[Senate Hearing 109-378]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-378

 
                   NOMINATIONS OF: MATTHEW SLAUGHTER,
                 KATHERINE BAICKER, ORLANDO J. CABRERA,
               CHRISTIANE GIGI HYLAND AND RODNEY E. HOOD

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

                                HEARING

                               before the

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

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON

                            NOMINATIONS OF:

         MATTHEW SLAUGHTER OF NEW HAMPSHIRE, TO BE A MEMBER OF 
                    THE COUNCIL OF ECONOMIC ADVISERS

                               __________

         KATHERINE BAICKER OF NEW HAMPSHIRE, TO BE A MEMBER OF 
                    THE COUNCIL OF ECONOMIC ADVISERS

                               __________

       ORLANDO J. CABRERA OF FLORIDA, TO BE ASSISTANT SECRETARY 
                    FOR PUBLIC AND INDIAN HOUSING, 
            U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                               __________

          CHRISTIANE GIGI HYLAND OF VIRGINIA, TO A MEMBER OF 
             THE NATIONAL CREDIT UNION ADMINISTRATION BOARD

                               __________

          RODNEY E. HOOD OF NORTH CAROLINA, TO BE A MEMBER OF 
             THE NATIONAL CREDIT UNION ADMINISTRATION BOARD

                               __________

                            OCTOBER 25, 2005

                               __________

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


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



                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
27-371                      WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001


            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  RICHARD C. SHELBY, Alabama, Chairman

ROBERT F. BENNETT, Utah              PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               CHRISTOPHER J. DODD, Connecticut
MICHAEL B. ENZI, Wyoming             TIM JOHNSON, South Dakota
CHUCK HAGEL, Nebraska                JACK REED, Rhode Island
RICK SANTORUM, Pennsylvania          CHARLES E. SCHUMER, New York
JIM BUNNING, Kentucky                EVAN BAYH, Indiana
MIKE CRAPO, Idaho                    THOMAS R. CARPER, Delaware
JOHN E. SUNUNU, New Hampshire        DEBBIE STABENOW, Michigan
ELIZABETH DOLE, North Carolina       ROBERT MENENDEZ, New Jersey
MEL MARTINEZ, Florida

             Kathleen L. Casey, Staff Director and Counsel

     Steven B. Harris, Democratic Staff Director and Chief Counsel

                         Mark Oesterle, Counsel

               Peggy R. Kuhn, Senior Financial Economist

           Mark A. Calabria, Senior Professional Staff Member

                  Aaron D. Klein, Democratic Economist

             Jonathan Miller, Democratic Professional Staff

               Jennifer Fogel-Bublick, Democratic Counsel

                  Lynsey N. Graham, Democratic Counsel

   Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                  (ii)


                            C O N T E N T S

                              ----------                              

                       TUESDAY, OCTOBER 25, 2005

                                                                   Page

Opening statement of Chairman Shelby.............................     1

Opening statements, comments, or prepared statements of:
    Senator Dole.................................................     2
    Senator Martinez.............................................     3

                               WITNESSES

John Warner, a U.S. Senator from the State of Virginia...........     4
    Prepared statement...........................................    25
Richard Burr, a U.S. Senator from the State of North Carolina....     5

                                NOMINEES

Matthew Slaughter, of New Hampshire, to be a Member of the 
  Council of Economic Advisers...................................     7
    Biographical sketch of nominee...............................    27
    Response to written questions of Senator Sarbanes............    68
Katherine Baiker, of New Hampshire, to be a Member of the Council 
  of Economic Advisers...........................................     8
    Biographical sketch of nominee...............................    36
    Response to written questions of Senator Sarbanes............    71
Orlando J. Cabrera, of Florida, to Assistant Secretary for Public 
  and Indian Housing, U.S. Department of Housing and Urban 
  Development....................................................     8
    Biographical sketch of nominee...............................    47
    Response to written questions of Senator Sarbanes............    73
Christiane Gigi Hyland, Of Virginia, to be a Member of the 
  National Credit Union Administration Board.....................    10
    Biographical sketch of nominee...............................    56
    Response to written questions of:
        Senator Sarbanes.........................................    75
        Senator Allard...........................................    79
Rodney E. Hood, of North Carolina, to be a Member of the National 
  Credit Union Administration Board..............................    12
    Prepared statement...........................................    25
    Biographical sketch of nominee...............................    61
    Response to written questions of:
        Senator Sarbanes.........................................    80
        Senator Allard...........................................    84

                                 (iii)


                            NOMINATIONS OF:

                  MATTHEW SLAUGHTER, OF NEW HAMPSHIRE,

                                  AND

                  KATHERINE BAICKER, OF NEW HAMPSHIRE,

                           TO BE A MEMBER OF

                    THE COUNCIL OF ECONOMIC ADVISERS

                     ORLANDO J. CABRERA, OF FLORIDA

                     TO BE ASSISTANT SECRETARY FOR

                       PUBLIC AND INDIAN HOUSING

                     U.S. DEPARTMENT OF HOUSING AND

                           URBAN DEVELOPMENT

                  CHRISTIANE GIGI HYLAND, OF VIRGINIA

                                  AND

                   RODNEY E. HOOD, OF NORTH CAROLINA

                           TO BE A MEMBER OF

                       THE NATIONAL CREDIT UNION

                          ADMINISTRATION BOARD

                              ----------                              


                       TUESDAY, OCTOBER 25, 2005

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

    The Committee met at 10:09 a.m., in room SD-538, Dirksen 
Senate Office Building, Senator Richard C. Shelby (Chairman of 
the Committee) presiding.

        OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

    Chairman Shelby. The hearing will come to order.
    We have several nominees this morning. I appreciate the 
willingness of the nominees to appear before the Committee 
today.
    Today's witnesses are Dr. Matthew Slaughter, who has been 
nominated by the President to be a Member of the Council of 
Economic Advisers; Dr. Katherine Baicker, to be a Member of the 
Council of Economic Advisers--of course, nominated by the 
President; Mr. Orlando J. Cabrera, to be Assistant Secretary 
for Public and Indian Housing at the Department of Housing and 
Urban Development; Ms. Christiane Gigi Hyland, to be a Member 
of the National Credit Union Administration Board; and Mr. 
Rodney E. Hood, to be a Member of the National Credit Union 
Administration Board.
    Dr. Matthew Slaughter and Dr. Katherine Baicker are 
nominated, as I said, to be Members of the President's Council 
of Economic Advisers. The Council of Economic Advisers was 
established by the Employment Act of 1946, and it provides the 
President with economic analysis and advice on the development 
and implementation of domestic and international policy issues.
    Dr. Slaughter is currently a Professor of Business 
Administration at the Tuck School of Business at Dartmouth 
College. Previously, he was a Fellow at the National Bureau of 
Economic Research and has served as a Consultant to the 
National Foreign Trade Council, the World Bank, the Federal 
Reserve, and the IMF.
    Dr. Baicker is currently a Professor at the School of 
Public Affairs at UCLA. She was previously a Professor at 
Dartmouth College. Dr. Baicker is also a Fellow at the National 
Bureau of 
Economic Research and was a Senior Economist at the Council of 
Economic Advisers from 2001 to 2002.
    Mr. Orlando Cabrera has been nominated to be Assistant 
Secretary for Public and Indian Housing at the U.S. Department 
of Housing an Urban Development. Mr. Cabrera is currently 
Executive Director of the Florida Housing Finance Corporation.
    Mr. Rodney Hood and Ms. Christiane Gigi Hyland are both 
nominated to be Members of the Board of Directors of the 
National Credit Union Administration. The National Credit Union 
Administration, as we all know, is an independent agency, 
deriving its powers under the Federal Credit Union Act. The 
NCUA is responsible for chartering and ensuring the safety and 
soundness of the 5,500 Federal credit unions under the Act. The 
NCUA also administers the National Credit Union Share Insurance 
Fund.
    After we administer the oath, this morning's nominees will 
have an opportunity to make their opening statement, and you 
can introduce at that time any members of your family. But 
first we will recognize our colleagues that are here.
    Senator Dole.

              STATEMENT OF SENATOR ELIZABETH DOLE

    Senator Dole. Thank you, Chairman Shelby.
    This morning we are considering, as you have said, five 
outstanding nominees, and I am pleased to introduce to the 
Committee Mr. Rodney E. Hood, a fellow North Carolinian who has 
been nominated by President Bush to serve as a Member of the 
National Credit Union Administration Board.
    Mr. Hood has an impressive background in housing and 
financial services and has received a strong endorsement by the 
North Carolina Credit Union League for this position. In 
September 2004, Mr. Hood was appointed by President Bush to 
serve as Associate Administrator of the Rural Housing Service, 
RHS. RHS, an agency within Rural Development at the U.S. 
Department of Agriculture, is one of the Federal Government's 
largest direct lenders. In this position, Mr. Hood has managed 
a housing portfolio of more than $43 billion and has 
administered the Agency's Housing and Community Development 
programs.
    Previous to his appointment to RHS, Mr. Hood was an 
executive with North Carolina Mutual Life Insurance Company in 
Durham, where he directed the company's group insurance 
marketing and sales efforts. He also held management posts with 
Bank of America, where he served as a CRA Officer, and with 
Wells Fargo, where he served as Division Manager for Community 
Development Lending and, later, as the National Director of the 
Affordable Housing Lending Group. Mr. Hood also served on the 
Wells Fargo Housing Foundation Board, where he managed the 
Foundation's relationship with nonprofit housing providers, 
including Neighborhood Housing Services, Habitat for Humanity, 
and the National Council of La Raza.
    Among Mr. Hood's best attributes are his good, strong North 
Carolina roots and his ongoing involvement in public service. A 
native of Charlotte, he graduated from the University of North 
Carolina at Chapel Hill, where he served on the Board of 
Visitors. He currently serves on the Board of Trustees of the 
North Carolina School of the Arts and on the Board of Directors 
of the Caring House, a living facility for cancer patients 
receiving treatment at Duke University.
    Mr. Hood recently received the Triangle Business Journal's 
40 Under 40 Leadership Award, which recognizes the best of the 
best of Raleigh-area young professionals for the community 
service and their career accomplishments.
    Unfortunately, Mr. Chairman, I will not be able to stay for 
this important hearing, but I hope the Committee will take into 
account my good friend and colleague Richard Burr's comments, 
and mine, and give strong support to Mr. Hood's nomination.
    Thank you, Mr. Chairman.
    Chairman Shelby. Thank you.
    Senator Martinez.

               STATEMENT OF SENATOR MEL MARTINEZ

    Senator Martinez. Mr. Chairman, thank you very much. I am 
here today to have the great pleasure and honor of introducing 
to the Committee a good friend, a great Floridian, Orlando 
Cabrera. I am proud that Orlando is among a number of very 
talented Floridians that this Administration has tapped for 
service, even at HUD. The President and Secretary Jackson have 
chosen a great person to serve our country as Assistant 
Secretary for Public and Indian Housing. I believe Orlando is 
extremely well-qualified to succeed in this position.
    You know, Mr. Chairman, the demands of the Secretary of 
Public and Indian Housing at HUD are great. The challenges are 
terrific, and it takes a person of great integrity, management 
skill, and also a good deal of patience to work through the 
many problems that affect our public housing. I know Mr. 
Cabrera will be well-suited to that. As the Executive Director 
of the Florida Housing Finance Corporation, Mr. Cabrera led the 
fourth-largest housing finance agency in the United States to 
help Floridians obtain safe, decent, and affordable housing. 
Orlando worked diligently to ensure that our State's housing 
programs were well-managed to meet the needs of Floridians. His 
commitment to coordinating housing policy at all levels of 
Government will be a great asset to the Agency.
    As the son of Cuban immigrants, Orlando knows first-hand 
that, for many families, homeownership is the key to the 
American Dream. He recognizes and understands the struggles 
that are present for people moving through the housing 
continuum because of his experiences at Florida Housing and his 
participation on many housing-related boards, Orlando is also 
aware of the conflict that often arises between State and 
Federal housing regulations. I am confident that he will use a 
combination of personal and professional knowledge to guide the 
Department in making sound public policy.
    On a personal note, I recognize that from time to time 
people are willing to make a mistake. His family, when they 
first came here from Cuba about the same time that mine did, 
they settled in a very cold part of New York. And since then, 
they have recognized that error and have moved back to the 
balmier surroundings of Florida--although today that wisdom may 
be in question. But I have known Orlando for several years, 
have had the pleasure of working with him--during my time at 
HUD particularly--and I know and have always appreciated and 
respected him for his work. He is a man of great character and 
competence and he is also a man committed to his faith and his 
wonderful family, many of whom are here with him today.
    I know he will approach this position with the same kind of 
dedication and diplomacy that he has carried with him 
throughout his entire professional career. And I know that 
Orlando will serve our country well in this position. So, I 
would urge my colleagues in the Senate to join me in a swift 
confirmation of Mr. Cabrera.
    Thank you, sir.
    Chairman Shelby. Thank you.
    Senator Warner, you arrived just in time. I recognize you 
for any comments you would like to make before the Committee.

                    STATEMENT OF JOHN WARNER

           A U.S. SENATOR FROM THE STATE OF VIRGINIA

    Senator Warner. Thank you very much, Mr. Chairman, and my 
colleagues. I am chairing a hearing of our Armed Services 
Committee just below you here, but I did want to take the time 
to come up and talk about this extraordinary nominee by the 
President. And I want to thank our distinguished colleague, 
Senator Harry Reid, who had a lot to do with this nomination 
and counseled me on it.
    We have a fellow Virginian, Gigi Hyland, down there, I 
think, somewhere.
    Ms. Hyland. Here I am.
    Senator Warner. Right here.
    [Laughter.]
    And I, just by coincidence, met her and talked to her. She 
is very modest, and expressed some interest in public service. 
And her family, her father is very active in public service and 
her mother was at one time. It is a distinguished family of 
professionals. So, I invited her in, and I tell you--and I am 
not easily swept off, but she swept me away. She is really an 
extraordinary individual, and her accomplishments in life and a 
wealth of experience. I would like to put this into the record, 
Mr. Chairman----
    Chairman Shelby. Without objection, your entire statement 
will be made part of the hearing record.
    Senator Warner. --and just say that this is a proud 
American family and serving in public service in many 
capacities, and she would be a very strong person on this post 
to which our President has appointed her.
    Chairman Shelby. Thank you, Senator Warner. We know you are 
chairing the Armed Services Committee.
    Senator Warner. Thank you.
    Chairman Shelby. Senator Richard Burr from North Carolina, 
welcome to the Committee.

