[Senate Hearing 117-343]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-343


 NOMINATIONS OF MICHAEL S. BARR, JAIME E. LIZARRAGA, AND MARK TOSHIRO 
                                 UYEDA

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

                                HEARING

                               BEFORE THE

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

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                                   ON

                            NOMINATIONS OF:

  MICHAEL S. BARR, OF MICHIGAN, TO BE A MEMBER AND VICE CHAIRMAN FOR 
  SUPERVISION OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
                               __________

    JAIME E. LIZARRAGA, OF VIRGINIA, TO BE A MEMBER, SECURITIES AND 
                          EXCHANGE COMMISSION
                               __________

   MARK TOSHIRO UYEDA, OF CALIFORNIA, TO BE A MEMBER, SECURITIES AND 
                          EXCHANGE COMMISSION
                               __________

                              MAY 19, 2022
                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                                
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                Available at: https: //www.govinfo.gov /

                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
48-337 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

                 Dan Sullivan, Republican Chief Counsel

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                        Pat Lally, Hearing Clerk

                                  (ii)



                            C O N T E N T S

                              ----------                              

                         THURSDAY, MAY 19, 2022

                                                                   Page
Opening statement of Senator Tester..............................     1
    Prepared statement...........................................    41

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     3
        Prepared statement.......................................    42

                               WITNESSES

Nancy Pelosi, Speaker of the U.S. House of Representatives.......     5
Debbie Stabenow, a U.S. Senator from the State of Michigan.......     6
Gary Peters, a U.S. Senator from the State of Michigan...........     7

                                NOMINEES

Michael S. Barr, of Michigan, to be a Member and Vice Chairman 
  for Supervision of the Board of Governors of the Federal 
  Reserve System.................................................     9
    Prepared statement...........................................    43
    Biographical sketch of nominee...............................    45
    Responses to written questions of:
        Chairman Brown...........................................   115
        Senator Toomey...........................................   117
        Senator Menendez.........................................   130
        Senator Tester...........................................   131
        Senator Warnock..........................................   132
        Senator Crapo............................................   133
        Senator Scott............................................   137
Jaime E. Lizarraga, of Virginia, to be a Member, Securities and 
  Exchange Commission............................................    11
    Prepared statement...........................................    90
    Biographical sketch of nominee...............................    92
    Responses to written questions...............................    57
        Chairman Brown...........................................   138
        Senator Menendez.........................................   141
        Senator Tester...........................................   142
        Senator Warnock..........................................   143
        Senator Scott............................................   144
        Senator Hagerty..........................................   144
        Senator Moran............................................   145
Mark Toshiro Uyeda, of California, to be a Member, Securities and 
  Exchange Commission............................................    12
    Prepared statement...........................................   102
    Biographical sketch of nominee...............................   103
    Responses to written questions...............................    57
        Chairman Brown...........................................   146
        Senator Menendez.........................................   154
        Senator Tester...........................................   154
        Senator Warnock..........................................   156
        Senator Scott............................................   156

              Additional Material Supplied for the Record

Letters submitted in support of Nominee Mark Toshiro Uyeda.......   158
Letter submitted by SIFMA and BPI................................   171

                                 (iii)

 
 NOMINATIONS OF MICHAEL S. BARR, JAIME E. LIZARRAGA, AND MARK TOSHIRO 
                                 UYEDA

                              ----------                              


                         THURSDAY, MAY 19, 2022

                                       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, the Hon. Jon Tester presiding.

            OPENING STATEMENT OF SENATOR JON TESTER

    Senator Tester. Good morning, everybody. This is a day that 
will live in infamy because I am Chairman of the Banking 
Committee, but only temporarily, OK. Only temporarily.
    Today's hearing is in a hybrid format. Our witnesses are in 
person, but Members have the option to appear both in person or 
virtually.
    The Committee meets today to consider the nominations of 
three important Presidential nominees. First, the Honorable 
Michael Barr to be a Member and Vice Chairman for Supervision 
of the Board of Governors of the Federal Reserve; next, Mr. 
Jaime Lizarraga to be a Member of the Securities and Exchange 
Commission; and finally, Mr. Mark Uyeda to be a Member of the 
Securities and Exchange Commission.
    We thank the nominees for appearing here today, and welcome 
their families and their friends who are in attendance as well 
as those watching at home.
    I also want to extend a warm welcome to Speaker Pelosi who 
is going to be here, if not already here, to introduce Mr. 
Lizarraga and Senators Stabenow and Peters, our great Michigan 
Senators, will introduce Mr. Barr. And my friend, Senator 
Toomey, will introduce Mr. Uyeda.
    To our nominees, I want to thank you for your willingness 
to serve in these important roles.
    We are here today to consider three nominees who, if 
confirmed, will have a lasting impact on our economy. We know 
who powers our economy. It is small businesses, folks on Main 
Street who create jobs and prosperity for our communities. And 
it is workers. It is our job as Members of this esteemed body 
to support an economy that actually rewards their work.
    The nominees before the Committee today will play important 
roles in our efforts to support workers, small businesses, and 
American families.
    Michael Barr is the President's nominee to be Vice Chair 
for Supervision. Mr. Barr is a well-respected expert on 
financial regulation who currently serves as the dean for 
public policy and a professor of law at the University of 
Michigan. From 2009 to 2010, Mr. Barr served as Assistant 
Secretary for Financial Institutions at the Department of 
Treasury, where he played a key role in helping the Obama 
administration work with Congress to craft and enact the Dodd-
Frank Act.
    Mr. Barr previously served at the White House, and earlier 
in his career, in the Treasury and State Departments under 
President Clinton.
    Mr. Barr, I want to thank you for your willingness to serve 
our country again.
    Mr. Lizarraga and Mr. Uyeda have been nominated by the 
President to be Commissioners at the Securities and Exchange 
Commission. If confirmed, they will join the SEC at a critical 
time.
    Jaime Lizarraga has worked on financial services policy in 
Congress and played a key role in some of the most impactful 
pieces of capital markets legislation passed by Congress to 
support working families and our country's middle class. The 
son of Mexican immigrants, he understands the important role 
the SEC plays in protecting consumers.
    He currently serves as a senior adviser to Speaker Pelosi, 
who is here today to support his nomination. Prior to joining 
the Speaker's office, Mr. Lizarraga served in senior level 
positions on the House Financial Service Committee.
    Mr. Lizarraga also served at the Treasury Department, as 
well as the SEC, where he worked as the Deputy Director of 
Legislative Affairs.
    Mr. Lizarraga, we want to thank you for your willingness to 
serve our country.
    Mr. Uyeda has served at the SEC since 2006, and is 
currently working on Ranking Member Toomey's staff helping our 
Committee navigate some of the greatest financial challenges in 
recent American history. At the SEC, Mr. Uyeda has served as 
counsel for Commissioners Paul Atkins and Michael Piwowar. He 
also served as a Senior Adviser to my good friend, Jay Clayton.
    Earlier in his career, Mr. Uyeda worked in private law 
practice, as well as for the California Department of 
Corporations.
    Thank you, Mr. Uyeda, for your willingness to continue to 
serve.
    Look folks, these positions are really, really, really 
important. If confirmed, you all will be on the front lines at 
a critical point in our Nation's history. We are facing 
challenges that are unique, they are unprecedented, and we need 
folks serving our country who will always put the needs of our 
country before any personal or political ideology.
    Hopefully the worst of the pandemic is behind us, but our 
economy is not where it needs to be in terms of its recovery. 
Families are seeing higher costs from the gas pump to the 
grocery store, and while unemployment is at a record low, small 
businesses in Montana and across the country are having trouble 
finding and keeping workers.
    This Committee, under the leadership of Chairman Brown and 
Ranking Member Toomey, has confirmed a host of folks to 
critical positions charged with guiding the economy back from 
the brink. If confirmed, the three of you, that are here today, 
will immediately join in that work.
    But before these folks can do their jobs, we have to do 
ours. Our institutions have to be fully staffed if they are 
going to do their jobs and meet the challenges of our country.
    We have a lot more work to do here to support workers, to 
support small businesses, to lower costs for working families, 
to increase transparency in the marketplace and to hold bad 
actors accountable. So let us get to it.
    Ranking Member Toomey, you are now recognized for your 
opening statement.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman.
    We are here to consider three nominations: Michael Barr to 
be Fed Vice Chair for Supervision, and Mark Uyeda and Jaime 
Lizarraga to be SEC Commissioners. These nominations remind us 
of the importance of financial regulators abiding by their 
respective statutory mandates. This principle really should be 
nonpartisan.
    A fundamental aspect of a properly functioning democratic 
society is that important public policy decisions should be 
made by elected, accountable representatives. Otherwise, what 
is the point of the elections?
    Unfortunately, I am deeply concerned that financial 
regulators, including the Fed and the SEC, are increasingly 
straying into contentious political issues wholly unrelated to 
their mandates and expertise. These include issues like what to 
do about global warming, social justice, and even education 
policy. No doubt, these are important issues, but they are 
wholly unrelated to the limited statutory mandates and 
expertise of financial regulators.
    The Fed, for instance, has been weighing in on every one of 
these contentious issues. Some intend to use the Fed's expected 
climate scenario analysis to steer capital away from carbon-
intensive industries.
    All 12 of the reserve banks have sponsored a ``Racism in 
the Economy'' series where invited speakers advocated 
particularly politically controversial ideas, including race-
based reparations and defunding the police. And the Minneapolis 
Fed has been actively lobbying to change Minnesota's 
constitution on the issue of K-12 education.
    Does anyone truly think these activities are within the 
Fed's statutory mandates? Of course not.
    In February, we held a hearing to consider Sarah Raskin's 
nomination to be the Fed Vice Chair for Supervision. At that 
hearing, I cautioned that the hearing was not just about 
vetting Ms. Raskin. I noted that it was a referendum on the 
independence of the Fed in the face of pressure from some on 
the left who wanted to use the central bank to allocate capital 
to address global warming.
    Addressing contentious issues like global warming requires 
political decisions involving tradeoffs, like how expensive 
should credit be for oil drillers in order to make gas more 
scarce and costlier for motorists? And if we limit domestic oil 
and gas production, causing energy prices to rise and consumers 
to pay more, how much more is appropriate?
    In a democratic society, those tradeoffs must be made by 
elected representatives who are accountable to the American 
people, not unelected central bankers. Ms. Raskin's prior 
advocacy that unelected financial regulators should use their 
powers to address global warming led to the Senate's bipartisan 
rejection of her nomination. That rejection sends a powerful 
message to Fed nominees, including Professor Barr, and that is 
that all Fed Governors must commit to not exceed the Fed's 
limited statutory mandates and by doing so help to ensure the 
continuing independence of the Fed.
    The need for a Fed that is focused on its mandates is 
especially critical with inflation at a 40-year high. Even 
though wages are rising, prices are rising much faster, and 
that is causing workers, especially lower-income workers, to 
fall further and further behind.
    I hope Professor Barr will acknowledge today that inflation 
is severe and commit to doing ``whatever it takes'' to bring 
inflation back down.
    Professor Barr certainly has an impressive background and 
relevant experience to serve as the Fed Vice Chair for 
Supervision. However, some of his previous work raises some 
concerns and questions about his views on financial regulation.
    Professor Barr strongly opposed the bipartisan S. 2155 bill 
that Senators Tester and Warner helped to craft, which merely 
enacted modest and sensible reforms to Dodd-Frank. He has also 
argued that ``climate change presents severe long-term risks to 
the economy and financial stability that must be urgently 
addressed today.'' As I have discussed, there is no systemic 
risk to the banking system posed by the gradual changes in the 
Earth's average temperature.
    I will be interested in hearing Professor Barr describe the 
actions he believes the Fed should take to address these 
supposed risks.
    Keeping financial regulators apolitical and independent is 
as important now as it has ever been. To my Democratic 
colleagues who favor using financial regulators to address 
contentious political issues, I ask, how would you feel about a 
future Republican administration, under the pretense of 
``financial stability'' risk, using the Fed to allocate capital 
toward maybe increased defense spending, or financing a border 
wall, or offshore oil development?
    Once the precedent is set, the potential for further abuse, 
by both political parties, is limitless.
    In addition to Professor Barr, today we will also hear from 
two nominees for the SEC. Mr. Lizarraga has worked on financial 
services issues on Capitol Hill for many, many years. I commend 
him for his longstanding commitment to public service.
    And, in a few moments, I will introduce Mr. Uyeda, who is 
exceptionally well qualified to serve as an SEC Commissioner. I 
look forward to hearing from all three of our nominees.
    Senator Tester. Thank you, Senator Toomey.
    We will now have the introductions of today's nominees. 
First, Speaker Pelosi, it is an honor to have you in front of 
the Senate Banking Committee, and you may introduce Mr. 
Lizarraga.

    STATEMENT OF NANCY PELOSI, SPEAKER OF THE U.S. HOUSE OF 
                        REPRESENTATIVES

    Ms. Pelosi. Good morning, Mr. Chairman. Good morning, 
Ranking Member. I have great respect for the work of this 
Committee, having served on the Banking Committee when it was 
called the Banking Committee, before it became Financial 
Services in the House, Banking, Housing, and Urban Affairs. I 
take great pride in the fact that Mr. Toomey and Sherrod Brown 
both came from the House of Representatives and now serve on 
this great Committee. And thank you, Mr. Tester, Senator 
Tester, for your leadership. I congratulate you and Mr. Moran, 
Senator Moran, for your announcement the other day for our 
veterans. The bipartisan nature of it is pretty exhilarating.
    Today I here, as has been mentioned, with the greatest, 
again, official respect for the work of this Committee, and it 
is my privilege to introduce a devoted champion of working 
families, a respected expert on financial services, and a 
lifelong public servant, Jaime Lizarraga. He has served in my 
office, the Office of the House Speaker and Leader for nearly 
15 years, and for a long time as the highest senior advisor.
    Every single day his brilliant, strategic mind, wide-
ranging expertise, and unending compassion have been central to 
much of the work of the Congress, and if confirmed as a 
Commissioner he will be an invaluable asset to the Securities 
and Exchange Commission and its independent work.
    One of the most important roles of the SEC is to secure 
that the policies we enact in Congress protect consumers in 
their everyday lives. Jaime is uniquely positioned to succeed 
in this task, understanding how to transform legislation into 
implementation, as was mentioned by Senator Tester, having 
served on House Financial Services Committee, the Treasury 
Department, and as a staffer at the SEC.
    As Speaker, it has been my privilege to witnessed firsthand 
his masterful leadership. Because of his immense talent and 
vast knowledge, his portfolio has grown more expansive in the 
Speaker's office as he played an integral role in crafting and 
enacting some of the most consequential economic legislation in 
a generation.
    There are many things to say about him but one of them was 
the troubled Asset Relief Program that we worked in a 
bipartisan way with the Bush administration on, the Dodd-Frank 
reform, the Financial Crisis Inquiry Commission, restructuring 
Puerto Rico's debt and reforming our immigration system, among 
other things, and multiple relief packages that we worked, in 
large measure, in a bipartisan way to advance.
    And so with that I again just say that Jaime is known and 
adored by all as a family man. He comes here today strengthened 
and inspired by the love of his family. The son of immigrants 
from Mexico, as you mentioned, Senator Tester, he has never 
forgotten his parents' hard work and sacrifices to give him and 
his sister a brighter future. His story is the story of the 
American dream. His parents, Esther and Enrique, and his 
sister, Maria Esther, are beaming with pride as they watch this 
hearing from home in California. And today Jaime is joined this 
morning by his loving wife of 22 years, Kelly, his darling 
children, Victoria, Diego, Elena, Samuel, and Alexandra, and 
his dear mother-in-law, Paula.
    While he would be deeply missed by Members of Congress, 
this is a bittersweet moment for me, and he will be missed by 
our colleagues who depend on him. If confirmed, Jaime would be 
a powerful voice for families like his own at the SEC.
    Thank you again for the opportunity to appear before you 
and to introduce the nominee for SEC Commission, Jaime 
Lizarraga. I do so with great pride and confidence that he will 
do a great job, and I thank you for your leadership, all of 
you, and for this opportunity to be here today.
    Thank you, Mr. Chairman.
    Senator Tester. Madam Speaker, we are honored with your 
presence and we thank you for that introduction, and please 
know you are certainly welcome to stay for the entire hearing 
if you are not too busy.
    [Laughter.]
    Ms. Pelosi. I would like to do that, except that we have 
the Prime Minister of Sweden and the President of Norway here 
to talk about their entry into NATO. Only that would take me 
away from this important hearing.
    Senator Tester. We will give you that excuse. Thank you, 
Madam Speaker.
    Ms. Pelosi. Thank you.
    Senator Tester. Next up we have two Senators from another 
great M State, the great State of Michigan, to introduce Mr. 
Barr. Senator Stabenow.

STATEMENT OF DEBBIE STABENOW, A U.S. SENATOR FROM THE STATE OF 
                            MICHIGAN

    Senator Stabenow. Well good morning, and Mr. Chairman, I 
was thinking the last time we were together in a committee room 
I was chairing the Agriculture Committee and you were 
testifying about really important legislation. So it is great 
to be back with you and Ranking Member Toomey and the entire 
Committee. I appreciate the opportunity to be here also with my 
partner from Michigan in the Senate, Senator Peters.
    And I am really honored today to introduce Michael Barr, a 
fellow Michigander whom President Biden nominated to serve as 
Vice Chair for the Supervision of the Federal Reserve. I have 
known Michael for many years. He is exactly the person we need 
at the Federal Reserve as our Nation recovers from the pandemic 
and rebuilds for the future.
    Professor Barr has stellar credentials. He is currently 
dean of the Gerald R. Ford School of Public Policy at the 
University of Michigan. You would think that would keep him 
busy enough but he is also a Frank Murphy Collegiate Professor 
of Public Policy, Roy F. and Jean Humphrey Proffitt Professor 
of Law at the University of Michigan Law School, and the 
founder and faculty director of the University of Michigan 
Center on Finance, Law, and Policy.
    He has also taught financial regulation and international 
finance. He cofounded the International Transactions Clinic and 
cofounded the Detroit Neighborhood Entrepreneurs Project, which 
is a wonderful program that has helped launch more than 115 
small businesses in Michigan, and primarily owned by women. And 
so it is exciting to see what is happening.
    Giving small businesses and families the tools they need to 
succeed really is nothing new for Michael Barr. His entire 
career has been focused on protecting consumers and building an 
economy that helps our entire Nation thrive.
    And he is no stranger to the Senate, having previously been 
confirmed on a bipartisan basis during the Obama 
administration, and we so appreciated his service at that time. 
He played an important role in creating the Consumer Financial 
Protection Bureau and was a key architect of Dodd-Frank.
    Professor Barr deeply understands how the 2008 financial 
crisis hurt workers and families and businesses and 
communities, particularly in Michigan. I am confident that in 
this role he will work day and night to ensure that it never 
happens again.
    It is my honor to introduce Professor Barr, and I urge the 
Members of the Committee to vote yes on this important 
nomination. Thank you.
    Senator Tester. Thank you, Senator Stabenow. We appreciate 
the introduction and we appreciate your leadership. Thanks for 
being in front of the Banking Committee. Senator Peters.

  STATEMENT OF GARY PETERS, A U.S. SENATOR FROM THE STATE OF 
                            MICHIGAN

    Senator Peters. Thank you, Chairman Tester and Ranking 
Member Toomey. It is wonderful to be here before your 
Committee. And I join my colleague, Senator Stabenow, in 
introducing Professor Michael Barr to the Committee, and I 
think it shows how qualified he is, how we know him as an 
individual, and the strong support that we have for him in this 
nomination.
    There is no question Federal Reserve Governors are meant to 
lead an important agency with a long tradition of nonpartisan 
decisionmaking based on simply what is best for the economy. It 
is imperative that any nominee to join the Federal Reserve is 
able to make sound decisions based on evidence, without 
partisan bias, and the best interests of the American people.
    Thankfully, Michigan's own Michael Barr has the experience 
and the leadership needed to help strengthen our economy, 
support our families across our State and our country, and it 
is without reservations that I am proud to recommend him as 
President Biden's nominee to serve as Vice Chair of Supervision 
at the Federal Reserve.
    I am confident that Professor Barr has the professional 
qualifications, the independence, and the knowledge to protect 
the stability of our economy, to make him worthy of the 
Senate's favorable consideration.
    As Senator Stabenow mentioned, Professor Barr has a rich 
history of professional service, serving in both the Clinton 
and Obama administrations in a variety of different roles. One 
that I worked with him in particular with personally was in 
2009, when President Obama was trying to navigate out of the 
Great Recession. He nominated Professor Barr to serve as the 
Department of Treasury's Assistant Secretary for Financial 
Institutions. He was unanimously confirmed by this body to 
serve in that position. And as Assistant Secretary for 
Financial Institutions Professor Barr was responsible for 
developing and coordinating Treasury policies on legislative 
and regulatory affairs affecting financial institutions.
    Most notably, he was the key architect of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act of 2010, which I 
was very proud to work with him. I was a member of that 
conference committee, as a freshman in the House, and I can 
tell you that Professor Barr played a central role in 
developing the Consumer Financial Protection Bureau and 
policies to expand access particularly for small businesses 
across the country.
    In 2017, as a fitting recognition of his extensive 
experience in developing, enacting, and implementing public 
policies, Michael Barr was approved as the dean of the 
University of Michigan's Gerald R. Ford School of Public 
Policy, and in this role Professor Barr has committed to 
helping the Ford School become even more inclusive, even more 
collaborative with colleagues all across the university, and 
even more engaged in making a policy impact at both the local, 
the State, and national, and even global levels. The school is 
certainly very lucky to have him serving as dean.
    Throughout his career, Professor Barr has been an exemplary 
public servant, a molder of young minds, and has worked hard to 
serve the people of Michigan and across the State.
    So, in conclusion, I am proud to recognize Professor Barr 
today for his many, many professional achievements and for the 
expertise that I know he will bring to the Federal Reserve. 
Thank you again for this opportunity to recognize an 
outstanding nominee.
    Senator Tester. Senator Peters, thank you for that 
introduction and thank you for your hard work. We appreciate 
the Michigan delegation being here today in front of the 
Banking Committee. Thank you both.
    Senator Peters. Thank you.
    Senator Tester. Finally, Ranking Member Toomey will 
introduce Mr. Uyeda.
    Senator Toomey. Thank you, Mr. Chairman. It is my privilege 
to introduce Mark Uyeda today. In nominating Mr. Uyeda, 
President Biden has chosen someone who is exceptionally well 
qualified to serve as an SEC Commissioner.
    Mark is a dedicated public servant and an extremely 
talented securities lawyer. He has over 25 years of experience 
in securities and corporate law. That includes experience of 
regularly preparing prospectuses and 10Ks for public companies 
filed with the SEC, which I am told is something that no other 
current SEC Commissioner has done.
    For nearly two decades Mark Uyeda has worked as a State and 
Federal securities regulator, including the last 15 years as a 
career attorney with the SEC. During his career, Mark has been 
recognized with multiple SEC awards for his work, including the 
SEC Chairman's Award for Excellence and the SEC Capital Markets 
Award.
    Having personally worked with Mark during his time as an 
SEC attorney detailed to the Banking Committee, I know 
firsthand that the depth of his knowledge on securities and 
markets is unrivaled. Beyond his impressive credentials and 
expertise, Mark is a smart, fair, diligent, and humble 
colleague.
    Given his exemplary record and reputation it is no wonder 
that he has received multiple letters of support for his 
nomination. These include letters from seven former SEC 
Commissioners who have worked personally with Mark, three 
former chief securities regulators for the State of California, 
whom he directly advised, and multiple Asian American legal 
groups.
    Throughout his career, Mr. Uyeda has generously volunteered 
his time to help promote diversity at the SEC and throughout 
the legal community. For example, he previously served as the 
Chairman of the SEC Asian Pacific American Employees Committee 
and the President of the Asian Pacific American Bar Association 
of the Greater Washington, DC, Area.
    And Mark Uyeda's nomination is historic for the SEC. If 
confirmed, he will be the first Asian Pacific American to serve 
as an SEC Commissioner in the agency's 88-year history.
    I am very confident that as an SEC Commissioner he will 
faithfully carry out the agency's critical mission of 
protecting investors, maintaining fair, orderly, and efficient 
markets, and facilitating capital formation.
    Our loss here on the Committee will be investors' across 
America's gain. I am thrilled to support Mr. Uyeda's nomination 
and I know he is destined to do great things. I hope he can be 
swiftly confirmed.
    Thank you, Mr. Chairman.
    Senator Tester. Senator Toomey, thank you for that 
introduction. I would ask the panelists to step up, the 
nominees to step up. No need to sit down because we are going 
to administer the oath.
    So will you please raise your right hands. 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?
    Mr. Barr. I do.
    Mr. Lizarraga. I do.
    Mr. Uyeda. I do.
    Senator Tester. Let the record reflect that they all 
answered in the affirmative.
    Do you also agree to appear and testify before any duly 
constituted committee of the Senate?
    Mr. Barr. I do.
    Mr. Lizarraga. I do.
    Mr. Uyeda. I do.
    Senator Tester. Let the record reflect that they all 
answered in the affirmative. Thank you. You may take your 
seats.
    If you would like to introduce your family members or 
friends that are with you today I would invite you to do that 
before beginning your testimony.
    We will start with you, Mr. Barr, and we will just go right 
down the line. Mr. Barr, you are now recognized to begin your 
testimony.

STATEMENT OF MICHAEL S. BARR, TO BE A MEMBER AND VICE CHAIRMAN 
   FOR SUPERVISION OF THE BOARD OF GOVERNORS OF THE FEDERAL 
                         RESERVE SYSTEM

    Mr. Barr. Thank you, Senator Tester, Senator Toomey, and 
other Members of the Committee. It is my honor to appear before 
you today for this hearing. I am grateful to President Biden 
for nominating me to serve as Vice Chair for Supervision and a 
Governor of the Federal Reserve Board.
    My wife of 28 years, Hannah Smotrich, joins me today in the 
hearing room. I am grateful as well to be joined by my three 
children--Etai is here with us in person, and Avital and Dani 
are joining us online. I am thankful for their love and their 
support. My parents, David and Debbie Barr, imbued in me the 
deepest values of integrity and public service, and they are 
here with us in spirit today.
    For over 25 years, I have been working to help make the 
financial system safer, fairer, and better focused on the needs 
of businesses and households.
    I began my Government career at the U.S. Department of 
State, where I worked on international economic matters. I then 
spent 6 years at the U.S. Department of the Treasury, helping 
to strengthen the Community Reinvestment Act, build community 
development financial institutions, support fair lending and 
combat predatory lending abuses, and help bank the unbanked. I 
also worked at the Office of Management and Budget, where I ran 
an interagency task force advancing economic development in 
Washington, DC.
    I joined the faculty at the University of Michigan over 20 
years ago, following the advice of my mentor and friend, Ned 
Gramlich, former Director of the University of Michigan's 
School of Public Policy and longtime Governor of the Federal 
Reserve Board. At Michigan, I have taught domestic and 
international financial regulation, conducted research about a 
wide range of issues in finance, and coauthored a leading 
textbook on financial regulation, law, and policy. Along the 
way, I have also developed programs to help small business 
owners in our local communities in Michigan.
    In the wake of the global financial crisis of 2008, I 
served as Assistant Secretary of the Treasury for Financial 
Institutions, and I helped to develop and work with Congress to 
enact the Dodd-Frank Wall Street Reform and Consumer Protection 
Act of 2010. That basic framework is still with us today, and 
it has helped make the financial system stronger and work 
better for everyone. With the economy battered by the financial 
crisis, my team and I also worked to support struggling small 
businesses and households and community development financial 
institutions.
    After my time at Treasury, I stayed engaged in critical 
issues affecting both national and international financial 
policy, while also deepening my commitment to our local 
communities in Michigan, working with community banks and 
learning from advising private sector institutions.
    For the last 5 years, I have served as dean of the Gerald 
R. Ford School of Public Policy at the University of Michigan. 
I have loved serving our community, and have worked hard to 
advance bipartisan engagement, listening and talking to one 
another across our differences in a way that can deepen our 
democracy and get practical things done.
    If confirmed as Vice Chair for Supervision, I would be 
strongly committed to the Federal Reserve's responsibilities to 
ensure that the financial system is robust and resilient, that 
innovation flourishes with clear rules of the road, and that 
the financial system operates fairly.
    Additionally, an important part of the roles for which I 
have been nominated is to serve on the Federal Open Market 
Committee. Inflation is running far too high, hurting 
communities all across our country. I would be strongly 
committed to bringing down inflation to the Federal Reserve's 
target, consistent with the Federal Reserve's dual mandate of 
maximum employment and price stability.
    If confirmed, I look forward to working with all of you on 
this Committee, where I have spent much time learning from you 
and collaborating with you on critical issues for our country.
    I would be honored to be confirmed as Vice Chair for 
Supervision and Governor. Thank you for your consideration, and 
I look forward to your questions.
    Senator Tester. Thank you for your testimony, Michael Barr.
    Next we will go to Mr. Lizarraga. Please begin your 
testimony.

