[Senate Hearing 112-115]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-115
 
 NOMINATIONS OF: DAVID S. COHEN, DANIEL L. GLASER, TIMOTHY G. MASSAD, 
                 WANDA FELTON, AND SEAN ROBERT MULVANEY

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

                                HEARING

                               before the

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

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   ON

                            NOMINATIONS OF:

 David S. Cohen, of Maryland, to be Under Secretary for Terrorism and 
              Financial Crimes, Department of the Treasury

                               __________

    Daniel L. Glaser, of the District of Columbia, to be Assistant 
     Secretary for Terrorist Financing, Department of the Treasury

                               __________

   Timothy G. Massad, of Connecticut, to be Assistant Secretary for 
            Financial Stability, Department of the Treasury

                               __________

Wanda Felton, of New York, to be First Vice President and Vice Chair of 
              the Export-Import Bank of the United States

                               __________

   Sean Robert Mulvaney, of Illinois, to be a Member of the Board of 
       Directors for the Export-Import Bank of the United States

                               __________

                              MAY 3, 2011

                               __________

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


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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  TIM JOHNSON, South Dakota, Chairman

JACK REED, Rhode Island              RICHARD C. SHELBY, Alabama
CHARLES E. SCHUMER, New York         MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii              JIM DeMINT, South Carolina
SHERROD BROWN, Ohio                  DAVID VITTER, Louisiana
JON TESTER, Montana                  MIKE JOHANNS, Nebraska
HERB KOHL, Wisconsin                 PATRICK J. TOOMEY, Pennsylvania
MARK R. WARNER, Virginia             MARK KIRK, Illinois
JEFF MERKLEY, Oregon                 JERRY MORAN, Kansas
MICHAEL F. BENNET, Colorado          ROGER F. WICKER, Mississippi
KAY HAGAN, North Carolina

                     Dwight Fettig, Staff Director

              William D. Duhnke, Republican Staff Director

                       Charles Yi, Chief Counsel

                           Pat Grant, Counsel

               Colin McGinnis, Professional Staff Member

                Brian Filipowich, Legislative Assistant

                Hester Peirce, Republican Senior Counsel

          John O'Hara, Republican Senior Investigative Counsel

                      Anu Kasarabada, Deputy Clerk

                      Brett Hewitt, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

                                  (ii)











                            C O N T E N T S

                              ----------                              

                          TUESDAY, MAY 3, 2011

                                                                   Page

Opening statement of Chairman Johnson............................     1

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

                               WITNESSES

David S. Cohen, of Maryland, nominee for Under Secretary for 
  Terrorism and Financial Crimes, Department of the Treasury.....     4
    Prepared statement...........................................    26
    Responses to written questions of:
        Chairman Johnson.........................................    31
        Senator Shelby...........................................    33
        Senator Schumer..........................................    34
        Senator Brown............................................    37
        Senator Vitter...........................................    37
        Senator Johanns..........................................    43
        Senator Kirk.............................................    44
Daniel L. Glaser, of the District of Columbia, nominee for 
  Assistant Secretary for Terrorist Financing, Department of the 
  Treasury.......................................................     6
    Prepared statement...........................................    27
    Responses to written questions of:
        Senator Shelby...........................................    54
        Senator Brown............................................    58
        Senator Hagan............................................    59
Timothy G. Massad, of Connecticut, nominee for Assistant 
  Secretary for Financial Stability, Department of the Treasury..     8
    Prepared statement...........................................    28
    Responses to written questions of:
        Chairman Johnson.........................................    59
        Senator Shelby...........................................    62
Wanda Felton, of New York, nominee for First Vice President and 
  Vice Chair, Export-Import Bank of the United States............     9
    Prepared statement...........................................    29
    Responses to written questions of:
        Chairman Johnson.........................................    64
        Senator Shelby...........................................    65
        Senator Vitter...........................................    66
Sean Mulvaney, of Illinois, nominee for Member of the Board of 
  Directors, Export-Import Bank of the United States.............    10
    Prepared statement...........................................    29
    Responses to written questions of:
        Chairman Johnson.........................................    73
        Senator Shelby...........................................    74
        Senator Vitter...........................................    75

                                 (iii)


                            NOMINATIONS OF:

                      DAVID S. COHEN, OF MARYLAND,

       TO BE UNDER SECRETARY FOR TERRORISM AND FINANCIAL CRIMES,

                      DEPARTMENT OF THE TREASURY;

             DANIEL L. GLASER, OF THE DISTRICT OF COLUMBIA,

           TO BE ASSISTANT SECRETARY FOR TERRORIST FINANCING,

                      DEPARTMENT OF THE TREASURY;

                   TIMOTHY G. MASSAD, OF CONNECTICUT,

           TO BE ASSISTANT SECRETARY FOR FINANCIAL STABILITY,

                      DEPARTMENT OF THE TREASURY;

                       WANDA FELTON, OF NEW YORK,

               TO BE FIRST VICE PRESIDENT AND VICE CHAIR,

                EXPORT-IMPORT BANK OF THE UNITED STATES;

                   SEAN ROBERT MULVANEY, OF ILLINOIS,

                TO BE A MEMBER OF THE BOARD OF DIRECTORS,

                EXPORT-IMPORT BANK OF THE UNITED STATES

                              ----------                              


                          TUESDAY, MAY 3, 2011

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10:06 a.m. in room SD-538, Dirksen 
Senate Office Building, Hon. Tim Johnson, Chairman of the 
Committee, presiding.

           OPENING STATEMENT OF CHAIRMAN TIM JOHNSON

    Chairman Johnson. Good morning. I call this hearing to 
order. Thanks to all of you for joining us here today, and a 
special thanks to our witnesses and their family members who 
are with us.
    Before we begin, I want to take a moment to mention the 
devastation and the tragic loss of life in the wake of hundreds 
of tornadoes that broke out across the Southern United States 
last week. Ranking Member Shelby, I know your home town of 
Tuscaloosa was among the hardest hit, and I want to convey my 
condolences to all of those affected by these catastrophic 
events. I was also pleased to see a quick, coordinated response 
from President Obama, FEMA, and a number of Cabinet 
Secretaries.
    Today we consider five distinguished individuals nominated 
to serve in critical positions within the Obama administration. 
David Cohen and Daniel Glaser have both been nominated for key 
antiterrorism positions within the Department of the Treasury. 
As the President said in his address to the Nation on Sunday 
night, the death of Bin Laden marks the most significant 
achievement to date in our Nation's effort to defeat Al Qaeda. 
But his death does not mark the end of the effort. There is no 
doubt that Al Qaeda will continue to pursue attacks against us. 
We must and we will remain vigilant at home and abroad.
    I wholeheartedly agree with the President. Mr. Cohen's and 
Mr. Glaser's nominations are critical to these ongoing efforts 
to protect our homeland. Mr. Cohen has been nominated to become 
the Under Secretary for Terrorism and Financial Crimes and is 
currently serving in the role in an acting capacity. Mr. Glaser 
has been nominated to become the Assistant Secretary for 
Terrorist Financing. Timothy Massad has been nominated to serve 
as Assistant Secretary for Financial Stability at the Treasury 
Department, a role he is currently fulfilling in an acting 
capacity. Wanda Felton and Sean Mulvaney have both been 
nominated for positions at the Export-Import Bank of the United 
States. Ms. Felton has been nominated to serve as the First 
Vice President and Vice Chair, and Mr. Mulvaney has been 
nominated to become a member of the Board. Let me say a brief 
word about each of these nominees.
    David Cohen has had a long and distinguished career of 
public service in the public and private sector. Prior to 
serving as Acting Under Secretary for Terrorism and Financial 
Crimes, he was the Assistant Secretary for Terrorist Financing. 
He has also worked in the Treasury Department's Office of 
General Counsel and in the private sector with the law firm of 
Wilmer, Cutler, Pickering, Hale & and Dorr.
    Daniel Glaser also has had an outstanding career at the 
Treasury Department. He currently serves as the Department's 
Deputy Assistant Secretary for Terrorist Financing and 
Financial Crimes. Prior to serving in this role, Mr. Glaser was 
the first Director of the Executive Office of Terrorist 
Financing and Financial Crimes established in 2003. Previously 
he served as the Senior Counsel for Financial Crimes in the 
Treasury Department's Office of General Counsel.
    These nominees are providing key leadership in one of the 
Treasury Department's most critical offices. Since its 
creation, the Office of Terrorism and Financial Intelligence 
has played an even greater role in protecting our national 
security.
    As the Acting Assistant Secretary for Financial Stability, 
Timothy Massad heads the Office of Financial Stability which 
administers the Troubled Asset Relief Program. Previously he 
served as the Chief Counsel for OFS, and before joining 
Treasury, Mr. Massad had a diverse corporate practice as a 
partner at Cravath, Swaine & Moore. As both a special legal 
adviser to the Congressional Oversight Panel for its first 
report on the TARP investments and in his current capacity, Mr. 
Massad has already demonstrated his commitment to TARP 
transparency and maximizing taxpayer returns.
    Wanda Felton and Sean Mulvaney have been nominated for 
positions at the Export-Import Bank and the Official Export 
Credit Agency of the United States.
    Ms. Felton brings a varied and distinguished business 
record to the Ex-Im Bank. She currently owns and directs MAP 
Capital Advisors, a financial advisory firm. Prior to her work 
at MAP, Ms. Felton was the Managing Director at Helix 
Associates, a global placement agency for private equity funds. 
I note that this position would be a form of homecoming for Ms. 
Felton as she started her career with Ex-Im Bank as a loan 
officer.
    Sean Mulvaney currently serves as the Director of the 
Economic Policy Program at the German Marshall Fund of the 
United States. Prior to this, he worked for the U.S. Agency for 
International Development, where he served until November 2008 
as Assistant Administrator for Management, a Presidential 
appointment and Senate-confirmed position.
    It is my sincere hope that the Senate can act quickly on 
all of these nominations, including Ms. Felton and Mr. 
Mulvaney, since two of the three remaining members of the 
Export-Import Bank's Board will conclude their terms this July. 
I look forward to hearing all of our nominees' testimonies.
    I now turn to Senator Shelby for any opening remarks he may 
have. Senator Shelby.

             STATEMENT OF SENATOR RICHARD C. SHELBY

    Senator Shelby. Thank you, Mr. Chairman. Today the 
Committee will consider several nominations.
    David Cohen, as you have mentioned, has been nominated to 
served as Under Secretary of the Treasury for Terrorism and 
Financial Crimes. In this role Mr. Cohen will be responsible 
for shaping U.S. sanctions policy. Mr. Cohen will be succeeding 
Stuart Levey who has served in that position for the past 7 
years. I believe it will be a challenge for Mr. Cohen to follow 
in Mr. Levey's footsteps, but I believe he is up to it. 
Nevertheless, he will need to refocus our efforts on the 
dangers that this country and its financial institutions face 
here at home, such as cash smuggling, sophisticated money 
laundering, and TARP-related fraud.
    Daniel Glaser has been nominated to serve as Assistant 
Secretary of the Treasury for Terrorist Financing. He has been 
working at the Treasury Department on terrorism financing 
issues for nearly 7 years. He presently is Deputy Assistant 
Secretary for Terrorist Financing. If confirmed, his background 
will allow Mr. Glaser to hit the ground running.
    Timothy Massad has been nominated to serve as Assistant 
Secretary for Financial Stability at the Department of 
Treasury. He has been working in the Office of Financial 
Stability for 2 years, currently as the Acting Assistant 
Secretary, and prior to this as Chief Counsel. This office was 
created in October 2008 to run the Troubled Asset Relief 
Program we call ``TARP.''
    It is critical that the heads of these offices be committed 
to greater transparency and accountability for TARP here.
    Finally, there are two nominations that the Chairman 
mentioned for the Board of Directors of the Export-Import Bank. 
The Bank is the official export credit agency of the United 
States. Wanda Felton has been nominated to serve, as he has 
mentioned, as First Vice President and Vice Chair of the Board 
of Directors; and Sean Mulvaney has been nominated to serve as 
a Board member. It is important that these Board positions are 
filled promptly to allow the Bank to operate effectively and 
fulfill its missions to assist both large and small companies 
export their goods and services to foreign markets. I think it 
is particularly important now to have a full Board as the 
Committee will be considering legislation to reauthorize the 
Bank this year.
    I look forward to hearing from the nominees and working 
with Chairman Johnson so that we can move these nominations 
through the process as quickly as possible.
    Chairman Johnson. Will the panel please rise and raise 
their right hand? Do you swear or affirm that the testimony 
that you are about to give us is the truth, the whole truth, 
and nothing but the truth, so help you God?
    Mr. Cohen. I do.
    Mr. Glaser. I do.
    Mr. Massad. I do.
    Ms. Felton. I do.
    Mr. Mulvaney. I do.
    Chairman Johnson. Do you agree to appear and testify before 
any duly constituted Committee of the Senate?
    Mr. Cohen. I do.
    Mr. Glaser. I do.
    Mr. Massad. I do.
    Ms. Felton. I do.
    Mr. Mulvaney. I do.
    Chairman Johnson. You may sit down. Please be assured that 
your written statement will be part of the record, so if you 
could confine your remarks to 5 minutes, that would be greatly 
appreciated.
    Please also note that the Members of this Committee may 
submit written questions to you for the record, and you should 
respond to these questions promptly in order that the Committee 
may proceed on your nomination.
    I invite all the witnesses to introduce your family and 
friends in attendance before beginning your statements. Mr. 
Cohen.

STATEMENT OF DAVID S. COHEN, OF MARYLAND, TO BE UNDER SECRETARY 
 FOR TERRORISM AND FINANCIAL CRIMES, DEPARTMENT OF THE TREASURY

    Mr. Cohen. Thank you, Chairman Johnson. I would like to 
begin by introducing my wife, Susie Cohen, who is here with me 
today.
    Chairman Johnson, Ranking Member Shelby, and distinguished 
Members of this Committee, thank you for the opportunity to 
appear before you today. It is an honor to be the nominee to 
serve as Under Secretary for Terrorism and Financial Crimes. I 
want to thank President Obama for the confidence he has shown 
in me by nominating me and Secretary Geithner for recommending 
me to serve in this position.
    Having served for the past 2 years as the Assistant 
Secretary of Treasury for Terrorist Financing, I am keenly 
aware of the very significant responsibilities assigned to the 
Under Secretary for Terrorism and Financial Crimes, as well as 
the consequential contributions that the Under Secretary can 
make in advancing our Nation's security.
    Illicit finance, in its many forms, is a threat to the 
integrity of our financial system, both domestically and 
internationally. Combating illicit finance not only protects 
our financial system from abuse by money launderers, terrorist 
financiers, weapons proliferators, and others engaged in 
financial crime, but it helps to advance our most critical 
foreign policy and national security objectives. The many tools 
that the Treasury Department can deploy--ranging from anti-
money laundering regulatory oversight, to outreach to 
counterparts overseas, to deploying targeted financial measures 
focused on particular individuals and entities--play an 
integral role in responding to many of the challenges we face. 
Treasury's unique capacity to understand financial flows and 
the operation of the financial system, to analyze financial 
intelligence, to map financial and material support networks, 
and to take targeted, powerful actions are key to meeting these 
challenges.
    I believe that my professional experience, particularly 
serving as Assistant Secretary for Terrorist Financing since 
May 2009, has prepared me well to undertake the 
responsibilities of Under Secretary.
    As Assistant Secretary, I have had the opportunity to work 
very closely with the previous Under Secretary, participating 
in almost all aspects of the work of the Office of Terrorism 
and Financial Intelligence (TFI). This has included 
coordinating closely with my colleagues in each of the 
components of TFI the Office of Intelligence and Analysis, the 
Office of Foreign Assets Control, the Financial Crimes 
Enforcement Network, and the Treasury Executive Office for 
Asset Forfeiture.
    In my capacity as Assistant Secretary, I also have had the 
chance to work on many of the issues in TFI, but I have focused 
most intently on several key issues:
    First, our use of targeted financial sanctions, as well as 
outreach to the private sector and foreign governments, to 
increase pressure on the government of Iran for its continued 
refusal to live up to its international non-proliferation 
obligations;
    Second, and relatedly, our efforts to financially isolate 
and apply pressure on the North Korean regime for its continued 
provocative conduct;
    Third, our efforts to combat the financing of terrorism, 
especially financial support for Al Qaeda, the Taliban, and 
other violent extremist groups in South Asia;
    And, finally, the effort to ensure that information about 
the true beneficial owners of corporations is available to 
State and Federal law enforcement and regulators pursuing 
money-laundering and terrorist-financing investigations.
    Prior to serving as Assistant Secretary, I was an attorney 
for close to 20 years, in both private practice and in 
Government. In private practice, I represented institutions and 
individuals in complex financial investigations and litigation 
and counseled clients on their obligations to comply with 
Treasury's anti-money laundering and economic sanctions laws 
and regulations. From late 1999 to mid-2001, I served in the 
Treasury's General Counsel's Office, focusing much of my 
attention on anti-money-laundering law and policy.
    If confirmed, I look forward to working closely with you as 
the Treasury Department continues to implement the President's 
priorities for safeguarding our financial system from illicit 
finance. The variety and intensity of these challenges are well 
known to this Committee. Effectively addressing them requires 
great vigilance and constant innovation. I would welcome the 
opportunity to serve our great Nation by taking on these 
challenges as the leader of Treasury's critical work to fight 
illicit finance.
    In closing, I want to thank the Committee for the attention 
it has given to my nomination. If confirmed, I intend to work 
closely with you, Mr. Chairman, the other Members of this 
Committee, and your staff to pursue our shared objective of 
protecting national security and the integrity of the financial 
system. I am deeply committed to maintaining the very 
productive and close relationship that exists between this 
Committee and the office that I have been nominated to lead.
    Mr. Chairman, I would be pleased to respond to any 
questions that you or Members of the Committee may have.
    Chairman Johnson. Thank you, Mr. Cohen.
    Mr. Glaser, do you have family to introduce?
    Mr. Glaser. Yes, I do, Senator. I would like to introduce 
my wife, Laura, and my son, Ethan; and my parents, Gary and 
Lillian Glaser.
    Chairman Johnson. Mr. Glaser, please proceed.

STATEMENT OF DANIEL L. GLASER, OF THE DISTRICT OF COLUMBIA, TO 
 BE ASSISTANT SECRETARY FOR TERRORIST FINANCING, DEPARTMENT OF 
                          THE TREASURY

    Mr. Glaser. Thank you, Chairman Johnson, Ranking Member 
Shelby, distinguished Members of the Committee. Thank you for 
the opportunity to appear before you today. It is a tremendous 
personal and professional honor to have been nominated for the 
position of Assistant Secretary of the Treasury for Terrorist 
Financing. I would like to thank President Obama for the 
confidence he has shown in me by nominating me and Secretary 
Geithner for recommending me for this important position. If 
confirmed, I will certainly work my hardest to live up to their 
very high expectations.
    Mr. Chairman, over the course of my career I have served in 
the area of illicit finance under six Secretaries of the 
Treasury across three Presidential administrations. My 
positions have included serving as an attorney in the U.S. 
Secret Service Chief Counsel's Office, as Senior Counselor for 
Financial Crimes within the Treasury Department's Office of 
General Counsel, Director of the Money Laundering and Financial 
Crimes Section within Treasury's Office of Enforcement, 
Director of Treasury's Executive Office for Terrorist Financing 
and Financial Crimes, and since 2004, as the Deputy Assistant 
Secretary of the Treasury for Terrorist Financing and Financial 
Crimes within TFI. Additionally, since September 2001, I have 
served as head of the U.S. Delegation to the Financial Action 
Task Force--the premier international body that sets anti-
money-laundering and counterterrorist financing standards and 
works for their global adoption and implementation. I believe 
this experience has left me well prepared to take on this new 
position.
    Over the course of these years, I am proud to have been 
part of the team that has built something new and unique at the 
Treasury Department--a finance ministry with a central role in 
the development and implementation of national security policy. 
This evolution began in the late 1990s with Treasury's leading 
role in the development of the first National Money Laundering 
Strategies and culminated in March 2004 with the creation of 
the Office of Terrorism and Financial Intelligence. TFI brings 
together a broad and diverse range of Treasury's authorities 
and expertise for two goals: protecting the United States and 
international financial systems from abuse; and identifying, 
disrupting, and dismantling the financial networks that support 
terrorist groups, organized crime, weapons proliferators, and 
countries that threaten the national security of the United 
States. This approach has been successful. We have made it 
harder for terrorist groups to raise and move funds, disrupted 
the financial networks that support drug-trafficking 
organizations, and applied substantial financial pressure on 
regimes such as Iran and North Korea, while at the same time 
making it more difficult for them to acquire the material 
necessary to develop their nuclear programs.
    As the central policy office within TFI, the Office of 
Terrorist Financing and Financial Crimes works to develop and 
implement strategies and engages with multilateral bodies, 
foreign government counterparts, and private sector colleagues 
to achieve all of these objectives. If confirmed, I will lead 
TFFC in continuing to develop innovative approaches to 
undermining illicit finance and strengthening our national 
security. Challenges abound. From Iran's and North Korea's 
nuclear programs and other illicit activities, to drug-
trafficking and criminal organizations in the Western 
Hemisphere and Eastern Europe, to global terrorist 
organizations such as Al Qaeda and Hamas, to the new challenges 
posed by recent developments in the Middle East--never has it 
been more important to strategically and effectively marshal 
our financial tools and those of our allies in support of 
international security.
    In closing, I would like to thank the Committee for its 
time and consideration. If confirmed, I pledge to work closely 
with you, Mr. Chairman, and other Members of the Committee and 
your staff on our collective goal of combating illicit finance 
and protecting America. It is my immense honor to sit here 
before you today, and I would be happy to respond to any 
questions you or other Members of the Committee might have.
    Thank you.
    Chairman Johnson. Thank you, Mr. Glaser.
    Mr. Massad, do you have family to introduce?
    Mr. Massad. Yes, I do, Chairman Johnson. I would like to 
introduce my wife, Charlotte.
    Chairman Johnson. Please proceed.

STATEMENT OF TIMOTHY G. MASSAD, OF CONNECTICUT, TO BE ASSISTANT 
 SECRETARY FOR FINANCIAL STABILITY, DEPARTMENT OF THE TREASURY

    Mr. Massad. Thank you. Chairman Johnson, Ranking Member 
Shelby, and Members of the Committee, thank you for the 
opportunity to appear before you today. I am honored that 
President Obama has nominated me for this position, and I am 
deeply grateful to Secretary Geithner for his confidence in me.
    Over the last 2 years, it has been my privilege to be a 
part of the Treasury Department. I joined in May 2009 as Chief 
Counsel for the Troubled Asset Relief Program, and I had the 
honor of working closely with former Assistant Secretary Herb 
Allison, who set an outstanding example for us all. When Mr. 
Allison decided to return to retirement in September of 2010, 
Secretary Geithner asked me to serve as Acting Assistant 
Secretary.
    I was born in Louisiana, and I lived in Texas, Oklahoma, 
and Connecticut as a child. All of my grandparents were 
immigrants who came to this country as teenagers, barely able 
to speak English and with nothing more than a suitcase. My 
parents grew up during the Great Depression. Their families 
struggled to make ends meet. My parents worked hard and 
provided my siblings and me with many opportunities, and I have 
been very fortunate as a result.
    I mention this because I often think of the stories my 
parents told about life during the Great Depression, because 
this financial crisis has caused many American families to 
suffer on a scale not seen since that time. As a result of this 
crisis, millions of people have lost their jobs. Many have lost 
or are still in danger of losing their homes. Many small 
businesses have collapsed. Many families have lost their 
retirement savings, and many young people have had to postpone 
college plans. We must never forget that this human suffering 
is the true cost of this financial crisis.
    Congress passed the Troubled Asset Relief Program, or TARP, 
in the midst of this terrible crisis in order to stabilize our 
financial system. Of course, TARP could not avert or repair all 
the damage caused by this crisis. However, I strongly believe 
that without TARP, the suffering would have been much, much 
worse. While no one liked using taxpayer funds to rescue 
financial institutions, I believe that TARP--along with the 
other actions our Government took--helped prevent a 
catastrophic collapse of our financial system.
    Today, our financial system and our economy are much 
stronger, and important work remains for TARP. First, we must 
exit our remaining investments in banks and other companies. We 
have already recovered two-thirds of the amount of money 
invested, and our economy and our financial system will be 
stronger when the Government gets out of the business of owning 
interests in private companies. Second, we must continue to 
implement and improve our programs to help American families 
stay in their homes and avoid foreclosure. And, third, we must 
do both of these tasks in a manner that protects taxpayer 
interests and ensures accountability.
    In particular, I want to emphasize the importance of 
accountability and transparency. This program must meet the 
highest standards. Before joining Treasury, I helped the 
Congressional Oversight Panel get started. I served as their 
first special legal advisor on a voluntary basis and worked 
closely with them to help write one of their first reports. If 
confirmed, I will continue to work closely with the Special 
Inspector General for TARP, the Government Accountability 
Office, the Financial Stability Oversight Board, as well as 
this Committee and other Committees of Congress to ensure that 
the TARP program meets the highest standards.
    It has been the greatest professional honor of my life to 
serve my country during this difficult time. I have been 
fortunate to lead an extremely talented and dedicated team at 
the Office of Financial Stability, and I look forward to 
continuing this work should the Senate choose to confirm me.
    Thank you, Chairman Johnson and Ranking Member Shelby, for 
this opportunity, and I look forward to your questions.
    Chairman Johnson. Thank you, Mr. Massad.
    Ms. Felton, do you have family to introduce?

