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S. HRG. 108–872

NOMINATIONS OF: STUART A. LEVEY,

JUAN C. ZARATE, AND CARIN M. BARTH

HEARING

BEFORE THE

COMMITTEE ON

BANKING, HOUSING, AND URBAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

ON

NOMINATIONS OF:

STUART A. LEVEY, OF MARYLAND, TO BE UNDER SECRETARY

FOR ENFORCEMENT, U.S. DEPARTMENT OF THE TREASURY

JUAN C. ZARATE, OF CALIFORNIA, TO BE ASSISTANT SECRETARY

FOR TERRORIST FINANCING, U.S. DEPARTMENT OF THE TREASURY

CARIN M. BARTH, OF TEXAS, TO BE CHIEF FINANCIAL OFFICER

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

JULY 15, 2004

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

LINCOLN D. CHAFEE, Rhode Island

PAUL S. SARBANES, Maryland

CHRISTOPHER J. DODD, Connecticut

TIM JOHNSON, South Dakota

JACK REED, Rhode Island

CHARLES E. SCHUMER, New York

EVAN BAYH, Indiana

ZELL MILLER, Georgia

THOMAS R. CARPER, Delaware

DEBBIE STABENOW, Michigan

JON S. CORZINE, New Jersey

KATHLEEN L. CASEY, Staff Director and Counsel

STEVEN B. HARRIS, Democratic Staff Director and Chief Counsel

SKIP FISCHER, Senior Professional Staff

MARK A. CALABRIA, Senior Professional Staff

STEPHEN R. KROLL, Democratic Special Counsel

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator

GEORGE E. WHITTLE, Editor

(II)

CONTENTS

THURSDAY, JULY 15, 2004

Page

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

Opening statements, comments, or prepared statements of:

Senator Allard ................................................................................................... 3

Prepared statement ................................................................................... 25

WITNESSES

John Cornyn, a U.S. Senator from the State of Texas ......................................... 2

Orrin G. Hatch, a U.S. Senator from the State of Utah ....................................... 25

NOMINEES

Stuart A. Levey, of Maryland, to be Under Secretary for Enforcement, U.S.

Department of the Treasury ................................................................................ 4

Prepared statement .......................................................................................... 26

Biographical sketch of nominee ....................................................................... 28

Juan C. Zarate, of California, to be Assistant Secretary for Terrorist Financing, U.S. Department of the Treasury ................................................................ 5

Prepared statement .......................................................................................... 35

Biographical sketch of nominee ....................................................................... 37

Carin M. Barth, of Texas, to be Chief Financial Officer, U.S. Department

of Housing and Urban Development .................................................................. 19

Biograhpical sketch of nominee ....................................................................... 44

(III)

(1)

NOMINATIONS OF:

STUART A. LEVEY, OF MARYLAND,

TO BE UNDER SECRETARY FOR ENFORCEMENT

JUAN C. ZARATE, OF CALIFORNIA,

TO BE ASSISTANT SECRETARY

FOR TERRORIST FINANCING

U.S. DEPARTMENT OF THE TREASURY

CARIN M. BARTH, OF TEXAS,

TO BE CHIEF EXECUTIVE OFFICER

U.S. DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT

THURSDAY, JULY 15, 2004

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS,

Washington, DC.

The Committee met at 2:32 p.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 afternoon we will hear testimony on the nomination of Mr.

Stuart Levey of Maryland to be Under Secretary of the Treasury

for Enforcement; Mr. Juan Zarate, of California, to be Assistant

Secretary of the Treasury for Terrorist Financing and Financial

Crimes; and on the second panel, Ms. Carin M. Barth, of Texas, to

be Chief Financial Officer of the Department of Housing and Urban

Development.

I am glad we are holding these hearings. I know you, too, are.

The war on terrorism cannot be won without a firm grip, I believe, on the financial means by which terrorist organizations operate. Successful prosecution of that mission requires a governmental

structure uniquely organized and resourced to meet the increased

demands placed upon offices and individuals who, prior to September 11, 2001, focused overwhelmingly on money laundering associated with drug trafficking and other financial crimes.

The emergence of counterterrorism as a principal function of the

Department of the Treasury increased its role in national security

and law enforcement. It remains imperative, I believe, that these

missions be executed proficiently.

2

The positions for which these two witnesses on our first panel

have been nominated are the principal offices for carrying out the

mission of combating terrorist financing as well as domestic and

global money laundering schemes and other financial crimes.

Among other responsibilities, they are the direct chain of command

within the Department of the Treasury for ensuring oversight of

the Nation’s banks for compliance with the Bank Secrecy Act,

about which this Committee last held a hearing on June 3. That

hearing was specific to the case of Riggs Bank, its repeated failures

to comply with antimoney laundering laws, and the failure of the

Federal regulators to adequately enforce those laws.

These nominees are particularly well-qualified for the positions

for which they have been nominated. Stuart Levey is currently

Principal Associate Deputy Attorney General at the Department of

Justice, a very important post, in which capacity he serves as the

Attorney General’s point man on coordinating the Department’s

counterterrorism activities, including investigations, intelligence

collection, and prosecution. His responsibilities include acting as

the Justice Department’s representative to the National Security

Council Counterterrorism Security Group.

Juan Zarate is currently the Deputy Assistant Secretary of the

Treasury for the Executive Office of Terrorist Financing and Financial Crimes. He is well-known to this Committee for his role as the

Treasury Department’s lead office for terrorist financing. Prior to

joining the Treasury Department, Mr. Zarate served in the Criminal Division, Terrorist and Violent Crimes Section of the Department of Justice.

Gentlemen, I welcome all of you here, and our second panel, as

I mentioned, will be comprised of Ms. Carin Barth, the nominee to

be the Chief Financial Officer at the Department of Housing and

Urban Development.

But what I would like to do is recognize my colleague, Senator

Cornyn, for any remarks he wants to make.

STATEMENT OF JOHN CORNYN

A U.S. SENATOR FROM THE STATE OF TEXAS

Senator CORNYN. Thank you, Chairman Shelby, for letting me introduce my friend, Carin Barth, who I know is on the second panel,

but I appreciate the opportunity to come before you today to support her nomination to serve as Chief Financial Officer of the Department of Housing and Urban Development.

I have, as I said, known Carin and Todd, her husband, and her

family for a number of years, and I believe the President has chosen very wisely in asking her to take on this important assignment

at HUD.

Mr. Chairman, I might say, I just marvel at the number and

quality of our citizens who, at great financial and personal sacrifice, agree to take on these important positions, like you are going

to hear about from all these nominees. But Carin exemplifies what

I am talking about. She has a distinguished professional record and

is an extraordinarily active community volunteer. She is President

of LB Capital, Inc., a private equity investment firm that she cofounded in 1987. In addition, she serves on the board of directors

of Southwest Bank of Texas. She holds a bachelor’s degree from the

3

University of Alabama and an MBA from the Owen Graduate

School of Management at Vanderbilt.

She is Chairman of the board of Unipure Corporation and a

member of the Investment Committee for the City of Houston. She

is on the board of directors of the Ronald McDonald House of Houston and is a member of the Texas Tech University Board of Regents, where she chairs the committee responsible for investing the

university’s endowment.

Ms. Barth also serves on the Board of Trustees of the Oncology

Services Endowment Foundation and the Board of Governors of the

Houston Forum Club.

I asked her if she was going to have to sever all of these relationships to accept this nomination, and she said she would. And I

know that the loss to these various organizations is going to be the

Nation’s gain with her serving in this important role.

She will be a valuable member of the team at HUD, and like

many Federal agencies, HUD continues to improve its program and

management performance under the President’s leadership, and

this is critical. Owning a home is the cornerstone of the American

Dream, with the Department of Housing and Urban Development

often playing a critical role in expanding homeownership opportunities for low-income families and many first-time homebuyers each

year.

Thankfully, as a result of HUD’s work and low interest rates,

homeownership in America is at all-time high of 68.4 percent.

So, I would like to thank you for your many courtesies, Mr.

Chairman, and Senator Allard and the rest of the Members, for allowing me to testify in support of this nomination. I urge the Committee to approve this nominee and very much appreciate the courtesies you have extended to me and certainly to Ms. Barth and her

family.

Chairman SHELBY. Thank you, Senator.

I would note for the record that she is well-qualified and especially well-educated, being from the University of Alabama.

[Laughter.]

Senator CORNYN. I thought you would like the University of Alabama, Mr. Chairman.

Chairman SHELBY. Absolutely.

Senator Allard, do you have any opening statement?

STATEMENT OF SENATOR WAYNE ALLARD

Senator ALLARD. I do not. Senator Cornyn’s recommendation is

good enough for me.

[Laughter.]

Chairman SHELBY. Senator, thank you for your appearance. I

know you have other commitments.

Senator CORNYN. I think I had better leave while I am ahead.

Chairman SHELBY. If I could get Mr. Levey and Mr. Zarate to

stand and hold up your right hand, do you swear or affirm that the

testimony that you are about to give is the truth, the whole truth,

and nothing but the truth, so help you God?

Mr. LEVEY. I do.

Mr. ZARATE. I do.

4

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

duly-constituted committee of the Senate?

Mr. LEVEY. I do.

Mr. ZARATE. I do.

Chairman SHELBY. Thank you, gentlemen. We will start with

you, Mr. Levey. Your written testimony will be made part of the

record in its entirety, and I want to say again, you know, we held

up these nominees not because you are not qualified, because we

like you and we know you are qualified, and we are going to move

these nominations. And as you well know, we will be working closely with you on this Committee.

