[Senate Hearing 111-173]
[From the U.S. Government Publishing Office]
S. Hrg. 111-173
NOMINATIONS OF: RONALD SIMS,
FRED P. HOCHBERG, HELEN R. KANOVSKY,
DAVID H. STEVENS, PETER KOVAR,
JOHN D. TRASVINA, AND DAVID S. COHEN
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
ON
nominations of:
Ronald Sims, of Washington, to be Deputy Secretary,
Department of Housing and Urban Development
__________
Fred P. Hochberg, of New York, to be President and Chairman,
Export-Import Bank
__________
Helen R. Kanovsky, of Maryland, to be General Counsel,
Department of Housing and Urban Development
__________
David H. Stevens, of Virginia, to be Assistant Secretary for
Housing-Federal Housing Commissioner,
Department of Housing and Urban Development
__________
Peter Kovar, of Maryland, to be Assistant Secretary for Congressional
and Intergovernmental Affairs,
Department of Housing and Urban Development
__________
John D. Trasvina, of California, to be Assistant Secretary for
Fair Housing and Equal Opportunity,
Department of Housing and Urban Development
__________
David S. Cohen, of Maryland, to be Assistant Secretary for
Terrorist Financing,
Department of the Treasury
__________
APRIL 23, 2009
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
Available at: http: //www.access.gpo.gov /congress /senate/
senate05sh.html
U.S. GOVERNMENT PRINTING OFFICE
53-677 PDF WASHINGTON : 2009
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
CHRISTOPHER J. DODD, Connecticut, Chairman
TIM JOHNSON, South Dakota RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York JIM BUNNING, Kentucky
EVAN BAYH, Indiana MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey MEL MARTINEZ, Florida
DANIEL K. AKAKA, Hawaii BOB CORKER, Tennessee
SHERROD BROWN, Ohio JIM DeMINT, South Carolina
JON TESTER, Montana DAVID VITTER, Louisiana
HERB KOHL, Wisconsin MIKE JOHANNS, Nebraska
MARK R. WARNER, Virginia KAY BAILEY HUTCHISON, Texas
JEFF MERKLEY, Oregon
MICHAEL F. BENNET, Colorado
Colin McGinnis, Acting Staff Director
William D. Duhnke, Republican Staff Director
Amy Friend, Chief Counsel
Joe Hepp, Professional Staff Member
Neal Orringer, Professional Staff Member
Mark F. Oesterle, Republican Chief Counsel
Dawn Ratliff, Chief Clerk
Devin Hartley, Hearing Clerk
Shelvin Simmons, IT Director
Jim Crowell, Editor
(ii)
C O N T E N T S
----------
THURSDAY, APRIL 23, 2009
Page
Opening statement of Chairman Dodd............................... 1
Opening statements, comments, or prepared statements of:
Senator Shelby............................................... 13
Senator Schumer
Introduction of Nominee Fred P. Hochberg................. 9
Senator Johanns.............................................. 14
Senator Merkley.............................................. 14
Senator Reed................................................. 19
Senator Warner
Introduction of Nominee David H. Stevens................. 12
WITNESSES
Patty Murray, a U.S. Senator from the State of Washington........ 5
Maria Cantwell, a U.S. Senator from the State of Washington...... 7
Barney Frank, a U.S. Representative from the State of
Massachusetts.................................................. 8
Adam B. Schiff, a U.S. Representative from the State of
California..................................................... 11
NOMINEES
Ronald Sims, of Washington, to be Deputy Secretary, Department of
Housing and Urban Development.................................. 16
Prepared statement........................................... 28
Biographical sketch of nominee............................... 29
Response to written questions of:
Senator Dodd............................................. 111
Senator Shelby........................................... 113
Senator Menendez......................................... 115
Senator Bennett.......................................... 117
Senator Crapo............................................ 118
Senator Vitter........................................... 119
Fred P. Hochberg, of New York, to be President and Chairman,
Export-Import Bank............................................. 18
Prepared statement........................................... 44
Biographical sketch of nominee............................... 45
Response to written questions of:
Senator Dodd............................................. 121
Senator Shelby........................................... 122
Senator Bunning.......................................... 123
Helen R. Kanovsky, of Maryland, to be General Counsel, Department
of Housing and Urban Development............................... 20
Prepared statement........................................... 60
Biographical sketch of nominee............................... 62
Response to written questions of:
Senator Shelby........................................... 124
Senator Crapo............................................ 125
(iii)
David H. Stevens, of Virginia, to be Assistant Secretary for
Housing-Federal Housing Commissioner, Department of Housing and
Urban Development.............................................. 22
Prepared statement........................................... 69
Biographical sketch of nominee............................... 71
Response to written questions of:
Senator Dodd............................................. 126
Senator Shelby........................................... 128
Senator Bayh............................................. 129
Senator Crapo............................................ 130
Senator Corker........................................... 132
Senator Vitter........................................... 132
Peter Kovar, of Maryland, to be Assistant Secretary for
Congressional and Intergovernmental Affairs, Department of
Housing and Urban
Development.................................................... 23
Prepared statement........................................... 80
Biographical sketch of nominee............................... 82
Response to written questions of:
Senator Dodd............................................. 134
Senator Shelby........................................... 135
John D. Trasvina, of California, to be Assistant Secretary for
Fair Housing and Equal Opportunity, Department of Housing and
Urban Development.............................................. 25
Prepared statement........................................... 92
Biographical sketch of nominee............................... 94
Response to written questions of:
Senator Dodd............................................. 135
Senator Menendez......................................... 138
Senator Vitter........................................... 144
David S. Cohen, of Maryland, to be Assistant Secretary for
Terrorist
Financing, Department of the Treasury.......................... 26
Prepared statement........................................... 103
Biographical sketch of nominee............................... 104
Response to written questions of:
Senator Dodd............................................. 145
Senator Shelby........................................... 147
Senator Menendez......................................... 150
Senator Bunning.......................................... 151
Senator Vitter........................................... 152
Additional Material Supplied for the Record
Statement of Edward M. Kennedy, a U.S. Senator from the State of
Massachusetts.................................................. 155
Statement of John F. Kerry, a U.S. Senator from the State of
Massachusetts.................................................. 155
Letter submitted by the King County Housing Authority............ 156
Letter submitted by the National Association of Housing and
Redevelopment Officials, Pacific Northwest Regional Council.... 158
Letter submitted by the Seattle Housing Authority................ 159
Letter submitted by Transportation for America................... 160
Letter submitted by the National Association of Counties......... 161
Letter submitted by the Coalition for Employment Through Exports,
Inc............................................................ 162
Letter submitted by the Real Estate Services Providers Council,
Inc............................................................ 163
Letter submitted by the Manufactured Housing Institute........... 164
Letter submitted by the Asian Real Estate Association of America. 165
Letter submitted by the National Association of Realtors......... 166
Letter submitted by Self-Help and the Center for Responsible
Lending........................................................ 166
Letter submitted by Bernard K. Melekian, Chief of Police,
Pasadena Police Department..................................... 167
Letter submitted by the National Fair Housing Alliance........... 168
Letter submitted by SER-Jobs for Progress National, Inc.......... 169
Letter submitted by Gavin Newsom, Mayor, City and County of
San Francisco.................................................. 170
Letter submitted by the National Association of Judiciary
Interpreters and Translators................................... 171
Letter submitted by the Hispanic National Bar Association........ 172
Letter submitted by MANA, A National Latina Organization......... 174
NOMINATIONS OF:
RONALD SIMS, OF WASHINGTON,
TO BE DEPUTY SECRETARY,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT;
FRED P. HOCHBERG, OF NEW YORK,
TO BE PRESIDENT AND CHAIRMAN,
EXPORT-IMPORT BANK;
HELEN R. KANOVSKY, OF MARYLAND,
TO BE GENERAL COUNSEL,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT;
DAVID H. STEVENS, OF VIRGINIA,
TO BE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT;
PETER KOVAR, OF MARYLAND,
TO BE ASSISTANT SECRETARY FOR CONGRESSIONAL AND INTERGOVERNMENTAL
AFFAIRS,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT;
JOHN D. TRASVINA, OF CALIFORNIA,
TO BE ASSISTANT SECRETARY FOR FAIR HOUSING AND EQUAL OPPORTUNITY,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT;
DAVID S. COHEN, OF MARYLAND,
TO BE ASSISTANT SECRETARY FOR TERRORIST FINANCING,
DEPARTMENT OF THE TREASURY
----------
THURSDAY, APRIL 23, 2009
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10:43 a.m., in room SD-538, Dirksen
Senate Office Building, Senator Christopher J. Dodd (Chairman
of the Committee) presiding.
OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD
Chairman Dodd. The Committee will come to order, and let me
apologize to our witnesses and colleagues for the slight delay.
We have a bill on the floor of the Senate that is out of the
Judiciary Committee, but given the number of amendments that
have been offered, you would almost think it was a Banking
Committee bill. And so Senator Leahy was asking for me to stay
on the floor to consider some of the amendments being offered,
and we are going to try and work something out so that we can
maybe have a Member here complete the nomination process if I
am unable to complete it in order to get to the floor to
participate in the debates on the Judiciary Committee bill. So
I apologize. We are trying to work this all out, and we added
some confusion this morning, and I now how busy people are in
terms of schedules.
What I am going to do is make some brief opening comments,
and then I am going to recognize, with the permission of my
colleagues on the Committee, our members who have joined us
here, including the distinguished Chairman of the House
Financial Services Committee, Congressman Frank, to make some
introduction of witnesses. And then I will go to my colleagues
on the Committee for any comments they may have and then, of
course, to our witnesses.
We have quite a panel here this morning, and we are
grateful to all of you for your willingness to serve. I want to
congratulate you on being nominated, and thank you, as I said,
for your willingness to be a part of the change that we all
seek in our country. So I would like to welcome all of you here
this morning.
As you know, this Committee has been working closely with
the administration to implement the various programs that will
provide critically important issues to our Nation's economic
recovery. An integral part of this process is the selection of
strong and very talented leaders to oversee and manage the
operations of these programs and departments.
The American people are looking for leaders who will help
bring us out of our crisis that we are in economically by
fixing our housing problem, promoting economic growth, and
stabilizing our financial system. It will be those of you
sitting before this Committee this morning who, if confirmed,
will be charged with carrying out these very important
responsibilities.
Today we consider seven nominations: Mr. Ronald Sims, of
Washington, the State of Washington, to be the Deputy Secretary
of the U.S. Department of Housing and Urban Development, or
HUD; Mr. Fred Hochberg, of New York, to be Chairman and
President of the U.S. Export-Import Bank; Ms. Helen Kanovsky,
of Maryland, to be the General Counsel of HUD; Mr. David
Stevens, of Virginia, to be the Assistant Secretary for Housing
and Federal Housing Commissioner; Mr. Peter Kovar, also of
Maryland, to be Assistant Secretary for Congressional and
Intergovernmental Affairs of HUD; Mr. John Trasvina, of
California, to be Assistant Secretary for Fair Housing and
Equal Opportunity for HUD; and Mr. David Cohen, of Maryland, to
be Assistant Secretary for Terrorist Financing at the U.S.
Department of the Treasury.
As my colleagues know, we will have more nomination
hearings to go, so I will be consulting with my colleagues on
this Committee in an effort to develop a schedule for another
hearing in the very near future.
It has always been this Committee's view, particularly
given the urgency of our economic situation, that we ought to
help get the President's Cabinet in place as quickly as
possible. We have five HUD nominees before us today, and if the
housing crisis is at the root of the economic crisis, as I
believe it is, then I believe you in many ways will be the
authors at least of a good portion of the economic recovery we
all seek.
For the past 3 or 4 years, the country has been facing a
very serious housing problem that has its origins in the
scourge of predatory lending resulting in record-high
foreclosure rates. Across our Nation, between 9,000 and 10,000
homeowners face foreclosure every single day. I am pleased to
note that the new administration has taken a much more
aggressive approach to dealing with the housing problem than
did its predecessor, working to halt the spread of foreclosures
and to provide opportunities for homeowners to refinance their
mortgages and receive housing counseling.
The importance of succeeding in these programs cannot be
stressed enough. Like never before, we need an engaged,
aggressive, and well-run Department of Housing and Urban
Development with leadership that is confident in its mission
and unafraid to act. As President Obama has himself said, HUD's
role--and I quote him--``has never been more important.'' And
while HUD has been mismanaged and riddled with scandal in
recent years, there is an important time for new, bold
leadership and a clear direction, and I believe that Secretary
Donovan is already providing just that kind of leadership.
So I would like to welcome Mr. Sims, Ron Sims, whom I have
known for a long time, who is a former local official in the
State of Washington, who is the nominee to be Deputy Secretary.
He will be working closely with Secretary Donovan particularly
on the day-to-day management of the agency. Currently the
County Executive in King County, Washington, he comes with
years of experience in public service and in working with urban
policy and city planning. He also brings with him a passion for
breaking down the barriers between housing, transportation, and
environmental policies, and, more importantly, the results to
show for it. I share his enthusiasm and I look forward to
discussing how we can spur the kind of transit-oriented
development that gets our economy moving again, reduces
congestion, cuts transportation costs for working families, and
creates the kind of safe and affordable shelter needed in our
country.
We also welcome the nominee for Chairman and President of
the U.S. Export-Import Bank, Mr. Hochberg, whom I have known as
well for many, many years. The Export-Import Bank is
celebrating its 75th anniversary as the lead government agency
financing U.S. exports. It was founded in 1934--in fact, at a
time not unlike the one we are in today--and designed very
specifically to create jobs here at home. And I have some very
important questions for you, Mr. Hochberg, but the agency, in
my view, has been failing in that responsibility at this time.
It is not creating the kind of jobs. You have lending
authority, you have insurance authority and guaranty authority,
and neither of those areas are being fully complemented, in my
view, at a time like this. So I have some very important
issues, and you come at an important moment. Since this time,
this agency has supported over $400 billion in U.S. exports and
hundreds of thousands of good American jobs. In these tough
economic times, we need a strong Export-Import Bank to increase
our ability to make products that foreigners want, buy, and to
develop and help our exporters secure the financing they need
to sell those products. And with Mr. Hochberg's unique blend of
leadership skills honed over 30 years in the private sector,
government, philanthropy, and academia, I think the Export-
Import Bank will have a leader who understands the impact that
the financial crisis is having on financing of U.S. exports. So
I know welcome our additional HUD nominees as well.
Ms. Kanovsky will also have a critically important role in
strengthening the agency's operations and programs as the
nominee for General Counsel. Currently, she is the chief
operating officer of the AFL-CIO Housing Investment Trust,
where she has worked for the past 13 years. I have known her as
well in her capacity in that job, and I congratulate you on
being before us today.
Mr. Stevens, who will serve as the Assistant Secretary of
HUD for Housing and Federal Housing Commissioner, is President
and COO of the Long & Foster Companies and comes with a deep
understanding of the mortgage industry and is highly regarded
and highly supported, I might say, in my own State of
Connecticut. People involved in the housing area, in fact,
specifically brought it up to Secretary Donovan when he was in
my State 2 weeks ago for a day visiting people, and out of the
audience people stood up and highly commended him for choosing
you to do this job--not something you normally hear about
nominees in the process, but there is a lot of excitement about
you taking this job. I want you to know that as well.
Mr. Kovar, who will serve as the Assistant Secretary of HUD
for Congressional Affairs, has executive experience on Capitol
Hill which includes as chief of staff to Congressman Barney
Frank, the Chairman of the Financial Services Committee. So you
bring a lot of experience and knowledge, and we welcome you as
well.
Mr. Trasvina, who will serve as Assistant Secretary of HUD
overseeing fair housing and equal opportunity programs, has
deep experience working on Capitol Hill and in immigration and
civil rights policy. As we celebrate National Fair Housing
Month, I am very pleased to welcome you here before the
Committee.
And, last, I would like to welcome the nominee for the
Assistant Secretary of the Treasury for Terrorist Financing,
Mr. Cohen. If confirmed, your work would impact our Nation's
major security challenges, including nuclear proliferation,
international terrorism, drugs and arms trafficking, and piracy
on the high seas--a matter that we are all more than familiar
with as a result of events of the last few weeks.
Since its creation just 5 years ago, the Office of
Terrorism and Financial Intelligence has played an invaluable
role in protecting our national security. In fact, the 9/11
Commission gave the U.S. Government its only A-minus in the
category of combating terrorism financing. Yet much work still
remains to be done using the tools this Committee has afforded
Treasury in recent years, including legislation that I and
Members of this Committee authored in 2007 to increase
penalties against sanctions violators and the USA PATRIOT Act
of 2001. TFI will continue to play an important part in denying
funds that promote Iran's nuclear program, tracking activities
of global terrorism and halting money laundering, and
international domestic organized crime. Mr. Cohen will provide
invaluable assistance to Under Secretary Levey and Secretary
Geithner in managing this critical operation, bringing with him
years of experience at both the Treasury and working with the
law firm of Wilmer, Hale.
Again, I welcome all of our nominees. It is an awful lot of
you. Frankly, I would prefer to be dealing with you
individually. That would be the way to do this. But, obviously,
given the sense of urgency in getting people in place, it is
something I think all of us can appreciate and support.
I mentioned earlier supporting this President's nominees. I
have been a member of the U.S. Senate for some 28 years. I can
count on one hand the number of nominees that I have opposed
over that time of Republican and Democratic administrations. I
do not believe it is a time for people to inject the
opposition, their ideological framework. Presidents' elections
have meaning, and if a President gets elected, he or she
deserves to have the teams in place to help them execute their
policies and their promises to the American people. I do think
we have an obligation to examine nominees on other matters
affecting their capacity to serve. But my general view has been
to support nominees when that occurs, and, again, I would
prefer to have done this in a more deliberate fashion with each
of you in front of us rather than having a panel of this size.
But, again, given the exigencies of getting people in place,
given the economic circumstances we are facing, it is what it
is, and so I am conducting the hearing in this manner.
What I would like to do--and, again, colleagues are here.
Mr. Sims, you have both of our colleagues from the State of
Washington here, and let me turn to them very quickly, and then
the Chairman of the Financial Services Committee to make his
introductions. And so I thank both of my colleagues, Senator
Cantwell and Senator Murray, for being here.
Yes, and Congressman Schiff. How are you, by the way?
Welcome.
Representative Schiff. Thank you.
Chairman Dodd. Seeing all these Congressmen sitting at this
Committee makes us nervous in the Senate, I want you to know
that.
[Laughter.]
Chairman Dodd. I know the House members would like to have
something akin to a term of office that did not coincide with
Senate elections. I suspect that would pass overwhelmingly in
the House and have a very difficult time in the Senate, I want
you to know.
Anyway, welcome. We are delighted to have you here.
Representative Frank. Well, everything has a very difficult
time in the Senate.
Chairman Dodd. Everything has a very--I know. Having been a
member of the other body, I can appreciate that point of view
as well.
To my colleague, Senator Murray, or whatever order you
would like.
STATEMENT OF PATTY MURRAY
A U.S. SENATOR FROM THE STATE OF WASHINGTON
Senator Murray. Thank you very much, Mr. Chairman, and to
all the Members of the Committee, and I am pleased to be here
today with Senator Cantwell to introduce Ron Sims, who is our
King County Executive, to this very important hearing. I know
his wife, Cayan, could not be here, but he is accompanied by
some family members--a brother-in-law and niece, I believe--and
I know his family is very excited about this opportunity for
him.
I want to personally congratulate Ron on the honor of being
President Obama's nominee to serve as the next Deputy Secretary
of the Department of Housing and Urban Development. Ron and his
family are no strangers to public service, and I want to thank
them for once again answering the call at this pivotal time in
our Nation's history.
As Chairman of the Transportation, Housing, and Urban
Development Appropriations Subcommittee, I know firsthand HUD's
important mission--to support community development, increase
access to affordable housing, and help house families in need.
From those struggling families to our Nation's veterans, HUD's
services often mean the difference between the despair on the
streets and the safety and security of a home.
But today HUD faces challenges as daunting as at any other
time in the agency's nearly 45-year history as a Cabinet-level
agency. Millions of Americans have lost their homes to
foreclosure, and as unemployment continues to rise, millions
more are at risk. I have been reassured by the dedication and
leadership shown by Secretary Donovan over the past 3 months,
but given the magnitude of this housing crisis, Secretary
Donovan cannot do it alone. And that is why I am so pleased
that the President has tapped Ron Sims to provide his
leadership and experience as Deputy Secretary at HUD.
Throughout his 12-year career as King County Executive, Ron
Sims has been a strong leader for our State and the people of
King County. He has always faced challenges head on and has
always been open to consider new, innovative policies to
improve the lives of the families in King County. He has been a
true pioneer in housing policy, but I want to focus on three
examples that illustrate his readiness to immediately step in
and step up to tackle HUD's challenges.
First of all, Ron knows that making progress requires
partnerships. As King County Executive, Ron has worked to build
strong, diverse community partnerships that address many of the
housing needs in King County. These partnerships have helped
leverage the resources of the county to create thousands of new
affordable housing units and preserve and improve existing
housing stock. Ron has helped to establish and currently serves
as co-chair of the Committee to End Homelessness. That is a
regional partnership that has helped add more than 3,000
housing units for the homeless in King County.
This experience is going to be critical at HUD, an agency
that depends on partnerships with everyone, from the largest
Cabinet agencies to the smallest community boards, to extend
housing opportunities in communities across the Nation.
Another central part of HUD's mission is the promise to
provide housing to all those who need it, free from
discrimination and prejudice. And as the people of King County
well know, Ron Sims is an uncompromising champion of equal
rights. In fact, he recently led an effort to establish the
King County Equity and Social Justice Initiative that brings
together community leaders to root out discrimination and
improve access to education, health care, and affordable
housing.
And, finally, HUD will most certainly benefit from Ron's
steadfast commitment to smart community development. When it
comes to environmental protection, expanding transit, and
managing growth, Ron has always been ahead of the curve. He has
worked hard on initiatives to reduce the carbon footprint of
King County, expand transit service, and has been a tireless
advocate for smart growth management policies that have helped
establish synergies across county programs and services.
Mr. Chairman, Members of this Committee, this is a great
time of challenges for HUD, but it is also a time of great
opportunity. Today we have the chance to refocus the agency's
efforts on meeting the needs of low-income families and to
renew its commitment to be a lifeline for those in dire
straits. Innovative ideas, strong leadership, and dedication to
equality are what HUD needs to move in a new direction, and
those are all skills that Ron Sims brings to the table.
So I appreciate this opportunity to participate in this
hearing, and I look forward to working with this Committee as
it moves forward on this nomination.
Chairman Dodd. Senator, thank you very much.
Maria.
STATEMENT OF MARIA CANTWELL
A U.S. SENATOR FROM THE STATE OF WASHINGTON
Senator Cantwell. Thank you, Mr. Chairman, and thank you
and Members of the Committee for holding this important
hearing. I am pleased to be here with my colleague Senator
Murray to help introduce King County Executive Ron Sims. I urge
my colleagues to swiftly confirm him as the next Deputy
Secretary of Housing and Urban Development.
Ron Sims is just the person we need to work on the full
spectrum of housing issues, from promoting homeownership to
making sure we have adequate supply of affordable rental
housing, to addressing the special needs of homeless neighbors.
I have known Ron Sims for more than 20 years, and I know he
really knows affordable housing from a hands-on perspective.
And, more importantly, he knows how to manage effectively when
resources are tight.
In his 13 years as King County Executive, Ron has worked to
reform government, to move past the status quo, to provide for
our communities, and this is just what HUD needs now. As HUD's
point person on housing assistance and affordable housing
programs, he will be responsible for making sure that families
in most need are well served.
In 2003, I worked personally with Ron to prevent the
closure of Branch Villa Health Care Center. The Branch Villa
Health Care Center, now known as the Leon Sullivan Health Care
Center, is a nursing home that provides services to King County
seniors, most of whom are African American. When the property
faced foreclosure by HUD, we did all that we could at the
Federal and State level to work with the resources to make sure
that this transfer of ownership to a nonprofit group was done
so that the center's doors could remain open.
This success was more than just protecting a facility. It
was about protecting our community's seniors and striving to
provide the best for our communities. This is just the example
of how Ron Sims operates. He cares about the community and
works collaboratively to solve problems. He understands HUD,
and he understands housing issues.
Ron will also bring his smart business-oriented approach to
the Department. He will ensure that the limited resources are
used efficiently to meet the agency's critical mission. As King
County Executive, he was instrumental in maintaining a balanced
budget and earning the country's highest available credit
rating. In 2006, Ron was recognized as the Public Official of
the Year by Government Magazine, and in 2008, they named him
one of America's Most Innovative Leaders.
Now he brings all that energy to HUD at a time when we need
it most, so I am glad that President Obama has recognized Ron
Sims' innovative spirit. And I know it is that kind of
visionary leadership that we need alongside Secretary Donovan
at this critical agency at this critical point. So I encourage
my colleagues to support quickly his nomination.
Thank you.
Chairman Dodd. Senator Cantwell, thank you very much. I
thank both of our Senators from Washington.
Let me turn, if I can, to our visiting colleagues here from
the other body. The Chairman of the Financial Services
Committee, Barney, we are delighted to have you here this
morning, and Congressman Schiff as well. I want to welcome you
as well.
Is that on, Barney, your microphone there?
Representative Frank. No. OK.
STATEMENT OF BARNEY FRANK
A U.S. REPRESENTATIVE FROM THE STATE OF MASSACHUSETTS
Representative Frank. I really have appreciated the chance
to work with you, Senator, and I think we have done a lot, and
we will be able to do a lot more in what has been a very good
relationship between our two committees.
I will say I had a very sad moment yesterday. As I was
leaving my office, I walked past the desk of Peter Kovar, who
has been my chief of staff, and it was blank. And I learned
that I was going to have to--I realized I was going to have to
learn to live without him.
He is enormously talented. Actually, he comes to this job
with both substantive knowledge, having worked as my chief of
staff for over 20 years, having had some experience in the
Senate. He is fully familiar with the substantive matter that
comes before this Committee, because members will know your
chief of staff inevitably becomes fully involved in the work of
the Committee. And particularly these past few years when I
became the Ranking Member in 2003, my sole Committee assignment
has been this Committee. So he knows a great deal about it. We
do little on the side.
