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S. HRG. 112–321 

NOMINATIONS OF: MARTIN J. GRUENBERG, 

THOMAS J. CURRY, AND S. ROY WOODALL 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

ON 

NOMINATIONS OF: 

MARTIN J. GRUENBERG, OF MARYLAND, TO BE CHAIRPERSON, BOARD 

OF DIRECTORS, AND A MEMBER, BOARD OF DIRECTORS, FEDERAL 

DEPOSIT INSURANCE CORPORATION 

THOMAS J. CURRY, OF MASSACHUSETTS, TO BE COMPTROLLER OF THE 

CURRENCY 

S. ROY WOODALL, OF KENTUCKY, TO BE A MEMBER, FINANCIAL 

STABILITY OVERSIGHT COUNCIL 

JULY 26, 2011 

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

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

TIM JOHNSON, South Dakota, Chairman 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

MICHAEL F. BENNET, Colorado 

KAY HAGAN, North Carolina 

RICHARD C. SHELBY, Alabama 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

JERRY MORAN, Kansas 

ROGER F. WICKER, Mississippi 

DWIGHT FETTIG, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director 

CHARLES YI, Chief Counsel 

LAURA SWANSON, Policy Director 

BRIAN FILIPOWICH, Professional Staff Member 

ANDREW OLMEM, Republican Chief Counsel 

DANA WADE, Republican Professional Staff Member 

CHAD DAVIS, Republican Professional Staff Member 

DAWN RATLIFF, Chief Clerk 

LEVON BAGRAMIAN, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

TUESDAY, JULY 26, 2011 

Page 

Opening statement of Chairman Johnson ............................................................. 1 

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

Opening statements, comments, or prepared statements of: 

Senator Shelby .................................................................................................. 2 

WITNESSES 

Paul S. Sarbanes, a former U.S. Senator from the State of Maryland ............... 3 

Senator Ben Nelson of Nebraska ........................................................................... 4 

NOMINEES 

Martin J. Gruenberg, of Maryland, to be Chairperson and a Member, Board 

of Directors, Federal Deposit Insurance Corporation ....................................... 6 

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

Thomas J. Curry, of Massachusetts, to be Comptroller of the Currency ............ 7 

Prepared statement .......................................................................................... 27 

S. Roy Woodall, of Kentucky, to be a Member, Financial Stability Oversight 

Council .................................................................................................................. 8 

Prepared statement .......................................................................................... 28 

Responses to written questions of: 

Senator Corker .......................................................................................... 30 

(III)

(1) 

NOMINATIONS OF: 

MARTIN J. GRUENBERG, OF MARYLAND, 

TO BE CHAIRPERSON AND A MEMBER, BOARD OF DIRECTORS, FEDERAL DEPOSIT INSURANCE CORPORATION; 

THOMAS J. CURRY, OF MASSACHUSETTS, 

TO BE COMPTROLLER OF THE CURRENCY; AND 

S. ROY WOODALL, OF KENTUCKY, 

TO BE A MEMBER, FINANCIAL STABILITY OVERSIGHT 

COUNCIL 

TUESDAY, JULY 26, 2011 

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

The Committee met at 10:04 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Tim Johnson, Chairman of the Committee, presiding. 

OPENING STATEMENT OF CHAIRMAN TIM JOHNSON 

Chairman JOHNSON. Good morning. I call this hearing to order. 

Thanks to all of our nominees for joining us here today. I also want 

to extend a warm welcome to our witnesses’ family and friends who 

are here with us. 

Today we consider three nominees that will play a key role in the 

continued safety and soundness of our financial system as well as 

protecting consumers. 

We need strong leadership at all our financial regulators, and I 

am glad that the President has sent us three well-qualified individuals to fill openings at the Federal Deposit Insurance Corporation, 

the Office of the Comptroller of the Currency, and on the Financial 

Stability Oversight Council. Especially at this point in our economic and financial recovery, these are extremely important positions to be filled. 

Under the Wall Street Reform Act, the FDIC was given new authorities that put an end to too big to fail by allowing the orderly 

resolution of large, complex financial institutions. Those authorities 

are a key part of making sure taxpayers are never again forced to 

bail out Wall Street, and it is vital that the FDIC have a Senateconfirmed Chairman as it works to implement these rules. 

2 

Both the FDIC and OCC play crucial roles in our Nation’s ongoing housing recovery. Recent reports exposing abusive practices by 

mortgage servicers and banks—from excessive fees to fraudulent 

foreclosures—highlight the importance of continued oversight and 

regulation of the housing sector. 

The OCC and the FDIC also help ensure that consumers and 

small businesses continue to have access to credit. From maintaining consumers’ access to a stable mortgage market, to protecting 

small businesses’ access to capital to help create jobs, to promoting 

small community banks’ ability to provide credit to consumers in 

areas where big banks simply will not go, both these agencies have 

their work cut out for them. 

I will look to our nominees to place a priority on all these issues 

at their agencies. 

Last, the Financial Stability Oversight Council is a key pillar of 

the Wall Street Reform Act. It was created to identify systemic 

risks posed by large, complex financial institutions before they 

threaten the stability of our economy. I am pleased to consider the 

nomination of Mr. Woodall to be the voting insurance expert on the 

FSOC. AIG showed us how interconnected the insurance industry 

is with the health of our economy, and I am sure Mr. Woodall’s 

contribution as an FSOC member will be invaluable. 

The stability of our financial system, and of our economy, is vitally important, and so I hope we can move expeditiously on these 

nominations. 

I now turn to Senator Shelby for any opening remarks he may 

have. Senator Shelby. 

STATEMENT OF SENATOR RICHARD C. SHELBY 

Senator SHELBY. Thank you, Mr. Chairman. 

Today the Committee will consider several very important nominations, as the Chairman has said. Martin Gruenberg has been 

nominated to serve as Chairman of the Federal Deposit Insurance 

Corporation. He is no stranger to the Banking Committee, having 

served right here with us on the staff for over 19 years. For the 

past 6 years, he serve as Vice Chair of the Federal Deposit Insurance Corporation. 

As Chairman, he would oversee the FDIC at a challenging time. 

Due to the financial crisis and the weak economy, bank failures 

continue at a steady pace. It will be no easy task for the FDIC to 

resolve these failed banks in a manner that protects the Deposit 

Insurance Fund. 

The FDIC must also decide how it will undertake the new regulatory responsibilities that it acquired under the Dodd-Frank Act. 

I hope to hear how Mr. Gruenberg would approach both of these 

tasks. In particular, I would like to learn his views on whether the 

FDIC’s new resolution authority will be sufficient to end too big to 

fail and prevent further Government bailouts. 

Also before us today is Thomas Curry, who has been nominated 

to be the Comptroller of the Currency. As the regulator of our largest banks, the Comptroller plays a key role in ensuring the safety 

and soundness of our whole banking system. Accordingly, I hope to 

hear today Mr. Curry’s views on capital requirements. One of the 

3 

lessons of the financial crisis should be the importance of maintaining strong capital requirements, especially for large global banks. 

Finally, Roy Woodall has been nominated to served as a member 

of the Financial Stability Oversight Council. He will be a sole member on the Council specializing in insurance issues and the first 

person to hold this position. He will be working on a Council that 

includes the Treasury Secretary, the Federal Reserve Chairman, 

and all of the heads of the major financial regulatory agencies. 

Since Mr. Woodall will not be supported by the staff of a financial 

regulator, unlike the other members of the Council, I am interested 

in hearing how he believes he can most effectively express his 

views and help the Council monitor systemic risk. 

The Federal Government has historically paid little attention to 

insurance. The failure of AIG, however, demonstrated that the Federal Government needs to do a far better job monitoring risk in this 

critical facet of our financial markets. Hopefully Mr. Woodall can 

improve the Federal Government’s understanding of the risk presented by insurers and in so doing help prevent another AIG. 

Mr. Chairman, I look forward to hearing from the nominees here 

this morning. 

Chairman JOHNSON. Are there any other Members who would 

like to make any remarks? 

[No response.] 

Chairman JOHNSON. Now for a brief introduction of our three 

nominees. Senator Paul Sarbanes, former Chairman of the Senate 

Banking Committee, will introduce Martin Gruenberg. Senator 

Sarbanes. 

STATEMENT OF PAUL S. SARBANES, A FORMER U.S. SENATOR 

FROM THE STATE OF MARYLAND 

Senator SARBANES. Chairman Johnson, thank you very much. 

Senator Shelby, Senator Corker, Senator Toomey, Senator Moran, 

I am pleased to be back in the Committee room, and I am mindful 

of the Chairman’s gentle admonition when he introduced me when 

he said ‘‘brief introduction.’’ 

[Laughter.] 

Senator SARBANES. I will do my best to abide by that. It is hard 

for a former Senator when he gets the microphone to do that. 

I am very pleased to have the opportunity to come before the 

Committee today to introduce the President’s nominee for Chairman of the FDIC, Marty Gruenberg. Marty worked on the staff of 

the Senate Banking Committee for almost two decades, both as 

staff director of the Subcommittee on International Finance and 

Monetary Policy and as senior counsel, and I think all would agree 

made an extraordinary contribution to the work of the Committee, 

and I should take a moment just to recognize all staff to the Committee who do a terrific job day in and day out. I have enormous 

respect and admiration for those who staff the Committee, and this 

Committee in particular has had very high standards over the 

years. 

During his time on the Committee, he was involved in all of the 

major legislation enacted by the Banking Committee, including the 

Financial Institutions Reform and Recovery Act, the Federal Deposit Insurance Corporation Improvement Act—highly relevant to 

4 

this nomination—Gramm-Leach-Bliley, Sarbanes-Oxley, and so 

forth. 

In August of 2005, he was appointed by President George W. 

Bush to the FDIC as Vice Chairman and, of course, was recommended out by this Committee and confirmed by the Senate. 

As FDIC Vice Chairman, Marty was closely involved in all of its 

efforts to respond to the financial crises we have encountered. He 

actually served as Acting Chairman of the FDIC for 8 months, from 

November of 2005, shortly after he went on the board, until June 

of 2006 because Chairman Don Powell, a close friend of President 

Bush’s, left to go coordinate the recovery effort in the gulf coast in 

the aftermath of Hurricane Katrina. 

Actually, 4 months after he left the Committee, he was Acting 

Chairman of the FDIC. I called him up and said, ‘‘Marty, I read 

in the American Banker this morning that you are the Acting 

Chairman of the FDIC in 4 months’ time.’’ So he gave a kind of 

embarrassed laugh, and he said, ‘‘Yes, that is right.’’ I said, ‘‘Marty, 

is this a great country or what?’’ 

