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79–782 PDF 2002

S. HRG. 107–459

NOMINATIONS OF: J. JOSEPH GRANDMAISON

KENNETH M. DONOHUE, SR., DIANE L. TOMB

AND VICKERS B. MEADOWS

HEARINGS

BEFORE THE

COMMITTEE ON

BANKING, HOUSING, AND URBAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

ON

NOMINATIONS OF:

J. JOSEPH GRANDMAISON, OF NEW HAMPSHIRE, TO BE A MEMBER

OF THE BOARD OF DIRECTORS OF THE EXPORT-IMPORT BANK

OF THE UNITED STATES

KENNETH M. DONOHUE, SR., OF VIRGINIA, TO BE INSPECTOR GENERAL

OF THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

DIANE L. TOMB, OF VIRGINIA, TO BE ASSISTANT SECRETARY

OF PUBLIC AFFAIRS, U.S. DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

VICKERS B. MEADOWS, OF VIRGINIA, TO BE ASSISTANT SECRETARY

FOR ADMINISTRATION, U.S. DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

DECEMBER 6 AND 18, 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

TIM JOHNSON, South Dakota

JACK REED, Rhode Island

CHARLES E. SCHUMER, New York

EVAN BAYH, Indiana

ZELL MILLER, Georgia

THOMAS R. CARPER, Delaware

DEBBIE STABENOW, Michigan

JON S. CORZINE, New Jersey

DANIEL K. AKAKA, Hawaii

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

JOHN ENSIGN, Nevada

STEVEN B. HARRIS, Staff Director and Chief Counsel

WAYNE A. ABERNATHY, Republican Staff Director

MARTIN J. GRUENBERG, Senior Counsel

JONATHAN MILLER, Professional Staff

BRIAN J. GROSS, Republican Deputy Staff Director and Counsel

MELODY H. FENNEL, Republican Professional Staff Member

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator

GEORGE E. WHITTLE, Editor

(II)

(III)

CONTENTS

THURSDAY, DECEMBER 6, 2001

Page

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

Opening statements, comments, or prepared statements of:

Senator Reed ..................................................................................................... 2

Senator Miller ................................................................................................... 2

Senator Allard ................................................................................................... 2

Prepared statement ................................................................................... 21

NOMINEES

J. Joseph Grandmaison, of New Hampshire, to be a Member of the Board

of Directors of the Export-Import Bank of the United States .......................... 3

Biographical sketch of nominee ....................................................................... 22

Kenneth M. Donohue, Sr., of Virginia, to be Inspector General of the U.S.

Department of Housing and Urban Development ............................................. 9

Biographical sketch of nominee ....................................................................... 32

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Miscellaneous information ...................................................................................... 38

TUESDAY, DECEMBER 18, 2001

Opening statement of Chairman Sarbanes ........................................................... 55

Opening statements, comments, or prepared statements of:

Senator Gramm ................................................................................................ 57

Senator Reed ..................................................................................................... 57

WITNESS

Rob Portman, a U.S. Representative in Congress from the State of Ohio .......... 55

NOMINEES

Diane L. Tomb, of Virginia, to be Assistant Secretary of Public Affairs, U.S.

Department of Housing and Urban Development ............................................. 57

Prepared statement .......................................................................................... 65

Biographical sketch of nominee ....................................................................... 66

Vickers B. Meadows, of Virginia, to be Assistant Secretary for Administration,

U.S. Department of Housing and Urban Development ..................................... 59

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

(1)

NOMINATIONS OF:

J. JOSEPH GRANDMAISON

OF NEW HAMPSHIRE, TO BE A MEMBER

OF THE BOARD OF DIRECTORS OF

THE EXPORT-IMPORT BANK OF THE

UNITED STATES

AND

KENNETH M. DONOHUE, SR.

OF VIRGINIA, TO BE INSPECTOR GENERAL

OF THE U.S. DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT

THURSDAY, DECEMBER 6, 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. The Committee will come to order.

We are here this morning holding nomination hearings on two

nominees—Joseph Grandmaison of New Hampshire, to be a Member of the Board of Directors of the Export-Import Bank of the

United States, and Kenneth Donohue of Virginia, to be Inspector

General of the Department of Housing and Urban Development.

Since you are in two entirely different bureaucratic universes, I

think we will take you one at a time instead of as a panel. And

we will start with Mr. Grandmaison.

The most relevant thing to note is that he has literally just finished serving as the Director of the U.S. Trade and Development

Agency, where he was for 71⁄2 years, I think the longest term of

service of any Director of the TDA.

The TDA funds feasibility studies and provides other assistance

to U.S. companies seeking to become involved in the planning

stages of infrastructure and industrial projects in middle-income

and developing countries.

In carrying out that work, of course, the TDA works closely with

large and small U.S. exporters, with U.S. financial institutions,

2

works closely actually with the Export-Import Bank, Overseas Private Investment Corporation, OPIC, the Commerce Department,

and other Federal agencies, all involved in export promotion.

In addition, under Mr. Grandmaison’s leadership, the TDA was

an important member and strong advocate in the Trade Promotion

Coordinating Committee, which was established by law by this

Committee. Since leaving the TDA earlier this year, Mr. Grandmaison has served as an international trade consultant.

Now, obviously, this experience is highly relevant to the work of

the Export-Import Bank. It is my view that Mr. Grandmaison’s experience and his demonstrated ability in this—and I have not gone

all the way back through his resume. I do note that at one point,

he worked for the Commerce Department as a Federal Co-Chairman of the New England Regional Commission, whose membership

included the New England Governors.

He has had a range of experience that is highly relevant, I think,

to the work of the Export-Import Bank. We want to get the Bank

up to full strength. We have one other nominee to be a Member of

the Export-Import Bank whose hearing has been held, Eduardo

Aguirre of Texas. And so, if we can move forward with that nomination and this one, we will be able to bring the Export-Import

Bank up to full strength. All five members of the Bank will then

have been nominated and confirmed.

Senator Reed, do you have an opening statement?

COMMENTS OF SENATOR JACK REED

Senator REED. Thank you, Mr. Chairman.

I just want to recognize Mr. Grandmaison, who is an active and

very distinguished member of the New England community.

I am pleased to see you here, sir, and I wish you well.

Chairman SARBANES. Senator Miller.

COMMENTS OF SENATOR ZELL MILLER

Senator MILLER. No, Mr. Chairman, I do not have an opening

statement. I just want to thank you for holding this hearing and

to welcome today’s nominees.

Chairman SARBANES. You do not want to get in on this New England community thing here?

[Laughter.]

Senator REED. We have to stick together. We do not have a lot

of territory.

[Laughter.]

Chairman SARBANES. He is from southern New England, maybe.

[Laughter.]

Senator REED. You all are right about that, Mr. Chairman.

[Laughter.]

Chairman SARBANES. Senator Allard has joined us. I am pleased

to see that. Do you have an opening statement?

COMMENTS OF SENATOR WAYNE ALLARD

Senator ALLARD. Yes, Mr. Chairman, thank you. I would like to

thank you for holding this hearing. Our witnesses today are both

nominated to key positions under the Committee’s jurisdictions. I

am pleased that the Chairman has moved to fill the vacancies.

3

Of course, I would like to welcome Ken Donohue to the Banking

Committee. Mr. Donohue is nominated to be the Inspector General

for the Department of Housing and Urban Development. I believe

that this is one of the most important positions at HUD. It is critical that we have an Inspector General in place to help ensure that

we continue to see progress on management reform.

As the Ranking Member, of the Subcommittee on Housing and

Transportation, I have seen firsthand how helpful the reports of an

Inspector General can be. The Inspector General acts as the eyes

and ears of the Congress and is expert at routing out fraud, waste,

and abuse.

I believe that Mr. Donohue’s background will serve him well in

his new position. He has extensive experience in criminal investigative matters, and he is a certified fraud examiner.

We have an obligation to both the taxpayers and to those who

utilize HUD’s programs to ensure that the money is well spent. Mr.

Donohue understands this obligation, and I look forward to the opportunity to work with him.

I would also like to welcome Mr. Joe Grandmaison to the Banking Committee. He is nominated to be a Member of the Board of

Directors of the Export-Import Bank.

Thank you, Mr. Chairman.

Chairman SARBANES. Thank you.

Mr. Grandmaison, it is our standard procedure to ask witnesses

to testify under oath at their nomination hearings. If you would

please 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. GRANDMAISON. I do.

Chairman SARBANES. Do you agree to appear and testify before

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

Mr. GRANDMAISON. I do.

Chairman SARBANES. Thank you very much. We would be very

happy to hear your statement.

STATEMENT OF J. JOSEPH GRANDMAISON

OF NEW HAMPSHIRE, TO BE A MEMBER OF THE

BOARD OF DIRECTORS OF THE EXPORT-IMPORT BANK

OF THE UNITED STATES

Mr. GRANDMAISON. Mr. Chairman, Members of the Senate, I am

honored to appear before you as the President’s nominee to become

a Director at the Export-Import Bank of the United States.

I am deeply appreciative to President Bush for giving me the unexpected opportunity to continue in public service. I am also most

appreciative to Majority Leader Daschle, to you, Senator Sarbanes,

and to my friend, Senator Dodd, for their support of my nomination. My promise to the President and to each Member of this Committee is that, if confirmed, I will serve with the same dedication,

zeal, and purposefulness as I have in my previous Government

service.