I will say, Mr. Chairman, that if a question involving
fishing should come up at HUD, he is an expert on that, because
I represent New Bedford.
[Laughter.]
Representative Frank. But in terms of both the Treasury and
HUD areas, he is extremely well equipped substantively, and in
terms of--I know one of the things you are going to have to do
obviously in the job of being Assistant Secretary for
Congressional Affairs is to deal with members of Congress with
all of their quirks and eccentricities and personal
difficulties. And I should think the fact that he has been my
chief of staff for 28 years would satisfy any doubts on that
score, that he would be able to deal with----
[Laughter.]
Chairman Dodd. And that is just the House side you are
talking about.
Representative Frank. Yes, that is true.
So I am delighted to have the chance, and I really
appreciate the President's appointing him. I am delighted also
to see these other members.
Let me say that I have also known and worked with Mr.
Hochberg in a variety of capacities, and I agree with you, we
could get more out of the Export-Import Bank than we have had,
and I look forward to working with you to see that that is
done.
But I comment the President on a great group of nominees,
and obviously, we look forward to working with them as they
take their place. And as I said, in Peter Kovar, if you told
someone that he had to train for 20 years to be the Assistant
Secretary of HUD for Congressional Relations, he would have
done very much what Peter Kovar has done.
Chairman Dodd. Thank you very much. And, by the way, we
have a statement from Senator Kennedy regarding, Peter, your
nomination as well, and I know Senator Kerry, in fact, is going
to try and get over as well and be heard on your nomination,
and I know Ms. Kanovsky's as well. We will put those in the
record as well.
Thank you very, very much.
Senator Schumer, we will jump to you because you have a
hearing to go to. Do you mind waiting a few minutes,
Congressman Schiff?
Representative Schiff. No.
Chairman Dodd. Thank you.
INTRODUCTION OF NOMINEE FRED P. HOCHBERG
BY SENATOR CHARLES E. SCHUMER
Senator Schumer. Thank you. And first I want to say, before
I introduce Fred Hochberg, who I am proud to introduce to my
colleagues, Peter, Barney said it would be OK if we voted you
down.
[Laughter.]
Representative Frank. So much for telling a Senator
anything in confidence.
[Laughter.]
Senator Schumer. I told Barney that he usually gets his way
with this Committee, but not this time.
Anyway, it is my honor to introduce Fred Hochberg, a good
friend of mine and of many of the Committee. Fred is an
accomplished businessman and public servant, and I am just so
delighted to support his nomination to head the Export-Import
Bank. I have known Freddie for many, many years, and he is
capable, dedicated, has a great business career, but always
wants to be in public service. He really cares about making
this country a better place.
He is a great fit for the position because it is about
creating and supporting American jobs. That is what the Export-
Import Bank is all about. And he knows how to do it. He spent
two decades of his career with the Lillian Vernon Corporation.
This was founded by his mother. She was an immigrant who fled
Nazi Germany. She founded it with $2,000 wedding gift money.
Under Fred's leadership, the company was transformed from a
small mail-order company to a wildly successful, publicly
traded direct marketing corporation that employs more than
1,000 people.
From Lillian Vernon, Fred moved to found and serve as
President of Heyday. That is an investment firm that manages
real estate and venture capital. And then he came to Washington
in 1994. He joined the Clinton administration as Deputy
Administrator, and then Acting, of the SBA. As we all know,
small businesses are the engines of growth here in our economy,
and, again, his business experience, his small business
governmental experience, as well as being dean of the Milano
School at the New School gives him an academic background as
well.
He has always been involved in the community. He and his
long-time partner, my friend Tom Healy, who I do not see here
today--he is not here, Fred?
Mr. Hochberg. He is in Africa--teaching.
Senator Schumer. He is in Africa, OK, teaching. They are
active in numerous philanthropic and civil rights groups, and I
want to thank them for what they have done to improve the lives
of so many New Yorkers.
So it is clear to me that Fred possesses the
entrepreneurial spirit, the sense of civic duty, and the
chutzpah necessary----
[Laughter.]
Senator Schumer. You are not supposed to laugh. That is
part of the English language these days.
[Laughter.]
Senator Schumer. ----to excel as head of the Export-Import
Bank.
So I want to thank you, Mr. Chairman, for the opportunity
to speak, and I hope the Committee will approve Fred's
nomination unanimously given his broad, wide, and deep
credentials. And, Freddie, congratulations on the nomination.
Chairman Dodd. Senator, thank you very much.
Let me turn to Representative Schiff for Mr. Trasvina's
nomination as well. Congressman, welcome.
STATEMENT OF ADAM B. SCHIFF
A U.S. REPRESENTATIVE FROM THE STATE OF CALIFORNIA
Representative Schiff. Thank you, Mr. Chairman. These are
wonderful seats, but don't worry, I will not get too
comfortable.
Mr. Chairman, Ranking Member Shelby, and other Members of
the Committee, I would like to introduce you to President
Obama's nominee for Assistant Secretary of the Office of Fair
Housing and Equal Opportunity, FHEO, a dedicated public
servant, an accomplished lawyer, Mr. John Trasvina.
A proud resident of Pasadena, California, John has spent
his life fighting for justice, working passionately as an
advocate for civil rights. He has intimate experience with the
inner workings of the executive and legislative branches, which
will serve him well in his new post.
John worked on the Hill and made his mark in civil rights
legislation as the General Counsel and Staff Director of the
Senate Judiciary Subcommittee on the Constitution. His
experience and expertise caught the eye of many around
Washington, and in 1997, John was appointed by President
Clinton and confirmed unanimously to head the Federal
government's only office devoted solely to immigrant rights.
There he worked to enforce antidiscrimination provisions of the
Immigration Reform and Control Act. This experience will be
particularly helpful at FHEO where he will oversee the
implementation and enforcement of the Fair Housing Act and
other civil rights laws.
After his time in D.C., he made his way to the West Coast
as President and General Counsel at the Mexican-American Legal
Defense and Education Fund, or MALDEF. There John gained
invaluable experience managing a large and diverse organization
with five offices around the country, working closely with a
diverse range of organizations, including corporations as well
as nonprofits.
I ask that you include a letter of support from the
Pasadena Police Chief, Bernie Melekian, in the record.
In Pasadena, John worked closely with the police department
advising the police chief and the city council on education,
issues involving the Hispanic community, city service. He is a
leader in our region not only for the Latino community, but he
has worked across all communities for the common good and was
awarded the President's Award by the Pasadena NAACP in 2008.
I strongly support John Trasvina's appointment as Assistant
Secretary for the Office of Fair Housing and Equal Opportunity.
He has the knowledge, experience, and expertise to succeed. He
has a passion for protecting Americans from discrimination,
preserving their civil rights, and I am convinced he will
enforce the Fair Housing Act, the Civil Rights Act of 1964, and
other measures under his jurisdiction justly, with great
dedication and heart. His experience in the administration and
here in Congress as well as his relationship with a diverse set
of outside organizations prepares him well for the path ahead.
John, we are tremendously proud of you, and we wish you
every success, and I urge his favorable consideration.
Thank you, Mr. Chairman.
Chairman Dodd. Thank you, Congressman, very much. We
appreciate your coming over and participating today as well.
Very grateful to you for doing that.
Senator Warner, you have got a nominee as well, and we want
to see if you would like to spend a few minutes----
INTRODUCTION OF NOMINEE DAVID H. STEVENS
BY SENATOR MARK R. WARNER
Senator Warner. I appreciate that, Mr. Chairman, and let
me, first of all, welcome the whole panel and say
congratulations on your nominations and hopefully your speedy
approvals.
I am here to introduce a fellow Virginian, David Stevens,
whom the President has nominated to be Assistant Secretary of
Housing and FHA Commissioner. I know David is here with his
wife, Mary, and I think he will present them as well.
I was happy to hear that when you were up with Secretary
Donovan in Connecticut that David's reputation has extended to
the Nutmeg State in terms of people stepping forward. And I
think that is because David brings a unique set of experiences
to this new challenge. He has been President and Chief
Operating Officer of the Long & Foster Companies, a
multifaceted real estate firm located in Virginia, but it has
holdings around the region and the country. He has served as
Vice President at Wells Fargo Home Mortgage Division, where he
has been obviously involved in issues intimately connected with
the mortgage challenge. He has been Vice President of Single
Family Housing at Freddie Mac and had a 16-year tenure at the
World Savings Bank. He, in addition, brings, I think, as we
particularly look at the challenges of restarting our housing
industry at this point and making sure that we truly have a
fair housing approach, he was a founding executive sponsor of
the Women's Mortgage Industry Network, and during his tenure at
Freddie Mac initiated some of the first outreach activities to
the Latino community.
So all of this broad background has clearly extended beyond
the reaches of Virginia in terms of the interest in his
nomination, and I am particularly anxious to have him come on
board because, as I am sure you found with Secretary Donovan,
we have a lot of new initiatives the President has outlined.
But as homeowners try to get the next level of detail down so
they can actually take advantage of some of these initiatives,
we are still seeing some lag time from the Department to get
these initiatives--the details out so that people can fully
take advantage of them. And David--I know his speedy
confirmation will help that process along.
I would add a couple other quick individual notes. I have
some trepidation seeing David again here today because, as he
was considering this, David and Mary and I were having dinner
one night at an event, and he shared the fact that he was
considering this, and to leave the private sector where he was
doing extraordinarily well to come back and take this
challenge, again, in the public sector, he was weighing that. I
am glad that you have weighed the decision and made the choice
as a family to take on this challenge. Again, your services
will be well needed and well regarded. So I welcome you. I
welcome the rest of the panel.
Two other quick items. One is let me add my voice to the
introductions of at least two of the members who have been
talked about, Fred Hochberg and Ron Sims. I know the whole
panel is great, but I have had personal experience with both
Fred and Ron, and I know they will be excellent additions to
the President's team.
And on a personal note--and I will get some grief for this
later. I think when Adam came in, he brought his daughter. This
is also ``Bring Your Daughter to Work Day.'' So I have my--she
is going to cringe behind the chair back here.
[Laughter.]
Senator Warner. My youngest daughter, Eliza, who is a
freshman in high school, attending today. I would only note
that she was very excited about this opportunity to come
because she thought she could miss school. She was really
bummed out when she heard that I was starting with an 8 o'clock
breakfast with Barney Frank and that we would have to leave
even earlier than she normally goes to school. And I think you
will see a lot of other kids and daughters particularly running
around the Hill today.
So thank you, Mr. Chairman. David, we welcome you and look
forward to your confirmation.
Chairman Dodd. Senator Warner, thank you very, very much.
I mentioned earlier Senator Kerry wanted to be here. When
he comes in, we will give him an opportunity, if he can, and
the schedules are very tight, as I know you are aware on this,
but certainly his comments on your behalf will be included in
the record, at the very least. I thank my colleagues for doing
this.
I want to turn to my colleague, Senator Shelby, for any
opening comments he may have, and then I am going to turn to my
colleagues here for any comments they may have. I will swear in
our witnesses.
I want to thank in advance Senator Warner, who is going to
take over the Chair for the nomination process so I can get to
the floor. There is a debate going on on some matters that
affect the jurisdiction of this Committee.
Senator Warner. I had the opportunity to work with Senator
Dodd as a young man and he promised great things. I didn't
think after only 100 days here that I would get to sit in the
chair, though, so I am----
[Laughter.]
Chairman Dodd. I am taking the gavel with me when I leave.
[Laughter.]
Chairman Dodd. Having known Mark for a long time, I might
never get it back.
[Laughter.]
Chairman Dodd. Senator Shelby.
STATEMENT OF SENATOR RICHARD C. SHELBY
Senator Shelby. I will be very quick. I am just here to
support all of you. I think we have got some outstanding
nominees. The sooner we move these nominees, Mr. Chairman, the
better. From the Republican side, I think we want to get
everybody in place and have the administration going full
blast.
Chairman Dodd. I thank you very much.
Jack, do you have any comments?
Senator Johanns, any comments you would like to make? You
know what it is like to sit at that table, as well, having been
a nominee.
Senator Johanns. I do know what it is like.
Chairman Dodd. You bring a special appreciation of sitting
on both sides of this dais.
STATEMENT OF SENATOR MIKE JOHANNS
Senator Johanns. I do. I will offer just a thought, because
I don't think I can stay for the whole hearing, but I don't
want to prolong this, Mr. Chairman.
It was about 4 years ago that I sat where you sit. I was
nominated to be the Secretary of Agriculture, kind of an
intimidating experience. But I would say this. None of you have
to be intimidated by this. You are enormously qualified to do
this job. I can't imagine there will be any problems with your
confirmation whatsoever, unless something were to pop up. But
it looks great.
[Laughter.]
Chairman Dodd. There is always that ``if,'' that thought.
Senator Johanns. I would offer a thought, though, because
like I said, I probably do have to leave the hearing. I would
just offer a word of advice in terms of taking on your new
assignments, because I think you can look forward to that. I
would urge you to work in a very bipartisan way. I quickly
found out that it was not acceptable for me to go into a Senate
office or a House office and explain to them that I inherited
the problem. They wanted me to solve the problem. And if it was
in their district, they really wanted me to solve the problem.
They were not interested in excuses or explanations as to why I
didn't cause the problem.
The other thing I would say to you is no matter how good
you are, and you are all enormously gifted and qualified, even
in what you are doing now, you are going to leave problems
behind for the next person. It is the nature of life. I am
guessing, Mr. Sims, in King County, there are still homeless
people. There is still inadequate housing. But you can't be
blamed for that. What you can be held responsible for is good
management and solid determination to get the job done. So I
really encourage all of you to focus on that.
Personally, I am anxious to work with all of you. These are
important issues that you are working on, everything from
terrorism to housing, my goodness, and everything in between.
Look at us as a partner and my hope is that we can have a very,
very solid good working relationship. Godspeed and good luck to
all of you.
Chairman Dodd. Thank you very much, Senator.
Senator Johanns. Thank you, Mr. Chairman.
Chairman Dodd. Senator Merkley, do you want to make a
comment on this?
STATEMENT OF SENATOR JEFF MERKLEY
Senator Merkley. Thank you very much, Mr. Chair. I wanted
to come and thank all of you for making this commitment to
public service. Housing is something that has been very much a
part of my background as Director of Habitat for Humanity in
Portland, Oregon, later a developer of affordable housing,
later an advocate in the legislature for both strong rental
assistance programs, decent housing, and for home ownership.
I think that housing is the foundation of the American
dream. It is often, in terms of home ownership, the foundation
of families' financial success. There is a lot of work to be
done and we are under difficult circumstances with the budget
we face. Far more families will be seeking assistance, needing
assistance, and we will be in more challenged national fiscal
circumstances in terms of providing that assistance.
So certainly my team, my staff team looks forward to
working with you. I look forward to working with you, and
Godspeed.
Chairman Dodd. Senator, thank you very, very much.
I want to note, by the way, Diane Farrell is in the
audience and works with the Export-Import Bank and from
Connecticut and was confirmed by this Committee earlier, so we
welcome you to the Committee.
And I want to recognize--there are an awful lot of people
in the room and I suspect an awful lot of the various staffs
from HUD, from Ex-Im Bank, and from Treasury, and not all of
them ever get to sit at this dais and be confirmed for a post
and get to make a statement. But the people who just do
everyday work do a remarkable job on behalf of the citizenry of
this country and never get enough recognition, in my view, for
the tremendous hours and efforts they make.
I forget to mention that from time to time, but I thought
today recognizing that I know a lot of people from the various
agencies are here in support of these nominees and to offer
whatever assistance they can, and I am confident I speak for
every one of us up here, how much we appreciate the work that
gets done by civil servants in this country throughout our
government who work hard, long after the regular hours every
day to make this country function. We need you more than ever,
obviously, at a time like this. So I want to thank all of you
who are in the room who don't get to sit at this table and to
be a nominee and be confirmed, but in a sense, all of us want
to confirm every day how much we appreciate what you do.
With that, I am going to ask our witnesses to rise and to
raise your right hands and to take an oath, if you would,
please.
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. Sims. I do.
Mr. Hochberg. I do.
Ms. Kanovsky. I do.
Mr. Stevens. I do.
Mr. Kovar. I do.
Mr. Trasvina. I do.
Mr. Cohen. I do.
Chairman Dodd. And do you agree to appear and testify
before any duly constituted committee of the U.S. Senate?
Mr. Sims. I do.
Mr. Hochberg. I do.
Ms. Kanovsky. I do.
Mr. Stevens. I do.
Mr. Kovar. I do.
Mr. Trasvina. I do.
Mr. Cohen. I do.
Chairman Dodd. I thank you very much.
With that, we will begin. Mr. Sims, Ron Sims, we will begin
in the order that you are at the table here and I am going to
ask all of you to try and keep your remarks relatively brief,
if you can. Any supporting data and information you think would
be helpful for this Committee to have in support of your
nomination will be certainly--I will accept at this point so
you don't have to just send it to us.
There may be a period of a few days after your testimony
here to respond to some questions from Members who, for
whatever reason, couldn't be here but would like to raise some
issues, and I would urge you to respond to those questions as
quickly as you possibly can so we can move your nominations
forward. We will leave the record open for that purpose.
With that, Mr. Sims, we welcome you, and I welcome all of,
again, the members of the panel.
STATEMENT OF RONALD SIMS, OF WASHINGTON, TO BE DEPUTY
SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Sims. Thank you, Mr. Chairman, Senator Shelby, and
distinguished Members of the Committee. I am honored and
humbled on the occasion of President Obama and Secretary
Donovan to nominate me as Deputy Secretary for Housing and
Urban Development. I want to thank the Committee for making
time in your busy schedules to provide this opportunity for us
to share our thoughts and views regarding housing and urban
development at this critical time in this country.
For over 12 years, I have been proud to serve as the
elected executive of the Nation's 14th largest county, managing
an annual budget of $5 billion and a workforce of 14,000
employees, delivering local and regional services to 1.8
million people. Throughout my career, I have championed
regional efforts to develop affordable and supporting housing,
end homelessness, improve blighted neighborhoods, and create
opportunities for home ownership. But I have also balanced
those priorities with the need to reduce congestion, improve
mobility, protect our environment, and address the inequities
and injustices in our region.
President Obama and Secretary Donovan and Congress have all
voiced a clear expectation that HUD can and must now step up to
the unprecedented levels of leadership in America's national
recovery.
Chairman Dodd. Is your microphone on?
Mr. Sims. The roles facing HUD today include stabilizing
the housing market, alleviating homelessness, creating healthy
housing stock and vibrant and sustainable urban and rural
communities. To do this, HUD must take a collaborative approach
and work to leverage Federal action with other agencies,
including Transportation, Treasury, Energy, Health and Human
Services, as well as the Environmental Protection Agency. This
interagency leadership will only be possible if HUD as an
organization is fully functional and focused on meaningful and
measurable outcomes.
I am ready for the challenge put before me by President
Obama and Secretary Donovan to bring transformational change to
HUD. I believe my management experience in King County and our
standing as a world class regional government can serve as a
relevant model for HUD. It has not always been easy, but with
many large organizations, dramatic reforms in areas like
information technology and human resources is sorely needed.
And by creating a cross-disciplinary team orientation and
providing managers with effective tools and support, we have
worked together to set King County on the right course.
More recently, King County has institutionalized a system
of data-driven management that brings evidence to
decisionmakers when they need it most. We have published these
results through an award-winning report that underscores our
commitment to accountability and to transparency.
And we have looked beyond the silos of our government
organization to help us in achieving these results. At King
County, we have built strategic partnerships similar to the
national network of partners Secretary Donovan outlined in his
confirmation testimony. I believe deeply in the power of this
vision, working with a range of local governments, housing
authorities, foundations, nonprofits, and private developers
who would join HUD in implementing its priorities.
Like our departments in King County, HUD's organization
must work and it must serve not simply as a pass-fail
bureaucracy. It must be a creative engine of ideas, actions,
and tools in which employees, partners, and our customers are
all empowered to implement a shared vision of the future.
In sum, we must be ready with a smoothly running
organization at all levels, from local to Federal leaders, to
take on the challenges before us. HUD must be accountable,
transparent, and effective as a major agent of oversight for
TARP and a primary decisionmaker in how recovery funds will be
spent. We must ease the foreclosure crisis and lay the
foundation of home ownership, affordability, and stability. And
we must chart a course for sustainable communities' visions,
one in which our urban and rural areas are more vibrant,
sustainable, and resilient.
Mr. Chairman, Senator Shelby, and Members of this
distinguished Committee, thank you again for the opportunity to
speak to you today. I firmly believe that under Secretary
Donovan's leadership and with ongoing input from Congress, we
can transform HUD into a catalyst for economic opportunity and
ensuring every American a decent, safe, and suitable living
environment.
I would also wish to acknowledge, if you will let me, the
incredible work being done by Senator Murray and Senator
Cantwell. They are extraordinary public officials. They do
great work in our community and our State and they are icons.
But they serve at a national level, as well. So we appreciate
all they are as Senators.
I would be remiss if I didn't thank my niece from
Bellingham, Washington, for being here today, and my brother-
in-law from College Park, Maryland, for being here today. The
rest of the family is back in Seattle.
I look forward to being able to serve this Nation. Thank
you, Mr. Chairman.
Senator Warner [presiding]. Thank you, Mr. Sims. We look
forward to your service. You have got quite a record at the
local level and I know we can bring that to bear here at the
national level.
Mr. Hochberg.
STATEMENT OF FRED P. HOCHBERG, OF NEW YORK, TO BE PRESIDENT AND
CHAIRMAN, EXPORT-IMPORT BANK
Mr. Hochberg. Thank you. I would like to just introduce my
brother, David Hochberg, a few rows back, and as Senator
Schumer mentioned, my mother is out of the country, and my
partner, Tom Healy, is teaching a course in Africa, so I wanted
to acknowledge them.
I want to also thank Senator Schumer for his very generous
introduction and thank you, Senator Warner, and also Barney
Frank for your comments.
Chairman Dodd, Senator Shelby, Members of the Committee, I
am honored to appear before you today to testify regarding my
nomination to be President and Chairman of the Export-Import
Bank of the United States. I am grateful to President Obama for
the trust he has placed in me and I want to thank the Committee
for the prompt scheduling of this hearing.
I bring 30 years' experience in business, government,
international affairs, and education. If confirmed, I will
immediately begin working on the challenges facing Ex-Im Bank
in particular, and most importantly the U.S. economy in
general.
In preparing for this hearing, I have been able to develop
an initial understanding of Ex-Im Bank's policies and
procedures. It is very clear that Ex-Im Bank's mandate is to
protect and sustain U.S. jobs. The Bank does this by helping
U.S. exporters meet foreign competition and stepping in when
commercial financing is not available for otherwise viable
transactions. The Bank keeps a watchful eye on taxpayer money
by acting only when it can find a reasonable assurance of
repayment.
Mr. Chairman, I do not have to tell any Member of this
Committee that these are not ordinary times, but Ex-Im Bank is
at its best in times such as these. Why do I feel this way? Ex-
Im Bank, established 75 years ago by President Roosevelt during
the Great Depression, has the capacity to step up now as it did
then. The Bank played an integral role in the implementation of
the Marshall Plan. It also helped our country meet the Latin
American and Asian debt crises of the 1980s and 1990s.
Past is prologue. I believe Ex-Im Bank needs to do more and
can do more in the months and years ahead. First, total Bank
business has already shown a significant increase, in the range
of 20 percent over last year. As Secretary Geithner said
yesterday, our country's economic recovery depends on reversing
the steep decline in exports. Moreover, for the first time in
its history, the Bank has authorized over $1 billion for the
support of small businesses in the first 6 months of this year.
Second, I had an opportunity to meet with a number of Ex-Im
Bank career employees and I have come away impressed, impressed
with their dedication, with their expertise, and impressed with
their competence.
Third, my time as Deputy and Acting Administrator of the
Small Business Administration, Dean of Milano the New School
for Management and Urban Policy, as well as my experience as a
Commissioner on the Port Authority for New York and New Jersey
has prepared me for this challenge.
But I am also prepared because of my experience in the
private sector and my personal life. I come to this position as
a businessman. I have run a business founded by my mother, who
came to this country at age ten as a refugee from Nazi Germany.
That business, Lillian Vernon, grew from our kitchen table into
a public company with thousands of employees doing business
around the world. I know firsthand what it takes to make a
small, family owned enterprise succeed and how difficult that
can be. And I also know firsthand that our economy relies on
entrepreneurs for innovation and growth, and I want to help
them succeed in any way the Bank can.
If confirmed, I fully commit to actively searching for new
policy initiatives and solutions to problems in order to move
the Bank forward, streamlining our services, eliminating
bottlenecks, and providing top-notch customer service to all
our constituents, be they American exporters or the banks that
support them. I will do this by consulting with our
stakeholders in labor, exporting, and banking, working closely
with our colleagues in the administration, strengthening our
support for small businesses and environmentally sound exports,
and of course keeping in close contact with this Committee and
the rest of Congress as we navigate through these difficult
times.
Ex-Im Bank is the right agency at the right place at the
right time.
In closing, I ask for your support for my nomination. Thank
you. I would be happy to answer your questions.
Senator Reed. Mr. Chairman?
Senator Warner. Senator Reed.
STATEMENT OF SENATOR JACK REED
Senator Reed. Mr. Chairman, I think we have a vote
impending shortly and I am going to have to depart. But I
particularly want to welcome all the witnesses, but a special
hello to Fred Hochberg for his great community service over
many, many years. Peter Kovar and I had the occasion to work in
the House. We both worked for Barney Frank, so we both have a
wonderful wealth of experience to go forward. And I have had
occasion to individually meet with some of the nominees. This
is a very distinguished group of individuals and I wish you
well. You are headed to difficult challenges which you will all
face. Thank you, Mr. Chairman.
Senator Warner. Thank you, Senator Reed, and thank you,
Fred, for your comments. I know we all will have some questions
for the record. I do think you are taking on a very important
challenge with an institution that has got a number of
challenges in front of it, some allegations in that have been
lodged against it that you will need to address, as well as
some abilities, particularly on the lending side, to do some
things in support of small business that we hope you will
explore.