                   STATEMENT OF RICHARD BURR

        A U.S. SENATOR FROM THE STATE OF NORTH CAROLINA

    Senator Burr. Thank you, Mr. Chairman. It is indeed an 
honor to be here. I know that all five nominees are more than 
qualified, or they would not have been nominated by the 
President. But I am here specifically also to introduce Rodney 
Hood of Durham, North Carolina, who has been nominated to the 
National Credit Union Administration Board.
    Rodney is well-prepared for the position for which he has 
been nominated. A graduate of the University of North Carolina 
at Chapel Hill--which it pains a Wake Forest graduate to say--
he has spent a career in finance and housing. Perhaps more 
importantly, though, is his commitment to community service, 
whether in Washington or North Carolina. He has been an active 
volunteer in the community, having served the North Carolina 
Low Income Housing Coalition, Boys and Girls Clubs in Raleigh, 
the North Carolina School of the Arts, the Duke Ellington 
School of the Arts in the District, and the Folger Shakespeare 
Library. This is a downside to Rodney's confirmation. When 
confirmed, he will have to step down from many of his current 
service commitments.
    Speaking for North Carolina, though, Mr. Chairman, I can 
say that North Carolina's loss is the Nation's gain with this 
nomination. The same drive to serve and succeed he has shown 
throughout his career will be a tremendous benefit to the 
National Credit Union Administration Board and the credit 
unions it oversees. I think this is particularly true of the 
credit unions serving low- and middle-income members. Rodney's 
career to date, as mentioned, has focused on finance and 
housing with a focus on affordable housing and community 
development, particularly in underserved areas. By extension, 
he has invested a great deal of time in the financial literacy 
and education programs, including programs on ownership. This 
background, with its close connection to the individual, will 
serve credit unions and their members well.
    Mr. Chairman, Rodney Hood is successful because he sees the 
human face behind the issues. I believe, with this nomination, 
he will not forget that human face that he represents. I 
believe the Committee will be pleased by his qualifications for 
the post. I urge the Committee to approve Rodney's nomination, 
and I can honestly say I think this Committee will be proud of 
the vote in favor of Rodney Hood's confirmation.
    I thank the Chair.
    Chairman Shelby. Thank you, Senator Burr.
    What I would like to do now is ask all of the nominees to 
stand, raise your right hand, and be sworn.
    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. Slaughter. I do.
    Ms. Baicker. I do.
    Mr. Cabrera. I do.
    Ms. Hyland. I do.
    Mr. Hood. I do.
    Chairman Shelby. Do you agree to appear and testify before 
any duly-constituted committee of the Senate?
    Mr. Slaughter. I do.
    Ms. Baicker. I do.
    Mr. Cabrera. I do.
    Ms. Hyland. I do.
    Mr. Hood. I do.
    Chairman Shelby. Thank you.
    Dr. Slaughter, we will start with you. Your written 
testimony will be made part--all of your written testimony will 
be made part of the hearing record in its entirety. If you 
have--I will pose this question to all of you and start with 
Dr. Slaughter--do you have any family members you want to 
recognize at this hearing today?
    Mr. Slaughter. I do, Mr. Chairman.
    Chairman Shelby. It is an important hearing. It is your 
day.
    Mr. Slaughter. Thank you, yes. We have a large and very 
close extended family, starting with my wife Lindsey and our 
two little boys, Nicholas and Jacob. With school and 
obligations, they are back home in New Hampshire, but with me 
here today is one of my brothers, Steve Slaughter, from 
Chicago, Illinois.
    Chairman Shelby. Okay. Dr. Baicker, do you have anybody you 
want to recognize?
    Ms. Baicker. Yes. Thank you very much for the opportunity, 
Mr. Chairman. I would like to introduce my husband, who is also 
an economist, Alan Durell, and my exceedingly proud parents, 
Maxine and Joseph Baicker, who are here from New Jersey.
    Chairman Shelby. Good. Mr. Cabrera, do you have anybody you 
want to recognize?
    Mr. Cabrera. Yes, Mr. Chairman, I have a big contingent 
here.
    Chairman Shelby. You go ahead.
    Mr. Cabrera. I have my wife, Betty Cabrera; my sons, Orly 
and Stefan; my mom and dad, Orlando Cabrera and Carmen Cabrera; 
my sister, Rosie; my nephew and niece----
    [Laughter.]
    --Alex and Giovanna. And my two best friends, Ron Weiner 
and Nick Schufer.
    Chairman Shelby. Well, that is great.
    Ms. Hyland, do you have somebody you want to recognize?
    Ms. Hyland. Yes, Mr. Chairman, I do, and I appreciate the 
opportunity. To my left is my dear aunt, Auntie Alba Colonne 
Whitt, and my dear friend Shirley Robson, and then my wonderful 
father, Fairfax County Supervisor for Mount Vernon, Gerry 
Hyland.
    Chairman Shelby. Thank you.
    Mr. Hood, do you have anyone you want to recognize?
    Mr. Hood. Yes, Mr. Chairman, I have family members. They 
are having flight delays getting out of North Carolina, but 
fortunately I have a few friends who are all visiting with me 
today, friends from USDA, Wells Fargo, Bank of America, and 
other social friends from here in Washington. Thank you all who 
are here.
    Chairman Shelby. Thank you.
    Dr. Slaughter, we will start with you, if you will sum up 
whatever you want to say.

                 STATEMENT OF MATTHEW SLAUGHTER

              OF NEW HAMPSHIRE, TO BE A MEMBER OF

                THE COUNCIL OF ECONOMIC ADVISERS

    Mr. Slaughter. Thank you, Mr. Chairman.
    Chairman Shelby, Senator Sarbanes, and Members of the 
Committee, I am deeply honored to appear before you today as a 
nominee to become a Member of the President's Council of 
Economic 
Advisers.
    Since its creation in 1946, the Council of Economic 
Advisers has provided the President with sound, objective 
advice on the full range of economic policy issues facing our 
country. On many measures, today the U.S. economy is among the 
world's strongest, thanks to the foundation of all the men and 
women that make up our highly productive work force. At the 
same time, today the U.S. economy faces important economic 
challenges. The rise of countries such as China and India, the 
costs of energy and health care, the demographic shift of an 
aging population, and the need to best educate our children. 
All the challenges, and more, will require careful, 
constructive policies to help ensure rising living standards 
for both ourselves and future generations of Americans. If I am 
fortunate enough to be confirmed to Council membership, I will 
devote my full energies to helping the Council work with all of 
you on meeting these challenges.
    Past Council Members have drawn on their experiences in 
research, teaching, and related activities. My experience 
include a wide range of policy-related work in international 
trade and finance, with a particular interest in how 
international commerce helps shape national economic outcomes, 
such as productivity and wages. I am currently an Associate 
Professor of Business Administration at the Tuck School of 
Business at Dartmouth, a tenured position that I have held 
since 2002. I am also currently a Research Associate at the 
National Bureau of Economic Research and a Visiting Fellow at 
the Institute for International Economics. In recent years, I 
have also enjoyed the opportunity to be a Visiting Scholar at 
the Federal Reserve Board and the International Monetary Fund, 
a Consultant at the World Bank, and a Term Member on the 
Council on Foreign Relations. I hope that the breadth and depth 
of these work experiences would serve me well at the Council of 
Economic Advisers.
    Let me close by thanking you again both for the privilege 
of appearing before this Committee and for your timely 
consideration of my nomination. I look forward to answering any 
questions that you may have.
    Thank you.
    Chairman Shelby. Dr. Baicker.

                 STATEMENT OF KATHERINE BAICKER

              OF NEW HAMPSHIRE, TO BE A MEMBER OF

                THE COUNCIL OF ECONOMIC ADVISERS

    Ms. Baicker. Chairman Shelby and Members of the Committee, 
it is a great honor to appear before you today as the 
President's nominee to be a Member of the Council of Economic 
Advisers.
    For almost 60 years, Members of the Council have had both 
the opportunity and the responsibility of providing the 
President with objective advice on issues ranging from 
education to health care to trade to welfare. Members of the 
CEA strive to bring the best scientific thinking from the 
broader economics community to bear on these often difficult 
questions.
    My previous experience includes work in both the academic 
and policy arenas. Since receiving my Ph.D., I have served on 
the faculty in both the Economics Department at Dartmouth and 
at the Center for the Evaluative Clinical Sciences and the 
Department of Community and Family Medicine at Dartmouth 
Medical School. I recently joined the Department of Public 
Policy in the School of Public Affairs at the University of 
California at Los Angeles. I am a Research Associate in the 
Public Economics Program at the National Bureau of Economic 
Research. My research focuses on health economics, welfare, and 
public finance, with a particular emphasis on financing health 
insurance, spending on public programs, and fiscal federalism. 
I have also had the privilege, several years ago, of serving as 
a Senior Economist at the Council of Economic Advisers, where I 
experienced first-hand the Council's vital role in providing 
sound economic advice to inform the policymaking process. I 
hope that my experiences will allow me to continue this strong 
tradition.
    In the coming years, our strong and growing economy will 
also be faced with many challenges, including mounting 
pressures on both public and private health care spending and 
the education and training of workers with the skills and 
flexibility required in the modern labor market. If I am 
fortunate enough to be confirmed, I look forward to working 
with you on all of these important issues.
    Thank you again for considering my nomination and for the 
privilege of appearing before the Committee. I look forward to 
answering any questions you might have.
    Chairman Shelby. Mr. Cabrera.

                STATEMENT OF ORLANDO J. CABRERA

             OF FLORIDA, TO BE ASSISTANT SECRETARY

                 FOR PUBLIC AND INDIAN HOUSING,

        U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Mr. Cabrera. Mr. Chairman, Senator Sarbanes, Senator 
Martinez, a good friend whom I greatly admire----
    Chairman Shelby. He has gone to vote, where we can continue 
this hearing. He will be back.
    Mr. Cabrera. I know. But I am grateful for his wonderful 
comments and for his friendship.
    Members of the Committee, thank you for allowing me the 
opportunity to address the Committee today.
    First, I would like to thank President Bush and Secretary 
Jackson for giving me the opportunity to serve our country as 
Assistant Secretary for Public and Indian Housing. I am humbled 
at having been asked, and honored to serve however I best may. 
I would also like to thank all of you for your time and 
graciousness in meeting with me these last few weeks--and your 
staff, all of whom have been wonderful. Hurricane Katrina has 
impacted all of our lives, and I appreciate each of you 
accommodating me into your busy schedules.
    I would very much like to thank Governor Jeb Bush for 
having appointed me Executive Director of Florida Housing and 
for allowing me to serve the people of the State of Florida. As 
a still waxing Floridian, I am grateful for all of his support.
    I sit before you today in profound gratitude of a lot of 
people. These people provided me with support and encouragement 
throughout my life, and particularly in the case of my parents, 
under sometimes difficult circumstances. I would likely not be 
here before you but for their constant love, support, and 
counsel.
    I would also like to thank the rest of my family and all of 
my friends, particularly Bill and Tracy Cowden, who have been 
lifelong friends but also have put me up for the last 2 months. 
And the staff of----
    [Laughter.]
    Chairman Shelby. That is a real friend, is it not?
    Mr. Cabrera. Yes, it is. And the staff and Board of 
Directors of the Florida Housing Finance Corporation for all of 
their encouragement and support. I wish I could mention all of 
them by name, but then we would need to order cots and make 
arrangements for dinner, and I do not know if everyone on the 
Committee likes Cuban food.
    I have always had a home. I know how fortunate I am to 
actually make that statement, especially because my parents 
were exiles in, and later immigrants to, our country. Our home 
always had those things that we would like to think are 
provided to all people from their childhood through that day 
when one leaves and makes one's own home. Like my parents 
before us, when my wife and I started our lives together, we 
initially rented and then purchased a home. We can 
affirmatively state that we have realized the American Dream of 
homeownership and we understand its importance to all 
Americans.
    Our family's experience is what most Americans hope is 
prototypical. Nonetheless, I am keenly aware that not every 
American is on that same housing continuum that our family 
followed. As a former Director, Vice Chairman, Chairman, and 
finally Executive Director of Florida Housing, my work really 
focused on making that continuum more possible for all 
Floridians. During my tenure at Florida Housing, we financed 
the construction of a lot of units for both homeownership and 
rental, to make that continuum as accessible as it could be for 
Floridians.
    While at Florida Housing, I had the honor to lead an 
organization that financed the construction of thousands of 
affordable housing units. Most of the units we financed went to 
Floridians that earned 60 percent of area median income and 
below, during my tenure we made great strides toward financing 
the construction of units for Floridians earning 30 percent of 
area median income and below. In my 5-year involvement, we 
developed more units for extremely low-income Floridians than 
had ever been developed in the previous 20 years, and that is 
an achievement I am extremely proud of.
    Happenstance being what it is, I was Florida Housing's 
Executive Director during five hurricanes and one tropical 
storm. We responded to the needs created by those storms by 
realigning State subsidies in order to make funds available to 
local governments for storm recovery, making our Federal 
subsidy available to fund tenant-based rental assistance and 
home repair, and by creating incentives for developers to 
construct units in storm-affected areas as quickly as possible.
    As unquestionable as our commitment to recovery from 
Katrina is--and hopefully Wilma will be kinder; although from 
news reports from my long-time home, Miami, it does not seem 
that it has been--the Office of Public and Indian Housing would 
address more day-to-day programmatic concerns. Public housing 
authorities hold a wealth of assets and ideas that are becoming 
more and more important to the sustainability of the housing 
continuum I mentioned above. If I am confirmed, I will work to 
develop policies so it will make it possible for PHA's to work 
more independently while maintaining fiscal soundness.
    Finally, on the issue of Indian housing, if confirmed, the 
Office of Public and Indian Housing will reach out to the 
various tribes, groups, and corporations to ensure we are 
addressing their needs as well as we can. Ongoing outreach and 
maintaining strong relations with stakeholders will be a 
significant focus of our efforts with respect to Indian and 
public housing.
    In closing, if confirmed, I look forward to serving our 
country, the President, Secretary Jackson, and HUD by looking 
for answers and taking opportunities wherever we may find them 
to make safe, decent, affordable housing available to all 
Americans.
    Thank you, Mr. Chairman, Senator Sarbanes, Senator 
Martinez, and all Members of the Committee for your time and 
consideration of my nomination. I stand ready to answer any 
questions you may have.
    Chairman Shelby. Thank you.
    Ms. Hyland.