[Laughter.] 

Senator SARBANES. I simply want to close with this observation. 

Given his experience on the Banking Committee and at the FDIC, 

Marty is extremely well prepared to serve as its Chairman. He 

would bring right from the beginning stability and continuity to the 

work of the FDIC, which, as both the Chairman and the Ranking 

Member indicated, is a very important consideration. I simply say 

to the Members of the Committee I know Marty to be a person of 

exceptional ability and character, and I very strongly commend him 

to you for this position. 

Thank you all very much. 

Chairman JOHNSON. Thank you, Senator Sarbanes. 

I will now introduce Thomas Curry. Thomas Curry took office on 

January 12, 2004, as a member of the Board of Directors of the 

FDIC for a 6-year term. Mr. Curry also serves as the Chairman of 

the NeighborWorks America Board of Directors. Prior to joining the 

FDIC’s Board of Directors, Mr. Curry served five Massachusetts 

Governors as the Commonwealth’s Commissioner of Banks. He also 

served as the Chairman of the Conference of State Bank Supervisors from 2000 to 2001. 

Senator Ben Nelson will now introduce Roy Woodall. 

STATEMENT OF BEN NELSON, A U.S. SENATOR FROM THE 

STATE OF NEBRASKA 

Senator NELSON. Good morning, Mr. Chairman and Ranking 

Member Shelby and Members of the Committee. Thank you for 

conducting this hearing today and for giving me the opportunity to 

offer a few comments on an outstanding nominee, Roy Woodall, 

who has been nominated to be a member of the Financial Stability 

Oversight Council. 

When Roy asked me to be here with him today to introduce him, 

I said I would be honored to do so because Roy and I go back a 

ways, and then some. In fact, I first got to know Roy in the year 

‘‘The Sound of Music’’ won the Academy Award for Best Picture 

and the first TV episode of ‘‘Star Trek’’ was broadcast. You know 

what it cost to send a letter first class then? Five cents. 

5 

Now, that might seem like a hundred years ago. Not quite, but 

it was 45 years ago. You see, I first met Roy in 1966 when he was 

appointed Commissioner of the Kentucky Insurance Department 

and I was working in the Nebraska Department of Insurance at 

the time. Over these years I have followed his career closely. We 

have kept in touch, and we have many common friends. 

As we all know, the Dodd-Frank law calls for appointment of ‘‘an 

independent insurance expert’’ to make sure that the insurance 

viewpoint is acknowledged in the Financial Stability Oversight 

Council’s work. I can think of no one better qualified to be that 

independent insurance expert than Roy Woodall. He is an outstanding leader who possesses a sharp mind, has the background 

and knowledge needed to do the job well. Equally important, he 

has the wisdom, too. 

He brings an invaluable perspective gained through a half-century of experience in insurance and insurance regulation. Roy 

Woodall has worked at the State level as an insurance attorney 

and helped rehabilitate troubled insurance companies. He has been 

a national leader serving as the president of the National Association of Life Companies and after a merger served as a senior official in the American Council of Life Insurers, and in more recent 

years as a senior insurance analyst for the Department of Treasury. 

Mr. Chairman, I ask that the Committee work diligently and 

quickly to work toward the confirmation of Roy Woodall. He will 

fulfill the duties of this position with skill, wisdom, integrity, and, 

I believe, great success. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator Nelson. I will look forward to hearing the nominee’s testimony. 

Will the nominees please rise and raise your right hand? Do you 

swear or affirm that the testimony that you are about to give is the 

truth, the whole truth, and nothing but the truth, so help you God? 

Mr. GRUENBERG. I do. 

Mr. CURRY. I do. 

Mr. WOODALL. I do. 

Chairman JOHNSON. Do you agree to appear and testify before 

any duly constituted committee of the Senate? 

Mr. GRUENBERG. I do. 

Mr. CURRY. I do. 

Mr. WOODALL. I do. 

Chairman JOHNSON. Please be seated. 

Please be assured that your written statement will be part of the 

record. Please also note that Members of this Committee may submit written questions to you for the record, and you should respond 

to these questions promptly in order for the Committee to proceed 

on your nomination. 

I invite all the witnesses to introduce your family and friends in 

attendance before beginning your statement. 

Mr. Gruenberg, please begin. 

6 

STATEMENT OF MARTIN J. GRUENBERG, OF MARYLAND, NOMINATED TO BE CHAIRPERSON AND A MEMBER, BOARD OF 

DIRECTORS, FEDERAL DEPOSIT INSURANCE CORPORATION 

Mr. GRUENBERG. Thank you very much, Mr. Chairman. If I may, 

I would like to introduce my wife, Donna, who is sitting right behind me here. 

Chairman Johnson, Ranking Member Shelby, Members of the 

Committee, it is my privilege to appear before you as the President’s nominee to serve as Chairman and Member of the Board of 

the Federal Deposit Insurance Corporation. 

I would like to thank President Obama for the honor of this nomination and Chairman Johnson and Ranking Member Shelby for 

scheduling this confirmation hearing. 

I have had the privilege of serving as Vice Chairman and Board 

Member of the FDIC since 2005, having been nominated by President Bush and confirmed by the Senate. From November 2005 to 

June 2006, as Senator Sarbanes indicated, I served as Acting 

Chairman following the departure of former Chairman Donald 

Powell. I am now again serving as Acting Chairman following the 

recent departure of former Chairman Sheila Bair. 

Prior to joining the FDIC, as you know, I worked for Senator 

Sarbanes on the staff of the Senate Committee on Banking, Housing, and Urban Affairs from January 1987 to August 2005. During 

that period I had the opportunity to work on the major legislation 

acted on by the Committee including FIRREA, FDICIA, the RiegleNeal Interstate Banking Act, the Gramm-Leach-Bliley Act, and the 

Sarbanes-Oxley Act. 

In addition to working on some of the key pieces of legislation 

governing the operations of the FDIC, I have had the opportunity 

to serve on the Board as it responded to the most severe financial 

crisis in the United States since the 1930s. I think it is fair to say 

that the deposit insurance, resolution, and supervision functions of 

the FDIC proved critical to maintaining public confidence and financial stability during the crisis. 

The experiences of serving on the staff of the Senate Banking 

Committee and on the Board of the FDIC have been good preparation to serve as Acting Chairman and, if confirmed, Chairman of 

the FDIC during what remains a challenging period ahead. If I 

may say, there are some positive signs. Although over 880 insured 

institutions remain on the FDIC’s problem bank list, we believe 

that number may have peaked and may start heading down in the 

near future. Similarly, although the FDIC closed 157 failed banks 

last year, we are projecting a substantially smaller number of bank 

failures this year. Fifty-eight banks have failed thus far this year. 

That is compared to 103 at this time last year. The FDIC’s Deposit 

Insurance Fund, which had a negative balance as a result of the 

costs of the bank failures, actually moved into positive territory at 

the end of June. 

In terms of priorities, the FDIC will have significant new responsibilities to implement under the Dodd-Frank Act for the resolution 

of systemically significant financial institutions. As the primary 

Federal regulator of the majority of our country’s community 

banks, the FDIC carries a particular responsibility for the future 

of this crucial segment of our financial industry. Finally, the FDIC 

7 

will also continue to play a leading role in expanding access to insured financial institutions to all Americans as a vehicle for economic opportunity and financial security. 

Mr. Chairman and Ranking Member Shelby, it has been a great 

privilege for me to serve on the Board of the FDIC for almost 6 

years now. I have come to have a deep respect for the professionalism and dedication of the staff of the FDIC who have performed with such distinction during this recent difficult period. I 

believe that the FDIC, which celebrated its 75th anniversary just 

3 years ago, has proven itself to be one of our country’s great public 

institutions. It is certainly the greatest honor of my career to have 

been nominated by the President to serve as Chairman of the FDIC 

and to be considered by this Committee for confirmation. 

Thank you very much, and I will be pleased to respond to your 

questions. 

Chairman JOHNSON. Thank you, Mr. Gruenberg. 

Mr. Curry, please begin. 

STATEMENT OF THOMAS J. CURRY, OF MASSACHUSETTS, 

NOMINATED TO BE COMPTROLLER OF THE CURRENCY 

Mr. CURRY. Chairman Johnson, Ranking Member Shelby, and 

Members of the Committee, thank you for this opportunity to appear before you today. I am honored that President Obama has 

nominated me to be Comptroller of the Currency. 

Eight years ago, I had the honor to be nominated by President 

Bush and to come before this Committee for confirmation hearings 

to be a Board Member of the Federal Deposit Insurance Corporation. It has been a tremendous privilege to serve at the FDIC during one of the most tumultuous economic periods in our Nation’s 

history. I take great pride in the work of the FDIC and its very 

dedicated staff who maintained the American people’s trust in the 

FDIC deposit insurance guarantee and the fundamental safety and 

soundness of our financial system. Independent and professional 

bank regulatory agencies like the FDIC and the Office of the Comptroller of the Currency are one of the strengths of our financial system. 

Prior to my Federal service, I served five successive Massachusetts Governors as the Commonwealth’s Commissioner of Banks for 

approximately 10 years and served for 7 years as a senior State 

bank regulatory official and attorney. My State bank regulatory experience also coincided with the New England banking crisis of the 

late 1980s and early 1990s. During this period of regional economic 

disruption and subsequent recovery, I gained invaluable experience 

and perspective which served me well as an FDIC Board Member. 

My 25 years of experience as a Federal and State bank supervisor has underscored the fundamental importance of a safe and 

sound banking industry to our economy, particularly in times of 

stress. Economic recovery and prosperity requires a healthy, independently regulated banking system that has both the financial capacity and confidence to extend credit to individuals and businesses. 

In sum, I believe my public service career has given me invaluable financial safety and soundness and public protection reguVerDate Nov 24 2008 11:19 Apr 26, 2012 Jkt 048080 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\07-26 NOMINATIONS OF GRUENBERG, CURRY, AND WOODALL\HEA
8 

latory experience and judgment to capably serve as the Comptroller 

of the Currency, if confirmed. 

It has been the greatest professional honor of my life to serve my 

country during this difficult time. Should the Senate choose to confirm me, I look forward to the opportunity to lead the team at the 

Office of Comptroller of the Currency as it serves the individuals, 

businesses, and communities that benefit from a safe, sound, and 

fair national bank system. 