I know and I appreciate that this is all of your special
day and many of you have brought family and others. We are
going to have a vote about 11:45. That means that I can
probably stay for about another 10 minutes after that, but
about 5 minutes of 12, I turn into a pumpkin, as well. So I
would request, if possible, at least in terms of getting all
the opening statements out, that if you could try to reduce
your statements to 2 to 3 minutes apiece, that would be very
helpful.
Ms. Kanovsky.
STATEMENT OF HELEN R. KANOVSKY, OF MARYLAND, TO BE GENERAL
COUNSEL, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Ms. Kanovsky. OK, and I will also speak fast. Mr. Chairman
and distinguished Members of the Committee, thank you for
considering my nomination and for the opportunity to appear
before you today.
With me today is my daughter, Emily Dorfman, and my brother
and sister-in-law, Martin Kanovsky and Ellen Teller, as well as
their daughter, my niece, Allison Kanovsky. My daughter,
Jennifer Dorfman, is an emergency room doctor in Pittsburgh and
had to be there saving lives today.
I am honored to have been nominated by President Obama to
be the General Counsel of the Department of Housing and Urban
Development. I also want to thank Secretary Donovan for asking
me to serve as General Counsel to the Department. Secretary
Donovan is an extraordinary public servant and an extraordinary
man and I will be thrilled to have the opportunity to advise
him and his team.
I am particularly honored to appear before you here in the
Senate Banking, Housing, and Urban Affairs Committee hearing
room where my interest in housing began a little more than 35
years ago. There were a number of interesting hearings
occurring the summer of 1973. That was the beginning of the
Watergate hearings. But there were also hearings before this
Committee. There was no C-SPAN, no CNN, and for good or ill,
there were no televisions in the Senate offices. If a Senator
wanted to know what was going on on the floor or in a committee
hearing and could not be there personally, the Senator sent a
staffer. I was the most junior member for the Senator 100th in
seniority and a member at that time of this Committee, Joseph
Biden of Delaware.
Chairman Proxmire held a hearing on manufactured housing,
mobile homes, and I still remember the film the committee
showed showing people's homes blowing away. I went back to
Senator Biden's office, and as only a 21-year-old can, told him
the government needed to do something. Now, 35 years later,
there is a stronger storm, a financial tsunami that threatens
not just our housing finance system, but our entire economy.
Again, the government needs to act, and I hope to be part of
that government.
I went from Senator Biden's staff to the Harvard Law
School, and after a short time in private practice I went to
HUD as Special Assistant to Secretary Patricia Roberts Harris.
I then went with her to the Department of Health, Education,
and Welfare, which became the Department of Health and Human
Services.
After a stint in the private practice of law, I went to
Skyline Financial Services, which was created by the United
States Bankruptcy Court to do a $1.5 billion workout that was
the precursor to the savings and loan collapse nationwide. We
dealt with a $1.5 billion loss and we thought that that was
significant, and we had only 20,000 properties to dispose of.
We successfully wound down the inventory of houses and
concluded the bankruptcy. We positioned ourselves to do
business with the Resolution Trust Corporation, and at that
point, GE Capital bought the business and that is exactly what
we did.
With that work completed, I left GE Capital and joined the
AFL-CIO Housing Investment Trust in 1995 as General Counsel. I
also began a long association with the National Housing
Conference, of which I currently serve as Chair. In 1998 to
1999, I was here as Senator John Kerry's Chief of Staff when he
served on this Committee and as Ranking Minority Member of the
Housing Subcommittee. I returned to the Housing Investment
Trust in 1999, where I served in various capacities, where I am
currently Chief Operating Officer and General Counsel.
I am proud of my many years at the HIT. The Trust is a
registered investment company and operates pursuant to the
rules and regulations of the Securities and Exchange
Commission. We deploy our $3.4 billion in investment in
housing. We do not employ leverage and we have never invested
in subprime single-family loans. Last year, our gross return
was 5.68 percent, and we are a conservative fund pursuing
competitive returns for our investors, good union jobs in the
construction industry, housing and economic development in
communities across the Nation. Only government service would
entice me to leave.
I am a lawyer, a manager, a policy wonk, and a believer
that now, more than ever, housing is where policy, regulation,
financial institutions, capital markets, profit and nonprofit
developers, builders, and workers join to provide not
necessarily a house, but a home for every American family.
We celebrate this year the 60th anniversary of the Housing
Act of 1949. That Act set a goal of, quote, ``a decent home and
suitable living environment for every American.'' The Senators
and Representatives who wrote that language meant it. The
housing crisis, the foreclosure crisis are enormous challenges
to that goal, but they bring us to a new focus on housing and
public policy and provide a forum to once more enunciate the
goal and commit to its achievement.
It would be an honor and a privilege to serve as General
Counsel of the Department of Housing and Urban Development. Mr.
Chairman, I want to thank you and the Committee once again for
this opportunity to appear before you and I am prepared to
answer any questions you may have.
Senator Warner. Thank you, Ms. Kanovsky.
Mr. Stevens.
STATEMENT OF DAVID H. STEVENS, OF VIRGINIA, TO BE ASSISTANT
SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER, DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
Mr. Stevens. Thank you, Senator Warner. Thank you for your
kind introduction. I am honored to be here today and humbled by
President Obama and Secretary Donovan's decision to nominate me
as Assistant Secretary of Housing-FHA Commissioner for the
Department of Housing and Urban Development, and I also
appreciate you scheduling this hearing so quickly after the
recess.
Before I begin, I just want to quickly introduce my wife,
Mary, my daughters, Sara, Alison, Maggie, and my son, Taylor,
who have joined me here today. Take your child to work day.
For the past 26 years, I have dedicated my career to the
business of helping support and working in the housing finance
industry. My career has taken me from working directly with
home buyers for a savings and loan association in the early
1980s to managing a nationwide loan operation. I have held an
executive leadership role in the secondary market as Senior
Vice President at Freddie Mac, working with virtually every
financial institution in the mortgage industry, mortgage
insurance firms, technology providers, Wall Street and industry
trade organizations. I have managed the wholesale mortgage
banking business as Executive Vice President for Wells Fargo.
And I am currently the President of the Nation's largest
privately held real estate company.
FHA has become critical to the stabilization and recovery
of the housing market. The recent surge in loan activity
clearly highlights FHA's importance as a primary vehicle to
strengthen housing. But the pressure of this growth has clearly
stressed the system.
If confirmed, I will work tirelessly to make sure that we
protect FHA and enhance its risk management capabilities to
proactively protect its future viability. Immediately, my top
three priorities would be as follows. First, we must ensure the
solvency of the fund and ensure that FHA does not require
taxpayer assistance. This can be done by balancing FHA's public
purpose with prudent credit risk management. This starts with a
thorough review of credit parameters of the FHA program and to
identify program features that are higher risk and could cause
adverse impacts to the fund.
Additionally, lender management must be enhanced to ensure
accountability for performance. Focusing on lenders with poor
performance and removing them from the system is job one to
protect the fund. Finally, system investments must be made in
order to improve both automated underwriting quality as well as
data integrity.
Second, we need to make sure that FHA does everything to
support the President's programs and the administration's
programs that have already been enacted.
Third, we need to restore FHA to a much more respected
position of leadership in the marketplace. The overall effort
to modernize the core technology systems must be combined with
enhancing FHA's best practices, possessing and utilizing fraud
detection tools that work, finding more effective solutions to
mitigate losses and market disruptions in the future when
adverse conditions occur again, and focusing on long-term
solutions to make FHA a positive force in protecting the future
of the Nation's housing.
As a real estate executive, I have witnessed firsthand the
importance and value of the FHA program. After the private
label mortgage market collapsed in 2007, I can assure you that
the Nation's economic problems would be significantly more
worse today if it had not been--if FHA had not been there to
fill the void in the Nation's housing system. FHA has fulfilled
its public purpose by helping hundreds of thousands of families
finance their homes with lower rates and better terms. The
challenge now is to balance actuarial soundness and effective
risk management, and if confirmed, I will be committed to
ensuring FHA's financial stability going forward.
Thank you very much for your time.
Senator Warner. Thank you, Mr. Stevens, and thank you for
taking the plunge.
[Laughter.]
Mr. Kovar.
STATEMENT OF PETER KOVAR, OF MARYLAND, TO BE ASSISTANT
SECRETARY FOR CONGRESSIONAL AND INTERGOVERNMENTAL AFFAIRS,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Kovar. Thank you. I appreciate that, and thank Senator
Dodd and the other Senators on the Committee for giving me the
chance to testify here. As a Congressional staffer for more
than 25 years, I have often been in the back or back here and
it is a different experience and one that I really appreciate
having a chance to sit at the table instead.
I do want to just introduce my wife, Paula, sitting behind
me here, and my daughter, Sarah, and my son, Paul. It is great
to have them here. And I want to thank Congressman Frank, who
had to leave, for that nice introduction. I guess Senator Kerry
and also Kennedy put in written statements. As a Massachusetts
native, having their expressions of support really is something
I will appreciate for a long time.
I do want to say that I hope the Committee will confirm me,
and if I am confirmed, I anticipate building strong
relationships not only with Senators on the Committee here, but
with all their colleagues throughout Congress to advance the
important housing goals that have been articulated by President
Obama and also Secretary Donovan.
As someone who became involved in politics out of a desire
to assist people who are less well-off or economically
disadvantaged, it is really a great opportunity to be in line
for a position at a department which focuses on that set of
issues. In the short-term, there are three key initiatives that
the Department is going to be working on, and on all of them, I
think my role as the Assistant Secretary for Congressional
Relations will be to ensure that we communicate fully with
Congress and also that we interpret the information that you
are providing back on how the administration is doing.
The first thing, of course, is the response to the
foreclosure crisis. I think the Members of the Committee are
aware of the various components of that and in particular the
efforts to both allow refinancing and also allow those who are
having trouble paying their mortgages to modify them. But it is
essential going forward that we provide on an ongoing basis
information on how that is proceeding, so I will be doing that.
The second one is the Recovery Act. With over $13 billion
in key HUD initiatives, like promoting energy efficiency and
creating green jobs, unlocking the credit markets, and also
making funding available for shovel-ready projects, it is going
to be essential for Congress to really be aware of how that is
proceeding and to be informed when grants are issued, et
cetera.
Third, the details of the budget have not yet been
released, but that is probably going to happen in about 2
weeks. But the Secretary has announced that key components of
the budget will include additional steps to help those who wish
to purchase or refinance homes, promotion of affordable rental
housing, curtailing mortgage fraud and predatory lending,
expansion of green development, and increased funding for
vouchers, and also programs like CDBG, that are so helpful to
low-income people and low-income areas. HUD is going to on all
of those have to undertake a major outreach effort to Congress,
and again, I view that as a central element of my future job.
The Secretary mentioned in his confirmation hearing that
Congress often hasn't received the information and data it
needs to properly evaluate HUD's work, and he indicated that he
would place a high priority on developing systems in order to
meet those needs. So this is something that I will be committed
to, and this goes beyond the three issues that I just
mentioned. We will be working on ensuring that the Gulf Coast
States that are still suffering from the effects of the
hurricane are helped. That will also be something on which we
will have to provide metrics to ensure that we know how we are
doing. And that is also true when we are looking at, for
example, trying to preserve multi-family housing. And, there is
the urban development component of HUD's mission, too, which
sometimes isn't mentioned, that we want to make sure we do
well.
In Congressman Frank's office, our top priority is serving
the 600,000 constituents that we represent, and responsiveness
is what we strive for when we do that. I pledge to continue to
do that if I am confirmed.
I noticed that Senator Schumer mentioned that Congressman
Frank said it would be OK if they didn't approve me, and as a
loyal staffer, I am not accustomed to disagreeing with my boss
in public, but maybe in this case I will make an exception.
[Laughter.]
Mr. Kovar. So I do hope that the Committee will confirm me
and everybody else here. Thank you for the opportunity.
Senator Warner. Thank you, Mr. Kovar.
Mr. Trasvina.
STATEMENT OF JOHN D. TRASVINA, OF CALIFORNIA, TO BE ASSISTANT
SECRETARY FOR FAIR HOUSING AND EQUAL
OPPORTUNITY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Trasvina. Thank you, Senator Warner. It is a high honor
to be nominated by President Obama to be Assistant Secretary
for Fair Housing and Equal Opportunity. I am gratified by the
assistance of this Committee in considering my nomination today
during Fair Housing Month and for your favorable consideration
to the full Senate. I am particularly appreciative of
Congressman Schiff's kind words from Pasadena.
In America, civil rights begins at home. As Americans, we
are proud of the progress we have made in civil rights,
progress made possible by the energies and insights of Members
of this Committee and your predecessors dating back 41 years to
the Fair Housing Act of 1968, progress made possible by the
brave appeals to our true core principles as a Nation of
fairness, by countless individuals and institutions from the
South, North, rural, metropolitan, and urban America, from
coast to coast to coast.
The vital importance of carrying out the principles of fair
housing for our communities remains today, and I bring to the
post of Assistant Secretary a career of civil rights
leadership, Federal government and institutional management,
and dedication to bringing communities together.
The principles of fair housing probably have the greatest
impact on our Nation's children. If left ignored, the pain and
shame of a parent whose family is denied an apartment or home
because of race, national origin, or disability is felt by a
child for a lifetime. But when fair housing violations are
effectively addressed, and better yet, discrimination is
prevented, we can provide a lifetime of recognition and
understanding of the protection of the Constitution and our
laws and the responsiveness of civil servants. Moreover, where
one lives shapes opportunities for an equal education,
preparation for the workplace, access to transportation,
culture, and myriad other elements of our daily life.
So today, as the Obama administration and Congress work
together to provide stability to home ownership, the Office of
Fair Housing and Equal Opportunity must play a meaningful role.
When I was Senator Simon's counsel on the Constitution
Subcommittee, I was honored to play a staff role in the passage
of the Fair Housing Act Amendments of 1988 and speak to
disability organizations about the extension of protections of
the law.
As Special Counsel for Immigration-Related Unfair
Employment Practices at the Department of Justice from 1997 to
2001, I led the Federal government's only office devoted solely
to immigrant workplace rights. There, we were successful in
widespread education to employers and legally authorized
workers about their rights and responsibilities under the
immigration and employment laws. I am proud of the
accomplishments of the career attorneys and legal staff in
obtaining bank paper discrimination victims, fining employers
to remedy violations, and ensuring that the office was
responsive to all stakeholders.
I would apply these same principles to the Office of Fair
Housing and Equal Opportunity to ensure that our partners,
whether they are the Department of Justice, outstanding local
civil rights agencies, among public interest fair housing
advocates, interest associations, or organizations in the
housing and lending industries can carry out their work in
furtherance of the Fair Housing Act.
We have many weapons available to us to eradicate housing
bias from our society. All must be used in a coordinated
fashion to be effective.
I am grateful to the President for nominating me, giving me
the opportunity to serve the Nation in this capacity.
Similarly, I am highly appreciative of your consideration and
consent to my nomination. Thank you.
Senator Warner. Thank you, Mr. Trasvina.
Mr. Cohen.
STATEMENT OF DAVID S. COHEN, OF MARYLAND, TO BE ASSISTANT
SECRETARY FOR TERRORIST FINANCING, DEPARTMENT OF THE TREASURY
Mr. Cohen. Thank you, Senator Warner. I will be very brief.
Chairman Dodd, Ranking Member Shelby, and distinguished
Members of the Committee, thank you for the opportunity to
testify here today. It is truly an honor to be the nominee to
serve as Assistant Secretary of the Treasury for Terrorist
Financing. I want to thank President Obama for the confidence
he has shown in me by nominating me, and Secretary Geithner for
recommending me, to serve in this position.
I would like first to introduce my wonderful wife, Suzy,
and our two outstanding sons, Sam and Zeke, who are here today.
I am also very happy that my parents, Jordan and Carole Cohen,
are here today. I know that this occasion fills them all with
pride.
As I sit before this Committee, I am keenly aware of the
very significant responsibilities assigned to the Assistant
Secretary for Terrorist Financing. As set out in the statute
creating the position, the Assistant Secretary, working under
the direction of the Under Secretary for Terrorism and
Financial Intelligence, is, ``responsible for formulating and
coordinating the counterterrorist financing and antimoney
laundering efforts of the Department of the Treasury.'' These
efforts are critically important in maintaining the integrity
of our financial system, combatting illicit finance at home and
abroad, and advancing the foreign policy and national security
objectives of our great Nation.
The variety and intensity of the challenges in this arena
are, of course, ever-changing, and if confirmed, I very much
look forward to working on these challenges with the
outstanding professionals who make up the Office of Terrorist
Financing and Financial Crimes at the Department of the
Treasury. I also intend to work closely with you, Mr. Chairman,
the other Members of this Committee, and your staff to pursue
our shared objective of protecting our national security and
the integrity of our financial system.
Mr. Chairman, I would ask that my entire statement be
entered into the record of this hearing. I would be happy to
answer any questions that you may have.
Senator Warner. Thank you, Mr. Cohen.
Let me thank all of the witnesses here and make clear what
Mr. Cohen said, that all of your full statements will be
submitted for the record.
Let me also add that a number of us have questions that we
will submit, as well, and we will have to get those answers
back before your confirmation process is completed.
I would simply come back to Mr. Hochberg, and Chairman Dodd
had asked me to raise this, and I share his concerns, that
there have been recent concerns about an Inspector General
report about Export-Import Bank having upwards of between $100
and $300 million of fraud over the last few years. We will look
very carefully at your comments on that subject.
Let me also--and I apologize, the vote is now going--the
fact that the other Members are not here is not a reflection of
anything other than the scheduling constraints of the Senate.
Let me thank you all in advance for your service, and let
me also thank the family members who are here. I know this was
your dad's or wife's or husband's big day, and we thank you for
your service, as well. As somebody who has been in public
service for some time, it is truly a family affair. Our country
will be better served by your participation and we look forward
to your speedy and rapid confirmation.
With that, I say the Committee stands adjourned. Thank you.
[Whereupon, at 11:53 a.m., the hearing was adjourned.]
[Prepared statements, response to written questions, and
additional material supplied for the record follow:]
PREPARED STATEMENT OF RONALD SIMS
To Be Deputy Secretary,
Department of Housing and Urban Development
April 23, 2009
Thank you Mr. Chairman, Senator Shelby, and distinguished Members
of the Committee.
I am honored and humbled by the decision of President Obama and
Secretary Donovan to nominate me as Deputy Secretary of Housing and
Urban Development. I want to thank the Committee for making time in
your busy schedules to provide this opportunity for us to share our
thoughts and views regarding housing and urban development at this
critical time in our country.
For over 12 years, I have been proud to serve as the elected
Executive of the Nation's 14th largest county, managing an annual
budget of $5 billion and a workforce of 14,000 employees, delivering
local and regional services to 1.8 million people.
Throughout my career, I have championed regional efforts to develop
affordable and supportive housing, end homelessness, improve blighted
neighborhoods and create opportunities for home ownership. But I've
also balanced those priorities with the need to reduce congestion,
improve mobility, protect our environment, and address inequities and
injustices in our region.
President Obama, Secretary Donovan, and Congress have all voiced a
clear expectation that HUD can and must now step up to unprecedented
levels of leadership in America's national recovery.
The roles facing HUD today include stabilizing the housing market,
alleviating homelessness, creating healthy housing stock and vibrant
and sustainable urban and rural communities. To do this, HUD must take
a collaborative approach and work to leverage Federal action in other
agencies including Transportation, Treasury, Energy, and Health and
Human Services as well as the Environmental Protection Agency.
This interagency leadership will only be possible if HUD as an
organization is fully functional and focused on meaningful and
measurable outcomes.
I am ready for the challenge put before me by President Obama and
Secretary Donovan to bring transformational change to HUD. I believe
that my management experience in King County, and our standing as a
world-class regional government can serve as a relevant model for HUD.
It has not always been easy, but with many large organizations
dramatic reform in areas like information technology and human
resources, is sorely needed. And by creating a cross-disciplinary team
orientation, and providing managers with effective tools and support,
we have worked together to set King County on the right course.
More recently, King County has institutionalized a system of data-
driven management that brings evidence to decision makers when they
need it most. We have published these results through an award-winning
report that underscores our commitment to accountability and
transparency.
And, we have looked beyond the silos of our government organization
to help us in achieving results. At King County, we have built
strategic partnerships, similar to the ``national network of partners''
Secretary Donovan outlined in his confirmation testimony. I believe
deeply in the power of this vision--working with a range of local
governments, housing authorities, foundations, nonprofits, and private
developers, who will join HUD in implementing its priorities.
Like our departments in King County, HUD's organization must work--
and it must serve not simply as a pass-fail bureaucracy. It must be a
creative engine of ideas, actions, and tools--in which employees,
partners, and our customers are all empowered to implement a shared
vision of the future.
In sum, we must be ready with a smoothly running organization at
all levels--from local to Federal leaders--to take on the challenges
that are before us. HUD must be accountable, transparent, and effective
as a major agent of oversight for TARP, and a primary decision maker in
how Recovery Act funds will be spent. We must ease the foreclosure
crisis and lay the foundation for homeownership affordability and
stability. And we must chart a course for a new Sustainable Communities
vision--one in which our urban and rural areas are more vibrant,
sustainable, and resilient.
Mr. Chairman, Senator Shelby, and Members of the Committee, thank
you again for the opportunity to speak with you today. I firmly believe
that under Secretary Donovan's leadership, and with ongoing input from
Congress, we can transform HUD into a catalyst for economic opportunity
and ensuring every American a decent, safe, and suitable living
environment.
PREPARED STATEMENT OF FRED P. HOCHBERG
To Be President and Chairman,
Export-Import Bank
April 23, 2009
Chairman Dodd, Senator Shelby, Members of the Committee: I am
honored to appear before you today to testify regarding my nomination
to be President and Chairman of the Export-Import Bank of the United
States. I am grateful to President Obama for the trust he has placed in
me, and I want to thank the Committee for its prompt scheduling of this
hearing. If confirmed, I will bring my 30 years of experience in the
private sector, government, international affairs, and education to
immediately begin working on the challenges facing Ex-Im Bank in
particular and the U.S. economy in general.
In preparing for this hearing, I have been able to develop an
initial understanding of Ex-Im Bank policies and procedures. It is very
clear Ex-Im Bank's mandate is to protect and sustain U.S. jobs. The
Bank does this by meeting foreign competition from other export credit
agencies, and stepping in when commercial financing is not available
for otherwise viable transactions. The Bank keeps a watchful eye on
taxpayer money by acting where it can find a ``reasonable assurance of
repayment.''
Mr. Chairman, I do not have to tell any Member of this Committee
that these are not ordinary times. But the history of the Bank has
shown that it is frequently at its best in times such as these. It was
established 75 years ago by Franklin Roosevelt during the Great
Depression. It played an integral role in the implementation of the
Marshall Plan. It helped our country to meet the Latin American and
Asian debt crises of the 1980s and 1990s.
The past is prologue. I believe Ex-Im Bank can do even more in the
months and years ahead. First, total Bank business is showing a
significant increase, in the range of twenty per cent. As Secretary
Geithner said yesterday, our country's economic recovery depends on
reversing the decline in exports. Moreover, for the first time in its
history the Bank has authorized over $1 billion for the support of
small businesses in the first 6 months of the fiscal year.
Second, I have had the opportunity to meet with several Ex-Im Bank
career staff, and I have come away impressed with their dedication,
expertise, and competence. Third, with my background, including Deputy
and Acting Administrator of the Small Business Administration, Dean of
Milano the New School for Management and Urban Policy, as well as
experience as a Commissioner on the Port Authority of New York and New
Jersey, I am prepared for this challenge.
But I am also prepared because of my experience in the private
sector and my personal life. I come to this position as a businessman.
I have run a business founded by my mother, who came to this country at
age 10 as a refugee from Nazi Germany. That business, Lillian Vernon,
grew from our kitchen table into a public company, doing business
around the world. I know first-hand what it takes to make a small,
family owned enterprise succeed, and how difficult that can be. But I
also know first hand that our economy relies on entrepreneurs for
innovation and growth, and I want to provide them with all the tools of
success Ex-Im Bank has to offer.
If confirmed, I fully commit to:
Actively search for new policy initiatives and solutions to
problems, in order to move the Bank forward;
Streamling our services and eliminating bottlenecks; and
Providing top-notch customer service to all our
constituents, be they American exporters or the banks that
support them.
I will do this by:
Consulting with our constituents in exporting, banking, and
labor;
Working closely with our colleagues in the administration,
Strengthening our support for small businesses and
environmentally sound exports; and of course
Keeping in close contact with this Committee and the rest
of Congress as we navigate through these troubled times.
Ex-Im Bank is the right agency in the right place for these times.
In closing, I ask for your support for my nomination. Thank you. I
will be happy to answer your questions.
PREPARED STATEMENT OF HELEN R. KANOVSKY
To Be General Counsel,
Department of Housing and Urban Development
April 23, 2009
Mr. Chairman and distinguished Members of the Committee, thank you
for considering my nomination and for the opportunity to appear before
you today.
I am honored to have been nominated by President Obama to be the
General Counsel of The Department of Housing and Urban Development. I
also want to thank Secretary Shaun Donovan for asking me to serve as
General Counsel to the Department of Housing and Urban Development.
Secretary Donovan is an extraordinary public servant and an
extraordinary man. I would be thrilled to have the opportunity to
advise him and his team.
I am particularly honored to appear before you here in the Senate
Banking and Housing Committee Hearing Room where my interest in Housing
began a little more than 35 years ago. There were a number of
interesting Hearings occurring the summer of 1973. There was no C-Span,
no CNN, and, for good or ill, there were no televisions in the Senate
offices. If a Senator wanted to know what was going on on the floor or
at a Committee Hearing and could not be there personally, the Senator
sent a staffer. I was the most junior staff member for the Senator
100th in Seniority and a Member of this Committee, Joseph Biden of
Delaware. Chairman Proxmire held a Hearing on manufactured housing--
mobile homes--and I still remember the film the Committee viewed
showing people's homes blowing away in a storm. I went back to the
Dirksen Building and told Senator Biden that the government needed to
do something.
Now 35 years later there is a stronger storm, a financial tsunami
that threatens not just our housing finance system but our entire
economy. Again the government needs to act. I hope to be a part of that
government.
