[Senate Hearing 118-659]
[From the U.S. Government Publishing Office]
S. Hrg. 118-659
NOMINATIONS OF CHRISTY GOLDSMITH ROMERO,
CAROLINE A. CRENSHAW, KRISTIN N. JOHNSON,
AND GORDON I. ITO
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
ON
NOMINATIONS OF:
CHRISTY GOLDSMITH ROMERO, OF VIRGINIA, TO BE CHAIRPERSON AND
MEMBER OF THE BOARD OF DIRECTORS OF THE FEDERAL DEPOSIT INSURANCE
CORPORATION
__________
CAROLINE A. CRENSHAW, OF WASHINGTON, DC, TO BE A MEMBER OF THE
SECURITIES AND EXCHANGE COMMISSION
__________
KRISTIN N. JOHNSON, OF GEORGIA, TO BE AN ASSISTANT SECRETARY OF
THE TREASURY
__________
GORDON I. ITO, OF HAWAI`I, TO BE A MEMBER OF THE FINANCIAL STABILITY
OVERSIGHT COUNCIL
__________
JULY 11, 2024
__________
Printed for the use of the Committee on Banking, Housing, and Urban Affairs
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Available at: https: //www.govinfo.gov /
______
U.S. GOVERNMENT PUBLISHING OFFICE
60-420 PDF WASHINGTON : 2026
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chair
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
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Pat Lally, Assistant Clerk
(ii)
C O N T E N T S
----------
THURSDAY, JULY 11, 2024
Page
Opening statement of Chair Brown................................. 1
Prepared statement....................................... 40
Opening statements, comments, or prepared statements of:
Senator Scott................................................ 4
Prepared statement....................................... 41
NOMINEES
Christy Goldsmith Romero, of Virginia, to be Chairperson and
Member of the Board of Directors of the Federal Deposit
Insurance Corporation.......................................... 7
Prepared statement........................................... 43
Biographical sketch of nominee............................... 45
Responses to written questions of:
Senator Scott............................................ 99
Senator Britt............................................ 121
Senator Hagerty.......................................... 122
Senator Menendez......................................... 124
Senator Rounds........................................... 125
Senator Tester........................................... 131
Caroline A. Crenshaw, of Washington, DC, to be a Member of the
Securities and Exchange Commission............................. 9
Prepared statement........................................... 61
Biographical sketch of nominee............................... 62
Responses to written questions of:
Senator Scott............................................ 133
Senator Britt............................................ 143
Senator Cramer........................................... 146
Senator Hagerty.......................................... 147
Senator Lummis........................................... 152
Senator Menendez......................................... 153
Senator Rounds........................................... 155
Kristin N. Johnson, of Georgia, to be an Assistant Secretary of
the Treasury................................................... 10
Prepared statement........................................... 72
Biographical sketch of nominee............................... 73
Responses to written questions of:
Senator Scott............................................ 157
Senator Lummis........................................... 166
Gordon I. Ito, of Hawai`i, to be a Member of the Financial
Stability Oversight Council.................................... 11
Prepared statement........................................... 91
Biographical sketch of nominee............................... 92
Responses to written questions of:
Senator Scott............................................ 167
Senator Britt............................................ 174
Senator Lummis........................................... 175
Senator Menendez......................................... 176
Senator Rounds........................................... 177
Additional Material Supplied for the Record
Letter submitted by DEPA......................................... 178
Letter submitted by TBA.......................................... 179
(iii)
NOMINATIONS OF CHRISTY GOLDSMITH ROMERO,
CAROLINE A. CRENSHAW, KRISTIN N. JOHNSON,
AND GORDON I. ITO
----------
THURSDAY, JULY 11, 2024
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10 a.m., via Webex and in room 538,
Dirksen Senate Office Building, Sherrod Brown, Chair of the
Committee, presiding.
OPENING STATEMENT OF CHAIR SHERROD BROWN
Chair Brown. Good morning, everyone. The Senate Committee
on Banking, Housing, and Urban Affairs will come to order.
The Committee meets today to consider four nominees, all
long-time public servants, all overwhelmingly supported by both
parties in this body. The Honorable Christy Goldsmith Romero,
to be member and chairperson of the Federal Deposit Insurance
Corporation. Welcome. The Honorable Caroline Crenshaw,
nominated to be a member of the Securities and Exchange
Commission. Welcome. The Honorable Kristin Johnson, to be
Assistant Secretary of Financial Institutions at the Department
of the Treasury. Welcome. And Mr. Gordon Ito to be a member of
the Financial Stability Oversight Council to serve as the
independent member with insurance expertise on FSOC. Mr. Ito,
welcome.
We thank the nominees for appearing today. I will brief
statements about each. I will swear each of you in. And I
believe the Senator Warner has a statement, a brief statement,
he wants to make about one of the nominees.
Three nominees have already been confirmed unanimously. Ms.
Goldsmith Romero, Ms. Crenshaw, Ms. Johnson have all been
confirmed unanimously by the Senate. We are hopeful we get the
same kind of bipartisan cooperation that we see in this
Committee oftentimes again.
Ms. Goldsmith Romero has been confirmed by every Member of
the Senate multiple times. In a Washington far too divided far
too often, Republicans and Democrats on this Committee in the
Senate--and I appreciate Ranking Member Scott's bipartisanship
on these kinds of matters--have agreed that these nominees
possess the experience and the character to serve the public.
The nominees have received strong statements today of
support and support letters from a broad swath of the financial
services sector, including consumer groups, former regulators,
State insurance commissioners, on and on and on and on. These
nominees bring with them years of experience and a strong
dedication to public service. If confirmed, each will play an
important role in the success and the stability of our
financial system.
The President nominated Christy Goldsmith Romero to be a
member and chairperson of the FDIC. As chair, she will lead an
agency responsible for protecting the bank accounts of millions
of Americans across the country. Ms. Goldsmith Romero is a
highly qualified nominee, more than two decades of financial
services experience. She served as a commissioner of the
Commodity Futures Trading Commission since 2022, after she
was--again, underscore--unanimously confirmed by the Senate.
At the CFTC, she has worked to ensure market integrity and
protect commodity end users and consumers. Prior to joining
CFTC, she spent 6 years at the SEC where she served as counsel
to SEC Chairs Schapiro, a Democrat, and Cox, a Republican,
during Administrations of both parties. She served as Special
Inspector General for TARP, the Troubled Asset Relief Program.
She took on that post in 2009, amid the worst financial crisis
since the Depression, where she did vital work protecting
taxpayers.
She served in several roles in the Inspector General's
office at TARP before being unanimously confirmed by the Senate
to serve as the Special Inspector General. She managed a large
staff of examiners and accountants and auditors and other
investigative professionals. As the Inspector General, she
followed the facts where they led. She wore her independence
proudly. She helped the office meet its mission and, in the
process, recover literally billions of dollars for American
taxpayers.
During her decade as IG, she looked under the hood of many
financially distressed banks and institutions. She knows how to
spot signs of trouble. She knows what to look for when it comes
to financial stability or instability or potential contagion.
She understands regulation, the important role regulators play
in ensuring the safety and soundness of financial institutions.
She has proved that she will hold accountable those who engage
in fraud and misconduct.
Ms. Goldsmith Romero's nomination comes at a pivotal time.
Everyone here today agrees the FDIC needs drastic cultural
change. Longstanding issues of harassment and misconduct have
plagued the agency for over a decade under multiple chairs,
chairs of both parties. The women and men of the FDIC deserve a
workplace free of harassment and misconduct. That is why I
called, weeks ago, on the President to nominate a new highly
qualified chair, and Ms. Goldsmith Romero is that: tough, fair,
accomplished regulator, manager, track record of making sure
bad behavior doesn't go unchecked.
Listen to the people who have worked with her, the people
who have seen her character up close. Christopher Cox, former
Republican SEC chair, wrote the Committee and said this: ``She
is a consummate professional. Her skill and objectivity are the
reason she has worked successfully across multiple
Administrations of different parties. That high level of
professionalism is reflected in the fact that she has twice
been unanimously confirmed to her important financial
regulatory positions.''
I believe that Senator Scott, I believe, as a House Member,
served with Congressman Cox, as I did. Perhaps not, but I know
they have been acquaintances and friends over the years. Not to
speak for the Ranking Member, of course.
The Committee also received a letter of support from a
group of bipartisan women who have spent decades working in
financial services as congressional staff, Federal agency
staff, and industry representatives.
Leadership starts at the top. She's the right choice to
lead the agency as it charts a much-needed transformation of
its culture. Congratulations on your nomination.
The President has re-nominated Caroline Crenshaw to a full
term on the Securities and Exchange Commission. She joined the
SEC Board in 2020, after being nominated by President Trump,
who was a Republican, and unanimously confirmed by the Senate.
In her 4 years as a commissioner--he is still----
Senator Scott. He's still Republican.
Chair Brown. OK. As we all follow.
In her 4 years as commissioner, Ms. Crenshaw has been a
fierce advocate for protecting Americans' money and has
routinely fought to make our markets more fair and more
transparent. Prior to her confirmation to the SEC, she served
as a career staff attorney to SEC, as well as counsel to two
commissioners. Prior to joining, Ms. Crenshaw worked in private
law practice in Washington.
In addition to her exemplary service to our country, Ms.
Crenshaw is also an Army Reserve Captain in the Judge Advocate
General's Corps. Welcome back, Ms. Crenshaw. Thank you for your
service. Nice to see you.
The President has nominated Kristin Johnson to serve as
Assistant Secretary for Financial Institutions at Department of
the Treasury. The office Ms. Johnson would lead, if confirmed,
handles a broad portfolio, including financial institution
policy, insurance, cybersecurity, community economic
development. She brings with her a wealth of experience in the
public and private sectors, as well as experience in academia,
giving her a well-rounded understanding of financial
institutions policy and regulation.
She currently served as a commissioner in the CFTC after
being unanimously confirmed by the Senate in 2022. At the CFTC,
she has served as a reliable voice for market participants and
has fought for sound and competitive and efficient markets.
Prior to joining CFTC, Ms. Johnson served as a professor of law
for more than a decade, teaching at Emory and Tulane and Seton
Hall University. She taught courses in banking law, the law and
regulation securities, derivatives markets, financial
institutions, and systemic risk law and policy. Earlier in her
career, she worked for large financial institutions and in
private law practice in New York City.
Good to see you, Ms. Johnson. Thank you.
The final nominee in today's panel is the only one that is
not a woman. The President has nominated Mr. Ito to serve as
the independent insurance expert on FSOC. If confirmed, he
would be 1 of 10 voting members in FSOC, responsible for
monitoring and identifying financial instability risks. Mr.
Ito's decades of insurance experience have prepared him to
serve as a member of FSOC.
Like the other nominees today, Mr. Ito is well-qualified.
He currently serves as the insurance commissioner for the State
of Hawai`i. He first joined the Hawai`i Division of Insurance
some 30 years ago and has served in multiple roles within the
office. As the insurance commissioner in his State, he has been
a strong proponent for a fair and competitive insurance
marketplace and for consumer protection. He has played an
important role in helping Hawai`i recover from the devastating
wildfires which resulted in the deaths of more than a hundred
residents and billions of dollars in damages.
In addition to serving in Hawai`i's Insurance Division, Mr.
Ito has held several leadership roles with the National
Association of Insurance Commissioners, including secretary-
treasurer. Early in his career, he worked in private law
practice in Hawai`i. Welcome, Mr. Ito.
Thanks again to the nominees. Ranking Member Scott.
OPENING STATEMENT OF SENATOR TIM SCOTT
Senator Scott. Thank you, Mr. Chairman, and thank you to
the noms for being here with us this morning.
While I appreciate the Senate's important role in the
nomination process, unfortunately, what brings us here today is
a classic case of stubbornness. This Administration wants to
safeguard its progressive agenda no matter the cost, not the
employees of the FDIC and not the people they are supposed to
serve.
Chairman Gruenberg has been at the helm of the FDIC for
nearly two decades. And under his leadership tenure he has
allowed rampant harassment, discrimination, vile behavior to
continue to flourish. That is why I said several times before
this Committee that Mr. Gruenberg should resign immediately,
not wait for someone to replace him, but start a culture of
healing at the FDIC. Without that action, it is frustrating to
the American people, frustrating to the employees at the FDIC,
that Mr. Gruenberg refuses to do the right thing in spite a
bipartisan coalition asking him to do so.
Mr. Gruenberg and his allies in the White House have
decided to play politics instead. Chair Gruenberg is refusing
to step down until a Biden nominee is confirmed, no matter the
timeline. That is like having a leak in your roof; instead of
fixing it, you just put a bucket underneath and wait and wait
and wait. Common sense reminds me the first step for
restoration is stopping the leak and cutting out the damage so
that the repairs can begin.
And it is clear President Biden is not interested in
cutting out the damage and not interested in accountability.
Instead, the White House has taken this opportunity to try and
make lemonade out of lemons by putting forward three additional
nominees selected for the purpose of advancing his progressive
regulatory agenda. And while I firmly believe we are here under
a false sense of urgency, we will do our very best to evaluate
the nominees before us today on their merit and fulfill our
constitutional responsibility.
So let's start with Commissioner Goldsmith Romero.
Commissioner, I enjoyed you taking the time and meeting with me
a few days ago and having a serious conversation about what it
takes to change the culture of the FDIC and deal with some of
the really important challenges coming our way. While you have
had a long career in public service, your background lacks the
banking regulatory experience necessary to carry out the
critical responsibilities of the FDIC and fulfill the
requirements of the FDI Act. The foremost mission of the FDIC
is to maintain stability and confidence in our financial
stability and the system, an important task that was front and
center just last year as we watched SVB fail.
The FDIC must ensure deposits, examine and supervise
financial institutions for safety and soundness and consumer
protections, while standing ready to manage receivership of
failed institutions. This is no small task. You have little
experience with bank supervision or prudential policymaking,
let alone managing the world's largest deposit insurer. The
next chair needs to be prepared to lead because not only are we
going to have to confront the magnitude of Basel III Endgame,
but, as I said a few times already, correcting the culture at
the FDIC is so important and it makes it challenging to have
on-the-job training, from my perspective.
Turning to the management challenges at the FDIC, as we
have discussed, I'm concerned with your ability to lead a much-
needed cultural change. We talked in my office about the number
of whistleblowers who have come forward and talked about your
management approach, as well. I look forward to having an
opportunity for you to share your responses during the
question-and-answer part of this meeting today.
Our next nominee, Ms. Caroline Crenshaw, has been re-
nominated for an additional 5-year term, ending in June of
2029, to serve as a member of the SEC. Commissioner Crenshaw,
while I respect your deep knowledge of the capital markets, I
have significant reservations over your nomination based on
your views of what appears to be the limitless authority of the
SEC. Take, for example, the SEC's Climate Disclosure Rule,
which the SEC has received nearly 24,000 letters on since its
proposal.
Despite widespread concern from the public, including from
myself, as well as both Democrats and Republicans on this
Committee, you expressed frustration that the SEC didn't go far
enough in its final rule. Furthermore, you have urged the SEC
to contort its authority over the private markets, praising the
finalization of the Private Fund Advisory Rule as ``an
important step in the name of investor protection, competition,
and market integrity.''
We know that the Fifth Circuit disagrees, ruling that the
SEC went beyond the powers granted to it by Congress in the
Investment Advisers Act. Our capital markets should not be a
testing ground for the expansion of the administrative State,
and your past actions give me serious pause for considering
your nomination.
I'll close with this. I find it incredibly frustrating that
we find ourselves here today, as this is a prime example of the
Biden administration's MO of politics over people. While I look
forward to hearing from the nominees, I must reiterate that
real, meaningful change could be brought to the employees of
the FDIC today if Marty Gruenberg would simply step down.