              STATEMENT OF CHRISTIANE GIGI HYLAND

                  OF VIRGINIA, TO A MEMBER OF

         THE NATIONAL CREDIT UNION ADMINISTRATION BOARD

    Ms. Hyland. Thank you very much, Mr. Chairman, Senator 
Sarbanes, and Members of the Committee. Let me begin by 
thanking Senator John Warner for his gracious introduction in 
support. I also want to extend my gratitude to the Senate 
Minority Leader, Senator Harry Reid, for submitting my name to 
the White House for consideration. I am especially grateful to 
President Bush for nominating me to be a Member of the National 
Credit Union Administration Board. I am deeply honored to be 
asked to enter into public service, and if confirmed I will do 
everything that I can to merit the trust that the President has 
placed in me.
    I also want to extend my thanks to NCUA Chairman JoAnn 
Johnson for her encouragement, my fellow nominee Rodney E. 
Hood, for his patience, and the professional staff at NCUA, who 
provided me thorough briefings and insights on many of the 
issues facing this independent Agency.
    I have already introduced the family members that I have 
with me today. Their unceasing love, support, and encouragement 
have sustained me through this process and I extend to them my 
heartfelt thanks.
    Mr. Chairman, if confirmed, I will bring to the NCUA Board 
over 14 years of credit union system experience. For 7 years, I 
was in private practice in my family's law firm, Hyland & 
Hyland, in Alexandria, Virginia. There, I represented natural 
person credit unions, particularly in the areas of regulatory 
and consumer lending compliance, residential real estate 
transactions, and credit union account lending and employment 
policies and procedures. While at the firm, I graduated from 
the Credit Union Development Education Program, a program that 
explores the inherent power of the cooperative structure and 
the ability of financial cooperatives to facilitate ``people 
helping people,'' both domestically and internationally.
    For the next 5 years, I served concurrently as Executive 
Director of the Association of Corporate Credit Unions and Vice 
President of Corporate Credit Union Relations with the Credit 
Union National Association. While at ACCU and CUNA, I 
spearheaded corporate credit union participation in the 
creation of the Community Investment Fund, the CIF, the 
National Credit Union Foundation's primary funding mechanism 
for local, State, and national credit union development 
activities. The funds in the CIF are earmarked specifically for 
development initiatives that increase credit unions' capacity 
to impact the financial lives of consumers. This includes 
education, small credit union programming, community outreach, 
and international development. In addition, I worked to involve 
corporate credit unions in the settlement of affordable and 
safe international remittances through the IRnet program 
established by the World Council of Credit Unions. In my 
current role as Senior Vice President/General Counsel to Empire 
Corporate Federal Credit Union in Albany, New York, I provide 
independent legal advice and counsel to Empire's management and 
board on initiatives, contracts, and projects.
    With all of this credit union experience, can I serve as an 
effective, independent regulator? Yes. I believe that my career 
in the credit union system enhances my ability to balance 
safety and soundness considerations with the needs of the 
institutions regulated. I believe credit unions serve as a 
critical component of the financial services sector, providing 
products and services cooperatively to benefit their member-
owners.
    If confirmed, Senator, I will strive to be a fair and 
thoughtful regulator, mindful of the stated Congressional 
findings and purposes of the original enabling legislation. I 
will work to foster credit unions' sense of responsibility to 
serve all segments of their membership, particularly working 
people, youth, and others who are not being served by 
traditional financial institutions. If confirmed, I will work 
closely with Members of this Committee and Members of Congress 
to ensure the financial integrity and vitality of credit unions 
in an ever-changing environment.
    Thank you, Mr. Chairman and Members of the Committee, for 
the opportunity to appear before you today. I look forward to 
answering any questions you might have.
    Chairman Shelby. Thank you.
    Mr. Hood.