I went from Senator Biden's staff to the Harvard Law School and
after a short time in private practice I went to HUD as a special
assistant to Secretary Patricia Roberts Harris and then I went with her
to the Department of Health, Education and Welfare, which became the
Department of Health and Human Services. After a stint in the private
practice of law, in 1986 I went to work for Skyline Financial Services
Corp, which was created by the U.S. Bankruptcy Court in Alexandria,
Virginia, to workout the EPIC bankruptcy, part of the Maryland Savings
and Loan collapse and a precursor to the Savings and Loan collapse
nationwide. We were dealing with $1.5 billion in defaulted loans and
20,000 properties nationwide. And we thought we had a big problem!
We successfully wound down the inventory of homes and concluded the
workout. In doing so we created an asset management company superbly
situated to purchase and manage properties from the Resolution Trust
Corporation. In 1990, GE Capital bought Skyline and created just such a
company, of which I was the General Counsel. With much of that work
completed, I left GE Capital Asset Management and joined the AFL-CIO
Housing Investment Trust in 1995, as General Counsel there. I also
began a long association with the National Housing Conference, of which
I am currently honored to serve as Chair.
In 1998-99 I was here as Senator John Kerry's Chief of Staff when
he served on this Committee and as Ranking Minority Member of the
Housing Subcommittee. I returned to the HIT in 1999 where I served in
various capacities, currently Chief Operating Officer and General
Counsel. I am proud of my many years at the HIT. The Trust is a
registered investment company and operates pursuant to the rules and
regulations of the Securities and Exchange Commission. We deploy our
$3.4 billion in investments in housing. We do not employ leverage and
we have never invested in subprime single family loans. Last year our
gross return was 5.68 percent; 5.25 net to our investors. We are a
conservative fund pursuing competitive returns for our investors, good
union jobs in the construction industry, and economic development in
communities across the Nation. Only government service would entice me
to leave.
I am a lawyer, a manager, a policy wonk, and a believer that more
now than ever housing is where policy, regulation, financial
institutions, capital markets, profit and nonprofit developers,
builders, and workers join to provide not necessarily a house, but home
for every American family. We celebrate this year the 60th Anniversary
of the Housing Act of 1949. That Act set the goal of ``A decent home
and a suitable living environment for every American Family.''
The Senators and Representatives who wrote that language meant it.
The housing crisis, the foreclosure crisis are enormous challenges to
that goal, but they bring us to a new focus on housing and public
policy and provide a forum to once more enunciate the goal and commit
to its achievement. It would be an honor and a privilege to serve as
General Counsel of the Department of Housing and Urban Development.
Mr. Chairman, I want to thank you and the Committee once again for
this opportunity to appear before you and I am prepared to answer any
questions you may have.
PREPARED STATEMENT OF DAVID H. STEVENS
To Be Assistant Secretary for Housing-Federal Housing Commissioner,
Department of Housing and Urban Development
April 23, 2009
I am honored to be here today and humbled by President Obama and
Secretary Donovan's decision to nominate me as Assistant Secretary of
Housing-FHA commissioner for the Department of Housing and Urban
Development. This agency plays a critical role as it partners with so
many in the Nation right now to overcome one of the greatest economic
crises that we have faced in decades. I would also like to thank this
Committee for scheduling this hearing so quickly after the recess as I
am sure you all have extremely busy schedules and I appreciate the time
you are committing to meet with me and share your thoughts and views
regarding housing issues and particularly those facing FHA.
Before I begin, please let me take a moment to introduce my wife of
almost 25 years, Mary, my daughters Sara, a recent graduate from
Virginia Tech, Alison, a 2nd year student at the University of
Virginia, and Maggie, a freshman at Oakton High School, and my son
Taylor, a senior at Oakton High School and a future freshman at the
University of Colorado.
For the past 26 years, I have dedicated my career to the business
of helping support and working in the housing finance industry. My
career has taken me from working directly with homebuyers for a savings
and loan association during the early 1980s, to managing a nationwide
loan operation. I have held an executive leadership role in the
secondary market, as Senior Vice President at Freddie Mac, working with
virtually every financial institution in the mortgage industry;
mortgage insurance firms, technology providers, Wall Street and other
third party providers, and industry trade organizations. Finally I have
managed the wholesale mortgage banking business for one of the Nation's
largest banks and am currently the President of the Nation's largest
privately held real estate company.
In virtually every position, I have gained critical knowledge of
this housing industry and through these positions I have gained the
most thorough and intimate understanding of the housing finance system
from the point of sale through the ultimate distribution in the capital
markets. If confirmed by this body, I would look forward to applying
this experience and knowledge to help ensure that FHA addresses the
critical issues facing it today and help work with you and others to
build a long term framework that will protect the future of the housing
finance market.
While FHA's role has always been an important one, FHA has now
become absolutely critical to the stabilization and recovery of the
housing market. Today FHA accounts for almost a third of all mortgages
created in this country, up from representing only 3 percent of the
lending market at the end of 2006. This enormous surge in loan activity
clearly highlights FHA's importance as a primary vehicle to restore
stability to the housing market. At the same time, this pace of growth
over such a short period of time has created pressure on FHA's
operational environment, which is in need of both system enhancements
and process changes to protect the quality of the program for the long
term.
FHA has not been immune to the adverse conditions of this market.
Default rates and foreclosures exceed prior estimates. Unlike subprime
mortgages, however, where these loans were built on unsafe features
with high-risk credit characteristics, FHA losses are more the result
of economic factors such as job loss. And while I would not expect
losses like those in the subprime market, the impacts of loans
originated in 2007 and 2008 with high loan-to-value ratios, combined
with seller funded down payment assistance programs and, in some cases
questionable lender behaviors, could cause some stress on the program
in the months going forward.
If confirmed, I will work tirelessly to make sure that we take this
great program and enhance its risk management capabilities and
proactively protect its future viability. Immediately, my top three
priorities would be as follows:
First, we must ensure the solvency of the fund and ensure that FHA
does not require any taxpayer assistance. This can be done by balancing
FHA's public purpose with prudent credit risk management. The effort
here needs to start with a thorough review of the credit parameters of
the FHA program and to identify characteristics of the program that are
higher risk and could cause adverse impacts to the fund. Tightening
guidelines on higher risk products would be the primary output of this
effort. Additionally lender management must be enhanced to insure
accountability for performance. Focusing on lenders with poor
performance and removing them from the system is job one to protect
newly insured business. Finally, system investments must be made to
improve both automated underwriting quality as well as data integrity
in order to manage incoming loan quality as well as existing insured
business.
Second, we will ensure HUD's Housing programs adequately support
the implementation of the President's housing priorities--specifically,
the Homeowner Affordability and Stability Plan and an updated Hope for
Homeowners program.
And, third, we need to restore FHA to a more respected position of
leadership in the marketplace. The overall effort to modernize the core
technology systems must be combined with enhancing FHA's best
practices, possessing and utilizing fraud detection tools that work,
finding more effective solutions to mitigate losses and market
disruptions in future periods of adverse economic conditions, and
focusing on longer term solutions like energy efficient mortgage
products that will make FHA a proactive positive force in protecting
the future strength of the Nation's housing system.
FHA is creating a strong leadership team. Carol Galante, as Deputy
Assistant Secretary for Multifamily Housing, brings enormous experience
and leadership in her field. The ability to have stronger leadership at
all levels of FHA, with practical business knowledge, will be of
significant value to all as we face the current challenges and look to
the future.
As a real estate executive, I have witnessed firsthand, the
importance and value of the FHA program. After the private label
mortgage market collapsed in 2007, I can assure you that the Nation's
economic problems would be even worse today if FHA had not been there
to fill the void in our Nation's housing system. FHA has fulfilled its
public purpose by helping hundreds of thousands of families either
purchase a home or refinance their existing mortgage with lower
interest rates and better terms for the homeowners. The challenge now
is to ensure that this value is balanced with actuarial soundness and
effective risk management. If confirmed, I will be committed to
ensuring FHA's financial stability going forward. Thank you again for
your time and interest today. I appreciate the opportunity to be here
and, if I am honored with your confirmation, I look forward to working
with you in the future.
PREPARED STATEMENT OF PETER KOVAR
To Be Assistant Secretary for Congressional and Intergovernmental
Affairs,
Department of Housing and Urban Development
April 23, 2009
I would like to thank Chairman Dodd, Ranking Member Shelby, and the
other Members of the Committee for giving me this opportunity to
testify. As a Congressional staffer for over 25 years, I have often sat
in the audience or behind the lawmakers in hearings, and it is an honor
to sit today for the first time at the witness table.
It is also an honor to be nominated by President Obama for the
position of HUD Assistant Secretary for Congressional and
Intergovernmental Relations. There are many people who have contributed
to my being here, including numerous colleagues and friends who have
offered encouragement. But, the most important has been my family, and
I would like to acknowledge their presence here today and express my
appreciation for their constant support: my wife Paula, my daughter
Sarah, and my son Paul.
I am grateful for those warm expressions of support from Senator
Kerry and Congressman Frank. They are two members of Congress for whom
I have great admiration, and it is a genuine professional and personal
pleasure for me to be the beneficiary of their generous remarks. I am
proud to have served on Senator Kerry's staff when he was first
elected, and I have of course had the privilege of working in
Congressman Frank's office for more than 25 years. If confirmed, I hope
to match the example they have set for commitment to responsive
government, public service and respect for Congress. And, as a
Massachusetts native, having that thoughtful endorsement of my
nomination by Senator Kennedy--a true hero in both my home State and in
Washington--is something I will always treasure.
If I am confirmed, I anticipate building strong relationships not
only with Senators on this Committee, but with their colleagues
throughout Congress, to advance the important housing goals that have
been articulated by President Obama and Secretary Donovan. As someone
who became involved in government largely out of a desire to provide
help to those who are economically disadvantaged, I am pleased to be in
line for a senior position in an agency with a primary mission along
those lines.
In the short term, the three key issue areas on which HUD will be
focused are responding to the foreclosure crisis, implementation of the
Recovery Act, and the 2010 budget. If confirmed, I will ensure that the
sharing of information with Congress about all three initiatives on an
ongoing basis is a top priority.
As the Committee is aware, the Administration's response to the
foreclosure problem includes working to reduce interest rates, helping
4-5 million homeowners who can't take advantage of the current low
rates to refinance, and providing funding to assist another 3-4 million
homeowners in modifying their mortgages to avoid foreclosure. These
efforts are still in their early stages, and it will be essential to
provide periodic reports to Congress, as recommended by Senator Dodd
during Secretary Donovan's confirmation hearing, so Congress will have
a clear idea of the program's effectiveness.
With the Recovery Act devoting over $13 billion to key HUD
initiatives such as promoting energy efficiency and creating green
jobs; unlocking the credit markets; making funding available for
shovel-ready projects; and mitigating the effects of the economic
crisis, it is crucial that Congress receives timely notification as
grants under the various programs are made. More broadly, it will be
vital to make sure that there is ready access to information about how
the funds are being expended.
While the details of the budget have not been released, the
Secretary has announced that key components will include additional
steps to help those who wish to purchase or refinance homes; promotion
of affordable rental housing; curtailing mortgage fraud and predatory
lending; expansion of green development; and increased funding for
vouchers and programs like community development block grants that
assist low income families and areas. HUD will undertake a major
outreach effort to inform Congress about all of these programs when the
budget is formally released.
On all of these efforts, the watch words will be transparency and
accountability. The Secretary mentioned in his confirmation hearing
that Congress often hasn't received the information and data it needs
to properly evaluate HUD's work, and he indicated that he would place a
high priority on developing systems aimed at meeting those needs. If
confirmed, I will play an important part in disseminating that
information to Congress. And, I expect this commitment to information
sharing to go beyond the three initiatives mentioned above. So, as we
work on addressing the continuing needs of the Gulf Coast States
affected by damaging hurricanes, preserving federally supporting multi-
family housing, or creating innovative programs in the ``Urban
Development'' component of HUD's mission, I look forward to making sure
Congress is as well informed as possible about the department's
activities.
In Congressman Frank's office, our top priority is serving the
660,000 constituents we represent. As Chief of Staff, a central element
of my job is making sure that the staff maintains a commitment to
responsiveness in everything we do. If confirmed, I will be committed
to ensuring that my staff and I are as responsive and accessible as
possible to the Members of this Committee and to the full Senate and
House.
Our emphasis on communication with Congress will include not only
sufficient advance notice of key initiatives, but thoughtful answers to
Congressional correspondence, and of course appropriate notification of
grants and local announcements. A key element of these efforts will be
coordinating with HUD field offices to ensure that Congressional
inquiries are appropriately handled. In addition, I plan to institute a
program of ``listening sessions'' in which senior HUD staff would be
available periodically for open, nonagenda meetings with key Hill staff
and, if they wish, Senators and Representatives.
President Obama and Secretary Donovan have outlined an ambitious
agenda for HUD. While Congress and the Administration will not always
agree, there are many policies on which effective collaboration is
possible. And, I expect a hallmark of my office to be fairness toward
all Senators and Representatives, regardless of party, and a
determination to seek bipartisan solutions when possible.
In closing I wanted to take a moment to touch on the key role
played by my parents. As career public servants involved in nonprofit
social service agencies, State government, and numerous local groups
and causes, they instilled in me the value of community service, and I
have followed their lead for much of my life. For the last quarter
century Congress has, in a sense, been my community. As I move toward
another community in the Obama Administration, I am confident that my
enduring connection to the Hill will help me to be successful in my new
position, and I am hopeful the Committee will support my nomination.
Thank you again, Mr. Chairman, for the opportunity to testify. I
would be pleased to answer any questions.
PREPARED STATEMENT OF JOHN D. TRASVINA
To Be Assistant Secretary for Fair Housing and Equal Opportunity,
Department of Housing and Urban Development
April 23, 2009
Mr. Chairman and Members of the Committee: Thank you for the
opportunity to come before you today with my prospective colleagues
seeking to serve the Nation at the United States Department of Housing
and Urban Development. It is a high honor to be nominated by President
Obama to be Assistant Secretary of Fair Housing and Equal Opportunity
and I am gratified by the assistance of this Committee in considering
my nomination today during Fair Housing month and for your favorable
recommendation to the full Senate.
In America, civil rights begin at home. As Americans, we are proud
of the progress we have made in civil rights--progress made possible by
the energies and insights of Members of this Committee and your
predecessors dating back 41 years ago to 1968 and the enactment of the
Fair Housing Act and prior to that time. And progress made possible by
the brave appeals to our true core principles as a Nation of fairness
by countless individuals and institutions in communities from South to
North, urban, metropolitan and rural from coast to coast to coast. The
vital importance of carrying out the principles of fair housing for our
communities remains today and I bring to the post of Assistant
Secretary a career of civil rights leadership, Federal government and
institutional management, and dedication to bring communities together.
The principles of fair housing probably have the greatest impact on
our Nation's children. If left ignored, the pain and shame of a parent
whose family is denied an apartment or home because of race or national
origin is felt by a child for a lifetime. But when fair housing is
effectively addressed and, better yet, discrimination is prevented, we
can provide a lifetime of recognition and understanding of the
protection of the Constitution and our laws and the responsiveness of
civil servants. Moreover, where one lives shapes opportunities for an
equal education, preparation for the workplace, and access to
transportation, culture, and myriad other elements of our daily life.
Today, as the Obama Administration and Congress work together to
provide stability to homeownership, the Office of Fair Housing and
Equal Opportunity plays a meaningful role.
From my own experience in San Francisco, I learned from an early
age about the ugly denials of a home to accomplished African American
men who could pay their way but were denied simply because of racism
and the color of their skin. My mother would point out the house on
Cedro Way that belonged to Cecil Poole, our United States Attorney,
where burned crosses were found to intimidate his family. And a little
farther away on Miraloma Way, it took our Republican Mayor George
Christopher to intervene with a homeowner who refused to sell his home
to San Francisco Giants star Willie Mays because he was black. These
overt acts of discrimination have subsided and today our community has
moved from almost all white to almost all black to heavily Chinese,
Vietnamese, and immigrant.
When I worked for the late Senator Paul Simon as his counsel at the
Senate Judiciary Committee's Subcommittee on the Constitution, I was
honored to play a staff role in the passage of the Fair Housing Act
amendments of 1988 and speak to disability organizations about the
application and extension of the law's important protections. As
Special Counsel for Immigration Related Unfair Employment Practices at
the U.S. Department of Justice from 1997 to 2001, I led the Federal
government's only office devoted solely to immigrant workplace rights.
There, we were successful in widespread education to employers and
legally authorized workers about their rights and responsibilities
under the immigration and employment laws. I am proud of the
accomplishments of the career attorneys and legal staff in obtaining
back pay for discrimination victims, fining employers to remedy
violations, and ensuring that the Office was responsive to all
stakeholders. Our work knew no party. During the 3 years I served as
Special Counsel in a Democratic Administration, we built the foundation
for strong performance that carried over into a Republican
Administration in which we brought the largest lawsuit ever under our
enforcement statute.
I would apply these principles to the Office of Fair Housing and
Equal Opportunity to ensure that our partners, whether they are at the
Department of Justice, at State and local civil rights agencies, among
public interest fair housing advocates, industry associations, or
organizations in the housing and lending industries, can carry out
their work in furtherance of the Fair Housing Act. In addition, I offer
my commitment of cooperation and communication on your ideas and the
Administration's on further steps to advance fair housing and equal
opportunity.
We have many weapons available to us to eradicate housing bias from
our society. All must be used in a coordinated fashion to be effective.
The mission goes beyond access to an apartment or house to the lending
decisions and the ability to remain in one's home. If confirmed, I will
work vigorously to guard against scams that prey upon people's race or
ethnicity to thwart their well-laid plans for homeownership or block
access to assistance for the same reasons.
Again, I am grateful to President Obama for nominating me to be
Assistant Secretary for Fair Housing and Equal Opportunity and giving
me the opportunity to serve the Nation in this capacity. Similarly, I
am highly appreciative of your consideration and consent to my
nomination.
PREPARED STATEMENT OF DAVID S. COHEN
To Be Assistant Secretary for Terrorist Financing,
Department of the Treasury
April 23, 2009
Chairman Dodd, Ranking Member Shelby, and distinguished Members of
this Committee: Thank you for the opportunity to appear before you
today. It is truly an honor to be the nominee to serve as Assistant
Secretary of the Treasury for Terrorist Financing. I want to thank
President Obama for the confidence he has shown in me by nominating me,
and Secretary Geithner for recommending me, to serve in this position.
With your indulgence, I would first like to introduce my wonderful
wife, Suzy, and our sons, Sam and Zeke. I am also very happy that my
parents, Jordan and Carole Cohen, are here today. I know that this
occasion fills them all with pride.
As I sit before this Committee, I am keenly aware of the very
significant responsibilities assigned to the Assistant Secretary for
Terrorist Financing. As set out in the statute creating the position,
the Assistant Secretary, working under the direction of the Under
Secretary for Terrorism and Financial Intelligence, is ``responsible
for formulating and coordinating the counterterrorist financing and
antimoney laundering efforts of the Department of the Treasury.'' These
efforts are critically important in maintaining the integrity of our
financial system, combating illicit finance at home and abroad, and
advancing the foreign policy and national security objectives of our
great Nation. Having worked on antimoney laundering policy during my
tenure several years ago in the General Counsel's Office of the
Treasury Department, and having counseled many clients in my private
law practice on their obligations to comply with Treasury's antimoney
laundering and economic sanctions laws and regulations, I believe I am
well prepared to undertake this responsibility.
The variety and intensity of the challenges in this arena are, of
course, ever-changing. Here at home, we need to continue the work of
refining our antimoney laundering and counterterrorist financing
regulatory regime, sensitive always to the need to carefully balance
the burden that these rules impose on our citizens and our financial
institutions against the value of the information obtained for law
enforcement and counterterrorism purposes. If confirmed, I expect to
work closely with the Congress, and my colleagues within the Treasury
Department, in these efforts.
Internationally, as the Obama Administration engages with
governments around the world and confronts those who would do us harm,
the many tools that the Treasury Department can deploy--including
targeted financial measures focused on particular individuals and
entities--will continue to play an integral role in our strategies for
responding to the many challenges that lie ahead. To take just one
example, in his recent address on nuclear nonproliferation in Prague,
President Obama declared that ``we must ensure that terrorists never
acquire a nuclear weapon,'' and made clear that we must ``use financial
tools to disrupt'' their efforts to do so. Treasury's capacity to
analyze financial intelligence, and to act on that intelligence by
targeting the financial networks of terrorists, proliferators, and
their supporters, will no doubt be employed as we undertake to meet
this challenge. If confirmed, I pledge to dedicate myself to this
mission, and, more broadly, to the use of all of Treasury's tools to
advance our Nation's foreign policy and national security objectives.
If confirmed, I very much look forward to working with the
outstanding professionals who make up the Office of Terrorist Financing
and Financial Crimes at the Department of the Treasury. I have deep
respect for the knowledge, dedication and effectiveness of these
professionals, led by Deputy Assistant Secretary Daniel Glaser. And I
have great respect--both professionally and personally--for Under
Secretary Stuart Levey, whom I have known well for almost 20 years, and
who so ably leads the overall effort in the Office of Terrorism and
Financial Intelligence.
In closing, I want to thank the Committee for the attention it has
given to my nomination. If confirmed, I intend to work closely with
you, Mr. Chairman, the other Members of this Committee, and your staff
to pursue our shared objective of protecting our national security and
the integrity of the financial system. I have enormous respect for this
institution, and I am deeply committed to maintaining the very
productive and close relationship that exists between this Committee
and the Office that I have been nominated to lead.
Mr. Chairman, I would be pleased to respond to any questions that
you or Members of the Committee may have.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD
FROM RONALD SIMS
Q.1. HUD Management--Mr. Sims, as I said in my opening
statement, if you are confirmed as General Deputy Secretary,
you will be confronted with an enormous number of management
challenges--from outdated accounting and information systems to
a workforce nearing retirement. Traditionally, the person in
your position has day-to-day responsibility for departmental
management.
What do you see as your primary management challenges at
HUD and what are your priorities?
A.1. Dramatic reform in information technology and human
resources is sorely needed at HUD. HUD must be a creative
engine of ideas, actions, and tools--in which employees,
partners, and our customers are empowered to implement a shared
vision of the future.
Q.2. How do you balance the need to work with the public with
the need to address the challenges that HUD confronts?
A.2. Transparency in government is conducive to both better
serving the public's needs as well as enhancing HUD's internal
management efficiencies. Transparency in government service
should not be a mere phrase, but rather a transformational
process by which both HUD's public support functions and
internal management efficiencies will be improved.
Q.3.How can you coordinate various functions at HUD to make
sure they work together?
A.3. As I stated in my earlier confirmation testimony, my
experience in King County as County Executive, taught me the
value of, and the need for, cross-disciplinary teams and
solutions. As every manager or businessman or businesswoman
knows, resources are always finite. Coordinating efforts from
an enterprise-wide perspective which is inclusive of our non-
Federal partners, allows one to take advantage of certain
economics-of-scale and collaboration synergies. Too often in
government we manage by cylinders. That needs to change at HUD;
that will change at HUD.
Q.4. DOT--We are currently facing many challenges: a deep
recession, a housing crisis, a crumbling infrastructure,
worsening metropolitan traffic congestion, global climate
change, a growing and aging population, and a dangerous
dependence on foreign oil. While these challenges are clearly
connected, Federal policy dealing with each of these elements
is too often developed in isolation. As you know, in February I
sent a letter to President Obama encouraging him to create a
White House Office of Sustainable Development to better
coordinate housing, transportation, energy, and environmental
policy to help us meet these challenges.
Recently, HUD and DOT announced an interagency partnership
to promote sustainable communities.
Mr. Sims, could you please elaborate on the nature and
goals of this interagency partnership, and discuss what has
been done thus far and what will be done in the future to
advance these goals?
A.4. The new partnership that Secretaries Donovan and LaHood
announced last month between HUD and DOT is intended to create
a new model of integrated housing and transportation planning,
research and development in communities around the Nation. The
partnership will work together to implement several new
initiatives:
First, we will set a goal to have every major metropolitan
area conduct integrated housing, transportation, and land use
planning in the next 4 years. To facilitate integrated
planning, we propose to make planning grants available to both
metropolitan and rural areas, and create mechanisms to ensure
that those plans are carried through to localities. DOT will
encourage Metropolitan Planning Organizations to conduct this
integrated planning as part of their next long-range
transportation plan, and HUD will work with its formula
grantees (CDBO and HOME) to coordinate their Consolidated Plans
with these regional housing and transportation plans. The goal
of this effort will be to enable metropolitan areas to set a
vision for growth and then apply Federal transportation,
housing, and other investments in an integrated way in support
of the broader vision. Coordinating these planning processes
can result in improved use of Federal housing and
transportation dollars, and expanded affordable housing
opportunities near transit.
Second, we will explore the feasibility of developing
Federal housing affordability measures that include both
housing and transportation costs. Although transportation costs
now approach or exceed housing costs for many working families,
Federal definitions of housing affordability do not account for
the dual impact that high housing and transportation costs have
on American families. The partnership will work to redefine our
definitions of affordability to reflect these interdependent
costs--so that the combined cost of housing and transportation
expenditures is more transparent to working families.
Third, HUD and DOT will work together to identify
opportunities for coordinating their programs and encouraging
``location efficiency'' in housing and transportation choices.
HUD and DOT will identify ways to incentivize locating housing
near transit and review processes to facilitate better-informed
decisions and coordinated housing and transportation
investments.
Fourth, HUD and DOT will conduct research, data collection,
development of information platforms, and analytic tools to
track housing and transportation options and expenditures,
establish standardized and efficient performance measures, and
identify best practices.
We will be submitting detailed proposals to support these
efforts in our Fiscal Year 2010 budget that will be submitted
to Congress next month. In the meantime, HUD is encouraging the
adoption of energy efficient, green building and location
efficient practices through the expenditure of our Economic
Recovery Act funds.
In addition, joint HUD-DOT efforts are already underway
through a HUD-FTA Working Group. In September 2008, FTA and HUD
submitted a joint report entitled, Better Coordination of
Transportation and Housing Programs To Promote Affordable
Housing Near Transit, to the House and Senate Committees on
Appropriations. This report outlines the strategies developed
by FTA and HUD to implement the recommendations of a jointly
sponsored 2007 study, Realizing the Potential: Expanding
Housing Opportunities Near Transit, authored by Reconnecting
America's Center for Transit Oriented Development. Over the
next few months, the Working Group will produce a Best
Practices Manual, convene key housing and transportation
stakeholders and produce a series of Policy Reports on key
issues related to lowering the cost of housing near transit.
