[Senate Hearing 109-931]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-931

 
                            NOMINATIONS OF:
               FREDERIC S. MISHKIN, LINDA MYSLIWY CONLIN,
                         J. JOSEPH GRANDMAISON,
                 EDMUND C. MOY, AND GEOFFREY S. BACINO

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

                                HEARING

                               before the

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

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                   ON

                            nominations of:

frederic s. mishkin, of new york, to be a member, board of governors of 
                       the federal reserve system

                               __________

   linda mysliwy conlin, of new jersey, to be first vice president, 
                export-import bank of the united states

                               __________

j. joseph grandmaison, of new hampshire, to be a member of the board of 
           directors, export-import bank of the united states

                               __________

        edmund c. moy, of wisconsin, to be director, u.s. mint, 
                    u.s. department of the treasury

                               __________

           geoffrey s. bacino, of illinois, to be director, 
                     federal housing finance board

                               __________

                             JULY 12, 2006

                               __________

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


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            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

               Peggy R. Kuhn, Senior Financial Economist

           Mark A. Calabria, Senior Professional Staff Member

                         Andrew Olmem, Counsel

                    John East, Legislative Assistant

              Stephen R. Kroll, Democratic Special Counsel

                    Sarah Kline, Democratic Counsel

                 Lee Price, Democratic Chief Economist

   Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                        WEDNESDAY, JULY 12, 2006

                                                                   Page

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

Opening statements, comments, or prepared statements of:
    Senator Sarbanes.............................................     3
    Senator Allard...............................................     5
    Senator Dodd.................................................     6
    Senator Sununu...............................................     7
    Senator Menendez.............................................     8

                                NOMINEES

Frederic S. Mishkin, of New York, to be a Member of the Federal 
  Reserve System.................................................     9
    Biograpical sketch of nominee................................    27
    Response to written questions of Senator Bunning.............    87
Linda Mysliwy Conlin, of New Jersey, to be First Vice President, 
  the Export-Import Bank of the United States....................    10
    Prepared statement...........................................    51
    Biograpical sketch of nominee................................    52
J. Joseph Grandmaison, of New Hampshire, to be a Member of the 
  Board of Directors of the Export-Import Bank of the United 
  States.........................................................    11
    Biograpical sketch of nominee................................    60
Edmund C. Moy, of Wisconsin, to be Director, the U.S. Mint, U.S. 
  Department of the Treasury.....................................    12
    Prepared statement...........................................    59
    Biograpical sketch of nominee................................    71
Geoffrey S. Bacino, of Illinois, to be a Director of the Federal 
  Housing Finance Board..........................................    13
    Biograpical sketch of nominee................................    79

                                 (iii)


                            NOMINATIONS OF:

                   FREDERIC S. MISHKIN, OF NEW YORK,

              TO BE A MEMBER OF THE FEDERAL RESERVE SYSTEM

                  LINDA MYSLIWY CONLIN, OF NEW JERSEY,

                       TO BE FIRST VICE PRESIDENT

                J. JOSEPH GRANDMAISON, OF NEW HAMPSHIRE,

              TO BE A MEMBER OF THE BOARD OF DIRECTORS OF

              THE EXPORT-IMPORT BANK OF THE UNITED STATES

                      EDMUND C. MOY, OF WISCONSIN,

                     TO BE DIRECTOR, THE U.S. MINT

                  U.S. DEPARTMENT OF THE TREASURY AND

                    GEOFFREY S. BACINO, OF ILLINOIS,

                          TO BE A DIRECTOR OF

                   THE FEDERAL HOUSING FINANCE BOARD

                              ----------                              


                        WEDNESDAY, JULY 12, 2006

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10:40 a.m., in room SD-538, Dirksen 
Senate Office Building, Senator Richard Shelby (Chairman of the 
Committee) presiding.

        OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

    Chairman Shelby. The hearing will come to order.
    This morning, we will consider several nominations. I 
appreciate the willingness of the nominees to appear before the 
Committee this morning.
    This panel of nominees, if confirmed, will have important 
responsibilities for overseeing our Nation's financial 
institutions, payments systems, housing and community 
development finance, and export trade financing.
    Our first nominee is Frederic Mishkin, of New York, who was 
nominated to serve as a Member of the Board of Governors of the 
Federal Reserve System. If confirmed by the Senate, Mr. Mishkin 
would fill the seat vacated by Roger Ferguson in April and 
serve the remainder of the 14-year term expiring in January 
2014. Dr. Mishkin has served the Federal Reserve System in 
several capacities. From 1994 to 1997, he headed the Research 
Department of the Federal Reserve Bank of New York and has 
served as a consultant. He was also an economist with the Board 
of Governors early in his career. Currently, Dr. Mishkin is the 
Alfred Lerner Professor of Banking and Financial Institutions 
at the Graduate School of Business, Columbia University, as 
well as a Research Associate at the National Bureau of Economic 
Research; a Senior Fellow at the FDIC Center for Banking 
Research, too.
    Dr. Mishkin has extensive experience with central banks 
around the globe, having held positions with the Ministry of 
Finance in Japan, the Reserve Bank of Australia, the Financial 
Supervisory Service of South Korea, the Bank of England, the 
International Monetary Fund, and the World Bank.
    Since receiving his Ph.D. from the Massachusetts Institute 
of Technology in 1976, Dr. Mishkin has taught at the University 
of Chicago, Northwestern University, Princeton University, and 
Columbia University, with which he has been affiliated since 
1983. Dr. Mishkin's research focuses on the effects of monetary 
policy on financial markets and the economy, a particularly 
useful area of expertise for a Governor at the Federal Reserve.
    A few years ago, Dr. Mishkin wrote ``Inflation Targeting: 
Lessons from the International Experience'' with Chairman 
Bernanke, who now serves as the Chairman of the Fed, as we 
know.
    We also have two nominees with us this morning who have 
been nominated to very important positions outside the Fed, the 
U.S. Export-Import Bank: Ms. Linda Mysliwy Conlin, of New 
Jersey, who has been nominated to serve as First Vice President 
of the Bank; and Joseph Grandmaison, of New Hampshire, who has 
been nominated to the Bank's Board of Directors.
    Ms. Conlin presently serves as a Member of the Board of 
Directors of the Export-Import Bank, a position she has held 
since 2004. Prior to joining the Bank, Ms. Conlin was Assistant 
Secretary for Trade Development at the U.S. Department of 
Commerce from 2001 to 2004. She has also served as Director for 
Travel and Tourism at the New Jersey Commerce and Economic 
Growth Commission from 1994 to 1999, as Assistant Secretary for 
Tourism and Marketing at the U.S. Department of Commerce from 
1989 to 1993, and as an Associate Director at the U.S. 
Information Agency from 1986 to 1989. Ms. Conlin holds an 
undergraduate degrees from the University of Massachusetts and 
completed graduate studies at Indiana University.
    Mr. Joseph Grandmaison, nominated to the Board of Directors 
of the Export-Import Bank, previously served as Director of the 
Ex-Im Bank from 2001 to 2005. He served as Director of the U.S. 
Trade and Development Agency from 1993 to 2001 and as an 
adjunct professor at the College of Communications at Boston 
University. He is a graduate of the Kennedy School of 
Government at Harvard University and Burdett College.
    Our fourth nominee, Geoffrey Bacino, of Illinois, is 
President Bush's nominee to the Federal Housing Finance Board. 
If confirmed, he will fill the vacant Board seat held by Franz 
Leichter. Mr. Bacino is currently Senior Vice President of 
Legislative and Regulatory Affairs at Centrix Financial, a firm 
specializing in the subprime auto loan market and serving more 
than 180 credit unions nationally. Previously, he was president 
of his own firm, a law firm headquartered in Washington, DC. 
President Clinton nominated him to the Board of the National 
Credit Union Administration where he served from 2000 to 2001. 
He was co-founder of the National Association of State 
Chartered Credit Unions and served as Executive Director of the 
National Association of Share Insurance Corporations. He 
received his undergraduate degree in political science from 
Indiana University.
    Our final nominee today is Mr. Edmund C. Moy, of Wisconsin, 
who has been nominated to serve as Director of the U.S. Mint, 
one of our oldest and most venerable institutions. Mr. Moy 
currently serves as Special Assistant to the President for 
Presidential Personnel at the White House. Previously, he 
worked with venture capitalist firms and entrepreneurs and 
served on the boards of several companies and nonprofit 
organizations. He served in the Administration of President 
George H.W. Bush at the Federal Health Care Financing 
Administration. If confirmed, Mr. Moy will replace Henrietta 
Holsman Fore, whom President Bush nominated to be Under 
Secretary of State for Management. Mr. Moy graduated from the 
University of Wisconsin with a triple major in economics, 
international relations, and political science.
    I welcome all of you here this morning.
    Senator Sarbanes.

