[Senate Hearing 107-883]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-883

 
                   NOMINATIONS OF: ALBERTO F. TREVINO
                 CAROLYN Y. PEOPLES, RAFAEL E. CUELLAR
                    MICHAEL D. SCOTT, JOHN M. REICH
                DIANA E. FURCHTGOTT- ROTH, DEBORAH DOYLE
                 McWHINNEY, AND ARMANDO J. BUCELO, JR.

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

                                HEARING

                               before the

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

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                   ON

                            NOMINATIONS OF:

    ALBERTO F. TREVINO, OF CALIFORNIA, TO BE ASSISTANT SECRETARY FOR
      POLICY DEVELOPMENT AND RESEARCH, U.S. DEPARTMENT OF HOUSING
                         AND URBAN DEVELOPMENT

                               __________

     CAROLYN Y. PEOPLES, OF MARYLAND, TO BE ASSISTANT SECRETARY FOR
     FAIR HOUSING AND EQUAL OPPORTUNITY, U.S. DEPARTMENT OF HOUSING
                         AND URBAN DEVELOPMENT

                               __________

     RAFAEL E. CUELLAR, OF NEW JERSEY, TO BE A MEMBER OF THE BOARD
         OF DIRECTORS OF THE NATIONAL CONSUMER COOPERATIVE BANK

                               __________

    MICHAEL D. SCOTT, OF NORTH CAROLINA, TO BE A MEMBER OF THE BOARD
         OF DIRECTORS OF THE NATIONAL CONSUMER COOPERATIVE BANK

                               __________

    JOHN M. REICH, OF VIRGINIA, TO BE VICE CHAIRPERSON OF THE BOARD
       OF DIRECTORS OF THE FEDERAL DEPOSIT INSURANCE CORPORATION

                               __________

   DIANA E. FURCHTGOTT-ROTH, OF MARYLAND, TO BE A MEMBER OF THE BOARD
           OF DIRECTORS OF THE FEDERAL HOUSING FINANCE BOARD

                               __________

    DEBORAH DOYLE MCWHINNEY, OF CALIFORNIA, TO BE A DIRECTOR OF THE
               SECURITIES INVESTOR PROTECTION CORPORATION

                               __________

      ARMANDO J. BUCELO, JR., OF FLORIDA, TO BE A DIRECTOR OF THE
               SECURITIES INVESTOR PROTECTION CORPORATION

                               __________

                            OCTOBER 3, 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

   Jospeh R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                  (ii)


                            C O N T E N T S

                              ----------                              

                       THURSDAY, OCTOBER 3, 2002

                                                                   Page

Opening statement of Chairman Sarbanes...........................     2

Opening statements, comments, or prepared statements of:
    Senator Allard...............................................     2
        Prepared statement.......................................    35
    Senator Gramm................................................     3
    Senator Reed.................................................     9

                                NOMINEES

Alberto F. Trevino, of California, to be Assistant Secretary for 
  Policy Development and Research, U.S. Department of Housing and 
  Urban Development                                                   3
    Prepared statement...........................................    35
    Biographical sketch of nominee...............................    36
Carolyn Y. Peoples, of Maryland, to be Assistant Secretary for 
  Fair Housing
  and Equal Opportunity, U.S. Department of Housing and Urban
  Development....................................................     4
  ...............................................................
    Prepared statement...........................................    40
    Biographical sketch of nominee...............................    42
Rafael E. Cuellar, of New Jersey, to be a Member of the Board of 
  Directors
  of the National Consumer Cooperative Bank......................     6
    Prepared statement...........................................    49
    Biographical sketch of nominee...............................    50
Michael D. Scott, of North Carolina, to be a Member of the Board 
  of Directors
  of the National Consumer Cooperative Bank......................     8
    Prepared statement...........................................    59
    Biographical sketch of nominee...............................    60
John M. Reich, of Virginia, to be Vice Chairperson of the Board 
  of Directors
  of the Federal Deposit Insurance Corporation...................    17
    Prepared statement...........................................    64
    Biographical sketch of nominee...............................    65
Diana E. Furchtgott-Roth, of Maryland, to be a Member of the 
  Board of
  Directors of the Federal Housing Finance Board.................    19
    Prepared statement...........................................    77
    Biographical sketch of nominee...............................    79
Deborah Doyle McWhinney, of California, to be a Director of the 
  Securities
  Investor Protection Corporation................................    29
    Prepared statement...........................................    89
    Biographical sketch of nominee...............................    90
Armando J. Bucelo, Jr., of Florida, to be a Director of the 
  Securites Investor
  Protection Corporation.........................................    30
    Prepared statement...........................................    98
    Biographical sketch of nominee...............................    99

              Additional Material Supplied for the Record

Statement of Dianne Feinstein, a U.S. Senator from the State of 
  California.....................................................   112
Letters submitted by Diana Furchtgott-Roth.......................   113

                                 (iii)
                            NOMINATIONS OF:

                   ALBERTO F. TREVINO, OF CALIFORNIA

                     TO BE ASSISTANT SECRETARY FOR

                    POLICY DEVELOPMENT AND RESEARCH

                                  AND

                    CAROLYN Y. PEOPLES, OF MARYLAND

                     TO BE ASSISTANT SECRETARY FOR

                   FAIR HOUSING AND EQUAL OPPORTUNITY

            U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                              ----------                              


                    RAFAEL E. CUELLAR, OF NEW JERSEY

                                  AND

                  MICHAEL D. SCOTT, OF NORTH CAROLINA

               TO BE MEMBERS OF THE BOARD OF DIRECTORS OF

                 THE NATIONAL CONSUMER COOPERATIVE BANK

                              ----------                              


                       JOHN M. REICH, OF VIRGINIA

                       TO BE VICE CHAIRPERSON OF

                         THE BOARD OF DIRECTORS

                 FEDERAL DEPOSIT INSURANCE CORPORATION

                              ----------                              


                 DIANA E. FURCHTGOTT-ROTH, OF MARYLAND

                        TO BE A DIRECTOR OF THE

                     FEDERAL HOUSING FINANCE BOARD

                              ----------                              


                 DEBORAH DOYLE McWHINNEY, OF CALIFORNIA

                                  AND

                   ARMANDO J. BUCELO, JR., OF FLORIDA

                         TO BE DIRECTORS OF THE

               SECURITIES INVESTOR PROTECTION CORPORATION

                              ----------                              


                       THURSDAY, OCTOBER 3, 2002

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.

    The Committee met at 2:42 p.m. in room SD-538 of the 
Dirksen Senate Office Building, Senator Paul S. Sarbanes 
(Chairman of the Committee) presiding.

         OPENING COMMENTS OF CHAIRMAN PAUL S. SARBANES

    Chairman Sarbanes. The hearing will come to order.
    The Senate Banking, Housing, and Urban Affairs Committee 
meets this afternoon to consider eight nominees who have been 
sent to us by the President for various positions in the 
Administration. I want to welcome all of the nominees, as well 
as their families and friends who may be here with us and to 
thank the nominees for appearing before the Committee this 
afternoon.
    We have decided to break this into three panels, so we will 
do those seriatim. Our first panel will consist of four 
nominees: Alberto Trevino, who has been nominated to be the 
Assistant Secretary of Housing and Urban Development for Policy 
Development and Research; Carolyn Peoples, who has been 
nominated to be the Assistant Secretary of Housing and Urban 
Development for Fair Housing and Equal Opportunity; Rafael 
Cuellar, nominated to be a Member of the Board of Directors of 
the National Consumer Cooperative Bank; and Michael Scott, also 
nominated to be a Member of the Board of Directors of the 
National Consumer Cooperative Bank.
    Before I swear in the nominees, hear their opening 
statements, and then go to the question and answer period, I 
yield to Senator Allard for any statement or comments he may 
have.

                COMMENTS OF SENATOR WAYNE ALLARD

    Senator Allard. Well, thank you, Mr. Chairman. I would like 
to make my formal statement a part of the record and ask 
unanimous consent to do that.
    Chairman Sarbanes. Without objection, so ordered.
    Senator Allard. I would just make one request of all those 
whose nominationS we are considering today, and that is that 
you take a careful look at the Government Performance and 
Results Act. I may not be here to ask that question but I think 
it is an important piece of legislation that passed by the 
Congress.
    I would just ask that you take a careful look at it. It is 
the Government Performance and Results Act.
    Thank you, Mr. Chairman.
    Chairman Sarbanes. Good. I would like to ask the nominees 
to stand. It is the practice of this Committee to place 
nominees under oath. If you would raise your right hands.
    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. Trevino. I do.
    Ms. Peoples. I do.
    Mr. Cuellar. I do.
    Mr. Scott. I do.
    Chairman Sarbanes. Do you agree to appear and testify 
before any duly-constituted committee of the U.S. Senate?
    Mr. Scott. I do.
    Mr. Cuellar. I do.
    Ms. Peoples. I do.
    Mr. Trevino. I do.
    Chairman Sarbanes. Thank you. Please take your seats.
    Mr. Trevino, I think we will just start with you and move 
right across the panel with the opening statements of the 
nominees. We would be happy to hear from you, sir. And if 
anyone wants to introduce members of their family who might be 
here, why, we would certainly invite you to do so as well.

         COMMENTS OF ALBERTO F. TREVINO, OF CALIFORNIA

                 TO BE ASSISTANT SECRETARY FOR

                POLICY DEVELOPMENT AND RESEARCH

        U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Mr. Trevino. Thank you very much.
    Chairman Sarbanes and Members of the Committee, it is an 
honor and privilege to appear before you as President Bush's 
nominee for Assistant Secretary for Policy Development and 
Research at the Department of Housing and Urban Development.
    I am looking forward to the prospect of leading HUD's 
Office of Policy Development and Research to develop creative 
and well-structured solutions to the housing and community 
development problems facing the Nation. If confirmed, I intend 
to implement a long-term strategic approach to problem solving 
that uses research and analysis to gain a comprehensive 
understanding of the problems confronting our cities and rural 
communities. This understanding will provide a strong 
foundation for innovative, long-term solutions.
    While I recognize the need to apply creative problem 
solving to the immediate issues facing the Nation, I believe it 
is equally important to anticipate issues the country will face 
in the coming decades. This will enable PD&R to develop 
productive policy options addressing emerging issues.
    Another important responsibility of the Office of Policy 
Development and Research is to conduct evaluations of HUD's 
programs ensuring the programs are operating as Congress 
intended. The Secretary's fiscal year 2003 budget envisions an 
expansion of this important activity.
    I would like to thank you for scheduling this hearing 
during a very busy time in the session. I look forward to 
learning of key issues and concerns of this Committee to ensure 
PD&R's research agenda fully addresses them.
    I appreciate your time and look forward to working with the 
Members and their staff of this Committee.
    Thank you.
    Chairman Sarbanes. Thank you very much, sir.
    We have been joined by Senator Gramm and I will defer to 
him now before I go to Ms. Peoples for any opening statement he 
might wish to make.

                 COMMENTS OF SENATOR PHIL GRAMM

    Senator Gramm. Mr. Chairman, I will be brief. I have looked 
over the resumes of our nominees today and, first, you cannot 
help but notice that there are a lot of them.
    [Laughter.]
    I want to thank you, Mr. Chairman, for holding these 
hearings.
    Second, I think that each and every one of them are 
eminently qualified, either by their experience in the private 
sector or their experience in Government, or both. And I want 
to commend the President on choosing good people and I want to 
thank each of you for your willingness to serve the greatest 
country in the history of the world.
    Our system works as well as it does because we have good 
people who are willing to serve. It is no prize. You do not get 
rich doing it. You are more likely to get criticized than you 
are to get praised, and your name will never be on the front 
page of The Washington Post unless you really screw something 
up.
    [Laughter.]
    But, nevertheless, there seems to be an endless line of 
people that are willing to serve, and that encourages me.
    Chairman Sarbanes. Good. I also want to note for the 
Members of the Committee, we have another nomination hearing 
scheduled for tomorrow morning at 11:00 a.m. That is Phil 
Merrill, to be the Chairman of the Export-Import Bank. And upon 
the completion of that hearing, we will then have had hearings 
for all nominees sent to the Senate by the President that fall 
under the jurisdiction of this Committee. So on the nominee 
side of our agenda, we will not have any further outstanding 
hearings after tomorrow morning.
    Senator Gramm. Well, Mr. Chairman, let me say I think that 
is a commendable record and I thank you for it.
    Chairman Sarbanes. Ms. Peoples, we would be happy to hear 
from you.

          STATEMENT OF CAROLYN Y. PEOPLES, OF MARYLAND

                 TO BE ASSISTANT SECRETARY FOR

               FAIR HOUSING AND EQUAL OPPORTUNITY

        U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Ms. Peoples. Thank you.
    Again, I would like to introduce my family that are here. 
My husband, Dennis, my son Derrick, my daughter Jackie, and my 
other daughter Cheryl in the back. We are very pleased to be 
here.
    Chairman Sarbanes. We are pleased to have your family here.
    Ms. Peoples. Chairman Sarbanes, Ranking Member Gramm, and 
distinguished Members of this Committee, thank you for giving 
me the privilege to address this Committee in consideration of 
my confirmation as Assistant Secretary for Fair Housing and 
Equal Opportunity.
    I am here today with some very special people in my life. 
They are my husband and my three children, my sisters and 
brothers. I also want to acknowledge my friends from Catholic 
Charities, MANPHA, The Beacon Institute, the Office of Fair 
Housing and Equal Opportunity, and the University of Baltimore.
    First, I would like to share a little of my background with 
you. I am one of seven children born to the late Julius and 
Cornelia Jacobs. I was born and raised in Baltimore, Maryland. 
My father served in the U.S. Army and worked most of his life 
as a laborer. My mother was a housewife. For several years, we 
lived in public housing and I attended local schools. From an 
economic standpoint, we were considered poor. But as a family, 
we were rich, rich in faith, character, values, and humor with 
a closeness that endures even today. My mother, without doubt, 
was instrumental in forming my character and strong work ethic. 
Throughout my public education, she always encouraged me to do 
my best. And it is that drive for excellence that both inspires 
and motivates me in all my endeavors.
    Prior to my nomination by President Bush, I was Founder and 
Executive Director of Jeremiah Housing, Inc., a faith-based, 
nonprofit housing services organization. Preceding this, my 
professional experience for the past 25 years has been 
exclusively in the operation, coordination, and management of 
HUD-assisted and sponsored housing. Beginning in 1976, as a 
manager of a Section 202/8 housing facility for the Presbytery 
of Baltimore. I left there in 1980 and joined the Housing 
Services Division of Catholic Charities. Over a 19 year period, 
I progressed in various positions. I later attended the 
University of Baltimore and earned a BS degree in Finance and a 
Master's degree in Business Administration.
    As I was preparing for this testimony and thinking about 
fair housing, I began to reflect upon discrimination and how it 
impacts lives. I liken discrimination to an inflicted wound. 
The wound eventually heals, but invariably leaves a scar. As a 
woman of color, I have experienced discrimination. One such 
experience when I was 8 years old left, an indelible imprint on 
me. My mother took me to a department store in downtown 
Baltimore. After choosing several items of clothing, she took 
them to the counter to pay for them. For several minutes, I 
watched as a the sales lady waited on other people, but would 
not wait on my mother. After all the customers standing next to 
my mother had been waited on and exited the store, my mother 
remained at the counter until the sales lady finally waited on 
her. When we left the store, I asked my mother why the lady 
would not wait on her. Her reply to me was, ``because we are 
colored.''
    Discrimination in any form is demeaning. Whether it comes 
as a result of being denied housing because you have children, 
or if a real estate agent steers you to a ``certain'' community 
or a lender charges you extra fees not charged to other people, 
discrimination is wrong and is against the law.
    Moreover, discrimination has a social impact. Just as my 
mother and I had to wait in that department store until all 
others were served, discrimination in America has denied many 
the opportunity to share in the prosperity of this Nation. 
Since the passage of the 1968 Fair Housing Act, significant 
progress has been made in reducing barriers to fair housing and 
expanding homeownership opportunities for the historical 
victims of discrimination. Despite all that has been 
accomplished, much more needs to be done. No one should be 
denied the home of their dreams because of their race, color, 
religion, national origin, sex, familial status, or disability.
    While the Nation's homeownership has reached a record high, 
a large gap still remains between the percentage of minorities 
and whites who own their own homes, 48 percent African-American 
and 47.6 percent Hispanic, compared to 74.3 percent for whites. 
We must do all we can to ensure that discrimination is removed 
as a barrier to the achievement of the American Dream.
    The extent to which discrimination against persons with 
disabilities exists today is also problematic. Currently, HUD 
receives nearly as many complaints of disability discrimination 
as it does race complaints. There is a significant lack of 
accessible housing units for persons with disabilities, both in 
private and in the subsidized housing. Noncompliance with the 
accessibility requirements combined with the failure of 
landlords to provide necessary accommodations and modifications 
has contributed to a shortage of housing for persons with 
disabilities in housing developments.
    I have a strong interest in helping improve the quality of 
life for underserved and unserved persons. If I am confirmed by 
the Senate to this most important post, I pledge my full 
commitment to aggressively enforce civil rights and fair 
housing laws; to be diligent in conducting timely 
investigations; to continue to reduce impediments to fair 
housing laws; to develop close working partnerships with faith-
based and grassroots organizations, local government, and other 
agencies; to enforce departmental equal employment opportunity 
laws; to ensure effective program monitoring and compliance and 
develop performance-based measures to ensure quality.
    With my extensive experience in HUD's programs and 
policies, combined with 25 years of proven management, 
organizational, and policy development skills, I am eager to 
join the fine staff of the Office of Fair Housing and Equal 
Opportunity in implementation of our strategic goals and 
objectives.
    In closing, I want to thank the Senator from my home State 
of Maryland, Senator Sarbanes, and the Members of the Committee 
for your courtesy. I want to thank President Bush for honoring 
me with the opportunity to serve in his Administration, and to 
Secretary Mel Martinez for his strong support in the several 
months since my nomination. I also want to give special thanks 
to Floyd May for his wise counsel and advice. Finally, but not 
least, I want to thank God for bestowing His grace and this 
very special honor upon me.
    Thank you.
    Chairman Sarbanes. Thank you, Ms. Peoples. That was a very 
thoughtful statement and the Committee appreciates it.
    Mr. Cuellar.

