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80–951 PDF 2002

S. HRG. 107–585

NOMINATIONS OF: SHEILA C. BAIR

MARK B. McCLELLAN, MELODY H. FENNEL

MICHAEL M.F. LIU, HENRIETTA HOLSMAN FORE

LINDA MYSLIWY CONLIN & MICHAEL J. GARCIA

HEARINGS

BEFORE THE

COMMITTEE ON

BANKING, HOUSING, AND URBAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

ON

NOMINATIONS OF:

SHEILA C. BAIR, OF KANSAS, TO BE ASSISTANT SECRETARY OF THE

TREASURY FOR FINANCIAL INSTITUTIONS

MARK B. MCCLELLAN, OF CALIFORNIA, TO BE A MEMBER OF THE

COUNCIL OF ECONOMIC ADVISERS

MELODY H. FENNEL, OF VIRGINIA, TO BE ASSISTANT SECRETARY

FOR CONGRESSIONAL AND INTERGOVERNMENTAL RELATIONS

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

MICHAEL MINORU FAWN LIU, OF ILLINOIS, TO BE

ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

HENRIETTA HOLSMAN FORE, OF NEVADA, TO BE DIRECTOR OF THE U.S. MINT

LINDA MYSLIWY CONLIN, OF NEW JERSEY, TO BE ASSISTANT

SECRETARY OF COMMERCE FOR TRADE DEVELOPMENT

MICHAEL J. GARCIA, OF NEW YORK, TO BE ASSISTANT SECRETARY OF

COMMERCE FOR EXPORT ENFORCEMENT

JULY 12 AND 26, 2001

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

(

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

PAUL S. SARBANES, Maryland, Chairman

CHRISTOPHER J. DODD, Connecticut

JOHN F. KERRY, Massachusetts

TIM JOHNSON, South Dakota

JACK REED, Rhode Island

CHARLES E. SCHUMER, New York

EVAN BAYH, Indiana

JOHN EDWARDS, North Carolina

ZELL MILLER, Georgia

PHIL GRAMM, Texas

RICHARD C. SHELBY, Alabama

ROBERT F. BENNETT, Utah

WAYNE ALLARD, Colorado

MICHAEL B. ENZI, Wyoming

CHUCK HAGEL, Nebraska

RICK SANTORUM, Pennsylvania

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

DON NICKLES, Oklahoma

STEVEN B. HARRIS, Staff Director and Chief Counsel

WAYNE A. ABERNATHY, Republican Staff Director

MARTIN J. GRUENBERG, Senior Counsel

JONATHAN MILLER, Professional Staff

ERIN HANSEN, Legislative Assistant

JENNIFER FOGEL-BUBLICK, Counsel

BRIAN J. GROSS, Republican Deputy Staff Director and Counsel

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator

GEORGE E. WHITTLE, Editor

(II)

(III)

CONTENTS

THURSDAY, JULY 12, 2001

Page

Opening statement of Chairman Sarbanes ........................................................... 1

Opening statements, comments, or prepared statements of:

Senator Dodd .................................................................................................... 4

Senator Enzi ..................................................................................................... 5

Senator Stabenow ............................................................................................. 5

Senator Gramm ................................................................................................ 10

Senator Miller ................................................................................................... 11

Senator Carper ................................................................................................. 11

Senator Ensign ................................................................................................. 14

Senator Bennett ................................................................................................ 16

WITNESS

Pat Roberts, a U.S. Senator from the State of Kansas ......................................... 2

NOMINEES

Sheila C. Bair, of Kansas, to be Assistant Secretary of the Treasury for

Financial Institutions .......................................................................................... 6

Prepared statement .......................................................................................... 19

Biographical sketch of nominee ....................................................................... 20

Mark B. McClellan, of California, to be a Member of the Council of Economic

Advisers ................................................................................................................ 7

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

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Letter to Senator Paul S. Sarbanes from former Senator Bob Dole in support

of Sheila C. Bair, dated July 11, 2001 ................................................................ 39

THURSDAY, JULY 26, 2001

Opening statement of Chairman Sarbanes ........................................................... 41

Opening statements, comments, or prepared statements of:

Senator Akaka .................................................................................................. 43

Senator Reed ..................................................................................................... 44

Senator Allard ................................................................................................... 48

Senator Corzine ................................................................................................ 50

Senator Ensign ................................................................................................. 63

WITNESS

Kay Bailey Hutchison, a U.S. Senator from the State of Texas .......................... 46

NOMINEES

Melody H. Fennel, of Virginia, to be Assistant Secretary for Congressional

and Intergovernmental Relations, U.S. Department of Housing and Urban

Development ......................................................................................................... 45

Prepared statement .......................................................................................... 63

Biographical sketch of nominee ....................................................................... 64

Page

IV

Michael Minoru Fawn Liu, of Illinois, to be Assistant Secretary for Public

and Indian Housing, U.S. Department of Housing and Urban Development . 46

Prepared statement .......................................................................................... 69

Biographical sketch of nominee ....................................................................... 70

Henrietta Holsman Fore, of Nevada, to be Director of the U.S. Mint ................ 54

Prepared statement .......................................................................................... 78

Biographical sketch of nominee ....................................................................... 79

Linda Mysliwy Conlin, of New Jersey, to be Assistant Secretary of Commerce

for Trade Development ........................................................................................ 55

Prepared statement .......................................................................................... 87

Biographical sketch of nominee ....................................................................... 89

Response to written questions of Senator Reed ............................................. 105

Michael J. Garcia, of New York, to be Assistant Secretary of Commerce

for Export Enforcement ....................................................................................... 56

Prepared statement .......................................................................................... 95

Biographical sketch of nominee ....................................................................... 96

(1)

NOMINATIONS OF:

SHEILA C. BAIR, OF KANSAS

TO BE ASSISTANT SECRETARY OF THE

TREASURY FOR FINANCIAL INSTITUTIONS

AND

MARK B. McCLELLAN, OF CALIFORNIA

TO BE A MEMBER OF THE

COUNCIL OF ECONOMIC ADVISERS

THURSDAY, JULY 12, 2001

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

The Committee met at 10:05 a.m., in room SD–538 of the Dirksen Senate Office Building, Senator Paul S. Sarbanes (Chairman of

the Committee) presiding.

OPENING STATEMENT OF CHAIRMAN PAUL S. SARBANES

Chairman SARBANES. Let me call our hearing to order.

The Committee has two items of business. First, we have five

nominees that we want to report out to the floor of the Senate. And

once we have a quorum here, we will proceed to do that. We are

in the process of trying to gather a quorum and at the appropriate

time, I will make a motion with respect to those nominees.

Second, we are going to begin our hearing this morning on the

additional nominations submitted by the President to the Senate.

Sheila Bair, to be the Assistant Secretary for Financial Institutions

in the Department of the Treasury; and Mark McClellan, to be a

Member of the Council of Economic Advisers.

Before turning to that, I just want to take a moment to welcome

Senator Akaka to the Committee. We are very pleased that he has

come aboard as a Member of this Committee. He has been a very

distinguished Member of the Senate since 1990, and I know he has

had an interest in this Committee for some time and we are very

pleased, Dan, that you are joining us.

Welcome to the Committee.

I think before I make a statement, I would simply turn to our

colleague, Senator Roberts, who is here. I know he has some other

commitments and he wants to make an introduction.

Pat, we would be happy to receive your introduction at this point.

2

STATEMENT OF PAT ROBERTS

A U.S. SENATOR FROM THE STATE OF KANSAS

Senator ROBERTS. Thank you, Mr. Chairman.

There is no other more important commitment that I have than

to be supportive and give testimony on behalf of my very good

friend and our nominee from Kansas, Sheila Bair.

Mr. Chairman, I am a poor but very proud substitute for Senator

Bob Dole, who is recuperating from surgery and doing fine, thank

you. I know that you will have some statements to read from Bob’s

statement of support for Sheila as well.

Therefore, it is my very great pleasure to speak on behalf of the

nomination as Assistant Secretary of the Treasury for Financial Institutions, Sheila Bair.

Sheila is a native Kansan. She, along with her mentor, and mine,

and I am speaking of Senator Dole, we think represent the values

of our home State. And those values are a strong work ethic, which

she certainly has, and a commitment to common sense. We think

her nomination really continues the Kansas tradition of offering

outstanding individuals to serve our Government.

Many in Bob’s office have certainly gone on to do that and they

have served all the Federal agencies and our country well.

Her career path is an ideal one for the position for which she is

nominated. She has a strong background in Government service

and an impressive resume in the financial services industry.

After earning a law degree from the University of Kansas, home

of the fighting and optimistic Jayhawks, Sheila began her civil

service career as an attorney for the then-Department of Health,

Education and Welfare, now H2S. She later served as Counsel to

Senator Dole and as Commissioner for the Commodity Futures

Trading Commission. She did that job very well.

As Senior Vice President for Government Relations at the New

York Stock Exchange, Ms. Bair gained valuable experience and understanding of our country’s financial markets.

As Assistant Secretary, we think that she will oversee policy development, as well as the coordination of the Treasury’s legislative

and regulatory issues for our country’s financial institutions and

the Federal agencies that certainly regulate them.

We believe her wealth of experience in both Government and the

financial services industry makes her an excellent choice.

She has been a regulator. She has been a policymaker and a

member of the financial services industry.

Sheila has written extensively on financial, regulatory, and policy issues and she understands the complexities of our country’s

monetary system, as well as the challenges of Government service.

So as we continue the implementation of what we call the

Gramm–Leach–Bliley and examine the issues such as financial privacy and deposit insurance reform, it is critical, Mr. Chairman, to

have individuals like Sheila who can help develop and implement

the policies for our financial institutions and our regulatory agencies that reflect the intent of Congress.

I am pleased to recommend her, a fellow Kansan, a friend, as the

Assistant Secretary of the Treasury for Financial Institutions.

Sheila, I wish you the best. I encourage a speedy confirmation,

Mr. Chairman, of her nomination, and Bob and I stand in full supVerDate 11-MAY-2000 15:13 Aug 07, 2002 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 80951.TXT SBANK4 PsN: SBANK4
3

port of the nomination. I appreciate so much the privilege and

honor of being here.

Thank you, Mr. Chairman.

Chairman SARBANES. Thank you very much, Senator Roberts. We

appreciate your coming and your statement. You certainly may be

excused because I know you have other commitments.

Following up on Senator Roberts’ statement, I have received a

letter from Bob Dole indicating his regrets that he was not actually

able to be with us, although he is doing fine, I understand. He submitted a statement which I will have included in the record.

Without objection, it is so ordered.

I will just quote a couple of paragraphs from it:

In Sheila Bair, the President has chosen a talented and dedicated individual,

someone well-suited to lead the operation and regulation of financial institutions,

and the promotion of consumer access and protection in financial services. I am

proud to offer my strong support for this nomination.

And later on, our former colleague says:

As I am sure many of you can recall, she was an irreplaceable member of my

staff, someone who I had every confidence in, who I counted on for advice and analysis, and she never failed me in this role.

For the sake of time, I will not go on and quote the balance of

it, but it is, as one can assume, a very laudatory statement and we

will include that in the record.

Let me just say at the outset that we are very pleased to have

these two nominees before us, one for a very important position in

the Treasury and the other to help round out the membership of

the Council of Economic Advisers.

Pat Roberts has given a lot of the resume of Sheila Bair, but let

me say that she has devoted a good deal of her professional career

to Federal Government service and the other part of it, in a sense,

working in the financial services industry.

She was an attorney in the Department of Health, Education and

Welfare, the Department of Education. She worked with Bob Dole

on his Senate staff, as Counsel in the Senate Judiciary Committee,

later as Deputy Counsel to the Majority Leader. Then, as one

might anticipate, she worked on the Dole For President campaign.

From 1991 to 1995, she served as a Commissioner on the Commodities Future Trading Commission, including a period as Acting

Chairman.

From 1995 on, she has worked at the New York Stock Exchange,

first as Senior Vice President for Government Regulations and currently, as a Consultant to the Chairman of the Stock Exchange,

Dick Grasso.

She has been active in a number of professional groups—the

American Bar Association, the Economic Club, Women in Housing

and Finance, on the Board of the National Women’s Law Center,

and the Kansas University School of Law.

She has written extensively on a number of matters in the financial field, including derivative products and their regulation.

The position to which she has been nominated, of course, plays

a vital role in making quality financial services available to all

Americans and strengthening the financial service systems.

4

She brings a very distinguished and varied background to this

nomination. As Senator Roberts has indicated, she is well known

and respected by Members, I think, on both sides of the aisle.

Mr. McClellan has an exceptional background for nomination as

a Member of the Council of Economic Advisers. He received an undergraduate degree from the University of Texas—a lot of Texas

flavor to these nominees that are coming through here nowadays.

[Laughter.]

Senator DODD. We have never seen that before.

Chairman SARBANES. No.

[Laughter.]

A Master’s of Public Affairs from Harvard in 1992; a medical degree from Harvard in 1992; and, a Ph.D. in Economics from MIT

in 1993. So, Mr. McClellan comes with both medical credentials

and economic credentials.

He was a Research Associate at Harvard Medical School’s Department of Health Care Policy from 1991 to 1995. And since then,

he has been at Stanford University as a Professor in the Department of Economics and in the Department of Medicine.

Actually, he took a leave from Stanford in 1998 and 1999, to

serve as Deputy Assistant Secretary for Economic Policy at the

Treasury Department.

As one would expect, he has written extensively on the economics

of health care, which I gather will be a prime responsibility of his

at the Council of Economic Advisers.

So, I am pleased to welcome both of these nominees before us

this morning. And before I turn to them, I will yield if there are

any other Members of the Committee who would like to make a

statement.

Senator Dodd.

COMMENTS OF SENATOR CHRISTOPHER J. DODD

Senator DODD. Mr. Chairman, very, very briefly. First of all, our

congratulations to the nominees before us this morning. But I

wanted to commend you, Mr. Chairman. I note that after we get

a quorum here, we have five nominees who will be voted on later

this morning. And the two nominees here, the pace at which we are

moving, I know that Chairman Sarbanes subscribes to the notion

that the Executive Branch ought to have its personnel in place.

As a matter of fact, all of us do here.

I know there has been some press recently about the pace of the

confirmation process. Occasionally, there are nominations that

cause some difficulties. That is not the case, obviously, with our

two nominees here, nor the ones we will be voting on later this

morning. We are going to move as quickly as we can.

I just commend you, Mr. Chairman, for the pace and the time of

all of this. I know that all of us on the Committee are anxious to

be here and to support you in that effort to get these nominations

through and to see to it that the Administration has the people

that they need to have in place in order to get the job done. So,

I wanted to make that point, if I could, to you.

Chairman SARBANES. Well, I appreciate that very much. I might

ask the staff if they could sort of get in touch with their principals.

5

We have seven. We need 11. If we can rustle up four more. I am

not sure that rustle up is the right language.

[Laughter.]

Senator DODD. We Democrats want to help this Republican Administration get on with it and get going here.

[Laughter.]

I count six of us over here.

I want to commend our two nominees. Sheila Bair I knew during

her years with Bob Dole.

Let me just say, I thank both of you for doing this. We do not

thank people enough, in my view, for a willingness to be a part of

the public sector and go through a process such as this where backgrounds are explored and examined microscopically. It takes too

long, in my view, it is too painful for people, in many cases. I just

have the highest admiration for people who are willing to do this.

Both of you have done it in the past. You have served in the past,

and your willingness to step up again is to be commended.

You both have wonderful backgrounds and credentials. I know

that all of us up here will be looking forward to working with you

as these matters come before us.

I thank you both for your willingness to serve. It is appreciated

very, very much.

Thank you, Mr. Chairman.

Chairman SARBANES. Senator Enzi.

COMMENTS OF SENATOR MICHAEL B. ENZI

Senator ENZI. I just want to thank you for holding this hearing

and for the way that you are conducting the Chairmanship. I very

much appreciate it. I have always enjoyed working with you.

Chairman SARBANES. Thank you very much.

Anybody else have any statements?

Senator DODD. Welcome, Dan.

Chairman SARBANES. I indicated that.

Senator DODD. It is hard to see you down there.

[Laughter.]

It is almost like being in Hawaii down there.

[Laughter.]

Chairman SARBANES. Jon Corzine really feels elevated, though,

by this development.

[Laughter.]

Senator Stabenow.

COMMENT OF SENATOR DEBBIE STABENOW

Senator STABENOW. Mr. Chairman, in fact, I was going to add,

I feel so much more senior today than I did last week.