             STATEMENT OF SENATOR PAUL S. SARBANES

    Senator Sarbanes. Thank you very much, Mr. Chairman, and I 
am pleased to join with you in trying to move the President's 
nominees forward through the nomination process. I think just 
as a basic requisite, we need an efficient appointment and 
confirmation process so that able appointees can assume the 
varied responsibilities for which they have been selected, and 
I think this Committee over the years has had a very good 
record in that regard. Occasionally, we have someone we feel 
maybe is not up to standard, and that obviously calls for a 
different kind of hearing. But I am pleased to say that, 
looking over these papers here this morning, I am looking 
forward to moving these nominees ahead as promptly as we can.
    I hold public service in high esteem, and I congratulate 
all of our nominees. We appreciate their willingness to serve 
the country.
    I will be very quick because I know you want to get to 
them, but I just want to mention a couple of points.
    First of all, I want to welcome Professor Mishkin. He has 
had a distinguished academic career, including serving as the 
Research Director of the Federal Reserve Bank of New York and 
as a leading authority on U.S. and foreign monetary policy. He 
has been a consultant overseas to a number of central banks and 
other countries.
    I just want to underscore--and I may get to it in the 
question period if time permits--that the Fed has a dual 
mandate: Maximum employment and stable prices. For the last 3 
months, jobs have grown at a sluggish pace, 108,000 this last 
month. This is in a period where we have had slower job growth 
than has been typical of past expansions, combined with falling 
real wages.
    The issue of inflation targeting has been raised. I do not 
quite know why at this particular juncture this issue has been 
introduced into the discussion, and Professor Mishkin has--one 
of the problems with being a distinguished professor like Fred 
Mishkin is you have a lot of writings that people can make 
reference to.
    Chairman Shelby. A lot of good questions.
    [Laughter.]
    Senator Sarbanes. My concern, as I expressed it when we had 
the Bernanke hearing, is that inflation targeting carries with 
it, I think, the serious risk of slighting one side of the 
Fed's dual mandate. I do want to observe that the mandate of 
the Fed is established by the Congress by statute, not by the 
Fed. The Fed does not have a wide-open blank check to write its 
own mandate. And the statute has the dual mandate in it, and I 
for one will keep an eye on maintaining that dual mandate.
    The other is that we need to discuss the Basel II capital 
requirements, and I think that is a major issue.
    Chairman Shelby. Absolutely. I brought it up yesterday.
    Senator Sarbanes. Actually, Basel II had the initial goal 
of improving incentives for banks engaging in complex financial 
transactions to control risk without markedly lowering capital 
requirements. They moved ahead on an international agreement 
for Basel II before a careful quantitative impact study of what 
implementation would mean for the required level of buying 
capital had been undertaken. When that study came along, called 
QIS-IV, it found that the Basel rules would lower the required 
bank capital for half of the participating U.S. institutions by 
at least 25 percent. One institution had a capital reduction of 
just shy of 50 percent. And aggregate capital declined over 15 
percent.
    Actually, Professor Mishkin's own research has shown the 
importance of capital requirements when economic hard times 
come along, both here and abroad, and we need to proceed in a 
prudent way on this Basel II. And, actually this Committee has 
been raising that issue time and time again.
    Chairman Shelby. Absolutely.
    Senator Sarbanes. And I think it is an important matter.
    I want to welcome the two nominees for the Export-Import 
Bank. The Bank finances U.S. exports in cases in which 
commercial financing might not be available or where sales 
might not otherwise occur in order to create U.S. jobs. That is 
the charge for the Bank, and I want to underscore that.
    Ms. Conlin is now serving as a Board Member. She has been 
nominated now to become Vice Chairman of the Board. She is 
former Assistant Secretary of the Department of Commerce for 
Trade Development. She has been on the Board of the Bank now 
for, I guess, a couple of years, if I am not mistaken. We look 
forward to her becoming the Vice Chair.
    And, of course, Joe Grandmaison is a veteran of the trade 
area of our policy, Director of the U.S. Trade and Development 
Agency, and he has been on the Board, well, from 2001 to 2005 
and has now been renominated for another term. We look forward 
to his continued service.
    I hope, Mr. Chairman, we can move Mr. Grandmaison, Ms. 
Conlin, and Jim Lambright through pretty quickly so the Board 
gets--I would note there is still one vacancy on the Board, and 
I urge the Administration to send another nominee so we can get 
the Board up to full strength, particularly as we consider its 
reauthorization, which is an issue that we have to deal with in 
the next few months.
    Mr. Moy, you have a big assignment to be the Director of 
the Mint. It is the largest coin manufacturer in the world, and 
it is a big administrative job, and so it is a real challenge, 
although you have done important administrative work in the 
past, and I know you have now been working closely with 
President Bush in Presidential Personnel.
    I do not see your nomination here to be the Director of the 
Mint as analogous to Dick Cheney becoming the Vice Presidential 
candidate.
    [Laughter.]
    He was in charge of finding the candidates, and it ended up 
he was the candidate. And Mr. Moy has been in charge in 
Presidential Personnel, and here he is nominated.
    Chairman Shelby. Maybe Mr. Moy found a good candidate here.
    [Laughter.]
    He found the best candidate. We hope so.
    Mr. Moy. Purely coincidental.
    Chairman Shelby. We hope you are the best candidate. We 
believe you are well-qualified.
    Senator Sarbanes. Mr. Bacino, we welcome you before the 
Committee. You have serious corporate governance and risk 
management problems at several of the Federal Home Loan Banks. 
We may ask you a bit about that, if time permits, and, you 
know, the Federal Home Loan Banks have assets totaling almost 
$1 trillion. They are one of the world's largest issuers of 
debt. We are concerned about some of the practices at some of 
the Federal Home Loan Banks, and, of course, once you go on the 
Board, you will have a major responsibility for that.
    Thank you very much, Mr. Chairman.
    Chairman Shelby. Senator Allard.

               STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. First of all, Mr. Chairman, I want to thank 
you for holding this hearing today. We have some very important 
nominations for consideration before us. I look forward to 
hearing their testimony and having the opportunity to discuss 
issues related to their agencies.
    First, I would like to welcome all of you to the Banking 
Committee. Dr. Mishkin, monetary policy is an important issue 
to this Committee, to the Senate, and to the country. You have 
a big job ahead of you upon confirmation, but I am sure you are 
aware of this already. And there are many important issues 
facing our economy, and I am eager to discuss a few items with 
you.
    Ms. Conlin and Mr. Grandmaison, your previous experience at 
the Export-Import Bank obviously makes you well-qualified to 
continue serving. I look forward to hearing your thoughts on 
the Bank's reauthorization.
    I would like to take this opportunity to express my 
disappointment that the Bank still does not have an Inspector 
General. I was frustrated that although an Inspector General 
was authorized in 2002, Congress failed to appropriate the 
necessary money until last year. However, I would note that the 
Senate included funding in each of those years. The 
appropriations bill containing the Inspector General funding 
was signed into law last November, 8 months ago, yet the White 
House has still failed to come forward with a nominee. It will 
become increasingly difficult to support nominees for the 
Export-Import Bank while the White House leaves what I consider 
to be an equally important position, the Inspector General, 
vacant. Ms. Conlin and Mr. Grandmaison, I would hope that you 
would use your positions to help pressure the Administration to 
move quickly on this critical vacancy.
    Mr. Bacino, we appreciate your willingness to serve on the 
Federal Housing Finance Board, particularly when there are a 
number of us that are looking forward to the day when we would 
actually eliminate the Board. Your point of view will be 
helpful to the Committee as we continue our attempts to create 
a new regulator for the housing GSE's.
    Mr. Moy, it is nice to see you in front of the Committee as 
well. As you already know, Denver is proud to be the home of a 
Mint facility. The Denver Mint is one of only two Mints in the 
United States that produce coinage for circulation. I am sure 
that if you are confirmed, we will be working together in the 
future.
    Again, thank you, Mr. Chairman, for holding this hearing 
today, and I look forward to hearing from our witnesses.
    Chairman Shelby. Thank you, Senator Allard.
    Senator Dodd.

            STATEMENT OF SENATOR CHRISTOPHER J. DODD

    Senator Dodd. Mr. Chairman, I will be very brief. You, 
Senator Sarbanes, and Senator Allard covered the ground pretty 
well here. Let me congratulate all of you on being nominated 
and for your willingness to serve in these important positions 
and roles.
    I am particularly interested, as you know, Mr. Chairman, in 
the Export-Import Bank and the fact that we have had an 
incomplete board for too long a time, and that is putting that 
institution in a very precarious situation.
    Chairman Shelby. You know a lot about that Board.
    Senator Dodd. I know a lot about that Board. Truth in 
advertising here, my wife is a former Vice Chairman of the 
Board, and so I have a great familiarity with it and a great 
respect for it. The point that Senator Sarbanes made--
    Senator Sarbanes. You have huge shoes to fill.
    [Laughter.]
    Senator Dodd. I did not say that, Ms. Conlin. Senator 
Sarbanes said that.
    Ms. Conlin. I understand.
    Senator Dodd. But the role of the Bank, since its charter 
in 1934, in fact, it almost should be called, ``the Export 
Bank.'' The import side of it, I do not know why that name is 
even in the title. I guess originally they thought more about 
the import aspects of all of this. But the job creation in this 
country as a result, particularly with smaller businesses, I 
must say, going back to people like Ken Brody and others in the 
past who really expanded that role. Historically, in fact, 
there were major corporations that took advantage of it, and 
under new leadership over the last several years, we have 
watched the Bank expand its operations to really reach out to 
smaller enterprises in the country that have really increased 
job opportunities here at home and created opportunities for 
the United States in these businesses overseas. And I just want 
to commend him. Joe has done a great job here, and I am 
delighted you are willing to do this again, Joe.
    As Paul pointed out correctly, you bring a wealth of 
experience to this job. You have been there a long time. You 
know it well. Ms. Conlin, you now have several years there as 
well. We are still missing one member, as Senator Sarbanes 
points out, and I hope the Administration would send up a 
nominee and, Mr. Chairman, we could move quickly on it so we 
would have the full five-member complement of the Board there 
to function and operate.
    But this is great news to have a quorum now that can be 
achieved and really give great legal authority to the decisions 
the Board makes and not raise questions about whether or not 
they are adequate.
    So, I commend you both, and particularly my relationship 
with Joe goes back a long time. I am grateful to you, Joe, for 
doing this again.
    To the other members, I am interested in your testimony and 
some questions will be raised appropriately, with 
congratulations on your willingness to serve.
    Thank you, Mr. Chairman.
    Chairman Shelby. Senator Sununu.

