[Senate Hearing 117-325]
[From the U.S. Government Publishing Office]
S. Hrg. 117-325
NOMINATIONS OF PARISA SALEHI AND BRIAN MICHAEL TOMNEY
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
ON
NOMINATIONS OF:
PARISA SALEHI, OF THE DISTRICT OF COLUMBIA, TO BE INSPECTOR GENERAL,
EXPORT-IMPORT BANK
__________
BRIAN MICHAEL TOMNEY, OF VIRGINIA, TO BE INSPECTOR GENERAL, FEDERAL
HOUSING FINANCE AGENCY
__________
DECEMBER 7, 2021
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available at: https: //www.govinfo.gov /
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-208 PDF WASHINGTON : 2022
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey RICHARD C. SHELBY, Alabama
JON TESTER, Montana MIKE CRAPO, Idaho
MARK R. WARNER, Virginia TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia KEVIN CRAMER, North Dakota
STEVE DAINES, Montana
Laura Swanson, Staff Director
Brad Grantz, Republican Staff Director
Elisha Tuku, Chief Counsel
Corey Frayer, Professional Staff Member
Dan Sullivan, Republican Chief Counsel
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Charles J. Moffat, Hearing Clerk
Jason T. Parker, GPO Detail
(ii)
C O N T E N T S
----------
TUESDAY, DECEMBER 7, 2021
Page
Opening statement of Chairman Brown.............................. 1
Prepared statement....................................... 17
Opening statements, comments, or prepared statements of:
Senator Toomey............................................... 2
Prepared statement....................................... 17
NOMINEES
Parisa Salehi, of the District of Columbia, to be Inspector
General, Export-Import Bank.................................... 4
Prepared statement........................................... 19
Biographical sketch of nominee............................... 20
Responses to written questions of:
Chairman Brown........................................... 40
Senator Toomey........................................... 41
Senator Sinema........................................... 45
Brian Michael Tomney, of Virginia, to be Inspector General,
Federal Housing Finance Agency................................. 6
Prepared statement........................................... 29
Biographical sketch of nominee............................... 31
Responses to written questions of:
Chairman Brown........................................... 46
Senator Toomey........................................... 47
(iii)
NOMINATIONS OF PARISA SALEHI AND BRIAN MICHAEL TOMNEY
----------
TUESDAY, DECEMBER 7, 2021
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10 a.m., via Webex and in room 538,
Dirksen Senate Office Building, Hon. Sherrod Brown, Chairman of
the Committee, presiding.
OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
Chairman Brown. The Senate Committee on Banking, Housing,
and Urban Affairs will come to order. This hearing is in the
hybrid format. Our witnesses are in person. Members have the
option to appear either in person or virtually, or even both if
they choose.
The Committee meets today to consider two nominations,
Parisa Salehi to be Inspector General of the Export-Import Bank
and Brian Tomney to be Inspector General of the Federal Housing
Finance Agency. We congratulate the nominees and thank them for
appearing here today and for their willingness to serve in
these important roles. I also want to welcome their families
and friends in attendance and I've met them, and those watching
from home, and each nominee, certainly feel free at the
beginning or during your testimony to introduce family members,
either here or watching from somewhere else, by name.
It is so important that the Biden administration is working
to fill inspectors general vacancies. These positions are vital
to making our Government work for people, and to ensuring tax
dollars are put to good use for the people whom we serve.
The Trump administration took unprecedented steps--
unprecedented in the sense that Presidents of neither party had
done this in the past--to undermine IGs across the Executive
branch. They either sidelined them, or fired them without
cause, simply for doing their jobs, for showing independence,
which is their job, and pursuing the facts, which is also their
job.
Through audits, evaluations, and investigations,
inspectors' general offices play pivotal roles in uncovering
abuse, waste, and fraud, ensuring American tax dollars are
protected.
The nominees today possess the independence, honesty, and
integrity--qualities we all want and expect in an inspector
general--things they need to take on these critical roles. And
both nominees appearing before us are clearly qualified.
Ms. Salehi currently serves as the Chief of Staff to the
Inspector General of the Department of State. She assists the
IG on enterprise risk management and oversees the Congressional
and public affairs sections of the IG office. Prior to joining
State, she served in the USAID inspector general office.
Previously, Ms. Salehi spent more than 4 years at Ex-Im
Office of Inspector General, serving in various roles,
including as Acting Inspector General from 2018 to 2019. If
confirmed, she would be rejoining an office she is familiar
with, and her experience with the bank's charter and its
operations will enhance her office's work.
When she served as the Acting Ex-Im Inspector General, my
office found that she was very responsive to requests when we
needed additional information concerning her office's
investigations and reports.
Ex-Im, as we know, is vital to manufacturers in Ohio and
Montana and Pennsylvania and throughout the country. It will be
Ms. Salehi's job to help ensure that the bank works
efficiently. She will help the bank comply fully with its
charter and other statutory requirements. I believe she is well
prepared to step into this job immediately.
Welcome to the Committee.
From 2006 to 2017, Mr. Tomney served in various roles at
DOJ. From 2006 to 2009, he served as a trial attorney in DOJ's
criminal division, where he investigated drug trafficking and
narco-terror organizations. From 2009 to 2014, Mr. Tomney
served as Counsel for Rule of Law in the Office of the Deputy
Attorney General, where he engaged with teams of Federal
prosecutors and attorneys in efforts to root out corruption and
support the rule of law in Afghanistan and Iraq. He went on to
serve in several roles, including Assistant Deputy Attorney
General.
Mr. Tomney has a proven commitment to service, even in the
toughest situations. Early in his career he spent more than a
decade as a paramedic and a firefighter. He will bring those
same values with him to this job, ensuring that FHFA is working
for all homeowners and all renters.
Welcome to the Committee, Mr. Tomney. We are glad you are
here today too.
Thank you to both of you for your willingness to serve. I
look forward to your testimonies today.
Ranking Member Toomey.
OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY
Senator Toomey. Thank you, Mr. Chairman. Ms. Salehi and Mr.
Tomney, welcome to both of you and your families. I commend you
both for your commitment to public service and your willingness
to serve in these important roles to which you have been
nominated.
Mr. Tomney, if confirmed, you will have a challenging job.
The GSEs led us into the 2008 financial crisis through their
excessive risk taking, and Congress established FHFA as a tough
regulator to ensure that never happened again. But instead of
being the cop on the beat, the Biden administration seems
intent on turning FHFA into a coconspirator with the GSEs.
FHFA has taken a number of troubling steps to extend credit
to risky borrowers and undermine the GSEs' financial condition.
It has proposed reductions in the GSEs' capital requirements,
lowered guarantee fees and has said it is considering further
cuts, suspended restrictions on the GSEs' risk layering and
acquisitions of investor and second home loans, relaxed the
GSEs' underwriting requirements, and replaced much of FHFA's
senior leadership.
Meanwhile, housing prices, of course, have skyrocketed an
astonishing 18.5 percent in just the last 12 months. So I think
it is a question of when, not if, these good times for the
housing market come to an end, and I worry that FHFA's enabling
of risky lending, together with the Administration's total
disinterest in recapitalizing the GSEs through outside private
capital, has placed the GSEs on a path that could well lead to
another round of taxpayer bailouts.
Mr. Tomney, if that were not already enough, your job will
be made more challenging by an Administration with no
discernable housing policy besides giving mortgages to as many
borrowers as possible with little regard to their ability to
repay.
Housing is expensive, in part, because our housing policy
subsidizes demand while ignoring supply constraints. Our
Democratic colleagues' reckless tax-and-spend bill makes little
effort to increase housing supply.
The Senator Schumer earmark, or the ``Schu-mark,'' as I
call it, and as I discussed at the October 21st hearing, would
spend up to $40 billion renovating New York City's existing
public housing. Much of the other housing funds would go to
imprudent downpayment assistance and rental vouchers that add
further to housing demand. The bill even creates an astonishing
invitation to mortgage fraud by making $15 billion available to
borrowers who sign an attestation, truthfully or not, that they
are, quote, ``first-generation homebuyers,'' end quote.
Amazingly, you can qualify so long as your parents do not
currently own a home and you have not owned a home in the last
3 years. So much for ``first generation'' homebuyer.
We need to try something different than the same housing
policies that caused the 2008 financial crisis. To that end, in
March I proposed principles to guide housing finance reform
discussions. The Administration, however, has shown no interest
in real reform, and even missed a September 30th deadline to
report on its plan.
Mr. Tomney, given the path the Administration has put us
on, I suspect you might soon be investigating how we so eagerly
doubled down on 50 years of failed housing policy and thereby
predictably led the GSEs into what could be another round of
taxpayer bailouts.
Now turning to Ex-Im. Ex-Im claims that it only takes risks
that private lenders are unable or unwilling to take. We should
stop right there and ask ourselves: If private lenders are
unwilling or unable to take a risk, why should taxpayers be
forced to take that risk?
Yet, at the same time, Ex-Im also claims it only makes safe
bets. It is obviously impossible to do both. Ex-Im cannot only
take transactions so risky that no one else will do them, and
at the same time only be doing safe transactions. The fact is
Ex-Im wins business by systematically underpricing the risk it
takes. That is why borrowers go to Ex-Im instead of any number
of private lenders that will not offer deals on the same terms
as Ex-Im will. That is why our largest banks go to Ex-Im for
loan guarantees. The Ex-Im terms are too good to be true, at
least in the private sector.
And it is important to note that the vast majority of
American exports get done without Ex-Im support. We have
reviewed annual export data from 2007 through 2020. In that
period, the highest percent of U.S. exports using Ex-Im
financing was in 2012, and it was 2.3 percent. And that was
when Ex-Im had everything going for it. It was fully
operational, had a quorum on its board, and it had not reached
its lending limit.
The reality is we are the world's second-largest exporter
of goods behind only China, we lead the world in value-added
exports, and we do it almost entirely without Ex-Im financing.
Not only is Ex-Im financing generally not needed, but it is
often nothing more than crony capitalism providing taxpayer-
financed subsidies to some of the world's largest companies who
have plenty of access to private capital. Ex-Im's recent deal
guaranteeing an $82 million loan from JPMorgan to Qantas for
the purpose of buying jet engines from GE is just one example.