         STATEMENT OF RAFAEL E. CUELLAR, OF NEW JERSEY

          TO BE A MEMBER OF THE BOARD OF DIRECTORS OF

             THE NATIONAL CONSUMER COOPERATIVE BANK

    Mr. Cuellar. Chairman Sarbanes and distinguished Members of 
the Committee, I am honored to appear today before you as a 
nominee for the Board of Directors of the National Consumer 
Cooperative Bank.
    I am here because I believe my combined experience, as a 
military officer, entrepreneur, and community leader is 
consistent with the mission of the National Consumer 
Cooperative Bank. It was established to address the financial 
needs of an underserved community. The Bank's primary lines of 
business include multifamily and commercial real estate 
services, commerical and small business banking, community 
development, and personal banking. To date, NCB has provided 
more than $6 billion in financing, thousands of homeownership 
opportunities, school facilities for 4,500 students, 1,000 
affordable assisted-living units, a health center serving 
100,000 patients annually and more than 10,000 employee stock 
owners. In short, the Bank provides economic empowerment.
    My goal on this board is to bring these options to 
communities like my own in Passaic, New Jersey. Once a deserted 
area of marginalized immigrants that had to commute to New York 
for work, now a thriving center of commerce because business 
people like my father invested and started businesses to 
increase the city's economic vitality. I remember he would say, 
``No se puede sacar sin dar''--You cannot take without giving.
    With those words in mind, I left to join the United States 
Navy at the age of 17. This country had given my family 
opportunity when we arrived as immigrants in 1970. I knew that 
opportunity came with responsibility. And so it was for 9 years 
as I worked my way up the ranks from enlisted to officer. I 
attended Fordham University on a NROTC scholarship and received 
my Bachelor's degree in Economics. The regimented training and 
discipline prepared me for an even greater challenge.
    After my father's sudden death in 1996, I resigned my 
commission to fulfill my family duty and care for the business 
my father began years before. I have been President and Chief 
Executice Officer of ECO & Sons, Inc., for 7 years. In that 
time, I have significantly increased revenue every year, 
diversified our products and services, and created new jobs to 
expand the employee base. I inherited a large ``bodega'' in 
debt. However, today, due to strategic planning and investment, 
ECO & Sons, Inc. makes a profit through a successful 
independent supermarket, an upscale catering company, and an e-
commerce site that survived the Internet downturn. Currently, I 
own one of the top 500 Hispanic businesses in the country, 
according to Hispanic Business Magazine.
    In addition, I was selected as 1999 Dun & Bradstreet's 
Number 2 Minority Entrepreneur, 1999 Finalist for Ernst & 
Young's Entrepreneur of the Year, 2000 Finalist for Hispanic 
Business Magazine Entrepreneur of the Year, and 2001 Finalist 
for Ernst & Young's Entrepreneur of the Year. To share the 
benefits of my success, I work with several organizations 
including the Paterson Restoration Corporation, New Jersey 
State Chamber of Commerce, William Paterson University 
Foundation, and the United States Hispanic Chamber of Commerce, 
to name a few.
    While those accolades look great on a resume, what I am 
really proud of is building a partnership with my community. 
They know I am there to service their needs whether it is for 
groceries or otherwise. For instance, the Passaic fire last 
year put 75 families out on the street without shelter or food. 
They came to me and we fed those families three meals a day for 
2 weeks and they ate with 
dignity because that food came from a supermarket that they 
patronize. I was humbled that they came to me instead of one of 
the big chain stores. I connect with my customers and peers 
alike.
    I understand and have overcome the challenges that face 
minority entrepreneurs--the lack of capital, scarce resources, 
no mentoring. The NCB has developed and implemented a 
successful model, a public and private sector partnership, to 
solve these problems and provide innovative solutions. With my 
experience, I will be an integral part of those solutions.
    I would be very proud to serve on the Board of Directors of 
the National Consumer Cooperative Bank, and I truly appreciate 
your consideration.
    Allow me to answer any questions that you may have.
    Chairman Sarbanes. Thank you very much, sir.
    Mr. Scott.

        STATEMENT OF MICHAEL D. SCOTT, OF NORTH CAROLINA

          TO BE A MEMBER OF THE BOARD OF DIRECTORS OF

             THE NATIONAL CONSUMER COOPERATIVE BANK

    Mr. Scott. Thank you.
    Mr. Chairman, Senator Gramm, distinguished Members of the 
Committee, it is an honor and privilege for me to appear before 
you today as the President's nominee to be a Member of the 
Board of Directors of the National Consumer Cooperative Bank.
    Before I begin my statement, I would like to thank my wife, 
Janet and my children, Zachary and Taylor. Without their 
patience, understanding, and support, I could not be here 
before you. Unfortunately, they are not able to be here today, 
as they continue to live in North Carolina until we sell our 
home.
    I would also like to thank Under Secretary Peter Fisher, 
Assistant Secretary Brian Roseboro, and Deputy Assistant 
Secretary Roger Kodat for all of their support. Finally, I 
would like to thank President Bush for the honor of this 
nomination and the opportunity to serve.
    I am, and if confirmed, will continue to be, the Senior 
Advisor to the Deputy Assistant Secretary for Government 
Financial Policy at the Treasury Department. Prior to serving 
in the Administration, all of my previous experience has been 
in the private sector. I have worked extensively in finance, 
capital markets, investments, corporate strategy, financial 
analysis, and commercial lending.
    It is my current and former experience that I believe will 
enable me to be an effective contributor to NCB's Board. NCB 
plays a vital role in meeting the underserved needs of 
America's cooperatives, which range from housing cooperatives 
to affordable housing communities to small businesses to Alaska 
Native Corporations and Tribal Entities. I hope to bring 
constructive ideas to the Board that will help grow NCB in the 
important sectors it serves. Additionally, I am keenly 
interested in NCB's capital structure and assisting it in 
addressing the statutory repayment of the Class A Notes that 
the Federal Government holds, and that mature in 2020.
    NCB is a multifaceted financial services company that 
enables cooperative endeavors throughout America to grow and 
succeed. These businesses are large and small. They serve rural 
and urban communities. NCB helps them by crafting financial 
solutions tailored to their individual needs, and the needs of 
their members. Chartered by Congress in 1978, NCB was 
privatized in 1981 as a cooperatively owned financial 
institution. Currently, NCB is owned by 1,841 of its customers.
    NCB's capital base is funded by long-term subordinated 
notes, medium-term notes and commercial paper, loans from its 
banking partners and customers, deposits through its 
subsidiary, NCB FSB, and stock purchased by NCB members. The 
Bank's medium-term notes and commercial paper carry investment-
grade ratings.
    NCB's primary lines of business include: Multifamily and 
commercial real estate, commercial and small business banking, 
community development services, and personal banking.
    To date, NCB has provided more than $6 billion in 
financing. Combined with balance sheet assets and letters of 
credit, NCB now manages more than $3.6 billion in assets 
nationwide. NCB reported a profit of $14.6 million for the 
first 6 months of 2002. In early September of this year, NCB 
distributed approximately $12.6 million in patronage dividends 
to its member-owners in the form of cash and stock.
    Last year alone: First, the Bank grew its deposit base by 
50 percent, further diversifying its funding sources and 
lowering the capital costs for its customers. Second, the Bank 
received reaffirmation of its investment-grade ratings by 
Moody's (Baa1) and Standard & Poor's (BBB).
    NCB has a distinguished history of serving the cooperative 
community and I believe that its future is extremely bright. I 
would appreciate your support so that I may be able to 
contribute to its future.
    In closing, I would like to take this opportunity to thank 
you, Mr. Chairman, and the Committee for the prompt 
consideration of my nomination. Mr. Chairman, if confirmed, I 
commit to you, the Members, and the NCB, all of my energy to 
serve with distinction and honor. I would request that my 
additional statements be entered into the record on the 
background on the Bank and I would be delighted to answer any 
questions.
    Thank you.
    Chairman Sarbanes. Without objection, the full statement 
will be included in the record.
    We thank all of the panelists for their statements.
    Chairman Sarbanes. We have been joined by Senator Reed. Did 
you have an opening statement, Senator Reed.

