[Senate Hearing 118-490]
[From the U.S. Government Publishing Office]
S. Hrg. 118-490
NOMINATIONS OF TANYA OTSUKA, MARK UYEDA,
SPENCER BACHUS III, JENNIFER FAIN, CLAUDIA
SLACIK, AND WILLIAM BRODSKY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
ON
NOMINATIONS OF:
TANYA OTSUKA, OF VIRGINIA, TO BE A MEMBER OF THE NATIONAL CREDIT UNION
ADMINISTRATION
__________
MARK UYEDA, OF CALIFORNIA, TO BE A MEMBER OF THE SECURITIES AND
EXCHANGE COMMISSION
__________
SPENCER BACHUS III, OF ALABAMA, TO BE A MEMBER OF THE BOARD OF
DIRECTORS OF THE EXPORT-IMPORT BANK
__________
JENNIFER FAIN, OF VIRGINIA, TO BE INSPECTOR GENERAL, FEDERAL DEPOSIT
INSURANCE CORPORATION
__________
CLAUDIA SLACIK, OF NEW YORK, TO BE A DIRECTOR OF THE SECURITIES
INVESTOR PROTECTION CORPORATION
__________
WILLIAM BRODSKY, OF ILLINOIS, TO BE A DIRECTOR OF THE SECURITIES
INVESTOR PROTECTION CORPORATION
__________
OCTOBER 19, 2023
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available at: https: //www.govinfo.gov /
__________
U.S. GOVERNMENT PUBLISHING OFFICE
57-393 PDF WASHINGTON : 2025
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island TIM SCOTT, South Carolina
ROBERT MENENDEZ, New Jersey MIKE CRAPO, Idaho
JON TESTER, Montana MIKE ROUNDS, South Dakota
MARK R. WARNER, Virginia THOM TILLIS, North Carolina
ELIZABETH WARREN, Massachusetts JOHN KENNEDY, Louisiana
CHRIS VAN HOLLEN, Maryland BILL HAGERTY, Tennessee
CATHERINE CORTEZ MASTO, Nevada CYNTHIA M. LUMMIS, Wyoming
TINA SMITH, Minnesota J.D. VANCE, Ohio
RAPHAEL G. WARNOCK, Georgia KATIE BOYD BRITT, Alabama
JOHN FETTERMAN, Pennsylvania KEVIN CRAMER, North Dakota
LAPHONZA R. BUTLER, California STEVE DAINES, Montana
Laura Swanson, Staff Director
Lila Nieves-Lee, Republican Staff Director
Elisha Tuku, Chief Counsel
Amber Beck, Republican Chief Counsel
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Pat Lally, Assistant Clerk
(ii)
C O N T E N T S
----------
THURSDAY, OCTOBER 19, 2023
Page
Opening statement of Chair Brown................................. 1
Prepared statement....................................... 30
Opening statements, comments, or prepared statements of:
Senator Scott
Prepared statement....................................... 31
Senator Rounds............................................... 4
NOMINEES
Tanya Otsuka, of Virginia, to be a Member of the National Credit
Union Administration........................................... 6
Prepared statement........................................... 33
Biographical sketch of nominee............................... 35
Responses to written questions of:
Chair Brown.............................................. 118
Senator Scott............................................ 118
Senator Warnock.......................................... 119
Senator Tillis........................................... 120
Senator Hagerty.......................................... 121
Mark Uyeda, of California, to be a Member of the Securities and
Exchange Commission............................................ 7
Prepared statement........................................... 46
Biographical sketch of nominee............................... 47
Responses to written questions of:
Senator Scott............................................ 121
Spencer Bachus III, of Alabama, to be a Member of the Board of
Directors of the Export-Import Bank............................ 8
Prepared statement........................................... 63
Biographical sketch of nominee............................... 64
Responses to written questions of:
Chair Brown.............................................. 124
Senator Scott............................................ 125
Senator Warnock.......................................... 126
Jennifer Fain, of Virginia, to be Inspector General, Federal
Deposit Insurance Corporation.................................. 9
Prepared statement........................................... 77
Biographical sketch of nominee............................... 78
Responses to written questions of:
Chair Brown.............................................. 127
Senator Scott............................................ 129
Senator Warnock.......................................... 131
Claudia Slacik, of New York, to be a Director of the Securities
Investor Protection Corporation................................ 11
Prepared statement........................................... 92
Biographical sketch of nominee............................... 93
Responses to written questions of:
Chair Brown.............................................. 132
Senator Scott............................................ 132
Senator Menendez......................................... 133
Senator Warnock.......................................... 134
(iii)
William Brodsky, of Illinois, to be a Director of the Securities
Investor Protection Corporation................................ 12
Prepared statement........................................... 101
Biographical sketch of nominee............................... 103
Responses to written questions of:
Chair Brown.............................................. 134
Senator Scott............................................ 135
Senator Menendez......................................... 136
Senator Warnock.......................................... 136
Additional Material Supplied for the Record
Letters submitted regarding nominees............................. 138
``The NCUA Must Step Up for Overseas Sevicemembers'', Credit
Union Times, by Mary McDuffie.................................. 178
NOMINATIONS OF TANYA OTSUKA, MARK UYEDA, SPENCER BACHUS III, JENNIFER
FAIN, CLAUDIA SLACIK, AND WILLIAM BRODSKY
----------
THURSDAY, OCTOBER 19, 2023
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10 a.m., in room SD-538, Dirksen
Senate Office Building, Hon. Sherrod Brown, Chair of the
Committee, presiding.
OPENING STATEMENT OF CHAIR SHERROD BROWN
Chair Brown. The Senate Committee in Banking, Housing, and
Urban Affairs will come to order. Thank you for joining us.
Senator Rounds will be Ranking Member today. Welcome back. He's
done that before.
Senator Rounds. Thank you, sir.
Chair Brown. I like the relationship. I'd like to thank
Senator Sinema for her years on the Committee in her service.
She is moving to the Appropriations Committee. I welcome
Senator Butler from California. She, unfortunately, soon after
being sworn in, she is sick. Nothing serious, but will be back
likely next week. We're excited to work with her.
The Committee meets today to consider six nominations. Four
of whom are renominations. Ms. Tanya Otsuka, to be a Member of
the National Credit Union Administration Board. Welcome.
The Honorable Mark Uyeda, nominated to be Member of the
Securities Exchange Commission. Welcome back.
The Honorable Spencer Bachus, whom I served in the House
with renominated to be a Member of the Board of Directors of
Ex-Im Bank. Welcome back, Congressman Bachus.
Ms. Jennifer Fain, to be Inspector General of Federal
Insurance Deposit Corporation. Welcome, Ms. Fain.
The Honorable Claudia Slacik, renominated to be a Director
of the Securities and Investor Protection Corporation. Welcome
back, Ms. Slacik.
And the Honorable William Brodsky, renominated to be
Director of the Securities Investor Protection Corporation.
Welcome back, Mr. Brodsky.
We thank the nominees for appearing today. We especially
thank them for their willingness to serve, in the case of
pretty much all of you, to continue to serve your country.
These nominees will play an important role in the success and
stability of our financial system, if confirmed. We look
forward to that. I would like to talk for a moment about each.
I will spend more of the time talking about the one of the
six, that I know the best, who has served in this Committee--is
actually still serving this Committee, and is not used to
sitting there looking in this direction. I met her parents, and
her husband, and her young son, Adrian, and her sister today.
The President's nominated Tanya Otsuka to be a member of
the National Credit Union Administration Board. She would be
the first Asian-American to serve on that board in the agency's
53-year history. She's exceptionally well qualified. She served
as a key member of my Banking and Housing Committee staff.
She crafted legislation, she provided strategic advice on
banking issues and credit union policy understanding. She's no
longer doing credit union issues for the Committee now that
she's been nominated. She's a career public servant. She first
joined this Committee in 2019 as a legislative fellow detailed
from the FDIC. She became a permanent member of my team in 2020
where she currently serves as senior counsel.
Within days of her joining the Committee, coronavirus
pandemic endangered our financial system. Ms. Otsuka
immediately got to work with then Chair Crapo's staff, I was
Ranking Member at that time, on critical provision of the CARES
Act and so that our credit union system would remain strong,
and viable, and stable as it has.
When our financial system was tested earlier in the year by
the largest bank failures since 2008, Ms. Otsuka worked to keep
Committee officers informed about the rapidly involving
evolving situation. She was in constant contact with regulators
and other stakeholders.
She's played a pivotal role in legislation advanced by the
Committee this year, including surprise to many, the RECOUP
Act, to hold failed big bank executives accountable. We voted
out of this Committee, again, a surprise to people that we
could work together on something so contentious and difficult
that many banks didn't want. We passed it out 21-2. Ms. Otsuka
has played a big role in that, and I thank her for that.
River City Federal Credit Union out of San Diego wrote to
the Committee--out of San Antonio, excuse me, wrote to the
Committee, ``We appreciate Tanya's work to raise a visibility
of credit unions, remove barriers to growth, and support credit
unions in deepening their impact in the communities they
serve.''
Michael Adelman, whom I know, President, CEO of the Ohio's
Bankers League, wrote, ``While we may have differed on specific
policy decisions, Ms. Otsuka did her homework, gave OBL and
other interested parties a fair shake. She welcomes a diversity
of views. She's the type of regulator we ought to have in these
critical economic positions.'' Congratulations on your
appointment, Ms. Otsuka.
The President has renominated Mark Uyeda to a full term in
the SEC. He served as a board member of the commission since
last year. Prior to his confirmation, Mr. Uyeda was detailed to
then Ranking Member Toomey's staff from the SEC. He first
joined the SEC in 2006. He served in several roles, including
counsel for Commissioners Paul Atkins and Michael Pievar, as
well as senior advisor to Chair Jay Clayton. Early in his
career, he worked in private law practice as well as for the
California Department of Corporations. Welcome back, Mr. Uyeda.
The President has renominated Congressman Bachus to the Ex-
Im Bank Board. Spencer Bachus first joined Ex-Im as a board
member in 2019, along with Judith Pryor and then Chair,
Kimberly Reed. He played an important role in helping reopen
Ex-Im Bank after an unfortunate 4-year partial shutdown.
For 12--oh, I'm sorry, for 22 years, Congressman Bachus
represented Alabama's 6th District. He joined the House of
Representatives the same day I did many years ago. He was Chair
and Ranking Member in on that Committee. Good to see you again,
Congressman.
The President has nominated Jennifer Fain to be Inspector
General of the FDIC, a role that carries great importance given
the recent bank failures. She brings years of audit
inspections, evaluations, and investigations experience,
including in the areas of financial services and consumer
protection. She possesses extensive experience in Federal
Government oversight, serving in several agencies, Inspector
General offices.
More recently, she served in senior leader leadership roles
at Ex-Im Bank Office of Inspector General, notably as Deputy
Assistant IG for Inspections and Evaluations. Prior to joining
Ex-Im Bank, she served in IG offices at HUD, FHFA, and in the
U.S. Election Assistance Commission. Glad to see you, Ms. Fain.
Thanks for coming.
We'll also consider the nominations of two qualified
nominees to the board of directors of the Securities Investor
Protection Corporations, Claudia Slacik and William Brodsky.
Both nominees have significant financial services experience.
Ms. Slacik possesses some 30 years of financial services
experience both in the public and private sector. The Senate
confirmed her by voice vote to the SIPC board last year. She
currently serves as Chair. Prior to serving on SIPC, Ms. Slacik
was the Chief Banking Officer, Export-Import Bank. She served
in senior level roles at several large banks before entering
public service. Glad to see you again, Ms. Slacik.
Last, Mr. Brodsky possesses five decades of securities and
investment business experience. The Senate confirmed him to the
SIPC board last year, similar to Ms. Slacik by voice vote.
During his career, he has worked in senior level roles at
several major exchanges, including the American Stock Exchange,
the Chicago Mercantile Exchange, and the Chicago Board Options
Exchange, where he was Chair and Chief Executive Officer.
Welcome, Mr. Brodsky. Thank you for joining us.
If all of you would please stand for the oath, please.
Senator Britt. Let him go first.
Chair Brown. Oh, I'm sorry. You make your statement, then
we do the oath. Sorry about that. Sit back down.
[Laughter.]
Sorry about that. Six of you is overwhelming, so. Sorry, go
for it. Sorry.
OPENING STATEMENT OF SENATOR MIKE ROUNDS
Senator Rounds. Well, and we're keeping you all to
ourselves right now as well. First of all, thank you, Mr.
Chairman. And I want to say welcome to all of our nominees. I
commend each of you for your desire to serve the American
people. With six nominees today, I will try to move through
each of you rather quickly.
Congressman Bachus, welcome back to Capitol Hill, and
congratulations on being renominated for a position on the
board of the Export-Import Bank. The Ex-Im Bank is a valuable
tool for promoting U.S. exports economic growth and job
creation. In the face of an increasingly competitive global
market, I believe American companies must be able to
effectively compete on the international stage. I look forward
to hearing ways you believe the Ex-Im Bank can continue to be
effective, especially as countries like China bolster their own
companies by guaranteeing export loans.
Mr. Uyeda, in your capacity as a member of the Securities
and Exchange Commission for the last year, you have been an
independent voice of reason, pushing back against harmful
policies that aim to overhaul our capital markets.
Over the last 3 years under Chair Gensler's reign, the SEC
has issued dozens of complex rulemakings that will hurt markets
and investors. Mr. Uyeda, I am confident that you will continue
to act as that rational voice to promote policies that will
strengthen our capital markets while protecting investors, not
attempt to legislate through rulemaking.
Turning to Ms. Fain, during the Obama administration, the
Department of Justice and financial regulators initiated the
controversial Operation Choke Point. The program aimed to
pressure banks into withholding their services from completely
legal industries that the Administration didn't support, such
as firearm manufacturers and payday lenders. The FDIC's own
Inspector General, the position for which you are nominated,
determined that FDIC personnel singled out these businesses in
line with a widely held belief that senior FDIC officials
disapproved of the businesses.
I fear that there are individuals in the Biden
administration who still advocate for the core principle of
Operation Choke Point, which involves the abuse of regulatory
power to restrict financial access to lawful businesses that
happen to be politically disfavored.
Ms. Fain, if confirmed, I'd charge you to use your 22 years
of experience in Federal oversight to make sure the FDIC
adheres to its mission of promoting stability and public
confidence in our financial system, rather than playing
politics with American companies.
Ms. Otsuka, we know financial institutions are fully
capable of pricing risks into their business decisions,
including risks from changing customer preferences over time. I
am extremely concerned financial regulators are trying to
allocate capital away from carbon emitting industries,
including agriculture to those deemed to be sufficiently green.
For example, NCUA has warned that credit unions and I
quote, ``May need to consider adjustments to their fields of
memberships, as well as the types of loan products they
offer,'' because of climate change. In the Upper Midwest,
producers rely on access to credit from their local credit
unions and other financial institutions for the financing of
their farming and ranching operations. They feed the world.
Ms. Otsuka, as we discussed, and I really appreciated our
discussions in my office, I remain concerned about unintended
consequences from the misapplication of climate financial risk
considerations, especially if credit unions are pressured to
unnecessarily avoid and/or reduce serving certain industries
like agriculture if an examiner deems it too risky based on
climate change.
We don't need bureaucrats telling farmers, ranchers, and
the credit unions that support them and tell them how to run
their operations, especially bureaucrats that believe chocolate
milk may come from brown cows. You're supposed to laugh at
that, by the way.
[Laughter.]
I look forward to discussing ways NCUA can engage with the
agricultural community to protect access to their capital. I
also want to thank you for your service to Chairman Brown's
team and the Committee at large.
Finally, we have two nominees before us today who have been
renominated to the Securities Investor Protection Corporation,
or SIPC, which serves as a liquidator for broker-dealers that
experience financial troubles or are forced into bankruptcy,
and protects against the loss of cash and securities.
Since its creation, SIPC has helped to recover $141.8
billion in assets. Ms. Slacik and Mr. Brodsky, I look forward
to learning more from you during this hearing on your plans to
protect American families. I will note that the Banking
Committee's last SIPC oversight hearing took place in 2015. I
believe we should be more diligent in conducting our oversight
role here so that the public has a better understanding of the
functionality of SIPC.
I will close by saying that Americans are frustrated,
deeply frustrated by the actions of regulators that are hurting
their businesses, families, and interfering in their daily
lives. It is our role in the Senate to scrutinize and evaluate
each nominee who comes before this Committee. The decisions you
make in your respective roles, if confirmed, will have a
bearing on the quality of life for American families. We are
entrusting you with very real and serious responsibilities.
Thank you, Mr. Chairman.
Chair Brown. Thank you, Senator Rounds. As a kid who is a
Democrat, who milked Guernsey cows, reddish-brown cows, as a
kid, I can assure you that chocolate milk doesn't come from
those kinds of cows, so.
[Laughter.]
Senator Rounds. Spoken like a real egg.
Chair Brown. Yeah. Please stand, for real this time, and
raise your right hand. Thank you.
[Witnesses sworn.]
Chair Brown. OK. Thank you all. Please be seated. If any of
you, as you speak, as you testify, would like to introduce
friends or family members, certainly include that in your
testimony, and I won't count that against your 5 minutes. So,
Ms. Otsuka, if you would begin. Ms. Otsuka.
Ms. Otsuka. Thank you, Senator.
STATEMENT OF TANYA OTSUKA, OF VIRGINIA, TO BE A MEMBER OF THE
NATIONAL CREDIT UNION ADMINISTRATION
Ms. Otsuka. Chairman Brown, Ranking Member Rounds, and
distinguished Members of the Committee, it is an honor to
appear before you today. Thank you to President Biden for
nominating me and to Senator Brown for his support. I also want
to thank the Senate Banking, Housing, and Urban Affairs
Committee staff, and the member staffs for their well wishes,
and most importantly, for the work they do every day to serve
the American people.
With me today are my spouse of 10 years, Matt, our son
Adrian, and my sister Natalie. Also with me today are my
parents, Cary and Sima Otsuka, who worked and sacrificed so
that my sister and I would have everything we needed to
succeed. They instilled in me a strong work ethic, sense of
purpose, and respect for others. I would not be sitting here
today without their love and support.
I'm honored and humbled to be nominated to serve on the
board of the National Credit Union Administration. The NCUA's
mission of ensuring a strong system of cooperative credit is
one that resonates with me both personally and professionally.
Growing up, I spent many summers with my paternal
grandparents listening to my grandmother tell me stories about
her childhood. During World War II, she and her family were
sent to an internment camp in Arkansas, forced to leave behind
most of their possessions, including their family farm in
California.
For the rest of the war, my grandmother and her family were
incarcerated in a prison-like compound, surrounded by barbed
wire because they were Americans of Japanese descent. At the
same time, her brother fought overseas in the 442nd Regiment of
the U.S. Army. My grandfather and his family shared a similar
fate, forcibly incarcerated in Arizona.
My grandmother recounted how difficult it was after the war
to make ends meet when she and her family had lost everything.
Like my grandparents, many Japanese Americans face the same
struggle and were often met with discrimination when they tried
to deposit money or get a loan. Some took matters into their
own hands, forming a credit union so that Japanese Americans
could access financial services and help each other rebuild
their lives.
Today, that credit union is still active and insured by the
NCUA. Experiences like this embody the cooperative spirit and
exemplify the important role that credit unions play in our
communities and economy. It is fitting that today is the 75th
anniversary of International Credit Union Day, which celebrates
the credit union movement's mission of financial inclusion.