Generally, the same giant lenders, exporters, and foreign
companies--often State-owned--benefit from Ex-Im while
taxpayers take the risk. There is also a history of waste,
fraud, and abuse at Ex-Im. Ex-Im's IGs have identified numerous
concerning practices at the bank over the years. If confirmed,
Ms. Salehi will have the important responsibility to serve as
an independent watchdog.
Mr. Chairman, I look forward to hearing from today's
nominees.
Chairman Brown. Thank you, Senator Toomey.
Would witnesses please rise and raise your right hand.
Do you swear or affirm that the testimony you are about to
give is the truth, the whole truth, and nothing but the truth,
so help you God?
Ms. Salehi. I do.
Mr. Tomney. I do.
Chairman Brown. Do you agree to appear and testify before
any duly constituted committee of the Senate?
Ms. Salehi. I do.
Mr. Tomney. I do.
Chairman Brown. Thank you. Please be seated.
I welcome you both to the Committee. As I said, if you
would like to introduce family and friends, proceed.
Ms. Salehi, please begin your testimony. Thank you.
STATEMENT OF PARISA SALEHI, OF THE DISTRICT OF COLUMBIA, TO BE
INSPECTOR, EXPORT-IMPORT BANK
Ms. Salehi. Thank you, Chairman Brown, Ranking Member
Toomey, and Members of the Committee. I am honored to appear
before you today as the President's nominee to be the Inspector
General of the Export-Import Bank of the United States.
I would not be here today without the generous support of
my family, friends, and colleagues. I would particularly like
to recognize my mother, whose hard work and determination has
afforded me many opportunities. She grew up far away from this
free land, in a place where she was legally required to get her
husband's permission to do many simple things, like travel.
Through selfless acts she ensured that her kids would have
better and brighter life choices than the ones available to
her. I would also especially like to thank my partner, Burk,
who is here with me today, and has been supportive of my
professional growth for the past 18 years.
I have also benefited from the wisdom of many formal and
informal mentors along the way, who have graciously invested in
and supported me. The list is long, so I can only name a few:
my sister, Atousa, Peter Briggs, Jeanie and Kent Henricksen,
Allison Lerner, and Mark Greenblatt. I have learned many life
lessons from all of them, which I hope to pass forward.
If confirmed, I will be living proof of the American story,
that if you work hard you will 1 day go places no one thought
possible. I am a first-generation American and very proud of
it. Common to many first-generation Americans, my professional
path has not been easy or without sacrifices. To know that
someone like me can appear before you is the fulfillment of the
American dream--my dream.
With many years of experience, both in the public and
private sectors, I believe I offer unique qualifications to
lead as the IG for Ex-Im. My experience as Counsel to the Ex-Im
IG and subsequent services as Ex-Im's Acting IG allows me to
hit the ground running. I have learned from strong leaders at
the Offices of Inspectors General at the U.S. Agency for
International Development and the Department of State, where I
currently serve as the Chief of Staff. Both agencies have
taught me important lessons on effective oversight. If
confirmed, I hope to build on that foundation.
I appreciate Ex-Im's important mission of supporting
American jobs by facilitating the export of goods and services.
IGs play an important role in conducting reliable, objective,
fact-based oversight. Should I be confirmed, I am committed to
conducting audits and investigations relating to the programs
and operations of Ex-Im, as required by the law, and serving in
this role independently, with fairness and integrity. I will
seek to bring positive change to Ex-Im programs through
constructive relationships with Ex-Im leadership. As Acting IG,
I invested considerable time in building those relationships
and I will continue to do so, if confirmed, while maintaining
the independence of my office.
Inspectors general play a vital role in rooting out bad
actors. By partnering with other stakeholders, Government
agencies at the Federal and State level, and by promoting a
whole-of-Government approach we can make progress in this
effort and foster trust in Government programs. Bad actors can
erode trust in Federal programs, which can prove fatal to the
long-term success of any agency program. If confirmed, I will
ensure that my office helps deter those actors by maximizing
accountability.
If confirmed, I will uphold the IG Act's dual reporting
requirements to keep the agency head and Congress ``fully and
currently informed'' about problems and deficiencies relating
to agency programs and operations and commit to direct and
transparent communications with congressional stakeholders.
Ex-Im's inspector general position has been vacant since
June 2014, the longest-running IG vacancy in the Federal
Government. Even in the absence of a permanent IG, OIG
professionals at Ex-Im have worked hard to advance the mission
and conduct meaningful oversight. I acknowledge their
accomplishments and dedication under these challenging
conditions and would welcome the opportunity to work hand-in-
hand with them, support them, facilitate their work, and bring
about the stability of a permanent IG, should I be confirmed.
In closing, I appreciate the opportunity to give back and
serve the American people and the country that has made my
first-generation American story possible.
Thank you and I would be pleased to respond to any
questions you might have.
Chairman Brown. Thank you, Ms. Salehi. Mr. Tomney, welcome.
STATEMENT OF BRIAN MICHAEL TOMNEY, OF VIRGINIA, TO BE INSPECTOR
GENERAL, FEDERAL HOUSING FINANCE AGENCY
Mr. Tomney. Chairman Brown, Ranking Member Toomey, thank
you for the opportunity to appear before the Committee today
while I sit before you as nominee for Inspector General to the
Federal Housing Finance Agency, and thank you to President
Biden for nominating me to this very important position in
Government service.
At the outset, I would like to thank my family members
watching remotely and those here, including my son, Michael,
who I love very much, and my brother, Chris, who honorably
served 32 years in the United States Coast Guard. My two older
sisters, Laura and Karen, cannot be here but I appreciate all
of their support throughout the years.
Serving the public is a rewarding career path. However, it
often comes at the expense of missed family holiday gatherings,
weddings, little league games, and school events. And although
my parents are both deceased, I believe my core value of
service to others emanated from them.
For over 30 years, I have served the public in roles
offering me an intimate view of challenges faced by ordinary
Americans. As a young man serving as a paramedic/firefighter, I
cared for people experiencing homelessness, mental illness, and
domestic violence. This work established a foundation of care,
compassion, and empathy toward all people that permeates my
professional career.
During my service at the Department of Justice, I held
accountable individuals violating our Nation's laws. I proudly
led many brave public servants engaged in supporting rule of
law efforts overseas following the terrorist attacks on
September 11, 2001. And I reimagined an initiative that sought
to revisit prison sentences for certain individuals sentenced
under drug laws of the 1990s.
Collectively, this arc of public service has helped shape
who I am personally and professionally: I am a thoughtful,
independent, and objective seeker of facts; I believe that
Government service should embrace and promote the value of
transparency and integrity; and I believe there is no greater
honor than service to the American people.
In the private sector, many of these common threads readily
transferred to compliance and ethics teams I have worked with
in the financial services industry, in particular integrity,
accountability, and transparency.
As Chief of Staff in the Compliance and Ethics department
of a Fortune 100 company, I helped ensure the department
maintained sound financial practices and used strategic
communications to support departmental operations. Furthermore,
I have developed, grown, and led teams enhancing regulatory and
Board reporting. I also challenged the business to strengthen
internal controls, refined independent testing, and helped
ensure the proper remediation of any findings. These combined
efforts focused on guiding teams to be well-managed, efficient,
and effective.
Currently I lead the Office of Corporate Investigations.
Here, my teams conduct rigorous and independent investigations
into allegations of insider fraud, whistleblower claims, and
unethical business practices.
FHFA has a vital role in maintaining the stability and
liquidity of the mortgage market, and it furthers equal and
affordable access to America's housing market. That is why it
is critical to the American people that the Office of Inspector
General fulfill its core mission, which is to promote economy,
efficiency, and effectiveness while also protecting FHFA and
the entities it regulates against fraud, waste, and abuse.
Since 1978, inspectors general have been independent,
objective, and nonpartisan finders of fact. The key to their
success is the ability to remain independent and objective--to
put it simply, to call balls and strikes. Their duty to report
to Congress is an equally important function driving
transparency in how our Government's departments and agencies
are functioning.
The independence of an IG does not make them immune from
accountability for their actions. IGs must set the bar and hold
themselves to the highest standards of ethics and integrity.
If confirmed as inspector general, I will exercise my
duties with the same level of independence and objectivity that
has defined my entire professional career. I will ensure FHFA
OIG conducts its audits, evaluations, and investigations in a
fair and rigorous manner. I commit to a transparent and
responsive relationship with this Committee and Congress. I
will endeavor to develop a productive, thoughtful working
relationship with the FHFA Director, as an effective
relationship will best serve the agency, the entities it
supervises, and the American public. Moreover, I will lead FHFA
OIG with candor, transparency, and humility.
For me and many in my family, the call to public service is
strong. We have a long tradition of military, Government, first
responder, and other frontline workers who, like me, believe
caring for and protecting our fellow citizens is the highest
honor. My three decades of public service share several common
themes: independence, integrity, and a belief in the honor of
service to the American people. If confirmed, I very much look
forward to the opportunity to serve this great country once
again.
Thank you, and I look forward to your questions.
Chairman Brown. Thank you, Mr. Tomney.
Ms. Salehi, Ex-Im OIG has previously worked to help the
bank reduce fraud and risk. I applaud that focus as the risk of
fraud is a significant challenge for financial institutions,
both in the public and the private sectors. We know the Ex-Im
OIG has also helped identify limited instances when exterior
parties have attempted to perpetrate fraud against Ex-Im, the
banks that partner with Ex-Im, to lend to exporters and U.S.
taxpayers.
So talk, if you would, about your approach to reducing
fraud when evidence of fraud is identified and how your
professional experience has helped to ensure that Ex-Im IG's
office can effectively work with DOJ and other law enforcement.
Ms. Salehi. Thank you, Senator. I appreciate the question.
I have over 25 years of experience in white-collar crime or
Government investigations, both in the Federal Government and
in private practice.
When bad actors penetrate the programs of any U.S.
Government agency it erodes the trust of the American people.
And so my approach, if confirmed, going in would be to take a
whole-of-Government approach by engaging with all the
stakeholders that are necessary to defer waste, fraud, and
abuse. By that I mean I would be working with the Department of
Justice, prosecutors and attorneys. I would, of course, be
working with the law enforcement partners, other Government
agencies such as Office of Special Counsel, Office of
Government Ethics or others that have a stake in the game to
ensure that we can deter penetration into those Government
programs.
