[Senate Hearing 110-914]
[From the U.S. Government Publishing Office]
S. Hrg. 110-914
NOMINATIONS OF: DAVID G. NASON,
MARIO MANCUSO, ROBERT M. COUCH,
MICHAEL W. TANKERSLEY, NGUYEN VAN HANH, AND JANIS HERSCHKOWITZ
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
ON
nominations of:
David G. Nason, of Virginia, to be Assistant Secretary for Financial
Institutions of the Department of Treasury
and to be a Member of the Board of Directors for the National Consumer
Cooperative Bank
__________
Mario Mancuso, of New York, to be Under Secretary for Export
Administration of the Department of Commerce
__________
Robert M. Couch, of Alabama, to be General Counsel for the Department
of Housing and Urban Development
__________
Michael W. Tankersley, of Texas, to be Inspector General for the
Export-Import Bank of the United States
__________
Nguyen Van Hanh, of California, to be a Member of the Board of
Directors for the National Consumer Cooperative Bank
__________
Janis Herschkowitz, of Pennsylvania, to be a Member of the Board of
Directors for the National Consumer Cooperative Bank
__________
THURSDAY, MAY 10, 2007
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
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senate05sh.html
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
CHRISTOPHER J. DODD, Connecticut, Chairman
TIM JOHNSON, South Dakota RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York WAYNE ALLARD, Colorado
EVAN BAYH, Indiana MICHAEL B. ENZI, Wyoming
THOMAS R. CARPER, Delaware CHUCK HAGEL, Nebraska
ROBERT MENENDEZ, New Jersey JIM BUNNING, Kentucky
DANIEL K. AKAKA, Hawaii MIKE CRAPO, Idaho
SHERROD BROWN, Ohio JOHN E. SUNUNU, New Hampshire
ROBERT P. CASEY, Pennsylvania ELIZABETH DOLE, North Carolina
JON TESTER, Montana MEL MARTINEZ, Florida
Shawn Maher, Staff Director
William D. Duhnke, Republican Staff Director and Counsel
Jonathan Miller, Professional Staff Member
Joseph L. Hepp, Professional Staff Member
Didem Nisanci, Professional Staff Member
Mark A. Calabria, Republican Senior Professional Staff Member
Andrew Olmem, Republican Counsel
Jim Johnson, Republican Counsel
Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator
George Whittle, Editor
C O N T E N T S
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THURSDAY, MAY 10, 2007
Page
Opening statements, comments, or prepared statements of:
Senator Reed................................................. 1
Senator Casey................................................ 11
WITNESS
Tim Holden, U.S. Representative from the State of Pennsylvania... 15
NOMINEES
David G. Nason, of Virginia, to be Assistant Secretary for
Financial Institutions of the Department of Treasury and to be
a Member of the Board of Directors for the National Consumer
Cooperative Bank............................................... 4
Prepared statement........................................... 26
Mario Mancuso, of New York, to be Under Secretary for Export
Administration of the Department of Commerce................... 5
Prepared statement........................................... 28
Response to written questions of:
Senator Dodd............................................. 51
Robert M. Couch, of Alabama, to be General Counsel for the
Department of Housing and Urban Development.................... 7
Prepared statement........................................... 32
Michael W. Tankersley, of Texas, to be Inspector General for the
Export-Import Bank of the United States........................ 8
Prepared statement........................................... 35
Nguyen Van Hanh, of California, to be a Member of the Board of
Directors for the National Consumer Cooperative Bank........... 9
Prepared statement........................................... 37
Janis Herschkowitz, of Pennsylvania, to be a Member of the Board
of Directors for the National Consumer Cooperative Bank........ 12
Prepared statement........................................... 45
NOMINATIONS OF:
DAVID G. NASON, OF VIRGINIA,