As a career public servant with over a decade of experience
in financial services law and policy, I also have a deep
appreciation for the role that independent agencies like the
NCUA play in maintaining stability and public confidence in our
financial system. I began my career as an attorney at the
Federal Deposit Insurance Corporation in the wake of the 2008
financial crisis.
During my 10 years at the FDIC, I gained experience in
supervision, enforcement, resolution, assessments, and deposit
insurance, all of which are also critical functions of the
NCUA. I worked on the implementation of a number of FDIC policy
actions, including many related to the Dodd-Frank Act and S.
2155.
For the last several years, I've had the honor of serving
on the staff of the Senate Banking and Housing Committee,
managing a wide range of financial services issues, including
credit union policy and oversight. I'm grateful to Senator
Brown for this opportunity and to Senator Crapo, who was the
Chair of the Committee in 2019, allowed me the opportunity to
serve as a legislative fellow on detail from the FDIC.
During my time on the Committee, I have had the privilege
of working with his staff, Senator Toomey's staff Ranking
Member Scott's staff, and the staffs of the Members of this
Committee. Together, we have worked on a number of bipartisan
bills, including the CARES Act, which helped maintain the
strength of the credit union system and allowed credit unions
to support their members and communities through the COVID-19
pandemic. I have seen the positive impact of Government working
for the American people to maintain a safe and sound financial
system, especially in times of uncertainty.
I hope to continue my public service in support of the
NCUA's critical mission and to ensure a fair, competitive, and
resilient credit union system. If confirmed, I will remain
committed to the millions of Americans who rely on the NCUA to
safeguard their hard-earned money. Thank you, and I look
forward to your questions.
Chair Brown. Thank you, Ms. Otsuka.
Mr. Uyeda.
STATEMENT OF MARK UYEDA, OF CALIFORNIA, TO BE A MEMBER OF THE
SECURITIES AND EXCHANGE COMMISSION
Mr. Uyeda. Chairman Brown, Ranking Member Rounds, and
Members of the Committee, thank you for the opportunity to
appear before you today. Joining me in the hearing room is my
wife Masae, and watching remotely from California are other
members of my extended family.
In May, 2022, I was privileged to appear before the
Committee as the nominee to fill the 12 months of then-
remaining former Commissioner Elad Roisman's term. I'm grateful
for the Committee's support then. I thank the President for his
nomination to serve a full 5-year term as a member of the
Securities and Exchange Commission. If confirmed, I would be
able to continue to contribute to an agency where I've served
since 2006.
As the first Asian Pacific American to serve as an SEC
Commissioner, I grew up in a world where many immigrant
families ran small businesses. My first job was spending my
teenage summers with my grandfather on his delivery route,
where he drove a small truck bringing fresh produce from the
Los Angeles wholesale market to restaurants and retailers,
which were often small businesses themselves.
For these small enterprises, capital was not always easily
obtainable. Nevertheless, their owners had the opportunity to
create and grow businesses that served customer needs, provided
jobs, and generated economic activity. An environment amenable
to creating those opportunities is what makes America a special
place for hardworking and innovative entrepreneurs.
The past 16 months of as Commissioner have been the most
fulfilling and humbling time of my public service. Since taking
office, I've provided input and voted on the proposal or
adoption over 40 SEC rulemakings that touch upon nearly all
aspects of the capital markets and its participants.
When evaluating the SEC's policy initiatives, I draw upon
my diverse experiences of nearly 30 years, including as a
corporate lawyer in private practice, as a state securities
regulator at the California Department of Corporations, as a
member of the SEC staff, and as a detailee to the Senate
Committee on Banking, Housing, and Urban Affairs.
One lesson that I have learned from these experiences is
the need to carefully assess the cost of regulatory activity
relative to its benefits. Many of these costs are passed on to
the workers and retirement savers who are investing for their
future.
Given the SEC's critical role in overseeing our country's
capital markets, promulgating regulations that are based on
data, cost effective, and aimed at addressing identified issues
of utmost importance. Consideration should be given to
appropriately scaling our roles and implementation timelines so
it's not to have a disparate impact on small businesses,
including those owned by women and minorities.
Investors from around the world are willing to place their
capital at risk in our markets due, in part, to our regulatory
structure being perceived as effective, efficient, and
rationally applied. It's important that the SEC'S rules
continue to meet these expectations. Keeping our markets
robust, liquid, and vibrant means both facilitating capital
formation for companies and protecting investors. One cannot
exist without the other to close.
To close, I would like to express my gratitude and
appreciation for the work of my fellow commissioners and the
staff of the SEC. Their efforts to carry out the agency's
mission of protecting investors, maintaining fair, orderly, and
efficient markets, and facilitating capital formation continues
to inspire me every day. Thank you, and I look forward to your
questions.
Chair Brown. Thank you, Mr. Uyeda.
Congressman Bachus is welcome.
STATEMENT OF SPENCER BACHUS III, OF ALABAMA, TO BE A MEMBER OF
THE BOARD OF DIRECTORS OF THE EXPORT-IMPORT BANK
Mr. Bachus. Hearing from my fellow nominees about their
past and their stories is really gratifying. It makes us really
appreciate our country much more that we can improve a lot over
generations.
Chairman Brown, Ranking Member Rounds, and other Members of
the Committee, I was afforded the opportunity to meet with many
of your staffers. I see some of them up there on the dais with
you, and we had some very meaningful conversations. They asked
many questions, and I think I answered a lot of them.
If I'm approved for another term on the Export-Import Bank,
I would consider it a privilege. I've really enjoyed my past
term on the board. I think what I've enjoyed the most is
visiting small towns, small businesses, women-owned businesses,
minority businesses. We just approved--I was not on the board,
but we just approved our first thing under the Make More in
America. And it was a minority-owned business.
And I visited Dickinson, North Dakota, and there's a
company there that is the only company in the United States
that produces a part for our F-35 and our nuclear submarines.
Other than that company, we have to rely on foreign sources,
and some of those, quite frankly, are belligerent to our
interest.
My wife Linda couldn't be here. She and four of my five
children were here last time. But I think events in the House
and the invasion of the Capitol has scared off my children. And
I think that she is having eye surgery and isn't with me, but
I'd like to acknowledge her. She's been an important part of my
life and of any success and accomplishments that I've had.
When I testified before you in 2017, and it was '17, I
wasn't appointed till '19, we had undergone a pretty dramatic
event at Export-Import. We were reauthorized, but we did not
have a quorum. And that existed for 4 years. During that period
of time while we were inactive, our competitors were not.
And unfortunately, they captured market share and resulted
in several of our companies losing market share, actually, some
of them going out of existence. And I sort of was there to
witness that. It was very sad. But we do have a quorum now. We
have new assignments from the Senate and from the White House.
I want to thank President Biden for nominating me for a second
term.
I'd be happy to answer any of your questions about any of
our programs. I will say that talking to staff, I think they
honed in on the China and Transformational Exports Program. And
we have three of those programs that we've approved. I mean, we
have more than three. We have several. But there's three that
I'd like to just quickly mention.
One is Bridges for Cameroon, and it is the steel industry.
Senator Vance yesterday expressed his desire that when we talk
about transformational assets, we don't forget about our basic
industries. You know, agricultural products and other things.
And a small company in Chicago, based in Chicago, we'll supply
girder modular bridges for Cameroon. And we had intense
negotiation over 3 years to take that from China.
We also had two solar projects. One was in Honduras.
Another one was in Angola. Now, we usually do business where
there's risk. We don't function if there's no risk. And we have
banks that partner with us on all these projects. Having said
that my time is up. I look forward to your answers.
Chair Brown. Thank you very much, Congressman.
Ms. Fain, you're welcome. You're recognized for 5 minutes.
Thank you.
STATEMENT OF JENNIFER FAIN, OF VIRGINIA, TO BE INSPECTOR
GENERAL, FEDERAL DEPOSIT INSURANCE
CORPORATION
Ms. Fain. Good morning, Chairman Brown, Ranking Member
Rounds, and Members of the Committee. It's an honor to appear
before you today as the President's nominee to serve as the
Inspector General for the Federal Deposit Insurance
Corporation.
I would first like to thank my family, especially my
husband, Kevin, who is here today, and my two brothers and
their families. My gratitude must begin with my parents who
exemplified the opportunity of America and service to the
country. My mother immigrated to the United States from South
Korea and labored for years running her small restaurant. She
has gone now, but still with me in so many ways.
My father enlisted in the Army as a young man, and those
years of military service served to inspired me to pursue a
career in public service. For all of these family influences, I
am profoundly grateful. I also thank my colleagues and mentors
who have shared this professional journey with me. I would not
be here without their support and encouragement over the years.
I deeply appreciate the FDIC'S long-standing essential role
in maintaining stability and public confidence in the U.S.
financial system. The FDIC insures deposits; examines and
supervises financial institutions for safety, and soundness,
and consumer protection; makes large, complex financial
institutions resolvable; and manages receiverships. Simply put,
the FDIC helps protect individual Americans who place great
trust in our Nation's banks.
As an independent organization, the FDIC Office of
Inspector General plays a vital oversight role in ensuring the
integrity and accountability of FDIC programs. The OIG conducts
audits, evaluations, and reviews. It also pursues criminal and
administrative investigations relating to FDIC employees,
contractors, and financial institutions.
Importantly, OIG's mission is not simply to identify issues
of concern, but to also to recommend corrective actions for
their prevention. This proactive function is essential to
improve and strengthen the effectiveness and integrity of the
agency. The OIG contributes to the successful accomplishment of
the agency's mission.
I have valued this critical role based on serving for over
22 years in the Federal Inspector General community, most
recently as the Deputy IG at the Export-Import Bank of the
United States. Previously, I acted in the role of IG for nearly
3 years, where I led a team of auditors, investigators, and
analysts providing independent oversight of Ex-Ims programs and
operations.
Our office's accomplishments depended on the contributions
of exceptional staff, and my main goal was to empower them to
succeed. I carry these lessons in leadership with me today. My
extensive oversight experience in financial services and
consumer protection matters provided deep foundation for me to
serve as Inspector General for the FDIC.
In prior management positions at Ex-Im OIG, I directed
complex financial and performance audits and evaluations, and
inspections of multimillion-dollar international transactions.
I also held leadership positions in OIG offices at the Federal
Housing Finance Agency and the Department of Housing and Urban
Development, which broadened my expertise in oversight for
other agencies and disciplines, particularly for consumer
protection.
My appreciation for public service actually dates back to
the beginning of my Federal career in 1994 when I was a student
intern in the accounting division of the United States Mint.
After graduating from college, I worked in HUD OIG's Denver
field office, where for several years I conducted and
supervised audits of HUD programs throughout the Rocky Mountain
region.
I met with individuals from all walks of life who were
affected by those programs, including lenders and loan
recipients. Those conversations and experiences made a lasting
impression on me. They illuminated the direct impact that OIG
oversight can have on the lives of Americans and the importance
of OIG staff individual contributions. This perspective will be
essential for me to successfully lead the FDIC OIG.
It would be an honor to serve as the Inspector General of
the FDIC. I would be committed to delivering results in an
independent and objective manner on the effectiveness and
efficiency of FDIC's programs and operations, which ultimately
would benefit the American people. Thank you for considering my
nomination. I look forward to working with you and your staffs,
if I am confirmed. I'm happy to answer any questions you may
have.
Chair Brown. Thank you, Ms. Fain.
Ms. Slacik, welcome.
STATEMENT OF CLAUDIA SLACIK, OF NEW YORK, TO BE A DIRECTOR OF
THE SECURITIES INVESTOR PROTECTION
CORPORATION
Ms. Slacik. Chairman Brown, Ranking Member Rounds, and
distinguished Members of the staff and the Committee, it's an
honor to appear before you today and it's really an honor to
appear with this panel that is so impressive. Their personal
stories are just so impressive.
I'm grateful to be nominated by the President for
reappointment to a full term as a member of the Board of
Directors of SIPC. If confirmed, I would be honored to continue
to serve and do all I can do in that capacity to protect
investors and to promote confidence in the U.S. securities
markets.
Before presenting my background, let me first introduce you
to the members of my family who are here with me today. First,
my wife, Susan Davis, who was born and raised in Louisiana, and
who has dedicated most of her professional life and service to
impoverished people in the neediest parts of the world.
And second, my brother Kurt Slacik, who was born in New
York State, and who is now a senior executive at a steel mill
in Pennsylvania. Three of my five beautiful and smart nieces
are also with me today, Sophia, Katherine, and Samantha.
As for myself, I was born in upstate New York, and grew up
there as well as in New Jersey, Illinois, Connecticut,
California, and Massachusetts. I also spent 5 years in
Brussels, Belgium. I'm a product of both public and parochial
schools, received my undergraduate degree from Smith College
and my MBA from New York University. My parents are both
deceased, but were the children of people who immigrated to the
United States from Eastern Europe in the early 1900s. I have
three other siblings who live in Florida, California, and
Nevada.
As for myself, I spent 35 years in the U.S. financial
services industry, mostly as a commercial lender at
corporations--hello, Senator.
Senator Tester. Hi.
Ms. Slacik. ----and an international trade finance
specialist. I have also experience in corporate restructurings,
risk management, and general management. I've served on the
boards of several companies, both public and private, with a
specialty in audit committees, and I've served on several not-
profit boards as well.
Before beginning my service as SIPC chair in 2022, my most
recent professional position was as the Chief Banking Officer
of the Export-Import Bank, where my staff and I analyzed
billions of dollars of transactions for small, medium, and
large companies, which supported hundreds of thousands of jobs
for Americans.
My responsibilities included expanding the public's
awareness of the bank and overseeing the due diligence and
underwriting of transactions greater than $10 million before
they were presented to the bank's board of directors. My close
working relationship with the board allowed me to gain a keen
appreciation for the role and responsibility of Presidentially
appointed boards.
Since early 2022, I've served as the Chair of SIPC'S Board
of Directors. During that time, SIPC has continued to increase
its reserves, and to adapt to new technologies and changes in
the securities industry. In addition, SIPC has overseen the
closing of the liquidation of Lehman Brothers in which 110,000
customers achieved 100 percent recovery of all nearly $106
billion of customer property at no cost to SIPC or to the
American taxpayer.
Moreover, the trustee and the SIPC initiated liquidation of
the Bernard L. Madoff Investment has resulted in tremendous
recovery efforts and recouped and distributed more than $14
billion to investors. That's 70 percent of the funds deposited
with that firm.
I recognize the importance of SIPC to retail investors and
the vital role it plays in the country's financial system. By
ensuring that individual investors' securities accounts are
protected when a broker-dealer fails, SIPC promotes investor
confidence in our U.S. securities markets. In addition to
protecting individual investors from financial hardship, SIPC
helps to insulate the markets from disruption which can follow
any brokerage firm failures.
If confirmed, I will support SIPC's mission to guard
investors in the always evolving securities markets. I pledge
to act vigorously as a principal advocate for robust investor
protection. I further pledge to work diligently with the
Members of the Committee to address your concerns, and keep you
informed of SIPC's activities.
Thank you for your time and consideration of my nomination.
I look forward to answering any of your questions.
Chair Brown. Thank you, Ms. Slacik.
Mr. Brodsky, you're welcome.
STATEMENT OF WILLIAM BRODSKY, OF ILLINOIS, TO BE A DIRECTOR OF
THE SECURITIES INVESTOR PROTECTION
CORPORATION
Mr. Brodsky. Thank you, Mr. Chairman, Senator Rounds, and
Senator Tester. It's a pleasure to appear before you today. I'm
honored to appear as one of President Biden's nominees to serve
on the board of the Securities Investor Protection Corporation.
Before presenting my background, let me first introduce to
you the members of my family who are here with me today. My
wife Joan, who's been my wife and partner for over 50 years.
Our son, Michael, and his wife Aleta Margolis, are also here
with me today.
I believe that I'm well qualified to continue to serve on
the Board of SIPC based on my lifetime career in the investment
business, and specifically based on my experience in the
securities industry. If confirmed, I will look forward to
working with the Committee to ensure that investors do not lose
their hard-earned assets as a result of a brokerage firm
failure.
My career in the securities industry spans more than 50
years. I began my career on Wall Street serving summer
internships that included working on the floor of the New York
Stock Exchange. I had summer jobs in three securities firms on
Wall Street while still in college. And after graduating from
law school, I worked at an international securities brokerage
firm as an attorney in the law and compliance division, and
where I learned all aspects of the business.
In fact, I was on Wall Street when brokerage firms were
failing, and many customers lost all their investments because
SIPC had not yet been created. So I know from personal
experience the vital role that SIPC plays in providing
confidence to investors in having faith in the safety and
soundness of the assets they entrust to their broker-dealer.
I next joined the American Stock Exchange, first as a
lawyer in its policy planning and Government relations
department, and ultimately rising to become Executive Vice
President for operations. In 1982, I moved to Chicago to become
Executive Vice President and Chief Operating Officer of the
Chicago Mercantile Exchange, now known as the CME Group.
In 1985, I was named President and CEO of the CME, and
served in that role until 1997 when I moved across town to
become Chairman and CEO of the Chicago Board Options Exchange,
now known as CBOE Global Markets. I served in that position
until 2013 when I stepped down as CEO, but remained as chairman
until 2017. I guided CBOE's demutualization leading to it
becoming a public company, and with its shares becoming part of
the S&P 500 stock index. During my tenure at CBOE, I also
served as Chairman of the World Federation of Exchanges, an
association of the largest exchanges in the world.
For the past 6 years--I don't want to retire, by the way.
As you can tell!
[Laughter.]
For the past 6 years, I've served as Chairman of Cedar
Street Asset Management, an SEC-registered investment advisor,
founded by my son, Jonathan, that invests exclusively in non-
U.S. stocks on behalf of individual and institutional
investors.
I also serve as chairman of another SEC-registered
investment advisor, Option Solutions, founded by son, Michael,
who sits behind me, that provides investment management
services to investors. I also serve as an advisor to Madison
Dearborn Capital Partners, a private equity firm, and OCA
Ventures, a venture capital firm, both of which are based in
Chicago.
I've served on the board and as trustee for several public
companies, private companies, and nonprofit organizations.
Among these, I've served as Chairman for 11 years of the
Investment Committee of Northwestern Memorial Hospital in
Chicago, where we oversaw its multibillion-dollar portfolio.
And I currently serve on the Investment and Endowment Committee
of my alma mater, Syracuse University.
I've utilized these experiences in my service on the SIPC
Board because for the last 15 months, I've been Chairman of the
Investment Committee of SIPC. During this period, SIPC'S fund
reserve have reached their an all-time high, and my goal is to
make sure that SIPC always has sufficient reserves and
liquidity if a crisis were to arise.
I affirm my deep commitment to investor education, customer
protection, and to help maintain the credibility and importance
that SIPC plays in the viability and integrity and importance
of our securities markets to the citizens of our country.
I believe SIPC's mission of protecting investors, and more
broadly raising, the confidence in the U.S. securities markets
is important. I have devoted my entire career to help further
this country's capital markets to improving financial literacy,
investor education, and to ensuring safety and soundness of our
capital markets. If confirmed, I promise to work with Members
of this Committee in advancing these shared goals.
Mr. Chairman and Members of the Committee, this concludes
my remarks. Thank you for your attention, and I'd be happy to
answer any questions you may have.
