[Senate Hearing 107-743]
[From the U.S. Government Publishing Office]
S. Hrg. 107-743
NOMINATION OF WAYNE A. ABERNATHY
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
ON
NOMINATION OF WAYNE A. ABERNATHY, OF VIRGINIA, TO BE ASSISTANT
SECRETARY OF THE TREASURY FOR FINANCIAL INSTITUTIONS
__________
SEPTEMBER 12, 2002
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
PAUL S. SARBANES, Maryland, Chairman
CHRISTOPHER J. DODD, Connecticut PHIL GRAMM, Texas
TIM JOHNSON, South Dakota RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York WAYNE ALLARD, Colorado
EVAN BAYH, Indiana MICHAEL B. ENZI, Wyoming
ZELL MILLER, Georgia CHUCK HAGEL, Nebraska
THOMAS R. CARPER, Delaware RICK SANTORUM, Pennsylvania
DEBBIE STABENOW, Michigan JIM BUNNING, Kentucky
JON S. CORZINE, New Jersey MIKE CRAPO, Idaho
DANIEL K. AKAKA, Hawaii JOHN ENSIGN, Nevada
Steven B. Harris, Staff Director and Chief Counsel
Wayne A. Abernathy, Republican Staff Director
Martin J. Gruenberg, Senior Counsel
Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator
George E. Whittle, Editor
(ii)
C O N T E N T S
----------
THURSDAY, SEPTEMBER 12, 2002
Page
Opening statement of Chairman Sarbanes........................... 1
Opening statements, comments, or prepared statements of:
Senator Gramm................................................ 2
Senator Shelby............................................... 6
Senator Hagel................................................ 6
Senator Bunning.............................................. 6
NOMINEE
Wayne A. Abernathy, of Virginia, to be Assistant Secretary of the
Treasury for Financial Institutions............................ 3
Prepared statement........................................... 6
Biographical sketch of nominee............................... 8
Response to written question of Senator Akaka................ 15
Additional Material Supplied for the Record
Letter to Senator Paul S. Sarbanes from Neil Milner, President
and CEO, Conference of State Bank Supervisors, dated September
11, 2002....................................................... 16
Letter to Senator Paul S. Sarbanes from William J. Donovan,
Senior Vice President and General Counsel, National Association
of Federal Credit Unions, dated September 11, 2002............. 17
Letter to Senator Paul S. Sarbanes from Daniel A. Mica, President
and CEO, Credit Union National Association, Inc., dated
September 12, 2002............................................. 18
(iii)
NOMINATION OF
WAYNE A. ABERNATHY, OF VIRGINIA
TO BE ASSISTANT SECRETARY OF THE
TREASURY FOR FINANCIAL INSTITUTIONS
----------
THURSDAY, SEPTEMBER 12, 2002
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 2:45 p.m., in room SD-538 of the
Dirksen Senate Office Building, Senator Paul S. Sarbanes
(Chairman of the Committee) presiding.
OPENING STATEMENT OF CHAIRMAN PAUL S. SARBANES
Chairman Sarbanes. The Committee will come to order.
This afternoon, we will first hold a hearing on the
nomination of Wayne A. Abernathy to be Assistant Secretary of
the Treasury for Financial Institutions.
Upon the completion of that hearing, the Committee will
then proceed to a mark-up session to consider the FHA
Downpayment Simplification Act, the Native American Housing
Assistance and Self-Determination Act, and to consider the
nomination of Mr. Wayne A. Abernathy, whose hearing would have
been completed shortly before.
I will just be very brief in my opening statement here.
Wayne Abernathy is well known to all Members of the
Committee. He has faithfully and loyally served the Committee
with distinction since July 1981, more than 20 years now, in a
variety of positions, including Full Committee Staff Director,
Minority Staff Director, Staff Director of the Securities
Subcommittee, an economist for the Subcommittee on
International Finance and Policy, the Republican Economist on
the Committee--I always thought that was Senator Gramm, but it
was really Wayne Abernathy.