                  STATEMENT OF RODNEY E. HOOD

              OF NORTH CAROLINA, TO BE A MEMBER OF

         THE NATIONAL CREDIT UNION ADMINISTRATION BOARD

    Mr. Hood. Thank you, Mr. Chairman. Thank you for the 
opportunity to meet with you on behalf of my nomination to 
serve on the Board at the National Credit Union Administration.
    I would like to express my deep appreciation to President 
Bush for nominating me to this position. I would also like to 
thank Senator Elizabeth Dole and Senator Richard Burr for their 
generous remarks. I am humbled by their kind and gracious words 
and would like to acknowledge and applaud their great 
leadership and service for my home State, North Carolina.
    While my parents are not here today in person, I feel the 
warmth of their presence as they watch from Heaven. I am 
thankful to them for bequeathing to me a strong value system, a 
value system that reflects humility, honesty, hard work, and 
compassion. I believe that these values have helped me make a 
difference in the lives of many people during my 17 years in 
the private sector and in public service.
    If confirmed by the Senate, I look forward to fulfilling 
the duties and responsibilities of an NCUA Board Member. I am 
committed to listening carefully, working hard, and doing my 
level best to ensure the safety and soundness of the Nation's 
8,800 federally insured credit unions.
    I have a profound appreciation for community empowerment, 
which was developed early on in my youth as a missionary in 
Africa. There in a rural landscape, I saw the hard work, 
struggle, and resilient character of people who made their 
living from farming. I learned and saw that strong, struggling 
people were at the heart of what any country is about. That is 
why I am pleased to now be in a position where I can continue 
to serve my country by overseeing the institutions that give 
hardworking people access to capital.
    President Bush said it best when he said, ``The true 
measure of compassion is more than good intentions, it is good 
results.'' I have been blessed and fortunate to work at some of 
America's most respected financial institutions, which sought 
to empower stability and prosperity in our local communities. 
While at North Carolina Mutual and Wells Fargo, I held 
management posts that allowed me to promote community 
development and outreach in underserved communities. I served 
on the board at the Wells Fargo Housing Foundation and managed 
public-private partnerships with results-oriented housing 
providers such as the Neighborhood Reinvestment Corporation, 
Habitat for Humanity, and the National Council of La Raza. 
Having served as a Community Reinvestment Act Officer at Bank 
of America and the National Director of Affordable Housing at 
Wells Fargo, I have been both an advocate and provider of 
affordable housing and small business lending. In those 
positions, I oversaw loan programs, managed teams of regional 
community development managers, and worked with both our 
internal Credit Policy Group and the Office of the Comptroller 
of Currency to review credit risk.
    At USDA, I helped administer a $43 billion loan portfolio 
comprised of over 400,000 loans--loans to individuals seeking 
homeownership, private entities to provide affordable rental 
housing, and to local government entities to fund schools, 
hospitals, and first responder services.
    These experiences have directly exposed me to the 
importance of financial soundness, risk management, and 
regulatory review. I come to NCUA with a mindset based on the 
following tenets: First, I will work hard to ensure that credit 
unions remain safe and sound financial institutions; second, I 
will strive to be recognized as a fair and thoughtful 
regulator, one who realizes the value and necessity of 
regulation while being cognizant of the impact of arduous 
regulations; third and finally, I understand the importance of 
disclosure and transparency and will work closely with the 
Members of this Committee and all Members of Congress to ensure 
the financial integrity of credit unions in a rapidly changing 
environment.
    Since joining the Federal Government at USDA, I have been 
honored to work side-by-side with and lead some of the most 
capable and talented career staff around. And should I be 
honored by your confidence, I look forward to doing so at NCUA 
as well.
    Mr. Chairman, thank you for the honor of appearing before 
you this morning. And I thank you for your courtesy and 
consideration. I welcome any questions you may have.
    Thank you.
    Chairman Shelby. Thank all of you.
    Dr. Slaughter, I will start with you and Dr. Baicker.
    Rather, the impact of higher prices for oil and other goods 
on the economy. There has been much speculation as to how our 
economy will adapt to the aftermath of hurricanes Katrina and 
Rita. It now appears concern has shifted back to the dangers of 
inflation, particularly in the energy market. What will be the 
impact, in your judgment, of continued high oil prices on the 
economic expansion in the United States, and what particular 
policy options will you recommend to the President to enable 
our economy to manage the reconstruction of the Gulf Coast 
area?
    I will start with you and then go to Dr. Baicker.
    Mr. Slaughter. Thank you, Mr. Chairman. That is an 
excellent question that raises an important set of issues. The 
price of oil and oil-based products we all see while at the 
gasoline station to fuel up our cars. Many of us are going to 
see----
    Chairman Shelby. It affects everybody.
    Mr. Slaughter. It affects everybody in many different ways. 
To this point, we all have seen the sharp rise and price 
increases for the gasoline we buy. We will see it in home 
heating oil prices and natural gas prices. Fortunately, the 
U.S. economy in the past few decades has become much more 
energy efficient. Thanks to a lot of technology innovations and 
the broad guidance of policy regulators, today the U.S. economy 
produces our goods and services needing a lot less energy than 
it did in the past. So one of the implications of that, when we 
think about the important issue you raise of the impact on 
broader prices in the U.S. economy, is that, relative to 
previous oil price increases in the 1970's, for example, we 
think there will be a much more muted impact on broader prices 
of goods and services in the U.S. economy.
    That remains to be seen, but thus far the oil price 
increases and gasoline price increases have been contained.
    Chairman Shelby. Natural gas is factored in there, too?
    Mr. Slaughter. Natural gas as well, absolutely. But the 
broader prices of goods and services----
    Chairman Shelby. ``Has been contained''--what do you mean 
by that?
    Mr. Slaughter. It has been contained to those sectors and 
those particular immediate products.
    Chairman Shelby. In other words, it has not gone everywhere 
else?
    Mr. Slaughter. Exactly. It has not gone broader to goods 
and services that we buy at the grocery store and----
    Chairman Shelby. Or wages.
    Mr. Slaughter. Or wages thus far. Exactly.
    So the policy challenge going forward, I think, is twofold. 
One is to think about a possible impact on a broader range of 
prices in the U.S. economy and, more importantly, to the extent 
that some of the underlying forces driving oil price increases 
are based on growth in the United States and in other countries 
around the world--China being a prominent example. These high 
prices for oil and related products are likely to persist for 
quite some time, and so the policy challenges we will be 
thinking about: What broad sets of frameworks could allow 
American households and American businesses to best respond.
    Chairman Shelby. Dr. Baicker.
    Ms. Baicker. To follow up on what my colleague has 
mentioned, fortunately core inflation in the United States is 
relatively low and stable, which has meant that the shock to 
oil prices has not had a wider effect.
    Chairman Shelby. Would you, just for the audience, define 
generally what you mean by ``core inflation''?
    Ms. Baicker. Energy prices and food prices in general are 
more volatile than prices in the broader economy. Sometimes 
when we look at how inflation is evolving over the longer-run--
--
    Chairman Shelby. In other words, they are volatile, they 
are up and down?
    Ms. Baicker. They are up and down a lot more.
    Chairman Shelby. But they have mainly been up, haven't 
they?
    Ms. Baicker. Well, lately oil prices certainly have been 
up. We want to think about those as an important factor 
affecting all Americans, from heating expenses to 
transportation expenses and the like. But we also want to look 
at other elements of inflation that may evolve more stably over 
time to give us a sense of what the underlying pressures on 
wages and broader inflation are. If you look at the prices of 
things excluding energy and food, which move around more 
rapidly, we see that those prices do remain low and stable, 
unlike in the 1970's. The pressures that you brought up that we 
would all be worried about, on wages and on inflation more 
broadly, are mitigated by those other prices being more stable.
    That said, as you correctly brought up, oil prices and 
refined product prices have been high and do not appear to be 
going down anytime in the immediate future. So that creates 
challenges for the economy, but also the opportunity to develop 
alternative sources of energy that may become cost-effective 
where they were not before. And to that end, it seems that 
refining capacity is likely to grow over the next 10 to 15 
years, as is the capacity to import liquefied natural gas, 
which will provide alternatives as well.
    Chairman Shelby. Does the current account imbalance bother 
either one of you, the way it has grown in recent years?
    Mr. Slaughter. Mr. Chairman, that is an issue of great 
concern that you raise. By any measure, the current account 
imbalance that the United States runs today is large by 
historical standards of the United States and by standards of 
other countries. So, I think a broad policy challenge for the 
United States in the coming years will be trying to understand 
the underlying causes of the current account imbalance, 
thinking about its consequences, and thinking about possible 
ways that that imbalance could be brought down.
    I think a lot of analysis has gone into the current account 
deficit the United States is running. It is clear that at least 
some of the causes of the current account imbalance today 
actually reflect underlying strengths of the United States 
economy, one example being that the United States has enjoyed 
much faster rates of economic growth than have most of our 
trading partners in recent years. Countries like Japan, 
Germany, and France, which are the bulk of our trading, have 
been going much more slowly.
    Chairman Shelby. Is some of that because we have more of a 
flexible labor market? Is that factored in there?
    Mr. Slaughter. I think there is a lot of evidence now that 
the underlying flexibility of labor markets in the United 
States of capital markets and product markets as well, allows 
the deployment of people and capital to industries to grow more 
quickly when new opportunities arise. I think you are exactly 
right. But in terms of the current account implication, it 
means that we tend to be importing a lot more from them, thanks 
to our growth, than they import from us.
    So that is one of the underlying causes. There are others.
    Chairman Shelby. That is an unhealthy situation 
economically over time, is it not?
    Mr. Slaughter. It is. And I think a broad policy challenge 
that this Administration and others have been working hard on 
is working with policymakers in these other countries, like 
Japan and Germany, to try to think about the macro- and micro-
economic reforms, kind of big-level and down at the level of 
individual companies, that would allow those countries to grow 
more quickly.
    Chairman Shelby. Dr. Baicker, do you have any comments?
    Ms. Baicker. Certainly. I would share your concern as well, 
and I defer to my colleague's greater expertise on issues of 
international commerce. That said, even things that are good 
for the economy overall may not benefit all workers in the U.S. 
economy in the same way. Some people may be hurt by trade while 
others are helped. And there are lots of policy opportunities 
to make sure that those workers who may be displaced by trade 
or lose their jobs because of other changes in the U.S. economy 
have every opportunity to get retrained and have income support 
they need to weather those changes.
    Chairman Shelby. To both of you, what is your take on the 
long-term--or let us say the next 20 years, if you can look 
that far out--the economic implications to the United States 
economy and to the workers of the U.S. facing a rising Chinese 
growth economy and perhaps India and so forth. Do you view that 
as a concern, as an opportunity, as a challenge, or all of it?
    Ms. Baicker. Certainly it raises the importance of ensuring 
that workers have access to education when they are young and 
training and retraining once they enter the labor market. A 
more rapidly evolving economy, where some sectors grow quickly 
but others shrink, necessitates making sure that retraining is 
available to move workers into sectors that are growing or into 
parts of the country that are growing. Giving them the 
flexibility to make those decisions about what training they 
need in the sad event that they do lose jobs to other sectors 
of the U.S. economy or to foreign countries is of vital 
importance to ensuring that all Americans enjoy the benefits of 
growing commerce across the United States and across other 
countries.
    Chairman Shelby. Dr. Slaughter.
    Mr. Slaughter. To build on what Dr. Baicker has said, I 
think there is a real opportunity for the United States, with 
the growth that has been going on and that is expected to go on 
in countries like China and India, for American-based 
companies. The fact today is that about 95 percent of the 
world's population lives outside of the United States so for 
U.S.-based companies, when they think about growth 
opportunities, countries like China and India present a 
tremendous opportunity.
    That said, I do have some concerns about the magnitude of 
the policy challenges that we all face with integrating China 
and India into the market-based world economy that we would 
like to see them continue to move into. There are a lot of 
policy challenges. One I will highlight is support for 
enforcement of intellectual property rights. One of the 
strengths of the U.S. economy for a long time has been 
intellectual property creation, knowledge-based activities, 
things like information technology, life sciences, and finance. 
Those are things that American firms are particularly good at. 
And ensuring that the institutions and legal regimes develop in 
countries like China and India to afford our companies those 
opportunities, I think, is a real challenge going forward that 
will require a lot of diligent and ongoing policy work.
    Chairman Shelby. Dr. Baicker, you have done some work, as I 
understand, in the health care area. We have a great challenge 
in dealing with Medicare, Medicaid, among other things. How do 
we meet that challenge in the future? Maybe you will win a 
Nobel Prize if you come up with that.
    Ms. Baicker. That would be great.
    [Laughter.]
    I agree with you that these are the primary forces 
affecting U.S. long-run spending growth that we should get 
under control now before they swallow the entire Federal 
budget.
    Chairman Shelby. Is that a combination of demographics and 
politics, perhaps?
    Ms. Baicker. It is certainly a combination of both 
demographics and of the increasing expenditures per person on 
health care. The reason Medicare expenditures are growing so 
much more quickly than Social Security expenditures is that the 
same aging population that is consuming more Social Security 
resources is consuming even more health care per person. If you 
look at the Medicare budget over a 30- or 50-year horizon, the 
growth in excess of GDP is almost entirely driven by the excess 
growth of health spending relative to GDP growth and relative 
to wage growth.
    So what do we do about that? Well, it is all well and good 
to say we should spend less on health care, but we have one of 
the premier health systems in the world and we develop lots of 
new health technologies. It is important that any policies do 
not stifle that innovation that has served us all well. That 
said, our health resources do not seem to be going where they 
achieve the greatest gains. We spend a lot of our Medicare 
resources on people in the last 6 months of life getting care 
that neither prolongs their life nor improves their quality of 
living nor makes them more satisfied with the health care they 
receive.
    Chairman Shelby. What percentage, roughly, of our health 
care costs are incurred in the last couple of months or so of 
someone----
    Ms. Baicker. In the Medicare program, about 20 percent of 
expenditures go to people in their last 6 months of life, I 
believe which is a lot of spending and, interestingly, highly 
variable across different areas of the country. So in some 
parts of the country, twice as many Medicare beneficiaries die 
in the intensive care unit than in other parts of the country. 
And this is not because those people are sicker or older or 
have different stated preferences for receiving care at home or 
receiving care in the hospital. It is just that medicine is 
practiced more intensively and more expensively in those areas 
in ways that do not seem to pay off in the beneficiary's well-
being physically, psychologically, or in any way we can 
measure.
    The challenge is to understand what is driving those higher 
expenditures and what makes low expenditure/high-satisfaction 
areas different, and try to implement that in different areas. 
CMS, the Centers for Medicare and Medicaid Services, has gone a 
long way in developing quality measures and best practices 
guidelines that would help areas of the country that lag behind 
in quality and excel in expenditure in adopting some of the 
better practices that are done in other areas of the country. 
And there is a strong role for the transmission of information 
to all those hospitals.
    Chairman Shelby. Would both of you economists deem this 
economy we have today a strong growing economy still?
    Mr. Slaughter. I would, Mr. Chairman. In a lot of the basic 
measures we look at, the U.S. economy, in spite of the 
challenges it has faced in recent years with a lot of shocks, 
has been performing quite well. If you look at GDP growth this 
year, it is on track to be an----
    Chairman Shelby. Especially since 2001, you know.
    Mr. Slaughter. Absolutely. With the terrorist attacks, with 
the downturn in U.S. equity markets, with the uncertainty that 
faced a lot of businesses in terms of accounting reform, that 
natural disasters' as we have seen in recent months, 
unfortunately. That flexibility we were speaking of, I think, 
has served the economy well. GDP growth is on track to be about 
3.5 percent this year. Unemployment is now below 5 percent in 
the U.S. economy. And as we were discussing----
    Chairman Shelby. But in a lot of areas, 3 percent, 2.8--in 
my State of Alabama recently it was 3.8 percent unemployment--I 
mean hired worker performance, low unemployment.
    Mr. Slaughter. Absolutely, there are pockets where I think 
the firms are trying to find the people they need to help them 
build the houses and man the----
    Chairman Shelby. Well, that is a good sign, is it not?
    Mr. Slaughter. It is a good sign. And again, the broad 
policy goal is trying to have those good outcomes be shared as 
broadly as possible.
    Chairman Shelby. I know that our deficits, because of the 
hot economy and we have had more tax receipts and so forth, 
have been going down better than they were a year ago. But does 
the deficit and then the ensuing debt concern either one of 
you? It concerns most Americans.
    Mr. Slaughter. Absolutely. I am concerned about the 
deficits, not just today but, as we were discussing, when you 
look out on the coming generation, you mentioned the 
demographic changes facing the U.S. economy, and the reality 
is, for example, that we have a labor force that is going to 
grow a bit more slowly in the coming years than it has in 
previous decades because of the fact that there are not as many 
baby busters as will replace the baby boomers that are at the 
leading edge of retirement. And so I think the real fiscal 
challenges going forward, as we have discussed, are issues of 
Social Security, Medicare, and Medicaid spending. Innovative 
thinking on both the spending side and also the taxation side 
will be warranted and in that regard, I think we all look 
forward to hearing the recommendations of the President's Tax 
Reform Panel and the ideas that they may bring to the table to 
help facilitate these discussions.
    Chairman Shelby. Dr. Baicker, do you have a comment?
    Ms. Baicker. Yes, I share your concern as well. And the 
ability to run deficits in times of natural disaster, war, or 
high unemployment is a real asset to the economy. But we are 
now on a path to reducing the deficit by 50 percent over 5 
years, ideally, and that puts us on the right path, I think. 
Taxes are only half the equation, as my colleague mentioned. 
Entitlement growth that we were just speaking of Social 
Security and Medicare is eating up an increasing fraction of 
discretionary spending. So getting those programs on a more 
efficient track would go a long way toward alleviating those 
problems.
    Chairman Shelby. Mr. Cabrera, I will go to you now, if I 
could, because we have a vote on the floor and Senator 
Martinez, I hope, will vote and get back here where we can 
continue the hearing without recessing.
    Could you share briefly with the Committee the role that 
the Florida Housing Finance Corporation has played in 
rebuilding after hurricanes in Florida? What role do you all 
have there?
    Mr. Cabrera. Florida Housing, essentially, allocated a good 
amount of resources to people who needed tenant-based rental 
assistance, and most of that resource went to public housing 
authorities. They stepped in in order to make it as easy as 
possible for the funds that are necessary for people to find 
homes to utilize them. The second thing that Florida Housing 
did was create a pool fund so people can begin repairing their 
homes, or alternatively, allow them to borrow so they can buy a 
new home.
    The other aspect that Florida Housing helped with was 
helping our sister agencies. Our sister agencies, particularly 
DCA, Department of Community Affairs, was mostly charged with 
hurricane recovery tasks at the State level, and our largest 
role was supporting them.
    Chairman Shelby. We wish you well over there at HUD. You 
have a great challenge, which you follow in some big shoes and 
Senator Martinez. I think the Cuban Americans can play a big 
role there, and you will.
    Mr. Cabrera. Thank you, sir.
    Chairman Shelby. I congratulate you.
    Mr. Cabrera. Thank you.
    Chairman Shelby. Ms. Hyland and Mr. Hood--Ms. Hyland first. 
You spent the last several years working in the credit union 
industry. You know a lot about it.
    Ms. Hyland. Yes, sir.
    Chairman Shelby. If you were to be confirmed, which I 
predict you will be, your responsibilities would change from 
that of an industry advocate--you know, working in the 
industry--to that of a safety and soundness regulator. Two 
different roles, as you well know. Could you give us some 
insight in what you believe would be the appropriate role of 
the regulator is in relation to the industry, that is, the 
credit union you would regulate? To what extent should a 
regulator be concerned about appearing as an industry advocate? 
In other words, I do not think you can do both.
    Ms. Hyland. Certainly.
    Chairman Shelby. I am not saying you would, but, you know, 
you come----
    Ms. Hyland. Certainly, Mr. Chairman. I guess there are two 
points I would like to make. Number one is that, by virtue of 
the Federal Credit Union Act and the parameters that are laid 
out for the Board, there is a line to be drawn in terms of 
listening to the interests of the industry and listening to the 
professional staff at NCUA, and as a board member, then, 
exercising independent judgment and being able to balance those 
concerns so that the credit union system is protected by a 
strong safety and soundness regulator.
    Chairman Shelby. That should be number one, shouldn't it?
    Ms. Hyland. Correct.
    Chairman Shelby. The strong safety and soundness of the 
credit union system.
    Ms. Hyland. Absolutely. Secondarily, I would like to 
emphasize, as I said in my statement, that I believe credit 
unions play a vital role in the larger financial services 
sector. So to the extent that that safety and soundness can be 
balanced with regulatory flexibility to allow credit unions to 
continue to serve the Congressionally mandated mission of 
serving people of smaller means, I believe that also should be 
pursued and monitored by the regulator.
    Chairman Shelby. Mr. Hood, could you briefly tell us any 
trends that you may have picked up, either credit union-
specific or generally, that would be applicable to the 
financial system, that in your opinion pose a threat to the 
safety and soundness of credit unions?
    Mr. Hood. Well, yes, sir, Mr. Chairman. I think that one 
trend that I am seeing that could potentially pose a threat is 
the view that taxation should be imposed on our credit unions. 
When the credit unions were chartered, they were chartered to 
be tax exempt, democratically controlled entities that would 
provide for the----
    Chairman Shelby. I have not introduced any legislation.
    [Laughter.]
    Mr. Hood. Thank you for that, Mr. Chairman. But I recognize 
that that is potentially a trend. And I believe, sir, that if 
it were to reach fruition, it would have such an adverse effect 
on the credit unions' ability to serve the needs of low- to 
moderate-income individuals. And that is something that I think 
we really will probably want to address, in the sense that it 
would, one, fundamentally change the scope of the charter, and 
I think that is something that is really out there on the 
horizon that, if confirmed, I would like to address with you 
and your staff.
    Chairman Shelby. I have a number of questions for the 
record. I know Senator Sarbanes and others that are in other 
hearings will have questions for the record. But we would like 
to get all of you confirmed, have a markup, move you out as 
soon as possible. But I have a number of questions for the 
record myself, and we will ask those and get in touch.
    We are voting on the Senate floor. Senator Martinez is 
back. I am going to give the chair to him and let him close up 
the hearing.
    Senator Martinez. [Presiding.] Thank you all very much for 
your indulgence. We have votes going on and so that requires 
the coming and going that you have seen. So a busy time in the 
life of a Senator.
    Mr. Cabrera, I wanted to ask you a couple of questions 
relating to public housing, an area that I know well from my 
time at HUD--I wanted to just ask of you--and some of this may 
already have been asked, but what do you see as the major 
challenges in terms of providing affordable housing, the 
challenges of the Section 8 program, the future of HOPE VI, 
which has been perceived differently by the Administration than 
some here in the Congress. Frankly, I was conflicted greatly as 
a member of the Administration and what I believed to be a 
positive program in HOPE VI and it had done a lot of good, 
while at the same time I understand too often that there is not 
enough benefit to the entirety of it.
    What are your thoughts on some of those issues, if you 
could just in general?
    Mr. Cabrera. I think that public housing has a few 
challenges. The initial challenge it has is to become a better 
manager of valuable resources. And I think it is doing just 
that. It has made great strides in the last few years to become 
a better manager, certainly with the help of this Congress. And 
that infrastructure, that rubric has to be put in place and 
executed upon.
    As to the issue of HOPE VI, I think it has had its 
successes. It certainly has successfully demolished a lot of 
severely distressed units. But it has had its challenges as 
well in terms of trying to get units built. I think that a lot 
of my time, if confirmed, will be spent on trying to improve 
the rough edges of HOPE VI.
    Senator Martinez. One of the things that I hope we can do 
is to think about the future differently. You know, HOPE VI 
accomplished what it did, obviously many lessons that could be 
learned from the positive as well as some of the things that 
maybe did not work as well. Nevertheless, there is a need for 
us to do something to continue to modernize public housing, to 
continue to improve the stock of public housing, to reinvent 
it, if you will, in a different concept and a different 
vision--more mixed ownership, you know, just a rethinking of 
the concept. And I wonder if you have any impetus, or is there 
any impetus in the Administration that you know of, to come 
back to Congress with some new ideas on a program that might 
not be HOPE VI--maybe HOPE VII--but something new and different 
that would accomplish some of the goals of HOPE VI while at the 
same time bringing about some of the lessons learned.
    Mr. Cabrera. I think that certainly SLHFA is a good place 
to start the discussion. The idea of having flexibility at the 
PHA level, I think, is a good one so long as you can guard or 
enhance fiscal soundness. I think giving PHA's the ability to 
go and compete for a variety of resources--because they have 
significant assets--in order to replenish units is good policy. 
I think that would be a good start. In Florida, we recently 
amended Chapter 421 of the Florida Statutes, which is a statute 
that essentially administers or enables PHAs, and now PHAs in 
Florida have a wider breadth of options in terms of how to 
conduct their activities, at least in the State of Florida. I 
think that is a good thing.
    Senator Martinez. I do not mean to neglect the rest of you 
but, as you can tell, this is a little more in my vein. So, I 
will continue here for another minute or two.
    One of the things that I known distressed me greatly during 
my time at HUD was the morning news clips when it got to Public 
and Indian Housing, the multiplicity of indictments, 
convictions, fraud, waste, abuse that was kind of the daily 
fare. You know, we have--I do not remember now the exact 
number, but I think some 2,600 housing authorities across the 
country. And a number of these, the number of people associated 
with them, from time to time would stray from the straight and 
narrow. And I find that disappointing because I always thought 
it was really interfering with the ability of some needy person 
to live in a safe and decent place. It was really not stealing 
from that impersonal Government, but it was really stealing 
from the neighbor next door or someone living in public 
housing.
    I wonder what you think about the status of that situation? 
I know Michael Liu, the fellow you will be succeeding, worked 
diligently in this area. We stressed it a great deal. We made 
some progress, but I am not sure we turned the tide. I just 
wonder how you might view that aspect of things--unfortunately 
a negative aspect, but nevertheless one that needs to be dealt 
with.
    Mr. Cabrera. I think Secretary Liu made great strides on 
that. I think he did a terrific job. I also think that there 
are other things that we can do in order to minimize those 
incidences. One of the things is to more methodically approach 
troubled agencies, and specifically agencies that HUD has put 
into receivership, in order to better deal with the business 
aspects that one has to content with when you have a troubled 
agency. Simple things: Marshalling assets, paying liabilities, 
and getting people in place to properly run a PHA. I think that 
would go a long way to helping circumstances.
    Senator Martinez. One last area, and this is more related 
to your prior job but it would help me in carrying out my 
responsibilities toward the State. I have been impressed how, 
over the last, I would say, 3 years, what I did not perceive to 
be a crisis in affordability of housing in Florida has become 
that, and accentuated each and every day. And of course, as we 
see the devastation of the latest hurricane, this only destroys 
more of the basic stock of housing for many, whether it be farm 
workers, whether it be retirees in a mobile home park.
    What, as you depart from that world, are your 
recommendations in terms of creating more affordability of 
housing opportunities for people in the State of Florida? 
Frankly, these lessons really are nationwide; it is not unique 
to Florida. But what are your thoughts on housing 
affordability, how to bring housing as affordable to more and 
more people?
    Mr. Cabrera. When I was asked this question in Florida, the 
first thing I stated--and I think particularly my colleagues to 
the right would agree--is patience. Because markets are funny 
things, and markets change. But that is not a very satisfying 
answer on a practical level. On a practical level, I think that 
the Low-Income Housing Tax Credit is a remarkable devise to 
have the private sector essentially construct units and manage 
them. And when I say ``private sector,'' I do not just mean 
for-profit entities. I also include nonprofit entities. I am 
just saying----
    Senator Martinez. Nongovernmental sector.
    Mr. Cabrera. --other than Government.
    Senator Martinez. Right.
    Mr. Cabrera. And it has been a remarkably helpful thing 
from the perspective of unit production. Now, how does that 
relate to public housing? It does increasingly because many 
public housing authorities are beginning to become more 
entrepreneurial, which is, I think, good. And they have 
assets--mainly land--that can be developed. In many cases, that 
land is the only affordable land that is viable, where one can 
develop units. So that is another aspect that would be helpful.
    I think the market, as markets change, the private activity 
bond allocation, which is currently probably under-utilized 
nationwide, is going to become very, very important to the 
production of units. But those are the strongest production 
devices I believe we have, and I think we should utilize them 
to their fullest extent.
    Senator Martinez. Let me ask other panel members if you 
might have any thoughts you want to share on the issue of 
affordability of housing. In addition to that, maybe the other 
issue related to that, which is housing bubble, whether the 
possibility of us having an overheated housing market that may 
create some disruptions. Ms. Baicker, I notice some interest in 
you in this topic.
    Ms. Baicker. I agree with Mr. Cabrera that vouchers are a 
really flexible tool to use to get people into housing that 
they might not otherwise be able to afford. I know there have 
been many experiments at both the State and Federal level with 
vouchers that are larger for people with lower income and phase 
out as people's income grows, and gives them the opportunity to 
live in housing that otherwise would not be accessible and does 
not have some of the disadvantages of housing that is 
designated only for low-income people, which often then has 
problems that you do not see in the wider housing community. 
So, I share the hope that that kind of program, with 
flexibility built in for people to take the vouchers to the 
housing that suits them best, would really give people that 
opportunity.
    Senator Martinez. I think Single-Family Housing Tax Credits 
would also be a good idea. You know, we have done it for 
multifamily; it seems to me that it only makes sense to do it 
in single-family housing as well.
    Any other comments on that?
    Mr. Slaughter. Senator, I think this issue of the increase 
in home prices, especially in particular communities--on the 
coasts, for example, in recent years---there is legitimate 
concern about that rate of increase and whether in some sense 
those prices have gone too high and, going forward, whether 
price growth will moderate or even turn negative and prices 
will actually decline.
    This very important issue of housing affordability has 
longer time horizons that are important as well. In addition to 
the immediate concerns, one issue that I always think about is 
that affordability depends not just on the price of the homes, 
but also on the earnings power of the families involved. And so 
a broad policy challenge, I think, is continuing to ensure 
income gains for as many American households as possible, to 
allow them to achieve that dream that a lot of people have, 
which is having their own home.
    Senator Martinez. Yes, a dream which we share.
    Ms. Hyland.
    Ms. Hyland. Senator Martinez, I would suggest that credit 
unions certainly can play a seminal role in that through 
individual development accounts to allow low-income and working 
people to essentially build toward that American Dream as well 
as offering affordable mortgage products through efforts from 
the National Credit Union Foundation and others that really 
strive to reach out to people that need to build wealth in 
order to put their first down payment on a home. And I believe 
that credit unions can serve a seminal role in doing that. And 
partnering with other entities, both Government as well as 
other not-for-profits to help that.
    Mr. Hood. Yes, Senator Martinez, I would agree with my 
colleague and also say it is important to create public/private 
partnerships. And I was pleased when Mr. Cabrera said that 
there are other community stakeholders who are getting involved 
now with affordable housing. I think it is equally important 
for us to really note the importance of analyzing applicants, 
in terms of having to look outside the box when it comes to 
qualifying them.
    Senator Martinez. Traditional, right.
    Mr. Hood. Looking outside of traditional credit and trying 
to really find innovative ways of advancing the dreams of 
homeownership. That is one of the things I think we are going 
to see more of if we really are going to create more affordable 
homeownership opportunities.
    Senator Martinez. I think we have seen that over the last 
several years. There are financing companies moving out of the 
straightjacket of looking at an applicant in a single way, but 
the more diverse population we have.
    Mr. Hood. Exactly.
    Senator Martinez. Frankly, it gets into other issues that I 
really do not care to open the box, of the whole issue of 
illegals that seek to finance a home and what happens with all 
of that. But anyway, we will save that for another day.
    I want to just thank all of you for your indulgence of the 
Committee and myself. I know that Ranking Member Senator 
Sarbanes had an interest in being here and questioning the 
panel. I am done with the questions that I had, and so at this 
point let me seek some counsel as to how we might approach 
this.
    Senator Sarbanes's questions will be asked in writing and 
you can submit them for the record. And so with that, I will 
bring the hearing to an end. And thank you very much for your 
participation. We wish you all luck.
    Mr. Slaughter. Thank you.
    Ms. Baicker. Thank you.
    Ms. Hyland. Thank you, Senator.
    Senator Martinez. The hearing is adjourned.
    [Whereupon, at 11:17 a.m., the hearing was adjourned.]
    [Prepared statements, biographical sketches of nominees, 
and response to written questions supplied for the record 
follow:]

