[Senate Hearing 111-501]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-501
 
                   NOMINATIONS OF: ERIC L. HIRSHHORN,
                   MARISA LAGO, AND STEVEN L. JACQUES 

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

                                HEARING

                               before the

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

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   ON

                            Nominations of:

 Eric L. Hirschhorn, to be Under Secretary for Export Administration, 
                         Department of Commerce

                               __________

               Marisa Lago, to be Assistant Secretary for
                 International Markets and Development,
                       Department of the Treasury

                               __________

   Steven L. Jacques, to be Assistant Secretary for Public Affairs, 
              Department of Housing and Urban Development

                               __________

                            NOVEMBER 5, 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

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            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

                    Edward Silverman, Staff Director

        William D. Duhnke, Republican Staff Director and Counsel

                  Joe Hepp, Professional Staff Member

                Neal Orringer, Professional Staff Member

                 Beth Cooper, Professional Staff Member

                   Drew Colbert, Legisltive Assistant

                Mark Oesterle, Republican Chief Counsel

          John O'Hara, Republican Senior Investigative 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, NOVEMBER 5, 2009

                                                                   Page

Opening statement of Chairman Dodd...............................     1

Opening statements, comments, or prepared statement of:
    Senator Shelby...............................................     3

                               WITNESSES

Stephen J. Solarz, former Representative from the State of New 
  York...........................................................     4
Claire McCaskill, Senator from the State of Missouri.............    10

                                NOMINEES

Eric L. Hirschhorn, of New York, to be Under Secretary for Export 
  Administration, Department of Commerce.........................     7
    Prepared statement...........................................    23
    Responses to written questions of:
        Senator Shelby...........................................    26
        Senator Bunning..........................................    28
Marisa Lago, of New York, to be Assistant Secretary for 
  International Markets and Development, Department of the 
  Treasury.......................................................     8
    Prepared statement...........................................    24
    Responses to written questions of:
        Chairman Dodd............................................    30
Steven L. Jacques, of Kansas, to be Assistant Secretary for 
  Public Affairs, Department of Housing and Urban Development....    10
    Prepared statement...........................................    24

                                 (iii)


                            NOMINATIONS OF:

                    ERIC L. HIRSCHHORN, OF NEW YORK,

                       TO BE UNDER SECRETARY FOR
                         EXPORT ADMINISTRATION,

                        DEPARTMENT OF COMMERCE;

                       MARISA LAGO, OF NEW YORK,

  TO BE ASSISTANT SECRETARY FOR INTERNATIONAL MARKETS AND DEVELOPMENT,

                      DEPARTMENT OF THE TREASURY;

                     STEVEN L. JACQUES, OF KANSAS,

                     TO BE ASSISTANT SECRETARY FOR
                            PUBLIC AFFAIRS,

                       DEPARTMENT OF HOUSING AND
                           URBAN DEVELOPMENT

                              ----------                              


                       THURSDAY, NOVEMBER 5, 2009

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 9:40 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. Let me 
welcome everyone here this morning, and I apologize for being a 
couple minutes later getting underway. We are here this morning 
to consider several nominations. I want to thank each of the 
nominees for their willingness to serve and, of course, to 
thank the President for sending us what I believe to be very, 
very competent and qualified nominees as well. And I thank all 
of those who are in the audience here this morning.
    I want to make some brief opening comments. I will turn to 
Senator Shelby very quickly, and then we will turn to our--we 
have several guests here this morning, one in particular, Steve 
Solarz, my dear, wonderful friend. We were elected to the House 
together just a couple of years ago.
    Senator Reed. Me, too.
    Chairman Dodd. And Jack served with Steve, so we have all 
served with him, a wonderful Member of Congress who is here, 
and I will introduce him appropriately in a few minutes.
    Well, this morning we meet in open session to consider 
three of the President's nominees. These critical nominations 
arrive before this Committee at a time of heightened security 
and continuing economic turmoil, as we all know. If confirmed, 
these qualified, highly qualified individuals I believe will 
play an important role in safeguarding our national interests 
and returning our country to the prosperity that we all seek.
    Our first nominee is Eric Hirschhorn who has been nominated 
to be the Under Secretary for Export Administration, and we 
thank him for his willingness to serve. If confirmed, Mr. 
Hirschhorn would serve as head of the Commerce Department's 
Bureau of Industry and Security, overseeing the implementation 
of our Nation's export controls for dual-use products, that is, 
goods and technologies that have both military and commercial 
applications. In that capacity, Mr. Hirschhorn may be tasked 
with developing and carrying out reforms to our Nation's export 
control system, which I understand is a high priority for the 
Secretary of Commerce, Gary Locke.
    Additionally, Mr. Hirschhorn would be responsible for 
implementing certain improvements to the Defense Production 
Act, as authored by Senator Shelby and myself and very recently 
signed into law by President Obama. These enhancements will 
help the United States industry's ability to deliver supplies 
to the Government during national crises.
    Our next nominee, Marisa Lago, has been nominated to be 
Assistant Secretary for International Markets and Development. 
It gives me a great deal of pleasure to note that this position 
was created as part of the Foreign Investment and National 
Security Act, the FINSA law, as it is called, which was passed 
unanimously by this Committee and signed into law during the 
last Congress. And, again, I commend all the members of the 
Committee that worked on that, including my partner and friend, 
Senator Shelby. It was one of those efforts we did together 
here to make a difference, and we believe it is doing all the 
things we hoped it would.
    The Assistant Secretary supports the Under Secretary for 
International Affairs in advising the Secretary and Deputy 
Secretary of the Treasury in the formation and execution of 
United States international economic policy as related to 
foreign investment in the United States and security policy 
through the Committee on Foreign Investment in the United 
States, the CFIUS bill, which, again, was a subject of 
considerable debate and discussions. We reformed that law in 
this Committee as well. And, again, I thank my fellow Committee 
members for the tremendous effort we made during that 
legislation. It was a very explosive debate, you may recall, 
over the acquisition of ports in our country by foreign 
governments, and it created quite a stir for a time, and the 
Committee responded to all of that in a very sound piece of 
legislation.
    Ms. Lago is a Harvard Law School classmate of our 
colleague, Jack Reed, and I am going to turn to Jack in a 
minute here to introduce her.
    Our final nominee is Mr. Steven Jacques, who has been 
nominated to serve as Assistant Secretary for Public Affairs in 
the U.S. Department of Housing and Urban Development. As 
Assistant Secretary for Public Affairs, Mr. Jacques would be 
the principal adviser to HUD Secretary Donovan and his staff on 
public information, opinion, and events. In addition, Mr. 
Jacques would advise the Secretary on public education and 
information regarding one of the most critical institutions, of 
course, our homes--whether it is raising awareness of mortgage 
rescue scams or ensuring that families facing homelessness know 
where to turn in their communities. The need for HUD to raise 
public awareness in my view could not be more vital.
    I would also like to note that our former colleague Senator 
Robert Dole and Representative Emanuel Cleaver, among others, 
have sent letters of support for Mr. Jacques that will be 
entered as part of the record here this morning.
    Chairman Dodd. I look forward to hearing the testimony of 
our nominees, and, again, I congratulate all of you for your 
willingness to serve and the President for nominating you, and 
we hope we can move you along fairly quickly so that you can 
meet your obligations.
    With that, let me turn to Senator Shelby.

             STATEMENT OF SENATOR RICHARD C. SHELBY

    Senator Shelby. Thank you, Mr. Chairman.
    The core mission of the Bureau of Industry and Security is 
to keep sensitive dual-use items away from dangerous countries, 
organizations, and individuals. Performing this function must 
be done in a manner that preserves the innovative and 
productive capacity of the United States.
    Mr. Hirschhorn, the Under Secretary for Export 
Administration has an enormous responsibility, as you know. 
Every decision you make entails a national security assessment, 
a foreign policy statement, and a fundamental business decision 
that affects the bottom line of U.S. companies and our workers. 
It will be your job to objectively provide solutions narrowly 
tailored to maintain an effective national security umbrella 
over the country's healthy promotion of exports.
    Ms. Lago, the work you have been nominated to perform 
focuses primarily on foreign direct investment security issues, 
particularly as they pertain to the Committee on Foreign 
Investment in the United States, CFIUS, as Senator Dodd 
referred to. You will need to work the CFIUS process in a 
timely way while remaining cognizant of the national security 
implications of each covered transaction. This can be a very 
difficult balance to strike, as you well know.
    Mr. Jacques, you are also nominated for a very important 
position at the Department of Housing and Urban Development. 
You will serve as a key point of contact for a multi-billion-
dollar agency that plays a role in the lives of millions and 
millions of Americans. As the Department's public liaison, you 
will be expected to establish an active and an open 
relationship with the American people. We look forward to 
hearing how you intend to do so, and I congratulate all three 
of you on being nominated by the President.
    Thank you.
    Chairman Dodd. Thank you very much, Senator.
    I am going to turn, if I can briefly, to Senator Solarz--
Congressman Solarz. I just elevated you.
    Senator Shelby. Well, he would have made a good Senator.
    Chairman Dodd. He would have made a very good Senator, I 
tell you, and just a wonderful friend, and I have fond memories 
of being sworn in together in January 1975 and working 
together. There was no more talented and gifted Member of the 
Congress than Steve Solarz. I just recall on countless 
occasions his inquiries. Whether serving in a committee or just 
in informal conversations with visiting dignitaries from other 
countries, no one was more perceptive and incisive in their 
examination of people who came before us. And so it is a 
pleasure to have you back. I regret in some ways you are not 
sitting on this side of the dais, my friend. You would have 
been a wonderful United States Senator. But we are honored to 
have you here this morning, so the floor is yours.