[Laughter.]

Chairman SARBANES. Could I ask the two nominees to stand and

take the oath?

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. MCCLELLAN. I do.

Ms. BAIR. I do.

6

Chairman SARBANES. Do you agree to appear and testify before

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

Mr. MCCLELLAN. I do.

Ms. BAIR. I do.

Chairman SARBANES. Thank you very much.

Ms. Bair, why don’t we begin with your opening statement?

STATEMENT OF SHEILA C. BAIR, OF KANSAS

TO BE ASSISTANT SECRETARY OF THE

TREASURY FOR FINANCIAL INSTITUTIONS

Ms. BAIR. Thank you, Chairman Sarbanes, and Members of the

Committee. I am very pleased to have this opportunity this morning to discuss my nomination to be the new Assistant Secretary for

Financial Institutions at the Treasury Department.

After hearing Senator Roberts’ kind remarks and those quoted

from Senator Bob Dole, as well as your kind remarks, Chairman

Sarbanes, I am tempted to quit while I am ahead and just leave

it at that. But I do have a brief statement I would like to make.

Before I do anything, I would like to introduce the members of

my family who are here with me—Scott Cooper, my husband, and

my 8-year-old son, Preston. I also have a 17-month-old daughter,

Colleen, who is roaming the halls with our au pair. I am afraid

that she did not quite make it through the introductions, but I am

very glad that they could all be here with me today for this very

special occasion.

Chairman SARBANES. We are very pleased to have them here.

Ms. BAIR. Thank you, Senator.

I would like to begin my statement by expressing my deep appreciation to President Bush for nominating me to this important position. I am honored by the confidence the White House has shown

in me by naming me to this post and I will work hard to justify

that confidence. I would also like to thank Secretary O’Neill, Deputy Secretary-Designate Ken Dam, and Under Secretary-Designate

Peter Fisher for the support they have provided for my nomination.

I look forward to having the privilege of working with them and

the rest of the impressive team that the President has assembled,

and the career staff at the Treasury Department.

Next, I would like to thank Senator Dole for his support and help

on this nomination, and all the support, advice, and mentoring he

has provided me over the past two decades. I know he wanted to

be here this morning and I wish him a full and speedy recovery

from his recent surgery, as I know we all do.

Working for Senator Dole early in my career, I was able to learn

all the best things about being in public service. In the tradition

of two other great Kansans, William Allen White and Dwight D.

Eisenhower, Senator Dole’s leadership in the Senate reflected the

common sense values and pragmatic idealism so steeped in the politics of Middle America. From him, I learned that Government has

a special obligation to use American taxpayers’ dollars wisely and

sparingly, wisdom that will serve me well at the Department of the

Treasury, whose job I believe, first and foremost, is to protect taxpayers’ funds from imprudent risk and wasteful expenditure. Senator Dole also taught me, however, that Government has a special

obligation to help society’s less fortunate and those programs to

7

help the poor and the disadvantaged, if carefully targeted and efficiently managed, can constitute a wise and a noble use of taxpayer’s funds.

I come to you today with over a decade of experience working in

public service, ranging from my first job as a civil rights attorney

for the old Department of Health, Education and Welfare, to my 5

years of service to this august body on the staff of Senator Dole,

to over 4 years as a Commissioner on the Commodity Futures

Trading Commission, where I served as Chairman of the CFTC’s

Financial Products Advisory Committee, and for a while, as Chairman Sarbanes has indicated, as the Acting Chairman of the entire

Commission.

I have nearly 12 years of experience working with the financial

markets, combining my years at the CFTC, with over 7 years with

the New York Stock Exchange, and 5 years as Senior Vice President of Government Relations. My blend of experiences with the

NYSE and CFTC has given me valuable insights into the financial

regulatory/policymaking process from the perspective of both the

regulator and the regulated. It has also given me a broad-based understanding of the workings of financial markets and the financial

institutions, which participate in them.

I have a full statement I would like to submit for the record, but,

again, just let me thank President Bush and than you, Chairman

Sarbanes, for convening this hearing.

These are very exciting times in the financial services industry

and I very much look forward to working with this Committee and

others once confirmed by the Senate.

Thank you.

Chairman SARBANES. We will include the full statement in the

record. Thank you very much for your opening statement.

Mr. McClellan.

STATEMENT OF MARK B. McCLELLAN

OF CALIFORNIA, TO BE A MEMBER OF THE

COUNCIL OF ECONOMIC ADVISERS

Mr. MCCLELLAN. Mr. Chairman, and Members of the Committee,

thank you very much for the opportunity and the honor of appearing here today and for taking the time for the prompt consideration

of my nomination to the Council of Economic Advisers.

I will start by introducing my wife, Stephanie McClellan. She is

in the second row here.

I am afraid to say that I was not quite as courageous as Ms.

Bair. Our 2-year-old twins, Ellie and Alex, are at home instead of

roaming the halls. But they have enjoyed the move to Washington.

Chairman SARBANES. I am sure you will tell them what they

missed.

[Laughter.]

Mr. MCCLELLAN. That is right, all the excitement.

[Laughter.]

I also want to thank the President for the honor and trust he has

put in me with this nomination and reaffirm my commitment to

upholding the standards of the Council of Economic Advisers.

Mr. Chairman, as you well know, careful economic analysis and

the integration of the latest and best academic thinking into policyVerDate 11-MAY-2000 15:13 Aug 07, 2002 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 80951.TXT SBANK4 PsN: SBANK4
8

making only can be to the good for all of the difficult issues that

we confront in dealing with the economic challenges facing the

country. In that respect, the Council of Economic Advisers has a

critical role. It represents in the Administration the interface of

academic research and real-world policymaking. And as such, it is

not a responsibility to be taken lightly.

Too often in many difficult political issues, it is easy to take a

political route rather than the often more thoughtful and difficult

course to make sound, long-range policy decisions. But on the other

side, too often, academics are removed from the realities of policymaking and all of the intricacies that must be considered in the difficult issues that we face.

The Council of Economic Advisers has a long and storied history

of overcoming these barriers and providing the kind of link between valuable policy insights from academia and the opportunities

to actually implement them in real-world policymaking, as you well

know, from your own background with the Council of Economic

Advisers.

It will be an honor and a pleasure if I have the opportunity to

continue that tradition by working on the broad range of issues

that come before the Council.

Thank you very much for the opportunity to appear here today.

Chairman SARBANES. Thank you very much.

Mr. McClellan, let me ask you. We are reading a tremendous

amount in the press nowadays about the state of the economy. How

do you see it? Where is it and where is it heading?

Mr. MCCLELLAN. Obviously, Mr. Chairman, the rate of economic

growth in the economy today is not as good as it should be. We

think that the economy is not in recession. I think the consensus

forecasts at this point are still for growth in 2001 of approximately

1.6 percent and perhaps more.

We think that continued careful and sound monetary policy decisions, as well as fiscal policy decisions, can help bring the economic

growth rate back up to a higher level that I know we would all like

to see.

To that end, the recent tax cut enacted by this Congress is expected to have an effect on boosting economic growth this year of

about 1 percent of GDP and hopefully will have some long-lasting

effects beyond that.

The advice on helping to steward the economy is obviously one

of the most important roles of the Council of Economic Advisers.

Chairman Glenn Hubbard and all of the Members take that responsibility very seriously and we will continue to provide whatever advice we can to the President in making policy to improve

our economic function.

Chairman SARBANES. Ms. Bair, Chairman Greenspan and former

Treasury Secretary Summers each have expressed a concern regarding the issue of our Nation’s financial literacy and education.

It is a concern of mine and Senator Corzine has already undertaken a leadership role in attempting to promote financial literacy.

And I understand that it is also a high priority of Senator Akaka,

who has just joined our Committee and, indeed, of many Members

of this Committee.

9

Is this an area of interest to the Administration? And do you

have any thoughts on how we can work together and what might

be done to improve our Nation’s financial literacy?

Ms. BAIR. Thank you, Mr. Chairman, because I also have a very

strong commitment to financial education.

My personal view is that with more and better financial education at much earlier ages, a lot of the regulatory problems and

consumer abuses that we see, unfortunately, from time to time,

could be eradicated. That is not to say that financial literacy is an

end-all, but it is an important complement to any comprehensive

regulatory policy to protect consumers in the delivery of financial

services.

Yes, my sense is, I have been a consultant for the past 4 weeks

at the Treasury Department and I am not in an official capacity

to speak for the Administration, but sense certainly that this is a

very high priority, at the highest levels of the Administration.

I think we need a comprehensive approach and I think that those

educational efforts must include, consistent with Senator Corzine’s

leadership, more and better financial education programs in the

schools. Certainly at the high school level, perhaps sooner.

As I think Chairman Alan Greenspan has suggested, even at the

elementary level, certain basic economic concepts, children are capable of grasping and more aggressive efforts should be made to introduce them to those concepts at an earlier age.

Chairman SARBANES. A few weeks ago, The Washington Post ran

an article that said: ‘‘Identity theft is one of the Nation’s fastestgrowing white-collar crimes.’’ What additional efforts should be

taken to prevent this practice and, more broadly, how important an

issue is the protection of an individual’s financial privacy to the

Administration?

Ms. BAIR. Well, again, I am not in a position to speak for the

Administration.

On the first question, on the question of identity theft, I would

agree. I think it is a growing problem. Technology has brought

wonderful innovations in the delivery of financial services and wonderful enhancements in the services and the products available to

consumers. The downside is it has provided the means for fairly

widespread dangers of identity theft to the detriment of the consumers that technology also serves. So, we need a very concentrated effort, a very focused effort. I think it should be a very

high priority.

On the broader question of financial privacy, it is interesting. To

the extent that that debate involves the very important issue of

consumers’ rights to access financial data that is being held for

them, I think we need to be careful to balance that since it involved

on-line access with the first issue you raised, identity theft, and

how we balance those two issues.

On the broader issue of financial privacy, we have the important

provisions for the Gramm–Leach–Bliley bill. We need to gather

greater experience, I think, under those provisions.

I, for one, was somewhat disappointed in the quality of the disclosures that some financial firms recently submitted pursuant to

those sent out to their consumers consistent with the requirements

10

of Gramm–Leach–Bliley. On the other hand, I think a number of

financial services firms did a very good job.

The statutory standard, however, is clear and conspicuous. And

I think that gives the regulators adequate authority to deal with

that discrete part of the problem.

There are obviously broader remaining issues. People of goodwill

still debate whether you should opt in or opt out in terms of information sharing, the ability of a firm to share information with

unrelated third parties.

I know that this is of interest to you and I look forward to continuing to work with you and Senator Gramm on those important

policy questions.

Chairman SARBANES. Thank you very much. I see my time is up.

Senator Gramm.

STATEMENT OF SENATOR PHIL GRAMM

Senator GRAMM. Mr. Chairman, thank you. Let me apologize to

everybody for being late. I was at the White House with the President when he announced his Medicare prescription drug initiative.

Mark McClellan has been very instrumental in putting that together. Let me begin by congratulating him on that.

Mr. Chairman, I know both of these nominees very well. I knew

Sheila Bair when she was Commissioner of the Commodity Futures

Trading Commission, from her work with the New York Stock Exchange, and when she worked for Senator Dole. It is hard to call

up the name of anyone who has had as extensive experience in the

public and private sector as Sheila Bair.

I want to congratulate the President on nominating her, and I

strongly support her and look forward to working with her.

Ms. BAIR. Thank you, Senator.

Senator GRAMM. Let me say with regard to Mark McClellan, that

I think demonstratively he is one of the best-educated people on

the planet.

[Laughter.]

How many people have both an M.D. degree from Harvard and

a Ph.D. from MIT? My only sadness at his being here is that he

was going to Texas A&M on a joint appointment with the Economics Department prior to President Bush convincing him to come to

Washington.

Chairman SARBANES. He was leaving Stanford to go to Texas

A&M?

Senator GRAMM. Yes. Of course.

[Laughter.]

I think I should, in all fairness, add that that is going home.

Mark’s mama is one of my closest political allies. She is the Comptroller in our State, and Mark is from one of our State’s most distinguished and talented families. It is certainly encouraging, Mr.

Chairman, when people with Mark McClellan’s ability are willing

to take time out of their career to come and serve the country in

a position that gets very little attention and that, in most cases,

gives you a marginal opportunity to have an input.

And again, as I have said on many occasions and I know, Mr.

Chairman, that you agree with me, it is a great testament to our

country that we have so many good people who are willing to serve

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in so many different capacities. It is the greatest strength of our

system that we are able to call forth the best and the brightest to

serve the country—and they are willing to do it. It is kind of amazing to me, but it is true. That is certainly true with both of our

nominees here today, and I want to thank them for their willingness to serve.

Chairman SARBANES. Senator Miller.

COMMENT OF SENATOR ZELL MILLER

Senator MILLER. Thank you, Mr. Chairman, but I have no questions at this time.

Chairman SARBANES. Senator Enzi.

Senator ENZI. I also want to thank both of you for your willingness to serve. I am a little bit more familiar now with all of the

paperwork that you have had to go through, including the process

and meeting all of the people. I am pleased that I had an opportunity to look through some of the materials that you provided. I

have some questions for later about the Basel capital standards

rule and the know-your-customer regulation.

As you all know, the Senate soundly defeated the know-your-customer rule the last time it came up because it conflicted with personal rights that are guaranteed by the Constitution.

We will be exploring that with you later. But, again, congratulations on your appointments and we look forward to working with

both of you.

Chairman SARBANES. Thank you very much.

Senator Carper.

COMMENTS OF SENATOR THOMAS R. CARPER

Senator CARPER. Dr. McClellan, I had been prepared to support

your nomination until I heard the disclosures about your mom and

Senator Gramm.

[Laughter.]

I will have to look at this one more closely.

[Laughter.]

I just want to thank you both for going through this process and

for your willingness to serve our country. Having gone through a

Senate nomination process myself when I was Governor and nominated for the Amtrak Board of Directors, I have some idea of what

you had to go through in terms of disclosures. It is just not much

fun and I thank you for just getting to this point.

Dr. McClellan, did you serve in the Clinton Administration?

Mr. MCCLELLAN. Yes, sir, that is correct.

Senator CARPER. In what capacity?

Mr. MCCLELLAN. I was a Deputy Assistant Secretary of the

Treasury for Economic Policy. It is a position that is involved in

providing advice and policy guidance to the Secretary of the Treasury on economic issues. My particular responsibilities focused on

microeconomic issues, including health care and Social Security,

issues like that.

Senator CARPER. Did I understand that you have had your hand

in the development of the President’s prescription drug proposal?

Mr. MCCLELLAN. Yes. I have been advising the Administration

on economic issues related to health care for some time.

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Senator CARPER. All right. Well, that is good. You have had a

foot in both camps, sort of like Norm Mineta.

Mr. MCCLELLAN. Trying to get some bipartisanship enacted in

policy.

Senator CARPER. That is what some of us are doing, too. Terrific.

We look forward to supporting your nomination.

Thank you both very much for being here. And maybe at another

time, we will have an opportunity to talk about Medicare reform.

Thank you. Good luck.

Mr. MCCLELLAN. Thank you.

Chairman SARBANES. I have just a couple of questions I want to

ask, and then I think we can probably draw the hearing to a close.

Mr. McClellan, I had a talk with Secretary Evans, the Secretary

of Commerce, the other day about Federal statistics and support

for the various statistical agencies. It is an issue in which he is

quite interested, I am very pleased to say.

I just want to get this on the Council’s radar screen. The Council

of Economic Advisers on occasions in the past has played a leading

role in trying to ensure adequate resources for the various Federal

statistical agencies, recognizing, of course, that we make lots of decisions on the basis of those statistics and that, therefore, timely

and relevant and accurate statistical information is an important

part of good policy formulation.

Michael Boskin, interestingly enough, when he was Chairman of

the Council, had this as quite a high priority. He really made a

major effort. We would like to see the Council involve itself in that

and now that we have the Secretary of Commerce, who has jurisdiction over some of the statistical agencies, although, not all of

them because the Bureau of Labor Statistics is outside that jurisdiction, as are some of the health and education statistics. Do you

have any view on this issue of the statistical information?

Mr. MCCLELLAN. Yes, sir. Good statistical information, prepared

in a timely and accurate fashion, is of crucial importance to guiding

policymaking on a whole host of economic issues.

As you mentioned, getting better statistics is a high priority of

the Secretary of Commerce. I have had a number of discussions

with Kathleen Adams at the Commerce Department, who oversees

many of the statistical collection activities related to productivity

and industrial output.