Thank you, Chairman Johnson and Ranking Member Shelby, for 

this opportunity, and I look forward to your questions. 

Chairman JOHNSON. Thank you, Mr. Curry. 

Mr. Woodall, please begin. 

STATEMENT OF S. ROY WOODALL, OF KENTUCKY, NOMINATED 

TO BE A MEMBER, FINANCIAL STABILITY OVERSIGHT COUNCIL 

Mr. WOODALL. Chairman Johnson, Ranking Member Shelby, and 

distinguished Members of the Committee, it is my honor to appear 

before you today, and I am also deeply honored to be President 

Obama’s nominee for this position. And I would also like to thank 

you and your staff for the time you have spent with me, helping 

to move my nomination forward. 

With me today is my wife, Jane, my best friend and life partner 

of 53 years, along with our four sons and their respective families. 

Jane is a former English teacher and school principal and now 

serves as the General Manager of the Smithsonian Chamber Music 

Society at the National Museum of American History. Our sons, in 

chronological order: Sam, the oldest, is an attorney in Washington; 

Brock is a hardwood flooring contractor in Georgia; Claiborne 

works with the Virginia Natural Heritage Program in Abingdon, 

Virginia; and Garner, our youngest, is an intelligence analyst with 

the FBI. When we get together with our daughters-in-law and nine 

grandchildren, there are 19 of us, and I think most of them are 

here today filling up this space. 

If approved by this Committee and confirmed by the Senate, I 

know that the constant support and guidance of this wonderful 

family will continue to enlighten my thoughts and actions as I 

carry out the duties as a member of the Financial Stability Oversight Council, better known as FSOC. 

As stated earlier, FSOC was created by the Dodd-Frank Wall 

Street Reform and Consumer Protection Act to identify risk to U.S. 

financial stability, promote market discipline, and respond to 

emerging threats. The FSOC is comprised of existing Federal financial services regulators as voting members, and both Marty and 

Tom would be serving on that as heads of the two agencies. However, since there is no existing Federal financial services regulator 

in the insurance field, the bill provided for a Presidential appointment of an independent person with insurance expertise in order 

to assure that insurance, which represents a substantial portion of 

the United States financial system, is appropriately recognized and 

accommodated within the new framework. 

I frankly know of no one who could technically qualify as an undeniable ‘‘expert’’ in all aspects of the highly diversified and constantly changing insurance industry, as well as its State-based regVerDate Nov 24 2008 11:19 Apr 26, 2012 Jkt 048080 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\07-26 NOMINATIONS OF GRUENBERG, CURRY, AND WOODALL\HEA
9 

ulatory regime and its international position. However, if I am confirmed, I do believe that my half-century of experience in insurance 

would provide FSOC with the insurance perspective that was envisioned by the Dodd-Frank Act. 

Insurance is in my blood. My grandfather, C.A. Woodall, started 

selling insurance from a mule-drawn wagon in 1904 and continued 

to be a leading insurance producer in Princeton and western Kentucky for over 50 years. My father, Roy Woodall, Sr., started his 

own general agency in Paducah, Kentucky, in the 1920s and ran 

it until he retired in 1973. 

I was first introduced to the regulatory side of insurance as a law 

student in the summer of 1961 at the University of Kentucky when 

I was an intern at the Kentucky Insurance Department. After getting my law degree in 1962, I continued to work as an attorney for 

the department, became general counsel in 1964, and was appointed commissioner in 1966. After the completion of my term, I 

practiced law with a firm in Louisville, Kentucky, until 1972, at 

which time I became a court-appointed rehabilitator of three publicly owned life insurance companies that had been seized by the 

State. The rehabilitation was concluded successfully in 1976, and 

from then until 1980 I worked as the assistant to the president of 

a family owned insurance company in Louisville, Kentucky. At that 

time I was selected to become the President of an Atlanta-based insurance trade association, the National Association of Life Companies, which merged in 1993 with the American Council of Life Insurers, or ACLI, as many of you know it. Following the merger I 

served ACLI as managing director of issues and chief counsel for 

State relations until my retirement in 1999. I then became Of 

Counsel to an Atlanta-based law firm and was pretty well set on 

that type of work for the rest of my life, but then 9/11 hit. 

As with many others I know, the terrorist attacks of 9/11 

changed the focus of my life and my career. I became an insurance 

consultant to the Congressional Research Service as it addressed 

the needs of Congress in developing the Terrorism Risk Insurance 

Act, or TRIA. Following the passage of TRIA, I was asked by Treasury to assist in its implementation of the new law. I continued to 

serve as Treasury’s senior insurance policy analyst for 8 years, 

monitoring all types of insurance issues and the State insurance 

regulatory system. 

In all of these insurance-related areas, my experiences taught me 

lasting lessons about the various aspects of insurance. Also, I believe that those experiences qualify me to serve in the position to 

which I have been nominated. If confirmed by the Senate, I pledge 

to work closely with the other members of FSOC, and to continue 

expanding my knowledge of, fascination with, and passion for the 

complex world of insurance and the substantial role that it plays 

in our financial system. 

Thank you again for opportunity to appear before you today, and 

I look forward to answering any questions that you might have. 

Chairman JOHNSON. Thank you, Mr. Woodall. 

We will now begin the question-and-answer period. Will the clerk 

please put 5 minutes on the clock for Members’ questions? 

10 

Mr. Gruenberg, can you tell us how the new Office of Complex 

Financial Institutions positions the FDIC to address its new responsibilities? 

Mr. GRUENBERG. Yes, Mr. Chairman. The key new responsibility 

that the FDIC has under the Dodd-Frank Act is responsibility for 

the Title II authorities for the orderly liquidation of systemically 

significant financial companies. In addition, we have a responsibility under Title I for the resolution plans that systemically significant companies will be required to prepare. 

These are really new responsibilities and authorities created 

under this Act and implementing them in a credible way is really 

the major new challenge for the agency. In fact, in some sense, it 

is a major new challenge for any agency of any financial regulator 

around the world. And to undertake this responsibility, as you indicate, we have established a new Office of Complex Financial Institutions which will have three key responsibilities. 

First, there will be a group within that office responsible for 

monitoring the condition of the large systemically significant companies from the standpoint of resolvability. 

Second, there will be a group responsible for overseeing the development of the resolution plans that will be required of all systemically significant companies under the Act. That is a joint authority that the FDIC shares under the law with the Federal Reserve and we are in the process of developing a rule for the implementation of that responsibility. Those resolution plans have to 

meet the standards of the Bankruptcy Code. In addition to the 

plans that the institutions will prepare, the FDIC will be preparing 

our own plans for the resolution of these companies using our Title 

II authorities. 

And finally, the third group within this office will be responsible 

for dealing with the cross-border relations with the foreign supervisors for the international operations of these systemic companies. 

Many of them, as you know, have extensive foreign activities and 

an effective resolution of these companies really will require cooperation and coordination across borders. 

This is our major new challenge. We are in the process of setting 

this office up. We expect it to be fully operational by the end of this 

year. And in some sense, from an operational side, it is our top priority in terms of the implementation of the legislation. 

Chairman JOHNSON. Mr. Curry, as Comptroller, you will be expected to be independent, exercise independent judgment, and act 

independently from the Treasury Department. Are you prepared to 

act independently and use your own judgment? 

Mr. CURRY. Senator, yes, I believe so. I have, I think, a 25-year 

history of acting independently as both a member of the FDIC, an 

independent agency of the United States, and as Bank Commissioner for the Commonwealth of Massachusetts. As Bank Commissioner, in particular, you are called upon often to make decisions 

that affect individuals, institutions, and communities. Many times, 

those decisions are unpopular. However, I believe in my past history and experience, I have demonstrated the independence to fairly and reasonably apply the rules and laws that govern bank regulation. 

11 

Chairman JOHNSON. Mr. Woodall, as the FSOC works to complete its rulemaking to designate Systemically Important Financial 

Institutions, or SIFIs, you will be the lone insurance voice voting 

on this rule. How will you approach this crisis, and do you think 

insurance companies should be designated? 

Mr. WOODALL. Well, as far as the first part, fortunately, there 

are two other insurance members that are members of FSOC, even 

though they are not voting members. One is the Director of the 

Federal Insurance Office that was created by the Dodd-Frank Act 

and the other one is a State regulator, John Huff from Missouri, 

who represents the State regulators. So there are really three of us 

that would be working on insurance issues, but the appointed position that I have been nominated for is the only voting member. 

Certainly, I will be working in cooperation with the other two 

members and with all members of FSOC in trying to bring the insurance perspective. 

Now, as far as the question as to whether insurers are systemic, 

I think that has to be done on a case-by-case basis and looking 

under the hood of each insurance company to see whether or not 

they are systemic. But I think, generally, that most people agree 

and I agree that if a company follows a traditional core model of 

insurance products and insurance practices, they are likely not to 

be systemic. However, you do not know that until you see what sort 

of products they are selling, what sort of interconnectedness there 

might be with either other insurance companies or noninsurance 

companies or banking institutions, and I think that is why it does 

have to be done on a case-by-case basis. 

Chairman JOHNSON. Senator Shelby. 

Senator SHELBY. Thank you, Mr. Chairman. 

Basel III—Mr. Gruenberg and Mr. Curry, both the FDIC Chairman and the Comptroller, as you well know, play important roles 

in ensuring that our Nation’s banks hold sufficient capital to guard 

against another financial crisis. Recently, the Basel Committee 

reached an agreement on the new Basel III capital accords with the 

aim to increase capital requirements for large international banks. 

Mr. Gruenberg and Mr. Curry, do you support higher capital requirements for large financial institutions, and what is your assessment of the new Basel III capital accords? Will they work and will 

they be sufficient? Mr. Gruenberg. 

Mr. GRUENBERG. Thank you, Senator Shelby. We do support the 

new Basel III agreements. The FDIC is a member of the U.S. delegation to the Basel Committee. I have participated as the FDIC’s 

representative at Basel Committee meetings. And I think we view 

the Basel III agreement as a step forward to strengthen capital 

both in the United States and, quite importantly, internationally. 

Historically, U.S. institutions have generally had higher levels of 

capital than some of the large foreign financial institutions and 

Basel III will have the effect of both strengthening the quality and 

amount of capital under the U.S. standards and, importantly, apply 

those standards internationally for both the leverage ratio and a 

risk-based capital standard. So from both a domestic standpoint 

and an international standpoint, it seems to us to be a significant 

step forward. 