Chair Brown. Thanks, Mr. Brodsky. I'm going to yield the
floor. First questions to Senator Tester.
Senator Tester. Thank you, Mr. Chairman. I appreciate the
courtesy, and thank you and Ranking Member Scott for having
this hearing. And I want to thank all of you for your
willingness to serve. I appreciate it very, very much.
I'm going to start with you, Mr. Uyeda. First of all, thank
you for the work you've done. I have led letters, joined
efforts with my colleagues to highlight the importance of the
SEC, to ensure that as you undertake proposals and proposed
rulemaking that you take into consideration how it interacts
with existing rules, and not only within the SEC, but other
agencies. And I appreciate you guys taking that to heart moving
forward.
American markets are the gold standards. And I think that
we need to be able to protect those markets, investors,
facilitate capital formation, maintain fair, orderly, and
efficient capital markets. It is fundamental if we're going to
maintain that standard and it's fundamental for a functioning
economy.
Tell me how you achieve the goals of protecting investors
while facilitating capital formation, and maintaining a fair,
and orderly, and official capital market?
Mr. Uyeda. Well, thank you, Senator Tester. I completely
agree with you that our markets are the gold standard through
the world, and that's one reason why we attract capital from
around the world. The way I look at it, facilitating capital
formation, maintaining fair, orderly, and efficient markets,
and investor protection, they all go hand in hand. You cannot
take out one of those elements and still have a world class set
of capital markets
To balance that, it's really important we do an effective
economic analysis. We need to promptly identify the problems
that we are trying to solve and address, make sure our rules
and regulations are appropriately structured to address that
problem. We do a robust economic analysis to look at what the
costs are, both direct and indirect.
We also think, as you pointed out, how it fits in with the
rest of our rules statutes, but also within the broader
financial regulatory system, which involves many other fellow
regulators.
Senator Tester. OK. Jennifer Fain, IGs are our eyes on
agencies to be able to protect taxpayers and be able to protect
taxpayers' dollars. You must be independent and be able to
operate without political interference. I feel that is very
important, not only from the agencies, but from here too. So
the question becomes is how do you protect your independence,
and how do you protect against interference in the office that
you would run?
Ms. Fain. Thank you for your question, Senator Tester.
Independence is a critical requirement for the Office of
Inspector General, and most certainly, for the Inspector
General position. How I would lead or how I have done in my
career with regards to independence is following the standards
that guide the work that we conduct.
Certainly, as it relates to the agencies and ensuring
independence, it's critical that we maintain our independence
and objectivity to ensure that the work that we conduct has not
been interfered with, or directed, or someone has attempted to
suborn our judgment.
Senator Tester. OK. Thank you. Congressman Bachus, Chairman
Spencer, thank you for being here. I come from the great State
of Montana. We have a lot of small manufacturers, small
businesses, rural areas, Tribal areas. I believe in the Ex-Im
Bank strongly. I think it provides us the ability to be able to
compete worldwide against other countries that have similar
banks.
But oftentimes I see hurdles or Ex-Im can't help some of
these small folks, some small businesses. Number one, do you
see those same hurdles? And number two, what can Ex-Im do
without congressional intervention that will allow them to
serve those small rural businesses, Tribal businesses better?
Mr. Bachus. That's a great question. We are the most
restricted of all ECAs. There are over a hundred ECAs. But for
us to make a loan, our content requirements are higher
sometimes because of the supply chain that's impossible. Some
of our shipping requirements we often have to deal with
additionality, and we're very careful to meet that. But we have
a restricted view of that.
But I would say our greatest problem is staff. We're
understaffed. We're about 150 positions below where we're
supposed to be. We have about 300 employees. At times, the bank
has had 500, 600 employees. They're engineers, they're MBAs,
they're accountants, and you know, it's hard to attract those
people. And of course we have a net-zero appropriation.
But I think we are weathering the storm. There are a few
things that I think we could use. I know there's a bill before
Congress to allow us to get records from the IRS to see whether
people have paid their taxes. And we can't get that from the
IRS.
Senator Tester. Got you.
Mr. Bachus. Just, you know, it sounds like a small problem,
but, you know, we don't need to be loaning money from people
who hadn't paid their taxes.
Senator Tester. Now, my most important question, when
Alabama plays Auburn in football, who do you root for?
Senator Britt. Watch out.
Mr. Bachus. Well, I've got two Auburn graduate--well, I've
got the Auburn graduate over here, and I'm an Auburn graduate
who went to law school at Alabama and representing the
university. But I'm all Auburn.
Senator Tester. Are you all Auburn?
[Laughter.]
Chair Brown. Great rivalry, the University of Montana and
Auburn, I particularly enjoy watching.
[Laughter.]
Mr. Bachus. Well, we're just glad to give you all back
Coach Harsin, I'll say that.
Chair Brown. Senator Rounds.
Senator Rounds. Thank you, Mr. Chairman. Ms. Otsuka--and if
I'm mispronouncing your name, it's the Chairman's fault. OK?
Thank you, again, for your service to this Committee as a
member of the Chairman's team. I wanted to build off some of
the comments that I made in my opening statement and our
discussion the other day.
It is critical that credit unions be able to serve farms as
a part of the economy, and that regulators not stand in the way
of that happening. Do you believe agriculture is a climate
issue?
Ms. Otsuka. Yeah. Thank you for the question, Senator, and
thank you for the discussion that we had. It was really great
to visit in your office.
I think agriculture is a critical part of our economy in
agricultural lending is a critical part of the economy. I think
credit unions that serve agricultural communities, they
understand the risks of the industry, they know the industry
well. And they know how to manage those risks.
And I think that's ultimately what needs to be assessed
when regulators make sure that credit unions are engaging in
safe and sound practices. I don't think they should be in the
business of telling credit unions that they can't lend to
ranchers or farmers as long as those credit unions are managing
those risks appropriately and following the law.
Senator Rounds. OK. So if confirmed, you will commit to
working with stakeholders in the Ag community to preserve their
access to capital?
Ms. Otsuka. If confirmed, Senator, yes.
Senator Rounds. OK. Thank you. Ms. Fain, if confirmed, it
is critical that you be completely independent and vigorous in
your auditing and investigatory work at the FDIC to hold
partisan regulators accountable. The FDIC IG played a critical
role when the FDIC, under Chairman Gruenberg, improperly sought
to pressure banks to cutoff access to credit to companies they
deemed to be politically unfavorable, such as firearm and
energy businesses.
Ms. Fain, if confirmed as the FDIC IG, would you commit to
being independent and vigorous in your audits and
investigations into the activities of the FDIC?
Ms. Fain. Thank you, Senator, for the question. And
absolutely, I would commit to being vigorous and independent in
the work oversight work of the FDIC OIG. And I am familiar with
the Operation Choke Hold issue, and certainly the work of the
IG.
And if confirmed, I would be interested in learning more
about the agency's policies in advancing the safety and
soundness of the financial system, and would certainly be
welcome to follow up with you and your staff to discuss any of
your concerns.
Senator Rounds. Thank you very much. I appreciate that, and
we'll take you up on that offer.
Ms. Fain. Thank you.
Senator Rounds. Thank you. Commissioner Uyeda, thank you,
again, for being here and for your service. And, you know,
you've been an SEC commissioner now for the last year. As I
noted in my opening statement, the SEC has issued a dozens of
rulemakings over the last 3 years. If finalized, these
rulemakings will have overlapping implementation timelines, and
often affecting the same or interconnected financial products
and market sectors.
Commissioner Uyeda, I would hope that you would agree that
when conducting rulemaking, the Commission should consider
known economic impacts, including the cumulative impact of
concurrent rulemakings. Would you agree, sir?
Mr. Uyeda. Senator, yes, I agree. Each individual
rulemaking is not in itself in a vacuum, but operates and
interacts with many other rules. And we really need to think,
especially when we're making a lot of other changes at the same
time, how they all interact together to pursue our goal of
investor protection, fair, orderly, and efficient markets, and
facilitating capital formation.
Senator Rounds. Thank you. How do you weigh the benefits of
a proposed rule against its cost, specifically, if the rule
might have an outsized impact on small businesses and emerging
fund managers?
Mr. Uyeda. That is a very, very important issue. That is
one that I have pressed. One of the most important things I
think we can do for smaller investment advisors and smaller
broker-dealers is give them a longer period to comply.
Many times when you do a rule, there are a lot of details
that still remain be worked out. It's much easier for those
smaller entities to comply if those issues have already been
solved, especially by those who have much more resources to
work to come to solutions with the staff.
Senator Rounds. Thank you.
Thank you, Mr. Chairman.
Chair Brown. Thank you, Senator Rounds.
Ms. Otsuka, a two-part question. You started your career at
FDIC, an independent financial regulator, before we were lucky
enough to have you on our staff. You've been nominated to serve
on another independent financial regulator, NCUA. Discuss why
it's important for financial regulators to be independent, and
tell me at the same time, same answer, what will some of your
priorities be?
Ms. Otsuka. Thank you for the question, Senator. The
safety, and stability, and the resiliency of our financial
system is important to the strength of our entire economy. And
so I think financial regulators like the NCUA should be
independent to promote market stability, predictability, and
continuity. Americans need to have confidence that decisions
that affect the financial system, that affect their
pocketbooks, are made independently and based on data.
At the same time, I think Congressional oversight of those
independent agencies is important so that regulators are held
accountable to the American people. If confirmed I will work to
ensure that the NCUA fulfills its mission to protect the credit
union system.
One priority I would like to focus on, if confirmed,
however, is to make sure that credit unions, especially smaller
ones, can continue to stay competitive and provide affordable
financial services to their members in a constantly evolving
financial system. Small credit unions serve a lot of areas of
this country that do not have access to financial services in
the same way as other parts of the country. And so I think
that's really critical to the strength of our overall economy.
Chair Brown. Thank you. Ms. Fain, you have two decades of
experience. Talk about how IG offices can promote transparency
and efficiency in agency operations and agency programs, and
tell us some of the lessons you've learned from various IG
offices you've worked with.
Ms. Fain. Thank you, Senator, for the question.
Transparency is very key, if not a critical component, of the
Inspector General mission and office, and in general. One way
that Inspector Generals are able to contribute is through the
reporting that they do. And it's key because off oftentimes you
have agencies with programs and operations that can be opaque.
And so the reporting that the Inspector General's offices
complete an issue, not only to Congress, but the agency head,
and are available to public, provide that inside look and
understanding that taxpayers may not necessarily have with
regards to the agency's operations.
With my experience of 22 years with the inspector
community, what I take from that is just the overall mission
and the ability to have an impact on other people's lives
beyond oneself. And personally, I like to fix things, and so I
take great gratitude in the work that I've been able to conduct
throughout my career, and make recommendations to agencies and
departments that have provided solutions in instances where
those agencies and departments can continue to build and do
what they do best for the American public.
Chair Brown. Thank you. Mr. Uyeda, you heard what Ms. Fain
said about transparency. I'm not sure you understand the
outrage by people in stock buybacks. Senator Vance and I have
been intricately involved together on what happened in East
Palestine with the train derailment. You may not know details,
but you certainly know of it.
What led up to that, in large part, is that Norfolk
Southern laid off a third of its workforce. In the preceding
years, executives took stock buybacks. Executives issued stock
buybacks, took them to the tune of between $2 and $3 billion.
Yet, you voted against better disclosure of cyberattacks and
stock buybacks.
I don't really understand why, in light of what Ms. Fain
said and what we know, that disclosure shines a light and makes
people behave better often, including railroad executives. Why
would you do such a thing?
Mr. Uyeda. Chairman Brown, first off, let me express full
agreement that transparency is a very key part of the
securities laws. And I think one of the fundamental parts is
that for the capital market, especially, material financial
information needs disclosed.
In those two particular rules that you raised share
repurchase in cyber security, there were a number of technical
approaches that I had significant concerns for. For instance,
on the security rule that you mentioned, for the first time,
SEC actually mandated forward-looking statements, which is very
unusual for us to do for a particular type of disclosure.
Normally, our disclosures are based on things that you can
prove as fact. That's one thing we look at on our enforcement
efforts.
So I had significant concerns about the forward-looking
statement part. I realize my time is up. May I continue, I just
finish my thought on share repurchase?
Chair Brown. Sure. Of course.
Mr. Uyeda. With respect to the share repurchase part, we've
had disclosure for a while, but the daily disclosures came out
that are filed at quarter end were more prescriptive than what
we normally do. But I also had fairly significant concerns
about how we're making a philosophical change on how we
regulate foreign private issuers.
Chair Brown. OK. Thank you for your response. I the
president of the Richmond Fed told me many years ago, the
former president, he said, ``Watch what we do, and let us know
you're watching what we do.'' And you understand that.
Senator Vance of Ohio.
Senator Vance. All right. Thank you, Mr. Chairman, and
thanks to the six of you for being willing to serve.
I want to direct my questions to Commissioner Uyeda, in
particular. You know, have written and said some interesting
things about BlackRock and some of the large institutional
asset managers. And I just want to sort of, you know, talk
about that and talk about why I find it concerning, and why I
think the SEC has a very, very important role here in
monitoring the way in which these massive financial
conglomerates have effectively consolidated, but also used that
consolidation to push a certain political view into our
economy.
Underscore this point. In 2022, Berkshire Hathaway's,
Charlie Munger, of course, one of the most famous investors
over the last 50 years observed that we have a new bunch of in
emperors, and they're the people who vote the shares in index
funds.
I think a lot of Americans, of course, own shares and index
funds. They don't necessarily realize that when they hand their
money over to an index fund, they're handing their money over
to a very active political participant in our economy. And it's
something that, I think, this Committee we should spend a lot
of time on in the coming years.
But Munger was specifically referencing the, ``Big Three,''
asset managers. Could you just highlight why are they the Big
Three? Who are the Big Three?
Mr. Uyeda. With respect, generally, I believe Vanguard,
Blackrock, and State Street are among the Big Three. There are
a number of other big asset managers too, although I don't have
the specific assets under management.
Senator Vance. Yeah. So my staff has compiled that
information for me. I'm sure you're not surprised by this, but
these three asset managers control the three largest index
funds.
Together, they manage around $20 trillion in assets. An
extraordinary amount of assets that they control. Accounts for
about 34 percent of all mutual fund assets as of 2015. They
market their funds as passive or as index tracking. In other
words, if you sign up for an index fund, you don't think that
you're signing up for an active participant in the market.
But I'm curious, Mr. Uyeda, I mean, is that actually
accurate when the American people think that they're giving
their money over to an index fund, and it's just going to track
the general trajectory of the stock market? Is that actually
what happens, or do these index funds participate a little bit
more aggressively in the management of some of these companies?
Mr. Uyeda. Well, Senator Vance, I would distinguish between
the fund itself and the advisor. The fund itself, investors----
Senator Vance. Sure.
Mr. Uyeda. ----are very much looking to something that
tracks very closely. In fact, that one of the criteria you
would look at is how closely does the return track, the
underlying index. The managers themselves have voting power not
only of the assets that are held in the index funds, but any
other assets that that manager oversees, whether it's a
collective investment trust, actively managed funds, separately
managed account, and so on.
Senator Vance. And am I right that they use their power as
massive institutional investors to effectively direct steward
stewardship activities, right, and this is the way in which
they sort of use and infect their own politics into the
management of some of these companies?
Mr. Uyeda. Yes, Senator. That's correct. A lot of the
advisors put out their stewardship policies and promote that.
Senator Vance. So here's what I find a little bit weird,
right? So there are 13(d) and 13(g) disclosures. OK? These
index funds, which of these do they file, and why do they file
those?
Mr. Uyeda. My observation is most file on Schedule 13(g)
for a passive investor.
Senator Vance. And 13(g) allows them to avoid disclosure of
a lot of their activities. Right? So there are a lot of things
that you don't have to put in a 13(g) that you would have to
put into 13(d). Is that right?
Mr. Uyeda. That's correct.
Senator Vance. And do we think that sometimes their
activities rise to the level of actually statutorily requiring
them to do a 13(d) disclosure?
Mr. Uyeda. That would be a concern. Well, it's a facts and
circumstance basis to the extent that one is trying to
influence control over an issuer. And you can oftentimes do
that with a very large stockholder that raises questions
whether you ought to be found on 13(d) rather than 13(g).
Senator Vance. Yeah. And I'm mindful of my time running
short here, so I'll cut this off now. But, you know, something
I'd like to work with you, Mr. Uyeda, and my staff here, is if
they should be filing much more substantive disclosures that
actually give the American people insight into how $20 trillion
of their money is being spent, and yet they're filing a 13(g)
disclosure. That probably means there's something going on.
I don't want to put my tinfoil hat on here too much.
Sometimes I do that in the Banking Committee, and the Chairman
gets mad at me. But I really worry that there's a massive part
of the American economy that lays hidden from the American
consumers and from the lawmakers who represent them. That may
be something is something we should look at. Thank you.
Chair Brown. Senator Vance, I can't think of when I was mad
at you, so.
Senator Menendez is recognized. From New Jersey.
Senator Menendez. Overdraft fees are borne almost
exclusively by those who can least afford them. A 2021 report
by the Financial Health Network found that nearly 60 percent of
all overdraft fees in 2020 were paid by low and moderate income
households, and about 25 percent were paid by Latino
households, specifically.
Some banks have either decreased or eliminated overdraft
freeze altogether in large part due to increased scrutiny and
oversight. But a recent report from California State regulator
showed some credit unions took in $252 million in overdraft and
nonsufficient fund fees in 2022. Thirty of the credit unions in
the report earned half or more of their net profit just from
overdraft and NSF fees.
Ms. Otsuka, can you commit to looking into this and seeing
if there needs to be more oversight of certain credit unions
whose profitability is overly reliant on overdraft fees?
Ms. Otsuka. Yes. Thank you for the question, Senator. I
think consumer protection is absolutely important, and making
sure financial services are affordable is critical. And so if
confirmed, yes, I am committed to looking more into this issue,
and following up with you and your office.
Senator Menendez. Thank you. Overdraft fees are a major
reason why so many Americans are still hesitant to enter the
formal financial system, and I hope the NCUA will be closely
monitoring this issue and ensure more is done.
Two years ago, the SEC's Asset Management Advisory
Committee unanimously submitted four recommendations for
actions the SEC could take to improve diversity in the asset
management industry. Since your confirmation when you said that
you support holding a vote on these recommendations, the SEC
has adopted two of the recommendations in the form of staff
guidance, but has not taken action on the other two.
Mr. Uyeda, can you commit to advocating for a vote on the
other two recommendations, particularly the requirement for
enhanced disclosures by investment companies and advisors
regarding diversity within their workforces and leadership?
Mr. Uyeda. Senator Menendez, yes, I commit to having in
consideration of those two remaining issues. It's statutory
required. The agenda, though, is set by Chair Gensler, to
decide what goes on for consideration by the Commission.
But as someone in my staff's role at the SEC work very
closely with the Asset Management Advisory Committee, I do take
their recommendations very seriously.
Senator Menendez. I appreciate that the chairman ultimately
will set the agenda, but he very often will turn to his fellow
commissioners for votes on a variety of things. And if his
fellow commissioners are advocating for a vote, at least on
these issues, I think we may see the light of it. So I hope
you'll be an active participant in urging a vote.
These are noncontroversial recommendations that I think the
commission should have acted on a long time ago. I've raised
this issue with Chair Gensler repeatedly. I intend to keep
raising it with nominees to the SEC until we see action taken.