   STATEMENT OF WANDA FELTON, OF NEW YORK, TO BE FIRST VICE 
  PRESIDENT AND VICE CHAIR, EXPORT-IMPORT BANK OF THE UNITED 
                             STATES

    Ms. Felton. Yes, Senator, I do: my husband, Mike Owens, who 
is sitting right behind me; and my mother, Maro Lester. I also 
have several friends here: my best friend, Ivonia Slade, and my 
dear friends, Lesley Redwine and Grace Speights, who attended 
college with me.
    Senator Shelby, please allow me to express my sincere 
sympathies for the devastation in your State.
    Chairman Johnson, Senator Shelby, and distinguished Members 
of the Committee, I am honored to appear before you today as a 
nominee for the position of First Vice President and Vice Chair 
of the Export-Import Bank of the United States. To say that I 
am deeply honored to have the opportunity to serve my country 
in this capacity does not begin to capture my feelings. I am 
awed and I am humbled. And I am so grateful to President Obama 
for the opportunity to serve him and our country.
    Briefly, I have more than 25 years of financial industry 
experience. I began my career, as noted earlier, as a loan 
officer at Ex-Im Bank. I understand and am committed to the 
Bank's mission. Creating good-paying jobs that can sustain the 
American middle class and promote the competitiveness of U.S. 
companies overseas, these are imperatives in the current 
economy. To my knowledge, Ex-Im Bank is the only lever 
available to our Government to accomplish these goals without 
burdening taxpayers. As such it is a vital tool.
    However, I believe that the imperative extends beyond the 
current economic cycle. Maintaining American competitiveness 
over the long term is a strategic imperative. President Obama 
has observed that 95 percent of the world's customers are 
outside the United States. I believe that American businesses--
large and small--must capture a larger share of this market so 
that our country can continue to prosper.
    Under Chairman Hochberg, Ex-Im Bank's activity has 
increased dramatically with many innovative programs that 
stretch every dollar and leverage every resource the Bank has 
available. Ex-Im Bank's support for small businesses is at an 
all-time high. There are new programs that provide outreach, 
training, and financing to help small businesses penetrate 
overseas markets. This financing fills a void left by the 
banking industry. If I am confirmed, I will be committed to 
helping to build on this success.
    I believe I bring a skill set that will allow me to make a 
meaningful contribution. My experience in banking gives me the 
tools to perform my primary duty, which is to assess the 
creditworthiness of transactions that are brought before the 
Board. Should I be confirmed, I will be committed to ensuring 
that the Bank remains self-financing. I see the role as 
fulfilling a fiduciary duty to the American taxpayer.
    If confirmed, I also feel well suited to help grow U.S. 
exports in Sub-Saharan Africa. I understand this is a 
congressional mandate and believe that I can contribute in this 
area as well. I have experience working in South Africa and 
Nigeria, two of the nine countries which Ex-Im Bank has named 
as primary markets. There is a growing need in Africa and many 
emerging markets for equipment and services to build basic 
infrastructure, telecom, transportation, and other areas. These 
are needs which American businesses can and should supply. I 
believe that my experience positions me well to pursue this 
mandate.
    For the past 15 years, I have performed due diligence on a 
number of transactions involving emerging markets. For example, 
in 1994, I advised CalPERS and the New York State Common 
Retirement Fund as they made their first private equity 
investments in post-apartheid South Africa.
    Mr. Chairman and Members of the Committee, thank you for 
the opportunity to seek your support for my nomination. I look 
forward to answering any questions you may have for me.
    Chairman Johnson. Thank you, Ms. Felton.
    Mr. Mulvaney, do you have family and friends to introduce?
    Mr. Mulvaney. I do, Mr. Chairman: my wife, Susan, and my 
daughters, Kate and Rachel, who are right behind me.
    Chairman Johnson. Welcome. Please proceed.

STATEMENT OF SEAN MULVANEY, OF ILLINOIS, TO BE A MEMBER OF THE 
  BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES

    Mr. Mulvaney. Mr. Chairman, Senator Shelby, other Members 
of the Committee, please allow me also to start by expressing 
deep appreciation for the opportunity to appear before you. I 
am honored to be a candidate for the Board of the Export-Import 
Bank of the United States. As a former congressional staffer, I 
understand and recognize the importance of the Committee and 
this hearing. I would also like to thank President Obama for 
nominating me to this position, as well as Senator McConnell. 
If confirmed, I would welcome the opportunity to serve.
    Over the course of my career, I have had several positions 
that have contributed to my candidacy for the position. These 
positions span the private and public sectors and include 
experiences in management, U.S. trade policy, budget, and 
international affairs. If confirmed, I stand ready to leverage 
these experiences in support of the Bank at this critical time 
during the ongoing U.S. recovery from the economic crisis.
    Let me express some key commitments and priorities in this 
hearing.
    First, I would like to express my commitment to the Bank's 
mission. While Ex-Im Bank may be a small and a lean agency, its 
mission is by no means insignificant or modest. Last year, the 
Bank supported over $34 billion of U.S. exports with 
authorizations of over $25 billion. This financing support was 
essential to sustain over 227,000 American jobs at more than 
3,300 companies. Since my nomination, I have had a few 
opportunities to interact with the Bank's staff. In these 
initial meetings, I have quickly appreciated the Bank's 
professionalism and a clear sense of purpose that emanates from 
its employees. If confirmed, I would be honored to work with 
the Chairman and the rest of the organization.
    Second, I am committed to the Ex-Im Bank's strong 
relationship with the legislative branch. The Bank has earned 
the trust and confidence of this Committee and the Congress. 
Even though the Bank's operations are self-sustaining, the Bank 
extends the full faith and credit of the United States as it 
supports U.S. exports and jobs. It is important that this trust 
and confidence be preserved in the years ahead, particularly as 
the Bank seeks reauthorization.
    Third, I am committed to the Bank's partnership with other 
Federal agencies. The Bank plays a vital complementary role to 
the programming of organizations like OPIC, TDA, SBA, USTR, and 
the Department of Commerce. Together, the Bank and these 
agencies enable greater U.S. economic engagement in the global 
economy so that the United States can secure economic growth, 
job creation, and prosperity.
    If confirmed, I would hope to work with Chairman Hochberg 
and the Bank staff on a few areas.
    First, the Bank has developed a strategic plan for 2010 
that includes a number of priorities, including expanding 
awareness of Ex-Im Bank services through increased outreach and 
partnerships, increasing the number of small- and medium-sized 
businesses using Bank services, and targeting business 
development in emerging markets with high potential for U.S. 
export growth. A key statistic I have come to appreciate in 
this nomination process is the fact that over 20 percent of the 
dollar volume and 85 percent of its transaction volume benefit 
American small business.
    Finally, I firmly believe in the practice of measuring for 
results. I would consider it an important part of my job to 
understand and improve Bank metrics that give stakeholders a 
sense of its performance over time, particularly mitigating 
risk in its operations to the U.S. taxpayer.
    Again, I appreciate the opportunity to be here, Mr. 
Chairman and Senator Shelby, and I look forward to answering 
any of your questions.
    Chairman Johnson. Thank you, Mr. Mulvaney.
    Will the clerk put 5 minutes on the clock?
    Mr. Cohen, as you noted in your statement, combating 
illicit finance protects our financial system from abuse by 
money launderers, terrorist financiers, weapons proliferators, 
and others engaged in financial crime and helps to advance our 
most critical foreign policy and national security objectives. 
Can you describe the overall state of the Treasury Department's 
efforts in this area and where you think we need to more 
clearly focus in the coming years to ensure a more effective 
counterterrorist financing effort? Are there tools that you do 
not now have that you think would be useful in this fight?
    Mr. Cohen. Thank you, Mr. Chairman. I would say that the 
state of the overall Treasury effort to combat terrorist 
financing is quite good. We have in TFI an integrated approach 
to combating terrorist financing that includes the policy 
developments that come from the Office of Terrorist Financing 
and Financial Crimes, the office that Mr. Glaser has been 
nominated to lead; the Office of Intelligence and Analysis, an 
intelligence shop in the Treasury Department, and I would note 
that we are fortunate to be the only finance ministry in the 
world that has an in-house intelligence unit that is dedicated 
specifically to the intelligence related to following the money 
and combating terrorist financing and other forms of illicit 
finance; the Office of Foreign Assets Control, which 
administers our Counterterrorist Financing Executive Order; and 
FinCEN, which also contributes by regulating the domestic anti-
money laundering market and the Bank Secrecy Act and gathering 
information.
    We bring all of that information together in targeting our 
efforts to combat terrorist financing, and it involves both 
taking specific targeted actions against terrorist financiers, 
the donors, the facilitators, and others who are involved in 
moving the money, but also, importantly, engaging with 
counterparts overseas.
    I think one of the most effective things that we as a 
Department do is interacting with foreign governments, foreign 
central banks, foreign financial institutions, and foreign 
intelligence services, sharing information, sharing best 
practices, learning from one another about the networks that 
are supporting the terrorist activity.
    So bringing together this integrated approach, I think we 
have made some important strides in weakening, in particular, 
Al Qaeda core. I think we have, obviously, work still to be 
done with Al Qaeda core and with the affiliates, Al Qaeda in 
the Arabian peninsula, Al Qaeda in the Islamic Maghreb, Al 
Shabaab. These are all serious challenges. They all depend on 
receiving financing in order to survive and we will continue to 
bring to bear all of the resources that I mentioned in 
attacking those problems.
    Chairman Johnson. Mr. Glaser, I understand you are working 
hand-in-hand with Acting Under Secretary Cohen to counter 
terrorist financing, weapons proliferation, money laundering, 
and similar scourges as he did with his predecessor, Stuart 
Levey. I gather that part of your efforts will focus on anti-
narcotics and anti-money laundering efforts on our Southern 
border. Can you describe for us the scale of the problem and 
how we are combating it, including new ways being used by the 
cartels to smuggle in funds and prepaid digital stored value 
cards. Do you think we are winning this war, losing it, or just 
holding our ground?
    Mr. Glaser. Thank you, Mr. Chairman, for the question, 
because I think it is a really important issue and it is an 
important issue for the U.S. Treasury Department, in 
particular, to be focusing on. In my opening statement, in 
David's opening statement, we spent a lot of time talking about 
all of the innovative work that we have done over the years in 
terms of mapping out the financial networks that support 
regimes such as North Korea, Iran's nuclear proliferation 
networks, terrorist organizations like Hamas and Al Qaeda. 
There has been a tremendous amount of effort from a systemic 
level to understand those networks and then to look at the 
tools that we have, sanctions, tools, regulatory tools, law 
enforcement tools, diplomatic tools to attack those networks, 
to disrupt and dismantle those networks.
    There has not been the same type of thought process, I 
think, or enough of the type of thought process that has gone 
into looking at the narcotics networks and I think that that is 
something that we could really innovate on, and I think that 
that is something that we at Treasury could really lend our 
assistance to. There has been a tremendous amount of work that 
has been done by the DEA, by the Justice Department, by all our 
law enforcement agencies in case-driven efforts to identify 
individuals, to arrest them, to take down narcotics 
organizations, and they have done heroic work on that. We 
ourselves have contributed to that through our kingpin 
designations. That said, I think that we can do some more 
systemic work in understanding these flows.
    Precisely to the question that you asked, later this month, 
I am going to be traveling down to Mexico to meet with my 
counterpart in the Mexican Finance Ministry and then we are 
going to do something that I do not think has been done before. 
He and I are going to do a joint Mexican-United States visit to 
Central America, to places like Guatemala and Panama, so that 
we and Mexico can work together to begin to jointly understand 
precisely how these broad networks work and then look at our 
array of tools, which is what we do in TFI, look at our array 
of financial tools to see how we could target it.
    I think that a good example of the value that we could 
bring to this is an action that we at the Treasury Department 
took recently with respect to Lebanese Canadian Bank. Lebanese 
Canadian Bank is a bank in Beirut that is part of the global 
narcotics financing network. When I first started in this job, 
when we looked at the drug cartels, we looked at a system that 
was limited to the Western Hemisphere. Now, it is a system that 
is worldwide--Africa, the Middle East, Asia. The action that we 
took in coordination with the DEA to target this bank in 
Beirut, which, by the way, involved a network with ties to 
Hezbollah, allowed us to really find a way to disrupt the way 
these drug cartels are moving their money. I think we could do 
more of that and I look forward to working on that if 
nominated--if confirmed. Thank you, Chairman.
    Chairman Johnson. Thank you, Mr. Glaser.
    Senator Shelby.
    Senator Shelby. Thank you, Mr. Chairman.
    Mr. Cohen, although there has been some success in 
sanctioning Iranian banks, Iran's nuclear program and support 
for terrorist organizations continues, I believe, unabated. 
Financing for these activities must be coming from somewhere, 
so my question to you is this. What role, if any, do you 
believe that the Central Bank of Iran plays in supporting 
Iran's nuclear proliferation activities or helping businesses 
evade U.S. or U.N. sanctions on Iran, and what is the 
Treasury's criteria for sanctioning the Central Bank of Iran, 
if you have one?
    Mr. Cohen. Thank you, Senator Shelby. I want to begin by 
also extending my condolences and sympathy to you and to your 
constituents.
    Senator Shelby. Thank you.
    Mr. Cohen. With respect to the Central Bank of Iran, we are 
very, very focused on the role the Central Bank of Iran may 
play in supporting Iran's nuclear program as well as its 
support for terrorism. I would note that in the most recent 
Security Council Resolution 1929 from last June, the Security 
Council made special pains to point out that vigilance is 
required with respect to the Central Bank because of its 
potential role in supporting Iran's nuclear program and its 
ballistic missile program.
    We at the Treasury Department in several FinCEN advisories 
have noted for our financial institutions the potential that 
the Central Bank of Iran could be involved in that sort of 
activity. The criteria that we apply for the Central Bank of 
Iran is the same criteria that we would apply for any financial 
institution. That is, if we have the evidence, if we have the 
evidence that the Central Bank of Iran is involved in 
proliferation activities or in supporting terrorism, we will 
take that into account and we will, if the facts----
    Senator Shelby. What do you mean when you say you will take 
it into account? What are you really telling us?
    Mr. Cohen. I am telling you that this is something that we 
are very focused on----
    Senator Shelby. OK.
    Mr. Cohen. We are looking for evidence that would suffice, 
and we need to take this into account in our general policy of 
applying pressure on Iran.
    Senator Shelby. OK. Mr. Glaser, what are the main lifelines 
of Iranian financing for its nuclear and terror programs right 
now? In other words, where are they getting the money? I know 
they have a lot of oil and gas. We understand that.
    Mr. Glaser. Thanks for the question, Senator Shelby. You 
know, again, just to step back for a second, when we really 
first started working on this issue in earnest at the Treasury 
Department back in 2006, it was more or less outside the United 
States's business as usual with Iran in terms of the financial, 
international financial community. There are very few, if any, 
financial institutions that were voluntarily not doing business 
with Iran.
    We have made tremendous progress over the years on that, 
and I think a watershed moment was last summer when in very 
quick succession we had 1929, U.N. Security Council Resolution 
1929, CISADA, and then the very robust implementation of the 
U.N. resolution by the E.U., Republic of Korea, and Japan. So 
where we started, where it was business as usual, now what we 
are left with there is, as your question implies, there are a 
few lifelines, and the challenge now--and in some ways it is a 
good challenge to have, in some ways it is making it more 
challenging--is to identify those.
    I think one of the more important lifelines that exists is 
a bank in Europe called EIH, which I know this Committee has 
focused on. It is an Iranian-owned bank in Germany which, 
again, provides one of the last real broad points of access for 
Iran into the European financial system. It is a bank that we 
designated at the Treasury Department under our WMD 
proliferation authorities some time ago and it is one that we 
have been engaged very closely with the Germans and with the 
European Union as a whole on because we think it is very 
important that that lifeline be closed down.
    Senator Shelby. What basic initiatives that you have been 
dealing with have been successful against the Iranian financial 
lines?
    Mr. Glaser. Well, again, I think----
    Senator Shelby. And I do not want to say about all of it, 
not here.
    Mr. Glaser. I am sorry?
    Senator Shelby. I said, you might not want to disclose all 
of it----
    Senator Shelby. No. No. I certainly understand the 
question. I think what we have really succeeded in is bringing 
an international coalition together to make the international 
financial system very difficult for Iran to access. I will say, 
I think that Congress enacting CISAD and President Obama 
signing CISAD into law was extremely effective in cooling the 
willingness of banks around the world to do business with 
designated Iranian banks. I think that has been extremely 
effective.
    Senator Shelby. OK. Mr. Massad, former Special Inspector 
General for TARP Neil Barofsky wrote in a recent op-ed that he 
strongly disagrees with the Obama administration's assertion 
that TARP has been effective by any objective measure. 
Particularly, Mr. Barofsky noted that the Home Affordable 
Modification Program, HAMP, has been a colossal failure. HAMP 
was announced with the promise by the Administration to help up 
to four million families with mortgage modifications. However, 
it is my understanding there have been only about 600,000 
permanent modifications to date and more than 800,000 trial 
modifications have failed and been canceled. Why has HAMP 
failed to live up to the expectations? Have you done any work 
there?
    Mr. Massad. Yes, sir. I would be happy to answer that 
question. I would say, first of all, that HAMP has not failed.
    Senator Shelby. OK.
    Mr. Massad. I think we have helped many, many people, both 
directly and indirectly. As you point out, about 630,000 have 
entered into permanent modifications. We will be coming out 
with a new report later this week which will indicate 
additional families----
    Senator Shelby. But it has not lived up to expectations. 
You have got to admit that, have you not?
    Mr. Massad. Yes, sir. We will not achieve three to four 
million----
    Senator Shelby. OK.
    Mr. Massad.----permanent modifications.
    Senator Shelby. All right.
    Mr. Massad. I think there are a couple of reasons for that. 
One is we set eligibility criteria which provide that we do not 
offer assistance to everyone. This program was never meant to 
help stop every foreclosure. We do not help, for example, 
people who can afford their mortgage without Government 
assistance. We also do not help those that even with the 
Government assistance may not be able to sustain their 
situation. We do not help people in million-dollar homes and 
vacation homes and vacant properties. That is factor number 
one. So the eligibility pool today, for example, is about 1.4 
million families.
    Second, servicer implementation has been difficult and 
disappointing in many ways and we have taken many steps to try 
to improve that.
    And finally, it is difficult to reach borrowers sometimes.
    The other thing I would point out, though, is that this 
program has had a very big indirect effect. Prior to the launch 
of HAMP, very few modifications were getting done by the 
industry and the standards that we have set have pushed the 
industry to do an additional two million modifications on their 
own. So I think it is important to look at both the direct and 
indirect effects.
    Senator Shelby. Mr. Chairman, I have a number of other 
questions I would like to submit for the record, if it would 
please you.
    Chairman Johnson. It will be received.
    Senator Shelby. Thank you.
    Chairman Johnson. Senator Reed?
    Senator Reed. Thank you very much, Mr. Chairman. I, too, 
want to join you in offering our support and help to the 
Senator from Alabama with those devastating tornadoes.
    Senator Shelby. Thank you.
    Senator Reed. We saw some floods in Rhode Island last 
summer and we received your help and assistance, Mr. Chairman, 
and we look forward to helping you.
    Senator Shelby. Thank you.
    Senator Reed. Mr. Cohen and Mr. Glaser, how do you measure 
the effect of these sanctions? Is there a metric that they are 
using? And then, second, as we impose sanctions, individuals 
adapt and modify their behavior. Can you indicate in that 
regard what is the most disturbing trend in terms of their 
reaction to the sanctions? Both of you can deal with these 
questions.
    Mr. Cohen. Senator Reed, with respect to the Iran sanctions 
in particular, I think we measure our success in terms of the 
qualitative disruptive impact that the sanctions have on Iran's 
ability to access the worldwide financial system. We have seen 
over the last several years, as Mr. Glaser was mentioning, a 
substantial reduction in the number and quality, frankly, of 
banks around the world that are willing to transact with 
Iranian banks.
    It is unquestionable that that has applied pressure on the 
Iranian government. It is not a pressure that I think is easily 
quantifiable, but we can see it in a variety of different ways, 
that this is having an impact on Iran's ability to engage in 
the transactions that it needs to engage in to support its 
nuclear program and to support terrorism around the world. And 
it is also, just more generally, imposing pressure on the 
Iranian government, which is obviously part of the dual-track 
strategy that we are pursuing as an Administration.
    You know, in other programs, there are other measures of 
success. The Libyan program comes to mind in which we have 
frozen, you know, $35 billion in assets. But that is not a 
measure that is translatable across programs and it is--the 
number of frozen assets is sort of not a measure that we use as 
a metric because it is dependent, obviously, on so many 
variables that are outside of our control, including the use of 
the U.S. financial system.
    So I think for each program, the measures are different, 
but the goal of each of these sanctions programs is to disrupt 
and to apply pressure as a sort of a coercive measure to 
encourage change in behavior, and that is how we measure the 
effectiveness.
    Senator Reed. Mr. Glaser, you might take the second 
question, which is basically you have been involved in three 
Administrations. What trends, and most disturbing trends, do 
you see in terms of response to these sanctions?
    Mr. Glaser. Thank you, Senator, and I will focus 
specifically on our Iran sanctions program, because that is 
what I think your question was focused on. I think you are 
right. When we think about how we are going to apply sanctions 
and what tools to use with respect to Iran, we need to 
understand that this is a dynamic process, that as we impose 
sanctions, Iran is going to respond to it, and that then 
creates challenges and opportunities for us in terms of how we 
respond, and there is an inevitable cat-and-mouse game that 
goes on. So as we identify banks for designation, other banks 
emerge that provide Iran opportunities.
    One good example of that, for example, was Post Bank. Post 
Bank had never really been a particularly important bank for 
Iran internationally. It is their postal bank. After the broad 
international sanctions against Iran and other large state-
owned banks, all of a sudden, you start seeing a huge amount of 
transactions emanating from Post Bank. Essentially, Post Bank 
was stepping into the shoes of these other Iranian banks. That 
was something that we saw. We responded and applied sanctions 
on Post Bank. So there is an element of cat and mouse to it.
    Additionally, it is important to look at other alternative 
mechanisms. Is Iran looking to purchase banks surreptitiously? 
Is Iran looking to use mechanisms outside of the formal 
financial system? We need to be careful about that. Is Iran 
looking at sort of second-tier financial centers? So now that 
we have closed off Europe, we have closed off South Korea, we 
have closed off Japan, is Eastern Europe something that Iran is 
interested in?
    I took a visit earlier this year to Albania and to Ukraine 
to discuss it with them, the challenges they face with respect 
to potential Iranian involvement. As we look at South Korea and 
Bank Mellat-Seoul being cutoff to the Iranians, will they start 
looking to Chinese financial institutions more? That is 
something that we need to keep our eye on.
    But I just want to conclude by saying there is more to it 
than just the cat-and-mouse game. Iran has a real economy, a 
large economy. They are a large country. It is--as their access 
to the international financial system decreases, it is not like 
the second-tier options and the third-tier options and the 
fourth-tier options are perfect substitutes for the first-tier 
options, and that over time is going to hopefully apply the 
pressure that we need to apply to seek a change in Iranian 
attitudes and policy.
    Senator Reed. Thank you. Mr. Chairman, I have no further 
questions, but I do want to recognize Mr. Massad. We have had 
the chance to have hearings together. I support you and your 
efforts and thank you, sir. And to our nominees at the Ex-Im 
Bank, good luck. Thank you.
    Mr. Massad. Thank you.
    Chairman Johnson. Senator Johanns?
    Senator Johanns. Thank you, Mr. Chairman.
    Let me just start out and say to all of you, 
congratulations on great careers. You have done a lot of 
interesting things, served your nation and wanted to do some 
more and I appreciate that.
    Let me, if I might, focus, if I could. Mr. Cohen and Mr. 
Glaser, I think you can see from the bipartisan questioning on 
the sanctions that there is a concern that we in Congress pass 
these laws, we work with the Administration, we work with 
Treasury, whoever. We put something in place that gets 
tremendous bipartisan support here. Just literally, by the time 
it is done, there are no votes against it and no controversy, 
and then it is kind of like, what is happening? Is anything 
coming out of this?
    So let me start with a very, very direct question, and that 
is has any foreign-owned non-Iranian financial institution been 
sanctioned under the Iran sanctions bill? Anyone out there?
    Mr. Cohen. With respect to the law that was passed just 
this past summer----
    Senator Johanns. Right.
    Mr. Cohen.----we have not yet sanctioned any foreign 
financial institution outside of Iran under that legislation. 
But I would hasten to add that that legislation has been 
extraordinarily effective and very powerful and we have used it 
in traveling around the world, in meeting with close to 20 
foreign governments, central banks, close to 50 financial 
institutions where we had a concern that the financial 
institution, the foreign financial institution may be involved 
in significant transactions with either designated Iranian 
banks or with IRGC entities and we have had very good success 
in moving those financial institutions away from interactions 
with Iran.
    So as we began this effort over the summer, as Mr. Glaser 
had mentioned earlier, we had seen over the preceding several 
years many financial institutions stepping out of the Iranian 
market, but there were still some that remained involved with 
these designated Iranian banks, and CISADA has been a very 
effective tool in going after many of those banks that remained 
engaged with designated Iranian institutions.
    That said, it has not been uniformly effective and we are 
focused quite vigorously on identifying and pursuing those 
financial institutions that continue to maintain significant 
transactional activity with designated Iranian banks. We have 
not yet designated a bank under CISADA, but that should not be 
taken to mean that we will not.
    Senator Johanns. I do not take it to mean we will not. I am 
just curious as to, you know, some months have now passed, why 
that action would not be taken if you have got banks out there 
with significant financial transactions relating to Iran. Why 
would we not be pursuing that leverage?
    Mr. Cohen. Senator, we are pursuing the leverage. Our first 
best option is to get them to stop. Our second best option is 
to apply sanctions, and without getting too much into the 
details of any particular investigation that we are conducting, 
I can tell you that we are, I would say, close to a decision 
point on several institutions.
    Senator Johanns. Mr. Glaser, do you have anything to add on 
that?
    Mr. Glaser. Thank you, Senator. Not surprisingly, I agree 
with my present and future boss----
    Senator Johanns. That is a good idea.
    [Laughter.]
    Mr. Glaser. But----
    Mr. Cohen. Not always the case, I would add.
    Senator Johanns. Yes, I know.
    Mr. Glaser. I do think it is--I think it is important to 
emphasize that we are using the leverage that CISADA has given 
us and we have seen a dramatic reduction in Iranian access to 
the financial system as a result. The challenge now, as you 
highlight, is to pick out the points where it remains, the 
points that we have not been able to exert adequate leverage, 
the banks that think that they are immune, and target them, and 
that is something that we are committed to doing.
    Senator Johanns. I am running out of time, but let me wrap 
up and just say, this is an example of exactly what I was 
saying with my opening. We passed the law. We want something 
done. You do, too. I am not questioning your desire to be as 
effective as you can. But there is a point at which we mess 
around with these financial institutions, there is a point at 
which it is time to just drop the hammer. And I can almost 
assure you that here in Congress, you are going to get support 
for that effort because we want these laws to be effective. So 
good luck to all of you.
    Chairman Johnson. Senator Bennet?
    Senator Bennet. Thank you, Mr. Chairman, and I would like 
to thank all of the witnesses here today for your willingness 
to serve, and congratulations on the nomination.
    Just to pick up where Senator Johanns left off for a 
second, on the Iranian sanctions, can you give us an 
impression, either of you, of whether there is a geographic 
profile of the 50 or so institutions that you have been most 
worried about, and how--and maybe specifically how some of 
these institutions actually have modified their behavior in a 
way that makes you feel confident that they do not need to be 
sanctioned, they are responding to the law.
    Mr. Cohen. I would say, Senator Bennet, that there is not a 
particular geographic profile other than it is obviously not 
the United States----
    Senator Bennet. Right.
    Mr. Cohen.----and largely not in Europe. ``Largely'' 
probably leaves too much room there. Not in Europe. What we 
have are financial institutions, you know, whether it is in 
Eastern Europe and in the Gulf, in Asia, a variety of 
jurisdictions that have been the focus of our efforts. And what 
has satisfied us, and I will say it is a trust but verify 
approach, is commitments from the financial institutions that 
to the extent that they were engaged in any of the transactions 
that would be sanctionable under CISADA, that they are stopping 
entirely. Obviously, we do not take them just at their word. We 
pursue whatever information we can to assess whether their 
representations are accurate. But that is what the statute 
focuses on is significant transactions with designated Iranian 
institutions, but I think for our purposes, we are looking for 
these banks to completely exit the market.
    Senator Bennet. And to shift to Al Qaeda for a second, 
because you raised it, Mr. Cohen, in, I think, one of your 
answers to the Chairman, I wonder--you had said that you had 
had some success, you think, in interrupting the financial 
networks that supported Al Qaeda, and I wonder if you could 
describe that a little bit to the extent that you can in a 
public hearing, the effect that Osama bin Laden's death might 
have on that financing, if any. And then can you give us a 
sense, either of you, of how overlapping the networks are for 
Al Qaeda, Al Qaeda on the Arabian Peninsula, Hamas, or any 
other terrorist organizations, just an impression of whether 
you are seeing some geographic relationship here.
    Mr. Cohen. The success that we have had with respect to Al 
Qaeda core, to the Al Qaeda leadership in Pakistan, has been 
something that has developed over a number of years and is the 
result of both taking targeted actions against the facilitators 
who were involved in moving money for Government-Qaeda as well 
as very dedicated engagements with counterparts in the Gulf. We 
have been working with governments in the Gulf to identify the 
networks that are where the money is raised and the money is 
moved into Pakistan, and it has really put a fair amount of 
pressure, financial pressure on Al Qaeda. Frankly, some of the 
other actions that the governments, you know, some of the other 
things that we have been doing in Afghanistan and elsewhere has 
also put pressure on Al Qaeda core.
    The death of bin Laden is obviously a tremendously 
important step. I think it will--it takes away a person who 
was, at a minimum, a symbol that was helpful in raising money. 
But I think our assessment is that it is by no means the end of 
the road in terms of going after the financing.
    I will just make one observation on that. Obviously, all 
credit for that action goes to other components of the 
Government. The Treasury Department did not play a role. But 
the reports are that what led us to bin Laden was a 
facilitator, an information facilitator. What we do in large 
part is go after financial facilitators and use that leverage 
as a way to go after the senior leadership and the 
organizations themselves, and I think it does point up to some 
extent the value of the approach that we pursue, which is to 
sort of, much like a law enforcement agency builds its case by 
going after the low-level people and building its way up, we go 
after the networks and the facilitators in the networks and 
that has been quite effective in disrupting the financing for 
these organizations.
    The question about overlapping networks, you know, there 
are overlapping networks and success with respect to Al Qaeda 
core does to some extent yield some success with the other 
organizations. But it is also the case that over the last 
several years, we have seen this franchising of the Al Qaeda 
network so you have Al Qaeda in the Arabian Peninsula, you have 
Al Qaeda in the Islamic Maghreb, you have Shabaab in Somalia. 
They also have independent sources of financing and our efforts 
to disrupt Al Qaeda core have some impact, but clearly not 
complete impact on those other entities. So we need to, you 
know, for each one of those and other terrorist groups, we need 
to apply the same theory but different tools--but different 
specific application.
    Chairman Johnson. Senator Hagan?
    Senator Bennet. Thank you.
    Senator Hagan. Thank you, Mr. Chairman.
    Sort of following up on Senator Bennet's question, Mr. 
Glaser, in your testimony you stated that you would lead the 
Office of Terrorist Financing and Financial Crimes in 
developing innovative approaches to undermining illicit finance 
and strengthening our national security. What do you see as the 
most imminent threats in this area? And what are some of the 
innovative approaches that you would advocate?
    Mr. Glaser. Thank you, Senator, for the question. I think 
the challenges that we face, I think the targets that are out 
there that are imminent, are the ones that we have been focused 
on around North Korea, terrorist groups, organized crime 
groups, WMD proliferators.
    There are emerging issues. I made reference in my opening 
statement as well to recent developments in the Middle East, 
and within the last month or so, the Treasury Department has 
been quite active in applying financial pressure, just last 
week, when President Obama announced the new Executive order 
with respect to Syria. So there is a whole range of challenges 
that we have; there is a whole range of international security 
problems that we face.
    When I talk about innovative solutions to those problems, 
what I really have in mind is, again, what I think TFI, the 
Office of Terrorism and Financial Intelligence, as a whole 
brings to the table in all of this, which is our ability to 
come at it from the perspective of a finance ministry, to look 
systemically at the way these financial networks operate and 
then think creatively about what sort of tools do we have to 
disrupt those networks.
    In my testimony already today, I think I pointed to two of 
the recent, again, innovative approaches that we have taken. 
Again, I could point to the recent action we took under Section 
311 of the PATRIOT Act with respect to Lebanese Canadian Bank, 
a bank that stood at the center of a global narcotics and 
money-laundering network, again, with ties to Hezbollah, 
allowing us to use authority to disrupt a network, to initiate 
a process within the Lebanese Government to strengthen their 
own money-laundering and financial crimes regulations, and to 
demonstrate the links that all of these illicit activities have 
with Hezbollah. I thought that was a very creative use of our 
authority and a very effective use of our authority.
    I think we would like to see--we would like to do more of 
that, and I think we will do more of that as we move forward.
    Senator Hagan. When you commented on weapons of mass 
destruction, in this setting can you go over that in a little 
bit more detail from the proliferation?
    Mr. Glaser. Well, sure. I would put our actions in sort of 
two broad categories. The first set of initiatives that I would 
highlight would be our overall efforts with respect to North 
Korea and around putting wide financial pressure on those 
countries, and that is something that we have been doing for 
years now. What we do in that regard is, again, marshal all of 
our tools, so unilateral sanctions under Executive Order 13382, 
which is the Executive order specific to WMD proliferation; 
working on multilateralizing these efforts through 
organizations like the Financial Action Task Force, U.N. 
Security Council resolutions; and then importantly, as 
important as anything else, working with the private sector to 
encourage financial institutions around the world to have very, 
very robust implementation of these obligations. And the goal 
is to create a dynamic within the financial system that tends 
to isolate these regimes, either as a matter of international 
law, as a matter of domestic law, or as a matter of 
international practice. And I think that we have had a lot of 
success on that.
    Senator Hagan. Thank you.
    Mr. Mulvaney and Ms. Felton, Congress has enacted 
legislation to restrict the Export-Import Bank from making 
loans or providing guarantees in relation to certain projects 
or companies that conduct prohibited business in or with Iran. 
If confirmed, will you ensure the Export-Import Bank strictly 
adhere to congressional restrictions on the provisions of funds 
related to Iran?
    Ms. Felton. Senator, yes. I believe, first of all, that the 
Export-Import Bank takes the sanctions against Iran very 
seriously, and if confirmed, I would make sure that every 
transaction that came before the Board during my tenure is 
compliant.
    Mr. Mulvaney. Let me also say that, if confirmed, I would 
follow the law as well. The Ex-Im Bank does not conduct foreign 
policy. It follows the foreign policy set by the President and 
directives from Congress.
    Senator Hagan. Thank you, Mr. Chairman.
    Chairman Johnson. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Cohen, you just recently returned from Turkey, as I 
understand, where I also understand--and correct me if I am 
wrong--you pressed the Erdogan government on Turkey's financial 
ties to Iran. And for me, it is pretty clear that Iran has 
turned to Turkey to conduct illicit financial transactions in 
support of its nuclear program, and that it is actively seeking 
to establish new financial mechanisms in Turkey to bypass and 
evade U.S. and other international sanctions and gain access to 
European markets.
    What was the Turkish Government's response to your 
concerns? And--well, let me hear the answer to that first.
    Mr. Cohen. Senator Menendez, I was just in Turkey last week 
raising the concerns that you just articulated. We have seen, I 
think, two trends recently in Turkey. We have seen the 
Government at the highest levels talking up interaction with 
Iran and expanded trade with Iran and, with that, naturally 
expanded financial relationships. We have also seen, on the 
other hand, the financial sector in Iran--in Turkey, rather, 
being much more cautious. It is in part the effect of CISADA 
that I was addressing with Senator Johanns earlier, and in part 
their recognition that if they want to be part of the 
international financial system, they are much better off 
isolating Iran.
    My trip to Turkey was focused on raising the question with 
the Government of the extent to which their rhetoric is 
conflicting with the full compliance with their U.N. Security 
Council obligations and, more generally, dissonant with the 
international community's efforts to apply maximum pressure on 
Iran. The reaction that I got was, you know, first of all, the 
Turkish Government reaffirming strongly their opposition to the 
development of a nuclear program in Iran, an acknowledgment, I 
would say, of the importance of the international sanctions 
regime; and, you know, a hearty discussion about the place of 
Turkey both geographically and as a leader in the region, and 
their desire to expand their economy, not just with Iran but 
expand their economy generally.
    Senator Menendez. So let me ask you this, though--I 
appreciate that. But as I understand it, there are certain 
Turkish financial institutions that are currently doing 
business with a designated Iranian bank. Are we ready to 
sanction them?
    Mr. Cohen. Senator, as a matter of longstanding Treasury 
policy, we cannot comment on any particular action that we may 
take. I will say, though, that----
    Senator Menendez. Are we ready to generically sanction 
those that, notwithstanding our overtures, are still doing 
transactions in violation of CISADA?
    Mr. Cohen. Well, that is----
    Senator Menendez. I voted for you in the Finance Committee 
because I wanted to move your nomination along. But I want 
someone who is going to vigorously pursue the law, and so I am 
trying to get a sense from you whether you are going to 
vigorously pursue the law, or are we just going to have a 
sanctions law that ultimately is sitting out there unenforced 
or enforced with low-level participants instead of being 
enforced when there is a significant entity?
    Mr. Cohen. Absolutely, Senator, and we are committed to 
enforcing the law. And just as you say, generically, if we have 
a financial institution that is not responsive to our overtures 
and is engaged in activity that is sanctionable under CISADA, 
we will pursue that very vigorously.
    Senator Menendez. Let me ask you this: It is no secret that 
while China eventually supported U.N. sanctions on Iran, it did 
so reluctantly, and only after it succeeded in significantly 
watering down the sanctions. Iran continues to use Chinese 
companies to procure hardware for its nuclear and missile 
programs, and Chinese companies continue to invest in Iran's 
energy sector.
    So what financial tools does the United States have to 
press China to reduce that relationship with Iran? And why has 
the United States been willing to confront China on trade 
issues, but then unwilling to sanction Chinese banks or energy 
companies for dealing with Iran?
    Mr. Cohen. Well, with respect to the energy aspects, that 
aspect of CISADA, as you know, is implemented by our colleagues 
at the State Department, and they have been pursuing those 
issues. You know, for the Treasury Department I can say that 
there is no country that is exempt from the application of 
CISADA. We have both CISADA tools as well as other tools that 
can be brought to bear in the appropriate circumstance to 
address whether it is Chinese financial institutions or other 
Chinese businesses that may be supporting the Iranian 
proliferation activity.
    We have in the past used those tools, and, you know, I can 
assure you that in the event that we have a good case, we will 
proceed.
    Senator Menendez. Mr. Chairman, I hope, I would urge the 
Chair--I know you have a busy agenda, but at some point to hold 
hearings on the sanctions legislation that we have passed and 
its enforcement. I am seriously concerned, as one of the prime 
movers of that legislation, that a sanctions regime that 
ultimately goes largely unenforced or to low-level players 
sends a message of a toothless tiger. And to the extent that 
Congress had a real intention to see entities sanctioned that, 
in fact, were violating the law, I am concerned that we are 
just not seeing that type of action. So I know you have a very 
busy agenda. I would just urge you at some point to consider 
including that.
    I have a series of other questions for all of these 
witnesses, and I look forward to your answers. Your answers are 
going to, you know, color my decision as to how I vote.
    Chairman Johnson. Mr. Cohen, I gather that the Iranian 
government has been working to craft ways to get around current 
international sanctions. What are the primary ways that you are 
focused on now to combat such efforts by the government of Iran 
to circumvent U.S., U.N., and EU sanctions? What are we doing 
to counter their efforts? Is there anything more we should be 
considering to make those efforts more effective? For example, 
do we need to address by statute the sophisticated barter 
arrangements into which they have reportedly entered to support 
certain transactions? Or can that already be used using CISADA?
    Mr. Cohen. Mr. Chairman, we are very much focused on 
Iranian efforts to develop alternative financial arrangements 
to the financial ties that they had previously. So we are alert 
to efforts of Iran to find banks in jurisdictions where they 
had previously not been present that will do business with 
them. We are alert to efforts by Iran to expand transactional 
activity with the branches of Iranian banks that they have 
overseas.
    To follow up on an earlier answer to Senator Menendez, one 
of the issues that I addresses in Turkey was the existence in 
Turkey of branches of Bank Mellat. That is a concern that we 
have that Iran will use its branches of its state-owned banks 
in Turkey and in several other countries where these branches 
exist to compensate for their lack of access to other financial 
institutions. So we are staying alert to any efforts by Iran to 
develop alternative access to the financial system.
    With respect to barter arrangements, that is also something 
that is on our radar screen and that we are focused on. We are 
happy to work with you and your colleagues on the question of 
whether additional legislative tools might be necessary to 
address those issues. I am not certain that it is, but we are 
very happy to engage in that effort.
    Chairman Johnson. Ms. Felton and Mr. Mulvaney, in large 
part due to the economic crisis, the Ex-Im Bank has seen a 70-
percent increase in its authorized transactions over the last 2 
years. As the economy continues to recover, how do you think 
the Ex-Im Bank will be affected?
    Ms. Felton. Senator, as I stated in my opening comments, I 
believe that the Ex-Im Bank plays a vital role in helping to 
ensure and promote American competitiveness in international 
markets as well as promoting job growth in this country and 
stimulating the economy. I believe that that is a long-term 
strategic goal that should not be abandoned in any market 
conditions. Going forward, as the economy improves, the Ex-Im 
Bank can continue to make a very important contribution to 
American exporters. I believe that this country has not--let me 
state it differently, had had the luxury of not paying much 
attention to international markets because of the size of our 
domestic market. But going forward, what we are seeing is that 
many, many countries that are substantially less developed than 
the United States are actively pursuing exporting as a strategy 
to grow their economies, and that if the United States is to 
prosper, it has to continue to promote exports.
    Chairman Johnson. Mr. Mulvaney.
    Mr. Mulvaney. Thank you, Mr. Chairman, for the question. I 
interpreted your question as kind of eliciting a discussion of 
some of the key challenges that the Ex-Im Bank faces. One of 
the impressions that I had initially in interacting with the 
Bank staff, which is only about 400 full-time equivalent 
positions, is the enormous level of authorizations the Bank has 
done in the wake of the economic crisis while its staff size 
has remained the same and its admin budget has only increased 
about 8 percent. So I have appreciated that the staff is 
actually accomplishing a lot more with less, with the same 
amount of resources. This has created a little bit of stress on 
the personnel and systems of the institution, and I am 
committed to going to the Bank, if confirmed, and helping the 
Bank through this challenge.
    Another challenge I would frame is the growing competition 
in the global economy and the role that Ex-Im Bank can play in 
helping U.S. exporters and supporting U.S. jobs in that 
competition. When you look at the export credit activity of 
other ECAs around the world, countries like Japan do $130 
billion worth of export credit business, and according to some 
private sector estimates, China has done about $300 billion. It 
puts in perspective the competition that American exporters 
face around the world.
    Chairman Johnson. Thank you, Mr. Mulvaney.
    I thank the witnesses for your testimony and for your 
willingness to serve our Nation. We are going to submit 
questions for the record to you by 12 noon this Friday, May 
6th. Please submit your answers to us by the close of business 
Monday, May 9, so that we can move your nominations in a timely 
manner.
    This hearing is adjourned.
    [Whereupon, at 11:32 a.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]
                  PREPARED STATEMENT OF DAVID S. COHEN
     Nominee for Under Secretary for Terrorism and Financial Crimes
                       Department of the Treasury
                              May 3, 2011
    Chairman Johnson, Ranking Member Shelby, and distinguished Members 
of this Committee: Thank you for the opportunity to appear before you 
today. It is an honor to be the nominee to serve as Under Secretary for 
Terrorism and Financial Crimes. I want to thank President Obama for the 
confidence he has shown in me by nominating me, and Secretary Geithner 
for recommending me, to serve in this position. Having served for the 
past 2 years as the Assistant Secretary of Treasury for Terrorist 
Financing, I am keenly aware of the very significant responsibilities 
assigned to the Under Secretary for Terrorism and Financial Crimes, as 
well as the consequential contributions that the Under Secretary can 
make in advancing our Nation's security.
    Illicit finance, in its many forms, is a threat to the integrity of 
our financial system, both domestically and internationally. Combating 
illicit finance not only protects our financial system from abuse by 
money launderers, terrorist financiers, weapons proliferators and 
others engaged in financial crime, but it helps to advance our most 
critical foreign policy and national security objectives. The many 
tools that the Treasury Department can deploy--ranging from anti-money 
laundering regulatory oversight, to outreach to counterparts overseas, 
to deploying targeted financial measures focused on particular 
individuals and entities--play an integral role in responding to many 
of the challenges we face. Treasury's unique capacity to understand 
financial flows and the operation of the financial system, analyze 
financial intelligence, map financial and material support networks, 
and take targeted, powerful actions are key to meeting these 
challenges.
    I believe that my professional experience, particularly serving as 
Assistant Secretary for Terrorist Financing since May 2009, has 
prepared me well to undertake the responsibilities of Under Secretary.
    As Assistant Secretary, I have had the opportunity to work very 
closely with the previous Under Secretary, participating in almost all 
aspects of the work of the Office of Terrorism and Financial 
Intelligence (TFI). This has included coordinating closely with my 
colleagues in each of the components of TFI--the Office of Intelligence 
and Analysis, the Office of Foreign Assets Control, the Financial 
Crimes Enforcement Network, and the Treasury Executive Office for Asset 
Forfeiture.
    In my capacity as Assistant Secretary, I have had the chance to 
work on many of the issues in TFI, but I have focused most intently on 
several key issues: First, our use of targeted financial sanctions, as 
well as outreach to the private sector and foreign governments, to 
increase pressure on the government of Iran for its continued refusal 
to live up to its international non-proliferation obligations; second, 
and relatedly, our efforts to financially isolate and apply pressure on 
the North Korea regime for its continued provocative conduct; third, 
our efforts to combat the financing of terrorism, especially financial 
support for Al Qaeda, the Taliban, and other violent extremist groups 
in South Asia; and finally, the effort to ensure that information about 
the true beneficial owners of corporations is available to State and 
Federal law enforcement and regulators pursuing money laundering and 
terrorist financing investigations.
    Prior to serving as Assistant Secretary, I was an attorney for 
close to 20 years, in both private practice and in Government. In 
private practice, I represented institutions and individuals in complex 
financial investigations and litigation, and counseled clients on their 
obligations to comply with Treasury's anti-money laundering and 
economic sanctions laws and regulations. From late-1999 to mid-2001, I 
served in the Treasury's General Counsel's office, focusing much of my 
attention on anti-money laundering law and policy.
    If confirmed, I look forward to working closely with you, as the 
Treasury Department continues to implement the President's priorities 
for safeguarding our financial system from illicit finance. The variety 
and intensity of these challenges are well known to this Committee. 
Effectively addressing them requires great vigilance and constant 
innovation. I would welcome the opportunity to serve our great Nation 
by taking on these challenges as the leader of Treasury's critical work 
to fight illicit finance.
    In closing, I want to thank the Committee for the attention it has 
given to my nomination. If confirmed, I intend to work closely with 
you, Mr. Chairman, the other Members of this Committee and your staff 
to pursue our shared objective of protecting national security and the 
integrity of the financial system. I am deeply committed to maintaining 
the very productive and close relationship that exists between this 
Committee and the Office that I have been nominated to lead.
    Mr. Chairman, I would be pleased to respond to any questions that 
you or Members of the Committee may have.
                                 ______
                                 