When I was first asked whether I would be interested in possible

service on the Ex-Im Bank Board, my first thought was how perfect

that would be to use my 7-plus years of experience as Director of

4

the Trade and Development Agency. Not only is Ex-Im Bank TDA’s

sister trade finance agency, along with the Overseas Private Investment Corporation, OPIC, TDA’s success is inextricably linked

to Ex-Im Bank. In fact, about a third of the exports facilitated by

TDA feasibility studies are financed by the Bank.

To have the chance to bring my experience and enthusiasm to

Ex-Im Bank; to assist in strengthening our U.S. economy; and to

help create and preserve jobs here at home is a singular and special personal and professional opportunity. And U.S. jobs are what

it is all about at the Bank.

Last year, Ex-Im Bank financed or insured over $15 billion of

U.S. exports. In today’s competitive international market, often it

is whoever provides the financing that gets the business. American

companies need to be assured they can depend on their Government as their partner in further growing their company’s share of

the worldwide market. Ex-Im Bank will continue and, with the Administration’s and Congress’ support, will further strengthen that

partnership.

If confirmed, I will have the opportunity and honor to join the

President, the Congress, Ex-Im Bank’s Chairman John Robson, and

his colleagues at the Bank, in serving our Nation’s interest.

I would welcome that opportunity and ask for your support.

Thank you.

Chairman SARBANES. Thank you very much.

You have been nominated to serve a term that expires in January 2005. Is it your intention to serve the full length of that term?

Mr. GRANDMAISON. Yes, it is, Senator.

Chairman SARBANES. While you were at TDA, you served as a

Member of the Trade Promotion Coordinating Committee. What is

your view of the work of the Coordinating Committee, and how important do you think it is to the U.S. export effort?

Mr. GRANDMAISON. I believe it is very important, Senator. Among

other things, what it does is it sends a message throughout the operating bureaucracies of each of the member agencies that they are

supposed to be working together.

I was pleased when I learned of Secretary Evans’ commitment to

a renewed TPCC. Obviously, it is leadership that is necessary and

having the new Secretary of Commerce fulfill that role is going to

be exciting.

Also, as you know, Mr. Robson, as President of the Ex-Im Bank,

serves as Vice Chair at the TPCC. And if called upon, I would obviously do whatever he asked of me to help further those relationships among agencies.

Chairman SARBANES. I am interested in your view about the

tied-aid credit fund, whereby we seek to match credit terms offered

by other foreign export credit agencies. What is your view of the

need for the fund and how it should be utilized?

Mr. GRANDMAISON. Senator, the fund is terribly important as a

tool. In many ways, what it does is it helps us fulfill the broader

Government policy, our Government’s policy, relative to concessional financing, having it available to use. Now it is an even better tool if, when called upon for very specific reasons, it is actually

put into play.

5

I think one has to use it wisely. I think one has to be conscious

of the overall Government policy relative to concessional financing.

But, again, as a constructive mechanism to help us fulfill and assist our companies in being competitive, it is very important.

Chairman SARBANES. What do you understand the overall Government policy toward concessional financing to be?

Mr. GRANDMAISON. Well, as I understand it, Senator, it is that

concessional financing should not be granted and that the market

should prevail. And that is an exemplary matter of public policy.

Many of our competitors observe and abide by the OECD rules.

Others perhaps often work at the margin. That is where having the

ability to use the tied-aid fund I would think comes into play.

Actually, I think it is our perception that the use of the tied-aid

fund, or its potential use, has been very helpful in getting the

OECD to adopt limitations and restrictions on the use of concessional financing by its member nations.

Chairman SARBANES. I would like to explore with you the issue

of market windows, the government-sponsored enterprises used by

foreign countries, Canada and Germany are two leading examples,

to provide subsidized export credits outside of the requirements of

the OECD arrangement on export credits. Do you have any view

on how serious this problem is and how the United States should

respond to it?

Mr. GRANDMAISON. Senator, it is my understanding that the

threat of it becoming serious is there. Now, we do not as yet know

that for a fact. Therefore, at this point in time, what would appear

to make most common sense and business sense is to continue to

track and to identify what are the transactions that are falling into

that classification when it comes to our competitors who are using

market windows to, if you will, expand what they consider to be

their horizons.

Chairman SARBANES. Well, I see that my time is almost expired.

I will yield to Senator Allard.

Senator ALLARD. Thank you, Mr. Chairman.

As I think I indicated to you in our previous conversations, I

have been working to establish an Office of the Inspector General

at the Export-Import Bank. Do you support establishing an IG at

the Bank?

Mr. GRANDMAISON. Senator, you expressed to me your belief that

whoever becomes a Director at the Bank must walk in with an

open mind. And I promised you that I would do so.

I share your belief in the accountability factor, in always keeping

in mind that it is taxpayer money that the Bank is using. And

should that become the case, you have my commitment that I will

do everything possible to make it work successfully.

Senator ALLARD. In our conversation, you also mentioned that

the relationship of conflicts is less productive for both offices. I just

want to make it clear that you would pledge to strive for a productive and coordinated relationship, if we should have the inspector

general, with the inspector general. Is that right?

Mr. GRANDMAISON. Yes, sir.

Senator ALLARD. Thank you. Mr. Chairman, I yield my time.

Chairman SARBANES. Senator Reed.

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

6

And thank you, Mr. Grandmaison, for your willingness to come

forward again and serve this country. You have a very distinguished career, both as a businessman and also as a civic leader,

and we thank you for that.

One of the criticisms that we hear about Government all the

time is that it has to be run more like a business. This agency

seems to be one of those agencies that can and should run a lot

like a business, a financial institution. And some criticism I have

heard is that there is not either the resources or the ability to

leverage the private sector to help out in your mission. Could you

comment upon that as you go forward?

Mr. GRANDMAISON. Senator, I agree with the philosophy that

there are many things in Government that should be run more like

a business and there are business practices that can be adopted.

But I would add that one has to also keep in mind that there are

public policy issues and that it is not a business in the normal use

of the word.

The cooperation between the Ex-Im Bank and its clients, the

American business community, has to be a partnership. And everincreasingly, you see where U.S. companies would prefer that it

would be a level playing field overseas in every sense of the word

so that they would not have to come to us with their business.

Often that is just not as practical as one would hope, particularly

when it comes to small businesses. Those are the ones that have

the most difficult time maximizing opportunities.

Senator REED. I think, Mr. Grandmaison, coming from our part

of the country, most of our businesses are small businesses. It is

encumbent upon Ex-Im Bank to, I think, more aggressively reach

out to indicate to businesses what you are able to provide for them

in terms of assistance, and I hope you can do that. In terms of not

only reaching out to your potential clients, but also being part of

a larger, sort of financial support to the export business.

Some criticism I have had is that there is not that, you know,

your mission and you pursue it, but sometimes Ex-Im Bank does

not look to see if they can bring other banking institutions in to

do deals that will use some of your credits with some other straight

financing.

And I wonder if you might have a comment or just simply store

that away for reference as you go forward.

Mr. GRANDMAISON. What I would like to do is choose the storing

it away, Senator.

Senator REED. That is fine. That is fine.

Mr. GRANDMAISON. I am not that well acquainted with it. But I

assure you that I will become better informed.

Senator REED. Well, since we are confirmed automatic expertise

in everything by virtue of where we sit, I will accept that response

very gratefully.

[Laughter.]

But one further point, and it goes back I think also to the issue

that you mentioned in your initial response. I believe that the

agency needs to do a lot more of getting the message down to the

small businesses of America—north, south, east, and west—who

now increasingly depend upon the export market for their livelihood and survival going forward. That would require resources. It

7

might require different programmatics that you do not have at the

moment. And again, I would urge you to let us know if you feel

that there is something that we should do in terms of trying for

additional resources, additional programmatic responsibilities, or

discretion.

I wish you well, and thank you for your service to the country.

Chairman SARBANES. Good. Thank you, Senator Reed.

Senator Miller.

Senator MILLER. Thank you, Mr. Chairman. And thank you, sir,

for continuing to serve in the arena.

I know that you believe that TDA’s success is very much linked

to Ex-Im Bank’s, and I believe that also. And I would be interested

if you would care to elaborate a little on how you see the working

relationship between the Ex-Im Bank and TDA and the other sister

agencies, and how you think that could be improved and how you

intend to go about that.

Mr. GRANDMAISON. Well, thank you for that question, Senator,

because it is an area I have a deep dedication toward, if you will.

One of the frustrations is that often you run into problems when

you ask agencies to cooperate with one another. What I learned at

TDA, to be quite honest with you, is perhaps because of how small

it is, there was a tendency that you began with the recognition that

you could reach into other agencies, that all the expertise was not

on the same floor within your agency, so that you aggressively

went out and worked with agencies, whether it be the FAA or

FEMA or whoever, and called upon that expertise to help you.

What the TPCC does is it sends the message, as I said, right

straight through that agency, cooperation is supposed to be the

order of the day. And cooperation is even more important when it

comes to the three sister trade finance agencies—that the heads of

the three agencies, if you will, actually like one another, that they

are open to suggestions from one another—and that as often as

possible and practical, they meet to find ways to work together,

particularly on Senator Reed’s point relative to marketing the

agencies domestically.

So that is where you can be far more effective, if you go in and

conduct a training session in Atlanta utilizing all three agencies

together, so that the attendees get a full view of the type of U.S.

Government export services that are available to them.