              STATEMENT OF SENATOR JOHN E. SUNUNU

    Senator Sununu. Thank you, Mr. Chairman. I welcome all the 
nominees, and I do want to offer a special welcome to a good 
friend, Joe Grandmaison, or as his friends on the west side of 
Manchester would say, ``Joe Grand-may-sohn.'' We have a long 
friendship, although Senator Dodd is much, much older than I 
am.
    [Laughter.]
    Your friendship may actually go back even a little bit 
further.
    Senator Dodd. He is going to learn eventually how this 
works.
    [Laughter.]
    Senator Sununu. Actually, Mr. Moy, Senator Dodd gave me 
what may be the best advice I have received in the Banking 
Committee so far, and that is, do one coin bill and do only one 
coin bill.
    [Laughter.]
    And I look forward to working with you on that, on the 
implementation of the dollar coin bill, which is now the law of 
the land.
    But Joe really is, in addition to an experienced individual 
along the lines described by the Chairman and Senator Sarbanes, 
a great public servant, and I think that needs to be 
emphasized, because that is the kind of individual and 
experience we look for in any of these Presidential appointees, 
going back to his National Guard service as a young man and 
working as a one-time alderman in the city of Nashua, and New 
Hampshire local politics is by far the toughest job there is. 
He has been a delegate to the New Hampshire Constitutional 
Convention, which is taken very seriously in a State like New 
Hampshire, and, of course, as was mentioned, his work at U.S. 
Trade and Development and his previous work as a Board member 
at the Bank all has made the people of New Hampshire very proud 
of the work that he has done here.
    He also has private sector experience, and, in particular, 
I think that is why he has been such a great advocate for the 
small and medium-sized businesses that Senator Dodd mentioned. 
He has been a great voice for them at the Bank.
    I will close by noting that my staff has indicated that 6 
weeks ago Joe called at about 8 o'clock in the morning and 
spent an hour and a half just chatting about things the Bank 
and its work and his thoughts about the economy and business 
and how Ex-Im might continue to make a bit of a difference in 
that area. And that is an indication of one of two things: 
Either he loves my staff, or he loves the Ex-Im Bank. And my 
sense it is a little bit of both because my staff has really 
enjoyed working with him as well and with this nomination and 
his confirmation, and I look forward to many more years.
    Thank you, Mr. Chairman.
    Senator Sarbanes. What are we to make of the fact that he 
called at 8 a.m. in the morning in order to have that chat?
    Chairman Shelby. He is up early working for jobs.
    Senator Sununu. Well, a good sign there is that he knew my 
staff would be in, so that is a credit to both parties.
    Chairman Shelby. Senator Menendez.

              STATEMENT OF SENATOR ROBERT MENENDEZ

    Senator Menendez. Thank you, Mr. Chairman. I want to 
congratulate all the nominees on their nomination by the 
President.
    Mr. Bacino, I actually hope that you will have a long-term 
engagement. I think there is still a role for the Federal Home 
Loan Bank, and as I talk to bankers not only in my State but 
also across the country, they tell me that there is still a 
need for them and a real opportunity to create homeownership as 
part of the reality that we want for as many Americans as 
possible. So, I hope you have a long-term engagement.
    I appreciate the assignments that all of the nominees will 
have. I particularly want to share Senator Dodd's comments 
about the Export-Import Bank, and I know we have two excellent 
nominees there. I hope to work with both of you, particularly 
from a State that is still looking to enhance the opportunity 
from New Jersey, to enhance the opportunity to get many more 
small and mid-sized businesses into this global marketplace and 
to enhance those who are in it already.
    Part of our challenge in trade as we take trade votes is to 
have the connection to people in their everyday lives become 
more and more real, and that means being able to have more and 
more people benefit, whether by employment or by expansion of 
businesses in that regard. And it makes these trade issues a 
lot more easy. And so we hope that as we look at a variety of 
new initiatives in New Jersey, creating something we call the 
``Liberty Corridor,'' a place to go from idea to marketplace 
and do everything in between, that we will be able to work with 
both of you in promotion of those opportunities.
    We appreciate Mr. Grandmaison. When I was in the House, we 
often had the opportunity before the International Relations 
Committee, looking at some of those issues, and we appreciate 
your great expertise, and we are honored that a New Jerseyan 
has been designated to be the First Vice President of the Bank. 
And, Ms. Conlin, with your background, I know it is going to 
further enhance the Bank's capabilities, and we look forward to 
having your specific insights, as it relates to your history in 
New Jersey as well, be an asset.
    So, with that, Mr. Chairman, I look forward to being 
supportive, and thank you for the opportunity.
    Chairman Shelby. Would all of you stand and be sworn? Hold 
up your right hand. Do you swear or affirm that the testimony 
that you are about to give is the truth, the whole truth, and 
nothing but the truth, so help you God?
    Mr. Mishkin. I do.
    Ms. Conlin. I do.
    Mr. Grandmaison. I do.
    Mr. Moy. I do.
    Mr. Bacino. I do.
    Chairman Shelby. Do you agree to appear and testify before 
any duly-constituted committee of the U.S. Senate?
    Mr. Mishkin. I do.
    Ms. Conlin. I do.
    Mr. Grandmaison. I do.
    Mr. Moy. I do.
    Mr. Bacino. I do.
    Chairman Shelby. Thank you.
    All of your written testimony will be made part of the 
hearing record in its entirety, and, Dr. Mishkin, we will start 
with you, if you will just sum up briefly, because we have got 
a big panel.

         STATEMENT OF FREDERIC S. MISHKIN, OF NEW YORK,

                        TO BE A MEMBER,

        BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

    Mr. Mishkin. Chairman Shelby, Senator Sarbanes, and Members 
of the Committee, I am honored to have been nominated by 
President Bush to serve as a member of the Board of Governors 
of the Federal Reserve System. I thank you for the opportunity 
to appear today and for the expeditious scheduling of the 
hearing.
    After receiving my Bachelor of Science in Economics from 
MIT in 1973, I went on to earn my Ph.D. in economics from the 
same institution in 1976. I have been a Professor at the 
University of Chicago, Northwestern University, Princeton 
University, and, since 1983, have been a Professor at the 
Graduate School of Business, Columbia University. My research 
has focused on monetary policy and the financial system, and I 
am the author of more than 100 professional articles and more 
than 10 books on these topics. I currently as a research 
associate of the National Bureau of Economic Research, serve on 
six editorial boards of academic journals, and have been a past 
President of the Eastern Economic Association.
    In addition to my academic background, I also have 
substantial policy experience. From 1994 to 1997, I was an 
Executive Vice President and Director of Research at the 
Federal Reserve Bank of New York and, in that capacity, 
attended Federal Open Market Committee meetings on a regular 
basis. I continue to be a consultant to the Federal Reserve 
Bank of New York and currently am a member of its Economic 
Advisory Panel. I also have consulted for numerous central 
banks throughout the world, as well as for the World Bank and 
the International Monetary Fund.
    As Members of this Committee know, Congress has assigned to 
the Federal Reserve considerable responsibilities, among which 
are: Fostering price stability while maintaining maximum 
sustainable employment; promoting a safe and sound banking and 
a stable and efficient payments system; and promoting financial 
literacy and fair dealing for consumers. If confirmed by the 
Senate, working with Chairman Bernanke and my fellow Board 
members, I will do my utmost to fulfill these responsibilities. 
I believe that my experience as a scholar whose research has 
focused on issues of direct concern to central banks and my 
prior experience within the Federal Reserve System will enable 
me to substantially contribute to the operations of the Federal 
Reserve System.
    I look forward to responding to your questions. Thank you 
very much.
    Chairman Shelby. Ms. Conlin.

       STATEMENT OF LINDA MYSLIWY CONLIN, OF NEW JERSEY,

                  TO BE FIRST VICE PRESIDENT,

            EXPORT-IMPORT BANK OF THE UNITED STATES

    Ms. Conlin. Mr. Chairman, Senator Sarbanes, distinguished 
Members of the Committee, I am pleased to come before you today 
as the President's nominee to become First Vice President of 
the Export-Import Bank of the United States. I appreciate the 
confidence that the President has placed in me, and I am 
grateful for another opportunity to contribute to an 
institution where I have had the privilege to serve these past 
2 years.
    If confirmed, I look forward to working with the members 
and staff of the Committee to help sustain and increase the 
number of high-paying U.S. jobs by financing export 
transactions that otherwise would not go forward.
    I would like to recognize my husband, Joe, and my dear 
friend, Louise Wheeler, who are both with me here today, and 
the fine team from Ex-Im Bank.
    Chairman Shelby. Do you want them to stand up?
    Ms. Conlin. Stand up, please. Or a slight wave. He is so 
tall, a slight wave would do.
    [Laughter.]
    It was not that long ago on February 26, 2004, that I came 
before the Committee as the President's nominee to be a 
Director of the Export-Import Bank. Since that time, I have 
endeavored to honor the confidence that you have placed in me 
and the commitment I made to you: Simply stated, to ensure that 
U.S. exporters have the financing tools they need to succeed in 
today's highly competitive global economy.
    As a Board member, I have been given the responsibility of 
overseeing a key Congressional mandate: Increasing the Bank's 
financing of environmentally beneficial goods and services, 
including renewable energy. We continue to make a difference in 
that area. Ex-Im Bank has supported more than $1.1 billion of 
U.S. exports of environmentally beneficial goods and services 
over the past 4 years. And in this regard, it has been 
personally gratifying for me to work with the Bank's 
Environmental Exports Team, a group of enthusiastic and 
dedicated professionals from various departments who have 
helped implement this program.
    As a former small business owner, I am also pleased to be 
working with the many small and medium-sized companies that 
make up the lion's share of the U.S. environmental sector. 
These entrepreneurs serve as the backbone of the American 
economy, and their risk-taking fuels our free market system. I 
want to do everything to help them to grow. A key to that 
growth is Ex-Im financing that can help shoulder the risk of 
opening up new markets overseas.
    I have personally witnessed the positive results of the 
Bank's expanded small business program over the past year. 
Assuming that the Bank is provided sufficient administrative 
resources going forward, I firmly believe that the Bank's 
efforts focused on small businesses will continue to grow. I, 
therefore, welcome the opportunity to assist Acting Chairman 
Jim Lambright in helping these companies succeed in the global 
marketplace.
    It has also been my pleasure to work with Ex-Im's Sub-
Saharan Africa Advisory Committee and the business development 
team to increase financing in that region, building upon the 
hard work and success of my former colleague and Ex-Im Board 
Member-Designate, Joe Grandmaison. I am pleased to say that we 
are now implementing many of the Advisory Committee's 
recommendations.
    If confirmed as First Vice President, I will use my 
experience both at Ex-Im Bank and in trade development at the 
U.S. Department of Commerce to leverage the resources of 
Federal agencies and industry organizations to accomplish our 
shared goals.
    I welcome the opportunity to work with Ex-Im Bank's 
Chairman and executive leadership and the talented professional 
staff at the Bank to ensure that Ex-Im Bank's programs and 
policies remain competitive.
    Mr. Chairman, Senator Sarbanes, Members of the Committee, I 
respectfully ask for your favorable consideration of my 
nomination, and I will be pleased to respond to your questions.
    Chairman Shelby. Mr. Grandmaison.