                  COMMENT OF SENATOR JACK REED

    Senator Reed. No, Mr. Chairman.
    Chairman Sarbanes. Let me ask the panelists a few 
questions.
    I want to ask the two nominees for the National Consumer 
Cooperative Bank if they could just outline for us the 
financial situation and arrangements of the Cooperative Bank. 
Where does your money come from and how much of it do you put 
out each year and, generally speaking, who do you put it out 
to, and so forth?
    Mr. Cuellar, why don't we start with you and then we will 
go to Mr. Scott.
    Mr. Cuellar. The National Consumer Cooperative Bank 
provides loans to cooperatives and their members. Half of the 
loan portfolio is housing cooperatives, and the other half is 
to supermarket cooperatives, and other business cooperatives 
and their members. Most of their capital funds came from within 
their membership.
    The initial loan pool that created the Bank came through an 
act of Congress back in 1979. In 1981, however, the Bank was 
privatized. Because of its privatization, however, the Bank's 
entire slate of Board of Directors is not appointed by the 
President or Government employees. Only a small percentage are 
because of the bank's debt with the Government.
    The portfolio again to commercial real estate, commercial 
business banking, and community development is where the Bank 
does its investing. If that answers your question.
    Chairman Sarbanes. Partially. Maybe Mr. Scott can elaborate 
on it a bit more.
    Mr. Scott. Sure. Mr. Chairman, banks, in general, rely on 
equity capital and equity-like instruments and debt to be able 
to make loans. The National Consumer Cooperative Bank's effort, 
it has a limited ability to raise equity capital, which is very 
important to most traditional banks. The Bank's lending to 
cooperatives, nonprofits, is met largely through the issuance 
of debt. The Class A notes that the Government currently holds 
used to be equity prior to the privatization. That $183 million 
is a very important part of its capital structure that allows 
it to make the existing loans that it does. Going forward, it 
has funded itself largely on the issuance of debt.
    Chairman Sarbanes. How much of that debt is there, over and 
above--there is about $183 billion of debt to the Treasury.
    Senator Gramm. Million. You said billion.
    Chairman Sarbanes. That is an important distinction.
    [Laughter.]
    Senator Gramm. I do that all the time, so I am sensitive to 
it.
    [Laughter.]
    Chairman Sarbanes. One hundred eighty-three million dollars 
debt to the Treasury, which I take it the Bank is paying off 
over time. Is that correct?
    Mr. Scott. Yes, sir. It has a sinking fund to repay the 
Class A notes. It is going to have to address how it pays off 
those notes in the future.
    Chairman Sarbanes. Then it has borrowed further, Correct?
    Mr. Scott. That is correct.
    Chairman Sarbanes. From whom? In the private markets?
    Mr. Scott. Yes, from the capital markets and banks, in 
general.
    Chairman Sarbanes. How much of that debt is there?
    Mr. Scott. Sir, I do not have the balance sheet with me. 
The on-balance sheet assets are I believe about $1.2 billion. 
Of that, you have $183 million from the Class A notes. I 
believe there is about $162 million of Class B equity and the 
rest would be in the debt markets.
    Chairman Sarbanes. And how much money does the Bank put out 
each year?
    Mr. Scott. My understanding is that the Bank pays out about 
55 percent of its net income in patronage dividends back to the 
cooperative members.
    Chairman Sarbanes. There is no implicit Federal guarantee 
of the Bank's debt?
    Mr. Scott. None whatsoever. In fact, if you look at the 
Standard & Poor's and Moody's ratings, which are essentially 
BBB, it is very clear that the market does not view the NCB as 
an implicit Federal guarantee.
    Chairman Sarbanes. Right. Now, is the position you hold at 
the Treasury traditionally been, in effect, the President's 
nominee to the Bank? He nominates one person to represent 
Federal agencies and departments. Is that correct?
    Mr. Scott. That is correct.
    Chairman Sarbanes. Has it traditionally been whoever holds 
the position you have now in the Treasury?
    Mr. Scott. No, it has not. Traditionally, my understanding 
is that during the 1980's and 1990's, it came from the 
Department of Agriculture. This position itself has been vacant 
since 1991.
    Chairman Sarbanes. There has not been a person on the Board 
for 10 years?
    Mr. Scott. That is correct.
    Chairman Sarbanes. Well, my time is expired and I will 
cease and I will come to the other two nominees in the 
following round.
    Senator Gramm.
    Senator Gramm. I would be nervous about telling people 
that. They may decide that they do not need you on the Board.
    [Laughter.]
    Well, Mr. Chairman, it made me a little nervous when Mr. 
Scott was saying that they set up a sinking fund and they are 
going to have to make some arrangement to pay the Federal 
Government.
    I had thought and I forget, forgive me, but not only am I 
getting old, but we have so many of these things. Am I right 
that when we went through privatization, we set up a structure 
whereby, over time, the Bank was going to pay the taxpayer 
back? Is that right?
    Mr. Scott. The original structure mandated a 2020 maturity. 
The Bank has, I believe in 1994, instituted a corporate 
strategy of a combination of the sinking fund and raising money 
starting in 2005, that would raise most likely preferred stock 
to use to pay down the Treasury. But there is actually not a 
mandated repayment schedule.
    Senator Gramm. Just the requirement as of that date that 
there be a repayment.
    Mr. Scott. October 31.
    Senator Gramm. But is there any money in this sinking fund?
    Mr. Scott. Yes, there is. I believe right now there is $12 
million.
    Senator Gramm. Thank you, Mr. Chairman.
    Chairman Sarbanes. Good. Anything else?
    Senator Gramm. No. Thank you, Mr. Chairman.
    Chairman Sarbanes. Senator Reed.
    Senator Reed. Thank you, Mr. Chairman. And I would like to 
thank the nominees for thier testimonies. Good luck as all of 
you take on these very important tasks.
    Mr. Trevino, if I may ask a question. You will be charged 
with developing, monitoring, and supervising important research 
projects. I wonder what experience you have in the area of 
either conducting research or managing research? Could you 
elaborate?
    Mr. Trevino. Yes, I can answer that several ways. One, from 
the private-sector experience that I have in the development 
and planning of very large-scale projects, new communities, and 
working with developers such as Jim Rouse in Columbia and also 
in Reston, all of this is basic research because these were the 
state-of-the-art developments in the country at that time.
    And with General Electric, directing General Electric 
Foundation research grants to various universities, including 
Washington University, MIT, UCLA, University of Michigan, North 
Carolina, and these again were state-of-the-art research issues 
of large-scale new town development.
    Also, I have lectured or taught at many of the universities 
in this country--Michigan, North Carolina, Harvard, Berkeley, 
USC, and directed grants from other foundations to these 
universities.
    Senator Reed. So you have had a role in foundations 
awarding grants and research contracts?
    Mr. Trevino. With the GE Foundation, primarily. And then 
with the Ford Foundation, I was just an advisor to them.
    Senator Reed. There are a number of difficult issues that 
you will have to tackle. When I go through my State I hear 
continuous clamor for more production of units. In fact, people 
will comment, ``We have vouchers and we cannot use them because 
they cannot find affordable houses.'' They do not have 
physically the number of units. Would increasing production be 
a focus of one of your policy or research initiatives?
    Mr. Trevino. As I stated, the approach that I generally 
take to a problem is to look at the problem a little bit more 
holistic, if you will, than the way it is been approached in 
the past.
    Housing production, barriers to housing, if you look at the 
Kemp Report, you could provide money to build housing, but the 
real problem is in implementing that program. In today's world, 
in most communities, if you make an announcement that you are 
going to build 100 to 200 units, whatever it might be, mixed-
use, low-income, et cetera, the local community objects to 
those projects. It is very difficult to get projects approved 
in communities. That is called a NIMBY. That clearly can be a 
strategy. But from looking at an entire program, you have to 
evaluate and make a determination whether that is the most 
feasible direction to move in. And that would be part of the 
studies within PD&R.
    Senator Reed. Thank you.
    Ms. Peoples, you have a very significant responsibility, 
and I think you are going to take it on with the great passion 
you have done all your work throughout your life. But you 
cannot do it alone.
    I understand that there is a significant shortage of 
personnel in the Office of Civil Rights. What are your plans 
now to mobilize more people to do the work that you are so 
committed to doing?
    Ms. Peoples. I agree that the Office of Fair Housing and 
Equal Opportunity has been plagued by shortages in staff prior 
to the past 4 years. We are actively engaged in correcting that 
by trying to bring on additional staff to meet the demand, at 
least the problems that we are considering.
    In terms of meeting the challenges that are ahead, we must 
at least look to hiring additional people to fill those slots, 
particularly in the area of enforcement. Investigators are very 
much needed in the regional offices. And we are moving in that 
area at this point.
    Senator Reed. Thank you very much, Ms. Peoples and all of 
you for your testimony.
    Thank you, Mr. Chairman.
    Chairman Sarbanes. Thank you.
    Mr. Cuellar, have you spent any time over at the National 
Cooperative Bank?
    Mr. Cuellar. Yes. I actually today got my first tour of the 
Bank itself and was there once previously when we had first 
discussed the entire nomination process and how it all takes 
place.
    Chairman Sarbanes. I ask both of the nominees, did the Bank 
provide as a kind of extended briefing for either of you in 
terms of being new nominees to the Board?
    Mr. Cuellar. We definitely got a briefing. Extended is 
probably the briefing we will get after our confirmation, more 
than likely. And then we will have a much more involved 
briefing.
    If I am not mistaken, one of the reasons that we are not 
privy to some of the information of the Bank is just because we 
are not on the Board currently.
    Mr. Scott. That is correct. I have spent about 3 hours with 
Mr. Chuck Hackman. The detailed briefing as a Board Member does 
come later, after we have been confirmed.
    In answer to one of your questions, I neglected--in 1988, 
the Bank acquired a thrift. So when you were asking, how does 
it fund itself, they also actually have--a portion of that is 
funded through deposits, very much like any other bank. But 
that is a relatively small part of their capital base.
    Chairman Sarbanes. I am just sending them a message because 
I am concerned that some of these boards or banks or so forth 
do not brief their nominees the way they probably should before 
they come to us, and actually, before they go into the job. I 
do not think the agency should assume that they can do all the 
briefing post the fact because that puts the Committee in the 
awkward position of investigating matters with someone who 
hasn't had a fairly comprehensive introduction to the work of 
the particular institution. So, I hope you will take that 
message back with you.
    Mr. Cuellar, I have a lot of respect for your career 
pattern here, although you are still a very young man. How long 
did you serve in the Navy?
    Mr. Cuellar. Nine years, sir.
    Chairman Sarbanes. Nine years. And you went to Fordham on 
an NROTC scholarship?
    Mr. Cuellar. Yes, sir.
    Chairman Sarbanes. And then, you were in a career, but left 
because of the change in the family circumstances. So, you 
moved out in order to look after the family business.
    Mr. Cuellar. That is correct.
    Chairman Sarbanes. Have you been in charge of it yourself ?
    Mr. Cuellar. Yes, sir.
    Chairman Sarbanes. I mean you took it over after your 
father passed away. Is that right?
    Mr. Cuellar. Yes, sir.
    Chairman Sarbanes. You are the senior son, or the senior 
child, I take it?
    Mr. Cuellar. Actually, no. I am the youngest child.
    Chairman Sarbanes. Okay. I gather it has been quite 
successful.
    Mr. Cuellar. We have done okay.
    [Laughter.]
    Chairman Sarbanes. Quite successful, I would guess, is what 
that means.
    Ms. Peoples, let me ask you a couple of questions and then 
I have one or two for Mr. Trevino.
    The office that you are being nominated to head is 
understaffed currently by about 50 full-time employees. What is 
your view of that? Or first of all, is that accurate? Then what 
plans might you have to try to remedy that situation?
    Ms. Peoples. Well, a plan is already in place. Many of 
those positions have been filled. So, we do not have the 
shortage that we had prior to a couple of months ago.
    Chairman Sarbanes. I am pleased to hear that.
    Ms. Peoples. I am very pleased as well.
    [Laughter.]
    Chairman Sarbanes. Let me ask you, there has been a backlog 
of fair housing complaints which have not been reviewed at HUD, 
although I understand that they are taking steps to try to 
process these claims quickly.
    My concern is this. Claims need to be processed quickly or 
within a reasonable period of time. But I am also concerned 
that the claims get properly and thoroughly examined so that we 
make sure that we are rendering appropriate judgments. Do you 
have any comment on this balance between moving the claims 
along and making sure, on the other hand, they are adequately 
reviewed?
    Ms. Peoples. Well, that is one of the problems I think that 
resulted from being understaffed. I am pleased to say that as 
of last week, we get weekly reports on the status of the cases 
and we have decreased our backlog to now I believe it is 35 
percent of our cases are aged. And that compares to over 80 
percent back in 2000. So, we are making progress in that area.
    Chairman Sarbanes. Mr. Trevino, when you were at HUD back 
in the early 1970's, the New Communities Program was under your 
jurisdiction.
    Mr. Trevino. That is right, Title 7.
    Chairman Sarbanes. Yes. Tell me about that program.
    Mr. Trevino. The person really responsible for the 
legislation was Lud Ashley, Congressman from Ohio. The program 
was a loan guarantee program to fund infrastructure for new 
communities. And the idea was these new communities would be 
able to alleviate some of the problems of suburban sprawl and 
so forth. Actually, during the time of the legislation, I was 
with General Electric at the time and GE was going to build 
experimental cities, at least explore that potential. Some of 
this information really is not known, but it was an interesting 
period.
    Jim Rouse at Columbia was just getting started, as well as 
Bob Simon, R.E. Simon, at Reston. Those were two that were 
starting to work in parallel with this program. And with new 
communities, the major issue, any large-scale development, is 
the infrastructure costs, the front-end loading of debt. The 
new Title 7 was to alleviate that problem by providing lower-
cost funds for this front period. And payback on a new 
community is something like 15 to 18 years, so it is a very 
high risk.
    I really had nothing to do with the program for maybe 6 to 
8 years of its original inception. When Secretary Lynn became 
Secretary of HUD, he wasn't quite sure what to do with this 
particular program. There was thought that it was not being 
managed properly. He called me in. At that time I had a fairly 
substantial background in this project. I had been with the 
Irvine Company, which is the largest land development project 
in the country. I agreed to come back for a year to look at the 
prospects of this program, whether there was any opportunity to 
repay the loans that were being made.
    The pipeline was basically filled with projects, two in 
Rochester, some in Texas between Ft. Worth and Dallas. And 
there were maybe 12 projects. And the total commitment was 
about $700 million at that time. We are talking about 1972 
dollars.
    Bill Simon was Secretary of Treasury at that time. Tom 
Bomar was head of the Home Loan Bank. Secretary Jim Lynn at 
HUD. I brought in Ray Watson, who was the President of the 
Irvine Company, and myself. And so, we formed the Board of 
Directors. I established the methodology to evaluate the 
potential of the taxpayer ever recovering the $700 million, 
made the determination that the projects were ill-conceived, 
and recommended to Senator Proxmire and to Congressman Ashley 
that we terminate the program. And that, in a nutshell, is my 
experience with it. I was here 17 months.
    Chairman Sarbanes. Columbia and Reston were not part of the 
program, were they?
    Mr. Trevino. No, no.
    Chairman Sarbanes. You were just trying to emulate that if 
you could.
    Mr. Trevino. Yes, we were trying to solve the front-end 
financing for those type of projects. If you follow the large-
scale New Town Program in this country, none of them have 
really had financial success. Rouse eventually lost that 
project to the banks, as well as Bob Simon. I was instrumental 
with GE in placing Appliance Park at Columbia and we purchased 
500 acres to try to resolve some of his cashflow problems. That 
was my decision, to assist Rouse.
    In Texas, the two people were Nasher and Eddie Marcus, who 
also had a project. It was called Flower Mountain. So large-
scale, new town development again is very similar to the issue 
that was brought forward about building housing. Some of these 
decisions are made locally to get zoning, attraction of 
industry, job base, many issues.
    As with two projects in Rochester, which was losing 
population and declining economy, it really did not take much 
to make a determination that they would never be able to repay 
the debt.
    Chairman Sarbanes. The HUD website says that the Office of 
Policy Development and Research, ``. . . is committed to 
investing in the development of reliable databases describing 
housing market conditions and needs, as well as documenting how 
HUD programs work, how much they cost, and who they serve.''
    Regrettably, we hear from many people, including some 
people at HUD, that many of the databases do not contain 
reliable information. I would be interested in your comments on 
this situation and what might be done to make sure that HUD's 
systems contain correct and helpful data on housing programs. I 
think this is an important part of the responsibility that you 
would have as Assistant Secretary.
    Mr. Trevino. There is no doubt that statistical information 
is vital in making decisions, just as with new communities. It 
is hard to imagine that these new communities were located 
without understanding the market forces.
    There is the American Housing Survey. Many of the issues 
related to that are do you ask the right question? And I think 
that is an issue I certainly am familiar with and I cannot 
really speak to that subject at this point. But it does not 
take a terrible amount of change in order to try to get 
statistical information that is more relevant to the needs of 
the markets. It is the user of the information that has to make 
a determination of what type of information is vital?
    Some of these collection mechanisms take decades to 
develop. In my opening statement, I mention the fact that a 
person does have to take a longer-term view of research and you 
cannot just totally respond to putting out fires. You have to 
look at it a little bit long term.
    Chairman Sarbanes. I take it that you perceive this, 
though, as a major challenge that you are going to have to deal 
with. Would that be correct?
    Mr. Trevino. Oh, yes. There is no doubt that all issues of 
strategic planning are a major challenge because what you are 
doing is you are weighing between competing funding, competing 
decisions as to how you are going to implement. When I was with 
General Electric or with Walt Disney, of course these are the 
same issues of limited resources and using those resources or 
optimizing those resources for whatever you determine is 
important--affordable housing, transportation, whatever it 
might be.
    Chairman Sarbanes. Senator Gramm, do you have anything you 
would like to ask?
    Senator Gramm. No, Mr. Chairman.
    Chairman Sarbanes. We want to thank the panel very much. We 
appreciate your testimony.
    We will now turn to our next panel, which we announced 
earlier: John Reich and Diana Furchtgott-Roth. If they'd come 
forward.
    [Pause.]
    We are going to turn now to the nomination of John Reich, 
who has been nominated to be the Vice Chairperson of the Board 
of Directors of the Federal Deposit Insurance Corporation. Mr. 
Reich is currently serving a term as a Director of the FDIC. 
That was reported out by this Committee and confirmed by the 
Senate. Prior to becoming an FDIC Director, Mr. Reich had 
served on the staff of our colleague, Senator Connie Mack, for 
12 years, and had previously worked in the banking industry for 
a number of years.
    Diana Furchtgott-Roth has been nominated to be a Director 
of the Federal Housing Finance Board, which is the board that 
regulates the Federal Home Loan Bank System, a system of 12 
regional banks created in 1932 by the Congress to ensure the 
availability of funds for home mortgage lenders. The banks are 
cooperatively owned by their members. I think it now includes 
almost 8,000 institutions. And last year, its assets totaled 
almost $700 billion. The Housing Finance Board is charged with 
overseeing this extensive system. Ms. Furchtgott-Roth has 
recently been the Chief of Staff at the Council of Economic 
Advisors. Prior to that, she was a resident fellow at the 
American Enterprise Institute. And in the first Bush 
Administration, served as an Associate Director of the Domestic 
Policy Committee.
    I ask the nominees to stand so that we can place them under 
oath. As I indicated, it is the standard practice of this 
Committee.
    Do you swear or affirm that the testimony that you are 
about to give is the truth, the whole truth, and nothing but 
the truth, so help you God?
    Ms. Furchtgott-Roth. I do.
    Mr. Reich. I do.
    Chairman Sarbanes. Do you agree to appear and testify 
before any duly-constituted committee of the U.S. Senate.
    Mr. Reich. I do.
    Ms. Furchtgott-Roth. I do.
    Chairman Sarbanes. John, why do not we hear from you first 
and then we will turn to Ms. Furchtgott-Roth.