                STATEMENT OF STEPHEN J. SOLARZ,

             FORMER REPRESENTATIVE IN CONGRESS FROM


                     THE STATE OF NEW YORK

    Mr. Solarz. Thank you very much. It is a pleasure----
    Chairman Dodd. Is that microphone on, Steve?
    Senator Shelby. Put your microphone on, Steve.
    Chairman Dodd. You have to push that button there.
    Mr. Solarz. Thank you very much, Mr. Chairman. Let me say 
first of all it is a pleasure to see some of my former 
colleagues in the House who have gone on to bigger and, 
arguably, better things in the Senate. But it is a particular 
honor to be able to testify today before a Chairman and on 
behalf of a nominee for both of whom I have the greatest 
respect and affection.
    As you indicated, Mr. Chairman, we go back a long way 
together. We have known each other for 34 years when we were 
both elected in 1974 as members of the Watergate class. And in 
the words of my old district back in Brooklyn, I want you to 
know that I ``shep naches,'' which means I derive great pride 
and pleasure from your achievements since then.
    But believe it or not, I know the nominee Eric Hirschhorn 
even longer than I know you, because back in 1971, as a back-
bench member of the New York State Assembly, a minority within 
the minority, where the measure of my influence was that with 
an assembly of 150 members, I was given New York State Assembly 
license plate 152.
    [Laughter.]
    Mr. Solarz. Together with several of my other colleagues 
equally situated in the Assembly who had the quaint notion that 
we ought to understand the bills we were voting on, we pooled 
our meager staff resources and hired a young attorney by the 
name of Eric Hirschhorn to brief us each Monday morning when 
the legislature reconvened on the bills that were on the 
calendar for that week.
    During the course of that experience, I came to feel that 
what Winston Churchill once said about Harry Hopkins when he 
dubbed him ``Lord Root of the Matter'' could be said with equal 
applicability to Eric Hirschhorn because he had the ability to 
go to the heart of the matter, the legislation before us.
    Also like Hopkins, Eric has the rare capacity to disagree 
without being disagreeable, and I think that would be an asset 
in this position.
    After he left us in Albany, he came to Washington, where he 
went to work as a legislative assistant for Congresswoman 
Abzug, whom you may have heard of, who was another member of 
the New York delegation. He went on to become the Deputy 
Assistant Secretary for Export Administration in the Commerce 
Department under President Carter. And for quite some time 
afterwards until now, he has been a partner in Winston & 
Strawn, one of the major American law firms.
    And it seems to me that this combination of experiences 
makes him in a way the perfect candidate for this particular 
position. He knows the Congress, its sensitivities and 
concerns. He knows the executive branch, its procedures and 
politics. And he knows the private sector, its objectives and 
its perspectives.
    And I think that the combination of these experiences 
clearly equip him to balance the competing desire of the 
private sector to export its goods and services and the needs 
of the Government to protect our vital national security 
interests. And I have no doubt, given a clash between those 
objectives, where national security is at stake, Mr. Hirschhorn 
will do what needs to be done to protect our vital interests.
    So for all these reasons, I urge you to expeditiously 
facilitate his confirmation as the Under Secretary of Commerce 
for Export Administration.
    Chairman Dodd. Steve, thank you very much. Could not be 
more eloquent. Case over, I think, Mr. Hirschhorn. I would not 
say a word at that point.
    [Laughter.]
    Chairman Dodd. Case made.
    Jack.
    Senator Reed. Well, thank you very much, Mr. Chairman, and 
I will confess, Marisa does not have as good a lawyer as Mr. 
Hirschhorn.
    [Laughter.]
    Senator Reed. But it will have to do.
    I am just delighted and honored to be able to introduce 
Marisa Lago. Marisa is my classmate from Harvard Law School. 
She graduated with great distinction and was recognized as such 
by being awarded a clerkship in the First District, which 
suggests her legal skill which she has developed through her 
extraordinary career.
    Unlike so many people who would have taken that clerkship 
and gone to a big law firm and done big things in some sense, 
she went to New York City Department of Planning to commit 
herself to helping people live better, neighborhoods to develop 
better, and she has followed through in so many different ways 
in public service, at the New York City Economic Development 
Corporation, and she served Mayor Menino in the city of Boston 
as the chief economic development officer. So she has committed 
herself to making a difference in the communities that are so 
important.
    And I think significant for the job that she is about to 
assume--I hope--is that she was the chief in the Securities and 
Exchange Commission for International Activities under Chairman 
Arthur Levitt. In that sense, she handled all of the 
international aspects of SEC operations. She prepared herself 
well for the job that she will, I hope, assume, which is 
looking at complex merger and acquisitions, which are at the 
heart of security transactions, but involving national security 
considerations. And I do not think we could find a better not 
only lawyer but, perhaps more importantly, person than Marisa 
Lago to do this.
    So I think the President has chosen wisely, and I would 
hope that we could move this nomination expeditiously.
    Chairman Dodd. Well, that is good. Jack, thanks immensely, 
and that is a pretty good case to be made as well.
    Mr. Jacques, you have a colleague of ours coming in as 
well, and when she gets here, we are going to recognize her to 
give you an appropriate introduction. We cannot have you 
sitting there and not get as good an introduction as you have 
heard for these other nominees.
    What I would like to do, if I could, though, before we do 
that, there is always a courtesy we extend, and that is, if any 
of your family members are here--I do not know if they are or 
not. But, Mr. Hirschhorn, do you have any family members that 
are with us?
    Mr. Hirschhorn. Yes, Mr. Chairman. My wife is here, Leah 
Wortham. She teaches up the road at Catholic University Law 
School. And my son Alex and my brother-in-law, Henry Howard, 
are all here today.
    Chairman Dodd. Terrific. I noticed going over your resume 
last night that each of your children have your wife's maiden 
name as their middle name.
    Mr. Hirschhorn. Yes.
    Chairman Dodd. That is not a bad idea. That was a very 
smart move on your part.
    [Laughter.]
    Chairman Dodd. Ms. Lago, any family members?
    Ms. Lago. Yes, thank you very much. I would like to 
introduce my best friend of 35 years, my husband, Ron Finiw. 
Ron is an architect, and some of you may have seen one of his 
buildings that graces our capital, the new International Law 
Center at Georgetown Law School.
    Chairman Dodd. Absolutely. Wonderful, terrific.
    Ms. Lago. And I am also joined by my brother, Paul Lago. 
Like me, Paul has dedicated his life to public service. He has 
been with the Defense Intelligence Agency for 20 years, 
including serving voluntarily as a civilian in Iraq. And my 
sister-in-law, Kelly Lago, who serves with the Bureau of 
Alcohol, Tobacco, and Firearms.
    Chairman Dodd. Clearly, a distinguished family. We are 
honored to have all of you with us.
    Mr. Jacques, do you have----
    Mr. Jacques. Mr. Chairman, I am sorry to say that my wife 
could not make it here today, but my wife, Christine, is back 
in Kansas and she will be watching this on your website when it 
is up to make sure that I did OK.
    Chairman Dodd. I have a 4-year-old daughter named 
Christina. That is a connection we can make here.
    [Laughter.]
    Chairman Dodd. I am going to ask you to rise, if you could, 
and to raise your right hand while I swear you in and give the 
oath, if you would. Do you swear or affirm that the testimony 
you are about to give us is the truth, the whole truth, and 
nothing but the truth, so help you God?
    Mr. Hirschhorn. Yes.
    Ms. Lago. I do.
    Mr. Jacques. I do.
    Chairman Dodd. And do you agree to appear and testify 
before any duly constituted committee of the U.S. Senate?
    Mr. Hirschhorn. Yes.
    Ms. Lago. Yes.
    Mr. Jacques. I do.
    Chairman Dodd. I thank you for that.
    With that, why don't we begin in the order, Mr. Hirschhorn, 
that you were introduced? By the way, just to let you know, any 
and all documentation and support services or activities, 
rather, that you want to include in the record, we will make 
part of the record here today. And any of the comments and 
statements by any of the members--and I will leave the record 
open for a few days here for them to submit any questions they 
may have for you as well, and I would urge you to respond as 
quickly as you can to questions of members who may not be here 
this morning but would like to submit a few, if they could.
    With that, Mr. Hirschhorn, the floor is yours.

         STATEMENT OF ERIC L. HIRSCHHORN, OF NEW YORK,

TO BE UNDER SECRETARY FOR EXPORT ADMINISTRATION, DEPARTMENT OF 
                            COMMERCE

    Mr. Hirschhorn. Thank you, Mr. Chairman, and thank you 
also, Ranking Member Shelby and Senator Reed. I am quite 
honored to be here today. I appreciate the expression of 
confidence in me by President Obama and Secretary Locke, and I 
am hopeful that I can gain your confidence as well. I want to 
thank the Committee members and staff for making time for this 
nomination hearing in the midst of a busy legislative session. 
And should I be confirmed, I very much look forward to 
continuing to work with you.
    I want to thank Steve Solarz for doing me the honor of 
introducing me. He has been a dear friend for many years, and I 
am delighted he could be here.
    I had the privilege of working on export control, 
antiboycott compliance, and Defense Production Act issues at 
the Commerce Department in 1980 and 1981, so this would be a 
return for me. I found the career staff who administer that 
system, those laws--not only at Commerce but also the other 
agencies who were deeply involved in it--to be extremely 
capable and one hundred percent committed to the interests of 
our country. Should I be confirmed, I will be delighted to be 
working with them all once again.
    As Secretary Locke has noted, the Bureau of Industry and 
Security ``has a unique mission at the intersection of 
international trade and national security.'' Working closely 
with the Departments of State, Defense, and Energy, BIS 
evaluates thousands of export license applications each year to 
ensure that items proposed to be sold abroad are going to 
suitable end users for appropriate end uses. Getting this right 
is very important. It is equally important to have an 
enforcement program ensuring that those who flout the rules are 
caught and are punished. I am committed to ensuring that BIS 
does the best possible job of performing these important 
functions as well as overseeing its role in ensuring an 
effective treaty compliance system and promoting continued U.S. 
leadership in strategic technologies.
    President Obama has asked the agencies to take a hard look 
at the existing system in an effort to see whether it can be 
improved consistent with our national security. Of course, this 
Committee will be significantly involved in that process, and I 
hope you will give me the opportunity to help carry it out.
    Since leaving the Government for private law practice in 
1981, I have spent a good deal of my time advising clients 
whose activities are subject to U.S. export control and embargo 
regulations. My practice also has included considerable 
litigation, much of it involving railroad issues, and I have 
served as an internal ethics counselor for my law firm. Outside 
the firm, I have been an active member of the D.C. Bar's Ethics 
Committee and the D.C. Bar's Rules Review Committee.
    Most of my practice has involved explaining to clients how 
the often complex regulations work, analyzing whether a 
proposed course of action requires advance Government 
permission, and, if a license is required, assisting the client 
in preparing the application. I have assisted clients with 
their internal compliance programs and have represented some 
regarding enforcement issues. I also have acted as an advocate 
for clients who believe that our export control system can be 
improved. I frequently have written and spoken in the area, and 
my writings include not only articles but also a book whose 
third edition will be published early next year. I believe that 
this experience will be of great help to me in what I hope will 
be my new job.
    If I am confirmed by the Senate, my goal will be to perform 
competently and objectively, and that means to me hearing and 
considering all viewpoints on the matters that would come 
before me.
    I recently read the remarks that my law school's dean 
delivered this fall to the incoming class. He spoke of two 
``fundamental truths.'' ``First,'' he said, ``excellence is its 
own reward.'' Second, ``integrity is the bedrock of any 
successful career.'' I promise you that, if confirmed, I will 
strive to bring these qualities to everything I do.
    Again, thank you, and I would be delighted to respond to 
any questions you may have.
    Chairman Dodd. Thank you very, very much.
    Ms. Lago.