Additionally, I will be working, if confirmed, with my Ex-
Im OIG staff and look for opportunities where we can introduce
internal control measures to the management at the Export-
Import Bank of the United States so that they can partner with
us in preventing fraud altogether.
Chairman Brown. Thank you. Mr. Tomney, oversight of FHFA
and the GSEs involves a wide range of issues from lender fraud
to agency options and cybersecurity. How do you prioritize
issues for evaluation and investigation in that agency?
Mr. Tomney. Thank you for the question, Mr. Chairman. If
confirmed, one of the first areas I will get into is assessing
how the agency has been prioritizing those decisions.
Historically, they have looked for general buckets, including
effective and enhanced provision of the entity conservative
operations, the risk posed by counterparties and third parties,
and importantly cyber concerns.
I think once I am able to get in to see how they have
distributed their resources and human capital I will be in a
better position to assess exactly how to prioritize, but
certainly matters such as cybersecurity is certainly a whole-
of-Government concern, and that will certainly be one of my
priorities I will be looking at.
Chairman Brown. As more and more of the mortgage process
moves online, what new challenges do the GSEs and FHFA face?
Mr. Tomney. Thank you, Mr. Chairman. The challenges are
broad, particularly as policymakers weigh different policies.
As an OIG, I would envision ensuring robust oversight of
whichever tact policymakers take and use the opportunity to
produce meaningful reports that can help stakeholders, such as
Congress and the agency, to understand the tradeoffs they may
be making with those decisions.
Chairman Brown. Thank you. Senator Toomey.
Senator Toomey. Thank you, Mr. Chairman. Ms. Salehi, during
your time as Acting IG at Ex-Im, the IG office conducted an
evaluation of Ex-Im's policies and procedures to ensure the
bank does not crowd out the private sector and only supports
transactions where Ex-Im financing is necessary. This, I
believe, is known as Ex-Im's additionality policy.
Ex-Im was found to have insufficient recordkeeping in some
respects, which increased the risk that the bank might not
consider all relevant information about replacing private
capital when it approved transactions. In May of 2020, the
board of directors strengthened its policies to protect against
crowding out private sector capital. It is yet to be seen if
the new policies are being properly observed.
Will you commit to conduct another evaluation to determine
if Ex-Im is, in fact, complying with its updated policies and
procedures that are designed to prevent crowding out of private
sector capital, and also will you commit to reviewing the
updated policies themselves to ensure that they actually are
achieving Ex-Im's statutory mandate not to replace private
capital?
Ms. Salehi. Thank you, Senator, for the question. If
confirmed as the IG for the Export-Import Bank of the United
States it would be my job to be looking at policies and
procedures of the bank and reporting them to you and to the
head of agency and the American public in a transparent
fashion.
Of course, I know that this issue of additionality is one
that is very important to you, and I would be happy to meet
with you and your staff to understand your concerns better and
take those concerns to my staff, and consult with my staff, as
we set about our work and do our risk analysis of our
priorities.
Senator Toomey. You would acknowledge that it would fall
under your purview to determine if these policies are being
properly implemented.
Ms. Salehi. Yes.
Senator Toomey. OK. In September of 2019, Ex-Im approved
the second-largest loan in its history. It was a $4.7 billion
loan project for an LNG development in Mozambique.
Unfortunately, in that same year, we learned of deep corruption
in the Government of Mozambique that extended all the way to
the former finance minister who had been arrested in a $2
billion fraud and money-laundering scheme that directly hurt
U.S. investors.
Now to be clear, Mr. Chang was out of office by the time
Ex-Im agreed to the LNG deal, but I just think that the Chang
affair revealed deep and pervasive corruption within the
Government of Mozambique, and I worry about whether Ex-Im is
taking adequate steps to ensure that its financing deals are
not subject to some kind of corruption.
Can you commit to doing everything that you can to ensure
that Ex-Im does not unwittingly enrich corrupt officials,
particularly in countries with long histories of corruption?
Ms. Salehi. Thank you, Senator. Rooting out bad actors and
investigating fraud, waste, and abuse is the core of every OIG
mission, and I commit to doing just that, if confirmed.
Senator Toomey. Thank you.
Mr. Tomney, if confirmed, one of your responsibilities will
be to investigate mortgage fraud that affects Fannie Mae or
Freddie Mac. In the lead-up to the 2008 financial crisis, the
GSEs got into the business of acquiring so-called no-doc and
low-doc loans, where the borrower simply attested to his or her
eligibility without any independent verification.
Well, predictably, some borrowers lied about their income
and other key factors considered in the underwriting, and
predictably, many of those borrowers eventually defaulted,
resulting in significant losses at the GSEs that were then
borne by the taxpayers.
Unfortunately, or Democratic colleagues are pursuing this
reckless tax-and-spending bill that will return the GSEs to the
precrisis practice of relying on unverified borrower
attestations. It is inevitable, in my mind, that some
borrowers, once again, will misrepresent their circumstances in
order to get, for instance, downpayment assistance.
If you are confirmed, Mr. Tomney, and if this bill becomes
law, will you commit to vigorous investigations of borrowers
who knowingly lie about their eligibility for downpayment
assistance on GSE-acquired loans?
Mr. Tomney. Thank you, Ranking Member Toomey, for the
question. Yes, if confirmed, I believe one of the key roles of
Office of Inspector General is to engage in robust enforcement
efforts, and this would certainly be an area that, should that
law pass, I believe would come under our purview, and like we
have seen with a lot of the stimulus investigations going on,
we will continue to engage in robust enforcement efforts.
Senator Toomey. Thank you. I appreciate that. I would just
point out, if past practices by some at the Department of
Justice and some at the CFPB are any indication, if I were a
lender and a borrower lied on his application and I extended
credit in part because of a lie, or I should say relying on the
lie, I would be worried that I would be the one that would be
subject to investigation and made to face the consequences. But
I appreciate your answer.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Toomey.
Senator Menendez, from New Jersey, is recognized.
Senator Menendez. Thank you, Mr. Chairman.
Mr. Tomney, I was pleased to read in the FHFA Office of
Inspector General's annual plan for fiscal year 2022 that the
office you are nominated to lead is planning an audit of,
quote, ``FHFA's initiatives responding to the Executive order
on advancing racial equity and support for underserved
communities through the Federal Government.''
Given the immense disparities faced by minority home
buyers, I believe it is imperative that FHFA does everything in
its power to promote racial equity in its role as a regulator
of housing finance.
Do you agree that reviewing FHFA's racial equity
initiatives will make the agency more effective?
Mr. Tomney. Thank you, Senator, for the question. I agree
that there have been new discussions and focus in that area,
which is certainly the purview of the policymakers, and to the
extent that more focus is paid in that area I certainly commit
to engage in robust oversight of that activity so that we can
provide information to key stakeholders such as Congress and
yourself, as well as the agency, to understand the course of
action that they are taking.
Senator Menendez. So if you are confirmed you are going to
follow through on what the FHFA already said that they are
intending to do. No?
Mr. Tomney. Thank you, Senator. Yes, to the extent that the
OIG has committed to engaging in that, yes.
Senator Menendez. Well, the FHFA plays a critical role in
maintaining a fair and healthy housing finance market, and a
critical part of that mission is ensuring that all home buyers,
regardless of race, are treated fairly. So will you commit to
making this review a top priority, if confirmed?
Mr. Tomney. Senator, yes.
Senator Menendez. All right. Now I was glad to see that the
fiscal year 2022 FHFA plan contained a planned evaluation of,
quote, ``the FHFA's efforts to identify and address potential
appraisal bias and valuation disparities.''
Now home ownership is the cornerstone of intergenerational
wealth in our country, particularly for low- and middle-income
Americans. However, home ownership can only lead to wealth
building if homes are properly appraised and valued. Will you
commit to making this review a top priority?
Mr. Tomney. Senator, thank you for the question. I
certainly commit to, if confirmed in the office, rolling up my
sleeves and making sure that that is addressed quickly.
Senator Menendez. Well, I appreciate hearing that because
minority homes, we know, are not properly appraised in value,
thanks to numerous studies, including one from Freddie Mac
showing that about 15.5 percent of single-family properties in
majority Latino, and 12.5 percent in majority Black census
tracts are appraised lower--lower--than their contracted price,
compared to 7.4 percent in white neighborhoods. That is a
fundamental, dramatic difference. That is why these types of
audits would be so important.
So if confirmed, what will you do to ensure that FHFA's new
appraisal policies are effective and not harmful to minority
home buyers?
Mr. Tomney. Thank you, Senator. To the extent that those
policies are implemented, I will ensure that the office follows
through with doing rigorous assessments, looking at metrics and
models to ensure that they are producing meaningful reports
that are helpful to all of the stakeholders, including the
American public.
Senator Menendez. Ms. Salehi, Ex-Im has always found ways
in which it can improve--I believe it has ways, I should say,
in which it can improve when it comes to racial equity. For
instance, the most recent Ex-Im competitiveness report noted
that only 14.6 percent of Ex-Im's director small business
support went to minority- and women-owned businesses. These
businesses were among the hardest hit by the pandemic, so it is
critical they have access to the tools and assistance to remain
competitive. By the way, before the pandemic, they were also
the greatest rate of growth among small and mid-sized
businesses in the Nation.
Do you agree that part of Ex-Im's mission is to support
minority- and women-owned business efforts to engage in
international commerce?
Ms. Salehi. Yes, Senator. In the 2019 reauthorization of
the bank I believe that Export-Import Bank has a mandate for
small businesses, to do business with small businesses.
Senator Menendez. So how would you help Ex-Im improve their
performance when it comes to the issues of racial equity?
Ms. Salehi. Thank you for that question. This issue of
diversity and inclusion is a priority of mine. It is a very
important issue, and I hope that when and if I am confirmed, to
be able to basically bring that fact that diversity matters at
the top and ensure that my Ex-Im OIG staff finds areas of
opportunity when they do their work, of audits and inspections
and evaluations, with an eye toward diversity, inclusion, and
this priority.
I also would like to make sure that my own staff, within
Ex-Im OIG is empowered to think through these issues of
diversity and inclusion and include them wherever possible for
management of the bank to think through them.