    STATEMENT OF JAIME E. LIZARRAGA, TO BE A MEMBER OF THE 
               SECURITIES AND EXCHANGE COMMISSION

    Mr. Lizarraga. Chairman Brown, Ranking Member Toomey, 
distinguished Members of the Committee, thank you for the 
opportunity to appear before you today. It is an honor to be 
nominated by President Joe Biden to serve as a Commissioner of 
the Securities and Exchange Commission.
    I would also like to thank House Speaker Nancy Pelosi for 
introducing me. I am proud to have been part of her team for 
nearly 15 years. Witnessing her extraordinary leadership up 
close, and her dedication to building a more prosperous future 
for America's working families has been the privilege of a 
lifetime. It has also prepared me well for the role of SEC 
Commissioner.
    At its core, the SEC's mission is about the aspirations of 
all working families to secure a prosperous financial future, 
with the confidence that their interests will always be 
protected.
    To me, the SEC's mission is also deeply personal, dating 
back to my days growing up in a Southern California working-
class community. Neither of my parents graduated from high 
school. They immigrated from Mexico and began their life in the 
United States as farm workers in California's Central Valley. 
Like millions of families in our country, they sought 
opportunity wherever they could.
    In the absence of stable job prospects, my parents decided 
to run a Mexican food business out of our home. On nights and 
weekends, my sister and I helped them prepare the food, mostly 
Mexican-style sandwiches called tortas. My father then sold the 
food from his car at soccer games and at community shopping 
centers.
    Growing up, my father always encouraged me to study the 
newspaper's financial pages. He taught me the importance of 
saving and investing for long-term financial security. In those 
years, and unlike now, access to safe and mainstream investment 
opportunities was virtually nonexistent. This limited my 
parents' wealth-building potential and their ability to grow 
their small business into a more established enterprise.
    My parents were also unable to save for retirement and 
faced constant financial strains. Their goal was for my sister 
and me to get an education. What little they had, they invested 
in us. I often asked how our financial system could have served 
their needs better.
    This life experience inspired me to pursue a career in 
public service. I focused on financial services policy, where 
issues of investor protection, financial stability, and 
economic security all come together.
    In more than three decades of public service, both as a 
House leadership and committee staffer, I played key roles in 
all financial regulatory legislation moving through Congress, 
from the Sarbanes-Oxley Act to the Dodd-Frank Act, and more. I 
also served as a Presidential appointee at the U.S. Treasury 
and at the SEC, working to ensure congressional mandates were 
effectively implemented.
    A key lesson from my long experience is that fair and 
transparent markets benefit everyone, whether a pension plan 
participant, a retail investor, or parents investing in their 
children's future education.
    The most enduring lesson is from the 2008 financial crisis: 
poorly regulated markets can have devastating consequences for 
working families and for the broader economy.
    If confirmed, I look forward to bringing my experience and 
unique perspective to the SEC. It would be an honor to work 
with the agency's talented staff and with my fellow 
Commissioners to uphold and strengthen the SEC's mission of 
protecting investors, promoting fair, orderly, and efficient 
markets, and facilitating capital formation.
    I would approach the SEC's vital mission through the eyes 
of working families like my own and work with my fellow 
Commissioners to make sure congressional mandates are robustly 
implemented. I would focus on making sure our regulations keep 
pace with rapid technological changes in our markets. And I 
would focus on facilitating capital formation for our job-
creating small businesses, particularly in underserved areas.
    Our country's future prosperity depends on robust oversight 
of our capital markets. To me, this means safe and transparent 
markets that foster a level playing field for all market 
participants, meaningful protections for investors, and broad-
based access to capital.
    As the Speaker noted, my parents are here in spirit, and 
are watching from home in California, and I am also proud to be 
joined by my family today, behind me, my wife of 22 years, 
Kelly Lizarraga, and our five children--Victoria, Diego, Elena, 
Samuel, and Alexandra. Also joining us is my mother-in-law, 
retired Reverend Paula Werner.
    Thank you again for the opportunity to speak today, and I 
look forward to answering your questions.
    Senator Tester. Thank you, Jaime Lizarraga, and I 
appreciate your testimony.
    Next we will go to Mr. Uyeda.