TO BE ASSISTANT SECRETARY FOR FINANCIAL INSTITUTIONS,
DEPARTMENT OF TREASURY
AND TO BE A MEMBER OF THE BOARD OF DIRECTORS
THE NATIONAL CONSUMER COOPERATIVE BANK;
MARIO MANCUSO, OF NEW YORK,
TO BE UNDER SECRETARY FOR EXPORT ADMINISTRATION,
DEPARTMENT OF COMMERCE;
ROBERT M. COUCH, OF ALABAMA,
TO BE GENERAL COUNSEL,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT;
MICHAEL W. TANKERSLEY, OF TEXAS,
TO BE INSPECTOR GENERAL,
EXPORT-IMPORT BANK OF THE UNITED STATES;
NGUYEN VAN HANH, OF CALIFORNIA,
TO BE A MEMBER OF THE BOARD OF DIRECTORS,
THE NATIONAL CONSUMER COOPERATIVE BANK;
JANIS HERSCHKOWITZ, OF PENNSYLVANIA,
TO BE A MEMBER OF THE BOARD OF DIRECTORS,
THE NATIONAL CONSUMER COOPERATIVE BANK
----------
THURSDAY, MAY 10, 2007
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 3:05 p.m., in room SD-538, Dirksen
Senate Office Building, Senator Jack Reed, presiding.
OPENING STATEMENT OF SENATOR REED
Senator Reed. This hearing will come to order. Thank you,
ladies and gentlemen.
Let me begin by saying that Senator Dodd very much wanted
to not only be here but to obviously chair the hearing. He is
unable to attend. He has asked me to conduct the hearing. This
is an important constitutional process that we are engaged in.
I appreciate the fact that the nominees would all come forward,
and not only appear but respond to our questions, both
questions here today and questions that may be submitted in
writing.
First let me introduce Mr. David George Nason of Rhode
Island. Mr. Nason already has something to commend him to this
Committee. He has been nominated to serve as Assistant
Secretary of the Treasury for Financial Institutions and to
serve as a Member of the Board of Directors of the National
Consumer Cooperative Bank, as the designated Federal official
in the Bank's charter. Mr. Nason currently serves as Acting
Assistant Secretary of the Treasury for Financial Institutions,
and until recently served as Deputy Assistant Secretary for
Financial Institutions. Should he be confirmed, Mr. Nason would
be responsible for managing a number of Treasury officials,
including the agency's Office of Financial Institutions Policy
and Government-Sponsored Enterprise Policy Office.
Prior to coming to the Treasury, Mr. Nason worked at the
Securities and Exchange Commission where he served as counsel.
Mr. Nason also worked as an attorney at Covington & Burling in
Washington, D.C. Mr. Nason received a Bachelor of Science in
finance from the American University and a J.D. summa cum laude
from the Washington College of law at the American University.
I am particularly pleased to welcome Mr. Nason. I have had
a chance to talk to him, and he not only ably represents the
administration, but he able represents Rhode Island, and he
does not forget his family and friends back there.
Next we have Mr. Mario Mancuso of New York. Mr. Mancuso has
been nominated to serve as Under Secretary of Commerce for
Export Administration. If confirmed, Mr. Mancuso would serve as
head of the Commerce Department's Bureau of Industry and
Security, and his primary duties would focus on enforcing our
Nation's export controls of dual-use products, items with both
civilian and military applications, including items that
contribute to the proliferation of nuclear, biological, and
chemical weaponry. Additionally, he would be tasked with
coordinating Defense Production Act policies for delivering
emergency supplies to the Government during a national
emergency.
Since August 2005, Mr. Mancuso has served as Deputy
Assistant Secretary of Defense for Special Operations in
Combating Terrorism. From January 2005 to July 2005, Mr.
Mancuso served as Special Counsel to the General Counsel of the
Department of Defense where he worked on numerous matters
involving international law, national security policy, and
international affairs.
The next nominee is Mr. Robert Couch of Alabama, and
Senator Shelby particularly wanted to be here, Mr. Couch, and
introduce you in person, and I will do my best in that regard.