Chair Brown. Will the four nominees please rise? Raise your
right hand. Do you swear or affirm that the testimony that you
are about to give is the truth, the whole truth, and nothing
but the truth, so help you God?
Do you agree to appear and testify before any duly
constituted committee of the Senate?
OK. Please be seated.
Senator Warner, Virginia, would like to introduce Ms.
Goldsmith Romero.
Senator Warner. I would, Mr. Chairman. And I thank you for
that, and I thank you for your comments about all the nominees.
I think they are all uniquely qualified, and I hope we will
follow the tradition of this Committee and that we will weigh
these individuals on their merits.
But I am particularly here to introduce Christy Goldsmith
Romero, who is nominated to be the next chair of the FDIC and
currently serves as a commissioner on the Commodity Futures
Trading Commission.
I am proud to say that Christy is a Virginian through and
through. She grew up in Virginia Beach, where her family
continues to live and her sister runs a small business. She
attended Virginia Beach schools. She is a graduate of Old
Dominion. She has lived in Arlington for more than 20 years,
with her wife, Adrianne, who I had a chance to meet, and their
three daughters, Chelsea, Brooke, and Julia, all, again, who
attended Arlington Public Schools. She is also grandmother to
two beautiful grandchildren who also live in Northern Virginia.
Christy's father, Augusto ``Romy'' Romero, came to America
from the Philippines as a young man. He became a U.S. citizen,
served in the U.S. Navy for 20 years, and was stationed in
Norfolk. Her brother Scott served in the military with
deployments to Bosnia, Afghanistan, and Iraq, and her brother-
in-law is currently a retired SEAL.
Continuing her family's deep dedication to serving our
Nation for the last two decades, the commissioner has dedicated
much of her career to protecting consumers and investors as a
financial regulator, with leadership roles at the SEC, the
Treasury Department, and her current position as commissioner
of the CFDC. In these positions, she has focused on results,
reform, and accountability, all things that are going to be
needed at the FDIC and, I believe, will bring a broad range of
relevant experiences to this new role.
For example, she served for more than a decade as a Special
Inspector General for the Troubled Asset Relief Program,
SIGTARP, and we all remember the challenges that were faced
there. In this role, her office was charged with acting as a
watchdog over Federal resources that were authorized by
Congress to stabilize our financial system and support
homeowners during that challenging, challenging time.
During her tenure as Special Inspector General, her office
recovered $11 billion for taxpayers and was responsible for
convictions for more than 400 individuals who committed fraud,
money laundering, and other crimes. That sounds like the kind
of experience we need at the FDIC.
In addition to her history of results there at SIGTARP, she
has worked and spent her career working, again, as the Chairman
said, on a bipartisan basis, serving as counsel for two SEC
chairs during the financial crisis, including, as the Chairman
pointed out, President Bush's SEC chair, Chris Cox, who was
very, very active during that time. And, again, to remind
folks, she has been unanimously--unanimously, that means all
100 of us--confirmed by the Senate twice.
Now, there are a number of letters of recommendations that
Christy has received. I would point out one from Sheila Bair,
who many of us, again, on this Committee, in a bipartisan way,
have worked with over the years, from the crisis and afterwards
who, again, if anyone would know what were the needed skills to
be chair of the FDIC, I'd count Sheila Bair pretty high on that
list, since she served as President Bush's head of the FDIC
from 2006 to 2011.
In her current role with the CFTC, she sponsors the
Commission's Technology Advisory Committee where she is engaged
with industry and other stakeholders on challenges and risk in
AI, blockchain, and digital assets. And, again, in our
conversations, I think going at the FDIC from that regulatory
position, having the knowledge, a technology-based knowledge,
about how AI is going to change our systems and our banking
regulations, blockchain, and the whole realm of digital assets,
this is exactly the kind of experience we need at this troubled
agency at this point.
Christy's dedication to public service, the breadth of her
bipartisan work experience, and her many accolades for
improving financial accountability in the sector make her well-
qualified to take the lead at the FDIC at this crucial time in
its history. And I have complete doubt that she can make the
kind of cultural change--and we spend a lot of time talking
about this--in this role, I hope, when she's confirmed.
So, I look forward to her testimony. And, Mr. Chairman, I
have got to step out for a minute, but I'll be back in time for
my questions. Thank you.
Chair Brown. Thank you, Senator Warner. Thank you, Mark.
Thank you to all four of you. Please proceed, beginning with
Ms. Goldsmith Romero. Welcome. And feel free, all of you, to
introduce family members at the beginning of your testimony. I
know people like to do that, for good reason. Thank you.
STATEMENT OF CHRISTY GOLDSMITH ROMERO, OF VIRGINIA, TO BE
CHAIRPERSON AND MEMBER OF THE BOARD OF DIRECTORS OF THE FEDERAL
DEPOSIT INSURANCE CORPORATION
Ms. Goldsmith Romero. Chairman Brown, Ranking Member Scott,
and Members of the Committee, thank you for this opportunity
and for your consideration. I am honored to be nominated by
President Biden to serve as the chair of the FDIC. Thank you,
Senator Warner, for your gracious words and support.
I do want to introduce my wife, Adrianne, and my daughters,
Chelsea, Brooke, and Julia. I'm incredibly grateful for their
love and support. I also want to thank my parents and my in-
laws, my son-in-law, my grandsons, and siblings for their love
and support. Yes, I said grandsons. I am a very happy
grandmother.
I grew up in a military family where my parents raised me
to be respectful and kind. My mom was a homemaker and, later, a
school teacher. And my dad came from the Philippines and became
a U.S. citizen after joining the U.S. Navy, where he served for
20 years. So, he inspired my own service, 22 years, under four
presidents, at the SEC, Treasury, and the CFTC. This nomination
and your consideration are a testament to the American dream
that my parents worked to achieve.
I have dedicated my career to the stability of our Nation's
financial system so that it can serve families and businesses
in search of their American dream. At the SEC, I protected
investors in markets, and I was counsel to SEC Chairs Chris Cox
and Mary Schapiro during the financial crisis. After witnessing
how a crisis on Wall Street can take a toll on Main Street, I
wanted to be part of the solution, so I helped build an
independent office at Treasury called the Office of Special
Inspector General for the Troubled Asset Relief Program, or
SIGTARP.
Congress created TARP to provide $442 billion for more than
700 banks, housing, autos, insurance, and derivatives.
Secretary Paulson said TARP was necessary to restore confidence
in the banking system, and that is how SIGTARP viewed our
mission. I was privileged to lead SIGTARP for 11 years, where
everyone pulled together to accomplish this massive mission.
And SIGTARP was successful. We brought transparency and
oversight through reporting and recommendations. We protected
TARP funds, recovering more than $11 billion, which was 27
times our cost. SIGTARP was known for its ability to uncover
hidden fraud in banks, and I credit that to a proactive,
analytics-based system that we developed working within the
bank supervisory privilege.
We brought accountability through civil actions against
large financial institutions and criminal convictions of more
than 400 individuals, including 95 bankers and more than 90
bank borrowers, often related to failed banks. Courts sentenced
75 bankers to prison.
I also gained a great appreciation for community banks
because 625 banks in TARP were less than $100 million in size.
And as I told Congress in 2011, small- and medium-sized banks
play an important role in our Nation's economy and are the
lifeblood of many communities across the country. They provide
credit to small businesses and farms and serve customers in
rural areas and small metropolitan areas not served by big
banks.
It is my experience at the SEC, SIGTARP, and at the CFTC
regulating derivatives will be invaluable if confirmed.
Derivatives are an important tool to manage risk, particularly
for the agricultural sector. At the same time, derivatives
subsequently contributed to the 2008 crisis and the FDIC
recently found shortcomings in the living wills of four large
banks related to derivatives. So there is more to do.
If confirmed, I will keep top-of-mind the significance of
leading an agency tied to the financial well-being of every
American and would prioritize maintaining stability and
confidence in the financial system.
As employees need to be supported in the FDIC's critical
mission, I would prioritize a complete overhaul of the FDIC's
workplace culture. The reporting is deeply disturbing and
describes deep-seated cultural issues that have caused pain for
many employees. It must not continue, and I will bring
accountability.
I would also ensure that banks of all sizes can provide
depository services and loans to businesses and households,
which is necessary for the U.S. economy. I would ensure that
banks appropriately manage emerging risk and that the
Government keeps pace as banking has modernized.
If confirmed, I look forward to working with Congress on
issues. To be entrusted with leading the FDIC in this mission
and at this moment would be a great honor. Thank you.
Chair Brown. Thank you, Ms. Goldsmith Romero.
Ms. Crenshaw, you're welcome to be here for 5 minutes.
Thanks for your statement.
STATEMENT OF CAROLINE A. CRENSHAW, OF WASHINGTON, DC, TO BE A
MEMBER OF THE SECURITIES AND EXCHANGE COMMISSION
Ms. Crenshaw. Chairman Brown, Ranking Member Scott, and
distinguished Members of the Committee, thank you for the
opportunity to appear before you. It is an honor to be
considered for reappointment to the Securities and Exchange
Commission.
Last month was the 90th anniversary of the passage of the
Securities Exchange Act of 1934, which established the SEC
during the Great Depression. Over the years, the SEC and its
staff have worked on behalf of generations of Americans to help
ensure that the securities markets are fundamentally fair and
safe for investors' hard-earned dollars. This capital, in turn,
has financed all manner of businesses and allowed our economy
to thrive.
I have had the privilege to contribute to the SEC's work
for over a decade. I began my career at the SEC as a staff
attorney in the Division of Exams, helping to oversee
institutions that manage millions of Americans' savings. I also
served in the Division of Investment Management and as counsel
to Commissioners Kara Stein and Robert Jackson, focusing on how
to strengthen investor protections in our increasingly complex
markets.
Most recently, I have served as a member of the Commission,
using the expertise I developed as a member of the staff of the
securities laws, of the markets we regulate, and of the inner
workings of the institution itself, to bring independent
thought and analysis to the service of our mission.
In addition to my SEC work, I also serve in the United
States Army Reserve Judge Advocate General's Corps. My SEC and
Army lives sometimes intersect in good ways and in bad. I have
been committed to bringing a message of financial readiness to
American servicemembers. Speaking with servicemembers, cadets,
midshipmen about the securities markets and financial literacy
has been a highlight for me.
Unfortunately, I'm also aware of the fraudsters who prey on
everyday Americans, including servicemembers and their
families. In one particularly troubling SEC enforcement action,
it is alleged that an Army financial counselor defrauded the
families of fallen soldiers. If confirmed, I intend to continue
to educate and advocate for strengthening protections for
American servicemembers.
I would also work tirelessly in support of the SEC's
mission: protecting investors, maintaining fair, orderly, and
efficient markets, and facilitating capital formation. To me,
this means promoting trust in the securities markets by
reducing opportunities for bad actors to engage in fraud and
manipulation. It means ensuring that investors have access to
appropriate and truthful disclosures that help them make
informed investment decisions. It means ensuring that the
investment professionals fulfill their obligations to customers
and elevate their interests above their own. And it means
balancing the interests of those who participate in our markets
to help ensure smaller players have the chance to compete. I
believe that this framework benefits investors and those
seeking to raise capital alike, and it is a pillar of our
economy.
Thank you to my husband, Alex Cole, who is here today, and
my family that are with me, for their unwavering support. The
littlest ones are at camp and at home. I figured you didn't
want them disrupting the proceedings today. Thank you also to
my fellow commissioners. Our discourse, although at times
differing, leads to more thoughtful outcomes on behalf of the
American public. And, of course, thank you to the SEC staff.
The talent, ingenuity, and commitment of the public service at
the agency cannot be overstated. It has been a privilege and an
honor to work alongside them in support of the SEC's mission.
I feel truly honored to be here today. Thank you for your
time and consideration, and I look forward to answering your
questions.
Chair Brown. Thank you, Ms. Crenshaw.
Ms. Johnson, you're recognized for 5 minutes. Thank you for
joining us.
STATEMENT OF KRISTIN N. JOHNSON, OF GEORGIA, TO BE AN ASSISTANT
SECRETARY OF THE TREASURY
Ms. Johnson. Good morning, Chairman Brown, Ranking Member
Scott, and other distinguished Members of the Committee. It is
a privilege to appear before you today. I am joined by my
parents and my son Jackson and good friends from law school and
law teaching. I am honored to have been nominated by President
Biden to serve as Assistant Secretary for Financial
Institutions at the Department of Treasury.
If I am confirmed, I hope to draw upon my experience gained
as an academic, a lawyer, in-house counsel in one of the
largest Treasury services divisions at one of the largest
financial institutions in the world, to ensure the strength and
stability of our economy and to ensure the integrity of
financial markets. I am also hopeful to work tirelessly to
ensure access for American individuals and families to credit,
housing, and financial services on fair and reasonable terms.
As a commissioner at the CFTC, I have advocated for
customer protection and encouraged the adoption of recovery and
resilience reforms, cyber preparedness, risk governance, and
the effective enforcement against both sophisticated and
garden-variety fraud.
For nearly two decades, I have researched, published, and
taught about financial market risk and regulation. As an
associate dean at Emory and Tulane University law schools, I've
held endowed professorships, received research awards and
fellowships, and had the great pleasure of teaching many
students. My research aims to identify, assess, and address
exogenous, endogenous, and emerging risks in financial markets.
During the global financial crisis of 2007 to 2009 and the
ensuing Great Recession, a period characterized by falling GDP,
double-digit unemployment, and dissipating retirement account
and home values, I proposed reforms for the deeply
interconnected, opaque, bespoke, bilateral credit derivatives
markets. My recommended reforms aimed to enhance transparency,
reduce counterparty credit risk, as well as liquidity risk, and
to facilitate price discovery, each important to the stability
of the financial system and to end users, such as farmers,
ranchers, and growers, who rely on derivatives markets for
price discovery.
Today, transformational innovation, with light-speed
operational infrastructure, promises to increase equity,
access, transparency, and efficiency. In 2019 and again in
2021, I testified before Congress emphasizing the need for
responsible innovation, the significance of financial
technology firms, the rise of artificial intelligence, and the
creation of blockchain technology.
These innovations promised to address an issue at the heart
of my work: financial inclusion. For far too many in our
country, particularly families in fragile financial
circumstances, it can be extraordinarily expensive to be poor.
Throughout my career, I have emphasized financial inclusion,
entrepreneurship, and access to credit for local businesses,
values I learned growing up in the Midwest and South and as a
student at Georgetown University and the University of Michigan
Law School.
My great-great-great-grandfather, Alexander Moss, was born
in May of 1821, and, as a young man, his parents relocated to a
town on the Wabash River about 80 miles north of Indianapolis.
There, he founded a storefront business and became a celebrated
businessman, offering loans to African-American families and
businesses with limited access to traditional lines of credit.
He campaigned for the building of a school and a church in the
African-American community.
My family has maintained a strong commitment to public
service. Shortly after graduating high school, my uncle
volunteered for active duty during the Vietnam War. Others have
served as judges, legal aid lawyers, teachers, nurses, and
health care professionals supporting indigent communities.
I am grateful to my parents, who join me today. They
reinforced these values, and they have given me and my three
sisters a sense of infinite possibility. I am also joined by my
son, a rising fifth grader at Georgetown Day School and an
aspiring engineer or a professional soccer player, depending.
Jackson, I am grateful to you for your patience as I work to be
in service of others and to teach you that we must measure our
actions by what we do for those who are most in need.
Thank you very much. I welcome your questions.
Chair Brown. Normally, I don't interject like this, but I
love the look on who I believe is your mother's face as she
looked at Jackson, your son, when you said that. Mr. Ito.