Mr. Levey.

STATEMENT OF STUART A. LEVEY, OF MARYLAND,

TO BE UNDER SECRETARY FOR ENFORCEMENT

U.S. DEPARTMENT OF THE TREASURY

Mr. LEVEY. I appreciate that, sir. Thank you.

Chairman Shelby, Senator Allard, thank you for the opportunity

to appear before you today. It is truly an honor for me to be here

in the capacity as the nominee to be Under Secretary for Enforcement and as the proposed head of the new Office of Terrorism and

Financial Intelligence at the Treasury Department. I want to thank

the President and Secretary Snow for the confidence they have

shown in me by selecting me for this position.

Above all, I want to thank my wife, Annette, who is here with

me today——

Chairman SHELBY. Do you want to recognize them? You can do

that. Take your time.

Mr. LEVEY. I would like to. And also my mother-in-law, Lotte

Hamburger, who are here with me today. I want to thank them for

their support and sacrifices that they have made in allowing me to

pursue opportunities in public service.

I also think it is appropriate for me to thank my colleagues at

the Department of Justice, especially former Deputy Attorney General Larry Thompson and my current boss, Deputy Attorney General Jim Comey, and the staff of the Deputy Attorney General’s Office for all that they have taught me and their support.

During my time at the Justice Department, I have also been

privileged to work with and learn from some of the Government’s

foremost experts on terrorist financing and money laundering. The

dedicated professionals in the Criminal Division and the FBI warrant special mention. They have partnered with our U.S. Attorney’s

Offices around the country in developing cutting-edge criminal

cases against terrorist financiers and money launderers, achieving

success after success in an area that many observers considered beyond the reach of criminal law enforcement. I look forward to continuing to work with them in the Treasury Department if I am confirmed.

My experience in the last 3 years at the Justice Department

makes me very mindful of the enormous responsibility that will be

before me if I am confirmed. Almost every morning, I begin the day

by meeting with the Attorney General, the Deputy, and the FBI Director to go over the most important terrorist threats that are facing us that day. Even after so many months of doing it, I still find

5

it chilling to hear about people who are scheming to kill as many

of our citizens, innocent citizens, as possible. It is chilling, but it

is also a motivating force. I never have to question why I am going

to work and why I am doing what I am doing. There is so much

at stake in the war on terror.

The financial aspect of the war on terror is critical to the overall

mission. Terrorists obviously need money to operate—to train, to

recruit, to travel, to communicate, and to carry out attacks. Whenever we cut off their money supply, we reduce their abilities, and

force them to adopt new funding methods that are more cumbersome or risky and make them less effective. On another level,

the audit trail that money leaves is often our best source of intelligence to find and disrupt terrorists. And there are times when

watching where the money comes from and where it goes is more

valuable than taking immediate public action to stop it. We have

to adapt our strategy in each case to do whatever is best for the

overall mission of preventing terror. And that is one reason why a

coordinated, interagency effort is vital to our overall success.

But within that effort, the Treasury Department has a unique

leadership role to play in the financial war on terror. The Treasury

Department, working with other agencies around the Government,

and with the support of the Congress, has made significant

progress in the fight against terrorist financing since September

11. The people who have been doing that work in the Department,

including Juan Zarate, are among the most dedicated and talented

public servants you will find. If I am confirmed, I will be joining

a very talented team.

I think that team would agree with me that there is much, much

more work that needs to be done. The news in recent days reinforces that view. If I am confirmed, I hope to bring a heightened

sense of urgency to the overall terrorist financing mission at the

Treasury Department. We have to continue to reenergize our efforts because our enemies remain committed to killing innocent

people and because there really is no longer any low-hanging fruit

for us to pick in this fight.

I am aware that there are substantial challenges before us, and

still, I am optimistic because of the steadfast support that Secretary Snow and Deputy Secretary Bodman have shown to the

overall cause of fighting the financial war on terror. I am also

heartened by the support for this mission demonstrated by the

Congress and this Committee in particular. If I am confirmed, I

look forward to working with you on these important issues. I look

forward to your questions.

Thank you, Mr. Chairman.

Chairman SHELBY. Mr. Zarate.

STATEMENT OF JUAN C. ZARATE, OF CALIFORNIA,

TO BE ASSISTANT SECRETARY FOR TERRORIST FINANCING

U.S. DEPARTMENT OF THE TREASURY

Mr. ZARATE. Mr. Chairman, thank you very much, and Senator

Allard. It is indeed an honor for me to be here today, and I thank

you for your kind words earlier and your consistent support. It is

a privilege certainly for me to have been nominated by the President, sir, and I thank him, Secretary Snow, and Deputy Secretary

6

Bodman for their confidence in nominating me for this important

position.

Mr. Chairman, the positions for which Mr. Levey and I have

been nominated form an important part of our country’s long-term

strategy in the war on terror. This Administration has waged an

unprecedented campaign against terrorism and the financing that

fuels horrendous acts of violence and hatred around the world. This

is certainly not just an American problem born on September 11.

From the railway bombings in Madrid and Moscow to the commercial center attacks in Istanbul and Casablanca, we have seen that

terrorism does not discriminate among race, religion, or national

origin.

Mr. Chairman, when I came to Washington as a Federal prosecutor, I was immersed quickly into the reality of the threat that

al Qaeda posed to our country. Two of my most important assignments involved helping in the investigation and prosecution of

those responsible for the American Embassy bombings in East Africa and for the killing of 17 of our sailors on the USS Cole.

Just days after I began work at the Treasury Department in August 2001, America awoke to the horrors of al Qaeda. As a result,

our collective mission changed forever.

Since September 11, I have been charged with many others with

helping drive the U.S. Government effort, certainly along with Mr.

Levey, to attack the financial underpinnings of terrorism. Allow me

now, Mr. Chairman to say that I will count myself privileged to

work for and with Mr. Levey if we are both confirmed.

Mr. Chairman, we have achieved important successes in the mission to bankrupt terrorism. It is now certainly harder, costlier, and

riskier for al Qaeda and other like-minded terror groups to raise

and move money around the world. We have frozen and seized terrorist assets, exposed and dismantled known channels of funding,

deterred donors, arrested key facilitators, forged an international

coalition to face evolving threats, and build higher hurdles in the

international financial system to prevent abuse by terrorists. These

efforts have tightened the financial noose around al Qaeda’s neck.

The drumbeat of our drive to disrupt terrorist financing has been

constant, and, Mr. Chairman, it will continue. There are many examples of this important and steady work coming from the U.S.

Government and the Treasury Department, and I think it bears

mentioning just a few brief recent examples, sir.

On June 2, the United States and the Kingdom of Saudi Arabia

further clamped down on terrorist funding by announcing the designation of five branches of the Saudi-based charity Al Haramain.

At the same time the Saudi Government also announced the impending consolidation of their charitable sector. On June 10, we announced the designation of a key Hezbollah financier in the tri-border area of South America, along with two of his businesses. This

Hezbollah treasurer had used these businesses, counterfeiting, extortion, and other financial crimes to funnel money back into

Hezbollah’s coffers. We continue to identify front companies and individuals who acted on behalf of Saddam Hussein and his regime

in Iraq and abroad.

Since Secretary Snow launched our campaign to find and return

Iraqi assets in March 2003, we have worked with our international

7

partners to freeze approximately $6 billion around the world and

return over $2.7 billion to the Iraqi people.

Earlier this year, as you know, Mr. Chairman, the Treasury’s Financial Crimes Enforcement Network, along with the Office of the

Comptroller of the Currency, levied a fine of $25 million against

Riggs Bank for failure to comply with the provisions of the Bank

Secrecy Act. Led by the Secretary and the Deputy Secretary, this

has in turn resulted in a more aggressive plan with the regulators

for ensuring proper and more direct Treasury oversight in the administration of the Act. Just this morning, the Deputy Secretary

publicly laid out the plan that Treasury intends to implement along

with the regulators to ensure that this happens.

In May, the Secretary of the Treasury designated the Commercial Bank of Syria as a primary money laundering concern under

Section 311 of the USA PATRIOT Act, a power which this Committee and Congress gave to us. As a result, the Secretary ordered

the closing of their corresponding accounts because of that bank’s

complicity in dealing with the Hussein regime, its weak money

laundering practices, and suspicions of terrorist financing through

the institution.

This is but a mere snapshot of the important work that we all

do and that we all accomplish every day. The need for this type of

intensive and consolidated work in the long-term is why this Administration, in concert with Congress, decided to create the new

Office of Terrorism and Financial Intelligence. TFI brings under

one umbrella the intelligence, enforcement, diplomatic, policy and

regulatory resources of the Treasury. It will allow us to at once

consolidate our information and analysis, to utilize Treasury authorities to advance our national security interests, and protect our

financial systems.

This is important, Mr. Chairman, because we know that we are

in the midst of a real and protracted struggle against terrorism.

We will continue to strengthen the financial net to protect our financial institutions from tainted capital flows, and will continue to

use all of our authorities, expertise, and contacts to proceed with

this mission.

Finally, Mr. Chairman, if I could, I am pleased to have with me

some very close family, friends, and my dear wife, Cindy, who is

my best friend and my high school sweetheart.

Chairman SHELBY. Introduce them.

Mr. ZARATE. Cindy is back there.

Chairman SHELBY. Stand up, Cindy. Thank you.

Mr. ZARATE. Directly to her right, sir, is a very close family

friend who is like a brother to me, Lieutenant Colonel James Vogel.