Q.5. How will this interagency partnership incorporate energy
and environmental policies into your strategies for promoting
sustainable communities?
A.5. The partnership with DOT, and a parallel partnership with
the Department of Energy, will address critical energy needs
and environmental challenges facing our cities, suburbs, and
rural areas. The residential sector--and the built environment
more generally--are major contributors to energy consumption
and global warming. Residential buildings account for 20
percent of U.S. carbon emissions. The transportation sector
accounts for another one-third of carbon emissions, in part
because current development patterns have created a mismatch of
housing and jobs that, without adequate transit systems, have
led to long commutes and increased dependence on car travel.
The average American household now spends 34 percent of their
annual budget on housing, and 18 percent on transportation, a
combined total of 52 percent of their budgets wrapped up in
these, the two largest single expenses.
Many families that moved out to the exurbs to find
affordable housing have discovered that their home savings were
wiped out by high transportation costs. While there were many
factors that contributed to high foreclosure rates, high
gasoline costs last summer compounded the problem of high
housing and energy costs, with the result that some of the
highest foreclosure rates are to be found in places with the
highest transportation costs.
By addressing both location efficiency and energy
efficiency as key goals, the partnership will hopefully result
in more compact development and more affordable housing options
for local communities, improved zoning and creative land use
strategies to preserve open space and increase infill
development using existing infrastructure, and more energy
efficient and green construction practices. In combination,
these strategies will contribute to lowering vehicle miles
traveled, increasing energy efficiency of our buildings, and
lowering greenhouse gas emissions in our cities, suburbs, and
rural communities.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY
FROM RONALD SIMS
Q.1. HUD's Management Challenges--Mr. Sims, despite efforts at
improvement by previous administrations, HUD continues to
suffer from significant long-standing management and
operational challenges.
As Deputy Secretary, how do you intend to address HUD's
management and operational challenges?
A.1. HUD, like many large organizations, requires dramatic
reform in areas like information technology, space management,
and human resources. What we achieved in King County when I was
County Executive, was a cross-disciplinary team orientation
which provided managers with effective tools and support, to
implement and sustain effective and lasting change. Too often,
organizational change merely scratches the surface; HUD needs
to implement lasting change to meet their management and
operational challenges. I am committed to working beyond simply
creating a pass-fail bureaucracy. Employees need to be provided
the necessary tools and incentives to affect real change.
Q.2. Federal Government Role in Housing--Mr. Sims, you are
serving in your third term as County Executive of King County,
a large urban government.
As a County Executive, what are your views on the proper
role of the Federal government in housing?
A.2. As an elected County Executive with over 12 years of
experience, I feel strongly that the proper role of the Federal
government in housing is one of partner to State and local
governments. States and local governments, particularly during
these times, welcome the funds provided by the Federal
government to assist with new housing construction, housing
rehabilitation, foreclosure prevention, and other important
housing need areas. While States and local governments
recognize the authority of the Federal government to impose
requirements that must be adhered to with the provision of
Federal funds, State and local governments also must have a
voice in the expenditure of these Federal funds. State and
local officials are at the forefront of dealing with the
housing needs in their jurisdictions. In King County, we built
strategic partnerships, similar to the ``national network of
partners'' that Secretary Donovan outlined in his confirmation
testimony. As I stated in my testimony, I believe deeply in
partnerships and, as Deputy Secretary of HUD, I will work, as a
partner, with State and local governments and housing
authorities, nonprofit organizations, and private developers to
help the States and localities meet their housing needs.
Q.3. To what degree should local governments be provided with
the flexibility to meet their housing needs and how can it be
done in a manner that ensures accountability?
A.3. All State and local governments recognize that by
accepting Federal funds to address housing needs, Federal
requirements will apply to the expenditure of those funds.
However, as a County Executive, I believe that local
governments should be provided with as much flexibility as
possible within the parameters of the Federal law governing the
funds. State and local government officials are in the best
position to assess the specific housing needs in their areas,
determine how these needs should be addressed and the priority
in which these housing needs should be addressed. With respect
to accountability, President Obama already has set the standard
for all Federal agencies to be transparent in the allocation
and expenditure of Federal funds, not only for Recovery Act
funds, but for all funds. As Senator, President Obama was one
of the sponsors of the Federal Accountability and Transparency
Act, which establishes transparency and accountability
requirements for all Federal funds.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ
FROM RONALD SIMS
Q.1. Last year I introduced legislation to reform the HUD
Section 811 program. This bill, known as the Frank Melville
Supportive Housing Investment Act (S. 3593), would reform
Section 811 to make it a more effective program in developing
permanent supportive housing options for nonelderly people with
disabilities. The bill would reform the current capital advance
program and allow for a new category of multifamily projects
and end the flawed and ineffective mainstream tenant-based
program. Most importantly, the bill would authorize a new
project-based demonstration program that has the potential to
triple the number of new units developed by Section 811--
without increasing the current appropriation. The House
unanimously passed this bill in September 2008. I will soon
reintroduce the bill in the 111th Congress. If confirmed will
you work with me and Chairman Dodd to move this legislation
forward?
A.1. Yes. HUD has expressed general support for the
legislation. I understand that HUD indicated there were
portions of the proposed legislation that could be amended to
enhance the legislation. I look forward to the opportunity to
work with you on this important legislation.
Q.2. Some critics of the Department have argued that too much
low income housing has been concentrated in higher poverty and
lower opportunity neighborhoods. What will HUD do to ensure
that more assisted housing is located near high quality
schools, job openings, and recreation opportunities? What kind
of data will HUD use to measure its progress in this area?
A.2. President Obama is committed to addressing the needs of
higher poverty neighborhoods. Secretary Donovan and I share
your concern about reducing the concentration of assisted
housing tenants in high poverty and low-opportunity
neighborhoods. The President's 2010 budget proposal for HUD
will include a request to adequately fund housing vouchers, a
proven tool for giving families an opportunity to move to lower
poverty neighborhoods, as well as funding for a new initiative
called Choice Neighborhoods, that will focus on catalyzing the
transformation of distressed neighborhoods with assisted
housing into neighborhoods with high quality housing, schools,
and opportunities for jobs and recreation. Data from the Census
Bureau's American Community Survey will allow annual tracking
of neighborhood change beginning in 2010. In addition, HUD will
use other tools such as data from the Department of Education
on school performance, data from the U.S. Postal Service on
houses not receiving mail, data on the location of transit
stations, and data collected for the Home Mortgage Disclosure
Act on housing purchases to track neighborhood trends relative
to where public and assisted housing tenants live.
Q.3. King County was known for its innovative ``Equity and
Social Justice Initiative,'' which assessed certain budgetary
and planning decisions from an equity perspective. Could you
talk about how that approach could be applied to HUD programs--
and in particular the Making Home Affordable program?
A.3. The principles of King County's initiative are fundamental
to HUD's core mission and easily adaptable to HUD's new
leadership and commitment to transforming the agency. The goal
of the Initiative is for all King County residents to live in
communities of opportunity. To reach this goal, all communities
must be equipped with the means to provide individuals with
access to livable wage, affordable housing, quality education,
quality health care, and safe and vibrant neighborhoods. King
County is applying the principles of the equity and social
justice in its actions, decisions, and policies.
Equity and Social Justice Principles:
Identify and address the conditions at the root of
inequities
Actively seek out and promote decisions and
policies aimed at equity
Empower communities
Work across agencies and departments
Recognize and honor cultural differences
Raise and sustain visibility of equity and social
justice, and aim for long-term,
permanent change
These principles are incorporated into the policy
development and decision-making to ensure that promoting equity
is intentionally considered in the development and
implementation of key policies and programs and in funding
decisions. The Equity Impact Tool developed for the initiative
is starting to be used by King County departments. Extensive
internal and external communication is used to help drive the
delivery of county services and empower and build the capacity
of organizations and the community.
In regard to the Making Home Affordable programs at the
Department of Treasury, HUD shares the concern that principles
of equity and social justice have been applied to the
development and implementation of these programs. In
particular, HUD has been working with the Treasury Department
to gather data to review whether the Government Sponsored
Entities (GSEs) and loan servicers administer the Making Home
Affordable programs do so in a manner that is consistent with
the Fair Housing Act.
Q.4. As you know, the Low Income Housing Tax Credit program is
the largest assisted housing production program in the U.S.
Because the program is administered by the Treasury Department,
not by HUD, the program has not adopted any fair housing
regulations. HUD has the authority to enforce the Fair Housing
Act and the requirement that all Federal funding is used to
affirmatively further fair housing. How will HUD use this
authority with the LIHTC program?
A.4. HUD, the Department of Justice and the Department of
Treasury's Internal Revenue Service entered into a memorandum
of understanding (MOU) regarding the Low Income Housing Tax
Credit Program and potential Fair Housing Act (Act) violations
in August 2000. The MOU provides that HUD and DOJ will report
to the appropriate State or local housing finance agency any
charge of discrimination and any settlement agreement or
consent decree under the Fair Housing Act that involves a tax
credit property. In addition, HUD requires substantially
equivalent State and local agencies to report such information
to the housing finance agencies. The housing finance agencies
then reports this potential noncompliance to the IRS, which
then notifies the relevant property owners that they may lose
their tax credits if found to have violated the Act. HUD will
continue to work to ensure that persons who violate the Act do
not benefit from tax credits. I note that the Internal Revenue
Service has regulations concerning fair housing, 26 C.F.R.
1.42-55 and -9.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR BENNETT
FROM RONALD SIMS
Q.1. Given President Obama's affirmation of faith-based
offices, what is your vision for using the office to help
implement HUD's priorities?
A.1. The HUD Center for Faith-Based and Community Initiatives
(CFBCI) works to engage partners and stakeholders--both faith-
based and secular--around the agency's agenda and ensure their
experience informs our work. The CFBCI also works to ensure
that organizations rooted in the community are able to access
and participate in HUD programs, while emphasizing the agency's
standards of transparency, accountability, and efficacy.
Through regular communication, events, and trainings, the CFBCI
reaches thousands of organizations every month.
Going forward, the CFBCI will work closely with the Office
of Field Policy and Management (FPM) and program offices to:
(1) play a lead role in outreach to faith-based and community
organizations about the agency's priorities and opportunities
to become involved in programs focused on economic recovery,
support for homeowners, community development, homelessness,
and the provision of affordable housing free from
discrimination; (2) offer technical assistance to partners,
including targeted grant trainings and capacity building; (3)
foster new partnerships at the community level to identify
needs and new approaches to addressing them.
Q.2. What personnel changes has HUD made so far this year to
ensure that the faith-based office is able to meet its
mandates?
A.2. HUD recently appointed a new Director of the CFBCI to
oversee this work; and a new Staff Assistant. There are seven
other career staff in the center and a nationwide network of
field office liaisons who coordinate with the CFBCI. In
consultation with the Deputy Secretary's office and the White
House Office for Faith-Based and Neighborhood Partnerships, the
Director is engaging in a department-wide review and planning
process to ensure that in the short term the CFBCI is meeting
the objectives set out in the FY2009 APP; and setting new
objectives to support HUD's priorities.
Q.3. What program areas are likely to be enhanced by greater
faith-based office involvement?
A.3. We envision more robust outreach, technical assistance,
and support to groups who would participate in HUD programs
focused on economic recovery, support for homeowners, community
development, homelessness, and the provision of affordable
housing free from discrimination.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR CRAPO
FROM RONALD SIMS
Q.1. As FHA reserves continue to dwindle, what solutions do you
propose to restore the reserves so that FHA continues to
operate on a sound financial basis? Will you advocate for an
appropriation? Will you increase premiums? If so, will they be
front-end increases or annual during the life of the loan?
A.1. Financial stability of the FHA's Mutual Mortgage Insurance
Fund not only is a matter of sound fiscal management but also
is the subject of statutory requirements under the National
Housing Act. FHA reserves in the Mutual Mortgage Insurance Fund
currently satisfy program requirements, but I share the concern
expressed about the recent reduction in the amount of those
reserves. If confirmed, I will work closely with the FHA
Commissioner in his review of the fund's current and
anticipated activity and in the development of any proposals
that may be needed to ensure that operations of FHA's single
family mortgage insurance programs are done in a fiscally sound
manner and in conformity with statutory requirements.
Q.2. The HUD Hope for Homeowners program has received very few
applications and few banks have signed up to participate. What
are your objectives with this program going forward?
A.2. The current very low activity in the HOPE for Homeowners
Program is disappointing, but a bill (H.R. 1106), entitled the
``Helping Families Save Their Homes Act of 2009,'' was passed
by the house and is pending before the senate. There are
several HOPE for Homeowners provisions in this bill which would
address issues raised by potential participants in the program,
including incentives for loan servicers and less onerous
requirements for borrowers. If confirmed, I will work with the
FHA Commissioner and his program officials to ensure
implementation of these changes, if enacted, as soon as
possible in order to increase program activity.
Q.3. Are you intending to make additional changes to the RESPA
rule?
A.3. The Real Estate Settlement Procedures Act (RESPA) is
intended to reduce unnecessary and excessive settlement costs
for home purchasers by ensuring that necessary information is
available to them as they prepare to purchase a house with a
mortgage loan, and to eliminate abusive practices like
kickbacks and referral fees. The recent RESPA rulemaking
process has been an effort by HUD to improve a home purchaser'S
ability to shop by providing for more timely and clearer
disclosure of information.
HUD issued its RESPA reform regulation in November of 2008.
Under the new rule, home purchasers will receive disclosure of
pertinent information regarding their mortgage loans and
related settlement charges earlier in the shopping process
through a standardized Good Faith Estimate (GFE) and revised
HUD-1 form. The most significant provisions of the new rule
would go in effect on January 1, 2010. If confirmed, I will
assist HUD officials in their evaluation of the new rule in
order to assess the need for any additional changes in the
future.
I understand that HUD is in litigation that challenges two
aspects of the RESPA rule: the ``required use'' provision and
the mandatory disclosure of mortgage broker compensation. I
understand that HUD is considering withdrawing the ``required
use'' provision as drafted, and is defending the litigation
concerning mortgage broker compensation vigorously consistent
with its belief that transparency is essential to protect
consumers in making what is among the most significant
purchases in their lives.
Q.4. How do you plan to use FHA authorities as well as working
with Ginnie Mae to address the dramatic evaporation of
warehouse credit line availability to FHA lenders?
A.4. Discontinued, I will work closely with HUD officials in
their effort to respond to this situation in a manner that is
consistent with their statutory authority. I also will work
with other agencies, such as the Treasury Department, to
determine whether FHA and Ginnie Mae could provide assistance
in the operation of a credit facility that would provide
liquidity support for nondepository Ginnie Mae approved
issuers, or to warehouse lenders supporting nondepository
Ginnie Mae issuers, in connection with FHA insured or VA
guaranteed loans.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR VITTER
FROM RONALD SIMS
Q.1. How long do you want and plan to keep Disaster Housing
Assistance Program available to affected families in the Gulf
Coast Region?
A.1. As you may know the Disaster Housing Assistance Program is
a FEMA program administered by HUD pursuant to an MOU. The
program was to terminate March 2009, and funds have been
appropriated to provide vouchers for eligible families that
continue to require ongoing housing assistance. However, the
program has been extended until August 2009 to allow for a
transition period for the affected families. At this time there
is no intent to extend the program beyond August 2009.
Q.2. Do you have any plans to change the program?
A.2. As you are aware, any discussion to change the program for
future disasters must be had with FEMA. I understand that HUD
and FEMA have made some systems and procedural changes to DHAP-
Ike based on their experience with DHAP. However, I am not
aware of any intention to make substantive changes, but look
forward to learning more about the program and to discuss with
my counterpart at FEMA issues that may require changes to the
program.
Q.3.The White House Web site reads: My Administration is
committed to creating an unprecedented level of openness in
Government. We will work together to ensure the public trust
and establish a system of transparency, public participation,
and collaboration. Openness will strengthen our democracy and
promote efficiency and effectiveness in Government.
Yet, on March 22, 2009, news reports indicate that there
has been a protracted, 12-year legal battle involving
government documents relating to Qwest Field. This legal bill
will be approximately $1 million. Is this the standard that
this Committee and the American people can expect from HUD? How
will you work to ensure that you will be open and transparent
with the American people in your new role at HUD?
A.3. I am aware of the President's Executive Order on
Transparency, Openness, and Collaboration in Government. As I
stated in my testimony at my confirmation hearing, HUD must be
an accountable, transparent, and effective organization--ready
to embrace the new era of management oversight so that program
activities and outcomes, contracts, grants, and loans satisfy
these transparency and accountability provisions, and also
mitigate fraud, waste, and abuse. I am committed to the
challenge put forth before me by President Obama and Secretary
Donovan to bring transformational change to HUD and further
ensure the integrity of HUD programs.
With regard to the litigation involving Qwest Field, since
that matter is involved in active litigation, I am regrettably
unable to comment upon that case.
Q.4. Section 108 is the loan guarantee provision of the
Community Development Block Grant (CDBG) program that provides
communities with a source of financing for economic
development, housing rehabilitation, public facilities, and
large-scale physical development projects. Clearly, this is a
very important tool for both HUD and local governments.
You gave a low-interest-rate HUD loan to build a four-star
hotel at the Seattle-Tacoma International Airport. Those loans
are intended to clean up blighted areas and typically go to
nonprofits, low-income housing developers, or social service
agencies. Do you think that that loan, to an upscale hotel and
casino owner, was an appropriate use of taxpayer funds? Was
there no other, more worthy project?
Would you allow localities to make such loans?
A.4. Section 108 loans are not limited to cleaning up blighted
areas. The loans can be used for economic development projects
that benefit low and moderate income persons by creating jobs.
The hotel in question was not undertaken. Had it been
undertaken, however, it would have met the national objectives
criteria and would have exceeded the minimum public benefit
standards. Also, it is worth noting that HUD-guaranteed Section
108 loans are not funded with taxpayer funds. HUD arranges a
public offering of securities backed by the guaranteed notes.
Private investors provide the actual funding, not the
taxpayers.
Under the Section 108 program, like CDBG, the local
government--not HUD--decides which eligible projects to fund.
Like CDBG, the local government must undertake citizen
participation in preparing its Section 108 application. It is
appropriate that local governments who know the needs of their
communities decide which projects are worthy.
If the loan will be used for an eligible activity which
meets a national objective (and the guarantee is not an
unacceptable financial risk), the local governments may decide
which projects to fund.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD
FROM FRED P. HOCHBERG
Q.1. Export-Import Bank's Role in the Current Economy--The
current COO of Export-Import Bank (Ex-Im Bank) recently
summarized the economic situation at Ex-Im Bank's Annual
conference by paraphrasing Dickens by saying, ``In our case, it
is the worst of times for the global economy BUT the best of
times for Ex-Im Bank . . . .''
The extraordinary situation occurring in the U.S. financial
sector has created enormous challenges but it also highlights
the incredible opportunity facing Ex-Im Bank as it tries to
fulfill its core mission of supporting U.S. exporters and their
workers by providing financing for exports that would otherwise
not go forward.
One of those opportunities would be to utilize Ex-Im Bank's
authority to do direct lending. Do you foresee Ex-Im Bank doing
more direct lending? What other new programs or ideas do you
think should be pursued?
A.1. While it is too early for me to comment on new programs, I
am committed to seeking new and innovative tools and products
to help exporters and commercial banks in supporting U.S.
exports. However, Ex-Im Bank is already doing much more direct
lending over last year. Staff at the Bank believes this trend
will continue until the commercial banks here and around the
world recover. In the first half of FY09, Ex-Im has authorized
15 direct loans. The Bank authorized two in FY08.
Q.2. Inspector General's Report Concerning Fraud in Medium Term
Program--In the last Congress, this Committee confirmed the
inaugural Inspector General. It appears to have been a very
timely exercise, as that office has identified fraud in over
$100 million in medium term transactions. Some estimate, that
up to $300 million in fraud has been committed in that program
since 2002.
The Inspector General recently released a report detailing
the fraud and the report also highlighted a number of specific
steps Ex-Im Bank should take to address this problem. Are you
committed to working with the IG to implement those
recommendations, particularly concerning the strategic planning
for the medium term program and for Ex-Im Bank in general?
A.2. As a businessman for over 20 years, the one thing I don't
like to do is to lose money to fraud. Therefore, I am fully
committed to working with the Inspector General to review his
recommendations and, where prudent, implement them.
Q.3. Small Business--Congress has mandated that Ex-Im Bank use
20 percent of its annual authorizations on small business
transactions.
Given your background at SBA, do you have any ideas on how
to further expand Ex-Im Bank's role with small business
exporters so that 20 percent can become a floor, not a ceiling?
A.3. One of the reasons that President Obama nominated me to be
President and Chairman of Ex-Im Bank was my small business
background.
While I would like to make the 20 percent a floor, Ex-Im
Bank needs to support ALL exporters, small and large, in these
difficult economic times. What I can commit to is to focus on
small business and work to ensure that Ex-Im Bank encourages
small business exports in all ways possible. This is something
I firmly believe in.
Furthermore, it is my understanding that for the first time
in its history, the Bank has authorized over $1 billion for the
support of small businesses in the first 6 months of the year.
Given my dedication and interest in small business, I hope to
see this number increase.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY
FROM FRED P. HOCHBERG
Q.1. Expansion of Ex-Im Financial Support--Mr. Hochberg, over
the past few months, Ex-Im has responded to the ongoing
financial crisis by enhancing and modifying some of its
programs to provide more liquidity in the trade finance market.
Ex-Im has increased its direct lending and short-term finance
programs, and modified its direct lending program to cover a
wider range of transactions. While it is important that Ex-Im
support trade finance in this difficult time, it is also
important that Ex-Im not water-down its underwriting criteria
and expose itself to losses.
How do you plan to balance the increased demand for trade
financing with Ex-Im's need to maintain sound underwriting
standards?
A.1. Reasonable assurance of repayment guides all Ex-Im Bank
transactions. The Bank's job is to take reasonable risk. Our
mandate is to help correct market imperfections. If confirmed,
I will ensure that our rigorous underwriting standards are
maintained. At the same time, we need to keep in mind that Ex-
Im Bank exists to sustain and create U.S. jobs in this
difficult economy.
Q.2. Small Business Lending--Mr. Hochberg, the Ex-Im Bank is
required to allocate 20 percent of its authorizations to small
businesses. While Ex-Im has allocated more than 20 percent of
its authorizations to small business during the past 3 years,
it previously had difficulty meeting the 20 percent mandate.
What steps do you think Ex-Im can take to ensure that it
continues to meet the needs of small businesses and satisfy the
20 percent mandate?
A.2. I look forward to working with Karen Mills the new SBA
Administrator and finding ways for our two agencies to work in
greater concert to increase small business exports. This was a
finding that Karen and I reached when we both worked on the SBA
transition team this past fall. Ex-Im may need some new loan
and insurance products. I also look forward to working with
members of Congress to convene town hall meetings throughout
the country to better engage small business owners. As I stated
in my testimony, I also want to review our customer service to
ensure that Ex-Im Bank provides top notch service to all
customers, especially small business customers. I have already
consulted Ex-Im Bank's senior vice president for small business
on how we can improve our outreach to small businesses.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR BUNNING
FROM FRED P. HOCHBERG
Q.1. Recently, the Export-Import Bank came under Congressional
scrutiny when it became known that Ex-Im provided $900 million
in loan guarantees to benefit Reliance Industries Limited, an
Indian company which has been supplying some 10 percent of
Iran's gasoline needs. Over $500 million of these loan
guarantees were to help finance expansion of Reliance's
Jamnagar refinery complex, the very refinery complex at which
this gasoline for Iran is refined. Some portion of these loan
guarantees to Reliance has apparently not yet been disbursed.
Letters from several members of Congress called on Ex-Im to
cease disbursement of these loan guarantees until Reliance
halts its supply of gasoline to Iran. Indian newspapers
recently reported, without direct confirmation from Reliance,
that Reliance has responded to Congressional concerns by
deciding to halt further gasoline exports to Iran.
Can you confirm that Reliance has agreed to halt its
provision of gasoline to Iran? If not, do you support halting
further disbursement and any new loan guarantees to Reliance
until they stop supplying gasoline to Iran? If so, can you tell
us what your response would be if Reliance resumes supplying
gasoline to Iran while Iran continues to be a state sponsor of
terrorism and continues to advance its illicit nuclear program?
A.1. General Statement Preceding Specific Answers--I want to
assure you that as a private citizen I share your concerns
regarding state sponsors of terrorism, including Iran. These
are foreign policy concerns of the utmost importance to the
United States and its allies.
I have been informed that when foreign policy concerns are
part of Ex-Im Bank transactions, the Bank consults closely with
the Department of State and the Department of Treasury. This is
because the Bank is limited to considering transactions on the
basis of finance and adherence to the Bank's environmental
guidelines. I am also informed that there is a mechanism by
which the State Department can direct the Bank to consider
nonfinancial factors when deciding on whether to approve a
transaction. If confirmed, I commit to follow the requirements
of Ex-Im Bank's charter on this and all other matters.
Since I was not involved in this matter, I cannot confirm
whether or not Reliance has agreed to halt its provision of
gasoline to Iran. I also cannot make judgments as to what
future relations between the Ex-Im Bank and Reliance, or any
other Bank customer, should be, regarding state sponsors of
terrorism. These are foreign policy issues, so the Bank will
consult closely with the Departments of State and Treasury on
such matters. If confirmed, I will keep you informed of
developments.
Q.2. Are you aware of any future Ex-Im loan guarantees which
involve Reliance Industries?
A.2. I am not aware of any future Ex-Im transactions which
might involve Reliance or any other specific buyer. If
confirmed, I will keep you informed of any such transaction.
Q.3. JP Morgan is one of the banks which have benefited from
U.S. bank-share purchase program (or bailout). It is also the
bank which has been contracted to provide the loans associated
with Reliance's Jamnagar refinery. Are you aware of discussions
with JP Morgan where it has been asked and the Ex-Im Bank has
been assured that no loans backed by Ex-Im will be provided to
companies that have business dealings with Iran? This includes
the loans involving Reliance that have not yet been dispersed.