Mr. Couch has been nominated to serve as General Counsel at
HUD. The General Counsel provides legal opinions in regard to
all departmental activities. The Office of General Counsel is
also responsible for enforcing fair housing laws, which is a
critical function of the Department of Housing and Urban
Development. Mr. Couch has an extensive legal and professional
background. After graduating from law school at Washington and
Lee University, Mr. Couch served as a law clerk on the United
States Fifth Circuit; then he served as a law clerk to United
States Supreme Court Justice Lewis Powell.
In addition to practicing law at a number of firms, Mr.
Couch was President of Collateral Mortgage, Limited, a firm in
Birmingham, Alabama, and was President and CEO of New South
Federal Savings Bank, also in Birmingham, Alabama. Currently,
Mr. Couch is President of the Government National Mortgage
Association.
Mr. Michael W. Tankersley, of Texas, has been nominated to
serve as Inspector General of the Export-Import Bank of the
United States. Mr. Tankersley is a partner with the firm
Bracewell & Giuliani in Texas, where he counsels corporate
boards and committees regarding fiduciary duty, conflicts of
interest, disclosure, and securities law compliance. Mr.
Tankersley has served as Chairman of the Business Law Section
of the State Bar of Texas, and he is a former adjunct professor
at the University of Texas Law School. Additionally, Mr.
Tankersley received a bachelor's degree and master's of
accounting from Rice University and his law degree from the
University of Texas, where he served as editor of the Law
Review and chancellor.
The Inspector General position is a newly created position
at the Eximbank, and I would like to recognize the important
leadership of Senator Allard in creating this position. Without
his efforts, this nomination would not be possible today. I
look forward to hearing from Mr. Tankersley regarding his
thoughts on how this new office will operate.
The next nominee is Ms. Janis Herschkowitz, and I think
Congressman Holden is due to introduce you. As soon as he
arrives, I will let him do that, but suffice to mention that
Ms. Herschkowitz has been nominated to be a Member of the Board
of Directors of the National Consumer Cooperative Bank.
And, finally, Dr. Nguyen Van Hanh, of California, has been
nominated to be a Member of the Board of Directors of the
National Consumer Cooperative Bank. Dr. Van Hanh has served as
Director of the Office of Refugee Resettlement since September
2001. In this capacity, he is a national leader in domestic
refugee resettlement. Dr. Van Hanh was a part-time faculty
member of California State University in Sacramento and in 1990
served as a representative of California Governor Deukmejian on
community relations and managed various programs as senior
economist on water resources for the State of California. Dr.
Van Hanh holds a Ph.D. in economics from the University of
California at Davis, and earlier he received a Bachelor of
Science degree with high honors from the University of Florida
and a Master's of Science degree in agricultural science from
the same university. Welcome, Doctor. Thank you very much.
At this juncture I would now ask the nominees to stand so
that I might administer the oath, which is required in these
proceedings. Would you please raise your right hand? Do you
swear or affirm that the testimony you are about to give is the
truth, the whole truth, and nothing but the truth, so help you
God?
Mr. Nason. I do.
Mr. Mancuso. I do.
Mr. Couch. I do.
Mr. Tankersley. I do.
Ms. Herschkowitz. I do.
Mr. Van Hanh. I do.
Senator Reed. Do you agree to appear and testify before any
duly constituted committee of the Senate?
Mr. Nason. I do.
Mr. Mancuso. I do.
Mr. Couch. I do.
Mr. Tankersley. I do.
Ms. Herschkowitz. I do.
Mr. Van Hanh. I do.
Senator Reed. Thank you very much. Please be seated. I am
used to that. I have a 4-month-old child, and she is trying to
communicate with me, I know. And Senator Dodd also is used to
it, so feel right at home, please.