                 PREPARED STATEMENT OF DANIEL L. GLASER
        Nominee for Assistant Secretary for Terrorist Financing
                       Department of the Treasury
                              May 3, 2011
    Chairman Johnson, Ranking Member Shelby, and distinguished Members 
of this Committee: Thank you for the opportunity to appear before you 
today. It is a tremendous personal and professional honor to have been 
nominated for the position of Assistant Secretary of the Treasury for 
Terrorist Financing. I would like to thank President Obama for the 
confidence he has shown in me by nominating me, and Secretary Geithner 
for recommending me, for this important position. If confirmed, I will 
certainly work my hardest to meet their high expectations.
    I know time is short, but if you permit me, Mr. Chairman, I would 
like to introduce the members of my family who are here today--my 
parents, Gary and Lillian Glaser, my wonderful wife Laura, and our son 
Ethan. Their love and support over the years have been indispensable, 
and are an important part of why I am able to sit before you today.
    Mr. Chairman, over the course of my career I have served in the 
area of illicit finance under six Secretaries of the Treasury across 
three Presidential Administrations. My positions have included serving 
as an attorney in the U.S. Secret Service Chief Counsel's Office, 
Senior Counselor for Financial Crimes within the Treasury Department's 
Office of General Counsel, Director of the Money Laundering and 
Financial Crimes Section within Treasury's Office of Enforcement, 
Director of Treasury's Executive Office for Terrorist Financing and 
Financial Crimes, and since 2004, Deputy Assistant Secretary for 
Terrorist Financing and Financial Crimes within Treasury's Office of 
Terrorism and Financial Intelligence. Additionally, I have served, 
since September 2001, as the head of the U.S. Delegation to the 
Financial Action Task Force--the premier international body that sets 
anti-money laundering and counter-terrorist financing standards and 
works for their global adoption and implementation. I believe this 
experience has left me well prepared to take on this new position.
    Over the course of these years, I am proud to have been part of the 
team that has built something new and unique at the Treasury 
Department--a finance ministry with a central role in the development 
and implementation of national security policy. This evolution began in 
the late 1990s with Treasury's leading role in the development of the 
first National Money Laundering Strategies, and culminated in March 
2004 with the creation of the Office of Terrorism and Financial 
Intelligence (TFI). TFI brings together a broad and diverse range of 
Treasury's authorities and expertise for two goals: protecting the U.S. 
and international financial systems from abuse, and identifying, 
disrupting, and dismantling the financial networks that support 
terrorist groups, organized crime, weapons proliferators, and countries 
that threaten the national security of the United States. This new 
approach has been successful. We have made it harder for terrorist 
groups to raise and move funds, disrupted the financial networks that 
support drug trafficking organizations, and applied substantial 
financial pressure on regimes such as Iran and North Korea, while at 
the same time making it more difficult for them to acquire the material 
necessary to develop their nuclear programs.
    As the central policy office within TFI, the Office of Terrorist 
Financing and Financial Crimes (TFFC) works to develop and implement 
strategies, and engages with multilateral bodies, foreign government 
counterparts and private sector colleagues, to achieve all of these 
objectives. If confirmed, I will lead TFFC in continuing to develop 
innovative approaches to undermining illicit finance and strengthening 
our national security. Challenges abound. From Iran's and North Korea's 
nuclear programs and other illicit activities, to drug trafficking and 
criminal organizations in the Western Hemisphere and Eastern Europe, to 
global terrorist organizations such as Al Qaeda and Hamas, to the new 
challenges posed by recent developments in the Middle East--never has 
it been more important to strategically and effectively marshal our 
financial tools and those of our allies in support of international 
security.
    In closing, I would like to thank the Committee for its time and 
consideration. If confirmed, I pledge to work closely with you, Mr. 
Chairman, and other Members of the Committee and your staff to advance 
our collective goal of combating illicit finance and protecting 
America. It is my immense honor to sit here before you today and I 
would be happy to respond to any questions you or other Members of the 
Committee may have.
                                 ______
                                 
                PREPARED STATEMENT OF TIMOTHY G. MASSAD
        Nominee for Assistant Secretary for Financial Stability
                       Department of the Treasury
                              May 3, 2011
    Chairman Johnson, Ranking Member Shelby, and Members of the 
Committee, thank you for the opportunity to appear before you today. I 
am honored that President Obama has nominated me for this position, and 
I am deeply grateful to Secretary Geithner for his confidence in me.
    I would like to introduce my wife Charlotte. Her love and support 
have always been critical to me. And I want to thank her in particular 
for all she has done to support me in my work for the Department of the 
Treasury.
    Over the last 2 years, it has been my privilege to be a part of the 
Treasury team. I joined in May 2009 as Chief Counsel for the Troubled 
Asset Relief Program, and I had the honor of working closely with 
former Assistant Secretary Herb Allison, who set an outstanding example 
for us all. When Mr. Allison decided to return to retirement in 
September of 2010, Secretary Geithner asked me to serve as Acting 
Assistant Secretary.
    I was born in Louisiana, and lived in Texas, Oklahoma, and 
Connecticut as a child. All of my grandparents were immigrants who came 
to this country as teenagers, barely able to speak English and with 
nothing more than a suitcase. My parents grew up during the Great 
Depression. Their families struggled to make ends meet. My parents 
worked hard and provided my siblings and me with many opportunities, 
and I have been very fortunate as a result.
    I often think of the stories my parents told about life during the 
Great Depression, because this financial crisis has caused many 
American families to suffer on a scale not seen since that time. As a 
result of this crisis, millions of people have lost their jobs. Many 
have lost or are still in danger of losing their homes. Many small 
businesses have collapsed. Many families have lost their retirement 
savings, and many young people have had to postpone college plans. We 
must never forget that this human suffering is the true cost of the 
financial crisis.
    Congress passed the Troubled Asset Relief Program, or TARP, in the 
midst of this terrible crisis in order to stabilize our financial 
system. Of course, TARP could not avert or repair all the damage caused 
by this crisis. However, I strongly believe that without TARP, the 
suffering would have been much, much worse. While no one liked using 
taxpayer funds to rescue financial institutions, I believe that TARP--
along with the other actions our Government took--helped prevent a 
catastrophic collapse of our financial system.
    Today, our financial system and our economy are much stronger. And 
important work remains for TARP. First, we must exit our remaining 
investments in banks and other companies. We have already recovered \2/
3\ of what was invested, and our economy and our financial system will 
be stronger if the Government gets out of the business of owning 
interests in private companies. Second, we must continue to implement 
and improve our programs to help American families stay in their homes 
and avoid foreclosure. And third, we must do both of these tasks in a 
manner that protects taxpayer interests and ensures accountability.
    In particular, I want to emphasize the importance of accountability 
and transparency. This program must meet the highest standards. Before 
joining Treasury, I helped the Congressional Oversight Panel get 
started. I served as their first special legal advisor on a voluntary 
basis, and helped write one of their first reports. If confirmed, I 
will continue to work closely with the Special Inspector General for 
TARP, the Government Accountability Office, the Financial Stability 
Oversight Board, as well as this Committee and other Committees of 
Congress to ensure that the TARP program meets those high standards.
    It has been the greatest professional honor of my life to serve my 
country during this difficult time. I have been fortunate to lead an 
extremely talented and dedicated team at the Office of Financial 
Stability I look forward to continuing this work should the Senate 
choose to confirm me.
    Thank you, Chairman Johnson and Ranking Member Shelby for this 
opportunity. I look forward to your questions.
                                 ______
                                 
                   PREPARED STATEMENT OF WANDA FELTON
            Nominee for First Vice President and Vice Chair
                Export-Import Bank of the United States
                              May 3, 2011
    Chairman Johnson, Senator Shelby, and distinguished Members of the 
Committee, I am honored to appear before you today as a nominee for the 
position of First Vice President and Vice Chair of the Export-Import 
Bank of the United States.
    If I may, I would like to take a moment to acknowledge my husband, 
Mike Owens, and my mother, Maro Lester. They are both in attendance. I 
am also grateful to Ivonia Slade, Lesley Redwine, Grace Speights and my 
cousin, Brandon Felton, for being here.
    To say that I am deeply honored to have the opportunity to serve my 
country in this capacity does not begin to capture my feelings. I am 
awed and humbled. I am especially grateful to have the opportunity to 
serve President Obama.
    Briefly, I have more than 25 years of financial industry 
experience. I began my career as a Loan Officer at Ex-Im Bank. I 
understand and am committed to the Bank's mission. Creating good-paying 
jobs that can sustain the American middle-class and promote the 
competitiveness of U.S. companies overseas, are imperatives in the 
current economy. To my knowledge, Ex-Im Bank is the only lever 
available to our Government to accomplish these goals without burdening 
tax payers. As such, it is a vital tool.
    Moreover, I believe the imperative extends beyond the current 
economic cycle. Maintaining American competitiveness over the long-term 
is a strategic imperative. President Obama has observed that 95 percent 
of the world's customers are outside the United States. I believe that 
American businesses--large and small--must capture a larger share of 
this market so that our country can continue to prosper.
    Under Chairman Hochberg, Ex-Im Bank's activity has increased 
dramatically with the introduction of innovative programs that stretch 
every dollar and leverage every resource the Bank has available to it. 
Ex-Im Bank's support for small businesses is at an all-time high with 
programs that provide outreach, training and financing to help them 
penetrate overseas markets and fill a void left by the banking 
industry. If I am confirmed I will be committed to helping to build on 
this success.
    I believe I bring a skill set that will allow me to make a 
meaningful contribution. My experience in banking gives me the tools to 
perform my primary duty which is to assess the creditworthiness of 
transactions brought before the Board in order to find that there is a 
reasonable assurance of repayment. Should I be confirmed, I will remain 
committed to ensuring that the Bank remains self-sustaining. I see the 
role as fulfilling a fiduciary duty to the American tax payer.
    If confirmed, I also feel well suited to help grow U.S. exports in 
sub-Saharan Africa. I understand this is a congressional mandate and 
believe I can contribute in this area. I have experience working in 
South Africa and Nigeria, two of nine countries which Ex-Im Bank has 
named as primary markets. There is a growing need for services and 
equipment that can support the development of basic infrastructure, 
telecom, transportation and other sectors which American businesses can 
and should supply. I believe that my experience positions me well to 
pursue this mandate.
    For the past 15 years, I have worked on a number of transactions 
involving emerging markets. A main feature of my career has involved 
testing the investment merits and risks of various emerging markets. 
For example, in 1994, I advised CalPERS and New York Common Retirement 
Fund, as they made their first private equity investments in post-
Apartheid South Africa.
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to seek your support for my nomination. I look forward to 
answering any questions you may have for me.
                                 ______
                                 
                  PREPARED STATEMENT OF SEAN MULVANEY
     Nominee for Director, Export-Import Bank of the United States
                              May 3, 2011
     Mr. Chairman, Senator Shelby, other Members of the Committee, 
please allow me to start by expressing deep appreciation for the 
opportunity to appear before you. I am honored to be a candidate for 
the Board of the Export-Import Bank of the United States. I understand 
and recognize the importance of the Committee and this hearing. I would 
also like to thank President Obama for nominating me to this position 
as well as Senator McConnell. If confirmed, I would welcome the 
opportunity to serve.
    I am accompanied here today by my wife, Susan, and daughters, Kate, 
and Rachel. Other members of my family were not able to join me today 
but I am grateful for their love and support, particularly my mother, 
Kathryn, and my late father, James.
    Over the course of my career, I have had several positions that 
have contributed to my candidacy for the position of U.S. Export-Import 
Bank Board member. These positions span the private and public sectors 
and include experiences in management, U.S. trade policy, budget, and 
international affairs. If confirmed, I stand ready to leverage these 
experiences in support of the Bank at this critical time during the on-
going U.S. recovery from the economic crisis.
    Let me express some key commitments and priorities in this hearing.
    First, I would like to express my commitment to the Bank's mission. 
While Ex-Im may be a small and lean agency, its mission is by no means 
insignificant or modest. Last year the bank supported over $34 billion 
of U.S. exports with authorizations of nearly $25 billion. The 
financing support was essential to sustain over 227,000 American jobs 
at more than 3,300 companies. Since my nomination, I have had a few 
opportunities to interact with the Bank's career staff. In these 
initial meetings, I have quickly appreciated the Bank's professionalism 
and clear sense of purpose that emanate from its employees. If 
confirmed, I would be honored to work with Chairman Hochberg and the 
rest of the organization.
    Second, I am committed to the Ex-Im Bank's strong relationship with 
the legislative branch. The Bank has earned the trust and confidence of 
this Committee and the Congress. Even though the Bank's operations are 
self-sustaining, the Bank extends the full faith and credit of the 
United States as it supports U.S. exports and jobs. It is important 
that this trust and confidence be preserved in the years ahead, 
particularly as the Bank seeks reauthorization.
    Third, I am committed to the Bank's partnership with other Federal 
agencies. The Bank plays a vital complementary role to the programming 
of organizations like OPIC, TDA, USTR, the SBA, and the Department of 
Commerce. Together, the Bank and the agencies enable greater U.S. 
economic engagement in the global economy so that the United States can 
secure growth, job creation, and prosperity.
    If confirmed, I would hope to work with Chairman Hochberg and bank 
staff on a couple of key areas.
    First, the Bank has developed a strategic plan for 2010 that 
includes a number of priorities, including expanding awareness of Ex-Im 
Bank services through increased outreach and partnerships, increasing 
the number of small- and medium-sized business using Bank services, and 
targeting business development in emerging markets with high potential 
for U.S. export growth. A key statistic I have come to appreciate in 
this nomination process is the fact that over 20 percent of the dollar 
value of Bank activities are to the benefit of small business and 85 
percent of its transaction volume.
    Second, I firmly believe in the practice of measuring for results. 
I would consider it an important part of my job to understand and 
improve Bank metrics that give stakeholders a sense of its performance 
over time, particularly mitigating risk in its operations to the U.S. 
taxpayer. Again, I appreciate the opportunity to be here today and look 
forward to answering any questions the Committee may have.
    Thank you.
RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN JOHNSON FROM DAVIS S. 
                             COHEN

Iran
Q.1. You indicated in the hearing that you believed the 
Treasury Department was ``close to a decision point'' in making 
certain CISADA-related determinations regarding designations 
for certain banks. I know various factors inform that 
decisionmaking process, but in general do you expect those 
decisions to be made in the next month, the next 3-6 months, or 
later than that?

A.1. While there are always uncontrollable and unexpected 
factors that affect the timing of our work, we expect to reach 
a decision on several open CISADA-related investigations within 
the next month or so.

Q.2. You indicated in the hearing, in response to my question 
about sophisticated barter arrangements being used by the 
government of Iran to circumvent sanctions on its energy 
industry, that TFI is aware of and monitoring this activity. 
Can you describe in greater detail how these barter 
arrangements are structured, and how you might be able to 
address their use by the Iranian government to circumvent 
sanctions under current law?

A.2. Treasury is aware that Iran is using a number of means to 
circumvent sanctions, including bartering arrangements in which 
it sells oil in exchange for goods in order to avoid accessing 
the formal financial sector. We assess that Iran is forced to 
turn to such mechanisms because it is increasingly isolated 
from the financial sector as a result of international 
financial sanctions. Treasury has been aggressive in exposing 
and publicizing Iran's efforts to evade sanctions, and remains 
committed to taking action in response to activity that 
implicates existing U.S. or international sanctions against 
Iran. We are studying whether current law adequately addresses 
Iran's use of barter arrangements, and if confirmed I look 
forward to working with you and your colleagues in ensuring 
that U.S. law appropriately addresses this emerging issue.

Q.3. Since assessing internal bank activity, including 
correspondent relationship activity, in the detail required by 
CISADA is a complex undertaking for TFI, do you believe you 
have sufficient intelligence resources, within the Office of 
Intelligence Analysis and elsewhere within the intelligence 
community, to determine what foreign banks are actually doing 
in this area, and to provide information to support strict 
enforcement of the new mandatory financial sanction? If you had 
additional intelligence-related resources, what would you do 
with them?

A.3. For reasons that I am certain you understand, there is a 
limit to what I can say in this setting regarding our 
intelligence resources and capabilities. TFI is fortunate to be 
the only finance ministry in the world with an internal 
intelligence shop, the Office of Intelligence and Analysis 
(OIA), dedicated specifically to the intelligence related to 
following the money and combating illicit finance. I am 
impressed daily by the analysts in OIA. Their work product, as 
well as the intelligence produced by OIA's sister agencies in 
the intelligence community, is used daily by TFI in pursuing 
our work, including implementing CISADA.
    I believe the intelligence resources devoted to supporting 
our policy with respect to Iran, including implementing CISADA, 
are sufficient.
Libya
Q.4. I know the Administration acted quickly and effectively to 
freeze approximately $36 billion in assets of the Qadhafi 
government. What are the Administration's current decision 
rules, to the extent you can describe them, about how and when 
and to whom those funds might eventually be released? What 
standards under current law will you be applying in considering 
whether to seize and release any frozen assets to the Libyan 
opposition? What new legal authorities, if any, might be 
necessary to enable such a release?

A.4. Treasury blocked Libyan government assets within U.S. 
jurisdiction under Executive Order 13566 in order to hold the 
Qadhafi regime accountable for its use of violence against 
unarmed civilians and to protect those assets from 
misappropriation by Colonel Muammar Qadhafi and his associates. 
United Nations Security Council Resolutions 1970 and 1973 
affirm the intention to ensure that assets frozen under 
paragraph 17 of United Nations Security Council Resolution 1970 
are made available, at a later stage, as soon as possible to 
and for the benefit of the people of the Libyan Arab 
Jamahiriya. The Administration has drafted legislation that 
would authorize the President to confiscate assets frozen under 
EO 13566 and to use some or all of those assets to defray costs 
related to providing humanitarian relief to and for the benefit 
of the Libyan people. We have begun consulting with Congress on 
this legislation and are hopeful that we can work together to 
enact it as soon as possible.
Budget: BSA Enforcement
Q.5. The Administration's 2012 budget proposal proposes to 
limit direct access to BSA data to only State coordinators and 
to cancel scores of current direct access agreements with State 
and local law enforcement and regulators, sharply limiting 
their access to this critical data. I have consulted with law 
enforcement and regulatory officials in my State and elsewhere, 
and I believe this would be a serious mistake, and would 
sharply reduce the effectiveness of State and local law 
enforcement and regulatory efforts in this area. Will you work 
with authorizing and appropriations Committees of Congress, and 
internally with the Treasury Department, to reverse this 
proposal, and to ensure full funding to provide continuing 
unfettered direct access to BSA data for State and local 
officials?

A.5. I fully agree that BSA information plays a critical role 
in investigations and proceedings at all levels. I am committed 
to working with you and your colleagues to identify a 
meaningful solution that will provide a continuation of support 
to State and local law enforcement and regulatory agencies.
                                ------                                


 RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM DAVID S. 
                             COHEN

Q.1. In reference to Treasury's proposed rule implementing 
section 104(e) of the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act Act of 2010 (``CISADA''), 
what performance measures is the Office of Terrorism and 
Financial Intelligence (``TFI'') contemplating using to satisfy 
its congressional oversight obligation?

A.1. We will use Performance Measure #1, ``Impact of TFI's 
Programs and Activities,'' included in the Department of the 
Treasury's Fiscal Year 2010 Annual Performance Report, which 
measures TFI's impact as an organization through its sanctions, 
law enforcement, intelligence, regulatory and diplomatic 
programs to reduce threats to U.S. national security. In doing 
so, we will ensure that Congress is kept apprised of 
developments pursuant to the implementation of this regulation. 
In addition, if desired, we will keep the Committee apprised of 
when requests for information pursuant to the rule implementing 
section 104(e) are sent to U.S. banks, including the number of 
U.S. banks that receive a request and the number of foreign 
banks that are the subjects of the request.

Q.2.-1. In reference to CISADA and its implementation, 
generally, how does Treasury interpret and execute the various 
clauses to ``consult with the Secretary of State?''
    More specifically, how are conflicts of policy and 
intention to sanction a proven illicit financial entity 
resolved?

Q.2.-2. What conflicts of policy exist in the sanctioning of a 
proven illicit financial institution?

Q.2.-3. Can you provide an example of where a conflict of 
policy prevented a proven CISADA violator from being 
sanctioned?

A.2.1.-3. The Treasury Department has been in close contact 
with the State Department throughout our CISADA implementation 
efforts. Treasury and State have coordinated various outreach 
events, shared information about activities of concern, and 
utilized the combined resources available in our Embassies 
abroad to engage with foreign counterparts.
    Treasury interprets and executes the clause in CISADA that 
requires the Secretary of the Treasury to ``consult with'' the 
Secretary of State in the same way as similar clauses are 
interpreted in Executive Orders, including E.O. 13224 
(terrorism) and E.O. 13382 (WMD proliferation)--that is, we 
engage with our colleagues at State (as well as our colleagues 
in other Departments and agencies as appropriate) on an ongoing 
and collaborative basis. As in many contexts, Executive 
agencies discuss their perspectives and elevate as appropriate 
to achieve resolution. As required by CISADA, Treasury consults 
with State in taking steps with respect to the financial 
provisions of CISADA. I am not aware of any circumstance in 
which a conflict in policy has prevented sanctions from being 
imposed on an entity engaged in activities that are 
sanctionable under CISADA.

Q.3.-1. The Financial Crimes Enforcement Network (``FinCEN'') 
can be said to be the public face of the Office of Terrorism 
and Financial Intelligence (TFI). It works directly with 
financial institutions, international, Federal, State, and 
local law enforcement, and banking regulators, all in attempt 
to be one step ahead of illicit actors intent on using our 
banks to launder money or finance terror.
    TFI now has a number of new regulatory initiatives in the 
FinCEN pipeline, and some of them will bring entire new 
industries under the purview of the Bank Secrecy Act (``Bank 
Secrecy Act'') for the first time.
    How have the roles and responsibilities of FinCEN been 
changed or strengthened since the formation of TFI?

A.3.-1. The growth of FinCEN's responsibilities is commensurate 
with the expansion of covered financial institutions subject to 
the BSA, and with the increased focus on the financial 
component of criminal investigations by law enforcement and 
FinCEN's Financial Intelligence Unit counterparts globally. As 
an integral part of TFI, FinCEN is also involved in our overall 
efforts to effectively apply our sanctions and other 
authorities, as well as engagement with foreign counterparts on 
systemic illicit finance issues.

Q.3.-2. Are current staffing and funding levels sufficient to 
maintain these new programs, without instituting cuts in other 
areas of FinCEN's work, or are they lacking?

A.3.-2. I believe that FinCEN's current staff and funding 
levels are sufficient to maintain these programs.

Q.3.-3. Will you ensure this Committee that Treasury will 
preserve the State and local law enforcement BSA direct access 
agreements, from either being curtailed or eliminated?

A.3.-3. I am committed to working with you and your colleagues 
to identify a meaningful solution that will provide a 
continuation of support to State and local law enforcement and 
regulatory agencies so that critical law enforcement functions 
are not impaired.

Q.4.-1. The central role that offshore correspondent accounts 
and shell companies may play in illicit financing cannot be 
underestimated.
    Can you assure this Committee that it will be consulted, 
briefed, and included on any efforts to reform the laws of 
limited liability companies as they pertain to the jurisdiction 
of this Committee?

A.4.-1. Yes, Treasury will continue to work with the Members of 
this Committee on this priority of the Treasury Department.

Q.4.-2. Is Treasury actively engaged right now on any such 
efforts?

A.4.-2. We continue to be engaged in efforts to address the 
issue of disclosure of the beneficial owners of limited 
liability companies. We have had conversations with the 
Congress on legislation in this area, and have prepared our own 
legislative proposal in an effort to find a meaningful solution 
to this vulnerability.
                                ------                                


RESPONSE TO WRITTEN QUESTIONS OF SENATOR SCHUMER FROM DAVID S. 
                             COHEN

Q.1. More than 10 months after Congress enacted new Iran 
sanctions, no foreign, non-Iranian, bank has been sanctioned by 
this Administration pursuant to the requirements of the 
Comprehensive Iran Sanctions, Accountability, and Divestment 
Act of 2010. If confirmed--do you plan to shift course and 
immediately sanction a non-Iranian bank(s) as the sanctions law 
gives you the power do?

A.1. The Comprehensive Iran Sanctions, Accountability, and 
Divestment Act of 2010 (CISADA) has been an enormously 
effective tool in achieving the law's key objective--to 
increase Iran's isolation from the international financial 
system. Since the enactment of CISADA on July 1, 2010, and the 
publication of the Iranian Financial Sanctions Regulations on 
August 16, 2010, Treasury has been engaged in an aggressive 
campaign, involving dozens of foreign countries and scores of 
financial institutions, to explain the choice put to foreign 
financial institutions by CISADA between continued access to 
the U.S. financial system or continued involvement with Iran's 
proliferation efforts, its support for terrorism, and 
sanctioned Iranian-linked parties such as U.S.-designated banks 
and the Islamic Revolutionary Guard Corps. The response to 
Treasury's outreach has been very positive, and the great 
majority of financial institutions with which we have engaged 
have chosen to close their correspondent accounts with U.S.-
designated, Iranian-linked financial institutions, thus closing 
off avenues that Iran's designated banks had relied upon to 
engage in financial activities. Nonetheless, Treasury has 
concerns that a limited number of financial institutions may be 
continuing to engage in activities that could result in a 
finding under CISADA. We are actively investigating those 
situations, and are moving toward closure within the next month 
or so.