A.3. I am in no position to know what discussions have taken
place. If confirmed, I will pay particular attention to any
matters dealing with Reliance.
Q.4. What should the Bank's policy be with regard to providing
loan guarantees to companies whose projects benefit directly or
indirectly state sponsors of terrorism or do business with
state sponsors of terrorism?
A.4. This is a complex issue of utmost importance to U.S.
foreign policy. If confirmed, I will consult closely with the
Departments of State and Treasury regarding issues of state
sponsors of terrorism.
Q.5. As Chairman of the Ex-Im Bank, what mechanisms would you
put in place to ensure that, as a matter of Ex-Im policy, all
interaction and correspondence between the Bank and prospective
loan guarantee beneficiaries be shared with the Bank's board
prior to approval of the loan guarantees?
A.5. If confirmed, I will assure that as a matter of Bank
policy Board members will be kept fully informed of all
materials relevant to their responsibilities to make sound
decisions regarding transactions before them, including issues
of state sponsors of terrorism.
Q.6. Should language be inserted in standard Bank loan
applications committing loan recipients to halting business
dealings with state sponsors of terrorism?
A.6. I cannot comment on this issue at this time. However, if
confirmed, I will consult with our Office of General Counsel
and work closely with the Departments of State and Treasury
regarding this very important matter of U.S. foreign policy.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY
FROM HELEN R. KANOVSKY
Q.1. Fraud and Lending--On several occasions, HUD's Inspector
General has raised concerns regarding FHA's lax approach to
reducing fraud in its mortgage insurance programs. For
instsnce, the IG reported last year that FHA does not
consistently refer potentially fraudulent loans to the
Inspector General's Office.
What efforts can be taken to eliminate fraud in FHA
programs?
Do you have any perspective on steps that can be
taken to reduce or eliminate fraud?
A.1. I strongly support any steps government can take to reduce
or eliminate fraud in HUD programs. The Office of General
Counsel aggressively prosecutes fraud and malfeasance in HUD
programs through its enforcement authorities, such as the
Program Fraud Civil Remedies Act (PFCRA) and Civil Money
Penalty statutes. HUD is the lead agency in the Federal
govermnent in its use of the PFCRA to combat fraud.
It is my intention to fully support and expand, where
possible, pursuit of fraud cases under any enforcement
mechanism available to the Department. If confirmed, I will be
committed to increasing and enhancing HUD's enforcement
abilities. I will work with HUD's Mortgagee Review Board (MRB)
to sanction FHA-approved lenders for failing to comply with HUD
requirements.
I look forward to working with HUD's Inspector General,
HUD's Home Ownership Centers, Mortgagee Review Board, and other
government agencies, including the Department of Justice, to
incresse enforcement against FHA-approved mortgagees and others
who commit fraud in HUD programs.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR CRAPO
FROM HELEN R. KANOVSKY
Q.1. As FHA reserves continue to dwindle, what solutions do you
propose to restore the reserves so that FHA continues to
operate on a sound financial basis? Will you advocate for an
appropriation? Will you increase premiums? If so, will they be
front-end increases or annual during the life of the loan?
A.1. Financial soundness of the FHA Mutual Mortgage Insurance
Fund is required by section 205(h) of the National Housing Act.
If confirmed, I will work closely with the Secretary and the
FHA Commissioner to implement whatever steps they determine, on
the basis of their review of present and anticipated program
activity, to preserve the financial soundness of the Mutual
Mortgage Insurance Fund.
Q.2. The HUD Hope for Homeowners program has received very few
applications and few banks have signed up to participate. What
are your objectives with this program going forward?
A.2. Pending legislation, entitled ``Helping Families Save
Their Homes Act of 2009'' (H.R. 1106), was passed by the House
and currently is pending in the Senate. The bill has several
specific improvements to the HOPE for Homeowners program that
include simplification of the process and incentives for the
loan servicers. If confirmed and if this bill is enacted, I
would take all necessary steps to assist the Secretary and the
FHA Commissioner to implement the statutory amendments so that
program participants can benefit from them as soon as possible.
Q.3. Are you intending to make additional changes to the RESPA
rule?
A.3. As you know, the Real Estate Settlement Procedures Act
(RESPA) is a major consumer protection statute intended to
provide protection to consumers in the home mortgage settlement
process through increased disclosure and the elimination of
abusive practices such as kickbacks and referral fees. With the
current mortgage crisis, and the Department's interest in
eliminating all forms of mortgage fraud which may have
contributed to the crisis, RESPA has taken on even more
importance.
HUD's issuance of its RESPA reform regulation in November
of 2008 was a major revision of HUD's RESPA regulations,
including the disclosures that are required to be provided to
borrowers with regard to their mortgage loans and the
associated settlement charges that are disclosed on the Good
Faith Estimate (GFE) and the HUD-1. The intent of the new rule
is to make these RESPA disclosures more timely and effective,
with the ultimate goal of reducing mortgage costs for
consumers. The most significant provisions of the new rule are
not required to be used until January 1, 2010. HUD will
continue to evaluate the new rule during this 12 month
implementation period to assess the need for any additional
changes going forward.
Two aspects of the RESPA rule are being currently
challenged. In National Association of Home Builders, et al. v.
Preston, No. 08-1324 (E.D. Va.), plaintiffs have challenged
HUD's required use provision under the Administrative
Procedures Act. HUD has issued a notice proposing to withdraw
the required use provision from the rule and is considering
comments to this proposal. The court has stayed the litigation
until May 8, 2009, to provide HUD an opportunity to respond to
the comments. The second suit, National Association of Mortgage
Brokers, Inc. v. Preston, No. 08-2208 (D.D.C), challenges HUD's
requirement that mortgage brokers disclose their compensation.
HUD is vigorously defending this suit and anticipates a
decision prior to the rule's January 1, 2010, implementation
date.
Q.4. How do you plan to use FHA authorities as well as working
with Ginnie Mae to address the dramatic evaporation of
warehouse credit line availability to FHA lenders?
A.4. If confirmed, I would carefully review the statutory
authorities for FHA and Ginnie Mae programs to determine what
options, if any, may be available under current law with regard
to warehouse lines of credit, and consult with program
officials to ensure all options are thoroughly considered. I
would also consult with other agencies, such as the Treasury,
to determine if FHA and Ginnie Mae could provide assistance in
the operation of a credit facility that would provide liquidity
support for nondepository Ginnie Mae approved issuers, or to
warehouse lenders supporting nondepository Ginnie Mae issuers,
in connection with FHA insured or VA guaranteed loans.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD
FROM DAVID H. STEVENS
Q.1. Viability of FHA--One of the few bright spots in the
current housing economy has been the role being played by the
Federal Housing Administration. Just a year or two ago, many
people were asking whether or not the FHA program was a vestige
of another era--its market share had dropped 3 percent. Today,
that market share has expanded to between 20 percent and 30
percent; without FHA, millions of Americans would have no
access to mortgage credit at all.
At the same time, the very housing market that has wreaked
such havoc with so many mortgage lenders is also hurting FHA.
For example, FY08 capital ratio is estimated to be 3 percent,
down from 6.4 percent last year.
To a certain extent we want FHA to be this kind of counter-
cyclical force in the market, able to absorb losses while
continuing to lend, even in the bad times. But we also have to
be mindful of the solvency of the fund.
What steps can be taken to enure the ongoing financial
health of FHA?
A.1. As indicated in my statement to the Committee, maintaining
actuarial soundness of the fund is priority number one and
would involve the following steps. First, if confirmed, I will
immediately begin looking at specific product terms of the FHA
program against performance data to identify potential areas of
adverse selection in order to create changes that may be needed
to the program. Second, we will look to immediately impact the
quality of the seller pool by identifying outliers in the
program and eliminating those with questionable capital or
performance levels as a means to protect the fund from fraud or
other adverse impact from low performers. Third, if confirmed,
we will assemble a team to analyze revenues from the new
business against loan loss data and work to create options, as
needed, to strengthen the capital reserves of the fund. Please
let me reiterate, as I stated in my comments to the Committee,
that solvency of the fund for the short and the long term is a
priority. The short term questions are ones that I cannot
answer until I am confirmed and able to engage with the
organization to assess the risk profile of the portfolio.
Q.2. Career--You were Senior Vice President at Freddie Mac.
Please describe your role specifically regarding Freddie Mac's
purchase of subprime and high-risk products?
A.2. Freddie Mac was essentially two businesses prior to its
restructuring. The primary business that was at the core of its
mission was providing a guarantee on the flow deliveries of
standard business, primarily 30 and 15 year fixed-rate
mortgages, from mortgage sellers throughout the Nation into TBA
securities. It was this business for which I was largely
responsible, along with several other Senior Executives. The
other business was in the portfolio in which Freddie Mac was a
buyer of nonstandard products in the market with shareholder
returns as the primary objective. It was in the portfolio that
the purchase of the subprime and the other high risk products
occurred. I did not manage or have responsibility for this side
of the company in any way. One of the areas that did report to
me for a time included our expanding markets organization which
was tasked with helping to expand homeownership with low/mod,
special affordable, and underserved markets. In this area
Freddie Mac did offer a program under its ``home possible''
product menu that was designed to match the Fannie Mae ``My
Community'' product. This product had a high loan to value
ratio and a lower FICO score requirement, but it had primary
mortgage insurance that covered the top 40 percent of the value
and had credit guidelines that were far superior to anything in
the subprime market. This was perhaps the most risky product on
the flow side of the business, but it was a very small volume
and was heavily insured from a risk perspective. I left Freddie
Mae in early 2005, while their financial health was still very
strong, and both loan performance and company profits were
high.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY
FROM DAVID H. STEVENS
Q.1. Fraud and Lending--On several occasions, HUD's Inspector
General has raised concerns regarding FHA's lax approach to
reducing fraud in its mortgage insurance programs. For
instance, the IG reported last year that FHA does not
consistently refer potentially fraudulent loans to the
Inspector General's Office.
Mr. Stevens, what efforts can be taken to eliminate fraud
in FHA programs?
A.1. If confirmed, I will directly address this issue.
Unfortunately, without specific data or access, I would only be
able to speculate. The OIG concerns need to be looked at and
aggressively addressed. Let me state clearly that fraud is
absolutely not tolerated in the mortgage market and cannot be
tolerated in FHA programs. I believe that the OIG should be an
area of close cooperation with FHA to root out fraud and
eliminate and/or prosecute as it occurs. System enhancements
with stronger risk oversight in FHA can be a significant impact
to protect against fraud and misrepresentation, and this is an
area of priority for me, if I am confirmed.
Q.2. Financial Health of FHA--The crisis in our mortgage
markets has not been confined to solely the sub-prime market.
The last 2 years have witnessed increasing delinquencies in
FHA's single family business. In FY08 alone, the economic value
of FHA's insurance fund fell by over $14 billion, a decline of
almost 70 percent of the fund's value in FY07. At the same
time, FHA's presence in the market has increased dramatically.
Mr. Stevens, is it possible that we could see a continued
decline in FHA's health, potentially wiping out the fund's
remaining value?
A.2. At this point the FHA insurance fund is actuarially sound
and should be sound through FY2010. As expressed in my
statement to the Committee, this would be job number one to
address. If confirmed, I will immediately look into the
portfolio strength, current performance trends by book year,
State, product, lender, and program characteristic to determine
if, and where, we can make substantive changes to protect the
current and future state of the fund. I pledge that I will
evaluate and report back to this body our findings if I am
confirmed.
Q.3. Do you believe FHA has sufficient resources, in terms of
staff and technology, to safeguard the taxpayer from loss?
A.3. I have not had the opportunity to assess the full capacity
of the FHA resources and will do so quickly, if confirmed,
since the ability to address these complex issues requires
effective people, funding, and tools. I do know that FHA has a
strong, dedicated employee base of long-term career talent that
will be depended upon to help in this effort. I also know that
the FHA systems have significant deferred maintenance. A
business of this size cannot operate over so many years without
systems investment. The fact that FHA has grown from such a
small business relative to market size to one that approximates
one-third of the mortgage market is a testament to the existing
organization that they can manage this kind of incremental
change with limited incremental funding to support the growth.
If confirmed, an area that I intend to look for enhancement in
resources is the overall credit risk management area in order
to determine how best to manage and control risk across all off
FHA.
Q.4. FHA's Multifamily Program--Mr. Stevens, most of the focus
on our mortgage market has been solely on the single-family
side. However, over the last year we have seen increasing
delinquencies on multifamily mortgages. Among securitized
multifamily mortgages, delinquency rates have tripled over the
last year.
What is your view of the health of the multifamily mortgage
market, and in particular, the financial health of FHA's
Multifamily Programs?
A.4. Just as with the single family and commercial markets, the
multifamily market is not immune to the stresses of this
economic environment. With the appointment of Carol Galante as
the Deputy Assistant Secretary for Multifamily Programs, FHA
will have the best leadership to help evaluate the current
state of the multifamily mortgage market. Providing safe and
available housing in the market depends on both a sound single
family mortgage finance system and a strong multifamily market.
If confirmed, I will work closely with Carol Galante to
evaluate the current state of the market and identify areas of
focus and opportunity in order to protect and improve the
program going forward.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR BAYH
FROM DAVID H. STEVENS
Q.1. As Assistant Secretary for Housing, HUD's manufactured
housing program will fall under your jurisdiction. Can you
assure the Committee that the full and proper implementation of
the Manufactured Housing Improvement Act of 2000 will be a
priority for you?
A.1. The Manufactured Housing Improvement Act of 2000 provides
valuable protections for consumers, and I will work hard to
make sure that it is properly implemented. It is my
understanding that the Act requires HUD to create the
Manufactured Housing Consensus Committee, and to develop
national programs for installation and dispute resolution. It
is also my understanding that these key elements of the Act
have been implemented. The Consensus Committee has been
established, and the installation and dispute resolution
programs are in place. The continued protection of consumers
under the National Manufactured Housing Construction and Safety
Standards Act of 1974 and the Manufactured Housing Improvement
Act of 2000 will be a priority for me.
Q.2. The Manufactured Housing Consensus Committee (MHCC) is the
centerpiece reform of the Manufactured Housing Improvement Act
of 2000. It was established to serve as an intermediary between
the industry, consumers, and HUD. It has come to my attention
that the independence of this committee is being adversely
affected by restrictions placed on its functions, as well as
the ability of its members to communicate and interact with
program stakeholders and the public. Will you take steps to
ensure the independence of the MHCC in fulfilling its statutory
duties and purpose, as intended by the Congress?
A.2. The MHCC is an advisory committee, subject to the
protections and transparency requirements of the Federal
Advisory Committee Act, and established to provide independent
recommendations to the Secretary on certain aspects of the
Manufactured Housing Program. I understand that the MHCC has
participated in over 100 meetings since its creation and has
provided valuable expertise and assistance to the Secretary on
manufactured housing issues. I am not familiar with the details
of any policies to restrict the committee's function, but
nevertheless I would be concerned by any efforts to threaten
its independence. If confirmed, it is my intention to ensure
that the MHCC will continue to operate to fulfill its statutory
duties and purpose and in accordance with the protections of
the Federal Advisory Committee Act.
Q.3. The Manufactured Housing Improvement Act of 2000 provides
for the appointment of a noncareer official to serve as
Administrator of HUD's manufactured housing program. However, I
understand that this key position has often remained vacant,
undermining the intent of Congress in establishing this role to
serve as a liaison between the Department and the Manufactured
Housing Consensus Committee. Upon your confirmation, will you
commit to filling this position as quickly as possible?
A.3. The Act provides funding for a noncareer Administrator to
administer the manufactured housing program. This position has
been filled in the past. While the appointment of an
Administrator is not required by the Act, I feel that it is an
important position and I will take a close look at this matter.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR CRAPO
FROM DAVID H. STEVENS
Q.1. As FHA reserves continue to dwindle, what solutions do you
propose to restore the reserves so that FHA continues to
operate on a sound financial basis? Will you advocate for an
appropriation? Will you increase premiums? If so, will they be
front-end increases or annual during the life of the loan?
A.1. As stated in my statement during the hearing, the first
priority is to look into both the FHA product terms and lender
behaviors in order to quickly identify areas of weakness in the
program. At the present time, the FHA fund is solvent and meets
actuarial requirements. Based on HPI (House Price Index) data,
I do not see a short term need for any appropriation, and I am
hopeful that this will be true for full year 2010. In terms of
specific responses to improve the reserve, it will take three
steps to occur in order to provide a more thorough answer.
First, my confirmation will allow me to access all of the
current risk data and the ability to assess staff capabilities
and current mitigation efforts. Second, I will be able to
assess loss expectations and incoming revenues from the newly
insured business in order to quantify the net financial impacts
to the fund. Third, we then will be prepared to make
recommendations related to questions about premium increases,
front-end increases, or other options. Please understand that
credit risk management and actuarial soundness are my top
priorities, and I pledge to focus here immediately, assuming I
am confirmed.
Q.2. The HUD Hope for Homeowners program has received very few
applications and few banks have signed up to participate. What
are your objectives with this program going forward?
A.2. It is clear that Hope for Homeowners has not been
successful to date. The core reasons for this relate to the gap
in meeting the needs of homeowners and investor/servicers.
Between the complex process requirements and the fairly strict
restrictions in the initial program, it was unlikely from the
outset that implementation would meet expectations from those
who crafted the initial program. Pending legislation entitled
``Helping Families Save Their Homes Act of 2009'' (H.R. 1106),
which was passed by the House and currently is pending in the
Senate, has several specific improvements to the program that
include simplification of the process and incentives for the
servicers. This bill is a key part of improving the process. I
believe also that servicers' motivation for solutions has grown
with time, so the enactment of H.R. 1106 will meet a more eager
and willing market to participate in this program as an option.
At this time, I cannot formally engage in the dialogue with
industry lenders to gauge the success of these changes, but I
am confident that they are significant and will go a long way
to improving performance of the program.
Q.3. Are you intending to make additional changes to the RESPA
rule?
A.3. At this point the RESPA rule is something I support
pending the resolution of concerns about a provision called
``required use.'' I believe the rule is a significant
improvement in creating a more transparent disclosure process
and set of documents that will protect consumers in the process
of obtaining a mortgage loan for their home. Over time, there
may be more changes needed, and I was very involved in the
rulemaking process, having testified to a House committee in
the fall of 2008, and promise to look closely at the current
rule as well as any additional changes that may be needed in
the very short term.
I understand that HUD currently is in litigation
challenging two aspects of the RESPA rule, the required use
provision and the mandatory disclosure of broker compensation.
I also understand that HUD is defending this litigation
vigorously and believes that transparency is essential to
protect consumers in making what is among the most significant
purchases in their life.
Q.4. How do you plan to use FHA authorities as well as working
with Ginnie Mae to address the dramatic evaporation of
warehouse credit line availability to FHA lenders?
A.4. The issue of warehouse lines is significant and one that
would affect the ability of this Nation to have a fully
functioning, highly competitive mortgage market. In the absence
of private market solutions, there needs to be consideration of
a public solution as a minimum stop gap measure to protect
hundreds of otherwise well-capitalized and responsible lenders
in the market. I believe that FHA and Ginnie Mae should be more
closely aligned within their respective authorities since the
insurance and the financing of mortgage products are directly
related to the ability to provide a liquid and competitive
financing vehicle for consumers. Warehouse lending is a
priority of Secretary Donovan, and I will be directly involved
to help find a solution, if I am confirmed.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR CORKER
FROM DAVID H. STEVENS
Q.1. Mr. Stevens, due to the challenges in the financial
sector, hospitals that are looking to expand their facilities
or construct new facilities that are needed in certain areas
are unable to get the financing necessary for these projects. A
HUD program commonly referred to as a Section 242 mortgage loan
provides needed assistance to acute care hospitals. Currently,
Section 242 loans are not available to psychiatric hospitals or
physical rehabilitation hospitals that also serve important
health care functions in Tennessee and around the country. I
would appreciate your thoughts on the possibility of expanding
these section 242 loans to hospitals beyond traditional acute
care facilities.
A.1. The authority for FHA's hospital mortgage insurance
program is found in section 242 of the National Housing Act.
The answer to your question may depend upon the extent to which
section 242 provides authority for insuring mortgages secured
by psychiatric hospitals and physical rehabilitation hospitals.
If confirmed, I will review that authority with HUD attorneys
and consult with hospital program administers in order to
provide you with an informed response to your question.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR VITTER
FROM DAVID H. STEVENS
Q.1. What checks and balances should be present between the
Ginnie Mae functions and FHA?
A.1. In virtually any mortgage investment business, the ties
between the asset acquisition side and the securitization side
are extremely close. The performance of the Ginnie Mae
securities depends on the quality and duration of the assets
that are pooled to form the security. Ginnie Mae needs to have
a voice in the dialogue around programs and polices of
mortgages used to back the securities simply to ensure that
decisions are made on the best information available as FHA
moves forward. If confirmed, I pledge to work much closer with
Ginnie Mae to make sure that open and transparent information
is available in order to make the most effective decisions.
Q.2. Do you think TARP money should be used to facilitate Hope
for Homeowners, including compensating subordinate lien holders
so that they may be extinguished?
A.2. The TARP funding guidelines are prepared by the Treasury
Department, but I will look seriously at this issue, if
confirmed, and would promise to respond to this question after
that review.
Q.3. Do you believe Hope for Homeowners should be terminated?
If no, what should be the goals of a new program in its place?
If yes, what actions will you take to ensure Hope for
Homeowners works?
A.3. No. The reasons for the low participation in the current
program are due to complexity of process to the investors/
servicers, confusing qualification guidelines to consumers, and
adverse incentives. The program enhancements need to address
these issues.
Enactment of program improvements in H.R. 1106 would
simplify the process, remove hurdles to consumers, and provide
incentives to servicers. In addition, with more stress on
portfolios, I believe servicers desire for the improvements
will be higher now than perhaps when the program was first
introduced, especially if H.R. 1106 is enacted.
Q.4. How quickly do you plan to implement all aspects of last
year's FHA modernization initiatives as well as the related
systems and technology improvements?
A.4. Assuming appropriations for technology enhancements are
approved and assuming confirmation, I will work with all
deliberate speed to evaluate and implement all improvements as
quickly as possible, with prudent judgment and process.
Q.5. Currently there is a moratorium on the implementation of
risk-based pricing. How do you plan to implement risk-based
pricing? How will the implementation of risk-based pricing
affect the health of the FHA fund? How will the implantation of
risk-based pricing affect the need for the FHA to request a
credit subsidy from Congress?
A.5. If confirmed and the statutory moratorium is not extended,
I would review the data on which FHA based its decision to
implement risk-based mortgage insurance premiums in order to
determine what is the most prudent course of action, going
forward, to expand participation in these programs while
protecting the financial soundness of the mortgage insurance
funds.
Q.6. How do you plan to ensure that the multifamily group
streamlines approvals for new loans, refinancing of old loans,
and prepayments?
A.6. If confirmed, I will work very closely with Carol Galante,
FHA's new Deputy Assistant Secretary for Multifamily Programs,
to evaluate the current state of the market and to identify
areas of focus and opportunity in order to protect and improve
the programs, including those involving loan prepayments as
well as new loans and refinancing of existing loans.
Q.7. On March 8, 2009, a Washington Post investigation led many
observers to view the FHA as a ticking time bomb. The article
reports, ``There has been a spike in quick defaults that seems
to follow the pattern that preceded the collapse of the
subprime market as some of the same flawed lending practices
that contributed to the mortgage crisis are now eroding one of
the main Federal agencies charged with addressing it.''
According to the same article, ``more than 9,200 of the
loans insured by the FHA in the past two years have gone into
default after only no or only one payment.'' That is three
times the rate of instant redefault as last year.
How do you view the health of the FHA fund?
As you know Congress has never had to appropriate money for
the FHA insurance fund. Do you anticipate having to ask
Congress for a credit subsidy? If so, how much would you expect
to ask for?
How do you view the affect of reverse mortgages (HECMs) on
the program?
A.7. At the present time, the FHA fund is solvent and meets
actuarial requirements. Maintaining that solvency would be a
top priority for me. If confirmed, I would immediately look at
specific product terms of the FHA program against performance
data to identify potential areas of adverse selection in order
to create changes that may be needed for the program. Second, I
would look into the quality of the seller pool by identifying
outliers in the program and eliminating those with questionable
capital or performance levels as a means to protect the fund
from fraud or other adverse impact from low performers. Third,
if confirmed, I would assemble a team to analyze revenues from
the new business against loan loss data and work to create
options, as needed, to strengthen the capital reserves of the
fund. With respect to the HECM program with its increased
volume of loans insured by FHA, I would ensure that steps
described above would be taken to ensure program integrity
while its benefits are made available to an increasing number
of senior citizens.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD
FROM PETER KOVAR
Q.1. Improved Communications With Congress--Mr. Kovar, as you
may recall from your time working with Mr. Frank, one of the
hallmarks of the last HUD Administration was their lack of
communications and transparency to Congress. This was very
disappointing, because thoughtful oversight depends on having
access to accurate and timely information about these programs.
Can you assure us that you will be responsive to the Congress
so that we can carry out our duties to the American public?
A.1. One of my key responsibilities as the Assistant Secretary
for Congressional and Intergovernmental Affairs is to ensure a
commitment of responsiveness to Congress, State, and local
governments and the American public. My emphasis on improved
communications with Congress will not only include responsive
and timely answers to Congressional inquiries and
correspondence, but sufficient advance notice of key
initiatives, and appropriate notification of grants and other
HUD announcements that may affect members' districts and
States. To achieve this objective, I plan to coordinate with
HUD offices to ensure that Congressional inquiries are
appropriately assigned and properly handled. In addition, as I
mentioned in my testimony before the Committee, I would like to
institute ``listening sessions'' in which senior HUD staff
would make themselves available periodically to House members
and Senators to discuss subject matters of interest to our
Congressional partners.