STATEMENT OF GORDON I. ITO, OF HAWAI`I, TO BE A MEMBER OF THE
FINANCIAL STABILITY OVERSIGHT COUNCIL
Mr. Ito. Chairman Brown, Ranking Member Scott, and
distinguished Members of the Committee, it is my honor and
privilege to appear here before you today. I am very honored
and humbled to be President Biden's nominee for this position
as the independent member with insurance expertise on the
Financial Stability Oversight Council, also known as FSOC. I
also want to thank you and your staff for the time you have
spent with me during this process.
First, I would like to mention and thank my wife Joy, who
would have liked to be here with me today. Joy has always been
very supportive and been a tremendous help through this entire
process. However, due to a planned family vacation in which we
committed to lead nine other family members on, she was unable
to attend today. Our family members departed on their flights
yesterday, and tomorrow I will start on my journey to try to
catch up with them.
I was born and raised in the town of Hilo, Hawai`i. The
neighborhood I grew up was idyllic. We all knew our neighbors.
More importantly, we all helped one another, neighbor helping
neighbor. This upbringing instilled in me a value to try my
best to contribute in whatever small way I can to help my
community.
After graduating with degrees in finance and law, I
practiced law for nearly 7 years. Then, as life takes its
unexpected twists and turns, Hurricane Iniki struck and
devastated the island of Kaua`i. This unfortunate set of
circumstances led me to the Hawai`i Insurance Division as a
staff attorney.
The value instilled in me to help others has kept me at the
Insurance Division for over 30 years and resulted in my
interest in this position. Through my years at the Insurance
Division, I have gained a unique set of experience and
knowledge that I would bring to FSOC. To highlight a few, they
include managing the impact of natural catastrophes and that of
devastated communities, placing insurers under supervision,
rehabilitation, and liquidation, and helping with the
development of IT systems for the State and at the National
Association of Insurance Commissioners, also known as the NAIC.
I also assisted in starting up residual market mechanisms
in Hawai`i when the availability of insurance during hard
markets was limited or non-existent. I have worked closely with
fellow State and international regulators, insurers, agents,
legislators, and consumer groups to ensure the insurance
marketplace remains fair, viable, and responsive, and that
companies are financially solvent and there to pay claims. I
know the important role State insurance regulators play and the
benefit of collaboration on important questions of financial
regulation.
The three-part statutory mission of FSOC is to identify
risk to the financial stability of the United States, promote
market discipline, and respond to emerging threats to the
stability of the U.S. financial system. If confirmed, I will
work every day to share my experience and insight with fellow
FSOC members to help the organization achieve the mission
Congress gave it.
Thank you for the opportunity to appear here today. I look
forward to answering any questions you may have.
Chair Brown. Thank you, Mr. Ito. I would express the
opinion that Joy probably made the right choice, and we will
not keep you long so you can catch up.
Mr. Ito. I'm glad to report that they made it safely to
their destination.
Chair Brown. I'm not suggesting what my colleagues ask
about, but you may not get the most questions on this panel.
But, nonetheless, you should say here for the entire panel.
[Laughter.]
Chair Brown. But then, again, I don't know where you're
going on your vacation.
Thank you, all. I'll start with you, Ms. Goldsmith Romero.
The FDIC suffered from significant longstanding workplace
culture issues. It has been described as misogynistic,
patriarchal, insular, outdated, good old boys club. Significant
change is necessary because FDIC employees deserve a workplace
free from discrimination and abuse and harassment.
How do you go about addressing these longstanding issues
that appear to be deeply ingrained, through FDIC chairs of both
parties for far too many years, that seem to be ingrained in
the agency's culture?
Ms. Goldsmith Romero. Thank you for the question, Senator.
When I read the report, it reads like a bygone era,
particularly for women and minorities and members of the LGBTQ+
community. So, I'll learn more if confirmed and I can get in
there, but let me give you my top-line thoughts.
The first is to modernize the Federal workplace to one that
has the best practices that you would expect to see in Federal
workplaces, that invests in staff morale and values and
supports employees. The second is to herald the employees and
managers that have been doing the right thing. Third, I'd send
a clear message that harassment and discrimination and
retaliation will not be tolerated. So, that includes
investigations and holding people accountable. And I can say
that the conduct in the report would warrant multiple removals.
Additionally, we need to put in place what is the normal
standard Federal EEO process for complaints, and then encourage
people to use it, rather than have them live in fear. I would
change the litigation-adverse culture so that problems could be
addressed right away, rather than moved around or kick the can
down the road. And then the error of each office being a
fiefdom would be over. There would not be 70-plus FDICs. There
would be one FDIC with all employees and all offices following
the same rules the same way.
Chair Brown. Thank you. Discuss how your tenure at SIGTARP
informed your understanding of our banking system and prepared
you to lead the FDIC into its next, much better chapter.
Ms. Goldsmith Romero. Yes. Thank you, Senator. SIGTARP was
really deep into banks at the worst time in our Nation's
history. We were inside the same confidential supervisory
privilege that FDIC and other regulators hold, and we were
dealing with failed banks all the time and banks that were in
trouble. So we were actively monitoring all of the 700-plus
banks in TARP, making recommendations to Treasury. A lot of
those were community banks that were having trouble getting out
of TARP. And we were following all of that and following their
health and condition.
In terms of our investigations, we prosecuted more than 100
bankers, more than 90 bank borrowers who hurt banks. And so
would go into banks, just like a bank examiner does. We would
analyze all the bank's books and records, the examiner's
records. We would be talking to bank employees and management,
as well as the examiners. We would be using our proactive, data
analytics-based system to trend out call reports and be looking
at CAMELS ratings and really trying to identify areas of risk,
how banks were managing with risk, and whether they were
following the regulatory rules or not.
And then, on the largest banks, I did a lot of work on
systemic risk, capital liquidity issues, things like that, and
then served on a council of IGs with oversight over FSOC.
Chair Brown. Thank you. Listening to you, having talked to
you before, and I know you talked to a number of senators of
both parties, and looking at your experience and background,
says to me there is no question, there is no real reason to
oppose you, except for partisan reasons, and I hope the
Committee rises above that.
Ms. Crenshaw, I am running up against the clock. We'll have
time for one question to her. Ms. Johnson and Mr. Ito, I
apologize for that. We will get you written questions.
Ms. Crenshaw, Americans have become more involved in the
financial market in recent years as workers become responsible
for saving for their own retirements. That is a whole nother
debate. But the system is often rigged for Wall Street against
everyone else. We know that most of inflation in this country
is because of corporate greed. We see all kinds of signs of
this as a system for Wall Street more than for workers.
What steps does SEC need to take to make sure Americans
have the tools and the information they need to feel confident
they'll be treated fairly as they save for the future?
Ms. Crenshaw. Thank you. The fact that Americans'
retirement is in their own hands more than ever means that the
SEC must promote trust in our markets. We do that by reducing
bad actors, ensuring truthful and appropriate disclosures, and
making sure that market participants play by the rules, all of
them. This helps maintain confidence in the markets so
investors know it is a safe place to put their money.
Chair Brown. Thank you. Senator Scott.
Senator Scott. Thank you. Commissioner Goldsmith Romero,
thank you once again for the conversation we had. And I told
you then I was going to ask you these questions, so they're not
a surprise to you and so I would give you an opportunity to
deal with some of the challenges, unlike the Chairman, who
suggests the only reason to vote against someone in this
Committee is because of partisan reasons. That is just hogwash,
to be blunt.
The truth is that the whistleblower complaints--and I think
the whistleblowers would actually disagree with the Chairman's
comments, as well--the whistleblower complaints suggest that
the same challenges that we see at the FDIC under Gruenberg,
some of those same challenges exist with SIGTARP under your
leadership.
And so my question to you is: how would you respond to some
of the challenges that we've talked about in my office?
Ms. Goldsmith Romero. Thank you, Senator. I really do
appreciate the time to address this. I absolutely disagree.
There is nothing like what was in the Cleary Report at the
FDIC. We had, and I was very glad to have this, a very
independent and fair process that employees could go to and
they felt safe going to. And they did. And I'm glad they did,
because then, as management, we could see what the issues were
that we had to address.
We never had any women complaining about sexual harassment.
We never had these issues of retaliation. I was responsible. If
there had been discrimination, harassment, and retaliation, I
would have taken it seriously and dealt with it right away.
The findings were--and I have to respect the process, but
also the outcome--in 11 years, there was only one finding
against the agency. It was early on in my tenure, and I took it
very seriously and addressed it.
I'll also say that all IGs and their senior staff are held
to a very, very high standard because we fall under the
oversight of CIGIE. And so CIGIE has an integrity committee
that will do reports and investigations on IGs, and they never
had any findings.
But even without having discrimination or retaliation or
harassment, what I can tell you is that I still cared about
employee morale and trying to have employees feel supported and
trying to--we just created this environment of high dignity and
professionalism and respect, so that employees could bring
their best selves to work and work like a team. And the senior
staff shared those same values, and I believe that is reflected
in the great success that SIGTARP had.
We were a very small agency compared to the mission that we
had to take on, so everyone was pulling together and we were
able to have that success and protect the financial system. So
that is why I want to go to the FDIC and do the same thing
there.
Senator Scott. Can you confirm for me that you've had no
complaints filed against you, specifically, for discrimination,
harassment, or retaliation?
Ms. Goldsmith Romero. Senator, I think it would be very
normal to name me in any kind of complaints, and I would
welcome that, because I'm ultimately the one responsible for
changing things and fixing things right away. So, the buck
stops with me, and so I would be named. That would be a very
normal thing to name all the managers all the way up. But, in
my 11 years, we only had this one finding early on.
Senator Scott. I'm certainly familiar with the concept that
there are three sides to every story: yours, mine, and the
truth. And so I certainly appreciate you answering that
question.
In my office, we also talked about the importance of trying
to find a way for the employees, especially at the FDIC and
beyond, that have had challenges within the organization to be
able to go forward with complaints, but not go forward with
complaints in the same organization that actually manages.
So, under Chair Gruenberg, he has a recent proposal
creating the FDIC's Office of Professional Conduct and Office
of Equal Employment Opportunity. Of course, the challenge is
that all those reports, complaints, and concerns comes straight
back to the chair. How would you create a culture where the
person who is handling the complaints isn't a part of the
organization itself?
Ms. Goldsmith Romero. Thank you, Senator. I really do
appreciate that you and I had some time to talk about the
importance of having an independent and fair process. So in the
Federal Government, the EEOC sets that up. There is various
agencies for different kinds of allegations, but the EEOC sets
that up and works with the agencies to do that in a way where
the investigations can be investigated so that there's no
influence on the fact-finder. These are the types of things
that are important, that independence.
Senator Scott. Do you have State supervisory experience?
Ms. Goldsmith Romero. So, Senator, I have worked a lot with
the State banking regulators quite a bit. In fact, you know,
Pierce Bank in Washington, we were able to go in with the State
banking regulators for years that we did, working hand-in-hand.
We ultimately found why the bank failed, uncovered the cause of
it, and then we brought significant convictions in that case. I
believe 15 bankers who were convicted. We were working hand-in-
hand with the State banking regulators.
Senator Scott. So you do believe that your nomination
comports with the FDI Act?
Ms. Goldsmith Romero. Are you talking about to have the
banking----
Senator Scott. Yes.
Ms. Goldsmith Romero. So I'm not--if the way it is
written--I understand the issue there, I believe. If the way
itis written is that someone who has to have worked in a State
banking regulator, I have not done that. I have just worked
with the State banking regulators. That was just one example.
Senator Scott. OK. Thank you.
Chair Brown. Thanks, Senator Scott. Senator Smith of
Minnesota is recognized.
Senator Smith. Thank you, Chair Brown and Ranking Member.
And welcome to all of you. Thank you very much for your
willingness to serve. I'm very grateful for that.
Ms. Crenshaw, I'm going to start with you. You know, I
think one of the things that I see is that retail investing has
just changed dramatically. It is really almost unrecognizable
for what it was even 10 years ago. Smartphones and the capacity
for people to trade is so easily accessible. Social media has
become a way to draw people in to new schemes. And, as a
result, I think retail investors' appetite and access to new
and more sophisticated financial products is growing and quite
dramatic.
So could you talk to us, please, about how you view the
SEC's role in protecting retail investors and maintaining fair
markets, particularly in the face of the evolving investment
environment?
Ms. Crenshaw. Absolutely. Thank you, Senator. First and
foremost, I think education is fundamentally important. We need
to educate investors on how to assess the pros and cons of
various investments, of how to assess the risks and
opportunities that different investment opportunities provide.
So, first and foremost, I would start with that.
Second, we need to ensure that the intermediaries are
abiding by their obligations, the investment advisors, the
broker-dealers, and ensuring that they are abiding by their
fiduciary obligations or the Regulation Best Interest. And we
need to ensure that we hold bad actors to account so that there
is faith in the market.
So really accountability and transparency, I think, are the
fundamental ways that we need to ensure that those retail
investors--which is good, we want to encourage retail
investors, because, again, retirement is in their hands more
than ever. But we do need to ensure that it is a safe place for
them, so that they have more returns when they get their money
out than they did when they started.
Senator Smith. Thank you very much. Just as a follow up, I
think that, oftentimes, there is some confusion about whether
these new investment tools or products still have to abide by
the same consumer protection rules that we have in place. Could
you just address that? Because I think that create--sometimes
it seems to create nearly a loophole, and how would you
approach that at the SEC?
Ms. Crenshaw. Absolutely. I think, to the degree they are
securities, they must abide by all of the securities laws and
regulations. And I think it is as straightforward as that. And
when they are not, we have enforcement tools to hold them to
account.
I think that is also where education comes into account,
both for investors but for the marketplace. For example, ETPs
are very different from ETFs. And you hear a lot about ETFs.
They are ubiquitous in retirement accounts. We have recently
passed some ETPs. They are not ETFs. The protections around
them are incredibly different, and both the marketplace and the
investors need to understand what their obligations are.
Senator Smith. Great. Thank you very much. Thank you very
much.
Commissioner Goldsmith Romero, I really appreciated the
conversation that we had, and appreciated very much the
professionalism and the deep bench of experience that you bring
to this extremely important role. And I know that Chair Brown
asked you about the ways in which your experience at TARP will
shape your leadership at the FDIC. And, Chair Brown, I found
that very, very helpful.
So, I am going to just briefly follow up on a bit of what
the Ranking Member was asking. As you tackle the need for
culture change and accountability at FDIC, I, for one, think
that somebody with a fresh perspective, somebody who is not
part of that culture, but is coming in, can provide the kind of
leadership that is needed. And so could you just address that
for me? And could you talk a bit about how you see coming in as
a new person in an agency that needs culture change--which is
very difficult to do, let us be honest--how you see approaching
that?
Ms. Goldsmith Romero. Thank you, Senator. I appreciate the
question. So, I have been in the Federal Government for 22
years, so I know what is right and what is good. And what I am
reading here in this report is not that. It is not that at all.
And I have had the great opportunity to work at three different
agencies and lead a Federal office for 11 years.
So, you know, it is not everybody there. There is, I am
sure, a great number of people who are doing the right thing.
And, you know, here the agency's reputation is tarnished. So I
want to go in and go back to reestablishing the FDIC as being a
premier regulator.
Like I said, herald the people who are doing the right
thing, put in all the normal processes, procedures, best
practices that I have enjoyed and led, and make sure that
everyone feels safe and can be focused on mission.
Senator Smith. Thank you. I appreciate that answer. And I
think, again, it demonstrates how your experience will allow
you to be an effective leader in a very important agency.
Thank you, Mr. Chair.
Chair Brown. Thanks, Senator Smith. Senator Rounds from
South Dakota is recognized.