            STATEMENT OF JOHN M. REICH, OF VIRGINIA

      TO BE VICE CHAIRPERSON OF THE BOARD OF DIRECTORS OF

           THE FEDERAL DEPOSIT INSURANCE CORPORATION

    Mr. Reich. Thanks very much, Mr. Chairman. I appreciate 
your holding this hearing today. I know that time is of the 
essence for this body and to a hold a hearing with this many 
nominees is something that I am sure that we all appreciate. 
Mr. Chairman, Senator Gramm, it is a pleasure to be here today. 
I am privileged and honored to be sitting in this spot. And I 
am honored by the President's nomination and appreciate very 
much also the support of Chairman Don Powell, who has been very 
supportive since the nomination.
    In the almost 2 years that I have served on the Board of 
Directors of the FDIC, we have witnessed some significant 
changes in the economy and the banking issues. In fact, Mr. 
Chairman, you may recall that I was here last September. It 
happened to be on September 11. We had just started the hearing 
and were underway only about 5 minutes, when we had to 
terminate the hearing because of the events of that day which 
triggered some challenges to our country and to our financial 
system that no one could have foreseen.
    I am proud of my nearly 25 years in the banking business 
before I came to Washington, DC, which was about 13 years ago, 
to work for my friend, Former Senator Connie Mack, a period of 
time which lasted nearly 12 years. The combination of those 
experiences, the private sector and here on the Hill have 
allowed me to bring a perspective to the Board's deliberations 
that recognizes the vital role that banks play in their 
communities and that their customers play in the communities 
and in the economy of the Nation as a whole. Before my life in 
Washington, I was active for many years in a number of 
different charitable and nonprofit organizations. And the 
cumulative effect, I think, of that nonprofit experience, the 
private sector, and the public service since then enables me to 
evaluate issues which come before the Board of the FDIC in a 
fair and balanced manner which balances the interests of the 
banks, their customers, and the deposit insurance funds and the 
Nation's economy.
    Under the leadership of Chairman Don Powell during the past 
year, the FDIC has been at the forefront of many issues facing 
the industry. We have brought together leading thinkers on such 
key issues as corporate transparency, financial institution 
disclosure, risk management, and, of course, our work with 
deposit insurance reform. Following up on an initiative that 
was begun under Chairman Tanoue, we have launched the financial 
literacy effort called Money Smart with the stated goal of 
establishing partnerships with 1,000 organizations around the 
country and every State in the Union and plan to distribute 
100,000 copies of Money Smart in three languages and expose a 
million consumers to this financial literacy program over the 
next 5 years.
    We are also engaged in a major effort to reduce unnecessary 
regulatory burden and to tap the tremendous potential of 
technology to streamline bank supervision, while not 
sacrificing our primary goal of ensuring the safety and 
soundness and consumer compliance of the Nation's banking 
system. These are just a few of the initiatives that are 
underway at the FDIC today.
    While the FDIC has been aggressively moving forward on 
these developing issues, we have not neglected our primary 
mission of protecting depositors in the event of bank failures. 
In fact, I believe that the lessons learned in one of those 
failures was particularly instructive to me as a new Member of 
the Board about this time last year.
    Following the resignation of Chairman Tanoue, I was serving 
as the Acting Chairman of the FDIC during the failure of 
Superior Bank in the Chicago area. It wasn't just the size of 
the institution, about a $2.2 billion institution, that was 
instructive. As this Committee knows from your oversight, the 
failure raised a number of issues, ranging from subprime 
lending, to residuals and accounting opinions to regulatory 
cooperation and access, to management liability that challenged 
the leadership and the staff of the FDIC to modify established 
methods of handling bank failures and to create some innovative 
new approaches. This experience, along with other experiences 
during my almost 2 years on the Board, combined with chairing 
the committees of the Board, standing committees, I think 
enable me to serve effectively as the Director of the FDIC and 
as the Vice Chairperson of the FDIC, if I am confirmed.
    The FDIC occupies a unique position in our Government. We 
are keenly aware of the importance of our mission of 
maintaining the safety and soundness and the trust of the 
American people and the Nation's financial system. It is an 
organization with a highly capable, professional, and dedicated 
staff. I look forward to continuing to work with them in 
fulfilling our mission. And with all of the successes, I 
believe that there is still an amazing untapped potential of 
the FDIC that is just surfacing. I am honored that the 
President has nominated me for this position and I again thank 
you for having this hearing.
    I am happy to address questions.
    Chairman Sarbanes. Thank you very much. We appreciate your 
statement.
    Ms. Furchtgott-Roth.