Senator Menendez. Well, let me close by saying an IG's
purpose is to make the agency they oversee more efficient and
effective, and Ex-Im certainly has a lot of room to improve on
making racial equity a greater reality, so we look forward to
working with you upon your confirmation to make sure that
happens.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Menendez. Senator
Tester, of Montana, is recognized.
Senator Tester. Thank you, Mr. Chairman and Ranking Member,
and I appreciate both of you being here today for your
respective positions. You have both talked, in your opening
statements, about being independent and objective, which I
agree with 100 percent. The question is, how will you work to
protect your independence and fend off any sort of interference
by the agency head or, quite frankly, one of us? Go ahead,
whoever wants to go first.
Mr. Tomney. Thank you, Senator, for the question. To your
point, independence is the heart of the role of an inspector
general, and I have said to others that but for that
independence then OIG is nothing but a paper tiger. I think
developing a productive working relationship with the director
of the agency is essential, because at this core contentious
relationships often do not end up good for either side. So that
is not to cede my independence or objectivity. In fact, it is
for those moments where we might disagree on something, and we
can disagree without being disagreeable.
And so I look forward to developing that relationship as
well as I look forward to developing a productive relationship
with Congress, again, so once again my independence and
objectivity will not be questioned, but that does not mean I do
not listen to key stakeholders such as yourself.
Senator Tester. I will come back. Ms. Salehi.
Ms. Salehi. Thank you, Senator. So within OIGs we have
professional standards that we have to abide by. For example,
our auditors, the auditing standard that requires them to be
independent of mind and appearance. And of course, if
confirmed, if I am leading a group of auditors in that office,
that applies to myself in that I have to conduct myself and my
office in a way that is independent both in fact and in
appearance. And so I plan on conducting myself in such a way.
Senator Tester. So tell me what you would do--this is for
both of you, because it applies to both of you--tell me what
you would do if the director would stonewall you on
information? Because oftentimes--and I agree with you, Mr.
Tomney, that it is good to have that relationship--but
oftentimes they might not like your recommendations. They might
not think they are fair. They might not think they are just. So
what do you do when they stonewall you?
Mr. Tomney. Thank you, Senator. It is true, I am sure
inspectors generals are not necessarily the life of the party
when they come walking in, but I believe that developing that
relationship that is productive is important. If I am unable to
get access to information, access to information is fundamental
to the work and we cannot conduct full, robust, and fair
audits, evaluations, and investigations without it. If I am
unable to work through within the agency then there are
alternatives, such as speaking with folks in Congress.
Senator Tester. OK. Ms. Salehi, do you have anything to
add?
Ms. Salehi. My colleague and I see eye to eye, Senator. I
believe that there are a number of legislations currently in
front of Congress that the intent of them are to strengthen the
inspectors general to be able to do their work more
independently and better. And the same, you know, if the
constructive relationships that we have with the head of the
agency does not work and we have barriers such as access to
information or access to the head of agency, I would certainly
engage with your office and members of Congress to ensure that
those barriers are known to you.
Senator Tester. Yeah, I would hope you would do that, and I
would hope you would do that quickly, because you are our eyes
and ears, and it is really important.
I need you to answer this pretty quickly, and I think you
can. You will be overseeing 26 FTEs--I believe that is
correct--in FHFA, about 121 FTEs. What role will the folks
under you play in determining priorities?
Ms. Salehi. For me, Senator, consulting with my staff about
what needs to be done, especially the staff that is currently
there and knows the bank best, would be my high priority. We
engage in a risk-based process, and staff, along with all other
stakeholders, decide.
Mr. Tomney. Senator, I echo my colleague's comments as
well. A good leader will always listen to the subject matter
experts and take that into consideration. Leaders should
surround themselves with folks who tell them what they need to
hear, not what they want to hear.
Senator Tester. I want to thank you both for being here and
putting yourself up for this job. I will tell you that some
people in the Senate do not like the FHFA because some people
do not like the 30-year fixed rate mortgage, and I can tell you
some people do not like Ex-Im because they see it as supporting
people who do not need support. I hope that does not stop them
from voting for you, because we need your eyes and ears in
these departments. We can have a debate about the other stuff
at another point in time. Thank you.
Chairman Brown. Thank you, Senator Tester. Senator Cortez
Masto is recognized from her office, from Nevada.
Senator Cortez Masto. Thank you, Mr. Chairman. Mr. Tomney,
Ms. Salehi, congratulations on your nominations.
Mr. Tomney, let me start with you. Everybody is aware of
Freddie Mac and Fannie Mae. They are household names for many
Americans. But few folks are aware of the Federal Home Loan
Bank system. The Nation's 11 Federal Home Loan Banks are
charged with meeting the affordable housing, the community
development needs of the States, and the communities they
serve.
So my question, Mr. Tomney, to you is, if confirmed as
inspector general, will you commit to take a fresh look at the
distribution of work in the OIG and ensure that the FHLBs are
given the appropriate level of meaningful oversight as outlined
in their mission? And that includes each Federal Home Loan
Bank's community lending plans.
Mr. Tomney. Thank you, Senator, for the question. I agree
with you that if you stopped random people on a sidewalk that
most people would be able to at least be familiar with Fannie
Mae or Freddie Mac, and generally speaking what they do, and
perhaps far fewer would understand what the Federal Home Loan
Bank system is all about.
So yes, Senator, if confirmed, I look forward to getting in
the office, rolling up my sleeves, seeing where the current
breakdown of resources are devoted, and taking a fresh look to
ensure that not only are we looking at the Federal Home Loan
Bank system but to make sure that to the extent that we do
reporting on it that those reports are meaningful to key
stakeholders like yourself. And I look forward to working with
you and your staff, if confirmed, to do so.
Senator Cortez Masto. I appreciate that because I have
concerns that the Federal Home Loan Banks are not meeting the
needs of all the communities. Let me just give you an example.
In previous years only one bank has any goal for Native
Americans in the community. And so I am hopeful that you will
really take a look at that and be transparent and provide the
information Congress needs to be able to work with Federal Home
Loan Banks as well. So thank you for your comment.
Let me touch on cybersecurity very quickly, and I know some
of my colleagues have. Fannie Mae and Freddie Mac rely heavily
on counterparties and third parties to originate and service
their mortgages, enterprise, purchase, and provide operational
support for a wide array of professional services. This
reliance creates an opening for cybercriminals.
So these counterparties and third parties would be under
your office's oversight. How do you see the OIG office
monitoring and reporting on cybersecurity during the selection
and procurement process of these counterparties and third-party
service providers?
Mr. Tomney. Thank you, Senator, for the question. Certainly
the counterparty and third-party risk area has dovetailed
extensively into the cybersecurity world. If confirmed, I look
forward to getting up to speed on exactly what has been done so
far. There are certain statutory reports that OIGs within the
Government do. I am not convinced that that is nearly enough.
And so if confirmed, I can commit to you that that will be one
of the focus areas for me, because as you State, the risk is so
very high, particularly with the volume of NPI and PII
information that is out there that could be the subject of
criminal actors.
Senator Cortez Masto. Thank you. And then, when
appropriate, can you promise transparent and accessible
delivery of your findings to Congress?
Mr. Tomney. Senator, yes.
Senator Cortez Masto. Thank you.
Ms. Salehi, same question. When appropriate, can you make
sure that transparent and accessible delivery of your findings
to Congress as well?
Ms. Salehi. Absolutely, Senator, yes.
Senator Cortez Masto. Thank you. Ms. Salehi, the Export-
Import Bank is important to Nevada companies. Twenty-six
companies in Nevada use the Ex-Im Bank to sell their products
to buyers abroad. You have extensive experience at the Ex-Im
Bank. If confirmed as the inspector general, what barriers do
you expect to have as an IG and what will you need to overcome
those barriers?
Ms. Salehi. Thank you for the question, Senator. Obviously
I am not currently at the bank and only have access to the
public information. In reviewing those public reports and
information I cannot identify any specific issue currently that
they may be facing.
However, in general, as we have talked about here before,
the general barriers for any IG would be, for example, lack of
funding if the agency program or the agency has grown in size
and, for example, their OIG has not grown in the same level and
extent. That would be an issue because that would hinder the
ability or the OIG to produce meaningful and impactful
evaluations and audits.
Another barrier would be if there is a lack of access to
information or to the agency head. It is very important to have
those constructive relationships with the agency head. And I
guess last I will mention, also, the issue of independence,
which we discussed before, and that would be a barrier if not
recognized by the agency.
Senator Cortez Masto. And I know my time is almost up, but
let me just ask you this, because you both talked about
independence. I have heard my colleagues ask you questions
about that. How important is it to get the independent facts
that you need? It is crucial to be able to [inaudible]
functions of the jobs. Isn't that right?
Ms. Salehi. That is correct, Senator. It is a core value
for us in OIGs to be independent of mind and to look at facts
in a nonpartisan fashion, and lead the facts wherever they take
us.
Senator Cortez Masto. Thank you. I know my time is up.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Cortez Masto.
That is it for the hearing. Thank you to both our nominees
for being here today and providing testimony. It was a
productive discussion of the issues and thanks for your candor.
I hope to move forward quickly on Ms. Salehi's nomination and
Mr. Tomney's nomination.
For Senators who wish to submit questions for the hearing
record those questions are due at the close of business on
Friday, December 10th. To the nominees, we would like to have
your responses back to us by noon on Tuesday, December 14,
2021.
Thank you again for your testimony. With that the hearing
is adjourned.
[Whereupon, at 10:52 a.m., the hearing was adjourned.]
[Prepared statements, biographical sketches of nominees,
and responses to written questions supplied for the record
follow:]
PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
The Committee meets today to consider the nominations of: Parisa
Salehi to be Inspector General of the Export-Import Bank; and Brian
Tomney to be Inspector General of the Federal Housing Finance Agency.
We congratulate the nominees and thank them for appearing here
today, and for their willingness to serve in these important roles.
I also want to welcome their families and friends in attendance and
watching from home.
It's so important that the Biden administration is working to fill
inspectors general vacancies. These positions are vital to making our
Government work for people, and to ensuring tax dollars are put to good
use for the people we serve.
The Trump administration took unprecedented steps to undermine IGs
across the executive branch. They either sidelined them, or fired them
without cause, simply for doing their jobs-for showing independence and
pursuing the facts.