Senator SHELBY. Mr. Curry. 

12 

Mr. CURRY. Senator, I would agree with Vice Chairman 

Gruenberg that capital is critically important to the health of our 

financial system. At the FDIC, I think we have a demonstrated position of looking for both higher quantity and quality of capital. I 

would also offer that this past crisis and earlier crises have demonstrated that when institutions or the banking system needs capital is when it is the hardest to obtain it. So having strong capital 

levels in place in advance of an economic downturn is critically important. 

With respect to Basel III, Basel III, I think, achieves those important goals of stronger capital on an international basis and will 

work to potentially eliminate any unlevel playing field between domestic banking institutions and foreign institutions. 

Senator SHELBY. Preemption language—I will address this to Mr. 

Curry. There is an ongoing debate on whether the Dodd-Frank Act 

changed the standard for determining when national banks are 

subject to State law. The OCC and the authors of the preemption 

amendment in Dodd-Frank have taken one position. The Treasury 

Department has disagreed with that view. Mr. Curry, what are 

your views about how the Dodd-Frank preemption provisions have 

been interpreted by the OCC and the Treasury? 

Mr. CURRY. I understand that the actual language of Dodd-Frank 

is a matter of some controversy between interested parties. Generally speaking, I think the principle is clear from the Constitution 

that the Federal law supercedes conflicting State law and that is 

an important concept to remember. 

Senator SHELBY. Is that the position that the Comptroller’s Office takes? 

Mr. CURRY. I believe so. It is a Federal agency—— 

Senator SHELBY. Are you aware of the position that the Treasury 

Department is taking? 

Mr. CURRY. I understand that the Treasury Department did file 

a public comment on the OCC’s position. I think that having a comment on the record is probably the most appropriate way to express 

those views. Ultimately, I think it is incumbent upon the OCC to 

maintain its independence as a bank regulatory agency and to remain free from any undue influence from any external source. 

Senator SHELBY. Mr. Gruenberg, a report by the Government Accountability Office—we call it GAO, as you know—concluded that 

prompt corrective action has not prevented sizable losses to the Deposit Insurance Fund. The GAO found that every bank that underwent prompt corrective action because of capital deficiencies and 

failed since 2008 has produced a loss to the Deposit Insurance 

Fund. The GAO also found that the, and I will quote, ‘‘the presence 

and timeliness of enforcement actions were inconsistent.’’ Their 

words. For example, more than 80 percent of the banks that failed 

were on the regulatory watch list that you alluded to earlier for 

more than a year on average before failing. 

Do you agree with GAO’s findings, and what steps would you 

take as Chairman to improve prompt corrective action and protect 

the Deposit Insurance Fund? What would you do differently than 

we have been doing? 

Mr. GRUENBERG. Thank you, Senator. I do agree with the findings of the GAO report. I think one of the lessons we have learned 

13 

from this crisis is that capital tends to be a lagging indicator and 

capital is the trigger for prompt corrective action, so that during 

the course of this crisis, to the extent we are relying on capital as 

an early warning device for problems at institutions, it did not 

prove as effective as we would have liked. 

I should point out that PCA still proved important because it established, once an institution reaches that critically undercapitalized level of 2 percent, it provides for certainty in terms of the resolution process, which is quite important. But in terms of an early 

warning indicator, it really has not proven as effective as it could 

have been. 

I should note that for each failing institution, the Inspector General of the FDIC has to prepare a report on the causes of the failure—these are called material loss reviews—and our Inspector 

General in the course of conducting these reviews identified three 

key factors common to failing institutions. One was rapid growth. 

Two was concentration in commercial real estate. And three was 

reliance on broker deposits and other volatile deposits. 

I actually chair the Audit Committee at the FDIC, which oversees our IG. We have asked the IG to prepare a set of recommendations for us based on these material loss reviews as to how prompt 

corrective action could be improved and we expect to receive that 

report in the near future. We will be glad to share the results of 

that report. 

Senator SHELBY. With the Committee? Thank you. Thank you, 

Mr. Chairman. 

Chairman JOHNSON. Senator Reed. 

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

Mr. Gruenberg, Chairman Bernanke earlier this—a few months 

ago, actually, or weeks—said that the Federal Reserve is committed to rulemaking on resolution authority of the so-called living 

wills for large financial institutions by late this summer. What is 

the FDIC’s schedule with respect to this rulemaking? 

Mr. GRUENBERG. Late summer, Senator. We have been working 

in tandem with the Federal Reserve. It has actually been a very 

cooperative process. We are really near—we issued a joint rule earlier this year. I think we are near completion of the final rule and 

we do expect to issue the final rule in August. 

Senator REED. Very good. Thank you so much. 

You are the primary regulator of community banks and they are 

vital to our economy. They usually are the ones that are doing the 

most aggressive lending to small business and have the best record 

in terms of lending to small business and that creates jobs. 

Your view of the impact of Dodd-Frank on the community banks 

and community banking. Many of the provisions of Dodd-Frank 

were specifically excluded from application to small banks given 

that, one, they were not a major cause, and two, this dynamic contribution they make to local economies. But can you give me a brief 

sort of view of where you think they stand at the moment. 

Mr. GRUENBERG. Yes, Senator. As you note, the FDIC is the primary Federal regulator of the majority of community banks in the 

United States, so I think it is fair to say we bear a particular responsibility for the future of that important segment of our financial industry. I would note community banks account for about 11 

14 

percent of the banking assets in the United States but account for 

nearly 40 percent of the small business lending done by all insured 

institutions in the U.S. So they really occupy a very important 

niche in our financial system. 

On balance, I believe they have come through this episode reasonably well. They have been impacted. Of the 380 or so institutions that have failed in the course of this episode, over 300 of 

them have been institutions with assets less than $1 billion. But 

it is worth noting that even with that, we still have nearly 7,000 

community banks in the United States and most of them have 

worked their way through this difficult period in good shape and 

are really positioned now to continue to play their important role. 

In regard to Dodd-Frank, you noted accurately that in many of 

the provisions that are applied to the larger institutions, smaller 

institutions are excluded, and I would note in particular the deposit insurance provisions of Dodd-Frank, on balance, I think, are 

actually helpful to community banks. The increase in the limit on 

deposit insurance to $250,000 is something that community banks 

have sought and has proven to be during the course of this crisis 

a valuable source of attracting liquidity to community banks, which 

proved quite stabilizing. 

In addition, the Act changes the assessment base on which deposit insurance premiums are charged from deposits to assets. The 

consequence of that is actually to shift the burden of funding deposit insurance more to institutions with assets over $100 billion, 

and for institutions with assets under $10 billion, they will actually, in the aggregate, receive a 30 percent reduction in their deposit insurance premiums under the Act. So it will mean real 

money for community banks and should be helpful to them. 

So, on balance, particularly those provisions, I think were positive. 

Senator REED. Thank you very much. 

Mr. Curry, just first a quick comment. You have served at the 

State level under a number of Governors—Governor Dukakis, Governor Weld, Governor Celluci, Governor Swift, and Governor Romney, both Republicans and Democrats. So you have been essentially 

recognized from both sides of the aisle as a consummate professional and I think that is a quality that we are looking for in the 

next OCC Director—Comptroller. 

The other factor, too, is I think you bring a valuable perspective 

to the efforts because a lot of the issues, as has been suggested by 

some of the questions, involves this constant sort of discussion of 

and rebalancing of the lines between appropriate national authority and local State banking regulations, local State banking institutions. 

So I am particularly pleased that you have been nominated and 

I wish you well. I also, too, want to join Senator Shelby, who has 

been one of the most vigorous advocates for strong capital rules, to 

reinforce his point about the need for the U.S., we hope—I hope— 

the OCC Comptroller, to have significant capital in place. 

Mr. CURRY. Thank you, Senator. 

Senator REED. And since my time has expired, you are going to 

provide a valuable sort of expertise because the world of insurance 

is—it is not a Federal world here in the United States, but interVerDate Nov 24 2008 11:19 Apr 26, 2012 Jkt 048080 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\07-26 NOMINATIONS OF GRUENBERG, CURRY, AND WOODALL\HEA
15 

nationally, particularly. I note that in Great Britain, 30 percent of 

the assets in their financial system are held by insurance companies, not by financial institutions, or banks, rather, but 15 percent 

in the United States. So both looking within the United States and 

looking internationally, your views are going to be extremely important, and once again, I would hope that we will move quickly 

to confirm you and get you on the FSOC. Thank you for your service. Thank you. 

Chairman JOHNSON. Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman, and I thank all of 

you for being here today and being willing to serve the way that 

you have offered yourself, and I thank your families for being here. 

I know you certainly will not receive many tough questions with all 

of these family members in the audience, so we are glad they are 

here and we are glad to see all of them. 

I will start with you, Mr. Vice Chairman, soon to be Chairman. 

When Dodd-Frank was being debated and discussed, the previous 

Chairman did an outstanding job of convincing the majority of 

members of the Senate and the House to turn you into a super-entity with orderly liquidation abilities. As we were leading up to 

that, many of the rating agencies began saying that because they 

really thought that too big to fail was going to end, they were 

thinking about downgrading these institutions. 

Now that the law is law and people have interpreted what it 

really says, the big four institutions in our country are receiving 

disproportionately higher ratings and benefits. So it is evident that 

most of the world does not believe that we have ended too big to 

fail and I am wondering if there is anything that you are going to 

come see us about to change orderly liquidation so that people 

know that, in fact, we are in this country going to end the prospect 

of any entity being too big to fail. 

Mr. GRUENBERG. Thank you, Senator. That is really a critically 

important question, if I may say. It is our view that the authorities 

provided under Title II and Title I of the new law really are sufficient to deal with the issue. The challenge to us and what I think 

we are going to have to demonstrate with credibility to the financial markets is our capability to implement the authorities that we 

have been given, and that was really the basis of my response to 

the question that Chairman Johnson asked earlier. We have to 

demonstrate the capability to close a systemically significant financial company without creating a significant disruption to the financial system as a whole. There is no greater priority for us. 

It does not surprise me that much that the markets are in some 

sense taking a ‘‘show me’’ attitude. Simply providing an authority 

is not a demonstration of the capability and willingness to carry it 

out. And I think the challenge to the FDIC, in particular, will be 

to demonstrate both that we have the capacity and the willingness 

to implement it. 