                   PREPARED STATEMENT OF JOHN WARNER
               A U.S. Senator from the State of Virginia
                            October 25, 2005

    Chairman Shelby, Senator Sarbanes, and my other distinguished 
colleagues on the Senate's Banking, Housing and Urban Affairs 
Committee, I thank you for holding this confirmation hearing.
    Today, I am pleased to introduce a fellow Virginian, Gigi Hyland, 
who has been nominated to serve as a Member on the National Credit 
Union Administration Board. She is joined today by her father Gerry 
Hyland, who serves as the Fairfax County Supervisor for Mount Vemon, 
and her aunt Alba Colon Whitt.
    Gigi Hyland has a wealth of experience with the business of credit 
unions. She currently serves as Senior Vice President and General 
Counsel for the Empire Corporate Federal Credit Union in Albany, New 
York, where she is responsible for advising Empire on its compliance 
with the NCUA, the Department of the Treasury, Federal Reserve, 
Securities and Exchange Commission, and other Federal and State legal 
and regulatory requirements.
    Prior to joining Empire, Ms. Hyland worked concurrently as the Vice 
President for Corporate Credit Union Relations for the Credit Union 
National Association, Inc., and as the Executive Director of the 
Association of Corporate Credit Unions in Washington, DC. In her 
distinguished positions, she managed the development, coordination, and 
execution of a regulatory, legislative, public relations, and political 
advocacy program for the benefit of the corporate credit union network.
    Before she began her career in the credit union industry, Ms. 
Hyland earned her BA from the College of William and Mary in 
Williamsburg, Virginia, and her JD from the George Mason University 
School of Law in Arlington, Virginia.
    Mr. Chairman, Gigi Hyland's impressive credentials makes her highly 
qualified to serve as a Member on this Board, and I am certain that she 
will be a strong asset for the National Credit Union Administration.
    I urge my colleagues to support her nomination.

                               ----------
                  PREPARED STATEMENT OF RODNEY E. HOOD
         Member-Designate, National Credit Union Administration
                            October 25, 2005

    Chairman Shelby, Senator Sarbanes, and distinguished Members of the 
Committee, thank you for the opportunity to meet with you on behalf of 
my nomination to serve on the Board of the National Credit Union 
Administration.
    I would like to express my deep appreciation to President Bush for 
nominating me to this position. I would also like to thank Senator 
Elizabeth Dole and Senator Richard Burr for their generous remarks. I 
am humbled by their kind and gracious words and would like to 
acknowledge and applaud their great leadership and service for my home 
State of North Carolina.
    While my parents are not here today in person, I feel the warmth of 
their presence as they watch from Heaven. I am thankful to them for 
bequeathing to me a strong value system. A value system that reflects 
humility, honesty, hard work, and compassion. I believe that these 
values have helped me make a difference in the lives of many people 
during my 17 years in the private sector and in public service.
    If confirmed by the Senate, I look forward to fulfilling the duties 
and responsibilities of a NCUA Board Member along with my new 
colleagues. I am committed to listening carefully, working hard, and 
doing my best to ensure the safety and soundness of the Nation's 8,800 
federally insured credit unions.
    Now in existence for more than 150 years, credit unions play an 
important role as a financial partner for 84 million people. As not-
for-profit financial cooperatives, the charter of these institutions 
centers on servicing the financial needs of their members and 
empowering Americans from all walks of life to achieve financial 
stability.
    I have a profound appreciation for community empowerment which was 
developed early on in my youth as a missionary in Africa. There, in the 
rural landscape, I saw the hard work, struggle, and resilient character 
of people who made their living from farming. I learned and saw that 
strong, struggling people are at the heart of what any country is 
about. That is why I am pleased to now be in a position where I can 
continue to serve my country by overseeing the institutions that give 
hardworking people access to capital.
    I realize that credit unions are a critical element in helping 
families achieve the American Dream of homeownership; assisting 
entrepreneurs in creating small businesses; and providing the trusted 
mechanisms for families to save for the future.
    President Bush said it best when he said, ``The true measure of 
compassion is more than good intentions, it is good results.'' I have 
been blessed and fortunate to work at some of America's most respected 
financial institutions which sought to empower stability and prosperity 
in our local communities. While at North Carolina Mutual and Wells 
Fargo, I held management posts that allowed me to promote community 
development and outreach initiatives to underserved communities. I 
served on the board of the Wells Fargo Housing Foundation, and managed 
public-private partnerships with results-oriented housing providers 
such as the Neighborhood Reinvestment Corporation, Habitat for 
Humanity, and the National Council of La Raza. Having served as a 
Community Reinvestment Act (CRA) Officer at Bank of America and the 
National Director of Affordable Housing at Wells Fargo, I have been 
both an advocate and provider of affordable housing and small business 
lending. In those positions, I oversaw loan programs, managed teams of 
regional community development managers and community development loan 
specialists, and worked with our credit policy group to evaluate and 
manage credit risks. I have also provided financial education to 
underserved communities by conducting seminars on homebuyer education, 
small business lending, and credit repair. In addition, I worked with 
regulators from the Office of the Comptroller of Currency to review the 
bank's lending activities, credit quality, and community development 
outreach efforts. These experiences directly exposed me to the 
importance of regulatory review, financial soundness, and risk 
management.
    At USDA, I help administer a $43 billion dollar loan portfolio 
comprised of over 400,000 loans--to individuals seeking homeownership, 
private entities to provide affordable rental housing, and to local 
government entities to fund schools, hospitals, and first responder 
services. Throughout my career, I have nurtured and developed the core 
competencies that I will rely upon in assessing the safety and 
soundness of America's credit unions.
    I come to NCUA with a mindset based on the following tenets:

 First, I will work hard to ensure that credit unions remain 
    safe and sound financial institutions.
 Second, I will strive to be recognized as a fair and 
    thoughtful regulator--one who realizes the value and necessity of 
    regulation while being cognizant of the impact of arduous 
    regulation.
 Third, I will bring focused leadership and management to NCUA 
    while seeking to ensure efficient operations and prudent use of 
    resources.
 Fourth and finally, I understand the importance of disclosure 
    and transparency and will work closely with the Members of this 
    Committee, and all Members of Congress, to ensure the financial 
    integrity of credit unions in a rapidly changing environment.

    Since joining the Federal Government as Associate Administrator for 
the Rural Housing Service at USDA, I have been honored to work side-by-
side with and lead some of the most dedicated and hard working career 
staff around. And should I be honored by your confidence, I look 
forward to doing so at NCUA as well.
    Mr. Chairman and the Members of the Committee, I am honored to 
appear before you this morning and would like to thank you again for 
your courtesy and consideration. I welcome any questions you may have.




       RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES 
                     FROM MATTHEW SLAUGHTER

Q.1. The U.S. current account deficit reached a record $666 
billion last year and is on pace to reach $800 billion this 
year. As a percentage of GDP, the current account deficit is 
now over 6 percent and growing. Federal Reserve Chairman 
Greenspan has stated that ``countries that have gone down this 
path invariably have run into trouble, and so would we. 
Eventually, the current account deficit will have to be 
restrained.'' And just last week in testimony before the Joint 
Economic Committee, CEA Chairman Bernanke acknowledged that the 
``Current account deficit presents some economic challenges. 
Gradually reducing the current account deficit over time would 
be desirable.'' What is your view on the current account 
deficit? Do you believe that this imbalance presents a serious 
potential threat to the Nation's economic health? If you 
believe that it should be reduced, what policies, beyond 
promoting economic growth, would you advise the President to 
undertake?

A.1. I am very concerned about the U.S. current-account deficit 
today, which by any measure has grown quite large. This deficit 
merits careful analysis for causes, consequences, and possible 
transitions. It is now well-established that at least some of 
the causes of this current-account deficit are the underlying 
strengths of the US. economy. One in particular is the fact 
that U.S. economy has for many years now been growing much more 
rapidly than have the economies of our biggest trade partners 
such as Japan, Germany, and France. Our faster growth has meant 
that our demand for their exports has been growing faster than 
has their demand for our exports.
    At the same time, some of the other underlying causes of 
the current-account deficit are more worrisome. One in 
particular is the decline in savings by American households, a 
decline which began nearly a generation ago. In 2004, U.S. 
personal savings as percentage of disposable personal income 
was just 1.8 percent. Policy initiatives that can encourage 
greater personal savings will benefit not just American 
families but also the broader U.S. economy by helping reduce 
our current-account deficit.