Senator Rounds. Thank you, Mr. Chairman. First of all, to
all of you and to your families, thank you for being here. To
the families, this can be a pretty emotional time period for
the folks that are up here in front because they don't have any
idea at all what kind of questions they're really going to get.
They have had a chance to meet with most of us beforehand, and
they get an idea about what it is, but there is always that
trepidation. And you all get to put up with them during that
time period, so we thank you for that.
Ms. Johnson and Mr. Ito, thank you for being here. I am not
going to have any questions for either one of you, so you can
relax for just a minute here. Ms. Romero, I appreciate the
opportunity to visit with you. As you know, the Federal banking
agencies, including the FDIC, have proposed a comprehensive
revision to their capital rules that would subsequently
increase capital requirements. This revision is known as the
Basel III Endgame, and we have talked about it a lot within the
banking institutions but not a lot outside.
We know that there will be material changes made to the
entire proposal. Just Tuesday, Chair Powell says that he
supports another comment period. If confirmed, would you
support another comment period?
Ms. Goldsmith Romero. Thank you. And I really appreciated
when we met in your office and were able to talk through some
of these deep, complex issues. I think a re-proposal is always
on the table when you have a rule that is proposed and you get
that many negative comments. And so there is the Administrative
Procedures Act and the logical outgrowth doctrine that would
have to be applied, but I am not--I think it is on the table. I
am not looking to get something done fast; I am looking to get
something done right.
Senator Rounds. OK. Look, in this particular case, you
would be expected to make a decision rather quickly as to
whether or not that is going to occur. Your nomination is up
right now, and they are in the middle of making this decision
right now, so you are going to be put in a really tough
position here. And if you have not done the background to
decide whether or not you would support a continuation or not,
that is going to be a problem.
Ms. Goldsmith Romero. Well, Senator, I have done the
background on what's going on with Basel. I am just not privy
to the changes that are being made and do they fall within the
logical outgrowth doctrine, do they not. But what I can assure
you is, I am very open to a re-proposal, but, if confirmed, I
would need to get in there and sort of understand this. But I
am not looking to rush something through for the sake of
rushing it through. I am looking to make sure that the
regulation is long-lasting, it is going to work, and I want to
understand all the unintended consequences.
Senator Rounds. There is another possibility on that,
because that decision is going to be made very, very shortly.
And I recognize that they are asking you to move into a
position rather quickly in this particular case. If you are
confirmed, and we need to move forward quickly in this
particular case just because of the timing--this has been
around for a long time, but it is coming up now--would you
recuse yourself from voting and allow Vice Chair Hill to finish
the work on the Basel III Endgame proposal? Would you commit to
that?
Ms. Goldsmith Romero. Senator, I think, if I am confirmed
as chair, you know, there will be a decision made at the board
level. I do not see a reason to recuse, but I can tell you what
I am trying to explain is I have not seen the changes. I'm
certainly inclined to have a re-proposal whenever there are
this many comments and then there is going to be broad material
changes. That is my inclination.
Senator Rounds. The broad material changes appear to be
necessary if this is going to move forward at all. I think that
is pretty clear. I think, like, over 95 percent of all the
requests recommended making major changes in multiple different
areas on it.
OK. Ms. Romero, in light of the recent Supreme Court ruling
on Chevron deference, agencies like the FDIC will need to make
certain that they are complying with congressional intent. If
confirmed, do you commit to implementing the Economic Growth,
Regulatory Relief, and Consumer Protection Act, that is S.
2155, as intended by Congress?
I'm just curious. This really is a case of where there has
been a rulemaking change in the way that it is going to be
viewed in the future by the courts. Intent is really going to
be important. Give us your thoughts.
Ms. Goldsmith Romero. Yeah, thank you for that question,
Senator. I really believe that we are limited, as regulators,
to the laws that are before us. And we always strive to look at
congressional intent. Everything I do now is to sort of say,
OK, well, what's the authorization here from Congress and how
do we stick with it? S. 2155 is the law of the land. I am going
to comply with it. I really believe in the sentiments behind it
in terms of tailoring regulation. As we talked about it, all
banks are not the same. And I also want to understand the
unintended consequences of all these rules.
Senator Rounds. So, if confirmed, would you commit to
consulting with Congress if you view intent is not clear?
Ms. Goldsmith Romero. One hundred percent, Senator.
Senator Rounds. Thank you. Thank you, Mr. Chairman. My time
has expired.
Chair Brown. Thank you, Senator Rounds. Senator Warner of
Virginia is recognized.
Senator Warner. Thank you, Mr. Chairman. Let me actually
pick up where my friend from South Dakota--as somebody,
unfortunately, with some folks on my side of the dais, I was up
to my eyeballs in 2155. So if you need intent suggestions, I'd
be happy to share those with you.
[Laughter.]
Senator Rounds. On a bipartisan basis.
Senator Warner. On a bipartisan basis. Although, you know,
she ought to go first to the people who took the most grief for
that.
And I also think, you know, your comment, Commissioner
Goldsmith Romero, on Basel III was appropriate. Absolutely
appropriate. And the fact that you think, you know, you have
not been told about, just as we have not been told about, what
the re-workings are going to be and whether that needs to be
fully reissued or additional comment period. I mean, I think it
would be irresponsible to make a judgment when you, just like
me, have not seen the revisions yet.
So I think, based on our conversations, you understood the
complexity of this issue. We all think how we deal with Basel
III Endgame is terribly important. And, you know, having the
full economic analysis out, Chair Powell committed to that
yesterday, and making sure whatever direction we head, you
know, that it works in harmony with already existing standards,
I think is really important, and I appreciate the way you have
addressed this.
And I know Members have already asked this, but I want to
go at it again since it appears that my colleagues have
questions about, you know, your background and experience. I
think you have got the right background. I think you have got
the right experience. But the truth is FDIC is a large entity.
It is very complicated, and you are going to have a challenge
to both keep the trains running on time and not move away from
your critical financial supervisory role.
So can you give us a little bit of an outline, recognizing
you are not there yet, but can we look at 30-day metrics, 60-
day metrics, 90-day? What are the things that we could see from
you, particularly on the culture change, that, you know, I hope
you're going to be confirmed, that we could look back and say,
well, did she do what she said as she came into this role?
Ms. Goldsmith Romero. Thank you, Senator. I appreciate the
opportunity to address that. So I think there's going to be
some immediate things that need to take place, and the first of
that is making sure that there's the right process in place
because there was confusion in the process, and also making
sure employees feel safe and all the managers are encouraging
people to use that process. Otherwise, if you don't have a
process in place that people trust, then, you know, management
does not know what's going on and can't fix the problem. So
that's one of the first things that would need to be fixed.
I think this issue of field offices and fiefdoms, that's
going to take a little bit longer, I would say. You know, as I
said before, we had field offices at SIGTARP, and I made sure--
I did a number of things to make sure that all the offices were
operating in the exact same way in terms of conduct and
professionalism but also in terms of substance and what they're
doing. We can't have offices moving in a different direction
than, for example, what the policies and practices and
procedures allow. So that's going to be a larger issue. There's
definitely going to be accountability, and that might take a
little bit of time, but we want to do it right. We want to make
sure we go in and right the ship.
And then there's really just this issue of modernizing
culture and modernizing ideas, changing litigation-adverse
mentality. I think you could do some things right at the
beginning to start with that, but these are deep-seated fully
ingrained issues. Some of changing the whole culture is going
to take a bit of time, but we also can't take our eye off the
ball of the mission. And so, you know, we had bank failures in
spring 2023. We've got to make sure that everyone is in
position and can be focused on mission.
Senator Warner. And, again, I agree with the Chairman. This
was not a problem at the FDIC that happened overnight. It is
going to take time. But my hope would be we'd see a 90-day
plan, a 180-day plan, and some of the things that we can look
at at metrics.
I'm going to get one more question to you, Commissioner,
but I do want to say to Ms. Crenshaw for the record I would
love to both compliment what, frankly, Jay Clayton started on
human capital disclosure, and I know you've been active on
that, as well, and want to make sure we continue that good
work.
An issue that my colleagues have heard me come back to
repeatedly is better utilization of the discount window. Chair
Powell in the House yesterday was saying, you know, the fact
that they sometimes publish folks into creating that stigma.
When you get in and you come to the same conclusion that the
discount window needs to be better utilized and we need
reforms, will you continue to work with Chair Powell, me, and
others who care about this underutilized tool?
Ms. Goldsmith Romero. Absolutely. I care about it, too. I
mean, in times of crisis, banks need liquidity, and they need
it fast. We saw liquidity dry up very quickly in the crisis,
and that's actually what led to the Troubled Asset Relief
Program, or TARP. So we don't want to be in that same position
again.
So these ideas on taking away the stigma of the discount
window and then making sure banks are ready to use it, that
they can potentially pre-pledge collateral, and that they know
how to use it. I think that's worth taking the time to do.
Senator Warner. Thank you. Thank you, Mr. Chairman.
Chair Brown. Thank you, Senator Warner. Senator Tillis of
North Carolina is recognized.
Senator Tillis. Thank you, Mr. Chair. Congratulations to
all of you for your nominations. Commissioner Crenshaw, I want
to start with you. You made a statement after the SEC's recent
climate rule, and I think, to use your words, you said you
considered the rule to be the bare minimum and not the rule I
would have written. So I'm curious, with respect to Scope 3
reporting requirements, is that one of the root causes of your
disappointment? If you can keep your comments brief, I would
appreciate it.
Ms. Crenshaw. Sure, Senator. Thank you. With respect to
bare minimum, my intent there was----
Senator Tillis. Where did it fall short?
Ms. Crenshaw. It fell short, well, investors, I talked
about two places where investors--what I was really thinking
about when I said not the rule I would have written was I would
have thought about using models, assumptions, and estimates
much more completely than we did. And that way, we could have
gotten more information to investors in a way that was less
expensive. And I would also have considered robust safe harbors
from liability----
Senator Tillis. If confirmed, would you consider reopening
the rule and, if you did, would Scope 3 reporting requirements
be a part of the revised rule?
Ms. Crenshaw. I don't know, Senator. As you know, it's in
litigation right now, so a lot is going to depend on the
outcome of the litigation. And I don't know----
Senator Tillis. Do you generally support the notion of
Scope 3 reporting requirements?
Ms. Crenshaw. I think investors put comments in the comment
file, and I think we need to balance the interests. But I think
there's a way that you can look at assumptions and estimates
and a safe harbor from liability to ensure that the costs are
not prohibitive and to ensure that you're not asking farmers
and unregistered entities to provide information.
Senator Tillis. OK. Thank you.
Ms. Goldsmith Romero, I want to go back to Silicon Valley
Bank. What, in your opinion, if you could only, the major root
cause of SVB's failure, what was it? Was it--well, actually,
let me not give you choices. What do you think the root cause
of SVB Bank was?
Ms. Goldsmith Romero. Thank you, Senator, for that. Failure
of risk management at the bank and then failures on the
regulatory supervision.
Senator Tillis. Yeah. So you didn't see capitalization as
an issue?
Ms. Goldsmith Romero. I was not, you know, a bank regulator
at that time, but it seemed like the root cause was what you
were just asking----
Senator Tillis. Poorly managed and poorly supervised?
Ms. Goldsmith Romero. Correct.
Senator Tillis. And I think, as a result, because at the
time of the--it seems like it was ages ago. It's hard to
believe it hasn't been that long. But at the time of the
failure, everybody was saying, and because they failed so many
other banks were failing, was it your opinion that what we saw
there was going to ripple through? I know we had the one other
failure, First Republic. But do you view those, as some of us
do, as kind of outliers in the banking industry based on their
models and activities?
Ms. Goldsmith Romero. So this is a really interesting
question, so let me take it back even a little bit farther,
which is the crisis. And this really comes down to consumer
confidence, right. If consumers don't have confidence that
their money is safe, you know, businesses and individuals, then
you're going to see bank runs and you're going to see
contagion. You may have bank runs not even related to the banks
who are in trouble. And we don't want to have that. We don't
want to have people pulling their money out of the bank and
putting it in just one of the hugest banks, thinking that it's
safe.
And so, you know, I think there was a situation where there
was Silicon Valley Bank and Signature, and they tried to--the
regulator tried to contain that. But I do think we need to
really be looking deeply at this issue of bank runs and
consumer confidence particularly in modernized banking.
Senator Tillis. I just feel like there was some thinking
and a lot of people were attributing the Senate Bill 2155, I
was 1 of 4 on my side that worked with Senator Warner and
others on that bill, they were trying to blame it on just a
lack of regulation. But it doesn't really--it seemed like a
lack of supervision and a lack of risk management. So I'll move
on from there.
I'm kind of curious about your view of the 2024 stress
test. I read the results of those stress tests to say that our
banks are pretty well capitalized. How do you read the results
of those stress tests?
Ms. Goldsmith Romero. Yeah, so, again, I'm on the outside
looking at it, just like you are. And so it does seem like some
capital is strong. I think there's some areas that need to be
looked at, but that's how I read the----
Senator Tillis. But isn't a stress test, by definition,
really subjecting the banks to some of those areas? So do you
think that the stress tests themselves are insufficient, or you
just need to look at the details within the stress test
scenarios?
Ms. Goldsmith Romero. Yes. I mean, I'm very familiar with
stress tests. I mean, it's designed for capital adequacy and
so----
Senator Tillis. And it's literally stressing, so it's
coming up with extraordinary circumstances.
Ms. Goldsmith Romero. Absolutely, sir. Yes.
Senator Tillis. OK. Thank you. Thank you, Mr. Chair.
Chair Brown. Thank you, Senator Tillis. Senator Warren from
Massachusetts.
Senator Warren. Thank you, Mr. Chairman, and
congratulations to all of our nominees. Good to see you here
today.
So, Commissioner Goldsmith Romero, as chair of the FDIC,
your job would involve not only helping to prevent bank crises
but also cleaning up after them when the banks fail. You've had
decades of experience as a financial regulator, including
getting up close and personal with teetering banks during your
tenures as head of SIGTARP.
In the fallout from the 2008 financial crisis, Congress
created a $700 billion fund called the Troubled Asset Relief
Program, or TARP. It was designed to stabilize the financial
system, and you led the oversight of that huge fund for a
decade. You also managed SIGTARP's $45 million operating budget
and its hundreds of staff. By all accounts, you did so with
incredible success, recovering over $11 billion for the
American people. In fact, I understand that for every dollar
your office spent, the American taxpayer got a $29 return.
That's pretty good.
Commissioner Goldsmith Romero, your work at SIGTARP
required you to review the quality of bank assets, confidential
examination reports, management processes, and compliance with
Federal regulations. So how does that compare with the kind of
work a bank examiner does at the OCC, the FDIC, or the Federal
Reserve?
Ms. Goldsmith Romero. Very, very similar, Senator. I
appreciate that question. So we would go in, just like a bank
examiner goes in. In fact, sometimes we'd grab the operating
system and go through the banks. We'd look at what led up to
the call reports. We'd trend out the call reports. We'd see
changes in CAMELS ratings. I mean, we would go deep into these
banks.
I think the difference is that we--often, we had more time
to look at these. We dealt with a lot of failed banks, troubled
banks. We would determine the cause of the failure. And then
when we would determine the cause of the failure, if we could
hold, you know, some bankers accountable for that, we would
seek reimbursement to the FDIC for losses to the Deposit
Insurance Fund. That's harder for bank examiners to do this.
And then we had a higher standard that we had to prove in doing
our work.
Senator Warren. All right. And that's where your $29 to $1
invested came from, holding these folks accountable?
Ms. Goldsmith Romero. Yeah, this is how we got our, you
know, great return on investment.
Senator Warren. Good. It seems like pretty useful
experience for the person named to lead the agency in charge of
dealing with failed banks. In fact, I can't think of better
experience. The last Republican who was named to head the FDIC
had no experience in dealing with failed banks.
