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[Senate Hearing 111-770]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 111-770

                      NOMINATIONS OF: KEVIN WOLF,
   SURESH KUMAR, DAVID W. MILLS, DOUGLAS A. CRISCITELLO, THEODORE W. 
                                 TOZER,
                   ORLAN JOHNSON, AND SHARON Y. BOWEN

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   ON

                            Nominations of:

         Kevin Wolf, to be Assistant Secretary of Commerce for 
             Export Administration, Department of Commerce

                               __________

   Suresh Kumar, to be Assistant Secretary of Commerce and Director 
          General of the U.S. and Foreign Commercial Service, 
                         Department of Commerce

                               __________

   David W. Mills, to be Assistant Secretary of Commerce for Export 
                  Enforcement, Department of Commerce

                               __________

 Douglas A. Criscitello, to be Chief Financial Officer, Department of 
                     Housing and Urban Development

                               __________

        Theodore W. Tozer, to be President, Government National 
                          Mortgage Association

                               __________

          Orlan Johnson, to be Chairman, Securities Investor 
                         Protection Corporation

                               __________

        Sharon Y. Bowen, to be Vice Chair, Securities Investor 
                         Protection Corporation

                               __________

                            JANUARY 21, 2010

                               __________

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

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

                                  ______

                      U.S. GOVERNMENT PRINTING OFFICE
  57-381 PDF               WASHINGTON : 2010
___________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

               CHRISTOPHER J. DODD, Connecticut, Chairman

TIM JOHNSON, South Dakota            RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island              ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York         JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii              JIM DeMINT, South Carolina
SHERROD BROWN, Ohio                  DAVID VITTER, Louisiana
JON TESTER, Montana                  MIKE JOHANNS, Nebraska
HERB KOHL, Wisconsin                 KAY BAILEY HUTCHISON, Texas
MARK R. WARNER, Virginia             JUDD GREGG, New Hampshire
JEFF MERKLEY, Oregon
MICHAEL F. BENNET, Colorado

                    Edward Silverman, Staff Director

        William D. Duhnke, Republican Staff Director and Counsel

                     Dean Shahinian, Senior Counsel

                  Joe Hepp, Professional Staff Member

                Neal Orringer, Professional Staff Member

                 Beth Cooper, Professional Staff Member

                Neal Orringer, Professional Staff Member

               Jonathan Miller, Professional Staff Member

                Brian Filipowich, Legislative Assistant

                Mark Oesterle, Republican Chief Counsel

          John O'Hara, Republican Senior Investigative Counsel

                Hester Peirce, Republican Senior Counsel

                       Dawn Ratliff, Chief Clerk

                     Levon Bagramian, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

                                  (ii)

                            C O N T E N T S

                              ----------                              

                       THURSDAY, JANUARY 21, 2010

                                                                   Page

Opening statement of Chairman Dodd...............................     2

Opening statements, comments, or prepared statement of:
    Senator Shelby...............................................     4
    Senator Menendez.............................................     6
    Senator Brown................................................     6

                                WITNESS

Blanche L. Lincoln, Senator from the State of Arkansas...........     5

                                NOMINEES

Kevin Wolf, of Virginia, to be Assistant Secretary of Commerce 
  for Export Administration, Department of Commerce..............     8
    Prepared statement...........................................    32
    Response to written questions of:
        Senator Shelby...........................................    39
Suresh Kumar, of New Jersey, to be Assistant Secretary of 
  Commerce and Director General of the U.S. and Foreign 
  Commercial Service, Department of Commerce.....................    10
    Prepared statement...........................................    33
David W. Mills, of Virginia, to be Assistant Secretary of 
  Commerce for Export Enforcement, Department of Commerce........    12
    Prepared statement...........................................    34
    Response to written questions of:
        Senator Shelby...........................................    43
Douglas A. Criscitello, of Virginia, to be Chief Financial 
  Officer, Department of Housing and Urban Development...........    13
    Prepared statement...........................................    35
Theodore W. Tozer, of Ohio, to be President, Government National 
  Mortgage Association...........................................    15
    Prepared statement...........................................    36
Orlan Johnson, of Maryland, to be Chairman, Securities Investor 
  Protection Corporation.........................................    17
    Prepared statement...........................................    37
    Responses to written questions of:
        Chairman Dodd............................................    46
        Senator Menendez.........................................    49
Sharon Y. Bowen, of New York, to be Vice Chair, Securities 
  Investor Protection Corporation................................    18
    Prepared statement...........................................    38
    Responses to written questions of:
        Chairman Dodd............................................    50
        Senator Menendez.........................................    52

                                 (iii)

 
                            NOMINATIONS OF:

                        KEVIN WOLF, OF VIRGINIA,

    TO BE ASSISTANT SECRETARY OF COMMERCE FOR EXPORT ADMINISTRATION,

                        DEPARTMENT OF COMMERCE;

                      SURESH KUMAR, OF NEW JERSEY,

               TO BE ASSISTANT SECRETARY OF COMMERCE AND 
               DIRECTOR GENERAL OF THE U.S. AND FOREIGN 
                          COMMERCIAL SERVICE,

                          DEPARTMENT COMMERCE;

                      DAVID W. MILLS, OF VIRGINIA,

                 TO BE ASSISTANT SECRETARY OF COMMERCE 
                        FOR EXPORT ENFORCEMENT,

                         DEPARTMENT OF COMMERCE;

                  DOUGLAS A. CRISCITELLO, OF VIRGINIA,

                     TO BE CHIEF FINANCIAL OFFICER,

                       DEPARTMENT OF HOUSING AND 
                           URBAN DEVELOPMENT;

                      THEODORE W. TOZER, OF OHIO,

                            TO BE PRESIDENT,

               GOVERNMENT NATIONAL MORTGAGE ASSOCIATION;

                      ORLAN JOHNSON, OF MARYLAND,

                            TO BE CHAIRMAN,

              SECURITIES INVESTOR PROTECTION CORPORATION;

                     SHARON Y. BOWEN, OF NEW YORK,

                           TO BE VICE CHAIR,

               SECURITIES INVESTOR PROTECTION CORPORATION

                              ----------                              

                       THURSDAY, JANUARY 21, 2010

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 9:36 a.m. in room SD-538, Dirksen 
Senate Office Building, Senator Christopher J. Dodd, Chairman 
of the Committee, presiding.

       OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD

    Chairman Dodd. The Committee will come to order. I 
announced my retirement, and they took the gavel away.
    [Laughter.]
    Chairman Dodd. The Committee will come to order this 
morning, and let me thank all of you for being here. Let me 
invite our witnesses, why don't you just take seats here to 
begin, and I am going to make a couple of opening comments. 
Then I am going to turn to my colleague and friend from Alabama 
for any opening comments he may have. Thank you. There, they 
gave the gavel back.
    [Laughter.]
    Chairman Dodd. Who took the gavel? Who had this, by the 
way? Some of the young Turks here got the gavel.
    Then what I will do is I will ask several of our colleagues 
here who want to introduce our guests and our nominees, and 
then we will proceed with the opening statements by the 
nominees themselves. So the hearing comes to order, and today 
we are meeting in open session to conduct a nomination hearing 
on seven of President Obama's nominees. These hearings are a 
crucial part of this Committee's oversight responsibilities, 
and I would like to thank the witnesses, first of all, for 
their willingness to appear before the Committee and their 
willingness to serve our country. We do not often say that 
enough. The fact that you are willing to step up and have your 
lives exposed obviously to the scrutiny of a vetting process is 
something--in fact, Senator Shelby and I were just having a 
casual conversation with each other coming through the door a 
few minutes ago talking about--we always talk about how we are 
going to reform this process to some degree to make it less 
agonizing for the people who are willing to serve our country 
in any administration, and so I am particularly grateful that 
all of you are working to go through this process and then to 
serve as well knowing that there are tremendous 
responsibilities in the jobs that you will be assuming.
    Our first three witnesses are for the positions in the 
Commerce Department and will involve setting U.S. policy 
concerning the Government's dual role in exports--namely, the 
goal of promoting U.S. exports and economic growth, while at 
the same time protecting our national security through 
effective export controls.
    Kevin Wolf, who will be introduced by our friend and 
colleague from Arkansas, Senator Lincoln, has been nominated to 
be the Assistant Secretary for Export Administration and, if 
confirmed, will be responsible for overseeing the Bureau of 
Industry and Security's export licensing system.
    Our second Commerce nominee, Suresh Kumar, who will be 
introduced by Senator Menendez, our colleague from New Jersey, 
has been nominated to be an Assistant Secretary of Commerce and 
Director General for the U.S. and Foreign Commercial Service, 
and if confirmed, he will be tasked with leading a service 
comprised of hundreds of dedicated public servants who advocate 
on behalf of U.S. exporters and advance our economic interests 
throughout the United States as well as in 80 countries around 
the globe.
    Mr. Mills, our last Commerce nominee, has been nominated to 
be the Assistant Secretary for Export Enforcement and, if 
confirmed, will execute the Bureau of Industry and Security's 
export control policies. This position is especially important 
at a time of heightened security concerns and economic turmoil. 
Mr. Mills is an experienced attorney and distinguished public 
servant in the area for which he has been nominated. Mr. Mills 
spent 20 years in Government service, including 18 years 
supporting U.S. sanctions policy at the United States 
Treasury's Office of Foreign Assets Control. He has spent the 
past 3 years in private practice working OFAC cases as well as 
the anti-money-laundering audits, export control, and anti-
boycott matters.
    Our next nominee is Douglas Criscitello, who has been 
nominated to be the Chief Financial Officer for the Department 
of Housing and Urban Development. As CFO, he will be 
responsible for directly overseeing the accounting, budget, and 
financial management systems for HUD. As this Committee heard 
the testimony from HUD Secretary Donovan, the modernization of 
HUD financial systems is both a need and a priority for the 
administration. Mr. Criscitello has extensive public and 
private sector budget experience and has a particular specialty 
in Government finances and modeling the financial risk of 
credit programs. It is the hope of this Committee that Mr. 
Criscitello's extensive experience and leadership ability will 
reinvigorate the office of CFO so that it functions as more 
than an office to produce regular and accurate budget materials 
but, rather, that it begins the process of implementing the 
state-of-the-art financial technologies and practices that are 
so needed.
    Next we have Theodore ``Ted'' Tozer, who will be introduced 
by Senator Brown, who has been nominated to be the President of 
the Government National Mortgage Association, otherwise known 
as Ginnie Mae, and as the head of Ginnie Mae, Ted will be 
managing an organization which is small relative to its rapidly 
expanding portfolio in importance to the housing market. Ginnie 
Mae is facing tremendous challenges and needs a leader with Mr. 
Tozer's experience. Ginnie Mae has grown enormously over the 
past 2 years as other sources of mortgage credit have dried up. 
Ginnie Mae needs a strong, experienced manager to lead it 
through this period of unprecedented growth.
    And, finally, we have two nominees to serve on the Board of 
Directors for the Securities Investor Protection Corporation, 
known as SIPC. SIPC was created by Congress in 1970 to give 
investors certain protections against losses resulting from the 
failure of their stockbrokerage firms. In order to maintain 
investor confidence in the securities markets and their 
brokerage firms, SIPC must operate in a manner that is 
effective, efficient, and fair. This involves maintaining fund 
balances that are adequate and liquid so that SIPC can pay out 
investors' claims equitably and quickly. This requires 
appropriate corporate governance practices so that SIPC has 
adequate internal financial controls, transparent contracting 
protocols, and appropriate executive compensation practices, 
and its board members avoid conflicts of interest. It also 
requires educating investors broadly about the role of SIPC and 
the extent of SIPC's coverage.
    In addition to being nominated to be a member of the board 
of SIPC, Orlan Johnson has been designated by the 
administration to serve as the Chairman of the board of SIPC. 
Mr. Johnson has extensive private and public sector experience 
as well, is currently a partner in the businessdepartment of 
Saul Ewing in Washington, DC, where he works on a variety of 
issues, including mergers and acquisitions, corporate 
financing, and corporate governance. Mr. Johnson also has 
extensive Government experience, serving 9 years as the staff 
attorney and branch chief in the Division of Investment 
Management for the SEC.
    Our final nominee is Ms. Sharon Yvette Bowen. She is 
currently a partner in the New York office of Latham & Watkins 
where she represents corporations, private equity firms, 
financial and institutional clients in a variety of corporate 
finance issues. She has been a member of numerous bar 
associations and boards, including the board of New York City's 
Economic Development Corporation, the New York State
    Bar Committee on Minorities in the Profession, the American 
Bar Association House of Delegates, the Conference of Minority 
Partners at Majority Firms, and the New York Women's Bar 
Association Foundation. Ms. Bowen was recently recognized by 
the Metropolitan Black Bar Association as its 2006 Lawyer of 
the Year. She has also been selected as one of America's Top 
Black Lawyers by Black Enterprise.
    So I look forward to hearing from our witnesses, and I 
thank them all for being a part of this. I am particularly 
intrigued on the SIPC issue. I know my colleagues are as well, 
having gone through the hearings we had on the Madoff scandal. 
And I met with a group--I think probably my fellow colleagues 
to one extent or another have as well. I met with a large group 
of my constituents, all, of course, who lost life savings. And 
these were not affluent people, by the way. These were people 
who worked in an orthopedic practice in Connecticut as 
secretaries, nurses, and others who invested everything in 
terms of their retirement tied up with the Madoff operation. 
And I have been curious and they have been curious as to 
whether or not SIPC can possibly be of any help to people like 
that. I know there has been some examination of that issue, but 
I cannot resist in my opening comments to talk about it because 
it has been devastating, what has happened to these folks. So 
we may get into that in the question period, but let me thank 
all of you.
    Let me turn to Senator Shelby and then I will turn to my 
colleagues for some quick introductions.

             STATEMENT OF SENATOR RICHARD C. SHELBY

    Senator Shelby. Thank you, Mr. Chairman. I will be brief. I 
know we have a lot of nominees here today. I want to help you 
any way I can to expedite these nominations, and that is why we 
are here today.
    Chairman Dodd. Thank you very much, Senator.
    Let me first of all turn to Senator Lincoln. We welcome our 
colleague from Arkansas for some opening comments on Kevin 
Wolf, and then I will turn to Bob Menendez and Sherrod Brown.

                STATEMENT OF BLANCHE L. LINCOLN,

               SENATOR FROM THE STATE OF ARKANSAS

    Senator Lincoln. Well, thank you, Chairman Dodd and Ranking 
Member Shelby and members of the Committee. I am very pleased 
to be here to introduce Kevin Wolf as the President's nominee 
for the Assistant Secretary of Commerce for Export 
Administration. I have been good friends with Kevin and his 
family for many years now, and I strongly support his 
nomination.
    Many of you all will remember my predecessor, Senator 
Bumpers, who told me when I got here, he said, ``I hope that 
you will know the Senate that I knew.'' He said, ``Most of my 
good friends came from my colleagues,'' he said, ``and so many 
of my best friends were Republicans.'' And he said,

        It was because we spent time together as families and we grew 
        together as families. We saw our children grow together. We 
        spent time at lengthy band concerts and lengthy baseball games, 
        and we had plenty of time to become good friends and have the 
        kind of confidence in one another that you need as a good 
        friend.

And those are many of the things that I have shared with the 
Wolf family, the time that we have spent watching our children 
grow up together, and it does make for an unusual bond and 
confidence in one another, and I certainly appreciated that and 
have appreciated the opportunity to get to know so many of my 
colleagues that way.
    But I believe that there are few people in this country who 
could administer and improve the calls of export control 
enforcement better than Kevin. Kevin has worked with foreign 
and domestic companies for 17 years in precisely this area. His 
experience has made him an expert in the highly complex and 
technical arena of the U.S. export controls and sanctions. 
Sitting in those softball fields or baseball fields, as each of 
us got messages on our BlackBerrys, we had good conversations 
about many of the things that Kevin was faced with, and I was 
as well, and I began to understand much better what he did and 
the particular expertise that he had.
    Kevin has handled some of the largest civil and criminal 
export control enforcement cases in this area. As a legal 
partner with the Bryan Cave firm, he has done a tremendous job. 
Because of his background, he knows better than most former 
prosecutors what works and does not work with companies to 
enhance compliance.
    He has also proven that he can handle high-profile, 
sensitive matters as evidenced by his work on these cases and 
his role as the assistant special counsel for the Gingrich 
ethics investigation when he served a stint as the assistant 
special counsel to the House Ethics Committee in the 1990s.
    Kevin is well respected by his peers and Government 
regulators. He is 100 percent committed to our national 
security and to our Government's economic growth. I know 
Kevin's unique combination of intelligence, technical 
expertise, experience, and patriotism will make him an 
outstanding Assistant Secretary, and I heartily endorse his 
nomination.
    I thank you, Mr. Chairman, and the Ranking Member, Senator 
Shelby, and all of the members of the Committee for their 
consideration of his nomination, and I wish him well, as well 
as his family who is with him today, Barbara, Freddie, and 
Markus.
    Thank you.
    Chairman Dodd. Well, thank you very much, Senator. We 
appreciate very much your being here this morning.
    Mr. Wolf, you have got a hard act to follow to live up to 
that.
    [Laughter.]
    Senator Lincoln. Thank you, Mr. Chairman.
    Chairman Dodd. Bob?