Let me say that before we begin your statements, your
entire written statements will be included in the record. We
would like to confine remarks to 5 minutes because of the
number of nominees before us today. And please also note that
Members of the Committee could submit written questions to you
for your consideration and prompt response. Chairman Dodd has a
series of questions, I believe, for Mr. Mancuso which will be
part of the record and will be forwarded to you for response,
Mr. Mancuso, and other questions might be forthcoming from
other members.
Now I would like to proceed to your statements, so let me
first recognize Mr. Nason. Thank you for joining us today, and
if you have family or others that are accompanying you, please
feel free to introduce my constituents.
[Laughter.]
STATEMENT OF DAVID GEORGE NASON, ASSISTANT SECRETARY FOR
FINANCIAL INSTITUTIONS-DESIGNATE, DEPARTMENT OF TREASURY, AND
MEMBER OF THE BOARD OF DIRECTORS-DESIGNATE, NATIONAL CONSUMER
COOPERATIVE BANK
Ms. Nason. Thank you very much. Chairman Reed, Ranking
Member Shelby, and Members of the Committee, thank you for
inviting me to appear before you today. I am grateful to
President Bush and Secretary Paulson for their trust and
confidence in me. I am honored to be here today as the
President's nominee to be Assistant Secretary for Financial
Institutions at the Treasury Department and to be a Member of
the Board of Directors of the National Consumer Cooperative
Bank, an organization established to assist underserved
communities across the Nation.
I would like to thank my family for their unyielding
support of my decision to continue in public service. I would
like to introduce my wife, Nicole, right there, my best friend,
who is a dedicated public servant; and our daughters--Alexandra
is 6, Abigail is 2--and is 2 in every sense of the word but
asleep so I will keep my voice quiet. It will make this hearing
go a lot faster. And my parents, George and Ann Nason, are also
here today.
Chairman Reed, you would be interested in knowing that my
parents have been commuting from Providence to Washington,
D.C., weekly to take care of our daughters for a period of
years, so certainly above and beyond the call of duty for
parents and grandparents.
If confirmed, I look forward to working with Secretary
Paulson, Under Secretary Steel, and the rest of the Treasury
team, along with others in the administration and Congress, on
a variety of important issues impacting our financial
institutions. In my current role as Deputy Assistant Secretary,
I have had the opportunity to engage on numerous important
issues that affect our capital markets and financial
institutions, including Treasury's position on banking and
insurance regulation. I also serve as an adviser to Secretary
Paulson in his capacity as Chair of the President's Working
Group on Financial Markets.
If confirmed, I will work constructively in my role as
Assistant Secretary for Financial Institutions to ensure that
the Department faithfully carries out its responsibilities
related to financial institutions policy, critical
infrastructure protection, and financial education. These
topics are diverse, complex, and have a direct impact on the
lives of Americans.
The legal and regulatory structure imposed on our financial
institutions must guard against systemic risk, must protect
consumers, and must enhance their confidence. If confirmed, I
will help Secretary Paulson shape and implement his agenda on
capital markets competitiveness. I share the Secretary's view
that robust and vibrant capital markets are directly tied to
future economic prosperity for all Americans.
I believe that my prior professional experience has
prepared me for this important responsibility. Before coming to
Treasury, I served at the Securities and Exchange Commission as
counsel to a Commissioner. I was there at a critical moment in
the SEC's history when the agency implemented the Sarbanes-
Oxley act of 2002, the most comprehensive piece of securities
legislation in decades. My experience there has contributed
significantly in preparing me for this next challenge at the
Treasury Department.
Prior to the SEC, I spent time in the private sector as an
attorney at Covington & Burling where I focused on securities
offerings, mergers and acquisitions, and Federal tax planning.
If confirmed, I would seek to ensure a constructive dialog with
Members of Congress and their staffs, and I appreciate the time
that Members of the Committee have taken to consider my
nomination, and I would be happy to answer any questions.
Senator Reed. Thank you very much, Mr. Nason.