Chairman SHELBY. Thank you.

Mr. ZARATE. Mr. Chairman, I am sorry my parents, who are in

California, could not be here today, but they are very happy to

know that I sit here before you.

Chairman SHELBY. Maybe they are watching this on TV.

[Laughter.]

Mr. ZARATE. Perhaps, perhaps. It has certainly been both a

dream and expectation of my parents, who emigrated from Mexico

and Cuba in the 1950’s in search of prosperity and opportunity,

that my siblings and I serve this country. And indeed, it is an

8

honor for them and an honor for me to be here before you, and if

confirmed, I hope to continue to serve this President, the Secretary,

as well as this Congress on all of these critically important issues,

and I look forward to working with you and other Committees of

Congress in this mission. Thank you.

Chairman SHELBY. I want to just say again at the beginning,

that both of you are highly qualified for these positions, and I predict we are going to confirm as fast as possible, I mean as quickly

as we can, and I commend the President on selecting you.

Now I have a number of questions.

[Laughter.]

As you know, and they are not personal to you, as you know. But

they will be involved in your work.

Mr. Levey, I was a little disturbed by a recent article in the

American Banker about the Bureau of Immigration and Customs

Enforcement’s Operation Cornerstone. This operation, according to

the article, involves unannounced visits by ICE officials at banks

ostensibly for the purpose of establishing cordial relationships and

informing banks of their responsibilities. Operation Cornerstone is

disturbing on two fronts. One is the apparent absence of knowledge

on the part of the Federal regulators regarding the program’s existence. The other is the central question of leadership over regulation

of banks with respect to antimoney laundering laws.

For the Federal Deposit Insurance Corporation, which I know is

not a Treasury Agency, but which is supposed to coordinate with

Treasury, to be in the dark over an intrusive program involving

banks over which it has regulatory jurisdiction is alarming, to say

the least.

Could you tell us about your knowledge, if you have some information of this program, and what role if any that you would anticipate having in its implementation? And if confirmed—and you will

be—is this the kind of program about which you would anticipate

having advanced knowledge and some measure of influence over.

You want to start, Mr. Levey?

Mr. LEVEY. Yes, of course, sir.

Chairman SHELBY. Is that too much? I know it is not for you.

Mr. LEVEY. I will take a shot at it. If I do not get it all, then

I am sure you will come back and tell me I did not.

Chairman SHELBY. Sure.

Mr. LEVEY. It sounds as though—I am aware of the article that

you refer to, sir, and I am also aware of Operation Cornerstone

generally. It sounds like there may well have been a failure of coordination, particularly with the Treasury Department, with respect to this program of——

Chairman SHELBY. Coordination is very important, is it not?

Mr. LEVEY. It absolutely is, and I do think that Operation Cornerstone, based on what I know about it, is something that does

need to be coordinated well with the Treasury Department, and I

know that——

Chairman SHELBY. And under your leadership it will be?

Mr. LEVEY. It will be. The Assistant Secretary who is in charge

of ICE, as we call it, ICE, Michael Garcia, is an excellent public

servant, and I think he would have every intention of coordinating

this with me. I do think there is some valuable role for financial

9

investigations conducted by ICE, but these things have to be coordinated with the Treasury Department, and I fully expect they

will be.

Chairman SHELBY. This morning the Department released some

information pertaining to changes or refinements in how FinCEN

operates, and its role as the principal administrator of the Bank

Secrecy Act. One of the changes that is mandated here is increased

notification to FinCEN by regulatory agencies of significant—I believe that is the term—BSA violations of deficiencies discovered

during the examination process. We have had a hearing on that,

the Riggs situation. What will constitute significant violations or

deficiencies? Can you apply a new mode of operation to any of the

recent cases of BSA violations to show how it will operate in practice. Give us a reference point.

Mr. LEVEY. Sir, I am aware of the Deputy Secretary’s announcement and the plan. I think that maybe your staff or perhaps even

you have been briefed on the basic parameters of the plan. The

idea is to get FinCEN the information they need to see whether

there is effective BSA oversight or whether there may be systemic

problems that Riggs is just the tip of the iceberg of.

I think that the word ‘‘significant’’—to be honest with you, sir,

I do not know exactly what was meant by the word ‘‘significant,’’

but I think what maybe the Deputy Secretary was getting at there

is that there may be occasional technical violations that do not

need to be reported to FinCEN, but the basic thrust of the overall

program is to make sure that there is full reporting to FinCEN so

FinCEN knows what is going on out there so we know whether we

have got a huge problem, and until we know whether or not we

have a huge problem, we cannot be confident that we are ensuring

effective BSA compliance.

Chairman SHELBY. Today’s release would seem to have resource

implications for 2005–2006 at the latest. I chair another Committee, dealing with the funding, and we might cross here a little

bit. But can you provide information or can you do it for the record

on how FinCEN’s budget will be affected by today’s announcement?

If you cannot do it now, if you can do it for the record.

Mr. LEVEY. I think that is not something I am in a position to

do at this moment.

Chairman SHELBY. This Committee would not be as interested,

but the Appropriations would, to try to make sure you have what

you need.

Mr. LEVEY. I understand and appreciate that, sir.

Chairman SHELBY. This Committee has been critical of the Federal regulatory agencies’ enforcement of the Bank Secrecy Act, as

you know. The Riggs Bank, case which was referenced, was clearly

the most glaring example of deficiencies in compliance and enforcement, but a number of other examples have come to our attention

over the past several months, Banco Popular and Hudson United,

for example. Is that right, you are familiar with those cases?

Mr. LEVEY. Yes, sir.

Chairman SHELBY. The Committee is aware of meetings the Department has had with industry since our June 3 hearing on Riggs,

and with meetings internal to the Department, intended to convey

a sense of urgency with respect to BSA compliance and enforceVerDate 11-MAY-2000 18:12 Nov 07, 2005 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 24200.TXT SBANK4 PsN: SBANK4
10

ment. One message that was conveyed both internally and externally, it is my hope that it was, is that Congress does not see a

conceptual divide between safety and soundness and BSA compliance. I think you have to have both. Can you provide the Committee some sense of how you intend to improve the oversight of

the Bank Secrecy Act? I think it is very important, because much

of the culture in the banking industry and among the regulators,

has—and rightly so—for a long time, been safety and soundness.

But now we have that other big challenge.

Mr. Levey.

Mr. LEVEY. I understand, sir. I agree with you this is an issue

of great significance. It is important both because we need to enforce these laws for their own sake, but because, frankly, we go

around the world and try to tell other countries that it is not

enough just to have laws on the books, but you need to enforce

them, so we need to make sure we are doing our homework at

home in enforcing our laws.

The examples you give are very troubling, sir, and I know that

the Deputy Secretary and the Secretary feel the same way. I think

the steps that they have announced are certainly a step in the

right direction because it will provide FinCEN and ultimately the

Secretary with the information we need to know whether or not we

have a systemic problem, whether or not we have only seen the tip

of the iceberg, or whether these are isolated cases. That is an important question for us to answer.

I intend to make this a top priority. In fact, I have already met

with the Department’s Inspector General to get the benefit of his

views. The Inspector General of the Treasury has done a fair

amount of work on this issue. I wanted to hear his views, and get

that perspective. This is something we need to get on right away.

Chairman SHELBY. You would head, after you are confirmed, the

Office of Terrorism and Financial Intelligence. Additionally, the

yet-to-be-filled position of Assistant Secretary for Intelligence and

Analysis would also play an important role in coordinating the

Treasury Department’s intelligence activities with those of the intelligence community as a whole. Could you describe for the Committee what actions you anticipate will be necessary to ensure that

the Office of Assistant Secretary for Intelligence and Analysis has

the kind of relationship cemented with the intelligence community

that will enable it to operate efficiently and expeditiously? In other

words, will a memorandum of understanding be negotiated here or

what do you anticipate? You need some clear lines, do you not?

Mr. LEVEY. Yes, we do. We need to make sure that the Treasury

Department is receiving all the information it needs from the intelligence community.

Chairman SHELBY. Right. And sometimes, that is not so easy.

Mr. LEVEY. I understand that, sir, and you understand that probably better than anyone, given your experience on the Intelligence

Committee.

I believe that we will have an excellent experience with this office because we have gotten a great deal of support from the intelligence community in setting this up, and I think perhaps you were

even on the Intelligence Committee when that was first discussed.

11

Also part of this is to bring to bear the information the Treasury

Department already has, and put it together with the intelligence

information so that we make sure it is all being done in one place,

and that is the overall vision for that part of this office, which I

think is something that has not been done in the past, but where

we can really add value and do something new that the Treasury

Department has not done before, and help us achieve our mission

better.

Chairman SHELBY. Well, a lot of us believe that the job you two

are undertaking is key to this fight with terrorism because it is the

money. Without money, they have nothing, do they? They cannot

exist very long.

Mr. LEVEY. I agree, sir.

Chairman SHELBY. Mr. Zarate, I have a few questions for you.

Mr. ZARATE. Yes, Mr. Chairman.

Chairman SHELBY. Because of your responsibility for terrorist financing and money laundering, your position entails considerable

international exposure. Europe is a central focus of the Financial

Action Task Force. Much of Asia, notably excluding China, belongs

to the Asia-Pacific Group on Money Laundering; is that correct?

Mr. ZARATE. That is correct.