             STATEMENT OF MARISA LAGO, OF NEW YORK,

    TO BE ASSISTANT SECRETARY FOR INTERNATIONAL MARKETS AND 
            DEVELOPMENT, DEPARTMENT OF THE TREASURY

    Ms. Lago. Thank you, Mr. Chairman.
    Chairman Dodd, Ranking Member Shelby, distinguished members 
of the Committee, I am so honored to have my nomination come 
before you today, and I do want to start by thanking the staff, 
many of whom are here today, who took the time this week to 
speak with me about CFIUS, principally, and also about other 
international financial matters.
    I am so honored to have been nominated by President Obama 
to serve as Treasury Assistant Secretary for International 
Markets and Development, especially at such a critical time not 
just in our Nation's but also in the world's economies. I am 
grateful to Secretary Geithner for recommending me to the 
President. I had the pleasure of working with Secretary 
Geithner when he was last at Treasury, so I know what I would 
be getting into, if confirmed, and I look forward to having the 
opportunity to join his team.
    I would want to recognize two people who are not here 
today: Louis and Maria Lago. My parents cannot be here. After 
six decades in the U.S., they now live in the village in Spain 
where my mother was born. But my love of public service stems 
from my parents. My father served in the U.S. Navy during World 
War II, and he then spent the rest of his career as a civilian 
employee at a Department of Defense facility, Picatinny Arsenal 
in New Jersey. So I grew up in this setting, and I wish they 
were here today. But thanks to the Internet, they will be able 
to watch the proceedings.
    As my family's first college graduate, I have lived the 
American dream. As Senator Reed noted, upon graduating from 
Harvard Law School, the traditional route after having a 
clerkship in the First Circuit Court of Appeals would have been 
to go on to a law firm, and certainly those opportunities had 
been open to me. But I made the non-traditional choice because 
of a mentor in law school of joining New York City government, 
and I became absolutely hooked on public service, the ability 
to do good, to serve--the word ``servant'' in ``public 
servant'' matters to me--to make my home town a better place.
    Over the past 25 years, I have had the ability to serve New 
York State, New York City, and Boston in senior capacities in 
economic development. In each of these roles, I have had to 
strike a balance among multiple competing interests--fiscal 
prudence, the interests of the business community, job 
creation, and neighborhood concerns. And one of the hallmarks, 
I believe, of my career has been forging consensus but also 
showing the leadership to make tough decisions when a decision 
needs to be made and not all are agreed.
    I have also been fortunate to have served at the Federal 
level in the 4 years that I worked with Chairman Arthur Levitt 
at the Securities and Exchange Commission. As the head of 
International Affairs, I was involved in issues that ranged 
from trade in financial services to international accounting 
standards to enhancing the financial regulation in 
underregulated and uncooperative offshore financial centers. 
Throughout this time, I held a top secret security clearance 
because of the sensitive nature of the international matters 
with which I was dealing.
    In the private sector, I headed compliance globally for 
Citigroup's investment banking, its markets and banking 
business. In this role, I was responsible for compliance 
matters that ranged from anti-money laundering to OFAC 
sanctions initiatives, to all of the regulatory requirements 
attendant to Citigroup's investment banking, trading, public 
finance, and transaction services businesses. I dealt routinely 
with both the securities and the banking regulators of not just 
the U.S. but the regulators in over 80 countries. I had a team 
of over 500 in 80 different countries around the world.
    Turning to the future, if approved by this Committee and 
confirmed by the Senate, I commit closely to working with the 
Committee as a whole, individual members, and the staff to 
carry out the weighty responsibilities that are laid out in the 
landmark FINSA legislation and also to being part overall of 
the senior Treasury team that promotes economic growth, 
financial market stability, and open markets for U.S. firms. A 
critical component is going to be open, regular dialogue with 
the Committee, with the other agencies that are members of 
CFIUS, and with my colleagues in the Treasury Department. If I 
have the honor of being confirmed, I welcome the dialogue.
    Chairman Dodd. Thank you very much. Very good testimony.
    Yes, Mr. Jacques.

           STATEMENT OF STEVEN L. JACQUES, OF KANSAS,

  TO BE ASSISTANT SECRETARY FOR PUBLIC AFFAIRS, DEPARTMENT OF 
                 HOUSING AND URBAN DEVELOPMENT

    Mr. Jacques. Thank you, sir. Chairman Dodd, Ranking Member 
Shelby, Senator Reed, it is an honor to be here today as the 
President's nominee for the position of Assistant Secretary for 
Public Affairs for the Department of Housing and Urban 
Development. As a student of government, I understand that the 
confirmation process is one of the most critically important 
constitutional responsibilities of the Senate, so I come to you 
with humility and great respect for this process.
    Chairman Dodd. Well, it was just perfect timing here, Mr. 
Jacques. You sit anywhere you would like, Claire.
    Mr. Jacques. I cede my time to Senator McCaskill.
    [Laughter.]
    Chairman Dodd. Very smart nominee there.
    Claire, it is perfect. We were waiting for you, and I 
announced ahead of time that as soon as you arrived, we would 
take a pause in the middle of the testimony, and we are 
delighted you are here this morning to present Mr. Jacques to 
the Committee.