Mr. Mancuso, if you have friends or family here you would
like to introduce, please do so and the floor is yours.
STATEMENT OF MARIO MANCUSO, UNDER SECRETARY-DESIGNATE,
DEPARTMENT OF COMMERCE
Mr. Mancuso. Thank you very much, Mr. Chairman.
Mr. Chairman, Senator Shelby, and other distinguished
Members of the Committee, it is a great honor to be before you
today as the President's nominee to be Under Secretary of
Commerce for Export Administration. I want to thank the
President and Secretary Gutierrez for their trust and
confidence in me and for the privilege to be considered to lead
and serve alongside the dedicated and talented men and women of
the Bureau of Industry and Security.
I would also like to thank my wife, Leesa, and our
daughter, Maia--who do not live in Rhode Island, but are open
to the opportunity--for their love and support, and my family
and friends who are here today, I think filling half the room:
my Mom and Dad, Giacinto and Francesca Mancuso; my uncle,
Anthony Modika; my in-laws, Marty and Arlene Klepper; Abby
Golden and Bill Posner; Brother Dominic Quigley; and Tara and
Tim Kelly. Thank you.
Finally, I want to thank you and your respective staffs. I
appreciate the time you have taken to meet with me and to share
your perspectives on the issues facing the Bureau of Industry
and Security. I look forward, if confirmed, to working closely
with you and them in the future.
In late summer 2001, I was in the private sector practicing
corporate law at Ropes and Gray, much as I had done for the
better part of the previous decade. I represented U.S.
companies and investment banks as they made their way in the
competitive, fast-moving, and dynamic new international
business environment. It was the best of times. Then 9/11
happened and everything changed.
Soon after Johnny ``Mike'' Spann, a friend and jump school
classmate, was identified as the first combat fatality in
Afghanistan, I volunteered to serve a combat tour of duty in
Afghanistan. Despite my best efforts, I did not have the
opportunity to serve in Afghanistan. However, I would later
have the great privilege of leading U.S. troops like Tim Kelly
in Operation Iraqi Freedom.
The personal details of my service are less important than
the lesson I learned in Iraq and as a senior official at the
Department of Defense; that is, while we are fortunate to have
the world's most vaunted military, national security does not
rest upon military power alone. Instead, our national security
depends upon preserving our military capabilities and
advantages and integrating these with all elements of national
power, including the economic power of U.S. workers and
companies.
As this Committee knows well, the Bureau of Industry and
Security advances U.S. national security, foreign policy, and
economic objectives by ensuring an efficient and effective
dual-use export control system and by promoting continued U.S.
strategic leadership and technology. BIS uses two primary tools
to do this: issuing regulations and enforcing them. These
functions are synergistic and both are vitally important. If
confirmed, I will work diligently to ensure that these tools
are used fully and judiciously. If confirmed, I will also work
with this Committee in support of the reauthorization of the
Export Administration Act pending long-term fundamental reform
of the dual-use export control system.
For many years, the unrivaled position of the U.S. as the
economic and technology leader of the world made it possible
for the United States to generally administer export controls
without the need to give equal weight to economic tradeoffs of
reduced exports, particularly since our closest competitors
were also our allies and they agreed with export controls
designed to keep sensitive items outside of the hands of the
Soviet Union and its satellites.
Today, investment capital, technology, and intellectual
talent are more widely distributed, while national perceptions
of security risk are no longer universally shared. In light of
these tectonic changes, the decisions BIS makes every day
affect the bottom line of U.S. workers and U.S. companies. If
confirmed, I will never forget that. Moreover, I will use my
executive experience in the private and public sectors to help
U.S. businesses sell their products internationally, create
jobs for U.S. workers, and enhance our national security.
Should I be confirmed, I will take a multifaceted approach
to export controls and energetically strive to make our
controls as targeted and as multilateral as possible, whenever
possible. In every instance, I will seek maximum possible input
from this Committee, interested members of the executive
branch, and industry to ensure that our export control system
is smart, efficient, and effective and takes into account the
real bottom-line impacts on U.S. workers and companies.