              STATEMENT OF J. JOSEPH GRANDMAISON,

                       OF NEW HAMPSHIRE,

           TO BE A MEMBER OF THE BOARD OF DIRECTORS,

            EXPORT-IMPORT BANK OF THE UNITED STATES

    Mr. Grandmaison. Mr. Chairman, Members of the Committee, I 
am honored to once again appear before you today as the 
President's nominee to be reappointed as a member of the Board 
of Directors at the Export-Import Bank.
    I am deeply appreciative to President Bush for giving me 
the opportunity to continue in public service. I am also most 
appreciative to Majority Leader Reid, Senator Sarbanes, and 
Senator Dodd for their support of my renomination.
    I would also like to thank Senator Sununu for saying 
generous words about me. I was a little worried given that he 
mentioned he had reviewed my contributor list.
    [Laughter.]
    But as a New Hampshire Democrat, as you would expect, there 
happen to be a lot of Democrats that I supported. A few of them 
have been successful.
    You can be assured that, if confirmed, I will continue to 
serve with the same dedication, zeal, and purposefulness as I 
have in my previous Government service at the Bank and at the 
U.S. Trade and Development Agency.
    As we all know, what with reauthorization, this is an 
especially important year for the Bank. While my term ended 
prior to discussions having begun relative to reauthorization, 
be assured that I have followed the debate as well as having 
attended three of the Congressional hearings. I am aware of the 
concerns expressed by several Senators and Members of the House 
and, if confirmed, will reflect those concerns in my voice and 
in my vote.
    Ex-Im Bank is all about creating U.S. jobs in this ever-
changing world marketplace. I welcome the opportunity to 
continue to work with you toward that end and ask for your 
support and would obviously welcome any questions you might 
have.
    Thank you.
    Chairman Shelby. Mr. Moy.

           STATEMENT OF EDMUND C. MOY, OF WISCONSIN,

                   TO BE DIRECTOR, U.S. MINT

                U.S. DEPARTMENT OF THE TREASURY

    Mr. Moy. Chairman Shelby, Senator Sarbanes, Members of the 
Committee, thank you for the opportunity to appear before you 
today to discuss my nomination to become the 38th Director of 
the U.S. Mint.
    Joining me today is my wife, Karen, and without her support 
and love and partnership, I would not be here today. So thank 
you.
    I am pleased and honored by the trust that President Bush 
has placed in me by asking me to serve in this important 
position, and I recognize that, if confirmed, I will join the 
ranks of those privileged to be Directors since President 
Washington asked David Rittenhouse to become the first Mint 
Director in 1792.
    The background that I bring I think will be extremely 
helpful to the Mint at this point of its history. I have 10 
years as a sales and marketing and branding executive with a 
major corporation, 8 years working with venture capital firms, 
creating value. I have had Federal Government experience 
managing a fairly sizable staff at the Department of Health and 
Human Services, overseeing $7 billion of annual Federal 
expenditures, and being in Presidential Personnel, I certainly 
understand the human resources component of what I am about to 
do.
    If confirmed, there are a couple immediate priorities that 
I see myself focusing on. Most important is implementing the 
Presidential $1 Coin Act, which this Committee has approved. 
The second is providing information to Congress on dealing with 
the rising costs of producing coins, as you have read with the 
penny and the nickel. And, finally, reviewing and, if 
necessary, refining all the various business plans and 
operational plans that the Mint has, because some of the 
environment has changed since those original plans were 
developed.
    Thank you for the honor and privilege of appearing before 
you today.
    Chairman Shelby. Thank you, sir.
    Mr. Bacino.