I have also had the opportunity to participate in some ongoing

activities with the Bureau of Labor Statistics and the Department

of Labor to try to improve employment and other statistics. And as

a result of my background in health economics, I have been long

involved in the analysis and the improvement of statistics in the

health sector, everything from hospital market baskets to the analysis of trends in expenditures. One of the particular areas where

I think we can and need to do better is in the measurement of economic output in the service sector.

The health care industry is a good example of the problems

there. It is fairly easy to measure how many visits people have to

the doctor and how much those visits cost. It is much harder to

measure the actual output of those kinds of services—what is the

contribution of a visit to the doctor or hospital stay to the wellbeing of the population and to the productivity of the economy?

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These are areas where the CEA will be involved and I think we

can do better in delivering more useful statistics for your use and

those of the Congress in guiding policy analysis.

Chairman SARBANES. We would appreciate it if you made sure

that this was fairly high up on the agenda of the CEA and let’s see

if we cannot work at trying to get adequate resources and review

the statistical indices that are being kept to make sure that they

are still relevant to the modern economy.

And hopefully, working together, we take Federal statistical information to a new plateau, which I think is a win/win. I do not

know anybody who is against it and there are significant benefits

to be gained from it.

I have one question to put again to you, Ms. Bair.

The Treasury Department and the Department of Housing and

Urban Development, in June 2000, just a year ago, issued a joint

report curbing predatory home mortgage lending. It was a joint

product of the two Departments. It had some very good analysis

and some very good recommendations in it, in my opinion. That is

an issue that this Committee intends to pursue and to focus on.

I do not know whether you have had a chance to look at that report. But I would hope that this Treasury Department would carry

along on the same path with respect to predatory lending that was

first charted out here by Secretary Summers and his Department

just over a year ago. Have you had a chance to look at that report,

or do you have any view on the issue generally?

Ms. BAIR. I have had a chance to review it. I have not studied

it in detail. I thought that it was an excellent report on my first

reading. I would note that the Federal Reserve Board has two rule

proposals out now, one amending HOPA, the other, the HMDA.

And a number of those rule proposals were consistent with recommendations included in the Treasury HUD report. I know this is

an area of deep concern to you. It is an area of deep concern to me

as well. I look forward to working with you on it.

I requested that I have some briefing materials on what was

going on in Maryland, and Baltimore, specifically, with regard to

the flipping practices. It made me very angry. I share your anger.

I share your concern. And if there are additional things that we

can do, we should.

I think a distinction does need to be made between predatory

lending and legitimate sub-prime lending. Obviously, we do not

want to take measures that would have the unintended consequence of providing disincentives for legitimate financial service

providers to serve economically distressed areas.

But, again, I appreciate your concern and your work in this area

and I look forward to working with you.

Chairman SARBANES. Well, good. We look forward to doing that.

I am pleased with your reference to the Federal Reserve because

they really have embarked, I think, on a very positive and constructive endeavor there. And I know that they are now in the

process of formulating some regulations. We hope they will come to

finality and make an important contribution toward dealing with

this problem.

We have been joined by Senator Ensign. John, did you have any

comments?

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COMMENT OF SENATOR JOHN ENSIGN

Senator ENSIGN. No, thank you very much, Mr. Chairman.

Chairman SARBANES. Senator Carper.

Senator CARPER. Mr. Chairman, I just cannot let this opportunity

pass without asking a question of Dr. McClellan.

I leaned over and said to Governor Miller here—— Chairman SARBANES. It is just by chance that these two Governors are sitting next to each other.

[Laughter.]

Senator CARPER. We are joined at the hip.

[Laughter.]

Given the work that you did in the Clinton Administration on

Medicare, Medicare reform and, to some extent, prescription drugs,

the role that I understand you have played in helping to shape the

proposal of President Bush, I have been working with Senator Bob

Graham of Florida and others.

I have just become a cosponsor of not only his proposal, but also

that of Senator John Breaux and Senator Bill Frist. One of the

things that we have wrestled with in trying to figure out how to

hold down cost to the taxpayers, is how to harness market forces

in competition.

In the Graham proposal, we have called for dividing the country

into regions and inviting prescription drug benefit managers to

come and to compete for the business in those various regions. And

those who can negotiate the best prices with the drug companies,

pharmaceutical companies, will presumably get more of the business in those respective regions.

The President probably has a different proposal with respect to

competition and how do you harness it to help contain our costs.

Would you just share some quick thoughts with us on how do we

not let this become just a runaway entitlement? How do we make

sure that we meet the needs that are greatest out there, but in a

way that is consistent with our budget resolution?

We set aside $300 billion in our budget resolution to cover these

costs. That is the forecast costs of the Graham proposal. I think the

President is under that a little bit. But just some thoughts on competition, holding down our costs and providing the benefit.

Mr. MCCLELLAN. Sure, I would be happy to make a few remarks

on that. And I hope we have more opportunities to discuss these

issues going forward.

Senator CARPER. I expect some of our centrist Democrats are

going to try to get you to come and meet with us.

Mr. MCCLELLAN. That would be a terrific opportunity for me.

Senator CARPER. Probably invite John Ensign, too.

Mr. MCCLELLAN. As you mentioned, I had a chance to work on

these issues as well in former President Clinton’s Administration.

And there, too, there were fundamental concerns about how we can

best use competition to help seniors, to help keep costs down, to

give them better options, but not to take away options that they

depend on or disrupt services and benefits that have been their

lifeblood in getting the medical care that they need.

Fortunately, at this point, I think there are a lot of good ideas

out there about how to do that. You mentioned that you had recently signed on to the ‘‘Breaux–Frist II’’ bill. And I think that is

15

a good example of how we can start using competition more effectively in giving seniors reliable and good options for getting their

guaranteed Medicare benefits.

With respect to prescription drugs, obviously, the increase in

costs of prescription drugs is an issue that is at the absolute top

of the national agenda and I know is a top concern of the President, as well as many Democrats in this body.

Your ideas with Senator Graham for using the best tools of the

private sector—pharmacy benefit managers and similar approaches

that allow people and insurance groups to pool together and use

their buying power to negotiate competitive discounts from drug

manufacturers—have been very successful in lowering costs in the

private sector.

I think actually the President feels that using private sector tools

would be a very effective way to go. And if you look at all the proposals for prescription drug benefits out there, one of the things

that they have in common is relying more on the kinds of tools that

have proven effective in the private sector for getting lower cost

drugs to people who have private insurance and improving the

quality of their pharmaceutical use.

I think one of the announcements that the President made today

that Senator Gramm referenced was to try to take a step now to

get that process going for seniors. Obviously, it is going to be a long

and hard effort, despite all of the good bipartisan groundwork that

has been laid, to help provide a prescription drug benefit in Medicare. It will take a lot of work and all of us rolling up our sleeves

and working together to enact a prescription drug benefit as part

of modernizing Medicare and bringing the program up-to-date.

But the President believes, I think like you do, that seniors

should have access to the kinds of tools that have proven so effective in private insurance plans for helping keep drug costs down.

I think part of his announcement today was on that. And I know

that he views that as hopefully a very useful basis for moving forward on the kinds of legislation that we need to help seniors.

Senator CARPER. Thank you.

Yesterday, the House of Representatives passed, I think by a

wide margin, a measure that would enable people from our country

to buy their prescription drugs from other foreign countries. Any

thoughts on that legislation?

Mr. MCCLELLAN. That is an issue that I had an opportunity to

think about in the last Administration as well because, as you

know, similar bills passed Congress in the last Administration. The

big concerns there are maintaining the safety of prescription drugs

that people in this country are using.

In the last Administration, Secretary Shalala and the FDA made

a determination that importation of drugs would be virtually impossible to undertake in a substantial and systematic way, while

assuring high quality drug use. It is an issue that bears on the Department of the Treasury as well.

The Administration, I think, has been conducting an extensive

review of all of the possibilities for drug importation and all of the

obstacles that exist to making sure that the drugs coming back into

the country are certified as high-quality, unadulterated, and nonexpired products.

16

It is a real challenge. I think it just goes to the fact that we need

to work as hard as we can to find effective ways to get lowerpriced, safe, high-quality prescription drugs to the American public.

Senator CARPER. Mr. Chairman, it is unfortunate that Senator

Dole is not here, with this line of questioning. I am sure that we

can find something to talk about with him, too.

Chairman SARBANES. Well, yes. He has just had some surgery,

but he is coming along fine. He did send a very laudatory statement which I read before you arrived.

Senator CARPER. I thank you for letting me pursue this line of

questioning. We look forward very much to further discussions.

If time permitted, Ms. Bair, I would ask you to share with me

Treasury’s thoughts on these matters, but I do not think it does.

Thank you.

Chairman SARBANES. Senator Bennett, did you have anything?

COMMENTS OF SENATOR ROBERT F. BENNETT

Senator BENNETT. Mr. Chairman, I have been tied up down in

the Appropriations Committee, so I apologize for being late.

These two have my strong endorsement and I look forward to the

opportunity of voting for them and then working with them after

they take their positions.

Chairman SARBANES. Thank you very much.

I want to commend the President. He sent us two nominees I

think of high quality. We look forward to acting in a favorable way

on your nominations.

I had hoped that we could draw this to a close before Preston

Bair’s patience ran out.

[Laughter.]

But we did not accomplish that. Much to the relief of his father,

he left the room and has gone out into the hallway.

[Laughter.]

Let me say to the Members of the Committee, we were not able

to get a quorum to act on the five nominees that we wanted to report out today: Angela Antonelli, Chief Financial Officer of HUD;

Jennifer Dorn, to be Federal Transit Administrator; Roger Ferguson, to be on the Board of Governors of the FED; Donald Powell,

to be the Chairman of the FDIC; and Ron Rosenfeld, to be President of the Government National Mortgage Association.

What I am going to do, I am not going to adjourn the Committee.

I am just going to recess it. We will canvass then and see if there

is an opportune time in which we may draw the Committee back

together, have a quorum, and be able to report these people out.

We have indicated that we want to try to cooperate with the Administration as best we can. We presumably will differ on occasions

about some nominee, but to the extent we can, we will move these

people forward and get them into place so they can start doing

their jobs.

So with that, I want to thank the nominees and we will recess.

If we can work something out, we will let Members know. Maybe

we will do it off the floor of the Senate or something of that sort.

The Committee stands in recess and I thank the nominees very

much for coming.

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[Whereupon, at 10:52 a.m., the Committee was recessed, to reconvene at 12:25 p.m. in room S–116 of the Capitol.]

Chairman SARBANES. A quorum is now present to markup the

nominees that we had scheduled for this morning.

Very quickly, the nominees are: Angela Antonelli, to be Chief Financial Officer of HUD; Jennifer Dorn, to be the Federal Transit

Administrator; Roger Ferguson, to be a Member of the Board of

Governors of the Federal Reserve; Donald Powell, to be a Member

and Chairman of the Board of Directors of the Federal Deposit Insurance Corporation; and Ronald Rosenfeld, to be President of the

Government National Mortgage Association, Ginnie Mae.

There is no controversy. I ask unanimous consent that we consider all five nominations en bloc. Is that acceptable?

Senator BUNNING. Mr. Chairman, I would like to be recorded as

voting no against one.

Chairman SARBANES. Okay. We will consider them en bloc, but

register your negative vote with respect to one of the nominees. Is

that acceptable to everybody else?

Senator DODD. Is there something we should know, Jim?

Senator BUNNING. Well, there is someone who is so much like

Alan Greenspan that I cannot vote for him.

Chairman SARBANES. All right. The Clerk will call the roll.

The CLERK. Chairman Sarbanes.

Chairman SARBANES. Aye.

The CLERK. Mr. Dodd.

Senator DODD. Aye.

The CLERK. Mr. Johnson.

Senator JOHNSON. Aye.

The CLERK. Mr. Reed.

Senator REED. Aye.

The CLERK. Mr. Schumer.

Senator SCHUMER. Aye.

The CLERK. Mr. Bayh.

Senator BAYH. Aye.

The CLERK. Mr. Miller.

Senator MILLER. Aye.

The CLERK. Mr. Carper.

Senator CARPER. Aye.

The CLERK. Ms. Stabenow.

Senator STABENOW. Aye.

The CLERK. Mr. Corzine.

Senator CORZINE. Aye.

The CLERK. Mr. Akaka.

Senator AKAKA. Aye.

The CLERK. Mr. Gramm.

Senator GRAMM. Aye.

The CLERK. Mr. Shelby.

Senator SHELBY. Aye.

The CLERK. Mr. Bennett.

Senator BENNETT. Aye.

The CLERK. Mr. Allard.

Senator ALLARD. Aye.

The CLERK. Mr. Enzi.

Senator ENZI. Aye.

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The CLERK. Mr. Hagel.

Senator HAGEL. Aye.

The CLERK. Mr. Santorum.

Senator SANTORUM. Aye.

The CLERK. Mr. Bunning.

Senator BUNNING. Aye, with the exception of Roger W. Ferguson,

I vote no.

The CLERK. So noted.

Mr. Crapo.

Senator CRAPO. Aye.

The CLERK. Mr. Ensign.

Senator ENSIGN. Aye.

The CLERK. The Ayes are 21, with the exception of Mr. Roger W.

Ferguson, where the Ayes are 20 and 1 no.

Chairman SARBANES. Thank you all very much.

Senator GRAMM. Thank you, Mr. Chairman, for doing this, and

Danny Akaka, welcome to our Committee.

Chairman SARBANES. This hearing is adjourned.

[Whereupon, at 12:30 p.m., the hearing was adjourned.]

[Prepared statements, biographical sketches of the nominees, and

additional material supplied for the record follow:]

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PREPARED STATEMENT OF SHEILA C. BAIR

ASSISTANT SECRETARY OF THE TREASURY FOR

FINANCIAL INSTITUTIONS-DESIGNATE

JULY 12, 2001

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

I am pleased to appear before you today to discuss my nomination to become the

Assistant Secretary of the Treasury for Financial Institutions.

Before I begin my statement, it might be prudent to introduce my family, since

I think it unlikely our 17-month-old daughter, Colleen, is going to make it through

the entire hearing. With me today are my husband, Scott Cooper, our 8-year-old son,

Preston, Colleen, and our au pair, Urarat Sukahrom. I am very happy that they

could all be with me this morning on this special occasion.

I would like to begin my statement by expressing my deep appreciation to President Bush for nominating me for this important position. I am honored by the confidence the White House has shown in me by naming me to this post and I will

work hard to justify that confidence. I would also like to thank Secretary O’Neill,

Deputy Secretary-Designate Ken Dam, and Under Secretary-Designate Peter Fisher

for the support they have provided for my nomination. I look forward to having the

privilege of working with them, the rest of the impressive team that the President

has assembled, and the well regarded career staff at the Treasury Department.

Next, I would like to thank Senator Robert Dole for his support and help on this

nomination, and all the support, advice, and mentoring he has provided me over the

past two decades. I know he wanted to be here this morning and wish him a full

and speedy recovery from his recent surgery. Working for Senator Dole early in my

career, I was able to learn all the best things about being in public service. In the

tradition of two other great Kansans, William Allen White and Dwight D. Eisenhower, Senator Dole’s leadership in the Senate reflected the common sense values

and pragmatic idealism so steeped in the politics of Middle America. From him, I

learned that Government has a special obligation to use American taxpayers’ dollars

wisely and sparingly, wisdom that will serve me well at the Treasury Department

whose job I believe, first and foremost, is to protect taxpayers’ funds from imprudent

risk and wasteful expenditure. Senator Dole also taught me, however, that Government has a special obligation to help society’s less fortunate and those programs to

help the poor and disadvantaged, if carefully targeted and efficiently managed, can

constitute a wise and noble use of taxpayers’ funds.

I come to you today with over a decade of experience working in public service,

ranging from my first job as a civil rights attorney for the old Department of Health,

Education and Welfare, to my 5 years of service to this august body on the staff

of Senator Robert Dole, to over 4 years as a Commissioner on the Commodity Futures Trading Commission, where I served as Chairman of the CFTC’s Financial

Products Advisory Committee. I have nearly 12 years experience working with the

financial markets, combining my years at the CFTC, with over 7 years with the

New York Stock Exchange, and 5 years as Senior Vice President for Government

Relations. My blend of experiences with the NYSE and CFTC has given me valuable

insights into the financial regulatory/policymaking process from the perspective of

both the regulator and the regulated. It has also given me a broad-based understanding of the workings of financial markets and the financial institutions, which

participate in them.