       STATEMENT OF DIANA E. FURCHTGOTT-ROTH, OF MARYLAND

                    TO BE A DIRECTOR OF THE

                 FEDERAL HOUSING FINANCE BOARD

    Ms. Furchtgott-Roth. Thank you very much, Mr. Chairman, 
Senator Gramm, and distinguished Members of the Committee for 
the opportunity to appear before you today. I am honored that 
President Bush has nominated me to be a Director of the Federal 
Housing Finance Board, and I am deeply humbled to appear before 
you today at this confirmation hearing. If confirmed, I would 
be the first full-time female Director of the Board.
    I want to express my appreciation to you, Mr. Chairman, the 
Senator from my home State of Maryland. I would also like to 
express my appreciation to Senator Gramm for everything that he 
has done on my behalf. He'll be sorely missed by his many 
friends everywhere.
    I would like to take this opportunity to introduce my 
husband, Harold, and my six children, Leon, Francesca, Jeremy, 
Godfrey, Theodore, and Richard.
    Senator Gramm. Let's have them all stand up.
    Chairman Sarbanes. Yes.
    [Laughter.]
    Senator Gramm. Beautiful children.
    Chairman Sarbanes. Yes. Very good. We are pleased to have 
all of you with us.
    Ms. Furchtgott-Roth. I am very happy that they can take 
time out of their busy work and school schedules. It was a real 
fight to get them out of school today on the Code Blue day. 
They almost wouldn't let us take them out. But we managed, 
telling them that it was an historic occasion.
    I am also profoundly grateful to my parents, Ellen and 
Gabriel Roth, for making the difficult decision to come here 35 
years ago from England. I remember sailing into New York Harbor 
on Labor Day weekend, 1967, and seeing the Statue of Liberty. 
To be honest, its symbolism did not mean much to me then as a 
child. I was just glad that the 5 days of seasickness were 
over. But it became more and more important as I have grown 
into adulthood and made the choice to become an American. My 
parents' decision gave me the opportunity to work in the White 
House under President Reagan, President George H.W. Bush, and 
our current President Bush, as well as marrying a wonderful man 
and having six children. Nowhere else in the world can 
immigrants have such opportunities.
    It is extraordinarily hard to do what my parents did, and 
pack up all one's possessions and three young children and move 
to a new country, a country my mother had not even visited. The 
story is that my father called my mother from the United States 
and said, ``We have to move here, they even heat the 
bathrooms.'' Our home in England had kerosene heaters that my 
father would go around filling every night before he went to 
bed. There was no heater in our family's only bathroom, as was 
common practice in many English homes.
    And that brings me to the subject of housing, and the 
Federal Housing Finance Board. Many people ask about my 
interest in the Federal Housing Finance Board. Housing affects 
all of us--all of us need somewhere to live. And many either 
own homes, or aspire to do so--it is part of the American 
Dream. With such a large purchase, the financing mechanism is 
critical.
    Our housing and capital markets work so well that many 
people assume that there is nothing special about them. But, 
internationally, these well-functioning systems are rare. Our 
standard fixed 30 year mortgage is not standard in most other 
countries, even in the developed world. Generally, people in 
other countries are required to put down much larger sums, and 
borrow at rates which vary directly with the prime rate of 
lending. So when the prime rate goes up, mortgage payments 
unpredictably take more money away from groceries and clothing. 
And housing can be so scarce that selling a home and moving to 
another city becomes practically impossible. If I should have 
the honor of being confirmed, I would try to preserve and to 
improve the flexible financial systems that America has and 
make it possible for more Americans to take advantage of them.
    The Federal Housing Finance Board oversees the Federal Home 
Loan Bank System, a group of 12 banks which have $700 billion 
in assets and approximately 8,000 member banks. The Board makes 
sure that the System is on a sound financial footing, an 
important task, as can be seen by recent developments in the 
corporate and accounting world.
    The Federal Home Loan Bank System makes it easier for small 
banks to lend money to Americans for mortgages. In the first 
days of banking, banks could only lend out what they had on 
hand in deposits. Later, they acquired the ability to borrow 
from some sources to make loans to others. The 8,000 member 
banks can now, through the Federal Home Loan Banks and the 
Board's Office of Finance, take advantage of pooling their 
requests for funds to achieve lower rates, which get passed on 
directly to the consumer.
    About 68 percent of American households own homes. But the 
rate for minorities is far lower, with fewer than half of 
Hispanics and African-American households owning homes. 
President Bush and the Federal Housing Finance Board are trying 
to raise these levels. The Board's Affordable Housing Program 
helps improve homeownership among these groups, a vital social 
goal. Recently, the Board expanded the amount of affordable 
housing program funds that Federal Home Loan Banks can 
contribute toward downpayment assistance programs for first-
time homebuyers, one of the most important steps in purchasing 
a home.
    Chairman Sarbanes and Members of the Committee, I am 
honored to appear before you today. If confirmed, I promise to 
work closely with this Committee and Congress to ensure the 
safety and soundness of the Federal Home Loan Bank System and 
fulfillment of the System's affordable housing goals. I look 
forward to answering any questions that you might have.
    Chairman Sarbanes. Thank you all very much.
    Mr. Reich, let me ask you a couple of questions. When we 
did the hearing on the failure of Superior Bank, we had that 
issue about the OTS that refused the FDIC's request to 
participate in its examination of Superior. But I understand 
that they then entered into an agreement to allow the FDIC to 
participate in the other regulators' bank examinations. First, 
is this correct? And, is the agreement holding in terms of your 
practice now?
    Mr. Reich. It is correct, Mr. Chairman. Not too long 
thereafter, after a good bit of staff work by the senior staffs 
of the regulatory agencies, the OTS, the OCC, the FDIC, and the 
Fed, we did complete a memorandum of understanding for back-up 
authority. That has been in existence now for probably most of 
this year. It is working very well.
    I want to emphasize that the relationship that currently 
exists between the Chairman and directors of the regulatory 
agencies is, I think, excellent today. There have been a number 
of instances where those agencies have invited us in to 
participate in examination on an unsolicited, unasked basis.
    So, we could not be more pleased today at the FDIC with the 
interagency cooperation and the way that the other agencies are 
welcoming the FDIC into examinations of three-, four-, and 
five-rated institutions, or any kinds of situations where they 
feel that there may be special interest to us.
    Chairman Sarbanes. Well, I am encouraged to hear that.
    After the failure of Keystone, there was an effort by the 
Federal bank regulators to propose stricter capital rules to 
limit the concentration of residuals in banks. The bank failed 
in September 1999. The comment period closed on December 26, 
2000. When we had our first hearing on October 16, 2001, there 
was still no final rule.
    You spoke at that hearing about the importance of updating 
the capital rules and indicated that you would make every 
effort to get that done. And at the end of November, the 
Federal regulators jointly announced the publication of a final 
rule.
    I know that you were instrumental in that process and I 
just wanted to express my appreciation to you here for doing 
that. Do you have any sense of why it took so long to bring 
that to fruition?
    Mr. Reich. It was a combination of the complexity of the 
issues, the number of agencies that were involved in trying to 
come to terms with what the capital requirements should be and 
those kinds of situations. But I will say that in the past year 
or so, and I want to compliment Chairman Don Powell of the FDIC 
who is the Chairman of the FFIEC, there is at our agency 
certainly, and I think on the staff of the FFIEC, a heightened 
sense of urgency. Long timelines within our organization are no 
longer acceptable. And that heightened sense of urgency has 
yielded benefits in a number of different areas.
    I would also add that greater participation by the 
principals, greater involvement by the principals in addition 
to the staff has produced positive results in making things 
happen in a shorter 
period of time.
    Chairman Sarbanes. Ms. Furchtgott-Roth, do you think it 
would be appropriate for you to be highlighted in an invitation 
to a political fundraiser as a special guest, being a Member of 
the Board of the Federal Housing Finance Board, when the 
invitations to that political fundraiser were going to the 
institutions for which you are the regulator?
    Ms. Furchtgott-Roth. I understand that according to the 
ethics regulations, Members of the Board of Directors of the 
Housing Finance Board are allowed to participate in political 
events as long as their title is not used, as long as it is 
just their name that is used. And it is common practice among 
many people in the Administration to participate in such 
events.
    Chairman Sarbanes. Regulators to do so?
    Ms. Furchtgott-Roth. Yes, it is common practice.
    Chairman Sarbanes. You do not see a problem? You would be 
happy with that practice? Would you do it yourself? Would you 
be bothered by being featured as a special guest at a political 
fundraiser, and then have the invitations for that fundraiser 
go to the heads of the institutions that you are charged with 
regulating?
    Ms. Furchtgott-Roth. I would make sure that I complied with 
all ethics laws----
    Chairman Sarbanes. No, no, no. That does not get me to 
where I want to go. Do you have any problem with that?
    Ms. Furchtgott-Roth. As long as I complied with all the 
ethics laws, then, and the invitations were sent to a large 
enough group of people, then I wouldn't have a problem. Of 
course, just sending it to, say, the 12 bank presidents I would 
regulate, I would think would pose a problem. If, on the other 
hand, there were thousands and thousands of invitations sent 
out, and some of them happened to reach the bank presidents, 
there is no problem with that under the ethics regulations.
    Chairman Sarbanes. Well, now, you are a regulator. What is 
your view of how you should be used for political fundraising? 
Should you be used at all?
    Ms. Furchtgott-Roth. I think that there are many people in 
Washington who are in the position of regulating. Political 
appointees are not covered by the Hatch Act. Those covered by 
the Hatch Act are not permitted any political activity. But 
Presidential appointees are not covered by the Hatch Act. And 
therefore, they are permitted participation, as long as their 
title is not used, as long as just their name is used.
    Chairman Sarbanes. Do you remember Eugene Ludwig, who was a 
Comptroller of the Currency?
    Ms. Furchtgott-Roth. I do, yes.
    Chairman Sarbanes. He went to a coffee at the White House 
at which members of the banking industry were present. Do you 
remember that?
    Ms. Furchtgott-Roth. I do not recall that he went to a 
coffee at the White House. But I have met Mr. Ludwig and he is 
an extremely intelligent person, very well informed.
    Chairman Sarbanes. And he was sharply criticized for that 
because it was felt, as a regulator, he ought not to be 
participating in something that arguably, was a political 
fundraiser, although it was not a charged event. People were 
not paying for a ticket. It was just, I guess, laying the 
ground work. But he was sharply criticized for that.
    I am trying to get at what your own sensibilities are on 
this important issue.
    Ms. Furchtgott-Roth. Well, having just finished being Chief 
Ethics Officer at the Council of Economic Advisors, I am 
familiar with a lot of these ethics rules, and there are also 
many of these ethics rules, so much so that each agency needs 
not only a chief ethics officer, but many other attorneys, to 
make sure that these laws are complied with. And the Office of 
Government Ethics has regular seminars on different aspects of 
the laws and there are ethics officers at each agency.
    If I were put in a situation, I would go to the ethics 
office at the Federal Housing Finance Board and say, does this 
comply with the ethics regulations?
    Chairman Sarbanes. Suppose I came to you and said, I am 
going to hold a political fundraiser and I am going to invite 
the heads of the regional home loan banks and their other 
principal officers to my political fundraiser. And I want to 
send out this invitation for this political fundraiser and I am 
going to say in the invitation that you are going to be a 
featured guest at my political fundraiser. What would you say 
to me?
    Ms. Furchtgott-Roth. The first thing I would do is I would 
go to the ethics officer and see if it were legal. If it were 
legal, then, Chairman Sarbanes, I would say that I would be 
happy to appear at your fundraiser, as long as it were legal 
according to----
    Chairman Sarbanes. Well, I would be unhappy about that. And 
it seems to me that what you should say to me is I do not think 
I should do that. I do not think as a regulator of these banks, 
that I should come to your political fundraiser. Clearly, the 
appearance of that is not good. Would you agree with that?
    Ms. Furchtgott-Roth. It depends on how many other people 
are invited. Usually, there are thousands and thousands of 
people invited to these fundraisers. People get invitations all 
the time.
    Chairman Sarbanes. Do you anticipate going around town 
appearing at political fundraisers?
    Ms. Furchtgott-Roth. I have never been to one before and I 
have never had my name listed on one before.
    Chairman Sarbanes. Would you commit now not to go to one as 
a regulator, that you would regard it as contrary to 
maintaining an appearance of impartiality?
    Ms. Furchtgott-Roth. I commit myself to always abiding by 
the ethics laws we have. I mean, there might be circumstances. 
For example, if you, Chairman Sarbanes, wanted me to come to 
one of your fundraisers and you thought it would be helpful 
that I come. And I was not listed as Federal Housing Finance 
Board. Then, absolutely, I would come.
    Chairman Sarbanes. I hope that I would have the good sense 
never to invite you and place you in that position. And were I 
ever to fall off that standard, I would hope that you would 
have the good sense to turn me down.
    Senator Gramm.
    Senator Gramm. Let me go to this issue.
    It seems to me that in terms of your rights as a citizen to 
attend a fundraiser, I hope that you would not go to Senator 
Sarbanes' fundraiser.
    [Laughter.]
    I would hope that you would come to my fundraiser.
    But I think there is a distinction you should draw, and let 
me try to draw it for you. I think in terms of your ability to 
be an active political citizen, as a Presidential appointee, 
you have every right to do that.
    I do believe that when you are regulating people and your 
decisions mean potentially millions of dollars to them, that 
you have to be very sensitive that no one ever believes that 
your good offices or your judgment could be for sale. I think 
that is what Senator Sarbanes is saying.
    For example, if I had a fundraiser and the Comptroller of 
the Currency, who is now a Democrat, came to my fundraiser, I 
think that would be fine. On the other hand, if I invited him 
as a special guest and then I invited bankers from around the 
country who sort of would be coming to visit with him as a 
special guest, I think that would cross over the line.
    And I think that you are going into a totally different 
situation than you have ever been in before, and I know your 
sensitivity to wanting to protect your full rights as a citizen 
because you have political views and you want to support people 
you support. But when you are a regulator, there is a line that 
you cannot cross and you have to ask yourself, is my name being 
used as an attraction to people who might believe that by 
coming and contributing, they might influence my decisions? And 
if you conclude that is the case, whatever the ethics rules 
say, then I would think it was not a very good idea.
    Ms. Furchtgott-Roth. The appearance of impropriety or of 
propriety is extremely important, especially in this town, as 
you mentioned in your earlier remarks.
    Chairman Sarbanes. Does that mean that you agree with 
Senator Gramm's analysis or that you are still holding to the 
position that you would refer it to the ethics officer and 
whatever they, in effect, told you was what you would do?
    Ms. Furchtgott-Roth. Well, the first thing I would do in 
any case is refer something to the ethics office. I mean, in 
any case, they know the ins and outs of these kinds of things.
    Chairman Sarbanes. You could have a standard higher than--
--
    Ms. Furchtgott-Roth. If it were targeted specially at bank 
regulators, then that is one thing and I would not be a special 
guest at that event. But I think the fundraiser to which you 
are referring, if there were thousands and thousands of 
invitations sent out and it wasn't targeted at the banking 
sector--it is difficult to work out beforehand who these 
invitations go to because there are so many mailing lists that 
it would be possible that it would get to someone in the 
banking sector.
    Chairman Sarbanes. But let us assume that hundreds were 
sent out, but encompassed within the hundreds were banking 
institutions for whom you were the regulator and you were being 
featured as the special guest at the fundraiser.
    Ms. Furchtgott-Roth. I think if it were targeted at a 
sector I was regulating, I would not participate. If it were a 
general type of fundraiser, then----
    Chairman Sarbanes. Well, by participating, we are not 
talking about showing up at the fundraiser. We are talking 
about headlined as a special guest at the fundraiser.
    Ms. Furchtgott-Roth. Right.
    Chairman Sarbanes. So this invitation goes out and it says, 
come to my fundraiser. My special guest is Ms. Furchtgott-Roth. 
Now it may or may not say that you are on the finance board, 
but that is at least for people in the know, that is known. And 
amongst the invitation list are going to be, although it may be 
broader than that, will be people that are in the industry that 
you are regulating. Would you allow yourself to be listed as a 
special guest on an invitation of that sort?
    Ms. Furchtgott-Roth. It depends on how broad the mailing 
list was. If it were a very large mailing list, I would. If it 
were a small group, I would not.
    Senator Gramm. I think we are probably drawing a 
distinction here that does not exist. If you recieved an 
invitation and it is has your name on it, that is your name. 
You are the special guest. And your name is unusual, but not a 
household word.
    Ms. Furchtgott-Roth. Right.
    Senator Gramm. And people are being invited to come with 
you as a special guest, and you have reason to believe that 
among those who would be invited are people that you would 
regulate. It seems to me that that is very different than, say, 
your neighbor hosting a fundraiser--do you live in Virginia or 
Maryland?
    Ms. Furchtgott-Roth. Maryland.
    Senator Gramm. Your neighbor is hosting a fundraiser for 
Ellen Saurbrey. And so people in the community send out 
invitations to people who live in that community and you list 
the neighbors' names on it. Perfectly legit, it seems to me. 
But when you are singled out as the honored guest and you know 
it is going to people that you are regulating, it seems to me 
that that is bad policy, and it something that you ought not to 
do.
    Ms. Furchtgott-Roth. Right. If I knew it was going to 
people I was regulating, then I would avoid it. But sometimes 
when one does not know who is in all these lists, you say, yes, 
fine, I will be a special guest at your fundraiser, and then it 
goes out to standard lists, and you just do not know who is on 
it.
    Chairman Sarbanes. Yes, but that is all the more reason not 
to allow yourself to be used as a special guest. You are moving 
now into a position in which you have regulatory authority over 
significant financial institutions. So, you will be in a 
position to make decisions that have potentially wide economic 
repercussions for these institutions and for the officers of 
these institutions. Now it seems to me you have to start 
thinking in a very different way because just the appearance of 
being able to influence a regulator's judgment in that 
political context is a serious matter.
    Ms. Furchtgott-Roth. Mr. Chairman, I have never been listed 
on any fundraiser as a special guest or anything else. But, as 
you say, I am moving into a different area. One does see many 
cabinet secretaries featured as special guests at fundraisers 
and many of the people invited undoubtedly have ties to some of 
those areas.
    Chairman Sarbanes. Well, do you think your role as a 
regulator and the responsibilities that flow with that are the 
equivalent to the role of a cabinet secretary?
    Ms. Furchtgott-Roth. Absolutely not. They both regulate 
different types of areas. A cabinet secretary has far more 
power and is far broader. Cabinet secretaries have regulatory 
powers over vast areas. This is just a very small agency.
    Chairman Sarbanes. No, no, no. My understanding is that the 
Secretary of the Treasury has to stay removed from the OCC in 
terms of regulatory decisions which the Comptroller of the 
Currency makes, and that arena is protected from what would 
otherwise be perceived as political interference, or an effort 
to influence the decisionmaking through political 
contributions.
    Senator Gramm. Mr. Chairman, let me suggest this. We have a 
nominee before us who, by her own admission, has never been a 
guest at a fundraiser. I would like to suggest that you----
    Ms. Furchtgott-Roth. I have never been listed on the 
program at any of these fundraisers.
    Senator Gramm. Yes. What I would suggest is that you go 
back and think about this, trying to separate yourself as a 
citizen and your position as a regulator. This is a small 
agency, but they have $700 billion.
    Ms. Furchtgott-Roth. Right.
    Senator Gramm. Seven hundred billion dollars. That is a lot 
of money. And I do believe that, as a regulator, you have a 
different set of standards and you have to apply what we would 
call in the country a smell test. Does this look right? Does 
this smell right? And again, I think you have to differentiate 
between yourself as a citizen, where you and your neighbors are 
supporting anybody. And I have a feeling that you would be 
supporting the right people, so I do not want you to get out of 
politics, and there is no reason you should. But I do believe 
that when you are regulating a certain industry, you have to be 
very careful about any appearance that somehow, through that 
fundraiser, that you might be influenced. The fact that you are 
not going to be influenced anyway does not change the fact that 
there might be a perception.
    So, I would like to propose, Mr. Chairman, that we just 
simply have the candidate go back and think about this special 
case and send a letter to the Chairman and to me basically 
stating your conclusion and what kind of commitment you would 
make about it, 
because I think what has happened here is, as a person who is a 
naturalized citizen and very much committed to being a full 
citizen, this is a special circumstance and it is one I think 
you need to think about. I think if you could put something 
into writing on it, having thought about it, I think it would 
be useful to us.
    Ms. Furchtgott-Roth. Okay. I will do that, yes.
    Senator Gramm. I just want to make a point. The Federal 
Home Loan Bank Board has been an entity that has worried me. We 
had a fellow named Bruce Morrison, and he was the Chairman. I 
guess he was the Chairman of the Board that you will be on. Is 
that right?
    Ms. Furchtgott-Roth. That is correct, yes.
    Senator Gramm. I was concerned about him to begin with 
because I thought he was too political. But he had done 
something very mean to me when I was in the House and I felt if 
I blocked his nomination, that I would look petty. And so, I 
let him go. But what happened very quickly thereafter was that, 
in my mind, just crazy things started happening at the Federal 
Home Loan Bank Board. Salaries were exploding. And look, I 
believe in competitive pay. I understand it is hard to get good 
people. Senator Sarbanes and I are doing this for the glory.
    [Laughter.]
    I understand it is hard to get good people, but at least my 
feeling at the end of the last Congress as this was coming to a 
conclusion was that this was an agency completely out of 
control.
    And so, I would like to ask you, if you are confirmed into 
this position, to take a hard, long look at the Federal Home 
Loan Bank Board, at these salary structures, at the whole 
question of paying directors, because I believe that you are 
not coming into what I would perceive to be a position where 
things are in a position that that would be considered the 
norm. I believe that this was almost a runaway agency 2 years 
ago. Now, I do not know what has happened in the interim of 2 
years.
    Ms. Furchtgott-Roth. The person who made the highest salary 
in the Federal Government, James Bothwell, $240,000 a year, has 
just been let go. They had a number of RIF's at the agency, 
letting go some of these high-paid people and hiring more bank 
supervisors, more examiners, because they only had eight 
examiners and there were 12 Federal Home Loan Banks, and they 
need a lot more examiners.
    Senator Gramm. Well, I do not know what the magic number 
is, I am just urging you to take a long, hard look at it.
    Ms. Furchtgott-Roth. Right.
    Senator Gramm. Again, I would rather have one good person 
than 100 bad ones. I do not object to paying people competitive 
salaries, but I just had the impression 2 years ago that this 
was a runaway operation. I would like to ask you to take a very 
close look at it.
    Ms. Furchtgott-Roth. Yes, I certainly would if I had the 
honor of being confirmed.
    Senator Gramm. Thank you, Mr. Chairman.
    Chairman Sarbanes. I gather that some of the bank 
presidents are making between $500,000 to $800,000 a year. Is 
that right?
    Ms. Furchtgott-Roth. That is correct, yes. They are private 
entities, though, rather than governmental. They are not 
Federal Government employees. They are private entities.
    Senator Gramm. Why do they call it Federal Home Loan Bank 
Board?
    Chairman Sarbanes. It is a private entity, but only within 
the Home Loan Bank System.
    I think there are some important questions about this 
System and we would intend to get the Chairman in to answer. 
Actually, many of the questions we were earlier directing to 
you need to be directed to him since I was putting to you a 
hypothetical, but we have a real-life situation with him.
    But I do not know what is going on. I am told that the bulk 
of the Federal Home Loan Bank advances go to a small number of 
very large members. According to the Board's own data, 30 
percent of the total advances of the System go to just 10 
institutions. In some home loan bank regions, the concentration 
is even higher. For example, over 80 percent of the advances 
from the San Francisco bank go to only five institutions.
    Should the Federal Home Loan Banks be primarily devoted to 
providing low-cost funding to such large institutions? They 
have direct access. Maybe they should graduate from the System. 
What is the rationale of providing these, in effect, subsidized 
advances from the Home Loan Bank in such a highly concentrated 
form? Do you have a view on that?
    Ms. Furchtgott-Roth. Yes. It does not really make sense 
when you look at it; but in practice, the way it works is that 
banks are allowed to borrow as much as they want up to the 
level of their collateral. There is no cap placed on how much 
they can borrow. That is why one gets large institutions 
borrowing so much more than small institutions.
    If a small institution had more collateral and wanted to 
borrow more, that institution could. It is not as though the 
banks, the large banks, are driving out the small banks in 
terms of lending because there is no cap on lending in the 
whole system. As long as there is the collateral, a Federal 
Home Loan Bank can borrow as much as it wants and a member bank 
can borrow as much as it wants. That is why you get this 
situation with these large banks wanting to borrow more than 
the small ones. In fact, there were more small institutions let 
in under that magnificent piece of legislation: The Gramm-
Leach-Bliley Act allowed more small community banks to become 
members of the Federal Home Loan Bank without having the 10 
percent of their assets in housing.
    So one can see that these very small institutions have less 
of a demand for funds. They do not want to make such big loans 
as the large ones. That is why one gets to that situation. But 
there isn't any limit on the borrowing, so the banks can borrow 
as much as they want.
    Chairman Sarbanes. I thought the Home Loan Banks were 
lending significant amounts without collateral in the form of 
unsecured loans, often through the overnight market.
    Ms. Furchtgott-Roth. The 12 Federal Home Loan Banks have 
recently completed new capital requirements as mandated under 
Gramm-Leach-Bliley, and that process is finished. It just 
finished last August with the Federal Home Loan Bank of New 
York. They all meet the capital standards set out under the 
law.
    Chairman Sarbanes. I thank the panel. Actually, there is a 
vote on. We will have to defer beginning the next panel until 
after the vote. We will go and vote, I am not sure whether 
Senator Gramm can return. I will return in order to conclude 
the other two nominees. I thank the two nominees for coming 
before the Committee.
    Mr. Reich. Thank you, Mr. Chairman.
    Chairman Sarbanes. The hearing stands in recess and upon 
our return, we will go to the third and final panel.
    [Recess.]
    Chairman Sarbanes. We will now turn to our third panel. I 
apologize to our nominees, but we have no control over these 
votes, as you can appreciate it. We have two nominees to be 
Directors of the Securities Investor Protection Corporation: 
Deborah Doyle McWhinney and Armando J. Bucelo. Did I pronounce 
it right, sir?
    Mr. Bucelo. Yes, you did, Mr Chairman.
    Chairman Sarbanes. Okay. Before I take your statements, I 
have to swear you in, as is our practice.
    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. Bucelo. I do.
    Ms. McWhinney. I do.
    Chairman Sarbanes. Do you agree to appear and testify 
before any duly-constituted committee of the U.S. Senate?
    Ms. McWhinney. I do.
    Mr. Bucelo. I do.
    Chairman Sarbanes. Please take a seat.
    Mr. Bucelo. Thank you.
    Chairman Sarbanes. Ms. McWhinney, why don't we hear from 
you first, and then we will go to Mr. Bucelo.