So I look forward to seeing your effort in that regard.
Congressman Bachus, good to see you. In previous years, Ex-
Im's competitiveness report has included information about the
percentage of Ex-Im's direct small business support that went
to minority and women-owned businesses. However, this
information was not included in the most recent report. When
Congress reauthorized the Ex-Im Bank in 2019, we specifically
included language to encourage the participation of minority
and women-owned businesses in international commerce to make
the bank more accessible to these businesses. It's important
that Ex-Im continue to report to Congress on how well it's
accomplishing that part of its mission.
So, if confirmed, will you commit to ensure Ex-Im's future
competitiveness reports includes robust data regarding the bank
support for minority and women-owned businesses?
Mr. Bachus. Yes, I will. And I'll also go a step further
and find out why that information was not in the last report.
Senator Menendez. I appreciate that. Finally, Ms. Fain, the
FDIC's latest OMWI report shows that Hispanic representation,
both in the overall workforce and in management, remains
unacceptably low. Little signs of progress. Less than 5 percent
of the FDIC's workforce is Hispanic or Latino, virtually
unchanged from 2021. I've heard time and time again from Chair
Gruenberg that and other FDIC's nominees that this is a
priority. But actions speak louder than words.
If confirmed, will you commit to conducting a review of
FDA's policies and strategies regarding increasing Hispanic
representation in the agency?
Ms. Fain. Certainly, Senator, and thank you for the
question. If confirmed, I'm certainly interested in
understanding the implementation of FDIC's policies toward its
consumers.
Senator Menendez. I hope not only toward its consumers, but
to its actually creating a diverse workforce that represents
its consumers. Thank you, Mr. Chairman.
Chair Brown. Thanks, Senator Menendez.
Senator Britt from Alabama is recognized.
Senator Britt. Thank you, Mr. Chairman. Thank you all for
being here, and congratulations on your nominations. I
particularly want to thank Congressman Bachus. Thank you so
much for reaching out to my office. And also to you--how do I
say your last name?
Ms. Otsuka. Otsuka.
Senator Britt. Otsuka. Oh, I am going to get that wrong,
but I'm going----
Ms. Otsuka. No, it was pretty good.
Senator Britt. ----to try really hard. OK. Otsuka. The two
of you reached out for courtesy meetings, and I can't tell you
how much I appreciate that. Thank you. I'll start with you. So,
as you know, credit unions play an integral part of our
economy. I know in Alabama, we are so proud of our local credit
unions and the role they play in economic development, and job
creation, and allowing people to actually reach their American
dream.
When we look at it, you know, in fact, this has been all
going on for years, and years, and years. Today is the 75th
annual International Credit Union Day. So I am particularly
pleased to be able to highlight this in the important role
these institutions play in our banking ecosystem. We must
continue to promote an environment that allows financial
institutions to thrive and continue to best serve their
customers and their members so hardworking families can
continue to take their family's life to the next level, that
they can achieve things that they maybe thought weren't
possible, and we continue to keep that American dream alive.
In order to accomplish this, it's imperative that the
Senate confirm individuals who understand the nuances of the
particular industry and are willing to do their due diligence
before taking regulatory action. So, Federal regulators must
fully consider the impacts of these actions that they take in
Washington on all financial institutions and consumers and the
states and communities across our great Nation.
So, my question for you, as a staffer, and a former staffer
myself, can you briefly describe what you believe are your
experiences here on the Senate Banking Committee and otherwise
that qualify you to regulate the credit union industry and the
tools that you will use and take with you and that role if
confirmed?
Ms. Otsuka. Thank you for the question, Senator Britt. So I
have spent most of my career in public service and have more
than a decade in financial services law and policy. I've spent
the last several years as a staffer for this Committee handling
a wide range of financial services issues, but that also
included credit union policy and oversight.
You know, I've worked with many of my colleagues who are in
this room today on bipartisan legislation to strengthen the
credit union system, to protect credit union members and
employees, and a number of other credit union-related issues.
And I completely agree with you that credit unions play a very
important role, particularly in local economies.
And then prior to my service on the Committee, I spent 10
years at the FDIC as a staff attorney. So I'm very familiar
with the role that a regulator like the NCUA should play in
supervising credit unions and financial institutions.
Senator Britt. Excellent. So the NCUA Chairman, Todd
Harper, has publicly announced consumer financial protection as
a priority for the agency. This administration and various
regulators, including the CFPB, have time and time again gone
far outside their scope to dramatically alter the financial
sector under the guise of what are consumer protection. Things
like slashing fees and requiring unnecessary ESG-related
information from financial institutions. These types of
policies usually steer consumers away from their local and
trusted credit unions or community banks, and make it harder
for institutions to do business.
My question is, can you commit to us today that, if
confirmed, you will not use your position as a credit union
regulator to support measures like these that far exceed the
NCUA's mission?
Ms. Otsuka. Thank you for the question, Senator. If
confirmed, I will take the NCUA's mission very seriously.
Senator Britt. Thank you.
Ms. Otsuka. And I think one thing that I've learned,
especially from my time working on this Committee, is that
talking to stakeholders in the credit union system, and the
broader financial system, is extremely important because you
can understand what concerns and what issues are out there. And
I think as a regulator, you want to have an open line of
communication and provide transparency. Because ultimately, I
think regulators and financial institutions share the same goal
of making sure that people have access to financial services.
Senator Britt. Absolutely. And last question. Chair Harper
also explicitly vocalized his intent for the NCUA to be more
active in the climate space. What's your perspective on the
appropriate role of the NCUA as it relates to climate-related
financial risk?
Ms. Otsuka. Senator, so I think regulators are required to
make sure that credit unions manage risks. And many credit
unions already understand the types of risks that they're
expected to manage. They do that every day in their normal
business.
And so I think that's the appropriate role of a regulator,
you know, as long as the institutions are following the law,
and mitigating and managing risks appropriately, I think, you
know, that's how a regulator can ensure that financial
institutions are safe and sound.
Senator Britt. Well, I appreciate your time, and the
acknowledgement that our local credit unions and community
banks are the economic engines for our small communities. Thank
you.
Chair Brown. Thank you, Senator Britt.
Senator Cortez Masto of Nevada is recognized.
Senator Cortez Masto. Thank you, Mr. Chairman. I do have to
agree with my colleague from Alabama. I'm a big supporter of
credit unions. It was the first account I opened as a very,
very young girl. My father took me there to open my first
account.
Let me, first of all, congratulate all of the nominees and
all of the family members who are there listening to all these,
hopefully, intelligent questions coming the way toward your
family. It's an honor always to be a part of these hearings and
recognize so many that are willing to serve at a Federal level.
So, thank you.
Ms. Fain, let me start with you. Earlier this year--we've
talked a little bit about this--when Silicon Valley Bank and
Signature Bank failed, the FDIC used the Deposit Insurance Fund
to repay deposits that exceeded its $250,000 limit. The FDIC
also used the DIF to help absorb some of the losses of the
failed First Republic Bank to help facilitate its sale to
JPMorgan Chase.
What lessons can the OIG take from these three bank
failures, and is there potential for reform of internal
processes to strengthen the FDIC to prevent such large bank
failures?
Ms. Fain. Thank you, Senator, for the question. Certainly,
I'm familiar with the bank failings as a private citizen. I do
not have access to some of the internal deliberations and
interactions within the agency itself and the IG itself.
But I am aware that the Office of Inspector General is
currently completing two material loss reviews that are
statutorily required. And I am very keen once those are issued
to understand what, if there are any findings, those
recommendations are, and how those reports would inform the
oversight work of the Inspector General's Office. And
certainly, anything else with regards to the agency.
Senator Cortez Masto. Thank you. And I realize you're not
there yet, based on the information you do have of the IG's
office, is there concern that it's underfunded or understaffed?
Ms. Fain. That's something that I would need to assess, if
confirmed, but I certainly have looked at their budgets and
their asks.
Senator Cortez Masto. Well, please don't hesitate to come
back. Not that we're going to give you what you need,
unfortunately. But I do want to hear, and there is a fight for
this independence. I think it is so important, and part of that
is making sure you're adequately funded and resourced. So,
thank you.
Ms. Fain. Thank you.
Senator Cortez Masto. So Ms. Slacik and Mr. Brodsky, you've
been quiet on the other end, so I'm going to direct my
questions to you. I only have 5 minutes. So similar to FDIC
deposit insurance, the Securities Investor Protection
Corporation ensures brokerage accounts up to $500,000 per
customer in the event the brokerage fails. And also similar to
the FDIC, the SIPC, and the SEC's Office of Investor Education
and Advocacy, they recently published a bulletin to help
educate investors about SIPC protection for brokerage accounts.
I'm curious for both of you, do you believe that the SIPC's
brokerage insurance adequately is understood by the average
investor, or is there more that should be done? And Ms. Slacik,
I'll start with you.
Ms. Slacik. I think this past year, particularly with the
bank failures, a lot of attention has been put on, ``Well, what
about my brokerage account?'' I think a lot of people do
understand. They see at the bottom of their statements what the
SIPC insurance does.
But I don't think we've done a good enough job. I think we
can go out and make sure people understand what we do cover and
what we do not cover. I don't think there's as good of an
understanding of that as there could be. And it certainly is
our intention, both the board, and the staff, and management
that we need to do more in that regard--what we do cover and
what we don't.
Senator Cortez Masto. And also add to this, the crypto
investor. I mean, is there more that we should be educating
that crypto investor that they're not covered?
Ms. Slacik. Yes.
Senator Cortez Masto. OK. Thank you.
Ms. Slacik. I think that's a very good question. It's an
important question. And until there's a better understanding of
that in that market, they need to understand that it's not
covered.
Senator Cortez Masto. Yeah. Mr. Brodsky.
Mr. Brodsky. Yes. Thank you for the question. We are
currently engaged in a joint effort with the SEC to educate
investors. You can never do enough, but that's necessary,
particularly with regard to young investors who are using the
brokers. I don't think they have any idea what, what the
protections are.
And the other thing is that we joined recently with IOSCO,
which is the International Organization of Securities
Regulators. They recently had World Investor Week to raise
awareness of that. So I'd say we're doing it, but we have to do
more.
Senator Cortez Masto. Thank you.
Thank you to all of the nominees for your willingness to
serve. Thank you, Mr. Chairman
Chair Brown. Thank you, Senator Cortez Masto.
Senator Van Hollen from Maryland is recognized.
Senator Van Hollen. Thank you Mr. Chairman, and
congratulations to all of you on your nominations. As
Congressman Bachus knows, we were doing a lot of running around
and trying to do many things at once. So good to have the
chance to get by.
And if I could start with you, Spencer, if I may, on Ex-Im,
you know, one of the big challenges we've got is making sure
that we have a unified strategy when it comes to providing
exports for American made products. Ex-Im is a big piece of
that. But we also have other instruments in the Government,
including the DFC, the Development Finance Corporation and
others. And I'm thinking about some of the big challenges we
had ahead. We had a meeting yesterday convened by Senator
Warner and others to focus on critical minerals, for example.
Could you just speak to the role that Ex-Im Bank can play
in that area, because it's an area where the United States is
way behind both in terms of access to mining critical minerals
for the batteries that will power electric vehicles, that are
powering electric vehicles, and the processing of those
critical minerals?
So could you just talk, number one, about Ex-Im's role in
that, but also the extent to which, in your experience, Ex-Im
is actually working with these other agencies within U.S.
Government to meet critical national needs?
Mr. Bachus. Lithium, one of our critical minerals is--I'm
sorry, did I turn--is it on now?
Senator Van Hollen. It is.
Mr. Bachus. OK. As you know, lithium is one of the critical
minerals, and it's absolutely essential in our electric
vehicles. And really, our domestic supply is inadequate. One of
our Make More in America projects that was approved just
recently was to supply Aquatech with laboratory equipment and
testing equipment to test the content of lithium because we
didn't have that capacity. And it's a small business. It also
is a minority-owned business, you know, which is one of our
charges.
But it is one of the 10 areas that we've identified. I will
say that some people take that to mean we don't operate in
other areas. We've been operating in other areas. We have a
staff of about 330 people. We should be staffed at about 500.
We have 12 regional offices. We only have 8 regional directors,
only regional 8 staff people in our offices. At one time we had
24. As I said earlier, our net-zero appropriation is a real
challenge.
One thing we've done is to try to get out there through our
website. I discovered shortly after being at Ex-Im when I was
at a small business, and they told me that they had gotten on
our website and they couldn't figure out how to access what we
were doing. And we've now updated that, simplified it, and
we've linked it with the SBA, Department of Agriculture,
Commerce Department, other programs. But I think the best way
to figure out how to do a better job is to get out and visit
these companies.
Senator Van Hollen. I appreciate that. Thank you. And I may
circle back with you on the question of making sure we have
coordination within the U.S. Government because so many of
these, you know, authorities, like Ex-Im's authority, really
work better when you have a multiplier effect of working with
others like the DFC.
But if I could, Mr. Commissioner Uyeda, thank you for all
the work that you've been doing. And thank you, and the SEC for
your help with Senator Kennedy and myself on our bipartisan
legislation, the Holding Foreign Companies Accountable Act,
which passed into law, making sure that we protect American
investors, especially smaller investors by ensuring that in
this case, China is complying with the same auditing rules as
any other companies that trade on the U.S. exchanges.
We've also introduced the Holding Foreign Insiders
Accountable Act to make sure that the insider trading rules,
the rules against insider trading that help protect American
investors that apply to American companies here at home also
apply elsewhere. So I wanted to thank you for that.
Are there other areas that we should be doing to better
protect American investors when it comes to ensuring that
worldwide people are complying with the transparency rules that
help protect our exchanges and American investors?
Mr. Uyeda. Well, first, when I was on detail at the Senate
Banking in the 117th, I was really pleased to help work on a
predecessor bill, and was quite happy when Congress passed the
Holding Foreign Companies Accountable Act. So I'm really
pleased that that is in place. The PCAOB has done what they
need to do. And from the reports I've been receiving, I'm at
least cautiously optimistic that it will do what it was
intended to accomplish.
With respect to other foreign private issuers, we have a
fairly simple rule. If you want to come and list in the United
States, raise capital in the United States, you need to provide
the disclosures required in our laws and our rules. We have
between our division of corporation finance and our division of
enforcement effective tools to ensure that the appropriate
disclosure is being made by those entities.
Senator Van Hollen. Thank you. We look forward to working
with you to make sure we plug all the loopholes. Thank you, Mr.
Chairman.
Chair Brown. Thanks, Senator Van Hollen.
Senator Fetterman from Pennsylvania is recognized.
Senator Fetterman. Thank you, Mr. Chairman. So Mr. Uyeda,
I'm going to be asking a question that it's not meant to be
combative or take anything like that. Honestly, it's an honest,
honest question, and apologize I if it's ever been touched on
before. But I really just want to ask a very basic kind of a
question, and that is; should crypto exist? Is that something
that should endure? And where does its value come from? You
know, where is it derived?
Mr. Uyeda. I can tell you, you know, my perspective as a
regulator. You know, our securities laws that we're charged
with enforcing are neutral on the merits of a particular
investment. The key question is whether they're providing all
the disclosures. There has been, I know, a lot of back and
forth with different views expressed as to whether or not
crypto falls within our jurisdiction, or whether it falls
within the jurisdiction of the CFTC.
There is a fair amount of activity in this. Events of last
year have shown then for those who purchase crypto there are
various risks involved in that. And, you know, I think it is
really important the efforts that are going on in Congress to
provide some more clarity specifically as to which regulatory
agency's jurisdiction it belongs to.
Senator Fetterman. So I guess drilling down on that, it's
like how can you really--like, how does it exist? You know, is
it because really when you look down, it's really just a
mathematical kind of an idea. And, you know, I mean, there's a
lot of mathematical ideas and theories that hasn't been
monetized. You know, is that strange or is this something--the
next step, the evolution of money, or is it really just kind of
like a fad?
Mr. Uyeda. Well, I'd love to say that I have an in-depth
technical knowledge of that, but I don't. I know one of the
things with the capital markets is that we allow innovation.
Should that be a security and should they be raising money, we
require the disclosures. When one looks--at least, when I look
back, I became a corporate lawyer in the 90s when there were a
lot of, ``How do we monetize the internet? How does that
occur?''
And so sometimes you don't know. Failure is actually a
fairly good teacher for investors. As a regulator, I get
concerned about fraud. And, you know, this is one where it's
complicated by the jurisdictional issues as to whether or not
it is a security or it is not.
Senator Fetterman. Yeah. Drilling down on what you
mentioned. Back in the late 90s, I remember it was go, go, go.
And if you just slap a .com after anything, you could raise
millions, if not billions on that. And many of them failed, but
there really was value behind the idea of something beyond
.com.
And I still can't figure out what that is, you know, for
crypto. And I think it was Warren Buffet who said that he
wouldn't pay a quarter for every, you know, crypto-type, if he
could. And he's, you know, much smarter and definitely richer
than I am. And that's, kind of, a profound statement to make,
and it's still having the conversation.
And I really don't fully understand in the way, and
should--even if crypto does exist, could it be just one
standard like Bitcoin or anything, or can even more than one
even survive is just a question. And to me it's just like an
open kind of conversation. I think that's really important part
of the American and world economy; especially given that it may
have been involved in the Israeli attack. So, thank you.
And Mr. Bachus, as well, I had the pleasure of meeting with
you in my office yesterday. And I was very pleased with what
you said, and fully have expected and absolutely will announce
today that I plan to vote for you and support you.
And I understand that you are the choice of the Republican
colleagues, and I absolutely would support that. And I am not
the kind of Senator that does not, kind of, find an obscure
tweet or find out, you know, that you had, you know, a really
bad taste in fashion or something to find out a reason not to
vote for you.
Because I believe that I may not agree with anything that's
ever you said or ever that you've done, but I support the right
of the Republicans to have their choice. And I absolutely
believe in the Export Bank as well, and I look forward to
voting for you. And thank you for spending time with me in my
office yesterday.
Mr. Bachus. Thank you.
Senator Fetterman. Mr. Chairman.
Mr. Bachus. I think the world needs bipartisanship and
respect for each other. And you certainly showed that to me
yesterday, and I appreciate it.
Chair Brown. Thank you, Senator Fetterman.
Thanks to the six of you for being here today and providing
testimony. I hope we can work together as a Committee to move
forward quickly. I appreciate the Congressman's comments about
bipartisanship in response to Senator Fetterman working
together on confirmations of today's nominees.
For Senators who wish to submit questions for the record,
those questions are due at 5 p.m. Monday, October 23rd. All
Members of the Committee, whether asking questions today or
not, are notified of that date. To the nominees, we'd like you
to have your responses back to us by Monday, October 30th, by 5
p.m. You'll have 1 week to get them. Thank you for your
testimony today. With that, the hearing is adjourned. Thank
you.
[Whereupon, at 11:36 a.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 CHAIR SHERROD BROWN
Good morning, everyone.
First, I'd like to thank Senator Sinema for her years of service on
our Committee, and welcome Senator Butler, who will be joining the
Senate Banking and Housing Committee. We're excited to work with her.