Chairman SHELBY. There has been a noticeable gap, however, in

the Middle East, and to a slightly lesser extent, Africa, in the

terms of regional coordination of antimoney laundering laws and

enforcement. The July 6 issue of Khaleej Times reported that some

Middle East and North African states agreed to set up a similar

regional body to combat money laundering and terrorist financing.

Could you provide for the Committee, either now or for the

record, your assessment of the status of the proposed Middle Eastern, entity which is a step, I have to say, in the right direction and

whether the individual countries have the track records of enforcing financial crimes required to make this initiative a success. I

know they are going to have to take some quantum leaps.

Mr. ZARATE. Mr. Chairman, you have identified gaps that we

have actually been working on, and the body that you have identified is a FATF-style regional body for the Middle East that we have

been working on with the World Bank, the FATF, and those countries for over a year now, and we hope to have that established in

the fall, along with as well, a Central Asian style regional body, because that is another part of the world that has been largely ignored with respect to dealing with these issues systemically and on

a regional basis.

I think the success of the FATF in dealing with these issues on

a regional basis, growing so in Africa, as well with one of those regional bodies called ESAAMLG, has proven that it has been very

good in terms of building up the systems, building up connectivity

between the jurisdictions and having them do exactly what Mr.

Levey said we try to get them to do, which is to enforce their laws,

to regulate their financial institutions, and to help us do what we

need to do, which is to capture tainted capital.

Chairman SHELBY. Would that involve the United States in capacity-building exercises in these countries that have never had to

deal with this kind of situation before to facilitate the passage and

12

the enforcement of antimoney laundering laws, terrorist financing

laws, and so forth?

Mr. ZARATE. Absolutely, Mr. Chairman. It will be a focus of our

attention. It has been a focus. To give you a very good example, we

spent quite a bit of time with Egypt, which had been listed as a

noncooperative country and territory by the FATF. We worked very

hard with our colleagues at the Department of Justice and State

to work with the Egyptians, and the Egyptians were taken off the

list given their very good progress. That is one minor example of

many around the region and around the world, based on our international engagement, and that that is part of our plan.

Chairman SHELBY. Senator Allard, thanks for your indulgence.

Senator ALLARD. Thank you, Mr. Chairman.

This is a question for both of you. Have you heard of GPRA, Government Results and Procedures Act? This is an important provision in law as far as I am concerned, and the reason I think it is

so important is because it sets up a format for how Members of

Congress can review how well your agencies are doing. It is similar

to a management by objectives procedure. So what you have to do

in your agencies is to determine measurable goals, and then report

to the Congress how well you do on those measurable goals. I wondered if either one of you thought what goals you are going to be

setting up here.

Your agencies are now setting up their budgets for next year,

and I would like to hear what your thoughts might be on measurable goals within both of your areas of interest and jurisdiction.

Mr. ZARATE. Senator Allard, first of all, I think it bears mentioning we currently have internal measures and goals that we use

for the Executive Office for Terrorist Financing Financial Crimes,

for OFAC, for FinCEN, the other elements that exist within Treasury that have been dealing with issues related to terrorist financing and money laundering. So those measurements already exist.

We use them internally, and that——

Senator ALLARD. Let me interrupt you. I do not believe that the

entire Treasury Department is in compliance with GPRA. I do not

know your area but I would hope that you would also be a voice

to make sure we get the whole Department under compliance because we will be asking those questions.

Mr. ZARATE. Yes, sir. One of the things we want to do, and certainly if Mr. Levey and I are confirmed we will need to do, is to

sit down, given the restructuring and given the new responsibilities

that this office now has, and restructure what those measurements

and goals will be.

I will tell you, Senator, in all due candor, that developing measurements and quantifiables in this area is very difficult because

our ultimate goal is to deter and to dismantle terrorist networks,

and it is very difficult at the end of the day to determine that. It

does not mean you cannot do it and it does not mean you should

not try, and we certainly have, but it becomes more difficult when

dealing in issues related to deterrence.

Senator ALLARD. But I do hope that you overcome those obstacles

and get the job done.

Mr. ZARATE. Yes.

Senator ALLARD. Yes.

13

Mr. LEVEY. Absolutely, and we will do what we need to do in

that respect. But just to make one point on this issue, which is that

when talking about terrorist financing in particular, I think that

there is some caution that we need to exercise with respect to some

of the metrics or measurable goals that have been put out in the

past, like how many people have been designated or how much

money has been frozen, because what we do not want to have happen is to have incentives created to do things that might not be the

best thing to do to disrupt the terrorist operation or cell in the

long-run. So this is an area that takes a lot of hard thought, and

we are committed to do that.

Senator ALLARD. And whenever you show up in front of this

Committee you are going to get this question from me, see? You

can plan on it.

Mr. LEVEY. Okay.

Senator ALLARD. And you will find I think that the appropriators

will pay attention, and I serve on the Budget Committee. We pay

close attention when we allocate dollars to the Treasury Department just how well your Department has been measuring up. So

this is important, and it is important I think that you take some

time and understand what we are trying to accomplish here.

The other thing that I want to address to you, Mr. Levey, you

talked about you receiving information from the Central Intelligence Agency. You did not say anything about passing it over to

them. You talk about pooling your resources plus theirs in some

central, but do you not feel an obligation to keep them informed?

And if there is a law or something that prevents you from passing

your information to them, I would like to hear about that. Do you

have any concerns there?

Mr. LEVEY. I do feel an obligation to keep them informed. There

is no law. They will be kept informed.

Senator ALLARD. Also, Mr. Levey, originally, as Under Secretary

of Treasury for Enforcement your responsibility was just the Department’s law enforcement activities, and then, that is, after restructuring, that includes money laundering and terrorist finance.

While I think each of these is definitely distinct, to what extent do

you plan to focus on these different areas of concern as well as the

other areas of the jurisdiction of enforcement?

Mr. LEVEY. I am sorry, sir. I did not——

Senator ALLARD. After a recent restructuring, money laundering

and terrorist finance have been given a greater emphasis.

Mr. LEVEY. Absolutely.

Senator ALLARD. Now, how do you plan to focus on some of the

other areas of concern under your jurisdiction?

Mr. LEVEY. The main thing that we are going to different I think

that has not been done in the past, and what differentiates this office from what the old Office of Enforcement was at the Treasury

Department is the intelligence function that we have been talking

about, which is while the Treasury Department has been a member

of the intelligence community, I think it is fair to say it has not

been a completely full partner in it. By elevating it, creating Assistant Secretary for Intelligence, and fully integrating into the intelligence community, we will be able to do the kind of long-term strategic effort against terrorist financing that maybe we were not able

14

to do, or the Treasury Department was not able to do as well before

that.

Senator ALLARD. This is for both of you. I hear a lot from independent bankers. I am from a small State, and the Chairman is I

guess from a small State too, and they are a vital part of what happens in rural areas. There has been some concern expressed to my

office about the burden of some of these laws and the impact they

have on small and independent community banks. I am wondering

if you would talk to me about what your thoughts are on this. Are

they an area of concern that we need to watch particularly closely,

or are they of lesser concern or are large banks more of an area

of concern, or is there any differentiation, they all are. Share with

me some of your thoughts on that.

Mr. ZARATE. Senator Allard, if I could, one of the key roles that

Treasury certainly plays is balancing the enforcement obligations

and regulatory obligations on the financial sector with burden imposed on the financial sector. One of the things that we have seen

post-September 11 with the passage of the USA PATRIOT Act is

that the extension of the antimoney laundering regime has now extended well beyond the banking industry, and is now applicable to

the nonbanking financial sector.

That issue generally is of great concern to us, and we do quite

a bit of outreach. We host, for example, the Bank Secrecy Act Advisory Group, which has as part of it, trade associations, small bank

associations, where we talk about these very issues, where we talk

about the burdens being imposed, the obligations on institutions, et

cetera.

In general, what we hope to do in very short order is to provide

these institutions with greater feedback with respect to how effective the regulations are and how effective the information they are

providing us is. We are trying to promote e-filing, for example, to

lessen the burdens on these types of institutions, and in general,

incorporate them much more broadly in the overarching discussions about antimoney laundering issues.

Senator ALLARD. Mr. Levey.

Mr. LEVEY. I am afraid, sir, I do not really have anything much

more to add to what Mr. Zarate said.

If I could, I feel like I might have been a little hasty in response

to a prior question of yours with respect to whether there is any

laws that bar the Treasury Department from sharing with the intelligence community. There are laws that deal with tax information that we might need to deal with. What I was referring to when

I said there is no such law is that there is nothing that prevents

Treasury generally from communicating information to the intelligence community. I just did not want to leave you with a

misimpression.

Senator ALLARD. I could visualize a situation where that issue

could be brought up fairly frequently by any taxpayer, whether

they are a citizen or not, I guess. Do you see that as a major impediment?

Mr. LEVEY. I do not know whether it is a major impediment or

not, but it is something that I think we should look at, to make

sure that the national security comes first, and we take a look at

whether any of these rules that govern the privacy of the tax inforVerDate 11-MAY-2000 18:12 Nov 07, 2005 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 24200.TXT SBANK4 PsN: SBANK4
15

mation would be an obstacle to pursuing a national security investigation.

Senator ALLARD. Based on your comments, I think yours and my

priorities are the same. National security is first. If you run into

problems in that regard, I would be interested in holding a hearing

about what concerns you run into there so we fully understand this

problem.

Mr. LEVEY. Absolutely, sir.