It is less so sometimes on the projects because, to a great extent,

that is controlled by the applicant, the person that you are actually

assisting. But especially on the marketing side, you can maximize

your time and your cost, resource-wise, by working together. And

quite honestly, that is one of the more rewarding aspects of being

involved in this particular field.

Senator MILLER. Thank you. That is what I wanted to hear. I

wish you well.

I do not have anything else, Mr. Chairman.

Mr. GRANDMAISON. Thank you, Senator.

Chairman SARBANES. Do you have a view on how important the

support for small business on the part of Ex-Im Bank should be?

Mr. GRANDMAISON. I believe that 90 percent of the transactions

that Ex-Im Bank in authorized fiscal year 2001 were with small

business. Now the only way that comes about is through aggressive

8

marketing and is through taking your product, if you will, your

services, and being able to explain to people how they can make

use of it quickly.

Now part of the explanation as to why Ex-Im Bank has been that

successful, I would respectfully suggest, is because of the oversight

by Congress that has continually underlined that it be a priority

of the agency.

The truth is that it is often easier to work with large companies.

It is not as rewarding, however. It does not feel as good. It is not

as satisfying as when you work with a small company and help

them break into the international market and we get that sale.

So it is a combination of both. But what it takes more than anything else is discipline, discipline and maintaining it as a priority

and not forgetting that that is what you are being paid to do.

Chairman SARBANES. Senator Allard.

Senator ALLARD. I have no further questions, Mr. Chairman.

Thank you.

Chairman SARBANES. Thank you very much. We appreciate your

coming before the Committee.

Mr. GRANDMAISON. Thank you, Senators.

Chairman SARBANES. Mr. Donohue, if you would come on up and

take a place at the table.

[Pause.]

Our second nominee that we will be considering this morning is

Kenneth Donohue, who has been nominated to be the Inspector

General for the Department of Housing and Urban Development.

Mr. Donohue had a long and distinguished career in the Secret

Service from 1969 to 1990. He then worked for the Resolution

Trust Corporation as an Assistant Director for Investigations. And

when he left Government service just a few years ago, he started

his own security firm.

If confirmed, Mr. Donohue will be taking the helm of an office

that, according to many observers, including the GAO, has experienced some significant troubles. For example, the IG’s office ran a

program called Operation Safe Home, which, of course, raised important questions about whether the Office of Inspector General

should be in the business of running a program at all, whether that

is not a basic conflict with their fundamental role.

The GAO found significant problems with the IG’s accounting for

the Safe Home fund. In fact, the Congress has now eliminated that

program from the IG’s purview.

We have been fortunate, and I want to express my appreciation

to David Williams, who is the Inspector General at Treasury for

Tax Enforcement, and who has been doing double-duty by serving

as Acting IG at HUD. He has been doing two jobs at the same time

and, by all accounts, he has been doing them very well. And I want

to express publicly the Committee’s appreciation to David Williams

for undertaking this responsibility.

He is a very highly regarded Inspector General amongst what I

guess one could term the inspector general corps.

Senator Allard, do you have an opening statement?

Senator ALLARD. I do not, no. I included my comments in my previous statement.

Chairman SARBANES. Does anyone else?

9

[No response.]

Mr. Donohue, if you would stand, I want to administer 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. DONOHUE. I do.

Chairman SARBANES. Do you agree to appear and testify before

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

Mr. DONOHUE. I do.

Chairman SARBANES. Thank you very much, sir. Please take a

seat and we would be happy to receive your statement.

STATEMENT OF KENNETH M. DONOHUE, SR.

OF VIRGINIA, TO BE INSPECTOR GENERAL OF THE

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Mr. DONOHUE. Thank you, Chairman Sarbanes.

Before proceeding further, Mr. Chairman, please allow me the

pleasure to introduce the members of my family that are with me

here today.

First, let me introduce my wife, Kathleen, who currently works

at the State Department and raised our wonderful sons while I was

traveling the world. Without her support and love, I would not be

here today.

Next is my eldest son, Kenneth Martin, who is a military veteran

and currently a Police Officer with the U.S. Mint. Timothy Patrick

is a Special Agent with the U.S. Secret Service. And finally, my

son, Brian Richard, who is a die-hard Hokie of Virginia Tech and

now a finance person with a worldwide computer corporation.

I have been blessed with this family that has made many untold

sacrifices for me over the years. I am very proud and love them

very much.

You can gather by their names that I am of Irish ancestry and

I can assure you that my foreign-born parents would be pleased to

see their youngest son sitting before this distinguished group of

U.S. Senators.

As a child of immigrants—raised in a borough of New York—I

know that when my parents sought their dream in America, they

found opportunity in the city. That opportunity must continue for

others less fortunate.

I am deeply grateful to President Bush and Secretary Martinez

for according me the honor of this nomination and, if confirmed, I

will serve in this position with enthusiasm and humility.

Chairman Sarbanes and Members of this Committee, I thank

you for your willingness to schedule this hearing given the stress

of other business during these very difficult times for our country.

During my 21 years of Federal law enforcement with the U.S. Secret Service, I have testified hundreds of times in Federal court

and before grand juries relating to criminal investigations. First

and foremost, I was taught that a good witness should be brief and

to the point.

Members of the Committee, I sit before you with admiration to

you for your service to the citizens of this country. The potential

opportunity to work with you in the future is an enormous privilege and responsibility.

10

I can assure you that I am up to the challenge.

In my previous role as Section Chief of a headquarters staff for

the Office of Investigations at the Resolution Trust Corporation,

the RTC, and later as the Assistant Director, I spearheaded our

efforts and successful outcome of working with the other related

regulatory and Federal law enforcement agencies from both the Department of Justice and the Department of the Treasury.

When I arrived at the RTC in 1980, we had very few employees

assigned to investigations. Those numbers would later grow to approximately 500 staff members located throughout 16 field offices

that I indirectly supervised through four regional directors.

By 1996, with a Congressional sunset mandate, we successfully

closed these offices and I returned to the Federal Deposit Insurance

Corporation. As a member of the national bank fraud working

group, we collectively addressed and reported our efforts to Congress on the investigation of the failed savings and loans.

This past governmental experience is not only relevant to my

prospective position at the Department of Housing and Urban Development, but will prove to be extremely valuable in performing

the duties of Inspector General, if I am confirmed.

My past 5 years have been in the private sector consulting on

law enforcement and investigative issues. This also provides a

strong foundation for the task that lies ahead, if I am confirmed.

For example, I recently completed a multiyear contract with a classified program at the Central Intelligence Agency that interrelated

with U.S. corporations.

I have learned firsthand that the corporate world, even though

guarded at times toward the Federal Government, has enormous

respect for those Government agencies that are responsive to the

will and concerns of the American people.

I am aware that HUD has been designated as high risk by the

General Accounting Office and criticized by its former Inspector

General. If confirmed, I pledge to you and our citizens that I will

be a strong manager and my office will commit to the task of aggressively investigating waste, fraud, and abuse. I intend to recruit

the best talent to this office and set the highest standards.

I will work with Secretary Martinez in achieving the shared goal

of eliminating fraud, waste, and abuse, and ensure that taxpayer

dollars go to the programs intended. I will do this while jealously

guarding the independence of the office of Inspector General.

If confirmed, I will maintain an open and forthright dialogue

with both the Secretary and the Congress during my tenure.

This I pledge and this I promise.

Finally, I enjoy a close relationship with many other current Inspector Generals, and I will seek their advice and counsel.

In this regard, I want to acknowledge and to thank the current

Inspector General for the Treasury Tax Administration, Mr. David

Williams, who has also served for the past 6 months as the Acting

Inspector General at HUD.

Thank you for the opportunity to appear before you this morning.

I stand ready to answer any questions you may have.

Chairman SARBANES. Thank you very much, sir.

Let me just say at the outset that I think you are going into a

very challenging position that is not only the range of activities in

11

which HUD is engaged and the interaction it has with both State

and local governments and with the private sector that require an

active Inspector General’s office, but also at least some of us are

very troubled by reports we have received in terms of the functioning of the Inspector General’s office at HUD in recent years. I

would like to explore that with you a bit.

You have been, I take it, over at HUD now as a consultant for

how long a period of time?

Mr. DONOHUE. Four or five weeks, Senator.

Chairman SARBANES. First of all, the previous Inspector General

had her own press operation. There was actually a press operation

in the Inspector General’s office. Do you regard this as an appropriate function for an Office of Inspector General?

Mr. DONOHUE. Senator, I see no need for a press office in the Office of the Inspector General. I will address matters that come to

my attention from the press. In most cases, I would suspect when

they involve the work that we do, it will be collectively done between ourselves and the Department of Justice and we will respond

to those accordingly. But I see no reason to have such a press program in the Office of the Inspector General.

Chairman SARBANES. I think David Williams closed it down, did

he not, when he went over there?

Mr. DONOHUE. I am not aware of that, Senator.

Chairman SARBANES. Operation Safe Home, which has now been

eliminated in the Fiscal Year 2002 HUD Appropriation Bill, I just

want to ask you about it so that we get some sense of how you

would go at the Inspector General’s job.

Robert Murphy, General Counsel of the General Accounting Office, in a letter to Representative Walsh on the House side, August

a year ago, raised concerns about the OIG taking responsibility for

running a program. Murphy wrote to Walsh: We—meaning the

GAO—are concerned about the impact the IG’s exercise of such

programmatic authority may have on the IG’s personal and organizational independence. The letter went on to point out the conflict

of interest that this situation could pose to the Office of Inspector

General.