         STATEMENT OF GEOFFREY S. BACINO, OF ILLINOIS,

         TO BE DIRECTOR, FEDERAL HOUSING FINANCE BOARD

    Mr. Bacino. Thank you. Senator Shelby, Ranking Member 
Sarbanes, and Members of the Committee, I, too, want to thank 
you for the opportunity to appear before you today and for the 
expeditious scheduling of this hearing. I would also like to 
express my thanks to President Bush for nominating me and to 
Minority Leader Reid for recommending me for the position of 
Board member at the Federal Housing Finance Board. If 
confirmed, I will work to the utmost of my abilities to fulfill 
the responsibilities of this office.
    With me today, I would also like to thank my wife, 
Nathalie, and my oldest daughter, Evan.
    A major component of the American Dream has been and should 
continue to be homeownership. With the involvement of the 
Federal Home Loan Banks and the mortgage lending process, the 
Housing Board and its oversight of this important purchase 
remain an integral part of the process.
    Having previously served as a Federal regulator for credit 
unions as a Board member at the National Credit Union 
Administration, I understand the need for a reasonable and 
rational regulator. During my time at NCUA, the Board advanced 
a regulatory framework where ``one size fits all'' gave way to 
a more progressive approach that took into account the 
capabilities of each institution.
    I often equate being a good regulator with the same 
qualities as being a good umpire. It is not the umpire's job to 
tell the manager who to start, when to change pitchers, or 
whether to hit and run. It is, however, the umpire's job to 
decide if a ball is a ball or a strike, decide if it is fair or 
foul, and if a runner is out or safe. Although the umpire is 
not playing the game, his role is essential to ensuring the 
integrity of the game.
    And so it is with a regulator. As the Federal Home Loan 
Banks continue on a daily basis to uphold their mission and 
commitment to help meet community housing and lending needs, 
the integrity in that process is essential. Integrity in the 
safety and soundness of the Federal Home Loan Bank system, 
integrity in their role in the capital markets. An effective 
regulator helps create an environment in which that integrity 
is ensured.
    Let me conclude by saying I look forward to working with 
this Committee and its counterpart on the House side as we 
address important housing and finance issues in the years to 
come through the Federal Home Loan Bank system.
    Thank you very much.
    Chairman Shelby. Thank you.
    I will start with you, Dr. Mishkin. Your research and 
writing suggests that you are a proponent of inflation 
targeting. What are your views on whether the FOMC should adopt 
an explicit inflation-targeting regime? Would you say, for 
example, that the Federal Reserve under Alan Greenspan 
implicitly practiced inflation targeting?
    Mr. Mishkin. First of all, the law of the land is that the 
Federal Reserve has a dual mandate: Not only is it supposed to 
preserve price stability, but it is also supposed to get 
maximum employment.
    This is clearly what the Federal Reserve was doing under 
Chairman Greenspan. I think it is definitely what the Federal 
Reserve should be doing in the future.
    The benefits of inflation targeting have actually been very 
similar to the benefits that were pursued under the Greenspan 
Fed and now under Chairman Bernanke's Federal Reserve in that 
the view that price stability is very critical to the economy--
that you anchor inflation expectations--is, in fact, a good way 
to not only control inflation but also to produce maximum 
sustainable employment.
    Any decisions about what will happen in the future--that I 
will be participating in, that what is appropriate in terms of 
the form of the Federal Reserve policymaking--is something that 
has to be deliberated on. Moving from an academic to a 
policymaker means that I have to keep an open mind. And I 
intend to bring my expertise to help in that process.
    Chairman Shelby. Doctor, given the importance of price 
stability, do you see any downside to the pursuit of an 
inflation-targeting regime?
    Mr. Mishkin. There are many forms of an inflation-
targeting, and, in fact, there are forms of an inflation-
targeting regime that could be problematic. I have thought 
about this issue and discussed it in some of my research.
    What is very important is that if you move in a direction 
along these lines, you need to make sure that you do not 
increase output and employment fluctuations.
    Chairman Shelby. During the past 10 years or so, the 
monetary policy process has certainly become more transparent 
as an increasing amount of information is now being released 
than in years past. Would you favor any additional specific 
actions to make the Fed more transparent to the public, aside 
from inflation targeting, which we have already discussed? And 
do you believe there would be a point at which transparency 
would be counterproductive to effective implementation of 
monetary policy? In other words, it seems like maybe we do not 
need to know everything or every move you make, at least when 
you make it--or before you make it.
    Mr. Mishkin. Right. I share your concerns about this issue 
of transparency. I think there are potential improvements in 
transparency that the Federal Reserve System can pursue. This 
is actually under study at the Federal Reserve currently, and I 
will actively participate in that discussion, if confirmed.
    I am concerned that you can go too far in transparency. I 
have a paper that says, ``Can central bank transparency go too 
far?'' And the answer is sometimes yes. So there is a critical 
balance here. The key to transparency is that it actually helps 
make the Federal Reserve more accountable to the political 
process and to the public, but too much information can 
confuse. So it is an appropriate balance which is what I would 
seek.
    Chairman Shelby. I know a lot of people will be talking to 
you, as we do all the Fed members, why are you raising the cost 
of money, interest rates, so to speak. But price stability is 
very important to this economy, too. It is not just low 
interest rates. Do you want to touch on that just a minute?
    Mr. Mishkin. Yes, Senator.
    Chairman Shelby. What do you mean by that?
    Mr. Mishkin. Your point is very well----
    Chairman Shelby. I know what you mean, but----
    Mr. Mishkin. Your point is very well taken. If you do not 
get price stability, that is when you actually get very high 
interest rates. And, unfortunately, we have had periods in the 
past where interest rates in the early 1980's went up close to 
20 percent. We do not want to return to that again, and, in 
fact, price stability, which has been the hallmark of Federal 
Reserve policymaking in recent years, has helped produce low 
interest rates. So a key issue here is that low interest rates 
are a good thing.
    Chairman Shelby. Keeping inflation under control, right?
    Mr. Mishkin. Keeping inflation under control is an 
important and critical way of producing that.
    Chairman Shelby. Ms. Conlin and Mr. Grandmaison, like 
Senator Sarbanes. I will ask you both this: The Export-Import 
Bank's impact procedures have been criticized for taking too 
long to complete and injecting an uncertainty about what 
transactions the Bank can support. What can be done to 
streamline the Bank's economic impact procedures while at the 
same time making sure they protect U.S. businesses? Senator 
Sarbanes and Senator Dodd were talking about this. We are 
interested in jobs, creating jobs for our people, and you can 
play a role there.
    Also, do you think that the Bank's economic impact 
procedures could be made more transparent so that it is easier 
for effective U.S. companies to have a better opportunity to 
comment on transactions?
    We will start with you, Ms. Conlin.
    Ms. Conlin. Yes, Mr. Chairman, if confirmed, I certainly 
would welcome the opportunity to work with the Members of the 
Committee to increase transparency and predictability where 
economic impact procedures are concerned. As Ranking Member 
Sarbanes pointed out, our mission is to help create and sustain 
jobs in the United States. And we should not be providing 
financing or extending credit if this indeed adversely affects 
the U.S. economy, employment, or production.
    Having said that, the transactions that have come before 
the Board and that have involved economic impact considerations 
have been among the most challenging and difficult because 
typically they pit one set of U.S. workers against another set 
of U.S. workers.
    So, I firmly believe that we should continue our current 
practice of vetting these transactions, of making sure that all 
interested parties have a voice and are included; and at the 
same time, we should make sure that we consider exporters and 
make sure that the process is timely, is predictable, that our 
exporters in the process have some certainty so that their 
commercial relationships are not jeopardized, and so that we 
can make sure that our exporters and not their foreign 
competitors are getting those sales and supporting those jobs.
    Chairman Shelby. Do you have anything to add, sir?
    Mr. Grandmaison. The only thing I would add, Senator, is 
that the criticism is justified, and hopefully during the past 
several months, given that several Senators have raised the 
issue that it can be handled internally at the Bank, I do agree 
with you that transparency is a key to it, but also 
responsiveness. The fact is that we have to be more open to 
both sides of any particular issue and to be able to explain 
clearly why the Board or management of the Bank may indeed feel 
one way or the other.
    Chairman Shelby. Thank you.
    Mr. Moy, I have a question for you, sir.
    Mr. Moy. Yes, sir.
    Chairman Shelby. You mentioned that base metal prices have 
been rising in recent years, and this has begun to cause 
industry concern. As Director of the Mint, you will be the 
largest maker of coinage, I guess, in the world. Is that 
correct?
    Mr. Moy. That is correct.
    Chairman Shelby. What impact will the rising prices of 
metal have on production and unit costs? And how will the Mint 
work to keep the cost of coinage in America efficient and cost-
effective? I know Senator Allard has a Mint in Denver that he 
is very interested in, too. We all are because of the--go 
ahead, sir.
    Mr. Moy. Senator, that is exactly right, and the primary 
driver behind the increased costs of both the penny and the 
nickel has been the metal composition. So it is the rising cost 
of metals that is the primary contributor to these rising 
costs.
    What I have discovered in what little time I have had to 
study the Mint, they have done an outstanding job keeping all 
the other production costs down. That has actually had a flat 
trend over time. This is an area that, as I mentioned in my 
opening statement, I am going to spend a considerable amount of 
time studying and bringing options before the Congress, because 
I recognize Congress' responsibility to determine not only the 
denominations we make, but also the metal composition of those 
coins.
    Chairman Shelby. Senator Sarbanes.
    Senator Sarbanes. Thank you very much, Mr. Chairman.
    Mr. Bacino, why don't we start with you? The Chairman got 
as far as you, and then his time ran out. In recent years, the 
Finance Board has made several significant decisions that I 
think have widespread implications for the Federal Home Loan 
Bank System without any prior notice or the opportunity for 
public comment.
    For example, the Mortgage Partnership Finance Program and 
the Shared Funding Program, operated by the Chicago Bank, both 
of which were major departures from the banks' traditional 
business of making advances, were initially simply authorized 
by the Board and only subsequently addressed through a formal 
rulemaking process.
    Furthermore, recently the Board allowed the Chicago Bank to 
issue subordinated debt, to include that debt in calculating 
the bank's minimum capital ratio. Let me repeat that. It issued 
subordinated debt and then allowed them to include that 
subordinated debt in calculating the bank's minimum capital 
ratio. That is unprecedented in the Federal Home Loan Bank 
System. This decision was also made with no notice or 
opportunity for public comment.
    So, I would just put this very basic question to you: How 
important is it for a regulator to seek public input, proceed 
in a transparent manner, when making substantive decisions of 
this sort that have broad implications and that represent a 
very sharp departure from past practice?
    Mr. Bacino. Senator, I would agree that I think it is very 
important that anytime a regulatory agency chooses to go on any 
path, regardless of whether it is an extreme diversion from 
what they have done before or whether it is a standard 
regulation, I think you need input from the stakeholders. I 
think you need input from the members of the Bank System. And 
one of the things that I would work for there would be some of 
the stuff similar to what we did at the National Credit Union 
Administration, is to make sure that things went out for public 
comment, to make sure that there was adequate notice and that 
things were not done in the dead of night.
    I think anytime you do something like that, it raises 
questions, regardless of whether or not the program itself 
would work or not. I think you need to be able to listen to the 
people that have a stake in the agency.
    Senator Sarbanes. I think that is absolutely right. I mean, 
the substance of the decision is complex, and people may differ 
on it. I happen to think that these are very risky 
undertakings. But at a minimum, the process should be a 
transparent one, and there is a whole procedure for prior 
notice and for public comment and so forth that was not 
followed in these instances.
    Let me ask you one other question. For the past 2 years, 
the Finance Board has failed to appoint any Directors to the 
Boards of the Federal Home Loan Banks, the so-called ``public 
directors'' despite the requirement in Section 7 of the Federal 
Home Loan Bank Act that the board make such appointments. If 