[Laughter.]
Wayne has been involved in every major piece of legislation
which has been considered by the Committee since 1981. Some of
those in which he has had the most direct impact include Gramm-
Leach-Bliley, the National Securities Markets Improvement Act,
revisions to the Export Administration Act, the Securities
Litigation Reform Act, and I could just go through the entire
list.
He has been very intimately involved with the legislative
product of this Committee. Throughout his career, he has had a
deep interest in international trade and finance issues, and I
am proud to say, he is a graduate of Johns Hopkins University
and the Johns Hopkins School of Advanced International Studies.
I think it is a fair to say that he is a consummate
professional, straightforward, honest, loyal to his principles
and his party. He is smart, hard-working. He has always
fulfilled his duties in a fashion that I think exemplifies the
highest traditions of the Senate.
I regard him as very well qualified to be the Assistant
Secretary of Treasury for Financial Institutions. That office,
of course, coordinates the Department's efforts regarding
financial institutions and securities markets and their
regulation. It also coordinates the Department's efforts on
financial education, on which this Committee has placed a great
deal of emphasis.
We look forward to working with Wayne in his capacity as
the Assistant Secretary for Financial Institutions.
We will miss him here on the Committee, but obviously, I
wish him well in his new job.
Senator Gramm.
STATEMENT OF SENATOR PHIL GRAMM
Senator Gramm. Well, thank you, Mr. Chairman. I do not
quite know what I can say about this good man, other than a
famous philosopher once said--in no way can you get a keener
insight into the nature of a leader than by looking at the
people with whom he surrounds himself.
I have always been very proud to have people judge me by
Wayne Abernathy.
The plain truth is that everyone who has ever been in the
Senate knows that often the Senator is simply the front guy.
And for all practical purposes, when I was Chairman, Wayne
Abernathy was Chairman of the Committee.
All of the daily details, all of the work, he was always on
top of everything. I can say that in all the years that I
worked with Wayne, I have never heard him say or seen him do
anything that was not honorable.
So, I am very excited about this opportunity for him to
serve. I have no doubt that he will reflect well on the
Administration. I have no doubt that he will do a great job.
And I am just grateful that I had an opportunity to work with
Wayne.
Wayne, I want to thank you for the great job you did as the
Staff Director and Minority Staff Director and all these other
positions. In fact, Wayne started here as an intern.
Just one other thing I would like to say. I probably ought
not
to say this. My mother will hear it and I will hear no end of
it.
But when the FBI agent came to ask me about Wayne, his first
question was: Can you tell me something about Wayne's moral
character?
And so, I thought a minute and I started my answer by
saying, I never knew Jesus.
[Laughter.]
But Wayne Abernathy is about as close in terms of character
as I have come.
Mr. Abernathy. Thank you, Senator.
Chairman Sarbanes. Well, that is a heavy thing to hang on
somebody.
[Laughter.]
Senator Bunning. That is heavy.
[Laughter.]
Senator Schumer. Vote, Mr. Chairman. What more can be said?
[Laughter.]
Chairman Sarbanes. Before we go to the nominee's statement,
as he well knows, it is the custom in this Committee to place
our nominees under oath. I am going to ask him to stand and
take
the oath.
Do you swear or affirm that the testimony that you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you God?
Mr. Abernathy. I do.
Chairman Sarbanes. Do you agree to appear and testify
before any duly-constituted committee of the U.S. Senate?
Mr. Abernathy. I do.
Chairman Sarbanes. Thank you very much. We would be happy
to hear your statement.
STATEMENT OF WAYNE A. ABERNATHY, OF VIRGINIA
TO BE ASSISTANT SECRETARY OF THE TREASURY
FOR FINANCIAL INSTITUTIONS
Mr. Abernathy. If I could, Mr. Chairman, I would like to
begin by introducing my family, most of which is here today.