Ms. Goldsmith Romero, you ran SIGTARP at a time of
extraordinary upheaval in the banking industry. Can you
estimate how many troubled banks you dealt with?
Ms. Goldsmith Romero. Hundreds. I mean, there was more than
700 banks in TARP. We were constantly working with them trying
to understand their health and their condition and risk that
they faced, and then we investigated and went very deep into
triple digits.
Senator Warren. OK. So you spent years digging through the
guts of troubled banks and compliance with banking and
securities laws. You kept some open, others you ended up
closing, and that experience is pretty much spot-on for
somebody to lead the agency in charge of monitoring the banks
and cleaning up the ones that fail.
Commissioner Goldsmith Romero, we know that there are
workplace issues at the FDIC. During your time at SIGTARP,
there were some workplace complaints filed. Should that be a
red flag that you were not a successful manager?
Ms. Goldsmith Romero. No, Senator. You want to have a
process that people feel safe using and that they actually do
use and they're not fearful of. That does not exist at the
FDIC. But you also want to look at the result, and, in 11
years, we only had one finding against us early in my tenure,
and I took it seriously and addressed it.
So, ultimately, what you want is to set up an environment
of high dignity, professionalism, respect, employees feel
supported and valued, so that they'll come in and they'll give
110 percent, and that's how we got such great results at
SIGTARP.
Senator Warren. Now, I very much appreciate both that you
have thought through these issues and actually have extensive
experience with it. These are critically important economic
positions that the nominees before us are eminently qualified
to fill. I'm sorry I don't have time to talk with everyone, but
I really appreciate your work here. Thank you, Mr. Chairman.
Chair Brown. Thank you, Senator Warren. Senator Kennedy
from Louisiana.
Senator Kennedy. Thank you, Mr. Chairman. Ms. Romero, I
know you've read the Cleary Gottlieb report; is that correct?
Ms. Goldsmith Romero. Yes, Senator.
Senator Kennedy. I watched a lot of powerful people in this
town try to cover it up. They said oh, it's bad, but don't
worry, the FDIC chairman will fix it. This was the same FDIC
chairman who had been at the agency since God was a corporal
and under whom all this stuff happened. And, fortunately, that
point of view didn't prevail.
Here's the way I read the report. Ninety-seven people at
that agency reported 145 separate incidents of sexual assaults;
91 others reported 141 separate incidents of gender or
sexuality-based discrimination; 187 people reported 320
separate incidents of verbal abuse. Over 500 people, about 10
percent of the people at the agency, came forward about
discrimination, harassment, mistreatment they faced at the
FDIC.
Now, I listened to you say all the right words, and you
talked about accountability, and you talked about refurbishing
the tarnished reputation of the agency, and you talked about
listening. And I appreciate all of that. But the phrase that
got my attention was send a clear message that this won't be
tolerated.
If you want to do that, what you need to do before you do
your listening tours or all that other stuff, you need to
investigate every one of these allegations, every single one,
and find out if they're true. And if they are true, then
somebody ought to be--the person who is responsible should be
fired, should be sued, and/or should be prosecuted. And then
you'll have a cleaner agency.
Now, I don't have any questions. You're either going to do
it or you're not. But I think a lot of the Members of the
Committee agree with me. We're going to be watching. Every time
the FDIC comes before the Banking Committee, as long as I'm on
it, I'm going to ask you about progress with specificity.
Ms. Crenshaw, this climate risk disclosure rule that you're
so proud of, how much is that going to cost the companies that
you regulate?
Ms. Crenshaw. Senator, on a per-issuer basis over 10 years,
I think the economic analysis was roughly $250,000 to $750,000
on a per-issuer basis over 10 years.
Senator Kennedy. What's the total cost, please?
Ms. Crenshaw. I don't know the total cost----
Senator Kennedy. You have no idea?
Ms. Crenshaw. Well, it's going to depend very much on the
individual issuer----
Senator Kennedy. So you impose this rule on every single
entity that you regulate, and you don't know the total cost?
Ms. Crenshaw. Well, Senator, it depends on the individual
issuer. We put in place----
Senator Kennedy. You don't know the total cost?
Ms. Crenshaw. It's going to depend on the individual
issuer.
Senator Kennedy. You don't know, do you?
Ms. Crenshaw. Because it's going to depend. I don't think
there's necessarily----
Senator Kennedy. It's going to be billions of dollars,
isn't it?
Ms. Crenshaw. I don't believe, on a per-issuer basis, that
it's going to be----
Senator Kennedy. I didn't say per-issue, I mean the total
cost.
Ms. Crenshaw. Senator----
Senator Kennedy. It's going to be billions of dollars,
isn't it?
Ms. Crenshaw. I don't know, Senator.
Senator Kennedy. Yeah, it is. And you know it is. How much,
after asking all these businesses to spend billions of dollars,
how much is that going to lower world temperatures?
Ms. Crenshaw. I don't know. It's not designed to lower
temperatures, Senator. It's designed to give investors
information so that they can assess risk----
Senator Kennedy. Why don't you just send them an email?
Ms. Crenshaw. Well, I think there's a lot of securities
laws that would prohibit us just sending an email.
Senator Kennedy. Let me be sure I understand. You voted to
spend--look, we all want clean air and bright water. You voted
to spend, to require the people regulated and the entities
regulated by the FDIC billions and billions of dollars, even
though you can't say really how much it's going to cost, you're
just going to make them do it. And you can't tell me today how
much it's going to lower world temperatures?
Ms. Crenshaw. Again, that's not what the rule is designed
for, Senator.
Senator Kennedy. Well, what's it designed for? To harass
people?
Ms. Crenshaw. To give investors information to assess
risk----
Senator Kennedy. Virtue signaling?
Ms. Crenshaw. ----to appropriately allocate their capital--
--
Senator Kennedy. I mean, this is insanity. You have a
personal supply chain. Suppose we passed a law that said
periodically you've got to report personally the carbon
emissions of the people who make all the clothes you buy. You
buy clothes, don't you?
Ms. Crenshaw. I do, Senator.
Senator Kennedy. And the car you drive and the house you
live in and the food you eat. How much do you think that would
cost?
Ms. Crenshaw. We carved out all of the smaller entities,
EGCs, SRCs, from the final rule to ensure that----
Senator Kennedy. If you think everybody ought to report,
why don't you make this rule applicable to everybody at the SEC
personally and see how they like it?
Ms. Crenshaw. Again, we carved out the smallest--we took
into account the comment file and we----
Senator Kennedy. Tell me again how much this is going to
lower world temperatures. I don't know if I remember asking----
Chair Brown. I think you know the answer to that, Senator,
Kennedy. Thank you.
Senator Kennedy. Zero.
Chair Brown. Your time is expired. Senator Cortez Masto is
recognized.
Senator Cortez Masto. Thank you, Mr. Chair. Ms. Crenshaw,
unfortunately, you weren't able to answer the questions that
were asked you. Are there any that you would like to respond
to, particularly the total cost amount? You were trying to
explain why you couldn't put a total cost to it.
Ms. Crenshaw. Thank you, Senator. It really depends on the
individual issuer, and we put in in the final rule some phased-
in compliance dates. We really catered it to and balanced it to
what we thought was appropriate based on the comment file, so
smaller reporting companies, emerging growth companies, do not
have the same obligations that some of the larger issuers have.
And thus really the cost is going to depend on the size of the
issuer at any given moment, who is in which category. And,
again, it's much more accurate to look at it on a per-issuer
basis, in my view.
Senator Cortez Masto. Thank you. I will say this also about
your background, and I appreciate your public service at the
SEC. I also appreciate your military service as a captain in
the United States Army Reserve and the Judge Advocate General
Corps. Thank you very much. You have been a leader. This has
been my focus since I'm on this Committee in ensuring that the
men and women who serve our country don't get taken advantage
of by scammers. And I appreciate your work there.
There is one case that I have been following, and it's the
case against Caz Craffy, an Army financial counselor, who used
his position to manipulate grieving Gold Star families by
directing them to transfer their benefits into brokerage
accounts he managed and made commissions off of outside of his
official duties. What more do you think the SEC can do to
protect members of the military and their families from scam,
from being victims of scammers like this?
Ms. Crenshaw. Thank you. And I haven't said this today. I
actually just got picked up for major so----
Senator Cortez Masto. Congratulations.
Ms. Crenshaw. ----I will be promoted in the military at
some point. Thank you. So first and foremost, I think we need
to impose harsher penalties for frauds and scams that target
our military. We need to make sure that there's a cost to
targeting our servicemembers and their vulnerable family
members.
I would also love to work with your office and members of
this body to ensure that conflicts of interest among military
financial counselors are prohibited. Their interests need to be
with the servicemember and not their own, and I think we need
to really figure out a way to eliminate those conflicts of
interest. And I think that they need to receive adequate
training, licensure, and oversight, and I think there are ways
to think through a centralized body or a way to make sure that
that oversight and that accountability is there for financial
counselors in the military.
Senator Cortez Masto. Thank you. The more that we can do
with our Federal agencies to protect our families in the
military, I think it's just so crucial. They are always
constantly the victims of scams, scammers, so thank you for
that.
Let me ask Ms. Goldsmith Romero, first of all, there's been
a lot of conversation about your previous experience as an
inspector general overseeing the capital investments of more
than 700 banks, and you led a staff of 140 people. You did
incredible work. Thank you very much. I was attorney general
when you were at SIGTARP. Thank you. During the downturn of the
crisis, it was something I took on for the big banks, as well.
So based on your experience, can you describe for me the
skills that you developed during that time that you will bring
to the FDIC?
Ms. Goldsmith Romero. Thank you, Senator. And I really
appreciate you working with me at SIGTARP in your position as
senator for the great State of Nevada. So I became an expert in
capital and liquidity and the interconnections of our financial
institutions that not only will bring down banks that are
connected to each other, which we saw, but also have Wall
Street be interconnected to Main Street, so we can see how Main
Street is hurt when Wall Street gets in trouble.
So, you know, there was a lot that I did. I would have to
meet constantly with Chair Bair at the FDIC and Secretary
Paulson and Secretary Geithner and Chair Ben Bernanke to figure
out how did we get in this position, how did we get ourselves
so vulnerable, and then what needs to change for that. And some
of that went then to Dodd-Frank and the changes that need to be
happening. And so I know all of sort of the Dodd-Frank and what
needs to be implemented to get our financial system in a
position where it's much healthier.
Then inside of banks and doing our investigations and also
our auditing of just what banks needed during times of great
turmoil. When there was a lot of failed banks happening that we
were going into and then determining the causes of the failure,
we could see how banks managed risk or didn't manage risk. We
could see the difference if there was a culture of risk
management or if there wasn't. These are the types of things
that are really, really important from a supervisory standpoint
and then also just more generally as a financial regulator.
Senator Cortez Masto. Thank you. I know my time is out, so
I won't be able to ask the rest of the questions. But let me
just say to all of the panellists, thank you. Thank you for
your willingness to serve. Congratulations on your nominations,
and welcome to all of the family members who are either here or
watching on, as well. Thank you.
Chair Brown. Thank you, Senator Cortez Masto. Senator
Hagerty is recognized.
Senator Hagerty. Thank you, Chairman Brown. Ms. Crenshaw, I
would like to start with you, please. You were a vocal
supporter of including Scope 3 emissions in the SEC's climate
disclosure rule. I'd just like you to briefly explain for us
your views on these requirements.
Ms. Crenshaw. Thank you, Senator. Again, I think that
investors were asking for information, and I think one of the
things investors were asking for was a variety of information
and there was a lot of support for Scope 3. At the end of the
day, as you know, we did not include it.
One of the things that I really think we should have
thought about more completely were using models and estimates
and assumptions, ways that issuers could provide investors with
the information that they were looking for without having to go
to the farmers, without having to go upstream or downstream.
And I also think we could have really considered a robust safe
harbor from liability. That way, it would have reduced costs
for issuers and provided information to investors.
Senator Hagerty. I'm glad to hear you talk about costs
right now, but it seemed that, when you were responding to
Senator Kennedy, you didn't have a good idea about what the
costs are. But the costs would be significant. The complexity,
obviously, very considerable.
When it comes to nominations, our job is to endorse or
reject the policy positions that you've taken because we've got
to look at your past history as we think about the future. I
really find it troubling that you leveraged your office at the
SEC to advance these extreme climate positions. I think you've
gone way beyond the remit of the SEC, and it's deeply
concerning, not only to just support this climate disclosure
rule but you have argued that it didn't go far enough. These
requirements would crush businesses, from manufacturing to
energy to agriculture.
I've talked to farmers in my State. They talk about, and
farmers across the Nation, frankly, have talked about how much
of a burden this would impose on them. Disclosing personal
information, business information, or go out of business.
You talked about wanting to impose costs on scammers. Well,
I can tell you you would impose costs on farmers to the extent
you could even put them out of business, and the type of legal
liability and exposure that this might be a predicate for, I
don't know where you're trying to go with this. This absolutely
has no place, in my view. This is a very misguided proposal
you've supported.
Commissioner Goldsmith Romero, I'd like to come to you. It
was reported that in 2016, when you were the inspector general
for TARP and investigating corruption allegations related to
Mayor Mike Duggan's Detroit Demolition Program, that you told
State investigators to, quote, go dark and halt that
investigation, noting to your staff Mayor Duggan's Obama White
House ties and his potential Clinton administration role. Is
that true? Did you tell mission investigators in 2016 to slow
down their investigation?
Ms. Goldsmith Romero. Absolutely not. That's completely
made up.
Senator Hagerty. Can I just get this on the record then?
Did you tell your staff in 2016 that Mayor Duggan was close
with the Obama White House and a potential Hillary Clinton
cabinet member or other senior post in the Clinton
administration?
Ms. Goldsmith Romero. No, Senator.
Senator Hagerty. I'm glad to have that on the record. Thank
you. I'll come back to you, Commissioner Crenshaw. You
dissented from the SEC's approval of Grayscale's spot Bitcoin
ETF application despite the fact that a Federal court had
struck down the SEC's prior disapproval. Do you continue to
disagree with the SEC's approval of Bitcoin ETFs?
Ms. Crenshaw. Senator, to approve an ETP, you have to make
a public interest finding on each individual one, so to the
degree that the Commission votes, and we have only voted on
that one, Senator. To make that public interest finding, you
look at the facts in front of you. And given the significant
fraud in the underlying spot markets globally, given the
opacity----
Senator Hagerty. Well, the court looked at the facts, and
they struck it down. I've just been deeply disturbed by the
posture that the Commission and, specifically, yourself have
taken with hostility toward the crypto industry. This is a
critical industry in terms of innovation and technology in our
country, and I hate to see it being pushed overseas.
Commissioner Goldsmith Romero, I'm going to come back to you
now. The current FDIC chairman grossly mishandled the auctions
of Silicon Valley Bank and Signature Bank, two of the largest
bank failures in U.S. history. Where do you think the biggest
risks are right now within the banking system?
Ms. Goldsmith Romero. Thank you for that question, Senator.
I think we need to look at, we still have this commercial real
estate risk that is happening, particularly related to offices
after the pandemic and also multifamily homes. So I think
that's a major risk we have to look at.
I think we also just need to continue to think about
interest rate risk and how banks should manage that. So those
are some of the areas----
Senator Hagerty. Real quickly, FDIC leadership heavily
cited the requirements of the least cost test as an excuse for
the fact that these auctions failed. What role did the least
cost test play in the failed auctions in your view?