Q.2. Many countries, notably China, Korea, and other Asian 
countries have been experiencing stronger economic growth than 
the United States, while their bilateral trade imbalances with 
the United States have widened significantly. It would appear 
that many of these countries also pursue policies of actively 
managing their currencies to promote competitive trade 
advantages. What has been the relationship between these 
countries' trade and exchange rate policies and the underlying 
U.S. current account deficit?

A.2. Bilateral trade imbalances between any two countries tend 
to reflect a number of forces, including their underlying 
patterns of comparative advantages. With the United States 
having strong capabilities in producing knowledge-intensive 
goods and services, we benefit from international commerce when 
we import labor-intensive goods and services from countries 
well-suited to those activities. Bilateral imbalances can also 
be affected by currency values as well.

Q.3. What policies do you think should be taken with regard to 
a country that has been found to be manipulating its currency 
to gain an unfair competitive trade advantage with the United 
States?

A.3. The Treasury Department currently has responsibility for 
all issues involving the value of the U.S. dollar. I will defer 
here to their established rules and procedures. More generally, 
it is important to encourage all countries to move toward more 
open, market-based systems--including for capital markets. 
Flexible capital markets generate a number of benefits for 
countries, including support for trade in goods and services.

Q.4. The prices of oil and gas have risen dramatically over the 
past year. In a July 3 article, The Washington Post reported 
that, ``Morgan Stanley economist Andy Xie (Zee) warned of an 
`oil bubble' and said much of the recent run-up has been driven 
not by supply and demand but by speculative energy traders at 
big investment firms that have grown increasingly dependent on 
returns from their trading profit.'' Do you see any evidence of 
Mr. Zee's findings?

A.4. Recent oil-price increases have been much more gradual 
than those of earlier decades, and seem to have been driven by 
rising demand rather than sudden supply shocks. And current 
prices, although high, have not reached the historic peaks (in 
real terms) of the early 1980's. Major countries driving this 
demand growth have included China and the United States, thanks 
to their strong economic growth. New production and refining 
capacity are expected to emerge in future years, but ongoing 
demand growth is expected to mean high prices for some time.

Q.5. The Bureau of Labor Statistics reported that the Consumer 
Price Index, the main inflation gauge, rose by 1.2 percent in 
September and has risen 4. 7 percent over the last 12 months. 
Real wages for working Americans continue to fall. According to 
the Labor Department, the average weekly earnings of 
nonsupervisory workers--who constitute about 80 percent of the 
workforce--fell by 1.2 percent in September and have fallen in 
8 of the past 12 months.
    However, some have argued that inflation is not such a 
significant issue because the so-called ``core inflation'' 
measures, those that do not include energy or food prices, have 
remained relatively stable. A recent New York Times article 
entitled, If You Don't Eat or Drive, Inflation's No Problem 
summarized that line of thinking: ``Many economists urged 
Americans to remain calm and to focus on the so-called core 
CPI--the inflation measure that excludes the volatile costs of 
energy and food. The core rate rose just 0.1 percent in 
September, and is up only 2 percent in the last 12 months.'' 
The article concluded, ``The dueling numbers seem to offer a 
classic case of how economists and consumers view the world 
differently. If only we lived in some futuristic biosphere 
where we did not need energy or food, inflation wouldn't 
matter.''
    As a Member of the President's Council of Economic 
Advisers, would you be concerned about increases in the costs 
of energy and food, or would you focus principally on core-
inflation? Given the decline in real wages, what is the impact 
of the increase in the costs of basic necessities, such as 
gasoline, heating oil, and food on working Americans?

A.5. I am concerned about increases in both core and overall 
rates of consumer-price inflation. Overall inflation rates are 
intended to capture the full basket of goods and services 
consumed by the typical American, and as such measure the price 
pressures facing all working Americans. Rising prices of energy 
and food impose real costs: Without commensurate increases in 
income, many Americans need to reduce spending on other goods 
and services.
    Thus far, the recent sharp increases in the prices of 
energy have not been passed through to the broad set of 
nonenergy (and nonfood) prices captured by core inflation 
rates. For the first 9 months of 2005, consumer prices 
excluding food and energy have been rising at an annual rate of 
just 2.0 percent. This lack of strong pass-through of energy 
prices is thanks in part to sizable gains in energy efficiency 
throughout the U.S. economy in recent decades, and it helps 
contain the impact of rising energy prices on both firms and 
families.

Q.6. According to the U.S. Census Bureau, in 2004, the top 
quintile of households held more than half of America's total 
income, which is a record level. In an editorial on the report, 
The New York Times finds that ``as the very rich get even 
richer, their gains can mask the stagnation and deterioration 
at less lofty income levels.''
    Dr. Slaughter, in an 1998 article, Globalization and Wages: 
A Tale of Two Perspectives, you wrote that, ``Tens of millions 
of American workers have experienced stagnation or even 
absolute declines in their real earnings for over 25 years. For 
many less-skilled workers, the declines have been staggering 
and largely unprecedented this century. . . Combined with 
sluggish growth in real wages of all workers, rising wage 
inequality has meant absolute stagnation or even declines in 
real wages for the majority of the U.S. labor force.''
    Federal Reserve Chairman Greenspan has also expressed 
concern with the growing income inequality in the United 
States. In his Semi-Annual Monetary Report to this Committee in 
July of this year, Chairman Greenspan called the growing 
inequality in income and wealth ``a very disturbing trend.'' Do 
you agree that income inequality is growing in America and that 
this is a serious problem, and if so, how would you address it?

A.6. I do agree that income inequality is growing in America, 
and that this trend is a serious problem in need of concerted 
policy effort. On many measures, income inequality has been 
rising in the United States for decades. In 1975, households at 
the 90th percentile of the national income distribution had 
incomes that were 8.5 times as high as households at the 10th 
percentile. By 1990, this ratio had risen to 10.1, and last 
year it stood at 11.1. At the individual level, one of the main 
force behind rising inequality is the increasing importance of 
education. In 2004, the average 
annual earnings of U.S. high-school graduates was $30,640, in 
contrast to $115,292 for Americans with advanced professional 
degrees.
    Rising inequality means that the strong rates of 
productivity growth the U.S. economy has enjoyed in recent 
years are not shared equally across all workers and families. 
The broad policy challenge is to equip more Americans with the 
skills necessary to command high and rising earnings in our 
increasingly global labor market. Improved education and 
retraining at all levels are essential. For example, President 
Bush's new Community-Based Job Training Grants aim to 
strengthen the vital role that community colleges play--in 
conjunction with local businesses--in skills development.

       RESPONE TO WRITTEN QUESTIONS OF SENATOR SARBANES 
                     FROM KATHERINE BAICKER

Q.1. I am interested in your thoughts on the minimum wage. The 
minimum wage today is $5.15, which is far below where it has 
been in the past, when adjusted for inflation. Earning the 
minimum wage is not even close to enough to support a family. 
The U.S. Census Bureau reports that for a person with a family 
of four to reach the poverty line that person would need to 
earn $9.65 per hour, a rate that is almost twice the minimum 
wage. Increasing the minimum wage, in my opinion, is one 
powerful tool that we have to increase the incomes of working 
Americans. There are some who argue against increasing the 
minimum wage, due to concerns about its effect on employment. 
However, there is much academic research, including a study by 
economist Alan Krueger, that suggests that increasing the 
minimum wage has little effect on employment. What are your 
views with respect to increasing the minimum wage above its 
current level of $5.15?

A.1 Raising the minimum wage merits serious consideration. In 
setting the Federal minimum wage, however, it is important to 
balance those advantages against the potential unemployment 
that it might generate and the efficiency of how well the 
minimum wage targets low-wage families. Evidence on the 
unemployment likely to be created by increasing the minimum 
wage is mixed, and effects may be larger for small businesses, 
and larger in a time of increasing health insurance and 
benefits costs. About half of the approximately 2 million 
minimum wage workers are under age 25. An 
alternate policy for increasing the living standards of low-
income workers is the Earned Income Tax Credit, which has been 
successful at increasing the living standards of low-income 
working parents.

Q.2. The prices of oil and gas have risen dramatically over the 
past year. In a July 3 article, The Washington Post reported 
that, ``Morgan Stanley economist Andy Xie (Zee) warned of an 
`oil bubble' and said much of the recent run-up has been driven 
not by supply and demand but by speculative energy traders at 
big investment firms that have grown increasingly dependent on 
returns from their trading profit.'' Do you see any evidence of 
Mr. Zee's findings?

A.2. Recent oil price increases have been much more gradual 
than those of the 1970's and 1980's, and seem to have occurred 
in response to increased demand in the face of tight supply, 
rather than in response to sudden supply shocks. This increased 
demand comes along with strong economic growth in the global 
economy. Concerns about security of supply may have contributed 
to some of the recent increases in crude oil prices, but 
current prices, although high, have not reached the highs of 
the 1980's. Although new capacity is expected to keep pace with 
increasing demand, we are likely to face tight crude oil 
markets and no decrease in prices for several years.

Q.3. The Bureau of Labor Statistics reported that the Consumer 
Price Index, the main inflation gauge, rose by 1.2 percent in 
September and has risen 4.7 percent over the last 12 months. 
Real wages for working Americans continue to fall. According to 
the Labor Department, the average weekly earnings of 
nonsupervisory workers--who constitute about 80 percent of the 
workforce--fell by 1.2 percent in September and have fallen in 
8 of the past 12 months. However, some have argued that 
inflation is not such a significant issue because the so-called 
``core inflation'' measures, those that do not include energy 
or food prices, have remained relatively stable. A recent New 
York Times article entitled, If You Don't Eat or Drive, 
Inflation's No Problem summarized that line of thinking: ``Many 
economists urged Americans to remain calm and to focus on the 
so-called core CPI--the inflation measure that excludes the 
volatile costs of energy and food. The core rate rose just 0.1 
percent in September, and is up only 2 percent in the last 12 
months.'' The article concluded, ``The dueling numbers seem to 
offer a classic case of how economists and consumers view the 
world differently. If only we lived in some futuristic 
biosphere where we did not need energy or food, inflation 
wouldn't matter.''
    As a Member of the President's Council of Economic 
Advisers, would you be concerned about increases in the costs 
of energy and food, or would you focus principally on core-
inflation? Given the decline in real wages, what is the impact 
of the increase in the costs of basic necessities, such as 
gasoline, heating oil, and food on working Americans?

A.3. Rising food and energy prices have real effects on 
American families and deserve careful attention. Energy prices 
in particular rose sharply in 2005. These price increases do 
not, however, seem to have passed through to the prices of 
other goods (with core inflation low and stable at 2 percent), 
thanks in part to increased 
energy efficiency, which mitigates the effect of the increases 
on consumers. Policies that promote continued strong economic 
growth and productivity gains will help ensure that Americans 
can enjoy increasing standards of living.

Q.4. According to the U.S. Census Bureau, in 2004, the top 
quintile of households held more than half of America's total 
income, which is a record level. In an editorial on the report, 
The New York Times finds that ``As the very rich get even 
richer, their gains can mask the stagnation and deterioration 
at less lofty income levels.'' Federal Reserve Chairman 
Greenspan has also expressed concern with the growing income 
inequality in the United States. In his Semi-Annual Monetary 
Report to this Committee in July of this year, Chairman 
Greenspan called the growing inequality in income and wealth 
``a very disturbing trend.'' Do you agree that income 
inequality is growing in America and that this is a serious 
problem, and if so, how would you address it?

A.4. I share these concerns about the growing income inequality 
in the United States. Recent increases are part of a long-run 
trend, with the income of high-income households growing more 
quickly than low-income households since the 1970's. One of the 
main contributors to this increase in inequality is the 
increasing importance of education: In 1980 the average high 
school graduate earned 28 percent more per year than workers 
without high school degrees, but in 2004 the difference was 49 
percent. Workers with college degrees earn 31 percent more (in 
real terms) than they did in 1980, while workers with less than 
a college degree have seen little real increase. Policies that 
promote educational attainment, such as increased 
accountability for primary and secondary schools and increased 
grants to support access to community colleges, would go a long 
way toward improving the economic well-being of low-income 
Americans.

       RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES 
                    FROM ORLANDO J. CABRERA

Q.1. Mr. Cabrera, do you commit to providing this Committee 
with any and all requested data and information in a complete 
and timely manner?

A.1. Yes. If confirmed, I will commit to providing Congress 
with requested information in a complete and timely manner, to 
the best of my ability. I look forward to working with Congress 
to fulfill HUD's mission and encouraging a positive working 
relationship.

Q.2. Disabled advocacy groups are concerned that vouchers that 
have been designated for the disabled do not retain this 
designation upon renewal. Do you commit to looking at what HUD 
can do to ensure that vouchers for the disabled continue to be 
used for this population?

A.2. Yes. If confirmed, I am committed to assuring that 
vouchers continue to be available to the disabled population. 
The Section 811 Program, Housing for Persons with Disabilities, 
provides assistance to expand the supply of housing with the 
availability of supportive services for persons with 
disabilities. In 2005, Congress appropriated funding for both 
new vouchers and renewal of vouchers in this program. HUD 
remains committed to ensuring that these vouchers continue to 
serve the disabled population.
    In addition, HUD has issued a notice (PIH 2005-5) that 
directs Public Housing Agencies (PHA's) to reissue vouchers to 
the targeted nonelderly disabled population upon turnover. This 
applies to both 5-year and 1-year mainstream vouchers and other 
special purpose vouchers intended to serve nonelderly disabled 
families. The Department has started tracking the use of these 
vouchers in the Public Housing Information System (PIC).

Q.3. Many PHA's around the country opened their doors to 
Katrina victims by providing vouchers and vacant public housing 
units to evacuees. Do you support reimbursing PHA's for these 
expenses, and will HUD reimburse housing agencies for these 
expenses, incurred prior to the announcement of the FEMA/HUD 
housing assistance programs, including for families who were 
not previously assisted by HUD?

A.3. Yes, unless they are being directly assisted by FEMA or 
otherwise prohibited by law. The Department has already 
notified PHA's nationwide that it will reimburse them for any 
Housing Assistance Payment and administrative costs retroactive 
to September 1, 2005 under the Katrina Disaster Housing 
Assistance Program but only for those families that were 
previously assisted by HUD and homeless families. The 
Department has obligated all funds provided in calendar year 
2005 in accordance with the Conference Report to the 
Consolidated Appropriations Act, 2005 and has no additional 
budgetary resources to assist families that were not previously 
assisted by HUD. These families are generally assisted by FEMA 
under their Individual Assistance or Public Assistance programs 
pursuant to the Stafford Act.