appointments are not made by the end of this year, the Banks 
will be missing more than 40 percent of their directors.
    It seems to me this is a very serious issue that the 
Finance Board should be addressing. Do you agree with that?
    Mr. Bacino. Yes, sir. I think this is probably going to be 
one of the top three or four issues, if I am fortunate enough 
to be confirmed, to be sitting on my desk. And I think we do 
need to make sure that we live up to our statutory 
requirements. And if we are required to make those nominations, 
I feel that is something that we should definitely be looking 
at. But if I am fortunate enough to be there, it would 
obviously be one of the things I would look at right away.
    Senator Sarbanes. All right. Thank you.
    Mr. Moy, you have a sales and marketing background. We 
tried a $1 coin before just a few years ago. It did not seem to 
work very well. In fact, the only place you see it in is in the 
homes of consumers who have kept them around. Now we are going 
to try it again.
    Do you have any ideas about what went wrong before and what 
steps might be taken now to make it a more popular coinage?
    Mr. Moy. When I first considered this position of the Mint, 
I tried to go out to my local banking institution to get a $1 
coin and found out how difficult it is for the Director nominee 
to even access a $1 coin.
    Given my background, and knowing what the Mint does, first 
of all, I am confident that the Mint will be able to produce a 
beautiful coin. It will be done on time. It will be done as 
efficiently as possible. And so the key here will be making 
Americans more aware of the benefits of using that dollar coin, 
as well as to make that coin more accessible.
    Senator Sarbanes. I have a question for the two nominees to 
the Ex-Im Bank. I understand the appropriators have tentatively 
cut $6 million from the administrative budget of the Export-
Import Bank. This does not sound like a lot of money, 
particularly in the terms in which we deal here with the 
Department of Defense, the Department of Homeland Security, and 
so forth. But for these smaller agencies, money of this amount 
can really have an impact.
    I am told that it will lead to a cut of 10 to 15 percent in 
the employees at the Export-Import Bank. Is that correct? And 
can the Bank take that kind of cut and continue its activities? 
There is some concern that not enough has been done on small 
business, that the time framework is not tight enough, 
businesses want quicker answers and so forth and so on.
    Ms. Conlin, do you want to take that on first? You are 
still there.
    Ms. Conlin. Senator Sarbanes, frankly I share your concern. 
I am deeply troubled and I am concerned about the ramifications 
to the operations of the Bank that this proposed reduction in 
our administrative budget would mean. And you have hit the nail 
right on the head.
    What this would really jeopardize is our small business 
effort, our small business program that Acting Chairman 
Lambright has dedicated so much time and effort to. We are 
starting to see solid results from this program. This reduction 
not only will it affect our ability to reach these small 
business exporters--and as a former small business person, you 
know that is near and dear to my heart--but it also will affect 
our ability to service these applications and requests.
    So, I share your concern, and I would hope that there would 
be consideration given to the importance of the outreach 
programs and small business programs at the Bank.
    Senator Sarbanes. Well, maybe you and Mr. Lambright could 
visit with the appropriators, if you have not yet done so.
    Thank you, Mr. Chairman.
    Chairman Shelby. I think Senator Sarbanes is directing some 
of that in a friendly way to the two of us. Senator Allard and 
I both are appropriators.
    [Laughter.]
    Chairman Shelby. He is a smart man.
    Senator Allard, any questions?
    Senator Allard. Thank you, Mr. Chairman.
    I want to start my first question with Mr. Moy, and I think 
you are aware of the problems that we are having with some of 
the female employees at the Mint, and, in fact, they have filed 
a class complaint. And the basis for this complaint seems to be 
that there is a hostile environment based on gender, and there 
is engagement in a pattern and practice of gender 
discrimination and then retaliation against any woman who 
reports harassment claims.
    Specifically, one case went to the U.S. District Court in 
Colorado with a former female employee alleging a hostile work 
environment. She claims that this began with an assault and 
culminated in her dismissal based on gender, race, and 
reprisal.
    I would like to know what your response would be to this 
particular--I do not know that you can comment on the specific 
case if it is before a court, but what do you intend to do 
about the situation in Denver; and then, finally, measures that 
you think could be taken to prevent sexual harassment, which 
that seems to be a problem.
    Mr. Moy. Yes, Senator. First, I share your concerns with 
what has been going on at the Denver facility. As you 
mentioned, this is an ongoing case. It would be inappropriate 
for me to comment on the specifics of this case. But I do have 
some pretty strong opinions on the subject.
    Quite frankly, any type of sexual harassment is a repellent 
behavior to me. Growing up Asian American, I have been subject 
from time to time to racial discrimination, so I have a certain 
sensitivity to discrimination issues. And if confirmed as 
Director of the U.S. Mint, you have my commitment to do 
everything in my ability to make sure that discrimination does 
not happen at that facility, or any of our facilities.
    I do know that since that case, the Mint has started a 
program to put all the employees through a mandatory education 
on discrimination issues. I am fully supportive of that. I am 
also fully supportive of the zero tolerance policy. But, in 
addition, I would like you to know, sir, that if there are any 
accusations of discrimination, I am committed to fully 
investigating them, and depending on the results of that 
investigation, making sure appropriate action is taken.
    And, finally, in addition to those existing programs, I 
like to lead by example, and I take pride in the various 
management jobs that I have had in the past having no EEOC 
complaints, having no accusations of discrimination. And I hope 
to instill that esprit de corps among all the managers and 
employees.
    Senator Allard. I appreciate your response, and if I may be 
so bold as to make one suggestion, it is that you make sexual 
harassment awareness training regular, because you have some 
turnover on your employees. And I think it is a judgment call 
as to how often, depending on the degree of turnover that you 
have with your employees. But so many times in talking to 
people who have gone through an educational process where they 
become aware of what the law says and what is considered sexual 
harassment, they are not aware that some of the actions that 
may have been acceptable in past years are not acceptable in 
today's environs.
    Mr. Moy. Sure.
    Senator Allard. And so I think a regular schedule based on 
what your employee turnover might be I think would be helpful, 
or at least look to your new employees coming in, particularly 
if they start moving up where people that are in charge of 
somebody underneath them, I think that becomes important.
    Mr. Moy. Senator, that is a great suggestion, and often 
reminders are extremely helpful in institutionalizing that 
behavior.
    Senator Allard. The laws have changed in that regard, and I 
think a lot of employers are having to deal with that 
particular issue and rethink their policy.
    I would like to now go to the Export-Import Bank, Ms. 
Conlin and Mr. Grandmaison. How do you view the relationship 
between the Bank and the Inspector General? And how can the 
Inspector General help the Bank improve its performance? I 
would like to just hear your comments in that regard. You 
obviously were paying attention when I made my opening 
comments, and I would like to have you respond to those.
    Ms. Conlin. Senator, if confirmed as First Vice President, 
I welcome the opportunity to work with the Inspector General 
nominee of the President, if confirmed by the Senate. As you 
know, I now serve as Chair of the Audit Committee at the Bank, 
so I am well aware of the importance of making sure that we 
have a very strong program within the Bank to address and 
mitigate risk, address issues of compliance, as well as issues 
of fraud, waste, and abuse, which would be the responsibilities 
of the new Inspector General. So from my perspective, I would 
be very supportive and would certainly welcome the nomination 
and confirmation of an Inspector General.
    Senator Allard. Mr. Grandmaison.
    Mr. Grandmaison. Senator, I remember when I called upon 
you, I guess 4 years ago, you first mentioned your specific 
concerns regarding an Inspector General, and you sensed my 
perhaps reluctance in terms of agreeing with you, but you 
extracted a promise from me. I promised you that if I were to 
be confirmed that I would do everything possible to cooperate 
with an Inspector General, and obviously I will meet that 
promise.
    My colleague mentioned the Audit Committee. The three 
nonmanaging members of the Board comprise the Audit Committee, 
and I must say that in the past 3 years, major changes have 
taken place with the support of management in terms of the 
independence of the Audit Committee. What will have to take 
place is a hand-in-glove relationship between the Audit 
Committee and the Inspector General to make sure that our 
combined efforts complement the agency's goals.
    If I could just add one point on small business, my concern 
relative to the suggested cut in the appropriation is that the 
Congress this year has wisely extracted promises from the Bank 
relative to further prioritizing small business. And I believe 
Senator Sarbanes is correct that that is specifically the area 
that will be hit the hardest if indeed that $6 million cut 
becomes active.
    Senator Allard. I think you understand that the Inspector 
General becomes the eyes and ears of those of us in the 
Congress. So many of us view that as an important position to 
have in some of our key agencies.
    I have a question just for all of you. I am a strong 
advocate of identifying goals and objectives in a measurable 
fashion and then measuring outcomes, and I would like to have a 
response from all of you. During your tenure in these appointed 
positions, what key performance goals do you want to 
accomplish? And how will the Congress know whether you have 
accomplished them? It is sometimes referred to as the PART 
program on the administrative side. Over here it was the 
Government Results and Procedures Act, if I remember that 
correctly. So, I wonder if you would respond in that regard, 
all of you. We can start with Mr. Mishkin.
    Mr. Mishkin. Well, consistent with the dual mandate, there 
are two measurable issues that you can look at; one is, how are 
we doing on inflation; the other is, how are we doing on 
employment and economic growth. So those are fairly easy things 
to measure and things that I am sure everybody looks at.
    Senator Allard. Ms. Conlin.
    Ms. Conlin. Senator, very simply, I would look to see that 
we can increase financing for U.S. exporters that would result 
in increasing jobs in the United States. But very specifically, 
I want to work with Acting Chairman Lambright to see that we 
can increase the financing for small and medium-sized 
businesses. As you know, we have a mandate from Congress to 
achieve 20 percent of our financing for small businesses. I do 
not see that as a floor and I do not see that as a ceiling.
    I will echo Acting Chairman Lambright's words when he said 
we want to go beyond that 20 percent, if at all possible. So 
that is a very important performance measure. It is one that we 
are all dedicated to, and I would look forward to supporting 
it.
    Senator Allard. I would hope that you would go beyond that. 
I would hope that you would look at the small businesses once 
they got the money and see what happened to the money and, if 
they did, what the results were of getting that money. That is 
a key part, I think, of that measurement.
    Ms. Conlin. I will add, if I may, Senator, that nothing has 
given me greater satisfaction than to talk to the businesses 
that have received Ex-Im financing. I recently talked with one 
of our environmental companies, and they said to me, ``Director 
Conlin, without Ex-Im financing we would not have made this 
sale. Without Ex-Im financing we would not have been able to 
add the 10 to 15 jobs.''
    So, I know how important in real-life terms our financing 
is.
    Senator Allard. Mr. Grandmaison.
    Mr. Grandmaison. Senator, more broadly, I believe there are 
some issues of governance relative to the role of the Board 
that hopefully could be addressed in this next term. One as an 
example would be that, whereas the Bank has some truly 
exceptional professional career staff people, it should be the 
Board that decides what the reasonable assurance of repayment 
standard is when it comes to providing financing for 
transactions.
    Senator Allard. That is a measurement we need to have.
    Mr. Grandmaison. And without addressing that narrow issue, 
it is my belief there is a lot of business that we could and 
should be doing. The interpretation of reasonable is not 
absolute reassurance of repayment. The fact is we are supposed 
to take reasonable risk. And I would like to see us address 
that as a Board, and then provide that direction to the members 
of the professional staff.
    Senator Allard. Mr. Moy.
    Mr. Moy. I am fortunate that, if confirmed, the Mint is a 
manufacturing operation that has outstanding performance 
measures and metrics, and they have been operating wonderfully 
over the past 6 years.
    What I hope to do is bring some of my private equity 
experience where you are used to putting companies on a plan, 
getting them a certain amount of revenue, et cetera, sales and 
those types of things, applying that expertise on some of the 
other areas of the Mint that would benefit by having some more 