Now the previous Inspector General disagreed with those conclusions, and I am interested in your view about the appropriateness

of the Inspector General’s office itself actually running a program.

Do you have any view on that question?

Mr. DONOHUE. Yes, Senator. I have been briefed about the program. My understanding is that this program has been phased out

by Congress. I am also aware that they are moving forward with

regard to resolving the cases that they may have and hope to have

those resolved and transferred to the respective Federal and State

agencies by the end of March of next year.

I read the GAO report and I do find issue with the notion of having an operational component such as this within the IG’s office.

It seems to me that the IG’s office must have total uninvolved oversight of programs within the agency itself.

Chairman SARBANES. Its job is to review the conduct of programs

by others, not to actually run programs itself, which of course

raises the question, if it does that, who reviews the operation of

12

those programs if the agency which is supposed to be doing the review is running the program?

The GAO earlier this year released a report on Operation Safe

Home and found that the IG’s office at HUD diverted some $3.9

million from normal operations to pay the salaries and expenses for

that program. In addition, the report found that of the $37.5 million in funding allocated to the Safe Home task forces, 50 percent

remained unspent and 25 percent remained unobligated. Do you

know the present status of the unobligated and unspent funds?

Mr. DONOHUE. Senator, I do not. I need to look at the expenditure. I am aware what the intention is, and my intention would be

to—Congress has seen fit to continue the budget for this coming

year and to reallocate those resources, I believe, to programs that

best serve HUD. And that is, programs such as predatory lending

and flipping tactics that have gone on nationwide.

Chairman SARBANES. Finally, let me just close out this issue. My

time is running out here.

Besides the questions about conflict in management of the Operation Safe Home program, we have had called to our attention a

memorandum from an IG special agent to the prior Inspector General, who was the special agent in charge, saying that the IG

agents must be instilled with a combat mindset and a certain degree of ruthlessness.

The memo goes on to say that the civilized mindset of many

agents in the field will have to change. It must be replaced by the

fighting man’s requisite ruthlessness. This means that our agents

may very well have to rip the mortal coil off a 10-year-old kid or

light up a woman, end of quote.

Now the thrust of this memo was trying to say, well, you know,

we are doing this Operation Safe Home. This is a dangerous business and our agents really have to sort of be up to it, which is a

very important point that needs to be registered on the agents.

On the other hand, this may underscore why Operation Safe

Home should not be done by the IG. That kind of work should be

done, it seems to me, increasingly by well-trained professional law

enforcement people who gear up to do exactly that kind of activity

and go through a very severe training program in that regard. Are

you at all familiar with this issue?

Mr. DONOHUE. I am a bit, Senator. And I can assure you that

what you refer to as cowboy tactics will not be tolerated.

I had the privilege of working for an agency that at one moment,

agents would be involved in sensitive investigations and the next

minute involved in the protection of the President of the United

States. The notion of presenting a professional, thorough, committed organization that can do the task at hand and that I believe

the Inspector General is charged to do is what their task will be.

If it involves training, training will be administered. But they

will apply their wares in the audit and investigations area specifically to the true task that I see the IG has responsibility over.

Chairman SARBANES. Senator Allard.

Senator ALLARD. Thank you, Mr. Chairman.

It is no secret that I have been a strong advocate of the Government Performance and Results Act, or simply some people refer to

it as the Results Act. This is an Act that requires the Government

13

agencies to create strategic plans based on outcomes rather than

processes. And these are measurable, which is very key to outcomes as you set out some goals where you can measure whether

there is success or failure. Are you familiar with the Results Act?

Mr. DONOHUE. Yes, in a way I am, Senator.

Senator ALLARD. Part of the responsibility that I view of the Inspector General is to make sure that there is adequate oversight

on the programs and that the agency is following through with

what Congress intended. Will you work to ensure that HUD utilizes this tool?

Mr. DONOHUE. Yes, I will.

Senator ALLARD. I understand you have been working at HUD

as a consultant for about 3 or 4 months. Is that correct?

Mr. DONOHUE. It seems like 5 weeks. It might very well be 6 or

7 weeks, I believe, after September 11.

Chairman SARBANES. It seems like a lifetime sometimes.

[Laughter.]

Senator ALLARD. Apparently, you have been assessing security

issues at the agency. What has been your role in this assessment?

Mr. DONOHUE. Yes, Senator. Thank you for the question.

I was asked to come over by the Deputy Secretary following the

September 11 events. I have an expertise in security. My objective

was to first bring together the HUD components that have a direct

involvement in the security requirements.

We have done that and created a working group. We have addressed emergency evacuation plans. And probably best of all is

that I have had the opportunity to go out to various colleagues at

the Veterans Administration, Department of Labor, and Justice, to

team-up with them, and with some of their concepts and notions,

to ultimately ensure a safe environment for the employees at HUD.

It is being proposed, that we will have people with expertise

going out to the field sites, which I believe is 85 sites, to look at

their needs, their requirements, and to come back and make those

recommendations to an executive group to implement those programs, where applicable.

One thing, I am also proud of, is that I had asked Mr. Williams

in the Inspector General’s office to create an Incident Assessment

Center. Think of it as a command post where employees can go,

call up, address concerns, such as EAP matters, but particularly

concerns of anthrax scares and the like.

They have become a central repository to be able to guide those

people through the appropriate address and to report to 911 or

Federal protective service.

So it has worked effectively. They will create an office of security,

permanent office of security, to address these matters following

this terrible tragedy.

Senator ALLARD. Apparently, you think that this is very important. Can you discuss why you think this is so important, security

at HUD?

Mr. DONOHUE. Senator, following September 11, as you I am

sure you will agree, is that employees were frightened. The focus

at HUD with regard to security had not existed and, for the most

part, the requirement did not necessarily exist.

14

I think that the need for this is great. I think the Secretary, the

Deputy Secretary have truly recognized the need. One of the byproducts, is that I have had a chance to work with the senior staff

and get to know them. As far as getting them to know how I am

and they are, and I think realizing that this new job will require

my need for independence and objective response.

I think it has proven favorable as well.

Senator ALLARD. You have an extensive background in investigations. I think it would help this Committee if you could elaborate

on your history and describe how this would tie in to your work as

Inspector General.

Mr. DONOHUE. Senator, I can identify with these agents. I was

a field agent for many years with the U.S. Secret Service. I interviewed, I collected evidence and maintained that evidence and

worked closely with the Department of Justice. I was fortunate,

based on my ability, to be a Section Chief on occasions in the U.S.

Secret Service, where I managed agents to perform fraud and forgery and counterfeit investigations.

I think I was a good manager.

I would later go on to the Resolution Trust Corporation. When

I got there, it was a very small organization. I was asked to be a

Section Chief and then asked later to be promoted to the Assistant

Director level.

That was a remarkable task because the agency had really not

existed before. So, I had to create programs. I had to create programs like an Asset Search Program to address the need for due

diligence and how much of value it was to pursue some of these

wrongdoers in civil litigation.

I had to be responsible for the training of the personnel. Many

of the personnel had come out of the failed institutions, but many

came out of an investigative background, and paired them up. We

had to train them, train them in criminal investigations, train

them on civil fraud investigations.

The focus was to deal with the respective offices, to work closely

with the Department of Justice and the FBI to further these cases

along. That represented a community of probably 400-plus employees which would later be downsized and, by Congressional mandate, terminated as was the RTC.

I returned to the FDIC and transferred what restitution collections we had back to try and pursue those cases.

In 1997, as a result of the downsizing of the FDIC, I left and

went in to the private industry.

Senator ALLARD. Mr. Chairman, I have just one more question.

Chairman SARBANES. Sure. Go ahead.

Senator ALLARD. And then I will be finished.

Chairman SARBANES. Yes.

Senator ALLARD. Have you thought about how you may apply the

Results Act to the Inspector General’s office? You have a separate

entity out here and if you are going to ask of everybody else how

you put in measurable results and maybe discuss that a little bit

in your own Inspector General’s operation.

Mr. DONOHUE. Senator, that is a very good question. I think I

became sensitive to the results-based programs, after I left the

Government and went into private industry for the past 5 years.

15

I came quickly to find out that your work better be of top quality

or you do not get paid.

So the notion of basing my resources, basing it on performance,

it seems to me, and will be, hopefully, the benchmark. I know it

is going to take some work. Dave Williams and I both share the

same sentiments.

I think it is a practical way to do it. This is taxpayers’ dollars,

which I am very sensitive to. And I hope to have a strategic plan

in place shortly into my term, if I am confirmed. I do see it as very

important. I will make it important in my program.

Senator ALLARD. Thank you, Mr. Chairman.

Chairman SARBANES. Thank you, Senator Allard.

Senator Reed.

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

Welcome, Mr. Donohue, and good luck.

Your discussion of security issues, that is the current assignment

you have as a consultant to the Department. Is that correct?

Mr. DONOHUE. That is right.

Senator REED. Looking at security. To what extent do you believe

that will be an important part of your role as the IG? Is it discrete,

different functions?

Mr. DONOHUE. No, Senator. My intention is, if I am confirmed,

that the security responsibility will stay behind and transfer on to

a newly created Director of Security position. I see no role with respect to the Inspector General other than oversight.

Senator REED. Thank you, Mr. Donohue. One other question. In

your analysis, do you have a bottom-line number of how much

money you believe that HUD needs to fully protect itself and its

employees?