My previous experience with financial derivatives and equities will be helpful in

dealing with the myriad public policy issues that are arising as traditional lines demarcating banking products from other types of financial products are blurring, and

in some cases, disappearing. With financial institutions forging into new product

lines and services in the wake of the Gramm–Leach–Bliley Act, the ability of financial regulators and policymakers to coordinate and work together cooperatively is

being increasingly challenged, and I hope my background will help me to contribute

to the development of comity and consistency in the regulation and oversight of our

financial institutions. These are exciting times in the making of financial regulatory

policy and once again, let me say how deeply grateful I am to President Bush for

giving me this opportunity to return to public service. If confirmed by the Senate,

I look forward to working closely with Members of this Committee, the House Financial Services Committee, and others as together we deal with the dynamic and

momentous changes occurring in the delivery of financial services.

Thank you very much. I would be very happy to respond to any questions that

you might have.

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STATEMENT OF SENATOR BOB DOLE

JULY 12, 2001

Mr. Chairman, Members of the Committee, it is my honor and pleasure to have

the opportunity to introduce to you today Ms. Sheila Bair—President Bush’s nominee to be Assistant Secretary of the Treasury for Financial Institutions.

In Sheila Bair, the President has chosen a talented and a dedicated individual,

someone well-suited to lead the operation and regulation of financial institutions,

and the promotion of consumer access and the protection in financial services. I am

proud to offer my strong support for this nomination.

Sheila is a fellow Kansan, receiving her undergraduate and law degrees from the

University of Kansas. She has many other attributes and I am confident you will

agree with my assessment.

I have known Sheila for the better part of the last two decades. Earlier in her

career, she served as my Counsel on the Senate Judiciary Committee, handling

issues including Civil and Constitutional Rights, Intellectual Property, and Judicial

Reform. As I am sure many of you can recall, she was an irreplaceable member of

my staff, someone who I had every confidence in, who I counted on for advice and

analysis, and she never failed me in this role.

After assisting my Presidential Campaign in 1988, she served as a Legislative

Counsel to the New York Stock Exchange. In 1990, she waged a strong race as a

Congressional candidate. She lost the Republican nomination by less than 1 percent—a total of 760 votes.

In 1991, President Bush appointed her to the Commodities Futures Trading Commission. In 1993, she served as Acting Chairman, where she oversaw the completion

of a major study on ‘‘The Growth of Off-Exchange Derivatives Instruments.’’ In

1994, she was reappointed to the Commission by President Clinton.

In 1995, Sheila was named the Senior Vice President of the New York Stock

Exchange, returning to Head the Government Relations Division, representing the

Exchange on Federal, State, and local matters. During this time she had extensive

relations with this Committee, as well as the House Commerce Committee and the

Securities and Exchange Committee. Sheila remained a Consultant to the Exchange

until early this year.

I had the pleasure of traveling up to New York with her to ring the closing bell

of the New York Stock Exchange in May of 1999. The Dow had just passed 10,000.

I am sure many of you have been there but it was something I had never done before and it was a great experience.

We need someone in this position who has knowledge of financial institutions and

who has ‘‘been there.’’ Someone who can really add value to this Administration’s

effectiveness in promoting the interests of business, consumers, and ultimately the

American people.

Our financial institutions are the finest in the world. They are strong and dynamic and changing. Sheila’s work history highlights her unique qualifications for

serving successfully in this post at the Department of the Treasury. Her experience

speaks for itself. Knowing her as a staff member, a colleague, and a friend, I can

assure you the President has chosen a highly qualified candidate.

Mr. Chairman, I want to thank you and the Members of this Committee again

for affording me the opportunity to introduce Sheila and convey to you my strong

support for her confirmation.

(41)

NOMINATIONS OF:

MELODY H. FENNEL, OF VIRGINIA

TO BE ASSISTANT SECRETARY FOR

CONGRESSIONAL AND INTERGOVERNMENTAL

RELATIONS, U.S. DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT

MICHAEL MINORU FAWN LIU, OF ILLINOIS

TO BE ASSISTANT SECRETARY FOR PUBLIC

AND INDIAN HOUSING, U.S. DEPARTMENT

OF HOUSING AND URBAN DEVELOPMENT

HENRIETTA HOLSMAN FORE, OF NEVADA

TO BE DIRECTOR OF THE U.S. MINT

LINDA MYSLIWY CONLIN, OF NEW JERSEY

TO BE ASSISTANT SECRETARY OF

COMMERCE FOR TRADE DEVELOPMENT

MICHAEL J. GARCIA, OF NEW YORK

TO BE ASSISTANT SECRETARY OF

COMMERCE FOR EXPORT ENFORCEMENT

THURSDAY, JULY 26, 2001

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,

Washington, DC.

The Committee met at 2:35 p.m., in room SD–538 of the Dirksen

Senate Office Building, Senator Paul S. Sarbanes (Chairman of the

Committee) presiding.

OPENING STATEMENT OF CHAIRMAN PAUL S. SARBANES

Chairman SARBANES. The Committee will come to order.

There is a vote on and we anticipate that other colleagues will

be joining us, and I know there were some Senators who wished

to introduce nominees that are before the Committee. We, of

course, will accommodate them when they arrive.

Today, the Senate Committee on Banking, Housing, and Urban

Affairs will be holding nomination hearings on five nominees for

positions in the Administration.

42

Linda Conlin to be Assistant Secretary for Trade Development at

the U.S. Department of Commerce; Melody Fennel to be Assistant

Secretary for Congressional and Intergovernmental Relations at

the U.S. Department of Housing and Urban Development; Henrietta Fore to be the Director of the U.S. Mint; Michael Garcia to

be Assistant Secretary for Export Enforcement at the U.S. Department of Commerce; Michael Liu to be Assistant Secretary for Public and Indian Housing in the U.S. Department of Housing and

Urban Development.

I want to welcome all of the nominees before the Committee and

thank them for appearing today. We appreciate the importance of

the Administration being able to fill its top positions and therefore

we hope to be able to act on these nominations in an expeditious

manner. The Committee has been trying to do that throughout the

course of the new Administration in an effort to help them get their

people on the job.

We are going to divide the five nominees into two panels. Our

first panel will consist of the two nominees for positions at HUD.

Afterwards, we will take the other three nominees on the second

panel, the Director of the Mint and the two nominees for the Department of Commerce.

Why don’t the two HUD nominees come forward and take seats

at the table.

[Pause.]

I, along with many Members of this Committee, have had the

pleasure of working directly with our first nominee, Melody Fennel,

who is well-known and well-respected by all Members of this Committee. She has worked on housing issues for the Committee for

the past 5 years, both with Senator D’Amato and with Senator

Gramm. Her knowledge of Congress and her impressive background in housing will, we believe, serve her well in her capacity

as Assistant Secretary for Congressional and Intergovernmental

Relations.

Melody Fennel has worked on affordable housing issues for 13

years in various capacities, because in addition to her time on the

staff of this Committee, she has held positions at the National

Council of State Housing Agencies and the National Association of

Home Builders.

Ms. Fennel has been a tremendous asset to this Committee and

the work we do on housing issues. She gave us invaluable assistance a few years ago when we developed the Bipartisan Public

Housing Reform legislation and she has always worked well with

all Members of the Committee and their staffs in addressing the

difficult issues that arise regarding housing and HUD.

I think it is fair to say we will certainly miss her presence on

the Committee, but we recognize the significant responsibility and

indeed honor for her to serve in the Administration. I think we all

wish her success in her new position. I think the view on this side

of the table is that the Administration is very fortunate to get her.

And if people have not yet drawn the obvious conclusion, I do not

think this is going to be a difficult nomination.

[Laughter.]

Our other HUD nominee is Michael Liu, who has been nominated to be the Assistant Secretary for Public and Indian Housing.

43

Mr. Liu also has an impressive background, having held office in

both the Hawaii State Senate and Hawaii House of Representatives. He has held numerous positions in banking and is currently

Senior Vice President for Community Investment for the Federal

Home Loan Bank of Chicago. Prior to this position, he served as

a Community Builder Fellow at HUD for a year. He previously has

served in the first Bush Administration as a Deputy Under Secretary and a Deputy Assistant Secretary at the U.S. Department

of Agriculture. He holds a B.A. from Stanford University, and a law

degree from the University of Hawaii.

Mr. Liu faces some serious challenges ahead. He will be responsible for overseeing the Nation’s largest housing assistance programs, the very programs that address the needs of the poorest

Americans. The Public Housing and Section 8 programs are critical

in meeting the needs of families who are otherwise unable to afford

decent and safe housing.

Both he and Ms. Fennel have their work cut out for them. I have

expressed to both of them the need to ensure that HUD’s programs

are adequately funded. Regrettably, the Administration’s budget

request this year had serious cuts in the area of public housing,

and I hope that with Mr. Liu’s work as Assistant Secretary, next

year’s budget request will not underfund these necessary programs.

I look forward to working with both of the nominees to make

HUD’s programs work more effectively, and to address the significant housing crisis in this country.

Now, Senator Akaka, I know that you wanted to say a few words

of introduction with respect to Mr. Liu, and I yield to you for that.

Then Senator Reed, I do not know if you have any opening comment. We will follow along before we turn to the nominees.

Senator Akaka.

STATEMENT OF SENATOR DANIEL K. AKAKA

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

Senator Sarbanes, Senator Gramm, Members of the Banking

Committee, it is a real pleasure for me to present to the Committee

Michael M.F. Liu and to present him for confirmation as Assistant

Secretary for Public and Indian Housing.

I would also like to welcome Susan, Mr. Liu’s wife, and their son,

Nicholas. Hi, Nick.

[Laughter.]

They have traveled from their home in Illinois to attend this

hearing today, and I want to say to Mike Liu and the family, aloha.

Mike is well-qualified to be the Assistant Secretary for Public and

Indian Housing, and I want you to know that I fully support his

confirmation.

The Office of Public and Indian Housing is vital to many families

who benefit from housing programs. Based on Mike’s impressive

credentials in housing, banking, and public policy, I have every

confidence in his ability to ensure that the Office of Public and Indian Housing achieves its mission which includes the implementation of public housing programs and coordination of departmental

housing and community development programs for Native American Indians, Alaska Natives, and Native Hawaiians.

44

In his current position as Senior Vice President and Community

Investment Group Head for the Federal Home Loan Bank of Chicago, Mike is responsible for a number of housing initiatives to assist families to purchase their first home, build affordable housing,

and help low- and moderate-income residents improve their communities. Mike’s experience in both the public and in the private

sectors has afforded him the opportunity to address many public

housing issues.

As a State legislator in Hawaii, Mike served as the Ranking

Member of the Housing Committees in both the State House of

Representatives and the State Senate. In addition, Mike has served

on boards of nonprofit organizations that build affordable rental

housing and serve tenants of public housing. He also was a Community Builder Fellow at the U.S. Department of Housing and

Urban Development where he gained valuable insight into the operations of HUD, and firsthand knowledge of HUD’s Section 8

voucher program.

While I have only touched on a few areas of Mike’s professional

experience and capabilities, I believe that his management, financial, and housing background clearly illustrate his qualifications for

this position. I believe he is an excellent choice to be Assistant Secretary for the Office of Public and Indian Housing. As such, I am

pleased to give my full support to Michael Liu’s confirmation as the

Assistant Secretary, and urge the Committee to act favorably on

his nomination.

Thank you, Mr. Chairman and Members of the Committee.

Chairman SARBANES. Thank you very much, Senator Akaka.

Senator Reed.

COMMENTS OF SENATOR JACK REED

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

Let me welcome Mr. Liu and Ms. Fennel. You are going into a

Department that is critical to the lives of so many Americans. One

of the basic obligations I believe that we have is to provide safe,

decent, affordable housing for all of our citizens. Frankly, we have

fallen behind in that obligation. I know you are going to use your

ingenuity and your creativity to try to make the programs more efficient and the reach more effective. But ultimately it will come

down, as the Chairman suggested, to appropriate resources.

I would hope, as you go forward, you would not be bashful about

asking, indeed demanding, within the Department, with OMB, and

the Congress for the resources that are necessary to keep people

well-housed in this country. I thank you both.

Thank you, Mr. Chairman.

Chairman SARBANES. It is the standard procedure of the Committee with respect to its nomination hearings to place the nominees under oath, so I would ask you both now to please stand.

[Witnesses sworn.]

Chairman SARBANES. We would be happy to hear your opening

statement. If you have any members of your family here that you

wish to present, we would be very pleased for you to do that. Why

don’t we start with Ms. Fennel.

45

STATEMENT OF MELODY H. FENNEL, OF VIRGINIA

TO BE ASSISTANT SECRETARY FOR CONGRESSIONAL

AND INTERGOVERNMENTAL RELATIONS

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Ms. FENNEL. Thank you, Chairman Sarbanes, Subcommittee

Chairman Reed, and Senator Akaka. It is my pleasure to introduce

my mother, Mary Lee Fennel, and my brother, Mark Fennel. I

have been blessed with a family that has made many told, and

even more untold, sacrifices for me.

I am deeply grateful to President Bush and Secretary Martinez

for according me the honor of this nomination. I anticipate the

charge for which I have been nominated with great humility.

Chairman Sarbanes, I thank you for your willingness to consider

me for confirmation and for supporting the nominations process

during such a busy time. Over the last 6 years, I have staffed hearings in this very room with approximately 200 witnesses. This has

taught me many important lessons. First and foremost, a witness

should be brief.

[Laughter.]

Members of the Senate Banking Committee, I sit before you with

true admiration, as a staff aide that has witnessed firsthand your

steadfast dedication to your principles and the pursuit of what you

believe is right for our fine Nation. I sit before my Staff Director

and my colleagues on both sides of the aisle with great respect for

their ethics, their commitment to public service, and their strength

of spirit. I only hope that I will continue my service with the courage Senator Gramm, my wise leader, has entrusted in me.

In 1780, Abigail Adams wrote to her son, who later became our

sixth President, ‘‘Justice, humanity, and benevolence are the duties

you owe to society.’’ If confirmed, it would be my duty to assist the

President and the Secretary in providing this justice—a justice that

proffers help to our citizens who are truly in need, and assures that

the monies from those that give are used honestly and efficiently.

To ensure this, a close relationship between the Executive and the

Legislative Branches is essential—and while there is a necessary

separation between the Administration and Congress, there also

exists a symbiotic relationship that I would endeavor to strengthen.

If confirmed, I personally pledge to you that the Administration’s

housing and economic development proposals will be presented to

Congress in an open and forthright manner in order to ensure the

full opportunity for a comprehensive dialogue.

In closing, I offer my thanks to God, to His Name be the glory.

Thank you.

Chairman SARBANES. Thank you very much.

We have been joined by Senator Hutchison.

Kay, are you under some time pressure?

Senator HUTCHISON. Mr. Chairman, I am. I am sorry. I have a

3 o’clock commitment.

Chairman SARBANES. Mr. Liu, I think that we will defer your

statement for the moment and we will give Senator Hutchison an

opportunity to introduce Ms. Fore.

46

STATEMENT OF KAY BAILEY HUTCHISON

A U.S. SENATOR FROM THE STATE OF TEXAS

Senator HUTCHISON. Thank you so much, Mr. Chairman. I appreciate it very much because although I am not her Senator I wish

she were my constituent because I have known Henrietta Holsman

Fore quite a while.

Chairman SARBANES. If she would be able to become your constituent, we would all be in danger; we would be worried that we

would be losing all of our constituents.

[Laughter.]

Senator HUTCHISON. This is true. We want good people in other

States as well. As you know, she has been nominated to be Director

of the U.S. Mint. She comes to this office very qualified. I have

known her in an organization called ‘‘The Committee of 200’’ which

is a businesswomen’s organization of the leading businesswomen of

our country of which Henrietta is one. She is President and Chairman of Stockman Products which manufactures and distributes

steel products, cement additives, and wire building materials, as

well as CEO of Holsman International, an investment and management firm.

She has the qualifications to be the Director of the Mint, which

I think is a management job and it is a manufacturing job and one

that I think she will take very seriously. How we can be efficient

and produce a quality product, and that is what we all want.

She has served in several other Administration positions. She

has been a Senior Associate at the Center for Strategic and International Studies, as well as being a leader in women’s business circles in our country.

I recommend her highly and I hope that you will look favorably

on her nomination and expedite it at your will.

Chairman SARBANES. Thank you very much.

Senator HUTCHISON. Thank you.