Chairman Sarbanes. We would love for you to do that.
Mr. Abernathy. My wife, Cindy. And she has brought two of
my daughters and two of my sons with her. My second-oldest
daughter is Cindy, named for her mother. My daughter Katie. And
my son Joseph. And my son Peter, who is being very good today.
[Laughter.]
Chairman Sarbanes. Terrific.
Mr. Abernathy. My oldest daughter would have been here, but
she is in Provo, Utah right now where she is a sophomore at
Brigham Young University.
We are going to tape this and send it to her.
Chairman Sarbanes, Senator Gramm, and Members of the
Committee, by custom, my first task should be to thank you for
holding this hearing on my nomination, and for doing so in an
expedited fashion--and I am indeed grateful for that--but I
would like to take the liberty to depart from that custom. I
would begin by thanking you and the Members of this Committee
for the privilege I have had over the last 20 years to serve
you and the many other Senators who have also been Members of
this Committee, and to thank you for the many considerations
that you have extended to me during that time. I would tender
that appreciation also to my colleagues on the staff, from my
first staff director, Chairman Jake Garn's Chief of Staff,
Danny Wall, to Steve Harris today, and to the many talented and
dedicated professionals who have worked with us during that
time.
I am reminded of a frequent comment that one of my
colleagues on Senator Jake Garn's staff used to make. She liked
to say to us that it was such a privilege to work for the U.S.
Senate that we should be working for free. I understood the
power of her sentiment, but I resisted her prescription.
[Laughter.]
Senator Gramm has taken that concept a step further. He
occasionally remarks to the staff that we are learning so much
here in the Senate that we should be paying tuition.
[Laughter.]
Again, there is great force in that idea, and again, I
resist the implications.
[Laughter.]
I have been in Senator Gramm's graduate program now for 15
years. And until today, I have been able to avoid graduation.
And there is no possibility that I could ever cover the value
of the education that I have received.
It was Senator Gramm who said, ``If you are willing to
tackle the tough issues, you do not need to worry about
stepping on anyone's toes; they will stand aside and shove you
to the front.'' It has been a real pleasure working with
Senator Gramm on the tough issues.
The Senate, in addition to many things, is a great academy.
It is as much a place of learning as it is a place of doing.
And it is the learning and the doing that I believe qualify me
for the next step before me.
And so I express my gratitude to President Bush, with a
mixture of pride and humility, for extending to me the
opportunity to serve the people of this Nation in a new and
challenging capacity.
I am eager to begin work with this Administration and the
team of outstanding people that President Bush has brought
together. I am grateful for the support that I have received
from Treasury Secretary O'Neill, from Deputy Secretary Dam, and
from Under Secretary Fisher. Having worked from the late 1970's
until now on the making of laws affecting our financial
institutions, I feel prepared to become involved in the
administration of those laws, with the keen insight of
experience into the intentions of the Congress in the making of
those laws.
In one of the several interviews that I went through for
this job, the discussion moved to my feelings about the
Congress. My thoughts turned to a time, when I was just a
young, rather junior member of the staff of this Committee. I
was thinking of a warm evening, when I had left the Capitol
building to walk back to my office. Rather than going
underground, I walked outside. The Senate had just ended the
day, passing legislation that I had been working on--I think
that it was a bill amending the Export Administration Act--we
are still working on that.
[Laughter.]
It was one of those beautiful nights, with the white dome
of the Capitol shining against the dark sky--we have all seen
that. And while I was charmed by the beauty of that scene, I
was even more exhilarated by the experience I had just left. I
was thrilled by the thought, by the overwhelming sense of the
power of the Constitution, that it works, that 100 men and
women, from all parts of the country, elected by their fellow
citizens to represent their various States, had come together
here and made a decision that was now the law of the land for
over 200 million people. That thought still exhilarates and
charms me. It has been a privilege to have lent a hand in that
process.