              STATEMENT OF SENATOR ROBERT MENENDEZ

    Senator Menendez. Thank you, Mr. Chairman. I am pleased to 
introduce to the Committee Suresh Kumar, the President's 
nominee for the post of Assistant Secretary of Commerce and 
Director General of the U.S. and Foreign Commercial Service. 
Mr. Kumar is an experienced professional in global trade. I 
believe he is the right man for the job. He has lived in 
Princeton, New Jersey, for quite some time now. He has worked 
for two of New Jersey's best-known corporations, Johnson & 
Johnson and Warner Lambert. He has balanced his private sector 
career with a belief in the importance of public service, 
establishing a successful student internship program with New 
Jersey businesses, which earned him a public service 
commendation from the New Jersey Senate.
    Mr. Kumar's impressive resume is a model for the global 
economy in the 21st century. He has lived in six countries, 
speaks six languages, has served on numerous global 
international councils, boards, and expert advisory panels. 
Educated in India at Delhi University and Bombay University, 
where he received his master's in business administration and 
management studies, Mr. Kumar has established businesses in 
China and India for Warner Lambert and has been the head of 
Worldwide Consumer Pharmaceuticals and International Vice 
President for Johnson & Johnson.
    But he has also given something back to the community, Mr. 
Chairman. As a special adviser at the Clinton Foundation, he 
worked on food security initiatives, agricultural output 
programs, loan and financing protocols in Rwanda, Kenya, and 
Tanzania. Mr. Kumar spearheaded initiatives to promote economic 
development and improve people's lives and livelihoods around 
the world. Most recently, he has been president and managing 
partner of KaiZen Innovation, LLC, a global management 
consulting firm, where he advised the Bill and Melinda Gates 
Foundation, the Alliance for a Green Revolution in Africa, and 
the African Development Bank.
    That is a pretty impressive resume, Mr. Chairman. I think 
he will serve us well and the Nation well, and it is my 
pleasure to introduce to the Committee Mr. Kumar.
    Chairman Dodd. Well, thank you very much, and we welcome 
you again, Mr. Kumar. Thank you very much. Thank you, Bob.
    Sherrod?

               STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. Thank you, Mr. Chairman. Thanks for 
convening the hearing. Thank you for giving me the opportunity 
to introduce Ted Tozer, who is the nominee for President of the 
Government National Mortgage Association. He is joined by his 
wife, Sandy, today whom I met for the first time today.
    Ted has tremendous expertise and experience in the unique 
nature of the secondary mortgage market, experience that will 
serve Ginnie Mae well in his new position, as the Chairman 
said, in an operation that is growing in importance all the 
time. He currently serves as senior vice president of capital 
markets at National City Mortgage, now a part of the PNC 
Financial Services Group, a position he has held for some 20 
years. Prior to joining National City, Ted served in various 
roles at one of Ohio's largest banks, Bank Ohio Mortgage 
Company and Bank Ohio National Bank. He served on the Board of 
Directors of the Ohio Mortgage Bankers Association from 1991 to 
2001.
    Throughout his career, Ted Tozer has been a leader of the 
Mortgage Bankers Association, serving as the MBA's Secondary 
and Capital Markets Committee chairman from 2002 to 2004. 
During his time he worked on the MBA Residential Board of 
Governors and worked with Ginnie Mae on major initiatives. So 
he is very familiar with the operations of Ginnie Mae. He 
understands its importance. And like so many who come in front 
of us, Mr. Chairman, as Presidential nominees and nominees in 
other ways, he has been very active--and people who believe in 
public service, he has been very active as a community 
volunteer, something that is so important for all of us.
    Ginnie Mae serves a crucial function providing loan 
guarantees that help to make affordable housing finance options 
available to millions of low- and moderate-income households 
across our country. Ginnie Mae-eligible products and programs 
extend affordable credit to qualified Americans even through 
times of market decline and economic uncertainty. Unlike the 
other GSEs, Ginnie Mae does not buy or sell loans or issue 
mortgage-backed securities itself. It simply guarantees 
investors the timely payment of principal and interest issued 
by other Federal agencies. In today's difficult mortgage market 
environment, Ginnie Mae and its partners have demonstrated the 
importance of a stable and a consistent source of housing 
finance liquidity.
    Ted Tozer is up for this job. As a community leader, as a 
long-time--three decades of experience in banking, I think that 
he will make a very--he is a very good nominee, and I support 
his candidacy.
    Thank you.
    Chairman Dodd. Thank you very much, Senator, for those 
comments and remarks.
    What I am going to do is I am going to have all of you 
stand, and I am going to have you take the oath, if you will do 
that for me, if each of you would raise your right hand as 
well. 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. Wolf. I do.
    Mr. Kumar. I do.
    Mr. Mills. I do.
    Mr. Criscitello. I do.
    Mr. Tozer. I do.
    Mr. Johnson. I do.
    Ms. Bowen. I do.
    Chairman Dodd. And do you agree to appear and testify 
before any duly constituted Committee of the U.S. Senate?
    Mr. Wolf. I do.
    Mr. Kumar. I do.
    Mr. Mills. I do.
    Mr. Criscitello. I do.
    Mr. Tozer. I do.
    Mr. Johnson. I do.
    Ms. Bowen. I do.
    Chairman Dodd. Thank you. Please be seated.
    Let me just say to all of you, since obviously we have got 
seven of you here this morning, if you would limit your remarks 
to around 5 minutes. I am not going to bang the gavel down, 
but--and that any other--whether it is the full testimony you 
want to provide or any other information you think would be 
worthwhile for the Committee to have, I will just announce 
right now we will include all of that in the record for you.
    Then what I will do, I will begin in the order I have 
introduced you. We will begin with you, Mr. Wolf. And why don't 
you do this as well? Why don't you tell us who is here with 
you, your family, as well. If any of them have shown up here 
today, we would love to recognize it as well. It is a big day 
to be before a Senate Committee in a nomination process, and so 
it is an honor to have your families here with you. We know 
that you do not do these things in any endeavor in life without 
the support of your families. So I gather looking around the 
room that there may be some families here, and we welcome them 
as well. But if you have got any members here, we would like to 
welcome them as well. Mr. Wolf?

STATEMENT OF KEVIN WOLF, OF VIRGINIA, TO BE ASSISTANT SECRETARY 
 OF COMMERCE FOR EXPORT ADMINISTRATION, DEPARTMENT OF COMMERCE

    Mr. Wolf. Thank you very much. My wife, Barbara Kanninen, 
and my son, Frederick, and my other son, Markus, are here.
    Chairman Dodd. Good morning. You are missing school today.
    Mr. Wolf. They are missing school today.
    Chairman Dodd. Do you want me to filibuster up here, keep 
this going all day?
    [Laughter.]
    Mr. Wolf. I am honored to have them here. Without their 
patience, I would not be here, in fact, and I also hope that my 
being here, if confirmed, will be a lesson for my two sons 
about the value of public service.
    Chairman Dodd. Good. I hope so as well. Thank you.
    Mr. Wolf. Thank you. Chairman Dodd, Ranking Member Shelby, 
and members of the Committee, I am honored to appear before you 
today as the President's nominee for Assistant Secretary of 
Commerce for Export Administration. I appreciate the confidence 
President Obama and Secretary Locke have expressed in me. I am 
hopeful that I can earn your confidence as well. I look forward 
to working with you and your staff.
    I want to thank Senator Lincoln for the very kind and 
thoughtful introduction. We have been friends for many years, 
and I have always valued her counsel and guidance. I am 
delighted that she could be here today.
    Mr. Chairman, I recognize the importance of the obligation 
I will be undertaking if confirmed. The threats we face are 
diffuse but very real. They include terrorism, non-state 
actors, the proliferation of weapons of mass destruction, and 
the several countries of concern. The Bureau of Industry and 
Security plays a critical role in countering these threats by 
regulating the flow of controlled goods, technology, software, 
and services. It does so primarily by working closely with the 
Departments of State, Defense, and Energy, and the intelligence 
community to evaluate thousands of export license applications 
a year. It also works with our international partners to 
develop controls to help, for example, stem illegal 
transshipments. This process and these relationships are the 
front line of defense against the export, re-export, and re-
transfer of items to prohibited end uses, prohibited end users, 
and prohibited destinations.
    Getting this right is very important. I realize that. And I 
commit to you that the Bureau will continue to do the best 
possible job in advancing U.S. national security, foreign 
policy, and economic objectives by ensuring an effective export 
control and treaty compliance system, while at the same time 
facilitating continued U.S. strategic technology leadership.
    National security is the Bureau's top priority. It cannot, 
however, ignore the impact export controls have on U.S. 
industry. If controls become outdated or are not applied 
fairly, then they burden the economy without promoting 
security. Indeed, such controls could reduce our security if 
they force dual-use and military manufacturing and development 
to countries that do not have adequate export control systems.
    I believe that I am well prepared to take on this 
responsibility. As an attorney with the international law firm 
of Bryan Cave, I have been working almost exclusively with 
export control, anti-boycott, and sanctions issues for nearly 
16 years. My clients have been primarily small, medium, and 
large U.S. companies and their foreign affiliates. Most of my 
work has involved explaining to them how to comply with both 
the ``law and the lore'' of the often complex export control 
and sanctions regulations. If U.S. Government permission was 
required to engage in a proposed transaction, I would help them 
apply for and receive the necessary authorizations. I have also 
handled several high-profile and significant export control 
enforcement cases that have affected export control law, 
policy, and compliance practices. I thus have a deep 
understanding of the culture, concerns, and technologies of the 
American exporter and how these rules affect U.S. economic and 
national security interests. As a result of this work and my 
efforts to promote dialog over the years between industry and 
Government officials, I also have developed a deep respect for 
the career staff at the various Government agencies who 
administer the rules. I look forward to working with them, if 
confirmed.
    My extensive background in this highly technical area will 
be vital to inspiring and leading the Bureau, administering the 
existing regulations fairly and efficiently, and working with 
the other agencies involved in the U.S. export control system. 
My background will also be vital to crafting and implementing, 
with the Under Secretary and the other agencies, the details of 
the significant export control reforms the President and the 
Secretary have announced are necessary to maintain our national 
security and economic growth. I look forward to working with 
Congress during this process. In all of my efforts, I will, if 
confirmed, be committed to our Nation's security and the rule 
of law.
    Thank you again for this opportunity to appear. I would be 
pleased to respond to any questions you might have.
    Chairman Dodd. Thank you very much for those comments.
    I should have mentioned as well, too--and, again, I want 
you to know, just given that we are back from this break and 
people are busy here, we do not have a full complement of the 
Committee here for these hearings. And I am going to leave the 
record open for a few days so that members can submit some 
written questions they may have for all of you, if they have 
any. I would just urge you to respond as quickly as you can so 
we can move your nominations along very quickly as well.
    Mr. Kumar, welcome again. That was a very kind introduction 
that Bob Menendez gave you and a very distinguished career as 
well, so we are honored that you are willing to serve. Do you 
have any family here with us today?

   STATEMENT OF SURESH KUMAR, OF NEW JERSEY, TO BE ASSISTANT 
  SECRETARY OF COMMERCE AND DIRECTOR GENERAL FOR THE U.S. AND 
       FOREIGN COMMERCIAL SERVICE, DEPARTMENT OF COMMERCE

    Mr. Kumar. Yes, I will introduce them.
    Chairman Dodd, Ranking Member Shelby, and distinguished 
members of this Committee, I am honored and humbled to come 
before you today as President Obama's nominee to be Assistant 
Secretary of Commerce and Director General of the U.S. and 
Foreign Commercial Service. I want to thank President Obama for 
the enormous trust he has placed in me with this nomination and 
Secretary Locke for his support.
    Over the past few weeks, I have had the pleasure of meeting 
members of this Committee and your staff. Thank you for your 
hospitality. If I am confirmed by this Committee and your 
colleagues in the Senate, I look forward to working closely 
with you.
    I am particularly grateful to Senator Menendez from my home 
State of New Jersey for his gracious introduction here today.
    Let me take this opportunity to introduce you to the 
members of my family who have joined me here today: my wife 
Sheila, my daughter Pooja, and my son Aditya.
    Sheila, my college sweetheart, has provided me her 
unshrinking support through a global journey that has spanned 
three decades and five countries. Sheila is amazing. Not only 
is she a distinguished business executive in her own right, but 
she has also managed to raise our two wonderful children.
    Our daughter Pooja is a physician who is pursuing her 
passion for public health. She has served the underprivileged 
in remote comers of the world--from working with displaced 
people from Azerbaijan to East Timor, and vulnerable children 
from the streets of Kolkata to the Congo.
    Our son Aditya has been a management consultant who has 
also worked with the homeless in America and victims of child 
labor in Asia. He has had the honor of interning for this 
distinguished body, the U.S. Senate, in the office of the late 
Senator Ted Kennedy. He now has the distinct pleasure and 
privilege of serving in the White House.
    I would be remiss if I did not mention my parents, Colonel 
Sundaram and Vasantha, who instilled in our entire family the 
importance of public service. Although they cannot be present 
here today, they are watching these proceedings via webcast 
from their home in Delhi.
    As I prepared these remarks, I could not help but reflect 
on what an incredible journey this has been for me from Mumbai, 
India, to the U.S. 16 years ago. I stand before you as a first-
generation immigrant and a testimony to our great country. If 
confirmed, you will have given me the opportunity to repay a 
small measure of debt to a country that has already given me so 
much.
    In my 30 years in the international business community, I 
have seen firsthand the immense possibilities, potential, and 
prosperity that follow global trade. In the past several years 
as an international development consultant, I have worked with 
civil society and nonprofit organizations to improve lives and 
livelihoods and support small and medium enterprises in 
establishing sustainable and scalable businesses. I have worked 
for multinational and local companies across six countries, 
culminating in my position as the head of Worldwide Consumer 
Pharmaceuticals for Johnson & Johnson. Through my work, I have 
seen the tremendous opportunities for U.S. businesses to more 
fully engage in Africa, Asia, and Latin America.
    The value and values of free and fair trade are embedded in 
my DNA. I pledge to help American enterprise enhance its 
competitiveness and grow its global footprint; to increase U.S. 
exports and help create jobs; and to protect our interests, 
patents, and intellectual property that are so critical to 
encourage innovation and support technological advancements 
particularly in emerging technologies in the environment, 
energy, and health care sectors. These are the priorities that 
have been articulated by Secretary Locke for the Department of 
Commerce, and I am humbled by the opportunity to work daily to 
advance them.
    International trade has always been a proven path to global 
prosperity. With 95 percent of the world's consumers living 
beyond our borders, we must encourage, nurture, and support 
U.S. companies, particularly small and medium businesses, to 
export goods and services into foreign markets. We must grow 
our exports to stimulate the economy and create and sustain 
American jobs. These are challenges, but they also present 
tremendous opportunities. That is why I am so excited by the 
prospect of leading the U.S. and Foreign Commercial Service at 
this pivotal moment in time.
    If confirmed, I will work closely with this Committee and 
your colleagues in Congress to expand U.S. exports and advance 
U.S. commercial interests abroad, to forge new economic ties 
for America overseas, and to ensure that America maintains its 
leadership in the global economy while advancing U.S. national 
security interests through a renewed focus on commercial 
diplomacy.
    Mr. Chairman, I thank you for your consideration of my 
nomination and for the opportunity to address any questions 
that you and your colleagues might have. Thank you.
    Chairman Dodd. Thank you very, very much, Mr. Kumar, and 
welcome to your family. What a wonderful example you are 
setting to these remarkable children of yours, as well, who are 
doing so well. We thank them for being with us today.
    Mr. Kumar. Thank you, sir.
    Chairman Dodd. Thank you for your very generous comments, 
as well, about what I think is the greatest reason of our 
success as a country in many ways, is the fact that we have 
been a welcoming people, and if we ever lose that status, I 
think we lose the essence of who we are in many ways, and you 
are a wonderful example of the wisdom of that open process over 
the years that have invited so many people to be a part of 
our--you made the choice to be with us. Most of us here had no 
choice in the matter.
    [Laughter.]
    Chairman Dodd. And so we are particularly pleased with 
people who make that choice, and thank you immensely.
    Mr. Kumar. Thank you, sir.
    Chairman Dodd. Mr. Mills?

   STATEMENT OF DAVID W. MILLS, OF VIRGINIA, TO BE ASSISTANT 
  SECRETARY OF COMMERCE FOR EXPORT ENFORCEMENT, DEPARTMENT OF 
                            COMMERCE

    Mr. Mills. Chairman Dodd, Ranking Member Shelby, Members of 
the Committee, I am honored to appear before you today as the 
President's nominee for the position of Assistant Secretary of 
Commerce for Export Enforcement. The President has my heartfelt 
gratitude for the trust and confidence he has placed in me. I 
would also like to express my appreciation to Secretary Locke, 
with whom I look forward to serving, if confirmed for this 
position.
    I would be remiss if I did not also thank my parents, 
Eugene and Dorothy Mills of Lee, New Hampshire, for their 
unstinting and unwavering love and support over the course of 
my life, without which I would not be before you today.
    I had the privilege of starting my first permanent position 
with the executive branch at the Department of Commerce and 
served there as an Attorney Advisor in the Bureau of Export 
Administration beginning in 1985. At that time, I had the 
opportunity to assist in the implementation of the 1985 
Amendments to the Export Administration Act as well as the 
implementation of the South African Anti-Apartheid Act in 1986. 
I am delighted at the prospect of returning to this agency 
should I be confirmed and in assisting its able and dedicated 
personnel in carrying out their continuing mission that is so 
vital to our national security.
    If given the opportunity to serve in the capacity for which 
I have been nominated, I also look forward to drawing upon the 
experience I gained during the 18 years I served at the Office 
of Foreign Assets Control at the U.S. Treasury Department. As a 
member of OFAC's Chief Counsel's Office, I provided legal 
support and review for licensing, interpretive and enforcement 
matters arising under the various economic sanctions programs 
for which I was responsible, working closely with Department of 
Justice attorneys in both the Civil and Criminal Divisions.
    I also served as OFAC's Chief of Policy Planning and 
Program Management. In that role, I was responsible for 
reviewing all warning letters, penalty actions, and settlements 
of alleged sanctions violations, and for preparing 
recommendations on the disposition of enforcement matters for 
the Director.
    I also supervised the drafting and issuance of OFAC's first 
set of comprehensive economic sanctions enforcement guidelines 
in 2003 as well as the semi-annual reports to Congress on the 
administration and enforcement of sanctions programs, and I am 
happy to say not one of them was late.
    As Chief of Licensing at OFAC, I gained invaluable 
managerial experience, ensuring timely response to requests for 
licenses and interpretive rulings, coordinating interagency 
review when required, and reducing an initial backlog of 
licensing requests from 1,400 to 100 pending cases. In 2005, I 
was awarded the Meritorious Service Medal by the Secretary of 
the Treasury.
    If confirmed, I look forward to the opportunity to 
coordinate compliance and enforcement efforts with my former 
agency, as well as other agencies with important roles to play, 
including the Departments of Justice, Homeland Security, State, 
and Defense.
    More recently, since 2007, I have worked in private 
practice, first at Baker, Donelson, Bearman, Caldwell and 
Berkowitz, a regional law firm present in five Southern States 
and DC, and then at DLA Piper, a global law firm with a 
presence in more than 60 cities throughout the United States 
and in more than 25 countries. Through my participation in 
several extensive internal investigations involving both civil 
and criminal matters, I have gained a deeper appreciation of 
the challenges that companies face, most of which are 
attempting in good faith to comply with often complex 
regulatory regimes.
    I believe that the enforcement of those regimes must not 
only be fair and firm, but also as clear and transparent as 
possible in order to advance both our national security and 
foreign policy interests and our economic potential through 
export promotion. Finally, in those instances where good faith 
is not a factor, I commit to vigorously enforcing our nation's 
laws to ensure that those who flout the rules are caught and 
punished.
    Thank you again for this opportunity to appear before you. 
I would be pleased to respond to any questions you may have.
    Chairman Dodd. Thank you very much, Mr. Mills.
    Mr. Criscitello, thank you again for joining us.