Mr. DONOHUE. I am sorry, Senator. It is a bit premature. We are

just about ready to send some experts out to the field.

There has been vulnerability assessments returned previously

from the field. But these people are not experts. I think we are

going to have to have a hands-on. That is my recommendation and

I suspect that will—hopefully, conclude itself. It begins January 2

and will wrap itself up sometime in mid-June.

Senator REED. Good. You have a very difficult job ahead of you,

if you are confirmed by the Senate. In some respects, you are responsible for very little. In fact, I concur with the feeling expressed

by the Chairman that the programmatic responsibilities of the IG

should be close to zero. But, then, again, you are responsible for

everything because if something goes wrong in the Department, it

could have been avoided by an effective IG.

You are an advisor to the Secretary, but you are also charged

with telling the Secretary some difficult truths at times. You have

to be perceived as someone who is open to everyone in the organization, from the entry-level clerk to the senior assistant if they feel

that something is wrong in the Department.

You have to be a colleague of the Secretary, give, in this case,

Mr. Martinez, good advice. But at some time, you might be compelled publicly to communicate with the Congress and the larger

public.

I come to this appreciation not so much from looking at civilian

departments, but from spending some time in the Army.

16

Do you disagree with any of those characteristics of your job?

Mr. DONOHUE. Absolutely not, Senator.

Senator REED. And you are prepared to do all those things?

Mr. DONOHUE. I am, Senator. I have no hidden agenda, and I

will tell things as they are. I have had the opportunity to meet

with the Secretary. He has indicated to me, and I have no reason

to question his support, for independent investigations and audits

with regard to the Inspector General, and has also indicated a willingness to implement such recommendations on a timely basis.

Senator REED. Good. It strikes me that a great deal of your responsibilities will be looking at essentially financial transactions— housing programs and whether funds have been used appropriately, either by members of the administration or by developers

out in the country, in the cities, doing their work. Do you feel that

your background has prepared you for that? I know you were at the

RTC. Can you comment a bit about your ability to manage people

who have financial expertise?

Mr. DONOHUE. I understand. Senator, there is no question that

my strong side is investigations. I truly have a strong sensitivity

to the audit work. When I was in the U.S. Secret Service, when we

had requirements of that sort involving financial reviews, we would

call upon those agencies that had audit experience.

At the Resolution Trust Corporation, we had components with

audit programs within the General Counsel’s office. We would hire

that kind of expertise.

I found that the outcomes of my investigations and recommendations were based on good audit review, and in a timely way good

reporting.

I do have a great deal of appreciation for that and I will place

that as the focus of my term, if confirmed.

Senator REED. Part of your role, too, is to, again, maintain this

very delicate balance between being a colleague and being a watchdog without one consuming the other.

I am sure there are examples of IG’s that were so collegial, that

nothing got looked at. And then there are examples that we have

seen of IG’s that were such watchdogs, that they could not effectively communicate with their colleagues, could not effectively do

anything because they became paralyzed in sort of personal, in

some cases, acrimony.

Again, there is no formula for this or right answer, but I would

feel comfortable if you could appreciate that very difficult balance.

Mr. DONOHUE. I do, Senator.

Senator REED. Then, finally, too, you are going into an organization, and Senator Sarbanes, the Chairman, has alluded to certain

issues, programmatic facts, some of the very harrowing description

of ripping the mortal coil of a 10-year-old, et cetera, some of the

ongoing controversy. One, do you have an assessment at this point

of the morale of the organization; and two, do you go into that organization with a very specific agenda to improve the morale? And

I do not know what the morale is. I am just asking you.

Mr. DONOHUE. Yes, Senator. I do have some thoughts.

First of all, I want to assure you that the senior staff that I select, and I will have that opportunity, will be the absolute best and

qualified for that position. I demand that and I insist upon that.

17

As to the agency itself, I think I must ensure the fact that the

audit and investigations staff are working collectively, I was told

by Mr. Williams, that the housing fraud initiative is an example.

They have worked together collectively and have been very successful. I will encourage that cooperation.

I do believe that there has been some communications issues. We

have had an Acting IG since June. If I am confirmed, I will instill

a professional policy and leadership of that program to ensure that

issues of this type will not happen, to the best of my ability.

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

Mr. DONOHUE. Thank you, Senator.

Chairman SARBANES. Mr. Donohue, I would like to pursue some

personnel issues with you because I think the challenge is just

enormous. And a number of personnel issues have arisen at the

OIG at HUD in recent years.

The Boston Globe, in February of this year, had a headline, and

I will read briefly from the article: ‘‘Black Agent Claims Retaliation

At HUD. Latest Suit Seeks To Block Job Transfer.’’

The agency that is supposed to root out crime in Federal housing

programs is being accused of institutional racism carried out by an

Inspector General who allegedly has ignored wrong-doing by white

executives while retaliating against black agents who speak out

about bias.

This is a suit that was brought by the highest-ranked black

agent in the Inspector General’s office, saying he was being sidelined into a new position as punishment for his suit against

Gaffney. He brought suit saying that she had recruited and installed as her top investigator a white man with no law enforcement background instead of him. He then brought suit that she

was then taking retaliation against him.

The Black Caucus in the House became very energized about this

issue, the NAACP, and the National Organization of Black Law

Enforcement Executives.

In the end, he received quite a substantial settlement from the

Government to resolve this dispute about the prior Inspector General’s conduct. This was not the only racial bias issue that had

been raised at the OIG under Ms. Gaffney.

So, I want to ask you first, just your own commitment to a working environment that is an open and tolerant one. Are you familiar

with these various episodes taking place within the IG’s office?

Have they been brought to your attention in your preparation to

take over this job?

Mr. DONOHUE. No, they have not, Senator Sarbanes. However, I

am familiar with what you just referenced from several Washington

Post articles, I believe, in May of this past year, and prior to Ms.

Gaffney’s departure from HUD, which involved the lawsuit of a

senior staff member within the Inspector General’s office.

My response, Senator, is that I will not tolerate racist behavior.

I will not tolerate sexual harassment. That is something that I will

not accept. The advancement of my personnel or my appointments

will be based solely on their capability and the knowledge of the

job at hand. I assure you that I will advise my senior staff that this

is unacceptable and that this will not happen, to the best of my

ability.

18

Chairman SARBANES. We are very concerned about what has

been going on down there.

Actually, Ms. Gaffney earlier this year wrote a memo outlining

disciplinary action against OIG’s employees, driving Government

vehicles after drinking, misusing Government computers for personal reasons, including downloading sexually explicit material, altering the price of merchandise, mishandling and misuse of firearms, misuse of Government property. These are all things that

she enumerated were going on within her office. I think virtually

all of the senior staff down there either resigned or were forced out

or took retirement. It is pretty vacant at the top ranks, is it not,

down at the OIG’s office at HUD?

Mr. DONOHUE. Yes, sir, it is.

Chairman SARBANES. Of course, that gives you a real opportunity

to bring in some top-notch people who won’t fool around.

We had brought to our attention an affidavit filed by one employee. I do not know if you have seen it. We are going to refer it

over to you, about engaging in sexual intercourse in the office, all

the rest of that. I do not know what kind of hijinks were going on

down there in the IG’s office. So, you have a Herculean task to

clean out the stables.

Mr. DONOHUE. According to Mr. Williams, Senator, they realize

and know that a new person is coming into this position. It has become rather clear to them, and it will become clear to them as I

come on, that this behavior will not be acceptable and tolerated

and will be dealt with very quickly and effectively.

Chairman SARBANES. Well, there is a strong feeling that her favorites were not punished and the ones that were not her favorites

were punished, even though they engaged in the same conduct,

that sort of double-standard, which I do not think any good administrator can have taking place within their organization.

I really commend to you the idea of reviewing all of this wrongdoing to make sure that the right decisions were made. That thing

has to be set back in the proper order. And I think that is one of

the major initial challenges that will confront you.

I am not aware, and I do not know if you are, of other IG offices

that seem to have had such extensive personnel problems.

Mr. DONOHUE. Nor am I, Senator.

Chairman SARBANES. Let me just ask. I was curious about one

question. Do you know how other Inspector Generals handle personnel decisions regarding disciplinary actions within their office?

In other words, the IG goes in and reviews the people in the Department. So if you get allegations of this sort taking place, the IG

becomes an agency that reviews that. But how do we get a review

of the IG’s office if this sort of thing is going on? Do you have any

thoughts on that?

Mr. DONOHUE. I do, Senator. What I am accustomed to, and my

notion supports this, is to have—call it an Office of Inspection or

Special Investigations, that will target matters of this type.

It seems to me, Senator, that the IG, like all Federal and State

law enforcement agencies, must be above reproach. They must set

the standard with regard to the agencies. How can they possibly

go back and conduct investigations of HUD organizations and not

be able to stand up to the same scrutiny?

19

So, I believe Mr. Williams has begun that process. I will install

an Office of Inspection that will target such matters, and, prevent

them from happening. But when they do, they will go to that matter directly and respond back to me for rapid action.

Chairman SARBANES. Have you had any conversations with Mr.

Williams as to whether he could remain available to you to consult

with and counsel with as you move into your responsibilities?

Mr. DONOHUE. Mr. Williams and I have not only become colleagues, but also good friends.

Chairman SARBANES. I understand that because Mr. Williams

has indicated to us that you have established a good working relationship. We value that opinion very highly because we have, as I

indicated earlier, a very high regard for Mr. Williams.