Chairman SARBANES. We certainly appreciate your coming and

speaking on her behalf. I know you have to leave. We are happy

to excuse you.

Mr. Liu, why don’t we hear your statement now?

STATEMENT OF MICHAEL MINORU FAWN LIU, OF ILLINOIS

TO BE ASSISTANT SECRETARY FOR

PUBLIC AND INDIAN HOUSING

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Mr. LIU. Thank you, Chairman Sarbanes, and Senator Reed. It

is really a privilege to be able to appear before you today as part

of the confirmation process.

By way of reintroduction again, let me note that my wife, Susan

Orlando Liu, and my son, Nick, are here with us.

Chairman SARBANES. Recording it for posterity.

Mr. LIU. Yes, for posterity, perhaps a budding Stephen Spielberg

in the making. But I would definitely not be here without their

support, and enduring patience.

My public and professional career has now spanned over 23

years, first as a Delegate to my home State’s Constitutional Convention, then as a State legislator, followed by work in community

development banking and law. My upbringing includes living in

47

public housing as a youngster; experiencing America’s post-World

War II transformation into a more diverse and tolerant society,

much of that through the immigrant experiences of my mother; and

being provided the opportunity to compete and to succeed in educational and career endeavors that have linked me to various communities on the local, State, and national levels.

I am no stranger to issues affected by Public and Indian Housing

policies as described so kindly by Senator Akaka. I have spent

many years in the State legislature dealing with issues that relate

to public housing. Many of my constituents in the districts that I

represented had a tie or were tenants of public housing. It also included the well-established Department of Hawaiian Home Lands

Papakolea Homestead, affording homeownership.

Affordable housing, both homeownership and rental, has been a

key area in which I have been involved for many years. While with

the U.S. Department of Agriculture as Deputy Under Secretary for

Small Community and Rural Development, I oversaw implementation of new guaranteed loan programs for both single-family and

multifamily housing in rural America. At Bank of America, I

worked on a number of single-family mortgage and multifamily

grant programs to help address Hawaii’s high-housing costs. In my

current role as Senior Vice President and Community Investment

Officer for the Federal Home Loan Bank of Chicago, I have managed an affordable housing grant program that allocates between

$14 and $16 million annually, and a $600 million portfolio of community investment credit projects, most of which are for housing.

In all of these experiences, I have had extensive contact with housing authorities both large and small.

With fundamental adjustments occurring in how the clients of

public housing and communities at large are seeing issues regarding housing, a plethora of program and regulatory changes have

been enacted. Most of these adjustments have been for the better,

giving local, State, and Federal authorities more options in framing

programs to match local conditions. I look forward to the challenge

of managing these changes in collaboration with Public Housing’s

many partners. And in this context, I see management as including

attention to the nuts and bolts of resource allocation for the support of Public and Indian Housing within HUD.

The renewed interest in creative and efficient use of public housing assistance is an integral part of housing goals as described by

Secretary Martinez before this Committee. For example: The use of

Section 8 vouchers for down payment accumulation, and application of vouchers toward monthly mortgage expense.

There have been great strides in addressing housing issues related to Indian Housing, including the ability to secure mortgages

through an ever-growing variety of leases on tribal lands. I will

support the coordination of efforts between and among the various

Federal agencies with native peoples’ programs. And more can be

done, especially in the educating of private sector banking interests

to the potential of markets available under programs administered

by Indian Housing and the Office of Native American Programs.

If fortunate enough to be honored by confirmation by the U.S.

Senate, I will be a manager and an advocate for fair and common

sense delivery of Public and Indian Housing program resources. I

48

understand that it is important to recognize the past in order to

effectively move into the future. I also understand that for the families affected by Public and Indian Housing, the future is often very

much on the near, rather than on the far horizon, so that timely

action must accompany efforts at prudent planning.

Mr. Chairman and Members of the Committee, I appreciate your

indulgence. This concludes my testimony. I stand ready to address

any questions or comments you may have.

Thank you.

Chairman SARBANES. Thank you very much.

We have been joined by Senator Allard. Wayne, do you have an

opening statement?

STATEMENT OF SENATOR WAYNE ALLARD

Senator ALLARD. Mr. Chairman, I do have a brief statement. I

would like to welcome our nominees here today and I look forward

to their testimony. I would also like to thank you, Mr. Chairman,

for moving the nominees so quickly through the Banking Committee. As Ranking Member of the Housing Subcommittee, I am

particularly pleased to see us get nominees confirmed at HUD.

I have met with most of the nominees here today. They all strike

me as very qualified. However, I must single out Melody Fennel.

Melody has been the Banking Committee’s expert on housing at

HUD throughout my tenure as Chairman and now Ranking Member of the Housing and Transportation Subcommittee. She has

been very helpful to me and I am going to miss her a great deal.

I will say, however, that it will be very nice to have an old hand

in Congressional relations at HUD. While we will miss her on the

Committee, we will not lose her expertise and talents. I look forward to continuing to work closely with her in the years ahead.

Thank you, Mr. Chairman.

Chairman SARBANES. Very good. I have a few questions I want

to put, first to Ms. Fennel.

Given your experience up here, tell us what qualities or performances you think would be important in the Office of Congressional

Intergovernmental Relations. What have you perceived from this

vantage point that you can now put to work when you go downtown into the Department?

Ms. FENNEL. Thank you, Senator.

My first objective for HUD’s Congressional Affairs Office is to improve communications with the Hill. First and foremost, the Office

should be responsive to every Member of Congress with accurate,

complete, and timely information. That kind of healthy dialogue is

what we need to achieve the ultimate goal for the Office—to work

together with Congress and other Government entities, as well as

public and private interest groups to improve housing and economic development situations in our country.

Chairman SARBANES. I was very much taken with the sentence

in your statement about pledging that the Administration’s Housing and Community Development proposals will be presented to

Congress in an open and forthright manner in order to ensure the

full opportunity for a comprehensive dialogue.

I definitely concur with that, and I think that is a very important

perception on your part, and we look forward to having such an

49

open and forthright dialogue. I think it is very important. Obviously, anything you can do to encourage others in the Department

to take the same attitude, we would appreciate.

I have not yet heard from House Members, but conceivably they

might get in touch with me with a concern that you might show

favoritism toward the Senate in terms of carrying out your responsibilities.

[Laughter.]

Should they do that, what should I tell these concerned House

Members?

[Laughter.]

Ms. FENNEL. I do have a great appreciation for the Senate and

it has been my home for 6 years. I am very sad in many ways to

leave it, but I think you can assure them that all Members will be

treated equally.

[Laughter.]

Chairman SARBANES. What a good answer.

[Laughter.]

Mr. Liu, let me turn to you for just a couple of moments. You

worked as a Community Builder Fellow at HUD for a year. Do you

think that experience was beneficial and worthwhile?

Mr. LIU. For me personally it was, sir. In fact, I was able to do

some things specifically related to public housing. I was able to actually go out into the field and do some housing inspections under

the Section 8 voucher program within the District, and it was very

valuable. In actually seeing what inspectors do, I was also able to

work with residents at the Capitol View Plaza Project in Southeast

that was undergoing major changes because of safety issues and

health issues at that project, and our need to relocate the residents

there. So from that aspect, as well as from a larger sense in seeing

some of the programs, and how they interrelated at HUD, it was

a good experience.

Chairman SARBANES. Did you feel that your work as a Community Builder, and that of others who were there as Community

Builders was beneficial to HUD? You have said it was beneficial to

you. Do you feel it was of benefit to HUD?

Mr. LIU. Mr. Chairman, I really did not get to see enough of the

total panoply of how all of the builders were interrelating in other

offices, so it is very difficult for me to say that, as a whole, it was

good or bad.

Chairman SARBANES. Did you meet enough of the other Community Builders who had been appointed to form any opinion about

how qualified or competent they were? What was your impression

of your fellow Community Builders?

Mr. LIU. Those I had the most interaction with were very committed and they were folks that had a lot of qualities and could

make them of value to HUD. The key issue at that point in time

was whether or not they would be provided the actual training in

the substantive programs where they could actually add value,

both in the field or back at headquarters.

Chairman SARBANES. The Administration’s budget request proposes to reduce the Section 8 reserves from 2 months to 1 month.

That is a proposal that was made. But during the negotiated rulemaking on the Housing Certificate Fund, HUD officials said that

50

reducing their reserves to 1 month would represent a serious

threat to housing baseline families. Are you familiar with HUD’s

position at all in terms of doing the negotiated rulemaking?

Mr. LIU. In a general fashion, sir, but I am not informed on the

actual details of that.

Chairman SARBANES. I would appreciate it if, in view of that position, you take a very careful look at this when you go back to the

Department. Again, it is an easy way to pick up some money, but

it may run counter to the kind of standards we want to apply. If

you shorten it from 2 months to 1 month, you are in a sense cutting the reserve you need in half. The rationale earlier was they

needed 2 months in order to forestall any threat to this baseline

housing, so if you would take a look at that, I would appreciate it.

I see my time has expired. I yield to Senator Allard.

Senator ALLARD. Thank you, Mr. Chairman. I would just reemphasize again that during my tenure with Melody on the Housing

and Transportation Subcommittee, my staff and I have had the

pleasure of working with you on a number of occasions. I have always found you to be knowledgeable, dedicated, conscientious, and

hardworking, and I hope that we will be able to continue to rely

on you in your new capacity at HUD.

We will have the record show that she shook her head in a positive manner.

[Laughter.]

Mr. Chairman, you so thoroughly grilled her unmercifully, I do

not think I can add any more to your line of questioning.

[Laughter.]

I do have one brief question for Mr. Liu. There are a number of

housing agencies, such as Puerto Rico, which have serious problems and have not been officially designated by HUD as troubled

housing authorities. Does this concern you, and are you going to

work with this Committee to help identify and clean up troubled

housing authorities?

Mr. LIU. Senator, I assure you that I will work with all Members

of Congress, yourself, and others, and any who are interested in

those issues. I understand there are actions going on right now to

address some of the concerns there, and I hope, if I am fortunate

enough to be confirmed, to be able to come back and report that

we have made significant progress in those areas.

Senator ALLARD. We look forward to hearing your report, and

look forward to working with you.

Thank you, Mr. Chairman.

Chairman SARBANES. Senator Corzine.

COMMENTS OF SENATOR JON S. CORZINE

Senator CORZINE. First of all, I want to congratulate the nominees and look forward to working with you, if you are confirmed,

and I expect there is a good chance of that. Let me actually pull

in a lobbying word, something that is working its way back into the

process that was left out of the HUD budget request. That is the

Drug Elimination Program.

Mr. Liu, have you had a chance to examine the program? I have

heard from more public housing advocates and agencies in New

Jersey with regard to this than almost any other issue with regard

51

to housing. Have you had a chance to evaluate it? Do you have an

opinion yourself? Can I count on you to be an inside voice to support a program which I think, at least the community thinks, is

very important?

Mr. LIU. Senator, I am certainly aware that there is a lot of concern over that issue. I believe that based on my conversations with

the folks over at HUD, as well as the Administration, that clearly

there is no disagreement, I think, in the need to deal with the issue

of drug elimination in relation to public housing. To the extent that

we can work toward the common goal, certainly I will take a close

look at the issue of resources I think HUD will do what needs to

be done in order to address the issues of concern.

Senator CORZINE. I will just comment that we asked Secretary

Martinez the same question at his confirmation hearing, and got

positive remarks and then the budget had it eliminated, so I am

somewhat insecure with regard to this issue. And it is something

I know, at least for those in New Jersey, they feel very strongly

about it being included as we go forward.

Thank you, Mr. Chairman.

Chairman SARBANES. That was a very good question. I want to

point out that the Senate Appropriations Committee has reported

out a bill that has virtually restored the cuts that were made in

the public housing area in the Administration’s budget, both on the

Drug Elimination Program and on the Public Housing Capital

Fund. And the Committee, having done that, I hope the Administration will now be supportive of that change.

I think one of your biggest challenges is to ensure that you have

sufficient resources for these programs. The Committee has tried to

provide them and I hope the Department will pick up on that and

carry it through.

Let me just ask you a couple of questions about the Capital

Fund. This money helps housing authorities repair and upgrade

their public housing stock. And as you noted, you have had such

stock in your districts when you were an elected member of the Hawaii legislature, and of course you served on the committees of the

Hawaii legislature that dealt with housing in both the House and

in the State Senate, as I understand it.

The Administration, when they cut the $700 million in the Capital Fund, uses a justification that the public housing authority had

unexpended capital funds. But are you familiar with the data? Actually, it was provided by HUD itself, which showed virtually all

the public housing authorities are expending capital funds well

within their statutory timeframe? In the Public Housing Reform

Act, which I discussed earlier with Ms. Fennel, we put in Senator

Mack, who took the lead on that, we worked out a provision to put

the public housing authorities within a statutory framework in

terms of obligating and then spending these funds so they do not

spend them all at once. We have sort of a pipeline that we have

to continue as a continuum. Are you familiar with the data that

showed they really were working within that framework and not

outside of it?

Mr. LIU. Senator, I have had a chance to look at the information.

I have not had a chance to digest all of the implications of that information. I can assure that upon confirmation, I will certainly be

52

spending a significant portion of time ensuring that the resources

that are needed to meet the capital requirements of public housing

will be met, both short and long term.

Chairman SARBANES. Also on this very same point, the ABT

study, A-B-T, has been cited for the proposition that public housing

authorities are only capable of spending $2.3 billion annually. They

do not have a more stepped-up capacity. Actually, the study did not

say that they do not have the capacity to spend additional capital

funds. What it said was that they accrue $2.3 billion in new capital

needs each year. That is what is added onto their needs, and that

they had a great need for additional capital funds, because they

have a backlog of capital needs of some $22 billion.

I hope when you go down there you will take a look. We have

this existing housing stock. It is providing very important affordable housing. I think it is very important that we maintain it, that

we not allow it to deteriorate. We have allowed too much of that

to happen, the consequence of which is, we end up tearing it down.

We then have the problem of replacing it, and the expense of replacing it. And I think it simply behooves us to make sure that to

the extent we can, we keep this stock in usable condition in order

to meet the affordable housing needs of our people.

So the area that is within your jurisdiction is an area of keen interest to Members of this Committee, as you can appreciate yourself, having been a legislator confronting these affordable housing

needs. We look forward to a very close interaction with you.

Are there any further questions?

[No response.]

We thank this panel very much. We would now like to excuse

you and ask the other three nominees to come forward.

[Pause.]

For our second panel this afternoon, I am pleased to welcome before the Committee Ms. Henrietta Fore, who has been nominated

to be the Director of the U.S. Mint, and two nominees for the Commerce Department, Linda Conlin, who has been nominated to be

Assistant Secretary for Trade Development, and Michael Garcia,

who has been nominated to be Assistant Secretary of Commerce for

Export Enforcement.

Ms. Fore is a graduate of Wellesley College, received a master’s

degree in Public Administration from the University of Northern

Colorado, has studied both at Oxford and Stanford. She is currently

the Chairman and President of Stockton Products, a manufacturer

of steel products, cement additives, and wire building materials in

Las Vegas, Nevada, and is also Chairman and CEO of Holsman

International, a DC-based investment and management company.

In addition to this extensive private sector experience, Ms. Fore

has held Presidential appointments at the U.S. Agency for International Development as Assistant Administrator for Asia and the

Assistant Administrator for Private Enterprise and has been confirmed in both of these positions previously by the Senate. Actually,

I sat on the Foreign Relations Committee when we considered

those nominations.

Since 1993, Ms. Fore has been a Senior Associate at the Center

for Strategic and International Studies in Washington. She’s a

53

trustee of The Aspen Institute, The Asia Foundation, and the National Public Radio Foundation.

She founded and served as first chair in the early 1990’s of the

United States–Asia Environmental Partnership, a coalition of business, Government, and community organizations from the United

States and 31 Asian countries.

Ms. Conlin received her undergraduate degree from the University of Massachusetts. She spent the first 10 years of her career

serving as President of the Park-Main Travel Agency in Massachusetts, which I understand was a family business, then worked as

Protocol Officer at the State Department, and as Corporate Liaison

at the U.S. Information Agency.

She previously served as an Assistant Secretary of Commerce for

Tourism Marketing from 1989 to 1993 under the first President

Bush, and then was the Executive Director for Travel and Tourism

of the New Jersey Commerce and Economic Growth Commission

for the balance of the 1990’s. Recently, she has been running her

own consulting company.