The Committee meets today to consider six nominations--four of whom
are renominations:
Ms. Tanya Otsuka to be a Member of the National Credit Union
Administration Board;
The Honorable Mark Uyeda renominated to be a Member of the
Securities and Exchange Commission;
The Honorable Spencer Bachus renominated to be a Member of the
Board of Directors of the Export-Import Bank;
Ms. Jennifer Fain to be Inspector General of the Federal Insurance
Deposit Corporation;
The Honorable Claudia Slacik renominated to be a Director of the
Securities Investor Protection Corporation; and
The Honorable William Brodsky renominated to be a Director of the
Securities Investor Protection Corporation.
We thank the nominees for appearing here today and for their
willingness to serve our country in these important positions.
If confirmed, these nominees will play an important role in the
success and stability of our financial system.
The President has nominated Tanya Otsuka to be a Member of the
National Credit Union Administration Board. If confirmed, she would be
the first Asian American to serve on the NCUA Board in the agency's 53-
year history.
Ms. Otsuka is exceptionally well-qualified to serve on the NCUA
Board.
Ms. Otsuka has served as a key member of my Banking and Housing
Committee staff--crafting legislation and providing strategic advice to
me on banking issues and credit union policy and oversight. A career
public servant, she first joined the Committee in 2019 as a Legislative
Fellow detailed from the FDIC, and became a permanent member of my team
in 2020--where she currently serves as senior counsel.
Within days of her joining the Committee, the coronavirus pandemic
endangered our financial system.
Ms. Otsuka immediately got to work with then-Chair Crapo's staff on
critical provisions of the bipartisan CARES Act, so that our credit
union system would remain strong and stable.
When our financial system was tested earlier in the year by the
largest bank failures since 2008, Ms. Otsuka worked to keep committee
offices informed about the rapidly evolving situation, and was in
constant contact with regulators and other stakeholders.
And she has played a pivotal role in legislation advanced by the
Committee this year, including our RECOUP Act to hold failed big bank
executives accountable, which received strong, bipartisan support by
this Committee.
Ms. Otsuka has garnered strong support from both credit unions and
banks, because they recognize that she is hardworking, intelligent,
open minded, and focused on ensuring that the financial system works
for all Americans.
River City Federal Credit Union out of San Antonio wrote to the
Committee, ``[w]e appreciate Tanya's work to raise the visibility of
credit unions, remove barriers to growth, and support credit unions in
deepening their impact in the communities they serve, all of which goes
towards increasing financial stability for credit union members. Her
thoughtful approach to this work and strong focus on the financial
well-being of credit union members will make her an asset to the NCUA
Board and an effective leader in the credit union system.''
Michael Adelman, President and CEO of the Ohio Bankers League,
wrote ``[w]hile we may have differed on specific policy decisions, Ms.
Otsuka always did her homework and gave OBL and other interested
parties a fair shake. She welcomes a diversity of views.''
Mr. Adelman went on to say, ``I am grateful for the genuine
opportunity she always gave the OBL and our member institutions to be
heard.''
Ms. Otsuka is the type of regulator we ought to have in these
critical economic positions.
Congratulations, Ms. Otsuka.
The President has renominated Mark Uyeda to a full term on the
Securities and Exchange Commission. Mr. Uyeda has served as a board
member of the Commission since last year.
Prior to his confirmation to the Commission, Mr. Uyeda was detailed
to then-Ranking Member Toomey's staff from the SEC.
Mr. Uyeda first joined the SEC in 2006 where he served in several
roles, including counsel for Commissioners Paul Atkins and Michael
Piwowar as well as Senior Adviser to Chair Jay Clayton.
Earlier in his career, Mr. Uyeda worked in private law practice, as
well as for the California Department of Corporations.
Welcome back, Mr. Uyeda.
The President has renominated Congressman Spencer Bachus to the Ex-
Im Board. Congressman Bachus first joined Ex-Im as a Board Member in
2019. Along with Judith Pryor and then-Chair Kimberly Reed, he played
an important role in helping reopen Ex-Im after a 4-year partial
shutdown.
From 1993 to 2015, Congressman Bachus represented Alabama's sixth
district--serving on the House Financial Services Committee where he
was both Chairman and Ranking Member.
Good to see you again, Congressman.
The President has nominated Jennifer Fain to be Inspector General
of the Federal Deposit Insurance Corporation--a role that carries great
importance given the recent bank failures. She brings years of audit,
inspections, evaluations, and investigations experience, including in
the areas of financial services and consumer protection.
Ms. Fain possesses extensive experience in Federal Government
oversight--serving in several agencies' Inspector General offices. Most
recently, she served in senior leadership roles at the Ex-Im Bank's
Office of Inspector General--notably as Deputy Assistant IG for
Inspections and Evaluations, Assistant IG for Audits and Evaluations,
Deputy IG, and Acting IG.
Prior to joining Ex-Im, Ms. Fain served in IG offices at HUD, FHFA,
and the U.S. Election Assistance Commission.
Glad to have you here, Ms. Fain.
Today, we also consider the nominations of two qualified nominees
to the Board of Directors of the Securities Investor Protection
Corporation--Claudia Slacik and William Brodsky. Both nominees have
significant financial services experience.
Ms. Slacik possesses more than 30 years of financial services
experience--both in the public and private sectors. The Senate
confirmed her by voice vote to the SIPC board last year where she
currently serves as Chair.
Prior to serving on SIPC, Ms. Slacik was the Chief Banking Officer
at the Export-Import Bank. Before entering public service, she served
in senior level roles at several large banks.
Glad you are here with us today, Ms. Slacik.
Mr. Brodsky possesses five decades of securities and investment
business experience. The Senate confirmed him to the SIPC board last
year by voice vote.
During his career, Mr. Brodsky has worked in senior level roles at
several major exchanges, including the American Stock Exchange, Chicago
Mercantile Exchange, and the Chicago Board Options Exchange--where he
served as Chairman and Chief Executive Officer.
Welcome, Mr. Brodsky.
Thanks again to the nominees for appearing here today.
______
PREPARED STATEMENT OF SENATOR TIM SCOTT
Presidential nominees serve an important role in carrying out and
executing the laws of the United States.
As Members of this Chamber, we have a necessary, constitutional
role in providing advice and consent on presidential nominees.
The American people don't get a vote on these nominees--but they do
expect us to scrutinize and evaluate them--a duty we must take
seriously.
As I have said at past nominations hearings, I believe all nominees
to senior positions in the Federal Government must be well qualified
for the positions for which they have been nominated. They should,
inspire confidence, have a strong respect for the rule of law, and
support policies that promote opportunity and the American Dream.
They must focus on policies that give Americans in every corner of
the United States a chance to improve their economic standing and build
success for the future of their families.
Several of the nominees before us today appear to meet this
standard.
First, we have Mr. Uyeda, who is currently serving as a member of
the Securities and Exchange Commission (SEC) and has been renominated
for this position after being confirmed by the Senate by voice vote on
June 16, 2022.
Mr. Uyeda is a dedicated public servant and an independent voice on
the Commission at a time when the agency has been going through an
unprecedented overhaul of our U.S. capital markets.
Indeed, the extraordinary volume and breadth of these rulemakings--
many of which are complex and interconnected--is staggering and will
unnecessarily increase the cost of companies going public. Moreover,
the Commission, under Chair Gensler, is not stopping with public
issuers. Chair Gensler's new disclosure requirements, particularly on
climate-related risks, could result in a significant increase in
compliance costs, not only on large issuers, but on private small
businesses and family owned farms downstream in companies' supply
chains. Similarly, Chair Gensler's rulemaking on private funds will
limit access to capital and push diverse fund managers out of the
market.
I am confident that Mr. Uyeda, the first Asian Pacific American to
serve as an SEC commissioner, will continue to adhere to the rule of
law and strive to keep the SEC's focus on its three-part mission of
protecting investors, maintaining fair and efficient markets, and
facilitating capital formation.
Second, we have Mr. Bachus a former Member of the House of
Representatives, who I served with in the other chamber, and a former
Chairman of the Financial Services Committee. He has been renominated
to serve as a Board Member at the Export-Import (Ex-Im) Bank, where he
has served since May of 2019.
The Ex-Im Bank plays a critical role in helping American businesses
obtain funding to compete globally on a level playing field.
Special attention must be paid to Ex-Im as the Biden
administration, with its all-of-Government approach to advance climate-
related priorities, is seeking to steer the bank's focus away from
businesses' competitive needs and towards environmental issues. This
was apparent when Ex-Im announced that it would prioritize financing
under its ``Make More in America Initiative'' to ``environmentally
beneficial projects.''
Additionally, as American industry must compete in a global market
with foreign competitors, like China, that often receive extensive
support from their own country's export credit programs, I am glad that
a leader like Mr. Bachus has been renominated for a position on the
Board of the Ex-Im Bank.
Third, we have Ms. Fain, who has been nominated to be the Inspector
General of the Federal Deposit Insurance Corporation (FDIC).
Ms. Fain has served for over 22 years in the Inspector General
community, including most recently as the Deputy Inspector General for
Ex-Im. She also served as Acting Inspector General for Ex-Im for nearly
3 years.
If confirmed as the FDIC Inspector General, I hope that Ms. Fain
will remain an independent watchdog at an agency that is still
rehabbing its image from Operation Choke Point, President Obama and
then-Vice President Biden attempted to use the FDIC to pressure banks
into cutting off access to credit for industries that they disagreed
with on a political basis under Chairman Gruenberg.
And where more recently, again under Chairman Gruenberg, the Agency
has issued sweeping regulations that do not appear to have undertaken
appropriate cost benefit analysis and has joined political
organizations such as the Network for Greening the Financial System,
which do not reflect the Agency's scope or mission.
As the Inspector General, you would have the important role of
ensuring there is no waste, fraud, or abuse at an independent agency
that is not subject to Congressional appropriations. I look forward to
hearing from you today about the importance of applying the law,
ensuring the safety and soundness of our financial system, and focusing
on accountability by identifying actual imminent financial risks,
rather than playing the role of a climate regulator.
Similarly, if confirmed, you would be dealing with an agency that
is blemished from recent events where its members, including Consumer
Financial Protection Bureau (CFPB) Director Chopra, staged an
unprecedented coup and forced out Chairman Jelena McWilliams, further
damaging the FDIC's reputation and distracting from its mission.
All of this is to say, Ms. Fain, I look forward to hearing from you
on these topics, and if confirmed, you will have your work cut out for
you.
Next, we have Ms. Otsuka, who has been nominated to serve on the
board of the National Credit Union Administration (NCUA).
Ms. Otsuka is currently Senior Counsel for the majority staff of
the Senate Banking Committee under Chairman Brown, where she has
handled the Committee's work on banking and credit union issues since
March 2020.
NCUA is an independent Federal agency that supervises and insures
deposits at federally insured.
As with many other independent financial regulators, I am concerned
that NCUA is focusing too much time prioritizing purported risks
associated with climate change and not enough time on material,
financial risks.
Ms. Otsuka has a good working relationship with my staff, and I
look forward to hearing her views on the risks facing financial
institutions and how she would carry out her duties at the NCUA if
confirmed.
Finally, we have two nominees who have been renominated to the
Securities Investor Protection Corporation (SIPC). Ms. Slacik, who is
currently a member and Chair of SIPC and Mr. William Brodsky, who also
is a member of SIPC.
SIPC protects against the loss of securities held by customers at
brokerage firms, and I am interested in hearing from these nominees
regarding their plans and work to ensure the protection of American
families investing for their retirement, their children, or to grow
their businesses.
Each of the nominees before us is tasked with an important role,
and if confirmed, I hope that all six of these nominees will work every
day to support the American people and maintain confidence in this
great Nation.
______
PREPARED STATEMENT OF TANYA OTSUKA
To Be a Member of the National Credit Union Administration
October 19, 2023
Chairman Brown, Ranking Member Scott, and distinguished Members of
the Committee. It is an honor to appear before you today. Thank you to
President Biden for nominating me, and to Senator Brown for his
support. I also want to thank the Senate Banking, Housing, and Urban
Affairs Committee staff and member staffs for their well-wishes and,
most importantly, for the work they do every day to serve the American
people.
With me today are my spouse of 10 years, Matt, our son, Adrian, and
my sister Natalie. Also with me today are my parents, Cary and Sima
Otsuka, who worked and sacrificed so that my sister and I would have
everything we needed to succeed. They instilled in me a strong work
ethic, sense of purpose, and respect for others. I would not be sitting
here today without their love and support.
I am honored and humbled to be nominated to serve on the Board of
the National Credit Union Administration (NCUA). The NCUA's mission of
ensuring a strong system of cooperative credit is one that resonates
with me both personally and professionally.
Growing up, I spent many summers with my paternal grandparents,
listening to my grandmother tell me stories about her childhood. During
World War II, she and her family were sent to an internment camp in
Arkansas, forced to leave behind most of their possessions, including
their family farm in California. For the rest of the war, my
grandmother and her family were incarcerated in a prison-like compound,
surrounded by barbed wire, because they were Americans of Japanese
descent. At the same time, her brother fought overseas in the 442nd
regiment of the United States Army. My grandfather and his family
shared a similar fate, forcibly incarcerated in Arizona.
My grandmother recounted how difficult it was after the war to make
ends meet when she and her family had lost everything. Like my
grandparents, many Japanese Americans faced the same struggle, and were
often met with discrimination when they tried to deposit money or get a
loan. Some took matters into their own hands, forming a credit union so
that Japanese Americans could access financial services and help each
other rebuild their lives. Today, that credit union is still active and
insured by the NCUA. Experiences like this embody the cooperative
spirit and exemplify the important role that credit unions play in our
communities and economy. It is fitting that today is the 75th
anniversary of International Credit Union Day, which celebrates the
credit union movement's mission of financial inclusion.
As a career public servant with over a decade of experience in
financial services law and policy, I also have a deep appreciation for
the role that independent agencies like the NCUA play in maintaining
stability and public confidence in our financial system. I began my
career as an attorney at the Federal Deposit Insurance Corporation
(FDIC) in the wake of the 2008 financial crisis. During my 10 years at
the FDIC, I gained experience in supervision, enforcement, resolution,
assessments, and deposit insurance--all of which are also critical
functions of the
NCUA. I worked on the implementation of a number of FDIC policy
actions, including many related to the Dodd-Frank Wall Street Reform
and Consumer Protection Act and the Economic Growth, Regulatory Relief,
and Consumer Protection Act (S. 2155).
For the last several years, I have had the honor of serving on the
staff of the Senate Banking, Housing, and Urban Affairs Committee,
managing a wide range of financial services issues, including credit
union policy and oversight. I am grateful to Senator Brown for this
opportunity, and to Senator Crapo, who as the Chair of the Committee in
2019, allowed me the opportunity to serve as a legislative fellow on
detail from the FDIC. During my time on the Committee, I have had the
privilege of working with his staff, Senator Toomey's staff, Ranking
Member Scott's staff, and the staffs of the Members of this Committee.
Together, we have worked on a number of bipartisan bills, including the
CARES Act, which helped maintain the strength of the credit union
system and allowed credit unions to support their members and their
communities through the COVID-19 pandemic. I have seen the positive
impact of Government working for the American people to maintain a safe
and sound financial system--especially in times of uncertainty.
I hope to continue my public service in support of the NCUA's
critical mission and to ensure a fair, competitive, and resilient
credit union system. If confirmed, I will remain committed to the
millions of Americans who rely on the NCUA to safeguard their hard-
earned money.
Thank you, and I look forward to your questions.
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PREPARED STATEMENT OF MARK UYEDA
To Be a Member of the Securities and Exchange Commission
October 19, 2023
Chairman Brown, Ranking Member Scott, and Members of the Committee,
thank you for the opportunity to appear before you today. Joining me in
the hearing room is my wife Masae and watching remotely from California
are other members of my family.
In May 2022, I was privileged to appear before the Committee as the
nominee to fill the 12 then-remaining months on the term of former
Commissioner Elad Roisman. I am grateful for the Committee's support. I
thank the President for his nomination to serve a full 5-year term as a
member of the Securities and Exchange Commission (SEC). If confirmed, I
would be able to continue contributing to an agency where I have served
since 2006.
As the first Asian Pacific American to serve as an SEC
commissioner, I grew up in a world where many immigrant families ran
small businesses. My first job was spending my teenage summers with my
grandfather on his delivery route, where he drove a small truck
bringing fresh produce from the Los Angeles wholesale market to
restaurants and retailers, which were often small businesses
themselves. For these small enterprises, capital was not always easily
obtainable. Nevertheless, their owners had the opportunity to create
and grow businesses that served customer needs, provided jobs, and
generated economic activity. An environment amenable to creating those
opportunities is what makes America a special place for hard-working
and innovative entrepreneurs.
The past 16 months as a commissioner have been the most fulfilling
and humbling time of my public service. Since taking office, I have
provided input and voted on the proposal or adoption of over forty SEC
rulemakings that touch upon nearly all aspects of the capital markets
and its participants.
When evaluating the SEC's policy initiatives, I draw upon my
diverse experiences of nearly 30 years, including as a corporate lawyer
in private practice, as a regulator at the California Department of
Corporations, as a member of the SEC staff, and as a detailee to the
Senate Committee on Banking, Housing, and Urban Affairs. One lesson
that I have learned from these experiences is the need to carefully
assess the costs of regulatory activity, relative to its benefits. Many
of these costs are passed on to workers and retirement savers who are
investing for their futures.
Given the SEC's critical role in overseeing our country's capital
markets, promulgating regulations that are based on data, cost-
effective, and aimed at addressing identified issues is of utmost
importance. Consideration should be given to appropriately scaling our
rules and implementation timelines, so as to not have a disparate
impact on small businesses, including those owned by women and
minorities. Investors from around the world are willing to place their
capital at risk in our markets due, in part, to our regulatory
structure being perceived as effective, efficient, and rationally
applied. It is important that the SEC's rules continue to meet these
expectations. Keeping our markets robust, liquid, and vibrant means
both facilitating capital formation for companies and protecting
investors. One cannot exist without the other.
To close, I would like to express my gratitude and appreciation for
the work of my fellow commissioners and the staff at the SEC. Their
efforts to carry out the agency's mission of protecting investors,
maintaining fair, orderly, and efficient markets, and facilitating
capital formation continue to inspire me every day.
Thank you and I look forward to your questions.
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PREPARED STATEMENT OF SPENCER BACHUS III
To Be a Member of the Board of Directors of the Export-Import Bank
October 19, 2023
Chairman Brown, Ranking Member Scott, and distinguished Members of
the Committee, thank you for considering my nomination to be a member
of the Board of Directors of the Export-Import Bank of the United
States. I also appreciate the opportunities I've had to sit down with
Senators and staff to discuss my nomination.
I am honored to be nominated to serve another term on Ex-Im's Board
of Directors, and if confirmed, would welcome the opportunity to
continue supporting American workers and promoting U.S. business
interests and exports in global markets.
Unfortunately, my wife Linda is unable to join me today, and so I
want to acknowledge her as my best friend and best advocate, who has
been by my side through my entire career in public service. She has
encouraged me every step of the way and makes me a better person.
I appreciate the support many of you provided when I appeared
before the Committee as a nominee in 2017. While much has changed in
the world and at Ex-Im since I was first confirmed in 2019, much has
also remained the same. I remain just as committed to Ex-Im, to its
mission, and the role the agency plays in our economy as I was when
first nominated. While serving on the House Financial Services
Committee, I helped guide the passage of legislation reforming many of
Ex-Im's operational requirements.