Q.2. Treasury has also failed to impose any specific sanctions 
against Bank Markazi (Iran's Central Bank) which, according to 
a February 25, 2008, Wall Street Journal story, is helping 
other Iranian banks circumvent the U.S. and U.N. banking 
pressure. Are you able to explain Treasury's failure to 
sanction Iran's Central Bank? And, if confirmed, would you take 
immediate steps to finally sanction Bank Markazi?

A.2. The activities of the Central Bank of Iran (CBI) have 
been, and continue to be, a focus of the Treasury Department. 
Treasury has noted previously that the CBI and Iranian 
commercial banks have requested that their names be removed 
from international payment messages to make it more difficult 
for intermediary financial institutions to determine the true 
parties to the transaction, and we remain concerned that the 
CBI may be facilitating transactions for sanctioned Iranian 
banks.
    While the CBI has not been designated under our 
proliferation authorities, under the Iranian Transactions 
Regulations U.S. financial institutions are prohibited, with 
only limited exceptions, from doing business directly or 
indirectly with all Iranian banks, including the CBI. As 
highlighted in UNSCR 1929, we remain vigilant over the 
activities of the CBI and other Iranian financial institutions, 
and the United States will continue to highlight its concerns 
with foreign governments and the private sector. We have been 
diligent in exposing and publicizing Iran's deceptive 
practices, as a result of which many in the private sector--
unable to distinguish between Iran's legitimate and illicit 
transactions--have become increasingly wary of engaging in any 
business with Iran, including business with the CBI.
Financial Crimes Enforcement Network
Mr. Cohen, I understand that the Department of Treasury has 
submitted a budget to Congress that would cut direct local and 
State access to the Bank Secrecy Act database. Doing this would 
save about $1.3 million in your budget. While I fully 
appreciate and take seriously the need to save money, I am very 
concerned that this measure would be penny-wise and pound-
foolish. In fact, I wrote to my colleagues on the 
appropriations committee to ask them to restore full funding 
for access to the BSA database in the FY 2012 budget.
    Here are my questions for you:

Q.3.-1. In 2009, the GAO issued a report in which 16 out of 20 
law enforcement agencies said that direct access to the BSA 
database was the most useful part of FinCEN's services. Do you 
agree that the BSA database is a major force multiplier that 
has no substitute at the State or Federal level?

A.3.-1.Yes.

Q.3.-2. In New York, many law enforcement agencies routinely 
rely on direct access to this information to conduct 
sophisticated investigations into terror financing, mortgage 
fraud, drug trafficking, and other serious crimes that involve 
hiding financial proceeds. I understand that the plan to cut 
direct access, as conceived, would replace direct access with a 
middleman, through whom all search requests would have to be 
funneled. How will this affect the speed and quality of the 
searches that are now conducted by the on-the-ground 
investigators who are directly involved with local cases?

A.3.-2. I do not believe there are any specific metrics that 
would capture the impact of this budget reduction on individual 
case investigations, but I acknowledge that there would likely 
be some impact. I am committed to working with you and your 
colleagues to identify a meaningful solution that will provide 
a continuation of support to State and local law enforcement 
and regulatory agencies so that critical law enforcement 
functions are not impaired.

Q.3.-3. I hope that this funding will be restored through the 
budget process.
    Would you support the full restoration of funding?

A.3.-3. As noted, I am committed to working with you and your 
colleagues to identify a meaningful solution that will provide 
a continuation of support to State and local law enforcement 
and regulatory agencies.

Q.3.-4. If it is not restored, will you work to make sure that 
neither the quality nor quantity of information is restricted 
for local enforcement agencies that need it?

A.3.-4. Yes.
                                ------                                


 RESPONSE TO WRITTEN QUESTIONS OF SENATOR BROWN FROM DAVID S. 
                             COHEN

Q.1. Are you investigating foreign banks today for possible 
violation of CISADA?

A.1. Yes, we are currently investigating several foreign banks 
for activities that may result in findings under CISADA.

Q.2. If a foreign central bank is supporting Iran's 
proliferation activities or facilitating the activity of 
entities under U.S. or U.N. sanctions, would it be 
sanctionable?

A.2. Yes, a foreign central bank, like any other person or 
entity, may be subject to designation or other sanctions under 
U.S. law for supporting Iran's proliferation activities or 
providing material support to persons designated under U.S. 
counter-proliferation sanctions.

Q.3. What financial tools does the United States have to press 
China to reduce its relationship with Iran?

A.3. China voted for all relevant United Nations Security 
Council Resolutions relating to Iran, and has publicly 
committed to implementing them. Treasury has actively engaged 
with the Chinese government on this basis, encouraging a broad 
interpretation of both the letter and spirit of the 
Resolutions, and providing specific information to enable a 
robust Chinese implementation. Moreover, Treasury has 
communicated directly with large Chinese banks through their 
offices in the United States to ensure that they understand the 
risks they face from financial activities with Iran. We believe 
this ongoing engagement with China has been productive. Beyond 
this engagement, Treasury retains the same diverse set of tools 
it has available to protect the U.S. financial system from all 
illicit activity, including anti-money laundering authorities 
grounded in the Bank Secrecy Act and USA PATRIOT Act and 
sanctions authorities grounded in the International Emergency 
Economic Powers Act (IEEPA) and CISADA.
                                ------                                


 RESPONSE TO WRITTEN QUESTIONS OF SENATOR VITTER FROM DAVID S. 
                             COHEN

Q.1.-1. In your role as a Senior U.S. Treasury official and 
Acting Undersecretary for Terrorism and Financial Intelligence, 
you recently traveled to France and Turkey to discuss ongoing 
measures against the regimes in Iran and Libya. Including 
multilateral sanctions, and in your own words to ``urge full 
and robust implementation of U.N. Security Council resolution 
1929 against Iran.''
    Given your statement, do you believe that current efforts, 
including those of the Treasury Department are falling short of 
FULL implementation?

A.1.-1. The international community has responded to UNSCR 1929 
with an unprecedented and comprehensive framework of new 
sanctions against Iran. In particular, the EU Council Decision 
of July 2010 provided a model that has been replicated by other 
major jurisdictions throughout the world, including Japan, 
South Korea, Australia, and Switzerland, among others. As Iran 
continues to seek new ways to evade international sanctions and 
continues to defy the international community, the Treasury 
Department and the broader U.S. Government will continue to 
work aggressively to impose our own sanctions as well as with 
our international partners to identify and implement measures 
that are consistent with and strengthen the multilateral 
sanctions framework.

Q.1.-2. If nominated would you consider the imposition of 
sanctions, as required under CISADA, against Turkish financial 
institutions that are currently doing business with designated 
Iranian banks?

A.1.-2. Yes.

Q.2.-1. As I understand it, the rate of issuing the draft rule 
appears to be abysmal with disregard to the severity of the 
situation should the sanctions fail to be fully utilized to 
impede Iran from achieving nuclear capabilities. I have serious 
concerns over the Treasury's apparent lack of enforcement of 
Comprehensive Iran Sanctions Accountability and Divestment Act 
(CISADA). The recent draft rule to implement Section 104(e) of 
the Comprehensive Iran Sanctions and Divestment Act (CISADA) 
published by the Treasury Department was not published until 
over 10 months after being signed by President Obama.
    What does your department need to expedite the enforcement 
for CISADA?

A.2.-1. Our initial CISADA implementation efforts focused on 
issuing a regulation implementing section 104(c) of CISADA. On 
August 16, 2010, the Office of Foreign Assets Control (OFAC) 
published the Iranian Financial Sanctions Regulations, which 
implement that section.
    Section 104(e) of CISADA complements section 104(c). It 
requires the Secretary to prescribe regulations to establish 
one or more of four specific requirements (set out in section 
104(e)(1)(A)-(D)) for U.S. financial institutions maintaining 
correspondent accounts for foreign financial institutions. The 
time it took to publish the proposed rule does not reflect a 
lack of seriousness on our part; rather, it reflects a desire 
to craft a rule that will best achieve our policy aims in this 
complex and novel context. Because we are mindful of the need 
to obtain the information targeted by the section 104(e) rule 
as expeditiously as possible, we issued the proposed rule with 
a 30-day comment period (quite often, proposed rules have 45- 
or 90-day comment periods). You have my assurance that, once 
the comment period closes on June 1, we will move to publish a 
final rule as quickly as possible, and, if confirmed, I will 
ensure that the tool created by the rule is used aggressively.

Q.3. When Congress passed the 1996 Iran-Libya Sanctions Act, it 
did so with the aim to compel foreign companies to diverge from 
trading with Iran. Yet, over the past 15 years despite 
additional international sanctions and the CISADA being signed 
last year, a failure to enact sanctions has produced an 
unmistakable message and precedent of allowing foreign 
companies to do business as usual with Iran. Additionally, I 
have seen reports that Iran circumvents current laws by 
altering the material grade of its gasoline, and continues to 
use foreign countries that regularly do business with the 
United States.
    What policies are you currently developing to track 
documentation of cocktail blends of gasoline to determine 
whether products originated in Iran?

A.3. The State Department is responsible for implementing the 
Iran Sanctions Act and the energy related provisions of CISADA, 
and as a result, I must defer to the State Department on any 
questions regarding energy-related sanctions.

Q.4.-1. Additionally, I have concerns over the Treasury 
Department's interpretation of Section 104(e). As I understand 
it, the draft rule published by Treasury in the Federal 
Register on April 27, 2011, has misinterpreted Section 104(e) 
as discretionary and infrequent.
    Please spell out the scope of the agency's authority to 
issue and implement these comprehensive sanctions?

A.4.-1. Please see below answer.

Q.4.-2. Please explain your understanding of Section 104(e) as 
well as what institutions this section will be applied?

A.4.-2. Treasury does not interpret section 104(e) to be 
discretionary. To the contrary, we understand section 104(e) to 
require the Secretary to prescribe regulations mandating that 
domestic financial institutions take one or more actions, one 
of which is to provide requested reports to Treasury, and we 
believe that the proposed rule reflects this understanding.
    We have proposed to target this reporting requirement on 
those foreign banks that the Department has reason to believe 
may be engaged in activities that may be sanctionable under 
section 104(c) of CISADA. We considered requiring every U.S. 
bank to provide periodic reports from every foreign bank for 
which they maintain correspondent accounts, but concluded that 
we would be better served by a rule that focused on those 
foreign banks that are of interest for purposes of CISADA. By 
requiring reports from those U.S. banks that maintain 
correspondent accounts with the specific foreign banks that are 
of interest to Treasury for purposes of CISADA implementation, 
we believe that Treasury will receive the information needed 
without generating a multitude of unnecessary and uninformative 
reports.
    The reporting requirement in the proposed rule, moreover, 
is scalable. Based on the circumstances, it permits Treasury to 
expand the number of U.S. banks that would be required to file 
reports, as well as the number of foreign banks from which 
information would be sought. For instance, if Treasury were 
unsure which U.S. bank maintains a correspondent account with a 
specific foreign bank, the requirement to file reports could be 
expanded to cover a broader number of U.S. banks to ensure that 
the information sought is captured.

Q.4.-3. What actions were taken during the last 10 months to 
backlog and track transactions that violate Section 104(e)?

A.4.-3. Since the enactment of CISADA on July 1, 2010, and the 
publication of the Iranian Financial Sanctions Regulations 
(IFSR) on August 16, 2010, Treasury has been engaged in an 
aggressive campaign, involving dozens of foreign countries and 
scores of financial institutions, to explain the choice put to 
foreign financial institutions by CISADA between continued 
access to the U.S. financial system or continued involvement 
with Iran's proliferation efforts, its support for terrorism, 
and sanctioned Iranian-linked parties such as U.S.-designated 
banks and the Islamic Revolutionary Guard Corps. The response 
to Treasury's outreach has been very positive, and the great 
majority of financial institutions with which we have engaged 
have chosen to close their correspondent accounts with U.S.-
designated, Iranian-linked financial institutions, thus closing 
off avenues that Iran's designated banks had relied upon to 
engage in financial activities. CISADA, in short, has proven to 
be a very powerful tool to further isolate and pressure Iran--
precisely what we understand Congress intended in enacting the 
law. Nonetheless, Treasury has concerns that a limited number 
of foreign financial institutions may be continuing to engage 
in activities that could result in a finding under CISADA. We 
are actively investigating those situations, and are moving 
toward concluding our investigations within the next month or 
so.

Q.4.-4. As the language mentioned above is draft language, do 
you intend to modify the language to more clearly reflect the 
intention of CISADA?

A.4.-4. Fully implementing CISADA, and the Administration's 
sanctions strategy more broadly, to hold Iran accountable for 
its persistent refusal to comply with its international non-
proliferation obligations and its continued illicit conduct is 
an obligation we take very seriously. We crafted the proposed 
rule with that in mind, and are fully prepared to modify the 
rule before it is issued in final form to more effectively 
support this overarching objective. We will review all of the 
public comments we receive on this proposed rule and assess 
whether any changes to the proposed rule should be made based 
on those responses.

Q.4.-5. What policies are being considered to improve Congress 
oversight of this implementation?

A.4.-5. We will use Performance Measure #1, ``Impact of TFI's 
Programs and Activities,'' included in the Department of the 
Treasury's Fiscal Year 2010 Annual Performance Report, which 
measures TFI's impact as an organization through its sanctions, 
law enforcement, intelligence, regulatory and diplomatic 
programs to reduce threats to U.S. national security. In doing 
so, we will ensure that Congress is kept apprised of 
developments pursuant to the implementation of this regulation. 
In addition, if desired, we will keep the Committee apprised of 
when requests for information pursuant to the rule implementing 
section 104(e) are sent to U.S. banks, including the number of 
U.S. banks that receive a request and the number of foreign 
banks that are the subjects of the request.

Q.5.-1. Trade continues to be increasingly used to disguise 
illegal activities of rogue states and money laundering to 
support illicit nuclear programs. Other than proposing a new 
international standard with the Financial Action Task Force and 
assisting the Department of Homeland Security and State 
Department with the Trade Transparency Unit program, what 
initiatives has the Treasury Department implemented to address 
trade based money laundering?

A.5.-1. Treasury works closely with Immigration and Customs 
Enforcement (ICE) and other interagency partners, including the 
Drug Enforcement Agency, to combat trade based money laundering 
(TBML).
    One recent example involves an action taken by Treasury in 
February 2011, when we identified the Lebanese Canadian Bank 
(LCB) in Beirut, Lebanon as a financial institution of 
``primary money laundering concern'' under Section 311 of the 
USA PATRIOT Act for its role in facilitating the money 
laundering activities of an international narcotics trafficking 
and money laundering network. This network moved drugs from 
South Africa to Europe and the Middle East via West Africa and 
laundered hundreds of millions of dollars monthly through 
accounts held at LCB, as well as through TBML involving 
consumer goods throughout the world.
    Treasury also conducts targeted outreach to key countries 
on the dangers of the trade system being abused by WMD 
proliferators. For example, Treasury, in conjunction with the 
State and Commerce Department, worked with Malaysia during the 
development of Malaysia's implementing regulations for its 
Strategic Trade Act in an effort to establish financial 
controls to guard against WMD proliferation through its trade 
sector. In addition, Treasury has presented at State's Export 
Control and Related Border Security Program (EXBS) conferences 
to raise awareness of WMD proliferation financing and possible 
ways to combat such financing.

Q.5.-2. Do foreign trade zones (FTZs) have the proper level of 
vigilance necessary to mitigate illicit and potentially 
dangerous cargo slipping into a country?

A.5.-2. Activities that take place within free trade zones 
(FTZs) as well as the laws and regulations governing FTZs vary 
greatly by jurisdiction. The Financial Action Task Force has 
published a typology of potential money laundering and 
terrorist financing vulnerabilities associated with FTZs 
including the inconsistent application and enforcement of anti-
money laundering and counter-terrorist financing laws within 
FTZs.

Q.5.-3. Additionally, please expand on any trade ties that you 
see as potential to provide Iran cover to mask illicit 
transactions.

A.5.-3. The Treasury Department has consistently cautioned that 
all business with Iran carries a risk of supporting Iran's 
illicit activity, and as such requires an extremely high level 
of scrutiny and due diligence to ensure that Iran is not using 
seemingly legitimate activity to mask illicit transactions. The 
current international sanctions regime, however, does not call 
for a trade embargo on Iran, thus legitimate trade with Iran 
continues to occur. The U.S. Government has reached out to 
countries, such as Turkey, that have expressed a desire to 
expand trade with Iran to share with them the importance of 
great vigilance in all trade with Iran. This outreach 
emphasizes that, as Iran is increasingly isolated from major 
trading centers, those countries that maintain or increase 
their trade ties with Iran are at a greater risk of being used 
by Iran to conceal proliferation-related transfers amidst 
legitimate trade flows.

Q.6.-1. As part of sanctions against Iran, U.S. financial 
systems may freeze out banks involved in significant 
transactions with proscribed Iranian banks.
    Do you know of any instances where the United States is 
aware of but not currently implementing full use of this?

A.6.-1. No, I am not aware of any such instances.

Q.6.-2. Has the Treasury Department sanctioned any foreign, 
non-Iranian bank pursuant to the Comprehensive Iran Sanctions 
Accountability and Divestment Act (CISADA)?

A.6.-2. To date, the Treasury Department has not sanctioned any 
foreign, non-Iranian bank pursuant to CISADA. Nonetheless, 
Treasury has concerns that a limited number of financial 
institutions may be continuing to engage in activities that 
could result in a finding under CISADA. We are actively 
investigating those situations. While there are always 
uncontrollable and unexpected factors that affect the timing of 
our work, we expect to reach a decision on several open CISADA-
related investigations within the next month or so.

Q.7. The Treasury Department, as well as the U.S. Congress, 
have repeatedly raised concerns about the role of the Central 
Bank of Iran--that it facilitates Iran's illicit financial 
activities--and has warned banks to exercise extreme caution in 
dealing with it. In September, the Treasury Department 
sanctioned the bank EIH, incorporated in Germany, for allegedly 
providing financial services to Iranian WMD proliferators and 
facilitating transactions on behalf of other sanctioned Iranian 
banks. Secretary Cohen, in your testimony to the Finance 
Committee last month, you said the United States is ``working 
aggressively to try and shut down the Iranians' ability to use 
that financial institution [EIH].''
    Why hasn't the United States taken more action against 
foreign banks that continue to work with EIH as required by 
CISADA?

A.7. Treasury has been working closely with our European 
allies, particularly Germany, to urge them to take action 
against EIH to ensure that this U.S.-designated, Iranian-owned 
institution can no longer serve as Iran's key access point to 
the European financial sector, and we believe that our European 
partners understand the threat posed by EIH's continued 
operation. Moreover, as Treasury has become aware of instances 
in which foreign financial institutions engage in transactions 
with EIH, Treasury has informed these foreign financial 
institutions and their regulators of the potential consequences 
under CISADA of engaging in such transactions.

Q.8. Additionally, I have concerns about the potential sale of 
the New York Stock Exchange to Deutsche Boerse; specifically I 
am concerned about the activity of Deutsche Boerse's subsidiary 
Clearstream Banking S.A. in Iran. I am also troubled that 
Luxembourg's lax anti-money laundering laws have allowed 
Clearstream to engage in questionable activity. While 
Luxembourg has implemented regulations over the past year to 
improve enforcement after the Financial Action Task Force 
(FATF) questioned its practices, much greater steps must be 
taken.
    Have Treasury Department officials raised concerns with 
officials from Luxembourg about Iranian money laundering 
efforts?

A.8. Treasury has long maintained a close and cooperative 
dialogue with the Luxembourg government and its banking 
regulators. Within the context of that relationship, senior 
Treasury officials have engaged the government of Luxembourg 
about the risks of doing business with Iran. Most recently, 
former Under Secretary Stuart Levey traveled to Luxembourg in 
January 2011 for consultations with the Luxembourg government 
about Iran, among other issues.
                                ------                                


RESPONSE TO WRITTEN QUESTIONS OF SENATOR JOHANNS FROM DAVID S. 
                             COHEN

Q.1. Despite the Administration's description of Syrian 
President Bashar Assad's regime as ``barbaric,'' why has 
President Assad himself not been sanctioned since the beginning 
of the unrest?

A.1. On April 29, the President signed Executive Order 13572 
targeting those responsible for human rights abuses in Syria, 
including those related to repression. Several high-ranking 
Syrian officials, the Syrian General Intelligence Directorate 
and the Iranian Islamic Revolutionary Guard Corps--Qods Force 
were listed in the Annex to E.O. 13572. Included in this 
listing is Syrian President Bashar Assad's brother Mahir, a 
brigade commander in the Syrian Army's 4th Armored Division, 
who has played a leading role in the Syrian regime's 
reprehensible actions in Dar'a, where protesters have been 
killed by Syrian security forces. While we do not comment on 
prospective actions, we continue to monitor the situation in 
Syria closely and are actively developing new designation 
targets. The Statement issued by the White House Press 
Secretary on Friday, May 6, put it well:

        Absent significant change in the Syrian government's current 
        approach, including an end to the government's killing of 
        protestors and to the arrest and harassment campaigns of 
        protestors and activists, coupled with a genuine political 
        reform process responsive to the demands of the Syrian people, 
        the United States and its international partners will take 
        additional steps to make clear our strong opposition to the 
        Syrian government's treatment of its people.

Q.2. Is there evidence that Syrian financial institutions have 
conducted sanctionable activities with Iranian organizations or 
with the Lebanese Hezbollah? If they have, how have they been 
sanctioned?

A.2. In 2004, Treasury identified the Commercial Bank of Syria 
(CBS), along with its subsidiary Syrian Lebanese Commercial 
Bank, as a financial institution of ``primary money laundering 
concern'' under Section 311 of the USA PATRIOT Act. This action 
was based on information that CBS had been used by terrorists 
and their sympathizers, in addition to having acted as a 
conduit for the laundering of proceeds generated from the 
illicit sale of Iraqi oil. In February 2011, Treasury 
identified the Lebanese Canadian Bank in Beirut, Lebanon, as a 
primary money laundering concern for the bank's role in 
facilitating the money laundering activities of an 
international narcotics trafficking and money laundering 
network. U.S. Government information indicates that Hizballah 
derived financial support from the network's criminal 
activities. Additionally, Treasury has sanctioned regional 
banks affiliated with Hizballah, including the 2006 designation 
of Bank Saderat Iran, which had funneled $50 million to a 
Hizballah-controlled institution. We will continue to take 
aggressive measures in Syria, or anywhere we identify financial 
connections to Iran or Lebanese Hizballah.

Q.3. Elements of Turkey's recent foreign policy have been 
extremely unhelpful, such as its involvement with the Gaza 
flotilla incident last May and its resistance to new sanctions 
on Iran. How would you describe Turkey's cooperation with the 
U.S. sanctions regime on Iran in general and CISADA in 
particular?

A.3. As part of Treasury's ongoing global engagement on Iran, I 
traveled to Turkey recently to meet with senior Government 
officials to discuss global efforts to impose sanctions against 
Iran for its failure to live up to its international non-
proliferation obligations. Turkish officials emphasized their 
desire to prevent Iran from acquiring nuclear weapons 
capability and their commitment to fully implementing UNSCR 
1929. Because several of the key financial provisions in UNSCR 
1929--in particular, paragraphs 21 and 23--call upon Member 
States to take steps beyond what is explicitly mandated by the 
Resolution, e.g., freezing the assets of specifically 
designated institutions, I emphasized for my Turkish 
counterparts the importance of adhering not just to the letter, 
but also to the spirit, of UNSCR 1929. Thus far, the Turkish 
authorities have not adopted an approach to the implementation 
of UNSCR 1929 that reflects this view. Treasury will continue 
to encourage Turkey's leadership to ensure a robust 
implementation of the international sanctions regime and to be 
vigilant concerning Iranian efforts to take advantage of Iran's 
commercial ties with Turkey to abuse the Turkish financial 
system.
    With regard to CISADA, Treasury has been in contact with 
the Turkish government and its banking regulators about CISADA-
related concerns. The response from the government and the 
regulators has been quite positive in terms of recognizing how 
the law functions and the importance of Turkish banks 
maintaining access to the U.S. financial system.
                                ------                                


  RESPONSE TO WRITTEN QUESTIONS OF SENATOR KIRK FROM DAVID S. 
                             COHEN

Background: On March 28, 2011, Senator Kyl, Senator Lieberman 
and I sent a letter to Secretary Geithner along with a 
classified annex detailing specific concerns about sanctionable 
activities involving energy investments in Iran, the provision 
of refined petroleum to Iran, financial relationships with 
Iran, as well as the regime's proliferation activities. To 
date, we have not received any specific responses to each 
individual activity detailed in our annex.

Q.1. While I appreciate your recent unclassified response, when 
will the Treasury Department be providing written classified 
responses to each sanctionable activity outlined in our March 
28th letter?