Through audits, evaluations, and investigations, inspectors'
general offices play pivotal roles in uncovering abuse, waste, and
fraud-ensuring American taxpayer dollars are protected.
The nominees today possess the independence, honesty, and
integrity--qualities we all want and expect in an inspector general--
they need to take on these critical roles.
And both nominees appearing before us today are clearly qualified.
Ms. Salehi currently serves as the Chief of Staff to the Inspector
General of the Department of State where she assists the IG on
enterprise risk management and oversees the Congressional and public
affairs sections of the IG office. Prior to joining the State
Department, Ms. Salehi served in the USAID inspector general office.
Previously, Ms. Salehi spent more than 4 years at Ex-Im-OIG,
serving in various roles, including as Acting Inspector General from
2018 to 2019. If confirmed, she would be rejoining an office she is
very familiar with, and her experience with the Bank's charter and its
operations will enhance her office's work.
When Ms. Salehi served as the Acting Ex-Im Inspector General, my
office found that she was very responsive to requests when we needed
additional information concerning her office's investigations and
reports.
Ex-Im is vital to manufacturers both in Ohio and throughout the
country. It will be Ms. Salehi's job to help ensure that the bank is
working efficiently. And she will help the Bank comply fully with its
charter and other statutory requirements. She is well prepared to step
into this job immediately.
Welcome to the Committee, Ms. Salehi.
From 2006 to 2017, Mr. Tomney served in various roles at the
Department of Justice. From 2006 to 2009, he served as a Trial Attorney
in DOJ's criminal division, where he investigated drug trafficking and
narco-terror organizations.
From 2009 to 2014, Mr. Tomney served as Counsel for Rule of Law in
the Office of the Deputy Attorney General, where he engaged with teams
of federal prosecutors and attorneys in efforts to root out corruption
and support the rule of law in Afghanistan and Iraq. He went on to
serve in several roles, including Associate Deputy Attorney General.
Mr. Tomney has a proven commitment to service, even in the toughest
situations--early in his career, he spent more than a decade as a
paramedic and firefighter.
He will bring those same values with him to this job, ensuring that
FHFA is working for all homeowners and renters.
Welcome to the Committee, Mr. Tomney. We are glad to have you here
today.
Thank you to the nominees for your willingness to serve. I look
forward to your testimonies today.
______
PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
Thank you, Mr. Chairman.
Ms. Salehi and Mr. Tomney, welcome to you both. I commend you for
your commitment to public service.
Mr. Tomney, if confirmed, you'll have a challenging job. The GSEs
led us into the 2008 financial crisis through their excessive risk
taking. Congress established FHFA as a tough regulator to ensure that
never happened again. But instead of being the cop on the beat, the
Biden administration seems intent on turning FHFA into a coconspirator
with the GSEs.
FHFA has taken a number of troubling steps to extend credit to
risky borrowers and undermine the GSEs' financial condition. It has
proposed reductions in the GSEs' capital requirements, lowered
guarantee fees and has said it is considering further cuts, suspended
restrictions on the GSEs' risk layering and acquisitions of investor
and second home loans, relaxed the GSEs' underwriting requirements, and
replaced much of FHFA's senior leadership.
Meanwhile, housing prices have skyrocketed an astonishing 18.5
percent in the last 12 months alone. I think it's a question of when,
not if, these good times for the housing market come to an end. I worry
that FHFA's enabling of risky lending, together with the
Administration's total disinterest in recapitalizing the GSEs through
outside private capital, has placed the GSEs on a path toward another
round of taxpayer bailouts.
Mr. Tomney, if that were not already enough, your job will be made
more challenging by an Administration with no discernable housing
policy besides giving mortgages to as many borrowers as possible with
little regard to their ability to repay.
Housing is expensive because our housing policy subsidizes demand
while ignoring supply constraints. The Democrats' reckless tax-and-
spend bill makes little effort to increase housing supply.
The Senator Schumer earmark, or ``Schu-mark'' that I discussed at
the October 21st hearing, would spend up to $40 billion renovating New
York City's existing public housing. Much of the other housing funds
would go to imprudent downpayment assistance and rental vouchers that
add to housing demand.
The bill even creates an astonishing invitation to mortgage fraud
by making $15 billion available to borrowers who sign an attestation,
truthfully or not, that they are ``first-generation homebuyers.''
Amazingly, you can qualify so long as your parents do not currently own
a home and you have not owned a home in the last 3 years. So much for
``first generation'' homebuyer.
We need to try something different than the same housing policies
that caused the 2008 financial crisis. To that end, in March I proposed
principles to guide housing finance reform discussions. The
Administration, however, has shown no interest in real reform, and even
missed a September 30th deadline to report on its plan.
Mr. Tomney, given the path the Administration has put us on, I
suspect you might soon be investigating how we so eagerly doubled down
on 50 years of failed housing policy and so predictably led the GSEs
into another round of taxpayer bailouts.
Now turning to Ex-Im. Ex-Im claims that it only takes risks that
private lenders are unable or unwilling to take. We should stop right
there and ask ourselves: if private lenders are unwilling or unable to
take a risk, why should taxpayers be forced to take that risk?
Yet at the same time, Ex-Im also claims it only makes safe bets.
It's impossible to do both. Ex-Im can't only take transactions so risky
that no one else will do them, and at the same time only be doing safe
transactions.
Ex-Im wins business by systematically underpricing risk. That's why
borrowers go to Ex-Im, instead of any number of private lenders that
will not offer deals on the same terms as Ex-Im.
That's why our largest banks go to Ex-Im for loan guarantees. The
Ex-Im terms are too good to be true-at least in the private sector.
It's important to note that the vast majority of American exports
get done without Ex-Im support. We've reviewed annual export data from
2007 through 2020. In that period, the highest percent of U.S. exports
using Ex-Im financing was in 2012 and it was only 2.3 percent. And that
was when Ex-Im had everything going for it. It was fully operational,
had a quorum on its board, and had not reached its lending limit.
The reality is: we're the world's second largest exporter of goods
behind only China. We lead the world in value-added exports. And we do
it almost entirely without Ex-Im financing.
Not only is Ex-Im financing generally not needed, but it's often
nothing more than crony capitalism providing taxpayer-financed
subsidies to some of the world's largest companies who have access to
private capital. Ex-Im's recent deal guaranteeing an $82 million loan
from JPMorgan to Qantas for the purpose of buying jet engines from GE
is just one example.
Generally, the same giant lenders, exporters, and foreign
companies--often State owned--benefit from Ex-Im while taxpayers take
the risk. There's also a history of waste, fraud, and abuse at Ex-Im.
Ex-Im's IGs have identified numerous concerning practices at the
bank over the years. If confirmed, Ms. Salehi will have the important
responsibility of serving as an independent watchdog.
Mr. Chairman, I look forward to hearing from today's nominees.
______
PREPARED STATEMENT OF PARISA SALEHI
To Be Inspector General, Export-Import Bank
December 7, 2021
Thank you, Chairman Brown, Ranking Member Toomey, and Members of
the Committee. I am honored to appear before you today as the
President's nominee to be the Inspector General of the Export-Import
Bank of the United States.
I would not be here today without the generous support of my
family, friends, and colleagues. I would particularly like to recognize
my mother, whose hard work and determination has afforded me many
opportunities. She grew up far away from this free land, in a place
where she was legally required to get her husband's permission to do
many simple things, like travel. Through selfless acts she ensured that
her kids would have better and brighter life choices than the ones
available to her. I would also especially like to thank my partner,
Burk, who is here with me today and has been supportive of my
professional growth for the past 18 years.
I have also benefitted from the wisdom of many formal and informal
mentors along the way, who have graciously invested in and supported
me. The list is long, so I can only name a few: My sister Atousa, Peter
Briggs, Jeanie and Kent Henricksen, Allison Lerner, and Mark
Greenblatt. I have learned many life lessons from all of them, which I
hope to pass forward.
If confirmed, I will be living proof of the American story--that if
you work hard, you will one day go places no one thought possible. I am
a first-generation American and very proud of it. Common to many first-
generation Americans, my professional path has not been easy or without
sacrifices. To know that someone like me can appear before you, is the
fulfillment of the American dream--my dream.
With many years of experience both in the public and private
sectors, I believe I offer unique qualifications to lead as the IG for
Ex-Im. My experience as Counsel to the Ex-Im IG and subsequent service
as Ex-Im's Acting IG allows me to hit the ground running. I have
learned from strong leaders at the Offices of Inspector General at the
U.S. Agency for International Development and Department of State,
where I currently serve as the Chief of Staff. Both agencies have
taught me important lessons on effective oversight. If confirmed, I
hope to build on that foundation.
I appreciate Ex-Im's important mission of supporting American jobs
by facilitating the export of goods and services. IGs play an important
role in conducting reliable, objective, fact-based oversight. Should I
be confirmed, I am committed to conducting audits and investigations
relating to the programs and operations of Ex-Im, as required by the
law, and to serving in this role independently, with fairness and
integrity. I will seek to bring positive change to Ex-Im programs
through constructive relationships with Ex-Im leadership. As Acting IG,
I invested considerable time in building those relationships and I will
continue to do so, if confirmed, while maintaining the independence of
the Office.
IGs play a vital role in rooting out bad actors. By partnering with
other stakeholders, Government agencies at the Federal and State level,
and by promoting a ``whole of Government'' approach, we can make
progress in this effort and foster trust in Government programs. Bad
actors can erode trust in Federal programs, which can prove fatal to
the long-term success of any agency program. If confirmed, I will
ensure that my office helps deter those actors by maximizing
accountability.
If confirmed, I will uphold the IG Act's dual reporting
requirements to keep the agency head and Congress ``fully and currently
informed'' about problems and deficiencies relating to agency programs
and operations and commit to direct and transparent communications with
congressional stakeholders.
Ex-Im's Inspector General position has been vacant since June
2014--the longest-running IG vacancy in the Federal Government. Even in
the absence of a permanent IG, OIG professionals at Ex-Im have worked
hard to advance the mission and conduct meaningful oversight. I
acknowledge their accomplishments and dedication under these
challenging conditions and would welcome the opportunity to work hand-
in-hand with them, support them, facilitate their work, and bring about
the stability of a permanent IG should I be confirmed.
In closing, I appreciate the opportunity to give back and serve the
American people and the country that has made my first-generation
American story possible.