In 2015, Ex-Im had a lapse in its authority and was without a
quorum on its Board for nearly 4 years. While this sidelined Ex-Im, it
did not sideline our competitors, including the People's Republic of
China (PRC). Congress recognized this challenge in 2019 when it
provided Ex-Im with a long-term reauthorization and directed the agency
to establish the China and Transformational Exports Program.
As a Member of the Board, I worked in a bipartisan fashion to help
stand up this new Program and help make sure U.S. exports can compete
and win across industries and regions--including significant
transactions supporting the sale of construction equipment to Cameroon
and solar energy goods to both Angola and Honduras.
If confirmed, I would work with my colleagues to help make sure
that we continue to combat the PRC's debt-trap diplomacy and support
the export of high quality, trusted, and reliable U.S. goods and
services around the world.
During my previous term on the Board, I had the honor of traveling
across our country to hear directly from businesses large and small--
making everything from pet food to advanced aviation electronics--about
the role Ex-Im can play in their ability to grow. What I heard from
those workers is that, if given a chance to compete on a level playing
field, they will compete with workers anywhere else in the world and
they will produce the best product at the best price. I truly believe
that and look forward to working with our partners in Congress to make
sure this remains a reality.
My previous tenure on the Ex-Im Board provided me with valuable
experience in discharging the duties of a Board Member, including an
understanding of the tools Ex-Im offers and the challenges facing
American manufacturers. My experience and familiarity with the agency
and its responsibility make me well-suited to serve in this role. Chair
Lewis and my fellow Board Members enjoy a cooperative and collegial
working relationship, and each brings different abilities to Ex-Im.
If I am confirmed by the Senate, I pledge to work with you, as well
as my fellow Board Members, to carry out and advance the mission of Ex-
Im. I pledge to carry out the agency's charter and to review all
applications for financing in accordance with statutory requirements.
Mr. Chairman, Ranking Member Scott, and Members of the Committee, I
truly appreciate your time today and consideration of my nomination. I
look forward to answering any questions you may have.
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PREPARED STATEMENT OF JENNIFER FAIN
To Be Inspector General, Federal Deposit Insurance Corporation
October 19, 2023
Good morning Chairman Brown, Ranking Member Scott, and Members of
the Committee. It is an honor to appear before you today as the
President's nominee to serve as the Inspector General (IG) for the
Federal Deposit Insurance Corporation (FDIC).
I would first like to thank my family, especially my husband Kevin,
who is here today, and my two brothers and their families. My gratitude
must begin with my parents, who exemplified the opportunity of America
and service to the country. My mother emigrated to the United States
from South Korea and labored for years running her small restaurant.
She is gone now but still with me in so many ways. My father enlisted
in the Army as a young man, and those years of his military service
inspired me to pursue a career in public service. For all of these
family influences, I am profoundly grateful. I also thank my colleagues
and mentors who have shared this professional journey with me. I would
not be here without their support and encouragement over the years.
I deeply appreciate the FDIC's long-standing, essential role in
maintaining stability and public confidence in the U.S. financial
system. The FDIC insures deposits; examines and supervises financial
institutions for safety and soundness and consumer protection; makes
large, complex financial institutions resolvable; and manages
receiverships. Simply put: the FDIC helps protect individual Americans
who place great trust in our Nation's banks.
As an independent organization, the FDIC Office of Inspector
General (OIG) plays a vital oversight role in ensuring the integrity
and accountability of FDIC programs. The OIG conducts impactful audits,
evaluations, and reviews. It also pursues criminal and administrative
investigations relating to FDIC employees, contractors, and financial
institutions. Importantly, an OIG's mission is not simply to identify
issues of concern, but also to recommend corrective actions for their
prevention. This proactive function is essential to improve and
strengthen the effectiveness and integrity of the Agency. The OIG
contributes to the successful accomplishment of the Agency's mission.
I have valued this critical role based on serving for over 22 years
in the Federal Inspector General community, most recently as Deputy IG
for the Export-Import Bank of the United States (Ex-Im). Previously I
acted in the role of IG for nearly 3 years, where I led teams of
auditors, investigators, and analysts providing independent oversight
of Ex-Im's programs and operations.
Our office's accomplishments depended on the contributions of
exceptional staff, and my main goal was to empower them to succeed. I
carry these lessons in leadership with me today.
My extensive oversight experience in financial services and
consumer protection matters provides a deep foundation for me to serve
as Inspector General for the FDIC. In prior management positions at Ex-
Im OIG, I directed complex financial and performance audits and
evaluations, and inspections of multimillion-dollar international
transactions. I also held leadership positions in OIG offices at the
Federal Housing Finance Agency (FHFA) and Department of Housing and
Urban Development (HUD), which broadened my expertise in oversight for
other agencies and disciplines, particularly for consumer protection.
My appreciation for public service actually dates back to the
beginning of my Federal career in 1994 when I was a student intern in
the Accounting Division of the United States Mint.
After graduating from college, I worked in HUD OIG's Denver field
office, where for several years I conducted and supervised audits of
HUD programs throughout the Rocky Mountain region. I met with
individuals from all walks of life who were affected by these programs,
including lenders and loan recipients. Those conversations and
experiences made a lasting impression on me. They illuminated the
direct impact that OIG oversight can have on the lives of Americans and
the importance of OIG staff's individual contributions. This
perspective will be essential for me to successfully lead the FDIC OIG.
It would be an honor to serve as the Inspector General of the FDIC.
I would be committed to delivering results in an independent and
objective manner on the effectiveness and efficiency of FDIC programs
and operations, which ultimately would benefit the American people.
Thank you for considering my nomination. I look forward to working with
you and your staffs if I am confirmed. I am happy to answer any
questions you may have.
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PREPARED STATEMENT OF CLAUDIA SLACIK
To Be a Director of the Securities Investor Protection Corporation
October 19, 2023
Chairman Brown, Ranking Member Scott, and distinguished Members of
this Committee, it is an honor to appear before you today. I am
grateful to be nominated by the President for reappointment to a full
term as a member of the Board of Directors of the Securities Investor
Protection Corporation. If confirmed, I would be honored to continue to
serve and do all I can in this capacity to protect investors and
promote confidence in the U.S. securities markets.
Before presenting my background, let me first introduce you to the
members of my family who are here today. First, my spouse Susan Davis,
who was born and raised in Louisiana and who has dedicated most of her
professional life in service to impoverished people in the neediest
parts of the world.
And second, my brother, Kurt Slacik who was born in New York State
and who is now a senior executive at a steel mill in Pennsylvania.
Three of my five nieces, Sophia, Katherine, and Samantha are also
with me.
As for myself, I was born in upstate New York and grew up there as
well as in New Jersey, Illinois, Connecticut, California, and
Massachusetts. I also spent 5 years in Brussels, Belgium, where my
father was a senior executive for a major U.S. company. I am a product
of both public and parochial schools, and I received my undergraduate
degree from Smith College and my MBA from New York University. My
parents are both deceased, but are the children of people who
immigrated to the United States from Eastern Europe in the early 1900s.
I have four siblings who live in Florida, California, Nevada, and
Pennsylvania.
I spent 35 years in the U.S. financial services industry, mostly as
a commercial lender to corporations and an international trade finance
specialist. I also have experience in corporate restructurings, risk
management, and general management. I have served on the boards of
several companies, both public and private, with a specialty serving on
their Audit Committees, in addition to service on several nonprofit
boards. I also served as a fellow at Harvard University's Advanced
Leadership Institute.
Before beginning my service as SIPC Chair in 2022, my most recent
professional position was as the Chief Banking Officer at the Export-
Import Bank where my staff and I analyzed billions of dollars of
transactions for small, medium, and large companies, which supported
hundreds of thousands of jobs. My responsibilities included expanding
the public's awareness of the Bank and overseeing the due diligence and
underwriting of all transactions greater than $10 million before they
were presented to the Bank's Board of Directors. My close working
relationship with the Board also allowed me to gain a keen appreciation
for the role of a Presidentially appointed Board and the
responsibilities of such Board members.
Since early 2022, I have served as Chair of the SIPC Board of
Directors. During that time, SIPC has continued to increase its
reserves and to adapt to new technologies and changes in the securities
industry. In addition, SIPC has overseen the closing of the liquidation
of Lehman Brothers, Inc., in which 110,000 securities customers
achieved a 100 percent recovery of $105.7 billion of customer property
at no cost to SIPC or the American taxpayer. Moreover, the Trustee in
the SIPC-initiated liquidation of Bernard L. Madoff Investment
Securities LLC continues his recovery efforts and has recouped and
distributed more than $14 billion to investors--70 percent of funds
deposited with the firm.
I recognize the importance of SIPC to retail investors and the
vital role it plays in the country's financial system. By ensuring that
individual investors' securities accounts are protected when a broker-
dealer fails, SIPC promotes investor confidence in the U.S. securities
markets. In addition to protecting individual investors from financial
hardship, SIPC helps insulate the markets from the disruption which can
follow brokerage failures.
If confirmed, I will support SIPC's mission to guard investors in
the always evolving securities markets. I pledge to act vigorously as a
principal advocate for robust investor protection. I further pledge to
work diligently with all Members of this Committee to address your
concerns and keep you informed of SIPC's activities.
Mr. Chairman, Ranking Member Scott, and Members of the Committee,
thank you for your time and consideration of my nomination. I look
forward to answering any questions you may have.
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PREPARED STATEMENT OF WILLIAM BRODSKY
To Be a Director of the Securities Investor Protection Corporation
October 19, 2023
Good morning, Mr. Chairman, Ranking Member Scott, and distinguished
Members of this Committee. My name is William J. Brodsky, and I am
honored to appear before you today as one of President Biden's nominees
to serve on the Board of Directors of the Securities Investor
Protection Corporation.
Before presenting my background, let me first introduce to you the
members of my family who are here today. My wife, Joan Brodsky has been
my wife and partner for over 50 years. My son, Michael Brodsky, and his
wife, Aleta Margolis, are also accompanying me here today.
I believe that I am well qualified to continue to serve on the SIPC
Board based on my lifetime career in the investment business and
specifically based on my experience in the securities industry. If
confirmed, I look forward to working with this Committee to ensure that
investors do not lose their hard-earned assets as a result of a
brokerage firm failure.
My career in the securities industry spans more than 50 years. I
began my career on Wall Street serving in summer internships that
included working on the floor of the New York Stock Exchange. I worked
summer jobs at three securities brokerage firms while still in college.
After graduating from law school, I worked in the law and compliance
department of an international brokerage firm for 6 years learning all
aspects of the securities business.
In fact, I was on Wall Street when brokerage firms were failing,
and many customers lost all their investments because SIPC had not yet
been created. So, I know from personal experience the vital role SIPC
plays in providing confidence for investors in having faith in the
safety and soundness of the assets they entrust to their broker-dealer.
I next joined the American Stock Exchange, first as a lawyer in its
policy planning and Government relations department, and ultimately
rising to Executive Vice President in charge of operations.
In 1982, I moved to Chicago to become Executive Vice President and
Chief Operating Officer of the Chicago Mercantile Exchange, now known
as the CME Group. In 1985, I was named President and CEO of the CME and
served in that role until 1997 when I moved across town to become
Chairman and CEO the Chicago Board Options Exchange, now known as CBOE
Global Markets. I served in that position until 2013, when I stepped
down as CEO but remained as Chairman until retiring in 2017. I guided
CBOE's demutualization leading it to become a public company and with
its shares becoming part of the S&P 500 index of major U.S. companies.
During my tenure at CBOE, I also served as Chairman of the World
Federation of Exchanges, the global body of the world's largest
exchanges.
For the past 6 years, I have served as Chairman of Cedar Street
Asset Management, an SEC registered investment advisor, founded by my
son, Jonathan, that invests exclusively in non-U.S. stocks on behalf of
individual and institutional investors. I also serve as Chairman of
another SEC registered investment advisor, Options Solutions, founded
by my son, Michael, that provides investment management services to
investors. Last, I serve as an advisor to Madison Dearborn Capital
Partners, a private equity firm, and OCA Ventures, a venture capital
firm, both of which are based in Chicago.
I have served as a Board Member and Trustee for several public,
private, and nonprofit companies and organizations.
Among these, I previously served as Chair of the investment
committee of Northwestern Memorial Hospital where we oversaw its
multibillion-dollar portfolio, and I currently serve on the Investment
and Endowment Committee of my alma mater, Syracuse University. I have
utilized this experience in my service on the SIPC Board for the past
15 months as Chair of its Investment Committee. During this period, the
SIPC Fund reserves have reached their largest balance, and my goal is
to make sure that SIPC always has sufficient reserves and liquidity
should an unexpected crisis arise.
I affirm my deep commitment to investor education, customer
protection, and to helping to maintain the credibility and importance
that SIPC plays in the viability, integrity, and importance of our
securities markets to the citizens of our country.
I believe in SIPC's mission of protecting investors and, more
broadly, of raising confidence in the U.S. securities markets. I have
devoted my entire career to help further this country's capital
markets, to improving financial literacy and investor education, and to
ensuring the safety and soundness of our capital markets. If confirmed,
I promise to work with the Members of this Committee in advancing these
shared goals.
Mr. Chairman, that concludes my remarks; thank you for your
attention and consideration. I will be happy to answer any questions
that you may have.
Thank you.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
RESPONSES TO WRITTEN QUESTIONS OF CHAIR BROWN
FROM TANYA OTSUKA
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
A.1. In my role as Senior Counsel on the staff of the U.S.
Senate Banking, Housing, and Urban Affairs Committee, I have
been involved in interviewing and recommending candidates to be
hired as interns, fellows, and other staff, and have
prioritized diversity, equity, and inclusion, consistent with
Federal law. In my current and past positions, I have provided
staff with opportunities to take on high-level projects and
assignments to encourage their career growth and development
and facilitated a welcoming and positive work environment for
those on the team. There is always room for improvement when it
comes to attracting and hiring diverse candidates and creating
a workforce in the financial services sector that reflects the
country's diversity. If confirmed, I hope to serve as an
example for other women and people of color who want to pursue
opportunities and grow their careers in the financial services
policy arena.
Q.2. What specific measures will you use to evaluate the
success of NCUA in understanding and addressing the needs of
Black, Indigenous, and people of color (BIPOC)? And, will you
work with the other members of NCUA to keep Congress apprised,
as appropriate, on the progress being made on these measures?
A.2. If confirmed, I will work with the other NCUA Board
members to keep Congress apprised, as appropriate, of the
progress being made to understand and address the needs of
Black, Indigenous, and people of color (BIPOC) communities. To
evaluate the success of NCUA in understanding and addressing
these needs, it is important to look at staff hiring,
retention, and leadership at the NCUA, as well as what work the
NCUA does to ensure that credit unions are serving these
communities. I will look to agency resources, such as the
Office of Minority and Women Inclusion (OMWI) at the NCUA, as
well as engage with stakeholders, such as credit unions,
minority depository institutions, community development
financial institutions, civil rights groups, consumer groups,
and credit union members to continue to make progress on this
important goal.
Q.3. What is your plan for creating an inclusive working
environment for employees within your office?
A.3. In my experience, encouraging teamwork and open
communication promotes inclusivity. If confirmed, I plan to
create an inclusive work environment for employees within my
office by creating a respectful, welcoming, and positive
atmosphere where individuals can share their ideas and work
together to support the agency's mission.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM TANYA OTSUKA
Q.1. The Biden administration passed down a directive to the
financial regulators to consider climate-related risk. The NCUA
recently issued a request for information on climate-related
financial risk, focusing on current and future climate and
natural disaster risks to credit unions, related entities,
their members, and the National Credit Union Share Insurance
Fund (NCUSIF). Do you think it is appropriate or necessary for
the NCUA to act to consider climate risk?
A.1. The NCUA is responsible for making sure credit unions
assess and manage risks appropriately, consistent with safety
and soundness, consumer protection, and other applicable laws.
Q.2. Given the unique nature of credit unions, do you believe
that credit unions are able to appropriately account for these
risks to their members?
A.2. In my experience, many credit unions understand and manage
the risks associated with serving their members and their
communities, which may include risks from severe weather or
natural disasters.
Q.3. Do you believe that the NCUA should mandate that credit
unions take into account factors like climate change in
offering services?
A.3. Credit unions are best positioned to make business
decisions about what loans, investments, or services they make
or provide to their members, as long as they are managing the
risks appropriately and following applicable laws.
Q.4. Credit unions continue to struggle with compliance
challenges, due in large part to new regulations from the NCUA
and other regulatory agencies. Several years ago, the NCUA
established a Regulatory Reform Task Force to conduct a
comprehensive review of the agency's rules intended to
recommend clarification/elimination of unnecessary rules. After
issuing two reports, the work of the Task Force has concluded.
Would you support reconstituting this Task Force or a similar
entity to thoroughly examine the NCUA's rules and regulations
with an eye toward reducing regulatory burdens?
A.4. It is important to ensure rules are clear and effective.
If confirmed, I commit to reviewing the two reports and what
additional clarification or other work is needed, if any.
Q.5. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me and other Members of the Committee? Please answer
``yes'' or ``no.''
If no, please explain.
A.5. Yes, if confirmed, I will work with you and other Members
to fulfill information requests, consistent with law and
precedent.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
FROM TANYA OTSUKA
Q.1. If confirmed, what would you do as a Board Member of the
National Credit Union Administration to support credit unions,
especially those that are minority development institutions and
community development financial institutions, which serve as
vital sources of basic financial services and capital in
underserved areas?
A.1. Minority depository institutions (MDIs) and community
development financial institutions (CDFIs) are critical to
providing basic financial services and capital in underserved
areas. If confirmed, I commit to working with the other NCUA
Board Members, agency staff, and stakeholders to better support
MDI and CDFI credit unions and strengthen the agency's MDI
program. I would also engage with credit unions and their
members, as well as community groups and other local
stakeholders, to understand the challenges they face and what
resources they need to better serve their communities. If
confirmed, I would work to make sure the NCUA does more to
ensure that credit unions, particularly small credit unions,
MDIs, and CDFIs, can stay competitive in our rapidly changing
financial system.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS
FROM TANYA OTSUKA
Q.1. As you may know, the Department of Defense (DoD)'s
Overseas Military Banking Program (OMBP) provides essential
financial services to members of the armed forces stationed
abroad and has been classified by the DoD as a priority program
vital to national defense. Among the services it provides is
deposit insurance to protect servicemembers' funds, which for
the last 77 years has been provided by the Federal Deposit
Insurance Corporation (FDIC). Earlier this year, DoD selected
Navy Federal Credit Union (Navy Federal) to take over from the
current OMBP operator, Bank of America. In doing so, the
responsibility for Federal insurance shifted from the FDIC to
the National Credit Union Administration (NCUA).
To date, NCUA has unfortunately appeared unwilling to
commit to extending Federal deposit insurance to accounts under
the OMBP once the transition to Navy Federal occurs. It is also
my understanding that their decision does not stem from a
question of legal authority--NCUA has the relevant authority--
but has been unwilling to exercise it.
Will you commit to support the provision of share insurance
in the Overseas Military Banking Program so that the deposits
of the members of our armed forces are subject to the same
protections they would receive if they were back home instead
of abroad defending our country?