                 STATEMENT OF CLAIRE McCASKILL,

               SENATOR FROM THE STATE OF MISSOURI

    Senator McCaskill. Thank you. It is not often that you get 
to introduce an old friend under these circumstances, and I am 
honored to be able to introduce Steve to the Committee this 
morning. He has a long history in Missouri both in politics, 
public policy, and public service--in all three. He, in fact, 
volunteered for a South Side St. Louis Democratic Club at the 
age of 11. So he actually--I think I was giving out ``Vote for 
Haskell Holman'' emery boards when I was 11 or 12, but you may 
have beat me by 6 months or so in terms of political 
involvement.
    His father and mother lived in St. Louis. He graduated from 
Washington U. with a master's degree in international affairs 
and a bachelor's in political science. His dad and his family 
helped found a church in St. Louis. They did inner-city 
service--his dad was an optometrist. They did inner-city 
service for kids who could not afford to have optometry 
services, and his family kind of is responsible for his ethos 
of public service.
    He was a deputy campaign manager for Representative Jerry 
Litton in his race for the U.S. Senate, a successful race that 
ended tragically on the night of his victory in the primary in 
one of several tragic airplane accidents we have had in 
Missouri that have taken some of our best and brightest from 
us.
    He worked in government in various capacities. He was 
Director of Communications for the U.S. State Department, 
Director of Communications and Senior Adviser to the Under 
Secretary of Export Administration, all during the Clinton 
administration. He has worked in higher education in Missouri 
and has continued to stay very involved with the public in 
every capacity since he began working in campaigns at the age 
of 11.
    He is going to be a terrific addition to this Department. 
He is going to, I think, bring a trench perspective, the 
perspective of somebody who has been out there working in these 
neighborhoods, working in these communities. While he has been 
in Washington, he has not been here long enough that he has got 
that insular disease that detaches you from what is really 
going on out there, and Lord only knows we need more of that in 
every agency of the Federal Government.
    So I am pleased that he has received this nomination. I am 
honored to be here today to support his nomination, and I 
certainly urge unanimous support from this Committee for his 
nomination to this administration.
    Chairman Dodd. Thank you very much, Senator McCaskill. We 
appreciate your being here. I served with Jerry Litton. I think 
Richard may have as well.
    Senator Shelby. He was right before me.
    Chairman Dodd. He was right before you? I often thought 
that had it not been for that tragic accident, Jerry Litton 
might have ended up President of the United States. He was that 
talented. His roundtable things he did in the early days going 
back, I do not know if that was your idea or not.
    Mr. Jacques. It was not.
    Chairman Dodd. If it was, you ought to be confirmed right 
now.
    [Laughter.]
    Chairman Dodd. It was a brilliant stroke for a Congressman 
in a small district in Missouri. I remember he had Henry 
Kissinger and Hubert Humphrey. He would get all these national 
figures to come to his congressional district to be part of 
those discussion groups and forums in the round, or in the 
circle. Circle in the round he would do. Very, very talented 
individual. Thank you, Claire, very much.
    Mr. Jacques. Thank you, Senator. Appreciate it.
    Chairman Dodd. Mr. Jacques, the floor is still yours.
    Mr. Jacques. Thank you, sir. And, no, that was Jerry 
Litton's own idea. He was his best adviser on those matters, a 
real professional.
    I will pick up where I left off. I come to you from the 
great State of Kansas after a long career in public service in 
both the public and private sectors. A considerable portion of 
my career has been spent in politics and government, including 
many bipartisan endeavors. One of the great honors of my life 
has been the opportunity to serve as a senior fellow and 
associate director of the Robert J. Dole Institute of Politics 
at the University of Kansas. The primary mission of this 
wonderful institution is to show students that a career in 
politics and government is an honorable profession. Former 
Senator Dole is obviously our prime exemplar, but the concept 
of ``politics as an honorable profession'' also includes many 
of the practitioners from the world of public service who have 
graced the institute with their wisdom.
    Through my work in government, politics, higher education, 
and with civic and charitable organizations, nonprofit 
corporations, and businesses, I have been privileged to be able 
to provide timely, useful information to those who can benefit 
from it. This is my mission and the part of my career that 
provides me with the most satisfaction.
    I view the primary mission of the Assistant Secretary for 
Public Affairs at HUD as ensuring that the people who need our 
services find out about those services and ultimately know how 
to access those services. Specific information that comes to 
mind are the resources that can help Americans avoid 
foreclosure, refinance their homes, find affordable rental 
housing, or rebuild their homes after a natural disaster.
    My broad spectrum of experience has taught me the 
difference between simply ``releasing'' information and truly 
communicating that information. How do we reach those who do 
not have access to the Internet or email? How do we inform 
people who do not get newspapers or do not have the time to sit 
down and watch TV news because they are working two jobs and 
running a household?
    I have been honored to serve as Director of Communications 
and Strategic Communications Planning for the U.S. State 
Department, where I participated in the successful NATO 50th 
Anniversary Summit, and the accession to NATO of the first 3 
former Eastern Bloc countries--Poland, Hungary, and the Czech 
Republic. I was also honored to serve at the U.S. Department of 
Commerce as the Communications Director for the Bureau of 
Export Administration.
    My public sector experience also includes two State 
universities--the University of Kansas, where I served at the 
Dole Institute, and the University of Missouri-Kansas City, 
where I served as associate vice chancellor for public affairs. 
At the University of Missouri, I worked hard to bring new 
positive media and community attention to the school's good 
works.
    Since 1976, I have served on the national advance staff in 
nearly every Presidential election. I have used the skills I 
learned in the intense working environment of Presidential 
campaign advance to serve both Republican and Democratic public 
officials in the conduct of their official duties.
    In the private sector, I have worked for numerous nonprofit 
and civic organizations, as well as municipalities. Among those 
clients I was most proud to serve was the Kansas City, 
Missouri, Police Department, for which I developed and 
implemented a public affairs campaign to increase the number of 
minorities and women on the police force. We were successful in 
dramatically increasing the number of high-quality individuals 
who applied and eventually became police officers.
    I view the role of public affairs in government, academia, 
civic and nonprofit organizations as the nexus between policy 
and action. Not even the best policies have a hope of being 
implemented, or of helping people, without effective 
communication and outreach to those who need to know and can 
act on the information they receive. You can build the 
proverbial better mousetrap, but no one will beat a path to 
your door unless they are aware of it.
    I ask for your support, and in return I promise to actively 
search for every opportunity to provide you and your 
constituents with the information you need and want regarding 
the work of the U.S. Housing and Urban Development Department.
    Chairman Dodd. Terrific. Great statement. Thank you very 
much, Mr. Jacques. I appreciate it very much.
    I am going to ask the clerk to put on 6 minutes. There are 
only three of us here right now and more may come, but we will 
try and move this along. A lot of questions, obviously, for you 
and a very important hearing.
    Mr. Hirschhorn, the Secretary of Commerce recently gave a 
speech in which he criticized the current export control system 
for hampering American competitiveness and inadequacy focusing 
on certain national security items. The aerospace industry, as 
I know you must be aware, certainly in my State it is a very 
important industry. United Technologies is a major industrial 
corporation with Pratt and Whitney and Sikorsky Helicopters, 
the Electric Boat Division. We have a lot of defense work and 
aerospace work in our State of particular importance.
    So my questions are: What priorities should be considered 
in modernizing the cold war-era export licensing system? How 
can limited resources available to the Bureau of Industry and 
Security be better utilized to promote America's current 
national security needs? And the Export Administration 
regulations currently provide for exemptions if certain 
products are readily available overseas, and I wonder if you 
might share with us in your experience how has this foreign 
availability standard helped level the playing field for U.S. 
companies without compromising our security. Let me ask you 
that, but also let me in the same context--and I will give you 
a chance to respond to all of this.
    This Committee voted just a few days ago unanimously, 23-0, 
to report our comprehensive sanctions legislation targeting 
Iran. Under our bill, the U.S. would assist other countries in 
halting the transshipment of sensitive U.S. technology to Iran. 
If these countries refuse to cooperate, then under the bill 
that was passed unanimously we could subject them to severe 
export controls.
    So I wonder if you might discuss your commitment to working 
with our Committee and the Congress, obviously, to combat the 
efforts of Iran, North Korea, Syria, and others who trawl 
transshipment hubs for various parts to assemble high-tech 
weapons, which is going on. And what other risks are currently 
borne by the trade-sensitive technologies in the global 
marketplace and how serious are those threats posed by this 
proliferation, such as Pakistan scientist A.Q. Khan's selling 
missile and nuclear technologies around the world as an example 
of what can happen. So the juxtaposition of how we reconcile 
these goals here of recognizing we are in a post-cold war 
period, and yet there are, as we all know, continuing threats 
to our national security and people who are obviously engaged 
in the transshipment of technologies that can do us great 
damage. How do you respond to that?
    Mr. Hirschhorn. I think this job is, above all, a national 
security job, and I expect to work closely with this Committee 
and with the Congress on making sure we have a system that is 
the best system we can have for that.
    Diversion is certainly a problem that we have to look 
closely at. I think it requires a team effort among the 
agencies, because Commerce is not the only agency involved 
here, but certainly with Commerce doing its part to work with 
foreign governments to ensure that they have perhaps both the 
carrot and the stick to assist in keeping important, critical 
items out of the hands of dangerous people. I think that is 
what the job is about. I certainly consider it to be one of the 
foremost responsibilities I would take on.
    Chairman Dodd. Well, good. You might want to just in time 
want to explore that, because this obviously is a delicate 
balance as we move forward in these areas.
    One of the--as you are aware, the foreign governments 
oftentimes impose foreign offsets on U.S. manufacturers in 
exchange for lucrative contracts. I recall that back--in fact, 
there was language that existed for a long time, including up 
to a few years ago--in fact, it may still exist--that in an 
effort to provide help to war-torn Europe, is the language, 
that we allowed for offset contracts. And what an offset 
contract is, if a certain country decides to award you a 
contract, as a business in the United States, you must in many 
cases provide subcontractors in that country a certain quantity 
of work. We actually have some countries where that agreement 
requires 100 percent or more of subcontract work in exchange 
for the larger contract.
    It is very troubling. This goes on--there is a 
proliferation of these offset contracts, in my view. BIS is 
responsible for reporting annually the tens of thousands of 
U.S. jobs lost as a result of these offsets, and I wonder how 
you would characterize the process of offset contracts, what 
steps can be taken to ensure that American workers and 
suppliers are not disadvantaged by them.
    Six years ago, I authored a law requiring an interagency 
team to work with foreign governments to limit the loss of jobs 
in the United States to the defense industry. I wonder if you 
would like to discuss the efforts and tell the Committee, if 
confirmed, of your commitment to revive this body's work.
    Mr. Hirschhorn. Well, I must say that, I know less about 
offsets than I know about export controls, but I am certainly 
aware of it. I am aware of your interest in it and the 
importance of it. I think that it is very important that we 
maximize U.S. jobs, especially in these difficult times, but at 
other times, as well, and if working with foreign countries on 
offsets, as I understand this interagency committee did, will 
help do that, I think it is something we should take very 
seriously.
    Chairman Dodd. Well, I would be very interested in hearing 
back on that. It had clearly been lying dormant, but that 
idea--and again, we are living in a global economy. These 
things are very important. But there are a lot of antiquated 
ideas that exist out there. We do not provide--we do not have 
offset contracts. We do not require that at all.
    And I am not suggesting we should, but it seems to me we 
ought to be doing something here to minimize this practice 
which goes on which disadvantages very talented workers, the 
industrial base, absolutely critical in the 21st century. We 
have an aging workforce in many of these areas, and if we are 
beginning to lose business because of these offset contracts, 
it is going to be harder to replace those workers with the 
talented young people who can provide that kind of work that 
needs to be done. So I have a lot of interest in the subject 
matter and would hope that you would get back to us and share 
some thoughts with us.
    Ms. Lago, very quickly, if I can, this Committee labored 
over the course of the last Congress to produce the landmark 
Foreign Investment National Security Act, which was unanimously 
approved by the Committee and the full Senate and signed into 
law in 2007. Again, I want to thank Senator Shelby and Jack 
Reed and others here. A lot of our staff and others worked 
very, very long and hard to get the kind of unanimity on a very 
complex and delicate issue, and I believe that, if implemented 
correctly, it will achieve two principal objectives. One, 
protecting our national security, which is critical, but two, 
ensuring that appropriate foreign investment in the United 
States is not inhibited, which we don't want to stop.
    I wonder if you would agree with that assessment and how 
would you help to fill the mandate, if confirmed?
    Ms. Lago. Interestingly, Senator, in much the same way that 
Mr. Hirschhorn noted that his position is principally a 
national security position, I think that the position, this 
Assistant Secretaryship that was created by the landmark FINSA 
legislation is principally a national security position----
    Chairman Dodd. Yes.
    Ms. Lago.----and in your remarks, Senator, I have to echo 
your comment that there is not an inconsistency between having 
a bipartisan longstanding approach of encouraging--of nurturing 
open markets, open markets that benefit U.S. citizens and U.S. 
firms, while recognizing that a focus on national security on 
assuring through the CFIUS process that no national security 
risk goes unaddressed, those two are not at odds with each 
other. Actually, they reinforce each other.
    Chairman Dodd. Well, I appreciate that. Again, we want to 
work closely with you on this and monitor, so stay in touch 
with us.
    Mr. Jacques, quickly, and then I will turn the time over to 
Senator Shelby, you have had a wonderful career, and I couldn't 
agree more that at a time like this, here we all work very hard 
to come up with what we believe are hopefully good ideas that 
will begin to make a difference, particularly when people are 
looking to see whether or not anyone is paying attention to 
what is happening with them, and so you are absolutely correct 
in your assessment.
    Great ideas, creating that mousetrap you described, and if 
no one knows it exists out there--we saw this, again, Senator 
Shelby, and again, Senator Reed and I, we all worked on trying 
to come up with the best idea we could on mitigation on 
foreclosures. But you looked at it, it was so complex that the 
ability for an average person going through that, to understand 
it and how to access it, I think was one of the difficulties we 
faced. There were other problems, but that was one of them.
    I wonder if you might share with us any thoughts you have 
had, and this is just very quickly, on how do you reach--what 
are some of the ideas you would bring to the table on reaching 
those constituencies? We have listened to all sorts of people 
talk to us about how do we penetrate a marketplace where 
typically, in many cases, because they are holding down two or 
three jobs, because they are struggling to hold things 
together, there may be a health crisis in the family, all sorts 
of things which make it almost impossible for them necessarily 
to get information about what is available to them in the area 
of housing and related matters. What ideas do you bring to the 
table?
    Mr. Jacques. Absolutely, sir. Well, I come to this position 
with kind of a private sector mentality. Many, many years ago, 
in the mid-1980s, I believe, there was a study done that showed 
that people are bombarded with something like 5,000 marketing 
messages every single day and they call that the communications 
jungle, and cutting through that and penetrating with the 
information that the American people need to respond to the 
crisis, the foreclosure crisis, especially at this moment in 
time, is a challenge. And we have high technology and everybody 
now is more aware of the technology aspect of things, but also 
going down that spectrum, down to low-technology, word of mouth 
is still the most effective form of communication.
    And to the extent that we can, I view this office within 
the Department as a service agency, as a service unit for both 
the Department, for the American public, and for Congress to be 
able to respond to people's understanding or lack of 
understanding in an effective way and just keep bombarding 
them, really. It is the shotgun approach, repeating, repeating, 
repeating the information that people need so that you can get 
through to people with what is the information they need? How 
do they access that information effectively? It runs the entire 
spectrum of communication.
    I remember when I was at the State Department, a professor 
came in to speak about communicating in the electronic age and 
he said that there is no difference between public sector and 
private sector marketing. The only differences are legal and 
ethical. I bring that kind of a mentality to this, that you 
just have to make sure that you are doing every single thing in 
your power to reach out. And certainly feedback from this 
Committee and from Members of Congress, from your staff, in 
terms of how effective we are being in this regard, being a 
valuable part of that.
    Chairman Dodd. Well, one suggestion I would make to you, 
and as the Chairman of this Committee, I have served on this 
Committee a long time, and when we prepare for hearings, I have 
a terrific staff, we all do, who work really hard and really 
know these issues tremendously well, I will get acronyms for 
various organizations. I mean, I am looking at it, and I have 
been here a long time, and I have to go back and review, what 
does that acronym stand for? What are we actually talking 
about?
    I think, too often, we talk to each other in this town and 
we don't talk to the people outside. We use language that even 
people here have a hard time understanding. So we need a 
translator sometimes to be able to talk about what these 
programs are and how they work and language that the average 
person can begin to understand. And so I urge you, as you look 
over statements being made, testimony being provided in 
committees, whether it is the Internet or being carried on C-
SPAN and others, that there be an ability to speak in plain 
English about what these ideas are and how people can 
understand them even better. It is just a thought, but as one 
here who pays a lot of attention to these issues, I find myself 
wondering what we are talking about sometimes with these 
various programs and ideas.
    Mr. Jacques. Thank you. It is one of the most important 
aspects, simple language.
    Chairman Dodd. Well, I thank you.
    Senator Shelby.
    Senator Shelby. Thank you, Mr. Chairman.
    Mr. Hirschhorn, our allies and trading partners, as you 