Senator ALLARD. And last question, Mr. Chairman. The Currency Transaction Report has a threshold of $10,000,

which was established 34 years ago. Do we need to change that

since it was established so long ago and our economy has grown

and whatnot, or raise it or increase it after we have had 34 years

of experience? Again, this is an issue that was brought to my attention by a number of small banks, and I would like to hear what

your comments might be.

Mr. ZARATE. Senator Allard, from my perspective, it is certainly

something that we need to review and actually are talking about

and thinking about. The Bank Secrecy Act Advisory Group again

is another forum in which we have started to discuss this and other

issues.

One of the main concerns we have with the CTR filing requirement is that it has become somewhat rote in the industry to file

CTR’s when, in fact, there are a number of exceptions under the

law that are not taken advantage of. So one of our primary duties

and, frankly, I think our number one assignment, is getting industry to understand those exceptions and to apply them. So we are

not inundated with less-than-useful information.

Second, I think we need to look at that very requirement.

I would note, Senator, that one of the things we are promoting

internationally is greater reporting of currency transactions, both

with financial institutions and at the border, and that is something

we are pushing very aggressively.

Senator ALLARD. Thank you, Mr. Chairman. I see that my time

has expired.

Chairman SHELBY. Thank you, Senator.

I have a few more questions. The growth of remittance monies

from individuals here in the United States to their countries of origin has been astounding. You well know this. This year alone over

$30 billion will be sent abroad involving as many as 150 million

separate transactions. We know that such transactions are occurring almost entirely outside what we call the traditional financial

system, primarily by way of international money order, money

transfer companies, such as Western Union, Moneygram, and so

forth.

Mainstream financial institutions are making efforts to play a

more significant role, attempting to get a piece of this huge market.

These financial service companies are deepening their outreach efforts and offering integrated services for remittance customers such

as account services, savings, credit and mortgage products.

But with regard to the international money transfers, are they

difficult to trace, Mr. Levey, and susceptible to money laundering

practices?

Mr. LEVEY. Sir, I absolutely think that they are.

16

Chairman SHELBY. It is a lot of money involved.

Mr. LEVEY. It is a lot of money, and it is actually one of the areas

I think of concern to the Treasury Department because there is a

lot of noncompliance out there with the requirement that these

money service businesses register with the Treasury Department.

Chairman SHELBY. Do you need legislation in this regard or enforcement?

Mr. LEVEY. We need enforcement.

Chairman SHELBY. Are you going to lead that task force?

Mr. LEVEY. I will take a look at this and do something to make

sure that this gets enforced. We have a lot of noncompliance with

what is a criminal statute under the USA PATRIOT Act.

Chairman SHELBY. Would incorporating remittance transactions

into the traditional financial system help to focus the Treasury’s

oversight and enforcement role, Mr. Zarate?

Mr. ZARATE. Mr. Chairman, I think so. And that is, in part, what

the effort has been about—not only extending regulations and

antimoney laundering controls——

Chairman SHELBY. We are talking about at least $30 billion. You

are talking about a lot of money for nontraditional banking.

Mr. ZARATE. That is right. And one of the points the Treasury

Department has been making, both domestically and internationally, is that this is a profitable venture for the banking community,

and we have seen some very good results with respect to that. We

have seen results not only domestically with banks taking more of

this type of business, lowering their own costs, entry barriers for

people, but also abroad in Southeast Asia, in Mexico, and elsewhere. So that is part of Treasury’s mission and something we

have been working very hard on, and it goes hand-in-hand with our

regulatory function.

Chairman SHELBY. For the past year, the amount of terrorist

money frozen by the U.S. Government seemed frozen at around

$136 million. Recent Treasury Department statements place the

number at $200 million. How much has been frozen or seized over

the past year? Do you know, Mr. Levy, roughly? Do you want to

furnish that for the record?

Mr. LEVEY. We can definitely furnish that for the record, but it

has not been nearly as much in the last year as it was in the prior

2 years.

Chairman SHELBY. It has dropped off, has it not?

Mr. LEVEY. It absolutely has, yes, sir.

Chairman SHELBY. You all will work with us on that, for the

record?

Mr. ZARATE. Yes, Mr. Chairman.

Chairman SHELBY. Mr. Zarate, I know the Joint Counterterrorist

Financing Task Force in Saudi Arabia is Bureau-operated. As the

Treasury Department’s point man for terrorist financing, can you

comment—and if you cannot herethen for the record—can you comment on the level of cooperation the United States is receiving from

the Saudis. Is it better? Is it about the same? Where is it?

Is there a gap there?

Mr. ZARATE. The cooperation has been growing, and it has been

exponentially——

17

Chairman SHELBY. Has it been growing a lot more since the attacks on their own country?

Mr. ZARATE. That is exactly right, sir. The attacks in Riyadh

have certainly awoken the Saudi Government to the realities of the

threat that they face. That is what helped, in fact, spur the idea

of the Joint Task Force, where we actually have not only FBI, but

also IRS agents on the ground in Riyadh sharing financial information.

We have a situation where there is actual real-time sharing of

information for the first time at least in my knowledge between our

Governments and our agents. We are not only working well with

them, but we are also working very well with our Ministry of Finance and their bank regulatory agency, which has quite a bit of

authority over some of these activities.

Chairman SHELBY. Are they implementing what they have been

saying? Generally, there is a big difference between how people

make policy and the way they implement the policy.

Mr. ZARATE. That is right, Mr. Chairman. That is something we

are——

Chairman SHELBY. We know that ourselves sometimes.

Mr. ZARATE. Yes, sir. We are watching that very carefully, and

we are working with the Saudis. We make very clear to them, in

our bilateral discussions and publicly, that we expect them to enforce exactly what they are saying they are going to do. A very

good example of that was their very important announcement on

June 2 about the consolidation of their charitable sector. We want

to see that happen, and we want to know how it is going to happen, and we are working with them to do just that.

Chairman SHELBY. Mr. Zarate, the General Accounting Office estimates the former regime of Saddam Hussein had skimmed as

much as $10 billion from the United Nations Oil-for–Food program.

There is concern that some of that money went to support terrorist

organizations.

Last May, the Department of the Treasury designated the Commercial Bank of Syria as a financial institution of primary money

laundering concern on the basis partly of its handling of money diverted from the Oil-for-Food program. Syria, of course, is a U.S.

State Department-designated terrorist-supporting state.

What is your assessment of the degree to which money skimmed

from the Oil-for-Food program went to support terrorist organizations? If you cannot get into that here, we will do it later. I am

sure you have some concerns.

Mr. ZARATE. We certainly do have concerns. We know that the

regime of Saddam Hussein was paying families of Palestinian suicide bombers. We know that he was housing certain terrorists in

Baghdad. So there was certainly support.

In terms of the percentage, it is very hard to tell. We know that

from that $10-billion estimate, we do know that he spent quite a

bit of that for his pleasure palaces, his armaments and his own

purposes, and we have found a good bit of it abroad. As I mentioned, we have frozen $6 billion of Iraqi-related assets and returned a good bit of that to the Iraqi people. So it is hard, in terms

of breakdown.

18

One of the things that we are still concerned about, Mr. Chairman, is any assets that are still out there that have not been frozen that could be used to continue to fuel the insurgency or the terrorist acts that we see in Iraq on an almost daily basis.

Chairman SHELBY. You both, I know, are familiar with the UBS

situation involving the Federal Reserve, the Iraqi money and so

forth, where they were fined $100 million for doing business with

Libya, Cuba, and Iran.

Have you looked in or will you look into any possibility a link to

terrorism financing?

Mr. ZARATE. We have been working very closely, Mr. Chairman,

with the Federal Reserve Bank in New York to look at any appropriate leads.

Chairman SHELBY. Anything that is appropriate.

Mr. ZARATE. And there are ongoing investigations with respect to

the activity of UBS and that ECI agreement, the Extended Custodial Inventory agreement that formed the basis of the relationship

with the New York Fed.

It is certainly something we are looking at. I cannot say here as

to whether or not we are seeing that at this point.

Chairman SHELBY. We will meet with you at another place sometime.

Senator Allard, do you have any more questions?

Senator ALLARD. I just want to comment we have been entirely

too easy on these two gentlemen.

[Laughter.]

But on the more serious note, we do think this is very important

work that you are doing. I am absolutely delighted we have got

these positions filled and can move forward because this is critical

work to our country’s security, as you are probably well aware of.

And both the Chairman and I have served on the Intelligence Committee so we fully understand the implications and importance of

your work.

So thank you very much for taking the time and your willingness

to do that.

Chairman SHELBY. Senator Allard was saying that in jest. He

knows we have not been easy on you. We respect you, and from

where you are coming, and where you are going, and what you are

going to do.

Senator Sarbanes asked me, he is also on the Foreign Relations

Committee, he wants to keep the record open a few days. He has

a number of questions for both of you in this area.

Gentlemen, we appreciate you and your families appearing

today, and we will expedite these nominations, we assure you.

Thank you very much.

Mr. LEVEY. Thank you, sir.

Mr. ZARATE. Thank you, Mr. Chairman.

Chairman SHELBY. I look forward to working with you.

Thank you.

Chairman SHELBY. Our second panel will be, as we said, Ms.

Carin Barth, of Texas, nominated to be Chief Financial Officer, Department of Housing and Urban Development.

19

Ms. Barth, welcome to the Committee. Again, we appreciate you

appearing here. Before I get you to testify, I want you to stand and

hold up your right hand and be sworn.

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

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

help you God?

Ms. BARTH. I do.

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

duly-constituted committee of the Senate in the future?

Ms. BARTH. I do.

Chairman SHELBY. Thank you. As I said earlier—I think I did.