Q.4.a. Substantial increases in utility costs--about 1/3 in 
fuel oil and nearly 50 percent in natural gas--are anticipated 
in 2006. These cost increases will create substantial hardship 
for public housing agencies and the seniors, people with 
disabilities, and families with children that they assist 
through the public housing and housing voucher programs, unless 
Federal funding is increased to help meet these costs. How will 
you ensure that PHA's can meet these increased costs without 
diverting funding from other critical needs?

A.4.a. Existing regulations for the Housing Choice Voucher 
(HCV) program and Public Housing program at 24 CFR 982.517 
require PHA's to review utility allowances at least once a year 
if there is a change in utility costs that exceeds 10 percent. 
This assures that any large increases in utility costs are 
taken into account when calculating utility allowances for 
various unit types and sizes. Having said that, it is important 
to note that the Consolidated Appropriations Act for fiscal 
year 2005 changed the way the HCV program is funded from a 
unit-based to a budget-based program. The Conference Report 
specifically states that, ``PHA's are expected to manage 
utility costs, decreased tenant contributions, and protect the 
most at-risk within these budgets.'' PHA's have been provided 
with 100 percent of their budgetary allocations in 2005 and 
most have at least 1 week of reserves that they may utilize to 
offset increased utility costs by increasing payment standards. 
It may, however, become necessary for PHA's to delay the 
issuance of vouchers upon turnover if increasing payment 
standards would preclude the PHA from managing within its 
budgetary allocation.
    It is also important to note that Public and Indian Housing 
has an ongoing aggressive energy conservation program to assist 
PHA's in managing their operating costs relative to utilities 
consumption and cost and ensure residents decent, safe and 
sanitary housing. PIH is assisting PHA's in their efforts to 
control costs and meet the energy crisis brought about by 
Katrina in four crucial ways: (1) PIH is conducting outreach 
and education directed to PHA's and specifically residents as 
end users; (2) PIH is providing technical assistance for 
installing energy systems directed to PHA's to streamline 
procurement and facilitate financing options; (3) PIH provides 
incentives to PHA's that enable them to use savings to amortize 
energy costs, so as not to divert the use of capital funds from 
more emergent capital projects; and (4) PIH is promoting 
partnerships with other agencies to leverage resources. For 
example, HUD has worked with Department of Energy and State-
sponsored energy programs to promote and fund weatherization 
and encourage the use of Energy Star equipment replacements. 
Low-income residents have also used the Low Income Home Energy 
Assistance Program (LIHEAP) through the Department of Health 
and Human Services to help pay energy bills.
    In addition, PIH recently published a special Katrina 
energy newsletter reaching out to PHA's, resident groups, and 
Indian Housing in anticipation of higher utility costs this 
winter. PIH will 
continue to explore ways and means to mitigate the impact from 
escalating utility cost.

Q.4.b. Will you submit to this Committee within 2 weeks of your 
confirmation an estimate of the additional funding needed in 
2006 to meet these extreme increases in utility costs?

A.4.b. I will be happy to work with the Senate in an effort to 
assess the level of funding that may be needed.

       RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES 
                  FROM CHRISTIANE GIGI HYLAND

Q.1. On Wednesday, October 19, the NCUA presented its budget 
briefing at which it proposed a budgetary increase for 2006 of 
just 1.9 percent. The proposed budget would also reduce the 
staff by three positions, a 10-year low for the agency. Do you 
believe that NCUA has sufficient budget and staffing resources 
to effectively fulfill its duties?

A.1. Although I have been briefed by agency staff on the budget 
process, I have not had the opportunity to analyze the data 
used to develop the proposed budget. I understand examiner 
resources assessment development is robust, with initial 
resource needs presented by the field credit union examiners. 
If confirmed prior to the November NCUA Board Meeting, I intend 
to assess the adequacy of proposed resources as they relate to 
the budget package and 
ensure those resources are sufficient to achieve the objective 
of maintaining a safe and sound credit union system and meeting 
the strategic and annual plans developed by the agency.

Q.2. It has been brought to our attention that banks appear to 
be providing better outreach to communities than credit unions. 
In a 2003 report on the financial condition of credit unions, 
the GAO reported that its analysis suggested that ``credit 
unions served a slightly lower proportion of low- and moderate-
income households than banks.'' (GAO Report, ``Financial 
Conditions Has Improved, but Opportunities Exist to Enhance 
Oversight and Share Insurance Management,'' October 2003.) How 
do you believe that credit unions can increase their outreach 
to the communities they are intended to serve?

A.2. I am aware credit unions have aggressively pursued 
expansions into underserved areas since Congress enacted the 
1998 Credit Union Membership Access Act, which permitted credit 
unions to maintain their current field of membership while 
expanding into these underserved areas. With more credit unions 
using this expanded authority I expect they will further 
demonstrate their outreach to all segments of society.
    As mentioned in my testimony, I spearheaded corporate 
credit union participation in the creation of the Community 
Investment Fund, which is the National Credit Union 
Foundation's primary funding mechanism for development 
activities by credit unions. These funds--collected from credit 
unions throughout the country--are being utilized to enhance 
the credit unions' outreach to communities and further improve 
the financial well being of all consumers, with a focus on 
those in low- and moderate-income communities. As more of these 
funds are made available for initiating innovative products and 
services, credit unions best practices will be identified and 
shared throughout the credit union system on the most effective 
means of enhancing outreach.
    Credit unions are also actively adopting international 
remittance services through the IRnet\TM\ program established 
by the World Council of Credit Unions to provide safe and 
affordable remittances to those within their field of 
membership. This service offered by credit unions will provide 
many within the immigrant community an introduction into the 
financial industry in the United States, with the hope they 
will become active participants in the credit union system.
    I have also seen the results of the outreach programs 
conducted by NCUA, as well as the State and national trade 
organizations, to present to the credit union participants 
opportunities available to credit unions to further expand 
their outreach to all segments of the population. Credit unions 
have responded to these programs by partnering with community 
development organizations and committing funds for low- and 
moderate-income loan programs. A recent example is the 
commitment--in excess of $110 million--by several of the 
largest credit unions in New York to provide mortgage funding 
to minority and low- and moderate-income individuals.
    I strongly believe that credit unions must continue these 
community outreach efforts.

Q.3.a. Since the passage of the 1998 Credit Union Membership 
Access Act, credit union fields of membership have been 
expanding significantly, in large part through the expansion of 
the requirement for credit unions to serve members who have a 
``common bond'' or ``community bond.'' As credit unions serve 
increasingly large geographic areas, questions have been raised 
about the extent to which they are distinguishable from 
traditional banks. Under the Federal Credit Union Act, the 
credit union system was established ``to make more available to 
people of small means credit for provident purposes through a 
national system of cooperative credit.'' Credit unions have 
been given favorable regulatory treatment for that purpose. As 
credit unions behave more and more like traditional banks, why 
should they continue to be regulated differently?

A.3.a. Credit unions are held to almost all of the same 
regulatory requirements as other federally insured depository 
institutions while remaining restricted in the loan rates they 
may charge, the individuals they may serve and the manner by 
which they raise capital. Credit unions continue to maintain 
their cooperative structure where members retain their 
democratic principles of one person one vote and the Federal 
credit unions' boards of directors 
remain volunteer member representatives. Credit unions continue 
to offer the financial services their members have come to 
expect, while adopting the innovations of service delivery now 
available through improved technology in an increasingly 
competitive financial services marketplace.
    With the continual changes of financial services and 
products occurring in the financial industry, credit unions 
have remained an affordable alternative to other financial 
institutions.

Q.3.b. What are your views on membership expansion of the 
common bond requirement and the implication for credit unions 
and their competitors?

A.3.b. Membership expansion into underserved areas has provided 
credit unions an opportunity to retain their occupational field 
of membership while affording them the ability to expand into 
underserved community areas determined by the Department of the 
Treasury. Prior to the Credit Union Membership Access Act in 
1998 this ability was not statutorily authorized. I understand 
that over 620 Federal credit unions have availed themselves of 
this expansion authority.
    The ability of credit union members to change their type of 
field of membership maintains the viability of the credit union 
system, diversifies risk, and allows credit unions to 
effectively deal with any adverse impact on occupation-based 
credit union may encounter due to economic challenges faced by 
the credit union's sponsoring organization or business.
    The growth of credit unions does not appear to have 
impacted other institutions within the mainstream financial 
industry. I understand federally insured credit unions account 
for less than 7 percent of the federally insured deposits 
within the United States. With record profits being reported in 
the banking industry, credit unions do not appear to have 
adversely impacted these institutions.
    As credit unions further increase their service in 
underserved areas, I expect that the alternative lending 
services, such as check cashers and payday lenders, may be 
challenged to provide less costly services which will benefit 
consumers.

Q.4. There have been a number of proposals to allow credit 
unions to perform an increasing amount of member business 
lending, getting credit unions more involved in the traditional 
business of commercial banks.
    Arguments have been made that the more credit unions move 
into the areas of traditional commercial banks and offer a 
wider variety of services such as business lending, the more 
they should be regulated like traditional banks. Do you believe 
that the expansion of member business lending has implications 
on the distinction between credit unions and banks and the 
types of services they provide?

A.4. No, I do not. Credit unions have been involved in member 
business lending since the beginning of the last century. In 
New York, credit unions have been the primary provider of loans 
to purchase New York City taxi medallions since the 1920's. 
Many credit unions in the Midwest were formed as agricultural 
lenders, providing funding for the seeds and farm implements.
    Credit unions have generally been the first source of 
capital for sole proprietor and small business owners in 
obtaining equipment and vehicles for their business. This 
lending has assisted individuals whose lending needs may not 
have been deemed large enough for commercial lenders.
    The cooperative structure of credit unions remains 
constant, with members determining the services and products 
credit unions provide, including member business loans.

Q.5.a. Some banks and other financial institutions are 
providing their customers with a service that is being referred 
to as ``bounce protection'' or ``courtesy pay.'' This is a 
service that covers drafts that would otherwise have bounced, 
so that when a consumer overdrafts his or her account by 
writing a check, or using a debit or ATM card, the financial 
institution will pay to cover the overdraft. Often substantial 
fees are then charged when the service is activated. This 
differs from standard overdraft protection, which draws funds 
from a customer's savings account or other credit line to cover 
an overdrawn check.
    In addition, unlike overdraft protection, which consumers 
generally must sign up for, bounce protection is often offered 
automatically, so the member may not even be aware that they 
have this service. I am concerned about reports of aggressive 
marketing tactics that lead consumers to overdraw their 
checking accounts and use ATM's to withdraw more cash than they 
have available. Do you believe that bounce protection is a 
practice in which credit unions should be engaging?

A.5.a. Credit union products and services are member driven. To 
the extent that credit union members ask and want this service 
from their credit unions, credit unions should be providing it.

Q.5.b. If so, what should the NCUA do to ensure that bounce 
protection is offered in a manner so that it provides a 
valuable service to members, rather than encouraging 
irresponsible behavior?

A.5.b. I understand NCUA has joined most of the other FIRREA 
agencies in issuing a ``best practices'' paper on the 
implementation of this type of program. I believe it important 
that clear disclosure is provided to members relating to these 
types of programs. If confirmed I will assess the guidance 
provided by the NCUA to credit unions and determine whether 
additional guidance or regulation is warranted.

Q.6. The GAO has suggested that there is limited follow-up to 
determine whether credit unions, after having been chartered, 
are successfully serving their fields of membership. The GAO 
reported that ``[w]hile NCUA has stated its commitment to 
ensuring that credit unions provide financial services to all 
segments of society, NCUA has not developed indicators to 
determine if credit union services have reached the 
underserved.'' (GAO Report, ``Financial Conditions Has 
Improved, but Opportunities Exist to Enhance Oversight and 
Share Insurance Management,'' October 2003.) What do you 
believe that the NCUA should be doing to ensure that credit 
union services are successfully reaching the underserved?

A.6. If confirmed I will review what the NCUA has done to 
address the findings in the GAO report mentioned and determine 
whether additional data collection and reporting is necessary. 
This may also include regular follow-ups with credit unions 
that received community charters or added underserved 
communities to their fields of membership to document the 
challenges and successes of their plans to serve the 
underserved.
    In addition, I have received information from the NCUA 
which provided me the average and median share and loan 
balances of all credit unions based on recent financial call 
report information. These balances compared very favorably to 
those 1,000 credit unions that are designated low income.
    To obtain this designation, these low-income designated 
credit unions demonstrated to the NCUA that they served a 
membership with more than 50 percent of the members being at or 
below 80 percent of the national median household income.

Q.7. The Senate Banking Committee has been concerned about the 
level of noncompliance by financial institutions with necessary 
anti-money laundering and counter-terrorist financing measures. 
One important response was the issuance by the Federal 
Financial Institutions Examination Council of interagency anti-
money laundering examination guidelines. Can you assure us that 
NCUA will fully adhere to those guidelines with respect to the 
institutions it supervises?

A.7. Yes. As SVP, General Counsel of Empire Corporate FCU, one 
of my key responsibilities is to ensure compliance with the 
Bank Secrecy Act and other anti-money laundering measures. If 
confirmed I will ensure NCUA maintains its commitments to the 
FFIEC and FinCEN, the primary enforcement agency, and will 
review the examination guidelines developed by the agency to 
address the anti-money laundering and counter-terrorist 
financing measures.

        RESPONSE TO WRITTEN QUESTIONS OF SENATOR ALLARD 
                  FROM CHRISTIANE GIGI HYLAND

Q.1. Do you believe it can be appropriate for a credit union to 
offer loans to a member when that applicant has impaired 
credit?

A.1. Credit unions have been in the forefront in offering loans 
to members who have found themselves in financial difficulties, 
with loan consolidations being a historic part of the credit 
unions' loan portfolio. In assessing the loan applications from 
members, credit unions have practiced the three ``C''s of 
underwriting when determining the approval of a loan; that 
being character of the member, capability to repay, and 
collateral offered. When offering loans to members who have 
found themselves in financial difficulty credit unions need to 
ensure they are continuing to practice their due diligence when 
acting on loans while following their historic precepts.

Q.2. Do you believe it can be appropriate for a credit union to 
hire a vendor to perform lending activities such as loan 
origination and servicing, and to what degree should they be 
monitored?

A.2. Credit unions have long utilized third-party vendors for 
operational activities. This has allowed credit unions to 
provide services their members want and need while containing 
costs. However, I believe that these activities need to be 
effectively monitored by the credit union's officials and staff 
who are ultimately responsible for the safety and soundness of 
the credit union. I believe it is critical the officials 
thoroughly understand the program and any potential risk, and 
then establish clear oversight responsibilities to ensure the 
activity is providing the expected results in a safe and sound 
manner.