well know, do not always share the same export controls. So 
some of our restrictions are, quote, ``unilateral.'' You have 
argued before this Committee in the past that, and I will quote 
your words, ``unilateral controls don't work,'' and that we 
should not restrict trade any more than other countries do. 
U.S. unilateral export controls, however, include prohibitions 
on trade with Iran, as you well know, and other terrorist-
supporting states.
    My question to you is this. If confirmed, how will you 
reconcile your duty to enforce unilateral U.S. export controls 
with your opposition, or seemingly opposition, to such 
controls? Are you just stating the truth in your----
    Mr. Hirschhorn. I think we can't doubt that there is a cost 
to unilateral controls.
    Senator Shelby. Sure, there is.
    Mr. Hirschhorn. Often, they are important. I would have no 
trouble enforcing the laws as this Congress has enacted them, 
the regulations as they stand. None at all.
    Senator Shelby. In the past, you have suggested that the 
Commerce Department should be given more authority for the 
oversight of dual-use exports while the responsibilities of the 
Defense and State Departments in this area should be reduced. 
Do you continue to hold this view, and if so, what makes you 
confident that under this construct American technology will 
not fall in wrong hands?
    Mr. Hirschhorn. I think the team approach that currently 
exists is an excellent approach that enables the Commerce 
Department, although it is handling the physical act of 
processing and licensing cases, to get the foreign policy 
advice of the State Department, to get military advice of the 
Defense Department--certainly, I don't think anyone thinks the 
Commerce Department is an expert on military policy--and the 
resources of the intelligence community, and that is certainly 
what is missing for a lawyer in private practice who is 
advocating for his clients. It is all behind the curtain for 
me, and I obviously will have a much better sense of the whole 
picture----
    Senator Shelby. You are saying to us you will do your duty 
in----
    Mr. Hirschhorn. Absolutely, Senator.
    Senator Shelby. Ms. Lago, while foreign investment plays a 
crucial role in our economy--we all know that--national 
security considerations, I think, always should remain 
paramount, the security of this nation. Under what conditions 
might a foreign acquisition of a U.S. company constitute a 
genuine national security threat to the United States?
    Ms. Lago. Thank you for the question, Senator. I think that 
Congress, this Committee, actually, the two of you, Senators 
Dodd and Shelby, deserve such praise for passing FINSA. That 
piece of legislation is so finely crafted to address just this 
concern. Obviously, the entire CFIUS process is premised on 
assuring that national security risks are addressed, and it is 
the composition of that committee that I think gives a high 
degree of comfort.
    Looking at the broad array, 16 different agencies that are 
represented on the committee, the fact that every CFIUS process 
begins with an assessment from the Director of National 
Intelligence, that has at its core an assurance that those 
expert agencies, the expert agencies that Nominee Hirschhorn 
just mentioned, are bringing to bear their expertise.
    With respect to particular cases, the confidentiality 
provisions that, again, very properly were built into the CFIUS 
process because of the sensitive commercial and national 
security information, mean that I haven't had the possibility--
I appropriately could not have been briefed on particular 
matters. But there is one other facet of the CFIUS process that 
I think gives the comfort that the proper decision giving 
proper weight--predominant weight to national security concerns 
will prevail, and that is the creation of the new Assistant 
Secretary position----
    Senator Shelby. That is right.
    Ms. Lago.----which has someone appointed with the approval 
of the Senate, accountable, and reporting to the Committee 
following the conclusion of every CFIUS matter. And if 
confirmed, I would take that accountability seriously as well 
as the reporting and communication obligation.
    Senator Shelby. Generally speaking, how should analysts and 
strategists at CFIUS assess risk and threats to distinguish 
between the serious and the inconsequential? That is a big job.
    Ms. Lago. Certainly, Senator, and it is a job. I think, 
again, it is why this Committee, it is why Congress in 
reforming the CFIUS process so recently assured that the right 
folks were at the table, the folks with the level of national 
security expertise, the full gamut, from Homeland Security to 
the Department of Defense, so that on a case-by-case basis the 
proper experts could be brought to bear.
    Another feature of FINSA that I think also assures that the 
right folks are at the table is the provision to appoint a co-
lead agency. Treasury serves as the chair, but in FINSA, the 
emphasis was placed on choosing that lead agency that would 
have the most expertise about the particular transaction before 
the Committee.
    Senator Shelby. Do you anticipated as a result of FINSA an 
increase in CFIUS reviews that will generate the need for 
further resources being devoted to the CFIUS process?
    Ms. Lago. Thank you for raising that point, Senator. I 
think one of the challenges when one runs a process, an 
extremely important process that has strict time lines, is 
making sure that there are adequate resources brought to bear. 
The FINSA, the CFIUS legislation calls for strict time lines--
30 days, an additional 45 days if an investigation is to occur. 
As there is increased request by non-U.S. parties for 
investment in the U.S., there may be an increase in the 
workload of CFIUS and it is going to be incumbent, not just 
upon Treasury, but upon the other members of CFIUS, to make the 
appropriate and expert staff available to be able to carry out 
these obligations.
    Senator Shelby. OK. Thank you.
    Mr. Jacques, last, one of the greatest challenges, I 
believe, that you will face, and Senator Dodd has already 
brought this up, will involve making HUD programs 
understandable to the average American. As Chairman Dodd noted, 
there can be a lot of jargon involved in government, especially 
at HUD. This challenge of how you will need to be able to cut 
through this so the average person can understand in simple 
English what they are getting is important to all of us, is it 
not?
    Mr. Jacques. Absolutely.
    Senator Shelby. Do you look at that as a big challenge, and 
do you think you can be the first one to break through that?
    [Laughter.]
    Mr. Jacques. I----
    Senator Shelby. We hope you will.
    Mr. Jacques. It is a little bit challenging----
    Senator Shelby. It is.
    Mr. Jacques.----because when you are forcing the issue 
within an agency and trying to simplify things, it is a little 
bit tough sometimes to get through to people, but I commit to 
you that my staff will get tired of hearing me harp on that 
particular aspect----
    [Laughter.]
    Senator Shelby. We won't get tired of hearing you.
    Mr. Jacques.----to keep things simple and to reach out to 
local stakeholders, community organizations, faith-based 
organizations, our local field offices to explain these things 
in simple terms and really reach the people with good 
information they can understand and understand how they can 
access our services.
    Senator Shelby. Thank you. We wish you well. And I 
congratulate you all again.
    Mr. Jacques. Thank you.
    Chairman Dodd. Thank you, Senator Shelby.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Ms. Lago, you have the interesting challenge, if confirmed, 
to coordinate 18 different agencies under the CFIUS. Could you 
give us an idea of similar challenges you have had in your 
career, coordinating multiple agencies with different cultures 
and different viewpoints?
    Ms. Lago. Thank you, Senator, for recognizing that it is a 
formidable challenge, but if confirmed, it is one that I would 
so welcome. It feels quite familiar, principally because of the 
work that I did while at the Securities and Exchange 
Commission. I was the SEC's lead representative in any number 
of international groups where we needed to forge consensus.
    The one example that I would point out is I was the U.S. 
lead in the drafting of the IOSCO core principles of securities 
regulation. IOSCO is the International Organization of 
Securities Commissions, and there was a recognition that the 
investors would benefit from having a globally consistent set 
of principles.
    In these negotiations, we ranged with companies--we worked 
with countries that ranged from the most developed economies to 
emerging economies, and it was critical both to assure that 
there wasn't a watering down, that the United States approach 
of fair, open markets, of transparency prevailed, while at the 
same time recognizing that other countries weren't at the same 
stage of development.
    I was struck by Chairman Dodd's reference to language, to 
translation, echoed by Nominee Jacques, and I do think that 
having been brought up in an language other than English--
English was not my first language--is very helpful. It teaches 
one to hear and to communication, and certainly that is a skill 
that I think would be essential, if confirmed. in the CFIUS 
process, the ability to hear what this multiplicity of agencies 
is saying, the ability to respect the varying viewpoints, the 
ability to look for consensus, but also, as the Chair, to lead 
and to drive that consensus. And so I do think that my work, 
principally at the Securities and Exchange Commission, but also 
in my other leadership roles that I have had over the years, 
would serve me well, if confirmed.
    Senator Reed. And you are now wondering how I could have 
graduated from Harvard Law School, but I copied from Marisa.
    [Laughter.]
    Senator Reed. Sovereign wealth funds--should they be 
treated differently than others who were investing in American 
assets?
    Ms. Lago. Thank you for asking about the sovereign wealth 
funds. I found it interesting that 4 years ago, it was a term 
that was a little bit exotic, and now I would think that many 
average Americans are aware of the importance of sovereign 
wealth funds. Again, I would compliment the Committee for the 
FINSA legislation, which I think lays out the road map for how 
to treat sovereign wealth funds. Sovereign wealth funds are 
arms of government, and under FINSA, there is a heightened 
accountability when the proposed investment is by a foreign 
government. And so I think that FINSA itself lays out the 
appropriate approach.
    If a sovereign wealth fund is the potential acquirer, then 
generally there will be an investigation. That is an additional 
45-day review. And so this heightened accountability, I think, 
properly recognizes that sovereign wealth funds are not just 
any private sector investor, but rather are arms of government.
    Senator Reed. Thank you very much.
    Mr. Hirschhorn, you have, as you all do, a very challenging 
job with multiple and, at times, conflicting demands. I think 
you rightly said your primary responsibility is national 
security, protecting our key technologies. But we are in a 
world where if we don't increase our exports, we are not going 
to be economically viable to develop the sophisticated 
technologies.
    How do you--and I know this is a very, very, almost 
philosophical question--see the balancing? I know the priority 
is national security, but can we also accomplish that and still 
encourage imports in these areas? Exports, I should say?
    Mr. Hirschhorn. I think we can. I think we have been trying 
to do that for many years. When I served in the Commerce 
Department in the early 1980s, we were trying to do it, and 
people are still trying to do it. It is a difficult set of 
choices, and it is a question principally of risk tolerance. 
You could say in a sense that any sale involves a risk, but you 
have to make judgments and that is why we have a licensing 
mechanism. We look at this and say, OK, what is this 
technology? How serious is it? We look at who wants to use it, 
what they say they want to use it for, what we can find out, 
perhaps from the intelligence community, about what they want 
to use it for. And if confirmed, I intend to make sure that is 
done carefully and in a way that maximizes both values. They 
are not always in concert.
    Senator Reed. Let me just make a point from my perspective 
on the Armed Services Committee. So much of the technology 
transfer there is off-the-shelf in commercial or not the 
traditional military platform, a jet plane or a sophisticated 
computer. I wonder, would you be considering sort of--or how do 
you deal with this other trade? For example, the fertilizer 
that is used in IEDs? This is a rather extreme example, but in 
some respects, the competition in the old days was between the 
Soviet Union trying to get a hold of a very sophisticated 
device, and now the competition is people, guerrillas, who are 
trying to get a hold of fertilizer or priming cord or mining 
equipment. Is that something that you are going to be concerned 
with in your role?
    Mr. Hirschhorn. Absolutely. That is a lot of what BIS does, 
because the State Department, which handles military exports, 
knows that what they are being asked to license is for a 
military--ordinarily for a military purpose. It certainly is 
something that was designed with a military purpose in mind.
    BIS handles dual-use items, which could be like fertilizer. 
It could have a perfectly benign civilian use in agriculture, 
or it could be used to make a bomb, and that is true of many of 
the items that are controlled under the Commerce Control List. 
That is why there have to be judgments made about how 
sophisticated is this item, how available is it, who wants it, 
and why?
    Senator Reed. Thank you very much, Mr. Hirschhorn.
    Mr. Jacques, good luck in your endeavors. You have got a 
great story to tell, but it hasn't been told, so good luck.
    Mr. Jacques. Thank you.
    Senator Reed. Thank you, Mr. Chairman.
    Chairman Dodd. Thank you, Jack, very, very much.
    Senator Corker is here. Do you have any questions at all?
    Senator Corker. I don't. I think you all have done a really 
good job of ferreting out background and questions. I know we 
have some other business coming up right after this, so----
    Chairman Dodd. Yes, we do.
    Judd, any comments or questions at all?
    Senator Gregg. No, I am all set.
    Chairman Dodd. All right. Thank you.
    Well, listen, all three of you, I appreciate immensely your 
willingness to serve. You are very talented and accomplished 
people. This is going to help us tremendously. This is a 
complicated area and I appreciate, Ms. Lago, your strong 
comments about the effort this Committee made over many, many 
weeks in crafting CFIUS legislation, including obviously the 
FINSA piece of it, and to adopt it unanimously as we did and 
then unanimously by the Congress in a very delicate area. As I 
said, it was an explosive issue. This was, Bob, was in the 
foreign ports. That was the Dubai--I think it was the Dubai 
port. It really became sort of a major headline story day after 
day, and we went back and tried to wrestle with the conflicting 
goals, obviously, of expanding exports and increasing economic 
opportunity and simultaneously having an opportunity to make 
judgments about when the national security of the country might 
be jeopardized. Not an easy path to walk. And the staff on this 
Committee, both Democratic and Republican staff members, did a 
fantastic job and it was rewarded by our colleagues outside of 
this Committee adopting unanimously the efforts of the 
Committee. So I appreciate your strong comments. It was a major 
accomplishment in the midst of everything else that was going 
on. So we wish you well.
    I am going to leave the record open for a few days because 
other colleagues of ours who could not be here this morning may 
have some additional questions for you, and I would urge you to 
get answers back as quickly as we can.
    We would like to move along and get you confirmed, if we 
can. I strongly support your nominations. I think they are very 
exciting nominees to have working with us in Washington on 
these issues. Thank you.
    I should have noted, by the way, and I apologize, I saw 
Steve, but I didn't see Mrs. Solars, who was in the audience. 
Good to see you being here this morning, as well. You were 
hiding behind him and I didn't spot you and I apologize to you, 
and a great friend, as well, and an honor and a pleasure to 
have both of you here with us this morning. Steve, welcome back 
to the Congress. You are welcome any time to be here, as well.
    Senator Corker. Mr. Chairman, I do want to thank each of 
you for your desire to serve in this way. We do very much 
appreciate competent people coming forward like you, so thank 
you.
    Mr. Hirschhorn. Thank you, Senator.
    Chairman Dodd. Good. Thank you all. The hearing will stand 
adjourned.
    [Whereupon, at 10:43 a.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]
                PREPARED STATEMENT OF ERIC L. HIRSCHHORN
         Nominee for Under Secretary for Export Administration,
                         Department of Commerce
                            November 5, 2009
    Chairman Dodd, Ranking Member Shelby, and Members of the Committee, 
I am honored to be here today. I appreciate the expression of 
confidence in me by President Obama and Secretary Locke, and I am 
hopeful that I can gain your confidence as well. I want to thank the 
Committee members and staff for making time for this nomination hearing 
in the midst of a busy legislative session. Should I be confirmed, I 
look forward to continuing to work with you.
    At the outset, I'd like to introduce my wife, Leah Wortham, who 
teaches law at Catholic University here in Washington; our son, Alex 
Hirschhorn; and my brother-in-law, Henry Howard. Our two daughters, 
Elizabeth and Anne, and my sisters Victoria and Jessica, are out of 
town and so cannot be with us. My family's support is very important to 
me.
    I had the privilege of working on export control, antiboycott 
compliance, and Defense Production Act issues at the Department of 
Commerce in 1980 and 1981, so this would be a return for me. I found 
the career staff who administer the system--not only at Commerce but 
also the other involved agencies--to be extremely capable and one 
hundred percent committed to the interests of our country. Should I be 
confirmed, I will be delighted to be working with them again.
    As Secretary Locke has noted, the Bureau of Industry and Security, 
or BIS, ``has a unique mission at the intersection of international 
trade and national security.'' Working closely with the Departments of 
State, Defense, and Energy, BIS evaluates thousands of export license 
applications each year to ensure that items proposed to be sold abroad 
are going to suitable end users for appropriate end uses. Getting this 
right is very important. It is equally important to have an enforcement 
program ensuring that those who flout the rules are caught and 
punished. I am committed to ensuring that BIS does the best possible 
job of performing these important functions as well as overseeing its 
important role in ensuring an effective treaty compliance system and 
promoting continued U.S. leadership in strategic technologies.
    Further, President Obama has asked the agencies to take a hard look 
at the existing system in an effort to see whether it can be improved 
consistent with our national security. Of course, this Committee will 
be involved significantly in that process. I hope you will give me the 
opportunity to help carry it out.
     Since leaving the government for private law practice, I have 
spent a good deal of my time advising clients whose activities are 
subject to U.S. export control and embargo regulations. My practice 
also has included considerable litigation, much of it involving 
railroad issues. I also have served as an internal ethics counselor for 
my law firm, and as a member of the D.C. Bar's Ethics Committee and 
Rules Review Committee.
    Most of my export control and embargo practice has involved 
explaining how the often complex regulations work, analyzing whether a 
proposed course of action requires advance government permission, and, 
if a license is required, assisting the client in preparing the 
application. I have assisted clients with their internal compliance 
programs and have represented some regarding enforcement issues. I also 
have acted as an advocate for clients who believe that our export 
control system can be improved. I frequently have written and spoken in 
the area; my writings include a number of articles and a book whose 
third edition will be published early next year. I think this 
experience will help me in what I hope will be my new job.
    If confirmed, my goal will be to perform this job competently and 
objectively. That includes hearing and considering all viewpoints.
    I recently read the remarks that my law school's dean delivered to 
this fall's incoming class. He spoke of two ``fundamental truths.'' 
``First,'' he said, ``excellence is its own reward.'' Second, 
``integrity is the bedrock of any successful career.'' I promise that 
if confirmed, I will strive to bring those qualities to my work.
    Again, thank you. I would be pleased to respond to any questions 
you may have.
                                 ______
                                 