A.1. Making sure our servicemembers have access to financial
services is vital. My understanding is that federally insured
credit unions operating on military bases overseas are insured,
including the accounts of their military servicemembers. I
understand Navy Federal Credit Union has recently been awarded
the contract to operate ``Community Bank'' under the Overseas
Military Banking Program, which is a Department of Defense
(DoD) program. If confirmed, I look forward to understanding
the details of the DoD program and Navy Federal's role as they
take over the contract, and I commit to working with NCUA staff
and fellow board members on this important issue. I am
committed to ensuring that servicemembers have access to safe
and affordable financial services, including while serving
overseas.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR HAGERTY
FROM TANYA OTSUKA
Q.1. Please explain your views on the NCUA's role in insuring
deposits under the Overseas Military Banking Program (OMBP).
If confirmed, will you commit to working with NCUA staff
and fellow board members to ensure servicemember accounts
overseas are properly supported?
A.1. Making sure our servicemembers have access to financial
services is vital. My understanding is that federally insured
credit unions operating on military bases overseas are insured,
including the accounts of their military servicemembers. I
understand Navy Federal Credit Union has recently been awarded
the contract to operate ``Community Bank'' under the Overseas
Military Banking Program, which is a Department of Defense
(DoD) program. If confirmed, I look forward to understanding
the details of the DoD program and Navy Federal's role as they
take over the contract and I commit to working with NCUA staff
and fellow board members on this important issue. I am
committed to ensuring that servicemembers have access to safe
and affordable financial services, including while serving
overseas.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM MARK UYEDA
Q.1. The goal of our Nation's capital markets system is not
only to help everyday investors turn one dollar into two, but
also to help businesses grow. Access to capital means access to
funding that will help entrepreneurs, small businesses, and
newly public companies expand their operations and create jobs.
The SEC has a three-part mission: (1) to protect investors; (2)
to maintain, fair, orderly, and efficient markets; and (3) to
facilitate capital formation. In your view, what is the
significance of facilitating capital formation for our Nation's
capital markets system?
A.1. Capital formation plays a key role in maintaining a robust
and vibrant capital markets system. During my confirmation
hearing, I described working with my grandfather on his produce
delivery route in Los Angeles. From this experience, I saw
firsthand the importance of raising capital for small
businesses. Capital formation enables individuals to start
businesses and creates pathways for those businesses to grow.
These businesses contribute to the overall economy by producing
goods and services and generating employment. Some of these
businesses may eventually become public companies, traded on
exchanges, and their stock may be part of everyday Americans'
retirement savings.
None of this is possible without a regulatory framework
that facilitates capital formation. Therefore, the SEC's
regulatory framework should provide companies and entrepreneurs
with cost-effective means of raising capital that serve all
types of firms, from the family-owned small business to the
largest public companies. Regulations that are not cost-
effective will limit capital formation, which in turn will harm
our capital markets and impede wealth accumulation for
Americans across the country.
Facilitating capital formation is vital to the continued
success of our markets and it must be weighed equally when
balancing the values of our tripartite mission; none of the
three parts can exist without the other two. To this end, the
agency's regulatory agenda must consider policies that
facilitate capital formation while protecting investors and
maintaining fair, orderly, and efficient markets.
Q.2. In what ways can the Commission improve access to capital
for rural and non-metropolitan hubs, specifically for
entrepreneurs that face challenges accessing capital like
small, women-owned and minority businesses?
A.2. The SEC should consider expanding the pool of people
eligible to invest in the rural and non-metropolitan businesses
that are seeking capital, including those that are smaller and/
or owned by women and minorities. These businesses currently
raise capital from those who qualify as ``accredited
investors'' under current SEC's rules, which are based on their
income or net worth. However, these qualification tests produce
all-or-nothing results. Individuals can invest without limit if
they exceed the income or net worth threshold but can invest
nothing if they fall a dollar short. An alternative approach
would be to consider allowing an individual to invest a certain
percentage of his or her portfolio, regardless of income or net
worth. This approach might expand access to capital and be
helpful for businesses located in rural and non-metropolitan
areas, where fewer people may qualify as accredited investors.
However, this approach is by no means the only potential
solution, and I am supportive of having roundtables and other
public forums to consider alternatives.
The SEC should seek to design rules governing capital
raising by private companies that are not one-size-fits-all.
The SEC's rules should provide companies of all sizes and
capital demands with a means of raising capital that align with
their business objectives and desired growth. The requirements
for a company conducting an initial public offering should be
different from the requirements for a private company seeking
to raise capital. For private companies, the regulatory
concerns for a small business seeking funding from friends and
family may differ than a larger business seeking financing from
venture capital funds. Imposing a prescriptive set of rules
across all private companies that seek capital has the
potential to disproportionally impact small, women-owned and
minority businesses as well as those in rural and non-
metropolitan hubs.
Q.3. The notice and comment period is a fundamental part of the
democratic process, allowing the public to have a voice in the
rules and regulations that directly impact them. Are public
comments and the information they convey important to you as
Commissioner of the SEC? Please explain.
A.3. The public comments received by the SEC are very important
in the consideration of a rulemaking. This process is part of a
key procedural requirement set forth in the Administrative
Procedure Act (APA) referred to as ``notice and comment.''
Under this requirement, an agency generally must publish a
notice of proposed rulemaking in the Federal Register and give
interested persons the opportunity to participate through the
submission of comments.
As an SEC Commissioner, I take the requirements of the APA
very seriously. The information conveyed in public comments is
crucial to evaluating the costs and benefits of a particular
proposal. My analysis of proposed rules is informed by public
comments, and my determinations with respect to final rules
take into account whether the agency action reflects a robust
consideration of the public comments.
Q.4. How can the SEC do a better job at ensuring that retail
investors have adequate time to consider and comment on a rule?
A.4. The ``notice'' requirement set forth in the APA is deemed
satisfied when an agency ``affords interested persons a
reasonable and meaningful opportunity to participate in the
rulemaking process.'' Executive orders issued by Presidents
Clinton, Obama, and Biden all recognized the importance of a
60-day comment period. A comment period of at least 60 days is
also endorsed by the Administrative Conference of the United
States for significant regulatory actions.
To help retail investors have adequate time to consider and
comment on a rule, the SEC should consider setting comment
periods that consider: (1) the length and complexity of a rule,
(2) any Federal and/or religious holidays that may fall within
the comment period, and (3) the extent to which other proposed
rules are simultaneously out for public comment. A
consideration of these factors when setting comment periods
will help enable the public to meaningfully participate in
agency rulemaking. In addition, the SEC could consider more use
of the investor testing provision set forth in Section 912 of
the Dodd-Frank Act, which specifically encourages the SEC to
gather information from and communicate with investors or other
members of the public as part of the consideration of any new
rule.
Q.5. When evaluating or voting on a rule, how important is it
for a rule to be scaled, or tailored, to ensure that it does
not disproportionately impact small businesses?
A.5. A new rule's impact on small businesses is one of the most
important factors that I consider when evaluating the rule. For
disclosure by public companies, the SEC can exempt ``smaller
reporting companies'' from the disclosure requirement or scale
the requirement. Doing so can help alleviate the potential
disproportionate costs of a rule on smaller companies, which
may have fewer resources to bear these costs. The SEC can also
delay the compliance date of a new rule for smaller reporting
companies. This approach allows these companies to benefit from
the time and costs spent by larger companies during the initial
compliance period. These costs may include fees paid to law
firms and other outside advisors to prepare new policies or
draft new disclosures. Smaller reporting companies may then be
able to refer to these policies and disclosures when they begin
to comply with the new rule. This can help avoid the need to
incur significant outside advisor fees. When evaluating and
voting on a new disclosure rule, I advocate for one or both of
these avenues when appropriate. Additionally, the SEC should
regularly evaluate the threshold for qualifying as a smaller
reporting company, to ensure that ``small'' companies in the
then-current economic environment are eligible to receive the
aforementioned benefits.
Q.6. Do you agree that, when rulemaking, the Commission should
consider known economic impacts, including the cumulative
impact of concurrent rulemakings?
A.6. Yes, the SEC's rulemakings should consider all known
economic impacts, including the cumulative impact of concurrent
rulemakings. While individual regulations may not be costly,
when aggregated they may impose significant compliance costs
for firms and individuals.
Q.7. Will you commit that, if confirmed to a new term, you will
respond in a timely manner and fully comply with all
information requests from me and other Members of the
Committee? Please answer ``yes'' or ``no.''
If no, please explain.
A.7. Yes.
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RESPONSES TO WRITTEN QUESTIONS OF CHAIR BROWN
FROM SPENCER BACHUS III
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
A.1. As a Member of Congress and as an employer before my time
in Congress, I have sought not to discriminate in employment or
in any other matter. Specifically, I have hired without regard
to color or gender. My former colleagues in both parties in the
House of Representatives can attest to my lack of prejudice.
Q.2. What specific measures will you use to evaluate the
success of Ex-Im in understanding and addressing the needs of
Black, Indigenous and people of color (BIPOC)? And, will you
work with the other members of Ex-Im to keep Congress apprised,
as appropriate, on the progress being made on these measures?
A.2. The Bank has within it a Minority and Women Owned Business
Group in accordance with its congressional mandate. The group
is responsible for outreach and education of minority and/ or
women owned businesses to increase the usage of Ex-Im products
by underserved business communities. During my tenure I
participated in many of their activities, including a visit to
Charlotte, North Carolina, during my last month on the Board.
While in Charlotte I participated in a forum of such
businesses. Ex-Im reports on financing provided to minority and
womenowned businesses every year in its annual report. If
confirmed, I would be happy to work with Congress to make sure
Members are getting information on the Bank's efforts.
Q.3. What is your plan for creating an inclusive working
environment for employees within your office?
A.3. My father was a general contractor in Alabama in the 1960s
and actively supported racial equity and inclusion in the face
of personal sacrifice and vandalism. He was an inspiration and
role model to me, and I have sought to emulate his example
throughout my career, including while a Member of the U.S.
House of Representatives where I worked with colleagues
including former Rep. John Lewis to honor Alabama's civil
rights struggles.
As an independent member of Ex-Im's Board of Directors, I
do not have a large staff within my office. In my experience,
however, Ex-Im aggressively pursues and, in my opinion,
maintains an inclusive work environment. I fully supported
inclusion efforts while a member of the Board and would
continue to do so if confirmed by the Senate.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM SPENCER BACHUS III
Q.1. How competitive is the Ex-Im Bank compared to China in
terms of export financing?
A.1. China offers more favorable terms and conditions and is
not limited by the same financing restrictions and staffing
shortages which restrain our ability to finance American
manufacturing products. However, the quality and reliability of
American produced goods and services is advantageous to our
efforts to compete and win in global markets. Ex-Im's inability
to be fully operational, first from authorization lapse and
then from the lack of a board quorum resulted in loss of
markets and market share. I discussed these challenges with
your staff recently. Thank you for that opportunity.
I am optimistic that several recent developments in
Congress, at Ex-Im, in China, and in the world economy will,
with patience, improve American manufacturing competitiveness.
Ex-Im's China and Transformational Exports Program, included in
the 2019 reauthorization, supports Ex-Im's ability to offer
financing on competitive terms and lets American products
compete on quality rather than just financing terms.
Q.2. What improvements can be made to the ``China and
Transformational Exports'' program to increase our
competitiveness with China?
A.2. The program itself has increased our competitiveness.
However, staffing shortages and statutory language are, in my
opinion, the origin of challenges in leveling the playing field
for American exports.
For example, there's a statutory prohibition on Ex-Im's
default rate exceeding 2 percent. The agency must be a
responsible steward of taxpayer resources, while also retaining
the flexibility in our risk appetite to better compete with
China. It can be hard to predict when the U.S. or world economy
might face shocks, and flexibility or relief on Ex-Im's default
rate cap could allow U.S. exports to better compete with China
in the transformational export areas and invest in strategic
critical minerals projects, and more.
Q.3. To what extent does the Ex-Im Bank take climate change
into account in its financing decisions?
A.3. Ex-Im considers the environmental effects of transactions
during the review and underwriting process. The agency is also
prohibited from declining to approve transactions based solely
on industry. Many transactions approved by Ex-Im are projects
that would occur regardless of whether U.S. goods and services
are used.
Q.4. Should the Ex-Im Bank stop or curb its financing of oil
and gas projects?
A.4. No. The Charter prohibits discrimination based on
industry. Oil and gas projects and fields are going to be
developed if economically feasible. The question is are they
going to be built with environmental protections. Ex-Im has
rigorous safety and environmental standards and, in my opinion,
the same is not necessarily true of some of our competitors.
Q.5. Ex-Im Bank's ``Make More in America Initiative'' aims to
catalyze domestic production in sectors critical to national
security. Yet, the program's webpage also shows the Biden
administration's political influence in declaring that
``environmentally beneficial projects'' are prioritized. I find
this prioritization concerning, especially given the important
nexus to National Security. How does progressive commentary on
the environment and climate impact Ex-Im's ability promote
development in sectors that are critical to national security?
A.5. It is my understanding that Congress has required Ex-Im to
encourage exports that have a beneficial effect on the
environment. As an independent board member at an independent
agency, I think it's important that I follow the charter which
prohibits discrimination based solely on sector. I think it is
important that the agency's actions are not based on a
political bias, but on clear direction from Congress.
My experience on the board is that we consider every
project that has merit. That will be my approach if
reappointed. We do take pride in development of solar and other
so called alternative energy sources, and have approved several
solar projects, but not to the exclusion of oil and gas
projects. We will continue to review all applications based on
merit and creditworthiness.
Q.6. Will you commit that, if confirmed to a new term, you will
respond in a timely manner and fully comply with all
information requests from me and other Members of the
Committee? Please answer ``yes'' or ``no.''
A.6. Yes. In fact I would welcome such invitations.
Q.7. If no, please explain.
A.7. N/A.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
FROM SPENCER BACHUS III
Q.1. If confirmed, what actions would you take at Export-Import
Bank of the United States (Ex-Im) to work with other Federal
and international agencies to support the export of sustainable
technology manufactured in Georgia and throughout the U.S. to
developing Nations?
A.1. I have enjoyed working with Ex-Im's Atlanta office and
have visited with small, medium, and large businesses in
Georgia. In addition to Ex-Im's longstanding programs, in 2022
the Board approved a new domestic financing initiative known as
``Make More in America''. This initiative is designed to
support export oriented domestic manufacturing projects in
Georgia and around the country. This supports a whole-of-
Government approach to revitalize American manufacturing and
jobs.
As Original sponsor of the Debt Relief Legislation in 2000
I have a longstanding interest in improving the living
standards of those living in countries that suffer from
malnutrition, lack of potable water and electricity, and
educational opportunities.
Have served on the Board of Bread for the World in belief
our country can indeed be a force for addressing nutritional,
health, and educational challenges worldwide. In fact, I
believe it is in both our economic and national security
interests to do so.
The agency has a specific mandate to invest in sub-Saharan
Africa and have been doing so, for example we recently approved
an historic $900-million dollar transaction funding
Americanmade solar panels to the country of Angola and $74-
million project for modular bridges in Cameroon.
Q.2. Between 2014 and 2020, 76 percent of exporters supported
by Ex-Im in Georgia were small businesses. Please explain to
your commitment to small businesses and how you plan on
potentially increasing Ex-Im's support for small businesses.
A.2. I'm fully committed to supporting small businesses. In
fact, most of our opportunities to increase the export of
American manufacturing goods will be achieved by small
businesses, many of them MWOB. Small businesses who export are
faster growing and more profitable than those that don't export
as 95 percent of the world's consumers are outside of the
United States.
Almost all of Ex-Im transactions benefit small businesses,
in fact as an agency of less than 400 personnel, a full quarter
are specifically dedicated to supporting our small business
efforts.
If reappointed to serve on the Board, I will continue to
work with Congress to receive guidance about opportunities to
use Ex-Im's tools to support small businesses. I would
encourage you and all Members to invite me to your State to
engage all businesses, especially small enterprises.
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RESPONSES TO WRITTEN QUESTIONS OF CHAIR BROWN
FROM JENNIFER FAIN
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
A.1. Increasing opportunities for people of color, and other
underrepresented groups, has been part of my oversight career
for over 22 years. As a junior auditor, I was selected to be a
member of a group of minority and non-minority OIG employees
established to openly discuss issues and identify ways to
improve the diversity and inclusiveness of our work
environment, including minority recruiting. The results of
these discussions were used to inform OIG senior-executive
decisions about the work environment.
As a mid-level manager and senior executive, I focused on
empowering my direct reports to build diverse teams and an
inclusive work environment. For example, during my nearly 3
years of acting in the role of an IG, I focused on restoring
operations, which included back-filling much needed positions
due to many manager and staff departures. The diversity of our
office increased significantly with the hiring, including
internal promotions, of individuals who identified themselves
as persons of color. Further, the office hired its first female
special agent for investigations during my tenure.
Although we made great strides in attracting and hiring
diverse candidates, there were still potential areas for
attracting additional candidates with different backgrounds. In
particular, the office could have expanded its outreach and
recruitment efforts even further by focusing specifically on
additional underrepresented groups, such as Indigenous and
disabled individuals. If confirmed as IG, I look forward to
working with FDIC OIG management to better understand how we
can enhance recruitment and retention efforts of people of
color, including underrepresented groups, and determine if
there is additional room for improvement in other areas.
The FDIC OIG's Diversity, Equity, Inclusion, and
Accessibility Strategic Plan, published on the OIG's external
website, contains a vision and corresponding goals specifically
related to attracting, hiring, and promoting a diverse
workforce. Among initiatives cited in the OIG's DEIA Plan are
the following:
Cultivate outreach efforts to establish
relationships with Historically Black Colleges and
Universities, Hispanic-Serving Institutions, and
professional organizations that advance interests of
underrepresented groups.
Establish protocols for distribution of vacancy
announcements to ensure prompt notice of hiring
opportunities to professional organizations that
advance interests of underrepresented groups.
Develop and utilize dashboard/graphics on
demographics/trends in DEIA representation for
recruitment, hiring, and advancement.
I will ensure continued attention is given to successfully
carrying out these initiatives.
Q.2. What specific measures will you use to evaluate the
success of FDIC IG in understanding and addressing the needs of
Black, Indigenous and people of color (BIPOC)? And, will you
work with the agency to keep Congress apprised, as appropriate,
on the progress being made on these measures?
A.2. If confirmed as IG, I will work with FDIC OIG management
to better understand the FDIC's approach in addressing any
structural inequities within its workforce, particularly the
needs of Black, Indigenous, and people of color. I have
researched the FDIC's overall strategies for DEIA--as presented
in the FDIC's Diversity, Equity, and Inclusion Strategic Plan--
and the responsibilities of the FDIC's Office of Minority and
Women Inclusion, which include `` . . . ensuring diversity in
management, employment and business activities'' of the Agency.
I will welcome the opportunity to learn more about the FDIC's
implementation of this Plan and the Agency's efforts to achieve
an enterprise-wide culture that embraces DEIA principles.
By recognizing any important gaps, particularly in
employment and social integration, and creating an enabling
work environment, disparities can be identified. This
understanding is crucial for addressing barriers faced by
historically underrepresented groups and for promoting
diversity, equity, inclusion, and accessibility within an
Agency, including the OIG. I would also seek to understand the
data that is being collected by the FDIC for measuring progress
in this important area, with a view to identify ways in which
OIG oversight work can be utilized constructively to inform and
drive improvement at the Agency. In addition, I recognize these
issues of inclusion are relevant for communities and
individuals affected by FDIC programs.