Fundamentally, I view the position for which I have been
nominated as being focused on facilitating communication in
both directions: from the Administration to Congress in order
to ensure that the President's policies are fully understood by
those who will be responsible for developing legislation to
implement them, and from Congress to the Administration so that
the views and concerns of the lawmakers are appropriately taken
into account in developing those policies. As HUD's liaison to
Congress, I will do everything I can to ensure the timely and
responsive flow of information in both directions.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY
FROM PETER KOVAR
Q.1. HUD's Role in Disaster Relief--In the past decade, we have
witnessed two devastating disasters inflicted upon our Nation:
the terrorist attacks on 9/11 and Hurricane Katrina. In both
instances HUD has been tasked with helping to rebuild. I know
the rebuilding efforts in Alabama have been mixed, at best.
Often funds have not reached those most in need nor have been
distributed in a fair, timely, and equitable manner.
Mr. Kovar, please share with the Committee your insights on
improving HUD's efforts to assist in rebuilding after
disasters.
A.1. In the past few years, through the efforts of Federal,
State, and local government staff, the groundwork has been laid
for a sustained recovery in Louisiana, Mississippi, Texas,
Alabama, and Florida. The State and City of New York, in
concert with the Department, continue to address the
devastation caused by the terrorist attack on 9/11. Yet, many
challenges remain.
I believe the most significant challenge is improving
coordination of disaster response between Federal agencies and
among the various levels of government: Federal, State, and
local. Recent experiences have show how critical it is that
roles be established to prevent duplication of efforts which
often leave essential needs unmet. To the extent that there
have been deficiencies in the response to disasters in the past
in Alabama and elsewhere, I believe that has to some extent
been a result of the challenges inherent in merging the
activities of two or more agencies that have overlapping
responsibilities. With this in mind, it will be important for
HUD's future disaster response efforts to stress heightened and
more efficient interagency cooperation, starting at the
Secretarial level. Facilitating this improved coordination will
be a key focus of mine if I am confirmed. This will include
making certain that HUD staff maintain contact with their
counterparts at other agencies, and that will also be a high
priority of mine. If confirmed, I will also reach out to our
partners at the State and local level to ensure that disaster
responses are coordinated, and I pledge to work with your staff
to help ensure that the agency carefully reviews any concerns
you have specifically with regard to rebuilding in Alabama.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD
FROM JOHN D. TRASVINA
Q.1. The foreclosure crisis is wreaking havoc on communities
across the country. Unfortunately, there is some evidence that
minority communities were particularly targeted with predatory
lending practices that are now contributing to threatened or
actual foreclosures. If past is prologue, many of these
communities may also be affected by mortgage rescue scams. In
the FY2009 appropriations bill, Congress recently provided $2
million to HUD's FHEO to combat mortgage rescue scams.
What role can FHEO play in combating predatory practices
that are continuing to affect our communities?
A.1. Prosecuting lenders that prey on borrowers in this
economic crisis is a high priority for this Department.
Predatory scams continue to plague minority communities.
Previously, predatory lenders would convince minority
homeowners to obtain a high-cost subprime loan that the
borrower could not afford or to refinance for home
improvements. These scams have changed with the economic times,
and predatory lenders now target borrowers in foreclosure or in
danger of foreclosure, but the result is the same: minority
homeowners lose their equity and often their homes, and
minority communications are stripped of wealth. The Department,
through its internal work force and fair housing programs, has
the ability to combat these practices.
The Department has the ability to bring these predatory
lenders to justice. Within the Office of Fair Housing and Equal
Opportunity, the Fair Lending Division is devoted to
investigating cases of systemic discrimination by lenders. When
its team of fair lending specialists and an economist has
reason to believe that a lender may be discriminating, either
through complaint patterns, HMDA data, or reports from the
public, this Division also proposes Secretary-initiated
investigations into discriminatory lending practices. When the
Department finds a violation of the law, it will charge the
lender in order injunctive relief and damages for the borrower.
As Assistant Secretary, I will further enhance the capacity
of the Fair Lending Division to investigste and bring fair
lending cases. Investigators will communicate with consumer
counselors and fair lending advocates and use their authority
to investigate lenders that may be targeting mortgage abuse
schemes to minority neighborhoods. At the same time, the Fair
Lending Division will monitor and take appropriate action
against conventionl lenders to ensure that their foreclosure
and refinance procedures do not discriminate on the basis of
race or national origin. A recent study by the Federal Reserve
of San Francisco found that even after controlling for credit
score and financial characteristics, an African American
borrower was 3.3 times as likely as white borrowers to face
foreclosure. Another study found that white borrowers were
twice as likely as African American homeowners with similar
financial characteristics to be approved for a refinance, even
when they went to the same lender.
Under my leadership, this Division will analyze foreclosure
and refinance data to address discrimination in the refinance
and modification of mortgages. As part of this effort, HUD has
authorized the collection of data on race, ethnicity, and
gender under the Administration's Home Affordable Modification
Plan (``HMP''). Under HMP, servicers agree to alter the terms
of existing mortgage loans in certain circumstances by a
variety of means, including lowering interest rates, reducing
principal, and extending repayment schedules. These data,
together with information about the HMP benefits borrowers
receive, will enable HUD and other government agencies to
evaluate fair lending compliance of loan servicers.
As you are aware, Congress provided the Department with an
additional $2 million in FY2009 to address discriminatory
foreclosure rescue scams through the Department's Fair Housing
Initiatives Program (FHIP). This funding will assist
organizations to combat mortgage rescue scams that target
minorities or minority communities. The Depattment will seek
additional resources in FY2010 to continue this effort and to
combat other mortgage lending abuses. This effort will address
both the fair lending violations and deceptive trade practices
to provide the greatest possible relief for the borrower.
The Department also takes seriously the necessity to
increase consumer awareness in this area. All too often,
binding legal documents are executed before consumers know
their rights, making correction of the problems all the more
difficult. HUD educates consumers regarding the dangers of
predatory lending and how to avoid them, as well as the legal
remedies available to those who have fallen (or may fall) prey
to predatory lending. HUD's webpage, Public Service
Annoucements, and brochures provide information on how to file
a fair lending complaint, HUD fair lending studies, subprime
lending, predatory lending, and minority homeownership. As
Assistant Secretary, I will continue the production of the
materials and expand their availability in languages other than
English.
I am keenly aware that the Office of Fair Housing and Equal
Opportunity is not working in a vacuum. As Assistant Secretary,
I will emphasize greater communication with the other HUD
offices and improve coordination with entities outside of the
Department, including banking regulatory agencies, the
Department of Justice and the Federal Trade Commission, and
State Attorneys General. This will not only allow us to
coordinate our investigations, but also share tactics and
techniques for bringing these lenders to justice. I will also
emphasize the importance of open communication with fair
housing organizations. The front-line assistance provided by
these organizations makes them an invaluable resource for
referrals and information regarding discriminatory lenders in
their communities.
In this economic climate, it is critical that the
Department not simply wait for the homeowners to come to us. We
will call upon fair housing organizations and other trusted
organizations within minority communities for their assistance
and expertise to reach those most affected by the foreclosure
crisis. I plan to conduct extensive outreach across the country
to inform homeowners of the resources and relief available to
them in FHEO and throughout the Department. But we will do more
than inform them; I hope to be able to provide on the spot
assistance and referrals for homeowners in one location, to
ease what is without a doubt a complicated process of
navigating the different assistance available to them.
Through these various efforts, the Department can provide
assistance and justice to minority homeowners who are targeted
for predatory mortgage abuse schemes.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ
FROM JOHN D. TRASVINA
Q.1. Improving Enforcement of the Fair Housing Act--Forty years
after the passage of the Fair Housing Act, our Nation remains
highly segregated and housing discrimination continues almost
unchecked. Of the more than 4 million estimated fair housing
violations annually, only 29,300 complaints were processed in
2008. Of these, HUD's Office of Fair Housing and Equal
Opportunity (FHEO) handled 2,123 cases, charged only 48 cases
and has not addressed continuing systemic discrimination
nationwide. These numbers are tragically low. HUD has the
primary responsibility of enforcing our fair housing laws.
What is your position on HUD's complaint processing load?
What steps would you take to bolster FHEO's investigative
strategies so that it addresses all types of discrimination and
works toward developing systemic cases that effectively combat
discrimination and promote inclusive communities?
A.1. The Office of Fair Housing and Equal Opportunity (FHEO)
must provide the leadership in a coordinated effort to promote
fair housing and to combat housing discrimination. The
complaint processing system is but one measure of the success
and effectiveness of this effort. I agree with your view, and
that of leaders among fair housing and civil rights experts,
that 48 charges on an annual basis is disappointingly low. At
the same time, it is important to note that the statutory
requirement to promote conciliation--which is successful in
approximately 30 percent of complaints--often obviates the need
to file a charge in order to provide relief to a discrimination
victim. As Assistant Secretary, I will examine this area
thoroughly, including the vital work conducted by FHEO and its
partners among nonprofit fair housing groups and Fair Housing
Assistance Program agencies and others to prevent housing
discrimination. As Assistant Secretary, I will undertake an
evaluation of the effectiveness of current procedures and seek
ways to promote vigorous enforcement of the laws.
It is important to note that the share of housing
discrimination cases handled by HUD will remain comparatively
small compared to the caseload of State and local agencies. As
you know, the Fair Housing Act requires that HUD refer
complaints to State and local agencies in jurisdictions that
enforce State and local laws that are substantially equivalent
to the Federal Fair Housing Act. It is a reflection of the
national commitment to eliminate discriminatory housing
practices that 110 jurisdictions enforce substantially
equivalent fair housing laws that cover 39 States and more than
85 percent of the population. As a result, the number of
complaints received by FHEO does not fully reflect its impact
on combating housing discrimination.
Another measure of HUD's effective use of the tools to
combat housing discrimination is Secretary-initiated actions.
Secretary-initiated investigations and complaints may result
from matters that were otherwise resolved by the parties
through the required conciliation process but where
conciliation does not adequately advance the public interest to
combat discrimination. Information received through complaint
investigations or otherwise can and should lead to Secretary-
initiated actions where appropriate. I will work to strengthen
the Department's existing and new relationships with private
nonprofit fair housing organizations whose community
involvement and innovative techniques can help the Department
develop more cases with strong evidence.
Finally, in order to address the full extent of harm to
victims of discrimination, I hope to improve FHEO's
coordination with Federal, State, and local agencies, such as
the Department of Justice, the Federal Trade Commission, the
Federal Deposit Insurance Corporation and other banking
regulators, and State Attorneys General.
Q.2. Promoting Public-Private Partnership--A recommendation of
the bipartisan National Commission on Fair Housing and Equal
Opportunity report is that funding for the Fair Housing
Initiatives Program (FHIP) should begin at $52 million. And in
order to create a strong presence in our Nation's communities,
FHIP eventually should support full funding of private fair
housing organizations to conduct enforcement activity in each
of the 363 Metropolitan Statistical Areas, at a cost of
approximately $109 million per year.
In addition to funding, FHIP should fund, as required by
Congressional mandate, an annual comprehensive national media
campaign to educate consumers about how to recognize and report
housing discrimination, and to promote inclusive communities
and an understanding of the benefits of neighborhood diversity.
FHIP should also incorporate a regional or national systemic
investigation component in addition to the systemic work done
on the local level.
Do you support these recommendations? What steps will you
take as Assistant Secretary of FHEO to address the needs of
local fair housing organizations and promote a meaningful
partnership with local fair housing groups in order to create
thoughtful, creative actions to address long-entrenched
patterns of segregation and new forms of discrimination in the
housing, lending, and insurance marketplaces?
A.2. The National Commission on Fair Housing and Equal
Opportunity provided national attention and nonpartisan
expertise to the cause of fair housing. I have enormous respect
not only for the contributions of its co-chairs, former HUD
Secretaries Jack Kemp and Henry Cisneros, but for the day-to-
day and sustained efforts of the many fair housing and civil
rights organizations and leaders that were involved with the
development of the report. I was pleased to have hosted the
Commission's hearing in Los Angeles at the headquarters of the
Mexican American Legal Defense and Educational Fund. Thus, I
can assure you that I have and will continue to review closely
the recommendations of the Commission and those of the many
experts who testified before it.
The public interest is greatly benefitted when trusted and
established local and other organizations are in a position to
assist victims of housing discrimination in learning about
their rights and responsibilities under the law and the process
to file a fair housing complaint. The Department's Fiscal Year
2010 budget for the Fair Housing Initiatives Program (FHIP)
will reflect the Administration's commitment to FHIP and its
position on an appropriate level of funding for FHIP.
As part of its FHIP funding for fair housing organizations,
the Department makes available approximately $7,000 to each
organization to defray its costs in pursuing training to
promote creative and innovative investigative techniques. The
Department has encouraged the FHIP organizations to enroll in
courses at the Department's National Fair Housing Training
Academy. FHIP groups may also use those funds to pursue other
training opportunities. Additionally, every 2 years, the
Department hosts a fair housing policy conference that brings
together fair housing organizations and State and local fair
housing agencies to exchange thoughtful and creative approaches
to addressing housing discrimination. Under my leadership, FHEO
will continue to partner with FHIP organizations to promote
greater innovation in combating housing discrimination as the
nature of discrimination evolves, and I will seek their
valuable expertise in assisting the Department in education,
outreach, and other roles.
Q.3. Promoting Fair Housing Across the Federal Government--In
order to build, sustain, and grow strong, stable, diverse
communities, we need leadership that coordinates fair housing
policy and practice across all Federal programs. One of the
basic principles in the Fair Housing Act is that the Federal
government, and all of its programs and activities, must take
proactive steps to advance fair housing, not just to avoid
discriminating.
How do you see FHEO's role in advancing fair housing? How
would you work within FHEO and HUD to promote diverse inclusive
communities and advance fair housing throughout the Federal
government's programs?
A.3. Affirmatively furthering fair housing is a critical
priority of the Department. And, as you well know, Senator, the
Fair Housing Act charges all executive departments and agencies
to carry out and administer their programs and activities
relating to housing and urban development in a manner
affirmatively furthering the Act's purposes. Secretary Donovan
has declared his commitment to affirmatively further fair
housing in several public addresses. For example, at the April
1, 2009, opening event at HUD observing the 41st anniversary of
the Fair Housing Act, Secretary Donovan set clear priorities
for HUD to build diverse and inclusive communities and to
advance fair housing in all Federal programs. He said that,
``Our successes in ensuring equal housing opportunity for all
Americans demand an unprecedented level of collaboration,
cooperation, and communication between HUD, other Federal
agencies, State and local government, and community agencies.''
I support this position, and if confirmed, I will carry out
these goals by working closely with the leadership of other HUD
programs, recipients, and other Federal agencies to see that
the Department in its programs and the States and localities
that receive Federal funds go beyond mere compliance and take
proactive steps to further the goals of fair housing.
One important strategy to deploy is formally partnering
with Federal agencies to promote fair housing. The seed of
partnership was planted when Secretary Donovan signed a
Memorandum for Understanding with Secretary LaHood of the
Department of Transportation to help American families gain
better access to affordable housing, more transportation
options, and lower transportation costs. The average working
American family spends nearly 60 percent of its budget on
housing and transportation costs, making these two areas the
largest expenses for American families. Secretaries Donovan and
LaHood want to find ways to cut these costs by focusing their
efforts on creating affordable, sustainable communities.
Secretary Donovan stated that, ``This partnership furthers fair
housing goals by taking steps to remedy the problems caused by
concentrations of poverty across the country, and to give all
Americans equal housing choice.''
I also will review Executive Order 12892, ``Leadership and
Coordination of Fair Housing in Federal Programs: Affirmatively
Furthering Fair Housing,'' to determine whether the President's
Fair Housing Council should be convened to coordinate cross-
agency collaboration to support fair housing.
Q.4. The Fair Housing Act's statutory obligation to act
affirmatively to further fair housing that applies to Federal
programs and activities has not been enforced to promote strong
and diverse communities. The Federal government's three largest
Federal housing programs (Section 8, public housing, and the
Low Income Housing Tax Credit) serve more than 4.5 million
families and yet do very little to further fair housing and, in
some cases, work to create and/or maintain segregated housing
patterns.
As Assistant Secretary of FHEO, would you support issuing a
new regulation giving HUD more authority to address failures in
affirmatively furthering fair housing by recipients of its
funding?
A.4. I believe that this is an important issue that requires
serious thought and consideration. Currently, HUD regulations
require recipients to sign certifications to affirmatively
further fair housing. These regulations provide HUD the
authority to question the certifications if the recipients do
not show evidence that they have promoted fair housing. HUD
also has the authority to take adverse legal action against
jurisdictions that are directly involved in discrimination and/
or fail to affirmatively further fair housing.
If confirmed, I will explore what steps would best
implement the Department's mandate to affirmatively further
fair housing.
Q.5. Fair Housing and the Foreclosure Crisis--The current
mortgage crisis has its roots in decades of discriminatory
housing and lending practices. When traditional lenders would
not lend in communities of color, exploitative predatory
lenders filled the gap, causing an unprecedented loss of wealth
to those communities.
Given this, it is critical that the solutions that have
been proposed to address our current mortgage crisis comply
with the mandate that all government housing and lending
programs affirmatively promote fair housing. In the foreclosure
context, this means assessing the racial impacts of alternative
plans and seeking approaches that are racially and ethnically
inclusive--approaches that do not further segregate and isolate
low-income communities of color, but rather promote diverse
neighborhoods.
What role do you think FHEO should play in addressing
discrimination and segregation as part of its response to the
foreclosure crisis? More specifically, what steps will you take
to ensure that the Troubled Assets Relief Program (TARP) for
which HUD is on the oversight board and Neighborhood
Stabilization Program that is administered by HUD will be
implemented with full attention to the requirement to
affirmatively further fair housing? As Assistant Secretary of
FHEO, how would you reform HUD's fair lending programs to
assure that discrimination in lending is addressed?
A.5. Prosecuting lenders that prey on borrowers in this
economic crisis is a high priority for this Department in
general and the Office of Fair Housing and Equal Opportunity
(FHEO) in particular. Predatory scams continue to plague
minority communities. Previously, predatory lenders would
convince minority homeowners to obtain a high-cost subprime
loan or refinance for home improvements that the borrower could
not afford. These scams have changed with the economic times,
and predatory lenders now target borrowers in foreclosure or in
danger of foreclosure. Nevertheless, the result is the same:
minority homeowners lose their equity and often their homes,
and minority communities are stripped of wealth. The
Department, through its internal work force and fair housing
programs, has shared responsibility to combat these practices.
If confirmed, I will seek to enhance the capacity of the
Fair Lending Division to investigate and identify fair lending
cases. Moreover, regarding the Neighborhood Stabilization
Program (NSP), HUD is ensuring that the requirement to
affirmatively further fair housing is fully incorporated into
the notices and notices of funding and availability carrying
out its operations NSP and NSP II are likely to operate in
neighborhoods targeted by mortgage fraudsters on the basis of
race, national origin, or age. Mortgage fraud schemes have
evolved to take advantage of new funding sources and avoid
detection, and it is likely that the perpetrators will seek to
exploit programs like the NSP and the persons who would benefit
from such programs. HUD and its grantees must remain vigilant
to investigate and prosecute such frauds, and FHEO will
undertake outreach and education to prevent exploitation and
bring vigorous enforcement actions against acts of illegal
discrimination where they may occur.
Furthermore, as you are aware, Congress provided the
Department with an additional $2 million in FY2009 to address
discriminatory foreclosure rescue scams through the
Department's Fair Housing Initiatives Program (FHIP). This
funding will assist organizations to combat mortgage rescue
scams that target minorities or minority communities.
The Department also takes seriously the necessity to
increase consumer awareness in this area. All too often,
binding legal documents are executed before consumers know
their rights, making correction of the problems all the more
difficult. HUD educates consumers on the dangers of predatory
lending and how to avoid them, as well as the legal remedies
available to those who have fallen (or may fall) prey to
predatory lending. HUD's webpage, Public Service Announcements,
and brochures provide information on how to file a fair lending
complaint, HUD fair lending studies, subprime lending,
predatory lending and minority homeownership. As Assistant
Secretary, I will continue the production of these materials
and expand their availability in languages other than English.
I am keenly aware that the Office of Fair Housing and Equal
Opportunity is not working in a vacuum. If confirmed, I will
emphasize greater communication with the other HUD offices and
improve coordination with entities outside of the Department,
including banking regulatory agencies, the Department of
Justice, the Federal Trade Commission, and State Attorneys
General. This will not only allow us to coordinate our
investigations, but also share tactics and techniques for
bringing these lenders to justice. I will also emphasize the
importance of open communication and collaboration with fair
housing organizations. The front-line assistance provided by
these organizations makes them an invaluable resource for
referrals and information regarding discriminatory lenders in
their communities.
Through these various efforts, the Department can provide
meaningful assistance and justice for minority homeowners whose
fair housing rights have been violated.
Q.6. Limited English Proficiency Issues--In the Summer of 2007,
a coalition of multifamily industry stakeholders, and civil
rights advocates agreed to legislative language which would
allow HUD to better serve persons with limited proficiency in
the English language by providing technical assistance to
recipients of Federal funds. This language was included in both
of the Section 8 Voucher Reform Act (SEVRA) bills introduced in
the House and Senate (H.R. 1851, S. 2684). I also introduced
this legislation as a free standing bill (S. 2018). Some of the
key parts of this authorization bill would have:
Created a task force of industry and civil rights
stakeholders to identify vital documents (to include
both official HUD forms and unofficial property
documents);
Required HUD to translate the vital documents
within 6 months;
Created a HUD-administered 1-800 hotline to assist
with oral interpretation needs; and
Authorized appropriations.
Although these bills were not enacted before the 110th
Congress adjourned, I anticipate they will be reintroduced in
this Congress.
As Assistant Secretary of Fair Housing and Equal
Opportunity, would you recommend that the Administration
support legislation identical to S. 2018 (from the 110th
Congress)? Please explain the rationale you would offer to
support your recommendation.
A.6. If confirmed, I would like to work closely with you and
your staff to ensure full protection of the law for all
individuals without regard to their level of proficiency in
English and to ensure meaningful access for such individuals to
HUD programs and the programs of HUD funding recipients. This
is an area of the law I have worked on for the past 30 years
and will continue to do so.
Q.7. Please explain where HUD stands in its effort to translate
important documents to support the multifamily housing and
public housing programs. I am interested to know:
Which documents has HUD already provided to support
these programs?
Which documents are in the process of being
translated, which languages are being provided and when
will HUD make them available to the public?
Which documents does HUD plan to translate, which
languages will be provided, and what is the expected
timeframe for completing action on these documents?
As Assistant Secretary of Fair Housing and Equal
Opportunity, what actions will you take to ensure HUD
makes translated documents available for use in a
timely manner?
A.7. As Assistant Secretary, I will work to ensure that
language service requirements are coordinated within HUD,
industry groups, and recipients, on a timely basis. HUD has
translated a total of 27 vital documents into 15 different
languages. Each of the documents has been translated into one
or more of the following languages: Amharic, Arabic, Armenian,
Chinese, Farsi, French, Hmong, Khmer, Korean, Portuguese,
Russian, Somali, Spanish, Tagalog, and Vietnamese. More
specifically, HUD has translated four separate model leases for
the Multifamily Housing Program into 13 languages; the
``Resident Rights and Responsibilities'' brochure into 13
languages; the ``Protect Your Family From Lead in Your Home''
brochure into 10 languages; and the ``Housing Discrimination
Complaint Form'' into seven languages.
I understand that HUD is reviewing what other vital
documents should be translated and what target languages are
most urgently needed.
The translated documents will be available on the HUD Web
site (www.hud.gov/lep) by mid-May.
HUD will continue to support the LEP Initiative by
continuing to provide written translations of vital documents,
continuing to provide oral interpretation phone services, and
collaborating with other Federal agencies.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR VITTER
FROM JOHN D. TRASVINA
Q.1. The previous Administration succeeded in forcing the
Philadelphia Housing Authority to commit to a plan that would
bring its buildings closer to compliance with the Fair Housing
laws. Are you aware of whether or not the Housing Authority has
already breached that agreement? If they have breached the
agreement, or breach it in the future, how do you plan to
address this high-profile fair housing issue?
A.1. It is critical that recipients of Federal funds ensure
that their programs, facilities, and housing are available
without regard to diasbility.
I am not in a position to know whether the Philadelphia
Housing Authority (PHA) is in breach of its October 2008
agreement with HUD. However, in order to ensure compliance, I
plan to work with PHA in a cooperative manner, in that FHEO
would not wait to take action until full breach or default has
taken place. Instead, as with any housing authority with whom
there is an agreement under Section 504, I will see that FHEO
reviews the periodic submissions for any action, anticipated or
unanticipated, that could lead to a later breach or default,
and immediately works cooperatively to avoid an actual breach
or default. I plan to continue this method with PHA.
If the Department is not satisfied with the housing
agency's efforts to cure a default, under the terms of the
agreement, the Department may impose a schedule of actions and/
or a management plan to complete the activities specified in
the agreement, take appropriate action under HUD's regulations,
or impose sanctions as specified in the agreement.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD
FROM DAVID S. COHEN
Q.1. Iran--Mr. Cohen, our Iran policy is currently framed by
three layers of sanctions--(1) a trade embargo; (2) targeted
financial measures, shutting off the global banking system to
specific persons; and (3) the threat of penalties against
foreign companies that do energy business in Iran.
Even as the Administration explores possible diplomatic
channels, how should Treasury continue to maintain pressure to
combat Iran's terrorist support and nuclear proliferation?
A.1. In my view, enhanced vigilance of Iranian financial
institutions remains critical in our effort to prevent Iran
from making further progress on its nuclear program and
preventing its support of terrorism. If confirmed, I would be
assisting in holding Iran responsible for its actions by
joining Treasury's efforts to conduct intensive public and
private sector outreach to warn governments and global
financial institutions of the risks of doing business with
Iran; maintaining the close dialogue established with our key
partners in Europe, Asia, and the Middle East; extending our
outreach to less traditional financial centers that may be
increasingly vulnerable to Iran's illicit financial activities;
and coordinating Treasury's policy around efforts to detect,
disrupt and prevent the financing of terror and nuclear
proliferation.
Q.2. How would you characterize current U.S. policy toward
Iran? What is the Department of the Treasury's appropriate role
in formulating and enforcing such a policy?