                   PREPARED STATEMENT OF MARISA LAGO
           Nominee for Assistant Secretary for International
                        Markets and Development,
                       Department of the Treasury
                            November 5, 2009
    Chairman Dodd, Ranking Member Shelby, distinguished members of the 
Committee, I am honored to have my nomination come before you today.
    I want to thank your staff for meeting with me to discuss CFIUS and 
other international financial matters.
    I am honored to have been nominated by President Obama to serve as 
Treasury assistant secretary for international markets and development, 
especially at such a critical moment for our nation's--and the 
world's--economies. And I am grateful to Secretary Geithner for 
recommending me to the President. Having had the pleasure of working 
with Secretary Geithner when he was last at Treasury, I am looking 
forward to having the opportunity to join his team.
    Before I begin, I would like to briefly introduce my family members 
who are here with me today. My husband, Ron Finiw, is my best friend of 
35 years. Our nation's Capitol is graced by one of Ron's buildings: he 
was the principal architect for the international law center library at 
Georgetown Law School. I am also joined by my brother, Paul Lago. Paul 
shares my passion for public service. He is a senior intelligence 
officer at the Defense Intelligence Agency, where he has served for the 
past two decades.
    My parents, Louis and Maria Lago, cannot be here today. After 6 
decades in the United States, they now live in the village in Spain 
where my mother was born. But, my love of public service stems from my 
parents. My father served in the U.S. Navy during World War II, and 
spent the rest of his career as a civilian employee of the Department 
of Defense at Picatinny Arsenal in New Jersey.
    As my family's first college graduate, I have lived the American 
dream. Upon graduating from Harvard Law School, I made the atypical 
decision to join New York City government, rather than the more 
traditional path of joining a law firm. I became hooked on public 
service, because of the ability to do good, to serve, to make my 
hometown a better place. Over the past 25 years, I have had the 
privilege of heading the economic development arms of government in 
both New York State and the city of Boston, and serving as the general 
counsel of New York City's economic development agency. In each of 
these roles, I have had to balance competing interests--of fiscal 
prudence, of the business community, of neighborhood concerns.
    I have also been fortunate to have been able to serve at the 
Federal level. For 4 years, I headed the Securities and Exchange 
Commission's Office of International Affairs. Working closely with 
then-Chairman Arthur Levitt, I played a key role on numerous 
international initiatives involving trade in financial services, 
international accounting standards, and enhancing financial regulation 
in offshore financial centers. Throughout this time, I held a top 
secret security clearance.
    In the private sector, I headed the compliance department globally 
for Citigroup's markets and banking business. In this role, I was 
responsible for compliance matters, including anti-money laundering and 
OFAC (sanctions) initiatives, for Citigroup's investment banking, 
trading, public finance and transaction services businesses. In 
addition to securities regulators, I dealt routinely with both domestic 
and non-U.S. banking regulators, as I had members of my team in over 80 
countries.
    Turning to the future, if approved by this Committee and confirmed 
by the Senate, I commit to working closely with this Committee to carry 
out the weighty responsibilities laid out in FINSA, and to being part 
of the Treasury team that promotes economic growth, financial market 
stability, and open markets for U.S. firms. A critical component will 
be open and regular dialogue with this Committee, with the other 
members of CFIUS, and with my colleagues in the Treasury Department. If 
confirmed, I will welcome this dialogue.
                                 ______
                                 