Senator CORKER. Do you think the Bankruptcy Code ought to be 

tremendously expanded so that people know that unless there is 

some really unusual situation, there is a better vehicle for institutions through bankruptcy? 

Mr. GRUENBERG. I think the way the law is structured, the 

premise is that the Bankruptcy Code is still the first recourse for 

16 

dealing with the failure of a financial company. It is only in the circumstance—and frankly, I hope and expect it to be rare—where a 

determination is made that, in effect, if you are going through the 

bankruptcy process, it could present issues for the system as a 

whole, in which case you would turn as a final resort to the orderly 

liquidation authority under Title II. I think it is a last measure to 

avoid a disruption to the system, and I think that is as it should 

be. 

Senator CORKER. Would you be willing to work with us to tighten 

up orderly liquidation and to make sure that these large institutions are not enjoying significant benefits because people believe 

that they are too big to fail, and to work with us on streamlining 

the Bankruptcy Code so that it would actually work better for 

these large highly complex institutions? 

Mr. GRUENBERG. Yes, sir. 

Senator CORKER. OK. Thank you. We talked a little bit in our office. I think you are aware that one of the biggest complaints community bankers have across this country is the lack of consistency 

with the examiners in charge. You know it is a problem. So a big 

part of your problem, and I think you know this, is going to be to 

get the culture better as it relates to that issue, not in any way 

criticizing the former Chairman. We had these same conversations. 

But the examiners in charge, to make sure their careers are not 

interrupted by making mistakes, are no doubt being overly zealous 

and really creating a self-fulfilling prophecy around our country. I 

think you are aware of that and I hope you will work to end that. 

Mr. GRUENBERG. Senator, I will have no higher priority than the 

community bank responsibilities, and we will work with our examiners to assure that examinations are done in as balanced and fair 

a way as possible. 

Senator CORKER. I just have a few seconds. To you, Mr. Curry, 

I think we all are concerned about this Federal preemption issue. 

I know that you were State Commissioner of Banking for Massachusetts back in 2000 and made a quote, and I just want you to 

reaffirm that this is not where you are, but we suggest that—this 

is you—‘‘we suggest that Federal preemption itself sometimes has 

the unintended consequence of limiting State regulators’ ability to 

protect consumers and ensure a healthy banking and lending industry. Many States responded through statute or regulation to 

protect consumers from predatory practices. However, it has been 

the perhaps unintended consequence of Federal preemption that 

has made it difficult for States to offer the protection their consumers demand.’’ 

So you are going to be in a position, obviously, of making sure 

that we have uniform national standards, and yet seem to have in 

the past indicated that you question that, and we just want you to 

affirm that you absolutely are not going—you are going to be independent, you are not going to let Treasury brow-beat you into a different position, and that you are denouncing this former position. 

Mr. CURRY. I want to assure you, Senator, that I will zealously 

enforce and uphold the National Bank Act, particularly where it relates to Federal preemption. 

What I would want to point out is that I think that the DoddFrank Act’s provisions actually resolve some of the issues that I 

17 

was highlighting in that statement. There is now much more clarity in terms of the role of State Attorneys General, the applicability 

of Federal law to it and its relation to State consumer financial 

laws. And you also have the creation of the CFPB to address any 

gaps in terms of consumer protection. So I do think that my statement in the past is actually addressed by Dodd-Frank. 

Senator CORKER. Thank you both, and Mr. Woodall, you are apparently universally loved. 

[Laughter.] 

Senator CORKER. I may have a question for you later, but we will 

see. Thank you. 

Chairman JOHNSON. Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Let me in this atmosphere that we are in here in Washington 

right now, let me strike a bipartisan note with Senator Corker and 

say to you, Mr. Gruenberg, that his observation about community 

banks and just banks in general, you know, we are sitting on the 

Committee saying to those institutions, particularly those that we 

helped save in 2008, we would like to see you lend, and then we 

listen to a chorus of voices that say, well, everything you want us 

to do, we are being told totally different by examiners. 

So the question is, how do you strike the pendulum in the right 

way? We are not talking about speculative lending, obviously. For 

those of us who had to cast the votes to change the course of 2008, 

we do not want to see that again. By the same token, many of us 

have the observation that the pendulum has swung so far that we 

are creating a crisis in terms of getting access to capital and moving this marketplace and creating an economy that can thrive 

again. Without that access to capital, it is not going to happen. And 

if I have listened to one bank president or board of directors after 

another, I get a common thread, and when I get a common thread, 

I do not always believe it is contrived. 

So I hope that you—you know, we have performing assets that 

are being asked to be recapitalized. We have areas of lending in 

which there are basically examiners saying, do not do it. So I understand that there were some who were not the cop on the beat 

when they needed to be, but that does not make them now the 

total opposite. So I would like to hear how you will direct to find 

this balance in the pendulum so we can get this economy moving 

again. 

Mr. GRUENBERG. Thank you, Senator. That really is one of the 

key questions. The FDIC has six regional offices around the country. Over the course of this year, I had the opportunity to visit each 

of our regional offices, and in each office, I met with a group of our 

examiners without senior management present, except for one 

meeting where the senior manager kind of snuck in. But the rest, 

it was without management present to try to hear from them what 

they were seeing in terms of the institutions they were examining. 

What we tried to communicate to them was the need for balance 

and to work with the institutions to enable them to the maximum 

extent they can to carry out their basic mission, which is extending 

credit to creditworthy borrowers. 

I will tell you, for what it is worth, it is my sense that most of 

our examiners are career professionals who try to carry out their 

18 

job in a balanced way. I have no doubt that there are some that 

go too far or go overboard. I think most are trying to do their best 

in a difficult environment. 

What I will say to you is we are staying in close touch. People 

often talk about a disconnect between the policy makers in Washington and the examiners in the field. We will do our best to maintain or see that that connection is followed through, to stay in close 

touch with our examiners, and to encourage them to exercise judgment and discretion to allow these institutions to carry out their 

basic purpose. That is certainly going to be one of my top priorities. 

Senator MENENDEZ. Well, I appreciate that. 

Let me ask both of you, Mr. Curry and yourself, I am concerned 

that if the qualified residential mortgage definition being worked 

out by regulators is not broad enough, it could hurt a housing market that is already suffering enormously in terms of being part of 

our national economic recovery, especially if you perceive high 

downpayments of 20 percent or more. Can you comment on that? 

Mr. CURRY. I would be happy to, Senator. We are in the process 

at the FDIC, and with the other Federal bank regulatory agencies, 

of reviewing the comment letters, the numerous comment letters on 

both the risk retention proposal and its qualified residential mortgage exemption provisions. The issues you raised of whether or not 

the proposal appropriately excludes a large number of American 

families and households from home ownership is an issue that we 

are looking at very carefully and are mindful of the consequences 

to those families and individuals as well as our economy. 

Mr. GRUENBERG. Senator, I just might add, as you know, the 

agencies went forward with a Notice of Proposed Rulemaking on 

this issue. When the FDIC Board approved that Notice of Proposed 

Rulemaking, I commented at the time that we will have to strike 

a balance between trying to address the problems made evident in 

this crisis in terms of securitization and proper underwriting of 

mortgages with access to mortgage credit for creditworthy borrowers. I think that is the challenge of this rule. We extended the 

comment period. We expect to get additional comment and are 

seeking it and I think we understand a close review of this rule is 

going to be necessary. 

Senator MENENDEZ. Well, we are going to be looking at it with 

great interest. 

Finally, Mr. Curry, I will not go through all of the specifics of it, 

but we have sent, along with ten of our colleagues and about a 

dozen House colleagues, to the OCC as well as to other agencies 

the issue of alleged reports on mortgage modifications that suggests that the continued practice of robo-signing continues to be a 

reality, which is not acceptable and is not acceptable under the 

law. It should not be acceptable for the regulatory agencies. We are 

being told—we have been told by the regulatory agencies that that 

practice has ended, yet there are reports that it has not. 

So my question is, the question that is put before all of you who 

have jurisdiction in this field, is will you disclose the results of the 

foreclosure reviews on a bank-by-bank basis, including the letters 

of engagement for the independent consultants performing those 

reviews and the action plans by the mortgage services? I have got 

to believe—I know that there is some claim of proprietary realities. 

19 

The Congressional Research Service has said that, in fact, it can 

be released in the public interest. There has to be some medium 

here by which you can assure those of us who are both policy makers as well as the public that this has ended. 

Mr. CURRY. Senator, I think the robo-signing mortgage foreclosure issue is an extremely important one that affects individuals, families, the banking industry, and the overall mortgage finance industry. I think it is critically important that we work to 

restore credibility to that system. I think that the framework that 

is under the cease and desist orders—consent orders that were 

issued by the OCC and the other Federal regulatory agencies— 

were an important first step in trying to restore that credibility. I 

think, as well, the greater transparency that the agencies can show 

in how failures in that system are being corrected and individuals 

who have been harmed will find redress is critically important, and 

I think the agencies and the OCC, in particular, if I were confirmed, should work to be as transparent as possible, consistent 

with any governing supervisory or legal restrictions. 

Senator MENENDEZ. Well, we will look forward to that. Thank 

you, Mr. Chairman. 

Chairman JOHNSON. Senator Moran. 

Senator MORAN. Mr. Chairman, thank you very much. 

Mr. Gruenberg, Mr. Curry, Mr. Woodall, thank you for your current and past public service. Thank you for your interest in providing even additional leadership. 

Mr. Woodall, you seem to have avoided any kind of serious conversation today. I only have to suggest to you that you must be a 

good person because your grandchildren are so well behaved. 

[Laughter.] 

Senator MORAN. Congratulations. 

I want to focus my attention on community banks, as has been 

at least in conversation today a topic of conversation. You indicate, 

Mr. Gruenberg, in your testimony, ‘‘As the primary Federal regulator of the majority of our country’s community banks, the FDIC 

carries a particular responsibility for the future of this crucial segment of our financial industry.’’ 

I have genuine concern that community banks are on the verge 

of becoming a thing of the past, and in large part I believe that because of the increasing regulatory burden that is being placed upon 

those banks. 

I do not know whether you would know a number, but I would 

be interested in knowing what the percentage of regulatory cost is 

in comparison to assets or loans or deposits as compared to larger 

financial institutions. But in my view—and Kansas has lots of community banks. They are the ones, as you outlined, making loans to 

small business, in our case to farmers and ranchers. It is a different kind of environment. If you are seeking a loan at a community bank and you are someplace in a larger city with a larger financial institution, those personal relationships are important in 

rural States like mine. And I have had this conversation with every 

regulator that has sat in this room, and I would admit, Mr. 