If I did, I will repeat myself—your opening statement will be made

part of the record. If you want to move the afternoon on, you sum

up your—you were well-introduced by our colleague Senator

Cornyn. And I as noted, you are well-educated from the University

of Alabama. So you have a heads-up with me. You proceed as you

wish.

STATEMENT OF CARIN M. BARTH, OF TEXAS,

TO BE THE CHIEF FINANCIAL OFFICER,

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Ms. BARTH. Thank you, sir. Maybe I should stop there.

Chairman Shelby, Senator Allard, and distinguished Members of

the Committee, my name is Carin Barth. I thank you for inviting

me to appear before you today. I know how busy this Committee

is, and I very much appreciate the opportunity to appear before

you. I am especially grateful that you have invited me to appear

on such an expedited basis.

I would also like to thank Senator Cornyn for appearing and introducing me today. I have known and respected Senator Cornyn

for a long time. I am honored that he was with us today and very

much appreciate his comments.

Chairman SHELBY. If you have some family members you want

to introduce, I see them.

[Laughter.]

Ms. BARTH. Most important, I want to introduce my husband

Todd, and our three children—Mitchell, Wesley, and Melissa—as

well as the large contingent of families and friends I have here

today. You know we do everything bigger in Texas.

[Laughter.]

Ms. BARTH. I am humbled and honored to be the choice of President Bush and Secretary Jackson to serve as the chief financial officer for the U.S. Department of Housing and Urban Development.

If confirmed, I look forward to being a part of the team at HUD

that will work with you and your staffs to address the housing and

economic development needs in our Nation’s communities.

I would like to briefly talk about my background because it is an

important part of why I want to be the next CFO of HUD. I grew

up in Birmingham, Alabama, in a home where community service

was important. My parents were very involved in the local community and set the tone for our family.

After attending the University of Alabama as an undergraduate

and business school at Vanderbilt University, I took a job in Houston, Texas, in 1986, as an analyst for a firm engaged in the private

20

equity investment business. A year-and-a-half after joining the

firm, I purchased an equity interest in and went to work for one

of the firm’s portfolio companies, Cain Chemical. My duties at Cain

Chemical largely consisted of financial analysis of commodity

prices. Occidental Petroleum purchased Cain Chemical about a

year later.

In August of 1988, I left Cain Chemical and co-founded a firm

called LB Capital. My partner in LB Capital, Russell Bowers, who

is here, had been the president of the largest division of Cain

Chemical. Russell remains my partner today in a number of ventures we run out of our Houston office. Approximately 9 years ago,

my husband Todd, who had been a practicing attorney, joined us

in the business.

Currently, I serve on the board of one public company, Southwest

Bancorporation of Texas, which is a regional bank with nearly $6

billion in assets. I serve on the bank’s Audit, Trust and Governance

Committees.

During the course of my professional career, I have had the opportunity to pursue some things that I truly love. One of those

things is public service, and I would like to talk about some of

those opportunities.

I had the opportunity and privilege to co-found, in the early

1990’s, the Zina Garrison All Court Tennis Academy. The Academy

is an inner-city program for underprivileged children that provides

a free, after-school activity for the children of Houston. Tennis was

the hook that brought in the kids, but we taught the kids a lot

more than just tennis. The program started when Zina Garrison,

who you may know is a former professional tennis player from

Houston, approached me with the idea and asked for help. I enlisted the help of other Houstonians, two of which are here today,

and together we put the program in place. Since its inception, the

organization has literally served tens of thousands of inner-city

children in Houston.

I also had the opportunity and privilege of serving on the board

of the Ronald McDonald House of Houston and later as president

of the board. As you probably know, the Ronald McDonald House

offers a home away from home for families traveling to obtain cancer treatment for their children. In Houston, where we have worldclass cancer treatment facilities, the Ronald McDonald House

serves a huge need in the community.

I have had the privilege of serving the City of Houston as well.

I am on the board of the Houston Convention Center Hotel Corporation, which is a nonprofit corporation formed by the City of

Houston to construct and then operate a 1,200-room convention

center hotel in downtown Houston. I serve on the City of Houston’s

Investment Committee. Our committee oversees the investment of

the city’s short-term funds, which exceeds $2 billion.

I also serve the State of Texas as a member of the Board of Regents of Texas Tech University in Lubbock, Texas. The university

has over 25,000 students and an operating budget of over $800 million. In connection with my board service at Texas Tech, I chair the

Finance Committee and also chair the Investment Advisory Committee, which manages Tech’s $400-million endowment.

21

Based on my private and public service experience, I believe I am

qualified for the position of CFO for the Department of Housing

and Urban Development. I have experience preparing, justifying,

and monitoring budgets and strategic plans. I have helped establish, maintain, and review financial systems. I have managed assets and credit management functions. I have helped develop

strong internal control programs and assisted in the production of

audited financial statements. I have helped develop uniform financial management policies and procedures, and I have processed accounting transactions and payments.

My background also reflects that I sincerely love public service.

When I am able to make a positive difference in the life of another

human being, it makes my day. And I know that each Member of

this Committee knows exactly what I am talking about. Otherwise,

you would not be here.

I am deeply grateful for the confidence that President Bush and

Secretary Jackson have placed in me. If confirmed, I will take the

responsibilities and challenges ahead very seriously.

My husband tells me that I am blessed and cursed with the belief that I can make a difference. He is right. I believe I have the

professional background and the personal drive to be successful as

the Chief Financial Officer for the U.S. Department of Housing and

Urban Development. I sincerely hope that you will give me that opportunity.

Mr. Chairman, Senator Allard, thank you for your consideration

of my nomination and the opportunity to appear before you today.

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

Chairman SHELBY. Ms. Barth, I believe we are going to give you

that opportunity.

[Laughter.]

I like your confidence.

I want to reference the FHA single-family program. I have to put

this into context. You are not there yet, but you will be there, and

I understand none of this is your problem, but it will be.

A recent GAO report identified serious internal control deficiencies in FHA’s single-family and multifamily property programs

and have allowed at least one contractor and possibly others to

commit fraudulent activities. Such fraud, of course, we know if it

is left unchecked, greatly undermines the reputation of HUD, along

with potentially costing the taxpayers millions of dollars.

After you are confirmed—I predict you will be—as HUD’s new

CFO, when you get there in a few weeks, what immediate actions

would you take to strengthen FHA’s control environment and improve the Department’s stewardship over taxpayer funds?

If you want to do this for the record, since you are not there yet

or do you want to touch on it now?

Ms. BARTH. I really would prefer to wait and see once I get in

there. I am not up-to-speed.

Chairman SHELBY. Yes, that would be fair to you, but you have

still to have a plan once you get there.

Ms. BARTH. Yes, sir, I understand that.

Chairman SHELBY. Ms. Barth, I am greatly concerned that

HUD’s current acquisition practices leave the Department vulnerable to theft and fraud. For instance, GAO—and referencing that

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again—recently reported that HUD lacked adequate supporting

documentation and effective controls over its computer purchases.

GAO found that HUD did not consistently report purchases or even

inspect the quantity or quality of its purchases.

Are you aware of these deficiencies? And if you are not aware of

them, that is one thing, and as I said, I know you are not there

yet.

Ms. BARTH. I am not specifically aware with respect to the computer purchases.

Chairman SHELBY. These are serious accusations.

Ms. BARTH. Yes, sir, I understand.

Chairman SHELBY. Serious problems.

Contract monitoring. I am going to give some time to my collegue

in a minute. This is an area he has a great interest in is housing.

I want to bring up another point raised by GAO. HUD, over the

last 10 years or so, has been increasingly reliant on the outside

contractors to perform many of its responsibilities. GAO has raised

the issue of HUD’s ability to effectively monitor its contractors. If

you are aware of this, you can speak now; if you are not, for the

record, would you detail your relevant experience in monitoring

and evaluating contract performances in the private sector. In

other words, how would you do the oversight of these contractors

to make sure they are performing as expected? In other words, you

just cannot hire somebody and turn them loose. You have to evaluate them.

Ms. BARTH. I understand that, sir.

Chairman SHELBY. You have go to evaluate them, do you not?

Ms. BARTH. Yes, sir, you do. And then after you hire them, you

have to make sure that they are meeting the expectations of what

they said once you hire them.

I understand, with respect to the contract monitoring, and I have

added it to my list. And what I envision is just bringing some internal controls with respect to the contracts, different strategies that

I have seen in the private sector in terms of a more-reporting process as we go along on these contracts.

Chairman SHELBY. Senator Allard, this is an area you know a lot

about—housing.

Senator ALLARD. I do not know about that, but I appreciate the

opportunity to ask a few questions.

You heard me ask the previous panel about GPRA—the Government Results and Procedures Act. And having training in financial

accountability, you probably fully understand what I am talking

about, where you set goals and objectives that are measurable and

then look at the end of the year and see how successful you were

at reaching those goals.

And I hope that you make sure that those agencies in which you

are overseeing meets those requirements because we also look at

it from a budget aspect, and appropriators look at it. And if you

looked at this year’s budget from the President, there was a section

fully dedicated to how well the agencies were dedicated to meeting

those goals and objectives.

HUD is one that has come to the table with their feet dragging,

but I do think that they are doing a much better job than what

they used to. And at one time they were rated as one, I think the

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Chairman mentioned it was rated as one of the worst agencies as

far as risk analysis was concerned and accountability on how they

spent the taxpayer dollars. So, I think you have a huge responsibility, and you are going to walk into potentially some very big

challenges.