                PREPARED STATEMENT OF STEVEN L. JACQUES
          Nominee for Assistant Secretary for Public Affairs,
              Department of Housing and Urban Development
                            November 5, 2009
    Chairman Dodd, Ranking Member Shelby, members of the Senate 
Committee on Banking, Housing and Urban Affairs, it is an honor to be 
here today as nominee for the position of Assistant Secretary for 
Public Affairs for the Department of Housing and Urban Development.
    I come to you from the great State of Kansas after a long career in 
both the public and private sectors. My work in public affairs and 
communications has taken me throughout the United States, where I have 
been blessed to become part of communities from the smallest of towns 
to the biggest of cities. The one constant theme throughout my career 
is that it has always been an invaluable education. All of you are 
state-wide elected officials, so you have seen the diversity of 
communities and people even within your own states. As national 
figures, you have witnessed first-hand the incredible diversity of our 
country, as well as the common bonds that make us all so similar in so 
many ways.
    A considerable portion of my career has been spent in politics and 
government, including many bipartisan endeavors. One of the great 
honors of my life has been the opportunity to serve as a Senior Fellow 
and Associate Director of the Robert J. Dole Institute of Politics at 
the University of Kansas. The primary mission of this wonderful 
institution is to show students that a career in politics and 
government is an honorable profession. Former Senator Bob Dole is 
obviously our prime exemplar, but the concept of ``politics as an 
honorable profession'' also includes many of the practitioners from the 
world of public service who have graced the Institute with their 
wisdom.
    Through my work in government, politics, higher education, and with 
civic and charitable organizations, non-profits corporations, and 
businesses, I have been privileged to be able to provide timely, useful 
information to those who can benefit from it. This is my mission, and 
the part of my career that provides me with the most satisfaction.
    I view the primary mission of the Assistant Secretary for Public 
Affairs at HUD as ensuring that the people who need our services find 
out about those services, and ultimately know how to access them. 
Specific information that comes to mind are the resources that can help 
Americans avoid foreclosure, refinance their homes, find affordable 
rental housing, or rebuild their homes after a natural disaster.
     My broad spectrum of experience has taught me the difference 
between simply ``releasing'' information and truly communicating that 
information. How do we reach those who don't have access to the 
internet or email? How do we inform people who do not get newspapers, 
or do not have the time to sit down and watch TV news because they are 
working two jobs and running a household?
    I have been honored to serve as Director of Communications and 
Strategic Communications Planning for the U.S. State Department, where 
I participated in the successful NATO 50th Anniversary Summit, and the 
accession to NATO of the first three former Eastern Bloc countries, 
(Poland, Hungary and the Czech Republic). I was also honored to serve 
at the U.S. Department of Commerce as the Communications Director for 
the Bureau of Export Administration.
    My public sector experience also includes two state universities--
the University of Kansas, where I served at the Dole Institute, and the 
University of Missouri-Kansas City, where I served as Associate Vice 
Chancellor for Public Affairs. At the University of Missouri, I worked 
hard to bring new positive media and community attention to the 
school's good works.
    Since 1976, I have served on the national advance staff in nearly 
every Presidential election. I have used the skills I learned in the 
intense working environment of Presidential campaign advance to serve 
both Republican and Democratic public officials in the conduct of their 
official duties.
    In the private sector, I have worked for numerous non-profit and 
civic organizations, as well as municipalities. Among those clients I 
was most proud to serve was the Kansas City, Missouri Police 
Department, for which I developed and implemented a public affairs 
campaign to increase the number of minorities and women on the police 
force. We were successful in dramatically increasing the number of high 
quality individuals who applied, and eventually became police officers.
    I view the role of public affairs in government, academia, civic 
and non-profit organizations as the nexus between policy and action. 
Not even the best policies have a hope of being implemented, or of 
helping people, without effective communication and outreach to those 
who need to know and can act on the information they receive. You can 
build the proverbial better mousetrap, but no one will beat a path to 
your door unless they are aware of it.
    I ask for your support, and in return I promise to actively search 
for every opportunity to provide you and your constituents with the 
information you need and want regarding the work of the U.S. Department 
of Housing and Urban Development.

   REPONSES TO WRITTEN QUESTIONS OF ERIC L. HIRSCHHORN FROM 
                         SENATOR SHELBY

Q.1. For many years, you have been executive secretary of a 
group of major trade association called the Industry Coalition 
on Technology Transfer (ICOTT). On behalf of ICOTT, you have 
advocated several steps that would weaken U.S. export 
controls--including abolishing controls on items that are not 
controlled by our major trading partners.
    If you are confirmed, wouldn't you be required to enforce 
controls that you have spent a major portion of your career 
opposing?

A.1. If confirmed, I will act solely in the interests of the 
United States and will enforce the rules vigorously. During my 
prior service at the Commerce Department, I enforced the 
controls that were on the books and did so forcefully. This 
included unilateral controls, such as the embargo on grain and 
other agricultural products that we imposed on the Soviet Union 
in the wake of their invasion of Afghanistan.
    The role of a lawyer in private practice is to advocate his 
clients' positions. Moreover, a private practitioner is not 
privy to all the foreign and military policy considerations, or 
to the intelligence data, that often are critical in deciding 
what items should be controlled, to which end users and 
countries, and for which types of end uses. I recognize the 
difference between the role of a private practitioner/advocate 
and the role of an official whose sole ``client'' is the United 
States and the national interest. If confirmed, I will act 
solely in the interests of the United States.

Q.2. The United States retains jurisdiction over re-exports of 
U.S.-origin goods abroad, beyond their initial export from 
American soil. Such ``extraterritorial'' application of export 
controls helps the United States prevent and punish diversion 
of American goods that might be used against U.S. soldiers, or 
to help Iran build weapons of mass destruction. You have 
previously recommended that this Committee ``should consider 
terminating (or greatly limiting) the extraterritorial 
application of United States export controls.'' Without such 
application, however, it would be impossible to thwart 
companies like Mayrow General Trading, based in Dubai, which 
diverted U.S.-origin exports to Iran, exports that wound up in 
IEDs used against our forces in Iraq and Afghanistan.
    If confirmed, how would you reconcile the need to maintain 
``extraterritorial'' U.S. export controls with your opposition 
to such controls?

A.2. If confirmed, I will enforce our country's embargoes and 
export controls, including those that may have extraterritorial 
application.

Q.3. The Iran Sanctions Act is a tool adopted by Congress for 
the purpose of pressuring Iran to abandon its dangerous nuclear 
ambitions and its support for terrorism. The Act authorizes 
penalties against foreign firms that invest in Iran's energy 
sector. Congress is now working to strengthen this statute and 
to expand its reach to also penalize Iran's refined petroleum 
suppliers. You have previously criticized this statute before 
the Committee as a ``secondary boycott'' and an example of 
``unacceptable extraterritorial controls.''
    If confirmed, how would you reconcile your opposition to 
the Iran Sanctions Act with the possibility that the 
administration might need to enforce it?

A.3. As noted above, if confirmed, I will enforce the laws 
under BIS's jurisdiction vigorously, regardless of arguments I 
made as an advocate in private law practice.

Q.4. This Committee has just approved a bill which would 
authorize state and local governments to divest from companies 
which invest in Iran's energy sector. This bipartisan proposal 
has already been overwhelmingly endorsed by the House. The 
proposal is modeled on the Sudan Divestment and Accountability 
Act of 2007. That statute was adopted by Congress and signed by 
President Bush after the National Foreign Trade Council (NFTC) 
sued to prevent the state of Illinois from divesting from Sudan 
over the genocide in Darfur. You represented the NFTC in that 
lawsuit. Your firm, Winston and Strawn, became a member of 
NFTC, which is opposed in principle to ``unilateral'' and 
``extraterritorial'' controls and sanctions. You became the 
NFTC's point of contact at your firm. Today, the NFTC continues 
to oppose Iran divestment legislation and other Iran sanctions 
measures in Congress.
    Do you still oppose allowing divestment from companies 
dealing with Iran and Sudan?

A.4. I have never opposed allowing public pension funds to 
divest from companies dealing with Iran and Sudan. The NFTC, 
along with eight Illinois fire and police pension funds and 
nine individual retirees, hired my firm to challenge a law that 
imposed Illinois' own version of an embargo that already had 
been imposed, in substantially different form, by the Federal 
Government. The plaintiffs in that case did not take the 
position that the conduct of the Sudanese authorities was 
humane or worthy of support. Instead, the plaintiffs argued 
that the Illinois embargo conflicted with and undermined the 
Federal Government's policy.
    The Federal district court in Chicago agreed that the 
Illinois law was preempted by Federal law. Rather than appeal 
the ruling, the State of Illinois repealed the law and enacted 
a substitute that, so far as I am aware, has not been 
challenged.

Q.5. Commerce Secretary Locke recently proposed to eliminate 
license requirements for dual-use exports to a large number of 
countries which are our ``allies and partner nations.'' 
Although this proposal appears to be in the conceptual stage at 
present, it raises several troubling questions. Nearly all 
direct exports from the United States to Iran are prohibited by 
our embargo. But Iran's WMD and military procurement networks 
routinely seek to acquire U.S. origin dual-use goods through 
third countries. The United States exercises controls over such 
re-exports, and prosecutes foreign entities who re-export U.S. 
goods to Iran without U.S. authorization.

   LIf export license requirements are removed for 
        items sent to the European Union, for example, how will 
        the United States be able to stop re-exports?

   LHow will BIS deal with suspect entities located in 
        these suggested license-free countries? Will additional 
        resources be allocated to maintain and expand the 
        Entity List for this purpose?

   LHas the Department of Justice been consulted on 
        this proposal, and if so, what was the response?

   LMore generally, how will you ensure that any 
        proposals to decrease controls on sensitive U.S. 
        exports will not make it easier for Iran to acquire 
        such exports?

A.5. While I am aware of Secretary Locke's proposal, I am not 
employed by the Commerce Department as a consultant or 
otherwise, and did not prepare the proposal or any regulations 
that would implement the proposal. I share Secretary Locke's 
view that implementation of the proposal, as well as any 
additional reforms, must include strong, effective protections 
against reexport of United States-origin items to unauthorized 
parties or destinations.
                                ------                                


   REPONSES TO WRITTEN QUESTIONS OF ERIC L. HIRSCHHORN FROM 
                        SENATOR BUNNING

Implementation of the Iran Sanctions Act
Q.1. Mr. Hirschhorn, in June 1999 when you were Executive 
Secretary of the Industry Coalition on Technology Transfer 
(ICOTT), you testified before the Senate Banking Committee on 
the reauthorization of the Export Administration Act. In your 
testimony, you said the Committee should ``consider terminating 
(or greatly limiting) the extraterritorial application of the 
United States export controls.'' One example you cited was the 
implementation of the Iran-Libya Sanctions Act of 1996. You 
noted United States insistence that

        origin goods and technology remain subject to United States 
        export controls forever--no matter how many years may pass or 
        how many different owners the items have--are but two examples 
        of unacceptable extraterritorial controls.

   LAt the time of your comments, you were representing 
        the interests of industry. However, you have now been 
        nominated to fill a position with responsibility to 
        enforce export controls for the United States. Do you 
        still stand by your comments about export controls?

   LIf confirmed, will you support full implementation 
        of U.S. export laws?

