 

Given this, do you anticipate the Department being able to implement a system such as the one proposed, one intended to specifically target specific end users? 

Mr. PADILLA. Yes, Mr. Chairman. I strongly support that policy 

that Under Secretary McCormick developed and worked interagency because I think it reflects our broader foreign policy toward 

China, which is to try to encourage legitimate civilian trade while 

hedging against the concerns about rapid military modernization. 

And as you said, China’s military modernization has been growing 

at double-digit growth in real terms since 1996. The PLA is active 

in many sectors of the economy. 

I remember when I was in the private sector at AT&T, it was 

sometimes difficult for us to know, even in a big company whether 

your customer had links to the military because of the internecine 

nature of the economy there. So, I think we can help exporters in 

a number of key ways. 

First, I think we need to tell exporters more as Government who 

the trusted end-users are and who the suspect ones are. And this 

new rule will create the concept of a validated end-user where, if 

we have a good record of a customer selling only in the civilian sector and they are willing to open themselves up to inspection by 

U.S. Government officials on a periodic basis, then we are willing 

to allow them to have levels of technology under more expedited 

procedures. 

But we also need, I think, a robust program of end-use checks 

in China. There is an end-use visit understanding with the Chinese 

that was signed in 2004. If confirmed, I would work to try to improve it and expand that program. And then I think we also need, 

Mr. Chairman, to cooperate more with the intelligence community, 

and that is why I mentioned this in my opening statement. We 

need to be able to know, as Government, and to tell exporters as 

much as we can, without revealing sensitive information, who the 

trusted and suspect customers are. 

And then, finally, I hope we can give Chinese companies marketbased incentives for good behavior. For example, if a Chinese company has a legitimate civilian record, they are willing to have U.S. 

Government officials visit them, then we give them a little bit better treatment. I am hoping that will be an incentive for more to 

sign up for such a program. 

Chairman SHELBY. Mr. Padilla, controls on so-called ‘‘deemed exports’’ represent one of the more difficult areas to regulate and to 

enforce. You know all this from your background. Both the academic and scientific communities are, by nature, generally loath to 

60

restrict the flow of information within those communities. You 

mentioned intelligence just a minute ago. 

Mr. PADILLA. Yes. 

Chairman SHELBY. That is a problem. Both the Government Accountability Office and the Commerce Department’s Office of Inspector General have been highly critical of the Commerce Department’s regulation of deemed exports. 

For instance, the GAO, the Government Accountability Office, 

concluded that the Department lacks an effective monitoring program to determine whether firms comply with licensing conditions 

designed to protect sensitive information from disclosure to nationals from problematic countries. 

In addition, both the GAO and the Inspector General have noted 

the recurring problem of licensing foreign nationals based upon 

current residency rather than country of origin. The Department of 

Commerce recently proposed reforms to the deemed export control 

process, as you know. 

Could you comment on the status of these reforms? Can you assure this Committee that, if confirmed, you will give the admittedly 

very complicated, and sometimes very sensitive, issue of deemed 

export controls the attention it deserves? 

Mr. PADILLA. Mr. Chairman, if confirmed, I anticipate this will 

be one of my highest priorities, for exactly the reasons you mentioned. There is a clear threat to technology, the loss of sensitive 

technology from foreign nationals in U.S. companies or U.S. academic institutions. The National Counterintelligence Executive has 

identified more than 100 countries that have sought to acquire sensitive or controlled U.S. technologies in this fashion. 

At the same time, Mr. Chairman, as you said, our openness to 

foreign researchers is a critical element of our R&D competitiveness, and universities typically want to have as open an environment as possible. 

The Secretary of Commerce has recently appointed a Deemed Exports Advisory Committee, co-chaired by former CIA Director Bob 

Gates. It has a number of former intelligence and military officials 

on it, as well as some business and academic people. I would, if 

confirmed, want to work closely with that Committee to look at this 

issue from an overall perspective and understand how we can better come to terms with it. 

For example, we certainly know about the concern of Chinese researchers coming to the United States, but as we have seen, Mr. 

Chairman, in recent months sometimes people with passports from 

friendly countries can pose a threat. And we have seen concerns 

about terrorism in the United Kingdom and Canada. 

Chairman SHELBY. Absolutely. 

Mr. PADILLA. How do we deal with that aspect of the threat? 

And so these are some of the questions that I would want to pose 

to this Committee and work with them and, of course, with the 

Congress as we seek to fashion a policy that addresses the clear 

threat that is there while maintaining our R&D competitiveness. 