I believe it is well within the IG's authority to review
the FDIC's advancements in this area and keep Congress
appropriately apprised. I will work to create a proactive work
plan to oversee the FDIC's programs and operations, keeping
this and other important issues in mind, should I be confirmed.
Q.3. What is your plan for creating an inclusive working
environment for employees within your office?
A.3. An inclusive work environment involves creating a place of
work where the contributions, presence, and perspectives of all
OIG employees, including contractors, are respected and equally
valued. My aim is to lead by example and commit to open,
honest, and respectful communications at all levels in an
environment that welcomes diversity of opinions and
constructive conflict of ideas. Diverse perspectives,
backgrounds, and experiences not only improve OIG decision
making and performance, but also strengthen Agency oversight.
That is, as weaknesses and deficiencies are considered from
different viewpoints, there is an increased likelihood of
making recommendations that provide for practical and effective
solutions. If confirmed, I commit to being deliberate in my
actions to promote and maintain an inclusive working
environment for all within the FDIC OIG. Such an environment
will not only attract a diverse set of talent but also help in
retaining the diverse talent the OIG attracts.
As noted in my response to your first question, I will look
to the OIG's DEIA Strategic Plan to guide the Office's efforts
to create an inclusive working environment. The Plan is built
on four main goals that can serve to enhance inclusivity, and I
will vigorously pursue these goals:
1. Purpose--We have a shared purpose.
2. People--Each person is valued in our office.
3. Process--Our processes are fair and equitable.
4. Progress--We strive to mature our DEIA Program.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM JENNIFER FAIN
Q.1. As the nominee to serve as the Inspector General of the
FDIC, it is critical that you be completely independent and
vigorous in your auditing and investigatory work at the FDIC,
if confirmed. We need an independent watchdog at the FDIC to
ensure there is no waste, fraud, or abuse.
Unfortunately, we have seen politics overtake good policy
under Chairman Gruenberg's leadership, such as in the case of
Operation Choke Point and, more recently, when Mr. Gruenberg
and Rohit Chopra carried out an unprecedented coup, sidelining
the then-Chairman Jelena McWilliams.
If confirmed as the FDIC IG, would you commit to being
independent and vigorous in your audits and investigations into
the activities of the FDIC, even if doing so might ruffle
feathers at the agency?
A.1. Yes. In some cases, a Federal Agency will need to make
changes to its practices and operations in order to implement
corrective actions recommended by an OIG based on specific
findings. An OIG's oversight work may not be well-received by a
Federal Agency because of disagreement about the findings and/
or corrective actions recommended. Instances of disagreement
are to be expected as part of this oversight work. Nonetheless,
independence of an IG from Agency management is a key tenet in
improving the efficiency and effectiveness of Federal programs
and operations and ensuring there is no waste, fraud, or abuse.
Such independence depends on the OIG conducting oversight
activities of an Agency without bias or partisanship. Without
compromising the independence and objectivity of the FDIC OIG,
I intend to maintain a productive working relationship with the
Chairman, Board of Directors, and Senior Executives, including
this Committee and Congress. Therefore, if confirmed, I am
committed to conducting oversight of the activities of the FDIC
in an independent--unbiased and nonpartisan--and vigorous
manner.
Q.2. Do you believe that the FDIC Inspector General should
ensure that FDIC rules and regulations adhere to the spirit and
intent of Congressional legislation?
A.2. Yes. Among its duties, the FDIC IG oversees how the FDIC
maintains stability and public confidence in the U.S. financial
system. This includes conducting audits, evaluations, other
reviews, and investigations of the Agency's actions to ensure
that financial institutions operate in a safe and sound manner.
Insofar as the FDIC establishes rules and regulations that
impact the Agency's ability to carry out its responsibilities,
I believe the IG has the duty to ensure that the FDIC conducts
these regulatory activities within the authority provided by
laws, rules, and regulation. To that end, under the IG Act, the
FDIC OIG has an obligation to review legislation and
regulations. This effort is carried out by members of the FDIC
OIG's Office of General Counsel. I commit to maintaining such
an approach if I am confirmed. Additionally, I would seek to
continue the FDIC OIG's participation as a Member of the
Legislation Committee of the Council of the Inspectors General
on Integrity and Efficiency to more broadly inform my thinking
on Federal legislation that may impact the FDIC. This Committee
provides timely information to the IG community about
Congressional initiatives; solicits the technical advice of the
IG community in response to proposed legislation; and presents
views and recommendations to Congress and the Office of
Management and Budget on legislative matters that broadly
affect the IG community.
Q.3. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me and other Members of the Committee? Please answer
``yes'' or ``no.''
A.3. Yes. If confirmed, I commit to responding in a timely
manner and fully complying with all information requests from
the Committee, Congress, and other stakeholders consistent with
any applicable legal restrictions.
Q.4. If no, please explain.
A.4. N/A.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
FROM JENNIFER FAIN
Q.1. If confirmed as Inspector General of the Federal Deposit
Insurance Corporation (FDIC), what steps would you take to
ensure the independence and objectivity of your audits,
investigations, evaluations, and reviews, particularly those
involving FDIC employees and contractors?
A.1. To maintain stakeholder confidence in the FDIC OIG, its
oversight must be independent of the FDIC, including its
employees and contractors, both in fact and appearance.
Independence is a key characteristic of IGs and a fundamental
principle of the Inspector General Act of 1978 (as amended)
which includes specific protections for IG independence. These
protections include, for example, direct and prompt access to
the Agency head, separate personnel hiring authority, separate
and independent legal counsel, separately identified budget
requests, timely access to all Agency records, and a dual
reporting obligation to the head of the Agency and Congress.
If confirmed, I commit to ensuring that the FDIC OIG has
robust measures in place to identify, assess, and minimize any
potential (or perceived) threats to the independence and
objectivity in the performance of the OIG's oversight
responsibilities, particularly as it relates to FDIC employees
and contractors. This includes taking steps to ensure that
threats to independence are suitably managed and work
undertaken by the OIG is performed with objectivity and
integrity, and free from inappropriate influences and
considerations (e.g., current or past responsibilities that may
pose a threat due to conflict, familiarity, bias, or
influence).
The independence standards for conducting audits,
investigations, evaluations, and reviews are reflected in the
requisite professional standards established by the Government
Accountability Office and the Council of the Inspectors General
on Integrity and Efficiency. The FDIC OIG is statutorily
required to comply with these standards and subject to an
independent, comprehensive peer review of its audit,
evaluation, and investigation operations once every 3 years.
Further, in keeping with the IG Act, I commit to keeping the
Committee, and Members of Congress, fully and currently
informed of any instances where the Agency, its management,
employees, and/or contractors interfere with the FDIC OIG's
independence, should I be confirmed. Reporting such
interference in the OIG's semiannual reports to Congress is
also required under the IG Act and I will adhere to that
requirement.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIR BROWN
FROM CLAUDIA SLACIK
Q.1. The collapse of Silicon Valley Bank and other troubled
banks in March reminded us that crises in any part of the
financial sector can happen quickly, especially in the age of
social media. While SIPC is not responsible for backstopping
failed banks, it may need to act if a brokerage runs into
trouble. Are there lessons that SIPC can learn from the bank
failures about preparedness in the case of brokerage to ensure
it can respond fast to protect American savers, if needed?
A.1. Thank you for your question, Chair Brown.
SIPC understands the need for quick action and has
institutional experience in that regard given the nature of the
securities industry. The potential price volatility of
securities requires that SIPC be able to act promptly and
decisively when a broker-dealer fails. As one example, SIPC
commenced the liquidation of MF Global, the eighth largest
bankruptcy in history at the time, the same day that it was
notified by the Securities and Exchange Commission that
customers needed protection. In addition to having requisite
staff and systems ready, SIPC regularly engages with the staffs
of SEC and FINRA. Because they have investigatory authority,
the SEC and FINRA are required to notify SIPC when a brokerage
firm is in financial trouble and customer assets are missing.
Consequently, SIPC should be informed by the regulators as a
brokerage firm encounters financial difficulty and would be
ready to respond quickly to protect American investors if it
were to fail.
SIPC also continues to modernize its internal operations
and recruit and retain talented staff. SIPC continues to
increase its reserves, which currently total more than $4.4
billion, and manage its risk profile, including evaluating
alternative sources of liquidity.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM CLAUDIA SLACIK
Q.1. What would you consider to be the most significant issue
on the horizon for SIPC to address, and why?
How should SIPC address this issue?
A.1. Thank you for your questions, Ranking Member Scott.
I consider emerging technologies with resulting changes in
the securities industry to be the most significant issue that
SIPC faces. SIPC is staying current on these various emerging
technologies and changes in the security industry. These
include digital assets, 24-hour trading, and shortening of the
settlement period for securities trades, among others. To
address these and other potential issues, SIPC continues to
increase its reserves, which now total more than $4.4 billion,
and manage its risk profile, including evaluating alternative
sources of liquidity. It has remained engaged with the SEC and
FINRA to make sure that the current investor protection regime
remains robust and continues to support the regulators' efforts
to have in place appropriate safeguards of customer assets so
that customers do not lose assets even if a firm fails
financially. SIPC also continues to modernize its internal
operations and recruit and retain talented staff.
Q.2. In what ways, if any, could SIPC better articulate to the
average investor the type and extent of the protection that
SIPC provides?
A.2. SIPC maintains a robust investor information network
through its website, social media, ``AskSIPC'' email tool, and
prompt responsiveness to inquiries from the public. However, it
could and should continue to increase awareness about the type
and extent of SIPC protection. With younger investors entering
the marketplace, financial literacy, including about SIPC, is
increasingly important. Most recently, SIPC collaborated with
the SEC on several educational initiatives and joined in IOSCO
World Investor Week to raise awareness of the importance of
financial literacy. SIPC should continue to educate investors
about SIPC including through its continued initiatives with
public media, issuance of investor bulletins, and participation
in in-person events.
Q.3. Will you commit that, if confirmed to a new term, you will
respond in a timely manner and fully comply with all
information requests from me and other Members of the
Committee? Please answer ``yes'' or ``no.''
If no, please explain.
A.3. Yes.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR MENENDEZ FROM CLAUDIA SLACIK
Q.1. Last year, we saw FTX and others in the cryptocurrency
market go under, with investors unsure if missing assets and
cash would be returned. However, investors are still putting
hard earned dollars into the relatively new asset class.
Ms. Slacik, are investors protected by the SIPC in
situations where they are invested in cryptocurrency or crypto
assets?
What should SIPC be doing to promote investor education to
bring this awareness?
A.1. Thank you for the questions, Senator Menendez.
In answer to the first question, SIPC protection extends
only to cash and securities held in custody for specified
purposes in a customer securities account at a SIPC-member
broker dealer. The status of many digital assets is presently
unresolved, and many such assets do not qualify as
``securities'' within the meaning of the Securities Investor
Protection Act (SIPA), the statute under which SIPC operates.
Moreover, under current SEC guidance, the circumstances under
which a broker-dealer may hold in custody for customers digital
assets that qualify as securities are limited. Therefore, SIPC
currently has a limited role with respect to digital assets,
and most investors in cryptocurrency and crypto assets are not
protected by SIPC. If, however, digital assets were defined as
``securities'' under the SIPC statute, and a SIPC-member in
liquidation under SIPA held them for customers for any of the
statutorily specified purposes, those customers would receive
the same protection as any other customers eligible for SIPC
protection.
In answer to the second question, as it currently is doing,
SIPC should continue in its efforts with respect to investor
education by explaining what SIPC protects--and what it does
not protect, including digital assets that are not securities
held at SIPC-member broker-dealers. SIPC should continue
engaging media, and use platforms including its website and
social media, to spread this awareness. It should also continue
working with the SEC and FINRA in explaining to investors the
scope and limits of SIPC protection.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
FROM CLAUDIA SLACIK
Q.1. How would your experience as Chief Banking Officer at the
Export-Import Bank of the United States inform your investor
protection and education efforts at the Securities Investor
Protection Corporation?
A.1. Thank you for the question, Senator Reverend Warnock.
In my career, the concerns of U.S. customers and investors
have been paramount. At the Export-Import Bank (Ex-Im Bank), my
work supported dozens of U.S. companies, which employed
thousands of middle and working-class American workers. These
are the same retail investors whom SIPC primarily aims to
protect. I believe in the importance of SIPC's mission to
safeguard the assets of these retail investors custodied for
them at SIPC member broker-dealers, and I am committed to
supporting it. At the Ex-Im Bank, my responsibilities included
expanding the public's awareness of the Bank. I can use that
experience in support of SIPC's investor education efforts to
inform the public about what SIPC protects, and, just as
importantly, what SIPC does not protect, including most crypto
assets. By the same token, Ex-Im Bank supported American jobs
by facilitating the export of U.S. goods and services at no
cost to taxpayers. My goal at SIPC is similar--to ensure that
the SIPC Fund is sufficient to protect investors against the
loss of their cash and securities, at no cost to the American
taxpayer.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIR BROWN
FROM WILLIAM BRODSKY
Q.1. The collapse of Silicon Valley Bank and other troubled
banks in March reminded us that crises in any part of the
financial sector can happen quickly, especially in the age of
social media. While SIPC is not responsible for backstopping
failed banks, it may need to act if a brokerage runs into
trouble. Are there lessons that SIPC can learn from the bank
failures about preparedness in the case of brokerage to ensure
it can respond fast to protect American savers, if needed?
A.1. Thank you for your question, Chair Brown.
Yes, SIPC watched carefully how quickly the banking
regulators and other parts of the Executive branch acted to
address the rapid and unexpected collapse of Silicon Valley
Bank. With that in mind, SIPC continues to work to ensure that
if any large SIPC member broker-dealer failed unexpectedly, it
is prepared to act within its authority in a similar prompt and
comprehensive fashion. SIPC has institutional experience in
acting swiftly should it become necessary; SIPC commenced the
liquidation of MF Global, the eighth largest bankruptcy in
history at the time, the same day that it was notified by the
Securities and Exchange Commission. In addition to having
requisite staff and systems ready, SIPC remains continuously
engaged with the staffs of SEC and FINRA. Consequently, SIPC
should be informed by the regulators as a brokerage firm
encounters financial difficulty and would be ready to respond
quickly to protect American investors if it were to fail.
SIPC also continues to modernize its internal operations
and recruit and retain talented staff. SIPC continues to
increase its reserves, which currently total more than $4.4
billion, and manage its risk profile, including evaluating
alternative sources of liquidity. It is also currently working
with the SEC and the Department of the Treasury to enable rapid
access to its $2.5 billion statutory borrowing ability from the
Government should it ever become necessary.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM WILLIAM BRODSKY
Q.1. What would you consider to be the most significant issue
on the horizon for SIPC to address, and why?
How should SIPC address this issue?
A.1. Thank you for your questions, Ranking Member Scott.
I consider SIPC's ability to respond quickly to the
unexpected large broker-dealer failure to be the most
significant issue. SIPC noted the rapid response of the banking
regulators and other parts of the Executive branch to address
the unexpected collapse of Silicon Valley Bank. Accordingly,
SIPC continues to work to ensure that if any large SIPC member
broker-dealer were to fail unexpectedly, it would be prepared
to act within its authorities in a similar prompt and
comprehensive fashion. In addition to having requisite staff
and systems ready, SIPC remains continuously engaged with the
staffs of SEC and FINRA. Consequently, SIPC should be informed
by the regulators as a brokerage firm encounters financial
difficulty and would be ready to respond quickly to protect
American investors if it were to fail. SIPC continues to
increase its reserves, which currently total more than $4.4
billion, and manage its risk profile. It is also currently
working with the SEC and the Department of the Treasury to
enable rapid access to its $2.5 billion statutory borrowing
authority from the Government should it ever become necessary
and is evaluating alternative sources of liquidity.
Q.2. In what ways, if any, could SIPC better articulate to the
average investor the type and extent of the protection that
SIPC provides?
A.2. SIPC maintains a robust investor information network
through its website, social media, ``AskSIPC'' email tool, and
prompt responsiveness to all inquiries from the public.
However, it could and should continue to increase awareness
about the type and extent of SIPC protection. With younger
investors entering the marketplace, financial literacy,
including about SIPC, is increasingly important. Most recently,
SIPC collaborated with the SEC on several educational
initiatives and joined in IOSCO World Investor Week to raise
awareness of the importance of financial literacy. SIPC should
continue to educate investors about SIPC protection including
through continued efforts with public media, investor
bulletins, and in-person events.
Q.3. Will you commit that, if confirmed to a new term, you will
respond in a timely manner and fully comply with all
information requests from me and other Members of the
Committee? Please answer ``yes'' or ``no.''
If no, please explain.
A.3. Yes.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR MENENDEZ FROM WILLIAM BRODSKY
Q.1. Last year, we saw FTX and others in the cryptocurrency
market go under, with investors unsure if missing assets and
cash would be returned. However, investors are still putting
hard-earned dollars into the relatively new asset class.
Mr. Brodsky, are investors protected by the SIPC in
situations where they are invested in cryptocurrency or crypto
assets?
What should SIPC be doing to promote investor education to
bring this awareness?
A.1. Thank you for the questions, Senator Menendez.
In answer to the first question, SIPC protection extends
only to cash and securities held in custody for specified
purposes in a customer securities account at a SIPC-member
broker dealer. The status of many digital assets is presently
unresolved, and many such assets do not qualify as
``securities'' within the meaning of the Securities Investor
Protection Act (SIPA), the statute under which SIPC operates.
Moreover, under current SEC guidance, the circumstances under
which a broker-dealer may hold in custody for customers digital
assets that qualify as securities are limited. Therefore, SIPC
currently has a limited role with respect to digital assets,
and most investors in cryptocurrency and crypto assets are not
protected by SIPC. If, however, digital assets were defined as
``securities'' under the SIPC statute, and a SIPC-member in
liquidation under SIPA held them for customers for any of the
statutorily specified purposes, those customers would receive
the same protection as any other customers eligible for SIPC
protection.
In answer to the second question, as it currently is doing,
SIPC should continue in its efforts with respect to investor
education by explaining what SIPC protects--and what it does
not protect, including digital assets that are not securities
held at SIPC-member broker-dealers. SIPC should continue
engaging media, and use platforms including its website and
social media, to spread this awareness. It should also continue
working with the SEC and FINRA in explaining to investors the
scope and limits of SIPC protection.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
FROM WILLIAM BRODSKY
Q.1. In your view, what aspects of financial literacy and
investor education need to be addressed and improved
immediately?
A.1. Thank you for the question, Senator Reverend Warnock.
I have spent my entire career in the investment business. I
truly believe that this country has the best investment
markets, the most innovative financial products, and has the
best regulated financial markets of any major country in the
world. What concerns me most is that, as a country, we do a
very poor job at educating our citizens at every level of
education from primary school, high school, college, and even
graduate school on how to save, invest, and manage one's
financial affairs. I view this not only as a missed opportunity
but as a great disservice to our citizens.
My view is that we need a concerted effort to teach people
the basics of spending and investing, not speculating, as a way
of improving the financial health and security of our vast and
diverse citizenry. SIPC should do its part by continuing its
investor education efforts in explaining what SIPC protects,
and what it does not protect, including digital assets, that
are not securities held at SIPC-member broker-dealers.
Additional Material Supplied for the Record
LETTERS SUBMITTED REGARDING NOMINEES
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
``THE NCUA MUST STEP UP FOR OVERSEAS SEVICEMEMBERS'', CREDIT UNION
TIMES, BY MARY MCDUFFIE
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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