solid performance standards.
    Senator Allard. Mr. Bacino.
    Mr. Bacino. Senator, I was lucky in that, after leaving 
NCUA, I did a lot of strategic planning for institutions, which 
I think gives you an idea on making sure that you set the goals 
and find out if the institution meets them.
    I think the goals I would set for the Bank Board while I 
was there would be to make sure that the institutions are 
carrying out their lending and housing responsibilities in a 
safe and sound manner.
    In terms of the question Senator Sarbanes asked earlier, I 
want to make sure that we would increase transparency. And then 
I think you also have to take into account the stakeholders' 
opinions and positions, but also understanding that, using my 
umpire's analogy, at some point someone has to make a call.
    Senator Allard. Thank you, Mr. Chairman.
    Chairman Shelby. Senator Sarbanes, I understand you have 
several questions.
    Senator Sarbanes. Thank you. I have to depart, Mr. 
Chairman. I appreciate your allowing me to go out of turn. I 
got all the way across the table except to Mr. Mishkin. I want 
to put a couple of questions to him.
    In 1977, Congress clarified monetary policy objectives for 
the Federal Reserve, and the statutes says, ``The Board of 
Governors of the Federal Reserve System and the Federal Open 
Market Committee shall maintain long-run growth of the monetary 
and credit aggregates commensurate with the economy's long-run 
potential to increase production so as to promote effectively 
the goals of maximum employment, stable prices, and moderate 
long-term interest rates.''
    My first question is: How fast do you believe the long-run 
potential growth rate is now for the economy?
    Mr. Mishkin. Senator, unfortunately, this is a very tough 
question to answer. Economists actually--
    Senator Sarbanes. That is why I asked it of you.
    Mr. Mishkin. I know.
    [Laughter.]
    Economists actually have a very hard time knowing what that 
number is. Not only is it an issue very hard to measure in real 
time with the data, but also we do not even know theoretically 
or from a modeling perspective what the right number is. 
Indeed, one of the problems that has sometimes faced the 
Federal Reserve in the past is that they picked a number and it 
was the wrong number. In fact, it can go both ways; you could 
pick a number which is too low as a growth rate, and then you 
actually may have the tendency to restrain growth when you 
should not, but also you might have a situation where you go 
the other direction and then lead to a lot of inflation.
    So, I cannot take a stand on this. I think it is actually a 
very tough question. I wish I could give you a better answer, 
but--
    Senator Sarbanes. Well, let me take it a step further. 
Economists at Goldman Sachs--and we have the secretary now from 
Goldman Sachs--have forecast that real GDP growth will average 
2.7 percent between the second quarter of this year and the end 
of 2007. They believe that the slowdown in housing activity and 
the cash-out refinancing--ending cash-out refinancing with 
larger mortgages will be a sizable drag on the economy.
    Does that forecast sound right to you?
    Mr. Mishkin. Unfortunately, at this stage I am not a 
forecaster. I work on many different issues. Without the base 
of a staff that really knows what it is doing in terms of 
forecasting, which I will have when I get to the Federal 
Reserve, if I am confirmed, I cannot really tell whether that 
is a good forecast.
    Senator Sarbanes. All right. You defer on that one, too.
    Let me ask you, then, this question: Given this observation 
from Goldman Sachs and the fact that we learned last Friday 
that jobs have grown by only 108,000 a month for the last 3 
months, do you think that the Federal Reserve should be paying 
more attention to the risk of the economy growing slower than 
its long-run potential?
    Mr. Mishkin. Senator, that the Federal Reserve always has 
to worry about the economy potentially growing less than its 
long-run potential, as it also has to worry that the economy is 
overheating. So I think this is always part of what the Federal 
Reserve has to worry about, and is something that I would worry 
about as well.
    Senator Sarbanes. If you were going to move down the path 
of having specific quantifiable targets for inflation, would 
you also have specific quantifiable targets for maximum 
employment? And if not, why not?
    Mr. Mishkin. Senator, I actually would not be in favor of 
having a quantitative target for maximum employment or for 
maximum economic growth, for the reasons I mentioned earlier. I 
just do not think that we have enough knowledge to do that well 
enough so that----
    Senator Sarbanes. If you take that position but move ahead 
on specific quantifiable targets for inflation, do not you run 
the very real risk that you will inevitably put more weight on 
the inflation mandate rather than the employment mandate? That 
will become the focus of attention. Those numbers will be what 
attracts attention. That is what the entire focus will be on.
    Mr. Mishkin. I share your----
    Senator Sarbanes. Or close to the entire focus.
    Mr. Mishkin. I share your concern that you do not want to 
focus on inflation because you have some quantitative measure 
of what you would like to do in the long-run and then forget 
about employment and output fluctuations.
    Indeed, there certainly are cases where you have an economy 
that is much too slack and should do something about it. You 
should never forget about that, and so the sole focus on 
inflation would be a problem. But a well-designed system--I do 
not actually think the word ``target'' is a good word for what 
we should be doing in terms of the Federal Reserve--with more 
explicit goals should always worry about the fact that output 
fluctuations and employment fluctuations are important.
    Senator Sarbanes. Well, with the current uncertainty that 
seems to be prevailing and with the volatility that seems to 
follow the statements of leading figures at the Federal 
Reserve, it might just be better to leave these issues to the 
side, it seems to me. I just throw that out as hopefully a 
helpful piece of advice.
    Mr. Mishkin. I understand your point.
    Senator Sarbanes. What is your view about Basel II? I know 
the Chairman may follow up on that, but----
    Mr. Mishkin. Well, I think that the key issue--which is 
something that I have found in my research--is how important it 
is to have sufficient capital in the banking system in 
promoting economic health, not just for the banking system but 
for the economy as a whole. The fact that the banking system 
has been so well capitalized was actually a tremendous help 
during the recession that we just had recently, which was 
milder than it would have otherwise been.
    A key issue in terms of Basel II, of course, is that you 
want to----
    Senator Sarbanes. Did you follow that QIS-IV study?
    Mr. Mishkin. I have not actually spent much time on it, but 
I am certainly aware of the QIS-IV study. One of the concerns 
that that study has raised is that under the Basel II measures, 
as currently put in place, it would, in fact, mean a large 
reduction in required capital. That would be something that 
would concern me, that we----
    Senator Sarbanes. What concerns me is how did we get so far 
down the path in negotiating a framework internationally with 
respect to Basel II that when it was tested out with this 
study, it produced results, and everyone says, ``Oh, my God, 
those aren't the results''--you have just said it yourself at 
the table. Those are not the results we want.
    Chairman Shelby. Yet you are still going down that road.
    Senator Sarbanes. Yes. So you have questioned the substance 
of it, but I am raising--I mean, you were not there--but I am 
raising an earlier question, and that is, how did we ever get 
that far down the path? Because now I understand that the 
Europeans and the Japanese are saying to us, ``Well, you cannot 
pull out now. You brought us down this path, and we want to go 
through with it''--even though the study shows substantial 
problems.
    Mr. Mishkin. I have not been involved with the Basel II 
process and it is an extremely complicated.
    What I can assure you of is that I am very interested in 
the Basel II process and have always been very interested in 
issues of bank regulation and whether there is enough capital 
in the banking system. If I am confirmed, it is certainly 
something that I will want to study at the Federal Reserve. I 
want to make sure that the key idea in that, in fact, we do not 
want banks to be taking excessive risk and want to make sure 
that there is enough capital in the banking system so they have 
a cushion against bad shocks.
    Senator Sarbanes. I will close with this observation. Thank 
you, Mr. Chairman. I think there is a tendency at the Federal 
Reserve Board. They all see monetary policy as a major charge, 
and they are all involved in the monetary policy decisions. Of 
course, they are all on the Open Market Committee, supplemented 
by a certain number of the Federal Reserve regional banks.
    The other areas of responsibility that the Fed has, which 
are quite extensive--I mean, very significant regulatory 
responsibilities in the banking area, and this Basel II is an 
example of that. They have important consumer protection 
responsibilities. My perception is there is a tendency at the 
Bank to assign that to one or maybe two of the Governors, and 
instead of all of the Governors being involved in the 
decision--I understand why you do that given the workload and 
everything, but it seems to me this Basel II issue has risen to 
the level that it requires the close attention of all of the 
members of the Federal Reserve Board.
    Thank you very much.
    Chairman Shelby. I just want to pick up on what Senator 
Sarbanes said. We will hold a hearing again on Basel II. There 
is deep concern on the House Financial Services Committee, too, 
regarding this. And one of my concerns--and I have been on this 
Committee a long time. Not as long as Senator Sarbanes, but we 
have been through the bailout of the thrifts, and if you lower 
the capital so thin you have a downturn or something, you are 
not only a member of the Fed, but you also are a bank regulator 
there, too. We do not want that to happen. We have a pretty 
good banking system in this country. We have not had a lot of 
bank failures, thank God, lately. But you never know what the 
future is going to be. But capital is important, I believe. 
Isn't it, Doctor?
    Mr. Mishkin. I definitely think that capital is extremely 
important.
    Chairman Shelby. I hope you will--and you will go on the 
Fed--I believe, I am confident of that--soon. But I hope you 
will look at that very closely because it is very important.
    Mr. Mishkin. I definitely will, Senator.
    Chairman Shelby. Mr. Moy, I have a question. Going back to 
the coin and the dollar coin, and, you know, people pushed for 
that and said, My God, this is a panacea that the American 
people want a dollar coin and everything. You know, we are 
familiar with the British pound, which is worth a little more, 
and it is heavy. But we are used to it, and when we travel 
there, the British are used to it. They like it, the euro coin.
    What is it? Are the American people adverse to the dollar 
coin? What is the aversion there? What is it? Because that is 
something you will have to deal with.
    Mr. Moy. Yes, and I am beginning to look into that and 
finding out that there is probably a wide variety of reasons 
why the coin was not adopted. But sentiments change over time.
    Chairman Shelby. Sure.
    Mr. Moy. And I am very interested in finding out what 
current attitudes are, and one of the things that was part of 
the Presidential Coin Act of 2005 was to set up some of these 
dollar coin forums. The Mint has just had its first one, and I 
think that has gotten some pretty helpful information. And if 
confirmed, I will be attending these as they progress. With 
that additional information, I think we will have a better bead 
on what is going to make this coin more successful.
    But I am very confident that there needs to be more 
awareness by Americans on the benefits of using the dollar 
coin, which I think is a very appropriate role for the Mint to 
take.
    Chairman Shelby. Do people use the half-dollar like they 
used to? I see quarters everywhere. I do not see many half-
dollars.
    Mr. Moy. If I see a half-dollar, I collect it.
    [Laughter.]
    Chairman Shelby. Do you know?
    Mr. Moy. Yes, I do not know how widespread the use of the 
50-cent piece is.
    Chairman Shelby. You do not see it every day. You change 
something, it is quarters, very seldom a half-dollar. I just 
wondered.
    Mr. Moy. Very seldom. And I know that in the rare instances 
I have come across a Sacagawea dollar, instead of using it I 
keep it.
    Chairman Shelby. Sure.
    Mr. Moy. Yes, because it is kind of a collector's item. But 
I think with proper awareness and education, some of those 
sentiments can change.
    Chairman Shelby. Have any studies been done that you know 
of as to people's concern with the weight of the dollar?
    Mr. Moy. Yes.
    Chairman Shelby. In other words, for women, if your pockets 
are weighted down if you have too many of them, as opposed to 
something--go back again to the pound. It is not a light coin.
    Mr. Moy. No, not a light one, and the pound has been very 
useful. It always works when you stick it in the Underground 
machines to get your tickets. And so, yes, there are a lot of 
benefits. I am pretty bullish on coins, especially the dollar. 
And I am anxious to get to work, if confirmed, to make some 
impact there.
    Chairman Shelby. Sure. Well, we thank all of you for your 
appearance here today. We will try to move all of your 
nominations as expeditiously as possible, and we appreciate 
your willingness to serve. We know the President has a lot of 
confidence in all of you.
    Thank you. The hearing is adjourned.
    [Whereupon, at 12:02 p.m., the hearing was adjourned.]
    [Prepared statements, biographical skecthes of nominees, 
and response to written questions supplied for the record 
follow:]