Gruenberg, you have been in this room much longer than I have. 

But I have had this conversation at every opportunity, and I always get the same answer, which is, ‘‘We take special considerVerDate Nov 24 2008 11:19 Apr 26, 2012 Jkt 048080 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\07-26 NOMINATIONS OF GRUENBERG, CURRY, AND WOODALL\HEA
20 

ation, we account for community banks. We understand their importance.’’ But there is virtually no end to the concern or criticism 

raised by our commercial banks about the regulatory environment 

which they in and the amount of money which is being spent to 

comply with regulations, the additional staff that is necessary. And 

it would be one thing, I suppose, if community banks were not succeeding because they no longer serve an economic purpose, but that 

is not the case. In my view, the demise, the fewer number of community banks is much more related to the environment in which 

they are finding themselves having to work. 

One of our larger banks in our State, their CEO told me earlier 

this year that community banks for the first time in history are 

calling the large bank asking, ‘‘Are you at all interested in buying 

us? It is no longer any fun. The regulatory environment and costs 

that we encounter no longer make this a profitable venture.’’ 

So you see continued consolidation. The numbers are out there. 

We have fewer community banks as a result of some of the closures 

that have occurred. But in large part, it seems to me it is because 

they are consolidating with other banks in order to spread the regulatory costs among more assets and more loans. 

And so while I appreciate your reassurance, it is somewhat like 

you said, Mr. Gruenberg, about the too big to fail in response to 

Mr. Corker. We are waiting for the evidence that something is different in regard to those community banks. And so, in particular, 

I want to—and I certainly agree with you that the FDIC insurance 

issues that you raise I think are a positive development. But let me 

particularly raise with you the disparate treatment of capital 

standards between community banks and large financial institutions. 

The definition of ‘‘well capitalized’’ seems to have a different definition in regard to whether or not you are a large or small bank, 

and many of our community banks are being regulated in which 

they are required to have a much higher percentage of capital than 

our smaller banks—I am sorry, than our larger banks, many of 

which those larger banks are under other regulatory restrictions as 

a result of their financial condition. 

So my point is that there is a double standard, in my view, between the capital requirements that small banks, community banks 

are required to have and that of larger financial institutions across 

the country, including on Wall Street. 

And so my question is: Will you continue to regulate higher capital levels for the so-called too small to save community banks and 

in a sense let Wall Street—I do not want to say that—in a sense 

have a double standard, a disparate standard compared to Wall 

Street financial institutions? 

Mr. GRUENBERG. Well, Senator, let me try to respond to that. It 

is my understanding that, as a matter of the rules that apply 

today, they are the same across the board. I think it is fair to say 

that community banks as a general matter actually have higher 

capital than larger institutions. 

I think from my own perspective, one of the important authorities of the new law is to impose enhanced prudential requirements 

on our largest systemically significant institutions for precisely the 

point you make. They do derive an implicit benefit from their size, 

21 

and to a certain extent, their capital requirements have not fully 

reflected those benefits. And that approach is reflected in the Basel 

III accords that Senator Shelby asked about earlier. In addition, 

there is provision to impose what in effect is an additional surcharge on our largest institutions. That authority is under the 

Dodd-Frank Act. There is a new international agreement to impose 

a particular additional level of capital on our largest banks in an 

effort to both have them account for the systemic risks that they 

pose and to bring about some greater leveling of the playing field 

with the smaller institutions. 

I agree with you that that playing field has not been level. We 

should make efforts to try to bring greater balance to it. One of the 

things we can do under the new law which I think is important, 

in addition to the capital and prudential requirements, is to develop the capacity to place these large institutions into receivership 

because until you can do that, that also contributes to the funding 

advantage that they have. 

Senator MORAN. True. 

Mr. GRUENBERG. So on that end of it, I think the FDIC carries 

a responsibility in regard to the large institutions, and as you 

noted and I noted earlier, we have a responsibility for the small institutions. 

Senator MORAN. Well, there is a belief among bankers that there 

is an attitude at the FDIC that small banks are more difficult to 

regulate, it takes more assets, the sense that you do not believe— 

not you personally, but the FDIC does not believe the management 

skills and capabilities are there. So I assume that in this setting 

you are going to tell me that is not the case, but I would just reaffirm what I continually hear about a belief that the FDIC has— 

I would not say a policy but an approach that says it would be a 

lot better for our economy if there were a lot fewer financial institutions. I will tell you for the economy of Kansas that would not 

be the case. 

Mr. GRUENBERG. Senator, I appreciate you raising that point. I 

would say to you, it is my view we do not have that attitude toward 

community banks. Quite the contrary, we think they are really 

quite different in operation, and in a positive way, from the large 

institutions. In some sense, their business model, if anything, has 

been validated during the course of this crisis. They stay close to 

their customers. They rely on core deposits. They generally are a 

source of stability during difficult times. And they serve a function 

in their communities that is really quite unique and quite important for small business, for rural areas, for small towns that otherwise might not have access to financial services. 

I will note we do have a Community Bank Advisory Committee. 

It is made up of 14 community banks from around the country. Our 

board meets with those bankers three times a year to hear directly 

from them what they and their colleagues are encountering in the 

field. We are endeavoring to stay close to this issue. I know we are 

less than perfect, but I do commit to you this is something that will 

be a matter of continuing attention for us. 

Senator MORAN. Thank you, Mr. Gruenberg. 

Thank you, Mr. Chairman. 

22 

Chairman JOHNSON. Mr. Gruenberg and Mr. Curry, it seems to 

me that when producing a cost/benefit analysis of each individual 

rule your agency writes, you must also take into account the cost 

of the financial crisis and the harm inflicted on consumers, investors, and the overall economy. How will you ensure that your agencies are taking into account the costs of this crisis when evaluating 

the costs and benefits of the new rules? 

Mr. CURRY. Thank you, Chairman Johnson. I think it is critically 

important that all the agencies—the FDIC and the OCC in particular—identify and appropriately weigh all the costs as well as 

the benefits for any proposed rulemaking. And as you identified, 

the cost of the crisis I think is an appropriate factor to be weighed 

in that price as the long-term cost especially. 

What is critical, I think, to any rulemaking is to have an open 

process and to encourage input from all affected sources, and I 

think the FDIC, which I have been associated with for the last 8 

years, almost 8 years, has been very effective in reaching out to interested parties to hear their views and to help assess the costs as 

well as the benefits of any rule that comes before the agency. 

Mr. GRUENBERG. Mr. Chairman, I would just add to that. When 

the FDIC has a rulemaking to do, we put together an interdivisional team to oversee that process, and the way that works is that 

team comes up with a series of options for implementing the regulation. And the whole purpose of the exercise is to evaluate the different options, in effect to weigh the balance between costs and effectiveness. And when we come out with a proposed rule, quite 

often in our Notice of Proposed Rulemaking not only do we put forward the proposal that is agreed to by that working group, but we 

will also ask for comment on the other options that are developed 

by that group in some sense to get a full airing of the different approaches for implementation, to get the benefit of public comment 

for the series of options. 

And I would note that our Inspector General undertook a review 

of three of our rulemakings pursuant to the Dodd-Frank Act, in effect to evaluate the economic analysis that we do. And I refer you 

to that report. I think it is fair to say that that report found our 

process pretty credible and balanced. So I think we do a pretty 

good job. I am sure we could do better. 

Chairman JOHNSON. Mr. Curry, do you anticipate a good and effective partnership with the CFPB in the rulemaking process and 

other functions? 

Mr. CURRY. I think there is an important opportunity to collaborate between the bank regulatory agencies and the CFPB. I think 

that issues and rulemakings in this area really tend to have elements of both disciplines at stake. I would use as an example the 

implications from a financial safety and soundness or risk management standpoint of the nontraditional mortgage loan products. 

They have both elements of consumer protection and also, as we 

saw in the financial crisis, significant financial consequences to our 

banking system. If I were to be confirmed, I think it would be beneficial as a two-way street for the OCC to communicate to the CFPB 

the financial context in which a proposal would operate and also 

for the OCC, who will retain the ability to—or the responsibility to 

23 

supervise institutions under $10 billion, to have the opportunity to 

be aware of emerging or potential consumer protection issues. 

So, in summary, I think there really is a need for close collaboration and communication between the OCC, the banking agencies, 

and the CFPB. 

Chairman JOHNSON. Senator Shelby. 

Senator SHELBY. I would like to pick up on Senator Corker’s 

question about too big to fail and so forth. I would think that the 

ideal situation would be a message from the regulators that nobody 

is too big to fail, and that if you do reckless things and you are— 

the Comptroller of the Currency, the FDIC, and the Fed are the big 

regulators here—that we are going to close you down no matter 

who you are. Of course, we are going to try to prevent as regulators 

you from getting into this kind of trouble if you are hands on. But 

we all realize that a lot of—not everything, but a lot of the blame 

for the financial crisis, a lot of it came from the regulators right 

here. When I was Chairman of this Committee, I asked questions 

of the regulators, not you but the others, the Federal Reserve 

Chairman, the FDIC Chairman at that time, the Comptroller: 

What are the conditions of the bank? We had a hearing on this. I 

hope that the Chairman will continue this, to hold a hearing specifically on the condition of our banking system. And what was the 

answer right here? Right here in this Committee. The banks are 

in good shape. But they were not. They were undercapitalized and 

in a lot of instances not well managed, hands off instead of hands 

on. 

You do have the capacity now—I think you could have had it 

then, more capacity. But I agree with Mr. Gruenberg here that you 

have got to have the will, and you have got to send the message. 

Part of it is a message, but they will not believe you. What is the 

old story you have heard all your life? If you tell somebody you are 

going to shoot them if they cross the line and you do not shoot 

them, they have got you, you know? The question is: What are you 

as the regulators are going to do your job? You got the capacity but 

you have the will. I hope you do. And I think that the regulatory 

environment is tough. The Senator from Kansas got into that. 

I have never worried about—maybe I should—a lot of the small 

banks bringing systemic risk in this country, on this country or 

into this country. But some of the biggest institutions will—have 

and will again. I do worry about Europe, and as the Chairman 

said, the Acting Chairman, a lot of our European banks are undercapitalized, much more so than us. Basel III, which we have all 

worked on. I think you have got the framework, and the question 

is: Will you as the regulators implement Basel III capital? 