Thank you and I would be pleased to respond to any questions you
might have.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
PREPARED STATEMENT OF BRIAN MICHAEL TOMNEY
To Be Inspector General, Federal Housing Finance Agency
December 7, 2021
Chairman Brown, Ranking Member Toomey, thank you for the
opportunity to appear before the Committee today while I sit before you
as nominee for Inspector General to the Federal Housing Finance Agency
(FHFA). And thank you to President Biden for nominating me to this very
important position in Government service.
At the outset, I would like to thank my family members here and
those watching remotely. Serving the public is a rewarding career path.
However, it often comes at the expense of missed family holiday
gatherings, weddings, little league games, and school events. I have
been blessed with family and close friends who have supported me at
every turn. And although my parents are both deceased, I believe my
core value of service to others emanated from them.
For over 30 years, I have served the public in roles offering me an
intimate view of challenges faced by ordinary Americans. As a young man
serving as a paramedic/firefighter, I cared for people experiencing
homelessness, domestic violence, and mental illness. This work
established a foundation of care, compassion, and empathy towards all
people that permeates my professional career.
During my service at the Department of Justice, I investigated and
held accountable individuals violating our Nation's laws. I proudly led
many brave public servants engaged in supporting rule of law efforts
overseas following the terrorist attacks on September 11, 2001. And I
reimagined an initiative that sought to revisit prison sentences for
certain individuals sentenced under drug laws of the 1990s.
Collectively, this arc of public service has shaped who I am
personally and professionally:
I am a thoughtful, independent, and objective seeker of
facts,
I believe that Government service should embrace and
promote the value of transparency and integrity, and
I believe there is no greater honor than service to the
American people.
In the private sector, many of these common threads readily
transferred to compliance and ethics teams I have worked with in the
financial services industry: in particular, integrity, accountability,
and transparency. Effective and meaningful risk management requires
complete, honest, and transparent assessments, investigations, and
reporting.
As Chief of Staff in the Compliance and Ethics department of a
Fortune 100 company, I helped ensure the department maintained sound
financial practices and used strategic communications to support
departmental operations. Furthermore, I have developed, grown, and led
teams enhancing regulatory and Board reporting. I also challenged the
business to strengthen internal controls, refined independent testing,
and helped ensure the proper remediation of any findings. These
combined efforts focused on guiding teams to be well-managed,
efficient, and effective.
Currently, I lead the Office of Corporate Investigations. Here, my
teams conduct rigorous and independent investigations into allegations
of insider fraud, whistleblower claims, and unethical business
practices.
FHFA has a vital role in maintaining the stability and liquidity of
the mortgage market, and it furthers equal and affordable access to
America's housing market. The Agency's role is unique because it acts
as both regulator and conservator to Fannie Mae and Freddie Mac, and as
regulator of the Federal Home Loan Bank System. That is why it is
critical to the American people that the Office of Inspector General
(OIG) fulfill its core mission, which is to promote economy,
efficiency, and effectiveness while also protecting FHFA and the
entities it regulates against fraud, waste, and abuse.
Since 1978, Inspectors General (IGs) have been independent,
objective, and nonpartisan finders of fact. They and their staff have
saved the Government substantial monies, held criminals accountable,
and endeavored to have our Government work better. The key to their
success is the ability to remain independent and objective--to put it
simply, to call balls and strikes. Their duty to report and be
responsive to Congress is an equally important function driving
transparency in how our Government's departments and agencies are
functioning. The independence of an IG does not make them immune from
accountability for their actions. In fact, the very nature of the IG
role requires more than just avoiding conflicts of interests or the
appearance of a conflict of interest: IGs must set the bar and hold
themselves to the highest standards of ethics and integrity.
If confirmed as the FHFA Inspector General, I will exercise my
duties with the same level of independence and objectivity that has
defined my entire professional career. I will ensure FHFA OIG conducts
its audits, evaluations, and investigations in a transparent,
professional, thoughtful, fair, and rigorous manner. I commit to a
transparent and responsive relationship with this Committee and
Congress. I will endeavor to develop a productive, thoughtful working
relationship with the FHFA Director, as an effective relationship will
best serve the Agency, the entities it supervises, and the American
public. Moreover, I will lead FHFA OIG with candor, transparency, and
humility.
For me and many in my family, the call to public service is strong.
We have a long tradition of military, Government, first responder, and
other frontline workers who, like me, believe caring for and protecting
our fellow citizens is the highest honor. My three decades of public
service share several common themes: independence, integrity, and a
belief in the honor of service to the American people. My personal
journey leading up to this nomination has well-prepared me for the
challenge of this important position. If confirmed, I very much look
forward to the opportunity to serve this great country once again.
Thank you. I look forward to your questions.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM PARISA SALEHI
Q.1. Where have you excelled in past and current positions in
attracting, hiring, and promoting people of color in positions
in your organization? Where might there be room for
improvement?
A.1. I am a first generation American and a woman. Diversity
and inclusion are important to me, personally. I understand
that commitment to having a diverse workforce starts at the
top. In every position that I have held within the Federal
Government, whether as a GS-14 hiring manager or a career
Senior Executive, I have hired and promoted people of color and
those who identify with other marginalized identity groups,
because I believe that diversity of thought and a varied lens
by which we see the world strengthens any team.
Through hirings or internal promotions I have taken
advancing diversity seriously to implement what I believe in:
that promoting qualified individuals from underrepresented
communities, including people of color and minorities, matters.
I am an active member of CIGIE's Diversity, Equity, and
Inclusion working group. Additionally, in my current position
as Chief of Staff at the Department of State OIG, I directly
hired four individuals, three of whom identified themselves as
people of color or belonging to a minority group. In addition,
I participated in many panel interviews on behalf of others
within the State OIG leadership group and actively ensured that
diversity is a consideration in many of those hires. I work
with State OIG's Diversity and Inclusion council as well as
Human Resources to ensure that we find creative ways of
engaging with Historically Black Colleges and Universities to
attract talent. I worked at USAID OIG's Office of Management,
and led a group of about 90 professionals, many of whom I
promoted. My team was the most diverse group within the
organization. At Ex-Im OIG, I promoted people of color to
higher positions of influence. While at the Department of
Agriculture, the majority of my staff, some of whom I hired,
identified themselves as people of color.
Q.2. What is your plan for creating an inclusive working
environment for employees within your office?
A.2. If confirmed, I plan to create an inclusive working
environment by:
1. Ensuring Ex-Im OIG's performance and strategic plans
include diversity and equity goals and objectives.
2. Partnering with the CIGIE Diversity, Equity, and
Inclusion working group to remain informed of best
practices to attract and recruit diverse talent.
3. Working with my team's hiring managers to promote
attracting, hiring, and retaining diverse talent.
4. Initiating open conversations within Ex-Im OIG regarding
diversity and inclusion as a regular meeting as
appropriate.
5. Empowering my staff to review the policies and procedures
of the Bank, with an eye towards diversity and
inclusion. In other words, when possible, our audits or
evaluations will contain recommendations on how Ex-Im
can improve its performance regarding issues of equity
and inclusion.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM PARISA SALEHI
Q.1. Congressional Oversight--Please provide your philosophy on
how the Export-Import Bank of the United States (Ex-Im) will
approach and respond to Congressional information requests
(both for documentary information and oral testimony), if you
are confirmed.
A.1. Congress created the offices of inspector general (OIGs)
to assist in its oversight of the Executive branch. If
confirmed as the Inspector General at Ex-Im, I will lead Ex-
Im's OIG to share information in a transparent and nonpartisan
fashion and according to the law. This will apply to both
testimonies and written products such as audits, evaluations,
and reviews. Timeliness in reporting is also a key element of
effective oversight, and without timely Ex-Im OIG reports, Ex-
Im's ability to respond to such oversight efforts and Congress'
ability to conduct effective oversight of Ex-Im's operations
are limited. Therefore, I will be focused on timely and
transparent oversight, if confirmed.
Additionally, if confirmed, my role will be to make
recommendations to the Bank's Chairman on how to improve Ex-
Im's relationships with Congress, as part of any potential
audits or evaluations that my office might conduct.
Q.2. If confirmed, do you intend to respond to information
requests differently depending on who is making the
Congressional information request (whether it's the chair of
the Congressional committee, the Ranking Member, or another
member of Congress)? Please answer ``yes'' or ``no.'' If your
answer is ``yes,'' please explain.
A.2. If confirmed as the Inspector General, I will lead Ex-Im's
OIG to share information in a transparent and nonpartisan
fashion and according to the law. I plan to respond to
information requests from all stakeholders. In the event of
specific requests, I will ensure that Ex-Im OIG works closely
with Congressional staff to provide timely and useful
information, should I be confirmed.
Q.3. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me? Please answer ``yes'' or ``no.'' If your answer is
``no,'' please explain.
A.3. If confirmed, I commit to respond in a timely manner and
fully comply with information requests by you and all
stakeholders in accordance with the law and through Ex-Im OIG's
audits and evaluations or reviews.
Q.4. Will you commit that, if confirmed, you will make yourself
and any other Ex-Im employee expeditiously available to provide
oral testimony (including but not limited to briefings,
hearings, and transcribed interviews) to the Committee on any
matter within its jurisdiction, upon the request of either the
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If
your answer is ``no,'' please explain why.
A.4. I commit to making myself and other Ex-Im OIG employees
available to provide oral testimony to the Committee on any
matter within its jurisdiction, upon the request of either the
Chairman or Ranking Member.
Q.5. Do you believe that Ex-Im or Ex-Im's Office of the
Inspector General (OIG) may assert any privileges or other
legal justifications to withhold information (whether records
or oral testimony) from Congress? Please answer ``yes'' or
``no.''
A.5. If confirmed as the Inspector General, I will lead Ex-Im's
OIG to share information in a transparent and nonpartisan
fashion and according to the law. While disclosing information
to Congress with transparency and in a nonpartisan manner will
be my guiding principle, if the law requires and thus prohibits
Ex-Im OIG not to disclose the information, I must follow the
law.
Q.6. If you answered ``yes'' to the preceding question, please
list every such privilege or other legal justification and
provide the legal basis for why you believe Ex-Im or Ex-Im's
OIG may use such privilege or legal justification to withhold
information from Congress.