              STATEMENT OF DEBORAH DOYLE McWHINNEY

             OF CALIFORNIA, TO BE A DIRECTOR OF THE

           SECURITIES INVESTOR PROTECTION CORPORATION

    Ms. McWhinney. Mr. Chairman, thank you. Good late 
afternoon.
    Chairman Sarbanes. Everyone's gone, yes.
    [Laughter.]
    Ms. McWhinney. I am President of Schwab Institutional, an 
arm of the Charles Schwab Corporation that provides services to 
investors through commission-based independent investment 
advisors. But beyond my position at Schwab, I am the very proud 
mother of Megan and Aidan, two wonderful teenagers who could 
not join me today because of their studies.
    Both of my girls are studying U.S. Government now and I 
just cannot wait to get home today and tell them about this 
experience. But I particularly want to thank you for exhibiting 
the kind of attention and diligence in the questioning I have 
seen here this afternoon that will make them proud to be U.S. 
citizens. And I mean that in all sincerity. But be nicer to me, 
please.
    [Laughter.]
    Chairman Sarbanes. I thought we asked a very simple 
question. We just had trouble getting an answer.
    [Laughter.]
    Ms. McWhinney. I am not a regulator.
    [Laughter.]
    Schwab was founded more than 30 years ago on the principle 
of helping individuals to become educated, informed, and 
sensible investors--and our company remains focused on the 
individual investor today. I am honored to have been nominated 
by President Bush as a Director of the Securities Investor 
Protection Corporation, where I am looking forward to 
continuing that focus on the individual investor.
    We are all painfully aware of the economic slowdown and 
stock market fall-off of the last 2 years. The Dow Jones 
Industrial Average is off more than 34 percent from its January 
2000 high, and Nasdaq is down a more startling 77 percent. 
Millions of individual investors have lost countless trillions 
of dollars of wealth. For many Americans, those investments 
constitute the bulk of their retirement savings, the money they 
were hoping to use to buy a first home or send their kids to 
college--in sum, their most cherished financial hopes and 
dreams.
    That is why I believe there are few more important 
organizations than the Securities Investor Protection 
Corporation. SIPC has a narrow but extremely important role: 
Whenever a brokerage firm fails or goes bankrupt, SIPC steps in 
to return the money investors had with that firm as quickly and 
as painlessly as possible. No waiting for years of drawn-out 
court cases and bankruptcy hearings. SIPC gets the cash or 
securities that the individual investor had with the failed 
firm and returns it to that investor, so that he or she can 
move that money to a more reliable company.
    I wish that there was not a need for an organization like 
SIPC. But there is a very real need, and today that need is 
stronger than it has been in decades. Investors have a lot to 
worry about, with the accounting and ethics of some of the 
country's most respected companies now being questioned, the 
economy in a prolonged downturn, and the stock market 
retreating to levels not seen in several years. Investors 
should not have to worry about what happens if their brokerage 
firm goes under. With SIPC, they do not have to. More than 99 
percent of eligible investors get their money back with the 
SIPC's help. In the past 30 years, more than 600,000 investors 
have recovered nearly $14 billion in assets with the SIPC's 
help.
    If I am confirmed as a Director of SIPC, I promise the 
Members of this Committee and the millions of individual 
investors around the country that I will bring the vigilance 
and dedication that the role deserves. Individual investors are 
comfortable knowing that SIPC is behind them if anything should 
happen, and I will work hard to maintain and strengthen that 
confidence. In this era of 
uncertainty about the stock market, SIPC directors should bring 
nothing less than their full attention to their task. If I am 
confirmed, I promise to do so in the tradition of the many 
directors before me who have helped maintain a solid foundation 
beneath the strongest capital markets in the world.
    Thank you very much. I will be happy to answer questions.
    Chairman Sarbanes. Thank you very much. We appreciate your 
statement.
    Mr. Bucelo.

        STATEMENT OF ARMANDO J. BUCELO, JR., OF FLORIDA

                    TO BE A DIRECTOR OF THE

           SECURITIES INVESTOR PROTECTION CORPORATION

    Mr. Bucelo. Mr. Chairman, I am honored to appear before you 
as President Bush's nominee to serve on the Board of Directors 
of the Securities Investor Protection Corporation, better known 
to all of us as SIPC. I am deeply grateful to President Bush 
for awarding me the privilege of this nomination. It is now my 
pleasure to introduce my wonderful wife, Beatriz, companion and 
best friend for over 20 years, and my son, Alexander, a 9 year 
old baseball star who indeed will play with the New York 
Yankees one day, and upon his retirement from baseball, hopes 
to be President. I have also been blessed with two other 
children, Alexis Marie, a 17 year old National Honor Society 
student ranked in the top percentile of her class, and blessed 
with the gift of pen and speech. And last, but not least, my 15 
year old son, Armando Joseph, who is taller than I am and is 
considered an excellent swimmer and water polo player, and who, 
along with Alexis and myself, is a black belt first degree in 
karate. Mr. Chairman, and Members of the Committee, I thank God 
every day for my family.
    I am a proud Cuban-born American citizen. I arriving in 
this great country of ours over 40 years ago, with my parents 
looking for freedom and opportunity for my sister and I. 
Because of my father, Dr. Bucelo, and my mother Carmen, 83 and 
74 years young respectively, I am what I am today. We are 
forever thankful and appreciative of the opportunities given to 
us by the United States of America.
    I have been an attorney for the past 23 years, specializing 
primarily in real estate, corporate, and banking. As a result 
of my professional endeavors, I have been exposed to a myriad 
of career opportunities dealing in said fields. I had the 
opportunity to serve as a Director of Freddie Mac--Federal Home 
Loan Mortgage Association--during President George Bush's 
Administration. During my tenure at Freddie Mac, I was able to 
cooperate in the efforts to lead such a powerful and gigantic 
institution into its preparations for the 21st century. I also 
had the pleasure to serve as Cuban American National Chairman 
of the National Republican Senatorial Committee, where I 
attempted to establish a substantial dialogue, as well as a 
strong working relationship between Cuban Americans in this 
country and Members of the Senate. Among other activities, I am 
currently a Director of the National Housing and Development 
Corporation, created in 1997, to help preserve more of the 
Nation's at-risk affordable housing stock. Its principal 
purpose is to improve the quality of life of all of our 
national residents, making clean, safe, and attractive, family 
housing, as well as affordable rents its foundation. Finally, I 
serve as the Trustee of Miami-Dade Community College, the 
largest community college in the Nation, and from which I am a 
proud graduate.
    As we all know, SIPC was created by the Securities 
Investors Protection Act of 1970, to provide certain 
protections against losses to customers from the failure of 
securities firms.
    If honored by confirmation by the U.S. Senate, I vow to be 
a strong advocate for fairness and common sense. As a newcomer 
to the world of SIPC, I will promptly learn all I need to in 
order to work closely with this Committee, the Senate, and 
Members of the House of Representatives. I may not know the 
answers to may questions today, but I give you my word I do 
anticipate and welcome the charge for which I have been 
selected with both eagerness and humility. Mr. Chairman, I 
thank you for the opportunity you have given me to speak before 
you. I, along with the rest of this country, admire the work 
all of you are doing on our behalf, and I personally want to 
congratulate you for guiding us through these difficult times.
    Thank you, and I will be more than happy to answer any of 
your questions, sir.
    Chairman Sarbanes. Thank you very much, sir.
    The first question I want to put to both of you is, 
presumably, and I think you made reference to it, Ms. 
McWhinney, in your questionnaire. But you both, I assume, have 
had discussions with SIPC on how to handle any possible 
conflict of interest because these are part-time appointments 
and you will each continue in your current employment, as I 
understand it.
    Mr. Bucelo. That is correct.
    Ms. McWhinney. That is correct.
    Chairman Sarbanes. Have you had such discussions to work 
out the arrangements for recusals and so forth?
    Ms. McWhinney. I have been covered both by the Office of 
Government Ethics, and then I also had a conversation with 
Michael Dunn about that, and should anything come up with 
Schwab or any of its subsidiaries, I would recuse myself.
    Chairman Sarbanes. Have you worked out a written protocol, 
or was that an oral protocol?
    Ms. McWhinney. It was a written protocol with Government 
Ethics that I signed, I believe in December of last year, when 
the process started.
    Chairman Sarbanes. All right. Good.
    Ms. McWhinney. I have been in positions when I was in 
banking where I have had to do that before. So, I have some 
experience when I have to draw the line.
    Chairman Sarbanes. Okay. Good.
    Mr. Bucelo. Same case here, Mr. Chairman. I was with 
Freddie Mac for a number of years. I have not been fully 
briefed by SIPC. I have not met with them, but I have carried 
many conversations with its president. And by all means, I am 
aware of the conse-
quences and I intend to fully abide by them.
    Chairman Sarbanes. It is interesting, these organizations, 
people get nominated by the President, and we are happy to 
consider them, but you would think that the agency to which 
they were going would--this is not directed to you, it is 
directed to them--would invest some time and effort in 
preparing their prospective directors for the hearings before 
the Senate. You can go back and tell SIPC I said that.
    Ms. McWhinney. Actually, with all due respect, Mr. Dunn has 
spent quite a bit of time with me.
    Chairman Sarbanes. Okay.
    Ms. McWhinney. This began over a year ago and several times 
I have talked to him about it, even before I came to meet with 
Presidential staffing last summer. Their website is actually 
pretty good and has a lot of information on it that you can 
garner. Then I spent this morning with them going over a lot 
more in depth.
    Chairman Sarbanes. I am pleased to hear that.
    Mr. Bucelo. I could not meet with him, but he has always 
been available, Mr. Chairman.
    Chairman Sarbanes. Okay.
    Mr. Bucelo. And every time I have needed something, he has 
been there to respond.
    Chairman Sarbanes. Now, Mr. Bucelo, I was just kind of 
curious. How large is your law office?
    Mr. Bucelo. You are looking at it.
    Chairman Sarbanes. Okay.
    [Laughter.]
    So, you are a sole practitioner.
    Mr. Bucelo. Yes, sir, I am.
    Chairman Sarbanes. That is a tough road to hoe, isn't it?
    Mr. Bucelo. Especially when my partner and boss is sitting 
right behind me.
    [Laughter.]
    She is my top paralegal. We do primarily corporate banking 
and real estate. And by that I mean we represent loan closings. 
We have a title company called Metro-Dade Title. So whenever 
John and Mary go borrow money, they go to a bank, process the 
loan, I do the title work.
    Chairman Sarbanes. Okay. How old were you when you came to 
the United States?
    Mr. Bucelo. I was very young, 5, 6 years old.
    Chairman Sarbanes. So, you did all of your schooling, then, 
down in Florida.
    Mr. Bucelo. Yes, sir, I did. My father was an attorney--
is--he is very much alive, an attorney and judge in Cuba. We 
came over here. As a matter of fact, he had just finished a 
serious bout with hepatitis. He almost died. We came here. He 
began working. My mother did the same. Went to school, went to 
Miami-Dade Community College. Ironically enough, that is where 
I sit now as trustee. That is at the top of the heap. That is 
the institution that gave me the opportunity to continue. Then 
I went to the University of Miami undergraduate and law school.
    Chairman Sarbanes. Was your father able to----
    Mr. Bucelo. No, he never did because of the language 
barrier. He is retired. He was a realtor for many years.
    Chairman Sarbanes. In May 2001, the General Accounting 
Office issued a report called Securities Investor Protection--
Steps Needed to Better Disclose SIPC Policies to Investors. 
They made a number of recommendations there. They wanted 
greater transparency from SIPC and more information provided to 
the investors. Are either of you familiar with that report?
    Mr. Bucelo. Yes, sir, I am.
    Ms. McWhinney. Yes.
    Mr. Bucelo. I briefly reviewed it.
    Chairman Sarbanes. Well, I commend it to you. We think it 
made a number of worthwhile proposals.
    I know SIPC recently instituted new informational programs 
for the benefit of investors, and I would appreciate it if you 
all would look at the report and its recommendations and its 
workings.
    Obviously, at this particular time, we have to do 
everything we can to try to restore and bolster investor 
confidence. And SIPC is part of that. I mean, it is not right 
in the center of it, but it is part of that total picture.
    We passed the legislation here for making accountants 
accountable and corporate governance. But we need to strengthen 
all of the institutions that deal with it, and SIPC is one of 
them. So, I think you would be assuming your responsibilities 
at a particularly important time. And we do have this pretty 
recent GAO study which gives us some ideas.
    SIPC--how often will you all be meeting?
    Mr. Bucelo. Four or five times a year.
    Chairman Sarbanes. For a couple of days each time? How does 
that work?
    Mr. Bucelo. Pretty much.
    Chairman Sarbanes. There is a question about the adequacy 
of the SIPC fund reserve. In fact, I understand that SIPC has 
commissioned a study to analyze the adequacy of the current 
level of its reserves, which are $1.2 billion, but they hold 
about $3 trillion of investor securities. Of course, that is a 
very wide gap there. It is important to monitor the adequacy of 
the SIPC fund reserves in light of contemporary market 
conditions and I would commend that to you as well.
    Questions have been raised about the responsiveness and 
cost of the trustees who are hired by SIPC to handle investor 
claims from failed broker-dealers. One article stated, ``Their 
critics say that trustees wanting repeat business from the 
corporation have an incentive to minimize pay-outs to 
investors.'' The New York Times had an article entitled: ``Many 
Holes Weaken Safety Net For Victims Of Failed Brokerages.''
    If confirmed, would you, oversee this process to assure 
both that trustees honor appropriate investor claims without 
undue burdens? And that the costs of administering the claims 
program are appropriate for the work performed and for the 
benefits received by the investors?
    Ms. McWhinney. Definitely.
    Mr. Bucelo. Yes, sir.
    Chairman Sarbanes. You are in a very key position. Arthur 
Levitt, as I have heard him speak on more than one occasion, 
that you have this huge population of investors and, yet, they 
are the least, as it were, well organized to protect their 
interests. We set up these various institutions to try to do 
that. Of course, you do not get into the act until someone 
elsewhere has defaulted on their responsibility and then you 
end up trying to help ameliorate the situation. But that is a 
very important role and it is part of the system that we have 
structured now to try to make people feel more confident.
    The broker-dealers are controlled by the market officials 
and they are tightening up their whole approach. But this is an 
important responsibility that you are taking on, and we wish 
you well in it. And we appreciate your coming. I have no 
further questions.
    I know you have to catch a plane sometime soon, and I want 
to make sure that you do that.
    Mr. Bucelo. Thank you, Mr. Chairman.
    Ms. McWhinney. Thank you.
    Chairman Sarbanes. Thank you all very much.
    The hearing stands adjourned.
    [Whereupon, at 5:15 p.m., the hearing was adjourned.]
    [Prepared statements, biographical sketches of the 
nominees, and additional material supplied for the record 
follow:]
               PREPARED STATEMENT OF SENATOR WAYNE ALLARD
    Mr. Chairman, today we have an impressive line-up of nominees for a 
number of different positions and agencies. I appreciate your 
commitment to promptly confirming nominees. With the Nation at war the 
President needs a strong team in place.
    In particular, I am interested in our two HUD nominees. Through my 
work on the Housing Subcommittee I have seen how important it is to 
have top level appointments at the Department of Housing and Urban 
Development. It is my hope that we can get these officials confirmed 
quickly.
    For the benefit of all the nominees, let me raise a point I 
consider very important--we need results-based management. In 
particular, I would ask all the nominees to study carefully the 
Government Performance and Results Act and apply it to their 
decisionmaking process.
    Finally, I would urge you to communicate regularly with Congress 
and keep us informed of your work. We all have a common goal of wanting 
to provide effective and efficient service for American taxpayers, and 
good communication will help us both. I look forward to working closely 
with each of the nominees.
                               ----------
                PREPARED STATEMENT OF ALBERTO F. TREVINO
                     Assistant Secretary-Designate
            U.S. Department of Housing and Urban Development
                            October 3, 2002
    Chairman Sarbanes and Members of the Committee, it is an honor and 
privilege to appear before you as President Bush's nominee for 
Assistant Secretary for Policy Development and Research at the 
Department of Housing and Urban Development.
    I am looking forward to the prospect of leading HUD's Office of 
Policy Development and Research to develop creative, well-structured 
solutions to the housing and the community development problems facing 
the Nation. If confirmed, I intend to implement a long-term strategic 
approach to problem solving that uses research and analysis to gain a 
comprehensive understanding of the problems confronting our cities and 
rural communities. This understanding will provide a strong foundation 
for innovative, long-term solutions.
    While I recognize the need to apply creative problem solving to the 
immediate issues facing the Nation, I believe it is equally important 
to anticipate issues the country will face in the coming decades. This 
will enable PD&R to develop productive policy options addressing 
emerging issues.
    Another very important responsibility of the Office of Policy 
Development and Research is to conduct evaluations of HUD's programs 
ensuring the programs are operating as Congress intended. The 
Secretary's fiscal year 2003 budget envisions an expansion of this 
important activity.
    I would like to thank you for scheduling this hearing during a very 
busy time in the session. I look forward to learning of key issues and 
concerns of this Committee to ensure PD&R's research agenda fully 
addresses them.
    I appreciate your time and look forward to working with members of 
the staff of this Committee.