    STATEMENT OF MARK TOSHIRO UYEDA, TO BE A MEMBER OF THE 
               SECURITIES AND EXCHANGE COMMISSION

    Ms. Uyeda. Mr. Chairman, Ranking Member Toomey, and Members 
of the Committee, thank you for the opportunity to appear 
before you today. With me in the hearing room is my wife, 
Masae, and watching remotely from California are my parents, 
sister, and extended family.
    I greatly appreciate the kind words of Ranking Member 
Toomey in introducing me to the Committee.
    I am honored to have been nominated by the President to 
serve as a member of the Securities and Exchange Commission. I 
have a deep commitment to its mission to protect investors, 
maintain fair, orderly, and efficient markets, and facilitate 
capital formation.
    My first job was spending summers on my grandfather's 
produce route in Southern California. He drove a small truck, 
and I would help him pull cartons of fruits and vegetables off 
the truck to deliver them to small restaurants and retailers. 
It was a family business, run by him and his two younger 
brothers.
    My grandfather kept up this physical labor well into his 
70s. Every day, even during the hot summers, he would always 
wear a collared, buttoned-down shirt and work trousers, which 
were always neatly ironed. To me, that image of him has always 
represented the dignity of work.
    My grandfather had to build his business twice. First, in 
the 1930s, when he dropped out of high school to support his 
five younger siblings after both of his parents died. The 
second time was after World War II, when he and his family, 
including my mother, lost nearly everything when they were 
forcibly incarcerated in internment camps pursuant to Executive 
Order 9066 just because they were Americans of Japanese 
descent. At the same time, my uncle was fighting in Europe with 
the U.S. Army's segregated 442nd Regimental Combat Team, where 
he was awarded the Bronze Star and served in Company ``E'' 
alongside future Senator Daniel Inouye.
    Finding startup capital was difficult for my grandfather, 
particularly in an era where racial discrimination was common. 
Yet he persevered and accomplished the American dream. The 
story of the immigrant family business has been often repeated 
in the Asian American community--whether it is a restaurant, 
dry cleaner, nail salon, or donut shop--and that perspective 
has helped shape my views on the need for startup financing and 
capital formation.
    Since graduating law school in 1995, I have continuously 
practiced corporate and securities law, spending the vast 
majority of that time in public service. During my career, I 
have advised on, and helped to implement, major securities 
legislation, including the National Securities Markets 
Improvement Act, the Private Securities Litigation Reform Act, 
the Sarbanes-Oxley Act, the Dodd-Frank Act, and the JOBS Act.
    In 2004, I became the chief advisor to California's 
securities regulator, where we pursued an investor protection 
agenda and worked with the SEC and other State regulators. If 
confirmed, I would be one of the few State securities 
regulators ever to serve as a member of the SEC.
    During my past 15 years as an SEC civil servant, I have had 
the privilege of advising Commissioners and Chairmen as part of 
the executive staff and have been part of the Division of 
Investment Management.
    Since January of last year, I have been detailed by the SEC 
to serve as securities counsel to Ranking Member Toomey as part 
of this Committee, where it has been an honor to work with 
staff on both sides of the aisle, including Chairman Brown's 
staff.
    Before I close, I want to express my gratitude to the 
support and well wishes that I have received from my SEC 
coworkers on this nomination. Their efforts to protect 
investors have, and will continue to, inspire me every day.
    Thank you and I look forward to your questions.
    Senator Tester. Mark Uyeda, thank you very much for your 
testimony. We will now proceed to questions, and please know 
that some of the folks that are going to be asking questions 
are on virtually, so you can work with that.
    Mr. Barr, I am going to start with you. I want to thank you 
for your willingness to serve. I appreciated the opportunity to 
sit down with you in my office to hear more about your views 
and priorities. I asked you about Fed's independence. The 
Ranking Member talked about the Fed's independence in his 
opening statement. Can you describe to me why the Fed's 
independence is so important?
    Mr. Barr. Thank you, Senator, for that question. The 
Federal Reserve's independence is longstanding, and I think 
quite critical to its effectiveness as a nonpartisan 
institution, an institution that can make judgments purely 
based on the evidence, the facts in front of it. That is 
especially important with respect to its monetary policy 
duties. The market needs to have confidence that the Federal 
Reserve's decisions are made based solely on the evidence, and 
the American public needs to have confidence that those 
decisions are based solely on the evidence in front of it. So 
its independence dramatically enhances its effectiveness.
    I think you have seen, as other countries around the world 
have moved to a model of independent central banking, that that 
has also helped in their institutions as well.
    Senator Tester. So why would it be a mistake to allow 
politics to influence the Nation's monetary policy?
    Mr. Barr. Thank you, Senator. If politics were to get 
involved in monetary policy it would dramatically reduce the 
effectiveness of what the Federal Reserve does and what it 
says. It would reduce the effectiveness of what it does in the 
sense that it could lead to wild swings in policy that are 
based on politics rather than the evidence in front of it. And 
it would affect the effectiveness of what the Federal Reserve 
says because people would lose confidence that the judgments 
that are being made are based on the evidence in front of it.
    If confirmed as Vice Chair and Governor I absolutely assure 
you that I am and will be firmly committed to the independence 
of the Federal Reserve.
    Senator Tester. In the last Administration, the President 
got on TV and tried to influence the Chairman of the Fed. What 
would you do if that were to happen now?
    Mr. Barr. Thank you, Senator. I would ignore that.
    Senator Tester. That is good enough for me.
    Mr. Barr, I am very proud of the work that was done on 
2155. I think it struck the right balance, and quite frankly 
and maybe unfortunately, it was tested very, very quickly with 
the pandemic. And, quite frankly, I think it showed that we 
struck the right balance. I think the work that community banks 
and the credit unions did across Montana, and I think across 
the country, was exemplary.
    So what is your view on the impact that S. 2155 has had on 
our financial system?
    Mr. Barr. Thank you, Senator. During the passage of S. 
2155, I supported aspects of the legislation. I was concerned 
about other aspects of it. I think the community bank 
provisions of that legislation are quite good and strong, and I 
also thought other protections added to the legislation on 
veterans and servicemembers were spot on. And I think those 
community bank provisions worked well, both at the time and 
since.
    I did have some concerns that I expressed as the bill was 
being drafted that some aspects of the bill could weaken 
capital or liquidity rules for larger firms. Some of the 
concerns that I had were related to credit card banks and the 
large U.S. operations of foreign firms.
    A number of the concerns I had with the bill were actually 
addressed by a manager's amendment that came in that, for 
example, clarified that the U.S. operations of foreign firms 
would still be required to have intermediate holding companies.
    So overall, with the bill, I thought it was really quite 
admirable the way Republicans and Democrats worked together on 
that legislation, and I think if you look at the capital and 
liquidity in the financial system today they are quite strong.
    Senator Tester. All right. Thank you very much. I am going 
to turn to Ranking Member Toomey now, but before I do that I 
just want to express what a pleasure it has been working with 
you, Ranking Member Toomey, during this Banking hearing.
    Senator Toomey. And for so long.
    [Laughter.]
    Senator Toomey. Thank you, Mr. Chairman.
    Professor Barr, thanks for meeting yesterday. I appreciate 
your acknowledgment then and again this morning that inflation 
is way too high. During our discussion you said that if 
inflation persists you will do, and I quote, ``whatever it 
takes,'' end quote, to get inflation under control. Even if it 
were to unfortunately trigger a recession, which I know no one 
wants or could precisely predict, and I hope is quite unlikely, 
but just for the record this morning is that a fair 
characterization of your view of fighting inflation?
    Mr. Barr. Thank you, Senator. Yes, it is. I strongly 
believe that inflation is far too high today, and I am 
committed to bringing it down to the Federal Reserve's target 
of 2 percent.
    Senator Toomey. Great. Thank you. Now there are folks who 
have openly argued that climate change poses such an 
existential threat to humanity that we simply have to dispense 
with democratic norms and use financial regulatory powers to 
accelerate the transition to a lower carbon economy.
    So Professor Barr, my question for you is, does the Fed's 
mandate permit the Fed to use its power to accelerate the 
transition to a lower carbon economy?
    Mr. Barr. Senator, thank you for that question. The Federal 
Reserve's authorities here are important but quite limited, 
quite narrow.
    Senator Toomey. Right.
    Mr. Barr. And those are to assess risks to the financial 
system from all sources, including climate.
    Senator Toomey. I understand, Professor. I have got very 
limited time.
    Mr. Barr. Sorry.
    Senator Toomey. So I understand what the Fed's powers are. 
My question is do you believe that the Fed's mandate allows it 
to use its power to decide to accelerate the transition to a 
low-carbon economy?
    Mr. Barr. No, Senator. I think that the Federal Reserve is 
not able to allocate credit, should not be in the business of 
telling financial institutions to lend to a particular sector 
or not to lend to a particular sector.
    Senator Toomey. Thank you for that. So would you agree that 
that extends to the fact that the Fed does not have the 
authority to use climate-related stress tests for the purpose 
of penalizing banks for lending to energy companies, for 
instance?
    Mr. Barr. Thank you, Senator, for that question. The only 
purpose of the Federal Reserve's scenario analysis or other 
measures should be to understand risks that climate might pose 
to the financial system and to work with financial institutions 
on measures to manage those risks.
    Senator Toomey. Great. Thank you. There have been, in some 
quarters, a great deal of hostility to bank mergers, especially 
in recent months where there appeared to be a de facto 
moratorium on approving mergers that would result in a bank of 
more than $100 billion in assets. Now it is clear to me that 
bank regulators have no statutory authorization to impose a 
universal moratorium on bank mergers. So do you agree that the 
Fed does not have the authority to impose a blanket moratorium 
on bank mergers?
    Mr. Barr. Thank you, Senator. I am not aware of any 
authority with respect to a blanket moratorium on bank mergers.
    Senator Toomey. Yeah. I think if there were such an 
authority I think you would be aware of it. I think that is 
because there is no such authority.
    But I do want to point out, I am concerned, Acting 
Comptroller of the Currency, Michael Hsu, has proposed 
conditional regional bank mergers on their commitment to meet 
what would otherwise be inapplicable regulatory standards and 
requirements. To me this is an attempt to establish this 
requirement. This attempt exceeds the OCC's authority. And 
ironically, making it more difficult for regional banks to 
merge could actually decrease competition within the banking 
industry by preventing larger regional banks from being able to 
compete with very large banks.
    So let me ask you this. Do you agree that regional bank 
mergers can, in some circumstances, actually increase 
competition in the banking industry by better enabling them to 
compete with larger banks?
    Mr. Barr. Thank you, Senator. I think that bank mergers can 
have positive effects or negative effects on both competition, 
convenience, and needs. Financial stability, I do not have an a 
priori view. I think the merger reviews should be conducted 
based on the evidence.
    Senator Toomey. OK. Thank you. I do want to talk a little 
bit about the SLR also. The Fed announced, in March of last 
year, I think, that it would consider modifications to the SLR, 
and the idea was to ensure that it serves as a backstop, not 
the primary driver of capital requirements. So that is over a 
year now and we have not seen a proposal, I think in part 
because the seat to which you have been nominated had not been 
filled.
    If you are confirmed, would you commit to expeditiously 
issuing a proposal to ensure that banks are not penalized for 
holding risk-free assets like deposits at central banks?
    Mr. Barr. Senator, I see that time has expired. May I 
answer the question?
    Senator Toomey. Sure.
    Mr. Barr. Thank you. What I would like to do, if confirmed 
as Vice Chair, is to come in and take a look at capital and 
liquidity in the system, broadly speaking, to look at the SLR, 
to look at the Basel III, so-called end game rules that need to 
be proposed, and to try and take a look at this as a whole, 
rather than piece by piece.
    Senator Toomey. OK. Thank you, Mr. Chairman.
    Senator Menendez. [presiding]. Senator Brown has asked me 
to preside for a while so we will do that. I am going to 
recognize myself.
    Mr. Barr, there is a serious diversity problem at the 
Federal Reserve. Latinos are the Nation's largest minority. 
They make up 20 percent of the United States population, yet 
they have no representation in Fed leadership. I have raised 
this issue many times with nominees and sitting members of the 
Federal Reserve, I have heard extensively about what the Fed is 
supposedly doing, and I can just tell you right now that is 
just not sufficient.
    Sixty-two million Hispanic Americans in the United States 
with a $2 trillion domestic marketplace impact deserve a seat 
at the table where our Nation's most important economic 
decisions are made. It is the reason that I voted against 
Chairman Powell.
    So I am eager to hear how you would deal with this 
question. If confirmed, what steps would you take to improve 
minority representation, particularly Latino representation in 
leadership roles at the Fed?
    Mr. Barr. Thank you, Senator, for that question. I agree 
with you that diversity and equity and inclusion are important 
goals for the Federal Reserve to pursue. In my experience in 
prior jobs at the Treasury Department and at the Gerald R. Ford 
School of Public Policy those have been really quite important 
goals of mine as well.
    And what I have been doing in my own work is to try and 
build a pipeline of people who can then come in, get 
increasingly senior jobs, positions. It starts in our work at 
the Ford School, for example, we start in high schools now, 
going out into high schools and educating students about the 
opportunities of public policy. We run a summer program for 
juniors in college to get them engaged in public policy and 
prepare them for graduate training. We do a lot of work to 
build out the graduate pool. We then work on the postdoctoral 
pool, the faculty pool. And so really kind of a holistic 
approach.
    Senator Menendez. I appreciate that and preparing the 
pipeline, obviously, is a one element. But the problem is there 
are many qualified individuals now who could enter into the 
Fed's system. There are qualified individuals who should be on 
the regional banks. So will you commit to working with my 
office to increase Latino representation at the Fed?
    Mr. Barr. Yes, sir. I would be delighted to work with your 
office on these issues.
    Senator Menendez. You also have an important role to play 
in the selection process for presidents and members of the 
board of directors of the 12 Federal Reserve banks, which in 
its 108-year history has never had a Latino sitting on it. 
Would you commit to working to ensure that diverse candidates 
are considered for these positions?
    Mr. Barr. Yes, Senator. I think that is a quite important 
goal for the Federal Reserve, and I would be delighted to work 
on that.
    Senator Menendez. And it is not just to do the right thing. 
Study after study shows us that the more diverse boards, the 
greater the profitability on the bottom line.
    Mr. Lizarraga, congratulations on your nomination. If 
confirmed, you would be the only Latino currently serving on 
the SEC Commission or Senate-confirmed Federal financial 
regulator, for that matter. And Mr. Uyeda, congratulations to 
you as well in your historic nomination.
    The asset management and investment advisory industries are 
overwhelmingly White and male. Studies consistently show that 
greater diversity leads to greater profitability, as I just 
suggested. So in an effort to improve performance and thereby 
benefit retail investors the SEC's Asset Management Advisory 
Committee unanimously recommended that the SEC take concrete 
actions to improve diversity in these industries.
    So I want to ask both Mr. Uyeda and Mr. Lizarraga, can you 
commit to bringing these recommendations before the Commission 
for a vote so that we can bring transparency and diversity to 
the industry and ultimately deliver better outcomes for 
investors?
    Mr. Lizarraga. Thank you, Senator, for that question, and I 
embrace diversity and inclusion as fundamental values, and I am 
proud of the work that I have done in Congress on that issue, 
including in the setting up of the historic House Diversity 
Office that serves the entire House of Representatives.
    I am also aware that this is an issue that has received a 
lot of attention in the shareholder proposals, and it is 
something that, if confirmed, I intend to stay very active on.
    Senator Menendez. All I am looking for is a vote. You guys 
can vote it down if you want to. But the SEC Management 
Advisory Committee unanimously--and this is a very broad 
spectrum of individuals--made this recommendation. So all I am 
looking for is a vote before the SEC. If you all do not think 
it is a good idea you can vote it down. If you think it is good 
idea you can support it.
    So will you seek, if you are confirmed, to have a vote 
before the SEC on this advisory committee's recommendations?
    Mr. Lizarraga. If confirmed, I look forward to exploring 
that possibility, recognizing that I would need to look into 
the details of the process. But I agree with the sentiment that 
is expressed by the advisory committee.
    Senator Menendez. Mr. Uyeda.
    Mr. Uyeda. When I was on the SEC staff, I had the privilege 
of helping to stand up the Asset Management Advisory Committee. 
I have seen the incredible amount of work they have put in on 
these recommendations, and all of them, not only just for AMAC 
but the other advisory committees, the recommendations seem to 
be taken very, very seriously by the Commission. If confirmed, 
I will commit to considering any item that Chair Gensler, who 
oversees what items go on the agenda, are put up, on diversity, 
and improving inclusion in the asset management area.
    Senator Menendez. You are both learning your time in 
Congress to be very cautious in your answers. I am going to 
submit questions for the record. I would like to support both 
of your nominations. But I just simply want to hear a yes or 
no. If Chairman Gensler puts it up then, you know, you can be 
advocates to Chairman Gensler to put it on, right? You are not 
just stoic figures there. You have a role to play if you are 
ultimately confirmed.
    Senator Rounds is next.
    Senator Rounds. Thank you, Mr. Chairman. First of all, 
thank you all for placing yourselves within the nomination 
process. This is very important that we have the opportunity to 
look and to consider. My questions will primarily be to Mr. 
Barr.
    Mr. Barr, I have appreciated the opportunity to visit with 
you in my office this week. This is an opportunity to review a 
little bit of that. And I just wanted to begin, Senator Toomey 
touched on this already, but just to clarify, and this will 
save me from putting a question for the record in front of you, 
it sounds like you are agreeing to considering permanent 
modifications to the SLR. When do you think we could expect to 
see action on that? I think this is really important that we 
address it. We know that we have got other members on the board 
that have already committed, but we would like to hear a 
commitment that we move forward with this consideration.
    Mr. Barr. Thank you, Senator Rounds, for that question. It 
was wonderful to spend time with you in your office earlier.
    As I said to Senator Toomey, what I would like to do is to 
come into this position, if confirmed, and wrap my arms around 
the whole capital and liquidity picture--that includes the SLR. 
It includes the Basel III end game and stress testing and the 
like--to make sure I understand the full package of potential 
issues. I want to make sure that I understand how the 
institutions are doing with respect to emergent risks as well.
    Senator Rounds. Well, let us cut to the chase on that part 
because even right now, in the middle of what is significant 
inflation, the Federal Reserve has written, in its most recent 
supervision and regulation report that was released on Friday, 
and I will quote it, ``The banking system remains strong 
overall with robust capital and liquidity and improved asset 
quality.'' That would seem to point to the fact that the system 
right now is working, and what we are suggesting is that the 
modification to the SLR would be appropriate as well. We are 
just hoping that--I guess what I am asking is that you would 
move forward fairly quickly to address the SLR issue.
    Mr. Barr. Thank you, Senator Rounds. I agree with you that 
capital and liquidity in the system today is quite strong. But 
what I would really like to do, and I think makes sense, is not 
to think about the capital rule as piecemeal but to understand 
them as a group.
    Senator Rounds. But if you are talking about a long-term 
study you are talking an extended period of time. I just want 
to clarify that this is not going to take years to get done.
    Mr. Barr. Senator, it will not take years to get done.
    Senator Rounds. Will it take months to get done?
    Mr. Barr. I cannot specify the exact time period, Senator. 
I promise that I take the issues seriously. They are the reason 
that I am focused on the resilience of the financial system, 
and I promise to address the issues in a serious way.
    Senator Rounds. OK. Just a few minutes ago as we were 
looking at this, Senator Tester had started out and he talked 
about the success that we had with 2155. You and I spoke about 
2155 and the fact that I had questions whether or not you would 
have supported a number of the changes that were in there.
    Part of what 2155 did and focused on was the ability to 
tailor based upon the size of the different banks and so forth. 
Let's go back into that a little bit. It sounds like you still 
feel that tailoring based on size and a risk profile is good 
for banks, and it sounds specifically that, in particular, 
community banks, but what about regional banks as well? It 
seems to me that if you are tailoring, can you not apply that 
to regional banks as well?
    Mr. Barr. Thank you, Senator. Yes, I think that tailoring 
or a graduated approach, a tiered approach makes sense for the 
financial system. You want the strictest rules for the very 
largest institutions, and you want gradually less restrictive 
rules as you get to simpler, less complex, less risky 
institutions. And you particularly want, with respect to 
community banks, the simplest of rules given the potential for 
regulatory burden being very high for them----
    Senator Rounds. What about banks $50 billion and over, 
regional banks?
    Mr. Barr. I think that same principle of tailoring, or I 
think of it as tiered approaches to regulation, make sense at 
each of the kinds of size levels. I strongly agree with the 
principle of a tiered approach. Where I had disagreement was on 
whether that approach was exactly, you know, what I would have 
done for each of those institutions. Obviously, Congress has 
spoken on that.
    Senator Rounds. Well, tailoring recognizes that you can 
modify it based on the size.
    Let me ask this, just in turning to another topic. I have 
long pushed our U.S. representatives at the International 
Association of Insurance Supervisors to advocate in favor of 
the aggregation method as an alternative method to the ICS. 
Before confirmation, Governor Brainard indicated unequivocal 
support for this position and noted that the Fed continues to 
advocate for the aggregation method internationally.
    Mr. Barr, if confirmed, will you commit to the position 
outlined by Governor Brainard in defending the use of the 
aggregation method and the State-based system of insurance 
regulation? This is a very important question.
    Mr. Barr. Senator Rounds, I agree with Governor Brainard 
about that approach.
    Senator Rounds. Thank you. Thank you, Mr. Chairman.
    Senator Menendez. I understand Senator Warner is with us 
virtually.
    Senator Warner. I am, Senator Menendez. Thank you so much, 
and I say to my colleague, Senator Rounds, one of the reasons 
we have tailoring is because we did the reforms in 2155. And 
while Mr. Barr may not agree on exactly where the cut lines 
should be, and there was some arbitrariness on that, I do think 
it is the right approach.
    Mr. Barr, I am going to start with you on CRA. This is a 
topic I know you have written a lot about and talked a lot 
about. I think you made a thoughtful review in 2019. The Fed, 
FDIC, and OCC's recent proposal is extensive. How much have you 
reviewed that so far? How do you think it will stand the test 
of time? Are there areas that you would like to see moving 
further on? Give us your take on CRA.
    Mr. Barr. Thank you, Senator Warner, very much for that 
question. I think that the draft proposal from the three 
banking agencies is a good one. There was an enormous amount of 
work that has been put into that, and I think it shows in the 
proposal.
    I was especially glad to see the three agencies working 
together after there was a period of time where there was not 
that kind of alignment. I think that the certainty that that 
provides for the financial sector and for communities is really 
important.
    There are a few areas I just want to continue to review in 
the rule, and I also look forward to reading, if confirmed, the 
public comments that come in on that rule. I would like to be 
sure that the rule is appropriately taking on issues of 
financial inclusion. The rule has some tiering with respect to 
application of rules. I would like to make sure that that also 
is taking into account the needs of community banks in the 
process.
    But I was very much encouraged by what I read in the rule.
    Senator Warner. Did I just disappear? Folks, did I--whoops.
    Senator Smith. There you go. We can hear you. We can see 
you.
    Senator Warner. Am I looking as washed out? I think my 
battery is running down, and it is a little embarrassing since 
I invented cell phones, that I cannot figure out how to work a 
computer.
    Senator Toomey. I will send you some makeup.
    Senator Smith. You are looking a little peaked, Senator.
    Senator Warner. No matter how much kind of heckling from my 
colleagues--Mr. Barr, CRA, in my mind, fits in with racial 
wealth gap. It fits in with the whole questions of access to 
capital. This is a topic that I have talked with you about and 
every member of the Fed about how we can be more engaged with 
CDFIs and MDIs. You know, everybody gives me ``Attaboy, I 
agree, I agree, I agree.'' Frankly, the reality of the Fed 
moving in a meaningful way on these questions I think has been 
less than the rhetoric. There has not been as much there, 
there. And I would point out again I think the first round of 
PPP, while well-intentioned, showed huge lack of take-up by 
minority-owned businesses. I know Senator Cortez Masto, this is 
something she has worked on, Senator Van Hollen has worked on.
    I really am going to need--you know, I look forward to 
supporting you, but I think the Fed is going to really need to 
lean in, and particularly from the regulatory standpoint, 
regulatory supervision. There are lots of banks in the chain 
who, even beyond CDFIs, that say they would like to do more. 
And my fear, at times, is that you guys say one level comment 
at the national level, and that never translates down to the 
examiners. The examiners are still dinging institutions that do 
not dot every I and cross every T, particularly when we are 
trying to deal with underbanked communities.
    So in my last minute can you put a little more meat on the 
bones about when you get confirmed what you will do on this 
access to capital issue for underserved communities and 
particularly how CDFIs and MDIs can play a role.
    Mr. Barr. Thank you, Senator, very much for that question. 
I very much look forward to continuing to work with you on 
these issues, if confirmed. I think that community development 
based financial institutions and minority depository 
institutions and other community banks have played critical 
roles in expanding access to capital for underserved 
communities, for low- and moderate-income communities, for 
minority communities. And that, to my mind, is a critical role.
    I think the Federal Reserve can play an important role, as 
you suggest, in supervision and in regulation. And I have had 
the same experience that you indicate about the disconnects 
between Washington and the field I would be quite attentive to.
    Senator Warner. I know my time is up. I just want to again 
say thank you to so many of my Republican colleagues, frankly 
led by Senator Crapo, who helped really work to get that $12 
billion. It was the first time we put our money where our mouth 
is in terms of support for CDFIs and MDIs.
    Thank you, Senator Menendez.
    Senator Smith [presiding]. Thank you, Senator Warner. And 
now we will hear from Senator Moran for 5 minutes.
    Senator Moran. Chairwoman, thank you. A couple of questions 
for our SEC nominees, and thank you all for your willingness to 
serve, and I look forward to developing a solid working 
relationship with each of you.
    For Mr. Lizarraga and Mr. Uyeda, this I hope is a yes-or-no 
answer so I can get to other questions as well. Mr. Lizarraga, 
do you agree that any change to the disclosure rules, which 
would more than double the current cost of disclosures, with an 
outsized impact on smaller companies should be subjected to 
robust public debate, including in front of this Committee 
before those rules are finalized?
    Mr. Lizarraga. Yes.
    Senator Moran. Mr. Uyeda.
    Mr. Uyeda. Yes.
    Senator Moran. Thank you. Mr. Lizarraga, do you support 
competition among asset managers and believe that investment 
firms should compete to manage investors' money?
    Mr. Lizarraga. Senator, I believe in competition in all 
segments of our markets.
    Senator Moran. I will ask both of you, but let me add a 
little to that question. It is related to the following. Do you 
believe that smaller firms, such as those with less than $500 
billion in assets, which seems less than small to me, should 
have the same opportunities as the multitrillion-dollar firms 
to list exchange-traded products in order to compete and serve 
investors?
    Mr. Lizarraga. I am not sure I understood the last part of 
your question, sir.
    Senator Moran. Do you believe that smaller firms should 
have the same opportunities as multitrillion-dollar firms to 
list exchange-traded products in order to compete and serve 
investors?
    Mr. Lizarraga. Thank you, sir. I believe small firms, small 
issuers should be treated fairly, just like all market 
participants should be. So yes, I agree that they should be 
equitably treated.
    Senator Moran. This is not a trick question. There is not 
anything I am trying to capture here other than to make certain 
that what I have seen where small firms have been excluded from 
the ability to compete with larger firms due to decisions made 
by regulators. I want to make certain that you have an 
appreciation, that both of you have an appreciation for those 
smaller firms and will not do anything to disadvantage them and 
their capability of attracting and managing funds for clients 
as compared to those large, multitrillion-dollar firms.
    Mr. Lizarraga. Yes, sir. I agree with that principle, 
generally, yes.
    Senator Moran. Thank you. Mr. Uyeda.
    Mr. Uyeda. Yes. And, in fact, I would point out that 
consideration of competition is statutorily mandated by 
Congress that the SEC consider. So efficiency, competency, 
capital formation are three factors that, by law, the SEC must 
consider in any rulemaking. In addition, the SEC has a mandate, 
under the Regulatory Flexibility Act, to look at the impact on 
small entities, and a number of those definitions, particularly 
in the asset management space, I think are potentially outdated 
and need to be looked at.
    The current small entity definition is just $25 million of 
assets under management or less, which, as you noted, $500 
billion these days seems like quite a small amount, so that 
would be something to think about updating those limits.
    Senator Moran. Thank you both for your answer. The follow-
up to that, which I think--I will ask you if you will commit to 
working with this Committee to ensure that smaller firms have 
the opportunities and necessary infrastructure to compete with 
largest management firms by allowing them to offer exchange-
listed products.
    Mr. Lizarraga. Yes, sir. I commit to working with this 
Committee on all issues before us today.
    Senator Moran. That is a good answer.
    Mr. Uyeda. Yes. I also commit to working with this 
Committee on consideration of those issues.
    Senator Moran. Mr. Barr, in June of 2020, you stated that 
the continued reluctance of the Fed to force banks to preserve 
capital in the face of global pandemic and economic collapse. 
You talked about those circumstances. It seems that throughout 
the pandemic and now capital liquidity levels in the banking 
sector have been a key strength for our economy, and my 
question is, does that fact, if you agree with that does that 
fact lend credence to the banking sector being adequately 
prepared for the next recession?
    Mr. Barr. Thank you, Senator, for that question. The 
statement I made was in the context of the global pandemic 
having just hit the United States, and before Congress and the 
Federal Reserve took the really extraordinary actions they took 
to protect our economy, I was concerned that the paying out of 
dividends and permitting the cash repurchase of shares was 
dissipating capital when it needed to be preserved. But I agree 
with you that capital and liquidity today is quite strong.
    Senator Moran. Thank you. And I am out of time. Thank you.
    Senator Smith. Thank you, Senator Moran.
    We will next hear from Senator Cortez Masto, who is joining 
us virtually, I believe.
    Senator Cortez Masto. Thank you, Madam Chairwoman. 
Congratulations to all three of the nominees. I so appreciate 
your willingness to serve.
    Let me start with Mr. Uyeda and Mr. Lizarraga. Thank you, 
as well, for everything that you have done in the past 
supporting [inaudible] committed to. Let me ask you this, and 
this is a concern that I think many of us have. We have seen 
social media play a growing role in market manipulation, and 
the SEC has actually fined civil fines over tweets in the past 
as a result of this.
    So I am curious, for the two of you, what are your thoughts 
about market manipulation on social media, and what role should 
the SEC take to curb this practice? And Mr. Uyeda, let us start 
with you.
    Mr. Uyeda. So the SEC has longstanding authority to pursue 
enforcement actions for manipulation of the securities markets. 
Social media is definitely one avenue in which that 
manipulation can occur. But the use of the internet to 
manipulate prices, including in pump-and-dump schemes, is 
nothing new. In fact, I think it was a couple of decades ago 
when the first enforcement actions were brought for the use of 
internet bulletin boards, as they were called during the time, 
to disseminate false and misleading information.
    My experience at the SEC is that there is an ever-expanding 
set of technological tools to identify manipulative behavior, 
and if confirmed, that is something that I would be interested 
in working with to make sure that the hard-working staff have 
all the tools at their disposal to investigate potential market 
manipulation.
    Senator Cortez Masto. Thank you. Mr. Lizarraga.
    Mr. Lizarraga. Thank you, Senator, for your question. I 
think robust enforcement of our securities laws lowers the risk 
in our capital markets, protects investors, and lowers the cost 
of capital. To the extent that there is fraud and market 
manipulation, wherever it occurs, I think the SEC has an 
obligation to pursue that.
    Social media does facilitate, in some instances, these 
violations of the law, and I believe in prioritizing 
enforcement actions that address that. Recently, as you may be 
aware, Chairman Gensler added some resources to the Enforcement 
Division to address some issues related to the digital space, 
which may also include monitoring what happens on social media.
    Senator Cortez Masto. Thank you. Mr. Barr, let us talk 
cybersecurity. We have not had a chance to talk that yet. As 
you well know, banks and our other financial institutions in 
many ways are on the front lines of the growing rise of crime 
happening in cyberspace. Our Nation's banks must take 
appropriate risk mitigation from incursions from bad actors, 
both domestically and abroad.
    So can you talk a little bit about your experience in 
cybersecurity and data privacy and safety, and what role 
cybersecurity plays in fostering stability, integrity, and 
efficiency in our economy?
    Mr. Barr. Thank you very much for that question, Senator. 
Cybersecurity is really essential for risk mitigation, risk 
management in the financial system. Cyberrisk is a very urgent 
risk. It is with us today. And I think it is quite critical 
that both the Federal Reserve and the other Federal regulatory 
agencies, and the financial sector itself, continue to invest 
and try and stay ahead of the curve. It is a constant process.
    My own experience with cybersecurity relates to my work at 
the U.S. Treasury Department where I oversaw, among other 
things, the Office of Critical Infrastructure Policy. And I 
have also done work with firms engaged in antifraud and other 
measures, and I have written about the need for international 
coordination on efforts to address risks from cybersecurity in 
a way that continues competition and advances the ability of 
financial institutions to serve countries around the world. So 
it is an issue that is quite central and I would be focused on.
    Senator Cortez Masto. Great. I am glad to hear that. Thank 
you. Thank you again and congratulations.
    Senator Smith. Thank you, Senator Cortez Masto.
    We will now turn to Senator Daines for 5 minutes.
    Senator Daines. Thank you much. Professor Barr, you have 
previously voiced concerns regarding the regulatory relief put 
in place following the enactment of Dodd-Frank. Specifically, 
you were a very vocal critic of Senate Bill 2155. That was the 
2018 Dodd-Frank rollback that thankfully passed the Senate with 
overwhelming support. It had strong bipartisan support by a 
more than 2-to-1 margin.
    You stated at the time that passing the bill would be, 
quote, ``a significant mistake.'' You mentioned earlier in this 
hearing that many of your concerns were addressed by a 
manager's amendment. My question is, do you still think that 
passing that bill was a mistake?
    Mr. Barr. Thank you, Senator Daines. As you mentioned, a 
number of my concerns were addressed by the passage of a 
manager's amendment as well as subsequent regulation, for 
example, that made it clear that the custody bank provision 
could only genuinely be used by custody banks, which was an 
area of concern.
    Senator Daines. Looking back, do you still believe passing 
that bill was a mistake?
    Mr. Barr. I think, you know, on balance, again, I would 
have chosen a different balance. I think reasonable people can 
disagree about that. It obviously garnered widespread support 
in the Congress, and I would be quite committed to implementing 
the law as written by the Congress in doing that.
    And when you look at overall capital and liquidity level in 
the system today, as I have said previously, it is quite 
strong.
    Senator Daines. Now what are your views on the regulatory 
tailoring provisions that were included in that bill, 2155, and 
how would you approach these provisions in terms of 
implementation at the Fed?
    Mr. Barr. Thank you, Senator, for that question. As I 
indicated earlier, in response to Senator Rounds, I think a 
tiered approach, a tailored approach to regulation makes a lot 
of sense. I think the strictest rules ought to be applied to 
the largest institutions, and there should be a graduated 
approach below that. And especially care ought to be taken with 
respect to community banks who have difficulty meeting the 
regulatory burden.
    So I am a strong supporter of the principle of tiered 
regulation.
    Senator Daines. I want to turn to CFPB for a moment. With 
regard to the CFPB, you have stated, and I quote, ``A tax on 
its structure, budget, director, and authorities are pretext 
for weakening consumer protections, in general.'' You have also 
stated that Republican opposition to the CFPB during the Dodd-
Frank debate was, and I quote you, ``all about not wanting 
consumer regulation.''
    Do you stand by those very partisan views?
    Mr. Barr. Senator Daines, when I hear those remarks I think 
they are exactly the kinds of things I tell my students not to 
do. I think they were intemperate remarks, and I do not think 
that is a good way to engage in productive dialogue with people 
you disagree with, so I regret them.
    Senator Daines. Thanks. In light of the Supreme Court's 
decision, the CFPB's original governance structure, which you 
helped to design, was unconstitutional. Do you acknowledge that 
Republican concerns may have had some merit?
    Mr. Barr. Thank you, Senator. My concern about the 
constitutionality was not about whether the particular choice 
was a good choice or a bad choice. It was about who gets to 
decide, and my strong view is Congress gets to decide. So you 
get to decide if you want to structure a Federal agency with a 
commission or a board or a single director. I think Congress 
ought to be given a great deal of deference in that by the 
Judicial branch. And in history Congress has used a wide 
variety of techniques to establish agencies. I think that is 
the right approach.
    Senator Daines. I want to switch to the issue of climate 
change. Do you believe that climate change is among the top 
three threats to financial stability, because we have heard 
that from witnesses here at this Committee in the past? What 
are your views? Is it one of the top three threats?
    Mr. Barr. I think climate change is an interesting example 
because it is a very long-term issue, but we need to figure out 
how to wrap our arms around it today.
    Senator Daines. Would it rise, as you assess priorities and 
thinking through the lens of which you will, if confirmed, 
governed, do you believe it is one of the top three threats to 
financial stability?
    Mr. Barr. Senator, I have not thought about a priority 
ranking of the threats facing the financial sector. I think the 
job of the Vice Chair, if confirmed, is to think about the 
range of emergent threats to the financial system and then to 
design a regulatory approach and work with financial 
institutions so you can have a consistent risk management 
framework.
    You know, if you think back before the global pandemic, the 
global pandemic was not on anybody's list of the next threat to 
the financial sector. So I think it is just important to be 
humble about our understanding of those sets of risks.
    Senator Daines. All right. Thank you.
    Senator Smith. Thank you, Senator Daines.
    We will now hear from Senator Reed for 5 minutes.
    Senator Reed. Thank you very much, Madam Chairman.
    Mr. Uyeda and Mr. Lizarraga--I think I am close on both 
scores--the SEC has recently proposed a rule for public 
companies that would require cybersecurity expertise on the 
board or some mechanism to ensure that cybersecurity is taken 
into consideration. And starting with Mr. Lizarraga, do you 
believe that is critical and should be implemented quickly?
    Mr. Lizarraga. Thank you, Senator, for that question. I 
think it is essential to bolster cybersecurity at the SEC and 
its regulated entities as a matter of principle, yes.
    Senator Reed. Thank you. Mr. Uyeda.
    Mr. Uyeda. Yes, that is correct, Senator Reed. So without 
prejudging the current proposal, which is out for public 
comment, just generally I think cybersecurity is a very 
critical threat, particularly facing the financial service 
industry. There can be very significant fallout and 
consequences from a breach, and the SEC has an obligation, 
particularly for the broker dealers, transfer agents, clearing 
firms, investment companies that it oversees, to ensure that 
there is appropriate efforts to protect against cybersecurity 
threats.
    And I would also add it is very important for the SEC 
itself, as an agency, to bolster its cybersecurity defenses. 
The SEC, during my time there, has been subject to various 
intrusion effects and the information clearing process, for 
instance, that the EDGAR system provides is significant, and if 
there was an outage that could have market consequences.
    Senator Reed. Well thank you very much, both of you.
    Mr. Barr, cryptocurrencies have been in the news recently. 
Do you have concerns that they are inherently vulnerable to 
crises like we are seeing? There has been a huge meltdown. 
Could you give us an idea of your perspective on 
cryptocurrencies?
    Mr. Barr. Thank you, Senator Reed. I think advances in 
technology, including cryptocurrency, have some potential for 
upside in terms of economic benefit, and then also some 
significant risks. And I think of those risks in functional 
terms, depending on the particular kind of use that the 
cryptocurrency is being undertaken for. So for example, with 
respect to cryptoassets generally that are invested in as an 
asset class, the primary concern is investor protection, and 
that really is the responsibility of other agencies.
    But an issue such as stablecoins, there could be financial 
stability risks, and I think it is quite important that 
Congress and regulatory agencies wrap their arms around those 
financial stability risks and regulate so that we do not have 
situations where people are holding an asset that they believe 
is a cash instrument but it actually is not. That can have both 
significant investor protection problems but also financial 
stability risk, run risk.
    Senator Reed. The Federal Reserve, I understand, has been 
exploring whether to introduce a central bank digital currency 
to facilitate the ability of people to make digital payments, 
which are quite popular. Have you given any thought to that 
issue?
    Mr. Barr. Thank you, Senator. I think the development of a 
central bank digital currency requires a lot more thought and 
study. I think that the Federal Reserve's discussion paper on 
this is a good starting point.
    As Chair Powell previously indicated, if this is an area 
that the Federal Reserve decides makes sense to move forward 
on, it really should be with the buy-in of the Congress and the 
Executive branch, not something undertaken lightly, and I think 
that is the right view. If confirmed, that is the view I would 
take as well.
    Senator Reed. Thank you very much, Mr. Barr. Gentlemen, 
thank you.
    Senator Smith. Thank you, Senator Reed.
    Senator Tillis is recognized virtually for 5 minutes.
    Senator Tillis. Thank you, and thanks to the witnesses. 
Congratulations on your nominations.
    I want to start, very quickly, with having the SEC nominees 
pronounce their names. I have got a little crisis of confidence 
since I have heard four or five different pronunciations.
    Mr. Lizarraga. My name is Jaime Lizarraga.
    Senator Tillis. Lizarraga.
    Mr. Uyeda. And my name is Mark Uyeda.
    Senator Tillis. Uyeda. Thank you. OK. I got the phonetics 
right. I just wanted to make sure they were the right ones.
    I am going to come back to you all but I want to start with 
Mr. Barr. Mr. Barr, I actually want to start where Senator 
Daines did on Senate Bill 2155. I have heard your comments and 
how some of the amendments allayed some of your concerns. I 
played an active role in getting that bill passed and getting 
strong bipartisan support. What aspects of the bill do you--and 
I also heard you say that you would faithfully implement the 
strong bipartisan support will of Congress. But what areas of 
the bill are areas of concern for you as you move forward to 
confirmation?
    Mr. Barr. Thank you, Senator, for that question. Really, I 
would like to take a look at capital and liquidity in the 
system as a whole. I do not think it makes sense to be 
backward-looking and analyzing, you know, this or that change 
in the law from the past. What I would like to do, if 
confirmed, is to look at capital and liquidity as a whole. And 
as I said, capital and liquidity in the system today, I think, 
is quite strong.
    Again, I agree with the basic principles of the 
legislation, the idea of tiering, a financial regulation based 
on risk and based on size, and that is an approach that I would 
bring to the implementation of that law, if confirmed.
    Senator Tillis. OK. Another area I want to touch on relates 
to climate. Are you aware of the Federal Reserve Bank of New 
York, I believe it was a staff research paper that was titled, 
``How Bad Are Weather Disasters for Banks?'' Are you familiar 
with that staff report?
    Mr. Barr. Yes, sir, I am familiar with it.
    Senator Tillis. Do you recall the main takeaways of that 
report?
    Mr. Barr. It has been a while since I have looked at it, 
but I think the main takeaway was that in the last couple 
decades or so there have not been any weather events that have 
led to the failure of a bank.
    Senator Tillis. Yeah. I think the ones that stick in my 
mind are the takeaway that larger banks were barely affected. 
Smaller banks showed minor impact but nothing large enough to 
even remotely threaten bank solvency. And then postdisaster, an 
actual increase in loan demand.
    So we have got two pieces. We have customers of banks who 
probably have to look at it and see their own exposures, but 
the banks themselves seem to be relatively safe against 
disasters, at least in this story, and I think that has to be 
instructive when we have regulators talking about climate 
change being a major factor in future regulations. So that is 
just a point of information. I am happy to let you comment. But 
that is something I think we should take into account as we 
weave in climate change in any regulatory regimen for the 
banks.
    And with that, Mr. Lizarraga and Mr. Uyeda, I want to ask 
you all a little bit about resources. I know that the SEC is on 
a really fast pace now--25-plus proposals this year, hundreds 
of pages per proposal, with almost just as many questions, 
coupled with short comment periods. It is moving very, very 
quickly, so I have a question for you all on two fronts.
    Number one, how would the SEC have the bandwidth and staff 
support to get these proposals done right? So that is an 
internal SEC question in resourcing. And just with the sheer 
number of proposals, how can we make sure that some of the 
smaller entities that would like to weigh into the process with 
these abbreviated comment periods, how can we be sure that we 
get the resource balance right, both at the SEC and among those 
who have something to say about the proposed regulations?
    Mr. Lizarraga. Thank you, Senator. With regards to the 
first part of your question I have not been privy to the 
internal decisionmaking so I am not in a position to comment on 
that. But I do think that it is important for stakeholders to 
have an opportunity to comment on these proposals.
    In some instances, smaller issuers do have some relief 
included for them. But as a general matter I believe in the 
principle of stakeholders having an opportunity, a meaningful 
opportunity, to comment on these proposals.
    Senator Tillis. Mr. Uyeda.
    Mr. Uyeda. Yes. I believe that the ability of all 
stakeholders, whether large or small, to comment as part of the 
Administrative Procedure Act notice and comment process is 
critical to make informed decisions and have the rational basis 
for those decisions as required by law.
    Senator Tillis. Thank you. I do believe there has been some 
positive discussions with the SEC to discuss this issue, and I 
am going to continue to look at that. I have spoken with 
Members on the other side of the aisle who share the concern.
    Mr. Uyeda, thank you for your comments. Congratulations 
again to all three of you for your nominations.
    Senator Smith. Thank you, Senator Tillis.
    Senator Warren is recognized for 5 minutes.
    Senator Warren. Thank you, Madam Chairman.
    Before I dive into my questions I would like to briefly 
address the ethical standards to which we hold our Government 
officials.
    Mr. Barr, you are nominated to serve as one of the Nation's 
most powerful regulators. Ethics rules require you to divest 
your holdings in stocks and other investments, which include 
investments in at least half a dozen cryptorelated companies, 
if you are confirmed.
    But I previously asked you if you would go further and make 
the same historic ethics commitments that several other Fed 
nominees have made. Will you commit not to seek employment or 
compensation, including as a result of board service, from any 
company that has a matter before the Fed or any financial 
services company for 4 years after you leave Government 
service?
    Mr. Barr. Thank you, Senator Warren. I have committed to 
doing that, and I will do that.
    Senator Warren. I very much appreciate that. You know, 
these commitments are important because one of the key 
challenges that all three of you will face, if confirmed, is 
crypto. Last week, the cryptocurrency market tanked, again. The 
latest crash was triggered by a run on Terra, until recently 
the third-largest so-called stablecoin by market cap. It turns 
out it was not so stable. If you put $1,000 into Terra USD 10 
days ago, while it was still being promoted as a safe bet, 
today you would get $90 back.
    And Terra is not alone. A thousand dollars invested in 
Bitcoin in November would be worth $438 today. In fact, the 
average investor who put money into this can't-miss investment 
since last fall is underwater, a fact that the celebrity 
endorsers seem to have skipped over.
    But let us talk about who really lost money--not the rich 
folks, not the insider. No, it is ordinary investors. Online 
investor forums have been flooded with harrowing posts by 
people who feel they have nothing left and no way out, some 
with their life savings wiped out, and it smells a lot like 
2008.
    So what I would like to do is run through protections for 
ordinary investors in the cryptomarket and how they compare to 
protection in other financial markets. So Mr. Barr, if I can, 
let us start with you. If I bought a company's stock, even the 
most hyped-up, junkiest one listed on the New York Stock 
Exchange, could I be reasonably confident that the company is 
following basic rules that protect against fraud, insider 
trading, and sloppy cybersecurity protocols?
    Mr. Barr. Thank you, Senator Warren. The area of 
jurisdiction obviously is within the expertise of the SEC, but 
I think that is a reasonable basis for concluding that.
    Senator Warren. OK. So there would be that protection, 
because right now stablecoin and cryptotoken users are not 
getting that same protection. Now some stablecoin boosters 
claim they are safe because their stablecoins are backed by 
real assets like treasuries and cash, not fake tokens and an 
algorithm. But during last week's market turmoil Tether, the 
world's largest stablecoin market cap, broke its dollar peg, 
and that was scary, because it is an open secret that Tether is 
not actually backed one-to-one by treasuries and cash, like it 
claims.
    So Mr. Lizarraga, let me turn to you. If you invested in a 
money market fund would you generally have confidence that the 
fund was actually backed by the liquid, high-quality assets 
that it claimed it was?
    Mr. Lizarraga. Thank you, Senator. Yes. SEC rules require 
money market funds to disclose their assets and to have those 
disclosures audited by independent third parties.
    Senator Warren. All right. And now let us compare that to 
stablecoins. Are stablecoins currently providing audited 
disclosures that allow verification that they are backed by 
quality assets?
    Mr. Lizarraga. To the best of my knowledge, no.
    Senator Warren. No. And, in fact, asked why they would not 
produce audited financial disclosures, Tether's executive said 
it is because they do not want to spill their, quote, ``secret 
sauce.'' I believe them. Tether does not want investors to know 
what is and what is not backing up this so-called stablecoin, 
and that is a gigantic red flag.
    So I am going to do this really fast. Let me do one more. 
Mr. Uyeda, if you wanted to buy stock for a company listed on 
the New York Stock Exchange, could you be reasonably confident 
that the Exchange was not trading against you or had other 
conflicts of interest that could put you at a disadvantage?
    Mr. Uyeda. Yes. Exchanges have to have policies to mitigate 
or eliminate any conflicts of interest.
    Senator Warren. OK. Very much unlike what happens in 
stablecoins.
    So, you know, any investment involves risk. That is how 
markets work. But a market without rules is theft, and right 
now regular investors in stablecoins and crypto are not getting 
the baseline protections available in other financial markets. 
Count the ways that consumers can be cheated. No basic 
protections to protect against fraud. No review of 
cybersecurity. No audited financial disclosures. No protection 
against conflicts of interest. No cop on the beat to police 
market manipulation. There is not even any assurance that the 
other person on the end of the transaction is not a terrorist, 
a money launderer, or a Russian oligarch on the sanctioned 
list.
    I understand the three of you may differ on how to regulate 
the cryptomarket, but addressing these kinds of risks will be 
your responsibility. So while Congress is working to set up 
guardrails on crypto, I urge you to use the tools you already 
have at your disposal to protect investors, to protect our 
financial system, and to protect our economy overall.
    Thank you.
    Senator Smith. Thank you, Senator Warren.
    Senator Kennedy is recognized for 5 minutes.
    Senator Kennedy. Thank you, Madam Chair. Congratulations, 
gentlemen.
    Professor Barr, you worked for Secretary Geithner. And 
would it be fair to say that the two of you and others, as a 
result of the meltdown in '07 and '08, you rewrote the rules 
for Wall Street?
    Mr. Barr. Senator, thank you for that question. I would say 
that as a result of the meltdown Congress rewrote the rules for 
Wall Street, and the regulators have been implementing those 
rules since Congress rewrote them.
    Senator Kennedy. I am not trying to put words in your 
mouth, and I am not trying to trick you. You and Secretary 
Geithner sort of provided the roadmap. Is that accurate?
    Mr. Barr. Thank you, Senator. The Treasury Department 
issued a white paper in the spring of the year after the 
financial crisis, and that roadmap we then translated into 
draft legislation, which we shared with the Hill.
    Senator Kennedy. Professor Barr, do not stall me. I have 
got a lot of other questions.
    After you and Secretary Geithner rewrote the rules for Wall 
Street, and Secretary Geithner left Government, where did he 
go?
    Mr. Barr. Senator, I believe that he went to work for a 
private equity company.
    Senator Kennedy. He is at Wall Street, right?
    Mr. Barr. I will let you define what that is, sir.
    Senator Kennedy. And I believe you just committed to 
Senator Warren that you would not do that.
    Mr. Barr. Senator, when I left the Government before I went 
back to academia, and that is my plan, to return back to 
academia.
    Senator Kennedy. I appreciate that. Do we still have banks 
that are too big to fail?
    Mr. Barr. Senator, I think the answer to that question is 
always a work in progress. I think capital and liquidity in the 
system is very strong. The rules that Congress put in place 
after the financial crisis make it much less likely that such a 
financial firm could get itself into trouble in a way that 
would cause problems for the broader economy.
    Senator Kennedy. Well, if you are confirmed, if JPMorgan 
came to you and said, ``We are going down,'' would you bail 
them out?
    Mr. Barr. Senator, that is not an available option after 
the financial crisis rulebook was put in place. They would be 
put into orderly liquidation under the rules that Congress laid 
out.
    Senator Kennedy. OK. Do you consider yourself a Keynesian?
    Mr. Barr. Senator, I am not an expert either in 
macroeconomics or in Keynesianism, but I would suggest that I 
follow normal, modern rules of macroeconomics, including the 
teachings of Keynes.
    Senator Kennedy. Well, Professor Keynes said that in order 
to get out of a recession he recommended having the Government 
deficit spend in order to stimulate your economy. Do I have 
that right?
    Mr. Barr. That is one of the lessons, yes, sir, of his 
history.
    Senator Kennedy. OK. And a lot of people stop there. They 
do not read the next page. He also said that once your economy 
is recovering you should stop deficit spending, did he not?
    Mr. Barr. Yes. I think the basic idea is that deficit 
spending can be used to bolster the economy in bad times and 
that Government debt should be reduced in good times.
    Senator Kennedy. And we have not done that, have we?
    Mr. Barr. It has been a very long time since the Congress 
has reduced spending in line with expenditures.
    Senator Kennedy. And I believe on the next page, after the 
next page, in Professor Keynes' seminal work and others, he 
said when the economy is recovering, not only do you stop 
deficit spending, I believe he recommended paying the money 
back, did he not?
    Mr. Barr. Senator, I am not sure I can go page by page with 
the precision you have.
    Senator Kennedy. But he said once you stop deficit spending 
in the economy's recovery you eliminate the deficits, did he 
not?
    Mr. Barr. The basic idea, as I said, and I think it is 
consistent with what you are saying, is in good times you 
should be paying things down.
    Senator Kennedy. Yeah. We do not do that either, do we?
    Mr. Barr. As I said, it has been a very long time since 
Congress has had expenditures and revenues aligned.
    Senator Kennedy. Right. All right. And we have got coming 
soon a $250 billion bill--it may be more--to subsidize bit 
tech. Lord have mercy.
    Tell me what the community banks did wrong in '07 and '08. 
You guys punished them pretty hard, and I never have been able 
to figure out what they did wrong in the meltdown.
    Mr. Barr. Thank you, Senator. I am not aware of community 
banks doing something wrong in the financial crisis. There were 
community bank failures----
    Senator Kennedy. Why did you all regulate them so much? Why 
did you put the hammer down on them? I mean, it was the larger 
financial institutions that caused the meltdown, and I might 
add, you all did not put anybody in jail among that group. But 
in doing so, you really heightened regulation on community 
banks, and I am just asking what they did wrong. Was that just 
one of those Chicago drive-by shootings, or what?
    Mr. Barr. Thank you, Senator. I have been always a strong 
proponent of trying to protect community banks from excessive 
regulation, and to work on the safety and soundness of the 
community banking system. I think it is one of the things that 
makes our financial system vibrant and diverse.
    Senator Kennedy. Thank you, Madam Chair.
    Senator Smith. Thank you, Senator Kennedy.
    I now recognize Senator Ossoff virtually, from his office.
    Senator Ossoff. Thank you, Madam Chair, and congratulations 
to the nominees. Thank you for joining us.
    Mr. Barr, have you given any consideration to, and what is 
your assessment of, the distributional effects of monetary 
policy decisions?
    Mr. Barr. Thank you, Senator Ossoff, for that question. I 
think that the Federal Reserve's tools with respect to monetary 
policy are pretty simple ones, and they operate in pretty 
simple ways, broadly, in the economy. So when the Federal 
Reserve is getting its job done right, the economy is working 
well for everyone. And that is especially true if you are a 
low- and moderate-income worker who might be late to the job 
market. If the Federal Reserve is able to, with price 
stability, maintain lower rates, then that is helpful to you. 
And conversely, if the Federal Reserve is not able to do that 
and unemployment is too high or if inflation gets too high and 
inflation begins to erode wage gains, as it is doing today, 
then that is also harmful to working Americans.
    Senator Ossoff. What is the impact on asset valuations of a 
dovish stance by the Fed?
    Mr. Barr. Well, in general, when interest rates are quite 
low, asset prices tend to rise, and when asset prices tend to 
rise those who have more assets have a greater ability to take 
advantage of that opportunity. And conversely, when interest 
rates tend to rise, asset prices tend to be more muted.
    But the overall point is that with respect to monetary 
policy if the Federal Reserve is getting its job done right the 
economy is working for everybody, and I think that is the main 
goal of monetary policy.
    Senator Ossoff. Why, since 2007 and 2008, has the posture 
of not just the Fed but many central banks, necessarily been 
low rates and a lot of extraordinary bond buying that were not 
previously normal policy tools? Why have monetary policymakers, 
in your opinion, taken that posture or felt they needed to take 
that posture in OECD economies, Western economies, since the 
recession of '07, '08?
    Mr. Barr. Thank you, Senator, for that question. In 
general, when rates have been low and central banks have been 
pursuing asset purchases, it is generally speaking for two main 
reasons. One is to mitigate against financial stability risks 
facing the economy at that time, and the second is to 
effectuate an accommodative monetary policy.
    Senator Ossoff. I guess my question is why, in your 
opinion, has it been necessary, in the judgment of central 
bankers for the last 15 or 20 years, to maintain such an 
accommodative monetary policy, or to put it another way, what 
has changed about the structure of the U.S. and the world 
economy such that in order to achieve its dual mandate the Fed 
has deemed it necessary to sustain lower rates than the 
historical norm and more sustained bond buying than the 
historical norm, which, as we have just discussed, one of the 
impacts of that has been to pump up asset valuations, which has 
distributional effects that we have discussed. Why has that 
needed to be or been the posture for the last 15 years? What 
has changed?
    Mr. Barr. Thank you, Senator Ossoff. In general, there have 
been a couple of periods where interest rates were rising, but 
in general, when rates were low during those periods and when 
bond buying was important it was because either financial 
stability concerns facing the economies at those times or 
because of the need for monetary policy accommodation given the 
weakness of the economies during those times----
    Senator Ossoff. Forgive me. I am not in the room so I do 
not mean to interrupt you in a rude way. But my question is 
what has changed structurally about our economy such that in 
order to maintain financial stability and in order to sustain 
what central bankers deem to be adequate aggregate demand it 
has been necessary for rates to be aberrantly low and for bond 
buying to be aberrantly high? Why has that been necessary in 
the last 15 or 20 years, where it was not before? What changed 
in the structure of our economy does that suggest or represent?
    Mr. Barr. Thank you, Senator, and sorry for not 
understanding the nature of your question before. But there is 
significant debate in the academic literature about the answer 
to your question. Some of it has to do with changing 
demographics in advanced industrial economies. Some of it has 
to do, likely, with perceived overall lower extent of potential 
investment returns. Some of it has to do with a very high 
savings rate in most but not all of the advanced industrial 
economies. And people believe, academics believe that those 
factors and others may have, for a long period of time, muted 
effectively what the neutral interest rate it.
    So that is a long answer to your question.
    Senator Ossoff. Madam Chair, could I have the indulgence of 
one more minute?
    Senator Smith. Without objection.
    Senator Ossoff. Thank you. Please proceed, Mr. Barr, 
concluding the answer to that question, and then, just if you 
would, answer the following question. How would you, or should 
you, on the Open Market Committee consider the market effects, 
the impact on asset valuations of your decisions? And I think 
the answer cannot be not at all, because it is at least a 
mechanism of action for monetary policy. But to what extent 
should the Fed consider whether, for example, violating forward 
guidance will have effects on volatility? Should that be part 
of your decisionmaking calculus? How will it be?
    So again, in sum, please finish the analysis, which I found 
very interesting and I think the Committee needs to hear on why 
rates have had to be low and bond buying has needed to be so 
aggressive, and then talk to me about how you will think about 
the markets when you make your decisions. And that will be my 
final question.
    Mr. Barr. Thank you, Senator. Very briefly, I think, again, 
the tools of monetary policy are relatively simple and they 
affect the economy primarily through the Federal Reserve's 
targeting of the Federal funds rate, and secondarily through 
adjustments to the balance sheet of the Federal Reserve, and a 
third way through expression of forward guidance.
    And the primary goal of all these efforts is to bring 
inflation down to the target level of 2 percent. Again, it is, 
I think, a pretty simple goal. It is hard to achieve, but being 
clear about that objective I think is quite important.
    Senator Smith. Thank you, Senator Ossoff.
    I now recognize Senator Hagerty for 5 minutes.
    Senator Hagerty. Thank you, Madam Chair and Ranking Member 
Toomey. Thank you. And to our nominees, welcome.
    I would like to start with you, Mr. Lizarraga, about SEC 
rulemaking. Over the years we have seen the Commission propose 
rules that interact with one another on outstanding proposals. 
For instance, the Securities Lending Rule, the Securities-Based 
Swap Rule, and the Short Disclosure Rule all impact similar 
markets, but they were proposed individually by the Commission.
    With such an interconnected financial system it is 
important, I believe, to understand how these rules interact 
with one another. I am first curious, do you believe, like I 
do, that it is important to consider how rules interact with 
one another when they are proposed by the Commission?
    Mr. Lizarraga. Thank you, Senator. That is a good question, 
and as a general principle I do believe that it is important to 
assess whether there is any overlap among rulemaking without 
prejudging anything that is pending currently. But if 
confirmed, I do look forward to working with the Commission 
staff on assessing just the overall makeup of the current 
rulemaking.
    Senator Hagerty. Yeah. I would encourage the Commission, 
and if you are confirmed, your leadership on the Commission to 
make certain that proper due diligence is undertaken, because 
markets are highly interactive and the rules do overlap as they 
touch various components of the market, but it needs to be 
taken with a more holistic view, many times. And so I would 
encourage you, and hope I could get your commitment to carry 
out proper due diligence on the intersection of rules when they 
occur, to make certain that they achieve the proper goal when 
taken together.
    Mr. Lizarraga. Sir, I am happy to take a deeper dive into 
this question, if confirmed.
    Senator Hagerty. Thank you. I appreciate it.
    Mr. Barr, can I turn to you to talk about bank capital? 
Looking back on the spring of 2020, when the economy was truly 
in dire straits, our banking system weathered the storm, I 
think, remarkably well. The Federal Reserve characterized the 
banking sector at that point as, quote, ``a source of strength 
in an otherwise tumultuous period.''
    Mr. Barr, my question to you, in your answer earlier to 
Senator Moran you seemed to agree that 2020 provided real-world 
evidence that capital levels in our banking system were 
sufficient. And my question now is will you commit to relying 
on data and not ideology when assessing adding to regulatory 
requirements from capital to liquidity and beyond?
    Mr. Barr. Thank you, Senator. Yes, I would commit to being 
evidence-driven, data-driven in my approach to capital and 
liquidity regulation and in regulation more broadly.
    Senator Hagerty. I think that is absolutely essential for 
certainty in our marketplace. Having been on the other side of 
this, having been regulated in the banking environment and 
beyond, that is terribly important for certainty. So I 
appreciate your answer to that question.
    Next I would like to turn to an area that has just, 
frankly, troubled me for some time, and it is an area that you 
had a great deal to do with in a prior role, and that is 
regarding the CFPB. And as a key author of the legislation that 
created the CFPB you designed it in a way that made the Bureau, 
in my view, accountable to the American people because you 
placed it within the Fed and outside of the appropriations 
process.
    I serve on the Appropriations Committee. I appreciate very 
much how this structure has actually shielded the CFPB from 
necessary oversight, and it has allowed the CFPB, I think, to 
become a politically polarizing body, perhaps one of the most 
in Federal Government.
    So I would like to hear your thoughts on why you believe 
that the CFPB should be exempt from the appropriation process, 
or do you have a different thought at this point in time?
    Mr. Barr. Thank you, Senator, very much for that question. 
I think there is always a balance in regulatory agencies 
between fostering accountability and fostering independence, 
and it is a judgment that Congress gets to make, and Congress 
chose, in this particular case, exactly how to structure the 
agency--the choices about placement, the choices about 
approach.
    Congress can make a different choice, but if you look at 
the Federal Reserve, if you look at the OCC, if you look at the 
FDIC, those institutions also are outside of the appropriations 
process and that----
    Senator Hagerty. Indeed, but they are very different type 
of institutions, and the approach and the result has been quite 
different. I will follow up given the lack of time, with 
further questions for the record on this, but I would be very 
interested in your perspective and thoughts because I am very 
unhappy with the way things are working right now.
    Thank you. Thank you, Chair.
    Senator Smith. Thank you, Senator Hagerty.
    So the Chair now recognizes herself for 5 minutes, and I am 
going to be brief because I know it has been a long morning. 
Congratulations to all of you and thank you so much for being 
here.
    Mr. Barr, I am going to direct my questions to you. I want 
to follow up on the conversations that you and I had when we 
met around CRA. I think, as I indicated, and as we spoke, I was 
very happy to see the Fed and the FDIC and the OCC come 
together earlier this month, I think it was, to propose new 
rules for implementing the Community Reinvestment Act. I think 
this is long overdue, something that is very important to do.
    And I want to just follow up on this. You know, I think the 
pandemic has really shown us how stark the need is and how the 
challenges of our economy have not fallen disproportionately on 
everybody in our economy because of the pandemic, that it is 
rural and majority minority communities that have had the 
greatest impact, which is what the CRA was designed to really 
address.
    So could you talk to me a little bit, talk to us a little 
bit, about if you were confirmed, you would be joining the Fed 
midway through the rulemaking progress. I would like to 
understand a little bit about what your focus would be and what 
your priorities would be with regard to CRA implementation?
    Mr. Barr. Thank you very much, Senator. I appreciate the 
question. I think the Community Reinvestment Act has played an 
important role in helping banks and thrifts around the country 
over the years to serve all their communities, and I was very 
encouraged by the Community Reinvestment Act draft rule. If 
confirmed as Vice Chair and as a Governor I would be working 
with my colleagues, both at the Fed and at the other agencies, 
to seek and to understand and to evaluate all the public 
comment that I hope the agencies get, to understand the effects 
on the banking sector and the effects on communities and civil 
rights organizations. I think all of that public comment would 
be very helpful.
    And then, again, if confirmed, my thought would be to work 
with colleagues to get that rule in place expeditiously.
    Senator Smith. And do you think that the current economic 
conditions that we are seeing, the challenges that they 
present, do you think that elevates the urgency and the need to 
modernize our approach with implementing the CRA?
    Mr. Barr. Thank you, Senator. Yes, I do think that when 
there is greater economic uncertainty, when there is greater 
difficulty for people navigating the financial system, it is 
important to have certainty in these areas.
    Senator Smith. Thank you very much.
    In the interest of time I am going to cede back my time, 
and I recognize Senator Lummis for 5 minutes.
    Senator Lummis. Thank you very much, Madam Chairman, and 
during the course of my 5 minutes I would like to invite 
members of the families of our nominees to take a breath, 
remove your masks for 5 minutes if you wish. I know it can be a 
long haul with those masks on.
    Mr. Uyeda, great to see you again. Thanks for being here. 
Congratulations on your nomination.
    The SEC recently released Accounting Bulletin 121. This is 
the SEC staff. And they stated that reporting companies, and 
most importantly, their custodians should hold digital assets 
as an on-balance-sheet liability. I am really concerned about 
that because I think that actually weakens investor protections 
because in the event of insolvency customer assets are safer 
from creditors being held off balance sheets and further 
segregated from the company's assets.
    Do you have any thoughts on this?
    Mr. Uyeda. Thank you for your question on this. So am 
familiar with the Staff Accounting Bulletin, or SAB as they 
like to call them, the SAB 121, just at a very high level, and 
have not had time to become well-versed in the details or to 
have discussions with the SEC staff about it.
    I will note it was a staff position. It was not approved by 
a vote of the members of the Commission. There has been a 
tremendous amount of concern raised, that I have seen in the 
past week alone, about it. And so if confirmed, it is something 
that I would want to look much more into and have a discussion 
with the staff.
    One of the other concerns, I think, is we have a process 
for whenever there is any new rule of general applicability or 
you attack new conditions or requirements on existing rules to 
approve those through the notice and comment process under the 
Administrative Procedure Act. And when you have something that 
is effectively a rule that calls into question whether it 
should go through that process--and that also raises questions 
about the ability of this Committee to engage in oversight 
under the Congressional Review Act of any rule.
    So if confirmed, I would want to talk with the staff. I 
would also want to talk with the Federal and State banking 
regulators as to how this interplays with their regulatory 
regimes. And then, lastly I would just note that the SAB, the 
bulletin itself expressly states that it is just the position 
of the staff. It is not a rule of the Commission nor has it 
received the official approval of the SEC.
    Senator Lummis. Thank you for your response. I would note 
that the Securities Industry and Financial Markets Association 
and Bank Policy Institute sent me a really detailed letter this 
morning, concerned about the lack of public comment around this 
big shift in policy, and highlighting how this guidance could 
weaken important safeguards around custody of client assets.
    Madam Chairman, I ask for unanimous consent that it be 
entered into the record.
    Senator Smith. Without objection.
    Senator Lummis. And I urge everyone to take a look at it. 
Thank you for your response.
    Mr. Barr, switching to you, good to see you against too. My 
question for you is, do the Basel III capital standards 
establish a separate prudential capital treatment relating to 
on-balance-sheet custody accounts?
    Mr. Barr. Senator, there are particular rules, yes, in the 
Basel framework. Capital treatment is different for customer 
accounts, in general.
    Senator Lummis. It is my understanding that with regard to 
the capital standards at Basel III regarding this subject that 
they do not, but we can discuss that at another time. And that 
is because custody accounts are generally off balance sheet, 
from an accounting perspective. Correct?
    Mr. Barr. Yes, that is correct.
    Senator Lummis. Are you familiar with the Bank for 
International Settlements' proposed prudential treatment of 
cryptoasset exposures?
    Mr. Barr. I have not read the BIS proposal in this area.
    Senator Lummis. OK. Well, I will let you know. To my 
knowledge it is correct that this proposed capital framework 
explicitly declined to create prudential requirements for 
custody of digital assets, and we would be happy to just send 
that to you. If U.S. bank regulators were to impose separate 
requirements around bank custody activities for digital assets 
or if they were required to be accounted for as a liability on 
a bank's balance sheet, that would be different from 
international norms, as I understand them. And so I worry that 
that might make them uncompetitive.
    Can you commit to discussing this further with me?
    Mr. Barr. Yes. I would be happy to discuss this further 
with you, Senator.
    Senator Lummis. Thank you. Thank you, Madam Chairman. I 
urge all Members to look at this important issue as we might 
need to address at this some point. But to all of our nominees, 
again, congratulations. Thank you.
    Senator Smith. Thank you, Senator Lummis.
    So thank you to our nominees for being here today and 
providing testimony. I do not believe we have any other 
Senators who are present and wanting to ask questions. I hope 
that we can work together as a Committee to move forward 
quickly on these nominations of today's nominees.
    For Senators who wish to submit questions for the hearing 
record these questions are due close of business on Monday, May 
23rd, at 5 p.m. To the nominees, we would like to have your 
responses on Tuesday, May 31st, at 5 p.m.
    Thank you again for your testimonies today, and with that 
this hearing is adjourned.
    [Whereupon, at 12:10 p.m., the hearing was adjourned.]
    [Prepared statements, biographical sketches of nominees, 
responses to written questions, and additional material 
supplied for the record follow:]
                PREPARED STATEMENT OF SENATOR JON TESTER
    Good morning, everyone.
    Today's hearing is in a hybrid format. Our witnesses are in-person, 
but Members have the option to appear both in-person or virtually.
    The Committee meets today to consider the nominations of three 
important Presidential nominees:
    First, the Honorable Michael Barr to be a Member and Vice Chairman 
for Supervision of the Board of Governors of the Federal Reserve 
System.
    Next, Mr. Jaime Lizarraga to be a Member of the Securities and 
Exchange Commission.
    And finally, Mr. Mark Uyeda to be a Member of the Securities and 
Exchange Commission.
    We thank the nominees for appearing here today, and welcome their 
families and friends who are in attendance as well as those watching 
from home.
    I also want to extend a warm welcome to Speaker Pelosi who is here 
to introduce Mr. Lizarraga and Senators Stabenow and Peters who will 
introduce Mr. Barr.
    Senator Toomey will introduce Mr. Uyeda.
    To our nominees, thank you for your willingness to serve in these 
important roles.
    We are here today to consider three nominees who, if confirmed, 
will have a lasting impact on our economy.
    We know who powers our economy. It's small businesses, folks on 
main street who create jobs and prosperity for our communities.
    And it's workers.
    It's our job as Members of this esteemed body to support an economy 
that actually rewards their work.
    The nominees before the Committee today will play important roles 
in our efforts to support workers, small businesses, and American 
families.
    Michael Barr is the President's nominee to be Vice Chair for 
Supervision.
    Mr. Barr is a well-respected expert on financial regulation who 
currently serves as the dean for public policy and a professor of law 
at the University of Michigan.
    From 2009 to 2010, Mr. Barr served as Assistant Secretary for 
Financial Institutions at the Department of Treasury, where he played a 
key role in helping the Obama administration work with Congress to 
craft and enact the Dodd-Frank Act.
    Mr. Barr previously served at the White House, and earlier in his 
career, in the Treasury and State Departments under President Clinton.
    Mr. Barr, thank you for your willingness to serve our country 
again.
    Mr. Lizarraga and Mr. Uyeda have been nominated by President Biden 
to be Commissioners at the Securities and Exchange Commission. If 
confirmed, they will join the SEC at a critical time.
    Jaime Lizarraga has worked on financial services policy in Congress 
and played a key role in some of the most impactful pieces of capital 
markets legislation passed by Congress to support working families and 
our country's middle class. The son of Mexican immigrants, he 
understands the important role the SEC plays in protecting consumers.
    He currently serves as a senior adviser to Speaker Pelosi, who is 
here today to support his nomination. Prior to joining the Speaker's 
office, Mr. Lizarraga served in senior level positions on the House 
Financial Service Committee.
    Mr. Lizarraga also served at the Treasury Department, as well as 
the SEC, where he worked as the Deputy Director of Legislative Affairs.
    Thank you, Mr. Lizarraga, for your willingness to continue to 
serve.
    Mr. Uyeda has served at the SEC since 2006 and is currently working 
on Ranking Member Toomey's staff helping our committee navigate some of 
the greatest financial challenges in recent American history. At the 
SEC, Mr. Uyeda has served as counsel for Commissioners Paul Atkins and 
Michael Piwowar. He also served as a Senior Adviser to my good friend, 
Chair Jay Clayton.
    Earlier in his career, Mr. Uyeda worked in private law practice, as 
well as for the California Department of Corporations.
    Thank you, Mr. Uyeda, for your willingness to continue to serve.
    Look folks, these positions are really, really important.
    If confirmed, you all will be on the front lines at a critical 
point in our Nation's history. We are facing challenges that are unique 
and unprecedented, and we need folks serving our country who will 
always put the needs of our country before personal or political 
ideology.
    Hopefully the worst of the pandemic is behind us, but our economy 
is not where it needs to be in terms of its recovery.
    Families are seeing higher costs from the gas pump to the grocery 
store, and while unemployment is at a record low, small businesses in 
Montana and across the country are having trouble finding and keeping 
workers.
    This Committee, under the leadership of Chairman Brown and Ranking 
Member Toomey has confirmed a host of folks to critical positions 
charged with guiding the economy back from the brink. If confirmed, the 
three of you here today will immediately join in that work.
    But before these folks can do their jobs, we have to do ours. Our 
institutions have to be fully staffed if they're going to do their jobs 
and meet the challenges facing our country.
    We have a lot more work to do here to support workers, to support 
small businesses, to lower costs for working families, to increase 
transparency in the market place and to hold bad actors accountable.
    Let's get to it.
    Ranking Member Toomey.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Thank you, Mr. Chairman.
    We're here today to consider three nominations: Michael Barr to be 
Fed Vice Chair for Supervision, and Mark Uyeda and Jaime Lizarraga to 
be SEC Commissioners.
    These nominations remind us of the importance of financial 
regulators abiding by their respective statutory mandates. This 
principle should be nonpartisan.
    A fundamental aspect of a properly functioning democratic society 
is that important public policy decisions should be made by elected, 
accountable representatives. Otherwise, what's the point of the 
elections?
    Unfortunately, I'm deeply concerned that financial regulators, 
including the Fed and SEC, are increasingly straying into contentious 
political issues wholly unrelated to their mandates and expertise. 
These include issues like what to do about global warming, social 
justice, and even education policy.
    No doubt, these are important issues. But, they're wholly unrelated 
to the limited statutory mandates and expertise of financial 
regulators.
    The Fed, for instance, has been weighing in on every one of these 
contentious issues. Some intend to use the Fed's expected climate 
scenario analysis to steer capital away from carbon intensive 
industries.
    All 12 Reserve Banks have sponsored a ``Racism in the Economy'' 
series where invited speakers advocated for race-based reparations and 
defunding the police. And the Minneapolis Fed has been actively 
lobbying to change Minnesota's constitution--on the issue of K-12 
education policy.
    Does anyone truly think these activities are within the Fed's 
statutory mandates? Of course not.
    In February, we held a hearing to consider Sarah Raskin's 
nomination to be Fed Vice Chair for Supervision. At that hearing, I 
cautioned that the hearing was not just about vetting Ms. Raskin. I 
noted that it was a referendum on the independence of the Fed in the 
face of pressure from the left to use the central bank to allocate 
capital to address global warming.
    Addressing contentious issues like global warming requires 
political decisions involving tradeoffs, like how expensive should 
credit be for drillers in order to make gas scarcer and costlier for 
motorists? And if we limit domestic oil and gas production, causing 
energy prices to rise and consumers to pay more, how much more is 
appropriate? And if we limit production but other countries do not, 
warming won't slow--but should we do it anyway?
    In a democratic society, those tradeoffs must be made by elected 
representatives, who are accountable to the American people--not 
unelected central bankers.
    Ms. Raskin's prior advocacy that unelected financial regulators 
should misuse their powers to address global warming led to the 
Senate's bipartisan rejection of her nomination. That rejection sends a 
powerful message to Fed nominees like Professor Barr: all Fed Governors 
must commit to not exceed the Fed's limited statutory mandates and by 
doing so help to ensure the continuing independence of the Fed.
    The need for a Fed that's focused on its mandates is especially 
critical with inflation at a 40-year high. Even though wages are 
rising, prices are rising faster, which is causing workers-especially 
lower-income workers-to fall further and further behind.
    I hope Professor Barr will acknowledge that inflation is severe and 
commit to doing ``whatever it takes'' to bring inflation back down.
    Professor Barr certainly has an impressive background and relevant 
experience to serve as the Fed Vice Chair for Supervision. However, 
some of his previous work raises some concerns about his views on 
financial regulation.
    He strongly opposed the bipartisan S. 2155 bill that Senators 
Tester and Warner helped craft, which merely enacted modest and 
sensible reforms to Dodd-Frank. For example, Professor Barr was 
critical of a provision meant to relieve financial institutions from 
having to retain capital on deposits at central banks. But, after all, 
central bank deposits are risk free.
    He has also argued that ``climate change presents severe long-term 
risks to the economy and financial stability that must be urgently 
addressed today.'' As I've discussed, there is no systemic risk to the 
banking system posed by gradual changes in the Earth's average 
temperature.
    I'll be interested in hearing Professor Barr describe the actions 
he believes the Fed should take to address these supposed risks.
    Keeping financial regulators apolitical and independent is as 
important now as it has ever been. To my Democratic colleagues who 
favor using financial regulators to address contentious political 
issues, I ask: how would you feel about a future Republican 
administration, under the pretense of ``financial stability'' risk, 
using the Fed to allocate capital toward defense spending, financing a 
border wall, or offshore oil development?
    But once the precedent is set, the potential for further abuse--by 
both political parties--is limitless.
    In addition to Professor Barr, today, we'll also hear from two 
nominees for the SEC. Mr. Lizarraga has worked on financial services 
issues on Capitol Hill for many years. I commend him for his 
longstanding commitment to public service.
    And, in a few moments, I will introduce Mr. Uyeda, who is 
exceptionally well qualified to serve as an SEC Commissioner. I look 
forward to hearing from both of them.
                                 ______
                                 