A.1. As a matter of longstanding policy, Treasury does not 
comment on any possible or pending law enforcement 
investigation, including possible designations or sanctions. 
Accordingly, it would not be appropriate for me to comment on 
any particular financial institution, entity or person that may 
be under investigation until a final determination has been 
made regarding a designation or similar action. As noted in my 
response dated May 2, 2011, I am very familiar with the 
finance-related issue addressed in the classified annex to your 
letter, and my team and I are pursuing that matter--as well as 
several other similar matters--with a great sense of urgency.

Q.2. Why have no banks been sanctioned under the Comprehensive 
Iran Sanctions and Divestment Act (CISADA)? Is it your 
contention that no foreign, non-Iranian bank has engaged in 
sanctionable activity pursuant to Section 104 of CISADA?

A.2. Since the enactment of CISADA on July 1, 2010, and the 
publication of the Iranian Financial Sanctions Regulations 
(IFSR) on August 16, 2010, Treasury has been engaged in an 
aggressive campaign, involving dozens of foreign countries and 
scores of financial institutions, to explain the choice put to 
foreign financial institutions by CISADA between continued 
access to the U.S. financial system or continued involvement 
with Iran's proliferation efforts, its support for terrorism, 
and sanctioned Iranian-linked parties such as U.S.-designated 
banks and the Islamic Revolutionary Guard Corps. The response 
to Treasury's outreach has been very positive, and the great 
majority of financial institutions with which we have engaged 
have chosen to close their correspondent accounts with U.S.-
designated, Iranian-linked financial institutions, thus closing 
off avenues that Iran's designated banks had relied upon to 
engage in financial activities. CISADA, in short, has proven to 
be a very powerful tool to further isolate and pressure Iran--
precisely what we understand Congress intended in enacting the 
law. Nonetheless, Treasury has concerns that a limited number 
of foreign financial institutions may be continuing to engage 
in activities that could result in a finding under CISADA. We 
are actively investigating those situations, and are moving 
toward concluding our investigations within the next month or 
so.

Q.3. Are you currently investigating foreign banks for possible 
violation of CISADA and do you expect determinations to be made 
soon?

A.3. Yes, we are currently investigating several foreign banks 
for activities that may result in findings under CISADA. These 
investigations involve obtaining data from multiple sources, 
engaging in dialogue with the financial institutions and/or 
their home-country regulators, and using official channels to 
highlight the seriousness of the situation. We expect that 
several investigations will reach their conclusion within the 
next month or so.

Background: Last week, the Financial Crimes Enforcement Network 
(FinCEN) issued a proposed rule to implement key requirements 
of the Comprehensive Iran Sanctions Accountability and 
Divestment Act (CISADA). Under the proposal, U.S. banks would 
be required to inquire of their foreign correspondent banks 
whether they maintain correspondent relations with Iranian 
banks under U.S. sanctions--but only when specifically asked to 
do so by the Treasury Department. Under such circumstances, the 
U.S. bank would also be required to ask whether that foreign 
bank has processed transfers of funds on behalf of the IRGC in 
the past 90 days. At the end of this process, U.S. banks would 
then be required to report this information back to FinCEN.

Q.4. Why under the proposed rule are U.S. banks that maintain 
foreign correspondent accounts only required to provide FinCEN 
with information about foreign partners when the Treasury 
Department makes an inquiry?

A.4. We have proposed to target this reporting requirement on 
those foreign banks that the Department has reason to believe 
may be engaged in activities that may be sanctionable under 
section 104(c) of CISADA. We considered requiring every U.S. 
bank to provide periodic reports from every foreign bank for 
which they maintain correspondent accounts, but concluded that 
we would be better served by a rule that focused on those 
foreign banks that are of interest for purposes of CISADA. By 
requiring reports from those U.S. banks that maintain 
correspondent accounts with the specific foreign banks that are 
of interest to Treasury for purposes of CISADA implementation, 
we believe that Treasury will receive the information needed 
without generating a multitude of unnecessary and uninformative 
reports.
    The reporting requirement in the proposed rule, moreover, 
is scalable. Based on the circumstances, it permits Treasury to 
expand the number of U.S. banks that would be required to file 
reports, as well as the number of foreign banks from which 
information would be sought. For instance, if Treasury were 
unsure which U.S. bank maintains a correspondent account with a 
specific foreign bank, the requirement to file reports could be 
extended to a broader number of U.S. banks to ensure that the 
information sought is captured.

Q.5. Do you or do you not believe U.S. banks that maintain 
foreign correspondent accounts [should] be required to ensure 
their foreign partners are not conducting business with 
prohibited entities in Iran at all times?

A.5. Under section 312 of the USA PATRIOT Act and its Bank 
Secrecy Act (BSA) implementing regulations, every U.S. bank is 
required to ``establish a due diligence program that includes . 
. . policies, procedures, and controls that are reasonably 
designed . . . to detect and report, on an ongoing basis, any 
known or suspected money laundering activity conducted through 
or involving any correspondent account established, maintained, 
administered, or managed by such covered financial institution 
in the United States for a foreign financial institution.'' In 
addition, U.S. banks monitor the transaction activity that is 
conducted through the U.S. banks' correspondent accounts with 
foreign banks in order to comply with the Office of Foreign 
Assets Control's (``OFAC'') regulations. Because of the due 
diligence U.S. banks conduct over their foreign correspondent 
accounts to comply with the BSA and OFAC regulations, a foreign 
bank should not be utilizing its U.S. correspondent account to 
conduct transactions with designated entities in Iran. Indeed, 
it would be a violation of law and OFAC regulations for a U.S. 
bank to process any non-exempt, unlicensed transactions with 
any Iranian bank.
    In the normal course of business, however, U.S. banks are 
not likely to be in a position to monitor transactional 
activity between a foreign bank and its non-U.S. customers--
that is, transactions not involving the U.S. bank's 
correspondent account, including transactions with U.S.-
designated Iranian-linked financial institutions or with the 
Islamic Revolutionary Guard Corps (IRGC) or its U.S.-designated 
agents or affiliates. In proposing a rule to implement section 
104(e) of CISADA, Treasury tentatively determined that the most 
sensible way for U.S. banks to determine whether foreign banks 
are doing business with those designated persons (transactions 
that almost certainly would not transit through the U.S. 
correspondent account) would be to require the U.S. banks to 
ask the foreign bank to certify that it is not doing business 
with those persons, or to report to the U.S. bank on any such 
business it is doing. We have chosen a targeted approach to 
requesting information regarding certain foreign banks both 
because we thought it would be the most efficient way to 
collect this information and because the mere act of asking may 
pressure those targeted foreign banks to discontinue business 
with U.S.-designated Iranian-linked financial institutions or 
with the IRGC or its U.S.-designated agents or affiliates.

Q.6. Do you or do you not believe U.S. banks should be required 
to provide such information to the Treasury Department as soon 
as they are aware of it to enable swift and appropriate 
enforcement action?

A.6. U.S. banks are already monitoring the transaction activity 
that is conducted through the U.S. banks' correspondent 
accounts with foreign banks under both OFAC and the BSA 
regulations, and a variety of regulations require or result in 
U.S. banks reporting any improper activity in their 
correspondent accounts promptly to the Treasury Department. As 
noted above, however, in the normal course of business U.S. 
banks are not likely to be in a position to monitor 
transactional activity between a foreign bank and its non-U.S. 
customers, unless the foreign bank conducts transactions for 
those customers through the foreign bank's correspondent 
account with the U.S. bank. Requiring U.S. banks to obtain this 
information with regard to foreign banks that are of interest 
to the Treasury Department will provide Treasury with 
information that Treasury may use in taking action under CISADA 
or other applicable authorities, and we have drafted the 
proposed rule implementing section 104(e) to accomplish this 
goal.

Q.7. Your proposed regulation refers to the invocation of the 
reporting requirement ``as necessary.'' Could you please 
explain why FinCEN has made optional a requirement mandated by 
CISADA and can you describe a situation when this requirement 
would not be necessary?

A.7. We have proposed to target this mandatory reporting 
requirement on those foreign banks that the Department has 
reason to believe may be engaged in sanctionable activities 
under section 104(c) of CISADA. We considered requiring every 
U.S. bank to provide periodic reports from every foreign bank 
for which they maintain correspondent accounts, but concluded 
that we would be better served by a rule that focused on those 
foreign banks that are of interest for purposes of CISADA. By 
requiring reports from those U.S. banks that maintain 
correspondent accounts with the specific foreign banks that are 
of interest to Treasury for purposes of CISADA, we believe that 
Treasury will receive the information needed without generating 
a multitude of unnecessary and uninformative reports. There are 
a number of foreign banks that maintain correspondent accounts 
with U.S. banks, many of which the Department has no reason to 
suspect are doing business that implicates CISADA.

Q.8. The proposed rule requires banks to report whether the 
foreign bank has correspondent relations with sanctioned Iran 
bank or has processed fund transfers on behalf of the IRGC in 
the past 90 days. But under CISADA, the reporting requirement 
also includes transactions with any entity under U.N. sanction 
that has assisted Iran's proliferation activity. Why is the 
reporting requirement under the proposed rule limited to only 
part of the requirement outlined by the statute?

A.8. In our proposed rule, Treasury determined that obtaining 
information regarding whether a foreign bank is conducting 
transactions with a U.S.-designated, Iranian-linked financial 
institution or with Iran's Islamic Revolutionary Guard Corps or 
any of its U.S.-designated agents or affiliates is the most 
useful information Treasury can obtain in the most workable 
manner. Your question, however, raises an important point that 
we will consider in preparing the final rule.

Background: In a 2010 report entitled Iran's Dirty Banking and 
sourced to Bankers' Almanac, Mr. Avi Jorisch detailed a list of 
44 international banks providing services to Iranian-linked 
banks designated by the Treasury Department under Executive 
Order 13382. The report also listed 18 U.S. banks conducting 
business with international banks that service designated 
Iranian banks in possible violation of Section 104 of the 
Comprehensive Iran Sanctions and Divestment Act.

Q.9. Which of the following international financial 
institutions ceased all of its business dealings, including but 
not limited to providing correspondent banking services, with 
Iranian-linked banks designated under Executive Order 13382?

   LAmeriabank CJSC (Armenia)

   LRaiffeisen Zentralbank Osterreich AG (Austria)

   LUniCredit Bank Austria AG (Austria)

   LAlubaf Arab International Bank BSC (Bahrain)

   LFuture Bank BSC (Bahrain)

   LSonali Bank Limited (Bangladesh)

   LFortis Bank SA/NV (Belgium)

   LDanske Bank A/S (Denmark)

   LSociete Generale (France)

   LBHF-BANK Aktiengesellschaft (Germany)

   LCommerzbank AG (Germany)

   LDeutsche Bank AG (Germany)

   LLandesbank Baden-Wurrttemberg (Germany)

   LUniCredit Bank AG (Germany)

   LING NV (Holland)

   LHabib Bank Limited (India)

   LState Bank of India (India)

   LUnited Bank Ltd (India)

   LBank of the Middle East Iraqi Investment (Iraq)

   LTrade Bank of Iraq (Iraq)

   LIntesa Sanpaolo SpA (Italy)

   LMizuho Corporate Bank Ltd (Japan)

   LSumitomo Mitsui Banking Corporation (Japan)

   LThe Bank of Tokyo-Mitsubishi UFJ Ltd (Japan)

   LDnB NOR Bank ASA (Norway)

   LNordea Bank Norge ASA (Norway)

   LBankMuscat SAOG (Oman)

   LQatar National Bank SAQ (Qatar)

   LVTB Bank (Russia)

   LRiyad Bank (Saudi Arabia)

   LAresbank SA (Spain)

   LBanco Santander SA (Spain)

   LBanque Marocaine du Commerce Exterieur 
        International SA (Spain)

   LBank of Ceylon (Sri Lanka)

   LNordea Bank AB (Sweden)

   LSkandinaviska Enskilda Banken AB (Sweden)

   LSvenska Handelsbanken AB (Sweden)

   LBanque de Commerce et de Placements SA (Switerland)

   LUnited Bank AG (Switzerland)

   LZurcher Kantonalbank (Switzerland)

   LTurkiye Halk Bankasi AS (Turkey)

   LTurkiye IS Bankasi AS (Turkey)

   LDubai Islamic Bank PJSC

   LEmirates NBD Bank PJSC

A.9. Treasury understands that Mr. Jorisch obtained the 
information for his 2010 report from the Bankers Almanac, a 
financial industry resource that, among other services, prints 
profiles of most of the world's banks. These profiles are based 
on information provided by the banks themselves, and include 
details such as the bank's correspondent and settlement 
partners. The information presented in Bankers Almanac is not, 
to our knowledge, assessed for accuracy before it is published, 
nor do we have any reason to believe that Mr. Jorisch 
independently sought to verify the accuracy of the information 
that he republished in his report.
    With respect to the list of banks in Mr. Jorisch's article, 
the Bankers Almanac profiles of several banks indicated that 
they maintained correspondent accounts for U.S.-designated 
Iranian-linked financial institutions, such as Bank Sepah or 
Bank Melli. We determined, however, that at the time CISADA was 
enacted, many of those profiles were inaccurate, and that the 
relevant Iranian banks had far fewer correspondent banks than 
indicated. Moreover, in the Bankers Almanac profiles of some of 
the U.S.-designated Iranian-linked financial institutions, 
several of the banks listed above were listed as 
correspondents. Investigation by Treasury has similarly 
revealed out of date information for accounts long since closed 
or frozen.
    Since the enactment of CISADA and the promulgation of the 
IFSR, Treasury has been in contact with the majority of the 44 
banks listed above and/or their regulators to discuss any 
relationships maintained for U.S.-designated Iranian-linked 
financial institutions. The great majority of financial 
institutions that Treasury has focused on with CISADA-relevant 
concerns have indicated that they already have closed, or will 
immediately close, any correspondent accounts they previously 
maintained for U.S.-designated Iranian-linked banks. As noted 
above, however, Treasury has concerns that a limited number of 
financial institutions may be continuing to engage in 
activities that could result in a finding under CISADA. We are 
actively investigating those situations.

Q.10. Are there any other financial institutions not on the 
list provided in the previous question that are currently doing 
business, including but not limited to providing correspondent 
banking services, with Iranian-linked banks designated under 
Executive Order 13382?

A.10. Relying on a wide variety of information sources, we are 
following available leads in order to identify and investigate 
any institution that may be engaging in activity that may be 
sanctionable under section 104(c) of CISADA. As noted above, 
until we complete any such investigation and make the 
determination to take action, we are unable to comment on the 
identity of any financial institution that may be a target of 
our efforts. I can assure you, however, that my team and I are 
aggressively pursuing investigations that may lead to action 
under CISADA or our other sanctions authorities.

Q.11. What is the current status of your investigations into 
each of the following U.S. financial institutions that may be 
in violation of Section 104 of CISADA?

   LBank of America NA

   LThe Bank of New York Mellon

   LThe Bank of Tokyo-Mitsubishi UFJ Ltd

   LCitibank

   LCommerzbank AG

   LCredit Suisee AG

   LDeutsche Bank Trust Company Americas

   LHabib American Bank

   LHSBC Bank USA NA

   LIntesa Sanpaolo SpA

   LJPMorgan Chase Bank NA

   LMashreqBank PSC

   LMizuho Corporate Bank USA

   LSociete Generale

   LStandard Chartered Bank

   LState Bank of India

   LSumitomo Mitsui Banking Corporation

   LWells Fargo Bank NA

A.11. U.S. branches of foreign financial institutions, like 
financial institutions headquartered in the United States, are 
U.S. persons for the purposes of U.S. sanctions laws. 
Accordingly, U.S. branches of foreign financial institutions 
are required to comply with the regulations and restrictions 
that apply to U.S. persons conducting business with Iranian 
banks and other entities under sanctions programs administered 
by Treasury, including the Iranian Transactions Regulations and 
Executive Order 13382 pertaining to Weapons of Mass Destruction 
Proliferators and Their Supporters. These restrictions include 
the prohibition on maintaining correspondent accounts for, or 
generally providing financial services to, Iranian banks and 
U.S.-designated individuals and entities. In our regulatory 
role, we maintain vigilance over U.S. persons and are prepared 
to act quickly if we detect any action that implicates any of 
our sanctions programs. As noted above, we are unable to 
comment on the identity of any financial institution that may 
currently be a target of our investigations or enforcement 
efforts.

Background: As you know, the Central Bank of Iran (CBI) 
facilitates Iran's illicit financial activities. According to a 
banking advisory issued by FinCEN on March 28, 2008 (and 
updated on June 22, 2010), the CBI is listed as an Iranian bank 
that is engaged in ``illicit and deceptive activity.'' Banks 
have been warned to exercise extreme caution in dealing with 
virtually every Iranian-linked financial institution, including 
the CBI. As the United States and some of our allies have 
sanctioned individual Iranian banks, Iran's Central Bank has 
reportedly taken over many of the illicit activities of the 
sanctioned entities.

Q.12. Do you believe the Central Bank of Iran is supporting 
Iran's proliferation activities or facilitating the activity of 
entities under U.S. or U.N. sanction? If so, why hasn't the 
U.S. designated the Central Bank of Iran?

A.12. The activities of the Central Bank of Iran (CBI) have 
been, and continue to be, a focus of the Treasury Department. 
Treasury has noted previously that the CBI and Iranian 
commercial banks have requested that their names be removed 
from international payment messages to make it more difficult 
for intermediary financial institutions to determine the true 
parties to the transaction, and we remain concerned that the 
CBI may be facilitating transactions for sanctioned Iranian 
banks.
    While the CBI has not been designated under our 
proliferation authorities, under the Iranian Transactions 
Regulations U.S. financial institutions are prohibited, with 
only limited exceptions, from doing business directly or 
indirectly with all Iranian banks, including the CBI. As 
highlighted in UNSCR 1929, we remain vigilant over the 
activities of the CBI and other Iranian financial institutions, 
and the United States will continue to highlight its concerns 
with foreign governments and the private sector. We have been 
diligent in exposing and publicizing Iran's deceptive 
practices, as a result of which many in the private sector--
unable to distinguish between Iran's legitimate and illicit 
transactions--have become increasingly wary of engaging in any 
business with Iran, including business with the CBI.

Background: In September, the Treasury Department sanctioned 
the Iranian-owned bank EIH, incorporated in Germany, for 
providing financial services to Iranian weapons proliferators 
and facilitating transactions on behalf of other sanctioned 
Iranian banks. Secretary Cohen, in your testimony to the 
Finance Committee last month, you said the United States is 
``working quite, quite aggressively to try and shut down the 
Iranians' ability to use that financial institution [EIH].''

Q.13. Can you please be more specific--what steps are you 
taking to shut down Iran's ability to use EIH?

A.13. On September 7, 2010, Treasury designated EIH pursuant to 
Executive Order 13382, which blocks the property of designated 
weapons of mass destruction proliferators and their supporters. 
To suspend EIH's access to the EU financial system, however, 
either Germany or the EU must take similar action and add EIH 
to its own list of designated entities. Treasury has been 
working closely with our European allies, particularly Germany, 
to urge them to take action against EIH to ensure that this 
U.S.-designated, Iranian-owned institution can no longer serve 
as Iran's access point to the European financial sector, and we 
believe that our European partners understand the threat posed 
by EIH's continued operation.

Q.14. What steps will you be taking to stop foreign banks that 
continue to work with EIH despite Treasury's designation?

A.14. As Treasury has become aware of instances in which 
foreign financial institutions engage in transactions with 
EIH--a U.S.-designated, Iranian-linked financial institution 
for purposes of CISADA--Treasury has informed these foreign 
financial institutions and their regulators of the potential 
CISADA consequences of engaging in such transactions. In 
addition, as noted in the response to the previous question, 
Treasury has been working with Germany and other EU member 
states to have EIH designated by either Germany or the EU, 
which, we believe, would effectively end EIH's ability to 
operate at all.

Q.15. Why has the Treasury Department not taken action against 
foreign banks that continue work with EIH as required by 
CISADA?

A.15. Treasury is aggressively pursuing investigations of 
possible activity that may be sanctionable under CISADA or our 
other authorities designed to bring economic and financial 
pressure to bear on Iran. As noted above, Treasury does not 
comment on any specific possible or pending law enforcement 
investigations, including possible designations or sanctions.

Background: In July 2010, Germany designated its affiliate of 
the Turkish group IHH as a terrorist organization due to its 
close ties to Hamas. Last week, the Dutch government also 
designated its IHH affiliate as a terrorist group and froze its 
assets. I understand the Israeli Government has provided the 
Treasury Department extensive evidence detailing the IHH's ties 
to Hamas, a U.S.-designated foreign terrorist organization, and 
the ``Union of the Good,'' which was designated by the Treasury 
Department under Executive Order 13324 in November 2008 and 
referred to by the Department as ``an organization created by 
Hamas leadership to transfer funds to the terrorist 
organization.'' As you know, Hamas is responsible for the 
murders of at least 26 American citizens.

Q.16. Why are you delaying designation of the IHH as a 
terrorist entity despite evidence demonstrating the group's 
ties to the Hamas terrorist organization and the Union of the 
Good terrorist entity?

A.16. Although I cannot comment on any possible or pending 
designation of IHH, I can assure you that my team and I are 
fully committed to taking action against sources of support for 
terrorist organizations. With respect to Hamas, Treasury has 
actively sought to disrupt its financing through a number of 
methods, including: designating individuals and entities 
raising funds on behalf of the organization; engaging and 
sharing information with the Palestinian Authority to disrupt 
Hamas' charitable infrastructure in the West Bank and Gaza; and 
pressing European allies to take corresponding action. 
Specifically:

   LTreasury has designated a number of charities for 
        providing support to Hamas, being owned or controlled 
        by it, or acting for or on its behalf, including the 
        Union of Good (November 2008), Al Salah Society (August 
        2007), Interpal/The Palestinian Relief and Development 
        Fund (August 2003), Commite de Bienfaisance et de 
        Secours aux Palestiniens and the Association de Secours 
        Palestinien (August 2003), the Palestinian Association 
        in Austria (August 2003), the Al-Aqsa Foundation (May 
        2003), and the Holy Land Foundation for Relief and 
        Development (December 2001).

   LThe Treasury Department engages regularly with 
        senior Palestinian Authority (PA) officials on illicit 
        finance issues, including sharing information on Hamas-
        controlled charities and NGO's operating in the West 
        Bank and Gaza. Since 2007, the PA has taken significant 
        steps to rid the charitable sector in the West Bank of 
        Hamas influence, including the dissolution and 
        reformation of Zakat committees (Islamic charitable 
        organizations) that received financial support from 
        Union of Good member organizations.

   LPressing the Europeans to crack down on Hamas 
        fundraising in Europe has been one of our priorities. 
        Together with our State Department colleagues, we have 
        been specifically pushing both the EU and European 
        member states to designate the Union of Good. Recently, 
        Treasury participated in a delegation led by the State 
        Department's Coordinator for Counter-Terrorism, 
        Ambassador Benjamin, to press our European partners on 
        these issues.
                                ------                                


RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM DANIEL L. 
                             GLASER

Q.1.-1. China is always at the center of a sanctions 
controversy, whether it be related to North Korea, or Iran. The 
United States has recently sanctioned a North Korean bank and 
tightened sanctions prohibiting the import of goods, services 
and technology from North Korea.
    How does the revival in commerce between China and North 
Korea compare to U.S. efforts to isolate North Korea? Are U.S. 
sanctions working here, or is the back door to China overcoming 
U.S. efforts?

A.1.-1. U.N. Security Council Resolutions 1718 and 1874 provide 
the foundation for the international sanctions framework 
against North Korea. These instruments are supplemented by the 
recent warning by the Financial Action Task Force of the risks 
to the international financial system of North Korea's failure 
to comply with international anti-money laundering standards. 
The United States has taken a broad interpretation of the 
financial provisions of these instruments, and relying on these 
and our other authorities, our implementation has gone beyond 
them. Just last month, President Obama signed Executive Order 
13570 continuing our broad import restrictions on North Korea. 
In August 2010, President Obama signed Executive Order 13551, 
authorizing Treasury, in consultation with State, to impose 
sanctions on the financial networks that facilitate North 
Korean trafficking in arms and related materiel, procurement of 
luxury goods, and engagement in other illicit activities, such 
as money laundering and counterfeiting. Treasury has put this 
authority to good use, targeting not just North Korean 
government entities such as Office 39 and the Reconnaissance 
General Bureau, but also important nodes in their respective 
financial networks such as Daesong Bank and Bank of East Land. 
Treasury has also targeted numerous North Korean entities 
pursuant to our WMD sanctions authorities under Executive Order 
13382, and has issued several advisories to our financial 
institutions warning of the risks presented by North Korea's 
illicit financial activities. These formal measures have been 
accompanied by an aggressive outreach campaign, both to foreign 
governments and the private sector. I have personally traveled 
throughout Asia and the Middle East, providing both general and 
specific information to governments and banks to assist them in 
protecting themselves from illicit North Korean financial 
activity. To date, our efforts have been effective in 
significantly restricting North Korea's access to the 
international financial and commercial systems.
    China also voted for UNSCRs 1718 and 1874. China, however, 
has taken a narrower approach to the implementation of the 
financial provisions of these instruments, and continues to 
maintain a unique relationship with North Korea, both 
financially and commercially. Given North Korea's financial 
isolation from much of the rest of the world, these financial 
ties with China are of increasing importance to North Korea. 
Treasury has, therefore, actively engaged with the Chinese 
government, encouraging a broad interpretation of both the 
letter and spirit of the resolutions, and providing specific 
information to enable robust Chinese implementation. Moreover, 
Treasury has communicated directly with large Chinese banks 
through their offices in the United States to ensure that they 
understand the risks they face from their financial activities 
with North Korea.