A.1. As the question recognizes, my testimony of a decade ago 
was on behalf of a group of trade associations and their many 
members. I recognize that the role of a lawyer/advocate is far 
different from that of a government official. Moreover, my role 
as advocate was not informed by foreign policy considerations 
or by intelligence information, to which private individuals 
are not privy. If I am confirmed, my sole ``client'' will be 
the United States and the national interest, and I will fully 
and vigorously implement our country's export control laws. 
This includes regulations requiring that foreign companies 
seeking to reexport U.S.-origin technology abide by U.S. rules, 
including obtaining a reexport license where warranted.
Diversion of goods to Iran
Q.2. The transshipment of sensitive technology to Iran 
continues to be a problem. The UAE has been a major hub for 
illegal transshipments of goods to and from Iran. We have seen 
reports that Dubai has been working to prevent these 
transshipments from going through, but it seems that the 
activities have moved north to the Emirate of Ras al-Khaimah. 
Also, Malaysia and Oman continue to be key intermediaries for 
Iran to illegally acquire U.S. technology.

   LWill Iran and the enforcement of our export control 
        laws remain a priority for the Commerce Department if 
        you are confirmed?

   LIf confirmed, how do you intend to work with Oman, 
        the UAE, and Malaysia to stop these illegal shipping 
        networks? What steps do you think should be taken by 
        these countries in order for them to successfully 
        control items from being diverted to Iran?

A.2. Iran and the enforcement of our export controls will be a 
priority if I am confirmed. Countries that are diversion points 
should be pressed to prevent such conduct. I am not now in a 
position to recommend specific actions but would consult with 
appropriate enforcement and diplomatic personnel about what 
steps would be appropriate and likely to be effective.

Q.3. When Daniel O. Hill testified before this Committee in 
October, he indicated that the Bureau of Industry and Security 
only had five agents overseas working on issues related to the 
diversion of sensitive goods to Iran.

   LIf confirmed, will you increase the number of 
        agents that are stationed abroad to monitor this 
        problem?

   LHow will you cooperate with other U.S. agencies in 
        stopping and prosecuting illegal export schemes?

A.3. My outsider's impression is that cooperation among the 
agencies enforcing our export control and embargo laws, 
including the Departments of Commerce, Justice, and the 
Treasury, is far greater than when I previously served in the 
Department of Commerce. If confirmed, I will be committed to 
such cooperation.
    Before offering specific recommendations about the 
placement of enforcement resources, I would have to consult 
with BIS's career enforcement staff and others in the executive 
branch. I have no hesitation, though, in agreeing that rigorous 
enforcement is important in improving compliance with our 
export control laws.
Boycott of Israel
Q.4. The Commerce Department is responsible for enforcing U.S. 
anti-boycott laws which discourage, and in some circumstances, 
prohibit U.S. companies from furthering or supporting the 
boycott of Israel, sponsored by the Arab League and certain 
Muslim countries.

   LIf confirmed, will you fully enforce U.S. anti-
        boycott laws?

   LIn dealings with countries that participate in the 
        boycott of Israel, will you make it a priority to 
        encourage them to end their boycott?

A.4. Though it occurred nearly thirty years ago, I still take 
pride in having personally negotiated the first six-figure 
settlement under the Commerce antiboycott regulations. If 
confirmed, I will fully enforce those regulations and will 
follow U.S. Government policy, which I understand encourages 
boycotting countries to end their boycotts.
                                ------                                


          REPONSES TO WRITTEN QUESTIONS OF MARISA LAGO
                       FROM CHAIRMAN DODD

FINSA Objectives
Q.1. Ms. Lago. As we noted, this Committee labored over the 
course of the last Congress to produce the landmark Foreign 
Investment and National Security Act (FINSA), which was 
unanimously approved by this Committee and the full Senate, and 
signed into law in July 2007.

   LI believe that if implemented correctly, it will 
        achieve two principal objectives: (1) protecting our 
        national security and (2) ensuring that appropriate 
        foreign investment in the United States is not 
        inhibited. Would you agree with this assessment? How 
        would you fulfill this mandate, if confirmed?

A.1. Yes, I agree that FINSA provides CFIUS with a set of tools 
necessary to safeguard national security in a manner consistent 
with the United States' longstanding policy of welcoming 
foreign investment. In addition, by focusing CFIUS reviews 
solely on national security, FINSA provides foreign investors 
with confidence in our open investment approach while making 
clear that we will take any necessary action within our 
authority to protect national security. If confirmed, I will 
work to ensure that CFIUS continues to conduct rigorous and 
comprehensive national security reviews, seeks to resolve or 
mitigate any and all national security concerns so that 
transactions can proceed (and recommends that the President 
prohibit a transaction if the threat cannot be mitigated), and 
processes reviews fairly and expeditiously in accordance with 
statutory requirements and deadlines.
Control
Q.2. Ms. Lago. For over a year after FINSA was enacted, we 
worked with the Bush Administration to issue satisfactory CFIUS 
regulations. Of particular concern was the definition of 
``control.'' Ultimately, we were pleased the regulations 
recognized that even foreign entities holding less than 10 
percent of voting interest, may still exercise control and thus 
prompt a CFIUS review.

   LPlease discuss the definition of ``control'' under 
        this new set of regulations. What do you believe to be 
        the various factors constituting an exercise of 
        control, even if a foreign investor was acquiring a 5-
        percent (or less) stake in a U.S. company?

A.2. The regulations provide an illustrative list of important 
matters for CFIUS to consider in determining whether there is 
control. These include, for example, the total outstanding 
voting interest in an entity, board representation, proxy 
voting, special shares, negative rights, contractual 
arrangements, and formal or informal arrangements to act in 
concert. The facts and circumstances of each case vary, of 
course, and CFIUS must consider them in their totality in 
making this determination. Therefore, this list is not 
exhaustive and is not dependent on any particular numerical 
threshold ownership interest. Instead, the regulations permit 
and expect that CFIUS will consider any ``other means'' by 
which an investor might exercise control.
Mitigation
Q.3. Ms. Lago. As you are aware, the CFIUS process is not 
simply an up-or-down vote on investment in the United States. 
Under FINSA, Treasury and other Departments often-times 
negotiate ``mitigation agreements'' with both foreign investors 
and U.S. entities, to address specific national security 
concerns.

   LWhat priorities and principles would you adhere to 
        in developing such arrangements?

A.3. As required by FINSA, any such arrangements must be based 
on a risk-based analysis conducted by CFIUS of the threat to 
national security posed by the covered transaction. Executive 
Order 11858, as amended in 2008, implements this statutory 
requirement by requiring that any CFIUS agency proposing risk 
mitigation measures must provide CFIUS, for its approval, with 
such an analysis and proposed mitigation measures the agency 
believes are reasonably necessary to address the risk. The 
Order also makes clear that, before using a risk mitigation 
agreement, CFIUS should determine whether any national security 
concerns that it has identified can adequately be addressed 
through the exercise of other existing legal authorities. If 
confirmed, I will work to ensure that the framework for use of 
mitigation measures defined in FINSA and the Executive Order 
continues to be implemented faithfully in each case, including 
ensuring that all national security concerns are resolved or 
mitigated before CFIUS concludes action on a transaction and 
that mitigation is used only when justified by, and 
proportional to, the national security risk posed by the 
transaction.

Q.4. How will you work to ensure that these agreements are 
continually monitored and enforced?

A.4. I understand that, as required by FINSA, CFIUS has 
developed and agreed upon methods for evaluating compliance 
with every risk mitigation agreement entered into or condition 
imposed, allowing CFIUS to adequately assure compliance. In 
addition, I understand that the mitigation agreements 
themselves generally contain provisions that facilitate 
compliance monitoring. I further understand that Treasury, as 
chair of CFIUS, convenes a quarterly meeting for agencies 
designated as lead agencies for monitoring any agreement to 
report to CFIUS on the state of compliance with such 
agreements. If I am confirmed, I will work to ensure that CFIUS 
as a whole, and each lead agency for mitigation monitoring, 
continue to be actively engaged in monitoring and ensuring 
compliance with mitigation agreements.
Reciprocity
Q.5. Ms. Lago, During the previous Administration, many trade 
discussions focused on the United States commitment to remain 
open to foreign investment. But I remain concerned that there 
oftentimes seemed to be a reluctance to promote reciprocity--
that is, to insist that countries remove their barriers to U.S. 
investment.

   LUnder your stewardship in the Office of Investment 
        Security and as manager of the Committee on Foreign 
        Investment, would you undertake bilateral discussions 
        on these matters, particularly with China to advance 
        mutual economic interests?

   LHow should the United States use multilateral 
        forums to advance such an agenda?

A.5. The U.S. open investment policy emphasizes openness both 
at home and abroad and, if confirmed, I will continue to push 
for robust open investment policies in other countries, 
including China. I understand that Treasury is already very 
engaged in this effort, both bilaterally and multilaterally. 
With regard to other countries' investment review processes, 
Treasury strongly supports the OECD's current program of peer 
review to ensure that its members' processes are--as I believe 
CFIUS is--consistent with the OECD's open investment 
principles: non-discrimination, transparency, predictability, 
accountability, and proportionality.
    The Administration is also engaged in bilateral investment 
treaty negotiations, including with China. One objective of 
these negotiations is to lock in open investment policies such 
as non-discriminatory treatment of U.S. companies and increased 
market access. Multilaterally, the United States is an active 
participant in the OECD Investment Committee's pursuit of open 
investment policies among OECD members and observer countries, 
as well as the OECD's investment liberalization outreach 
efforts to developing countries.
Sovereign Wealth
Q.6. Over a year ago, the Bush Administration participated in 
an IMF forum in Santiago, Chile to develop the ``Generally 
Accepted Principles and Practices'' (or GAPP) for Sovereign 
Wealth Funds to observe when investing in various economies 
around the world.

   LWhat is your assessment of the GAPP?

A.6. The GAPP aims to help maintain a stable and open global 
financial system by encouraging sovereign wealth funds (SWFs) 
to establish sound institutional and operational practices. The 
GAPP is credible in that it responds directly to the key 
macroeconomic, financial market, and investment issues raised 
by the rapid growth in the size and number of SWFs, and helps 
to demonstrate a significant positive shift in SWF practices.

Q.7. What sorts of principles and practices should the United 
States government be promoting regarding sovereign wealth 
investment?

A.7. The United States government should promote the principles 
and practices identified in the GAPP, which will help allay 
concerns that SWF investments may be politically motivated and 
reduce potential uncertainty and volatility in financial 
markets.

    Key principles include:

   LSWF investment decisions should aim to maximize 
        risk-adjusted financial returns in a manner consistent 
        with the SWF's investment policy, and based on economic 
        and financial grounds.

   LFinancial information, including asset allocations, 
        benchmarks, and historical returns, should be publicly 
        disclosed.

   LInvestment policies, including policies for voting 
        publicly traded equity shares, should be publicly 
        disclosed.

   LThe governance framework for the SWF should be 
        sound and should establish a clear and effective 
        division of roles and responsibilities in order to 
        facilitate accountability and operational independence 
        in the management of the SWF to pursue its objectives.
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