Chairman SHELBY. Mr. Padilla, as our experiences with Iran 

have illuminated, the United States sometimes takes a more 

proactive position with regard to economic sanctions than do other 

countries, including some of our allies. A major argument of those 

61

who oppose unilateral controls is that American companies lose 

business opportunities to other countries that market similar items 

but exercise fewer controls. 

A countervailing argument suggests that sometimes the United 

States has both a moral and practical obligation to block exports 

of sensitive items to certain destinations, irrespective of whether 

other countries follow suit. 

Clearly, the United States needs to continue to work closely with 

other countries under existing multilateral export control regimes 

to ensure that problematic entities are deprived of certain capabilities. 

Can you assure the Committee, however, that you will vigorously 

pursue controls when U.S. national security interests dictate that 

controls be in place irrespective of foreign cooperation? 

Mr. PADILLA. Mr. Chairman, in my most recent time in the State 

Department, working for Deputy Secretary Zoellick, I had the opportunity to sit across the table in negotiations for the Darfur 

Peace Agreement with leaders of the Government of Sudan. And 

our export sanctions on Sudan are in some respects multilateral, 

but there are unilateral aspects to them. 

And I saw with my own eyes, Mr. Chairman, how important 

those sanctions are as a tool of foreign policy. And as I said in my 

opening statement, there are clearly costs to imposing controls unilaterally. 

What I would hope to do, if confirmed, is to have a good assessment of the costs and benefits so that we understand what the 

costs are before we undertake a policy decision. But simply the fact 

that there is a cost associated with it does not mean you do not 

do it. It may mean you decide to accept that cost for reasons of foreign policy, in the case of Sudan, or as a first step in leading international coalitions, as may become necessary with regard to other 

countries. 

Chairman SHELBY. This will be my last question to you. Chemical and biological exports. 

Mr. PADILLA. Yes, sir. 

Chairman SHELBY. Application of dual-use export controls to prevent the proliferation of weapons of mass destruction and their 

means of delivery has been one of the Bureau of Industry and Security’s most important missions. Even before September 11, keeping such weapons out of the hands of terrorists was a widely recognized national security imperative. 

In its post-September 11 review, the Bureau identified controls 

on chemical and biological agents as a priority. Yet, according to 

a 2006 study by the General Accountability Office, GAO, the agency’s watchlist did not include a large number of individuals and 

companies identified with past export control violations related to 

terrorist organizations and potential biological weapons. 

One case that was detected and that resulted in a fine involved 

Marine Biological Laboratories, a Maine company charged with the 

unlicensed export of vaccines to Syria, a terrorist-supporting state. 

There is, however, every reason to believe that the control regime 

remains deficient in this crucial area. 

If confirmed, can we be confident that this apparent shortcoming 

will be fully addressed, and quickly, by you? 

62

Mr. PADILLA. If confirmed, yes, Mr. Chairman. I did read that report——

Chairman SHELBY. You will be confirmed, we want to assure you. 

Mr. PADILLA. Thank you, Senator. I did read that GAO report 

and found it of great interest. I think the report found generally 

that the licensing system seems to be working well, but the GAO 

did identify this issue with regard to end-users, and that is why I 

highlighted this issue in my opening statement. 

Mr. Chairman, when I was in the private sector, I worked at the 

time for AT&T, one of the largest corporations in the world. We 

wanted the Government to tell us more about who the trusted and 

suspect end-users were, because even a company with our vast resources, we were sometimes confronted with customers where we 

were not exactly sure. And we do not have a separate intelligence 

capability. You are relying usually on the local salesperson to give 

you information about who the customer is. And that is why I 

think it is important—certainly, companies have a responsibility to 

know their customers. That is not going to change. But I do believe 

Government has a responsibility, if we are going to regulate, to tell 

people more about who the good guys and the bad guys are. That 

is why I support this concept of a validated end-user. If we can 

identify trusted customers, great. 

I also think we need to do more in telling people who the bad 

end-users are on the entity list, or who the entities are that are 

unverified, where there might be a red flag and perhaps some suspicious——

Chairman SHELBY. So you will be in a position to do that. 

Mr. PADILLA. Yes, Mr. Chairman, if confirmed, I will. And that 

is why I highlighted in my statement that that would be one of my 

top priorities. 

Chairman SHELBY. Thank you. 