Mr. DONOHUE. Also, there seems to be, what I have found, a

collegiality among the Inspector Generals throughout and within

the PCIE program. I have met them. Senator, I hope to call upon

them for ideas, suggestions, and possibly mimic some of their programs that have effectively worked. I am a very open-minded person and I would look upon them, and Dave Williams has indicated

a willingness to do that as we go along.

Chairman SARBANES. I think that is a very constructive attitude

on your part as you move into these important responsibilities.

Also, the General Counsel at the Department, Dick Hauser, who

we think is quite able, has also indicated his willingness to work

in an effort to clean up this IG’s office.

Let me touch on one other issue.

We have received reports that the previous OIG undertook an extensive effort to develop an information tracking system separate

and apart from the rest of HUD. The system was to be called the

OIG Audit Support Investigative System—OASIS. Apparently, the system was in development for over 2 years at a cost of $4 to $5

million. The system was never put on line. Have you had a chance

to become acquainted with this failed effort?

Mr. DONOHUE. Senator, I have not.

Chairman SARBANES. If you could take a look at that, I think it

would be important to do that. It is my understanding that the

OIG continued to contract out its IT function, rather than use

HUD’s existing system, even though using HUD’s system would

have been considerably cheaper.

It sounds like the IT systems at the IG’s office are a mess. I commend that to you. In fact, I think after you have a reasonable

period of time to try to straighten out the office, we might want to

have a hearing just to see where things are. You would have a

chance to review things very carefully and put in an action program in order to correct a lot of these deficiencies.

There was a constant clash going on between the IG and the previous Secretary at HUD. That was attributed to personality clashes

and so forth and so on. But it seems that what happened is that

in the furor of the personality clash, not enough attention was

being paid really to the workings of the IG’s office—on personnel,

on information technology, of this whole range of issues that we

have touched upon here.

You have a double-challenge, it seems to me. First is to get the

IG’s office itself into shape. And the other, of course, and the real

20

responsibility of the IG’s office, is to supervise, to review, and to

oversee the workings and the programs in the Department.

You should not have to do the first, but that is the situation that

has been left to you, unfortunately, although I think that David

Williams has been addressing at least some of those issues.

I have no further questions.

Senator Allard.

Senator ALLARD. No further questions, Mr. Chairman.

Chairman SARBANES. Well, thank you very much, sir.

Mr. DONOHUE. Thank you, Senator.

Chairman SARBANES. We appreciate your appearance before the

Committee, and we are also very pleased to welcome your family

that is here with you today.

The hearing stands adjourned.

[Whereupon, at 11:12 a.m., the hearing was adjourned.]

[Prepared statement, biographical sketches of nominees, and additional material supplied for the record follow:]

21

PREPARED STATEMENT OF SENATOR WAYNE ALLARD

I would like to thank Chairman Sarbanes for holding this hearing. Our witnesses

today are both nominated to key positions under the Committee’s jurisdictions, and

I am pleased that the Chairman has moved to fill the vacancies.

First, I would like to welcome Ken Donohue to the Banking Committee. Mr.

Donohue is nominated to be the Inspector General for the Department of Housing

and Urban Development. I believe that this is one of the most important positions

at HUD. It is critical that we have an Inspector General in place to help ensure

that we continue to see progress on management reform.

As the Ranking Member, of the Subcommittee on Housing and Transportation, I

have seen firsthand how helpful the reports of an Inspector General can be. The Inspector General acts as the eyes and ears of the Congress and is expert at rooting

out fraud, waste, and abuse.

I believe that Mr. Donohue’s background will serve him well in his new position.

He has extensive experience in criminal and investigative matters, and he is a certified fraud examiner.

We have an obligation to both the taxpayers and those who utilize HUD programs

to ensure that money is well spent. Mr. Donohue understands this obligation, and

I look forward to the opportunity to work with him.

I would also like to welcome Mr. Joe Grandmaison to the Banking Committee. He

is nominated to be a Member of the Export-Import Bank’s Board of Directors.

The Banking Committee has spent a good deal of time this year working on the

reauthorization of the Export-Import Bank. During this work I have raised several

concerns. First, I would like to see the Bank increase its small business work. Although I am pleased that the Bank does a significant volume of its deals with small

business, I would like to see the dollar value of those deals increase. I sponsored

an amendment to increase the small business goals, and I was pleased to have it

accepted by the Committee.

My second amendment concerned establishing an Office of the Inspector General

at the Bank. As my previous comments have indicated, I strongly believe in accountability and in good government. The Export-Import Bank is the only Government

agency offering direct loans and loan guarantees that does not have an Inspector

General. I believe that an Inspector General will give the Bank greater credibility

and will bolster the work that they do to oversee themselves. I am hopeful that Mr.

Grandmaison can be helpful as we continue to work to resolve this matter.

I look forward to hearing from our witnesses today. I am very hopeful that the

Committee will be able to schedule a markup quickly so that these nominees can

be confirmed by the Senate before we complete our business for the year.

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NOMINATIONS OF:

DIANE L. TOMB, OF VIRGINIA

TO BE ASSISTANT SECRETARY OF

PUBLIC AFFAIRS, U.S. DEPARTMENT OF

HOUSING AND URBAN DEVELOPMENT

AND

VICKERS B. MEADOWS, OF VIRGINIA

TO BE ASSISTANT SECRETARY FOR

ADMINISTRATION, U.S. DEPARTMENT OF

HOUSING AND URBAN DEVELOPMENT

TUESDAY, DECEMBER 18, 2001

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,

Washington, DC.

The Committee met at 2:50 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.

I am sorry that we were delayed in getting the hearing started.

I think before I make my opening statement and turn to Senator

Gramm, other Members of the Committee, and swear in the witnesses, I will turn to Congressman Portman because I know that

he may well have some conflicting obligations over on the House

side, and we very much appreciate his coming today. Why don’t you

go ahead. We will be happy to hear from you.

STATEMENT OF ROB PORTMAN

A U.S. REPRESENTATIVE IN CONGRESS FROM

THE STATE OF OHIO

Representative PORTMAN. Mr. Chairman, thank you very much

for the privilege of being able to be here this afternoon to talk a

little bit about my former colleague, Diane Tomb.

Senator Gramm, good to see you again. Thank you for having

me. Senator Reed, good afternoon.

Diane has been nominated for the position of Assistant Secretary

of Housing and Urban Development for Public Affairs. She has a

strong background in housing matters. Her most recent position is

as Senior Vice President for Communications at the Fannie Mae

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Foundation, which had her overseeing efforts to educate the public

about affordable housing and homebuying processes. They are the

biggest housing foundation in America and she received good experience there.

In addition to that, she has a lot of experience in public affairs,

having worked prior to Fannie Mae as the Director in the public

affairs practice at the Washington office of Burston, Marstellar.

I got to know her in the Bush Administration a few years ago,

the first Bush Administration, where I was in legislative affairs

and she was in the press office. We worked on a number of projects

together and I was always impressed with her work ethic, her creativity, her approach to problems, and her effectiveness.

She is a person who gets things done and has the kind of strong

character with that background that I think would be appropriate

for this very important position.

She also cares a lot about housing. We talked a little bit before

the hearing, Mr. Chairman, about some of her efforts at Fannie

Mae and some of her objectives at HUD.

I think that she would be a great asset, not just to the Bush Administration, but also to this Committee, frankly, and to the House

Committee, to promote issues that we all care about in terms of

availability of housing.

She is the person who has the kind of background skills that I

think we should encourage in terms of public service.

I am delighted she is interested in reentering public service, and

I urge that she be given favorable treatment by this distinguished

panel, and go on to be able to serve President George W. Bush.

I thank you again, Mr. Chairman, for allowing me to be able to

be here this afternoon.

Chairman SARBANES. Thank you very much for coming. We appreciate it. I know that you have to excuse yourself, but thank you.

Representative PORTMAN. Thank you, sir.

Chairman SARBANES. This afternoon, the Committee meets in

order to consider the nominations of Diane Tomb, the nominee to

be the Assistant Secretary for Public Affairs, and Vickers Meadows,

the nominee for the position of Assistant Secretary for Administration, both at the Department of Housing and Urban Development.

Secretary Martinez spoke to us about his desire to try to get his

people into place before this Congress concludes, and so, we have

scheduled this hearing on rather short notice in order to try to respond to the Secretary’s request. In fact, these nominations came

to us only recently, and we are very willing to try to assist the Secretary in his efforts to get his team into place. I want to thank my

colleagues for their response in that regard.

Diane Tomb has had extensive experience in the field of public

relations, most recently, as Congressman Portman indicated, as

Senior Vice President for Communications at the Fannie Mae

Foundation. Prior to that, she was a Vice President and Director

for Burston Marstellar, and has held a number of positions in the

public affairs field.

Vickers Meadows—another Texan, I might observe, to my colleagues—was in charge of administration in the office of then-Governor Bush in Texas. She’s originally, though, from Alexandria,

Virginia, and she’s had previous work in the White House. In fact,

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she has been working in White House management for the first

part of this year.

So, we are very pleased to have both nominees before us.

Senator Gramm, I yield to you for any statement.

COMMENTS OF SENATOR PHIL GRAMM

Senator GRAMM. Mr. Chairman, first of all, let me thank you for

holding this timely hearing. There are various complaints raised

about whether or not we are moving fast enough on nominees, and

some chairmen perhaps are subject to the complaint that we are

not. But none of that would apply to you, and I want to thank you

very much.