                PREPARED STATEMENT OF CAROLYN Y. PEOPLES
                     Assistant Secretary-Designate
            U.S. Department of Housing and Urban Development
                            October 3, 2002
    Chairman Sarbanes, Ranking Member Gramm, and distinguished Members 
of this Committee, thank you for giving me the privilege to address 
this Committee in consideration of my confirmation as Assistant 
Secretary for Fair Housing and Equal Opportunity.
    I am here today with some very special people in my life. They are 
my husband and my three children, my sisters, and brothers. I also want 
to acknowledge my friends from Catholic Charities, MANPHA, The Beacon 
Institute, the Office of Fair Housing and Equal Opportunity, and the 
University of Baltimore.
    First, I would like to share a little of my background with you 
today. I am one of seven children born to the late Julius and Cornelia 
Jacobs. I was born and raised in Baltimore, Maryland. My father served 
in the U.S. Army and worked most of his life as a laborer; my mother 
was a housewife. For several years, we lived in public housing and I 
attended local schools. From an economic standpoint, we were considered 
poor. But as a family, we were rich . . . rich in faith, character, 
values, and humor with a closeness that endures even today. My mother, 
without doubt, was instrumental in forming my character and strong work 
ethic. Throughout my public education, she always encouraged me to ``do 
my best.'' It is that drive for excellence that both inspires and 
motivates me in all my endeavors.
    Prior to my nomination by President Bush, I was Founder and 
Executive Director of Jeremiah Housing, Inc., a faith-based, nonprofit 
housing services organization. Preceding this, my professional 
experience for the past 25 years has been exclusively in the operation, 
coordination, and management of HUD-assisted and sponsored housing. 
Beginning in 1976, as a manager of a Section 202/8 housing facility for 
the Presbytery of Baltimore, I left there in 1980 and joined the 
Housing Services Division of Catholic Charities. Over a 19 year period, 
I progressed in various positions. I attended the University of 
Baltimore and earned a BS degree in Finance and a Master's degree in 
Business Administration.
    As I was preparing for this testimony and thinking about fair 
housing, I began to reflect upon discrimination and how it impacts 
lives. I liken discrimination to an inflicted wound. The wound 
eventually heals, but invariably leaves a scar. As a woman of color, I 
have experienced discrimination. One such experience when I was 8 years 
old left, an indelible imprint on me. My mother took me to a department 
store in downtown Baltimore. After choosing several items of clothing, 
she took them to the counter to pay for them. For several minutes, I 
watched as a the sales lady waited on other people, but would not wait 
on my mother. After all the customers standing next to my mother had 
been waited on and exited the store, my mother remained at the counter 
until the sales lady finally waited on her. When we left the store, I 
asked my mother why the lady would not wait on her. Her reply to me 
was, ``because we are colored.''
    Discrimination in any form is demeaning. Whether it comes as a 
result of being denied housing because you have children, or if a real 
estate agent steers you to a ``certain'' community or a lender charges 
you extra fees not charged to other people--discrimination is wrong and 
is against the law.
    Moreover, discrimination has a social impact. Just as my mother and 
I had to wait in that department store until all others were served, 
discrimination in America has denied many the opportunity to share in 
the prosperity of this Nation. Since the passage of the 1968 Fair 
Housing Act, significant progress has been made in reducing barriers to 
fair housing and expanding homeownership opportunities for the 
historical victims of discrimination. Despite all that has been 
accomplished, more needs to be done. No one should be denied the home 
of their dreams because of their race, color, religion, national 
origin, sex, familial status, or disability.
    While the Nation's homeownership has reached a record high, a large 
gap still remains between the percentage of minorities and whites who 
own their own homes (48 percent African-American- 47.6 percent Hispanic 
compared to 74.3 percent for whites). We must do all we can to ensure 
that discrimination is removed as a barrier to the achievement of the 
American Dream.
    The extent to which discrimination against persons with 
disabilities exists today is also problematic. Currently, HUD receives 
nearly as many complaints of disability discrimination as it does race 
complaints. There is a significant lack of 
accessible housing units for persons with disabilities, both in private 
and subsidized housing. Noncompliance with the accessibility 
requirements combined with the failure of landlords to provide 
necessary accommodations and modifications has contributed to a 
shortage of housing for persons with disabilities in housing 
developments.
    I have a strong interest in helping to improve the quality of life 
for underserved and unserved persons. If I am confirmed by the Senate 
to this most important post, I pledge my full commitment to 
aggressively enforce civil rights and fair housing laws; to be diligent 
in conducting timely investigations; to continue to reduce 
impediments to fair housing laws; to develop close working partnerships 
with faith-based and grassroots organizations, local government and 
other agencies; to enforce departmental equal employment opportunity 
laws; to ensure effective program monitoring and compliance and develop 
performance-based measurements to ensure quality.
    With my extensive experience in HUD's programs and policies, 
combined with 25 years of proven management, organizational, and policy 
development skills, I am eager to join the fine staff of the Office of 
Fair Housing and Equal Opportunity in implementation of our strategic 
goals and objectives.
    In closing, I want to thank the honorable Senator from my home 
State of Maryland, Senator Sarbanes, and the Members of the Committee 
for your courtesy. I want to thank President Bush for honoring me with 
the opportunity to serve in his Administration, and to Secretary Mel 
Martinez for his strong support in the several months since my 
nomination. Finally, but not least, I want to thank God for bestowing 
His grace and this special honor upon me.














                PREPARED STATEMENT OF RAFAEL E. CUELLAR
       Board Member-Designate, National Consumer Cooperative Bank
                            October 3, 2002
    Chairman Sarbanes and distinguished Members of the Committee, I am 
honored to appear today before you as a nominee for the Board of 
Directors of the National Consumer Cooperative Bank.
    I am here because I believe my combined experience, as a military 
officer, entrepreneur, and community leader is consistent with the 
mission of the National Consumer Cooperative Bank. It was established 
to address the financial needs of an underserved community. The Bank's 
primary lines of business include multifamily and commercial real 
estate services, commerical and small business banking, community 
development, and personal banking. To date, NCB has provided more than 
$6 billion in financing, thousands of homeownership opportunities, 
school facilities for 4,500 students, 1,000 affordable assisted-living 
units, a health center serving 100,000 patients annually and more than 
10,000 employee stock owners. In short, the bank provides economic 
empowerment.
    My goal on this Board is to bring these options to communities like 
my own in Passaic, New Jersey. Once a deserted area of marginalized 
immigrants that had to commute to New York for work, it is now a 
thriving center of commerce because business people like my father 
invested and started businesses to increase the city's economic 
vitality. My father would say, ``No se puede sacar sin dar.''--``You 
cannot take without giving.''
    With those words in mind, I left to join the United States Navy at 
the age of 17. This country had given my family opportunity when we 
arrived as immigrants in 1970; I knew that opportunity came with 
responsibility. And so it was for 9 years as I worked my way up the 
ranks from enlisted to officer. I attended Fordham University on a 
NROTC scholarship and received my Bachelor's degree in Economics. The 
regimented training and discipline prepared me for an even greater 
challenge.
    After my father's sudden death in 1996, I resigned my commission to 
fulfill my family duty and care for the business my father began years 
before. I have been President and Chief Executice Officer of ECO & 
Sons, Inc. for 7 years. In that time, I have significantly increased 
revenue every year, diversified our products and services, and created 
new jobs to expand the employee base. I inherited a large ``bodega'' in 
debt, however today due to strategic planning and investment, ECO & 
Sons, Inc. makes a profit through a successful independent supermarket, 
an upscale catering company, and an e-commerce site that survived the 
Internet downturn. Currently, I own one of the top 500 Hispanic 
businesses in the country, according to Hispanic Business Magazine.
    In addition, I was selected as 1999 Dun & Bradstreet Number 2 
Minority Entrepreneur, 1999 Finalist for Ernst & Young's Entrepreneur 
of the Year, 1999 Hispanic Business Magazine Entrepreneur of the Year, 
2000 Finalist for Hispanic Business Magazine Entrepreneur of the Year, 
and 2001 Finalist for Ernst & Young's Entrepreneur of the Year. To 
share the benefits of my success, I work with several organizations 
including the Paterson Restoration Corporation, New Jersey State 
Chamber of Commerce, the William Paterson University Foundation, and 
the United States Hispanic Chamber of Commerce--to name a few.
    While those accolades look great on a resume, what I am really 
proud of is building a partnership with my community. They know I am 
there to service their needs whether it is for groceries or otherwise. 
For instance, the Passaic fire last year put 75 families out on the 
street without shelter or food. They came to me and we fed those 
families three meals a day for 2 weeks and they ate with dignity 
because that food came from a supermarket that they patronize. I was 
humbled that they came to me instead of one of the many big chain 
stores. I connect with my customers and peers alike.
    I understand and have overcome the challenges that face minority 
entrepre-
neurs--the lack of capital, scarce resources, no mentoring. The NCB has 
developed and implemented a successful model, a public and private 
sector partnership, to solve these problems and provide innovative 
solutions. With my experience, I will be an integral part of those 
solutions.
    I would be proud to serve on the Board of Directors of the National 
Consumer Cooperative Bank, and I truly appreciate your consideration.
    Allow me to answer any questions that you may have.

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                 PREPARED STATEMENT OF MICHAEL D. SCOTT
       Board Member-Designate, National Consumer Cooperative Bank
                            October 3, 2002

    Chairman Sarbanes, Senator Gramm, distinguished Members of the 
Committee, it is an honor and privilege for me to appear before you 
today as the President's nominee to be a Member of the Board of 
Directors of the National Consumer Cooperative Bank (NCB).
    Before I begin my statement, I would like to thank my wife Janet, 
and my children, Zachary and Taylor. Without their understanding, 
patience, and support, I could not be here before you. Unfortunately, 
they are not able to be here today, as they continue to live in North 
Carolina until we sell our home.
    I would also like to thank Under Secretary Peter Fisher, Assistant 
Secretary Brian Roseboro, and Deputy Assistant Secretary Roger Kodat 
for all of their support. Finally, I would like to thank President Bush 
for the honor of this nomination and the opportunity to serve.
    I am, and if confirmed, will continue to be, the Senior Advisor to 
the Deputy Assistant Secretary for Government Financial Policy at the 
U.S. Department of the Treasury. Prior to serving in the 
Administration, all of my previous experience has been in the private 
sector. I have worked extensively in finance, capital markets, 
investments, corporate strategy, financial analysis, and commercial 
lending.
    It is my current and former experience that I believe will enable 
me to be an 
effective contributor to NCB's Board. NCB plays a vital role in meeting 
the underserved needs of America's cooperatives, which range from 
housing cooperatives to affordable housing communities to small 
businesses to Alaska Native Corporations and Tribal Entities. I hope to 
bring constructive ideas to the Board that will help grow NCB in the 
important sectors it serves. Additionally, I am keenly interested in 
NCB's capital structure and assisting it in addressing the statutory 
repayment of the Class A Notes that the Federal Government holds, and 
that mature in 2020. NCB is a multifaceted financial services company 
that enables cooperative endeavors throughout America to grow and 
succeed. These businesses are large and small. They serve rural and 
urban communities. NCB helps them by crafting financial solutions 
tailored to their individual needs and the needs of their members. 
Chartered by Congress in 1978, NCB was privatized in 1981 as a 
cooperatively owned financial institution. Currently, NCB is owned by 
1,841 of its customers.
    NCB's capital base is funded by long-term subordinated notes, 
medium-term notes and commercial paper, loans from its banking partners 
and customers, deposits through its subsidiary, NCB FSB, and stock 
purchased by NCB members. The Bank's medium-term notes and commercial 
paper carry investment-grade ratings.
    NCB's primary lines of business include: Multifamily and commercial 
real estate, commercial and small business banking, community 
development services, and personal banking.

 To date, NCB has provided more than $6 billion in financing.
 Combined with balance sheet assets and letters of credit, NCB 
    now manages more than $3.6 billion in assets nationwide.
 NCB reported a profit of $14.6 million for the first 6 months 
    of 2002. In early September of this year, NCB distributed 
    approximately $12.6 million in patronage dividends to its member-
    owners in the form of cash and stock.
 Last year alone:

          1. The Bank grew its deposit base by 50 percent, further 
        diversifying its funding sources and lowering the capital costs 
        for its customers.
          2. The Bank received reaffirmation of its investment-grade 
        ratings by Moody's (Baa1) and Standard & Poor's (BBB).

    NCB has a distinguished history of serving the cooperative 
community and I believe that its future is extremely bright. I would 
appreciate your support so that I may be able to contribute to its 
future.
    In closing, I would like to take this opportunity to thank you, Mr. 
Chairman, and the Committee for the prompt consideration of my 
nomination. Mr. Chairman, if confirmed, I commit to you, the Members 
and the NCB, all of my energy to serve with distinction and honor. I 
would be delighted to answer any questions you and other Members of the 
Committee may have.
    Thank you.