With this deep and broad experience behind me, I believe
that I am ready for duty at Treasury, with a full, deep
understanding of the interaction of the Executive and
Legislative Branches and how they work together to meet the
needs, the concerns, and the interests of the people who
elected our leaders and whom we are called upon to serve.
The job of Treasury's Assistant Secretary for Financial
Institutions is particularly well-suited for such a background.
Nearly all of our financial institutions are overseen by
regulators with varying degrees of institutional independence,
placed somewhere between the two branches of Government. I
believe they have been so situated to meet two very important
goals--to minimize political influence in the regulation of our
financial institutions while retaining adequate accountability
over the regulators. That accountability can best be
maintained, then, in cooperation between the two branches,
addressing the issues on the basis of principles and sound
policies. And while that may seem nice to say in theory, it has
been my experience that it works that way in practice. And if
confirmed, it is my intention to continue that productive
tradition.
Thank you again for holding this hearing, and now I would
be pleased to respond to any questions you may have.
Chairman Sarbanes. Well, thank you very much for a very
thoughtful statement.
Ordinarily, we subject nominees to policy questions and so
forth. But I think transcending that is to take a measure of
people's character and commitments to the workings of our
democratic institutions. We have had more than ample
opportunity to do that in Wayne Abernathy's case. For myself, I
am quite prepared to move forward without any questions. And I
will defer to any of my colleagues who may have questions.
[No response.]
If not, Wayne, we thank you very much and we will excuse
you, and we will move on to our mark-up.
Mr. Abernathy. Thank you very much, Mr. Chairman.
Chairman Sarbanes. We are delighted to have seen your
family and to have them here with you.
Mr. Abernathy. Thank you.
[Applause.]
[Whereupon, at 3 p.m., the Committee concluded the
nomination hearing of Wayne A. Abernathy.]
[Prepared statements, biographical sketch, response to
written questions, and additional material supplied for the
record follow:]
PREPARED STATEMENT OF SENATOR RICHARD C. SHELBY
Mr. Chairman, I want to commend you for facilitating the
Committee's rapid consideration of Wayne Abernathy's nomination for the
position of Assistant Secretary of the Treasury for Financial
Institutions.
It is not very often that we consider a nominee with whom we are as
familiar as we are with Wayne. For years now, I, as well as the other
Members of the Committee, have had a firsthand opportunity to observe
his efforts as a member of the Committee staff. Through his tenure, he
has demonstrated that he possesses a significant intellect,
considerable wisdom, strong character, and a tremendous work ethic.
Wayne's service to the Committee has been outstanding and I would like
to commend and thank him for it. Needless to say, someone with Wayne's
qualities will be truly missed on Capitol Hill. However, our loss is
the Administration's gain. I am supremely confident that he will
provide President Bush and Secretary O'Neill with the same level of
excellent service that he afforded Senators Garn, Gramm and all the
Members of the Committee.
Again, I want to thank Wayne for his contributions as a member of
the Committee staff, and to wish him good luck on his next endeavor.
----------
PREPARED STATEMENT OF SENATOR CHUCK HAGEL
I strongly support the nomination of Wayne Abernathy to be
Assistant Secretary of the Treasury for Financial Institutions. The
expedited process to confirm Wayne is a testament to the respect he has
gained from colleagues and Senators.
Wayne's staff leadership on the Senate Banking Committee over the
past 3 years has been marked with significant accomplishments--from the
substantial Financial Services Modernization Act, to dozens of trade,
banking, and housing bills. Through Senator Gramm, Wayne has been a
great defender of the free markets. The Department of the Treasury will
greatly benefit from his experience and wise command.
We have all benefitted from Wayne's guidance over the years. His
presence will be missed at the Senate Banking Committee.