A.2. I understand that the Administration's policy review on
Iran is ongoing, so it would be difficult to comment in any
detail about the current U.S. policy. However, the President
has been clear that the U.S. is pursuing engagement with Iran
and, at the same time, will continue to hold Iran responsible
for its actions. Within this context, I look forward, if
confirmed, to working vigilantly to ensure that Treasury
applies the full range of its authorities as necessary to
address Iran's illicit conduct and protect the international
financial system from Iranian abuse, and encourage our
international partners to remain vigilant and take steps
necessary to guard against the risks posed by Iran.
Q.3. Are additional authorities needed to strengthen U.S.
sanctions on Iran?
A.3. The Treasury Department has a robust set of authorities to
combat illicit activity by Iran. If confirmed, I will
concentrate on ensuring that those authorities are used in the
most effective and appropriate way to advance our national
security and foreign policy objectives. I am not in a position
at the this time to assess whether any additional authorities
are needed, but if I am confirmed I will work with Congress to
consider the utility of new or enhanced authorities to combat
the financing of terrorism, weapons proliferation, narcotics
trafficking, or other threats to the national security and
foreign policy interests of the United States, whether
emanating from Iran or elsewhere.
Q.4. Transnational Threats--Some of the most egregious
international crimes are funded via the least advanced
financial networks. America's adversaries--from al Qaeda
terrorists and Somali pirates to Mexican smugglers and
launders--exploit informal ``value transfer systems'' such as
Hawalas. This Committee modernized the 1970 Bank Secrecy Act to
arm Treasury with additional intelligence-sharing tools, in
part, to target these networks under Title III of the 2001 USA
PATRIOT Act.
Please describe how these additional tools may be used to
combat threats posed by ``transnational'' organizations that
are transmitting funds throughout the world outside of the
traditional international financial system?
A.4. I agree that many of our most dangerous adversaries
develop or exploit informal financial networks to fund their
operations and finance their organizations. The modernization
of the Bank Secrecy Act has provided Treasury with authorities
that continue to be essential to their ongoing efforts to
combat such illicit use of informal financial networks. In
general, I believe that these authorities have proven to be
essential by strengthening and expanding Bank Secrecy Act
regulatory requirements to promote transparency and
accountability across the financial system, including across
informal value transfer systems that operate as money services
businesses; and providing new information-sharing channels
between and among financial institutions and law enforcement
about persons, accounts and transactions of particular concern,
including those related to informal financial networks. In
addition, the USA PATRIOT Act strengthened Treasury's ability
to designate terrorist financiers--including those operating
informal financial networks--by clarifying our authority to
protect classified information required to support designation
from public disclosure.
If confirmed, I will support the use of these and other
critical tools that the Congress has provided in order to
protect the international financial system from all forms of
illicit finance and to identify and disrupt illicit financing
networks through targeted action.
Q.5. What would be your goals for promoting greater
international cooperation in this area?
A.5. If confirmed, I would seek to promote greater
international cooperation in this area by following through on
the existing strategies of promoting a greater understanding of
how terrorist organizations and other transnational criminal
groups develop or exploit informal financial networks to
finance their operations; strengthening implementation of
international standards that subject informal value transfer
systems to financial regulation and supervision; and targeting
transnational illicit financing networks that evade or attempt
to operate within applicable financial regulatory frameworks
for enforcement action.
Q.6. Bank Reporting--Under the Bank Secrecy Act, banks are
required to file with the Department of the Treasury suspicious
activity reports (SARs) on customers possibly engaging in
illegal activity and Currency Transaction Reports (CTRs) for
certain large cash transactions.
Many businesses are exempt from having banks file CTRs on
them. Are these exemptions adequate? Is regulatory relief
needed in this area? If so, what approach should the Department
take, without compromising our efforts to combat money
laundering and terrorist financing? Do you share law
enforcement's concerns over certain proposals for regulatory
relief?
A.6. In December, FinCEN issued a rule that simplified the
requirements for financial institutions to exempt their
eligible customers from currency transaction reporting. The new
rule introduced a number of changes designed to make it easier
for depository institutions to exempt low-risk customers from
the CTR filing requirement. I understand that these changes are
consistent with the recommendations of the GAO's February 2008
report on CTRs. At present, I believe it would be prudent to
monitor the impact of these simplified requirements before
concluding that additional regulatory relief is needed in this
area, but, if confirmed, I will be especially attentive to the
need to carefully weigh the cost imposed by the recordkeeping
and reporting rules against the benefit of the information
obtained by law enforcement.
Q.7. How should the Department of the Treasury prevent banks
from stripping identifying information from international wire
transfers to avoid U.S. government scrutiny?
A.7. The Treasury Department is working with the law
enforcement, regulatory, and intelligence communities, as well
as with international counterparts and the international
banking industry, in a coordinated effort--including outreach,
the development of international standards, and, when
necessary, law enforcement action--to prevent banks from
stripping identifying information from international wire
transfers. If confirmed, I would work to continue these
efforts.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY
FROM DAVID S. COHEN
Q.1. Compliance Penalties/TARP--To address significant
weaknesses in their financial condition, hundreds of financial
institutions have received billions of dollars through
government programs.
Mr. Cohen, do you believe firms could use TARP funds to pay
compliance fines?
A.1. Funds provided to institutions under the TARP program are
designed to strengthen TARP recipients' balance sheets, so that
they are in better position to extend credit to American
families and businesses. I understand that determining
precisely which funds a TARP recipient might use to pay
compliance fines would be difficult.
Q.2. In the case of institutions in weak financial condition,
will Treasury reduce a fine or even agree to put it off?
A.2. The responsibility to assess civil money penalties or
other fines for violations of regulations issued by the
Treasury Department's Financial Crimes Enforcement Network
(FinCEN) and the Office of Foreign Assets Control (OFAC) has
been delegated to Directors of those organizations. In the
normal exercise of their enforcement discretion, the Directors
of OFAC and FinCEN take into account a variety of factors,
including the financial condition of the violator, in imposing
a sanction. Nevertheless, I am confident that the Directors of
OFAC and FinCEN expect that all persons and entities subject to
these rules fully comply with the law irrespective of their
financial condition, and will not excuse noncompliance by firms
encountering financial distress.
Q.3. Cross-Border Wire Transfers--Mr. Cohen, I understand that
an OMB hold was placed on a proposed FinCEN regulation
requiring reporting on Cross-Border Electronic Funds
Transmittals.
What can you tell us of the status of that proposed
regulation and of the broader concept itself, today?
A.3. My understanding is that FinCEN, responding to direction
from Congress, prepared an October 2006 study entitled
``Feasibility of a Cross-Border Electronic Funds Transfer
Reporting System Under the Bank Secrecy Act,'' that concluded
that it is feasible to require the reporting of information
that is currently required to be recorded. The next step,
including whether to issue a notice of proposed rulemaking, is
subject to internal review by the Department of the Treasury.
If confirmed, I will promptly turn my attention to that review.
Q.4. General Terrorist Designations--Mr. Cohen, in your
opinion, what is Treasury's most effective tool for dealing
with terrorist activity?
A.4. In my opinion, Treasury's most effective tool for dealing
with terrorist activity, as with all illicit threats to our
national security, will continue to be the Office of Terrorism
and Financial Intelligence (TFI), which integrates and marshals
Treasury's authorities, resources, and expertise against the
national security threats that we face. The tools that I expect
to assist in deploying, if I am confirmed, include:
Targeted action against terrorist organizations or
their support networks, such as through designation
pursuant to Executive Order 13224 or through sensitive
dissemination of targeted information requests to U.S.
financial institutions pursuant to Section 314(a) of
the USA PATRIOT Act;
Systemic action against terrorist financing risks,
such as designation and the imposition of protective
measures pursuant to Section 311 or the issuance of
advisories to U.S. financial institutions;
International engagement with jurisdictions of
particular importance in combating terrorist financing;
and
Outreach to the private sector, including the
financial community and charitable sector, especially
when operating in high risk regions where terrorist
organizations are particularly active.
Q.5. How effective are sanctions, and sanctions lists against
terrorists?
A.5. In my opinion, sanctions--and particularly targeted
financial sanctions against designated or listed parties--have
proven to be an increasingly important tool in combating the
full range of illicit national security threats that we face,
including not only terrorism, but also threats such as WMD
proliferation, rogue regimes such as in Zimbabwe and the Sudan,
and drug trafficking kingpin organizations. Targeted financial
sanctions have successfully disrupted and deterred terrorists
and other threats to our national security by raising the
costs, risks, and difficulties associated with the targeted
illicit activity.
I believe that targeted financial sanctions have become an
increasingly effective tool primarily because:
Sanctions have evolved from broad-based,
jurisdictional programs to targeted ones that focus
specifically on the illicit conduct at issue. This
evolution has allowed Treasury to focus on the specific
threats faced by the United States, while reducing
negative collateral consequences to innocent third
parties, which in turn facilitates greater support from
financial institutions, partner countries, and the
general public.
Many of the national security threats that we
face--including WMD proliferation, money laundering,
drug trafficking, corruption, and transnational
criminal activity more broadly--are motivated by profit
or financial greed. Targeted financial sanctions can be
highly effective in attacking the financial gains of
such illicit activity, and as such, they can have a
highly disruptive and deterrent effect.
All of the national security threats we face--
including terrorist organizations, criminal
organizations, and corrupt or rogue regimes--depend
upon the financial system to raise, move, and use funds
to support their nefarious interests. Targeted
financial sanctions give us a tool to attack this
common vulnerability by identifying and shutting down
illicit actors that attempt to access the international
financial system.
Q.6. What is your general take on terrorist or ``black lists?''
A.6. For fighting terrorism, lists comprised of persons and
entities subject to sanction are essential to making targeted
financial sanctions work. Without such lists, U.S. persons--
including our financial institutions--would not know which
particular individuals and entities are subject to sanction.
For operational and compliance purposes, Treasury's Office
of Foreign Assets Control (OFAC) has consolidated and maintains
a current list (the list of Specially Designated Nationals, or
SDN list) of all persons publicly designated pursuant to our
targeted sanctions programs, including our counterterrorism
sanctions program pursuant to Executive Order 13224. If
confirmed, I will work with OFAC to ensure that we continue to
maintain the integrity of the SDN List.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ
FROM DAVID S. COHEN
Q.1. The Treasury Department has played a key role over the
past several years in ratcheting up the financial pressure on
Iran over its illicit nuclear program and support of terrorism.
For many years, the State Department has named Iran not only as
the world's leading state sponsor of terror, but as the
``central bank for terrorism.'' President Obama has committed
the United States to use all diplomatic, political, and
economic steps--including direct engagement backed by the
threat of tougher sanctions--to persuade Iran to turn away from
its dangerous course.
If Iran rejects offers to engage with the U.S. regarding
its nuclear program or if that engagement fails to bear fruit,
do you believe the Treasury Department will look to impose
increased financial sanctions on Iran? What might those
sanctions be?
A.1. It is, of course, very difficult for me, as a nominee, to
predict what course our policy will take if Iran rejects offers
to engage with the U.S. regarding its nuclear program, but I
note that during her recent testimony before the House Foreign
Affairs Committee, Secretary of State Clinton said that the
Obama Administration is ``laying the groundwork for . . . very
tough . . . sanctions that might be necessary in the event that
our offers are either rejected or the process is inconclusive
or unsuccessful.'' Such sanctions, of course, would likely be
administered by the Treasury Department, but it would be
inappropriate for me to speculate on what the specific
sanctions might be.
Q.2. If confirmed will you fully enforce those sanctions
already imposed related to Iran? If foreign banks continue to
conduct business with Iranian banks sanctioned by the U.S. do
you believe they should be held liable to sanctions?
A.2. If confirmed, I plan to fully enforce the sanctions
currently in place against Iran and those persons and entities
affiliated with the Iranian government that are subject to
sanctions for supporting terrorism, weapons proliferation,
destabilizing the region, or otherwise. Moreover, if confirmed,
I will work to ensure that any foreign bank that breaches our
sanctions laws (whether with respect to Iran or otherwise) are
subject to an appropriately severe penalty.
Q.3. Do you believe the Obama Administration will sanction the
Iranian Central Bank, an act that the Bush Administration never
got off the ground?
A.3. With all respect, I do not believe it is appropriate for
me to speculate on any particular sanction that may be imposed.
I can assure the Senate, however, that if confirmed, I will
consider all appropriate sanctions.
Q.4. What more can the U.S. do to cut off the financial
assistance that Iran provides to Hamas and Hizballah?
A.4. Iranian support for terrorism, including support for Hamas
and Hizballah, is completely unacceptable, and has resulted in
a number of designations of Iranian entities, including Bank
Saderat. Although it would be inappropriate for me to speculate
on what additional steps the Treasury Department might take to
cut off Iranian financial assistance to Hamas and Hizballah, I
can assure the Senate that, if confirmed, I will carefully
assess what appropriate additional steps can be taken.
Q.5. During the campaign, then-Senator Obama voiced support for
sanctioning the export of refined petroleum products to Iran.
This has always been an Achilles' heel for Iran because they
are forced to import 40 percent of their natural gas supply.
Does the administration intend to support such efforts and can
these sanctions work in hitting Iran where it will hurt the
most?
A.5. With all respect, I do not believe it is appropriate for
me to speculate on any particular sanction that may be imposed.
I can assure the Senate, however, that if confirmed, I will
consider all appropriate sanctions.
Since the end of the 2006 Lebanon War, Hizballah has not
only built up its power within the Lebanese government, but
also rearmed itself well beyond the capabilities they had
during the war. Iran and Syria continue to provide financial
support for Hizballah, as well as assist with smuggling efforts
to ensure that Hizballah is armed to attack Israel.
Q.6. Can you discuss U.S. efforts to prevent the illicit arming
and financing of Hizballah by Iran and Syria? What more do you
think we should be doing to stop Hizballah?
A.6. Since Hizballah's initial designation as a terrorist
organization in 1995, the Treasury Department has been engaged
in a wide-ranging effort to identify and disrupt its financial
and material support networks, including its sources of support
in Iran. Similarly, Treasury has used a variety of authorities
to hold the Syrian regime accountable for its destabilizing
behavior in the Middle East, including its support for
terrorist groups such as Hizballah. If confirmed, I look
forward to continuing Treasury's efforts to target Hizballah's
global financial network and to holding states that support
terrorist activity, such as Iran and Syria, accountable for
their actions.
Q.7. Hizballah has a very active fundraising network in South
America, largely tied to the trade of illegal narcotics. If
confirmed will you make it a priority to target Hizballah's
activities in South America?
A.7. Hizballah's efforts to raise funds in South America, and
its connection to the illegal narcotics trade, are a cause for
considerable concern. If confirmed, I will make Hizballah's
activities in South America a priority.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR BUNNING
FROM DAVID S. COHEN
Q.1. Mr. Cohen, are you aware of allegations that imports of
stainless steel from China contain Cuban nickel, in violation
of the United States' trade embargo with Cuba? In your
potential role overseeing the Office of Foreign Assets Control,
would you enforce U.S. law in this matter? Would you support
requiring China to certify that there is no banned Cuban nickel
in its stainless steel exports to the United States?
A.1. I am aware of concerns that Cuban nickel is incorporated
into stainless steel that is manufactured in third countries
and subsequently exported to the United States. It is my
understanding that the Office of Foreign Assets Control, as
well as U.S. Customs and Border Protection, have been
considering how best to address this issue to ensure that our
Cuba trade sanctions are effectively enforced. If confirmed, I
look forward to working with my colleagues in OFAC and Customs,
as well as with the Congress, to address this issue.
------
RESPONSE TO WRITTEN QUESTIONS OF SENATOR VITTER
FROM DAVID S. COHEN
Q.1. Are you aware of Shariah Compliant Finance (SCF)? Please
explain your understanding of what it is.
A.1. Shariah Compliant Finance, which is also referred to as
Islamic Finance, is a form of finance in which transactions are
designed to avoid payment of interest, which I understand is
prohibited by Islamic law. Islamic finance permits investors to
receive profits in return for bearing specific commercial
risks.
Zakat is the Islamic principle of giving a percentage of
one's income to charity. It is an obligation in the Qur'an that
Muslims pay 2.5 percent of their yearly earnings to zakat.
Every financial institution offering Islamic products appears
required to donate 2.5 percent of revenue generated from them
to zakat (charity). It is the norm that the shariah advisory
board determines which charity should receive the donation,
which means it is likely to be a Muslim charity.
Q.2. Are there risks associated with zakat? It has been proven
in cases like the Holy Land Foundation trial that radical
Muslims use charities that are fronts for terrorist
organizations. What is the risk of American dollars funding
terrorism directly when American Muslims engage in zakat?
A.2. Zakat, as I understand it, is the term used for the Muslim
obligation to give alms to the poor through charitable giving.
My understanding is that zakat is an obligation of individual
Muslims, but not specifically a corporate obligation. Some
Islamic financial firms, like many non-Islamic financial firms,
also engage in charitable giving.
Combating the misuse of charitable giving to fund terrorism
or other illicit activity has been a key focus of the work of
the Treasury Department, and it will remain so if I am
confirmed. The Treasury Department has worked extensively with
law enforcement to take action against those who would divert
charitable contributions, of any kind, to fund terrorism or
other illicit activities. The Treasury Department has an
ongoing dialogue with the American Muslim community, working
with the community to prevent abuse of charitable contributions
collected by the community.
Q.3. There is concern that Islamic finance will and is being
used as a vehicle for sidestepping U.S. and international
economic sanctions. For example, the Sudanese government
reportedly issued Islamic bonds to Gulf investors in order to
circumvent U.S. sanctions. Given the current situation with
Iran and the push for economic sanctions, this would be a huge
loophole and render any enforceable economic sanctions useless.
How would you suggest Congress and the Administration address
this issue?
A.3. I am not familiar with what considerations may have driven
Sudanese government to issue bonds in the fashion that it did,
or whether an effort to sidestep U.S. and international
sanctions imposed on Sudan motivated its actions. In any event,
financial institutions that comply with Islamic law are subject
to the same rules and regulations that govern any other
financial institution, including the sanctions programs
administered by OFAC and the antimoney laundering rules of
FinCEN, the Federal banking regulators, and the securities
regulators.
Q.4. As you may have heard, the Treasury Department has been
studying Shariah Compliant Finance (SCF) as a way to help ease
the pain of the world financial crisis. Taking it a step
further, the Treasury has hosted informational sessions on SCF
to staff and the Presidential transition team. Do you believe
that this was an appropriate practice for the U.S. Treasury
Department? Do you plan on continuing the practice?
A.4. I understand that the Treasury Department held a seminar
in November 2008, in which industry practitioners and academics
briefed regulators, policymakers, and members of the academic
community about current developments in the Islamic finance
industry. Treasury monitors developments in all sectors of the
financial services industry on an ongoing basis, and routinely
hosts seminars and attends industry events.
Q.5. Zakat donations have recently decreased because observant
Muslims in the U.S. do not know what charities they can trust
and do not want to mistakenly fund terrorism. What
recommendations would you make to the Treasury Department
regarding this problem? How can the Treasury Department
advocate this practice when Muslims trying to exercise freedom
of religion are skeptical of the risks?
A.5. The Treasury Department has worked closely with the
Muslim-American community to educate the community about the
risk that charitable donations may be misdirected to fund
terrorism. It is a terrible tragedy when well-meaning Muslim
Americans, who simply want to provide charity to those in need,
are victimized by having their donations diverted to fund
terrorists. I understand that as part of Treasury's
comprehensive strategy to combat terrorist abuse of charities,
Treasury has issued guidance, including the Anti-Terrorist
Financing Guidelines: Voluntary Best Practices for U.S.-Based
Charities, to assist all donor and charitable communities in
understanding how terrorist organizations abuse the charitable
sector and in adopting appropriate practices to protect against
such terrorist abuse. If confirmed, I intend to work with my
colleagues in the Treasury Department in advancing these
efforts.
Q.6. If there is a legitimate concern that American investors
will unknowingly fund zakat resulting from SCF--what steps can
Treasury take to educate investors of that fact? Would
legislation that amends the money and finance section of the
U.S. code to include the types of financial institutions that
practice SCF and requires that all the businesses covered in
that section be required to submit a list to the Financial
Crimes Enforcement Network (FinCEN) of all charitable
contributions made by the financial institution, during the
preceding year for review by FinCEN provide additional, useful
information to both law enforcement and investors? What would
be problematic about such an approach?
A.6. I am not aware of any particular concerns that American
investors may be unknowingly funding zakat resulting from
Shariah Compliant Finance, nor am I aware of charitable
contributions from any U.S. financial institution presenting
terrorist financing or other illicit financing concerns. If
confirmed, however, I will be interested in learning more about
this issue and will recommend action, if it appears warranted.
Q.7. Shouldn't Shariah-Compliant financial institutions be
required to disclose the destination of zakat payments?
A.7. I am not aware of any unique problem that has been
encountered with terrorist financing by the zakat practices of
Shariah-Compliant financial institutions within the
jurisdiction of the United States. If confirmed, however, I
look forward to studying this issue and working with Congress
to determine whether any special rules should be imposed.
Q.8. Shouldn't Shariah-Compliant financial institutions be
required to disclose the full and true nature of shariah, the
basis of their business?
A.8. Transparency is the touchstone of our antimoney laundering
and counterterrorist financing programs, and thus I support the
general proposition that U.S. financial institutions should be
transparent about the products and services they offer to their
customers. For Shariah-Compliant financial institutions, this
transparency would include appropriate disclosure that the
financial products and services it offers are specifically
tailored to comply with shariah principles.
Q.9. Shouldn't Shariah-Compliant financial institutions be
required to disclose who the shariah scholars/advisors are and
their associations and backgrounds?
A.9. As noted in response to the prior question, I am a strong
proponent of transparency in financial transactions. If
confirmed, I will explore carefully the question whether the
Treasury Department should require any additional disclosure of
Shariah-Compliant financial institutions.
Additional Material Supplied for the Record
STATEMENT OF EDWARD M. KENNEDY, A U.S. SENATOR FROM THE STATE OF
MASSACHUSETTS
Chairman Dodd and Members of the Committee: I appreciate this
opportunity to offer my strong support for President Obama's nomination
of Peter Kovar to be Assistant Secretary for Congressional and
Intergovernmental Relations at the Department of Housing and Urban
Development.
I've known Peter for many years through his service in the office
of Congressman Barney Frank, where he currently serves as Chief of
Staff. Peter has a deep commitment to public service. He has a thorough
understanding of the legislative process, and he is willing to go the
extra mile in seeking common ground in discussions with other
Congressional offices. These are some of the very qualities that
attracted so many people to the message that Barack Obama put forth
during his campaign, and they are, I believe, qualities that will
enable Peter to perform very effectively as a direct link between
Congress and HUD.
We face a serious housing crisis, and we need to be prepared to
work closely across party lines and with HUD in the effort to minimize
the impact of foreclosures on our communities. I believe Peter is
someone who will make valuable contributions to that vital effort, and
to many other key HUD initiatives, by helping to keep Congress well
informed about the Department's activities and ensuring that there will
be a constructive exchange of ideas in the development of policies.
I know that Congressman Frank is proud of the work that Peter has
done on his staff over the years, and, as a fellow Bay State native, I
share that view. Though Peter's departure to the Administration would
deprive Congressman Frank and the rest of the Massachusetts delegation
of his valuable work, I'm convinced that it will serve the greater
interests of Congress and the Nation as a whole. I urge my colleagues
to support Peter Kovar's nomination.
______
STATEMENT OF JOHN F. KERRY, A U.S. SENATOR FROM THE STATE OF
MASSACHUSETTS
Mr. Chairman: It isn't often that a Senator gets to appear before a
committee to recommend confirmation for not one but two former members
of their staff.
But I have that rare opportunity today, with Peter Kovar and Helen
Kanovsky, both of whom have been nominated by President Obama to
positions at the Department of Housing and Urban Development.
When Helen and Peter worked for me I promised them one day they
would be working for a Democratic president in his administration. Of
course at the time I said that I thought the president would be me.
Many of you know Peter. He has been involved in Massachusetts
politics since 1982 and he has worked for members of Congress from
Massachusetts for the last two decades. Since 1991, he has been Chief
of Staff to Representative Barney Frank, a job that obviously took on
new importance 2 years ago when Barney took over the chairmanship of
the House Financial Services Committee.
In 1985, my first year in the Senate, Peter was the correspondence
manager in my Senate office. That means that he got the first look at
all those wonderful cards and letters that came in from constituents,
some of whom may have been a little upset about something the
government was doing--or not doing.
Come to think of it, that may have been perfect training for
someone who has been helping Barney get Wall Street back in working
order. Or maybe it was his work as a wine importer before deciding on a
career in public service.
During his years on the Hill, Peter has been involved in a number
of important issues, including immigration, Medicare reimbursement,
environmental protection, and government ethics. His years on the Hill
make Peter a perfect choice to serve as HUD assistant secretary for
congressional and intergovernmental affairs.
Helen was my chief of staff from 1998 to 1999. And all of you know
that a job like that prepares you for just about anything. In addition,
she has skills as a lawyer, an adviser, and a leader, all of which she
will need as the General Counsel to HUD.
Most recently, Helen has been General Counsel to the AFL-CIO
Housing Investment Trust (HIT), which, since its inception, has
invested more than $5 billion to finance more than 85,000 units of
housing nationwide, generating more than 58,000 union jobs.
Housing will be at the forefront of our economic recovery, so it is
fortunate that the President has chosen someone with Helen's experience
to assist Secretary Donovan at HUD.
______
From: Roussell, Melanie N
Sent: Wednesday, April 22, 2009 2:01 PM
To: Gilkey, Eureka N
Subject: Fw: support for David Stevens
FYI.
Melanie Roussell
Press Secretary
U.S. Department of Housing and Urban Development
[email protected]
Blackberry: 571-423-8796
Direct: 202-402-6605
From: Martin Eakes
To: Roussell, Melanie N
Sent: Wed Apr 22 14:00:08 2009
Subject: support for David Stevens
Hello Ms. Roussell,
As CEO of Self-Help and the Center for Responsible Lending, I want
to register my support for the nomination of David Stevens for FHA
Commissioner. Mr. Stevens has a very strong background in mortgage
finance and has a well-deserved reputation for integrity. He will be a
great leader for the FHA during this time of unparalled challenge and
opportunity.
If I can be of assistance, or provide further support, please let
me know. Thank-you.
Martin Eakes, CEO
Self-Help
919-956-4437