                 PREPARED STATEMENT OF MICHAEL S. BARR
   To Be a Member and Vice Chairman for Supervision of the Board of 
                Governors of the Federal Reserve System
                              May 19, 2022
    Chairman Brown, Ranking Member Toomey, and other Members of the 
Committee, it is my honor to appear before you today for this 
confirmation hearing. I am grateful to President Biden for nominating 
me to serve as Vice Chair for Supervision and a Governor of the Federal 
Reserve Board.
    My wife of 28 years, Hannah Smotrich, joins me today in the hearing 
room. I'm grateful as well to be joined by my three children--Etai is 
here with us in person, and Avital and Dani are joining us online. I'm 
thankful for their love and support. My parents, David and Debbie Barr, 
imbued in me the deepest values of integrity and public service, and 
they are here with us in spirit today.
    For over 25 years, I have been working to help make the financial 
system safer, fairer, and better focused on the needs of businesses and 
households.
    I began my Government career at the U.S. Department of State, where 
I worked on international economic matters. I then spent 6 years at the 
U.S. Department of the Treasury, helping to strengthen the Community 
Reinvestment Act, build community development financial institutions, 
support fair lending and combat predatory lending abuses, and help bank 
the unbanked. I also worked at the Office of Management and Budget, 
where I ran an interagency task force advancing economic development in 
Washington, DC.
    I joined the faculty of the University of Michigan over 20 years 
ago, following the advice of my mentor and friend Ned Gramlich, former 
Director of the University of Michigan's School of Public Policy and 
longtime Governor of the Federal Reserve Board. At Michigan, I've 
taught domestic and international financial regulation, conducted 
research about a wide variety of issues in finance, and coauthored a 
leading textbook on financial regulation, law, and policy. Along the 
way, I've also developed programs to help small business owners in our 
local communities in Michigan.
    In the wake of the global financial crisis of 2008, I served as 
assistant secretary of the Treasury for financial institutions, and I 
helped to develop and work with Congress to enact the Dodd-Frank Wall 
Street Reform and Consumer Protection Act of 2010. That basic framework 
is still with us today, and it has helped make the financial system 
stronger and work better for all of us. With the economy battered by 
the financial crisis, my team and I also worked to support struggling 
small businesses and households and community development financial 
institutions.
    After my time at Treasury, I stayed engaged in critical issues 
affecting both national and international financial policy, while also 
deepening my commitment to our local communities in Michigan, working 
with community banks in the region, and learning from advising private 
sector institutions.
    For the last 5 years, I've served as dean of the Gerald R. Ford 
School of Public Policy at the University of Michigan. I've loved 
serving our community, and have worked hard to advance bipartisan 
engagement, listening and talking to one another across our differences 
in a way that can deepen our democracy and get practical things done.
    If confirmed as Vice Chair for Supervision, I would be strongly 
committed to the Federal Reserve's responsibilities to ensure that the 
financial system is robust and resilient, that innovation flourishes 
with clear rules of the road, and that the financial system operates 
fairly.
    Additionally, an important part of the roles for which I have been 
nominated is to serve on the Federal Open Market Committee. Inflation 
is running far too high, affecting communities all across our country. 
I would be strongly committed to bringing down inflation to the Federal 
Reserve's target, consistent with the Federal Reserve's dual mandate of 
maximum employment and price stability.
    If confirmed, I look forward to working together with all of you on 
this committee, where I have spent much time learning from you and 
collaborating with you on critical issues for our country.
    I would be honored to be confirmed as Vice Chair for Supervision 
and Governor. Thank you for your consideration, and I look forward to 
your questions.