               PREPARED STATEMENT OF LINDA MYSLIWY CONLIN
                     First Vice President-Designate
                Export-Import Bank of the United States
                             July 12, 2006

    Mr. Chairman, Senator Sarbanes, and distinguished Members of the 
Committee, I am pleased to come before you today as the President's 
nominee to become First Vice President of the Export-Import Bank of the 
United States. I appreciate the confidence the President has placed in 
me and I am grateful for another opportunity to contribute to an 
institution where I have had the privilege to serve these past 2 years.
    If confirmed, I look forward to continuing to work with the members 
and staff of this Committee to help sustain and increase the number of 
high-paying U.S. jobs by financing export transactions that otherwise 
would not go forward.
    I would like to recognize my husband, Joe, and my dear friend, 
Louise Wheeler, who are with me here today, and the fine team from the 
Ex-Im Bank. I would like to acknowledge as well the colleagues from our 
sister U.S. Government agencies and the industry association 
representatives here today. Their cooperation and support have meant so 
much during my tenure as a Member of the Board at Ex-Im Bank.
    On February 26, 2004, I came before the Committee as the 
President's nominee to be a Director at the Export-Import Bank. Since 
then, I have endeavored to honor the confidence that you placed in me 
and the commitment I made to you: Simply stated, to ensure that U.S. 
exporters have the financing tools they need to succeed in today's 
highly competitive global economy.
    As a Board Member, I have been given the responsibility of 
overseeing a key Congressional mandate: Increasing the Bank's financing 
of environmentally beneficial goods and services, including renewable 
energy. We continue to make a difference in this area. Ex-Im Bank has 
supported more than $1.1 billion of U.S. exports of environmentally 
beneficial goods and services over the past 4 years. In this regard, it 
has been personally gratifying for me to work with the Bank's 
Environmental Exports Team, a group of enthusiastic and dedicated 
professionals from various departments who have helped implement this 
program.
    As a result, Ex-Im financing is supporting high-quality jobs in the 
United States, while enabling international buyers to access U.S. 
technology to address important global environmental needs.
    As a former small business owner, I am also pleased to be working 
with the many small and medium-sized companies that make up the lion's 
share of the U.S. environmental sector. These entrepreneurs serve as 
the backbone of the American economy and their risk-taking fuels our 
free market system. I want to do everything I can to help them grow. A 
key to that growth is Ex-Im financing that can help shoulder the risk 
of opening up new markets overseas.
    I have personally witnessed the positive results of the Bank's 
expanded small business program over the past year. Assuming the Bank 
is provided sufficient administrative resources going forward, I firmly 
believe that the Bank's efforts focused on small businesses will 
continue to grow. I, therefore, welcome the opportunity to assist 
Acting Chairman Jim Lambright in helping these companies succeed in the 
global marketplace.
    It has also been my pleasure to work with Ex-Im's Sub-Saharan 
Africa Advisory Committee and business development team to increase 
financing in that region, building upon the hard work and success of my 
former colleague and Ex-Im Bank Board Member-Designate, Joe 
Grandmaison. I am pleased to say that Ex-Im Bank is implementing many 
of the Advisory Committee's recommendations, including strategies to 
expand cooperation with leading African banks and to build business in 
the important Gulf of Guinea region.
    If confirmed as First Vice President, I will use my experience both 
at Ex-Im Bank and in trade development at the U.S. Department of 
Commerce to leverage the resources of Federal agencies and industry 
organizations to accomplish our shared goals.
    I welcome the opportunity to work with Ex-Im Bank's Chairman and 
executive leadership to ensure that Ex-Im Bank's programs and policies 
remain competitive. I would look forward to engaging the energy and 
good ideas of the Bank's bipartisan Board, the talent and innovation of 
the dedicated professional staff, as well as the experience and 
customer knowledge from Ex-Im Bank's many important stakeholders in the 
exporting community.
    Mr. Chairman, Senator Sarbanes, and Members of the Committee, I 
respectfully ask for your favorable consideration of my nomination and 
will be pleased to respond to your questions.




                  PREPARED STATEMENT OF EDMUND C. MOY
                     Director-Designate, U.S. Mint
                    U.S. Department of the Treasury
                             July 12, 2006

    Chairman Shelby, Ranking Member Sarbanes and Members of the 
Committee on Banking, Housing, and Urban Affairs, thank you for this 
honor and opportunity to appear before you today to discuss my 
nomination to become the 38th Director of the U.S. Mint. Joining me 
today is my wife, Karen.
    To many Americans and me, the U.S. Mint represents the best of 
America. I respect its place in our history. I appreciate the beauty 
and artistry of its coins. I value its role in facilitating commerce, 
and I have learned about our collective culture through its designs on 
the Nation's coinage. I am pleased and honored by the trust President 
Bush has placed in me by asking me to serve in this important position, 
joining the ranks of those privileged to serve as Directors since 
President Washington asked David Rittenhouse to serve as the first 
Director of the Mint in 1792. If confirmed, I look forward to working 
closely with this Committee and Congress on all the policy and 
legislative issues that will determine the course for American coinage 
now and in the future.

    The U.S. Mint applies world-class business practices in making, 
selling, and protecting our Nation's coinage and assets.

    I am committed to this mission statement and the 2,000 men and 
women of the U.S. Mint who work to implement the practices that fulfill 
the requirements of Congress and the country to produce approximately 
15 billion coins annually. These coins are distributed to the Federal 
Reserve banks and branches for commerce and trade; The U.S. Mint also 
maintains the physical custody and security of the Nation's more than 
$100 billion in gold and silver assets. And finally, it produces 
numismatic coins, medals, gold, silver, and platinum bullion coins for 
the general public to collect.
    I value public service and, if confirmed, I will bring to bear all 
the experience I have earned through my career in management, 
marketing, and human resources both in the private sector and 
government. These are essential areas for the U.S. Mint which also 
shares characteristics of both a business and governmental 
organization, operated for the benefit of the public, with revenues 
approaching $2 billion.
    I have spent 10 years as a sales and marketing executive, 8 years 
working with venture capital firms and entrepreneurs, and 4 years 
overseeing $7 billion in annual Federal Government expenditures for 
managed health care programs with the Department of Health and Human 
Services. I am familiar with the demands of being an officer and 
director, having served in those capacities at several companies and 
nonprofits.
    Most recently, I have been honored to serve the President of the 
United States in a human resources capacity as a Member of the Office 
of Presidential Personnel. I have worked closely with many members of 
the cabinet and independent agencies to understand the results they 
desire, recruiting the Nation's best and brightest to attain those 
results, and then making recommendations to the President for those who 
may serve as appointees. I understand the responsibility appointees 
have to the President, and their accountability to Congress and the 
American people to be good stewards of the public's trust and 
resources. I am confident that my experience and qualifications will 
contribute to the continuing success of the U.S. Mint.
    If confirmed, I see some immediate responsibilities and challenges 
before me. Implementing the ``Presidential $1 Dollar Coin Act of 
2005,'' which this Committee approved, is a major operational focus for 
the U.S. Mint that is well under way. As directed by that legislation, 
the U.S. Mint has, and will continue, to work with those who can 
influence and encourage the greater use and acceptance of dollar coins 
in American commerce.
    The rising cost of metals used in coin production is prompting some 
needed analysis and consideration of the impact of that trend on all 
denominations of coins, especially the penny and nickel. Public 
preferences and priorities on this subject will loom large, and the 
U.S. Mint will need to provide technical and manufacturing 
considerations to Congress, the Administration, and others who are 
evaluating the future course of coinage.
    Reviewing, refining if necessary, and implementing the U.S. Mint's 
business, management, operational, and strategic plans, executing the 
President's Management Agenda, and providing effective leadership, are 
priorities for me should I be confirmed.
    Thank you for the honor and privilege to appear before you today.

    
    
    
       RESPONSE TO WRITTEN QUESTIONS OF SENATOR BUNNING 
                    FROM FREDERIC S. MISHKIN

Q.1. What is the appropriate inflation-targeting method for the 
Federal Reserve?

A.1. The form of inflation targeting that I advocated in the 
past as an academic is flexible rather than rigid or 
mechanical, forward-looking and forecast-oriented rather than 
backward-looking, and should be fully sensitive to the dual 
mandate of the Federal Reserve to promote maximum sustainable 
employment as well as price stability. A hallmark of the 
approach that I have advocated is clear communication of the 
objectives, strategies, and outlook of the Federal Reserve to 
better inform the public and markets and increase the 
accountability of the Federal Reserve. However, my past 
experience as a policymaker has taught me that moving from 
academia to the policymaking world often necessitates a 
modification of views to better deal with practical 
considerations. Thus, I expect that there will be some 
evolution of my thinking once I become a Member of the Board of 
Governors, if I am confirmed by the Senate. I am certain that 
these issues will be an important focus of discussion and 
debate among the members of the FOMC in coming months and 
years, and I look forward to participating in that process, 
should I be confirmed.

Q.2. Are there differences between your views on inflation-
targeting and those of Chairman Bernanke?

A.2. I have not spoken with Chairman Bernanke about his views 
on inflation-targeting since he became the Chairman. As my 
views, and I am sure his, have evolved since we wrote together 
on this topic, I would suspect that we would have our 
differences.
    However, because I do not know what these differences might 
be, I do not have a clear-cut answer to this question.

Q.3. What factors or indicators do you look at when assessing 
inflation? Which are most important?

A.3. In recent years, I have not focused intensely on inflation 
forecasting, but I can give you a few indications based on my 
observation of central banks around the world. In general, it 
seems to me the best approach is quite eclectic and relies on 
regular inspection of a broad range of indicators. Among these 
would be the prices of labor, commodities and materials, and 
other inputs into the production process; indicators of the 
pressures on productive resources such as the unemployment rate 
and the rate of capacity utilization; indicators of foreign 
activity and contributions to domestic inflation such as 
foreign rates of GDP growth, exchanges rates, and price indexes 
for imports; productivity growth; and a variety of measures of 
inflation expectations including both survey-based measures of 
short- and long-term expectations as well as measures of 
inflation compensation implicit in the relative prices of 
nominal and inflation-protected Treasury securities. The most 
important indicator of the success of a central bank is the 
performance of inflation itself; for that variable, a central 
bank must, over the long-term, be held accountable.

Q.4. From your experience, do you believe that the statements 
and minutes released to the public accurately reflect the 
debates that take place within the Federal Reserve when 
considering monetary policy decisions?

A.4. I am able to give only a qualified answer to this 
question. I have not attended FOMC meetings for nearly a decade 
(that is, in the period since I resigned my position as 
Research Director at the Federal Reserve Bank of New York), and 
consequently do not have direct knowledge of the proceedings of 
such meetings over that interval. Moreover, I have not reviewed 
the minutes of the FOMC meetings for the period during the mid-
1990's in which I attended FOMC meetings. Finally, the Federal 
Reserve followed significantly different practices regarding 
its post-meeting announcements in the period during which I 
attended the meetings than it does at present. That said, my 
impression based on my experience during that interval and more 
generally is that the statements and minutes accurately reflect 
the monetary policy discussion at FOMC meetings.

Q.5. The Fed has a bad track record of going too far on 
interest rates, most recently in 2000. What are the 
implications if the Fed gets it wrong this time? What will 
happen if the Fed overshoots or undershoots, and do you think 
either are a possibility in the current cycle of tightening?

A.5. Monetary policy influences the economy and inflation with 
long lags, and consequently monetary policy must be made on the 
basis of forecasts. Such forecasts are always subject to 
considerable error. Consequently, policy ``undershooting'' or 
``overshooting'' is always a possibility. For that reason, the 
Federal Reserve needs to monitor carefully incoming information 
that affects the outlook for the economy and inflation. When 
incoming information suggests a different outlook than had been 
anticipated, the Federal Reserve needs to adjust the stance of 
monetary policy accordingly in order to achieve a reasonable 
balance of risks to the attainment of its statutory objectives 
of maximum employment and price stability. If confirmed by the 
Senate, I will do my utmost to help in the Federal Reserve's 
deliberations and make it less likely that the Fed will 
overshoot or undershoot in its setting of interest rates.
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