A.6. I am not currently familiar with any Ex-Im specific
privileges or legal justifications to withhold information.
However, in my general oversight experience, in circumstances
when, on balance, disclosing the information might not be
permissible, I commit to seek the advice of counsel, as well as
those in the Inspectors General community, such as CIGIE, who
have the expertise to guide me in identifying what information
I would be legally permitted to share. Some examples of the
type of information that may not be disclosed, absent
extraordinary justification, might be:
1. Personally Identifiable Information to safeguard, for
example, a whistleblower's identity during an ongoing
investigation (to avoid a chilling impact on disclosing
wrongdoing);
2. Information about an open criminal investigation (to
comply with the law);
3. Executive Privilege (this privilege belongs to the Agency
and not the OIG, therefore, OIG may not waive the
privilege);
4. When otherwise required by the law.
Q.7. In an effort to be open and transparent with Congress and
the public, will you commit not to assert any such privilege or
legal justification against Congress that you listed above? If
not, why not? If so, please identify all such privileges or
legal justifications that you will commit to not assert against
Congress.
A.7. I will commit to transparent and open communication
whenever legally permissible. Additionally, I commit to seek
the advice of counsel, as well as those in the Inspectors
General community, such as CIGIE, who have the expertise to
guide me in identifying what information I would be legally
permitted to share.
Q.8. Private Sector Financing--During the December 7, 2021,
Banking Committee hearing for your nomination, I asked you:
``if you would commit to conduct another evaluation to
determine if Ex-Im is in fact complying with its updated
policies and procedures that are designed to prevent crowding
out of private sector capital, and also will you commit to
reviewing the updated policies themselves to ensure that they
are actually achieving Ex-Im's statutory mandate not to replace
private capital?'' In your response, you did not commit to
conduct an evaluation of Ex-Im's updated additionality
policies. However, during the hearing you were willing to
commit to at least one other Senator's request for a
commitment.
Will you commit to conduct an evaluation of Ex-Im's updated
additionality policies?
A.8. Congress created offices of inspector general in 1978 to
assist in its oversight of the executive branch. As a member of
the IG community, I believe my duty in assisting Congress is
paramount. As the Inspector General, it is my role to review
the policies and procedures of the Bank to ensure they are in
accordance with the law and the Congressional intent.
Therefore, should I be confirmed, I commit to working with you
and your staff to fully understand your concerns relating to
additionality as part of my oversight of the Bank. Though I do
not currently hold a position at Ex-Im OIG, and therefore am
not aware of Ex-Im OIG's workload, staffing challenges, or
priorities, I commit to working with my staff at Ex-Im OIG to
ensure that the timing of a follow-on review produces relevant
recommendations to Ex-Im and Congress, so that Ex-Im
supplements and encourages private capital as opposed to
competing with it.
Q.9. If the answer is ``no,'' can you please explain the reason
why you will not commit to this evaluation?
A.9. N/A.
Q.10. Priorities as Inspector General--During the December 7,
2021, Banking Committee hearing for your nomination, Senator
Bob Menendez (D-NJ) asked you: ``so how would you help Ex-Im
improve their performance when it comes to the issues of racial
equity?''
In your response, you stated: `` . . . this issue of
diversity and inclusion is a priority of mine. It's a very
important issue and I hope that when, and if I am confirmed, to
be able to basically bring that tone of, the fact that
diversity matters, at the top and ensure that my Ex-Im OIG
staff finds areas of opportunity in, when they do their work of
audits and inspections and evaluations, with an eye towards
diversity, inclusion and this priority. I also would like to
make sure my own staff within Ex-Im OIG is empowered to think
through these issues of diversity and inclusion and include
them wherever possible for management of the Bank to think
through them.''
Can you elaborate further on how you would operationalize
your diversity and inclusion priority?
A.10. If confirmed, I would operationalize my commitment to
diversity and inclusion concepts by:
1. Ensuring Ex-Im OIG's performance and strategic plans
include diversity and equity goals and objectives.
2. Partnering with CIGIE Diversity, Equity, and Inclusion
working group to have best practices top of mind.
3. Working with my team's hiring managers to promote
attracting, hiring, and retaining diverse talent.
4. Initiating open conversations within Ex-Im OIG regarding
diversity and inclusion as a regular meeting at the
frequency that suits my staff.
5. Empowering my staff to review the policies and procedures
of the Bank, with an eye towards diversity and
inclusion. In other words, when possible, our audits or
evaluations would contain recommendations on how Ex-Im
can improve its performance regarding issues of equity
and inclusion.
Q.11. Please list additional priorities that you have as Ex-
Im's Inspector General, if confirmed.
A.11. If confirmed, in consultation with my Ex-Im OIG staff, I
would like to understand the organizational priorities that we
should focus on to possibly include:
1. Review the new programs and policies of Ex-Im, as a
result of the 2019 Reauthorization of the Bank, so that
we can provide timely and transparent information to
Congress and to the Chairman of Ex-Im through our
audits, evaluations, and reviews, to ensure taxpayer
protections.
2. Thoroughly investigate all allegations of fraud and
misconduct to deter waste, fraud, and abuse.
3. Perform a workforce analysis to ensure that Ex-Im OIG has
the resources that it needs to function as an effective
oversight body, which is especially important as the
office has been without a PAS IG since June, 2014.
Q.12. Have you had any discussions with the White House, Ex-Im,
or Ex-Im's OIG staff about potential OIG priorities if you're
confirmed? If so, please identify the priorities and explain
what, if any, potential changes and modifications that may
result from the priorities.
A.12. I have not had any discussion with White House, Ex-Im, or
Ex-Im's OIG staff about potential OIG priorities.
Q.13. Fraud From COVID-19 Legislation/Measures--Ex-Im's OIG
Semiannual Report to Congress that was released last month
states the OIG anticipates an increase in suspicious
transactions due to the COVID-19 pandemic. The report points to
other investigative agencies that are overwhelmed by fraud
stemming from COVID-19 related legislation such as the CARES
Act and other relief measures.
Given the potential large amount of fraud that is expected
to arise over the coming years, what steps will you take to
ensure proper oversight of Ex-Im's transactions?
A.13. If confirmed, I would consult with my staff on how to
take the following steps:
1. Knowing that Ex-Im has created special initiatives in
response to the COVID-19 pandemic, understand the
impact of these measures on the Bank's mission of
supporting American jobs by leveling the playing field.
2. Trace financial transactions, both as a routine part of
any of our investigations of suspicious activities, and
to oversee Ex-Im's efforts in being a good steward of
taxpayers' monies.
3. Collaborate with other Government oversight bodies in an
effort to build on their experiences in understanding
the nature of these bad acts and to recommend
preventative measures and internal controls to Ex-Im.
Q.14. The Ex-Im OIG Fiscal Year 2022 Congressional Budget
Justification indicates the OIG has 26 full-time equivalent
employees (FTE). Do you anticipate requesting additional OIG
FTEs as result of an increase in suspicious transactions
stemming from the pandemic?
A.14. If confirmed, I hope to perform a workforce analysis and
consult with the current staff to ensure that we have the FTEs
as well as a sufficient budget to be able to function as an
effective oversight body, and request for an increase in OIG
FTEs if it is determined that the current staff is unable to
perform any additional and necessary work.
Q.15. Climate Policies on Ex-Im Financing--Ex-Im has long been
financing energy related projects. In its 2020 Annual Report,
Ex-Im reported that oil and gas represented 25.6 percent of its
total exposure. However, given the Biden administration's
favoritism for renewable and sustainable energy projects, there
may be pressure within Ex-Im to reevaluate these past deals and
refrain from financing oil and natural gas deals in the future.
Will you commit to investigating any reports or allegations
of political interference occurring during Ex-Im's evaluation
and decision making surrounding the issue of whether or not Ex-
Im will support a fossil-fuel related loan, financing, or
project?
A.15. Accountability for the exercise of Government authority
is key to our Nation's governing ethical principles.
Independent Government audits, in turn, provide essential
accountability and transparency over Government programs and
operations by providing objective analysis and information to
decisionmakers and the public. I will commit to overseeing the
review of any allegation of wrongdoing independently and
swiftly. That is the core function of any OIG.
Q.16. Answering Questions for the Record--Please describe with
particularity the process by which you answered these questions
for the record, including identifying who assisted you in
answering these questions along with a brief description of
their assistance.
A.16. I received the questions Friday 12/10/2021, in the
afternoon. I drafted my responses to these questions the same
day. On Saturday 12/11/21, I read my initial answers and made a
few edits. I finalized my responses on Monday 12/13/21, and
submitted them to the Ex-Im liaison for transmittal to the
Senate Banking Committee.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM PARISA SALEHI
Q.1. In your current capacity as Acting Inspector General, how
do you assess the efficiency of existing Ex-Im programs and the
efficacy of existing taxpayer protections?
A.1. I currently serve as the Chief of Staff at the Department
of State OIG. I did, however, serve as the Acting Inspector
General for Ex-Im in 2018-2019. In that role, I assessed the
efficiency and effectiveness of the programs through conducting
fact-based, data driven audits, evaluations, inspections and
reviews. Through these reviews, OIGs make recommendations to
the agency that they oversee on how to improve their policies
and operations in order to ensure that the agency is acting as
a responsible steward of taxpayer's monies. If confirmed, I
will consult with my staff and all stakeholders, including
Congress, to ensure that my office engages in impactful
oversight and to ensure Ex-Im is acting as a responsible
steward of taxpayers' monies.
Q.2. If confirmed, what reforms would you consider making to
processes within your purview to improve oversight at Ex-Im and
protect the public trust?
A.2. If confirmed, I will:
1. Consult with my Ex-Im OIG staff who are currently working
at the Bank and know the programs and the operations of
the Bank well.
2. Engage in a risk-based exercise to plan our work and
decide which processes and operations of the Bank we
will examine near and long term. In that planning we
will ensure to consider all stakeholders' views
regarding any potential reforms.
3. Consider whether we have the necessary resources and
tools for effective oversight and to perform the audits
and evaluations necessary to recommend reforms to Ex-
Im.
4. Review Ex-Im OIG's strategic and performance plans with
an eye towards improving our oversight.