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                PREPARED STATEMENT OF JAIME E. LIZARRAGA
           To Be a Member, Securities and Exchange Commission
                              May 19, 2022
    Chairman Brown, Ranking Member Toomey, distinguished Members of the 
Committee: Thank you for the opportunity to appear before you today. It 
is an honor to be nominated by President Joe Biden to serve as a 
Commissioner of the Securities and Exchange Commission.
    I would also like to thank House Speaker Nancy Pelosi for 
introducing me. I am proud to have been part of her team for nearly 15 
years.
    Witnessing her extraordinary leadership up close, and her 
dedication to building a more prosperous future for America's working 
families, has been the privilege of a lifetime. It has also prepared me 
well for the role of SEC Commissioner.
    At its core, the SEC's mission is about the aspirations of all 
working families to secure a prosperous financial future, with the 
confidence that their interests will always be protected.
    To me, the SEC's mission is also deeply personal--dating back to my 
days growing up in a southern California working-class community.
    Neither of my parents graduated from high school. They immigrated 
from Mexico and began their life in the United States as farm workers 
in California's Central Valley.
    Like millions of families in our country, they sought opportunity 
wherever they could.
    In the absence of stable job prospects, my parents decided to run a 
Mexican food business out of our home. On nights and weekends, my 
sister and I helped them prepare the food, mostly Mexican-style 
sandwiches called tortas. My father then sold the food from his car at 
soccer games and at community shopping centers.
    Growing up, my father always encouraged me to study the newspaper's 
financial pages. He taught me the importance of saving and investing 
for long-term financial security.
    In those years, and unlike now, access to safe and mainstream 
investment opportunities was virtually nonexistent. This limited my 
parents' wealth-building potential and their ability to grow their 
small business into a more established enterprise.
    My parents were also unable to save for retirement and faced 
constant financial strains. Their goal was for my sister and me to get 
an education. What little they had, they invested in us. I often asked 
how our financial system could have served their needs better.
    This life experience inspired me to pursue a career in public 
service. I focused on financial services policy, where issues of 
investor protection, financial stability, and economic security all 
come together.
    In more than three decades of public service, both as a House 
leadership and committee staffer, I played key roles in all financial 
regulatory legislation moving through Congress--from the Sarbanes-Oxley 
Act to the Dodd-Frank Act, and more. I also served as a presidential 
appointee at the U.S. Treasury and at the SEC, working to ensure 
congressional mandates were effectively implemented.
    A key lesson from my long experience is that fair and transparent 
markets benefit everyone--whether a pension plan participant, a retail 
investor, or parents investing in their children's future education.
    The most enduring lesson is from the 2008 financial crisis: poorly 
regulated markets can have devastating consequences for working 
families and for the broader economy.
    If confirmed, I look forward to bringing my experience and unique 
perspective to the SEC.
    It would be an honor to work with the agency's talented staff and 
with my fellow commissioners to uphold and strengthen the SEC's mission 
of protecting investors, promoting fair, orderly, and efficient 
markets, and facilitating capital formation.
    I would approach the SEC's vital mission through the eyes of 
working families like my own and work with my fellow commissioners to 
make sure congressional mandates are robustly implemented. I would 
focus on making sure our regulations keep pace with rapid technological 
changes in our markets. And I would focus on facilitating capital 
formation for our job-creating small businesses, particularly in 
underserved areas.
    Our country's future prosperity depends on robust oversight of our 
capital markets. To me, this means safe and transparent markets that 
foster a level playing field for all market participants, meaningful 
protections for investors, and broad-based access to capital.
    While my parents, Esther and Enrique Lizarraga, and my sister, 
Maria Esther, were unable to be here in person today, they're with me 
in spirit and are watching at home in California.
    I am proud to be joined today by my wife of 22 years, Kelly 
Lizarraga, and our five children--Victoria, Diego, Elena, Samuel, and 
Alexandra. Also joining us is my mother-in-law, retired Rev. Paula 
Werner.
    Thank you again for the opportunity to speak today, and I look 
forward to answering your questions.

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                PREPARED STATEMENT OF MARK TOSHIRO UYEDA
           To Be a Member, Securities and Exchange Commission
                              May 19, 2022
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee, thank you for the opportunity to appear before you today. 
With me in the hearing room is my wife Masae and watching remotely from 
California are my parents, sister, and extended family.
    I am honored to have been nominated by the President to serve as a 
member of the Securities and Exchange Commission (SEC). I have a deep 
commitment to its mission of protecting investors, maintaining fair, 
orderly, and efficient markets, and facilitating capital formation.
    My first job was spending summers on my grandfather's produce route 
in Southern California. He drove a small truck, and I would help him 
pull cartons of fruits and vegetables off the truck to deliver them to 
small restaurants and retailers. It was a family business, run by him 
and his two younger brothers.
    My grandfather kept up this physical labor well into his 70s. Every 
day, even during the hot summers, he would wear a collared, button-down 
shirt and work trousers, which were always neatly ironed. To me, that 
image of him has always represented the dignity of work.
    My grandfather had to build his business twice. First, in the 
1930s, he dropped out of high school to support his five younger 
siblings after both of his parents died. The second time was after 
World War II, when he and his family--including my mother--lost nearly 
everything when they were forcibly incarcerated in internment camps 
pursuant to Executive Order 9066 because they were Americans of 
Japanese ancestry. At the same time, my uncle was fighting in Europe 
with the U.S. Army's segregated 442nd Regimental Combat Team, where he 
was awarded the Bronze Star and served in Company ``E'' alongside 
former Senator Daniel Inouye.
    Finding startup capital was difficult for my grandfather, 
particularly in an era where racial discrimination was common. Yet he 
persevered and accomplished the American dream. The story of the 
immigrant family business has been often repeated in the Asian American 
community--whether a restaurant, dry cleaner, nail salon, or donut 
shop--and that perspective has helped shape my views on the need for 
start-up financing and capital formation.
    Since graduating law school in 1995, I have continuously practiced 
corporate and securities law, spending the vast majority of this time 
in public service. During my career, I have advised clients on, and 
helped to implement, major securities legislation, including the 
National Securities Markets Improvement Act, the Private Securities 
Litigation Reform Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, and 
the JOBS Act.
    In 2004, I became chief advisor to California's securities 
regulator, where we pursued an investor protection agenda and worked 
with the SEC and other State regulators. If confirmed, I would be one 
of the few State securities regulators ever to serve as a member of the 
SEC.
    During my past 15 years as an SEC civil servant, I have had the 
privilege of advising Commissioners and Chairmen as part of the 
executive staff and have been part of the Division of Investment 
Management.
    Since January of last year, I have been detailed by the SEC to 
serve as securities counsel to Ranking Member Toomey as part of this 
Committee, where it has been an honor to work with staff on both sides 
of the aisle, including Chairman Brown's staff.
    Before I close, I want to express my gratitude to the support and 
well-wishes that I have received from my SEC coworkers on this 
nomination. Their efforts to protect investors have, and will continue 
to, inspire me every day.
    Thank you and I look forward to your questions.
    
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        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                      FROM MICHAEL S. BARR

Q.1. Where have you excelled in past positions in attracting, 
hiring, and promoting people of color in positions in your 
organization? Where might there be room for improvement?

A.1. In my role as Dean of the Gerald R. Ford School of Public 
Policy, I have taken a holistic approach to diversity, equity, 
and inclusion, including making it a top priority to attract, 
hire, retain, and promote people of color, while adhering to 
Michigan and Federal law. We expanded our pipeline approach, 
including working with local high schools, expanding our 
programs for juniors in college, recruiting in our 
undergraduate and graduate programs, developing predoctoral and 
postdoctoral diversity programs, diversifying our Ph.D. 
program, and hiring diverse faculty and staff. I took a similar 
approach in my roles at the United States Department of the 
Treasury, where during both the Clinton and Obama 
administrations I prioritized diverse hiring, starting with 
internships and working all the way through senior policy 
positions. There is always room for improvement in this work.

Q.2. What specific measures will you use to evaluate the 
success of the Federal Reserve in understanding and addressing 
the needs of Black, Indigenous, and people of color (BIPOC)? 
And, will you work with the Chair and Board to keep Congress 
apprised, as appropriate, on the progress being made on these 
measures?

A.2. If confirmed, I will work with Chair Powell and other 
members of the Board to keep Congress apprised, as appropriate, 
on the progress being made to understand and address the needs 
of BIPOC communities. When evaluating the Federal Reserve's 
success in understanding and addressing the needs of BIPOC 
communities, I will consider measures of employment and price 
stability, fair lending enforcement, financial inclusion, staff 
hiring and retention, diverse leadership at the Board and 
Reserve Banks, outreach to civil rights and community 
organizations, and other measures to ensure that Federal 
Reserve policies help all Americans.

Q.3. What is your plan for creating an inclusive working 
environment for employees within your office?

A.3. If confirmed, I would continue my long-standing commitment 
to a holistic approach to diversity, equity, and inclusion, 
including through staff hiring and retention, research, public 
engagement, and other activities.

Q.4. With global uncertainty because of Putin's illegal 
invasion of Ukraine, increased cybersecurity risk, the rise in 
highly volatile and unregulated cryptoassets, and the 
existential threat of climate change--understanding the 
interconnectedness of our global financial system is critical.
    Do you agree we need to make sure global systemically 
important banks are prepared to weather all types of economic 
shocks with strong capital requirements and stress tests?

A.4. Yes.

Q.5. How will you ensure that risky bets by Wall Street 
megabanks do not end up hurting workers and businesses on Main 
Street?

A.5. I think it is critical that large, complex financial 
institutions have strong capital and liquidity positions, are 
well supervised, and operate within clear rules of the road. 
Stress testing and living wills, together with requirements for 
total loss absorbing capacity and orderly liquidation 
procedures, help to reduce the risks that such large, complex 
institutions might pose to workers and businesses on Main 
Street.

Q.6. As Assistant Treasury Secretary for Financial Institutions 
following the 2007-2008 financial crisis, you saw firsthand 
that when regulators do not proactively limit risks to the 
entire financial system and keep Wall Street firms in check, 
workers, homeowners, and consumers pay the price. What are the 
biggest risks to our financial system right now, and what will 
be your approach to addressing them?

A.6. There are a wide variety of potential risks to the 
financial system including cyberrisk, Russia's invasion of 
Ukraine and the accompanying global risks to commodities, food, 
and energy, disruptions to global supply chains from the 
pandemic, inflation, and measures to combat inflation, 
fragilities in Treasury markets, the rise of cryptoassets, 
including stablecoins, potential declines in asset prices 
across a wide range of asset classes including housing and 
commercial real estate, nonbank financial intermediation 
including money market mutual funds and nonbank mortgage 
servicing, risks associated with climate change, and other 
factors. If confirmed, my approach would be to focus on the 
need for humility about our ability to predict such events and 
how they would stress the system; therefore, I would focus on 
the resiliency of the financial system in the face of evolving 
uncertainties.

Q.7. I have long been concerned about the risks of shadow firms 
that provide products and services like banks, but don't play 
by the same tough rules that promote fair competition and 
protect consumers. Stablecoins have been billed as ``safe'' and 
``innovative'' ways to invest in volatile cryptoassets, but as 
we've seen time and again, it's another wild speculation scheme 
that ends in disaster. What parallels do you see between the 
risky derivatives that led to the subprime mortgage crisis and 
the growing risks to our financial system from crypto, 
stablecoin, and decentralized finance?

A.7. When new innovations arise in the financial sector, 
financial regulators and the market are often slow to 
understand emerging risks. Our fragmented system of regulation 
means that financial innovation can arise in unregulated or 
lightly regulated spaces in the cracks between existing 
financial regulation. New technologies are creating financial 
products and services that do not fit easily into existing 
regulatory categories. If confirmed, I would be highly focused 
on keeping abreast of financial innovations and determining 
appropriate ways in collaboration with interagency partners to 
mitigate financial risks while fostering innovation.

Q.8. A recent OIG Report found weaknesses in the Federal 
Reserve's approach to fair lending enforcement. And over the 
years, we see story after story of another Wall Street bank 
that is discriminating against Black and Brown borrowers and 
customers. If confirmed, what are your plans to strengthen the 
Fed's oversight and ensure that the Nation's banks are not 
engaging in discrimination? What are your plans to improve the 
Fed's fair lending examination and enforcement program to 
ensure compliance with all fair lending and antidiscrimination 
laws?

A.8. If confirmed, I would work with Chair Powell and other 
members of the Board to ensure fair lending enforcement is a 
top priority. Regulators need to improve best practices in 
supervision and enforcement, and advance cooperation across the 
regulatory agencies and the Department of Justice.

Q.9. During his January 2022 nomination hearing before the 
Committee, in response to a question from Senator Tester about 
the importance of maintaining Federal Reserve independence, 
Chairman Powell stated, ``it's essential that we work for all 
Americans, and that's what we do. And it's essential that we do 
that without regard to political considerations like the 
election cycles or particular political party's views on issues 
that are outside our mandate. You know, we have to focus on the 
job Congress has given us, which is maximum employment and 
price stability and also the payment system and financial 
stability and other things.''
    Do you agree with Chairman Powell?

A.9. Yes, I agree with Chair Powell.

Q.10. Please describe why Federal Reserve independence is 
important.

A.10. Independence is critical for the Federal Reserve to 
effectively carry out its congressional mandate to promote 
maximum employment and price stability. Politics should play no 
role in setting monetary policy. If politics were to come into 
play in Federal Reserve decision making, it could undermine 
effective and objective policy making, and both the market and 
the public would lose confidence in the Federal Reserve. I am 
committed, if confirmed, to adhere strictly to a nonpolitical, 
data-driven, independent approach to policymaking.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                      FROM MICHAEL S. BARR

Q.1. Monetary Policy--Federal Open Market Committee (FOMC) 
participants have reevaluated their views on the appropriate 
path of policy in light of recent inflation. In the March 2022 
Summary of Economic Projections, all participants see inflation 
slowing. The median FOMC participant sees headline PCE 
inflation falling to 4.3 percent this year. However, the median 
FOMC participant only projects raising the Federal funds rate 
to 1.9 percent by year end. In real terms, interest rates would 
still be sharply negative. While these projections are not a 
committee forecast, these numbers suggest that participants 
generally believe that inflation will fall despite real 
interest rates remaining in negative territory.
    How can the Fed curtail inflation when real interest rates 
remain negative?
    Does this imply that the neutral interest rate is now 
negative, and so a less negative rate can be contractionary?

A.1. Inflation remains far too high, and that's hurting 
families and businesses across the country. If confirmed, I am 
fully committed to bringing inflation down to the Federal 
Reserve's target of 2 percent. Changes to the Federal funds 
rate, as well as forward guidance, and reductions to the 
Federal Reserve's balance sheet, affect market interest rates 
across the yield curve and financial conditions more broadly. 
Tighter financial conditions, which help bring down demand, 
will put downward pressure on inflation. Easing of supply 
constraints would also tend to put downward pressure on 
inflation. While there is academic debate about the precise 
level of the neutral interest rate, and uncertainty about the 
precise rate at any given point in time, that rate is positive 
over the long term.

Q.2. In August 2020, the FOMC revised its ``Statement on 
Longer-Run Policy Goals and Monetary Policy Strategy'' to adopt 
flexible average inflation targeting. \1\ This policy entails 
that, ``following periods when inflation has been running below 
2 percent, appropriate monetary policy will likely aim to 
achieve inflation moderately above 2 percent for some time.'' 
Inflation now far exceeds the Fed's 2 percent target and has 
hit a 40-year high. CPI inflation was 8.3 percent over the past 
12 months. Over the past 3 years, CPI inflation has averaged 
about 4 percent. In your testimony, you acknowledged that this 
inflation is not consistent with the Federal Reserve's 
congressional mandate. In January 2022, despite this tremendous 
failure, the FOMC unanimously reaffirmed its ``Statement on 
Longer-Run Goals and Monetary Policy Strategy''. The reaffirmed 
statement is identical to the version initially adopted in 
August 2020.
---------------------------------------------------------------------------
     \1\ ``2020 Statement on Longer-Run Policy Goals and Monetary 
Policy Strategy'', Board of Governors of the Federal Reserve System, 
available at https://www.federalreserve.gov/monetarypolicy/review-of-
monetary-policy-strategy-tools-and-communications-statement-on-longer-
run-goals-monetary-policy-strategy.htm.
---------------------------------------------------------------------------
    What should the Fed have done differently in 2020 and 2021?
    How would you modify the Fed's framework so that it 
produces outcomes consistent with the dual mandate?

A.2. In retrospect, the FOMC should have tightened monetary 
policy sooner. If confirmed, I would be fully committed to 
bringing inflation down to the Federal Reserve's target of 2 
percent. The FOMC's framework was developed during a time of 
persistent low inflation, and during which time inflation 
consistently came in lower than the Fed's forecasts despite 
accommodative monetary policy. It may be appropriate to revisit 
the framework after a review of the current inflationary 
environment and the effectiveness of the Fed's response to it. 
If confirmed, I would look forward to ensuring that the Fed's 
framework is best suited to achieve the dual mandate in a 
variety of economic circumstances.

Q.3. Roughly how much of the 8.3 percent CPI inflation over the 
past 12 months was due to the Fed keeping monetary policy too 
loose for too long? For example, how much, if any, was due to 
the Fed keeping overnight rates at zero and buying bonds long 
after the economic emergency had passed?

A.3. It is difficult to apportion the causes of inflation 
across monetary policy, fiscal policy, supply constraints, the 
pandemic, the war in Ukraine, and other factors. If confirmed, 
I would be committed to using the Federal Reserve's monetary 
policy tools to bring inflation down to the Federal Reserve's 
target of 2 percent.

Q.4. Bank Capital Requirements--In April 2020, the Federal 
Reserve temporarily amended the supplementary leverage ratio 
(SLR) to allow banks to continue taking deposits, lending, and 
conducting other financial intermediation during the COVID-
related period of stress. \2\ That relief expired on March 31, 
2021, and, as a result, banks cannot exclude central bank 
deposits or U.S. Treasury securities from the denominator of 
the SLR. In conjunction with announcing the expiration of the 
relief, on March 19, 2021, the Federal Reserve announced that 
it would ``soon be inviting public comment on several potential 
SLR modifications.'' \3\
---------------------------------------------------------------------------
     \2\ https://www.federalreserve.gov/newsevents/pressreleases/
bcreg20200401a.htm
     \3\ https://www.federalreserve.gov/newsevents/pressreleases/
bcreg20210319a.htm
---------------------------------------------------------------------------
    Over 1 year later, the Federal Reserve still has not issued 
this proposal. At the same time, the Federal Reserve purchased 
trillions of dollars of securities, flooding the banking system 
with reserves. It appears that without adjustments the SLR is 
serving as a binding capital constraint and restricting banks' 
ability to accommodate customer deposits and intermediate in 
Treasury markets. The Federal Reserve has long believed that 
leverage capital requirements should serve as a backstop to 
risk-based capital requirements, a position adopted by both 
Chair Jerome Powell \4\ and then-Governor Daniel Tarullo, \5\ 
among others.
---------------------------------------------------------------------------
     \4\ https://www.federalreserve.gov/newsevents/speech/
powell20170623a.htm
     \5\ https://www.federalreserve.gov/newsevents/press/bcreg/
bcreg20140408a-tarullo-statement.htm
---------------------------------------------------------------------------
    Do you agree that leverage capital requirements, including 
the SLR, should serve as a backstop to risk-based capital 
requirements?
    If so, do you believe the SLR should be modified to ensure 
that it does not serve as the binding capital constraint?

A.4. Yes, leverage capital requirements, including the SLR, 
should serve as a backstop to risk-based capital requirements. 
With the significant rise of reserves in the system in the wake 
of the global pandemic, the SLR has become more binding than 
when the SLR was finalized. If confirmed, I commit to 
undertaking an evidence-based approach to U.S. capital rules. I 
would review the SLR promptly, together with other capital and 
liquidity rules, to ensure that the rules are efficient, 
effective, and keep capital in the system strong.

Q.5. During the hearing, you expressed the intent to ``look at 
[capital and liquidity] as a whole rather than piece by piece'' 
and noted that this holistic review would include both the SLR, 
stress testing, and the Basel III ``end game.''
    Given your view that current capital in the banking system 
is ``quite strong,'' will you commit that any changes to these 
regulations will seek capital neutrality?
    If non-U.S. jurisdictions implement a less stringent 
version of Basel III, do you believe that U.S. regulators 
should adjust their rules accordingly to maintain the 
competitiveness of U.S. banks?

A.5. Capital in the banking system today is quite strong. I 
commit to undertaking an evidence-based approach to U.S. 
capital rules. While considering what other jurisdictions are 
doing, the United States should implement capital rules that 
make sense for the United States and keep our financial system 
vibrant and strong.

Q.6. Stablecoins--In April 2022, I released a discussion draft 
of a bill that would establish a new regulatory framework for 
payment stablecoins. \6\ Specifically, the bill would authorize 
three different regulatory options for payment stablecoin 
issuers: (1) a bank charter, (2) a State-based money 
transmitter or similar license under State law, and (3) a new 
Federal license designed specifically for payment stablecoins. 
In addition, the bill would establish new, standardized public 
disclosure requirements for all three categories of issuers, 
including what assets back the payment stablecoin.
---------------------------------------------------------------------------
     \6\ https://www.banking.senate.gov/newsroom/minority/toomey-
announces-legislation-to-create-responsible-regulatory-framework-for-
stablecoins
---------------------------------------------------------------------------
    Do you believe that stablecoins offer potential benefits 
for consumers? If so, please describe those benefits.
    Do you agree that it is possible to design a regulatory 
framework for payment stablecoins without requiring all issuers 
to be insured depository institutions?

A.6. Properly regulated stablecoins might provide benefits for 
consumers by facilitating settlement of transactions, 
effectuating crossborder, crosscurrency trade transactions, or 
other use cases. At the same time, stablecoins present investor 
protection and financial stability risks that require a 
comprehensive regulatory framework. The President's Working 
Group report on stablecoins provides a reasonable basis for 
discussion of these issues, although other approaches might be 
possible that would meet core regulatory objectives.

Q.7. Cryptocurrencies Central Bank Digital Currencies--In 
November 2021, the Federal Reserve, FDIC, and OCC stated that 
they intend to provide banks greater clarity around a series of 
cryptorelated activities by 2022. If confirmed, do you commit 
to working with the FDIC and OCC in fulfilling this commitment 
by the end of 2022?

A.7. If confirmed, I commit to working with fellow regulators 
to provide banks with greater clarity on cryptorelated 
activities as soon as is practicable.

Q.8. Central Bank Digital Currencies--If the Federal Reserve 
receives authorization from Congress for the creation of a 
CBDC, there will still be many crucial decisions that the Fed 
will have to make regarding its design and implementation. If a 
CBDC is not adaptable, poorly designed, or excessively 
manipulated by the Government, the public will have other 
options to secure their privacy and ensure low-cost payment 
services.
    Could well-regulated, privately issued stablecoins serve as 
a check on the design and management of any American CBDC?

A.8. I view well regulated, privately issued stablecoins and a 
central bank digital currency (CBDC) as complementary products, 
rather than substitutes, for a number of possible use cases. It 
would be important to get the design issues right for 
regulation of stablecoins and for the development of a CBDC 
regardless of the presence or absence of the other product. I 
think a CBDC requires significant additional study and 
research. I agree with Chair Powell that the Federal Reserve 
should only move forward with a CBDC with the buy-in of 
Congress and the Executive branch.

Q.9. Do you think that the Federal Reserve should provide 
direct retail accounts to individual Americans for use with a 
CBDC, or for any other purpose?

A.9. I think the Federal Reserve's discussion paper on CBDC, 
which focuses on an intermediated model, is an appropriate 
focus for further research and development.

Q.10. In a 2020 paper that you cowrote, you stated that 
``Emerging technologies from virtual currencies to mobile 
payments and QR codes present opportunities for central banks 
to advance'' important work on reversing ``troubling 
inequality,'' reducing ``fragmentation,'' and eliminating 
``predatory practices.'' \7\ Your paper specifically discusses 
central bank digital currencies (CBDCs) as an example of such 
an emerging technology. The paper identifies the activities of 
the People's Bank of China (PBOC) in digital financial 
transactions as potential models to use CBDCs to enhance 
financial inclusion.
---------------------------------------------------------------------------
     \7\ M. Barr, A. Harris, L. Menard, and W. Xu, titled ``Building 
the Payment System of the Future: How Central Banks Can Improve 
Payments to Enhance Financial Inclusion'' (Jul. 31, 2020).
---------------------------------------------------------------------------
    Should the Federal Reserve use the activities of the PBOC 
and the Chinese Government as a model for financial inclusion 
and a CBDC? Please explain why or why not.

A.10. No. The Chinese model is not a useful starting point for 
the United States. We have very different political and 
economic systems, and the Chinese model raises privacy and 
other concerns.

Q.11. Community Reinvestment Act (CRA)--During the hearing, you 
expressed support for the recent proposed rule issued by the 
Federal Reserve, FDIC, and OCC to update the regulations 
implementing the CRA. \8\
---------------------------------------------------------------------------
     \8\ https://www.federalreserve.gov/consumerscommunities/files/cra-
npr-fr-notice-20220505.pdf
---------------------------------------------------------------------------
    Will you commit to ensure that any changes to the CRA 
regulations provide clarity, transparency, and objectivity to 
supervised institutions?
    Will you commit to work with me to increase the 
transparency of any CRA-related agreements between banks and 
community groups reached in connection with pending bank 
mergers? If so, will you incorporate those transparency 
measures into any final rule implementing the CRA regulations?

A.11. Yes, if confirmed, I would commit to working with my 
fellow governors and colleagues at the OCC and FDIC in pursuing 
CRA regulations that provide clarity, transparency, and 
objectivity to supervised institutions and communities. I would 
be pleased to work with your office with respect to the 
transparency of CRA-related agreements reached in connection 
with pending bank mergers.

Q.12. Consumer Banking and Credit Fees--In a paper entitled, 
``Behaviorally Informed Regulation'', you and your coauthors 
proposed allowing financial firms to ``deter consumers from 
paying late or going over their credit card limits with 
whatever fees they deemed appropriate, but the bulk of such 
fees would be placed in a public trust to be used for financial 
education and assistance to troubled borrowers.'' \9\
---------------------------------------------------------------------------
     \9\ M. Barr, S. Mullainathan, and E. Shafir, ``Behaviorally 
Informed Regulation'' (2012).
---------------------------------------------------------------------------
    Why should financial firms have a ``bulk'' of the fees they 
charge for servicing consumer accounts confiscated by the 
Federal Government so that the Government bureaucrats can use 
that money to pursue their social goals?
    Do you still support this proposal?
    If confirmed, will you use your position at the Federal 
Reserve to try to advance this proposal?

A.12. My paper was a thought experiment with illustrative 
examples designed to highlight how various issues in the 
consumer marketplace could be addressed. The particular thought 
experiment in the paper was designed to highlight the 
difference between the behavioral effects of contingent fees 
and the revenue-generating effects. I would not seek to advance 
this thought experiment as a policy proposal if confirmed to 
the Federal Reserve.

Q.13. Financial Stability Oversight Council (FSOC) Secondary 
Market Review--Section 10 of the Federal Reserve Act (12 U.S.C. 
242) provides that ``[t]he Vice Chairman for Supervision shall 
develop policy recommendations for the Board [of Governors of 
the Federal Reserve System] regarding supervision and 
regulation of depository institution holding companies and 
other financial firms supervised by the Board, and shall 
oversee the supervision and regulation of such firms.'' Section 
113 of the Dodd-Frank Act authorizes FSOC to determine that a 
U.S. nonbank financial company shall be supervised by the Board 
of Governors of the Federal Reserve System.
    Under what circumstances should FSOC determine under 
section 113 of the Dodd-Frank Act that Fannie Mae or Freddie 
Mac (each a GSE or Enterprise) should be supervised by the 
Board of Governors of the Federal Reserve System?

A.13. It would not be appropriate for me to comment on the 
possibility of designation of any particular firm or firms.

Q.14. On September 25, 2020, FSOC released a statement on its 
activities-based review of the secondary mortgage market. Do 
you agree with FSOC's finding in that statement that ``any 
distress at the Enterprises that affected their secondary 
mortgage market activities, including their ability to perform 
their guarantee and other obligations on their MBS and other 
liabilities, could pose a risk to financial stability, if risks 
are not properly mitigated''?

A.14. Given their scale and centrality to home mortgage 
markets, the GSEs are vitally important to the U.S. financial 
system and national economy. It is therefore essential that the 
GSEs be properly regulated and supervised, including with 
strong capital and liquidity rules.