 STATEMENT OF DOUGLAS A. CRISCITELLO, OF VIRGINIA, TO BE CHIEF 
 FINANCIAL OFFICER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Mr. Criscitello. Thank you, Chairman Dodd. Let me start off 
by introducing my family in the back here, my wonderful wife, 
Linda----
    Chairman Dodd. Can we see you? Stand up.
    Mr. Criscitello. My wonderful wife, Linda. She has been 
putting up with me since our high school days back in 
Binghamton, New York, and my three----
    Chairman Dodd. You are going to be the next witness we 
have.
    [Laughter.]
    Mr. Criscitello. My terrific kids, Lindsay, Sammy, and 
Kyle.
    Chairman Dodd. Terrific. Welcome. We are glad you are here 
with us today.
    Mr. Criscitello. OK. Well, Chairman Dodd, Ranking Member 
Shelby, and distinguished Members of the Committee, my name is 
Doug Criscitello and I would like to thank you for the 
opportunity to appear before you today. I know the Committee is 
really busy right now and I appreciate the opportunity to be 
here.
    I am absolutely humbled and honored to be the choice of 
President Obama and Secretary Donovan to serve as the Chief 
Financial Officer at the U.S. Department of Housing and Urban 
Development. If confirmed, I look forward to being part of the 
team at HUD that will work with you and your staffs to address 
the significant housing and community development needs of our 
nation.
    For the past 24 years, I have dedicated my career to 
governmental budgeting and financial management, with a 
particular emphasis on Federal credit programs, financial 
management, and budgeting. I have served in a number of 
different positions in that area at both the Federal and local 
levels of government. My most recent position in government was 
in New York City as the founding Executive Director of the New 
York City Independent Budget Office. IBO is an agency that was 
modeled after the Congressional Budget Office here in 
Washington to provide objective, nonpartisan analysis of fiscal 
issues facing New Yorkers.
    While at IBO, I concentrated initially on establishing the 
agency--I was the first employee there--and establishing IBO as 
a credible, nonpartisan voice on the many budgetary matters 
facing New York. And that was no easy task in that city. I am 
sure, as you all know, everyone in New York seems to have a 
very strong point of view.
    IBO's mandate was broadly aimed at enhancing official and 
public understanding of fiscal issues facing New Yorkers, which 
allowed me to work on a range of issues, and that role required 
me to think creatively about how to make governmental budgeting 
understandable to elected officials and to citizens, doing 
things like originating the concept for the Federal Taxpayer 
Right to Know Act, a bill introduced by Senator Schumer and 
enacted in 1999 to provide citizens with detailed information 
about how their taxes are spent.
    Prior to my IBO position, I spent 9 years as a career civil 
servant in the Federal Government focused on financial 
management and budgeting. At the Small Business Administration, 
I led efforts to help that agency implement two of the most 
important financial management statutes of the 1990s, the Chief 
Financial Officers Act and the Federal Credit Reform Act.
    Before working at SBA, I served as a Budget Examiner at the 
Office of Management and Budget in the Housing, Treasury, and 
Financial Institutions Division. I held a similar position at 
the Congressional Budget Office before that, where I learned 
the importance of providing impartial financial and budgetary 
analysis to elected officials to empower them to make informed 
legislative decisions. My primary areas of responsibilities at 
both OMB and the CBO involved credit programs, economic and 
community development, and budgetary analysis.
    Since 2000, I have worked in the private sector as a 
consultant and service provider to the government. At JPMorgan, 
I worked in the Government Institutions Group, where I provided 
operational and financial advisory services to a host of 
Federal agencies, including HUD and SBA. That position allowed 
me to enhance my understanding of the capital markets, 
including how they can be used to help accomplish public policy 
goals.
    At PricewaterhouseCoopers, I helped the firm establish a 
financial services--a Federal financial--I am sorry--helped the 
firm establish a public sector financial services practice 
aimed at supporting Federal financial stabilization 
initiatives. I also worked with a number of financial credit 
agencies, including HUD, on engagements involving credit reform 
implementation and various other financial management matters.
    Clearly, expanded programs and increased levels of funding 
have occupied management at HUD over the past year while the 
ongoing work of promoting sustainable home ownership, community 
and urban development, and access to affordable housing has 
continued. If confirmed by the Senate, I will work to ensure 
transparency and accountability of these programs through an 
effective financial management and internal controls program 
aimed at deterring waste, fraud, and abuse of taxpayer dollars.
    Key priorities will include providing timely and reliable 
financial information for use by both executive and legislative 
branch officials and ensuring the Department's financial 
management program continues to get a clean bill of health from 
its auditors.
    I would like to conclude by saying again how truly honored 
I am to be before this Committee. I have worked with HUD's 
programs for many years and am aware of at least some of the 
financial management and budgetary challenges facing the 
Department. If confirmed, I look forward to working with you to 
help HUD achieve its mission in a way that advances our 
economic recovery prospects while ensuring that taxpayer money 
is spent wisely.
    Thank you, and I look forward to your questions.
    Chairman Dodd. Thank you very much. That is a wealth of 
experience you bring to this job, and I know they are going to 
be very excited to have you working with them, so we thank you 
very much for your willingness to come back into public service 
for our country.
    Mr. Criscitello. Thank you.
    Chairman Dodd. Mr. Tozer, welcome.

           STATEMENT OF THEODORE W. TOZER, OF OHIO, 
         TO BE PRESIDENT, GOVERNMENT NATIONAL MORTGAGE 
                          ASSOCIATION

    Mr. Tozer. Thank you. I would like to take this opportunity 
to introduce my wife, Sandy, and recognize her for the 29 years 
we have been married and the incredible support she has given 
me----
    Chairman Dodd. Sandy, where are you? Why don't you stand up 
so we can see you back there, Sandy. Nice to see you. Thank you 
for being here with us.
    Mr. Tozer. Chairman Dodd, Ranking Member Shelby, and 
distinguished Members of the Committee, I want to thank you for 
the opportunity to appear before you today and thank you to all 
of the Members of the Committee and their staffs whom I have 
met over the past 2 weeks. And thank you, Senator Brown, for 
your kind words.
    I am honored and humbled by the confidence that President 
Obama and Secretary Donovan have shown in me by my nomination 
to this position at such a critical juncture in the history of 
housing. My 30 years' experience in the mortgage capital 
markets has uniquely prepared me to manage the Ginnie Mae, if 
confirmed. An effective President of Ginnie Mae must balance 
the needs of all three major stakeholders: The issuers, 
investors, and the U.S. Treasury.
    I began my career managing the operations of BancOhio 
National Bank's broker-dealer operation and its asset and 
liability management function. During the 6 years I managed the 
broker-dealer, my responsibilities included compliance, 
accounting, trade settlement, customer security safekeeping, 
and risk management. During this phase of my career, I 
developed a good understanding of what was involved in running 
a trading floor and was able to be part of the initial phase of 
interest rate risk management by the banking industry.
    My experience working in the investment community has 
prepared me to work closely with the investor base of Ginnie 
Mae Securities to help educate the investor communities on the 
various Treasury-guaranteed mortgage programs. This education 
is critical in keeping the cost as low as possible to the 
borrowers.
    During the last 24 years, I have managed the capital 
markets for National City Mortgage Company. My responsibilities 
included daily pricing of loan products, managing interest rate 
risk of loans being held in inventory for future sales, 
designing loan products that are salable into the capital 
markets, delivery and settlement of loan pools, and negotiating 
the sale of loan pools into the capital markets. My experience 
at National City allows me to develop a broad knowledge of the 
mortgage company's operations. I was required to balance the 
needs of the sales force, the servicing department, and 
mortgage investors. During my 24 years in the mortgage banking 
industry, I developed strong relationships with the capital 
market managers, whose companies account for 80 percent of 
Ginnie Mae's issuances.
    During my career, I worked closely with the FHA 
Commissioner and the FHA Chief Risk Officer, two mortgage 
industry leaders with whom I will work closely if I am 
confirmed as President of Ginnie Mae. These relationships were 
developed by participating on Fannie Mae and Freddie Mac's 
National Lender Advisory Boards, serving as Chairman of the 
Mortgage Bank Association Capital Markets Committee, as well as 
the Mortgage Bank Association Residential Board of Governors. 
Serving in these roles allowed me to understand the needs of 
the mortgage bank industry as a whole.
    I have also developed strong relationships with Wall Street 
mortgage traders, which has increased my understanding of how 
they view mortgages and their value. If confirmed, these 
experiences and relationships will help Ginnie Mae fulfill its 
responsibilities to both educate investors about loan program 
modifications and to be a capital markets advisor to the 
Federal housing agencies. Having a President of Ginnie Mae with 
capital markets expertise is more critical now than ever as the 
government uses various loan programs to stabilize the housing 
market.
    If confirmed, I will in an efficient and risk-averse manner 
work to make Ginnie Mae a strong foundation for execution of 
housing policy.
    Thank you for your consideration of my nomination and I 
look forward to answering the questions you may have.
    Chairman Dodd. Thank you very, very much. We appreciate 
your willingness to serve, as well.
    Mr. Johnson, we thank you for, again, your willingness to 
be a part of this administration and to serve and we thank you 
for your appearance here today.

   STATEMENT OF ORLAN JOHNSON, OF MARYLAND, TO BE CHAIRMAN, 
                SECURITIES INVESTOR PROTECTION 
                          CORPORATION

    Mr. Johnson. Thank you, Mr. Chairman. Chairman Dodd, 
Ranking Member Shelby, and members of this distinguished 
Committee, I would like to thank you for taking the opportunity 
to allow me to appear before you today and consider my 
nomination to be the Chairman of the Securities Investment 
Protection Corporation. I am deeply grateful to President Obama 
for nominating me to this important position. In addition, I 
also appreciate the time that Members of the Committee have 
already taken to meet with me, and if confirmed, I look forward 
to working with the Committee to address the challenges in 
ensuring the adequate protection of investment accounts and 
general investor confidence in the United States financial 
markets.
    With the Chairman's indulgence, I would like to take a 
moment to introduce my family that is here today.
    Chairman Dodd. Please.
    Mr. Johnson. I would like to introduce my wife, Zina, who 
is here supporting me, as she always has in our nearly 20 years 
of marriage. I would also like to recognize my daughter, Nia 
Johnson, who is not here today. She is an eleventh grader at 
Blue Mountain Academy and couldn't be here. But my two sons are 
here, Adam Johnson, who is in eighth grade, and my youngest 
son, Jair, who is in fifth grade. The two are missing school 
but didn't seem overly concerned.
    Chairman Dodd. Would you stand up so they can see you? 
Where is your wife? Is that Zina and the boys? Missing school 
again today, too, huh?
    [Laughter.]
    Mr. Johnson. Yes.
    Chairman Dodd. You owe me big time.
    [Laughter.]
    Chairman Dodd. I could have scheduled this on a Saturday.
    [Laughter.]
    Mr. Johnson. Thank you, Mr. Chairman. It is indeed an honor 
and a privilege. I have had approximately 20 years of 
experience working on complex corporate and securities 
transactions, both at major law firms and in the public sector. 
As you note, I am currently a partner at Saul Ewing in 
Washington, DC, where my practice focuses on general corporate 
matters, business transactions, and Federal and State 
securities laws.
    Prior to being with Saul Ewing, I had a chance to be with 
the New York-based law firm of Milbank Tweed, where I co-headed 
the regulatory practice here in Washington, DC. For nearly 10 
years, I was with the Securities and Exchange Commission, both 
as a Staff Attorney and as a Branch Chief, and in that 
opportunity I had to do numerous audits of investment advisors 
and energy companies in conjunction with public State utility 
commissions and also with the Federal Energy Regulatory 
Commission.
    I have also been given a great opportunity to stay on the 
cutting edge of securities issues by having an opportunity to 
teach securities regulation at Howard University School of Law 
for over 15 years. And as a result, I have had an opportunity 
to not only to stay on top of current issues, but also to get 
some wisdom of young people in the classroom, as they have 
ideas in this area, as well.
    As you are all well aware, SIPC's primary goal is really to 
protect individual investors from financial hardships and to 
insulate the economy from disruptions which can follow the 
failure of major financial institutions. I think SIPC has and 
should continue to stand as the first line of defense in 
protecting investors when such failures occur and act swiftly 
to eliminate so much as possible these risks that are 
associated with customer losses.
    If confirmed, I look forward to continuing and expanding 
SIPC's work in the areas of investor education and ensuring 
that its current rules and regulations provide adequate 
safeguards to protect investors in this ever-evolving global 
financial market. I believe that the Act that supports SIPC 
provides the framework that can be and should be used to guide 
the protection of investment accounts, not just in the U.S., 
but also may act as a framework for worldwide financial 
markets. If confirmed, I would view my role as being a 
principal advocate for robust investor protection.
    Mr. Chairman and Members of the Committee, I thank you 
again for your consideration of my nomination and look forward 
to answering any questions that you may have.
    Chairman Dodd. Thank you, Mr. Johnson, very, very much.
    Ms. Bowen, thank you for being with us. You are at the end 
of the line here. You have been very patient----
    Ms. Bowen. I am happy to do so.
    Chairman Dodd.----and we appreciate that very much. So 
thank you again for your willingness to serve and a very 
distinguished career and record you have had, as well. So we 
are honored you are here with us.

 STATEMENT OF SHARON Y. BOWEN, OF NEW YORK, TO BE VICE CHAIR, 
                SECURITIES INVESTOR PROTECTION 
                          CORPORATION