5. Report the findings of any reports regarding reforms to
Congress, the Chairman of the Bank, and the American
people transparently and independently.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM BRIAN MICHAEL TOMNEY
Q.1. Where have you excelled in past and current positions in
attracting, hiring, and promoting people of color in positions
in your organization? Where might there be room for
improvement?
A.1. Attracting, hiring, and promoting people of color, as well
as individuals from other diverse backgrounds, has been a core
value of mine throughout my professional career. In particular,
I am proud to have deployed a diverse team of attorneys and
staff to historically less inclusive places such as
Afghanistan. Leading by example in these distant locations not
only supported the importance of diversity here at home, but it
also gave hope and resilience to some historically brutalized
minority communities living overseas. More recently, I have
attracted, hired, and promoted individuals of color in my
current role leading internal fraud investigations. A team of
investigators who more accurately represent the diversity of
the company helps to ensure our investigations are thoughtful
and fair, and drives consistent outcomes across the
organization.
To be sure, there is always room for improvement. As an
initial matter, acknowledging and remaining mindful of implicit
bias in our everyday life and work is critical. If confirmed, I
look forward to consulting with other Inspectors General to
consider their best practices in this space and leverage their
collective wisdom to help me (and my team) avoid blind spots.
Q.2. What is your plan for creating an inclusive working
environment for employees within your office?
A.2. An inclusive working environment starts with creating a
safe place to express ideas and welcoming people of all
backgrounds. Accomplishing this imperative starts at the top of
any organization. If confirmed, it will start with me. I will
lead by example and commit to a candid, respectful, and
transparent office environment that welcomes a diversity of
people and thoughts. Moreover, I will ensure that my senior
leadership team follows my lead. An inclusive, respectful
office environment ultimately leads to innovation, makes us
work smarter, and helps to ensure that we respect each other as
individuals. If confirmed, I look forward to consulting with
other Inspectors General to consider their best practices in
this space and leverage their collective wisdom to help me (and
my team) avoid blind spots.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM BRIAN MICHAEL TOMNEY
Q.1. Congressional Oversight--What is your philosophy on how
the Federal Housing Finance Agency's Office of Inspector
General (OIG) should respond to Congressional information
requests (both documentary information and oral testimony)?
A.1. Consistent with the Inspector General Act of 1978, FHFA
OIG should respond to Congressional information requests (both
documentary information and oral testimony) fully,
transparently, and timely. If confirmed, I am committed to and
look forward to developing a positive, candid, and timely
responsive relationship with Congress.
Q.2. If confirmed, do you intend to respond to information
requests differently depending on who is making the
Congressional information request (whether it is the chair of
the Congressional committee, the Ranking Member, or another
member of Congress)? Please answer ``yes'' or ``no.'' If your
answer is ``yes,'' please explain.
A.2. No.
Q.3. Will you commit that, if confirmed, you will timely
respond to and fully comply with all information requests from
me? Please answer ``yes'' or ``no.'' If your answer is ``no,''
please explain.
A.3. Yes.
Q.4. Will you commit that, if confirmed, you will make yourself
and any other OIG employee expeditiously available to provide
oral testimony (including but not limited to briefings,
hearings, and transcribed interviews) to the Committee on any
matter within its jurisdiction, upon the request of either the
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If
your answer is ``no,'' please explain why.
A.4. Yes.
Q.5. Mission--How would you describe the OIG's mission?
A.5. The mission of FHFA OIG is to promote economy, efficiency,
and effectiveness and protect FHFA and the entities it
regulates against fraud, waste, and abuse, contributing to the
liquidity and stability of the Nation's housing finance system.
FHFA OIG accomplishes this mission by providing independent,
relevant, timely, and transparent oversight of the Agency in
order to promote accountability, integrity, economy, and
efficiency; advising the Director of the Agency and Congress;
informing the public; and engaging in robust enforcement
efforts to protect the interests of the American taxpayers.
Q.6. How would you describe the OIG's responsibilities as they
relate to fraud, waste, and abuse at FHFA's regulated entities?
A.6. FHFA OIG is vested with statutory law enforcement
authority to conduct criminal and civil investigations of
individuals, whether inside or outside of Government, who
waste, steal, or abuse Government monies in connection with
programs and operations of FHFA and the entities it regulates.
If confirmed, I will ensure the Office of Investigations
continues to conduct its work in a fair and thorough manner,
and in accordance with all applicable professional standards.
Similarly, OIG must conduct meaningful audits, evaluations,
and other assessments of FHFA and the regulated entities and
regularly inform the Agency and Congress of identified wasteful
or abusive practices.
Q.7. Risk Assessments--The OIG uses a risk-based oversight
strategy. Will you commit to promptly review and, as
appropriate, adjust the existing risk assessments that guide
the OIG's oversight?
A.7. If confirmed, I look forward to reviewing the breadth of
OIG operations to include how it leverages its risk-based
oversight strategy to guide its activities. As necessary, I
will adjust existing risk assessments that guide OIG's
oversight. Moreover, I remain committed to regular and ongoing
assessments of these processes.
Q.8. What data and other information will you consider in
reviewing and adjusting the OIG's existing risk assessments?
A.8. While reviewing OIG's risk-based oversight strategy, if
confirmed, I look forward to benchmarking the processes used by
other OIGs, factoring in relevant internal documents, and
seeking out key stakeholder input (e.g., subject matter
experts, Agency leadership, and Congress).
Q.9. Is there a role for outside or third-party information to
be used in reviewing and adjusting the OIG's existing risk
assessments?
A.9. Yes. A thoughtful review of FHFA OIG's risk-based strategy
need not be artificially constrained. Outside or third-party
information that is credibly sourced may be considered. That
said, it will be important to consider the proper weight to
give such information when factoring in other internal,
nonpublic material. A more holistic set of data points,
properly weighted to individual facts and circumstances, will
better position me to make independent and objective decisions
on the subject.
Q.10. Operational Risk--Based on your experience in financial
services, what are some of the key operational risks that might
be borne by FHFA's regulated entities?
A.10. I have not concluded the regulated entities possess any
particular operational risks because I lack specific insider
knowledge of the regulated entities. More generally, however,
my experience suggests that similar sized companies face the
risk of a major cyber or data security event as a key
operational risk. A significant cyberevent may be caused by
hostile foreign actors seeking to degrade or debilitate a key
economic driver of stability in the United States, external
organized fraudsters, or some other combination of malevolent
actors. Additional key operational risks found in larger
companies may include a heavy reliance on third parties, ill-
tuned models, ineffective controls, and an array of risks posed
by human capital who are either poorly equipped to handle rapid
technological advances or who overly rely on technology to
manage risk. Lastly, whether considered a subset of operational
risk or not, resiliency (risk) must also be considered.
Q.11. Fannie Mae and Freddie Mac (each a ``GSE'') each rely on
a common securitization platform to perform bond administration
and other securitization functions. Will you commit to conduct
an audit or other investigation of each GSE's management of the
third-party risk and other operational risks posed by the
relationship of a common securitization platform?
A.11. If confirmed, I will ensure the risks associated with the
common securitization platform (CSP) will be considered as
standalone CSP reporting or factored into broader topical-based
reporting (e.g., reporting and analysis of operational and
third-party risks).
Q.12. Ongoing Conservatorships--Will you commit to conduct an
audit or other investigation of whether the ongoing
conservatorships might pose risk to the ability of FHFA to
effectively perform its regulatory functions and ensure the
safety and soundness of each GSE?
A.12. Ensuring the safety and soundness of each GSE is vital to
the stability and liquidity of the mortgage market. As part of
OIG's robust oversight of FHFA's regulatory and conservator
responsibilities, if confirmed, OIG will use a risk-based
oversight strategy to conduct its work (utilizing the approach
detailed in questions 7, 8, and 9). If confirmed, I look
forward to reporting on the effectiveness of FHFA's regulatory
functions as informed by its other responsibilities, including
potential risks posed by current conservatorship activities.
Whenever the conservatorship ends, FHFA must be exceptionally
well-positioned to act as strongly as other independent federal
financial regulators.
Q.13. In particular, will you commit to conduct an audit or
other investigation of whether FHFA personnel with overlapping
conservatorship and safety and soundness responsibilities might
face conflicts of interest or other similar impediments that
undermine their ability to perform their safety and soundness
responsibilities?
A.13. If confirmed, I will seek to better understand whether
and to what extent there is overlap with conservator and
regulator FHFA personnel. To the extent FHFA OIG becomes aware
of a credible conflict of interest allegation, OIG will take
appropriate action to investigate the matter. To be sure, I
commit to ensuring that key matters undermining or otherwise
presenting an impediment from FHFA achieving its goal of
becoming a world-class regulator will be a part of OIG's work.
Q.14. Will you commit to conduct an audit or other
investigation of whether FHFA inappropriately consults with, or
otherwise relies upon, the GSEs in connection with its
rulemaking activities?
A.14. If confirmed, part of my work will be to determine
whether FHFA inappropriately consults with anyone, including
the GSEs, in connection with its rulemaking activities.
Although consultation in and of itself may not be
inappropriate, particularly in its role as the Enterprise's
conservator, a proper balance must be maintained. To the extent
FHFA OIG becomes aware of an allegation of inappropriate
communications during the rulemaking process, OIG will take the
necessary steps to fully assess the matter.
Q.15. OIG Staffing--Will you commit to assess the size and
scope of the staffing and budget of the OIG, including
benchmarks against the budgets and staffing of other Offices of
Inspector General?
A.15. If confirmed, I commit to assessing the size and scope of
the staffing and budget of FHFA OIG. As part of this
assessment, I will benchmark the OIG against other offices
while remaining mindful of the unique nature of FHFA's dual
role as regulator and long-term conservator. I also commit to
regular assessments of staffing and budget to adjust for any
changes in the landscape of FHFA operational requirements.
Being a good steward of allocated monies while being rightsized
is fundamental to being well managed.
Q.16. Answering Questions for the Record--Please describe with
particularity the process by which you answered these questions
for the record, including identifying who assisted you in
answering these questions along with a brief description of
their assistance.
A.16. The sum and substance of these answers are mine and mine
alone. They are based on my professional experience, a review
of limited public reporting, and a commitment to fulfilling the
mission of FHFA OIG. FHFA OIG's Director of External Affairs
and Risk Analysis assisted me with formatting, helping maintain
a consistent tone, and ensuring grammatical accuracy to these
questions.