Clearly, her prior service in the Commerce Department, as well

as her service in State government should be very useful for overseeing the Office of Trade Development at the Commerce Department. The Office of Trade Development is responsible for conducting analysis of the different sectors of the U.S. economy. It has

a staff of 400, including a large number of economists and experts

on a range of U.S. industries.

The Office of Trade Development performs the sectoral analysis

that supports international trade negotiations carried on by the

U.S. Trade Representative. It also oversees the Commerce Department’s Advocacy Center, which assists U.S. companies in competing for contracts for major capital projects abroad. The Assistant

Secretary for Trade Development is a very important part of the

Commerce Department’s export promotion efforts, something in

which this Committee has taken a keen interest, and I am hopeful

Ms. Conlin will provide the strong leadership which it requires.

Finally, Mr. Garcia received his undergraduate degree from the

State University of New York at Binghamton and his law degree

from the Albany Law School. After law school, he worked for a year

as an Associate Attorney in the law firm of Cahill Gordon &

Reindel in New York, then as a Law Clerk to the Honorable Judith

Kaye of the New York State Court of Appeals, one of our country’s

most distinguished State court judges.

Since 1992, he served as Assistant United States Attorney for

the Southern District of New York, which is a training ground—

well, just let me say it seems to me to be a superb training ground

for lots of people in Government service. In that capacity he has

prosecuted a number of cases involving terrorist attacks, including

the bombing of the World Trade Center in New York and the

bombing of U.S. Embassies in Kenya and Tanzania. These cases

have obviously given Mr. Garcia familiarity with the challenge of

prosecuting cases in which foreign citizens and foreign countries

are involved, as well as in dealing with the U.S. intelligence and

national security communities.

The nomination of a Federal prosecutor as Assistant Secretary

for Export Enforcement sends a strong message that enforcement

54

of our export control laws will be taken seriously by the Department of Commerce. We hope soon to reauthorize the Export Administration Act—we are working on that now in the Congress—to provide stronger penalties and enforcement tools for the very position

to which Mr. Garcia has been nominated. I hope we will be able

to move that legislation through so it won’t be necessary for him

to rely on the weaker penalties which are available under the

International Emergency Economic Powers Act.

I just want to enter into the record that I have been impressed

thus far with the quality of people that Secretary Evans, the Secretary of Commerce, has attracted to the Commerce Department

who have come before our Committee. I am very hopeful that these

nominees will become a very strong and effective part of that team.

Before we turn to your opening statements, if you could stand

up, I will administer the oath.

[Witnesses sworn.]

Chairman SARBANES. Thank you very much.

If any of you have family here that you wish to introduce, we will

be quite happy for you to do that.

Mrs. Fore, why don’t we start with you as Director of the Mint,

then we will go to the Commerce Department.

STATEMENT OF HENRIETTA HOLSMAN FORE

OF NEVADA, TO BE DIRECTOR OF THE U.S. MINT

Ms. FORE. Mr. Chairman, I do have family here. May I introduce

my mother, Marta Holsman, directly behind me. She started me on

my first coin collection. My sister, Marta Babson, daughter Rebecca

Fore, and husband Richard Fore.

Chairman SARBANES. Very good. Thank you. We are very pleased

to have you all with us.

Ms. FORE. Senator, mindful of your time, I have submitted a

written statement for the record, and I thought I would give you

a shorter oral version.

Chairman SARBANES. That is just fine. We will include the full

statement.

Ms. FORE. It is a pleasure to be with you, Chairman Sarbanes,

Senator Allard, Senator Corzine. I am honored that President Bush

has nominated me to serve as Director of the Mint. The President

has outlined an Administration that is business-like in its approach

to Government. That is the approach that I intend to take.

When the Senate and House assembled in 1792 in Philadelphia,

they passed the Coin Act to set the standards for a mint to create

the Nation’s coinage and protect the Nation’s treasure. Americans

have come to expect a safe and reliable currency in our pockets and

in our cash registers. Our currency must be smart, with an electromagnetic signature, and it must be durable, to last 30 years.

Our coinage must tell the story of our Nation, passing along the

chronicle of our rich heritage. I believe in the idea that every

American should serve our country. I was pleased to see Senator

Kay Bailey Hutchison, and I thank her for being here.

I have served in business, Government, and nonprofit sectors.

These experiences have exposed me to many different aspects of

America’s interests, and I believe they better prepare me for the

challenge at hand.

55

It would be an honor to again serve in Government, to work with

this Committee, with your staffs, the Senate, and the House of

Representatives.

Thank you.

Chairman SARBANES. Thank you.

Ms. Conlin.

STATEMENT OF LINDA MYSLIWY CONLIN, OF NEW JERSEY

TO BE ASSISTANT SECRETARY OF COMMERCE

FOR TRADE DEVELOPMENT

Ms. CONLIN. Thank you, Mr. Chairman.

I would like to introduce my friends and family that are here

with me today. My husband, Joe, in the second row, my father-inlaw, also Joe, my Aunt Clare, and my dear friends, Louise Wheeler

and Susan Rose.

Chairman SARBANES. We are pleased to have them with us.

Ms. CONLIN. Thank you, Mr. Chairman.

Mr. Chairman, Senator Allard, Senator Corzine, it is indeed an

honor and a privilege to appear before you today as President

Bush’s nominee to be Assistant Secretary of Commerce for Trade

Development. I appreciate the confidence that President Bush has

placed in me and the support of Secretary Don Evans and Under

Secretary Grant Aldonas.

I thank you for scheduling this hearing during a very busy time

in the session. I appreciate your time and look forward, if confirmed, to working with Members and the staff of this Committee.

I have welcomed the opportunity I have had these past weeks to

visit with several of the Members who have shared their recommendations, as well as some of their concerns. And if confirmed,

I would look forward to continuing the dialogue, meeting with you

and your staff on a regular basis.

The vision I would bring to this job, Mr. Chairman and Members,

reflects the underlying philosophy for trade and trade development

expressed by President Bush and Secretary Evans; namely, that

promoting trade, encouraging the free flow of goods and services,

capital and ideas, serves not only our economic interests, but also

the broader interests of political freedom and a more stable and

prosperous world.

I do believe, Mr. Chairman, that my private sector business experience, as well as my 15 years in public service serving at both the

Federal and the State level, has prepared me to take on this important challenge. I am, at heart, a businesswoman with a profound

respect and enthusiasm for the creativity and courage it takes to

own and operate your own business.

I was blessed with a bright and gifted father who gave me my

first job out of graduate school—the task of turning a marginal

business into a successful and profitable $4 million business. In the

process, I learned some very important business lessons and some

very important life lessons which I hope will continue to serve me

well as they have throughout my career. For me, creating an environment for businesses to succeed, as well as for the dedicated career professionals who serve them, will indeed be a privilege.

If confirmed as Assistant Secretary for Trade Development, I will

focus on three broad areas: Concentrating Trade Development’s reVerDate 11-MAY-2000 15:13 Aug 07, 2002 Jkt 000000 PO 00000 Frm 00059 Fmt 6601 Sfmt 6601 80951.TXT SBANK4 PsN: SBANK4
56

sources in ways that will best benefit American exporters; expanding the benefits of trade to small- and medium-sized businesses,

minority-owned and women-owned businesses; and strengthening

Trade Development’s relationships with the business community

and Government and nongovernment organizations involved in export promotion.

If confirmed, therefore, I will focus the Trade Development team,

on the things they do best: Providing critical data and economic

analysis which represent the underpinnings of our trade negotiations; managing industry participation in export promotion events;

advocating on behalf of U.S. companies seeking foreign government

contracts, and also utilizing our wonderful and our marvelous

Trade Information Center as the single point of contact within the

Government to provide export information and counseling.

In all of these actions, Mr. Chairman and Members, the Trade

Development team is on the front-line of action to ensure that U.S.

firms have the best tools and the maximum opportunity to compete

effectively in world markets.

I will also work to support Under Secretary Aldonas’ commitment to extending the benefit of trade to all Americans, for the

medium- and small-sized businesses, for minority- and womenowned firms. There is a tremendous opportunity here to reach out

to new exporters, as well as encouraging existing exporters to enter

new markets.

Last, if confirmed, I will look forward to strengthening our outreach to U.S. industry, including our Industry Advisory Committees, the President’s Export Council, as well as the many Federal

and State departments and agencies involved in trade development

and promotion. And in this regard, I commend the efforts of Chairman Sarbanes in working with Secretary Evans and with Under

Secretary Aldonas in focusing on the important role of the Trade

Promotion Coordinating Committee. If confirmed, I look forward to

supporting you, Mr. Chairman, in maximizing the synergies of the

TPCC. Helping businesses to succeed in the global market means

helping them to navigate through and access the multitude of resources available.

Finally, on a personal note, I would like to once again thank the

important people in my life, my friends and my family, who have

created for me an environment to succeed, and especially to my

husband, Joe, for his love and his support during this time.

I would like to once again thank President Bush, Secretary

Evans, and Grant Aldonas for their confidence and support and

take this opportunity to thank the Chairman and Members of the

Committee for your time and for your consideration this afternoon.

Chairman SARBANES. Thank you very much for your thoughtful

statement.

Mr. Garcia.

STATEMENT OF MICHAEL J. GARCIA, OF NEW YORK

TO BE ASSISTANT SECRETARY OF COMMERCE

FOR EXPORT ENFORCEMENT

Mr. GARCIA. Thank you, Mr. Chairman.

I would like to introduce my family. I think you may have heard

from some of them already. This is my wife, Liana, and my daughVerDate 11-MAY-2000 15:13 Aug 07, 2002 Jkt 000000 PO 00000 Frm 00060 Fmt 6601 Sfmt 6601 80951.TXT SBANK4 PsN: SBANK4
57

ter, Liana Sofia. I think my son had another meeting in the hallway and is no longer here, but maybe he will return.

Chairman SARBANES. I know that Liana Sofia has been giving us

a running commentary.

Mr. GARCIA. All positive.

Chairman SARBANES. That is fine by us. Thank you.

Mr. GARCIA. Chairman Sarbanes, Senator Allard, it is a great

honor for me to be here today as the President’s nominee for the

position of Assistant Secretary of Commerce for Export Enforcement. I thank both the President and Secretary Evans for their

confidence and trust in me. If confirmed, I look forward to working

closely with you and your staff.

Mr. Chairman, the Bureau of Export Administration, the BXA,

has a critical mission: Protecting, indeed, enhancing national security, while preserving the right of American businesses to export

their products. I take this responsibility very, very seriously. If confirmed, it will be my privilege to work with the career law enforcement officials within BXA to fulfill our national security and law

enforcement mission.

As a former Federal prosecutor, I fully appreciate the critical importance of protecting this country’s national security by ensuring

that our sensitive technologies do not fall into the wrong hands. I

recently successfully prosecuted individuals responsible for the

bombings of our Embassies in East Africa. I know firsthand the

real danger of our adversaries illegally obtaining U.S. products

which can be used against our citizens worldwide.

I look forward if confirmed to leading the enforcement arm of

BXA and working alongside Under Secretary Ken Juster and Assistant Secretary Jim Jochum in advancing BXA’s important trade

control mission. I will work hard to ensure that any violations of

U.S. dual-use exports are detected, investigated, and sanctioned.

Together with the special agents, intelligence analysts, and other

key enforcement staff at BXA, I will dedicate my tenure in Washington to the protection of national security through enforcement of

the export laws and regulations.

On a personal note, I want to again thank my wife, Liana, and

my children for agreeing to come to Washington with me to serve

in this Administration. I take my responsibilities seriously but cannot succeed, and would not be here without their support.

Let me conclude by thanking the Committee for its prompt consideration of my nomination and by reiterating my commitment to

work closely and cooperative with you all.

Thank you.

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

I thank all of you for your statements.

Ms. Fore, let me chat with you for just a few minutes here. Last

September, Senator Gramm held a really, I thought, outstanding

symposium in this room—I do not know whether you are familiar

with it or not—on U.S. Coin Design. He mentioned at the symposium that he wanted, and I am now quoting him: ‘‘To begin to look

at American coinage and to begin the debate about whether or not

we should have a new age of American coinage in which we seek

to issue and mint coins that say something about America today,

something about America’s values, about its history.’’

58

He went on to say that he wanted our U.S. coinage to be representative of the greatest Nation in the history of the world. I

agree with him in those sentiments, and I really applaud his efforts

in trying to focus attention on the design of American coinage and

to discuss how to improve those designs. In fact, I hope that you

all noticed these coin plaques that are up on the wall. These are

the State quarters. And as each quarter is added, a new one for

a State, we add a plaque. We are going to have to start down the

side of the Committee walls here. That was an idea of Senator

Gramm’s, and it turned out just by chance that the Maryland quarter ended up right here.

[Laughter.]

It was completely by chance. But that was another initiative of

his as well. We heard at that symposium, and we should probably

get—I presume there is still a transcript available of it—a copy of

it to you. We heard from members of the numismatic community,

the Smithsonian, the U.S. Mint, as well as coin collectors. Do you

have any views on this issue and question of improving the design

of our coins? You are in a strategic position as the Director of the

Mint now.

Ms. FORE. As are you, Senator. I read the 1792 Coin Act, and in

it it mentions that on one side of the coin we should have an impression of an entity that is emblematic of liberty, as well as the

word liberty. Its purpose was to do just what you are saying: To

embody the values of this Nation. So, I like that idea.

I have also noticed and have watched with interest how Europe

is addressing the Euro and its designs. They are going to have bimetallic coins, silver-and-gold, gold-and-red coins. I think how

Americans have approached the new Sacajawea ‘‘Golden Dollar’’ is

very interesting. They are intrigued with the weight, the size, the

color. I think it is an area that we should explore, and I would be

very pleased to be a partner in exploring what coin designs could

look like with you and with the American people.

Chairman SARBANES. We look forward to that. You mentioned

the Sacajawea dollar coin that was released at the end of January

a year ago I think it was. USA Today reported that fewer than half

of Americans have encountered the coin, and most who have are

saving it rather than spending it. In fact, they say that the Mint

reported that over 800 million are in circulation, yet 66 percent of

people save the coin and do not circulate it.

Now this is kind of a disconnect.

[Laughter.]

Of course, one of the reasons for doing it was the vending machine business was quite interested in getting these dollar coins

and getting them out and working. What, if anything, can be done

about this? Or what is the future of this Sacajawea dollar coin? Do

you have any thoughts on that?

Ms. FORE. Well, I can only speculate, Senator. But I think the

Sacajawea will have a place in our currency. I know that a lot of

people have been collecting it. It is very shiny and pretty when you

get ahold of one, and you are tempted to just put it aside, because

it is different, it is unique, and the coin collecting hobby has really

increased with interest due to the quarter program that you have

just outlined, as well as to the Sacajawea golden dollar.

59

So it is a good thing that people are tucking it away in their

drawers and pockets, but we would like to get it into circulation.

I think just as the American people, I find that I can use both at

one time. I want to use a nice golden coin for a bus turnstile. It

is simple, it is quick, but then at another, I like that nice, light,

flexible dollar bill to go into my wallet. I suspect they can co-circulate, and we will have to study more what the circulation patterns and usage patterns are. But any suggestions by the Committee would be most welcome.

Chairman SARBANES. Thank you. I see my time is up.

Senator Allard.

Senator ALLARD. Mr. Chairman, once in a while a word is mentioned that makes you flashback in some history aspects. My State,

for example, as soon as you mentioned bi-metallic, here in the

Banking Committee, we used to have a Senator Teller from Colorado, known as the bi-metallic Senator, because he allocated not

only the gold standard but also the silver standard, which was very

important to the mineral industry in the State of Colorado at that

particular point in time.

I have a feeling that you may hear some industry concerns if you

talk about a bi-metallic coin, because it does present some certain

demands on certain minerals, and obviously it would have an impact on what they may cost and their value. So it is interesting

how a term like that will make you flashback on some history that

might be pertinent to your State.

Another thing that is happening in Colorado right now that I

hope you are aware of, is that we have had some recent problems

with error coins leaving our Mint in Denver. While there are questions about how and why these coins are occurring as errors, the

fact that they get out of the Mint I think raises some very serious

security issues and concerns. My question is, what do you intend

to do about security at our Nation’s Mints?

Ms. FORE. My goal for the U.S. Mint is that it is the best mint

in the world. To be the best mint in the world, errors should be

nonexistent. But given the enormous volume demands that the

Mint has had in recent years, 20 to 30 billion coins a year, working

7 days, 24 hours, it has an enormous production load.