Mr. Rafiekian, if confirmed, you will assume—and I believe you 

will be confirmed. I am hoping we work out this snafu with Senator 

Allard and the Administration. But if confirmed, you will assume 

significant responsibilities. Hundreds of American exporters depend 

on the Export-Import Bank to provide financing that the private 

sector is unable to offer. As a result, the Export-Import Bank plays 

an important part in preserving the competitiveness of U.S. exports 

in world markets. How you fulfill your duties as a Board member 

of Ex-Im will, therefore, have a significant impact on scores of U.S. 

businesses, hence, our economy, as you well know. 

Would you just discuss briefly how your unique background—and 

it is unique—has prepared you to serve as a Member of the Board 

of Directors of the Export-Import Bank? 

Mr. RAFIEKIAN. Thank you, Senator. 

Chairman SHELBY. Great experience and education. 

Mr. RAFIEKIAN. I will bring my experience; if confirmed, I will 

use all that experience that I have gained in the private sector, 

first as a small business owner and operator, understanding the 

challenges of the small business. I will do my best, if confirmed, to 

aggressively serve the needs of small business in creating new jobs. 

I will also bring my experience, if confirmed, to understand the 

importance of exports and understanding the relevance of new jobs 

as a result of U.S. companies exporting. While doing that, if conVerDate 0ct 09 2002 17:16 Jul 16, 2007 Jkt 000000 PO 00000 Frm 00066 Fmt 6601 Sfmt 6601 S:\DOCS\36470.TXT SBANK4 PsN: KEVIN
63

firmed, Senator, Mr. Chairman, I will also keep in mind the significance of the economic impact that the role of the Ex-Im Bank has 

in serving that purpose. And all of this experience will be dedicated, if confirmed, to those crucial goals. I am committed to that, 

Senator. 

Chairman SHELBY. The Export-Import Bank is required by law 

to allocate 20 percent of its aggregate loan guarantee and insurance authority toward the financing of export by small businesses. 

Since this mandate was enacted, however, Ex-Im has never met 

that threshold of 20 percent. 

Since you have a long history working in small business, I would 

like to know what actions you think that the Export-Import Bank 

should undertake to ensure that it meets the 20-percent threshold 

of working with small business here? In other words, will you be 

an advocate for the small business sector, which is our economic 

engine? 

Mr. RAFIEKIAN. Mr. Chairman, I had the great honor of serving 

as a Commissioner of Economic Development in the State of California in some not-so-easy times for my home State, California, and 

I learned more about the challenges with small business during 

that period. I will bring that experience, if confirmed, to serve the 

needs of small business aggressively by specifically making sure 

that there is more connection between the Bank and the small 

business community; that the small business community is aware 

of all of the facilities that the Bank has to offer; staying closer to 

the business community, who at times, I observe, do not have the 

resources to even obtain the necessary information that helps them 

fulfill their business goals for growth and job creation. 

If confirmed, Mr. Chairman, I will aggressively pursue that goal. 

Chairman SHELBY. Thank you. 

Senator Allard. 

Senator ALLARD. Thank you, Mr. Chairman. 

I just want to relate to Mr. Rafiekian that I sense a sense of 

pride in your accomplishments here in the United States as a new 

citizen. And I feel as strongly about it and I share your sense of 

pride. I am very delighted to see you be able to move on with more 

responsibility in this country. I think it speaks well for the system 

that we have here in this country where individuals can come in, 

no matter what their background or nationality, and become a citizen and become successful in our country. 

So, I do not relish the idea that I have to put a hold on your 

nomination at this particular point—temporary in nature, I hope. 

We are now in communication with the White House and hopefully 

we can get this resolved and get moving forward with an Inspector 

General. As you can tell from my comments, I think the Inspector 

General is very important because they are the eyes and ears of 

the Members of the Congress, and they help us know how well an 

agency like the Export-Import Bank, is performing. It helps us detect waste, fraud, and abuse. 

But there is another function. They also help foster efficiency in 

the Government, and maximum efficiency can only be achieved 

through a cooperative relationship, I think, between the agency 

and the Inspector General—in this case, the Export-Import Bank. 

64

What relationship would you foresee with the Inspector General 

for the Export-Import Bank? 

Mr. RAFIEKIAN. Senator Allard, I would like to thank you for giving me the distinct honor and the opportunity to visit with you yesterday. I know how busy you are, sir, and how important your 

schedule is. I really appreciate that opportunity. 