Chairman SARBANES. Thank you.

Senator GRAMM. It seems to me, Mr. Chairman, we have two

people before us that have extensive experience in the Department

of Transportation, the Department of Commerce, and various parts

of the White House, the Executive Branch of Government. I believe

they are eminently qualified and I again want to thank you for this

timely hearing.

Chairman SARBANES. Thank you.

Senator Reed.

COMMENTS OF SENATOR JACK REED

Senator REED. Thank you, Mr. Chairman.

Mr. Chairman, I want to thank you for expeditiously holding this

hearing. I also want to congratulate the nominees before us today.

I do not have an opening statement.

Chairman SARBANES. It is the practice of this Committee to place

nominees under oath. So, I would ask you both to stand so that I

can administer 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?

Ms. MEADOWS. I do.

Ms. TOMB. I do.

Chairman SARBANES. Do you agree to appear and testify before

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

Ms. MEADOWS. I do.

Ms. TOMB. I do.

Chairman SARBANES. Thank you very much. Please take your

seats and we would be happy to hear from you.

Ms. Tomb, why don’t we start with you, and then we will go to

Ms. Meadows.

STATEMENT OF DIANE L. TOMB, OF VIRGINIA

TO BE ASSISTANT SECRETARY OF PUBLIC AFFAIRS

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Ms. TOMB. Thank you, sir.

Chairman Sarbanes, Ranking Member Gramm, and distinguished Committee Members, it is a privilege to appear before you

today as the nominee for Assistant Secretary for Public Affairs for

the U.S. Department of Housing and Urban Development. And

thank you, Congressman Portman, for your kind introduction.

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I am honored that Secretary Martinez and President Bush have

nominated me to serve in this position, and, sir, I would like to

thank you again for taking this time out of your busy schedule. I

appreciate your going forward with this.

I would like to introduce my parents, my husband, and my inlaws who are here with me today, sitting behind me. Paul and Beth

Tomb, my husband, Mark Tomb, and my parents, Sally and Tony

Leneghan. They came down from Philadelphia this morning by

train. The timing worked very well for us.

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

Ms. TOMB. My children are not here today. I thought I would

spare you all two year-olds running around wildly, but I would like

to acknowledge my daughter, Emma, and my son, Shane, because

they are a big part of our lives as well.

My parents came to this country from Ireland in 1959, in search

of opportunities. They chose America on my behalf and I cannot be

more grateful for that choice than I am today.

The U.S. Department of Housing and Urban Development’s core

mission is to help families find decent, affordable housing and to

find solutions to community development challenges in America.

Creating opportunities for all Americans to become homeowners is

a fundamental component of HUD’s mission.

Of course, the other issues considering affordability, availability,

and educating people on predatory lending practices and other

things, are other areas that HUD focuses on.

The Public Affairs Office at HUD plays a very essential role in

educating and in informing the public about HUD’s initiatives. If

confirmed, I look forward to keeping the media and all interested

parties informed on HUD’s work. I believe an informed public is

crucial to the democratic process and leads to better policymaking

from which we all benefit.

My career has been centered around communications, most often

and most rewardingly, on public education campaigns. I have spent

the last 4 years developing ways to communicate the importance of

homeownership and demonstrating how owning a home is a gateway to opportunity and improvement for individuals, families, and

communities. It is an honor to continue to focus on these important

issues at HUD, if confirmed.

Work in the realm of housing becomes a lot more personal when

we remember that it all boils down not to numbers and reports, but

to a real and unmistakable impact on the lives of individuals, families, and kids. At the end of the day, HUD exists for one reason

only—to make life better for people.

There is, of course, much more on the agenda, and I hope you

will see fit to approve my appointment so that I might contribute

to this work.

With your approval, my role will be to keep the public informed

of this agenda, as directed by the Administration.

Thank you again for this opportunity to address you today. This

concludes my testimony. I am prepared to answer any questions or

comments you may have.

Chairman SARBANES. Thank you very much.

Ms. Meadows.

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STATEMENT OF VICKERS B. MEADOWS, OF VIRGINIA

TO BE ASSISTANT SECRETARY FOR ADMINISTRATION

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Ms. MEADOWS. Chairman Sarbanes, Senator Gramm, and distinguished Members of the Committee, thank you for inviting me here

today.

I would like to introduce my husband, James Meadows, behind

me, whose support I very much appreciate.

It is an honor to be nominated for the position of Assistant Secretary for Administration at the U.S. Department of Housing and

Urban Development. I am very grateful for the confidence that

President Bush and Secretary Martinez place in me.

My experience in administration spans over 20 years. I have

served in an administrative management position for over 10 years

in the following organizations: The Office of the Vice President; the

Office of the Executive Secretary at the U.S. Department of Transportation; and the Office of the Governor of the State of Texas. My

experience in administrative services and management provide a

solid foundation for the Assistant Secretary for Administration position at HUD.

I am committed to the responsibilities and challenges that come

with this position. Under Secretary Martinez’s leadership and, if

confirmed, I am confident that we will move the HUD organization

to a more efficient and effective operation.

Thank you again for the opportunity to appear before you today.

Your time and your consideration are appreciated.

Chairman SARBANES. Thank you very much. I am going to yield

to Senator Gramm. He has a conflicting engagement and before he

goes, I want him to have an opportunity.

Senator GRAMM. Mr. Chairman, thank you, as always, for your

kindness. We appreciate your holding this hearing.

I intend to support both our nominees. We have a lot of work to

do at HUD. I think we are all impressed with our new Secretary.

I think this Committee is very open to ways we can improve on our

programs to try to help people have decent housing and to maximize the number of people who can have their own home.

I do not have any questions and again, I want to thank you, Mr.

Chairman.

Chairman SARBANES. Thank you.

Ms. Tomb, your work at the Fannie Mae Foundation, I know that

the Foundation has done a lot of work on the homeless situation.

I wondered whether you were involved in that aspect of the Foundation’s work?

Ms. TOMB. Yes, sir. Actually, serving the homeless and identifying ways to come up with solutions to the homeless problem is

one of the top priorities of the Fannie Mae Foundation.

I personally was responsible for the Help the Homeless Walk,

which is done here in Washington every year. Every year we have

increased—this year I think was the highest. I wasn’t personally

involved because I had already left the Foundation by November.

But we worked on this throughout the year, and we had more than

40,000 individuals, young folks, as well as folks like myself, who

are much older, involved.

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I believe last year we raised $5 million and the goal this year was $6 million, which is the largest effort across the country to

help the homeless.

I think that one of the most impressive things of the Help the

Homeless effort is that 98 percent of that money goes to nonprofits

here in Washington. So the Fannie Mae Foundation covers all of

the administrative costs and all the money raised goes directly to

the nonprofits. There are over 150 service providers in the metropolitan area.

Chairman SARBANES. It is a terrific program. Do you think that

the homeless problem is as much of a priority at HUD as it is at

the Fannie Mae Foundation? Or if it is not, do you think you could

help make it so?

Ms. TOMB. If confirmed, sir, I will do my best to address the

issues as they arise.

Chairman SARBANES. I think there is a real opportunity there.

Do you have any thoughts about this continuum of care with respect to the homeless, a sort of comprehensive approach to the

homeless problems? Do you have any sense about that question?

Ms. TOMB. Again, sir, if confirmed, I will do my best to be up to

speed on that issue.

Chairman SARBANES. Yes.

Ms. TOMB. From what I know from my background, it is obviously something that needs to be addressed. I think there are lots

of different approaches that would be effective. Again, if confirmed

at the Department of Housing and Urban Development, we will be

able to approach that problem.

Chairman SARBANES. Ms. Meadows, the GAO has done a number

of recent studies on issues that would actually involve the administration to HUD. Actually, they did two studies late this year on

problems with the information systems at HUD. Have you had a

chance to be briefed by the GAO about these studies or about the

problems that they have identified?

Ms. MEADOWS. No, sir, I have not. But I look forward to the opportunity. I realize that there are important issues with regard to

IT and Federal agencies, and I, if confirmed, will make that a top

priority at Housing and Urban Development.

Chairman SARBANES. What is your perception of the current

state of affairs with respect to administration at HUD? Do you

have any sense of that?

Ms. MEADOWS. Well, I am in the process of ascertaining the state

of affairs. I have been on board as a consultant for a week and am

learning as quickly as I can. But I feel that, if confirmed for this

position, I will have a better opportunity to get in and assess the

strengths and weaknesses and will get to work on fixing what

needs to get fixed.

Chairman SARBANES. Of course, at one time GAO labelled HUD

a high-risk agency. They have removed that rating. To what extent

do you perceive HUD as still being in the high-risk status in terms

of the operations of the Department?

Ms. MEADOWS. I do not know the answer to that and I really do

not want to speculate on that until I have an opportunity to get

in and again assess the situation. I haven’t had any reason to think

there are any crises at this time.

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Chairman SARBANES. Senator Reed.

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

Welcome, ladies, and thank you for your testimony.

Ms. Tomb, following along on the theme that Senator Sarbanes

set, and that is, part of your job is to—the right term might be or

might not be—defend the Department. But one of your reforms I

think is to try to focus attention on the housing issues that Americans confront today. Many of us feel that there is a real crisis in

housing in terms of affordability, accessibility, that not only affects

where one lives, but also if one can be an effective student in school

if you are a child and on and on and on. And so, I would ask simply, is it your intention not only to defend the Department, but also

to illuminate the issues of housing in this country?