----------
PREPARED STATEMENT OF SENATOR JIM BUNNING
Thank you Mr. Chairman, I want to thank you for holding this
hearing on the nomination of Wayne A. Abernathy, and quickly moving on
the President's nominee. I also want to thank you for the mark-up of
the important housing bills we will move today. I would like to welcome
Wayne this afternoon, and not only thank him for his service to this
Committee, but also for his willingness to continue to answer the call
to public service. Obviously, we all know Wayne very well. Although his
departure will be a great loss to the Banking Committee, he will be a
great asset to the President at the Treasury Department.
You have been nominated for a big job. But I am more than confident
that you are up to it. Your service to this Committee speaks for
itself. I believe the President could not have picked a better man for
the job. You are well deserving. As I said in our meeting earlier this
week, anyone who has worked for Senator Phil Gramm as long as you have
deserves something good.
I am also glad we are going to be marking up these small, but
important housing bills. I am a proud cosponsor S. 2239, the FHA Down
Payment Simplification Act. I believe S. 2239 will help get more people
into their homes, a goal we all support. I will also support S. 1210
the Native American Housing Assistance and Self-Determination Act. I
look forward to hearing from our good friend Wayne Abernathy and trust
the Committee will support his nomination and these important housing
bills.
Thank you, Mr. Chairman.
----------
PREPARED STATEMENT OF WAYNE A. ABERNATHY
Nominee for Assistant Secretary of the
Treasury for Financial Institutions
September 12, 2002
Chairman Sarbanes, Senator Gramm, Members of the Committee, by
custom, I should thank you for holding this hearing on my nomination,
and for doing so in such an expedited fashion--and I am indeed grateful
for that--but I would like to take the liberty to depart from that
custom. I would begin by thanking you and the Members of the Committee
for the privilege I have had for some 20 years to serve you and the
many other Senators who have been Members of this Committee, and to
thank you for the many considerations that you have extended to me
during that time. I would tender that appreciation also to my
colleagues on the staff, from my first staff director, Danny Wall--
Chairman Jake Garn's Chief of Staff--to Steve Harris today, and to the
many talented and dedicated professionals who have worked with us.
I am reminded of a frequent comment of one of my colleagues from
the staff of Senator Jake Garn. She liked to say to us that it was such
a privilege to work for the Senate that we should be working for free.
While I understood the power of her sentiment, I resisted her
prescription.
Senator Gramm has taken that concept a step further. He has
occasionally remarked to the staff that we are learning so much that we
should pay tuition. Again, there is great force in that idea, and
again, I resist the implications. I have been in Senator Gramm's
graduate program for 15 years (and until today avoided graduation), and
there is no way that I could cover the value of that education.
It was Senator Gramm who said, ``If you are willing to tackle the
tough issues, you do not need to worry about stepping on anyone's toes;
they will stand aside and shove you to the front.'' I have enjoyed
working with Senator Gramm on the tough issues.
The Senate, in addition to many things, is a great academy. It is
as much a place of learning as it is a place of doing. And it is the
learning and the doing that I believe qualify me for the next step
before me.
And so now I express my gratitude to President Bush for extending
to me the opportunity to serve the people of this Nation in a new and
challenging capacity. I am eager to begin working in his
Administration, with the team of outstanding people he has brought
together. I am grateful for the support that I have received from
Treasury Secretary O'Neill, Deputy Secretary Dam, and Under Secretary
Fisher. Having worked from the late 1970's until now on the making of
laws affecting our financial institutions, I feel prepared to become
involved in the administration of those laws, with the keen insight of
experience into the intentions of the Congress in their making.
In one of the several interviews I went through for this job, the
discussion moved to my feelings about the Congress. My thoughts turned
to a time, when I was just a young, rather junior member of the staff
of this Committee. I was thinking of a warm evening, when I had left
the Capitol building to walk back to my office. The Senate had just
ended the day, passing legislation that I had been working on--I think
it was a bill amending the Export Administration Act. It was one of
those beautiful nights, with the white dome of the Capitol gleaming
against the dark sky. While charmed by the beauty of the scene, I was
even more exhilarated by the experience I had just left. I was thrilled
by the thought, the overwhelming sense of the power of our
Constitution, that it works, that 100 men and women, from all parts of
the country, elected by their fellow citizens to represent their
States, had come together here and made a decision that was now the law
of the land for over 200 million people. That thought still exhilarates
and charms me. It has been a privilege to lend a hand in that process.