    Ms. Bowen. Thank you. Chairman Dodd, Ranking Member Shelby, 
and other distinguished Members of the Committee, I am honored 
to have been nominated by President Obama to serve as Vice 
Chair of the Securities Investment Protection Corporation. I 
want to thank the Members of the Committee and their staff for 
meeting with me and making time for this nomination hearing 
today.
    I also would like to take this opportunity to briefly 
introduce my family members who are here with me today. My 
husband, Larry Morse, who has been a constant supporter and 
friend since we first met at the University of Virginia. My 
sister, Sheila Taylor, and my nephews, Vincent, Junior, and 
Victor Bowen. Although other members of my family could not be 
here today, I want to acknowledge and thank them for their 
abundant and unconditional love and support.
    I have practiced in the corporate securities and finance 
areas of the law for more than 25 years. I am fortunate to be a 
member of the legal profession and to do what I love. My 
interest in finance, law, and business started during my early 
years, even before I knew that there was a place called Wall 
Street. After receiving a degree in economics, I attended 
business and law schools at the Northwestern University. I then 
moved to New York and began my career as a corporate attorney.
    My expertise in securities and corporate law and deep 
interest in our financial markets provided great background for 
me to address the challenges SIPC currently faces. When I read 
about the state of the economy and the financial markets at the 
formation of SIPC, I found many common themes we also face 
today. Yet at the same time, our current environment is vastly 
different and far more complicated. Even the sheer growth in 
the volume of customer accounts, let alone the types of 
securities within those accounts, could not have been imagined 
40 years ago.
    I look forward to bringing my deep knowledge of securities 
and corporate law to my role as Vice Chair of SIPC, should I be 
confirmed. I look forward to working with you and helping to 
improve our protection of investors.
    Thank you again for your time and consideration. I am happy 
to take questions.
    Chairman Dodd. Well, thank you very, very much. Again, 
congratulations on our nomination----
    Ms. Bowen. Thank you.
    Chairman Dodd.----and again, your willingness to be a part 
of the administration to serve.
    As I said earlier, there will be some written questions, I 
am sure, from other members. There are only three of us here 
right now, so I will just take a few minutes on some questions 
and begin with Mr. Wolf, if I can, and then sort of work down, 
based on time, and turn to Senator Shelby and Senator Johnson, 
as well, for any comments they may have.
    I wonder if you might, Mr. Wolf--we have had a lot of 
interest here, Senator Shelby and I and this Committee over the 
years, we have jurisdiction over a lot of these issues. We 
wrestled with trying to strike this balance between expanding 
markets obviously, which are critically important to our 
economic growth, and a time in which we live, obviously, with 
technology can also impose some risks to us all. So we never 
get it perfectly right and it has got to be a dynamic process, 
because as technology improves and becomes more available, to 
what extent, then, do you try and put restraints on it, 
competition, all of these factors that have to be weighed in 
making these decisions.
    So I wonder if you might just begin by giving us some sense 
of what priorities should be considered in modernizing our cold 
war-era export licensing system, since a lot of it originated 
during those times. A lot has changed since the end of the cold 
war, obviously, that puts additional pressures on those 
decisions. And what else do you think can be done to enhance 
our security? If you had to make a choice between those two--I 
think all of us would agree that while we would like to see 
expanding business opportunities--if granting licenses in 
certain technologies exposes our country to additional risks, I 
think all of us would clearly opt for the choice of protecting 
our security. So give us some idea of what you think the 
priorities ought to be and how we ought to handle this.
    Mr. Wolf. Thank you. Excellent question that goes right to 
the heart of the matter. I don't necessarily see it as a 
question of--can you hear me now?
    Chairman Dodd. We have had a lot of improvements in 
technology, but obviously not this here.
    Mr. Wolf. Speaking of technology----
    [Laughter.]
    Mr. Wolf. No, I don't necessarily see it as a question of 
balance. I see it as a question of national security. It 
doesn't necessarily mean in the course of identifying those 
goods, technology, software, and services that have 
implications or uses with respect to weapons of mass 
destruction, for example, or of issuing for the countries of 
concern, but I do see the economic side coming in and having 
rules that, as you put it, are modern, are up to date, that 
take into account the realities that were no longer in the cold 
war, and you achieve the economic efficiencies, you achieve the 
economic growth, you achieve the economic benefits by having 
regulations that are modern, that face today's threats, that 
deal with today's threats, that are clear, that are 
understandable, that are transparent, and that take into 
account the wisdom and the experience of all the various 
agencies involved in this, the Departments of Defense, 
Departments of State, Energy, and the intelligence communities.
    So the priorities that I would bring to this is keeping 
that in mind and adhering to the rule of law so that the rules 
are understandable and clear and working primarily with respect 
to keeping the lists up to date and having a process in place 
where the various lists of items controlled are consistent with 
the modern reality.
    Chairman Dodd. Well, good. Let me--you know, we recently 
did the ability to pass unanimously out of our Committee 
dealing with Iran sanctions, and one of the provisions of that 
legislation deals with the transshipment of sensitive U.S. 
technologies through third countries that end up in Iran and 
our concern about those practices.
    And second, let me ask you, as well, as part of the same 
question, how does this foreign availability standard help 
level the playing field for U.S. companies without compromising 
our security, as well? They are different questions, but I 
would like you to address both, if you could.
    Mr. Wolf. Thank you. Both very good questions. Again, with 
respect to the transshipment issue, it is as much a matter of 
policy as it is enforcement. Even with respect to the rules 
that exist, it is vital that foreign parties involved with U.S. 
goods and technology and derivatives of U.S. goods and 
technology are aware of and abide by the rules governing them 
so that items going through one country don't end up in 
prohibited destinations.
    I have read your legislation and will be happy to and 
continue working with your staff on the various carrots and 
sticks that go with trying to encourage our counterparts in 
other countries to enforce their own domestic export control 
regulations to accomplish the broader common interest.
    Chairman Dodd. Good.
    Mr. Wolf. With respect to the----
    Chairman Dodd. Foreign availability.
    Mr. Wolf.----foreign availability question, it is very 
important that foreign availability be taken into account with 
respect to all of the changes that will occur with respect to 
the regulations as they become modern. It is, however, not the 
sole criteria. There are going to be circumstances where 
unilateral controls are important, where foreign availability 
isn't the determining factor, but given the process that 
already exists, it is something that absolutely must be taken 
into account when deciding any individual licensing situations 
and any alterations to the existing regulations.
    Chairman Dodd. Well, good, and I appreciate your answer on 
that, as well. Under the Defense Production Act, again, which 
this Committee has jurisdiction over, during emergencies, the 
Commerce Department helps instruct private companies to set 
aside commercial orders so the government contracts are 
prioritized, enabling FEMA to better respond to these 
disasters. The President recently signed into law a reform 
measure that Senator Shelby and I wrote together mandating 
greater government coordinating in this area. How would you 
respond to the GAO's criticism that prior to our bill's 
enactment, U.S. agencies failed to coordinate or prepare in 
advance of emergencies? Do you think that was legitimate?
    Mr. Wolf. Thank you. I am an export controls and sanctions 
expert and the Defense Priorities and Allocation System will be 
something that I will need to come up to speed on. I look 
forward to working with your staff on it, working and taking 
into account and taking seriously the reports of the GAO study.
    Chairman Dodd. Well, I appreciate that and would like to 
hear back from you on that, as well, as you analyze it.
    Mr. Kumar, again, thank you for your willingness to serve. 
I mentioned the dedicated public servants that you are going to 
be supervising. They are just remarkable people and doing a 
very difficult job advocating on behalf of U.S. exporters, 
advancing our economic interests. What are some of the key 
challenges facing these public servants in increasingly the 
global marketplace and how does the Commerce Department respond 
to those challenges and what efforts can be made, in your view, 
to expand American small business access to critical markets?
    I should point out, I am a great advocate of the Export-
Import Bank and part of it, I became more aware of it because 
my wife, Jackie, was the Vice Chairman of the Export-Import 
Bank for a number of years and worked as the Chief of Staff of 
that agency for some time. It is a job-creating agency, in many 
ways, to expand markets and create opportunities. But today, it 
seems we have got to do a lot more. They have done a lot, I 
must say, in small business areas, but I would love to hear 
your thoughts.
    You have got the private sector experiences as well as 
global knowledge and information, so share with us some ideas 
and thoughts on how we might expand this.
    Mr. Kumar. Thank you, Chairman Dodd, for the opportunity to 
address something very close to my heart. Expanding business 
across the world can never be done by just one person or one 
entity and you have just touched upon the fact, the tremendous 
resources which are available to U.S. companies through the 
Commercial Service and the wonderful network of Commercial 
Service public servants across the world, as also the Eximbank 
and the SBA.
    If this Committee would confirm me, I would look forward to 
working very closely with all these different resources the 
government has at its disposal and make that available 
specifically to small and medium enterprises to build 
constructive plans and engage productively in those markets. If 
I am confirmed, I know what can be done. I have seen it 
firsthand running businesses, and I know what resources are 
required by small and medium enterprises which may not have the 
wherewithal of major American corporations.
    So I look forward to the opportunity of working closely 
with your staff, understanding through them what your 
constituents need, and unleashing, if you may, the power of all 
the resources which we have to make a constructive engagement 
all over the world.
    Chairman Dodd. Well, I appreciate hearing that, and I think 
you can bring some special talents to this. In a time when 
obviously credit is not as available to these smaller 
businesses, we have all heard from our small business 
communities in all of our States about the difficulty they are 
having, and obviously that is a separate matter we have to work 
on, but there are opportunities out there internationally. And 
again, you don't have to travel the world today to have access 
to contracts and opportunities.
    Today, the information technology has made a lot of this 
readily available on your computers screen in your very office, 
wherever you may reside in the country, and how we can enhance 
that and expand that and educate our small business community 
about how they can take advantage of this. It seems terribly 
complicated. They don't have the ability to speak six different 
languages, as you do, but they don't need to today. there are 
ways in which they can access this without having to go through 
all of that, and it seems to me it is a wonderful opportunity 
for us and we need to expand that.
    I think every one of us up here would be very excited about 
some ideas that you can bring to us on how we can help promote 
and advance that idea. So I encourage you to really jump into 
that, because you can make--you are not going to make all the 
difference, but in a tight credit market, expanding contract 
opportunities globally can do an awful lot for businesses that 
never imagined that someone might be interested in their 
service, their product that they offer. So I really encourage 
you to step up with that, if you could.
    Mr. Mills, let me just--and then I will turn to Senator 
Shelby. I am taking a lot of time, and I apologize. I wrote 
some legislation, again, along with my Committee members here, 
which was later signed into law that raised civil fines in the 
area of strengthening and deterrent effects on U.S. trade 
restrictions, and we increased those fines from $50,000 to 
either $250,000 or twice the amount of the transaction. In 
addition, we raised criminal penalties from $1 million with a 
maximum jail sentence of 20 years in these areas.
    I wonder if, in your view, these penalties have enhanced 
our sanctions and export enforcement tools. I know you have 
some knowledge about all of this, so I would be curious as to 
your reaction to this, as to whether or not we have gone too 
far, it is not far enough? Are they having they having the 
desired effect, in your view?
    Mr. Mills. I think that this Committee and the Congress 
made a tremendous contribution by passing that legislation and 
I have watched my former agency with great interest as they 
have implemented new enforcement guidelines to supercede the 
ones that I was responsible for back in 2003. I think that the 
enhanced penalties provide a huge deterrent against violation 
of the sanctions and export control laws given that BIS is 
operating under the same authority at this point.
    I think the way that OFAC, the Office of Foreign Assets 
Control, has parsed it out in terms of dividing possible 
violations among those that are egregious and those that are 
non-egregious, and then accordingly, they have a scale and 12 
different factors that you look at, is an instance where they 
provide a very transparent scheme for ensuring that each case 
is dealt with properly, and if needed, those enhanced penalties 
are available, but in most instances, they probably won't have 
to go that high. It would be judged on a case-by-case basis.
    Chairman Dodd. In that regard--and then this will be the 
last because it goes to that authority, as well--there have 
been criticisms, as there always are, over not doing enough, 
but one of the criticisms that has been raised is that key 
export control authorities were allowed to lapse in the last 
number of years, including provisions of the Special Deputy 
U.S. Marshal status to Commerce agents and requirements our 
government discourage compliance with foreign boycotts against 
allies, Israel being one that this issue has been raised with.
    I wonder if these issues, the important priorities of the 
Commerce Department's Bureau of Industry Security and what 
enforcement priorities should there be for BIS.
    Mr. Wolf. In the realm of those responsibilities that I 
would have if I am confirmed, I would want to guarantee that 
the enforcement agents were on a co-equal footing with their 
counterparts in other agencies and had all the tools that they 
needed to enforce the regulations.
    Chairman Dodd. Is that a legitimate criticism, or is that--
about letting these areas lapse in this area, or is that just 
talk?
    Mr. Wolf. I think that the criticism is legitimate insofar 
as the enforcement agents do not have the same authorities that 
their counterparts are able to exercise and that that is 
certainly something that could be addressed in legislation.
    Chairman Dodd. But, in your view, it needs legislation, 
then?
    Mr. Wolf. Yes.
    Chairman Dodd. Well then, again, I think we would welcome 
some ideas and thoughts in that regard, as well.
    Mr. Wolf. Certainly.
    Chairman Dodd. OK. Senator Shelby?
    Senator Shelby. Thank you, Mr. Chairman.
    Mr. Tozer, yesterday, HUD announced many changes to FHA 
lending, including increasing mortgage insurance premiums, 
increasing downpayment requirements for high-risk borrowers, 
and increasing enforcement on FHA lenders. What do you think 
will be the impact of these changes on the health of not only 
FHA, but also on the health of FHA loans that make up most--a 
lot of the mortgage-backed securities for which Ginnie Mae 
guarantees the timely payment of principal and interest? Have 
you thought about that?
    Mr. Tozer. Basically, my feeling--again, I have not gotten 
a chance to have a lot of conversations with the Commissioner 
and his staff about it, but my feeling is that the co-issue of 
home ownership should be sustainability and putting people into 
a home that they can basically make their payments and stay 
current on and to minimizing their chance of foreclosure. So I 
think anything that is done to create a system where the 
borrower can continue to make their payments and be put in a 
home that they can spend as long as they want to spend in it 
and not have problems with the financial ability to pay, I 
think it is critical. So anything that is done to do that, I 
think the whole system is better off in the long run.
    Senator Shelby. What do you, based on your experience, what 
opportunities and challenges do you believe face the next head 
of Ginnie Mae?
    Mr. Tozer. From my perspective as an issuer--again, I have 
not had an opportunity to really spend a lot of time with the 
Ginnie Mae staff--the staff is very dedicated, but I think just 
the sheer growth. They have gone from really being a very small 
piece of the mortgage industry to now, because of FHA and VA 
becoming a bigger piece of the market because of the low 
downpayment potential in those programs, I think it is the 
growth and trying to deal with the issues of counterparty risk 
with their issuers and just understanding the market and 
becoming a major player. I think that is probably the biggest 
challenge.
    But the people that I worked with when I was an issuer, 
they are very dedicated, a good foundation. I am looking 
forward to working with them, if confirmed, to move the agency 
to that next level to really make it a very solid operation 
that can support the housing market as a whole.
    Senator Shelby. But you had explosive growth here. In 2009, 
FHA's share of the mortgage market was 30 percent.
    Mr. Tozer. Right.
    Senator Shelby. The 2 years prior to that, their market 
share was 3 percent.
    Mr. Tozer. Right.
    Senator Shelby. So you have really grown and those 
challenges will be with you to handle the growth, will it not?
    Mr. Tozer. It will be, and I am really, if confirmed, 
excited about taking on. With my 30 years, I have worked with 
Ginnie Mae, worked with the various capital markets, and that 
is what I am excited about, helping them move to that next 
level and making them a really good, world-class operation that 
they deserve to be.
    Senator Shelby. Mr. Criscitello, would you describe some of 
the challenges that you see facing HUD and how you plan to 
address some of these challenges? Specifically, what new 
approaches would you take in addressing the problems, and HUD 
has got some real problems?
    Mr. Criscitello. Yes, definitely and I would just echo Mr. 
Tozer's comments on some of those challenges. I would say the 
largest challenge, at least from an FHA and Ginnie Mae 
perspective, is balancing the need to mitigate risk while 
continuing to serve under--while continuing to support 
underserved communities and also while continuing to foster our 
economic recovery.
    Senator Shelby. What about the staffing problems? You are 
going to have challenges there, too.
    Mr. Criscitello. Sure. You know, it is interesting. Back in 
the 1990s, I acted as the CFO at the Small Business 
Administration and sort of the mantra at that time was doing 
more with less. Well, the loan guarantee programs at SBA really 
caught on in the 1990s and they were becoming increasingly 
popular and we were handling increases in the ten to 15 percent 
a year range. We thought that was a profound increase. But 
given the statistics that you just cited, that was nothing 
compared to what FHA and Ginnie Mae are up against. These are 
tremendous increases.
    So it is going to be important--in the past, just looking 
back, a microcosm of this problem at SBA in the 1990s, we 
looked to how do we handle these rapidly expanding programs, 
how do we measure and mitigate financial risk, ensure 
appropriate accounting and financial controls, and also 
developing a budget was a--big challenges.
    Senator Shelby. Mr. Wolf, getting into your area and pick 
up on what Senator Dodd was raising, in 2008, the U.S. House 
found that the State Department had inadequate resources and 
staff to properly review commercial licenses for military 
exports in a timely and thorough manner. Do you think that the 
Department of Commerce has the resources and staff necessary to 
integrate non-U.S. actors to create a more effective global 
export control and treaty compliance, or do you not know yet?
    Mr. Wolf. Well, thank you for the question. It is an 
important question and I hope to find out, if confirmed, the 
status. I know that it is an important task and you need 
resources and manpower, engineers, expertise in order to do so. 
So I look forward to learning more about the budget and the 
status of the funding.
    Senator Shelby. I will direct this question to Mr. Mills 
and to you, Mr. Wolf. What measures do you intend to implement 
to ensure that your agency becomes more effective in deterring 
efforts to divert sensitive U.S.-made dual-use items to Iran 
and to China? Senator Dodd was also in this area with you. Mr. 
Mills, how can you be more effective there? It is a challenge, 
a big one worldwide.
    Mr. Mills. I think, first and foremost, to ensure that the 
enforcement agents and their counterparts at the Export Control 
Offices overseas have the tools that they need to investigate 
potential violations and follow through on that and that the 
process is efficient, that the resources are properly allocated 
in this regard, and that the focus is on the points of 
diversion. I am very intrigued by the draft legislation out of 
this Committee and I think that that is an excellent focus to 
have.
    Senator Shelby. Thank you.
    Mr. Johnson, when Congress created SIPC in 1970, many, as 
you well know, many brokerage firms were stand-alone entities. 
Today, many brokerages are subsidiaries within large, complex 
financial institutions. As this Committee works toward 
comprehensive reform of our financial system, one of our 
important challenges is to determine how to most effectively 
resolve large complex financial institutions that fail with 
minimal disruption to the financial system and at minimal cost, 
I hope, to the taxpayers. It may become necessary to modify--we 
don't know yet--some of SIPC's authorities.
    You were nominated because of your extensive background 
working with complex financial firms. What do you think are 
some of the major issues that you would suggest that the 
Committee focus on as we plan for the potential failure of 
large complex broker-dealer firms in the future?
    Mr. Johnson. Well, I think there are a couple of things, 
Senator Shelby, that we would have to focus on, in particular, 
if confirmed, probably three primary areas that I would like to 
focus on. One area is going to be investor education, the 
ability to almost take the show on the road, to let investors 
really have a better concept of their protections that they 
have available under SIPC.
    Secondarily, I think even the current full-scale 
examination of current rules and regulations that we have in 
place. I have had a chance to work in that area both at the SEC 
on a number of items and was even part of a group, and I don't 
know if it is an oxymoron, where we received an award for 
regulatory simplification.
    [Laughter.]
    Mr. Johnson. So it is an area that I think and I believe 
that SIPC is looking forward to really creating a task force 
that will start to kind of reevaluate exactly all the rules and 
regulations. It has been a number of years since something of 
that nature has taken place, and I think that you start out in 
that area, and that in and of itself, I think, helps you to 
really find out if you have all the adequate tools in place for 
investor protection, because at the end of the day, this is an 
agency whose primary role is to protect investors.
    The last thing I would point to is really what I would call 
the export of the intellectual capital that currently exists at 
SIPC, the ability to be able to utilize some of these rules and 
regulations from an international standpoint as other countries 
look to figure out how to handle these issues, as well. Many of 
the issues we are dealing with are no longer just domestic. 
They are global issues. And if we were in a position to have 
what I would call transparent rules and regulations that can go 
across lines from a cross-border standpoint, I think it would 
help to simplify things.
    I would mention that the transaction that SIPC spent a lot 
of time with dealing with the collapse of Lehman Brothers in 
large part was really grand in scope, over 130,000 accounts 
that had to be dealt with. It is one of those situations which 
crossed State lines, obviously, international lines. And for 
all intents and purposes, a pretty seamless transaction in 
terms of moving groups from one organization to another. So I 
think the framework is in place, but I think what we will end 
up doing is doing an evaluation to make sure we have adequate 
safeguards in place.
    Senator Shelby. Ms. Bowen, as you are well aware, SIPC does 
not offer to investors the same blanket protection that the 
FDIC provides to bank depositors. Despite efforts to educate 
individual investors, which he just alluded to, about what SIPC 
covers and what it does not cover, many people are confused 
about SIPC's role here. Do you have--have you thought about 
this? Do you have any specific ideas on how to improve SIPC's 
investor education initiatives? He has alluded to this. It is 
very important. And how will you measure the success of these 
ideas, because a lot of people, I think, thought that there was 
just blanket coverage there.
    Ms. Bowen. Right.
    Senator Shelby. Do you want to comment on that?
    Ms. Bowen. Yes, definitely. And certainly, there was a lot 
of confusion as to what SIPC does do and does not do, and some 
of that, frankly, from the educational perspective, I think you 
could work on a parallel basis with the SEC and other 
regulatory agencies that play the role of enforcement, who have 
the powers to investigate. So I think one of the ways to sort 
of enhance it, it is not just SIPC by itself, but we have a 
regulatory regime which you, of course, are examining right 
now.
    I think the other thing we should probably do is to see how 
we got to where we are today. I think one of the best ways to 
solve problems is to understand why we are where we are today, 
and I think, frankly, 40 years ago, there was just no way, 
given the sort of the limited mandate of the statute, that it 
could have contemplated that the types of securities, what 
constitutes customer accounts, whether that is an individual, 
whether they are feeder funds, those types of issues. I see why 
they are very confusing, because the statute does not define 
those very issues that are confusing, including how you would 
calculate net equity.
    I think once we clarify those items that are really--some 
of those issues are farther apart right now, and I think, 
frankly, having clarity on those items will go a long ways in 
enhancing education, as well.
    Chairman Dodd. Thank you very much.
    Senator Johnson?
    Senator Johnson. [Presiding.] Ms. Bowen, after the massive 
investor fraud perpetrated by Madoff and Sanford, there has 
been a closer scrutiny of SIPC and the types of investments it 
covers. In your opinion, what are the weaknesses with SIPC's 
structure? Is the SIPC coverage limit of $500,000 per account 
still appropriate?
    Ms. Bowen. Again, as I alluded to, I think it is not, 
quote, ``a SIPC problem'' as much as it is a definitional 
problem and an interpretation of what the statute was intended 
to do. Again, I think you should not--we should not look at 
this as a SIPC item alone. It should be looked at in tandem 
with other regulations that are in place.
    I totally agree with you. The confusion from where we are 
today led to a lot of the frustration that we have seen, some 
of the frustrations that were alluded to at the very beginning. 
So I think just a real examination of what it is that SIPC 
should be covering, I think will go a long way in sort of 
clarifying that.
    Senator Johnson. Mr. Kumar and Mr. Wolf, I have a question 
for you which is a bit parochial, but what set of steps will 
you take to assist agricultural producers and other residents 
from rural States like South Dakota in accessing international 
markets?
    Mr. Kumar. Thank you, Senator, for that question. While I 
have spent 30 years of my life building global businesses for 
major American corporations, the last 5 years of my life have 
been entirely devoted to rural markets, working with small 
holder farmers, albeit in a different country, Africa. Through 
that experience, I have seen the unique need of rural markets 
and what can be accomplished by even working on such ideas such 
as export of organic agriculture product, canned products, 
juices, et cetera.
    If confirmed by this Committee, I will have--or you will 
give me the opportunity to work with the network of commercial 
and trade specialists across the Commercial Service and I am 
excited of the reality that they have deep networks even in 
rural markets, often staffed--the USEACs are staffed by experts 
from that community who understand those markets. I look 
forward, if confirmed by this Committee, to work closely with 
them and with your own staff to understand better the 
opportunities, the needs of your constituents and the farming 
community in South Dakota, and I would really look forward to 
that opportunity.
    Senator Johnson. Mr. Wolf?
    Mr. Wolf. With respect to the Bureau of Industry and 
Security, the primary role will be, or is to carve out 
exceptions for agricultural products in humanitarian and 
related circumstances for countries subject to U.S. economic 
sanctions. So my role would be--and I look forward to working 
with your staff on this--ensuring that those exceptions are 
consistent with the national security and foreign policy 
guidelines set up by the Departments of State, Defense, the 
White House, and the Congress so that those exemptions allowing 
for the export of agricultural commodities are consistent with 
the larger policy.
    Senator Johnson. Mr. Tozer, what, if any, steps will Ginnie 
Mae need to make in response to FHA's announced criteria 
changes?
    Mr. Tozer. Really, nothing. Ginnie Mae--actually, to some 
degree, it would actually be a benefit to Ginnie Mae because 
the idea of having loans that do not go into foreclosure and 
that go their whole term as far as payment is actually a 
positive to the investor base of mortgage-backed securities 
versus having loans that are going to foreclosure and have to 
pull out of pools. So actually, any steps taken by FHA to make 
the homeowner more able to make their payment and more stable 
is a positive to the Ginnie Mae program as well as the FHA 
program.
    Senator Johnson. Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman, and let me thank 
you all for your willingness to serve, as Chairman Dodd said.
    I have some specific questions for Mr. Johnson. Mr. 
Johnson, Madoff victims are deeply concerned about the recent 
actions by SIPC, and in particular by the trustee, Mr. Picard, 
and I want to ask you about some of those concerns. First, they 
are concerned about the speed with which Madoff victims have 
been repaid, with many of them still not paid and some of their 
claims actually being litigated. What is your view of the 
progress or lack thereof that SIPC has made in taking care of 
Madoff victims?
    Mr. Johnson. Thank you, Senator Menendez. Obviously, we are 
all well aware of the complexities when you are unwinding these 
complex corporate vehicles. I think SIPC has been operating in 
what I would call deliberate speed. The ability to really be 
able to kind of get your arms around all of this process on a 
worldwide basis is going to be a considerable job. I do think 
that there are going to continue to be concerns as we move 
forward, because many of the issues that we are dealing with in 
the Madoff matter are going to be those of first impression, in 
large part.
    But I think that SIPC has what I would call the track 
record of showing that it has the ability in handling what I 
would call large-scale activities. In particular, I just 
previously mentioned the handling of the Lehman Brothers 
situation, which was large in scope and in breadth, and am 
feeling fairly confident that we will be able to move forward 
with deliberate speed in terms of taking care of investors----
    Senator Menendez. Well, if you speak to the Madoff victims, 
they don't particularly have that view, and I would like to 
elicit from you a commitment that if you are confirmed by the 
Senate, that you will meet with a group of representatives of 
the victims to get a different view about where SIPC is and 
listen to what their concerns are so that as the Chairman, you 
might very well have an opportunity to improve where we are 
headed here.
    Mr. Johnson. Senator Menendez, you do have my commitment on 
that. I believe in order to be successful in this area, you 
have to be willing to take all points of view. As mentioned 
earlier, one of the things that we will have to also take into 
consideration is whether or not the rules and regulations that 
we currently have in place provide the adequate safeguards. It 
has been a number of years since we have had a chance to take 
what I would call a full-scale view of the laws that support 
SIPC and I think that is one of the first orders of business, 
as well.
    Senator Menendez. I appreciate it and would look forward to 
your review of it and any responses we need legislatively to 
help you do the job.
    Let me ask you, Madoff victims are concerned about how SIPC 
has used clawback litigation to retrieve money from victims to 
contribute to the general pool or victims' funds. In your view, 
should SIPC use these clawbacks, and if so, under what 
circumstances?
    Mr. Johnson. It is difficult to really come to a final 
conclusion on that. Obviously, many of the issues regarding 
clawbacks and things of that nature are still being handled by 
the courts. But I will say that I think the primary goal of 
SIPC will always be to do what is necessary for the protection 
of all investors that are involved, making sure that we are not 
in a position where we are simply protecting those that may 
have been early to the game as opposed to those that have come 
at a much later point in time.
    I do think that there has to be a certain sensitivity as 
you deal with issues of this nature. One of the things that we 
want to make sure is that we are continuing to follow the rules 
and regulations that we have, and also be willing to figure out 
how to be flexible whenever possible, because obviously the 
definition of the organization by its nature is to be involved 
in the protection of its investors.
    So from a clawback provision standpoint, I think that is 
something that will have to continue to be looked at. I haven't 
had a chance to see what I would call all of the confidential 
and internal workings of how these decisions were made. But in 
taking into consideration the final rulings of the court and 
then having an opportunity to look at those issues, I am hoping 
to be able to draw some fairly adequate----
    Senator Menendez. Well, I hope you, and as for that fact, 
Ms. Bowen, are going to look at this, also the whole question 
of what, in essence, is the net equity. You know, it just seems 
to me we are in a position where victims find themselves even 
further behind in the process as it is unfolding. It is a 
difficult situation, and maybe, yes, to some degree that of 
first impression, but it just seems to me that the victims 
shouldn't ultimately be further victimized because of a process 
that ultimately puts them in a worse position than they should 
have or would have been.
    I really--I will send you some questions, both of you, on 
that issue. I would like to have your responses in writing as 
it relates to that.
    Finally, if I may, to go to Mr. Wolf or Mr. Mills, I also 
sit on the Senate Foreign Relations Committee. I have real 
concerns about having sensitive U.S. technology fall into the 
hands of countries that weren't supposed to get those 
technologies. I want to get a sense--for example, transshipment 
of sensitive technology to Iran continues to be a problem and 
it seems that the United Arab Emirates has been a major hub for 
illegal transshipment of goods to and from Iran. How can you 
enforce export control laws to prevent sensitive items and 
technologies from making their way to Iran? Particularly, what 
can be done to prevent aircraft and spare parts from being 
illegally reexported to Iran from third countries? That is 
something I would really like to get a sense.
    Mr. Wolf. It is primarily an enforcement question, so I 
will defer.
    Mr. Mills. Yes. I think at the front end, when the Office 
of Export Enforcement performs a supporting role in the 
evaluation of pending license applications to conduct pre-
license checks on potential end users in countries to attempt 
to guard against diversion of these products and technology to 
Iran and other countries and that that is a critical role that 
is played in the licensing process, and then the post-shipment 
verification to the Export Control Officers that are stationed 
abroad, including the UAE, to follow up and ensure that the 
items that were exported or reexported are done so in 
accordance with the terms of the license. And I think that the, 
as I said earlier, that ensuring that these agents have the 
proper tools to perform their function is critical.
    I think that the pending legislation that this Committee 
has produced is very much on point on that regard with respect 
to diversion concerns, so I look forward to working with your 
staff and this Committee in that regard.
    Senator Menendez. Finally, Mr. Chairman, I did say when 
Daniel Hill testified before the Committee in October, he 
indicated that the Bureau of Industry and Security only had 
five agents--five agents--overseas working on end-user 
verifications issues related to the diversion of sensitive 
goods, I hope that we are going to look at that and strengthen 
that reality, because five agents just simply cannot deal with 
the breadth and scope of what we need to ensure that sensitive 
technology does not get reexported illegally to other 
countries, particularly countries that wish us ill. That is 
something I look forward to hearing from you----
    Mr. Wolf. If I may, thank you.
    Senator Menendez. Thank you, Mr. Chairman.
    Senator Johnson. Thank you all for your testimony and 
commitment to public service.
    With that, this hearing will be adjourned.
    [Whereupon, at 11:06 a.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]
                    PREPARED STATEMENT OF KEVIN WOLF
 Nominee for Assistant Secretary of Commerce for Export Administration,
                         Department of Commerce
                            January 21, 2010
     Chairman Dodd, Ranking Member Shelby, and Members of the 
Committee, I am honored to appear before you today as the President's 
nominee for the position of Assistant Secretary of Commerce for Export 
Administration. I appreciate and am humbled by the confidence President 
Obama and Secretary Locke have expressed in me. I am hopeful that I can 
earn your confidence as well. Should I be confirmed, I look forward to 
working with you and your staff.
    Thank you Senator Lincoln for the kind and thoughtful introduction. 
We have been friends for many years and I have always valued your 
counsel and guidance. I am delighted that you could be here today.
    I also want to thank my wife, Barbara Kanninen, and my two sons 
Fred and Markus. Without their support and patience, I would not be 
here today. I also hope that my nomination and, if confirmed, 
government service will be a valuable lesson and guide to my sons as 
they think about their futures. Public service is an honor and a 
privilege.
    Mr. Chairman, I recognize the importance of the obligation I will 
be undertaking if confirmed. The threats we face are diffuse but real--
principally terrorism, non-state actors, the proliferation of weapons 
of mass destruction, and the several countries of concern. The Bureau 
of Industry and Security plays a critical role in countering these 
threats by regulating the flow of controlled goods, technology, 
software, and services. It does so primarily by working closely with 
the Departments of State, Defense, and Energy, and the intelligence 
agencies, to evaluate thousands of applications a year. It also works 
with our international partners to develop controls to help, for 
example, stem illegal transshipments. This process and these 
relationships are the front line of defense against the export, 
reexport, and re-transfer of items to prohibited end-uses, prohibited 
end-users, and prohibited destinations. I commit to you that if I am 
confirmed, the Bureau will continue to do the best possible job in 
advancing U.S. national security, foreign policy and economic 
objectives by ensuring an effective export control and treaty 
compliance system, while at the same time facilitating continued U.S. 
strategic technology leadership.
    While national security is the bureau's top priority, it cannot 
ignore the impact export controls have on U.S. industry. If controls 
become outdated or are not applied fairly, then they burden the economy 
without promoting security. Indeed, such controls could reduce our 
security if they force dual-use and military manufacturing and 
development to countries that do not have adequate export control 
systems.
    I am well prepared to take on this responsibility. As an attorney 
with the international law firm of Bryan Cave LLP, I have been working 
almost exclusively with export control, antiboycott, and sanctions 
issues for nearly 16 years. My clients have been primarily small, 
medium, and large U.S. companies and their foreign affiliates. Most of 
my work has involved explaining to them how to comply with both the 
``law and the lore'' of the often complex export control and sanctions 
regulations. If U.S. Government permission was required to engage in a 
proposed transaction, I would help them apply for and receive the 
necessary authorizations. I have also handled several high profile and 
significant export control enforcement cases that have affected export 
control law, policy, and compliance practices. I thus have a deep 
understanding of the culture, concerns, and technologies of the 
American exporter and how these rules affect U.S. economic and national 
security interests. As a result of this work and my efforts to promote 
dialog between industry and government officials, I have also developed 
a deep respect for the career staff at the various government agencies 
who administer the rules. I look forward to working with them, if 
confirmed.
    If I am confirmed, my extensive background in this highly technical 
area will be helpful in inspiring and leading the Bureau; administering 
the existing regulations fairly and efficiently; and working with the 
other agencies involved in the U.S. export control system. My 
background will also be helpful in crafting and implementing, with the 
Under Secretary and the other agencies, the details of the significant 
export control reforms the President and the Secretary have announced 
are necessary to maintain our national security and economic growth. I 
look forward to working with Congress during this process. In all of my 
efforts, I will, if confirmed, be committed to the rule of law, 
transparency, and advancing the use of modem technology.
    Thank you again for this opportunity to appear before you. I would 
be pleased to respond to any questions you may have.
                                 ______
                                 