Q.15. FSOC's statement also affirmed the overall quantity and 
quality of the regulatory capital required by the Federal 
Housing Finance Agency's (FHFA) June 30, 2020, proposed rule to 
establish a new regulatory capital framework for the GSEs. 
Specifically, FSOC stated that ``risk-based capital 
requirements and leverage ratio requirements that are 
materially less than those contemplated by the proposed rule 
would likely not adequately mitigate the potential stability 
risk posed by the Enterprises.'' FSOC also concluded ``it is 
possible that additional capital could be required for the 
Enterprises to remain viable concerns in the event of a 
severely adverse stress.'' (emphasis added [Ed.--not added.) 
FSOC committed to ``continue to monitor . . . FHFA's 
implementation of the regulatory framework to ensure potential 
risks to financial stability are adequately addressed.'' On 
December 17, 2020, FHFA finalized the regulatory capital 
framework for the GSEs largely along the lines of the June 30, 
2020, proposed rule.
    Do you accept each of the findings and recommendations made 
in the FSOC statement? If not, please identify each finding or 
recommendation with which you disagree and your rationale for 
the disagreement.
    In particular, do you accept FSOC's finding that ``risk-
based capital requirements and leverage ratio requirements that 
are materially less than those contemplated by the proposed 
rule would likely not adequately mitigate the potential 
stability risk posed by the Enterprises''?
    Do you accept FSOC's finding that ``[t]he alignment of 
market participants' credit risk capital requirements across 
similar credit risk exposures would mitigate risk to financial 
stability by minimizing market structure distortions''?
    Do you accept FSOC's recommendation that ``FHFA and other 
regulatory agencies . . . coordinate and take other appropriate 
action to avoid market distortions that could increase risks to 
financial stability by generally taking consistent approaches 
to the capital requirements and other regulation of similar 
risks across market participants, consistent with the business 
models and missions of their regulated entities''?

A.15. It is essential for the GSEs to have strong capital and 
liquidity rules. The GSEs had woefully inadequate capital going 
into the global financial crisis of 2008, and that lack of 
capital caused widespread disruption.

Q.16. Reduction in the GSE Capital Requirements--On September 
27, 2021, FHFA proposed amendments that would have materially 
reduced the GSEs' regulatory capital requirements. On February 
25, 2022, FHFA finalized those amendments largely as proposed. 
The amendments reduced the tier 1 capital that must be 
maintained by a GSE to avoid restrictions on capital 
distributions from 4 percent to roughly 3 percent of the GSE's 
adjusted total assets. The amendments also reduced Freddie 
Mac's combined capital requirements from 4 percent to 3.6 
percent as of September 30, 2021, with further reductions 
likely to follow due to continued house price appreciation, 
among other things. Fannie Mae's combined capital requirements 
also could further decline as it reverts to prepandemic levels 
of credit risk transfer coverage (about twice the year-end 2021 
levels according to its annual reports on Form 10-K).
    What steps do you think FSOC should take with respect to 
FHFA's now-finalized amendments to fulfill FSOC's commitment to 
``continue to monitor . . . FHFA's implementation of the 
regulatory framework to ensure potential risks to financial 
stability are adequately addressed''?
    In light of FSOC's commitment, does the absence of any 
comment by FSOC on FHFA's now-finalized amendments pose a risk 
to the credibility of FSOC or risk politicizing FSOC?
    Do you agree that these new risk-based capital requirements 
and leverage ratio requirements, as amended by FHFA, are 
``materially less than those contemplated by the proposed 
rule'' and are not adequate to ``mitigate the potential 
stability risk posed by the Enterprises''?

A.16. Given their scale and centrality to home mortgage 
markets, the GSEs are vitally important to the U.S. financial 
system and national economy. It is therefore essential that the 
GSEs be properly regulated and supervised, including with 
strong capital and liquidity rules.

Q.17. GSE Resolution Framework--FSOC's statement on its 
activities-based review of the secondary mortgage market 
encouraged FHFA to continue its efforts to enhance the GSEs' 
regulatory framework, including resolution planning 
requirements. In May 2021, FHFA finalized a rule that requires 
each GSE to develop a plan to facilitate its rapid and orderly 
resolution in the event FHFA is appointed receiver. These 
resolution plans are intended to, among other things, 
``foster[] market discipline by making clear that no 
extraordinary Government support will be available to indemnify 
investors against losses or fund the resolution of an 
Enterprise.'' Specifically, ``[i]n developing a resolution 
plan, each Enterprise shall: . . . [n]ot assume the provision 
or continuation of extraordinary support by the United States 
to the Enterprise to prevent either its becoming in danger of 
default or in default (including, in particular, support 
obtained or negotiated on behalf of the Enterprise by FHFA in 
its capacity as supervisor, conservator, or receiver of the 
Enterprise, including the Senior Preferred Stock Purchase 
Agreements entered into by FHFA and the U.S. Department of the 
Treasury on September 7, 2008, and any amendments thereto).'' 
Related to this, Treasury's Housing Reform Plan released in 
September 2019 recommended that ``[a] credible resolution 
framework can ensure that shareholders and unsecured creditors 
bear losses, thereby protecting taxpayers against bailouts, 
enhancing market discipline, and mitigating moral hazard and 
systemic risk.''
    In light of the risks to financial stability that could be 
posed by a future insolvency event at GSE, do you agree with 
the recommendation in Treasury's September 2019 Housing Reform 
Plan that ``[a] credible resolution framework can ensure that 
shareholders and unsecured creditors bear losses, thereby 
protecting taxpayers against bailouts, enhancing market 
discipline, and mitigating moral hazard and systemic risk''?
    Do you agree with FHFA's requirement that ``each Enterprise 
shall: . . . [n]ot assume the provision or continuation of 
extraordinary support by the United States to the Enterprise to 
prevent either its becoming in danger of default or in default 
(including . . . the Senior Preferred Stock Purchase Agreements 
entered into by FHFA and the U.S. Department of the Treasury on 
September 7, 2008, and any amendments thereto)''?

A.17. I agree that a credible resolution plan for the GSEs 
should ensure that shareholders and unsecured creditors bear 
losses and that the GSEs should not assume the provision of 
extraordinary support by the United States in developing such a 
credible resolution plan.

Q.18. As Secretary Yellen noted in her hearing opening 
statement on May 10, 2022, FSOC has issued a statement to 
express support for the Securities and Exchange Commission's 
efforts to reform money market funds and its work to consider 
potential reforms of open-end funds. Given FHFA's policy that, 
notwithstanding the PSPAs, unsecured creditors of each GSE 
should be at risk of loss upon an insolvency event affecting 
the GSE, do you think the Securities and Exchange Commission's 
regulations governing money market mutual funds, registration 
requirements, or other market activity should continue to give 
the GSEs special treatment (e.g., by treating them as 
Government securities for certain purposes)?

A.18. This is a matter that is squarely within the purview of 
the SEC.

Q.19. Credit Risk Capital Requirements for Securitization 
Exposures--The Federal Reserve is considering amendments to the 
regulatory capital requirements for Federal Reserve-regulated 
banks and bank holding companies in connection with the Basel 
III ``End Game'' effort. The Federal Reserve's current capital 
requirements impose operational criteria for securitization 
exposures that are in some respects stricter than those 
required under the Basel III standards, as well as minimum 
credit risk capital requirements (minimum risk weights) that 
are greater than those required under the Basel III standards.
    As part of the Federal Reserve's Basel III ``End Game'' 
rulemakings, will you commit to revisiting the operational 
criteria and minimum credit risk capital requirements for the 
securitization exposures of Federal Reserve-regulated 
institutions?

A.19. If confirmed, I commit to taking an evidence-based 
approach to capital and liquidity standards, including with 
respect to securitization exposures.

Q.20. Related to this, FHFA has finalized amendments to the 
regulatory capital requirements for the GSEs that adopted, 
relative to the Federal Reserve's requirements, a more lax 
approach to the operational criteria, and a smaller minimum 
credit risk capital requirement (a 5 percent risk weight), for 
the securitization exposures of the GSEs (known as retained 
credit risk transfer exposures under FHFA's framework).
    In light of FSOC's finding in its statement on its 
activities-based review of the secondary mortgage market that 
``[t]he alignment of market participants' credit risk capital 
requirements across similar credit risk exposures would 
mitigate risk to financial stability by minimizing market 
structure distortions,'' would you also commit to assessing the 
stability or other risks that might arise out of the Federal 
Reserve finalizing stricter operational criteria or greater 
minimum credit risk capital requirements for securitization 
exposures than those applied by FHFA to the retained credit 
risk transfer exposures of the GSEs?

A.20. I agree with the general principle that similar risks 
should be treated in similar ways. If confirmed, I commit to 
taking an evidence-based approach to capital and liquidity 
standards, including with respect to securitization exposures.

Q.21. Records Requests--I made a series of records requests 
approximately one year ago to the Federal Reserve Banks of San 
Francisco, Boston, Atlanta, and Minneapolis seeking records 
pertaining to some of these Federal Reserve Banks' activities 
that are outside the Fed's mandate.\10\ \11\ In response to my 
records requests, none of these four Federal Reserve Banks have 
produced even a single requested record to date.
---------------------------------------------------------------------------
     \10\ ``Toomey Expands Review of Woke Mission Creep by Regional 
Federal Reserve Banks'', Senate Banking Committee (May 24, 2021), 
https://www.banking.senate.gov/newsroom/minority/toomey-expands-review-
of-woke-mission-creep-by-regional-federal-reserve-banks.
     \11\ ``Toomey Launches Review of Mission Creep by Regional Federal 
Reserve Banks'', Senate Banking Committee (Mar. 29, 2021), https://
www.banking.senate.gov/newsroom/minority/toomey-launches-review-of-
mission-creep-by-regional-federal-reserve-banks.
---------------------------------------------------------------------------
    Do you think it is appropriate for a Fed Regional Bank to 
stonewall legitimate Congressional records requests? Please 
answer ``yes'' or ``no.''
    If ``yes,'' please explain fully explain your answer.
    If ``no,'' what steps will you take, if confirmed, to 
ensure that the Fed Regional Banks are responsive to 
Congressional records requests?

A.21. I think the Federal Reserve should respond promptly to 
congressional record requests. If confirmed, I would work with 
Chair Powell and fellow governors, as well as the presidents of 
the Reserve Banks, on this important issue.

Q.22. Politicization of the Fed--In 2019, Neel Kashkari, the 
President of the Minneapolis Fed, initiated a grassroots 
lobbying effort to support the ``Page Amendment''--a proposed 
amendment to Minnesota's State constitution dealing with 
education policy. President Kashkari has utilized--and 
continues to utilize--Minneapolis Fed resources to lobby for 
this amendment.
    These political lobbying activities of President Kashkari 
and the Minneapolis Fed obviously jeopardize the Fed's 
independence and, moreover, are prohibited by the Minneapolis 
Fed's own code of conduct, which forbids Minneapolis Fed 
employees from engaging in political activity in their official 
capacities or using Minneapolis Fed resources. \12\
---------------------------------------------------------------------------
     \12\ https://www.banking.senate.gov/imo/media/doc/ranking-member-
toomey-letter-to-minneapolis-fed-president-kashkari.pdf
---------------------------------------------------------------------------
    Do you believe it is appropriate for the Minneapolis Fed--
or any component of the Federal Reserve System--to be engaged 
in political lobbying activities, such as lobbying for an 
education amendment to a State constitution? Please answer 
``yes'' or ``no.'' If your answer is ``yes,'' please explain 
fully explain your answer.
    If confirmed, will you commit to using your position as 
Vice Chair of Supervision at the Fed to rein in the Minneapolis 
Fed's political lobbying activities? Please answer ``yes'' or 
``no.'' If your answer is ``no,'' please explain fully explain 
why you will not do so. If your answer is ``yes,'' what steps 
will you commit to take to rein in the Minneapolis Fed's 
political lobbying activities?

A.22. No, I do not think it is appropriate for the Federal 
Reserve to engage in political lobbying activities. If 
confirmed, I would work with Chair Powell and my fellow 
governors, as well as the presidents of the Reserve Banks, on 
this important issue.

Q.23. All 12 Regional Fed Banks have been sponsoring a ``Racism 
and the Economy Series'' since October 2020 to ``examine the 
ways in which structural racism manifests in America and 
advance actions to dismantle structural racism.'' According to 
the Minneapolis Fed's website, this series is premised upon the 
subjective opinion that ``[r]acism forms the foundation of 
inequality in our society.'' \13\
---------------------------------------------------------------------------
     \13\ ``Racism and the Economy'', Federal Reserve Bank of 
Minneapolis (accessed Feb. 4, 2022), https://www.minneapolisfed.org/
policy/racism-and-the-economy.
---------------------------------------------------------------------------
    Is it appropriate for the ostensibly independent and 
nonpartisan Federal Reserve to espouse divisive political 
rhetoric like the subjective opinion that ``racism forms the 
foundation of inequality in our society''? Please fully explain 
your answer.
    If confirmed, will you use your position at the Federal 
Reserve to ensure that the Federal Reserve System is not 
spending its time and resources focused on divisive, 
politicized events like the Racism and the Economy series? 
Please fully explain your answer.

A.23. I believe that the Federal Reserve System should be able 
to engage in independent research on a wide range of topics 
consistent with the Federal Reserve's mandates.

Q.24. If confirmed, will you commit to protecting the 
independence of the Fed by using your position as Fed Governor 
to rein in any and all political advocacy that is currently 
taking place across the Federal Reserve System? Please answer 
``yes'' or ``no.''
    If your answer is ``yes,'' what steps do you plan to take 
to rein in any and all political advocacy that is currently 
taking place across the Federal Reserve System?
    If your answer is ``no,'' fully explain your answer.

A.24. I do not think it is appropriate for the Federal Reserve 
to engage in political lobbying activities. If confirmed, I 
would work with Chair Powell and my fellow governors, as well 
as the presidents of the Reserve Banks, on this important 
issue.

Q.25. Recent Public Statements--On June 2, 2020, you issued a 
public statement as Dean of the Ford School of Public Policy 
that ``it is important to acknowledge that the violence and 
inequality in our systems are the result of centuries of laws, 
policies, and institutions that entrenched and enforced racist 
inequality.'' \14\
---------------------------------------------------------------------------
     \14\ Michael Barr, ``Dean Michael Barr Addresses Racist 
Violence'', Ford School of Public Policy at the University of Michigan 
(Jun. 2, 2021), https://fordschool.umich.edu/news/2020/dean-michael-
barr-addresses-racial-violence.
---------------------------------------------------------------------------
    What role can and should the Federal Reserve play in 
addressing the U.S. systems and institutions that you have 
identified as having ``entrenched and enforced racist 
inequality''?
    If confirmed, what specifically do you intend to do at the 
Federal Reserve, if anything, to address the U.S. systems and 
institutions that you have identified as having ``entrenched 
and enforced racist inequality''?

A.25. The Federal Reserve has an important, but clearly defined 
set of responsibilities, and other parts of Government and 
society are responsible for policies to address issues related 
to inequality. The Federal Reserve has a role to play by 
conducting monetary policy in pursuit of its dual mandate of 
price stability and maximum employment, which benefits the 
economy as a whole, enforcing fair lending and related laws, 
and seeking to diversify the staff and leadership of the 
Federal Reserve Board and Banks.

Q.26. In that same public statement from June 2, 2020, you 
wrote that ``in the aftermath [of George Floyd's killing by a 
police officer] many, many police officers and departments 
engaged in violent confrontations all over the country. \15\
---------------------------------------------------------------------------
     \15\ Id.
---------------------------------------------------------------------------
    What did you mean by your statement that ``many, many 
police officers and departments engaged in violent 
confrontations all over the country''?
    Were you asserting by this statement that ``violent 
confrontations'' during the protests and riots that occurred in 
the United States in the aftermath of George Floyd's murder 
were instigated by police officers and police departments? 
Please answer ``yes'' or ``no.''
    If your answer is ``yes,'' please provide the evidence you 
are relying on to justify your belief that ``many, many police 
officers and departments'' were the ones instigating violent 
confrontations all over the country.

A.26. These issues are not within the mandate of the Federal 
Reserve, and I would not be working on them if confirmed. At 
the time I wrote the statement, in the wake of George Floyd's 
death and the massive protests that ensued, police officers 
faced enormous challenges in their roles of protecting public 
safety, speech, and assembly.

Q.27. While serving as the dean of the University of Michigan's 
Gerald R. Ford School of Public Policy (Ford School), on 
September 26, 2020, you tweeted that ``I join @umich 
@DrMarkSchlissel & Provost Susan Collins in condemning White 
House's recent Executive order'' aimed at combating critical 
race theory and race and sex stereotyping in Federal 
contracting and the Federal workforce (E.O. 13950). \16\ You 
then elaborated that ``@fordschool, we teach about systemic & 
structural racism because in order to form a more perfect 
union, one has to acknowledge its flaws & work every day to 
correct them.''
---------------------------------------------------------------------------
     \16\ Tweet of Michael Barr, Twitter (Sept. 26, 2020).
---------------------------------------------------------------------------
    Given that Section 10(b) of the Executive order explicitly 
provides that ``Nothing in this order shall be construed to 
prohibit discussing, as part of a larger course of academic 
instruction, the divisive concepts listed in section 2(a) of 
this order in an objective manner and without endorsement,'' 
\17\ how specifically did the Executive order affect the Ford 
School, if at all?
---------------------------------------------------------------------------
     \17\ Section 2(a) of E.O. 13950 states: ``(a) `Divisive concepts' 
means the concepts that (1) one race or sex is inherently superior to 
another race or sex; (2) the United States is fundamentally racist or 
sexist; (3) an individual, by virtue of his or her race or sex, is 
inherently racist, sexist, or oppressive, whether consciously or 
unconsciously; (4) an individual should be discriminated against or 
receive adverse treatment solely or partly because of his or her race 
or sex; (5) members of one race or sex cannot and should not attempt to 
treat others without respect to race or sex; (6) an individual's moral 
character is necessarily determined by his or her race or sex; (7) an 
individual, by virtue of his or her race or sex, bears responsibility 
for actions committed in the past by other members of the same race or 
sex; (8) any individual should feel discomfort, guilt, anguish, or any 
other form of psychological distress on account of his or her race or 
sex; or (9) meritocracy or traits such as a hard work ethic are racist 
or sexist, or were created by a particular race to oppress another 
race. The term `divisive concepts' also includes any other form of race 
or sex stereotyping or any other form of race or sex scapegoating.''
---------------------------------------------------------------------------
    Section 5 of the order requires the recipient of a Federal 
grant to certify that it will ``not use Federal funds to 
promote the concepts that (a) one race or sex is inherently 
superior to another race or sex; (b) an individual, by virtue 
of his or her race or sex, is inherently racist, sexist, or 
oppressive, whether consciously or unconsciously; (c) an 
individual should be discriminated against or receive adverse 
treatment solely or partly because of his or her race or sex; 
(d) members of one race or sex cannot and should not attempt to 
treat others without respect to race or sex; (e) an 
individual's moral character is necessarily determined by his 
or her race or sex; (f) an individual, by virtue of his or her 
race or sex, bears responsibility for actions committed in the 
past by other members of the same race or sex; (g) any 
individual should feel discomfort, guilt, anguish, or any other 
form of psychological distress on account of his or her race or 
sex; or (h) meritocracy or traits such as a hard work ethic are 
racist or sexist, or were created by a particular race to 
oppress another race.''
    Do you believe it is appropriate for the Ford School or any 
recipient of Federal funds to use Federal funds to promote any 
of the above concepts? Please fully explain your answer.

A.27. I support the tradition of free academic debate in higher 
education, which is a long-standing tradition in American 
discourse.

Q.28. Congressional Oversight--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.28. If confirmed, I look forward to working with you and all 
Members of Congress on information requests.

Q.29. 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.29. If confirmed, I look forward to working with you and all 
Members of Congress on information requests.

Q.30. Will you commit that, if confirmed, you will make 
yourself and any other employee of the Federal Reserve 
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.30. If confirmed, I look forward to working with you and all 
Members of Congress on information requests.

Q.31. 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.31. I drafted all answers myself. I shared my draft answers 
with Federal Reserve and interagency staff for review.

Q.32. Did any person on the board of, or employed by, a 
501(c)(4) organization, provide advice to you, oral or written, 
on your responses to these questions? If so, please list those 
individuals and organizations.

A.32. No.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
             SENATOR MENENDEZ FROM MICHAEL S. BARR

Q.1. If confirmed as Vice Chair for Supervision you would be a 
key figure in implementing overdue regulations, such as the CRA 
update and an incentive-based executive compensation rule.
    If confirmed, will you make it a top priority to work with 
the other financial regulators to finalize and implement the 
new CRA rule recently proposed by the Fed, OCC, and FDIC?
    Will you also commit to working with the other financial 
regulators to develop and swiftly implement a strong incentive-
based compensation rule, as required by the Dodd-Frank Act?

A.1. Yes, if confirmed I will make it a top priority to work 
with the other financial regulators to finalize and implement 
Community Reinvestment Act regulations. I will also work with 
the other financial regulators to develop incentive-based 
compensation rules as required by the Dodd-Frank Act.

Q.2. The Class B Directors at the Federal Reserve Banks are by 
statute supposed to represent the public, but they are 
predominantly White, male, and come from banks and large 
businesses. Part of the problem is that the selection process 
for these directors lacks transparency, and therefore the 
predominately White, male, and corporate-centered member banks 
that choose Fed Directors continue to select people that look 
and think like they do.
    Given that Class B directors are supposed to represent the 
public, would you support changing the process for selecting 
these directors to solicit greater public input, including but 
not limited to (a) timely public notification of general 
selection criteria and estimated timeline, (b) engagement with 
minority professional organizations, when it comes to public 
notification of vacancies and general selection criteria, (c) 
opportunity for the public to submit comments on the overall 
process?
    If confirmed will you commit to working with my office to 
bring greater transparency and public input the Class B 
selection process?

A.2. If confirmed, I will prioritize increasing diversity 
across the Federal Reserve system, including at the Federal 
Reserve Banks. Under the Federal Reserve Act, Class B directors 
of the Reserve Banks are nominated and elected by the member 
banks in each district. I would be pleased to work with your 
office on potential ways to bring greater transparency and 
public input into the Class B director selection process.

Q.3. The Federal Reserve just finalized a rule governing its 
payment service FedNow. I've heard a lot of concerning stories 
of fraud and scams running rampant on Zelle, an instantaneous 
payment service owned and operated by some of the Nation's 
largest banks, and I've seen consumer groups raising similar 
concerns about FedNow.
    How will you ensure users of FedNow are adequately 
protected from scams and fraud?

A.3. Consumer confidence and trust are essential for the 
effective functioning of financial markets and payments 
infrastructure. If confirmed, I would be committed to learning 
more about the work carried out thus far in developing FedNow 
and working with the Federal Reserve staff and my fellow 
governors to discuss approaches to FedNow that would protect 
consumers from scams and fraud.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
                      FROM MICHAEL S. BARR

Q.1. Risks to Economic Stability--It is critically important 
that both the Fed and the SEC continue to gather as much 
information as possible on the risks to our financial system. 
It's critical for the safety and soundness of the institutions 
the Fed and the SEC regulates, our economy, and protecting the 
American taxpayer. Cybersecurity and cyberattacks will be among 
many risks you, if confirmed, will need to track and evaluate 
in these positions,
    How will you work to address cyberthreats? How will you 
evaluate when new risks are arising and how to address them?

A.1. I agree that cyberrisk is a critically important risk for 
the financial sector and financial regulators to understand and 
address. If confirmed, I will make cyberrisk a top priority for 
Federal Reserve supervisors. Together with Chair Powell and 
other members of the Board, I will ensure that the Federal 
Reserve coordinates with private financial institutions, other 
financial regulators, Treasury, the FBI, the National Security 
Agency, the Department of Homeland Security, global 
coordinating bodies, and other cybersecurity experts to 
understand and mitigate these risks.

Q.2. Innovation--As new financial products and technologies are 
developed and existing products evolve the Federal Reserve and 
the Securities and Exchange Commission will have opportunities 
to shape the ecosystem around cryptocurrencies and other 
``FinTech'' products and companies, and as regulators have a 
responsibility to provide adequate protections for our 
financial system and consumers.
    What is your view of the current regulation and oversight 
in this space? What do you believe works well and what would 
you change?

A.2. When innovations arise in the financial sector, they offer 
potential benefits, but financial regulators and the market can 
be slow to understand emerging risks, including consumer and 
investor protection, financial stability, cybersecurity, and 
illicit finance. Our fragmented system of regulation means that 
financial innovation can arise in unregulated or lightly 
regulated spaces in the cracks between existing financial 
regulation. If confirmed, I would be highly focused on keeping 
abreast of financial innovations and determining appropriate 
ways in collaboration with interagency partners to mitigate 
financial risks while fostering innovation.

Q.3. Community Banks--What more should be done to make sure 
that community banks can serve the Main Street businesses, 
workers, and families in their communities?

A.3. I think a tiered approach to regulation makes a lot of 
sense. The strictest rules ought to be applied to the largest 
and riskiest institutions, and there should be a graduated 
approach below that. Especially, care ought to be taken with 
respect to community banks, which have difficulty meeting 
regulatory burdens. It is critically important that the Federal 
Reserve look at ways to reduce regulatory burden on community 
banks, while fostering safety and soundness in the community 
banking system. The wide diversity of sizes of banks in our 
financial system is a source of strength, helping to foster 
financial stability, competition, and service to Main Street 
businesses and households.

Q.4. Generally, what is your view and approach to the 
regulatory responsibilities of the Federal Reserve Board?

A.4. If confirmed, I would focus on maintaining the resilience 
of the financial system; ensuring appropriate regulation of 
financial innovation that balances risks and benefits of new 
technologies; and promoting fairness so that our financial 
system works better for all of us.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                      FROM MICHAEL S. BARR

Q.1. The Boston Fed has reported that Black, Hispanic, and 
Asian borrowers were significantly less likely to refinance to 
take advantage of the large decline in interest rates spurred 
by the Federal Reserve's large-scale mortgage-backed security 
purchase program during the Covid-19 pandemic, which 
potentially widened the racial home ownership and wealth gaps. 
If confirmed, does the Fed have a plan to mitigate these 
discrepancies? What tools does the Fed currently have to extend 
these benefits to these groups of homeowners?

A.1. The racial home ownership and wealth gaps are critically 
important issues facing our country. When the Federal Reserve 
does its monetary policy job right, it helps the economy grow 
for everyone. The Federal Reserve can also play a role by 
fostering financial inclusion, advancing financial education, 
enforcing fair lending and related laws, conducting outreach 
with civil rights and community organizations, finalizing 
Community Reinvestment Act rules, and helping ensure the 
financial system is operating safely and fairly for all 
households. If confirmed, I would be committed to advancing 
these policies.

Q.2. According to U.S. Bureau of Economic Analysis, post-tax, 
corporate profits have increased 25 percent year over year. To 
what extent do you believe corporate behavior has contributed 
to the upward price pressure faced by American consumers? How 
has this behavior affected low-income Americans?

A.2. Inflation is far too high, and that's hurting families and 
businesses across the country. Low-income Americans face rising 
prices that in many cases are rising much faster than wages, 
making it much harder to make ends meet. With demand for goods 
and services far outstripping supply, prices have risen 
significantly, which is especially hard on low-income 
Americans. If confirmed to the Federal Reserve Board, I am 
fully committed to bringing inflation down to the Federal 
Reserve's target of 2 percent.

Q.3. If confirmed, how will you promote and grow the Fed's 
racial equity policies? Will this impact how you approach the 
scheduled regulatory updates to the Community Reinvestment Act 
(CRA)?

A.3. For over 25 years, I have worked to make the financial 
system safer and fairer, and better focused on serving 
households and businesses, including through my academic 
research and work at the United States Treasury Department on 
the Community Reinvestment Act, community development financial 
institutions, fair lending, financial inclusion, and other 
policies. If confirmed, I look forward to working with my 
fellow governors as well as the OCC and the FDIC to finalize 
Community Reinvestment Act regulations, which include important 
provisions relating to fair lending, minority depository 
institutions, and the provision of financial services in low-
to-moderate income communities. The Community Reinvestment Act 
was put in place to combat a history of redlining in the United 
States and to encourage banks and thrifts to meet the needs of 
all communities, including low- and moderate-income 
communities, and I look forward if confirmed to updating these 
rules.
    In addition, the Federal Reserve has an important role to 
play in helping the economy work well for everyone, by 
conducting monetary policy in pursuit of its dual mandate, 
through its monetary and financial regulatory policies, 
enforcement of fair lending and related laws, as well as 
seeking diversity in Federal Reserve Board and Bank staff and 
leadership, fostering financial inclusion, and advancing 
financial education.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAPO
                      FROM MICHAEL S. BARR

Q.1. Before withdrawing her nomination, Governor Raskin 
received criticism for advocating that regulators act to 
counter climate-change risk and called for the Fed to pressure 
financial institutions to ``choke off'' credit to traditional 
energy companies. As I am sure you know, ``choking off'' credit 
to industries viewed as unfavorable and controlling the 
allocation of capital is not a new concept. We can recall 
Operation Choke Point from the Obama administration years.
    Do you share this same view, that the Fed should pressure 
financial institutions to ``choke off'' credit to counter 
climate change risk? How do your views differ from Raskin's?

A.1. No, it is not appropriate for the Federal Reserve to 
prohibit financial institutions from lending to particular 
firms or sectors, or to require financial institutions to lend 
to particular firms or sectors. Those business decisions should 
be made by the private sector.