Regarding the Inspector General position, as someone who has 

served in a regulated industry, the banking industry, I recognize 

the significance and the importance of that position and the service 

it provides not just to the Bank and its customers, not just to the 

shareholders and owners, but also in fostering a productive relationship between the oversight mechanism within our Government 

and the operators at the Bank, all in the service of the customers. 

If confirmed, Senator, I will pursue, advocate, and do all that I 

can, together with colleagues, if confirmed, on the Board of the 

Bank, working with the Chairman, all those involved to advocate 

for this position, and I look forward to the opportunity to work very 

closely with the Inspector General, on transparency, providing information, and helping the Inspector General’s Office be informed 

so that the relationship between the operation of the Bank and the 

oversight, including Congress, is maintained at the highest, most 

productive, most transparent level, sir. 

As someone who has lived in the banking circles, sir, I follow a 

small but very clear motto for myself that principle always comes 

before interest. Without principle, there is no interest. I will follow 

that philosophy in working with the Inspector General, and I look 

forward to it. 

Senator ALLARD. Thank you very much, and I appreciate your 

support for the Inspector General and his responsibilities when we 

get him in that place. You know, it is good to have somebody with 

your background on the board, and I am very pleased that you will 

be very supportive with the idea of an Inspector General at the Export-Import Bank. 

You are a small business person. And I am a small business person. I am frustrated to some degree and I think you share that 

frustration that we do not do more for small business through the 

Export-Import Bank. I appreciate your response to the Chairman’s 

question because I had the very same question, basically, that I 

was going to pose to you. I think you gave a very appropriate response to that. 

I just wish you well. I think we will get our differences worked 

out between the White House and the Export-Import Bank. And 

then you will have an opportunity, I believe, to serve on that 

Board. I think you are the kind of individual that we need to serve 

on that Board, so I want to give you my support in the strongest 

terms once we get this issue resolved between the White House 

and ourselves and the Export-Import Bank. 

Mr. Padilla, I served on the Intelligence Committee with my good 

friend and Chairman of this Committee, and I also share his concerns that we have a proper balance between the security issues 

and the free enterprise issues. I am a free trader, and so I am conflicted, I think like a lot of other people are. But I do believe that 

security has to be a prime, number one concern for this country. 

65

And so I was heartened by your comments, and I just wish you 

well in that regard. 

In 2001, Congress attempted to reauthorize the Export Administration Act but was unsuccessful in its attempt. In light of other 

related acts now pending, including a CFIUS reform bill and the 

Export-Import Bank Reauthorization Act, how important is it to revisit authorization of the Export Administration Act? And if so, 

what recommendations do you have to improve the Export Administration Act? 

Mr. PADILLA. Senator, I think it is important that we have a 

clear legislative basis for our export control system. The statute expired in 1989 and has been renewed episodically since then. That 

statute is a Cold War statute. It reflects the threats that existed 

at the time that it was written, which were mainly focused on the 

countries of the Soviet Union and the Warsaw Pact. Now, the statute does not reflect the more recent threat of proliferation and terrorism. 

I think also it is important for us as a country when we ask 

other countries, particularly emerging economies, to establish 

strong export control laws to prevent proliferation, that we have a 

strong basis ourselves. And, of course, also, Senator, it is important 

to be able to have a law in place so that my hopeful future colleagues in export enforcement can apply meaningful penalties for 

those who violate the law. 

I know, Senator, the Administration has a longstanding view 

that the EAA needs to be modernized. I know that the Administration supported the bill in 2001. If confirmed, Senator, I would work 

within the Administration and with you, the Chairman, and members of your staff on modernization of the EAA. 

Senator ALLARD. Thank you. 

Mr. Chairman, that concludes any questions that I might have. 

Chairman SHELBY. I just want to say on behalf of the Committee 

that we appreciate your willingness to serve. Mr. Padilla, your position is a very, very important position in Commerce, as you know. 

Mr. PADILLA. Yes, sir. 

Chairman SHELBY. You have got a brilliant academic record and 

great experience in the private sector. 

Mr. PADILLA. Thank you. 

Chairman SHELBY. Mr. Rafiekian, you bring a lot to the table, 

too. We are proud of your journey in life and where you are today, 

and we believe you will serve well on the Export-Import Bank 

Board, and we will try to move your nomination as soon as possible. Thank you a lot. 

Mr. RAFIEKIAN. Thank you very much, Mr. Chairman. 

Chairman SHELBY. The hearing is adjourned. 

[Whereupon, at 10:55 a.m., the hearing was adjourned.] 

[Biographical sketches of nominees supplied for the record follow:] 

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