                   PREPARED STATEMENT OF SURESH KUMAR
   Nominee to be Assistant Secretary of Commerce and Director General
   of the U.S. and Foreign Commercial Service, Department of Commerce
                            January 21, 2010
    Chairman Dodd, Ranking Member Shelby, and distinguished Members of 
the Committee, I am honored and humbled to come before you today as 
President Obama's nominee to be Assistant Secretary of Commerce and 
Director General of the U.S. and Foreign Commercial Service. I want to 
thank President Obama for the enormous trust he has placed in me with 
this nomination and Secretary Locke for his support.
    Over the past few weeks, I have had the pleasure of meeting Members 
of this Committee and your staff. Thank you for your hospitality and 
generosity in taking the time to share your insights and perspectives 
on the economic landscapes of your home states. If I am confirmed by 
this Committee and your colleagues in the Senate, I look forward to 
continuing this dialog and working closely with you and your staffs.
    I am particularly grateful to Senator Menendez from my home state 
of New Jersey for his gracious introduction here today. Let me also 
take this opportunity to introduce you to the members of my family that 
have joined me here today--my wife Sheila, my daughter Pooja, and my 
son Aditya.
    Sheila, my college sweetheart, has provided me her unshrinking 
support through a global journey that has spanned three decades and 
five countries. Sheila is amazing--not only is she a distinguished 
business executive in her own right, but she also managed to raise our 
two wonderful children.
    Our daughter Pooja is a physician who is pursuing her passion for 
public health. She has served the underprivileged in remote comers of 
the world--from working with displaced people from Azerbaijan to East 
Timor, and vulnerable children from the streets of Kolkata to the 
Congo.
    Our son Aditya has been a management consultant who has worked with 
the homeless in America, as well as victims of child labor in Asia. He 
had the honor of interning for this distinguished body, the U.S. 
Senate, in the office of the late Senator Ted Kennedy. Nine years, 
three cities and two coasts later he is back in DC with the distinct 
privilege of serving in the White House.
    I would also be remiss if I did not mention my parents--Colonel 
Sundaram and Vasantha--who instilled in our entire family the 
importance of public service. Although they cannot be present here 
today, thanks to technological advancement that makes the world a 
global village, broadband and bandwidth permitting, they are watching 
these proceedings via webcast from their home in Delhi.
    As I prepared these remarks, I could not help but reflect on the 
incredible journey from Mumbai, India, via Indonesia, Singapore and 
Canada that brought me to the United States 16 years ago. I stand 
before you as a first generation immigrant and a testimony to our great 
country. It has provided me and my family the opportunities most could 
have only dreamed about. If I am confirmed for this position, you will 
have given me the opportunity to repay a small measure of the debt to a 
country that has already given me and my family so much.
    In the 30 years that I have been actively engaged in the 
international business community, I have seen firsthand the immense 
possibilities, potential, and prosperity that follow global trade. In 
the last several years as an international development consultant, I 
have worked with civil society and nonprofit organizations to improve 
lives and livelihoods and support small and medium enterprises in 
establishing sustainable and scalable businesses. I have worked for 
multinational and local companies across six countries, culminating in 
my position as the Head of Worldwide Consumer Pharmaceuticals for 
Johnson and Johnson. Through my work in emerging economies, both as a 
businessman and as a development consultant, I have seen the tremendous 
opportunities for U.S. businesses to more fully engage in Asia, Africa, 
and Latin America.
    The value and values of free and fair trade are embedded in my DNA. 
I have a deep appreciation for the unique challenges that face U.S. 
businesses seeking to expand overseas. If I am confirmed, I pledge to 
help American enterprise enhance its competitiveness and grow its 
global footprint; to increase U.S. exports and help create jobs; and to 
protect our interests, patents and intellectual property that are so 
critical to encourage innovation and support technological advancements 
particularly in emerging technologies in the environment, energy and 
healthcare sectors. These are the priorities that have been articulated 
by Secretary Locke for the Department of Commerce, and I am humbled by 
the opportunity to work daily to advance them.
    If confirmed, I will leverage my experience and passion in 
international business to maximize the efforts of the U.S. Commercial 
Service in increasing the global competitiveness of the American 
business community, with a particular focus on small and medium 
enterprises. I will work tirelessly with the wonderful trade 
professionals throughout the extensive global network of U.S. Export 
Assistance Centers in over 100 U.S. cities and in U.S. embassies and 
consulates across 77 countries to increase U.S. exports, and by doing 
so, to create good American jobs.
    International trade has always been a proven path to global 
prosperity. Very simply, by increasing U.S. exports, we will be 
creating good, high paying American jobs. The current economic climate 
makes it even more compelling to prioritize and pursue this course. 
With 95 percent of the world's consumers living beyond our borders, we 
must encourage, nurture and support U.S. companies, particularly small 
and medium businesses, to export goods and services into foreign 
markets. We must grow our exports to stimulate the economy, create and 
maintain American jobs and to help reduce our trade deficit. These are 
challenges, but they also present tremendous opportunities--that is why 
I am so excited by the prospect of leading the U.S. Commercial Service 
at this pivotal moment in time.
    If I am confirmed, I will work closely with this Committee and your 
colleagues in Congress to expand U.S. exports and advance U.S. 
commercial interests abroad, to forge new economic ties for America 
overseas, and to ensure that America maintains its leadership in the 
global economy while advancing U.S. national security interests through 
a renewed focus on commercial diplomacy.
    Mr. Chairman, I thank you for your consideration of my nomination 
and for the opportunity to address any questions that you and your 
colleagues might have.
                                 ______
                                 