And now, with this deep and broad experience behind me, I believe
that I am ready for duty in the Treasury Department, with a full, deep
understanding of the interaction of the Executive and Legislative
Branches and how they work together to meet the needs, concerns, and
interests of the people who elected our leaders and whom we are called
upon to serve.
The job of Treasury's Assistant Secretary for Financial
Institutions is particularly well-suited for such a background. Nearly
all of our financial institutions are overseen by regulators with
varying degrees of institutional independence, placed somewhere between
the two branches of Government. I believe that they have been so
situated to meet two important goals: to minimize political influence
in the regulation of our financial institutions while retaining
adequate accountability over the regulators. That accountability can
best be maintained, then, in cooperation between the two branches,
addressing the issues on the basis of principles and sound policies.
And while that may seem nice to say in theory, it has been my
experience that it works that way in practice. And if confirmed, it is
my intention to continue that productive tradition.
I would be pleased to answer any questions that you may have.
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RESPONSE TO WRITTEN QUESTION OF SENATOR AKAKA
FROM WAYNE ABERNATHY
Q.1. As you know, financial literacy is a subject of great
importance to many Members of the Banking Committee. Please
describe your thoughts on the importance of financial literacy,
describe the appropriate role for the Department of the
Treasury to increase the financial literacy of the public, and
what will you do to improve the financial literacy efforts of
the Department of the Treasury?
A.1. I know from several public remarks made by Treasury
Secretary O'Neill that he shares the concern that you, Chairman
Sarbanes, and other Members of the Committee have for promoting
financial literacy. I share that interest as well. Early in my
career on the staff of Senator Jake Garn I was frequently
dismayed when I heard of serious financial problems in which
people found themselves that I believed could have been avoided
had they had a better understanding of basic economic and
financial matters.
In my service with Senator Gramm I became acquainted with
the excellent financial and investor literacy program designed
by the Texas State Securities Board. The Texas State Securities
Board has been very successful in introducing their Teaching
Guide in high schools throughout the State, with over 2,000
copies of the guide placed in schools so far. This, and similar
programs, can be models for efforts elsewhere.
I have had the opportunity of guest lecturing at schools at
the elementary, middle school, and high school levels, and I
have always found the children eager to learn. These are
matters that they can understand, that they want to learn, and
that our children need to know in order to be successful
adults.
I believe that high school is the best (though not the
only) place to target our efforts. It is where we can have the
greatest results. High school students are thinking about
financial matters. Many have jobs; virtually all are
considering what their careers will be. They worry about
whether they will have the finances for college and other post
high school education. They are eager and able to learn. Basic
financial and economic education after high school can be
important as well, but in many cases we are already at that
point talking about remedial education, working with people who
have already gotten into financial difficulties that could have
been avoided or who have established habits that are difficult
to leave.
Perhaps most significant as a measure of the emphasis of
the Treasury on financial and economic education has been the
creation of the institutional support for an ongoing,
sustainable effort. In May, Secretary O'Neill announced the
establishment in the Treasury of the Office of Financial
Education, led by a Deputy Assistant Secretary. That Office
organized a panel discussion with national youth education
groups in May to explore the opportunities and obstacles
associated with integrating financial education into math and
reading curricula, and will be releasing a White Paper on the
topic soon. I am pleased that, if I am confirmed, this Deputy
Assistant Secretary will report to me. I look forward to
working closely with her and with the Congress, and with the
many excellent private sector programs, to achieve accelerated
progress in our efforts.