Q.3. As an incoming NCUA board member, you will benefit from an 
executive staff with significant experience. To what extent do 
you see yourself involved in setting NCUA policy? To what 
extent do you see yourself involved in the day-to-day 
management of the NCUA?

A.3. As stated in statute, it is the Board's responsibility to 
establish sound policy and procedures for the credit union 
system and then ensure the staff of the NCUA implements the 
established policies. I believe it important that the NCUA 
Board establish clear oversight and monitoring over the 
operations of the NCUA. As I have seen in credit unions, it is 
important that staff understand their roles and are held 
accountable without micromanagement from the policymakers.

Q.4. As a new NCUA board member, will you consider ongoing 
compliance actions to be your responsibility, or will you 
engage only in matters raised after your confirmation?

A.4. If confirmed, I plan on delving into all current and 
pending activities of the NCUA. There is ongoing focus on BSA, 
anti-money laundering, fair lending, and other compliance 
issues that the credit union system is challenged with. I will 
ensure each is assessed and the Agency continues to pursue its 
objective of ensuring the continued safe and sound operations 
of the credit union system.

       RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES 
                      FROM RODNEY E. HOOD

    (1).
    Budget
    Providing resources to achieve mission objectives, 
particularly the safety and soundness of credit unions is, in 
my view, a critical responsibility of the NCUA Board. Based on 
discussions with NCUA staff, it is their belief that the 
proposed NCUA 2006 budget they will present to the Board in 
November is appropriate for its mission requirements. However, 
I have not had an opportunity to fully assess the budget 
submission in relation to the defined mission objectives and 
any contingencies that may arise. If confirmed, that will be 
one of my first, and continuing, priorities as a Board Member.
    While NCUA staffing levels will be at their lowest in 10 
years, it should be noted that the number of Federally insured 
credit unions has decreased from 10,500 in 1995 to 8,800 in 
2005. Additionally, during 2003 NCUA restructured its central 
and regional operations that allowed for greater staffing 
efficiencies and other savings. In my review of the proposed 
budget, I will work to ensure that NCUA's operations are not 
compromised by inadequate budget and staffing resources. It is 
crucial that the strong financial reputation now enjoyed by 
credit unions be maintained. Critical to avoiding reputation 
and systemic risks is well trained and motivated examiner and 
support staff properly equipped to perform their jobs. It will 
be my direction and guidance that the current staffing level 
must achieve this standard, with an emphasis on ensuring the 
safety and soundness of credit unions in a changing 
environment. In addition, the agency's resources must allow it 
to take into consideration future events, such as the 
increasing complexity of credit unions, asset growth, new 
regulatory requirements such as Bank Secrecy Act, and other 
emerging areas such as indirect lending and member business 
loans.
    (2).
    GAO Report
    Having worked in the community development arena for almost 
17 years, I believe that credit unions can increase their 
outreach to their local communities by providing financial 
education seminars, creating strategic partnerships, and 
leveraging the resources of the Federal Government.
    At Wells Fargo, I managed our bank's financial education 
partnership with the American Library Association where we were 
able to provide homebuyer education and credit repair workshops 
in public libraries located in low-to-moderate income census 
tracts. By working with the American Library Association, Wells 
Fargo was given free space to educate its current and 
prospective customers in the comfort of the local library. 
Credit Unions should consider partnering with the American 
Library Association to create a similar partnership to provide 
financial education and outreach.
    In addition to providing financial education, I believe 
that it is important that credit unions create partnerships 
with results-oriented nonprofit organizations. Partnering with 
community stakeholders such as the Neighborhood Reinvestment 
Corporation, Neighborhood Housing Service, National Council of 
La Raza, Local Initiatives Support Corporation, National Urban 
League, and Operation Hope, credit unions can create community 
development loan programs and loan consortia using the 
experiences and best practices of some of the country's 
preeminent practitioners in community development. In my 
previous positions at Bank of America and Wells Fargo, I found 
that our partnerships with some of the aforementioned groups 
provided us with great tools for identifying, assessing, and 
meeting the credit needs of underserved communities. I am aware 
NCUA and credit unions already partner with some of these 
groups and support continuing these efforts.
    In my role as Associate Administrator at USDA, I spend a 
great deal of time meeting with financial service providers to 
inform them about our Guaranteed Rural Housing (GRH) loan 
product. Lender-approved loans to low-income borrowers can 
receive a USDA loan guarantee up to 90 percent of the loan 
amount. The GRH portfolio has 180,000 loans with an aggregate 
loan amount of $13 billion dollars. While there are 2,400 
lenders using our GRH product, fewer than 100 credit unions 
have a relationship with USDA. I would like to see more credit 
unions use USDA's product to meet the homeownership needs of 
its low-income members and to further meet safety and soundness 
requirements. Because GRH loans insured by the Federal 
Government, participating credit unions do not have to allocate 
risks to the guarantee loan portion. By using the GRH product, 
credit unions will be able to leverage their loan portfolio by 
offering a higher number of loans to low-income borrowers. In 
addition to USDA, the SBA and HUD also offer loan guarantees 
for affordable housing and small business lending. All of these 
Federal guarantees should be used by credit unions because 
these programs create win-win situations--both for the consumer 
and the credit union.
    If confirmed, I understand that in my capacity as a NCUA 
Board Member, I will be asked to speak at a large number of 
credit union events--seminars, symposia, workshops, etc. I will 
look forward to using upcoming speaking opportunities to 
provide credit unions with information about financial 
education, strategic partnerships, and Federal Government loan 
guarantees as important ways they can fulfill their mission.
    (3) (a) Should Credit Unions be Regulated Differently
    Since their inception in the 1900's, credit unions have 
provided financial products to meet the needs of their 
membership. Designed as tax-exempt, democratically controlled, 
and later as Federally insured entities, credit unions still 
operate under the same charter and remain critical in meeting 
the financial needs of low-to-moderate income individuals. They 
assist families in achieving the American dream of homeowners 
hip, entrepreneurs in creating viable, small businesses, and 
provide the trusted mechanisms for families to save for the 
future.
    While credit unions now offer a greater selection of 
financial products, they do so not to compete with banks, but 
to serve the evolving needs of their membership. Credit unions 
of today are, in my opinion, no different than they were 
yesterday. Today's consumers value one-shop stops for obtaining 
credit cards, mortgages, checking accounts, savings accounts, 
and equity loans. Given my commitment to ensuring safety and 
soundness, I also believe that with product diversification 
comes less concentration of risks for the credit unions.
    Unlike traditional banks, credit unions operate in an 
environment where they cannot provide financial services to 
individuals outside their field of membership. Banks are not 
restricted in defining their customer base. In addition, banks 
have a plethora of options for raising capital. While stock-
issuance is the method most often preferred, they, unlike 
credit unions, do not have to rely solely on retained earnings 
for meeting its capital needs. Given the profound differences 
that exist between credit unions and banks, I believe that 
credit unions should continue to operate based on their 
traditional statutory role.
    (3)(b) Membership Expansion of Credit Unions
    I will look forward to examining the membership expansion 
trend that is taking place in the credit unions industry. It is 
my understanding that the current trend in credit union 
membership expansion stems from expansions to incorporate 
underserved communities and some conversions of credit unions 
serving occupational and associational common bonds to 
community charters. Given my track record in working to serve 
underserved communities, I will take a close look at the new 
expansions and monitor the results to see if credit unions are 
continuing to reach a greater penetration of low-to-moderate 
income individuals. This can be tracked through call reports, 
HMDA analysis, and through mere observation of average loan, 
mortgage, and savings & share draft account balances.
    (4). Member Business Lending
    I believe that credit unions should have the flexibility 
and ability to meet the needs of their members. Unlike 
traditional banks that have no business lending penetration 
caps, it is my understanding that credit unions have a 12.25 
percent (of capital base) member business lending cap. While 
there are a handful of larger credit unions engaged in large 
business transactions, they are doing so based on the current 
regulatory mandates.
    As a trained commercial loan officer, I recognize that 
complex member business loan transactions require special 
underwriting and loan servicing expertise. Because it is my 
paramount responsibility to ensure that credit unions remain 
safe and sound institutions, I, as a regulator, will set clear 
expectations that credit unions engaged in member business 
lending have well-trained, competent staff involved in atypical 
member business loan transactions.
    In addition, I will work to ensure that credit unions 
participate in the SBA's guaranteed loan program. This will 
further allow the credit unions to engage in member business 
lending while adhering to the principles of safety and 
soundness.
    (5) (a) Bounce Protection
    If clearly described and articulated to credit union 
members, Bounce Protection can be a benefit that provides 
credit unions with a vehicle for adding to its product mix. 
When used properly, Bounce Protection should save individuals 
from the embarrassment one would experience if a check to a 
local merchant, school, or grocery store bounced. While it was 
designed as a convenience, I am concerned that many credit 
union members, especially the low-income members, have not 
fully understood the fee structure of using the product. I will 
review this issue with a goal on ensuring reasonable 
disclosures to fully protect credit union members. I will also 
work to develop procedures to determine the extent to which 
credit unions are conforming to published guidance on this 
issue.
    (5) (b) Bounce Protection
    As a regulator, I would propose that credit unions playa 
more visible and active role in providing disclosures that 
clearly discuss Bounce Protection and its fee structures. I 
would also suggest that our examiners look closely at credit 
unions using Bounce Protection products. I understand that in 
February 2005, the NCUA, jointly with the Board of Governors of 
the Federal Reserve System, the Federal Deposit Insurance 
Corporation, and the Office of the Comptroller of the Currency 
issued joint guidance to assist insured depository institutions 
in the disclosure and administration of overdraft protection 
programs. I would be willing to work with the Senate Banking 
Committee and my counterparts at other regulatory agencies to 
ascertain further best practices and/or ideas that should be 
shared with our examiners in providing them with a tool for 
gauging proper use of the products. Once creating an assessment 
tool, I would then suggest that NCUA take corrective action 
against any credit union that does not clearly disclose and 
market the products.
    (6) How to Ensure Credit Unions Reach the Underserved
    Having served as a CRA officer, I recognize the importance 
of assessing and measuring a financial institution's community 
development penetration. It is my understanding that NCUA 
receives quarterly call reports and from information contained 
in them can review how credit unions are serving their members, 
including the underserved. For other quantifiable methods to 
assess community development impact in underserved communities, 
I would propose that HMDA data and other available data be 
examined to assess mortgage lending to minorities and low-to-
moderate income individuals. Other suggestions would include 
examining credit unions' average loan, checking & savings 
account, and credit card balances over 3,5, and 7 year time 
periods to look for trends by income segment. One would expect 
average loan sizes and balances to decrease as credit unions 
attract additional low-to-moderate income members.
    As mentioned in my Senate testimony, I want to be a 
regulator who is cognizant of the impact of arduous 
regulations. To that end, it will be my desire to create 
assessment tools that do not materially detract from the credit 
union's core mission of providing affordable financial products 
to its membership. I will be delighted to work with the Senate 
Banking Committee to further explore additional community 
development assessment techniques that can NCUA can consider.
    (7) Money Laundering and Bank Secrecy Act
    As a regulator, I will go beyond the call of duty in 
assuring the Senate Banking Committee that Federally insured 
credit unions are in compliance with the Bank Secrecy Act. I 
will make sure that our regulators recognize that this is 
extremely important for both the safety and soundness of credit 
unions and of the United States. 9/111eft an indelible mark in 
my life, as it did for many of us. Every effort should be made 
to prevent future attacks, and this is clearly one regulatory 
act that makes America safer.

        RESPONSE TO WRITTEN QUESTIONS OF SENATOR ALLARD 
                      FROM RODNEY E. HOOD

Q.1. Do you believe it can be appropriate for a credit union to 
offer loans to a member when that applicant has impaired 
credit?

A.1. Yes, there are some circumstances where it is appropriate 
for individuals with impaired credit to have access to credit. 
As a regulator, the safety and soundness of credit unions would 
be of paramount importance. In my view, however, credit unions 
can offer loans to members with impaired credit in combination 
with promoting financial education, offering risk-based 
pricing, and employing certain guaranteed loan products.
    Great strides are being made now to assist people with 
impaired credit. In today's environment, financial education 
has helped borrowers understand the importance of managing 
their credit wisely. More informed borrowers can handle credit 
in more reasonable manners. At Wells Fargo, I managed a 
financial education partnership with the American Library 
Association where we provided homebuyer education and credit 
repair workshops in public libraries. In my previous positions 
in both Wells Fargo and Bank of America, we offered risked-
based pricing to compensate the banks for the risk of lending 
to impaired borrowers. As the borrowers continued to pay off 
their loans, the banks were able to lower interest rates and 
reward the customers for financial responsibility. In addition 
to offering risk-based pricing, I would encourage credit unions 
to offer guaranteed loan products from USDA and HUD to 
underserved borrowers.

Q.2. Do you believe it can be appropriate for a credit union to 
hire a vendor to perform lending activities such as loan 
origination and servicing, and to what degree should they be 
monitored?

A.2. Yes, hiring a vendor to perform lending-related activities 
can be a way for credit unions to serve members more 
effectively. The vendor may bring expertise or economies of 
scale that the credit union lacks. Due diligence and ongoing 
monitoring are very important, however. For example, 
outsourcing brings increased risk to the credit union, 
including reputation, compliance, credit, and transaction risk. 
I am aware that NCUA does not have vendor exam authority and 
the need for this is an issue that I would review if confirmed 
as an NCUA board member. I would also review whether there 
should be regulatory limits on the concentration of third party 
loan origination or servicing per credit union.

Q.3. As an incoming NCUA board member, you will benefit from an 
executive staff with significant experience. To what extent do 
you see yourself involved in setting NCUA policy? To what 
extent do you see yourself involved in the day-to-day 
management of the NCUA?

A.3. As a President-appointed and Senate-confirmed member of a 
three-member board, our responsibility is to set policy for 
NCUA. If confirmed as NCUA board member, I will delegate day-
to-day activities to competent staff but policy decisions 
firmly rest with NCUA board members. In doing so, I will work 
with the excellent, experienced staff and executive leadership 
to achieve effective and efficient uses of agency resources.

Q.4. As a new NCUA board member, will you consider ongoing 
compliance actions to be your responsibility, or will you 
engage only in matters raised after your confirmation?

A.4. As a new NCUA board member, I will consider ensuring the 
safety and soundness of federally insured credit unions to be 
an ongoing activity. It is the focus both now and in the future 
and has been since 1934, when the Federal Credit Union Act was 
signed authorizing the formation of federally chartered credit 
unions in the United States.