My question to both of you: If a foreign bank—let us say it is a 

German bank or a French bank or a British bank—doing business 

in this country if they are undercapitalized, do you have any power 

over them at all as to their capital standards doing business in this 

country? Because they could cause systemic risk here. Marty? 

Mr. GRUENBERG. Senator, to the extent the foreign bank has a 

subsidiary here subject to our regulatory authorities, the answer to 

that is yes. 

24 

Senator SHELBY. And what does that mean? Does that mean you 

have some capacity to deal with their capital, their overall capital? 

Because their overall capital is what matters. 

Mr. GRUENBERG. To the extent that we are dealing with the capitalization of their foreign operations, that is something we do not 

have direct authority over, and that is, frankly, why these international agreements are very important, not only to reach them 

but to monitor compliance with them. And we really need to develop that capacity to monitor not only our own compliance but 

what the major foreign institutions are doing, because at the end 

of the day it does all come together, and risk there poses risk here 

as well. 

Senator SHELBY. Mr. Curry, do you have any thoughts on that? 

Because some of those big foreign banks are doing business here, 

and some of them, as you know, had some shaky foundations just 

a few years ago. 

Mr. CURRY. I would have to agree with Vice Chairman 

Gruenberg that, with respect to the OCC, they would have to be 

a supervised entity by the OCC to take action. 

I would comment that I agree with you that you cannot legislate 

supervisory fortitude. It is something that you have to bring to the 

table, and I would hope, if confirmed, that I would do that. And I 

also believe that it is appropriate for all the banking agencies to 

look at, as the Vice Chairman mentioned with the material loss reviews, how we could have done better and to learn from the lessons 

of this recent crisis. 

Senator SHELBY. Mr. Woodall, I know you have gotten by here 

today, but I think that we basically believe that you are well qualified for this position. And you do have a well-behaved, nice-looking 

family. That does not hurt anything. 

[Laughter.] 

Senator SHELBY. But this position is unique here, as you pointed 

out and as we know, the position you have been nominated to serve 

on. You will be the first person to hold the insurance seat on the 

Financial Stability Oversight Council and how you carry out your 

duties will set important precedents for the role of this position 

that we will have in the future on the Council. 

What contributions do you see—and I know you do not see every 

crisis because they have not emerged yet—can this position make 

to improve the effectiveness of the Council from the perspective of 

insurance companies? And you will be, as you well know, in the 

company of some very powerful people, including the two here perhaps, and also the Chairman of the Federal Reserve and others at 

Treasury. How do you see your position there? I do not believe you 

are going to be a shrinking violet. You did not take the position for 

that. 

Mr. WOODALL. No, I do not intend to be a shrinking violet. 

Senator SHELBY. I do not believe you are a shrinking violet. I see 

four sons behind you. 

[Laughter.] 

Mr. WOODALL. In trying to bring the perspective of the insurance 

world—and it is not just the insurance industry or just the regulators or the international part—it is all of that. 

25 

Senator SHELBY. And a lot of financial products are created 

through the insurance company, just like banks, in a different way. 

Mr. WOODALL. That is right. As I said, those products sometimes, 

when they veer away from what the normal model, take on more 

risk, and they could, in some way have systemic risk involved in 

them. But that is what we have to look at, and we have to look 

at it from a company-by-company aspect. But the fact that the insurance industry is such a large part of financial services, I think 

that in all the issues that come before FSOC, there essentially is 

an insurance element, in the total picture of financial services. And 

as I said, this is a new creation, and I am an independent voice. 

I will not be speaking for the Administration or for the industry, 

or for the State regulators. I have to take all of that into account, 

along with what is happening at the international level, and vote 

my conscience. 

Senator SHELBY. But there are some big insurance companies 

that could cause systemic risk to this country. I hope they do not 

ever, but, you know, they are such a size they could. But they, too, 

have got to have standards of capital and working capital and everything that goes with it, have they not? 

Mr. WOODALL. Well, you have been talking about Basel with the 

banks. 

Senator SHELBY. Right. 

Mr. WOODALL. Well, on the insurance side, you have got Solvency 

II—— 

Senator SHELBY. And prevent another AIG. We do not want to 

go down that road. 

Mr. WOODALL. And I think I tried to address that. 

Senator SHELBY. You did. 

Mr. WOODALL. As I said before, history showed us that when an 

insurance company, that one in particular, went beyond what the 

traditional model was, it got us into trouble. And you have to look 

under the hood and make sure there are not any regulatory gaps 

in there that would bring systemic risk. That is why the FIO was 

set up, too, to help identify any sort of regulatory gaps and to help 

develop within the Federal Government positions both nationally 

and internationally on insurance issues. 

Senator SHELBY. Well, thank you. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. I thank the witnesses for your testimony 

and for your willingness to serve our Nation. 

I ask all Members of this Committee to submit questions for the 

record by noon this Friday, July 29, and I request that the witnesses submit your answers to us by close of business on Tuesday, 

August 2, so that we can move your nominations forward as quickly as possible. 

This hearing is adjourned. 

[Whereupon, at 11:32 a.m., the hearing was adjourned.] 

[Prepared statements and responses to written questions supplied for the record follow:] 

26 

PREPARED STATEMENT OF CHAIRMAN TIM JOHNSON 

Thanks to all of our nominees for joining us here today. I also want to extend 

a warm welcome to our witnesses’ family and friends who are here with us. 

Today we consider three nominees that will play a key role in the continued safety and soundness of our financial system as well as protecting consumers. 

We need strong leadership at all our financial regulators, and I am glad the President has sent us three well qualified individuals to fill openings at the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and on 

the Financial Stability Oversight Council. 

Particularly at this point in our economic and financial recovery, these are extremely important positions to be filled. 

Under the Wall Street Reform Act, the FDIC was given new authorities that put 

an end to ‘‘too big to fail’’ by allowing the orderly resolution of large, complex financial institutions. Those authorities are a key part of making sure taxpayers are 

never again forced to bail out Wall Street, and it is vital that the FDIC have a Senate confirmed Chairman as it works to implement these rules. 

Both the FDIC and OCC play crucial roles in our Nation’s ongoing housing recovery. Recent reports exposing abusive practices by mortgage servicers and banks— 

from excessive fees to fraudulent foreclosures—highlight the importance of continued oversight and regulation of the housing sector. 

The OCC and FDIC also help ensure that consumers and small businesses continue to have access to credit. From maintaining consumers’ access to a stable mortgage market, to protecting small businesses’ access to capital to help create jobs, to 

promoting small community banks’ ability to provide credit to consumers in areas 

where big banks simply won’t go, both these agencies have their work cut out for 

them. 

I will look to our nominees to place a priority on all these issues at their agencies. 

Lastly, the Financial Stability Oversight Council is a key pillar of the Wall Street 

Reform Act. It was created to identify systemic risks posed by large, complex financial institutions before they threaten the stability of our economy. I am pleased to 

consider the nomination of Mr. Woodall to be the voting insurance expert on the 

FSOC. AIG showed us how interconnected the insurance industry is with the health 

of our economy, and I am sure Mr. Woodall’s contribution as an FSOC member will 

be invaluable. 

The stability of our financial system, and of our economy, is vitally important and 

so I hope we can move expeditiously on these nominations. 

PREPARED STATEMENT OF MARTIN J. GRUENBERG 

TO BE CHAIRPERSON AND A MEMBER, BOARD OF DIRECTORS, FEDERAL DEPOSIT

INSURANCE CORPORATION

JULY 26, 2011 

Chairman, Johnson, Ranking Member Shelby, Members of the Committee, it is 

my honor to appear before you as the President’s nominee to serve as Chairman and 

Member of the Board of the Federal Deposit Insurance Corporation. 

I would like to thank President Obama for the honor of this nomination, and 

Chairman Johnson and Ranking Member Shelby for scheduling this confirmation 

hearing. 

I have had the privilege of serving as Vice Chairman and Board Member of the 

FDIC since August 2005. From November 2005 to June 2006 I served as Acting 

Chairman following the departure of former Chairman Donald Powell. I am now 

again serving as Acting Chairman following the departure of former Chairman Sheila Bair. 

Prior to joining the FDIC, as you know, I worked for Senator Sarbanes on the 

staff of the Senate Committee on Banking, Housing, and Urban Affairs from January 1987 to August 2005. During that period I had the opportunity to work on the 

major legislation acted on by the Committee including FIRREA, FDICIA, the RiegleNeal Interstate Banking Act, the Gramm-Leach-Bliley Act, and the Sarbanes-Oxley 

Act. 

In addition to working on some of the key pieces of legislation governing the operations of the FDIC, I have had the opportunity to serve on the Board of the FDIC 

as the FDIC responded to the most severe financial crisis in the United States since 

the 1930s. I think it is fair to say that the deposit insurance, resolution, and supervision functions of the FDIC proved critical to maintaining public confidence and financial stability during the crisis. 

27 

The experiences of serving on the staff of the Senate Banking Committee and on 

the Board of the FDIC have been good preparation to serve as Acting Chairman 

and, if confirmed, Chairman of the FDIC during what remains a challenging period 

ahead. There are positive signs. Although over 880 insured institutions remain on 

the FDIC’s problem bank list, we believe that number may have peaked and may 

start heading down in the near future. Similarly, although the FDIC closed 157 

failed banks last year, we are projecting a substantially smaller number of bank 

failures this year. Fifty-eight banks have failed thus far this year compared to 103 

at this time last year. The FDIC’s Deposit Insurance Fund, which had been in negative balance as a result of the costs of the bank failures, moved into positive territory at the end of June. 

In terms of priorities, the FDIC will have significant new responsibilities under 

the Dodd-Frank Act for the resolution of systemically significant financial institutions to implement. As the primary Federal regulator of the majority of our country’s community banks, the FDIC carries a particular responsibility for the future 

of this crucial segment of our financial industry. Finally, the FDIC will also continue to play a leading role in expanding access to insured financial institutions to 

all Americans as a means for economic opportunity and financial security. 

Mr. Chairman, it has been a great privilege for me to serve on the Board of the 

FDIC for almost 6 years. I have come to have a deep respect for the professionalism 

and dedication of the staff of the FDIC who have performed with such distinction 

during this recent difficult period. I believe that the FDIC, which celebrated its 75th 

anniversary just 3 years ago, has proved itself to be one of our country’s great public 

institutions. It is certainly the greatest honor of my career to have been nominated 

by the President to serve as Chairman of the FDIC, and to be considered by this 

Committee for confirmation. 