Q.2. Through regulation and so-called risk assessments, 
Treasury and probably the Fed are looking for reasons to find 
risks to financial stability from climate change. Some of those 
risks are self-created, such as risks to companies that 
Government officials have strongly suggested should disappear, 
such as oil and gas or ``extractive'' industries.
    Banks have also, using shareholder activism, been pressured 
into choking off credit to legal industries that may be 
disfavored by activist groups, such as gun manufacturers.
    It appears that there is a high risk of having Federal 
regulators and certain activists' pressure banks and other 
providers of capital into withholding lending and capital to 
industries or activities that are disfavored by some according 
to their political views.
    That means, effectively, that financial regulators are 
working with politically active groups to engineer yet another 
round of Operation Chokepoint.
    Would you use Fed regulation to channel credit or choke off 
credit to companies and industries that engage in legal 
activities, but may do things that are disfavored by certain 
groups based on their individual political and social 
preferences?

A.2. No, it is not appropriate for the Federal Reserve to 
prohibit financial institutions from lending to particular 
firms or sectors, or to require financial institutions to lend 
to particular firms or sectors. Those business decisions should 
be made by the private sector.

Q.3. In March, the SEC issued for comment proposed rule changes 
that would require all publicly traded companies to include 
certain climate-related risk disclosures in their registration 
statements and periodic reports. There is speculation that the 
Fed may soon follow suit and encourage the use of ESG data to 
explore climate change exposure as a part of stress tests for 
banks.
    The actions taken by the SEC are a clear attempt to 
influence U.S. energy policy through regulation and is beyond 
the scope of the agency. If confirmed would you encourage 
similar action by the Fed?

A.3. The Federal Reserve has an important but narrow role with 
respect to climate risk. The primary responsibility in the 
Government for addressing climate change rests with elected 
officials. If confirmed, I would be focused on identifying 
potential risks to the financial system from all sources, 
including climate-related risks. If the Federal Reserve were to 
conduct climate scenario analyses, in my view the purpose 
should be to understand risks that climate might pose to the 
financial system and to work with financial institutions on 
managing those risks.

Q.4. You have been critical of the Economic Growth, Regulatory 
Relief and Consumer Protection Act, or S. 2155. The primary 
purpose of S. 2155 was to spur economic growth by right-sizing 
regulations for financial institutions, including community 
banks and credit unions, midsized banks, and regional banks so 
that they could redirect important financial resources to 
individuals, households and businesses. Since the enactment of 
Dodd-Frank over a decade ago, these institutions had been 
crushed under undue regulation.
    Vice Chair Quarles implemented S. 2155 in a pretty 
straightforward way, do you agree?
    Do you plan to make changes to any enhanced prudential 
regulations or standards that S. 2155 amended?
    What are your views on Total Loss Absorbing Capacity (TLAC) 
for regional banks? Michael Hsu (Acting OCC Comptroller) has 
stated (most recently at a UPenn Wharton speech) that the 
regulators should implement TLAC for regional banks. Is this 
something you agree with?

A.4. I support important elements of S. 2155, particularly with 
respect to easing regulatory burden on community banks. I also 
support the principle of tiered regulation so that the largest, 
most complex firms are subject to the strictest oversight, and 
gradually less restrictive rules apply as to smaller, simpler, 
less complex firms. At the time, I was concerned that the draft 
legislation went too far in relaxing oversight of larger firms; 
many of those concerns were addressed in a manager's amendment 
and in subsequent Federal Reserve rulemakings.
    If confirmed, I commit to faithfully implement the laws 
that Congress passes. I would be forward-looking toward 
emerging risks and work to support the continued resiliency of 
our financial system. With respect to your question regarding 
TLAC, I have not had the opportunity to carefully study the 
ideas contained in Acting Comptroller Hsu's speech.

Q.5. In the FDIC's release of its RFI regarding bank merger 
transactions, the FDIC appears intent on creating a role for 
the CFPB in approving bank M&A transactions that do not 
otherwise exist under the Bank Merger Act. In fact, when the 
CFPB was created, this was not the congressional intent or the 
purpose of the CFPB. Rather, this would broaden the CFPB's 
scope.
    Do you think that the CFPB should have a role in bank 
merger approval?

A.5. I think it would be appropriate for the Federal Reserve 
and other agencies to review the existing interagency bank 
merger guidelines, which have not been updated since 1995. I 
have not had the opportunity to consider the role of other 
agencies, if any, in the bank merger review process.

Q.6. In December, CFPB Director Chopra and FDIC Director 
Gruenberg issued a joint statement that the FDIC approved a 
Request for Information (RFI) on bank mergers. However, shortly 
thereafter, the FDIC clarified that no such document had been 
approved by the FDIC and that there was no valid vote by the 
FDIC board. This hostile action by Directors Chopra and 
Gruenberg undercut the integrity of the FDIC board and resulted 
in the resignation of Chairwoman McWilliams.
    What is your view of the actions taken by Directors Chopra 
and Gruenberg?

A.6. I do not have any comment on the FDIC. With respect to the 
Federal Reserve, if confirmed, I would be committed to 
preserving its long tradition of collegial, collaborative, and 
apolitical decision-making.

Q.7. During Dodd-Frank, you supported the creation of the CFPB, 
an agency with no accountability to Congress. What are your 
views on transparency and accountability to Congress?
    Will you confirm that you will be responsive and 
transparent in your responses to this Committee?

A.7. Yes. I strongly believe in transparency and accountability 
to Congress and if confirmed I will be responsive and 
transparent in my responses to this committee.

Q.8. What are your views on inflation and do you believe in 
modern monetary theory?

A.8. Inflation is far too high today, and I am committed to 
bringing inflation down to the Federal Reserve's target of 2 
percent. Generally, I believe traditional macroeconomic 
analysis provides a good basis for understanding macroeconomic 
issues, and that existing tools provide an adequate basis for 
conducting monetary policy. I am strongly committed to the 
independence of the Federal Reserve from fiscal policy.

Q.9. There are significant concerns about a Central Bank 
Digital Currency (CBDC), including privacy and Fed control of 
payments.
    It is hard to see how a CBDC housed at the Fed could 
overcome privacy concerns, and it would not be appropriate to 
have a Federal agency have access to transactions histories of 
private citizens.
    There is also a concern about a CBDC with the digital 
currency possibly having smart contracting features. A clear 
risk would be that users of a CBDC could be prevented, through 
smart contracts programmed into the currency, from making 
transactions that may be legal but not favored by political 
interests. That is, CBDC could be a high-tech way for the 
Government to engage in something like what we saw with 
Operation Chokepoint.
    Do you support a CBDC and, if so, how would you propose to 
address privacy issues and risks of things like Operation 
Chokepoint?

A.9. I think a CBDC requires significant additional study and 
research. The Federal Reserve's discussion paper on this is a 
good starting point, including its analysis of privacy and 
other policy issues. I do not think a CBDC should be used to 
prohibit or require financial institutions to conduct business 
with particular firms or sectors. I agree with Chair Powell 
that the Federal Reserve should only move forward with a CBDC 
with the buy-in of Congress and the Executive branch.

Q.10. Your July 31, 2020, paper with A. Harris, L. Menard, and 
W. Xu, titled ``Building the Payment System of the Future: How 
Central Banks Can Improve Payments to Enhance Financial 
Inclusion'' discusses central bank digital currency, and uses 
efforts at the People's Bank of China (PBOC) as one example. 
The paper argues that: ``Emerging technologies from virtual 
currencies to mobile payments and QR codes present 
opportunities for central banks to advance'' important work on 
reversing ``troubling inequality,'' reducing ``fragmentation,'' 
and eliminating ``predatory practices.'' While many of those 
terms have loose definitions, enhancement of financial 
inclusion via central bank accounts ought not to involve 
unacceptable sacrifices of privacy and allowances for 
Government monitoring and control of private citizens' 
financial accounts and transactions. The paper appears to 
highlight PBOC activities in digital financial transactions, in 
the interest of identifying potential models to enhance 
financial inclusion via central bank digital currencies, but 
does not appear to have much to say about privacy concerns with 
PBOC activities.
    Do you believe that China and the PBOC provide a useful 
model for the Federal Reserve to use to pursue individual 
Federal Reserve officials' beliefs about financial inclusion?

A.10. No, the Chinese model is not a useful starting point for 
the United States. I share your privacy concerns about the 
Chinese model, among other concerns.

Q.11. A 2012 paper with S. Mullainathan and E. Shafir, titled 
``Behaviorally Informed Regulation'', discusses a proposal from 
you and your coauthors where financial ``firms could deter 
consumers from paying late or going over their credit card 
limits with whatever fees they deemed appropriate, but the bulk 
of such fees would be placed in a public trust to be used for 
financial education and assistance to troubled borrowers.'' The 
proposal, in effect, would have the Government mandate maximum 
percentages of late or over-limit fees that financial firms 
could ``retain,'' with the remainder taken by Government 
regulators for whatever they deem to be appropriate social 
goals.
    Do you continue to support a proposal to allow financial 
firms to ``retain'' a Government-determined fraction of costs 
they incur in servicing accounts in order to allow penalties to 
have ``behavioral'' effects, with the remaining fraction 
socialized and used for Government- or regulator-preferred 
social programs?

A.11. My paper was a thought experiment with illustrative 
examples designed to highlight how various issues in the 
consumer marketplace could be addressed. The particular thought 
experiment in the paper was designed to highlight the 
difference between the behavioral effects of contingent fees 
and the revenue-generating effects. I would not seek to advance 
this thought experiment as a policy proposal if confirmed to 
the Federal Reserve.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                      FROM MICHAEL S. BARR

Q.1. As you are likely aware, banks that calculate capital 
using the standardized approach may not recognize the capital 
benefits of collateral securing an extension of credit if a 
bank's right to foreclose on the collateral may be stayed or 
avoided under applicable insolvency law. The U.S. Bankruptcy 
Code broadly applies an automatic stay with few exceptions. 
This means that U.S. banks using the standardized approach 
cannot recognize the capital benefits of collateral securing 
many loans, even if the banks have a first priority, perfected 
security interest in high quality collateral that would, 
therefore, be at the top of the creditor stack.
    This treatment of collateralized transactions deviates from 
the approach in place in other jurisdictions (e.g., U.K., EU) 
and adopted by the Basel Committee on Banking Supervision. As 
such, U.S. banks subject to the standardized approach may be at 
a competitive disadvantage.
    If confirmed, are you willing to review the current 
framework and, as may be necessary, propose technical 
adjustments to ensure that high quality collateral securing 
extensions of credit receive the same capital treatment across 
regulated entities to appropriately account for the underlying 
risk?

A.1. If confirmed, I would be attentive to the issues that you 
raise, and I would take a holistic approach to bank capital and 
liquidity standards to ensure that the framework provides a 
consistent, transparent, competitive, and strong approach to 
resiliency in the financial system.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                    FROM JAIME E. LIZARRAGA

Q.1. Where have you excelled in past positions in attracting, 
hiring, and promoting people of color in positions in your 
organization? Where might there be room for improvement?

A.1. In my 31-year career in public service, diversity and 
inclusion have served as fundamental values guiding my work. I 
am proud to have been involved in, among other efforts, the 
historic establishment of a House Office of Diversity and 
Inclusion that now serves the entire House of Representatives, 
House diversity and inclusion initiatives that preceded it, and 
changes to House Democratic Caucus rules to promote House staff 
diversity. I worked closely with other House leadership 
offices, the Congressional Hispanic Caucus, other House 
Caucuses, House staff associations, and outside stakeholders on 
all these initiatives
    In my role as Director of Member Services in the Speaker's 
office and in the Office of the House Democratic Leader (2008-
2018), I led a team that served as a resource to new Member 
offices in their recruitment of staff. Our team maintained an 
internal resume bank and advised incoming Member offices 
regarding best practices on diversity and inclusion.
    As a House Financial Services Committee staff member, I was 
involved in initiatives to promote diversity and inclusion in 
the financial services industry and at financial regulatory 
agencies. In 2006, I oversaw efforts to recruit diverse staff 
for senior Committee positions.
    I currently serve as a member of the Congressional Hispanic 
Staff Association advisory board, and routinely mentor 
congressional staff on career advancement and best practices 
for workplace success.
    In December 2020, I received an award from the 
Congressional Hispanic Caucus Institute Alumni Association for 
my leadership and commitment to advancing diversity and 
inclusion on Capitol Hill.
    In my experience, awareness of the value of diversity and 
inclusion on Capitol Hill has increased markedly in recent 
years, but more work remains to be done. If confirmed, I intend 
to work closely with the Commission's Office of Minority and 
Women Inclusion to ensure the SEC consistently upholds the 
values of diversity and inclusion in its hiring practices.

Q.2. What specific measures will you use to evaluate the 
success of the Securities and Exchange Commission in 
understanding and addressing the needs of Black, Indigenous, 
and people of color (BIPOC)? And, will you work with the Chair 
and other Commissioners to keep Congress apprised, as 
appropriate, on the progress being made on these measures?

A.2. If confirmed, I plan to review the agency's most recent 
efforts to meet the needs of Black, Indigenous, and people of 
color. I plan to engage with the Office of Minority and Women 
Inclusion to measure progress in fulfilling the Dodd-Frank 
Act's mandates of fostering diversity and inclusion in the 
SEC's workforce and at SEC-regulated entities, and in promoting 
expanded opportunities for BIPOC businesses.
    I also plan to review progress in achieving the goals of 
the Diversity and Inclusion Strategic Plan and the SEC's 
benchmarks for measuring progress on these goals.
    A rule on corporate board diversity is on the SEC's 
Regulatory Flexibility agenda, and I want to be careful not to 
prejudge any future rulemaking. However, if confirmed, I look 
forward to working with my fellow Commissioners, Commission 
staff, and Congress to ensure that the principles of diversity, 
inclusion and equity are being fully integrated into the 
agency's mission.

Q.3. What is your plan for creating an inclusive working 
environment for employees within your office?

A.3. If confirmed, and consistent with my long-standing 
commitment to diversity and inclusion, I intend to hire and 
retain a diverse workforce and to foster an inclusive work 
environment in my own office.

Q.4. Please describe your general views on enforcement and 
detail what the SEC can do to better protect savers and 
investors from risks in volatile markets.

A.4. Robust SEC enforcement reduces risk in our capital 
markets, protects investors, and lowers the cost of capital. It 
is crucial to prioritize enforcement actions that shape market 
behavior and, critically, deter fraud and other future bad 
behavior.
    Enforcement actions should be brought to hold individuals 
accountable. Consistent with the SEC's authorities, the agency 
should seek tough penalties, like admissions and bars, for 
those who engage in wrongdoing. Lastly, it is important to me 
that the agency prioritize tackling affinity fraud--wrongdoing 
against seniors, servicemembers, retail investors, small 
businesses, and other vulnerable populations. If confirmed, I 
commit to following the law and the facts and to working 
closely with the agency's capable professional enforcement 
staff to ensure the robustness of the SEC's enforcement 
program.

Q.5. The SEC has a role to play in ensuring that its reporting 
requirements are broadly aligned with workable, effective and 
broadly supportive standards, when such existing standards 
exist. Not only does this help provide consistency and 
comparability for investors and other stakeholders, but 
especially for companies that are publicly listed in multiple 
jurisdictions, this can also alleviate additional costs of 
complying with different requirements. In examples of SEC rules 
where the U.S. standard is considered to be far weaker than 
that of the prevailing international standard, would you 
consider steps to align the U.S. reporting requirements with 
the international standard?

A.5. It is essential for the SEC to engage in robust dialogue 
and coordination with international standards-setting bodies, 
such as the Financial Stability Board and the International 
Organization of Securities Commissioners. Harmonization and 
convergence of standards play important roles in fostering 
investor access to comparable and consistent data and leveling 
the playing field for all market participants. Where 
international standards differ from current SEC rules, I 
believe it merits assessing whether and how aligning our rules 
can advance the SEC's mission. Moreover, lessons from other 
jurisdictions' experiences can enhance our own expertise in 
crafting our own rules. In assessing these issues, I will be 
guided by the fact that U.S. capital markets are unique and 
vibrant, and I will do all I can to ensure they remain the 
deepest and most liquid in the world. If confirmed, I look 
forward to engaging actively on these issues and in working 
with Congress and the SEC's Office of International Affairs.

Q.6. Over a decade ago, the U.S. led the world in the fight 
against corruption in the extractives industries. Implementing 
the bipartisan Cardin-Lugar amendment to the Dodd-Frank Act, a 
landmark transparency provision, the SEC developed a 
significant new disclosure standard for payments made to 
Governments by mining, oil, and gas companies that catalyzed 
global change in combating corruption. As a result, over thirty 
countries adopted nearly identical public reporting 
requirements for project-level payments and the international 
Extractive Industries Transparency Initiative, now being 
implemented by 56 countries, uses that same reporting standard. 
This has resulted in unprecedented transparency, with many 
companies publicly disclosing project-level payments to 
Governments each year. But under the Trump administration much 
of this progress was reversed. Despite many years of reporting 
by companies outside the U.S., U.S.-listed companies remain 
among the least transparent as they still are not reporting 
project-level payments. Indeed, after years of delay, the SEC 
put out a new, substantially weaker version of the rule in 2020 
that fell far short of the standard already being implemented 
around the world. The rule goes against the weight of evidence 
in the record in its failure to promote international 
transparency, in its failure to ensure consistent reporting 
obligations for companies, its inability to effectively fight 
corruption, and its failure to protect investors. In its 
current form, it does not satisfy the underlying statute's 
anticorruption and accountability purposes. Will you recommit 
the SEC to fulfilling the leadership role in combating 
corruption as Congress intended when it adopted new statutory 
transparency standards, and ensure consistency and 
comparability in reporting standards to better protect 
investors?

A.6. I support the Cardin-Lugar amendment's overall goal of 
promoting market transparency through the disclosure of 
decision-useful information to investors on payments to 
Governments by resource extraction issuers. A rule on 
disclosure of payments by resource extraction issuers is on the 
SEC's Regulatory Flexibility Agenda, and I want to be careful 
not to prejudge any matter that might come before me. That 
said, I believe this congressional mandate should be robustly 
implemented. I look forward to reviewing the staff's 
recommendations on the issue, and I will be guided by the 
general principle that any rule remain faithful to the mandate 
in the Dodd-Frank Act and congressional intent.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
            SENATOR MENENDEZ FROM JAIME E. LIZARRAGA

Q.1. Corporate America has a diversity problem-boards and 
executive offices across the U.S. do not look like the people 
of this country. The SEC's 2009 diversity disclosure rule fails 
to address this problem or even define ``diversity.'' 
Leadership diversity has been shown by McKinsey and others to 
lead to greater profitability for shareholders.
    Do you agree that the demographic breakdown of a company's 
executive board, as well as what policies the company has in 
place for promoting diversity, is material information that 
should be disclosed to shareholders?

A.1. I agree that women and people of color remain 
underrepresented in the management of public companies. A rule 
on corporate board diversity is on the SEC's Regulatory 
Flexibility agenda, and I want to be careful not to prejudge 
any future rulemaking. However, given strong investor interest 
as demonstrated by the increasing number of shareholder 
proposals on corporate board diversity, I believe this is an 
area in which the SEC should consider acting. If confirmed, I 
look forward to engaging with my fellow Commissioners and 
Commission staff on this matter generally and to reviewing 
stakeholder comments in any future rulemaking.

Q.2. Political spending is another area where disclosure 
standards need to be improved. More than 1.2 million securities 
experts, institutional and individual investors, and members of 
the public have pressed the SEC for a political spending 
disclosure rule.
    Do you agree that political contributions made by publicly 
traded companies are material information that should be 
disclosed to shareholders of those companies?

A.2. The lack of transparency in corporate political disclosure 
precludes investors from knowing whether corporate management 
is spending shareholder money in a way that diverges from 
shareholder interests. Investors see disclosure of this 
information as material for their investment decisions, as 
evidenced by the fact that proposals on the subject are 
regularly among the top at annual meetings. That said, as a 
long-time congressional staffer, I deeply respect the role of 
Congress and congressional directives. If Congress were to lift 
the appropriations rider barring the SEC from engaging in any 
rulemaking on corporate political disclosures, I believe it 
would be appropriate for the SEC to consider acting to provide 
investors the information they have been seeking on this 
matter.

Q.3. On July 7, 2021, the SEC's Asset Management Advisory 
Committee unanimously issued four recommendations that would 
help promote diversity among asset managers and thereby lead to 
greater returns for investors. \1\
---------------------------------------------------------------------------
     \1\ https://www.sec.gov/files/amac-recommendations-di-
subcommittee-070721.pdf
---------------------------------------------------------------------------
    If confirmed, would you support holding a vote to consider 
these recommendations?

A.3. Yes. I was particularly struck by the AMAC's finding that 
less than 1 percent of the $70 trillion of global assets under 
management is managed by women- and minority-owned asset 
management firms. This glaring underrepresentation of women and 
people of color in ownership interests and in boards and senior 
management of asset management firms is very concerning. This 
is an issue that I first examined nearly 20 years ago as a 
House Financial Services Committee staffer and it is 
disheartening to see relatively little progress since then.
    If confirmed, and without prejudging a matter that may come 
before me, I look forward to working with Commission staff to 
carefully evaluate the AMAC's recommendations, which I believe 
are critically important to advancing diversity and inclusion 
in the asset management industry. I also look forward to 
working with my fellow commissioners and the Chair, who 
controls the regulatory agenda of the agency, to consider a 
vote on the staff's recommendations.

Q.4. Section 13(d) of the Securities Exchange Act of 1934 
requires investors who become the beneficial owners of more 
than 5 percent of an issuer's equity securities to report 
certain identifying information to the SEC. While I appreciate 
that the Commission issued a proposed rule to modernize these 
requirements in February, enforcement of these rules needs to 
be a priority.
    How would you propose to strengthen SEC enforcement in this 
area to make sure that investors who acquire significant stakes 
in a company are reporting their ownership accurately and in a 
timely fashion?

A.4. The SEC has proposed a rule that, among other things, 
would accelerate the filing deadlines for beneficial ownership 
reports under Section 13(d) which is designed to notify the 
public and target companies when an investor rapidly acquires a 
substantial stake in the company. Without prejudging this 
proposed rule, any time the SEC determines that a violation of 
Section 13(d) has occurred, I believe the violator should be 
held to account under applicable law--including, where 
applicable, potential criminal referrals under Section 32 of 
the Exchange Act. If confirmed, I would work with my fellow 
Commissioners and Commission staff to review the data to 
identify violations of Section 13(d) and take proper 
enforcement steps.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
                    FROM JAIME E. LIZARRAGA

Q.1. Risks to Economic Stability--It is critically important 
that both the Fed and the SEC continue to gather as much 
information as possible on the risks to our financial system. 
It's critical for the safety and soundness of the institutions 
the Fed and the SEC regulates, our economy, and protecting the 
American taxpayer. Cybersecurity and cyberattacks will be among 
many risks you, if confirmed, will need to track and evaluate 
in these positions,
    How will you work to address cyberthreats? How will you 
evaluate when new risks are arising and how to address them?

A.1. If confirmed, I look forward to working with my fellow 
Commissioners, Commission staff, and Congress in advancing 
policies that protect our capital markets and the SEC from 
cyberattacks. I believe it is essential to exercise every 
authority available to the Commission to bolster cybersecurity 
at SEC-regulated entities, and at the SEC itself--a persistent 
target of cyberattacks. I also commit to working with Congress 
to fill any gaps in the SEC's current authorities in order to 
empower the agency in the effective fight against cyberthreats.
    In its 2021 annual report, the Financial Stability 
Oversight Council (FSOC) highlighted cybersecurity as a 
priority for addressing U.S. financial system risks and 
vulnerabilities. While I will not prejudge the two 
cybersecurity disclosure rules pending before the SEC, I 
strongly agree with the FSOC's conclusions and recommendations.

Q.2. Innovation--As new financial products and technologies are 
developed and existing products evolve the Federal Reserve and 
the Securities and Exchange Commission will have opportunities 
to shape the ecosystem around cryptocurrencies and other 
``FinTech'' products and companies, and as regulators have a 
responsibility to provide adequate protections for our 
financial system and consumers.
    What is your view of the current regulation and oversight 
in this space? What do you believe works well and what would 
you change?

A.2. As a matter of principle, I believe that as digital asset 
markets mature and evolve, it is essential for financial 
regulators to ensure a regulatory environment that encourages 
innovation while also ensuring investors have full access to 
the information they need to make informed investment 
decisions. I also believe that it is important to aggressively 
root out fraud and misconduct in these markets. To the extent 
that certain digital assets are securities, I believe the SEC's 
authorities are clear.
    If confirmed, I would work with my fellow Commissioners and 
Commission staff in evaluating the empirical evidence to 
identify gaps in current oversight and regulation efforts. I 
deeply respect the role of Congress and if congressional action 
is necessary to better protect investors or to better promote 
innovation, I would be happy to serve as a resource if and when 
legislation is considered.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                    FROM JAIME E. LIZARRAGA

Q.1. How do you respond to concerns that SEC's proposed changes 
to Rule 10b5-1 would expose markets to unintended risks by 
limiting the flexibility for businesses to return capital to 
shareholders efficiently through repurchases?

A.1. Adopted nearly 22 years ago, SEC Rule 10b5-1 provides a 
safe harbor from liability to corporate insiders with knowledge 
of material nonpublic information when they conduct trades 
under certain circumstances. I also understand that companies 
sometimes rely on 10b5-1 plans to effectuate stock buybacks. 
Without prejudging the SEC's recent proposal to modernize this 
rule, I believe effective oversight of our capital markets 
warrants revisiting rules that may be outdated to assess 
whether they merit appropriate updates that align them with 
current market realities.
    As a matter of principle, to the extent the current rule 
provides an advantage to corporate insiders to trade on 
material, nonpublic information before shareholders have access 
to that same information, I believe addressing that disparity 
would promote market transparency and protect investors. While 
stock buybacks are a common method for companies to return 
capital to shareholders, I believe it is important that 
buybacks be carried out transparently. If confirmed, I would 
evaluate the SEC's proposed changes to Rule 10b5-1 through the 
prism of investor protection, market transparency, and ensuring 
a level playing field for all market participants.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                    FROM JAIME E. LIZARRAGA

Q.1. The retail investor has never been better served by the 
U.S. capital markets that it is today, and that's in large part 
due to the robust role of active management. Investors who are 
incentivized to uncover fundamental value of public companies 
make our markets safer and stronger. Several recent SEC 
proposals threaten the role of active management in today's 
markets.
    Can you assure the Committee that if confirmed, you will 
prioritize rulemaking which promotes--not obstructs--the 
ability for investors to conduct market research and take 
positions based on such research?

A.1. The ability of investors, including active managers, to 
conduct independent research about public companies is critical 
to market efficiency and integrity. Without prejudging any 
proposed rule, I believe the SEC, consistent with congressional 
mandates, should carefully consider the impact that rulemakings 
have on investors' ability to conduct such market research and 
encourage proper price discovery.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR HAGERTY
                    FROM JAIME E. LIZARRAGA

Q.1. The U.S. capital markets system has two important pillars: 
the public markets and the private markets. Congress has long-
recognized that both play a critical role in capital formation 
and job creation.
    There are many types of businesses and many types of 
investors. Private funds and mutual funds are both integral to 
our markets, but they are not the same. The recently proposed 
Private Fund Adviser rulemaking seeks to treat sophisticated 
institutional investors as though they are retail investors. A 
distinction between the groups exists for a reason, as does the 
distinction between private and public markets. If confirmed, 
will you commit to upholding the strength of this diversity and 
not treat all markets and all investors with a one-size-fits-
all approach?

A.1. The Federal framework of securities laws that has been in 
place for nearly a century has resulted in the deepest, most 
efficient, fairest, and most innovative public markets the 
world has ever seen. I agree that the distinction between 
public and private markets exists for good reasons and that 
rules appropriate for a large public company, for example, are 
not necessarily appropriate for a small, private one.
    Both public and private markets have an important role to 
play in capital formation, and a careful balance between the 
two is essential to ensuring that companies can raise capital 
and that investors can also have access to the information they 
need to make informed investment decisions.
    For a variety of reasons, we have seen the emergence of 
deeper private markets in recent years, and companies are 
staying private much longer than they once did. I believe 
empirical evidence regarding the growth of private markets and 
the effect of SEC rules on these markets, especially since a 
decade has elapsed since the enactment of the JOBS Act, should 
inform the work of the Commission.
    Additionally, I also support the SEC considering how the 
cost of going public can be lowered without sacrificing key 
investor protections.
    If confirmed, I would work with my fellow Commissioners and 
Commission staff in assessing the appropriate balance between 
private and public markets and how key provisions in the JOBS 
Act--such as the on-ramp, revenue tests, and others--are 
meeting the needs of issuers and investors alike.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR MORAN
                    FROM JAIME E. LIZARRAGA

Q.1. Earlier this year, SEC Chair Gensler proposed a rule which 
would entirely upend the ability of many investors to access 
diversified investments in their portfolios. It seeks to 
mandate the terms of a private business arrangement between 
institutional investors and asset managers, and to prohibit 
practices relied upon by pensions, endowments, and foundations. 
This rule--the private fund adviser rule--is described by Chair 
Gensler as a transparency measure and a cost-saving measure. It 
is anything but. Not only will it harm institutional investors, 
it will impose insurmountable barriers to entry for emerging 
managers, many of whom are woman- and minority-owned.
    Can you assure this Committee that you will carefully 
evaluate any proposal's potential cost, not only in terms of 
compliance cost, but in terms of opportunity cost, 
diversification, and competition?