                  PREPARED STATEMENT OF DAVID W. MILLS
  Nominee for Assistant Secretary of Commerce for Export Enforcement,
                         Department of Commerce
                            January 21, 2010
    Chairman Dodd, Ranking Member Shelby, and Members of the Committee, 
I am honored to appear before you today as the President's nominee for 
the position of Assistant Secretary of Commerce for Export Enforcement. 
The President has my heartfelt gratitude for the trust and confidence 
he has placed in me. I would also like to express my appreciation to 
Secretary Locke, with whom I look forward to serving if confirmed for 
this position. I would be remiss if I did not also thank my parents, 
Eugene and Dorothy Mills of Lee, New Hampshire, for their unstinting 
and unwavering love and support over the course of my life, without 
which I would not be before you today.
    I had the privilege of starting my first permanent position with 
the executive branch at the Department of Commerce, and served there as 
an Attorney/Advisor at the Bureau of Export Administration beginning in 
1985. At that time, I had the opportunity to assist in the 
implementation of the 1985 amendments to the Export Administration Act, 
as well as the implementation of the South African Anti-Apartheid Act 
in 1986. I am delighted at the prospect of returning to this agency 
should I be confirmed, and in assisting its able and dedicated 
personnel in carrying out their continuing mission that is so vital to 
our national security.
    If given the opportunity to serve in the capacity for which I have 
been nominated, I also look forward to drawing upon the experience I 
gained during the 18 years I served at the Office of Foreign Assets 
Control of the U.S. Treasury Department. As a member of OFAC's Chief 
Counsel's Office, I provided legal support and review for licensing, 
interpretive, and enforcement matters arising under the various 
economic sanctions programs for which I was responsible, working 
closely with Department of Justice attorneys in both the Civil and 
Criminal Divisions. I also served as OFAC's Chief of Policy Planning 
and Program Management. In that role, I was responsible for reviewing 
all warning letters, penalty actions, and settlements of alleged 
sanctions violations, and for preparing recommendations on the 
disposition of enforcement matters for the Director. I also supervised 
the drafting and issuance of OFAC's first set of comprehensive economic 
sanctions enforcement guidelines in 2003, as well as the semiannual 
reports to Congress on the administration and enforcement of sanctions 
programs.
    As Chief of Licensing at OFAC, I gained invaluable managerial 
experience ensuring the timely response to requests for licenses and 
interpretive rulings, coordinating interagency review when required, 
and reducing an initial backlog of licensing requests from 1,400 to 100 
pending cases. In 2005, I was awarded the Meritorious Service medal by 
the Secretary of the Treasury. If confirmed, I look forward to the 
opportunity to coordinate compliance and enforcement efforts with my 
former agency, as well as other agencies with important roles to play, 
including the Departments of Justice, Homeland Security, State and 
Defense.
    More recently, since 2007, I have worked in private practice first 
at Baker, Donelson, Bearman, Caldwell & Berkowitz, a regional law firm 
present in five southern states and DC, and then at DLA Piper, a global 
law firm with a presence in more than 60 cities throughout the United 
States and in more than 25 countries. Through my participation in 
several extensive internal investigations involving both civil and 
criminal matters, I have gained a deeper appreciation of the challenges 
that companies face, most of which are attempting in good faith to 
comply with often complex regulatory regimes. I believe that the 
enforcement of those regimes must not only be fair and firm, but also 
as clear and transparent as possible, in order to advance both our 
national security and foreign policy interests and our economic 
potential through export promotion. Finally, in those instances where 
good faith is not a factor, I commit to vigorously enforcing our 
nation's laws to ensure that those who flout the rules are caught and 
punished.
    Thank you again for this opportunity to appear before you. I would 
be pleased to respond to any questions you may have.
                                 ______
                                 
              PREPARED STATEMENT OF DOUGLAS A. CRISCITELLO
                  Nominee for Chief Financial Officer,
              Department of Housing and Urban Development
                            January 21, 2010
     Chairman Dodd, Ranking Member Shelby, and distinguished members of 
the Committee, my name is Doug Criscitello, and I thank you for 
inviting me to appear before you today. I know how busy this Committee 
is, and I very much appreciate the opportunity to appear before you.
    Before I go any further, I would like to introduce my family: my 
wife, Linda, who has been putting up with me since our high school days 
in Binghamton New York, and our terrific children, Sammy, Kyle and 
Lyndsay. I am humbled and honored to be the choice of President Obama 
and Secretary Donovan to serve as the Chief Financial Officer for the 
U.S. Department of Housing and Urban Development (HUD). If confirmed, I 
look forward to being part of the team at HUD that will work with you 
and your staffs to address the significant housing and community 
development needs of our Nation.
    For the past 24 years, I have dedicated my career to governmental 
budgeting and financial management with an emphasis on Federal credit 
programs and community development issues. I have served in a number of 
financial management positions at both the Federal and local levels of 
government. My most recent position in government was as the founding 
Director of the New York City Independent Budget Office (IBO), a 
municipal government agency modeled after the Congressional Budget 
Office (CBO) to provide nonpartisan, objective research and analysis of 
NYC's budget. While at IBO, I concentrated on establishing the agency 
as a credible, nonpartisan voice on city budget and policy matters--no 
easy task in a city where seemingly everyone has a strong point of 
view. IBO's mandate is broadly aimed at enhancing official and public 
understanding of fiscal issues facing New Yorkers, which allowed me to 
work on a diverse range of issues. That role required me to think 
creatively about how to make governmental budgeting understandable to 
citizens--doing things like originating the concept for the Federal 
Taxpayer-Right-To-Know Act, a bill introduced by Senator Schumer and 
enacted in 1999 to provide citizens with detailed information about how 
their taxes are spent.
    Prior to my IBO position, I spent 9 years as a career civil servant 
in the Federal Government focused on financial management and credit 
programs. At the Small Business Administration (SBA), I led efforts to 
help that agency implement two of the most significant financial 
management statutes of the 1990s: the Chief Financial Officers Act and 
the Federal Credit Reform Act. Before working at SBA, I served as a 
budget examiner at the Office of Management and Budget (OMB) in the 
Housing, Treasury and Financial Institutions Division. Before OMB, I 
held a similar position at CBO, where I learned the importance of 
providing impartial financial and budgetary analysis to elected 
officials to empower them to make informed legislative decisions. My 
primary areas of responsibility at both OMB and CBO involved credit 
programs, economic and community development issues, and budgetary 
analysis.
    Since 2000, I have worked in the private sector as a consultant and 
service provider to the government. At JPMorgan, I worked in the bank's 
Governments Institutions Group, where I provided operational and 
financial advisory services to Federal credit agencies such as HUD and 
SBA. That position allowed me to enhance my understanding of the 
capital markets including how they can be used to help accomplish 
public policy goals. At PricewaterhouseCoopers (PwC), I helped the firm 
establish a public sector financial services practice to support 
Federal financial stabilization initiatives. I also worked with a 
number of Federal credit agencies, including HUD, on engagements 
involving credit reform implementation and various other financial 
management matters.
    Clearly, expanded programs with increased levels of funding have 
occupied management at HUD over the past year while the ongoing work of 
promoting sustainable homeownership, community and urban development, 
and access to affordable housing has continued. If confirmed by the 
Senate, I will work to ensure transparency and accountability of these 
programs through an effective financial management and internal 
controls program aimed at deterring waste, fraud and abuse of taxpayer 
dollars. Key priorities will include providing timely and reliable 
financial information for use by both executive and legislative branch 
officials and ensuring the Department's financial management program 
continues to get a clean bill of health from its auditors.
    I would like to conclude by saying again how honored I am to be 
before this Committee. I have worked with HUD's programs for many years 
and am aware of at least some of the financial management and budgetary 
challenges facing the Department. If confirmed, I look forward to 
working with you to help HUD achieve its mission in a way that advances 
our economic recovery prospects while ensuring that taxpayer money is 
spent wisely.
    Thank you and I look forward to your questions.
                                 ______
                                 
                PREPARED STATEMENT OF THEODORE W. TOZER
                         Nominee for President,
                Government National Mortgage Association
                            January 21, 2010
     Chairman Dodd, Ranking Member Shelby, and distinguished Members of 
the Committee, I want to thank you for the opportunity to appear before 
you today. Thank you to all the Members of the Committee and their 
staffs who met with me over the past 2 weeks. I also want to thank 
Sandy, my wife of 29 years, for supporting me throughout my career.
    I am honored and humbled by the confidence that President Obama and 
Secretary Donovan have shown in me by my nomination to this position at 
such a critical juncture in the history of housing. My 30 years 
experience in the mortgage capital markets has uniquely prepared me to 
manage Ginnie Mae, if confirmed. An effective President of Ginnie Mae 
must balance the needs of all three of its major stakeholders: issuers, 
investors, and the U.S. Treasury.
    I began my career managing the operations of BancOhio National 
Bank's broker/dealer operation and its asset and liability management 
function. During the 6 years of managing the broker/dealer, my 
responsibilities included compliance, accounting, trade settlement, 
customer security safekeeping, and risk management reporting. During 
this phase of my career, I developed a good understanding of the 
running of a trading floor and was also able to be a part of the 
initial phase of interest rate risk management by the banking industry.
    My experience working in the investment community has prepared me 
to work closely with the investor base of Ginnie Mae securities and to 
help educate the investment communities on the various Treasury-
guaranteed mortgage programs. This education is critical in keeping the 
costs as low as possible to the borrower.
    During the last 24 years, I have managed the capital markets for 
National City Mortgage Co. My responsibilities included daily pricing 
of loan products; managing the interest rate risk of loans being held 
in inventory for future sale; designing loan products that are sellable 
into the capital markets; delivery and settlement of loan pools; and, 
negotiating the sales of loan pools into the capital markets. My 
experience at National City allowed me to develop a broad knowledge of 
the mortgage company's operations. I was required to balance the needs 
of the sales force, the servicing department, and mortgage investors.
    During my 24 years in the mortgage banking industry, I have 
developed strong relationships with the capital market managers whose 
companies account for over 80 percent of Ginnie Mae issuances. During 
my career, I have worked closely with the FHA Commissioner and the FHA 
Chief Risk Officer, two mortgage industry leaders with whom I will work 
very closely if confirmed as President of Ginnie Mae. These 
relationships were developed by participating on Fannie Mae and Freddie 
Mac National Lender Advisory Boards, and serving as chairman of the 
Mortgage Bankers Association Capital Markets Committee, as well as the 
Mortgage Bankers Association Residential Board of Governors. Serving in 
these roles allowed me to understand the needs of the mortgage banking 
industry as a whole.
    I have also developed strong relationships with Wall Street 
mortgage traders, which has increased my understanding of how they view 
mortgages and their value. If confirmed, these experiences and 
relationships will help Ginnie Mae fulfill its responsibilities both to 
educate investors about loan program modifications and to be a capital 
markets advisor to Federal housing agencies. Having a President of 
Ginnie Mae with capital markets expertise is more critical now than 
ever as the government uses various loan programs to stabilize the 
housing market.
    If confirmed I will, in an efficient and risk-adverse manner, work 
to make Ginnie Mae a strong foundation for execution of housing policy. 
Thank you for your consideration of my nomination, and I look forward 
to answering any questions you may have.
                                 ______
                                 
                 PREPARED STATEMENT OF ORLAN M. JOHNSON
    Nominee for Chairman, Securities Investor Protection Corporation
                            January 21, 2010
    Chairman Dodd, Ranking Member Shelby, and Members of the Committee, 
I would like to thank for the opportunity to appear before you today as 
you consider my nomination to be the Chairman of the Securities 
Investment Protection Corporation. I am deeply grateful to President 
Obama for nominating me to this important position. In addition, I also 
appreciate the time Members of this Committee already have taken to 
meet with me, and if confirmed, I look forward to working the Committee 
to address the challenges in ensuring adequate protection of investment 
accounts and general investor confidence in the United States financial 
markets.
    It is indeed an honor and a privilege for me to be here. With the 
Chairman's indulgence I would like to introduce my wife Zina Johnson 
who is here supporting me today as she always has in everything that I 
do in our nearly 20 years of marriage. I would also like to recognize 
my daughter Nia Johnson, who is not here today and is a Junior at Blue 
Mountain Academy in Pennsylvania, and my two sons who are here today, 
Adam who is in eighth grade at Sligo Elementary School and my son Jair 
who is in fifth grade at the Dupont Park elementary school. I have 
always been blessed by their love and support.
    For more than 20 years, I have had the opportunity to work in the 
area of complex corporate and securities transactions at major law 
firms and in the public sector as both a staff and supervisory attorney 
at a major securities regulatory government agency. I have had the 
opportunity to remain on the cutting edge of recent novel securities 
issues in both private practice and in area of academia.
    I am currently a Partner in the law firm of Saul Ewing LLP. My 
practice focuses on general corporate matters, complex business 
transactions and Federal and state regulatory issues in business and 
securities transactions, including proxy solicitations, bankruptcy 
reorganizations and equity and debt offerings. I have has also engaged 
in investigations of investment advisers with state securities 
commissions and numerous SEC audits of energy companies in conjunction 
with state and local public utility commissions and the Federal Energy 
Regulatory Commission.
     Prior to joining Saul Ewing, I was with the international and 
Wall-Street based firm of Milbank, Tweed, Hadley & McCloy, LLP where I 
served as co-head of its regulatory practice in the Washington, DC 
office. Prior to Milbank, I served for over 9 years as a Staff Attorney 
and Branch Chief in the Division of Investment Management for the 
United States Securities and Exchange Commission.
    In addition to my work in both the public and private sectors, 
since 1994, I have served as an adjunct professor of law at my alma 
mater Howard University School of Law, where I have taught Securities 
Regulation classes in connection with the fundamentals of Federal and 
state securities laws, including the 1933 and 1934 Acts and the 
Investment Company Act of 1940.
    As you are well aware, SIPC's primary goal is to protect individual 
investors from financial hardship, to insulate the economy from the 
disruption which can follow the failure of major financial 
institutions. SIPC has and should continue to stand as the first line 
of defense in protecting investors when such a failure occurs, and act 
swiftly to eliminate, as much as possible, the risks associated with 
customer loss.
    If confirmed I look forward to continuing and expanding SIPC's work 
in the areas of investor education and ensuring that its current rules 
and regulations provide adequate safeguards to protect investors in 
this ever-evolving global financial market. I believe that SIPA 
provides the framework that can and should be used to guide the 
protection of investment accounts not just in the US, but in many other 
world financial markets. If confirmed, I would view my role as being a 
principal advocate for robust investor protection.
    Mr. Chairman and Members of the Committee, I thank you again for 
your consideration of my nomination, and I look forward to answering 
any questions you may have.
                                 ______
                                 
                 PREPARED STATEMENT OF SHARON Y. BOWEN
   Nominee for Vice Chair, Securities Investor Protection Corporation
                            January 21, 2010
    Chairman Dodd, Ranking Member Shelby and other distinguished 
members of the Committee, I am honored to have been nominated by 
President Obama to serve as Vice Chair of the Securities Investor 
Protection Corporation. I want to thank the Committee members and staff 
for meeting with me and making time for this nomination hearing.
    I would like to take this opportunity to briefly introduce my 
family members who are here with me today. My husband, Larry Morse, who 
has been a constant supporter and friend since we first met at the 
University of Virginia, my sister, Shelia Taylor, and my nephews, 
Vincent, Jr. and Victor Bowen. Although other members of my family 
could not be here today, I want to acknowledge and thank them for their 
abundant and unconditional love and support.
    I have practiced in the corporate, securities and finance areas of 
the law for more than 25 years. I am fortunate to be a member of the 
legal profession and to do what I love. My interest in finance, law and 
business started during my early years, even before I knew there was a 
place called Wall Street. After receiving a degree in Economics, I 
attended business and law schools at Northwestern University. I then 
moved to New York and began my career as a corporate attorney.
    My expertise in securities and corporate law and deep interest in 
our financial markets provide a great background for me to address the 
challenges SIPC currently face. When I read about the state of the 
economy and financial markets at the formation of SIPC, I found many 
common themes we also face today. Yet, at the same time, our current 
environment is vastly different and more complicated. Even the sheer 
growth and volume of customer accounts, let alone the types of 
securities within those accounts, could not have been imagined 40 years 
ago.
    I look forward to bringing my deep knowledge of securities and 
corporate law to my role as Vice Chair of SIPC, should I be confirmed. 
I look forward to working with you in helping to improve our protection 
of investors.
    Thank you for your time and consideration. I am happy to answer any 
questions.

RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM KEVIN WOLF

Q.1.-1. During the hearing, you pointed out that ``it is vital 
that foreign parties involved with U.S. goods and technology 
and derivatives of U.S. goods and technology are aware of and 
abide by the rules governing them so that items going through 
one country don't end up in prohibited destinations.'' At a 
recent international seminar of government and private experts 
on export control and nonproliferation, it was suggested that 
foreign compliance with U.S. re-export rules may improve if 
contracts between U.S. manufacturers and foreign re-sellers of 
their products uniformly required compliance with those rules. 
The contracts would need to specify substantial liquidated 
damages for violations--and these contract rights would need to 
be regularly and vigorously asserted and enforced. Recent 
cases, involving diversion of microprocessors to Iranian 
missile and nuclear entities, are instances when such contract 
rights could have been asserted--and if asserted, could have 
served as a deterrent for other would-be diverters.
    Based on your experience, do you think such an approach 
would bring practical non-proliferation benefits?

A.1.-1. I agree with the basic premise of the question that 
export control compliance clauses are a ``best practice'' and 
should be encouraged. Indeed, in my experience, they are a 
common element of contracts involving the sale of goods, 
technology, or software across borders. If they are tailored to 
the type of export control issues potentially created by the 
transaction and the parties' level of export control 
understanding, they can aid compliance and have practical non-
proliferation benefits because they serve an educational 
function. Parties that may not have known about or be 
experienced in dealing with the potentially applicable export 
control rules are, with the clause, informed of or reminded of 
a regulatory compliance obligation that exists in connection 
with the sale.
    As a practical matter, however, the liquidated damages 
element of such clauses are rarely enforced by the parties for 
a variety of reasons. Parties also tend to resolve their 
disputes in other ways. In any event, the reminder that a U.S. 
Government investigation (which can be time-consuming and 
costly for both the exporter and consignee) could occur or that 
denial orders or criminal penalties could be imposed if the 
export control rules are violated tends to have, in my 
experience, more of a deterrent effect than the possibility of 
having to pay liquidated damages. This does not mean, though, 
that they do not serve an educational, thus compliance, purpose 
in bringing attention to the export control issues associated 
with the proposed transaction.

Q.1.-2. What are potential challenges, if any?

A.1.-2. If company compliance programs do not include a 
requirement to train business and contracts personnel regarding 
the meaning and significance of such clauses, the clauses do 
not have an educational value and can become, for compliance-
related purposes, meaningless ``boilerplate.''

Q.1.-3. How could BIS encourage such practice by U.S. 
exporters?

A.1.-3. BIS should continue to encourage the use of export 
control compliance clauses by including a discussion of the 
issue and sample clauses in its educational outreach efforts 
and documents describing export control compliance program best 
practices. These materials could include sample clauses for 
exporters to work with and would have practical non-
proliferation benefits if they emphasized the need for parties 
to tailor their clauses to the export control compliance issues 
potentially created by the goods, technology, software, 
countries, end-uses, and end-users at issue. Many companies 
will choose not to include the liquidated damages element of 
such clauses in their contracts for a variety of reasons. For 
example, many companies have general policies against accepting 
such clauses for business and competitive reasons and the laws 
of some countries may limit the use of such remedies. The 
option of including such clauses can nonetheless have an 
educational, thus non-proliferation, benefit for the reasons 
described above.

Q.2.-1. For a number of years, BIS has operated under 
significant constraints, limiting the agency's ability to hire 
and retain quality staff and hampering access to resources 
needed to pursue its key national security mission.
    In your opinion, what effect has the recent resource 
constraints had on the licensing/enforcement function at BIS?

A.2.-1. I am not in a position to determine what impact recent 
budget constraints have had on the licensing and enforcement 
functions at BIS. It is my understanding that, until recently, 
BIS had been operating under a continuing resolution and as a 
result there have been few new hires. If confirmed, I will work 
to identify the licensing personnel and supply needs of BIS's 
Export Administration and, if needed, work to ensure that 
resources are made available. Additionally, I will work with my 
counterpart who is responsible for BIS's Export Enforcement to 
ensure that future budget requests include the appropriate 
funds to meet future licensing and enforcement needs. If 
confirmed, I will commit to seek out ways to use the resources 
that are available efficiently and to the greatest impact for 
export control compliance.

Q.2.-2. In your opinion, what does the licensing and 
enforcement function at BIS require to do a better job, in 
terms of manpower and other resources?

A.2.-2. I am not in a position at this time to determine what 
resources will be required for the licensing function at BIS to 
do a better job. If confirmed, I will review the resources 
required and those currently available to determine what 
additional resources might be needed.

Q.2.-3. If confirmed, what measures would you implement to 
remedy these shortcomings?

A.2.-3. If confirmed, I will assess the personnel and supply 
needs of BIS's Export Administration and work to empower that 
office's management to hire the necessary personnel to support 
Export Administration's needs. I will also review the 
feasibility of detailing of personnel to those offices most in 
need of support, particularly those offices with licensing 
responsibilities.

Q.3. In 2007, BIS launched the ``Validated End-User'' (VEU) 
program, which allows select foreign companies to receive 
controlled dual-use goods without otherwise-required export 
licenses. Since its inception, the program has been criticized 
as posing a national security risk while not being of much use 
to exporters.
    In your opinion, has the program been designed and 
implemented effectively and securely? Do you believe it should 
continue, and if so, how would you modify the program to 
improve its operation?

A.3. The VEU program is premised on the fact that the companies 
allowed to participate in it have a history of civilian end use 
and have robust, transparent, and verifiable export control 
compliance programs. Thus, in principle, the program is 
effective as it reduces the licensing burden on BIS and the 
companies and secure as it achieves the same or better level of 
export compliance that would have been achieved through the 
individual licensing of particular transactions. In my view, 
its existence also appears to be an important part of U.S.-
China trade relations.
    Without access to the information pertaining to the parties 
involved or that would like to participate in the program, I am 
not in a position to say whether the program has been designed 
and implemented effectively and securely. If confirmed, I 
commit to review its effectiveness and security and, if 
necessary, make recommendations for its revision.

Q.4. Last summer, a GAO study demonstrated that export controls 
on sensitive dual-use goods can be easily circumvented by 
domestic sales and subsequent shipments out of the country. 
Recent enforcement cases show that this technique is widely 
used for illicit procurement to China and Iran.
    If confirmed, what measures would you seek, by BIS and by 
industry, to address such domestic procurement schemes?

A.4. If confirmed, I commit to work with BIS's Export 
Enforcement to review current measures to address this issue 
and revise BIS's efforts as appropriate.
    I also commit to ensure that BIS will do what it can to 
ensure that American companies are aware of the ``Know Your 
Customer'' and red flag guidance that exists in the 
regulations, which note that various elements of the 
regulations are dependent upon a person's knowledge of the end-
use, end-user, ultimate destination, and other facts pertaining 
to a transaction or activity.
    Another key element of stopping such domestic procurement 
schemes is vigorous enforcement actions against those companies 
that ``self blind,'' i.e., willfully cutoff the flow of 
information that comes into the company in the normal course of 
business. Company personnel and individuals need to know and be 
reminded that consciously disregarding facts indicating a 
potential export control violation will not insulate them from 
prosecution.

Q.5.-1. The Commerce Department has emphasized the use of 
``trusted'' companies and countries as a way to reduce export 
licensing and facilitate trade. At the other end of the 
spectrum is Commerce's ``Entity List,'' which is meant to be 
the key nonproliferation tool helping industry to identify 
risky foreign buyers. According to BIS, the Entity List 
``undergoes continual review and revision.'' But a quick glance 
at the List shows that many of the entities have been on it for 
almost 10 years without an address or key aliases. There have 
even been cases when BIS has identified an alias for an Entity 
List company in a press release (http://www.bis.doc.gov/news/
2007/china07202007.htm), but then failed to add that alias to 
the Entity List itself. Also, recent additions to the Entity 
List have targeted known diverters and trans-shippers but not 
end-users linked to missile and WMD programs.
    Based upon your experience, do you believe the Entity List 
effectively identifies the ``risky'' end-users? If not, how 
would you improve it?

A.5.-1. Without access to the information pertaining to the 
listed companies or the intelligence regarding companies that 
should be listed, I am not in a position to say whether the 
list effectively identifies ``risky'' end-users. I do know, 
however, that BIS's attention to listing companies and 
individuals that are involved in diversions, illegal 
transshipments, violations of export control rules is a 
critical part of the export control compliance system. 
Companies with effective compliance programs rely on this 
information when making decisions about potential transactions. 
The list and efforts to expand the list are also central to the 
need to have more targeted end-user and end-use specific 
controls rather than those based solely on country-specific 
controls. If confirmed, I will work to ensure that the Entity 
List effectively identifies end-users of concern based on the 
data and intelligence available to BIS.

Q.5.-2. In your opinion, has BIS been trying to find additional 
identifying information for listed entities and failed, or has 
it simply not made an effort to review and update poorly 
described entities?

A.5.-2. BIS has recently increased the number of individuals on 
the Entity List. In addition, as part of the recent expansion 
of the Entity List, BIS, and its inter-agency partners, have 
committed to an annual review of all of the entities on the 
Entity List to keep the list up to date. If confirmed, I will 
review the existing process and the potential for revisions to 
the Entity List.

Q.5.-3. Will you commit to updating the address and alias 
information of all entities that have been on the list for 3 
years or longer within your first 6 months in office?

A.5.-3. My understanding is that there is an inter-agency 
review committee, the End-User Review Committee (ERC), made up 
of representatives from the Departments of Commerce, State, 
Defense, Energy, and, when appropriate, the Treasury. The 
Export Administration Regulations (EAR) now require the ERC to 
review the listing of all of the entities on the Entity List at 
least once a year. If confirmed, I will work to ensure that the 
Entity List contains, to the extent possible and within the 
scope of this interagency process, the correct, relevant, and 
required information about the listed entities.

Q.5.-4. Will you commit to review, if confirmed, the missile 
and WMD programs of countries represented on the Entity List, 
and to identify any additional entities in those countries that 
need to be added to the List for proliferation reasons?

A.5.-4. If confirmed, I will work to review the missile and WMD 
programs of countries represented on the Entity List and add 
any additional entities as appropriate to address proliferation 
concerns.

Q.5.-5. Based on your extensive experience counseling companies 
on export control compliance, are there changes that could be 
made to the Entity List, whether in format or content, that 
would simultaneously make it easier for U.S. companies to 
comply with the law, and make it harder for the entities on the 
List to get controlled U.S. technology?

A.5.-5. A prominent part of the BIS website is a link called 
``Lists to Check.'' It collects together in various 
downloadable formats the lists companies need to be aware of 
and check as part of their export compliance program. In my 
experience, different types of companies with different types 
of export control compliance programs find this link and the 
multiple ways in which the information in it can be downloaded 
to be useful. If confirmed, I will nonetheless review with BIS 
personnel ways in which the lists can be made even more user-
friendly, budget permitting, for companies that want to or 
otherwise should screen their exports against the lists.
                                ------                                

 RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM DAVID W. 
                             MILLS

Q.1.-1. During the hearing, you expressed support for pending 
legislation, produced by this Committee, regarding destinations 
of diversion concern. In fact, sometime prior to this 
legislation, the ``destinations of diversion concern'' concept 
was raised by the Bureau of Industry and Security as a 
regulatory proposal.
    Do you agree that implementing this as a regulation as soon 
as possible would decrease the risk of sensitive goods being 
diverted to Iran?

A.1.-1. I believe that any effort to decrease the risk of 
sensitive U.S. dual-use goods being diverted to Iran is worthy 
of serious consideration. If confirmed as the Assistant 
Secretary of Commerce for Export Enforcement, I will make it a 
top priority to closely study this issue and review any 
previously generated studies on this matter in order to make an 
informed decision.

Q.1.-2. If so, will you support implementing the ``destinations 
of diversion concern'' proposal immediately through 
regulations?

A.1.-2. As you know, one of the most critical priorities of the 
Bureau of Industry and Security is to prevent illicit 
diversions to Iran. To that end, Bureau of Industry and 
Security (BIS) currently has several programs in place toward 
achieving that goal. If confirmed, after conducting the 
critical review and assessment described above, and immersing 
myself in the current strategies employed by BIS, I will have 
vastly improved information from which to make these judgments.

Q.2.-1. For a number of years, BIS has operated under 
significant constraints, limiting the agency's ability to hire 
and retain quality staff and hampering access to resources 
needed to pursue its key national security mission.
    In your opinion, what effect has the recent resource 
constraints had on the licensing/enforcement function at BIS?

A.2.-1. I understand that recent resource challenges have had 
an adverse impact on filling several personnel positions and on 
some basic support resources needed to execute BIS's mission. 
My understanding is that unfilled positions range from BIS 
special agents and export control officers to analysts required 
to produce quality leads and in depth case support for BIS's 
special agents. I have not had an opportunity to determine what 
the resource constraints have meant to BIS's functions. 
However, if confirmed, I plan on immediately reviewing and 
assessing the impact that these shortfalls have caused, as well 
as what steps have been taken and need to be taken to address 
them.

Q.2.-2. In your opinion, what does the licensing and 
enforcement function at BIS require to do a better job, in 
terms of manpower and other resources?

A.2.-2. I believe BIS needs to ensure it maintains a viable 
force level and presence domestically and overseas. BIS also 
needs to provide quality analytical support that will ensure 
its special agents are focused on the most pressing threats and 
are provided the support to successfully enforce the laws and 
regulations so that our most critical dual-use items do not 
fall into the hands of entities that threaten our national 
security. As noted above, if confirmed, I will carefully review 
the available and required resources needed to carry out these 
functions.

Q.2.-3. If confirmed, what measures would you implement to 
remedy these shortcomings?

A.2.-3. As noted above, if confirmed, I will review BIS's 
enforcement needs, including possible shortcomings. The review 
will focus on issues such as ensuring the personnel and funding 
mix is appropriate for the mission, ensuring BIS has the right 
skill sets and job series for the functions to be performed; 
and ensuring BIS employees are provided the proper training to 
successfully perform their jobs.

Q.3. In 2007, BIS launched the ``Validated End-User'' (VEU) 
program, which allows select foreign companies to receive 
controlled dual-use goods without otherwise-required export 
licenses. Since its inception, the program has been criticized 
as posing a national security risk while not being of much use 
to exporters.
    In your opinion, has the program been designed and 
implemented effectively and securely? Do you believe it should 
continue, and if so, how would you modify the program to 
improve its operation?

A.3. The ``Validated End-User'' (VEU) program was designed to 
facilitate trade to civilian end-users who have reliable and 
robust export compliance programs, while minimizing risks to 
national security. If confirmed, I will review the VEU program 
with the other cognizant BIS officials and determine whether 
adjustments are needed to ensure that the program is 
implemented consistent with those objectives.

Q.4. Last summer, a GAO study demonstrated that export controls 
on sensitive dual-use goods can be easily circumvented by 
domestic sales and subsequent shipments out of the country. 
Recent enforcement cases show that this technique is widely 
used for illicit procurement to China and Iran.
    If confirmed, what measures would you seek, by BIS and by 
industry, to address such domestic procurement schemes?

A.4. Purchasing commodities represented as ``domestic sales'' 
is a tactic which has been employed by exporters to obtain 
items they are seeking for illegal shipment abroad without 
applying for an export license. It is my understanding that the 
BIS, through its Office of Export Enforcement (OEE), maintains 
a robust outreach program with industry that includes 
disseminating guidance on how to guard against illegal exports 
emanating from transactions represented as ``domestic sales.'' 
During these outreach visits, OEE special agents discuss the 
importance of knowing their customers and watching for any red 
flags indicating that sensitive U.S. commodities, technology 
and software may be exported contrary to the national security 
and foreign policy interests of the United States. Such 
guidance is intended to serve as a tool for the exporting 
community to use while employing due diligence regarding 
business relationships and decisions.
    Although presented in the context of ``export'' 
transactions, those guidelines can also be used when screening 
business transactions presented as purely domestic. As such, 
the guidance can be used to screen a wide range of 
transactions, not solely those represented as exports. 
Furthermore, BIS endorses as a ``best practice'' that industry 
include a statement on the purchase order that items are 
controlled under the Export Administration Regulations and may 
require a license prior to being exported out of the United 
States, and encourages business to have customers certify in 
writing prior to the sale that the items are not for export. 
During these visits, special agents also encourage industry to 
contact OEE regarding any abnormal circumstances involved in a 
transaction so that it can be assessed as a possible diversion. 
Numerous referrals have emanated from such outreach activities.
    If confirmed, however, I will review this issue with the 
other cognizant BIS officials to determine if additional 
actions are warranted.

Q.5.-1. A key aspect of BIS efforts to prevent diversions of 
dual-use goods (including to Iran) are the Export Control 
Officers (ECOs) placed in strategic locations around the world. 
The ECOs are tasked, among other duties, with carrying out 
inspections to ensure that dual-use goods exported from the 
United States are indeed in their declared locations and uses, 
and have not been diverted. However, only five ECOs have been 
in place--one each in Beijing, Hong Kong, Moscow, New Delhi and 
Abu Dhabi, United Arab Emirates. BIS has contemplated adding 
another ECO in China and one in Southeast Asia (for diversion 
points like Malaysia).
    In your experience, do you believe that this small number 
of BIS inspection officials (despite some assistance they 
receive from other Embassy personnel) is sufficient to prevent 
diversions to unauthorized end-users and end-uses, including to 
Iran and China?

A.5.-1. From my perspective, the mission of trained special 
agents at the ECO positions is a critical component to 
effective export control enforcement and licensing. The current 
locations appear to be located at the most critical embassies 
to provide the best coverage to ensure dual-use technologies 
are not diverted to activities that are counter to our national 
security and foreign policy interests. If confirmed, I will 
focus on filling any vacancies in a timely manner. 
Additionally, I understand that BIS did receive funding and is 
currently staffing the posting of a new ECO position at 
Singapore that will have regional responsibilities in 
Singapore, Malaysia, and Indonesia. This will provide 
additional coverage in an area that is a large transshipment 
point for world trade. Finally, while BIS does not have a large 
ECO footprint, it is my understanding that BIS does have the 
ability to send teams of agents to those countries that do not 
have ECO coverage to perform multiple End-Use Checks in areas 
that need additional emphasis.