So, I would like to address the prevention for error coins, how

they are currently being handled, and then how they get into circulation both intentionally and unintentionally. I know that the

Mint has had a senior management group that has looked at it.

They have a study and they have an assessment. I would like to

take a look at it and see what they have found out. It is an issue

that I think is important, and I will certainly look into it.

Senator ALLARD. Well, I would just reemphasize my feeling. I

think attitudes about security starts at the top, whether we are

talking about our military security or the State Department, Defense Department, the President’s own staff or even here as head

of the Mint, and I do think that you can play a key role in how

serious Federal employees take the security measures. And so, I

would hope that you would send a clear message that security is

of real concern to me and I suspect to other Members on this Committee and hopefully yourself.

Mr. Chairman, that is all I have. Thank you.

60

Chairman SARBANES. Thank you very much, Senator Allard.

Ms. Conlin, one of the challenges facing the International Trade

Administration, the ITA, is to make the bureaus responsible for

trade promotion coordinate better. You would be the head of one

of those bureaus, Trade Development. In addition, you have the

U.S. Foreign and Commercial Service and the Market Access and

Compliance people. Do you have any thoughts at the moment about

how better coordination might be achieved? Not that you necessarily should. But it is a matter of some interest to us, because

we want to see a highly effective, functioning Commerce Department, and I think this challenge that the ITA is facing is a very

real one.

Ms. CONLIN. Yes, Mr. Chairman. Whether you are coordinating

or have the challenge of coordinating the work in export development and promotion among Federal agencies and departments, or

whether you are trying to coordinate it within a department itself,

it is a challenge. And it is very important to make sure that we

are making the best use of our resources.

At our ITA family, as you have just said, Mr. Chairman, we have

a number of units dedicated to trade development and to export

promotion. I feel that each unit has their distinct strengths, as well

as perhaps share some responsibilities.

In, as you pointed out earlier, Mr. Chairman, in trade development, we have some very dedicated career professionals who provide the economic analysis and data that are the underpinnings for

the strategies and priorities in our trade negotiations, as well as

having people that advocate on behalf of businesses and help smallto medium- sized businesses.

My sister units also are involved in working on behalf of American business, whether it is compliance in trade agreements with

market access and compliance or working with small- to mediumsized businesses and helping them enter foreign markets through

the U.S. and Foreign Commercial Service. So, we all work together.

I think one of my goals in addressing Secretary Aldonas’ priorities

in the best use of those resources is to make sure that we as units

are working very well together, working on our strengths but also

on our shared areas of responsibility.

Chairman SARBANES. Very good.

Mr. Garcia, have you had a chance to familiarize yourself with

these efforts now underway in the Congress to reauthorize the Export Administration Act, which, of course, is very relevant to you

and your work?

Mr. GARCIA. Yes, Senator, very briefly I have. I just finished a

trial in New York and I came down to Washington, and I have

been attempting to look into those things.

Chairman SARBANES. Well, the Administration is strongly supportive of the reauthorization of that Act that was reported out of

this Committee. Now, we have run into a little heavy weather in

the Senate, although we hope to be able to move ahead with respect to that. But I, obviously, encourage you to follow this very

closely, because you will either get your authority to control under

the Export Administration Act, or the Administration will have to

put in a regime under the IEEPA, the International Economic

Emergency Powers Act.

61

The penalties under IEEPA are, in fact, less than the penalties

we would be providing in the legislation that we have brought out

of this Committee. And the regime is different. We think that it is

an improvement in the regime. But I would think one of your first

responsibilities once you get in down there is going to be to really

get right up to speed on this legislation. Actually, we are operating

under a 1 year extension of the Export Administration Act which

expires in August.

If it expires and we have not replaced it, the President will have

to invoke IEEPA, put a regime into place, which presumably you

will be involved in helping to develop. That is not as good a regime

in my opinion, and I think in the opinion of most of my colleagues.

And the authorities that are available to you under IEEPA would

be less than what we are trying to provide in the statute.

I think this is going to be an important item that is going to be

on the forefront of your agenda, because it is going to establish the

whole framework within which you operate so that whatever the

specific case is you are trying to deal with in export control is going

to relate back to this statutory framework. So, I think it really behooves you to take an interest to try to get it set right if you possibly can.

The Administration has reviewed this very carefully, and they

are supportive of our legislation. We have received letters from the

National Security Adviser. The President has made public statements about it. The Secretary of Commerce is very strongly in

favor of it, and Senator Daschle has indicated an intention to try

to move it, so we will see how we can do up here on it.

Mr. GARCIA. Mr. Chairman.

Chairman SARBANES. Go ahead.

Mr. GARCIA. I have looked at those provisions on the penalties

in the new legislation. I understand the increases. And it also

would provide permanent law enforcement authority for the agents

in export enforcement, which I think is very important, so that

they do not go back to the position where they have to be re-deputized as U.S. Marshals.

I think it is important for their law enforcement function and for

the morale of the unit and the important work they do that they

receive that permanent law enforcement certification.

Senator ALLARD. Mr. Chairman, I would just like to add on to

your comments a little bit. One thing that we consistently hear

from exporters, particularly those issues where it might deal with

dual-use items—they have a military purpose, as well as domestic

purpose—is the length of time it takes to get approval. I know that

from past studies, I think, for example, on the Armed Services list,

there are some 9,000 items. Some of them, if you look that over,

do not make a lot of sense. I am not sure whether that is under

your jurisdiction. But the thing that I think that you ought to be

aware of is that they are concerned about the considerable length

of time. You will have to go through three separate agencies many

times for approval—Departments of State and Commerce, as well

as the Department of Defense. Sometimes when you are in a highly

competitive in an international market and you cannot give a specific indication the businessman that you are dealing with in the

foreign country as to when you may be able to have a decision. Lots

62

of times that is all they ask for is a timeline so they can make

plans on the other end, it does make it very difficult to compete

internationally.

I do think I would agree with the Chairman it is an important

piece of legislation. It was reported out of Committee here nearly

unanimously. I know it had a lot of support here in the Banking

Committee.

Thank you, Mr. Chairman.

Chairman SARBANES. Thank you.

Mr. Garcia, I would like to ask you, just for my own personal curiosity, a couple of questions about the work you have been doing.

The bombings of the Embassy in Nairobi and in Dar es Salaam

were part of an Osama bin Laden enterprise. Is that right?

Mr. GARCIA. That is correct, Mr. Chairman.

Chairman SARBANES. Now what about the World Trade Center

in Manhattan?

Mr. GARCIA. Mr. Chairman, there is no public link between the

bombing of the World Trade Center that took place in 1993 and the

1998 bombings of our embassies in East Africa. What you do see

is a similar training path. People travel into training camps, obtaining this type of training, of activity, bomb-building, and using

that in terrorist acts against the United States. So while there is

no direct link to the group, there certainly is a link between the

types of training that is obtained.

Chairman SARBANES. Okay. Well, as I said at the outset, that is

terrific training at the U.S. Attorney’s Office for the Southern District of New York. And we are pleased now you are coming into

Washington to put that expertise to work for us.

Mr. GARCIA. Thank you, Mr. Chairman.

Chairman SARBANES. We appreciate all three nominees coming

before the Committee. I am hopeful we can markup these nominees

in the Committee the first part of next week, which would enable

us to report them to the Senate floor in time, I would hope, for action to be taken by the Senate with respect to your nominations

before the Senate goes out for the August recess, so that your

nominations would not carry over into September and we could

move ahead to get you on the job. I cannot guarantee that outcome,

but that is what we will try to accomplish.

Thank you all very much for coming today. We appreciate it.

The hearing is adjourned.

[Whereupon, at 3:55 p.m., the hearing was adjourned.]

[Prepared statements, biographical sketches of the nominees, and

response to written questions supplied for the record follow:]

63

PREPARED STATEMENT OF SENATOR JOHN ENSIGN

ON THE NOMINATION OF HENRIETTA HOLSMAN FORE

TO BE THE DIRECTOR OF THE U.S. MINT

Thank you, Mr. Chairman, for allowing me the opportunity to speak before the

Committee today. It is my pleasure to welcome Ms. Henrietta Holsman Fore this

afternoon before the Senate Banking Committee and to offer my recommendation

for her appointment to the position of Director of the U.S. Mint.

Ms. Fore is a fellow Nevadan and a continual leader. Having held previous Presidential appointments, Ms. Fore knows and surpasses the requisite criteria. Her reputation and background as a leader are beyond reproach. She has served since 1993

as Chairman of the Board and President of an international corporation in Las

Vegas, Nevada, and also serves as the Chairman and Chief Executive Officer of

Holsman International in Washington, DC. From 1990 to 1993, she served as Assistant Administrator in the Bureau for Private Enterprises and the Assistant Administrator in the Bureau for Asia. Ms. Fore is a graduate of Wellesley College and

received a Master’s in Public Administration from the University of Northern Colorado. With her years of nationwide experience, both in Government service and the

private sector, she has refined the ingenuity and expertise that will enable her to

excel as Director of the U.S. Mint.

I urge my colleagues on the Senate Banking Committee to support the nomination

of Ms. Henrietta Holsman Fore for Director of the U.S. Mint. I am proud to introduce her today as both a leader of this community and as a fellow Nevadan. I thank

you, Mr. Chairman, for allowing me to speak on her behalf today.

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PREPARED STATEMENT OF MELODY H. FENNEL

ASSISTANT SECRETARY-DESIGNATE OF CONGRESSIONAL AND

INTERGOVERNMENTAL RELATIONS

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

JULY 26, 2001

Chairman Sarbanes, Senator Gramm, and Members of the Committee:

It is my pleasure to introduce my mother, Mary Lee Fennel, and my brother Mark

Fennel. I have been blessed with a family that has made many told, and even more

untold, sacrifices for me.

I am deeply grateful to President Bush and Secretary Martinez for according me

the honor of this nomination. I anticipate the charge for which I have been nominated with great humility. Chairman Sarbanes, I thank you for your willingness to

consider me for confirmation and for supporting the nominations process during

such a busy time.

Members of the Committee, I sit before you with true admiration, as a staff aide

that has witnessed your steadfast dedication to your principles and the pursuit of

what you believe is right for our fine Nation. I sit before my Staff Director and colleagues on both sides of the aisle with great respect for their ethics, their commitment to public service, and their strength of spirit. Senator Allard, it has been a

privilege to serve you as you presided over complex housing issues with alacrity.

Senator Gramm, my wise leader, I sit before you with great appreciation for the

honor of having represented you. Thank you for allowing me the privilege of serving

you and the American people. I only hope that I will continue my service with your

badge of courage upon me.

In 1780, Abigail Adams wrote to her son, who later became our sixth President,

‘‘. . . Justice, humanity, and benevolence are the duties you owe to society. . . .’’

If confirmed, it would be my duty to assist the President and the Secretary in the

provision of this justice—a justice that proffers help to our citizens whom are truly

in need, and assures that the monies from those that give are used honestly and

efficiently. To ensure this, a close relationship between the Executive and Legislative Branches is essential—and while there is of course an important separation between the two, there also exists a natural concomitance. If confirmed, I personally

pledge to you that the Administration’s housing and community development proposals will be presented to Congress in an open and forthright manner—in order

to ensure the full opportunity for a comprehensive dialogue.

In closing, I offer my thanks to God, to his name be the glory.

Thank you.

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PREPARED STATEMENT OF MICHAEL MINORU FAWN LIU

ASSISTANT SECRETARY-DESIGNATE FOR PUBLIC AND INDIAN HOUSING

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

JULY 26, 2001

Chairman Sarbanes, Ranking Member Gramm, Distinguished Senators. It is a

privilege to be able to appear before you today as part of the confirmation process

for the position that I have been nominated.

By way of introduction, let me first note that my wife, Susan Orlando Liu, and

my 9-year-old son, Nicholas, join us in this hearing. I would definitely not be here

without their support, and enduring patience.

My public and professional career has now spanned over 23 years, first as a Delegate to my home State’s Constitutional Convention, then as a State legislator, followed by work in community development banking and law. My upbringing includes

living in public housing as a youngster; experiencing America’s post-World War II

transformation into a more diverse and tolerant society through the immigrant experiences of my mother; and being provided the opportunity to compete and succeed

in educational and career endeavors that have linked me to various communities on

local, State, and national levels.

I am no stranger to issues affected by Public and Indian Housing policies. As a

State Representative in Hawaii, my district included one of the largest subsidized

housing projects in Honolulu (Kukui Gardens), as well as one of the most distressed

(Mayor WrightHousing). It included the well-established Department of Hawaiian

Home Lands Papakolea Homestead. In recognition of constituent needs, I sought

and have retained membership on the Housing and Health and Human Services

Committee for 8 years, and another 2 years on the same committee in the Hawaii

State Senate.

Affordable housing, both homeownership and rental, has been a key area in which

I have been involved for many years. While with the U.S. Department of Agriculture

(USDA) as Deputy Under Secretary for Small Community and Rural Development

(1991–1993), I oversaw implementation of new guaranteed loan programs for both

single-family and multifamily housing in rural America. At Bank of America (1993–

1997), I worked on a number of single-family mortgage and multifamily grant programs to help address Hawaii’s high housing costs. In my current role as Senior

Vice President and Community Investment Officer for the Federal Home Loan Bank

of Chicago, I have managed an affordable housing grant program that allocates between $14 and $16 million annually, and a $600 million portfolio of community investment credit projects, most of which are for housing. In all of these experiences

I have had extensive contact with housing authorities both large and small.

With fundamental adjustments occurring in how the clients of public housing and

communities at large are seeing issues regarding housing, a plethora of program

and regulatory changes have been enacted. Most of these adjustments have been for

the better, giving local, State, and Federal authorities more options in framing programs to match local conditions. I look forward to the challenge of managing these

changes in collaboration with Public Housing’s many partners. And in this context,

I see management as including attention to the nuts and bolts of resource allocation

for the support of Public and Indian Housing within HUD.

The renewed interest in creative and efficient use of public housing assistance is

an integral part of housing goals as described by Secretary Martinez before this

Committee. For example: The use of Section 8 vouchers for down payment accumulation, and application of vouchers toward monthly mortgage expense.

There have been great strides in addressing housing issues related to Indian

Housing, including the ability to secure mortgages through an ever-growing variety

of leases on tribal lands. I will support the coordination of efforts between and

among the various Federal agencies with native peoples’ programs. And more can

be done, especially in the educating of private sector banking interests to the potential of markets available under programs administered by Indian Housing and the

Office of Native American Programs.

If fortunate enough to be confirmed by the U.S. Senate, I will be a manager and

advocate for fair and common sense delivery of Public and Indian Housing program

resources. I understand that it is important to recognize the past in order to effectively move into the future. I also understand that for the families affected by Public

and Indian Housing, the future is often very much on the near, rather than on the

far horizon, so that timely action must accompany efforts at prudent planning.

Mr. Chairman and Members of the Committee, I appreciate your indulgence. I

stand ready to address any questions or comments you may have.

Thank you.

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PREPARED STATEMENT OF HENRIETTA HOLSMAN FORE

DIRECTOR-DESIGNATE OF THE U.S. MINT

JULY 26, 2001

Thank you, Chairman Sarbanes, Ranking Member Gramm, and Members of the

Committee on Banking, Housing, and Urban Affairs. I am honored that President

Bush has nominated me to serve as Director of the Mint and I thank you for the

privilege of appearing here today. If confirmed, I will have the opportunity and the

challenge to work with Treasury’s Secretary Paul O’Neill and to meet his high

standards for operating a world class production facility. I will work to deliver the

benefits of quality, efficiency, and worker safety. President Bush has outlined an administration that is business-like in its approach to Government. That is the approach I intend to take.

Americans have come to expect a safe and reliable currency in our pockets, in our

cash registers, in the vending machines, and in the transit fare turnstiles across our

Nation. Our currency must be smart, with an electromagnetic signature; it must be

durable to last through 30 years of trips to the beach, fast food counters, and

through laundry machines. And our coinage must tell the story of our Nation, passing along the chronicle of our Nation’s rich heritage. We have a responsibility to

educate the public about their history, for it was an urgent, but not a simple matter

when the Senate and the House assembled in 1792, and set the standards for a

Mint to create the Nation’s coinage. The Coin Act also required the Mint to protect

and to account for the Nation’s treasure, which it still does today. And I will have

a challenge to encourage and to maintain the enthusiasm of the coin collecting

community.

If confirmed, I look forward to working closely with this Committee, the Senate,

and with members of the House of Representatives. I have had the pleasure of

working with you before and look forward to doing so again. I believe in the idea

that every American should serve their Nation’s interests and should bring with

them the ideas of other arenas. For me, those arenas are business and nonprofit.