Ms. TOMB. Thank you, sir. If confirmed, I think it is important

that all of those issues become top priority for everyone. And so,

one of my goals will be, again, if confirmed, sir, to communicate the

importance of housing and community development and how it

affects all aspects of people’s lives.

Senator REED. Thank you.

Ms. Meadows, what do you believe are the biggest challenges you

face? Again, Senator Sarbanes, I think set the context very well.

This is an agency that has been criticized routinely by GAO. This

is an agency that has been beaten about the head and shoulders

by many in the Senate and the House, sometimes I think as an

after-the-fact justification for not putting enough money into housing programs in this country. But, nevertheless, as you contemplate

taking this role, what are the key challenges you see in terms of

the administration of HUD?

Ms. MEADOWS. Well, I see going in and looking at the policies

and procedures and the systems. It is a big agency.

Making the Department more accountable for the systems, the

procurement, the IT, the internal infrastructure, making sure that

there are accountability measures in place, that there are performance measures in place with outcomes, and ensuring that the program offices have the resources they need to get their jobs done.

Senator REED. What are the important procurement issues that

are facing the Department, since I believe that that will be part of

your responsibilities?

Ms. MEADOWS. If confirmed, that will be one of my top priorities,

to look at the procurement processes, and the IT processes. I have

not had the opportunity to get in and really assess the strengths

and weaknesses of the different programs. But that will be a top

priority for me if I am confirmed.

Senator REED. In your prior experience, and you have administrative experience as indicated in your resume, how many people

generally were you supervising? What was the size of the agencies?

I know that the Department of Transportation is significant. Is

that comparable to your responsibilities at HUD, in your view?

Ms. MEADOWS. No, the staff was not as big in the Office of the

Executive Secretary. We certainly had responsibility to provide

support for all of the offices within the U.S. Department of Transportation. I have a similar function here. If confirmed, my responsibility will be to provide resources to all the offices.

62

It is a larger staff but I certainly won’t be responsible for each

individual one. They have managers and supervisors. I see the Assistant Secretary for Administration having five or six direct reporters who will have large staffs and have the expertise and have

been there a long time and I will rely on that.

Senator REED. Well, you are entering into this position at a time

when the agency has improved. That is clear. GAO has taken them

off their—whatever the proper term.

Ms. MEADOWS. High risk.

Senator REED. Their high-risk agency list. And your goal is not

only to keep them off that list, but also to improve the performance

of the agency dramatically because, ultimately, it is about spending

resources wisely on housing, not on administration. So, you have

that task.

I wish you well.

Ms. MEADOWS. Under Secretary Martinez’s leadership, I think

we will leave it better off than we found it.

Senator REED. I hope so. We are going to try to make sure that

happens, in our own meager way.

Finally, Ms. Tomb, I am just intrigued. Where do your parents

come from in Ireland?

Ms. TOMB. They are sitting right here behind me. They are from

County Mayo in the western part of Ireland.

Senator REED. County Mayo. Well, that alone is commendable.

Ms. TOMB. Yes, I know.

[Laughter.]

Senator REED. Thank you, Mr. Chairman.

Ms. TOMB. Thank you, sir.

Chairman SARBANES. Ms. Meadows, I want to pursue this procurement issue which Senator Reed raised.

One of the reasons HUD received this high-risk rating from the

GAO was the poor oversight of procurement. Now to deal with that,

or in response to that, Secretary Cuomo hired a Chief Procurement

Officer. But he had that officer report directly to him or the Deputy

Secretary. So they, in effect, elevated the Procurement Officer in an

effort to sort of clear up that problem. The National Academy of

Public Administration said this change was a key reason for improvement in the procurement in the Department.

Now HUD has restructured the Office of Administration so that

the Chief Procurement Officer will report to the Assistant Secretary instead of directly to the Secretary. And I guess there is

some concern about what will happen to procurement reform under

this arrangement.

I do note that apparently, the Chief Procurement Officer at HUD

who was the one who sort of did the improvements that received

this favorable or laudatory comment from the National Academy of

Public Administration, has retired. So what is your thinking on

this procurement issue?

Ms. MEADOWS. I think procurement is a very important part of

any Federal agency’s functions. I certainly am not well versed on

the procurement situation at HUD at this point in time. I do not

really want to speculate on whether that was good or bad.

I was a procurement officer years ago. I understand the importance of procurement and I can assure you that I will be spending

63

a lot of time making sure that the procurement reforms that are

in place are still intact.

Chairman SARBANES. I guess your immediate challenge will be to

get a new procurement officer.

Ms. MEADOWS. Yes, sir. There are some procedures in place, or

there are candidates, I understand, that have been brought forward. But I have not been part of that process.

Chairman SARBANES. It is a tremendous challenge. We have had

a lot of difficulty with HUD and its administration over the years.

As Senator Reed has pointed out, it is an issue in which this Committee has interested itself, almost by necessity. It is an issue that

obviously we will be monitoring closely as we proceed ahead.

But it is a very large agency and, unfortunately, it has had these

problems, so serious at one point that they received this high-risk

designation, which not all that many—thank goodness—agencies—

well, I was going to say achieve, but I guess a better way to put

it would be sink to or something of that sort.

We are very concerned about the operations of HUD.

Ms. Tomb, the only other thing I want to raise with you is many

of these HUD programs are very complex. You have probably seen

that from your work at Fannie Mae, with the Foundation.

I think some thought needs to be given as to how the Department communicates with the general public about what it is trying

to do and how it is trying to do it.

I think the public does not fully understand the importance of

the work and exactly how HUD is going about and trying to accomplish its objectives. And presumably, that is a matter that will fall

under your jurisdiction. Have you had any chance to talk with the

Secretary about that?

Ms. TOMB. I have not had a chance to talk to him directly about

that, sir. But in the interview process, it was definitely something

that came up. He was very concerned about the perception, in

many cases, rightfully so, that exists.

If confirmed, one of the first things I would like to do is really

work with the current staff there to come up with some techniques

and some alternative uses of the resources we have to communicate

to those who we interact with most, and that would be the consumers.

With my background I feel I can bring a lot from the public education campaigns that I have worked on. For instance, we did one

on educating people on the importance of credit, particularly in the

low- to moderate-income. There were some cultural differences in

how people approach credit and understanding that if you pay your

bills late, even if they are late, that there still are some adverse

effects of that.

So, I believe, if given the opportunity, that I will make it a priority to really be thoughtful about how do we educate people on the

importance of HUD and the work that we are doing, and try to

overcome the public perception that exists of HUD, and to talk

about the good work that we will be doing.

Chairman SARBANES. Thank you.

Senator Reed, any further questions?

Senator REED. No, Mr. Chairman. Thank you.

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Chairman SARBANES. Thank you both very much for appearing

before the Committee.

The hearing stands adjourned.

[Whereupon, at 3:17 p.m., the hearing was adjourned.]

[Prepared statements and biographical sketches of the nominees

supplied for the record follow:]

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PREPARED STATEMENT OF DIANE LENEGHAN TOMB

ASSISTANT SECRETARY OF PUBLIC AFFAIRS-DESIGNATE

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

DECEMBER 18, 2001

Mr. Chairman, Senator Gramm, and distinguished Senators, it is a privilege to

appear before you today as the nominee for Assistant Secretary of Public Affairs for

the U.S. Department of Housing and Urban Development. And thank you Congressman Portman for your kind introduction.

I am honored that Secretary Martinez and President Bush nominated me to serve

in this position, and that you are taking the time to consider my nomination.

Joining me are my husband, parents, and in-laws. As proud as I am to be here,

they are pretty excited, too.

My parents came to this country from Ireland in 1959 in search of opportunities.

My parents chose America on my behalf. I could not be more grateful for that choice

than I am today.

The U.S. Department of Housing and Urban Development’s core mission is to help

families find affordable, decent housing and to find solutions to the housing and

community development challenges in America. Creating opportunities for all Americans to become homeowners is a fundamental component of HUD’s mission.

The Public Affairs Office at HUD plays an essential role in educating the public

about HUD’s initiatives. If confirmed, I look forward to keeping the media and all

interested parties informed on HUD’s work. I believe an informed public is crucial

to the democratic process and leads to better policymaking.

My career has been centered on communications, and most often on public education campaigns. As the Senior Vice President of Communications at the Fannie

Mae Foundation, I have spent the last 4 years developing ways to communicate the

importance of homeownership and demonstrating how owning a home is a gateway

to opportunity and improvement for individuals, families, and communities. It is an

honor to continue to focus on these important issues.

America is now in a renaissance of homeownership. More than 70 million families

own their own home. This is as high as that number has ever been, and it encourages us to spread the opportunity to even more people. In particular, I look forward

to being a part of HUD’s effort to reach out to America’s minority communities that

do not yet share in the same high level of homeownership. Secretary Martinez has

asserted that one of HUD’s top priorities will be just that, and that it will be worth

the effort.

Work in the realm of housing becomes a lot more personal when we remember

that it all boils down not to numbers and reports, but to a real and unmistakable

impact on the lives of individuals, families, and kids. At the end of the day, HUD

exists for one reason only: To make life better for people.

With your approval, my role will be to keep the public informed of this agenda

as directed by the Administration.

Thank you again for this opportunity to address you today. This concludes my testimony. I am prepared to answer any questions or comments you may have.

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