Q.5.-2. If confirmed, what do you intend to do to increase the 
number and quality of pre-license checks, post-shipment 
verifications and other anti-diversion inspections?

A.5.-2. If confirmed, I will review the existing end-use check 
program to assess whether the number and quality of checks 
needs to be revised.
                                ------                                

   RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN DODD FROM ORLAN 
                            JOHNSON

Study of SIPA and SIPC
Q.1. After the failure of the Madoff and Stanford firms, some 
investors and observers are concerned that the extent of SIPC 
coverage is too narrow. Also, some have questioned the adequacy 
of the SIPC funding. Do you support a study of SIPA and SIPC 
that would have the ability to make recommendations to 
Congress?

A.1. As I testified at my confirmation hearing on January 21, 
2010, I am in favor of creating a task force that will be 
charged with examining all aspects of SIPC's operations with a 
view toward potential legislative proposals for Congress. It is 
my understanding that SIPC last enaged in such an exercise in 
1978, and that task force resulted in major substantive 
amendments to the Securities Investor Protection Act 
(``SIPA''). I believe that another such review is long overdue, 
and I would anticipate that such a review will address issues 
related to the adequacy of SIPC's current funding levels. I 
also understand that SIPC has requested from Congress an 
increase in the credit line provided by the Treasury, through 
the Securities and Exchange Commission, from the current $1 
billion to $2.5 billion. The current credit line has not 
changed since SIPA was passed in 1970.
SIPC Funding
Q.2. After the Madoff and Lehman failures, do you believe that 
the SIPC is adequately funded to pay for current and future 
losses? Do you think any changes need to be made to the funding 
of SIPC? If confirmed as Chairman, would you pledge to monitor 
and support the fund in order to maintain an adequate balance 
or notify the Committee if legislative changes are needed to 
adequately maintain the fund?

A.2. I believe that the issues surrounding funding adequacy 
need to be addressed. It is my understanding that SIPC's 
customer protection program is a major topic at virtually every 
SIPC Board Meeting, and that assessments are now based on net 
operating revenues of each SIPC member, as opposed to a flat 
fee. This change in assessment should garner over $480 million 
in 2010. The current board of SIPC has set a new ``target 
balance'' for the SIPC Fund of $2.5 billion, to match the 
proposed increase in the Treasury credit line. These revised 
methodologies of assessments are scheduled to remain in effect 
until that target is achieved. If confirmed, I would continue 
to monitor and support the current and possibly future 
assessment methodologies required to maintain an adequate SIPC 
Fund, and I would notify the Committee if legislative changes 
are required.
SIPC Internal Financial Controls
Q.3. In 2003, the SEC found that SIPC had inadequate controls 
over the fees and expenses awarded to trustees and their 
counsel. In 2004, the GAO stated that ``To address SEC's 
concern, SIPC is in the process of enhancing its controls for 
reviewing and assessing fees.'' Subsequently, SIPC has 
addressed the inadequacies. If confirmed as Chairman, would you 
seek to maintain strong internal financial controls at SIPC?

A.3. I am aware of the GAO report that addressed the SEC's 
concerns regarding SIPC's controls over the fees and expenses 
awarded to trustees and their counsel. I believe that the 
bedrock of any financial organization is strong institutional 
controls, and if confirmed, I pledge to maintain rigorous 
controls in order to maintain high levels of investor 
confidence.
SIPC Investor Education
Q.4. What is your view of the accuracy of the public 
understanding of the SIPC's function? Do you feel that there is 
investor confusion or ignorance over SIPC's role? Do you think 
there is a need for greater investor education in this regard?

A.4. As with most complex financial rules and regulation, it is 
somewhat difficult to ensure that the average investor is aware 
of his or her protections under the law. However, it is my 
understanding that SIPC has used a variety of methods to 
educate investors, including well-received television and radio 
public service announcements. There is always more work to do 
in the area of investor education, and if confirmed, I will 
work to ensure an expansion of those efforts.
Goals as SIPC Board Member
Q.5. As a potential SIPC Board Chairman, what issues would you 
focus on to improve the organization or its function?

A.5. If confirmed as Chairman of the SIPC Board, I would focus 
on assessing four primary areas: (1) investor education and the 
efficiency of SIPC's core mission of processing claims, (2) 
sharing information with our international partners in the 
global financial markets to hopefully create more seamless 
cross border protection of investors, (3) additional uses of 
technology including the digitizing of financial records to 
assist in SIPC's core mission, and (4) maintaining a high level 
working relationship with the SEC and the other self-regulatory 
organizations.
SIPC Relationship with the SEC
Q.6. As a potential SIPC Board Chairman, what relationship do 
you intend to pursue with the Securities and Exchange 
Commission, including the Division of Trading and Markets, and 
with this Committee and its staff?

A.6. As someone with nearly 10 years of experience as a staff 
attorney and Branch Chief at the Securities and Exchange 
Commission, it has been my view that SIPC and the SEC have had 
a very professional working relationship at both the staff 
level and the highest levels of both organizations. Complex 
matters such as Lehman, Madoff, and Stanford would never be 
resolved without clear and continual communication between the 
SEC and SIPC. If confirmed, it would be my intent to make 
contact with the Chairwoman Shapiro as one of my first orders 
of business. I have had the opportunity to work with Chairwoman 
Shapiro while at the SEC and expect that we would have a very 
strong working relationship. It is also my understanding that 
SIPC's current Chairman, SIPC's President and Chief Executive 
Officer, and SIPC's General Counsel have had numerous 
substantive meetings with the SEC over the last 18 months, and 
I would anticipate that, if confirmed, such meetings would 
continue to occur.
    Regarding SIPC's relationship with both the SEC Division of 
Trading and Markets and the Senate Banking Committee, if 
confirmed, I would be dedicated to a high level of cooperation, 
and I would expect the same from SIPC's President and CEO and 
SIPC's General Counsel.
SIPC and Pension Plan Participants
Q.7. What is your view of whether and under what circumstances 
beneficiaries of pension plans or investors in feeder funds 
that are customers of broker-dealers should be covered by SIPC?

A.7. The extension of SIPA protection to (1) individual pension 
plan participants and/or (2) investors in feeder funds will 
clearly have to be part of the issues to be addressed in any 
task force report. There may be some merit to the extension of 
coverage to beneficiaries of pension funds, but the issues 
become far more complicated when it comes to examining investor 
protections for indirect investors who are generally affiliated 
with hedge funds. The possible regulation of hedge funds in the 
securities area has been an ongoing discussion for the past few 
years, and any final resolution of this issue in SIPA should at 
a minimum take into consideration possible regulations from the 
SEC or other self-regulatory organizations.
                                ------                                

 RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ FROM ORLAN 
                            JOHNSON

Q.1. Madoff victims are concerned about the speed with which 
they have been repaid, with many still not paid and some with 
claims currently being litigated. What is your view of the 
progress, or lack thereof, SIPC has made in paying Madoff 
victims? If confirmed, what will you do to improve the 
efficiency with which SIPC pays Madoff victims?

A.1. From an outsider's point of view, it appears that the 
speed of processing certain Madoff claims has not progressed as 
quickly and smoothly as other matters handled by SIPC. If 
confirmed, reviewing this matter and seeking potential 
solutions would be a high priority.
    Based on my understanding so far, it appears that at least 
some of the delay has been due to the very unique sets of 
circumstances presented by the Madoff case. The fraudulent 
activities of Mr. Madoff went on for nearly 30 years. 
Initially, the trustee was not in complete control of many of 
the records that did exist, because the United States Attorney 
had control of the records on an active crime scene 
investigationsite. In addition, the records were not originally 
in a digital or searchable format making it difficult to 
transfer accounts to other brokerage firms. Additionally, in an 
effort to give all potential claimants a fair and reasonable 
opportunity to make their case for a potential claim, it is my 
understanding that SIPC and the trustee in the Madoff matter 
encouraged every possible claimant to file a claim, even if the 
claim was somewhat doubtful under the law. This obviously 
resulted in far more claims than there are accounts.
    If confirmed as Chairman, I pledge to review every aspect 
of the claims review process to determine whether it can be 
expedited.

Q.2. Madoff victims are concerned about how SIPC has used 
``clawback'' litigation to retrieve money from victims to 
contribute to the general pool for victims' funds. In your 
view, should SIPC use these ``clawbacks'' and under what 
circumstances? Should either SIPC or Congress change the 
``clawback'' policy for Madoff victims or not? Why?

A.2. To the best of my knowledge, the use of ``clawbacks'' has 
been a part of every bankruptcy, Ponzi Scheme, and SIPA case. 
Under certain circumstances, clawbacks have even been 
congressionally mandated and can provide a reasonable path to 
the equitable resolution for all investors that have been the 
victims of a Ponzi Scheme. Nevertheless, I believe that 
clawbacks have to be used on a case-by-case basis. Small 
investors, in particular, should be given the right to make 
their case that the clawback provisions would be financially 
detrimental to their current situation and that they should be 
exempted from such action. I believe that trustees should use 
reasonable discretion and common sense in deciding whether to 
apply clawbacks to certain investors--this should not be a one-
size-fits-all solution.
    I believe that this is also an issue that should be 
addressed to a task force that will review SIPC's operations. 
Before recommending any change in the law, I would want to 
examine the results of this review and the results of the 
Madoff case.

Q.3. Madoff victims are concerned that it's not fair to 
reimburse them based on what they originally invested, rather 
than what they believed their investment had grown to. This 
concerns what the proper definition of ``net equity'' is, and 
is currently being litigated by SIPC in bankruptcy courts. Do 
you believe Madoff victims should be reimbursed based on their 
original investment or their latest statement? Why?

A.3. The proper definition of ``net equity'' can be subject to 
both reasonable and differing interpretations. To the best of 
my knowledge, bankruptcy courts, previous SIPA cases, and cases 
involving other Ponzi Schemes, regardless of whether they arose 
under SIPA, have generally utilized the ``money in less money 
out'' principle. As noted above, the Madoff matter has very 
unique circumstances, and we must guard against utilizing any 
methods that would allow the perpetrator of an illegal scheme 
to determine what a claimant will receive. I believe that after 
the bankruptcy courts rule on this issue, SIPC should review is 
current methodologies to determine if the money in less money 
out principle is the appropriate for future activities.
                                ------                                

 RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN DODD FROM SHARON Y. 
                             BOWEN

Study of SIPA and SIPC
Q.1. After the failure of the Madoff and Stanford firms, some 
investors and observers are concerned that the extent of SIPC 
coverage is too narrow. Also, some have questioned the adequacy 
of the SIPC funding. Do you support a study of SIPA and SIPC 
that would have the ability to make recommendations to 
Congress?

A.1. I do support such a study of SIPA and SIPC to address a 
number of items, in addition to a review of its coverage and 
adequacy of funding. I believe that we all benefit from hearing 
different perspectives on how to better formulate the rules and 
polices that enhance the mission of SIPC.
    It is my understanding that SIPC has requested an increase 
in the credit line from its current level of $1 billion to $2.5 
billion. If confirmed, I plan to seek more information about 
this request and whether it is the appropriate level. Of 
course, any changes in SIPC's role would affect the level of 
funding required.
SIPC Funding
Q.2. After the Madoff and Lehman failures, do you believe that 
the SIPC is adequately funded to pay for current and future 
losses? Do you think any changes need to be made to the funding 
of SIPC? If confirmed as Chairman, would you pledge to monitor 
and support the fund in order to maintain an adequate balance 
or notify the Committee if legislative changes are needed to 
adequately maintain the fund?

A.2. If confirmed as Vice Chair of SIPC, I will monitor and 
support the adequacy of the fund and would notify Congress if I 
feel legislative action is warranted. I would also work with 
the SEC and any other appropriate regulatory authority. Having 
adequate funding is at the core of SIPC's ability to carry out 
its mandate. Further, monitoring the fund is good governance 
and should be a routine process.
SIPC Internal Financial Controls
Q.3. In 2003, the SEC found that SIPC had inadequate controls 
over the fees and expenses awarded to trustees and their 
counsel. In 2004, the GAO stated that ``To address SEC's 
concern, SIPC is in the process of enhancing its controls for 
reviewing and assessing fees.'' Subsequently, SIPC has 
addressed the inadequacies. If confirmed as Chairman, would you 
seek to maintain strong internal financial controls at SIPC?

A.3. If confirmed, I would seek to maintain strong internal 
controls and would routinely examine them to see if there are 
ways to improve them. I believe that making this process 
transparent is good governance and would also increase investor 
confidence in SIPC.
SIPC Investor Education
Q.4. What is your view of the accuracy of the public 
understanding of the SIPC's function? Do you feel that there is 
investor confusion or ignorance over SIPC's role? Do you think 
there is a needfor greater investor education in this regard?

A.4. I believe there is a need for greater investor education. 
I understand the public's frustration and confusion, which in 
large part goes to the core of the debate of SIPC's role. The 
public's misperception that SIPC was an insurance fund added to 
this confusion. As we study SIPC's role, I believe we should 
also examine ways to better educate and communicate with 
investors. As part of increasing investor education, we should 
have periodic public forums to directly communicate with 
investors. If confirmed, I would examine ways to further 
simplify communications in SIPC's brochures, website, and 
investor materials that accompany brokerage account statements.
Goals as SIPC Board Member
Q.5. As a potential SIPC Board Chairman, what issues would you 
focus on to improve the organization or its function?

A.5. Your questions highlight many of the key issues that I 
hope to examine, if confirmed. These include clarifying the 
role of SIPC and what it covers, determining the adequacy of 
its funding, implementing rigorous internal controls, and 
communicating to the public in a simple and comprehensive way. 
I also believe that our focus on investor education should be 
in tandem with the investor education materials and forums of 
the SEC, FDIC, FINRA and other regulatory authorities.
SIPC Relationship with the SEC
Q.6. As a potential SIPC Board Chairman, what relationship do 
you intend to pursue with the Securities and Exchange 
Commission, including the Division of Trading and Markets, and 
with this Committee and its staff?

A.6. If confirmed, I look forward to having a strong working 
relationship with the SEC, its Division of Trading and Markets 
and with your Committee and its staff. I think this is even 
more important today as the regulation of the financial market 
is being examined in a comprehensive way. Effective 
communication, accessibility, and sharing of ideas with these 
working groups will result in better solutions. It is my 
understanding that SIPC has had many such substantive meetings 
and has a strong working relation with the SEC and your 
Committee. If confirmed, I hope to further strengthen these 
relationships.
SIPC and Pension Plan Participants
Q.7. What is your view of whether and under what circumstances 
beneficiaries of pension plans or investors in feeder funds 
that are customers of broker-dealers should be covered by SIPC?

A.7. I believe that defining those circumstances would be a key 
part of the study of the SIPA and SIPC. Pension plans and 
feeder funds of the type we have today are vastly different 
from the customers of the 1960s. When the Ira Haupt brokerage 
firm was collapsing during that time, there were actual 
securities sitting in a vault, which were owned by specific 
named individuals. Today, determining who is the customer is a 
key issue. One's expectation of a fiduciary obligation of a 
trust holding one's pension account may be different from one's 
expectations when one gives investment control to an entity 
such as a hedge fund. It is these types of distinctions that 
need to be studied and clarified. Such examination should also 
be mindful of SIPC's key role of protecting customer accounts.
                                ------                                

 RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ FROM SHARON 
                            Y. BOWEN

Q.1. Madoff victims are concerned about the speed with which 
they have been repaid, with many still not paid and some with 
claims currently being litigated. What is your view of the 
progress, or lack thereof, SIPC has made in paying Madoff 
victims? If continued, what will you do to improve the 
efficiency with which SIPC pays Madoff victims?

A.1. I understand the dissatisfaction of the Madoff investors, 
both with respect to the length of time involved in the payment 
of claims as well as the determination of the amount of those 
claims. A three-decade ponzi scheme of the magnitude of the 
Madoff case is a huge challenge. Reconciling non-existent 
customer accounts with false customer statements would be 
challenging under any scenario. In addition, unlike customer 
accounts in the Lehman case, no Madoff customer accounts could 
be transferred to a solvent brokerage firm.
    If confirmed, addressing this issue would be a high 
priority. There are a number of ways we may be able to improve 
the efficiency of paying claims. First, the claims process 
should be examined to see if there are steps we can take to 
speed the process. In the case of fraud, such as in the Madoff 
case, we should determine if there is a way to work in tandem 
with any criminal investigation involving an examination those 
records. We should consider whether we could devote more 
resources upfront in terms of manpower and technology. We 
should also look at whether SIPC can improve its responsiveness 
in communicating with each investor.

Q.2. Madoff victims are concerned about how SIPC has used 
``clawback'' litigation to retrieve money from victims to 
contribute to the general pool for victims' funds. In your 
view, should SIPC use these ``clawbacks'' and under what 
circumstances? Should either SIPC or Congress change the 
``clawback'' policy for Madoff victims or not? Why?

A.2. The trustee in a bankruptcy proceeding has powers to 
recover funds from fraudulent conveyances, including through 
the use of ``clawbacks.'' These powers are subject to a review 
by the court. Nevertheless, I can certainly understand why 
investors may be concerned about the use of clawbacks. If 
confirmed to serve as Vice Chair of SIPC, I would hope to study 
this issue further before determining whether changes to SIPC's 
clawback policy are necessary with respect to the Madoff case.

Q.3. Madoff victims are concerned that it's not fair to 
reimburse them based on what they originally invested, rather 
than what they believed their investment had grown to. This 
concerns what the proper definition of ``net equity'' is, and 
is currently being litigated by SIPC in bankruptcy courts. Do 
you believe Madoff victims should be reimbursed based on their 
original investment or their latest statement? Why?

A.3. How we define ``net equity'' is a key issue for SIPC that 
must be clarified. As in the case of the clawback 
determination, it is important that all investors are treated 
fairly, and that no investor is unjustly enriched. This process 
should always be transparent, and no victim should feel as if 
he or she has been unfairly treated differently than others who 
are in the same group of claims. Because the bankruptcy court 
is currently addressing the definition of ``net equity,'' I 
would await the court's decision before recommending a course 
of action on this issue. The bankruptcy proceeding is a proper 
forum for all parties to have an opportunity to be heard. This 
forum also provides transparency, which is important in 
resolving these difficult issues.
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