I was born in Chicago, Illinois, grew up in California, and in 1970, graduated from

Wellesley College. I worked in General Services Administration and received a Masters in Public Administration from the University of Northern Colorado. For the

past 24 years I have managed and owned a wire and metal products manufacturing

company servicing the construction industry with factories in Nevada, Arizona, and

California. From 1989–1993, I served in the U.S. Agency for International Development and was confined twice by the Senate, once as Assistant Administrator for Private Enterprise and once as Assistant Administrator for Asia. Since that time, I

have served on several nonprofit and public corporate boards, traveled, and run my

business. These experiences have exposed me to different aspects of America’s interests that, I believe, better prepare me for the challenge at hand. It would be an

honor to again serve in Government.

Thank you, Mr. Chairman. I would be pleased to answer any questions.

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PREPARED STATEMENT OF LINDA MYSLIWY CONLIN

ASSISTANT SECRETARY-DESIGNATE FOR TRADE DEVELOPMENT

U.S. DEPARTMENT OF COMMERCE

JULY 26, 2001

Mr. Chairman, Senator Gramm, and Members of the Committee, it is an honor

and a privilege to appear before you today as President Bush’s nominee to be Assistant Secretary for Trade Development. I appreciate the confidence President Bush

has placed in me and the support of Secretary Don Evans and Under Secretary

Grant Aldonas. Thank you for scheduling this hearing during a very busy time in

the session. I appreciate your time and look forward, if confirmed, to working with

the Members and staff of this Committee.

It is an honor to appear before the Committee this afternoon. I have appreciated

the opportunity I have had these past weeks to visit with several of the Members

who have shared their recommendations, as well as some concerns. If confirmed, I

would look forward to continuing the dialogue, meeting with you and your staff on

a regular basis. We are all stakeholders who share common goals of a vibrant economy for the American people and business community. It is only through consistent

communication, cooperation, and collaboration between all that these goals can be

achieved.

The vision I would bring to this job was best described by Secretary Evans when

he spoke of President Bush’s trade policy goals: ‘‘Free minds and free markets are

essential to achieving a better and brighter tomorrow. . . . Our economic, social,

and political freedoms are woven together into a single fabric that allows every

human being to pursue the visions and dreams they have in their hearts. That understanding is the cornerstone for our trade policy.’’

Secretary Evans went on to say, ‘‘What Government can do is create the environment for people to succeed.’’ If reported favorably by this Committee and confirmed

by the Senate, as Assistant Secretary for Trade Development, I will be committed

to helping U.S. businesses succeed in expanding exports and the jobs they create.

I will also work to provide an environment to succeed for the dedicated professionals

of the Trade Development staff at Commerce who serve as this Nation’s day-to-day

link to U.S. industry for trade policy development and promotion.

I believe that my business experience, as well as my years in public service, serving at both the Federal and State level, has prepared me to take on this important

challenge. I am, at heart, a businesswoman with a profound respect and enthusiasm

for the creativity and courage it takes to own and to operate a successful business.

I was blessed with a bright and gifted father who gave me my first job out of graduate school—the task of turning a small company into a four million dollar business.

In the process, I learned important business and life lessons, which I hope, will continue to serve me well as they have throughout my career.

My career in public service spans some 15 years, including 9 years overseeing

tourism trade development and promotion at the Department of Commerce, and

later at New Jersey’s Commerce Department. I am pleased to say that on both Federal and State levels, we created an innovative and effective program to assist

small- and medium-sized tourism businesses in breaking new ground in key international markets.

If confirmed as Assistant Secretary for Trade Development, I will focus on three

specific areas: Concentrate Trade Development resources to best benefit American

exporters, expand the benefits of trade to small- and medium-sized businesses, and

strengthen Trade Development’s outreach programs to the business industry.

First, I will work with the Trade Development team to focus on priorities outlined

by Under Secretary Aldonas when he met before this Committee, namely, ‘‘to expand opportunities for American business (by) concentrating resources in ways that

are likely to provide the greatest pay-off for American businesses trying to gain access to world markets. . . identifying promising targets for our exporters and providing the support to reach those markets.’’

In this regard, the Trade Development area shares the responsibility for export

assistance and promotion with our sister units within the International Trade Administration—the domestic and foreign offices of the U.S. and Foreign Commercial

Service, the Market Access and Compliance team, and the Import Administration.

Trade Development’s role in this family, however, is distinct. Trade Development’s

industry sector offices devise export assistance programs, export strategies and

trade events tailored to the needs of individual industries. Trade Development also

serves as the principal link for industry input, data, and economic analysis, which

form the foundation for the development of our trade agreements and monitoring

of their impact. The work of Trade Development’s industry experts provides the

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foundation for the President’s trade negotiators in multilateral or bilateral fora—

both for trade liberalization and retaliation. Finally, we work closely with our sisteroffices in ITA to ensure foreign countries’ compliance with sector-specific international trade agreements.

Whether it is providing critical data and economic analysis which represent the

underpinnings of these trade negotiations, managing industry participation in trade

missions, or advocating on behalf of U.S. companies seeking foreign government contracts, the trade development team is on the frontline of action to ensure that U.S.

firms have the maximum opportunity to compete effectively in world markets. Trade

Development’s industry experts and trade specialists span the gamut of U.S. business sectors—from basic manufacturing to high-technology and service exports.

Trade Development is also home to the Trade Information Center (TIC), which

was established by the Trade Promotion Coordinating Committee. The TIC provides

a wealth of export information and a single point of contact within Government for

export assistance and counseling. We have tremendous resources and talent within

the Trade Development program. If confirmed, I will work to marshall those resources for the greatest benefit, working in concert and collaboration with our ITA

and USTR colleagues.

Second, I will work to support Under Secretary Aldonas’ commitment to ‘‘expanding the benefits of trade to all Americans,’’ for small- and medium-sized businesses,

including minority-owned businesses. There is tremendous opportunity here when

you consider that small- and medium-sized businesses account for some 97 percent

of all U.S. exporters, but only 30 percent of U.S. merchandise exports. Nearly twothirds of these exporters, however, post sales to only one foreign market. Encouraging these exporters to expand to other markets represents an enormous growth

opportunity.

Third, if confirmed, I will work toward further strengthening our outreach to industry, including our industry advisory committees and the President’s Export

Council, as well as the many Federal and State departments and agencies involved

in trade development and promotion. In this regard, I commend the efforts of Chairman Sarbanes in working with Secretary Evans and Under Secretary Aldonas in

focusing on the important role of the Trade Promotion Coordinating Committee

(TPCC). If confirmed, I look forward to supporting him in maximizing the synergies

of the TPCC. Helping businesses to succeed in the global market means helping

them navigate through and access the multitude of resources available.

On a personal note, I would like to thank the important people in my life who

have created an environment for me to succeed. I would like to take this opportunity

to thank my family and friends, many of who are here today. Without their support

I would not be able to take on this incredible responsibility. I would like to thank

my mother, and my father, who sadly is no longer with us. I will be forever grateful

for his trust and inspiration. I would like to thank my mother-in-law for her confidence and her prayers. She was a true friend and was always there for me. Two

weeks ago, she lost her courageous battle with multiple myeloma. I will be forever

grateful to my father-in-law and above all to my husband, Joe, for their love and

support, especially during this difficult period.

In closing, I would like to take this opportunity to thank the Chairman, Senator

Gramm, and other Members of the Committee for your time and consideration this

afternoon.

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PREPARED STATEMENT OF MICHAEL J. GARCIA

ASSISTANT SECRETARY-DESIGNATE FOR EXPORT ENFORCEMENT

U.S. DEPARTMENT OF COMMERCE

JULY 26, 2001

Chairman Sarbanes, Senator Gramm, and Members of the Committee: It is a

great honor for me to be here today as the President’s nominee for the position of

Assistant Secretary of Commerce for Export Enforcement. I thank the President and

Secretary Evans for their confidence and trust in me. If confirmed, I will look forward to working closely with you and your staff.

Mr. Chairman, the Bureau of Export Administration (BXA) has a critical mission:

Protecting, and indeed enhancing, national security while preserving the right of

American businesses to export their products. I take this responsibility very seriously. If confirmed, it will be my privilege to work with the career law enforcement

officials within BXA to fulfill our national security and law enforcement mission.

As a former Federal prosecutor, I fully appreciate the critical importance of protecting this country’s national security by ensuring that our sensitive technologies

do not fall into the wrong hands. Recently, I successfully prosecuted individuals

responsible for the bombings of our Embassies in East Africa. I know firsthand the

real danger of our adversaries illegally obtaining U.S. products which can be used

against our citizens worldwide.

I look forward to leading the enforcement arm of BXA and working alongside

Under Secretary Ken Juster and Assistant Secretary Jim Jochum in advancing

BXA’s important trade control mission. I will work hard to ensure that any violations of U.S. dual-use exports are detected, investigated, and sanctioned. Together

with the special agents, intelligence analysts, and other key enforcement staff in

BXA, I will dedicate my tenure in Washington to the protection of national security

through enforcement of the export laws and regulations.

On a personal note, I want to thank my wife, Liana, and my children, Manuel

Jose and Liana Sofia, who are in the audience today, for agreeing to come to Washington with me to serve in this Administration. I will take my responsibilities seriously but cannot succeed, and would not be here, without their love and support.

Let me conclude by thanking the Committee for its prompt consideration of my

nomination and by reiterating my commitment to work closely and cooperatively

with you.

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RESPONSE TO WRITTEN QUESTIONS OF SENATOR JACK REED

FROM LINDA MYSLIWY CONLIN

As you may or may not know, the jewelry industry in the past was

fairly large and competitive in the State of Rhode Island. Over the

last couple of decades, competition from abroad, specifically Asia,

has had a decimating effect on the industry as a whole.

Q.1. What do you think we can do to try to maintain the competitiveness of this industry in this country?

A.1. In March 1997, the Department of Commerce published ‘‘The

U.S. Jewelry Industry: Federal Interagency Report on U.S. Jewelry

Competitiveness Issues.’’ The study found that many competitive

issues facing the U.S. jewelry industry stem from broad economic

trends over which neither the industry nor the Federal Government has much control.

While this conclusion remains valid today, this study also recommended a number of steps to improve the industry’s competitiveness. One of these was to expand sales through increased exports,

and Commerce has worked with the industry to do just that. The

Commerce Department to date sponsored four U.S. Product Literature Centers to increase exports. In addition, the study recommended that industry members work through the Manufacturing Extension Partnership Centers to improve productivity.

Since these Centers are linked to the Commerce Department’s

Technology Administration, I would be pleased to put interested industry representatives in touch with them. And if confirmed, I

would also be pleased to work with the industry on a third recommendation by putting industry representatives in touch with the

Small Business Administration to make sure they are aware of assistance programs run by that agency.

In addition, the study recommended actively pursuing a policy of

opening foreign markets. The President’s trade agenda includes negotiations on a Free Trade Area of the Americas, a new negotiating

round in the WTO, and Free Trade Agreement talks with Chile and

Singapore. If confirmed, I will look for ways to enhance the competitive opportunities for the jewelry industry in these negotiations

as well. U.S. companies’ exports of jewelry increased more than 150

percent in the past decade, and the NAFTA and WTO negotiations

helped in this effort by reducing or eliminating their tariffs on U.S.

jewelry.

Be assured that, if confirmed, I will work closely with the industry to help in implementing these and other recommendations of

the 1997 study.

Q.2. What other ideas do you have to encourage these manufacturers to turn possibly to other industries that are perhaps more profitable at this point?

A.2. Some U.S. jewelry manufacturers have achieved success, despite intense foreign competition, by using their market knowledge

to find specific niche markets, by adopting improved technologies,

or by sourcing some especially labor-intensive products and components from lower-wage countries. An interagency study team visited a successful Rhode Island company that had used its manufacturing expertise to manufacture trophies and similar products. I

believe our Manufacturing Extension Partnership Centers may also

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be able to help jewelry firms diversify into other, possibly more

profitable markets, and I would be pleased to put the jewelry manufacturers in touch with them.

Q.3. I have for some time trumpeted potential regulations that

would mandate indelible country of origin labeling on jewelry products and jewelry boxes from abroad. What are your thoughts on

this idea?

A.3. Many consumers prefer American-made products. Currently,

U.S. Customs allows country of origin to be labeled with a gummed

label or a hang tag, under certain circumstances. Some jewelry

manufacturers indicate that some importers and retailers remove

these tags illegally, making origin difficult for consumers to identify. Customs has stated that it will prosecute importers and retailers that illegally remove country of origin labels or tags, but that

it needs industry’s help to identify violators.

I recognize the concerns that the jewelry manufacturers have on

this issue. However, as I understand it, indelible markings on jewelry products themselves frequently may be too small to be legible

or impair the value of the products. Again, I understand your concerns on this issue and I will work with the jewelry industry to

determine if there can be an effective solution to this problem.

Q.4. Do you think this is something we can do without it being

cost prohibitive or being unfair to our foreign competitors?

A.4. As I have noted, indelible marking on some jewelry products

can be difficult because of the small size and intrinsic value of the

products. Cost can also be an important factor. Also, our trading

partners may consider that such marking would represent an unfair trade restriction by potentially damaging the product, materially reducing its value, or unreasonably increasing the cost. Again,

if confirmed, this is an area, which I will explore closely with the

industry to see if there is an effective way to meet their concerns

while addressing our international obligations.

I am also quite concerned about the state of our textile manufacturing industry in Rhode Island, which has sustained some heavy

hits over the past two decades, similar to many other parts of the

country.

Q.5. What are your thoughts regarding the state of the textile industry in the Nation as a whole?

A.5. There is no question that the textile industry is going through

one of its more difficult periods. The textile industry has suffered

significant losses in employment in recent years and, although

some of these losses may be explained by productivity improvements, clearly imports and other economic factors have played an

important role. As you know, the slowdown in the U.S. economy

has also aggravated the situation.

A number of people in the industry have expressed their strong

concerns about current conditions, and I take those concerns very

seriously. I intend to examine carefully in what ways we can work

with the industry to help improve the situation.

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Q.6. Do you think that there are still ways that we can effectively

protect this industry before it completely disappears, and without

being overly protectionist?

A.6. Secretary Evans has indicated the strong priority he places on

ensuring compliance with our trade agreements, and I intend to enforce these agreements with respect to textiles and apparel. Commerce chairs the interagency Committee for the Implementation of

Textile Agreements (CITA), which enforces the provisions of the

WTO Agreement on Textiles and Clothing (ATC), as well as our bilateral agreements with non-WTO countries. This enforcement includes the undertaking of safeguards actions in cases where there

is a threat of serious damage to particular sectors of our industry,

and strong action to curb illegal transshipment and attempts to circumvent U.S. quotas. In this regard, the United States has adopted

a new transshipment policy which enables us to proscribe transshipping companies from exporting to the U.S. market and acts as

an inducement to foreign governments to take stronger action

against transshippers. The Administration is also working with

U.S. industry to ensure that they achieve maximum benefit from

the Trade and Development Act of 2000.

If confirmed, I will work to ensure these agreements are fully implemented and will press our trading partners to open up their

markets to our textile and apparel products.

Q.7. Do you have any other recommendations for States like my

own to deal with the decimation that this industry has experienced

at the hand of cheap competitors from abroad?

A.7. The Administration has strong concerns about current conditions in the industry. The Commerce Department, through Trade

Development’s Office of Textiles and Apparel, has a multifaceted

program in place designed to help the textile and the apparel industries remain viable and competitive. The Office administers the

U.S. textile quotas, implements the textile provisions of both the

NAFTA and the Trade and Development Act of 2000, administers

textile and apparel research grants for the National Textile Center

and The Textile/Clothing Technology Corporation, and has a special export program in place specifically designed to assist this

industry.

The Department of Commerce is actively encouraging U.S. companies to take advantage of legislation, such as the Trade and Development Act of 2000, which encourages the use of U.S. textile

components in apparel manufactured in beneficiary countries. This

includes an active program of seminars and outreach to advise U.S.

manufacturers on the provisions of the Act and how they can enter

into effective commercial relationships with companies in the Caribbean Basin and in Africa.

In addition, the Commerce Department’s Economic Development

Administration maintains a Trade Adjustment Assistance program

designed to help companies impacted by imports to obtain financing on favorable terms, and the Labor Department maintains a

similar Trade Adjustment Assistance program to help displaced

workers find new jobs.