Ms. Goldsmith Romero. Yeah, so I'm just looking at it from
the outside, Senator, just like you are. And so I don't know--
--
Senator Hagerty. Actually, I'm not looking at it from the
outside. I saw what happened, and the least cost rule is an
excuse because it was misapplied. It's got to be fixed. The
person that's going to come in and lead this agency can't learn
on the job. You need to know how it needs to be addressed
because what we did here, what the Commission did was expose
the system to massive risk. It just should have never happened
this way. How would you fix it?
Ms. Goldsmith Romero. Yeah, so I understand the least cost
test. What I was saying from the outside is I can't see sort of
specifically how it was applied and how they came up with those
numbers. That's something that's been raised by a number of
senators and would be one of the top things I would go in to
try to dig behind and try to figure out what is going on.
Senator Hagerty. I hope that, before you're confirmed, you
will work with us to come up with an approach to this because,
again, you could get the call on day one when you walk in the
office that there's another bank failure. We can't let this
situation repeat itself. Thank you, Mr. Chairman.
Chair Brown. Senator Warnock of Georgia is recognized.
Senator Warnock. Thank you so very much, Chair Brown. And
thank you to all of the nominees for your commitment to serve.
I'd also like to extend a special welcome to Commissioner
Kristin Johnson who hails from the great State of Georgia where
she has served as a law professor at Emory University.
Congratulations, Commissioner Johnson and congratulations to
your family.
As we've discussed in this Committee, systemic and cultural
issues have plagued the FDIC in recent years. It's clear that
senior leadership of the FDIC turned a blind eye, a blind eye
to ongoing discrimination, harassment, and abuse, and they
failed to properly reprimand or terminate offenders. Simply,
the FDIC failed to institute a culture of accountability and,
as a result, employee morale is low, which has deep
implications for the mission.
Ms. Goldsmith Romero, thank you for visiting with me
yesterday. I enjoyed our conversation in my office to discuss
your plans for the FDIC if you are confirmed as its next chair.
I appreciated your candor. The task you face, as you well
recognize, is monumental. This is tough work. The FDIC plays a
critical role in ensuring the safety and the soundness of our
financial system, and it needs an energized workforce in order
to do that.
What experience do you have changing organizational
cultures, and how do you plan to draw on that experience at the
FDIC?
Ms. Goldsmith Romero. Thank you, Senator. I very much
enjoyed our conversation in your office in talking through.
These are tough issues.
So I came in to SIGTARP, and it was primarily a law
enforcement office. It was male dominated. It was special
agents, who I have a great regard for because they put their
lives on the line. But I would say sometimes the level of
professionalism, the language, and all of that was not at the
level that I thought was appropriate, particularly for an IG's
office.
And so one of the things I came in and did was sort of, you
know, raise very high this level of respect and this level of
professionalism, this level of dignity, by which we would treat
each other but also how we would refer to those we were
investigating and anyone that we were coming in contact with.
And so that organizational change and being able to do that and
bring people along with that so they didn't fight me on it but
that they actually embraced it and moved in that direction I
think I would bring to the FDIC.
Senator Warnock. And as you expressed yesterday and
expressed today, it seemed it was just part of the culture and
people--this is just how it is.
Ms. Goldsmith Romero. Yeah, I think cultures can change,
and I think you start with the tone at the top and what's
acceptable and you send clear messages as to what's acceptable
and what's not.
Senator Warnock. The Cleary report made seven
recommendations for the FDIC ranging from protecting victims,
improving policies, and holding leadership accountable for
inaction. When Chair Gruenberg came in front of the Banking
Committee in May, he agreed to provide a written update and
briefing to my subcommittee on the status of these
recommendations.
Ms. Goldsmith Romero, what is your sense of where the FDIC
is in implementing these recommendations?
Ms. Goldsmith Romero. Senator, it's hard for me to see on
the outside, although I read some of the things that are
happening on the website. But I'm very committed to being
transparent with you and communicating with you as part of your
chair of the subcommittee.
Senator Warnock. Well, yeah, I made it clear to him in no
uncertain terms that as chair of Financial Institutions and
Consumer Protection I would hold him accountable and would hold
anyone in that position accountable for cultural and structural
changes needed, and I look forward to supporting your
nomination and holding you accountable to turning the FDIC
around. Certainly, you bring the kind of experience that we
need at just this particular moment.
Since I've got a little bit more time, a common theme in
the postmortems of the bank failures last spring was that there
was a brain drain at the FDIC that led to a lack of seasoned
and competent bank examiners which helped prevent issues from
being caught early. At the time, this was attributed to low pay
and difficult working conditions. We now know that the FDIC
failed to protect junior employees, particularly women and
people of color, from harassment and retaliation and failed to
punish the wrongdoers.
How will you ensure examiners feel empowered while also
working to recruit, to retain, and support examiners,
specifically examiners who are women and people of color?
Ms. Goldsmith Romero. Thank you for that, Senator. So,
first, we've got to make sure that they feel safe. We've got to
make sure there's a good process that they trust that they can
raise these complaints. And then we have to empower examiners
in other ways that allow them to be nimble, that allow them to
use their judgment and their expertise and experience. I do
want to be able to recruit to deal with this issue of the
workforce and, you know, how long some of them have been, and
we need to bring more in.
Senator Warnock. Thank you so much. I think all of this
underscores the ways in which these issues that we're raising
around the culture, around accountability, abuse, harassment,
that these aren't extraneous to the mission. They are central
to the ability of the FDIC to carry out its mission for
employee morale, for folks to remain focused on the work that
we require them to do, need them to do in order to protect our
financial system.
So thank you again for offering yourselves up for service,
and I look forward to supporting your nomination.
Chair Brown. Thank you, Senator Warnock. Senator Britt of
Alabama is recognized.
Senator Britt. Thank you, Chairman Brown. Welcome to all of
the people here and your families. I saw that so many of you
brought your families, so we are so glad that you all are here
today, as well.
So I want to start, thank you so much for coming by. I
enjoyed being able to have a conversation. I want to start
where my colleague from Georgia left off. He is exactly right.
We have got to go back to instilling confidence in the FDIC. It
was created in 1933 so that Americans did have confidence in
that, and I think the FDIC has lost its way and has forgotten
what its core mission is.
So just want to associate myself with those comments in
saying we want our best and brightest working at the SEC. We
want that to be the place they want to work. That's ultimately
going to be what helps us maintain the stability of our
financial institutions and also ensure Americans are confident
that their hard-earned taxpayer dollars are protected.
So, Ms. Goldsmith Romero, we discussed yesterday I am
incredibly concerned, obviously, that as the FDIC has strayed
from its primary core mission, it's become an agency that is
overly involved in controversial rulemaking and has become
politicized in many ways in its decisionmaking process, rather
than actually following that core mission. And on that, I
wanted to get your thoughts on, if we see another failure like
we saw last year, you know, let's say a bank similar in scale
to SVB were to fail, how would you approach that resolution
process?
Ms. Goldsmith Romero. Thank you, Senator. I very much
enjoyed our conversation in your office and appreciate your
commitment to making sure that the FDIC thrives in its mission.
So I dealt with a lot of failed banks while at SIGTARP, and
these things happen fast. So I think the first thing you need
to do is to ensure that the FDIC is looking at pockets of risk
in a very proactive way, data analytics way, and that we also
understand connections and then we figure out what needs to
happen. The first thing you need to do is sort of figure out
what you're going to do with the bank in terms of a resolution
when you walk in. Is there going to be an auction? Is that just
going to be wound down? How do you keep deposits----
Senator Britt. Well, yeah, and on the auction, let's say
there's going to be an auction, would you allow an open bidding
process where all banks or financial institutions can be a part
of that?
Ms. Goldsmith Romero. I think we'd want to bring all the
bidders in to try to get the best result.
Senator Britt. Absolutely, all interested parties should
have that opportunity. And in what circumstance would you
decide to liquidate, you know, rather than auction off the bank
to the private sector?
Ms. Goldsmith Romero. It's tough. It's tough in terms of
liquidation. You want to make sure that the deposits are safe.
That's the number one thing with the Deposit Insurance Fund.
You also want to look at those assets and say, if there's going
to be a loss to Deposit Insurance Fund, you want to see if
there's assets to sell. So, sometimes, though, there's going to
be a liquidation.
Senator Britt. Well, if you--let's say that it is a bidding
process, how do you decide which offer to accept?
Ms. Goldsmith Romero. Well, I think we have to follow the
least cost test which is laid out by Congress and then, you
know, we'd follow all the standards that are in that and we'd
follow all the rules.
Senator Britt. So under that scenario, would you commit to
accepting the highest bidder, the highest bidder that comes to
you?
Ms. Goldsmith Romero. Yeah, I think you'd have to go into
the very specifics. I think that's what you're looking for,
right. You're looking for the highest bidder because you want
the least cost to the Deposit Insurance Fund.
Senator Britt. Absolutely. That's the objective here. The
objective is not about playing politics. It's not about whether
or not we want a big bank to get bigger or whether we want
someone in this market. It is what is best for the American
people. It is to ensure that, you know, we don't want to have
to dip into the DIF at $20 billion. I mean, to me, Chair
Gruenberg did a poor job and chose to play politics, and the
American people paid the price. And it is your job not only--or
his job, not only as the secondary supervisor but also in his
role at the FDIC to ensure that these things don't happen. And
when they do, though, it's not time to take a look and figure
out what people on this Committee may want you to do. You have
to do what is best for the American people, so I'm glad to hear
you say that you will do that, as well.
In taking a step back, obviously, there was poor internal
risk management and regulators clearly failed to do their job.
Before the banks failed, there were numerous red flags that
were missed. We've talked about that over and over again. Would
you characterize, though, what happened as a capital or a
liquidity issue with SVB?
Ms. Goldsmith Romero. I think it's a failure in risk
management and a failure in supervision.
Senator Britt. And then, capital or liquidity?
Ms. Goldsmith Romero. So I think the issue of liquidity
becomes really important when a bank is going down because
short-term liquidity dries up so fast, and so then they can't
continue. And then when you couple that with the bank runs,
that's where you get into trouble.
Senator Britt. OK. And, last, I have a few, I think it was
most definitely liquidity, but a couple of--lastly, do you
think that 2155, the long-term debt proposal that is before you
currently, or before FDIC currently, that it is properly
adhering to the tailoring requirements in 2155?
Ms. Goldsmith Romero. Thank you, Senator. I've seen your
letter, which is pretty complex, and I'm still looking at the
long-term debt proposal, and I want to look at the comments----
Senator Britt. OK. And that's fair. Let me ask you this
then. Do you agree, Chair Powell mentioned earlier this week
that 2155 applies to all rulemaking out of your agency. Do you
agree?
Ms. Goldsmith Romero. One-hundred percent. It's the law of
the land.
Senator Britt. Thank you.
Chair Brown. Senator Butler from California is recognized.
Senator Butler. Thank you, Chairman Brown. I want to join
my colleagues in just congratulating all of you for being
nominated, celebrating your families for their sacrifices for
you all to achieve the level of success that has landed you at
this table as a nomination of the President of the United
States. It is no small feat, and it definitely takes the whole
team. So thank you all for doing it.
Ms. Goldsmith Romero, thank you, Commissioner, for spending
a little bit of time with me and my team extensively going
through your credentials, experience, preparation, background.
As has already been stated, you know, taking on the role of
FDIC chair in this moment is no small task. And the Gottlieb
report is quite substantive, in my opinion, and raises real
concerns, not just about the culture of supervision and
personnel policies at FDIC but a real crisis in leadership.
And so I want to ask just a very specific question. I feel
like I was clear with Mr. Gruenberg about the requirement to
not just have a plan that sits on a shelf or a report that is
nice that everyone reads when it's in The Wall Street Journal,
but something that--but the leadership that is required to
actually execute and turn things around.
So a very simple question. What are the first three things
that you will do if you are confirmed?
Ms. Goldsmith Romero. Thank you, Senator. I very much
appreciated our discussion. So first thing I would do is send a
clear message that harassment, discrimination, retaliation will
not be tolerated. That includes putting a system in place that
has an EEO process that employees could trust, having everyone
encourage employees to use that so that management can see
that. I think we would be doing investigations, conducting
investigations, bringing accountability. I think a number of
things described in the report warrants removals.
And then I'd change this litigation-adverse culture so that
it's not kick the can down the road or move things around, but
you address it right away.
Senator Butler. Thank you for the specific response. It's
consistent very much with ideas that you shared with our team
yesterday and similar to Senator Warnock, I think, this
Committee, through his subcommittee, but I do believe broadly
through the leadership of our Chair is committed to being fully
connected to the plan that is moving forward and applying
appropriate levels of accountability from the seats in which we
sit to be able to assist as much as possible, as much as is
required, but I think, most importantly, to be able to help to
do our part to restore confidence with the employees at the
FDIC and the work that you are going to be asked to do if you
are confirmed.
Mr. Ito, it was a pleasure to spend time with you
yesterday, and your leadership on the island of Hawai`i has
just, I think, goes underappreciated as an insurance
commissioner and just a public servant committed to the State.
And it just was a great time talking with you and learning
about your work and your perspective and what you would like to
bring to FSOC if you were confirmed.
Just a quick question. I want to make sure we had an
opportunity to get your voice on the record here. We talked a
good deal about local economies in the property insurance, the
rise in costs for consumers, and the concerns that insurers,
and bad years that insurers are having relative to climate
impacts.
I'd love for you to talk about how you believe FSOC and
relevant Government agencies, including insurance
commissioners, should capture climate risk data and how we
could measure the potential economic losses from the insurance
market.
Mr. Ito. Well, first of all, Senator, I enjoyed our
conversation the other day. With respect to getting data, the
NAIC and FIO at the present time are collecting data on
homeowners. Specifically, it's called the property and casualty
market intelligence data call that NAIC and FIO are working
through, and I'm glad that they are cooperating. I think this
is a good first step in collecting data and identifying what
stresses are occurring in the property and casualty market
throughout the country. It's also, I believe, really a good
first step in analyzing the data. If I'm confirmed, that's
something I really want to get into and really analyzing it and
assessing what's happening in the entire United States
marketplace on the property and casualty and the impact that's
occurring not only to insurers on financial solvency but, I
think, more importantly, in terms of what's happening to the
people, the policyholders that are purchasing those policies.
Currently--I can attest for Hawai`i. There's quite a bit of
homeowners, condo owners, that are really being financially
stressed because of the catastrophic losses, the unfortunate
event that happened in Maui, as well as the very hard market
that we're in at the present time.
Chair Brown. Thank you, Senator Butler. Senator Lummis from
Wyoming is recognized.
Senator Lummis. Thank you, Mr. Chairman. Ms. Goldsmith
Romero, I'll start with you. Welcome. Thank you for coming to
my office, and our conversation was very helpful.
Should banks be able to hold the assets of digital asset
companies?
Ms. Goldsmith Romero. Thank you, Senator. I appreciated our
conversation, too. Banks do hold custody of digital assets
right now.
Senator Lummis. And do you support that?
Ms. Goldsmith Romero. Yes. I'm very familiar with banks
holding custody of those assets, and, you know, it's just--it's
another business like any other business.
Senator Lummis. Should banks be able to provide services to
digital asset companies, like payment services?
Ms. Goldsmith Romero. Yeah, I don't think it's the FDIC's
role to tell banks what industries or companies they should be
providing services to.
Senator Lummis. I appreciate your answer because,
otherwise, we end up with concentration risk, regardless of
whether we're talking about digital assets or oil and gas or
any other banking--banked industry. So I appreciate that.
What's your action plan, the specific steps you would take,
to solve the management crisis that's going on at the FDIC?
Ms. Goldsmith Romero. Thanks, Senator. And I know you care
a lot about this, and we talked about this. I talked about how
the report reads like a bygone era, particularly for women and
minorities and people in the LGBTQ community. It's going to
take a lot.