    
    
    
    
    
    
    
    
                  PREPARED STATEMENT OF JOHN M. REICH
             Vice Chairperson-Designate, Board of Directors
                 Federal Deposit Insurance Corporation
                            October 3, 2002

    Mr. Chairman, I want to thank you for scheduling this hearing 
today, as I know your time is limited in the remaining days of this 
session. Chairman Sarbanes, Senator Gramm, Members of the Committee, I 
am honored by the President's nomination to be the Vice Chairperson of 
the Federal Deposit Insurance Corporation, and I am privileged to be 
sitting in this spot this afternoon. I also appreciate the support 
which FDIC Chairman Don Powell has given my nomination.
    In the almost 2 years I have served as a Member of the FDIC Board 
we have witnessed significant change in the economy and banking issues. 
In fact, Mr. Chairman, you may recall that I was about to testify at 
this very table on September 11 when the events of that day stopped the 
hearing and triggered challenges and changes to our country's financial 
system that no one could have foreseen.
    My nearly 25 years of experience as a community banker before I 
came to Washington to work with my good friend, Former Senator Connie 
Mack for nearly 12 years, has allowed me to bring a perspective to the 
Board's deliberations that recognizes the vital role that banks and 
their customers play in the economic success of their communities. 
Before my life in Washington, I was active for many years in a variety 
of community service organizations, and the affect of all of these 
private, nonprofit, and public service experiences causes me to 
evaluate issues which come before the Board in a manner which balances 
the interests of banks, consumers, the deposit insurance funds, and the 
Nation's economy.
    Under the leadership of Chairman Don Powell during the past year, 
the FDIC has been, and is, at the forefront of many of the issues 
facing the financial industry today. We have brought together leading 
thinkers on such key issues as corporate transparency, financial 
institution disclosure, and risk management, and, of course, our work 
on Deposit Insurance Reform. We have launched a major financial 
literacy effort called Money Smart with the stated goal of establishing 
partnerships with 1,000 organizations and institutions, in all 50 
States, to distribute 100,000 copies of Money Smart in three languages 
and expose one million consumers to our financial education program 
over the next 5 years.
    We are also engaged in a major effort to reduce unnecessary 
regulatory burden and to tap the tremendous potential of technology to 
streamline bank supervision--while not sacrificing our primary goal of 
ensuring the safety and soundness and consumer compliance of the 
banking system. These are just a few of the many initiatives and 
activities underway at the FDIC today.
    While the FDIC has been aggressively moving forward on these 
developing issues, we have not neglected our primary mission of 
protecting depositors in the event of bank failures. In fact, I believe 
that the lessons I learned in one of those failures provide me with a 
unique credential to serve as Vice Chairperson of the FDIC.
    Following the resignation of former Chairman Donna Tanoue in July 
2001, I was serving as the Acting Chairman of the FDIC when Superior 
Bank failed on July 27, 2001. It was not just the size of this 
failure--more than $2 billion in assets--that was instructive. As this 
Committee knows from its oversight, this failure raised a number of 
issues ranging from subprime lending, to residuals and accounting 
opinions, to regulator cooperation and access, to management liability, 
that challenged the leadership and staff of the FDIC to modify 
established methods of handling bank failures and to create some 
innovative new approaches. This experience along with other experiences 
gained during the past nearly 2 years I have served on the Board, 
combined with my duties chairing of all of the standing committees of 
the FDIC Board help, I believe, to enable me to serve effectively as 
Vice Chairman of the FDIC.
    Mr. Chairman, the FDIC occupies a unique position in the American 
Government. We are keenly aware of the importance of our mission of 
maintaining confidence and trust of the American people in the Nation's 
financial system. It is an organization with an outstanding, highly 
capable, professional staff. I look forward to my continued affiliation 
with both its mission and its people. With all of its successes, I also 
believe that there is still an amazing untapped potential at the FDIC 
that is just surfacing and will help shape the contours of the 
financial system for years to come. I am honored the President has 
nominated me to play an important role in that future, and, again, I 
wish to thank you for holding this hearing. I will be happy to address 
any questions you many have.

























             PREPARED STATEMENT OF DIANA E. FURCHTGOTT-ROTH
           Director-Designate, Federal Housing Finance Board
                            October 3, 2002

    Thank you very much, Mr. Chairman, Senator Gramm, and distinguished 
Members of the Committee for the opportunity to appear before you 
today. I am honored that President Bush has nominated me to be a 
Director of the Federal Housing 
Finance Board and I am deeply humbled to appear before you today at 
this confirmation hearing. If confirmed, I would be the first full-time 
female Director of the Board.
    I want to express my appreciation to you, Mr. Chairman, the Senator 
from my home State of Maryland. I would also like to express my 
appreciation to Senator Gramm for everything that he has done on my 
behalf. He will be sorely missed by his many friends everywhere.
    I would like to take this opportunity to introduce my husband, 
Harold, and my six children, Leon, Francesca, Jeremy, Godfrey, 
Theodore, and Richard.
    I am also profoundly grateful to my parents, Ellen and Gabriel 
Roth, for making the difficult decision to come here 35 years ago from 
England. I remember sailing into New York Harbor on Labor Day weekend, 
1967, and seeing the Statue of Liberty. To be honest, its symbolism did 
not mean much to me then as a child. I was just glad that the 5 days of 
sea sickness were over. But it became more and more important as I have 
grown into adulthood and made the choice to become an American. My 
parents' decision gave me the opportunity to work in the White House 
under President Reagan, President George H.W. Bush, and our current 
President Bush, as well as marrying a wonderful man and having six 
children. Nowhere else in the world can immigrants have such 
opportunities.
    It is extraordinarily hard to do what my parents did, and pack up 
all one's possessions and three young children and move to a new 
country, a country my mother had not even visited. The story is that my 
father called my mother from the United States and said, ``We have to 
move here, they even heat the bathrooms.'' Our home in England had 
kerosene heaters that my father would go around filling every night 
before he went to bed. There was no heater in our family's only 
bathroom, as was common practice in many English homes.
    And that brings me to the subject of housing, and the Federal 
Housing Finance Board. Many people ask about my interest in the Federal 
Housing Board. Housing affects all of us--all of us need somewhere to 
live. And many either own homes, or aspire to do so--it is part of the 
American Dream. With such a large purchase, the financing mechanism is 
critical.
    Our housing and capital markets work so well that many people 
assume that there is nothing special about them. But, internationally, 
these well-functioning systems are rare. Our standard fixed 30 year 
mortgage is not standard in most other countries, even in the developed 
world. Generally people in other countries are 
required to put down much larger sums, and borrow at rates which vary 
directly with the prime rate of lending. So when the prime rate goes 
up, mortgage payments unpredictably take more money away from groceries 
and clothing. And housing can be so scarce that selling a home and 
moving to another city becomes practically impossible. If I should have 
the honor of being confirmed, I would try to preserve and improve the 
flexible financial systems that America has and make it possible for 
more Americans to take advantage of them.
    The Federal Housing Finance Board oversees the Federal Home Loan 
Bank System, a group of 12 banks which have $700 billion in assets and 
approximately 8,000 member banks. The Board makes sure that the System 
is on a sound financial footing, an important task, as can be seen by 
recent developments in the corporate and accounting world.
    The Federal Home Loan Bank System makes it easier for small banks 
to lend money to Americans for mortgages. In the first days of banking, 
banks could only lend out what they had on hand in deposits. Later, 
they acquired the ability to borrow from some sources to make loans to 
others. The 8,000 member banks can now, through the Federal Home Loan 
Banks and the Board's Office of Finance, take advantage of pooling 
their requests for funds to achieve lower rates, which get passed on 
directly to the consumer.
    About 68 percent of American households own homes. But the rate for 
minorities is far lower, with fewer than half of Hispanics and African-
American households owning homes. President Bush and the Federal 
Housing Finance Board are trying to raise these levels. The Board's 
Affordable Housing Program helps improve homeownership among these 
groups, a vital social goal. Recently, the Board expanded the amount of 
Affordable Housing Program funds that Federal Home Loan Banks can 
contribute toward downpayment assistance programs for first-time 
homebuyers, one of the most important steps in purchasing a home.
    Chairman Sarbanes and Members of the Committee, I am honored to 
appear before you today. If confirmed, I promise to work closely with 
this Committee and Congress to ensure the safety and soundness of the 
Federal Home Loan Bank System and fulfillment of the System's 
affordable housing goals. I look forward to answering any questions 
that you might have.





















             PREPARED STATEMENT OF DEBORAH DOYLE McWHINNEY
     Director-Designate, Securities Investor Protection Corporation
                            October 3, 2002

    Good afternoon. My name is Deborah Doyle McWhinney, and I am 
President of Schwab Institutional, an arm of the Charles Schwab 
Corporation that provides services to investors through commission-
based independent investment advisors. But beyond my position at 
Schwab, I am the very proud mother of Megan and Aidan, two wonderful 
teenagers who could not join me today because of their studies.
    Charles Schwab was founded more than 30 years ago on the principle 
of helping individuals to become educated, informed, and sensible 
investors--and our company remains focused on the individual investor 
today. I am honored to have been nominated by President Bush as a 
Director of the Securities Investor Protection Corporation, where I 
look forward to continuing that focus on the individual investor.
    We are all painfully aware of the economic slowdown and stock 
market fall-off of the last 2 years. The Dow Jones Industrial Average 
is off more than 34 percent from its January 2000 high; and the Nasdaq 
is down a more startling 77 percent. Millions of individual investors 
have lost countless trillions of dollars of wealth. For many Americans, 
those investments constitute the bulk of their retirement savings, the 
money they were hoping to use to buy a first home or send their kids to 
college -- in sum, their most cherished financial hopes and dreams. It 
is a frustrating time to be an investor.
    That is why I believe that there are few more important 
organizations than the Securities Investor Protection Corporation. SIPC 
has a narrow but extremely important role: Whenever a brokerage firm 
fails or goes bankrupt, SIPC steps in to return the money investors had 
with that firm as quickly and as painlessly as possible. No waiting for 
years of drawn-out court cases and bankruptcy hearings. SIPC gets the 
cash or securities that the individual investor had with the failed 
firm and returns it to that investor, so that he or she can move that 
money to a reliable company.
    I wish that there was not a need for an organization like SIPC. But 
there is a very real need, and today that need is stronger than it has 
been in decades. Investors have a lot to worry about, with the 
accounting and ethics of some of the country's most respected companies 
now being questioned, the economy in a prolonged downturn, and the 
stock market retreating to levels not seen in several years. Investors 
should not have to worry about what happens if their brokerage firm 
goes under. With SIPC, they do not have to. More than 99 percent of 
eligible investors get their money back with SIPC's help. In the past 
30 years, more than 600,000 investors have recovered nearly $14 billion 
in assets with SIPC's help.
    If I am confirmed as a Director of SIPC, I promise the Members of 
this Committee and the millions of individual investors around the 
country that I will bring the vigilance and dedication that the role 
deserves. Individual investors are comfortable knowing that SIPC is 
behind them if anything should happen, and I will work hard to maintain 
and strengthen that confidence. In this era of uncertainty about the 
stock market, SIPC directors should bring nothing less than their full 
attention to their task. If I am confirmed, I promise to do so in the 
tradition of the many directors before me who have helped maintain a 
solid foundation beneath the strongest capital markets in the world.
    Thank you very much. I will be happy to answer questions.

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
              PREPARED STATEMENT OF ARMANDO J. BUCELO, JR.
     Director-Designate, Securities Investor Protection Corporation
                            October 3, 2002

    Chairman Sarbanes, Ranking Member Gramm, and distinguished Members 
of the Committee, I am honored to appear before you as President Bush's 
nominee to serve on the Board of Directors of the Securities Investor 
Protection Corporation, better known as SIPC. I am deeply grateful to 
President Bush for awarding me the privilege of this nomination. It is 
now my pleasure to introduce my wonderful wife, Beatriz, companion and 
best friend for over 20 years, and my son, Alexander, a 9 year old 
baseball star who indeed will play with the New York Yankees one day, 
and upon his retirement from baseball, hopes to be President. I have 
also been blessed with two other children, Alexis Marie, a 17 year old 
National Honor Society student ranked in the top percentile of her 
class, and blessed with the gift of pen and speech, and last, but not 
least, my 15 year old son, Armando Joseph, who is taller than I am and 
is considered an excellent swimmer and water polo player, and who, 
along with Alexis and myself, is a black belt first degree in karate. 
Mr. Chairman and Members of the Committee, I thank God every day for my 
family.
    I am a proud Cuban-born American citizen. Arriving in this great 
country of ours over 40 years ago, with parents looking for freedom and 
opportunity for my sister and I. Because of my father, Dr. Bucelo, and 
my mother Carmen, 83 and 74 years young respectively, I am what I am 
today. We are forever thankful and appreciative of the opportunities 
given to us by the United States of America.
    I have been an attorney for the past 23 years, specializing 
primarily in real estate, corporate, and banking. As a result of my 
professional endeavors, I have been exposed to a myriad of career 
opportunities dealing in said fields. I had the opportunity to serve as 
a Director of Freddie Mac (Federal Home Loan Mortgage Association) 
during President George Bush's Administration. During my tenure at 
Freddie Mac I was able to cooperate in the efforts to lead such a 
powerful and gigantic institution into its preparations for the 21st 
century. I also had the pleasure to serve as Cuban American National 
Chairman of the National Republican Senatorial Committee, where I 
attempted to establish a substantial dialogue, as well as a strong 
working relationship between Cuban Americans in this country and 
Members of the Senate. Among other activities, I am currently a 
Director of the National Housing and Development Corporation, created 
in 1997, to help preserve more of the Nation's at-risk affordable 
housing stock. Its principal purpose is to improve the quality of life 
of all of our national residents, making clean, safe, and attractive 
family housing, as well as affordable rents its foundation. Finally, I 
serve as Trustee of Miami-Dade Community College, the largest community 
college in the Nation, and from which I am a proud graduate.
    As we all know, SIPC was created by the Securities Investors 
Protection Act of 1970, to provide certain protections against losses 
to customers from the failure of securities firms.
    If honored by confirmation by the U.S. Senate, I vow to be a strong 
advocate for fairness and common sense. As a newcomer to the world of 
SIPC, I will promptly learn all I need to in order to work closely with 
this Committee, the Senate and Members of the House of Representatives. 
I may not know the answers to may questions today, but I give you my 
word I do anticipate and welcome the charge for which I have been 
selected with both eagerness and humility. Chairman Sarbanes, Senator 
Gramm, and Members of the Committee, I thank you for the opportunity 
you have given us to speak before you. I along with the rest of this 
country, admire the work all of you are doing on our behalf and we 
congratulate you for guiding us through these difficult times.
    Thank you, and I will be more than happy to answer any of your 
questions.



























STATEMENT OF DIANNE FEINSTEIN, A U.S. SENATOR FROM THE STATE OF 
                           CALIFORNIA

    I regret that I cannot introduce Alberto Trevino today, who 
has been nominated as the Assistant Secretary of the Department 
of Housing and Urban Development's Office of Policy Development 
and Research.
    This is not the first time Mr. Trevino has been before the 
Senate in a confirmation hearing, as he has served both the 
Nixon and the Ford Administrations. I am sure that his 
expertise will again be beneficial to the Department and to the 
Nation.
    Mr. Trevino's extensive background with the Urban Interface 
Group has allowed him to work to solve a variety of problems in 
affordable housing and strategic planning. From evaluating 
senior housing markets, to developing affordable housing 
strategies to meet the diverse needs of America's homebuyers, 
Mr. Trevino has honed his skills in urban planning and 
strategic development. This is knowledge that will benefit him 
in spurring development of affordable housing and boosting 
homeownership rates.
    Mr. Trevino was born in Inglewood, California, and went to 
the University of California in Berkeley, before continuing his 
studies with graduate work at Harvard. His background in 
strategic planning and affordable housing, and his current 
experience with urban planning and development, will prove an 
asset to the Department.
    I am confident that Mr. Trevino will ably lend his insight 
to the Office of Policy Development and Research in working 
toward long-term solutions to the problems confronting our 
cities and our rural communities.





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