A.1. Without prejudging this proposed rule, I believe robust 
economic analysis is an essential component of the agency's 
rulemaking process. The law requires the SEC to consider 
whether its rules will promote efficiency, competition, and 
capital formation, and Federal courts have held the SEC has an 
obligation to conduct economic analysis in its rulemakings. It 
is important to keep in mind that in conducting this economic 
analysis, some qualitative aspects of a particular issue 
addressed in a rulemaking may not lend themselves to readily 
quantifiable metrics. That said, if confirmed, I would engage 
with the Division of Economic and Risk Analysis in informing my 
thinking on the economic analysis underpinning SEC rules, 
including the private fund adviser rule.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                    FROM MARK TOSHIRO UYEDA

Q.1. Where have you excelled in past positions in attracting, 
hiring, and promoting people of color in positions in your 
organization? Where might there be room for improvement?

A.1. During my time at the SEC, I chaired the SEC's employee 
affinity group for Asian Pacific Americans for several years. 
In that role, I helped organize internal panels for SEC 
employees who were persons of color on how to advance their 
careers. I have represented the SEC at conferences and other 
events to recruit persons of color, both professionals and 
students, for careers in public service, particularly at the 
SEC.
    Through my longstanding involvement with Asian Pacific 
American bar associations, including as president of the Asian 
Pacific American Bar Association of the Greater Washington, DC, 
area, I assisted numerous persons of color who were interested 
in pursuing careers at the SEC, including explaining the type 
of work done by SEC staff and helping them prepare for 
interviews.
    If confirmed, I would work with the SEC's Office of 
Minority and Women Inclusion, the Office of Human Resources and 
the SEC's employee affinity groups to further efforts to 
promote opportunities to attract, hire, and promote persons of 
color. In my view, the SEC could further improve efforts to 
prepare persons of color for promotional opportunities within 
the agency. Personal outreach and relationship-building are 
paramount for recruiting, and retaining, persons of color who 
may be interested in an SEC career. Should I be confirmed, I 
hope to set an example for other SEC employees by continuing to 
personally meet with persons of color who may be interested in 
SEC career opportunities.

Q.2. What specific measures will you use to evaluate the 
success of the Securities and Exchange Commission in 
understanding and addressing the needs of Black, Indigenous, 
and people of color (BIPOC)? And, will you work with the Chair 
and other Commissioners to keep Congress apprised, as 
appropriate, on the progress being made on these measures?

A.2. If confirmed, I would start with the annual report to 
Congress from the SEC's Office of Minority and Women Inclusion. 
I would also look to data from the triennial Survey of Consumer 
Finances conducted by the Board of Governors of the Federal 
Reserve System with respect to the accumulation of wealth, 
savings, and investments by BIPOC households.
    If confirmed, I will work with the Chair and other 
commissioners to keep Congress apprised, as appropriate, on the 
progress being made on these measures.

Q.3. What is your plan for creating an inclusive working 
environment for employees within your office?

A.3. Each SEC Commissioner has a small staff of four persons 
plus a confidential assistant. If confirmed, I intend to make 
staffing decisions on a case-by-case basis and, in doing so, I 
would seek out opportunities to hire a diverse staff. To 
maximize potential applicants, I intend to have openings posted 
both internally within the SEC and externally on the SEC 
website. I would further request that the SEC's social media 
feeds (i.e., Twitter, Facebook, and LinkedIn) publicize the 
openings.
    During my SEC career, I spent significant periods of time 
working for two different commissioners. Both commissioners 
ensured that professional opportunities and projects were made 
available on an equitable basis to their staff and consistent 
with their subject matter expertise. If confirmed, I intend to 
create a similar environment for my staff, with opportunities 
for professional growth and development.

Q.4. In recent years, there have been severe disruptions in the 
market for U.S. Treasury securities and related instruments. 
Experts have expressed concerns about regulatory fragmentation 
and recommended specific regulatory reforms, including 
mandatory central clearing for Treasury securities and 
repurchase transactions and additional data collection. Do you 
believe that the current regulatory framework for oversight of 
the Treasury market is adequate? If not, what changes do you 
believe should be made?

A.4. Various components of the Treasury cash and futures 
markets are overseen by the SEC, the Financial Industry 
Regulatory Authority (FINRA), the Department of the Treasury, 
the Federal Reserve System, other banking regulators, and the 
Commodity Futures Trading Commission. Recent Treasury market 
events suggest that there may be a number of areas of 
structural vulnerability. One potential contributing factor is 
the rapid growth of the market size relative to dealers' 
intermediation and market-making capacity.
    My view is that a comprehensive review of the Treasury cash 
and futures markets should be undertaken, including 
identification of potential changes to the regulatory 
framework. If confirmed, I would encourage the SEC staff and 
other commissioners to evaluate ideas to strengthen the 
resiliency of the Treasury markets, which could include 
increasing market-making capacity, examining the role of 
central clearing, improving market transparency and monitoring, 
and studying whether additional safeguards and existing 
exemptions for Treasury securities are warranted.

Q.5. Do you believe bitcoin is correctly identified as a 
commodity? Why, or why not? If yes, do you think it's likely 
other cryptoassets can achieve that status?

A.5. The conventional view is that bitcoin is a commodity and 
not a security because it fails the Supreme Court's Howey 
investment contract test. If that view is correct and no other 
provision of the definition of ``security'' in the Federal 
securities laws is applicable, then it is likely that other 
cryptoassets can achieve a similar status if they are factually 
indistinguishable from bitcoin.
    In a July 2018 speech, a senior SEC staff member indicated 
that bitcoin was not a security but he was expressing his 
personal view and not speaking on behalf of the SEC. The SEC 
itself has not taken a position on bitcoin. SEC Chairman Gary 
Gensler declined to comment on bitcoin's status in testimony 
before the House Financial Services Committee in October 2021. 
Because the SEC may subsequently vote on bitcoin's status as a 
security, I will refrain from prejudging the merits of that 
issue.

Q.6. Please describe in detail what the SEC can do to bring 
greater investor protection to the cryptoasset market.

A.6. The SEC could provide additional clarity as to which 
cryptoassets are securities and which are not. If a cryptoasset 
is a security, then it falls within the SEC's jurisdiction and 
is subject to the investor protection provisions of the Federal 
securities laws. Some of these investor protections include: 
(a) any offering of a security must be registered with the SEC 
or satisfy the conditions of an applicable exemption from 
registration; (b) brokers who transact in a security are 
regulated by FINRA and subject to SEC rules; and (c) any 
trading venue that trades a security must either register with 
the SEC or qualify for an exemption from registration (like 
Regulation ATS).
    It can be difficult to make a definitive determination as 
to whether a particular cryptoasset is a security under the 
Supreme Court's Howey investment contract test. If the SEC were 
to make a ``security'' determination about a cryptoasset 
earlier in the process, then investors might benefit from 
additional protections under applicable Federal securities 
laws.

Q.7. Stablecoins in recent weeks have suffered volatility, 
including the loss of the dollar peg by an algorithmic 
stablecoin. The President's Working Group (PWG) report 
recommended that all stablecoin issuers should be insured 
depository institutions. Do you think stablecoin issuers should 
be required to be insured depository institutions? Please 
explain.

A.7. The November 2021 PWG report recommended that Congress 
pass legislation to establish a Federal regulatory framework 
for stablecoins. I agree with the report's acknowledgment that 
responsibility for clarifying whether and to what extent 
Federal agencies have jurisdiction over stablecoins, rests with 
Congress.
    I am skeptical about requiring all stablecoin issuers to be 
insured depository institutions (IDI). First, stablecoin 
issuers have different business models than banks. To the 
extent that a stablecoin issuer does not engage in bank-like 
activities like taking deposits and making loans, it would not 
seem appropriate to regulate it as a bank. Second, such a 
requirement could stifle innovation. Third, among stablecoin 
issuers, there are a range of different business models, 
including some for which a conventional bank charter may be 
appropriate but for others, less so. Fourth, some stablecoins 
may have attributes much more similar to securities than 
banking products, which may make them not be appropriate for 
issuance by an IDI.

Q.8. According to reports, since the start of the year, the 
cryptomarket has suffered close to $1 trillion in losses. And 
in recent weeks, we have witnessed the collapse of stablecoin 
TerraUSD. Do you believe significant losses in the cryptomarket 
present risks to traditional markets and financial stability? 
If not, how sure are you?

A.8. Whether significant losses in the cryptomarket present 
financial stability risks depends on the extent of 
interconnectedness to the traditional markets. TerraUSD is a 
specific cryptocurrency that had little to no 
interconnectedness and exposure to traditional financial 
markets. TerraUSD can be described as an ``algorithmic'' 
stablecoin. Speaking generally about ``algorithmic'' 
stablecoins, my understanding is that they are tied to other 
cryptoassets without anything specific to support their value. 
In other words, an ``algorithmic'' stablecoin's value is solely 
tied to holder confidence. If holders of stablecoins not 
connected to traditional markets have significantly high risk 
tolerances to bear losses, then risks to financial stability 
will be relatively lower. On the other hand, to the extent that 
cryptoassets are significantly intertwined with the traditional 
financial markets, risks to financial stability may be 
relatively higher.

Q.9. In recent years, studies have shown that board diversity 
correlates with enhanced performance. In February 2021, Senator 
Toomey wrote the SEC to request that it reject the NASDAQ 
listing proposal that required NASDAQ listed companies to 
disclose or comply with racial and gender diversity standards 
for boards of directors. Ranking Member Toomey previously 
commented on the proposal, stating, ``A quasi-regulatory body 
like NASDAQ should not be creating and enforcing social policy 
in America.'' \1\ Despite Ranking Member Toomey's opposition, 
many groups wrote the SEC in support of the rule. For example, 
the National Asian Pacific American Bar Association, which 
represents approximately 50,000 legal professionals, wrote, 
``[w]e are encouraged that the proposal may lead to more 
opportunities for numerous talented women, individuals who 
self-identify as Black, African American, Hispanic, Latino, 
Asian, Pacific Islander, Native American, Native Hawaiian, or 
Alaska Native, or who self-identify as gay, lesbian, bisexual, 
or transgender to join corporate boards.'' \2\ Do you believe a 
disclose or comply standard is social policy? If yes, please 
explain.
---------------------------------------------------------------------------
     \1\ https://www.banking.senate.gov/newsroom/minority/toomey-gop-
banking-members-urge-sec-to-block-nasdaqs-proposed-diversity-quota
     \2\ https://www.sec.gov/comments/sr-nasdaq-2020-081/
srnasdaq2020081-8204244-227431.pdf

A.9. While I have not reached an informed judgment on whether a 
disclose or comply standard is social policy, some may view it 
as such depending on the facts and circumstances. For example, 
in 2015, the U.S. Court of Appeals for the District of Columbia 
Circuit struck down an SEC disclosure regime for conflict 
minerals, required by the Dodd-Frank Act, on First Amendment 
grounds, and its opinion discussed how the disclosure was 
intended to achieve social benefits rather than economic 
benefits to investors. In my view, the guiding principle for 
disclosure is materiality. Materiality often depends on the 
particular facts and circumstances. It is important for public 
companies to provide material disclosures that investors, 
particularly retail investors, need to make informed investment 
decisions. If confirmed, I intend to consult with SEC staff, 
review public comments, and discuss with the other 
commissioners before reaching any decision on proposed 
disclosure requirements while faithfully abiding by all 
---------------------------------------------------------------------------
constitutional and statutory obligations imposed on the SEC.

Q.10. The recent SEC climate proposal asks public companies to 
describe and quantify risks, without prohibiting any business 
activities. In fact, the proposed rule does not dictate to 
investors which risks to take and which risks not to take. 
Investors have increasingly wanted to know the climate risk of 
companies whose stocks they own or might want to buy. Why 
shouldn't investors benefit from more complete and more 
comparable types of disclosures?

A.10. Because the SEC climate proposal is pending, I will 
refrain from addressing the specifics of that proposal to avoid 
any issue of prejudgment. As a general matter, investors can 
benefit from more complete and more comparable types of 
disclosures. One important factor in considering a disclosure 
requirement is materiality. Materiality often depends on the 
particular facts and circumstances. As described by Justice 
Thurgood Marshall in TSC Industries v. Northway, an omitted 
fact is material if ``there is a substantial likelihood that a 
reasonable shareholder would consider it important in deciding 
how to vote.'' Justice Marshall also warned that simply burying 
``shareholders in an avalanche of trivial information'' is 
``hardly conducive to informed decisionmaking.''
    The potential benefits provided to investors from 
disclosure is an important factor in the economic analysis 
conducted as part of a rulemaking. However, the analysis also 
requires consideration of costs. Further, the SEC is required 
by law to consider the effects on competition, efficiency, and 
capital formation. Thoughtful consideration of all factors are 
needed to provide a rational basis under the Administrative 
Procedure Act to support any final decision.

Q.11. Do you have concerns about the ``gamification'' of stock 
trading?

A.11. Before offering an answer, I would want to review the 
materials gathered by the SEC and the public comments submitted 
to the SEC in response to its August 27, 2021, information 
request on the use of digital engagement practices by broker-
dealers and investment advisers. The request covered behavioral 
prompts, differential marketing, and game-like features, 
commonly referred to as gamification. The SEC received a 
significant number of comment letters in response, which have 
been posted to the SEC website at https://www.sec.gov/comments/
s7-10-21/s71021.htm. However, I have not had an opportunity to 
review all of these comments in detail. If confirmed, I would 
discuss the concerns identified in the public comment letters 
with the SEC staff and obtain their reactions to develop a 
better understanding of this issue.

Q.12. To the extent the SEC wants to regulate gamification of 
trading, how should it go about doing it? What tools does it 
have in its disposal?

A.12. The SEC has multiple tools to address gamification. For 
example, the SEC has rulemaking authority under the Securities 
Act of 1933 and the Securities Exchange Act of 1934 (Exchange 
Act). The SEC could also provide interpretive guidance, which 
could be issued after a public notice and comment period. The 
SEC could issue a report of investigation under Section 21(a) 
of the Exchange Act. The SEC could also request that FINRA 
consider its own rulemaking as a self-regulatory organization. 
SEC staff could provide subregulatory guidance and no-action 
letters addressing gamification. SEC staff could engage in 
research and investor testing with respect to gamification and 
investor behavior. SEC staff could also undertake investor 
education efforts with respect to the costs of frequent and 
rapid trading.

Q.13. In 2019 and in 2021, House of Representatives voted 410 
to 13 and 350 to 75, respectively, in favor of the Insider 
Trading Prohibition Act, which would codify current principles 
of insider trading jurisprudence while also fixing gaps in the 
law that were highlighted by recent appellate court and Supreme 
Court cases and clarifying liability for insider trading 
derived from information obtained through a cyberbreach or 
hack. Do you support the changes the Insider Trading 
Prohibition Act would make?

A.13. The SEC has a critical role to play in enforcing insider 
trading law to help protect investors. As a general matter, 
insider trading law could benefit from legislation, rather than 
being developed piecemeal through judicial case law. For 
example, existing insider trading law has limits that make it 
difficult to bring cases with respect to cyberbreaches and 
hacks. As a nominee to the SEC, it is not my place to endorse 
specific pieces of legislation. I defer to the judgment of 
Congress on what legislation to enact, if any. However, if 
Congress does enact the Insider Trading Prohibition Act and I 
am confirmed, I would work with the SEC staff and the other 
commissioners to faithfully implement and enforce the act.

Q.14. What type of risk does cybersecurity present to markets 
and are there tools in the SEC's toolkit to respond to this 
type of risk?

A.14. Cybersecurity is a critical threat to the U.S. economy 
and the financial markets are particularly vulnerable. Because 
there are open SEC rulemaking proposals on cybersecurity--one 
for public companies and one for investment advisers--I will 
refrain from discussing specifics of those proposals. 
Generally, I view the SEC's responsibility as divided into 
three areas: regulated entities (e.g., broker-dealers, transfer 
agents, clearing firms, investment advisers, and investment 
companies), public companies, and the SEC itself. Each area 
represents a different context in which to consider 
cybersecurity. For instance, with respect to regulated 
entities, the SEC could increase its efforts to serve as an 
information clearinghouse to inform regulated entities promptly 
about emerging cybersecurity threats. For cybersecurity, 
proactive efforts to thwart breaches can offer significantly 
more investor protection as compared to retrospective 
postbreach enforcement actions.
    If confirmed, I would encourage the SEC staff to coordinate 
with other Federal efforts to improve defenses against 
cyberthreats, including efforts by the Federal Financial 
Institutions Examination Council, the Department of the 
Treasury's Office of Cybersecurity and Critical Infrastructure 
Protection, the National Institute of Standards and Technology, 
and the Department of Homeland Security.

Q.15. We have seen sophisticated financial services firms 
engage in misconduct and pay fine after fine, including 
recently an asset manager pleading guilty to securities fraud 
and paying a multibillion dollar fine. What can the SEC, and 
other regulators for that matter, do to encourage better 
compliance?

A.15. The SEC and other financial regulators could pursue more 
enforcement actions, including seeking civil penalties, against 
the individuals responsible for the misconduct or negligence. 
These enforcement actions could deter future misconduct by 
others and encourage better compliance with the law. In my 
experience, the SEC often imposes significant civil penalties 
and other remedies on financial service firms while not 
pursuing any enforcement actions against corporate executives 
to hold them accountable. Settlements with the firms identify 
the specific individuals as ``Executive No. 1'' or ``Trader No. 
1.'' It would not be surprising for the responsible individuals 
to quietly leave the sanctioned firm, only to find a position 
at another financial service firm without the public--or even 
their new employer--knowing the full scope of their culpability 
at the prior firm.

Q.16. The SEC has a role to play in ensuring that its reporting 
requirements are broadly aligned with workable, effective and 
broadly supportive standards, when such existing standards 
exist. Not only does this help provide consistency and 
comparability for investors and other stakeholders, but 
especially for companies that are publicly listed in multiple 
jurisdictions, this can also alleviate additional costs of 
complying with different requirements. In examples of SEC rules 
where the U.S. standard is considered to be far weaker than 
that of the prevailing international standard, would you 
consider steps to align the U.S. reporting requirements with 
the international standard?

A.16. Yes, if confirmed, I would consider whether it is 
appropriate to align U.S. reporting requirements with foreign 
standards. The identification and evaluation of reasonable 
alternatives is an important component of the SEC's internal 
guidance on economic analysis. The benefits and costs 
associated with respect to existing foreign standards can be 
informative when considering standard-setting efforts in the 
United States. Differences in reporting and liability regimes 
in foreign countries may need to be taken into account. For 
instance, foreign countries may not have comparable private 
class action liability or personal liability on executives for 
corporate disclosures under Sections 302 and 906 of the 
Sarbanes-Oxley Act, which can significantly increase the costs 
to produce disclosure in the United States relative to other 
countries.

Q.17. Over a decade ago, the U.S. led the world in the fight 
against corruption in the extractives industries. Implementing 
the bipartisan Cardin-Lugar amendment to the Dodd-Frank Act, a 
landmark transparency provision, the SEC developed a 
significant new disclosure standard for payments made to 
Governments by mining, oil, and gas companies that catalyzed 
global change in combating corruption. As a result, over thirty 
countries adopted nearly identical public reporting 
requirements for project-level payments and the international 
Extractive Industries Transparency Initiative, now being 
implemented by 56 countries, uses that same reporting standard. 
This has resulted in unprecedented transparency, with many 
companies publicly disclosing project-level payments to 
Governments each year. But under the Trump administration much 
of this progress was reversed. Despite many years of reporting 
by companies outside the U.S., U.S.-listed companies remain 
among the least transparent as they still are not reporting 
project-level payments. Indeed, after years of delay, the SEC 
put out a new, substantially weaker version of the rule in 2020 
that fell far short of the standard already being implemented 
around the world. The rule goes against the weight of evidence 
in the record in its failure to promote international 
transparency, in its failure to ensure consistent reporting 
obligations for companies, its inability to effectively fight 
corruption, and its failure to protect investors. In its 
current form, it does not satisfy the underlying statute's 
anticorruption and accountability purposes. Will you recommit 
the SEC to fulfilling the leadership role in combating 
corruption as Congress intended when it adopted new statutory 
transparency standards, and ensure consistency and 
comparability in reporting standards to better protect 
investors?

A.17. With respect to the resource extraction rules mandated by 
the Dodd-Frank Act, the SEC conducted notice and comment 
rulemaking procedures three times under the Administrative 
Procedure Act. First, the SEC issued final rules in 2012, but 
the U.S. District Court for the District of Columbia vacated 
them. Second, the SEC promulgated final rules in 2016, but they 
were disapproved by a joint resolution of Congress pursuant to 
the Congressional Review Act in 2017. Third, the SEC adopted 
final rules in 2020 under a statutory restriction imposed by 
the Congressional Review Act that prevents an agency from 
reissuing a disapproved rule in ``substantially the same form'' 
or further issue a new rule that is ``substantially the same'' 
as the disapproved rule.
    Although the 2020 rules are in effect, they contemplate a 
two-year implementation period and the compliance deadline has 
not yet passed. If confirmed, I would want to have discussions 
with SEC staff to understand the types of disclosures being 
filed by early adopters of the 2020 rules and request the 
staff's views as to whether the disclosures are providing 
transparency, consistency, and comparability in accordance with 
the Dodd-Frank Act and the Congressional Review Act.

Q.18. 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.18. Yes.

Q.19. 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.19. The responses I have provided are my own. As a part of 
the process of finalizing my responses, they were reviewed by 
White House, SEC, and congressional staff.

Q.20. Did any person on the board of, or employed by, a 
501(c)(4) organization, provide advice to you, oral or written, 
on your responses to these questions? If so, please list those 
individuals and organizations.

A.20. No.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
            SENATOR MENENDEZ FROM MARK TOSHIRO UYEDA

Q.1. On July 7, 2021, the SEC's Asset Management Advisory 
Committee unanimously issued four recommendations that would 
help promote diversity among asset managers and thereby lead to 
greater returns for investors. \1\
---------------------------------------------------------------------------
     \1\ https://www.sec.gov/files/amac-recommendations-di-
subcommittee-070721.pdf
---------------------------------------------------------------------------
    If confirmed, would you support holding a vote to consider 
these recommendations?

A.1. Yes, I would support holding a vote to consider these 
recommendations.

Q.2. Section 13(d) of the Securities Exchange Act of 1934 
requires investors who become the beneficial owners of more 
than 5 percent of an issuer's equity securities to report 
certain identifying information to the SEC. While I appreciate 
that the Commission issued a proposed rule to modernize these 
requirements in February, enforcement of these rules needs to 
be a priority.
    How would you propose to strengthen SEC enforcement in this 
area to make sure that investors who acquire significant stakes 
in a company are reporting their ownership accurately and in a 
timely fashion?

A.2. Determining beneficial ownership for compliance with 
Section 13(d) can be difficult, including detecting whether a 
``group'' exists for purposes of filing Schedule 13D. It can 
also be difficult to determine easily whether a Schedule 13G 
filer is complying with the requirement that it is not acting 
with the purpose or effect of changing or influencing the 
control of the issuer. As defined by Rule 12b-2, ``control'' is 
``the possession, direct or indirect, of the power to direct or 
cause the direction of management and policies of a person.''
    Better enforcement of Regulation 13D-G may serve as a 
deterrent to future noncompliance. The SEC's incentives for 
whistleblowers, including monetary rewards, may also be helpful 
in providing tips and evidence that could lead to enforcement 
actions. If confirmed, I would ask the SEC staff whether there 
are additional measures that could strengthen SEC enforcement 
in this area.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
                    FROM MARK TOSHIRO UYEDA

Q.1. Risks to Economic Stability--It is critically important 
that both the Fed and the SEC continue to gather as much 
information as possible on the risks to our financial system. 
It's critical for the safety and soundness of the institutions 
the Fed and the SEC regulates, our economy, and protecting the 
American taxpayer. Cybersecurity and cyberattacks will be among 
many risks you, if confirmed, will need to track and evaluate 
in these positions,
    How will you work to address cyberthreats? How will you 
evaluate when new risks are arising and how to address them?

A.1. Cybersecurity is a critical threat to the U.S. economy and 
the financial markets are particularly vulnerable. Because 
there are open SEC rulemaking proposals on cybersecurity--one 
for public companies and one for investment advisers--I will 
refrain from discussing specifics of those proposals. 
Generally, I view the SEC's responsibility as divided into 
three areas: regulated entities (e.g., broker-dealers, transfer 
agents, clearing firms, investment advisers, and investment 
companies), public companies, and the SEC itself. Each area 
represents a different context in which to consider 
cybersecurity. For instance, with respect to regulated 
entities, the SEC could increase its efforts to serve as an 
information clearinghouse to inform regulated entities promptly 
about emerging cybersecurity threats. For cybersecurity, 
proactive efforts to thwart breaches can offer significantly 
more investor protection as compared to retrospective 
postbreach enforcement actions.
    If confirmed, I would encourage the SEC staff to coordinate 
with other Federal efforts to improve defenses against 
cyberthreats, including the efforts of the Federal Financial 
Institutions Examination Council, the Department of the 
Treasury's Office of Cybersecurity and Critical Infrastructure 
Protection, the National Institute of Standards and Technology, 
and the Department of Homeland Security. I would consider the 
views of the SEC staff experts to evaluate new risks and how to 
address them.

Q.2. Innovation--As new financial products and technologies are 
developed and existing products evolve the Federal Reserve and 
the Securities and Exchange Commission will have opportunities 
to shape the ecosystem around cryptocurrencies and other 
``FinTech'' products and companies, and as regulators have a 
responsibility to provide adequate protections for our 
financial system and consumers.
    What is your view of the current regulation and oversight 
in this space? What do you believe works well and what would 
you change?

A.2. Generally, the existing principles-based securities laws 
have worked well to adapt to new financial products and 
technologies over time. For example, when I was a first-year 
law firm associate in 1995, whether a faxed signature page was 
valid was not universally settled law. In later years, 
questions arose regarding electronic signatures. Regulators, 
assisted by legislation in some cases, were able to adapt to 
new developments and make adjustments to protect investors.
    The term ``FinTech'' and cryptocurrencies encompass a broad 
range of products, services, and technologies, some of which 
fall within the SEC's current jurisdiction and others that do 
not. The SEC has had a longstanding ability to provide 
exemptive relief from provisions in Federal securities laws if 
doing so is necessary or appropriate in the public interest and 
consistent with the protection of investors. Exemptive 
authority permits the SEC to allow new innovations to move 
forward but with appropriate conditions and guardrails to 
protect investors. For example, the SEC granted an exemptive 
order for the first exchange-traded fund (ETF) in 1993. Today, 
ETFs represent a significant amount of the investment products 
purchased by retail investors and the SEC's experience with ETF 
exemptive orders eventually led to a general rule.
    The SEC's jurisdiction over cryptocurrency depends on 
whether it is a security. However, determining whether a 
particular cryptocurrency is a security under the Supreme 
Court's Howey investment contract test can be difficult. This 
is an area where Congressional legislation could be helpful. 
The lack of clarity can at times negatively affect investor 
protection.
    If a cryptoasset is a security, then it falls within the 
SEC's jurisdiction and is subject to the investor protection 
provisions of the Federal securities laws. Some of these 
investor protections include: (a) any offering of a security 
must be registered with the SEC or satisfy the conditions of an 
applicable exemption from registration; (b) brokers who 
transact in a security are regulated by FINRA and subject to 
SEC rules; and (c) any trading venue that trades a security is 
subject to SEC jurisdiction and must either register or qualify 
for an exemption from registration (like Regulation ATS).
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                    FROM MARK TOSHIRO UYEDA

Q.1. How do you respond to concerns that SEC's proposed changes 
to Rule 10b5-1 would expose markets to unintended risks by 
limiting the flexibility for businesses to return capital to 
shareholders efficiently through repurchases?

A.1. Because the SEC's proposed changes to Rule 10b5-1 are 
currently an open rulemaking, I can only provide a general 
response to avoid a potential prejudgment issue under the 
Administrative Procedure Act. Current Rule 10b5-1 was adopted 
in 2000 and it is appropriate for the SEC to engage in a 
retrospective review to determine whether the rule is operating 
effectively and as intended. I appreciate the public comments 
on the proposal, which have identified various concerns, 
including the concern that you have raised in your question. If 
confirmed, I would carefully consider these public comments and 
discuss them with the SEC staff, outside stakeholders, and the 
other commissioners before reaching any conclusion.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                    FROM MARK TOSHIRO UYEDA

Q.1. The retail investor has never been better served by the 
U.S. capital markets that it is today, and that's in large part 
due to the robust role of active management. Investors who are 
incentivized to uncover fundamental value of public companies 
make our markets safer and stronger. Several recent SEC 
proposals threaten the role of active management in today's 
markets.
    Can you assure the Committee that if confirmed, you will 
prioritize rulemaking which promotes--not obstructs--the 
ability for investors to conduct market research and take 
positions based on such research?

A.1. Yes, if confirmed, I will consider the ability for 
investors to conduct market research and take positions based 
on such research in rulemakings. A core investor protection is 
efficient price discovery. Fundamental research as to the value 
of public companies plays a significant role in the price 
discovery mechanism.
              Additional Material Supplied for the Record
              
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