If confirmed, I'll give you my sort of top-line thoughts.
Modernize the Federal workplace, put in the best practices of
Federal workplace that I'm used to and like what I've led. I
want to herald those employees who are doing the right thing
and the managers who are doing the right thing. I would send a
clear message that harassment, discrimination, and retaliation
is not allowed. That includes bringing accountability,
investigations, and disciplinary proceedings. Put in place the
process, the right process that I'm used to seeing for EEO and
encourage people to use it, rather than have them live in fear.
Change this litigation-adverse culture, which just moves the
problem around or kicks the can down the road and address it
right away. The era of each office being a fiefdom would end.
It would not be 70-plus FDICs, it would be one FDIC, just like
I did at SIGTARP with one SIGTARP.
And then, you know, we talked about I have plans--some
plans I'm thinking about on that hotel.
Senator Lummis. Thank you. And I thank you for your
willingness to address it right away. I think it does need
immediate attention. So thank you. Mr. Ito, welcome. Do you
support implementation of the International Task Force on
Climate-Related Financial Disclosures?
Mr. Ito. Senator, thank you for the question. You know, at
the present time, I'm not a member of FSOC, it's an issue that
I would like to, you know, learn more about and what that is,
and I'll be glad to meet with you and your staff.
Senator Lummis. Good. You know, I would like to meet with
you about that. I'm a little bit concerned about taking away
from the ability of States to do what's best in their local
markets, and your Hawaiian market is very different from mine
in the State of Wyoming. And I want to make sure that States'
markets are tailored to the needs of those States.
Tell me about your advocacy for States.
Mr. Ito. So, Senator, as being really a State regulator for
almost--in 5 days, it will be 31 years.
Senator Lummis. You're the commissioner's commissioner,
aren't you?
Mr. Ito. I've been there and been through many different
changes. I can state this regulation, I think, has done an
excellent job, my fellow State regulators, what we do in terms
of monitoring and protecting the insurance market, as well as
consumers.
As you noted, each State has its own unique risks. I mean,
Hawai`i, we have catastrophe, we have volcano, tsunamis,
hurricane----
Senator Lummis. Yes, absolutely.
Mr. Ito. ----and wildfires, you know. And every State is
different, so there is a uniqueness in the States. And as I
mentioned, really all my fellow commissioners, superintendents,
have done an excellent job and will continue to do so.
Senator Lummis. So one more question for you. The primary
function of the council is to identify risks to financial
stability, correct?
Mr. Ito. Yes.
Senator Lummis. So what do you consider to be the top risk
to financial stability?
Mr. Ito. Well, FSOC has identified in their 2023 annual
report, there's a number of risks that could pose a threat to
the financial stability. For me, one of the risks that Hawai`i
is living through right now is really on catastrophic risks and
climate risks. The Maui wildfire resulted in $3.2 billion in
insured losses. It has made the Hawai`i market even harder.
Tragically, there was a loss of 102 lives in Lahaina. And so
with respect to climate risks, in the last 4 years, in the U.S.
there's been on average about 20 catastrophic losses over a
billion dollars, total loss of about, four consecutive years,
of $100 billion in reinsurance loss.
So that is an emerging risk that FSOC has identified. If
I'm confirmed, that is one area that I would be interested in
really further analyzing what's happening with the property and
casualty market and the stresses it's putting on the financial
system.
Senator Lummis. Thank you, Mr. Ito. My time is up. I do
have a question for you, Ms. Johnson, but I will submit it for
the record and would kindly ask for your written response.
Thank you.
Thank you all for your willingness to be considered for one
of these appointments. Mr. Chairman, I yield back.
Chair Brown. Thank you, Senator Lummis, for your thoughtful
questions. And I think Mr. Ito's response tells you the
devastating impact of our unwillingness, inability in this body
to do as much as we should addressing climate issues, but thank
you for laying that out in insurance terms.
Ms. Johnson, last question I'm going to have, and then
we'll adjourn. We continue to see significant risk in our
financial system. We experienced three of the largest bank
failures in U.S. history after depositors lost confidence and
withdrew their money at an unprecedented rate, as you remember.
If confirmed, you'd have the critical job of identifying and
protecting our financial system from these risks to ensure that
hardworking Americans can keep their money and their jobs.
Ms. Johnson, what do you see as the most prominent risks to
our financial system, and how would you go about understanding
and addressing them?
Ms. Johnson. Thank you so much, Mr. Chairman. As was
referenced earlier, for the Department of the Treasury, FSOC
has outlined a number of vulnerabilities to financial services
markets. These risks, as outlined and as I mentioned in my
opening statement, some of them are endogenous, some are
exogenous, some are emerging risks that we've not yet had
sufficient opportunity to effectively explore. I think among
the risks that are most prevalent in the moment, we've
discussed the climate risk and its potential impact on
financial markets.
I think cyber preparedness also presents as a significant
question. And, in fact, in the Treasury Department, within the
Office of the Assistant Secretary for Financial Institutions, a
very recent report that looks at the intersectionality of cyber
and AI effectively begins us down the road of a conversation to
think carefully about how to address these concerns.
I think you noted rightly with respect to SVB and SB,
Signature Bank, and their failures, not only risk management
losses and general concerns regarding liquidity but, very
expressly, the accelerated manner during which runs occurred at
these banks, particularly with respect to communications over
social media and the technology to facilitate expedient
withdrawals even over weekends, creates a need for us to think
carefully about how we've integrated technology into the
banking sector and how we rightfully will be able to protect
the banking sector going forward in the context of crises and
concerns like those we saw in March 2023.
If confirmed, I would be grateful for the opportunity to
work directly with your office and to engage with others on
this Committee with respect to those risks and others that you
might identify.
Chair Brown. As we will. Absolutely. Thank you to the four
of you for being here. Thank you for your testimony and your
concise good answers to questions. I hope we can work together
as a Committee to move forward quickly on today's nominees. I
emphasized how you've--three of you have been in front of this
and have had big confirmation votes close to unanimity in some
cases.
Senators who wish to submit questions for the record, these
are due at 5 p.m., Monday, the 15th of July. To the nominees,
we'd like to have your responses on Friday, July 19th, by 5
p.m. So we need these more quickly than sometimes, so we hope
to move as quickly as possible on all this.
Thank you for your testimonies, the four of you today. The
Committee is adjourned.
[Whereupon, at 12:03 p.m., the hearing was adjourned.]
[Prepared statements, biographical sketches of nominees,
responses to written questions, and additional material
supplied for the record follow:]
PREPARED STATEMENT OF CHAIR SHERROD BROWN
The Committee meets today to consider four nominations:
The Honorable Christy Goldsmith Romero to be a Member and
Chairperson of the Federal Deposit Insurance Corporation; The Honorable
Caroline Crenshaw renominated to be a Member of the Securities and
Exchange Commission; The Honorable Kristin Johnson to be Assistant
Secretary for Financial Institutions at the Department of the Treasury;
and Mr. Gordon Ito to be a Member of the Financial Stability Oversight
Council, to serve as the ``independent member with insurance
expertise'' on the Financial Stability Oversight Council.
We thank the nominees for appearing here today.
Three of today's nominees--Ms. Goldsmith Romero, Ms. Crenshaw, and
Ms. Johnson--have all previously been confirmed unanimously by the
Senate. Ms. Goldsmith Romero has been confirmed by every Member of the
Senate multiple times.
In a Washington that is far too divided, far too often, Democrats
and Republicans on this Committee and in the Senate have agreed that
these nominees possess the experience and character to serve the
public.
The nominees today have received strong statements of support and
support letters from a broad swath of the financial services sector,
including from consumer groups, former regulators, State insurance
commissioners, and so much more.
These nominees bring with them years of experience and a strong
dedication to public service.
If confirmed, they will each play an important role in the success
and stability of our financial system.
The President has nominated Christy Goldsmith Romero to be a Member
and Chairperson of the Federal Deposit Insurance Corporation. As Chair,
she will lead an agency responsible for protecting the bank accounts of
millions of Americans across the country.
Ms. Goldsmith Romero is a highly qualified nominee with more than
two decades of financial services experience.
Ms. Goldsmith Romero has served as a Commissioner on the Commodity
Futures Trading Commission since 2022, after she was unanimously
confirmed by the Senate. At the CFTC, she has worked to ensure market
integrity and protect commodity end users and consumers.
Prior to joining the CFTC, Ms. Goldsmith Romero spent 6 years at
the SEC where she served as counsel to SEC Chairs Mary Shapiro and
Christopher Cox--in both Democratic and Republican administrations.
And she served as the Special Inspector General for the Troubled
Asset Relief Program--better known as TARP. She took on that post in
2009 amid the worst financial crisis since the Great Depression, where
she did vital work protecting taxpayers. She served in several roles in
the Inspector General's office at TARP before being unanimously
confirmed by the Senate to serve as the Special Inspector General.
She managed a large staff of examiners, accountants, auditors, and
other investigative professionals. As the Special Inspector General,
she followed the facts where they led and wore her independence on her
sleeve--helping the office meet its mission, and in the process recover
billions of dollars for American taxpayers.
During her decade as IG, she looked under the hood of many
financially distressed banks and institutions.
She knows how to spot signs of trouble--she knows what to look for
when it comes to financial instability or potential contagion.
She understands bank regulation and the important role regulators
play in ensuring the safety and soundness of our financial
institutions.
And she has proved she will hold accountable those who engage in
fraud and misconduct.
Ms. Goldsmith Romero's nomination comes at a pivotal time. Everyone
here today agrees that the FDIC needs drastic culture change.
Longstanding issues of harassment and misconduct have plagued the
agency for over a decade under multiple chairs. The women and men of
the FDIC deserve a workplace free of harassment and misconduct. That is
why I called on the President to nominate a new chair.
Ms. Goldsmith Romero is a tough, fair, and accomplished regulator
and manager who has a track record of making sure bad behavior does not
go unchecked.
Listen to the people that have worked with her--the people that
have seen her character up close.
Christopher Cox, the former Republican SEC Chair, wrote the
Committee and said this about Ms. Goldsmith Romero: ``She is a
consummate professional. Her skill and objectivity are the reasons she
has worked successfully across multiple Administrations of different
parties. That high level of professionalism is reflected in the fact
that she has twice been unanimously confirmed to her important
financial regulatory positions.''
The Committee also received a letter of support from a group of
bipartisan women who have spent decades working in financial services
as congressional staff, Federal agency staff, and industry
representatives.
Leadership starts at the top. Ms. Goldsmith Romero is the right
choice to lead the agency as it charts a much-needed transformation of
its culture.
Congratulations, Ms. Goldsmith Romero, on your nomination.
The President has renominated Caroline Crenshaw to a full term on
the Securities and Exchange Commission. Ms. Crenshaw joined the SEC
Board in 2020 after being nominated by President Trump and unanimously
confirmed by the Senate. In her four years as a Commissioner, Ms.
Crenshaw has been a fierce advocate for protecting Americans' money,
and has routinely fought to make our markets more fair and more
transparent.
Prior to her confirmation to the SEC Board, Ms. Crenshaw served as
a career staff attorney at the SEC, as well as counsel to two SEC
Commissioners.
Prior to joining the SEC, Ms. Crenshaw worked in private law
practice in Washington, DC.
In addition to her exemplary service to our country at the SEC, Ms.
Crenshaw is also an Army Reserve Captain in the Judge Advocate
General's Corps.
Welcome back, Ms. Crenshaw, and thank you for your service.
The President has nominated Kristin Johnson to serve as Assistant
Secretary for Financial Institutions at the Department of the Treasury.
The office Ms. Johnson would lead, if confirmed, handles a broad
portfolio including financial institution policy, insurance,
cybersecurity, and community and economic development.
Ms. Johnson brings with her a wealth of experience in the public
and private sectors, as well as experience in academia--giving her a
well-rounded understanding of financial institutions, policy, and
regulation.
Ms. Johnson currently serves as a Commissioner on the CFTC--after
being unanimously confirmed by the Senate in 2022. At the CFTC, Ms.
Johnson has served as a reliable voice for market participants and has
fought for sound, competitive, and efficient markets.
Prior to joining the CFTC, Ms. Johnson served as a professor of law
for more than a decade--teaching at Emory, Tulane, and Seton Hall
University. She taught courses in banking law, the law and regulation
of securities and derivatives markets, financial institutions, and
systemic risk law and policy.
Earlier in her career, Ms. Johnson worked for large financial
institutions and in private law practice in New York City.
Good to see you, Ms. Johnson.
The final nominee on today's panel is Gordon Ito. The President has
nominated Mr. Ito to serve as the independent insurance expert on FSOC.
If confirmed, Mr. Ito would be 1 of 10 voting members on FSOC
responsible for monitoring and identifying financial stability risks.
Mr. Ito's decades of insurance experience have prepared him to
serve as a member of FSOC.
Like the other nominees before us today, Mr. Ito is well-qualified.
He currently serves as the Insurance Commissioner for the State of
Hawai`i. He first joined the Hawai`i division of insurance over 30
years ago--in 1993--and has served in multiple roles within the office.
As Hawai`i's insurance commissioner, Mr. Ito has been a strong
proponent for a fair and competitive insurance marketplace and for
consumer protection. He has played an important role in helping Hawai`i
recover from the devastating wildfires in Lahaina, which resulted in
the deaths of more than one hundred residents and billions of dollars
in damages.
In addition to serving in Hawai`i's insurance division, Mr. Ito has
held several leadership roles with the National Association of
Insurance Commissioners, including Secretary-Treasurer.
Earlier in his career, Mr. Ito worked in private law practice in
Hawai`i.
Welcome, Mr. Ito.
Thanks again to the nominees for appearing here today, and for your
willingness to serve.
______
PREPARED STATEMENT OF SENATOR TIM SCOTT
Thank you, Mr. Chairman. And thank you to the nominees for being
here with us this morning.
While I appreciate the Senate's important role in the nominations
process, unfortunately, what bring us here today is a classic case of
stubbornness.
This Administration wants to safeguard its progressive agenda no
matter the cost.
Not the employees of the FDIC, and not the people are they are
supposed to serve.
Chairman Gruenberg has been at the helm of the FDIC for nearly two
decades. And under his leadership tenure, he's allowed rampant
harassment, discrimination, and vile behavior, to continue to flourish.
That's why I've said it several times before this Committee, Mr.
Gruenberg should resign immediately, and not wait for someone to
replace him, but start the culture of healing at the FDIC.
Without that action, it is frustrating to the American people,
frustrating to the employees of the FDIC, that Mr. Gruenberg refused to
do the right thing in spite a bipartisan coalition asking him to do so.
But Mr. Gruenberg and his allies in the White House have decided to
play politics instead.
Chair Gruenberg is refusing to step down until a Biden nominee is
confirmed. No matter the timeline.
That's like having a leak in your roof. Instead of fixing it, you
just put a bucket underneath it and wait and wait and wait.
Common sense reminds me that the first step for restoration is
stopping the leak and cutting out the damage so that repairs can begin.
And it's clear, President Biden is not interested in cutting out
the damage. And not interested in accountability.
Instead, the White House has taken this opportunity to try and make
lemonade out of lemons by putting forward three additional nominees
selected for the purpose of advancing his progressive regulatory
agenda.
And, while I firmly believe we are here under a false sense of
urgency--we will do our very best to evaluate the nominees before us
today on their merit and fulfill our constitutional responsibility.
So, let's start with Commissioner Goldsmith Romero.
Commissioner, I enjoyed you taking the time meeting you with me a
few days ago and having a serious conversation about what it takes to
change the culture of the FDIC.
While you've had a long career in public service, your background
lacks the bank regulatory experience necessary to carry out the
critical responsibilities of the FDIC and fulfill the requirements of
the FDI Act.