Thank you very much. I would be pleased to respond to your questions. 

PREPARED STATEMENT OF THOMAS J. CURRY 

TO BE COMPTROLLER OF THE CURRENCY

JULY 26, 2011 

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

thank you for the opportunity to appear before you today. I am honored that President Obama has nominated me to be Comptroller of the Currency. 

Eight years ago, I had the honor to be nominated by President Bush and to come 

before this Committee for confirmation hearings to be a Board Member of the Federal Deposit Insurance Corporation (FDIC). It has been a tremendous privilege to 

serve at the FDIC during one of the most tumultuous economic periods in our Nation’s history. I take great pride in the work of the FDIC and its very dedicated staff 

who maintained the American people’s trust in the FDIC deposit insurance guarantee and the fundamental safety and soundness of our financial system. Independent and professional bank regulatory agencies like the FDIC and the Office of 

the Comptroller of the Currency are one of the strengths of our financial system. 

Prior to my Federal service, I served five successive Massachusetts Governors as 

the Commonwealth’s Commissioner of Banks for approximately 10 years and served 

for 7 years as a senior State bank regulatory official and attorney. My State bank 

regulatory experience also coincided with the New England banking crisis of the late 

1980s and early 1990s. During this period of regional economic disruption and subsequent recovery, I gained invaluable experience and perspective which served me 

well as an FDIC Board Member. 

My 25 years of experience as a Federal and State bank supervisor, has underscored the fundamental importance of a safe and sound banking industry to our 

economy particularly in times of stress. Economic recovery and prosperity requires 

a healthy, independently regulated banking system that has both the financial capacity and confidence to extend credit to individuals and businesses. 

In sum, I believe my public service career has given me invaluable financial safety 

and soundness and public protection regulatory experience and judgment to capably 

serve as the Comptroller of the Currency, if confirmed. 

It has been the greatest professional honor of my life to serve my country during 

this difficult time. Should the Senate choose to confirm me, I look forward to the 

opportunity to lead the team at the Office of Comptroller of the Currency as it 

serves the individuals, businesses, and communities that benefit from a safe, sound, 

and fair national bank system. 

Thank you, Chairman Johnson and Ranking Member Shelby for this opportunity. 

I look forward to your questions. 

28 

PREPARED STATEMENT OF S. ROY WOODALL 

TO BE A MEMBER, FINANCIAL STABILITY OVERSIGHT COUNCIL

JULY 26, 2011 

Chairman Johnson, Ranking Member Shelby, and distinguished Members of the 

Committee, it is my honor to appear before you today. I am also deeply honored to 

be President Obama’s nominee for this position and I want to thank you and your 

staff for the time you have spent with me, helping to move my nomination forward. 

With me today is my wife, Jane, my best friend and life partner of 53 years, along 

with our four sons and their respective families. Jane is a former English teacher 

and now serves as the General Manager of the Smithsonian Chamber Music Society 

at the National Museum of American History. Our sons, in chronological order are: 

Sam, an attorney in Washington; Brock, a hardwood flooring contractor in Georgia; 

Claiborne, who works with the Virginia Natural Heritage Program in Abingdon, Virginia; and Garner, who is an Intelligence Analyst with the FBI. When we get together with our daughters-in-law and nine grandchildren, which we do frequently, 

there are 19 of us. 

If approved by this Committee and confirmed by the Senate, I know that the constant support and guidance of my wonderful family will continue to enlighten my 

thoughts and actions as I carry out my duties as a member of the Financial Stability Oversight Council (FSOC). 

FSOC was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to identify risk to U.S. financial stability, promote market discipline and 

respond to emerging threats. The FSOC is comprised of existing Federal financial 

services regulators as voting members. However, since there is no insurance regulatory agency at the Federal level, Dodd-Frank provides for a Presidential appointment of ‘‘an independent insurance expert’’ in order to assure that insurance, which 

represents a substantial portion of the U.S. financial system, is appropriately recognized and accommodated within the new FSOC framework. 

I frankly know of no one who could technically qualify as an undeniable ‘‘expert’’ 

in all aspects of the highly diversified and constantly changing insurance industry, 

as well as its State-based regulatory regime and international position. However, if 

I am confirmed, I do believe that my half century of experience in insurance would 

provide FSOC with the insurance perspective envisioned by Dodd-Frank. Aspects of 

that career include experience as a State insurance regulator, insurance attorney, 

insurance company rehabilitator, insurance trade executive, and a Federal insurance resource at the Congressional Research Service and the U.S. Treasury. 

Insurance is in my blood. My grandfather, C.A. Woodall, started selling insurance 

from a mule-drawn wagon in 1904 and continued to be a leading insurance producer 

in Princeton and Western Kentucky for over 50 years. My father, Roy Woodall, Sr., 

started his own general agency in Paducah, Kentucky, in the 1920s and ran it until 

he retired in 1973. 

I was first introduced to the regulatory side of insurance as a law student in the 

summer of 1961, when I was an intern at the Kentucky Insurance Department. 

After getting my law degree in 1962, I continued to work as an attorney for the Department; became General Counsel in 1964, and was appointed Commissioner in 

1966. After the completion of my term, I practiced law with a Louisville law firm 

until 1972, at which time I became a court-appointed rehabilitator of three publicly 

owned life insurance companies that had been seized by the State. The rehabilitation was concluded successfully in 1976, and until 1980 I worked as the Assistant 

to the President of a family owned life insurer in Louisville, Kentucky. At that time 

I was selected to become the President of an Atlanta-based insurance trade association, the National Association of Life Companies, which was merged in 1993 with 

the American Council of Life Insurers (ACLI). Following the merger I served the 

ACLI as Managing Director/Issues and Chief Counsel, State Relations until my retirement in 1999. I then became Of Counsel to an Atlanta-based law firm in its 

Washington office. 

As with many others I know, the terrorist attacks of 9/11 changed the focus of 

my life. I became an insurance consultant to the Congressional Research Service as 

it addressed the needs of Congress in developing the Terrorism Risk Insurance Act 

(TRIA). Following the passage of TRIA, I was asked by Treasury to assist in its implementation of TRIA. I continued to serve as Treasury’s Senior Insurance Policy 

Analyst for 8 years, monitoring all types of insurance issues and the State insurance 

regulatory system. 

In all of these insurance-related areas, my experiences taught me lasting lessons 

about the various aspects of insurance. Also, I believe that those experiences qualify 

me to serve in the position to which I have been nominated. If confirmed by the 

29 

Senate, I pledge to work closely with the other members of FSOC, and to continue 

expanding my knowledge of, fascination with, and passion for the complex world of 

insurance. 

Thank you for opportunity to appear before you today. I look forward to answering 

any questions that you may have. 

30 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR CORKER 

FROM S. ROY WOODALL 

Q.1. An important decision yet to be finalized by the Financial Stability Oversight Council (FSOC) deals with the method for determining what financial firms and insurance companies may be designated as systemically important. What metrics do you think 

should be considered by the FSOC in making a determination of 

whether an insurance company is systemically important? 

A.1. Section 113 of the Dodd-Frank Act (DFA) sets out a list of 10 

specific considerations that FSOC is to consider in determining 

whether a U.S. nonbank financial company, including an insurance 

company, should be designated as systemically important and thus 

subject to enhanced supervision by the Board of Governors of the 

Federal Reserve. These statutory considerations or criteria are: 

1. The extent of the leverage of the company; 

2. The extent and nature of the off-balance-sheet exposures of 

the company; 

3. The extent and nature of the transactions and relationships of 

the company with other significant nonbank financial companies and significant bank holding companies; 

4. The importance of the company as a source of credit for households, businesses, and State and local governments and as a 

source of liquidity for the United States financial system; 

5. The importance of the company as a source of credit for lowincome, minority, or underserved communities, and the impact that the failure of such company would have on the availability of credit in such communities; 

6. The extent to which assets are managed rather than owned 

by the company, and the extent to which ownership of assets 

under management is diffuse; 

7. The nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the company; 

8. The degree to which the company is already regulated by one 

or more primary financial regulatory agencies; 

9. The amount and nature of the financial assets of the company; and 

10. The amount and types of the liabilities of the company, including the degree of reliance on short-term funding. 

It would appear that some of these statutory criteria are more 

relevant than others with respect to insurance entities and groups 

in order to determine their overall risk. As I said in my testimony 

before the Committee, I believe that each large nonbank financial 

company under consideration by FSOC should be examined on a 

case-by-case basis, utilizing both quantitative metrics and qualitative judgments. It would appear to me that the following criteria 

drawn from the statutory list above would be of primary utility to 

FSOC in establishing those metrics necessary to determine whether an insurance company might present systemic concerns: 

1. Size: While size alone is not a determinative consideration, 

larger insurance entities or groups are likely to be more interconnected. Thus FSOC could use size to identify a subset of 

31 

those larger firms that could possibly be systemic and thereby 

present a threat to the financial system. Smaller insurers and 

those that clearly do not diverge from the traditional insurance core model would probably not need to be subject to the 

same degree of scrutiny unless they might be involved in specialized lines of insurance directly connected to the financial 

system, such as monoline or financial guarantee insurers. 

FSOC could consider various size metrics such as total consolidated assets of a firm or group, total assets of noninsurance financial entities within a firm or group, as well as total 

consolidated liabilities (including off-balance sheet liabilities, 

guarantees, and derivatives) of a firm or group. 

2. Interconnectedness: In order to measure the importance of the 

insurer in the equities market, the bond market, and the residential and commercial mortgage market, FSOC could review 

the maximum ownership share of these asset classes. It could 

also look at derivative exposure in order to capture the 

counterparty exposure risk beyond transactions to hedge existing risks. 

3. Degree to which the insurer is already regulated: FSOC could 

profile the number of primary or domiciliary State regulators 

of insurance entities, as well as the number of other State regulators with regulatory jurisdiction by virtue of the entities’ 

being licensed in their State. It could also be important to determine which entities within a group are unregulated. Also 

important could be an evaluation of the nature and extent of 

any supervision on a group wide basis. 

4. Other applicable metrics that could be of assistance in certain 

situations would include: lack of substitutes, leverage, liquidity risk, and maturity mismatch. 

If confirmed by the Senate, I look forward to working with the 

other FSOC members, and especially the two nonvoting insurance 

members, to develop in a fair and transparent manner the appropriate metrics to be used; and also to exercise my independent 

judgment, based on my years of experience, in applying those 

metrics.