Q.1.-2. Generally, what is behind the perception that Chinese 
banks and energy companies comply with U.N. sanctions but 
appear to violate CISADA?

A.1.-2. As with the domestic financial sanctions regimes of 
many of our allies, the financial provisions of CISADA go 
significantly beyond the provisions of the relevant U.N. 
Security Council resolutions. For example, the U.N. applies 
full targeted sanctions on only two banks--Bank Sepah and First 
East Export Bank. In contrast, the U.S. targeted sanctions, and 
by extension the financial provisions of CISADA, apply to many 
more Iranian-linked banks, including Bank Melli, Bank Mellat, 
Export Development Bank of Iran, Bank Saderat, Post Bank, and 
Europaisch-Iranische Handeslbank (EIH). It is therefore 
possible for a foreign bank to be acting consistent with its 
domestic laws and U.N. sanctions, and nevertheless be engaged 
in conduct that implicates CISADA.
    Since the passage of CISADA in 2010, Treasury has engaged 
the Chinese government and its banking regulators to discuss 
CISADA-related concerns and to raise awareness of the potential 
consequences that Chinese financial institutions may face under 
CISADA should they engage in sanctionable activity. As partners 
in the P5+1 process, we believe that China shares our concern 
about Iran's nuclear program and would not want its banks to be 
engaged in activity that could support Iranian proliferation-
related activities.
    The State Department is responsible for implementing the 
Iran Sanctions Act and the energy related provisions of CISADA, 
and as a result, I must defer to the State Department on any 
questions regarding energy-related sanctions.

Q.1.-3. Are U.N. sanctions working perversely to provide cover 
to cheat on U.S. sanctions with respect to either China or 
North Korea?

A.1.-3. U.N. Security Council Resolutions provide an important 
foundation and baseline for the international sanctions regime 
against North Korea and Iran. Given deep international concerns 
regarding North Korean and Iranian behavior, many countries 
have gone beyond this baseline. Equally as important, given 
long-standing international concerns about the illicit 
financial activities of Iran and North Korea, financial 
institutions throughout the world--including many in China--
have eliminated or severely restricted their dealings with 
entities from those jurisdictions beyond what is required under 
their domestic law. It is certainly possible for a financial 
institution to be in compliance with a strict reading of the 
UNSCRs, but nevertheless be engaged in conduct inconsistent 
with U.S. sanctions, and the sanctions regimes of many of our 
allies. In the case of China, the challenge has been to 
encourage a broad interpretation of both the letter and spirit 
of the relevant U.N. resolutions, and to provide specific 
information to enable robust Chinese implementation. I have 
spent time with the Chinese doing precisely this. Moreover, we 
must continue to encourage the dynamic among private sector 
financial institutions--including Chinese financial 
institutions--to take strong measures to protect themselves 
from illicit Iranian and North Korean financial conduct.

Q.2. What is the current status of the report authorized by 
section 6303 of the 2004 Intelligence Reform and Terrorist 
Prevention Act? What are the problems involved with its 
production?

A.2. Terrorist financing is constantly evolving, both in terms 
of sources and methodologies and in terms of international and 
domestic efforts to combat it. It is important that Congress be 
kept informed on developments in this area. One way of doing so 
is through broad reports such as the one authorized by section 
6303 of the 2004 Intelligence Reform and Terrorist Prevention 
Act, and, if confirmed, I will work to see that it is completed 
expeditiously. Moreover, I commit to make myself available to 
you, other members of the Committee, and your staff to ensure 
that as an ongoing matter your specific questions and concerns 
related to terrorist financing are being addressed.

Q.3.-1. The result of Treasury policies and increased law 
enforcement have forced a good deal of financing into informal 
channels like hawala, and the use of charities.
    Is charitable financing of terror a growing problem, or 
more of a manageable constant? And, is the problem different in 
the Gulf, Europe and here at home?

A.3.-1. The financing of terrorism and extremism by charities 
remains a concern to which Treasury devotes considerable 
effort. Charities are not just attractive vehicles by which 
terrorist organizations can raise funds, but they also provide 
opportunities to legitimize the organizations and radicalize 
populations. Domestically, we have made significant progress. 
Of course, only an extremely tiny fraction of the 1.8 million 
charitable organizations in the U.S. have ever presented a 
significant risk of terrorist financing. However, since 9/11 a 
combination of law enforcement actions and sustained dialogue 
with the charitable community has ensured that the U.S. is not 
a favorable environment for terrorist fundraising. Globally, we 
have also made progress, though much work remains to be done. 
In the Gulf, certain charities continue to support a wide range 
of terrorist organizations from Al Qaida to Hamas. In combating 
these organizations, we have over the last several years 
significantly improved our counter-terrorist financing 
cooperation and information sharing with partners such as Saudi 
Arabia and the UAE, even as we look for improvements in 
countries such as Qatar and Kuwait. The designation of groups 
such as the Revival of Islamic Heritage Society (RIHS) 
demonstrates that a continued focus on certain charities in the 
Gulf is required. In Europe our focus has been more 
specifically on Hamas fundraising. We consistently work with 
our partners in Europe and in the Middle East to try to block 
the flow of funds from charities in Europe that support Hamas--
most notably charities affiliated with the U.S.-designated 
Union of Good.

Q.3.-2. It is impossible to put a dollar figure on money moving 
through hawala, but is that system financing the majority or 
minority of terrorist activity in the world, and are our 
counter threat financing measures sophisticated enough to make 
a difference in this area?

A.3.-2. The Treasury Department has long-recognized the 
vulnerability of informal value transfer systems to illicit 
finance. As noted in the question, specific measurements are 
impossible, though by any account hawala continues to be among 
the most significant mechanisms through which terrorist 
organizations move funds. Hawalas can be an attractive transfer 
mechanism for terrorists for two primary reasons: (i) hawala 
networks often provide basic financial services to communities 
and regions that are not reached by more modern financial 
service providers, and (ii) if not adequately regulated, 
hawalas provide the opportunity for non-transparent financial 
activity.
    Treasury has worked to address the vulnerabilities 
presented by informal value transfers through a four-pronged 
approach: targeted financial sanctions and other enforcement 
actions; systemic regulation; outreach; and international 
engagement. The international component of this strategy is 
discussed in greater detail below, but includes standard 
setting through FATF, targeted sanctions on such illicit actors 
as the New Ansari Network in Afghanistan, and encouragement to 
countries such as Pakistan to strengthen their regulatory 
regimes.
    Domestically, hawalas, like all other money services 
businesses, are required to register with FinCEN, and we have 
worked to establish a transparent financial system with 
appropriate anti-money laundering and countering the financing 
of terrorism (AML/CFT) requirements on informal financial 
service providers. Where these requirements are not observed, 
it is important that we act. In the last 5 months FinCEN has 
taken civil enforcement actions against three unregistered 
money transmitters. Treasury is also working to ensure that our 
domestic regime is as robust as possible. Treasury is currently 
conducting a broad analysis of hawalas operating in the United 
States to better understand domestic hawala users and the money 
flows associated with their transactions. Moreover, Treasury is 
also engaging in rulemaking to impose cross-border reporting 
requirements on all cross-border transfers above one thousand 
dollars for all money transmitters. This will enhance our 
understanding of cross-border money flows through the industry 
and inform our outreach, enforcement and regulatory compliance 
efforts.

Q.3.-3. How effective are either international efforts through 
the Financial Action Task Force (``FATF'') or international law 
enforcement measures on informal value systems?

A.3.-3.The Financial Action Task Force (FATF) sets 
international AML/CFT standards and works for their global 
implementation. The FATF standards require that informal value 
systems be licensed or registered, and subject to transparency 
requirements. These standards provide an important baseline for 
global efforts in this area. In particular, FATF--in 
cooperation with the IMF, World Bank, and FATF's regional 
affiliates--has undertaken a global initiative to assess the 
compliance of virtually every country in the world with the 
FATF standards.
    International standard setting, however, is necessary but 
insufficient to protect the U.S. financial system from illicit 
informal value transfer networks. As noted above, it must be 
combined with adequate regulation domestically and robust 
enforcement action as necessary. In February 2011, for example, 
Treasury designated the New Ansari Money Exchange, a major 
Afghan hawala and money laundering vehicle, and 15 affiliated 
individuals and entities under the Foreign Narcotics Kingpin 
Designation Act. These actions exposed a primary money 
laundering network that transferred billions of dollars into 
and out of Afghanistan and the neighboring region, including 
proceeds of narcotics trafficking and corruption and funds used 
to support insurgency financing. More broadly, Treasury has 
worked with the Pakistani government to improve its AML/CFT 
regime, including with respect to informal value transfer 
systems such as hawalas.
                                ------                                


 RESPONSE TO WRITTEN QUESTIONS OF SENATOR BROWN FROM DANIEL L. 
                             GLASER

Q.1. Are you investigating foreign banks today for possible 
violation of CISADA?

A.1. Yes, Treasury is currently investigating several foreign 
banks for activities that may result in findings under CISADA.

Q.2. If a foreign central bank is supporting Iran's 
proliferation activities or facilitating the activity of 
entities under U.S. or U.N. sanctions, would it be 
sanctionable?

A.2. Yes, a foreign central bank, like any other person or 
entity, may be subject to designation under U.S. law for 
supporting Iran's proliferation activities or providing 
material support to persons designated under U.S. counter-
proliferation sanctions.

Q.3. What financial tools does the United States have to press 
China to reduce its relationship with Iran?

A.3. China voted for all relevant United Nations Security 
Council resolutions relating to Iran, and has publicly 
committed to implementing them. Treasury has actively engaged 
with the Chinese government on this basis, encouraging a broad 
interpretation of both the letter and spirit of the 
resolutions, and providing specific information to enable 
robust Chinese implementation. Moreover, Treasury has 
communicated directly with large Chinese banks through their 
offices in the United States to ensure that they understand the 
risks they face from financial activities with Iran. We believe 
this ongoing engagement with China has been productive. Beyond 
this engagement, Treasury retains the same diverse set of tools 
it has available to protect the U.S. financial system from all 
illicit activity, including anti-money laundering authorities 
grounded in the Bank Secrecy Act and USA PATRIOT Act and 
sanctions authorities grounded in the International Emergency 
Economic Powers Act (IEEPA) and CISADA.
                                ------                                


 RESPONSE TO WRITTEN QUESTIONS OF SENATOR HAGAN FROM DANIEL L. 
                             GLASER

Q.1. During your testimony, you mentioned that you plan to 
visit Panama during a joint Mexican-United States visit to 
Central America later this month in an attempt to better 
understand the networks that narcotics organizations use to 
launder money and finance illicit activities. It is my 
understanding from testimony provided to the Senate Armed 
Services Subcommittee on Emerging Threats and Capabilities that 
one of the predominant challenges that exists in Panama is its 
weak anti-money laundering regime and its inability to go after 
illicit finance.
    What is your assessment of Panama's current anti-money 
laundering regime? How involved are Panamanian financial 
institutions in the financing of narcotics activity throughout 
the world? What steps has Panama taken in recent years to limit 
these activities?

A.1. Like many other countries in the region, Panama's AML 
regime has deficiencies that make it vulnerable to money 
laundering activity related to narcotics trafficking. 
Deficiencies of particular concern include the lack of AML 
regulation and supervision in the Colon Free Zone and the 
opaque company formation options available in the jurisdiction. 
These deficiencies and others make the Panamanian financial 
system vulnerable to being exploited by bad actors. Through the 
South American FATF Style Regional Body (GAFISUD), we are 
working with Panama to remedy these deficiencies. A recent step 
Panama has taken to address transparency issues is the 
ratification of a tax information exchange agreement with the 
United States. During my upcoming trip, I hope to discuss 
additional steps Panamanian authorities can take to protect 
themselves and their financial institutions from money 
laundering predicated on narcotics trafficking.

Q.2. In your testimony, when discussing Central America's 
financial institutions, you referenced the Lebanese Canadian 
Bank. Was it your implication that similar institutions support 
the global narcotics financing network from Panama?

A.2. Lebanese Canadian Bank (LCB) was an important financial 
node in a narcotics money laundering network with links in the 
Western Hemisphere, Asia, Africa, and the Middle East. Though 
it was not my intention to imply that there are financial 
institutions in Panama that are precisely analogous to LCB, 
clearly narcotics trafficking organizations have financial 
networks in the Western Hemisphere and it is important that we 
target them. An important part of my upcoming visit to Panama 
will be to seek Panamanian government assistance in identifying 
and disrupting these financial networks.
                                ------                                


RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN JOHNSON FROM TIMOTHY 
                           G. MASSAD

Q.1. Mr. Massad, since our last hearing on TARP oversight (3/
17/11), you quickly responded to concerns I and others raised 
regarding HAMP with announced changes to the program, including 
a new servicer scorecard that includes penalties for non-
compliance. What impact do you expect these changes to have?

A.1. Recently, Treasury announced two enhancements to the 
Making Home Affordable (MHA) program implementation and 
reporting practices, which will be implemented soon. First, we 
will require servicers to establish a single point of contact 
with potential HAMP-eligible borrowers who will serve as a 
relationship manager to assist with the borrower's 
communications with the servicer. Treasury recognizes that too 
often homeowners receive conflicting information from their 
servicer and cannot gain access to someone knowledgeable about 
their case. This program enhancement is aimed at addressing 
that problem.
    Second, we will be enhancing MHA reporting by expanding our 
disclosure of the results of our servicer compliance reviews. 
Treasury has a robust compliance program, with compliance 
agents performing reviews as often as monthly in the largest 
servicers. The top priority of our compliance program has been 
to ensure that homeowners are appropriately assisted under MHA 
and that servicers are meeting their obligations under the 
program. In doing so, we require remedial action where needed 
to correct areas of non-compliance.
    To further bolster these efforts, Treasury is developing 
and plans to release next month more information regarding 
compliance reviews for each of the ten largest MHA 
participating servicers. This will provide more information 
regarding each of those ten largest servicers' respective 
compliance with MHA requirements, and is designed to provide 
greater transparency for the public regarding servicer 
performance. Under the contracts associated with MHA, Treasury 
will begin withholding financial incentives for servicers whose 
performance is deemed to be materially insufficient.
    The number of homeowners who will benefit from these 
enhancements to the program depends upon numerous variables, 
including the performance of participating mortgage servicers, 
the impact of any future changes to program terms and 
procedures, and the overall state of the economy and the 
housing market. That said, by requiring a single point of 
contact, Treasury expects servicers to improve their 
performance resulting in better communication with homeowners, 
fewer situations where homeowners feel their servicer is not 
responsive, more people in the program, fewer lost documents, 
and greater homeowner understanding of their mortgage 
mitigation options. Similarly, we believe that expanded 
reporting on compliance will enhance servicer performance 
overall. Approximately 1.4 million homeowners are currently 
estimated to be eligible for the program, in addition to the 
670,000 homeowners who have already received permanent 
modifications.

Q.2. In a Bloomberg poll last year, 60 percent of Americans 
said they believe most of the TARP money to the banks is lost. 
What is the current state of TARP repayments, and what steps 
will you take to ensure the administration of TARP is 
transparent to Congress and the American people?

A.2. Congress originally authorized $700 billion for TARP. We 
will spend no more than $475 billion. Of the $411 billion 
disbursed to date, we have already received back a total of 
$296 billion. Taxpayers have now recovered an amount equal to 
72 percent of total TARP disbursements, and I am hopeful that 
we will recover most of the outstanding amount within the next 
few years, market conditions permitting. Moreover, taxpayers 
have now recovered more than 100 percent ($251.6 billion) of 
the $245.1 billion in total funds disbursed for TARP 
investments in banks (inclusive of dividends, interest, and 
other income). Every additional dollar recovered from banks 
will constitute a positive return to taxpayers. Indeed, 
Treasury currently estimates that bank programs within TARP 
will ultimately provide a lifetime positive return of over $21 
billion. CBO's latest estimate puts the overall cost of TARP at 
approximately $19 billion--just a fraction of the initial 
estimate of $356 billion.
    To address the second part of your question, Treasury has 
taken many steps that have made TARP one of the most 
transparent programs in the Federal Government. Our website has 
a daily TARP tracker that shows the amount of funds disbursed, 
still outstanding, and returned by program. This is updated 
every day. We also provide a full report on TARP funds returned 
and outstanding in our monthly report to Congress (pursuant to 
Section 105(a) of the Emergency Economic Stabilization Act of 
2008 (EESA)), which details how TARP funds have been used, the 
status of recovery of such funds by program, and information on 
the estimated cost of TARP. In addition, Treasury has published 
hundreds of comprehensive reports and other information about 
TARP, so that the public knows how its money was invested, who 
received it and on what terms, how much has been repaid, and 
how much income has been earned from investments. This 
information is posted on our website, FinancialStability.gov, 
and includes:

   LThe daily TARP tracker and the monthly 105(a) 
        report to Congress referenced above;

   LA monthly housing report containing detailed 
        metrics on the housing programs;

   LA quarterly report on the PPIP program that 
        provides detailed information on the funds, their 
        investments, and returns;

   LA report on each transaction (such as an investment 
        in or repayment by an institution) within two business 
        days of its completion;

   LA quarterly report that details all dividend and 
        interest payments;

   LPeriodic reports on the sale of warrants, including 
        information on auctions as well as on how the sale 
        price was determined in the case of any repurchase of 
        warrants by a TARP recipient;

   LMonthly lending and use-of-capital surveys that 
        contain detailed information on the lending and other 
        activities of banks that have received TARP funds;

   LA list of all the institutions participating in 
        TARP programs and of all the investments Treasury has 
        made; and

   LEvery contract and financial agency agreement it 
        has entered into.

Further, pursuant to EESA, Treasury prepares separate, audited 
financial statements for TARP. In its first 2 years of 
operations, TARP's financial statements received unqualified 
(``clean'') audit opinions from the Government Accountability 
Office (GAO), and separate reports on internal control over 
financial reporting were unqualified and found no material 
weakness-unprecedented achievements for a startup operation 
with an extraordinary emergency mission. As a result of these 
efforts, the Office of Financial Stability (OFS) just received 
its second Certificate of Excellence in Accountability and 
Reporting award from the Association of Government Accountants.

Q.3. Former Senator Ted Kaufman testified before our panel on 
TARP, saying the program ``has become one of the most 
thoroughly scrutinized Government programs in U.S. history.'' 
Has TARP oversight been helpful to Treasury in administering 
the program? Will you continue to be responsive to concerns and 
suggestions Congress and the oversight bodies have to improve 
TARP?

A.3. OFS has a very cooperative relationship with our oversight 
bodies, and their reports and recommendations have made 
important contributions to the development, strength, and 
transparency of TARP programs. To date, we have responded to 80 
reports from GAO, the Congressional Oversight Panel, and the 
Special Inspector General for TARP (SIGTARP); have participated 
in more than 30 Congressional hearings on TARP; and have 
adopted more than 120 of the recommendations made by the 
oversight bodies. If confirmed, I will continue to be 
responsive to and will work closely with this Committee and 
other Committees of Congress, SIGTARP, GAO, and the Financial 
Stability Oversight Board to ensure that TARP meets the highest 
standards.
                                ------                                


RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM TIMOTHY G. 
                             MASSAD

Q.1. Last month, the Government Accountability Office (GAO) 
issued a report entitled, ``Improvements are Needed in Internal 
Control Over Financial Reporting for the Troubled Asset Relief 
Program.'' The report described deficiencies that the GAO had 
identified in the Office of Financial Stability's internal 
control over its accounting and financial reporting processes. 
What steps have you taken to remedy these deficiencies? What 
plans do you have for ensuring that TARP assets are properly 
valued?

A.1. Before addressing what action we have taken, it is 
important to put the report in context. Treasury has taken many 
steps that have made TARP one of the most transparent programs 
in the Federal Government. Pursuant to the Emergency Economic 
Stabilization Act of 2008 (EESA), Treasury prepares separate, 
audited financial statements for TARP. In its first 2 years of 
operations, TARP's financial statements received unqualified 
(``clean'') audit opinions from the GAO. In addition, GAO 
issued separate reports on internal control over financial 
reporting that were unqualified and that found no material 
weakness. These are unprecedented achievements for a startup 
operation. Those clean opinions demonstrate that the Office of 
Financial Stability (OFS) has accurately valued and reported on 
TARP assets since the program's inception.
    The deficiencies noted by GAO were related to recommended 
improvements regarding internal control over financial 
reporting, not the accuracy of OFS's financial statements or 
the valuation of OFS assets. After its fiscal year 2010 report, 
GAO sent OFS a management letter with specific recommendations 
relating to improvements to specific internal control 
processes. With those recommendations as a guide, OFS 
anticipates that by the end of June, OFS will have corrective 
actions in place that will address each of the issues 
identified by GAO. GAO's overall conclusion concerning the 
quality and accuracy of fiscal year 2010 OFS statements was as 
follows:

        OFS's financial statements for TARP, including the accompanying 
        notes, present fairly, in all material respects, in conformity 
        with U.S. generally accepted accounting principles, OFS's 
        assets, liabilities, and net position as of September 30, 2010, 
        and 2009, and its net cost, changes in net position, and 
        budgetary resources for fiscal years 2010 and 2009.

As a result of these efforts, OFS just received its second 
Certificate of Excellence in Accountability and Reporting award 
from the Association of Government Accountants.
    On April 18, 2011, GAO sent OFS a management report (the 
``Report'') based on GAO's fiscal year 2010 audit of OFS's 
financial statements and its audit of internal control over 
OFS's financial statements. The Report makes nine individual 
recommendations to OFS to correct one significant deficiency 
and two lesser control deficiencies. For example, the Report 
recommends that OFS take corrective action to ensure that only 
designated officials conduct and review period-end 
reconciliations; that journal entry review properly considers 
supporting documentation before entry into the general ledger; 
and that asset valuations only reflect amounts outstanding at 
fiscal year end.
    OFS is working hard to develop a corrective action plan 
(``CAP'') to address each of the nine recommendations. However, 
because we received the Report only 3 weeks ago, the CAP is not 
yet complete. Nonetheless, the CAP will provide the following: 
it will list GAO's findings and related recommendations; it 
will describe OFS's planned activities; and it will identify 
target completion dates. Moreover, the OFS Chief Financial 
Officer has identified and has assigned individual OFS staff 
members to address each of the nine recommendations. These 
staff members will develop corrective actions, which will be 
compiled and reviewed by OFS's Internal Control Program Office 
and senior management relative to GAO's findings. The 
corrective actions, in turn, will be entered into the 
Department of the Treasury tracking system and progress will be 
monitored by OFS leadership, Treasury's Deputy Chief Financial 
Officer staff, and the GAO. Corrective actions will not be 
closed until they have been resolved successfully and there is 
sufficient documentation of that fact. OFS anticipates that by 
the end of June we will have corrective actions in place that 
will address each of the recommendations made by GAO.
    Additionally, you specifically ask about our plans to 
ensure that TARP assets are valued properly. We agree that this 
is an important issue, and as noted above, we are working hard 
to develop a CAP to address all of GAO's recommendations, 
including areas GAO identified in which controls regarding the 
estimation process could be improved. In particular, during its 
review of interim estimates, GAO found that the Governmentwide 
discounting tool--which OFS is required to use--has limitations 
in making adjustments to exclude future disbursements that are 
separately needed for budget formulation purposes. Therefore, 
GAO recommended that OFS only include cash-flows related to 
outstanding investment balances. In addition, GAO noted several 
instances where documentation was insufficient involving the 
rationale for model changes and assumptions. In response to 
these recommendations, OFS is strengthening its testing, 
procedures, and documentation to ensure that estimates continue 
to be accurate and fully supported. We will make sure that 
these corrective actions taken will be described in our CAP and 
supporting materials.
    While OFS is committed to implementing each of the nine 
recommendations set forth in the GAO's Report, we are pleased 
with GAO's overall conclusion that OFS's financial statements 
``present fairly, in all material respects, in conformity with 
U.S. generally accepted accounting principles, OFS's assets, 
liabilities, and net position as of September 30, 2010, and 
2009.'' In its first 2 years of operations, TARP's financial 
statements received unqualified (``clean'') audit opinions from 
the GAO. In addition, GAO issued separate reports on internal 
control over financial reporting that were unqualified and that 
found no material weakness. As a result of these efforts, OFS 
just received its second Certificate of Excellence in 
Accountability and Reporting award from the Association of 
Government Accountants.
                                ------                                


  RESPONSE TO WRITTEN QUESTIONS OF WANDA FELTON FROM CHAIRMAN 
                            JOHNSON

Q.1. Congress has mandated that at least 20 percent of the 
Export-Import Bank's annual authorizations go toward small 
business transactions. How can the Export-Import Bank work to 
exceed the 20 percent mandate moving forward?