The foremost mission of the FDIC is to maintain stability and
confidence in our financial system.
An important task that was front and center just last year as we
watched SVB fail last year.
The FDIC must insure deposits, examine and supervise financial
institutions for safety and soundness, and consumer protections, while
standing ready to manage receiverships of failed institutions.
This is no small task.
You have little experience with bank supervision or prudential
policymaking, let alone managing the world's largest deposit insurer.
The next Chair needs to be prepared to lead, because not only are
we going to have to confront the magnitude of Basel III Endgame, but as
I said a few times already, correcting the culture of the FDIC is so
important. And it makes it challenging to have on the job training,
from my perspective.
Turning to the management challenges at the FDIC, as we've
discussed, I am concerned with your ability to lead a much-needed
culture change.
We talked in my office about the number of whistleblowers who have
come forward and talked about your management approach as well. And I
look forward to having an opportunity for you to share your responses
during the question-and-answer part of this meeting today.
Our next nominee, Ms. Caroline Crenshaw, has been re-nominated for
an additional 5-year term, ending in June of 2029, to serve as a member
of the Securities and Exchange Commission.
Commissioner Crenshaw, while I respect your deep knowledge of the
capital markets, I have significant reservations over your nomination
based on your views of what appears to be the limitless authority of
the SEC.
Take for example, the SEC's Climate Disclosure Rule, which the SEC
has received nearly 24,000 letters on since its proposal.
Despite widespread concern from the public--including from myself,
as well as both Democrats and Republicans on this Committee, you
expressed frustration that the SEC didn't go far enough in its final
rule.
Furthermore, you've urged the SEC to contort its authority over the
private markets, praising the finalization of the Private Fund Advisers
Rule as an ``important step in the name of investor protection,
competition and market integrity''.
We now know that the Fifth Circuit disagrees, ruling that the SEC
went beyond the power granted to it by Congress in the Investment
Advisers Act.
Our capital markets should not be a testing ground for the
expansion of the administrative State, and your past actions give me
serious pause for considering your nomination.
I will close with this. I find it incredibly frustrating that find
ourselves here today--as this is a prime example of the Biden
administration's M.O. of politics over people.
While I look forward to hearing from the nominees, I must reiterate
that real, meaningful change could be brought to the employees at the
FDIC today, if Marty Gruenberg would simply step down.
______
PREPARED STATEMENT OF CHRISTY GOLDSMITH ROMERO
To Be Chairperson and Member of the Board of Directors of the Federal
Deposit Insurance Corporation
July 11, 2024
Chair Brown, Ranking Member Scott, and Members of the Committee,
thank you for this opportunity and your consideration. I am honored to
be nominated by President Biden to serve as the Chair of the Federal
Deposit Insurance Corporation.
Thank you, Senator Warner for your gracious words and support.
I want to introduce my wife Adrianne and my daughters Chelsea,
Brooke, and Julia. I am incredibly grateful for their love and support.
I also want to thank my parents, my in-laws, son-in-law, grandsons, and
siblings, for their love and support. Yes, I said grandsons. I am a
very happy grandmother.
I grew up in a military family where my parents raised me to be
respectful and kind. My Mom was a homemaker and later a schoolteacher.
My Dad came from the Philippines, and became a U.S. citizen after
joining the U.S. Navy, where he served for 20 years.
He inspired my own service--22 years under four presidents--at the
Securities and Exchange Commission, Department of the Treasury, and the
Commodity Futures Trading Commission. This nomination and your
consideration are a testament to the American dream my parents worked
to achieve.
I have dedicated my career to the stability of our Nation's
financial system so that it can serve families and businesses in search
of their American Dream. At the SEC, I protected investors and markets.
I was counsel to SEC Chairman Chris Cox and later Chair Mary Schapiro
during the financial crisis.
After witnessing how a crisis on Wall Street can take a toll on
Main Street, I wanted to be part of the solution. I helped build an
independent office at Treasury called the Office of the Special
Inspector General for the Troubled Asset Relief Program (SIGTARP).
Congress created TARP to provide $442 billion during the crisis for
more than 700 banks, housing, the auto industry, insurance, and
derivatives markets.
Secretary Paulson said TARP was necessary to restore confidence in
the banking system, and that is how we at SIGTARP viewed our mission. I
was privileged to lead SIGTARP for 11 years, where everyone pulled
together to accomplish this massive mission.
SIGTARP was successful. We brought transparency and oversight
through reporting and recommendations. We protected TARP funds,
recovering more than $11 billion--27 times our cost. SIGTARP was known
for its ability to uncover hidden fraud in banks. I credit that to a
proactive, analytics-based system that we developed, working within the
bank supervisory privilege of the FDIC and other regulators. We brought
accountability through civil actions against large financial
institutions, and criminal convictions of more than 400 individuals
including 95 bankers and more than 90 bank borrowers, often related to
failed banks. Courts sentenced 75 bankers to prison.
I gained a great appreciation for community banks, as 625 banks in
TARP were less than $100 million in size. As I told Congress in 2011,
``small- and medium-size banks play an important role in our Nation's
economy and are the lifeblood of many communities across the country.
They provide credit to small businesses and farms and serve customers
in rural areas and small metropolitan areas not served by big banks.''
My experience at the SEC and SIGTARP, as well as at the CFTC
regulating derivatives, including at large banks, will be invaluable if
confirmed. Derivatives are an important tool to manage risk,
particularly for the agricultural sector. At the same time, derivatives
substantially contributed to the 2008 crisis. The FDIC recently found
shortcomings in the living wills of four large banks related to
derivatives. So, there is more to do.
If confirmed, I will keep top of mind the significance of leading
an agency so tied to the financial well-being of every American, and
would prioritize maintaining stability and confidence in the U.S.
financial system. As employees need to be supported in the FDIC's
critical mission, I would prioritize a complete overhaul of the FDIC's
workplace culture. The reporting is deeply disturbing and describes
deep-seated cultural issues that have caused pain for many employees.
It must not continue, and I would bring accountability.
I would also focus on ensuring that banks of all sizes can provide
depository services and loans to businesses and households, which is
necessary for the U.S. economy. I would also focus on ensuring that
banks appropriately manage emerging risk, and that the Government keeps
pace as banking has modernized.
If confirmed, I look forward to working with Congress on these
issues.
To be entrusted with leading the FDIC in this mission, and at this
moment, would be a great honor. Thank you.
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PREPARED STATEMENT OF CAROLINE A. CRENSHAW
To Be a Member of the Securities and Exchange Commission
July 11, 2024
Chair Brown, Ranking Member Scott, and distinguished Members of the
Committee, thank you for the opportunity to appear before you. It is an
honor to be considered for reappointment to the Securities and Exchange
Commission.
Last month was the 90th anniversary of the passage of the
Securities Exchange Act of 1934, which established the SEC during the
Great Depression. Over the years, the SEC and its staff have worked on
behalf of generations of Americans to help ensure that the securities
markets are fundamentally fair and safe for investors' hard-earned
dollars. This capital, in turn, has financed all manner of businesses
and allowed our economy to thrive.
I have had the privilege to contribute to the SEC's work for over a
decade. I began my career at the SEC as a staff attorney in the
Division of Examinations (formerly the Office of Compliance Inspections
and Examinations), helping oversee the institutions that manage
millions of Americans' savings. I also served in the Division of
Investment Management and as Counsel to Commissioners Kara Stein and
Robert Jackson, focusing on how to strengthen investor protections in
our increasingly complex markets. Most recently, I have served as a
member of the Commission, using the expertise that I developed as a
member of the staff--of the securities laws, the markets that we
regulate, and the inner workings of the institution itself--to bring
independent thought and analysis to the service of our mission.
In addition to my SEC work, I also serve in the United States Army
Reserve, Judge Advocate General's Corps.
My SEC and Army lives sometimes intersect, in good ways and in bad.
I have been committed to bringing a message of financial readiness to
American Servicemembers. Speaking with Servicemembers, Cadets, and
Midshipmen about the securities markets and financial literacy has been
a highlight for me.
Unfortunately, I am also aware that fraudsters prey on everyday
Americans, including Servicemembers and their families. In one
particularly troubling SEC enforcement action, it is alleged that an
Army financial counselor defrauded the families of fallen Soldiers. If
confirmed, I intend to continue to educate and advocate for
strengthening protections for American Servicemembers from fraud.
I would also continue to work tirelessly in support of the SEC's
mission: protecting investors; maintaining fair, orderly, and efficient
markets; and facilitating capital formation.
To me, this means promoting trust in the securities markets by
reducing opportunities for bad actors to engage in fraud and
manipulation. It means ensuring that investors have access to
appropriate and truthful disclosures that help them make informed
investment decisions. It means ensuring that investment professionals
fulfill their obligations to customers and elevate the interests of
investors above their own. And, it means balancing the interests of
those who participate in our markets to help ensure smaller players
have the chance to compete. I believe that this framework benefits
investors and those seeking to raise capital alike, and is a pillar of
our economy.
Thank you to my husband and family, who are here with me today, for
your unwavering support.
Thank you also to my fellow Commissioners. Our discourse, and at
times differing views, lead to more thoughtful outcomes on behalf of
the American public. And, of course, thank you to the SEC staff for
your service. The talent, ingenuity, and commitment of the public
servants at the agency cannot be overstated. It has been a privilege
and an honor to work alongside them in support of the SEC's mission.
I feel truly honored to be here with you today. Thank you for your
time and consideration. I look forward to answering your questions.
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PREPARED STATEMENT OF KRISTIN N. JOHNSON
To Be an Assistant Secretary of the Treasury
July 11, 2024
Chair Brown, Ranking Member Scott, and other distinguished Members
of the Committee, thank you very much for the opportunity to appear
before you today. I thank the Committee Members and majority and
minority staffs for their assistance during the nomination process.
I am honored to have been nominated by President Biden to serve as
Assistant Secretary for Financial Institutions at the Department of the
Treasury. If confirmed, I will draw upon the learning and skills gained
over the course of my career in public service, as a tenured academic,
a practicing corporate lawyer, and in-house counsel in the Treasury
Services division of one of the world's largest financial institutions
to ensure the strength and stability of our financial services sector
and to enhance access for American individuals, families, and
businesses to housing, credit, and financial services on fair and
affordable terms.
As a Commissioner at the Commodity Futures Trading Commission (CFTC
or Commission), I have advocated for consumer protection, recovery and
resilience reforms, cyber-preparedness, risk governance, and effective
enforcement against both sophisticated as well as garden-variety fraud.
For nearly two decades, I researched, published, and taught courses in
financial markets risk management and regulation.
As an Associate Dean and tenured professor at Emory and Tulane
University Law School, I held endowed professorships, and received
research awards and fellowships. I chaired or served on the Executive
Committees of national conferences focused on consumer protection and
financial services regulation. My research aimed to identify, examine,
and address exogenous, endogenous, and emerging systemic risks in
domestic and global financial markets.
During the Global Financial Crisis of 2007-2009 and the ensuing
Great Recession--a period characterized by falling GDP, double-digit
unemployment, and dissipating retirement account and home values for
many hard-working Americans--I proposed reforms for the deeply
interconnected, opaque, bespoke, bilateral credit derivatives market.
My recommended reforms aimed to enhance transparency, reduce
counterparty credit and liquidity risks, and facilitate price
discovery--each important to the stability of the financial system and
end-users such as farmers, ranchers, and growers who rely on
derivatives markets for price discovery.
Today, transformational innovation offers speed-of-light
operational infrastructure and promises to increase equity, access,
transparency, and efficiency. In 2019 and 2021, I testified before
Congress emphasizing the need for responsible innovation, the
significance of emerging financial technology firms, the rise of AI or
artificial intelligence, and the creation of blockchain technology.
For far too many in our country--particularly families in fragile
financial circumstances--it can be extraordinarily expensive to be
poor. Throughout my career, I have emphasized financial inclusion,
entrepreneurship, and access to credit for small, local businesses--
values I learned growing up in the Midwest and South and as a student
at Georgetown University and the University of Michigan Law School.
My great-, great-, great-grandfather Alexander Moss was born May 6,
1821. As a young man, Alexander's parents relocated to a small town on
the Wabash River north of Indianapolis. There, he founded a small
storefront business on South Broadway Street. He became a celebrated
local businessman who offered private loans to African-American
families and businesses who had limited access to traditional lines of
credit; he campaigned for the building of a school and a church in the
African-American community.
My family has maintained a strong commitment to public service.
Shortly after graduating high school, my uncle volunteered for active
duty during the Vietnam War. Others in our family have served as
judges, legal aid lawyers, teachers, and education policy advocates for
under-resourced communities; and nurses and health care professionals
supporting indigent communities in our largest public hospitals.
Achieving these accomplishments required courage.
Through exceptional hard work and sacrifice, my parents gifted to
me and my three sisters a sense of infinite possibility. I am grateful
to my parents who join me today. I am also joined by my son, a rising
fifth grader at Georgetown Day School and an aspiring engineer or
professional soccer player, depending. Thank you, Jackson, for your
patience as I work to be service of others and to teach you that we
must measure our actions by what we do for those who are most in need.
Thank you again for the honor to appear before you today. I look
forward to and welcome your questions.
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PREPARED STATEMENT OF GORDON I. ITO
To Be a Member of the Financial Stability Oversight Council
July 11, 2024
Chair Brown, Ranking Member Scott, and distinguished Members of the
Committee, it is my honor and privilege to appear before you today. I
am also very honored and humbled to be President Biden's nominee for
this position as the Independent Member with Insurance Expertise on the
Financial Stability Oversight Council (FSOC). I also want to thank you
and your staffs for the time you have spent with me during this
process.
First, I would like to mention and thank my wife Joy, who would
have liked to be here with me today. Joy has always been very
supportive and has been a tremendous help in this entire process.
However, due to a planned family vacation in which we committed to lead
nine other family members on, she was unable to be here today. Our
family members departed on their flights yesterday, and tomorrow I will
start my journey to catch up with them.
I was born and raised in the town of Hilo, Hawai`i. The
neighborhood I grew up in was idyllic, we knew all our neighbors. Most
importantly, we all helped one another, neighbor helping neighbor. This
upbringing instilled a value in me to try my best to contribute in
whatever small way I can to help my community.
After graduating with degrees in finance and law, I practiced law
for nearly 7 years. Then, as life takes its unexpected twist and turns,
Hurricane Iniki struck and devastated the island of Kaua`i. This
unfortunate set of circumstances led me to the Hawai`i Insurance
Division as a staff attorney. The value instilled in me to help others
has kept me at the Insurance Division for over 30 years and resulted in
my interest in this position.
Through my years at the Insurance Division, I have gained a unique
set of experiences and knowledge that I would bring to the FSOC. To
highlight a few, they include managing the impact of natural
catastrophes that have devasted communities; placing insurers under
supervision, rehabilitation and into liquidation; and helping with the
development of IT systems for the State and at the National Association
of Insurance Commissioners (NAIC). I also assisted in starting up
residual market mechanisms in Hawai`i when the availability of
insurance during ``hard markets'' was limited or non-existent.
I have worked closely with fellow State and international
regulators, insurers, agents, legislators, and consumer groups to
ensure the insurance marketplace remains fair, viable, and responsive,
and that companies are financially solvent and there to pay claims. I
know the important role State insurance regulators play, and the
benefits of collaboration on important questions of financial
regulation.
The three-part statutory mission of the FSOC is to identify risk to
the financial stability of the United States, promote market
discipline, and respond to emerging threats to the stability of the
U.S. financial system. If confirmed, I would work every day to share my
experience and insights with fellow FSOC members to help the
organization achieve the mission Congress gave it.
Thank you for the opportunity to appear here today. I look forward
to answering any questions you have.
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