Do you have any ideas on how you are going to enforce accountability so that, as policymakers, we can look at results and your

procedures and get some idea of how well the Agency is doing?

Ms. BARTH. I have been through the GPRA information I have

been sent and understand the importance of accountability and

transparency and actually setting goals that one has to stand by

and be accountable for. So it is my intention, if I am concerned,

that I would get in there and review what has been set out first

and make sure that there is accountability behind those goals.

I think the first thing I need to do is really get in there and see

what goals have been set.

Senator ALLARD. Very good. And like I mentioned earlier, it is

one of those areas that I hold as a top priority, and you can expect

me to ask you questions on that from time-to-time.

Ms. BARTH. I understand that, sir.

Senator ALLARD. Also, HUD has had some enormously unspent balances at certain points in time. At one time, they had $108 billion of unspent balances. Now, of that, there was about, you know,

you can understand if you get into a long-term project, you have

unspent balances, but they are obligated.

Ms. BARTH. Yes, sir.

Senator ALLARD. But the figure that really catches my eye is that more than $12 billion of those dollars, at various times, have been

unallocated. They were just sitting there. And I appreciate that

this Administration has made it a priority to reduce the obligated

and unspent balances. And as HUD Chief Financial Officer, what

do you plan to do to help continue in this effort?

Ms. BARTH. Well, I will continue in the effort to review them and

look at why the balances are unspent. At this point, I am not able

to opine as to how I am going to attack it. I just need to understand, and I am getting more familiar with the issue.

Senator ALLARD. Very good. Again, that is one of those issues

that I personally will be taking some interest in, too.

Now, in the private sector, a company must be consumer-focused

to survive. You are aware of that. You have a——

Ms. BARTH. Yes, sir.

Senator ALLARD. —a private company that you were involved

with. How important do you think a customer focus is for the public sector, and what would you do to make sure HUD identifies its

customers, understands their expectations, and establishes performance goals and measures to meet these expectations consistent

with their priorities? Do you have any ideas?

Ms. BARTH. I think, first and foremost, we have to understand

our customer, and we also have to understand, as in the private

sector, you have a budget, and you have a limited amount of

money. So one needs to utilize those funds very efficiently and effectively.

So I look at, as I go forward, really taking a look at the performance within the various programs.

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Senator ALLARD. I fully realize that when you are just going into

the job these are tough questions for you to answer, but I want to

share them with you because, as Chairman of the Subcommittee

under Banking here is that it is something that we watch for, and

I am sure I will not be the only one asking those questions.

I just wish you well.

Ms. BARTH. Thank you, sir.

Senator ALLARD. You have a great family there.

Ms. BARTH. Thank you.

Senator ALLARD. It is good to see all of you here.

Thank you.

Chairman SHELBY. Thank you, Senator Allard.

Ms. Barth, we want to move your nomination as quickly as possible, and we will. We appreciate your appearance here today. You

have a big job ahead of you, but I think you have the energy and

the background to attack it.

Ms. BARTH. Thank you, sir.

Chairman SHELBY. We will be working with you to do it.

Thank you so much.

Ms. BARTH. Thank you very much.

Chairman SHELBY. The hearing is adjourned.

[Whereupon, at 3:40 p.m., the hearing was adjourned.]

[Prepared statements and biographical sketches of the nominees

supplied for the record follow:]

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PREPARED STATEMENT OF SENATOR WAYNE ALLARD

I would like to thank the Chairman for convening today’s hearing. As always, I

appreciate his willingness to ensure that nominees under this Committee’s jurisdiction receive a prompt, fair hearing.

As Chairman of the Housing Subcommittee, I am particularly pleased that we are

considering the nomination of Ms. Carin Barth to be the Chief Financial Officer of

the Department of Housing and Urban Development (HUD). As I have noted at

other recent hearings, I have been very concerned that this key position at HUD

has remained vacant for a year. After the Secretary and Deputy Secretary, the CFO

is probably the most important position at HUD.

Now that the Committee has received all the formal nomination paperwork, I am

hopeful that this hearing will be the next step toward prompt confirmation. HUD

has a difficult challenge, and its mission is not made easier, nor is its work more

effective, when key positions remain vacant.

As I have also indicated during previous hearings, I believe HUD must focus on

its core mission—to provide decent, safe, sanitary, and affordable housing. Good

leadership involves a clear vision. Key HUD staff must have a clear set of performance goals in mind, as well as ways in which the Department and Congress can

measure progress in achieving those goals. Additionally, it is critical to consider the

long-term sustainability of any progress made at HUD.

Clear, outcome-based vision is critical for success in any agency, and the Government Performance and Results Act, or the Results Act, is a powerful tool toward

that end. I would encourage all of today’ s nominees to become familiar with their

agency’s strategic plan, annual performance plans, annual accountability reports,

and financial statements. If properly utilized, they can help you achieve success in

meeting your department’s mission.

I would also like to welcome Mr. Levey and Mr. Zarate to the Banking Committee.

Money laundering, and particularly terrorist finance, is a critical component of our

war on terror, and I look forward to hearing your ideas.

Again, thank you to all of the nominees for your willingness to serve in the Government and to appear before the Committee. I look forward to working with you

on issues before the Banking Committee.

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PREPARED STATEMENT OF ORRIN G. HATCH

A. U.S. SENATOR FROM THE STATE OF UTAH

MAY 15, 2003

Mr. Chairman, Senator Sarbanes, Members of this Committee, as you know, it is

a custom in the Senate that allows us to introduce nominees before committees that

are usually constituents, or, in other cases, close friends. I am proud and honored

to say that, while Stuart Levey is not a constituent, he is a close personal friend

whose impressive career I have had to pleasure to admire since he first came to

Washington.

Stuart likes to say I have known him since he became a Member of the Bar, and,

in fact that is correct. A graduate of Harvard College and Harvard Law School—

graduating, by the way, summa cum laude and magna cum laude, respectively—he

entered private practice in here in Washington in 1990, and he quickly built a welldeserved reputation as an expert litigator on white collar crime. He served as

special counsel for our former colleague, Senator Danforth, before he joined the Department of Justice.

Since September 11, we in the Congress have worked as closely as possible with

President Bush to craft a national response to international sub-state terrorism. We

have recognized that, in fighting and seeking to defeat this new enemy, we needed

a strategic approach to monitoring, disrupting, and closing the international network of terrorism financing. Such an approach required creating authorities for the

executive, and reorganizing our agency counter-terrorism structure.

Perhaps Congress’ greatest contribution so far was the passage of the USA PATRIOT Act, where we created authorities to monitor financial networks. The Administration has furthered a strategic approach to terrorist financing when, earlier this

year, it announced the creation of the Office of Terrorism and Financial Intelligence,

with a new Under Secretary at the Department of Treasury. I commend the President for nominating Stuart Levey to fill this position.

And I thank the Chairman and Ranking Minority Member of this Committee for

expediting the nomination of the President’s choice to fill this position. Stuart Levey

has the knowledge, experience, and character to fill this post. I believe Stuart unVerDate 11-MAY-2000 18:12 Nov 07, 2005 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 24200.TXT SBANK4 PsN: SBANK4
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derstands the strategic requirements for integrating intelligence analysis with enforcement, as well as the need to build on our growing international coordination

in checking and eliminating the international financial networks of terrorism. I believe that you can see, in reviewing his work as Principal Associate Deputy Attorney

General, where he served Justice’s coordinator with the Policy Coordinating Committee on Terrorist Financing and the NSC’s Counterterrorism Security Group, that

he developed in-depth knowledge of the networks we must penetrate, disrupt, and

destroy, while forging the important relations within Justice, the FBI, the CIA, the

State Department and Treasury that will be essential for his role in the position

to which he has been nominated.

Mr. Chairman, Senator Sarbanes, I certainly do not need to explain to this Committee the imperative of disrupting international financial networks that keep terrorists funded. I thank you once again for scheduling this hearing, and I urge your

favorable consideration of this nominee, as well as Mr. Zarate, and I hope for a

speedy Senate confirmation so that our Government can carry on in the essential

role of defeating those that would do us harm.

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PREPARED STATEMENT OF STUART A. LEVEY

UNDER SECRETARY-DESIGNATE FOR ENFORCEMENT

U.S. DEPARTMENT OF THE TREASURY

JULY 15, 2004

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

thank you for the opportunity to appear before you today. It is truly an honor to

be the nominee to serve as Under Secretary for Enforcement and as the head of the

new Office of Terrorism and Financial Intelligence at the Department of the Treasury. I want to thank the President and Secretary Snow for the confidence they have

shown in me by selecting me for this position.

Above all, I want to thank my wife Annette, who is the best thing in my life, for

the sacrifices she has made to allow me to pursue opportunities in public service.

She is the perfect wife, my best friend, a fabulous mother to our two baby daughters, and, on top of all that, a dedicated public servant at the National Institutes

of Health. I would also like to thank my parents for the opportunities and support

they have given me throughout my life.

I am also grateful to Attorney General Ashcroft for the opportunity he has given

me to serve at the Department of Justice. I came to the Justice Department to work

for Deputy Attorney General Larry Thompson, and I have continued to serve there

under Jim Comey. I have handled a variety of issues in the Deputy Attorney General’s Office, focusing most recently on national security and counterterrorism matters, including the Department’s terrorist financing portfolio. In my current role as

Principal Associate Deputy Attorney General, I serve as the Justice Department’s

representative to the Policy Coordinating Committee on Terrorist Financing and to

the NSC’s Counterterrorism Security Group. In these roles, I have established close

working relationships with officials within the Department of Justice as well as in

the FBI, the CIA, the State Department, and elsewhere that will be beneficial to

me in my new position, if I am confirmed.