A.1. One of Ex-Im Bank's mandates is to ``aid, counsel, assist, 
and protect, insofar as is possible, the interests of small 
business concerns in order to preserve free competitive 
enterprise.'' It is my understanding that Ex-Im Bank treats 
this mandate seriously--recognizing that small business is the 
engine that drives job creation. Under Chairman Hochberg, the 
Bank has announced its intent to achieve the following goals 
with respect to small business activity:

   Lincrease the cumulative value of authorized small 
        business transactions to at least $30 billion by fiscal 
        year 2015;

   Lsupport a total of $44.1 billion in small business 
        export sales; and

   Ladd 5,000 small business clients.

    A variety of tools are available to increase support for 
small businesses. These include:
Proactive Outreach and Training (road shows, seminars and webinars) To:

   Lincrease awareness of the Bank's programs;

   Lencourage small businesses to begin exporting; and

   Ltrain small businesses in how to access and utilize 
        its programs.
Innovative Products Tailored To Meet the Specific Needs of Small 
        Businesses
   LProvide access to competitively priced capital.

   LStreamline the application process.

   LReduce response time.
Leverage All Available Resources To Maximize Impact
   LDesign products that will attract bank and 
        insurance company participation.

   LLeverage other agencies such as the SBA.

   LUse Board members to get the message out.

It is my understanding that, through these efforts, Ex-Im Bank 
authorized nearly 3,100 small businesses transactions, which 
accounted for more than 87 percent of the Bank's total 
transactions in fiscal year 2010.

Q.2. The Export-Import Bank's decisions occasionally gain the 
attention of interested parties that do not necessarily 
interact with the Bank. What is your view on how the Export-
Import Bank can best receive input from various stakeholders 
who will be impacted by the decisions it makes?

A.2. It is reasonable to expect that Ex-Im Bank's decisions may 
affect many parties, including industry participants, Congress 
and its constituents, and other Government agencies. The Bank's 
primary mission is to promote U.S. job creation through 
exports. However, the Bank is required to fulfill this mandate 
while considering other policy objectives such as promoting 
renewable energy. Ex-Im Bank should anticipate the impact of 
its activities in the context of these broader considerations 
and undertake reasonable efforts to engage interested parties 
to seek their input, when appropriate. Ex-Im Bank's charter 
stipulates that it must notify Congress of authorized 
transactions of $100 million or more. In addition, there is a 
duty to seek input from the Department of Treasury, the State 
Department, and the National Security Council in connection 
with transactions with perceived implications for foreign 
policy, national security, and environmental policy as well as 
competitive factors which are perceived as potentially harmful 
to domestic interests.
    Ex-Im Bank has established internal due diligence 
procedures and policies to promote compliance and flag 
potential issues. Moreover, the Bank's staff is highly 
professional and experienced. To the extent that additional 
input is needed, Board members and staff can engage external 
resources. It is the Board's fiduciary responsibility to make 
its best efforts to weigh the various implications of its 
actions.
    If confirmed, I would have an open door policy regarding 
transactions pending before the Board. I would welcome and 
encourage input from individuals, industry and the Congress 
regarding transactions large and small.

   RESPONSE TO WRITTEN QUESTION OF WANDA FELTON FROM SENATOR 
                             SHELBY

Q.1. The duties of Board members of the U.S. Export-Import Bank 
(Ex-Im Bank) are not defined or explained in Ex-Im Bank's 
Charter. It is largely up to each Board member to determine how 
they want to have an impact on Ex-Im Bank.
    What will each of your priorities be as Board members? 
Taking into consideration the Chairman's set of priorities and 
those mandated by Congress, which aspects of Ex-Im Bank's 
operations would you each request to focus on, and why?

A.1. If confirmed, I feel confident that my priorities will be 
consistent with Ex-Im Bank's Charter, the Bank's Congressional 
mandates, and by extension, the Chairman's priorities. I am 
strongly committed to the Bank's mission. Certainly, the 
ability to promote American competitiveness in foreign markets 
to protect jobs, without burdening tax payers, is a unique and 
valuable tool in less robust economic cycles. However, I 
believe that Ex-Im Bank serves a critical need irrespective of 
economic conditions and that utilizing every resource to 
promote American competitiveness would serve the nation's long-
term strategic interests. As President Obama has observed, 95 
percent of consumers are outside the United States. U.S. 
businesses must position themselves to compete for these 
consumers.
    The Bank has also been directed by Congress to meet other 
important objectives, including providing access to capital to 
small business (including minority- and women-owned 
enterprises); promoting renewable energy; and promoting U.S. 
exports to sub-Saharan Africa. I believe that my background 
would allow me to make a meaningful contribution in bolstering 
American exports in Africa. Ex-Im Bank has identified nine 
countries which should be the focus of attention by virtue of 
the size of their markets, their projected economic growth, and 
substantial need for equipment and services to build basic 
infrastructure. I have prior business experience in two of the 
targeted countries in sub-Saharan Africa (Nigeria and South 
Africa) and believe I can be of value in this effort.
    In addition, while the Bank has made reaching out to small 
business a significant priority, there may be an opportunity to 
address the needs of middle-market companies which have also 
experienced a significant withdrawal of bank financing in the 
current down economic cycle. Again, I have been active in this 
arena by virtue of my prior business experience and I believe I 
have an understanding of how to approach this task. I believe 
that I can help raise general awareness of Ex-Im Bank through 
speaking engagements and other outreach.
    Finally, I am interested in specific tasks such as helping 
to plan Ex-Im Bank's next annual conference. I have previously 
been active in investor relations and helped plan annual 
conferences and have a network that may be valuable in 
attracting high quality speakers.
                                ------                                


  RESPONSE TO WRITTEN QUESTIONS OF WANDA FELTON FROM SENATOR 
                             VITTER

I do not have personal knowledge of the issues you raised. If I 
am confirmed, I will request to be briefed on them and will be 
happy to continue to work with you on these issues of concern. 
In the meantime, the Ex-Im Bank staff has provided the 
following information on the questions you asked.

Q.1. Please provide a list of all loans or other financial 
support over the last decade that have gone to foreign state-
owned energy companies that have been utilized in projects for 
their domestic energy production or to increase refining 
capacity.

A.1. See attached spreadsheet.

Q.2. Please provide a list of the top 5 U.S. companies that 
have been financial beneficiaries of Ex-Im Bank financing over 
the last decade in terms of total dollar support.

A.2. See attached spreadsheet.

Q.3. Of the initial request for Ex-Im Bank financing by 
Petrograd based on the May 7, 2009 preliminary commitment of $2 
billion how many companies have filed documentation to qualify?

A.3. There is no process of qualification for a preliminary 
commitment, since the Bank acts on actual transactions, not 
non-binding preliminary commitments. We are close to finalizing 
a $308 million credit guarantee facility as part of the 
preliminary commitment. Bank transactions are individually 
evaluated on the bases of ``reasonable assurance of repayment'' 
and, where applicable, the Bank's environmental guidelines. In 
other words, the great majority of the Bank's credit 
evaluations involve foreign buyers of U.S. exports, in both the 
public and private sectors.

Q.4. What metrics does Ex-Im Bank use in analyzing the return 
on investment before approving loans?

A.4. The Ex-Im Bank is not a traditional bank or a for-profit 
business. Bank transactions are individually evaluated on the 
basis of ``reasonable assurance of repayment.'' Other return on 
Ex-Im Bank transactions that is important can be measured, when 
possible, in U.S. jobs. Our measurement is that, on average, 
every $1 billion in U.S. exports supports approximately 7,400 
U.S. jobs. The Bank's primary mission is to support jobs 
through exports. Through prudent management the Bank has been 
self-sustaining since fiscal year 2008, meaning that revenues 
have exceeded losses and expenses. The Bank has returned more 
than $3.4 billion over the past 5 years. In addition, Congress 
recently rescinded $275 million of the Bank's excess funds as 
part of the fiscal year 2011 Continuing Resolution, which is 
additional money that benefits the U.S. taxpayers.

Q.5. What is the minimal return on investment Ex-Im Bank 
requires before issuing a loan or any other form of financial 
support?

A.5. The Federal Credit Reform Act of 1990 requires Ex-Im Bank 
to set aside reserves for all transactions at the time of 
authorization or commitment. If funds are not available at that 
time, the Ex-Im Bank is legally prohibited from approving a 
transaction. Since fiscal year 2008, Ex-Im Bank has been self-
sustaining where the fees charged on its transactions have paid 
for both prudent loan loss reserves as well as the Bank's 
administrative expenses. Again, Bank transactions are 
individually evaluated on the bases of ``reasonable assurance 
of repayment'' and the other return on Ex-Im Bank transactions 
that is important can be measured, when possible, in U.S. jobs. 
By the congressional mandate in its charter, Ex-Im Bank must 
find a reasonable assurance of repayment before it can approve 
a transaction. Transactions must also comply, where applicable, 
with the Bank's environmental guidelines. The return on 
investment is measured in U.S. jobs supported.

Q.6. Please provide a list of all Ex-Im Bank financing in which 
GE was the beneficiary over the last decade.

A.6. See attached spreadsheet.

Q.7. Please provide a list of all financial arrangements that 
have gone bad or not been repaid and by what companies and in 
what countries over the last decade.

A.7. See attached spreadsheet.

Q.8. What is the total dollar amount of all outstanding Ex-Im 
Bank financing obligations and what is the estimated annual 
return on investment for each year over the next 5 years.

A.8. The Export-Import Bank has been self-sustaining since 
fiscal year 2008, and expects to be self-sustaining going 
forward. As a self-sustaining agency, Ex-Im Bank pays for all 
annual costs from receipts or fees that it charges on the 
supported transactions. The following chart shows that Bank's 
self-sustaining results since fiscal year 2008.
Export-Import Bank of the United States

                                             Self-Sustaining Results
                                                 FY 2008-FY 2010
                                              (dollars in millions)
----------------------------------------------------------------------------------------------------------------
               FY                  Authorized Amount        Revenue            Expenses               Net
----------------------------------------------------------------------------------------------------------------
2008............................          $14,398.9              $122.8              $103.4               $19.4
2009............................          $21,021.1              $292.1              $118.5              $173.6
2010............................          $24,467.8              $479.4              $126.8              $352.6
----------------------------------------------------------------------------------------------------------------

    As a result of its self-sustaining, the Bank in fiscal year 
2009 returned to the U.S. Treasury $136 million as negative 
subsidy, and in fiscal year 2011 the U.S. Congress rescinded 
$275 million in unobligated balances.
    During the past 5 years, the Bank has returned $3.4 billion 
to the U.S. Treasury.
    The Ex-Im Bank is a demand driven agency and we forecast 
total exposure growth of approximately 12 percent per year. In 
fiscal year 2010, Ex-Im Bank's total exposure was $75.2 billion 
and by the end of fiscal year 2014, the Bank forecasts exposure 
to be $125 billion. The exposure increase is driven by the 
significant increase in new authorizations. Since fiscal year 
2008, new authorizations have increased an average of 25 
percent per year. Based on the Bank's new authorization 
pipeline and other factors, it forecasts growth in new 
authorization at 15 percent per year after fiscal year 2010. 
The Bank will continue to be self-sustaining during this time 
and forecasts revenue of $468 million compared to expenses of 
$201 million during fiscal year 2012. By FY 2014, the Bank 
forecasts revenue to grow to approximately $1.0 billion with 
expense levels slightly higher than the fiscal year 2012 
levels.



                                ------                                


  RESPONSE TO WRITTEN QUESTIONS OF CHAIRMAN JOHNSON FROM SEAN 
                            MULVANEY

Q.1. The President has called for a doubling of our nation's 
exports by 2015. In your view, what role should the Export-
Import Bank play in that effort?

A.1. Trade is a very important part of the American economy. 
Some estimates put trade as contributing a quarter of U.S. GDP 
growth over the last decade. In 2008, total trade (exports plus 
imports) represented more than 30 percent of U.S. GDP. In 1947, 
when the GATT was launched, it represented only 7.5 percent of 
U.S. GDP. Exports represent 12.5 percent of U.S. GDP. Over the 
last 13 years, total U.S. exports have increased 6.8 percent 
per year (1995-2008).
    The President has called for a doubling of our nation's 
exports by 2015 as part of his National Export Initiative 
(NEI). It is an ambitious goal that will require wide ranging 
efforts across the public and private sector. The Export-Import 
Bank of the United States plays an important role contributing 
to overall U.S. Government efforts. First, the Bank enables 
U.S. companies--large and small--to turn export opportunities 
into real sales that help maintain and create U.S. jobs and 
contribute to a stronger national economy. In fiscal year 2010 
the Bank supported over $34 billion of U.S. exports with 
authorizations of direct loans, guarantees, and export 
insurance of nearly $25 billion.
    Second, the Bank influences U.S. Governmentwide public 
awareness efforts about export opportunities. The Bank has more 
than 60 city/State partners in 40 States with a mission of 
expansion, promotion, and creation of jobs in a given region by 
helping to make available export financing and entrepreneurial 
services. The Bank cooperates with other Federal organizations 
such as OPIC, TDA, the Commerce Department, and USTR in 
providing leadership to this public awareness effort.
    And third, the Bank is a member of the Trade Promotion 
Coordinating Committee, the U.S. Government inter-agency 
process that deliberates on U.S. trade policy and supports 
executive branch leadership on trade issues in conjunction with 
the Congress. Tools of the Bank to support U.S. exports under 
the National Export Initiative will need to be complemented by 
other public and private sector efforts such as bilateral trade 
agreements to remove barriers to U.S. exports (FTAs with 
Panama, Colombia, and South Korea) and regional trade 
liberalization efforts as the Trans Pacific Partnership. 
Private sector efforts to innovate and invest will be 
critically important as well to meeting America's export goals.

Q.2. Information technology is an important tool in ensuring 
that the Export-Import Bank is operated effectively and 
transparently. According to the Export-Import Bank's 2010 
annual report, the Bank has taken several steps to improve its 
website and outreach efforts for customers and the public. How 
do you propose to work to further these initiatives?

A.2. Prior to this position, I served as the Assistant 
Administrator for Management, a Presidentially appointed and 
Senate-confirmed position, at the U.S. Agency for International 
Development. In this position, I supervised the Agency's Chief 
Information Officer (CIO) and secured Agency approval of an IT 
strategic plan. Through this experience, I developed an 
understanding of key enterprise architecture and IT change 
management issues as organizations undergo substantial 
renovation or modernization of their IT infrastructure.
    If confirmed, I would make every effort to bring this 
experience to the Bank's management. I would work with the 
Chairman and other Board members in oversight efforts that the 
Board might undertake as the Bank aims to implement IT 
improvements across its operations, particularly outreach 
efforts to customers and the general public.
                                ------                                


   RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM SEAN 
                            MULVANEY

Q.1. The duties of Board members of the U.S. Export-Import Bank 
(Ex-Im Bank) are not defined or explained in Ex-Im Bank's 
Charter. It is largely up to each Board member to determine how 
they want to have an impact on Ex-Im Bank.
    What will each of your priorities be as Board members?

A.1. If confirmed, my primary responsibility and priority will 
be to exercise the fiduciary duty and Board oversight 
responsibility as requested by the President of the United 
States and expected under the law. The primary elements of this 
will be to assess the largest transactions considered by the 
Bank. In my nomination statement, I identified two priorities, 
including supporting the Bank's strategic plan developed in 
2010 and improving Bank metrics that give stakeholders a sense 
of its performance over time.
    The Bank completed a strategic review in July, 2010. The 
plan identified ways to expand awareness of Bank services 
through increased outreach and partnerships, and ways to 
improve turn-around time of transactions. Four key programmatic 
priorities were developed, including increase the number of 
small- and medium-sized businesses using Bank services, support 
for environmentally beneficial exports with a particular focus 
on renewable energy, target business development with high 
potential for U.S. export growth, and build expertise and 
product offering in industries with high potential for export 
growth.
    Finally, if confirmed, I would like to help the Bank 
leadership and management explore opportunities to fill trade 
finance gaps facing U.S. service exporters. Between 1992 and 
2009, U.S. services exports increased by 183 percent, reaching 
$502 billion in 2009 according to the Commerce Department. The 
services industry is the largest component of the U.S. economy, 
employing 8 of 10 Americans. U.S. service exports constitute 30 
percent total value of all U.S. exports. The Bank currently 
supports about $2.5 billion in services exports, a modest 
percentage of its annual total program authorizations. The 
services portfolio of the Bank may have the potential to grow 
thereby enhancing U.S. service exports and job creation.

Q.2. Taking into consideration the Chairman's set of priorities 
and those mandated by Congress, which aspects of Ex-Im's 
operations would you each request to focus on, and why?

A.2. As part of its charter and authorization approved by 
Congress and the President, the Bank has a number of 
priorities. Board Members will undertake priorities and 
initiatives from time to time that are prescribed by the Bank's 
President that further the Bank's mission. These could include 
business development (international or domestic), priorities 
identified by Congress, and special projects. Priorities from 
the latest authorization agreed to by the President and the 
Congress include small business, women and minority-owned 
businesses, environmentally beneficial technologies and 
renewable energy, and Sub-Saharan Africa. Board members are 
expected to collaborate with the Chairman and select one of 
these areas and devote considerable effort in promoting and 
furthering the Bank's activities therein.
    Working in partnership with the Chairman's office, the Bank 
directors are expected to select one or more target 
international markets for outreach and engagement. Ex-Im Bank 
has identified nine focus countries, including Brazil, 
Colombia, India, Indonesia, Mexico, Nigeria, South Africa, 
Turkey, and Vietnam. In addition, Board members are expected to 
select one or more key exporting sectors and conduct outreach 
to exporters in that sector domestically.
    At this point, I have had no conversations with Chairman 
Hochberg so it is premature for me to firmly identify areas of 
priority since I need to work with him and the other Board 
members. I also would like to work with Bank staff to 
understand where there are needs to be filled. However, if 
confirmed, I believe that some of my skills and experiences 
could support Bank efforts to meet congressional directives 
relating to small business or perhaps Sub-Saharan Africa. 
Country or regional areas where I might add value to the Bank's 
mission include Turkey, South Africa, or Latin America. 
Potential sector areas where I might support the bank would 
include information and communication technology (that often 
include a services component) as well as medical technology. My 
earlier U.S. trade and development policy positions as well as 
private sector experience in the health care industry could be 
leveraged across these areas of Bank activity. For example, a 
number of countries in Latin America are partnered with the 
United States in either bilateral or regional trade agreements. 
Moreover, a number of these countries are either lower or 
middle income countries with significant opportunities for 
infrastructure development.
                                ------                                


   RESPONSE TO WRITTEN QUESTIONS OF SENATOR VITTER FROM SEAN 
                            MULVANEY

I do not have personal knowledge of the issues you raised. If I 
am confirmed, I will request to be briefed on them and will be 
happy to continue to work with you on these issues of concern. 
In the meantime, the Ex-Im Bank staff has provided the 
following information on the questions you asked.

Q.1. Please provide a list of all loans or other financial 
support over the last decade that have gone to foreign state-
owned energy companies that have been utilized in projects for 
their domestic energy production or to increase refining 
capacity.

A.1. See attached spreadsheet.

Q.2. Please provide a list of the top 5 U.S. companies that 
have been financial beneficiaries of Ex-Im Bank financing over 
the last decade in terms of total dollar support.

A.2. See attached spreadsheet.

Q.3. Of the initial request for Ex-Im Bank financing by 
Petrobras based on the May 7, 2009 preliminary commitment of $2 
billion how many companies have filed documentation to qualify?

A.3. As senior Bank officials explained to your staff at your 
office on May 6th, there is no process of qualification for a 
preliminary commitment, since the Bank acts on actual 
transactions, not non-binding preliminary commitments. We are 
close to finalizing a $308 million credit guarantee facility as 
part of the preliminary commitment. Bank transactions are 
individually evaluated on the bases of ``reasonable assurance 
of repayment'' and, where applicable, the Bank's environmental 
guidelines. In other words, the great majority of our credit 
evaluations involve foreign buyers of U.S. exports, in both the 
public and private sectors.

Q.4. What metrics does Ex-Im Bank use in analyzing the return 
on investment before approving loans?

A.4. Ex-Im Bank is not a traditional bank or a for-profit 
business. Bank transactions are individually evaluated on the 
bases of ``reasonable assurance of repayment.'' Other return on 
Ex-Im Bank transactions that is important can be measured, when 
possible, in U.S. jobs. Our measurement is that, on average, 
every $1 billion in U.S. exports supports approximately 7,400 
U.S. jobs. The Bank's primary mission is to support jobs 
through exports.
    Through prudent management the Bank has been self-
sustaining since fiscal year 2008, meaning that revenues have 
exceeded losses and expenses. The Bank has returned more than 
$3.4 billion over the past 5 years. In addition, Congress 
recently rescinded $275 million of the Bank's excess funds as 
part of the fiscal year 2011 Continuing Resolution, which is 
additional money that benefits the U.S. taxpayers.

Q.5. What is the minimal return on investment Ex-Im requires 
before issuing a loan or any other form of financial support?

A.5. The Federal Credit Reform Act of 1990 requires Ex-Im Bank 
to set aside reserves for all transactions at the time of 
authorization or commitment. If funds are not available at that 
time, the Ex-Im Bank is legally prohibited from approving a 
transaction. Since fiscal year 2008, Ex-Im Bank has been self-
sustaining where the fees charged on our transactions have paid 
for both prudent loan loss reserves as well as the Bank's 
Administrative expenses. Again, Bank transactions are 
individually evaluated on the bases of ``reasonable assurance 
of repayment'' and the other return on Ex-Im Bank transactions 
that is important can be measured, when possible, in U.S. jobs. 
By the congressional mandate in our charter, Ex-Im Bank must 
find a reasonable assurance of repayment before it can approve 
a transaction. Transactions must also comply, where applicable, 
with our environmental guidelines. The return on investment is 
measured in U.S. jobs supported.

Q.6. Please provide a list of all Ex-Im financing in which GE 
was the beneficiary over the last decade.

A.6. See attached spreadsheet.

Q.7. Please provide a list of all financial arrangements that 
have gone bad or not been repaid and by what companies and in 
what countries over the last decade.

A.7. See attached spreadsheet.

Q.8. What is the total dollar amount of all outstanding Ex-Im 
financing obligations and what is the estimated annual return 
on investment for each year over the next 5 years.

A.8. The Export-Import Bank has been self-sustaining since 
fiscal year 2008 and expects to be self-sustaining going 
forward. As a self-sustaining agency, Ex-Im Bank pays for all 
annual costs from receipts or fees that we charge on the 
supported transactions. The following chart shows that Bank's 
self-sustaining results since fiscal year 2008.

                         Export-Import Bank of the United States Self-Sustaining Results
                                                 FY 2008-FY 2010
                                              (dollars in millions)
----------------------------------------------------------------------------------------------------------------
               FY                  Authorized Amount        Revenue            Expenses               Net
----------------------------------------------------------------------------------------------------------------
2008............................          $14,398.9              $122.8              $103.4               $19.4
2009............................          $21,021.1              $292.1              $118.5              $173.6
2010............................          $24,467.8              $479.4              $126.8              $352.6
----------------------------------------------------------------------------------------------------------------

    As a result of our self-sustaining, The Bank in fiscal year 
2009, Bank returned to the U.S. Treasury $136 million as 
negative subsidy and in fiscal year 2011, the U.S. Congress 
rescinded $275 million in unobligated balances. During the past 
5 years, the Bank has returned $3.4 billion to the U.S. 
Treasury.
    The Ex-Im Bank is a demand driven agency and we forecast 
total exposure growth of approximately 12 percent per year. In 
fiscal year 2010, Ex-Im Bank's total exposure was $75.2 billion 
and by the end of fiscal year 2014, the Bank forecasts exposure 
to be $125 billion. The exposure increase is driven by the 
significant increase in new authorizations. Since fiscal year 
2008, new authorizations have increased an average of 25 
percent per year. Based on the Bank's new authorization 
pipeline and other factors, we forecast growth in new 
authorization at 15 percent per year after fiscal year 2010. 
The Bank will continue to be self-sustaining during this time 
and forecasts revenue of $468 million compared to expenses of 
$201 million during fiscal year 2012. By fiscal year 2014, the 
Bank forecasts revenue to grow to approximately $1.0 billion 
with expense levels slightly higher than the fiscal year 2012 
levels.