During my time at the Justice Department, I have been privileged to work with,

and learn from, some of the Government’s foremost experts on terrorist financing

and money laundering. The dedicated prosecutors in the Criminal Division’s

Counterterrorism Section (CTS) and Asset Forfeiture and Money Laundering Section (AFMLS) warrant special mention here. They have partnered with our U.S. Attorney’s Offices around the country in developing and bringing cutting-edge criminal

cases against terrorist financiers and money launderers, achieving success after success in an arena that many observers considered to be beyond the effective reach

of criminal law enforcement.

My experience at the Justice Department makes me very mindful of the enormous

responsibility that will be before me, if I am confirmed. I begin almost every morning by meeting with the Attorney General, the Deputy Attorney General, the FBI

Director, and other senior staff to go over the most important terrorist threats that

we are facing that day, both within the United States and abroad. Even after so

many months, it is still chilling to hear every morning about people who are scheming to kill as many innocent people as they possibly can. Chilling, but, in a sense,

motivating too. I never question why I go to work in the morning. There is so much

at stake.

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The financial war on terror is critical to our overall mission to defeat terrorism.

Terrorists need money to operate—to recruit, to train, to travel, to communicate,

and, of course, to carry out attacks. Whenever we cut off their money supply, we

reduce their present abilities and force them to adopt new funding methods that are

more cumbersome or risky. On another level, the audit trail that money leaves is

one of our best sources of intelligence to find and disrupt terrorists. There are times

when watching where the money comes from and where it goes is more valuable

than taking immediate public action to stop it. We must adapt our strategy in each

circumstance to do whatever is best for the overall counterterrorism mission. That

is one reason why a coordinated, interagency effort is vital to our success.

Within that coordinated effort, the Treasury Department has a unique leadership

role to play in the financial war on terror. The Treasury Department, working with

other agencies around the Government, and with the support of the Congress, has

made significant progress in the fight against terrorist financing since September

11. The people who have been doing that work in the Department, including Juan

Zarate, are among the most dedicated and talented public servants you will find.

If I am confirmed, I will be joining a fantastic team.

I think that team would agree that there is much more work that needs to be

done. If I am confirmed, I hope to bring a heightened sense of urgency to the terrorist financing mission at the Treasury Department. We must reenergize our efforts because our enemies remain committed to killing innocent people and our work

grows more difficult as terrorists move away from known funding channels and organizations.

The overarching mission for the new Office of Terrorism and Financial Intelligence will be to ensure that the Treasury Department is fully exploiting all of its

authorities, capabilities, and all of the Government’s information to combat terrorist

financing and financial crime. Among other things, if I am confirmed, I would strive

to make better use of the tools the Congress provided in the USA PATRIOT Act and

of Treasury’s other enforcement powers. I also would build a new Office of Intelligence and Analysis that will exploit Treasury’s own information and integrate the

Department more fully into the intelligence community. And, I would press terrorist

financing issues as a priority with other nations around the world whose cooperation we need if we are to succeed.

I am aware that there are substantial challenges before us. Still, I am optimistic

because of the steadfast support that Secretary Snow and Deputy Secretary Bodman

have already shown to the cause of fighting the financial war on terror. I am also

heartened by the support for this mission demonstrated by the Congress, including

this Committee. If I am confirmed, I look forward to working with you on these important issues. I am happy to answer any questions you may have.

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PREPARED STATEMENT OF JUAN C. ZARATE

ASSISTANT SECRETARY-DESIGNATE FOR TERRORIST FINANCING

U.S. DEPARTMENT OF THE TREASURY

JULY 15, 2004

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

Committee, it is an honor for me to be before you today. It is a privilege to have

been nominated by the President for the position of Assistant Secretary of the

Treasury for Terrorist Financing, and I thank him, Secretary Snow, and Deputy

Secretary Bodman for their confidence in nominating me for this important position.

Mr. Chairman, the positions for which Mr. Levey and I have been nominated form

an important part of our country’s long-term strategy in the war on terror. This Administration has waged an unprecedented campaign against terrorism and the financing that fuels horrendous acts of violence and hatred around the world. This

is not just an American problem born on September 11. From the railway bombings

of Madrid and Moscow to the commercial center attacks in Istanbul and Casablanca,

we have seen that terrorism does not discriminate among race, religion, or national

origin.

When I came to Washington as a Federal prosecutor, Mr. Chairman, I was immersed quickly into the reality of the threat that Al Qaeda posed to our country.

One of my first assignments was to assist in the prosecution of those responsible

for the American Embassy bombings in East Africa. I further confronted the

unabated viciousness of Al Qaeda as a prosecutor in the investigation of the murders of 17 of our countrymen and women on the USS Cole.

Just days after I began work at the Treasury Department on August 27, 2001,

our world and our collective mission changed forever.

Since September 11, I have been privileged to form part of the U.S Government

effort, along with Mr. Levey, to attack the financial underpinnings of terrorism. If

confirmed, I look forward to working with and for Mr. Levey more directly on issues

of such national importance.

We have achieved important successes in the mission to bankrupt terrorism. It

is now harder, costlier, and riskier for Al Qaeda and other like-minded terror groups

to raise and move money around the world. We have frozen and seized terrorist assets, exposed and dismantled known channels of funding, deterred donors, arrested

key facilitators, and built higher hurdles in the international financial system to

prevent abuse by terrorists.

We have forged an international coalition to combat terrorist financing and have

focused the world’s attention on previously unregulated, high-risk sectors like charities and hawalas. We have placed onto the international agenda the growing concern we have about the use of cash couriers by terrorists groups. In all of these

efforts, we have enlisted the private sector worldwide—the banks, money service

businesses, broker-dealers and the charitable sector—to serve as the front-line in

this battle. These efforts have tightened the financial noose around Al Qaeda’s neck.

The drumbeat of our drive to disrupt and dismantle terrorist financing has been

constant and will continue.

Mr. Chairman, I am very proud that this work has been undertaken while our

other efforts to combat money laundering, financial crimes, and enforce sanctions

have also intensified. There are many examples of the important and steady work

the Treasury continues to produce. I would like to share with you just a few of our

recent actions:

• On June 2, the United States and the Kingdom of Saudi Arabia announced the

designation of five branches of the Saudi-based charity, Al- Haramain, while the

Saudi Government also announced the consolidation of their charitable sector.

The United States further announced the designation of the leader of AlHaramain.

• We continue to identify front companies and individuals who acted on behalf of

the Saddam Hussein regime in Iraq. Since March 2003, when Secretary Snow

launched our campaign to find, freeze and repatriate the Iraqi assets stolen by

the Hussein regime, we have worked with our international partners to freeze approximately $6 billion around the world and return over $2.7 billion to the Iraqi

people.

• The Treasury’s Financial Crimes Enforcement Network (FinCEN), along with the

Office of Comptroller of Currency, levied a fine of $25 million against Riggs Banks

for failure to comply with provisions of the Bank Secrecy Act. This has resulted

in a more aggressive plan with the regulators for ensuring proper oversight and

accountability in the administration of the Bank Secrecy Act.

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• The Secretary of the Treasury recently designated the Commercial Bank of Syria

as a ‘‘primary money laundering concern’’ under Section 311 of the USA PATRIOT

Act. As a result, the Secretary ordered the closing of their correspondent accounts

because of that bank’s complicity in dealing with the Hussein regime, its weak

money laundering practices, and suspicions of terrorist financing through the institution.

• In recent weeks, we have continued to provide leadership internationally in the

field of countering terrorist financing and money laundering by driving issues of

key concern to the United States at the plenary meetings of the Financial Action

Task Force and the Egmont Group of Financial Intelligence Units.

This is but a mere snapshot of the important work the Treasury accomplishes

every day. These efforts are critical not only to preserve the integrity of our financial system, but also to promote the national security interests of our country.

The need for this type of intensive and consolidated work in the long-term is why

this Administration, in concert with Congress, decided to create the new Office of

Terrorism and Financial Intelligence. TFI, as it will be called, brings under one umbrella the intelligence, enforcement, diplomatic, policy, and regulatory resources of

the Treasury. It will allow us to consolidate our information and analysis to best

utilize Treasury authorities to advance our national security interests and protect

our financial systems. TFI will allow us to sustain these and additional efforts for

the long term.

This is important, Mr. Chairman, because we know that we are in the midst of

a real and protracted struggle against terrorism. We will not tire in our mission to

find and incapacitate those who underwrite terror. We will continue to strengthen

the financial net to protect our institutions from tainted capital flows and will continue to use all of our authorities, relationships, and expertise to attack sources,

conduits and proceeds of financial crime.

Finally, Mr. Chairman, I am pleased to have with me close friends as well as my

wife, Cindy, who is my best friend and high-school sweetheart. She has unselfishly

sacrificed over the past 3 years to allow me to pursue this mission. I am sorry that

my parents, who are in California, could not be here today, but they are very happy

to know that I sit before you. It has been both a dream and an expectation of my

parents—who immigrated from Mexico and Cuba in the 1950’s in search of freedom

and opportunity—that my siblings and I serve this country. If confirmed, I hope to

continue to serve this President and Secretary Snow with an unwavering commitment and a deep passion for these issues, and to work with this Committee and

other Committees of Congress to advance our national interests.

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