Mr. Chairman, thank you for this hearing and for
considering my nomination. I would be delighted to take your
questions.
Senator Reed. Thank you very much, Mr. Mancuso.
Mr. Couch, if you have anyone you would like to introduce,
please do so, then proceed with your statement.
STATEMENT OF ROBERT M. COUCH, GENERAL COUNSEL-DESIGNATE,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Couch. Chairman Reed, I want to thank you for the
opportunity to appear before you today. I would also like to
thank Ranking Member Shelby for the kind words he has entered
into the record. And thank you to all of the staff who have met
with me over the last month. Those meetings have helped me gain
important insights into the position for which I have been
nominated.
I would also like to express my sincere appreciation to
President Bush and Secretary Jackson for their confidence in
asking me to not only be part of the administration, but to
have the confidence in me to serve both as the President of
Ginnie Mae and as HUD's Acting General Counsel. I am certainly
honored to be nominated to serve as the General Counsel of HUD.
If my appearance today seems like deja vu to you, it was a
little more than a year ago that I came before this Committee
as the need to serve as President of Ginnie Mae. I appreciate
the confidence you put in me then, and I can assure you that
over the last year, Ginnie Mae has continued to fulfill its
mission of expanding access to affordable housing in America by
linking the global capital markets to the Nation's housing
markets. I am grateful for the opportunity the President,
Secretary Jackson, and the U.S. Senate gave me when I was
confirmed last year. I have been extremely impressed with the
professional staff at Ginnie Mae, and I strongly believe the
organization will continue to be successful and effective in
meeting its goals.
Today I am before you as the nominee for the position of
General Counsel of HUD. Just this past weekend, I was in
Lexington, Virginia, celebrating my 25th law school reunion at
Washington and Lee University. Since I graduated, I have been
proud of the opportunities I have had both as a lawyer and as a
banker, and I believe my previous occupations have provided me
with the skills necessary to serve as HUD's chief legal
officer. In addition, I have served as the Acting General
Counsel for approximately 6 months, and I have become very
familiar with the operations of the agency and the Office of
General Counsel.
The Office of General Counsel is a legal organization of
approximately 400 lawyers with offices spread throughout the
Nation. I have already visited several of our regional offices
and have gotten to know many of the very talented and dedicated
attorneys in the field and at headquarters here in Washington,
D.C. Let me just say that I have been extremely impressed.
If confirmed, I am committed to working with our clients
within the agency to provide the best legal counsel possible to
further HUD's mission--that is, to increase homeownership,
support community development, and increase access to
affordable housing, free from discrimination.
I would also like to thank my wife, Anne--who is here today
in the second row--and my family for the love and support they
have given me, especially during the move from Birmingham to
D.C. And, Senator I am afraid I cannot take this accent to
Rhode Island. This has been a challenging, exciting, and
rewarding time for me, and for them as well.
Mr. Chairman, I am very appreciative of the trust that the
President and Secretary Jackson have placed in me by nominating
me for the post of General Counsel. I am grateful for the
Banking Committee's consideration today, and I would be pleased
to answer any questions you might have.
Senator Reed. Thank you very much, Mr. Couch.
Mr. Tankersley, if you would make your statement and
introduce anyone who might be accompanying you.
STATEMENT OF MICHAEL W. TANKERSLEY, INSPECTOR GENERAL-
DESIGNATE, EXPORT-IMPORT BANK OF THE UNITED STATES
Mr. Tankersley. I will do that. Thank you, Mr. Chairman. I
am Mike Tankersley of Dallas. It is an honor to appear here
today as the President's nominee to become the first Inspector
General at the Export-Import Bank of the United States. I come
here today having spent 25 years as a practicing lawyer working
for clients that have included numerous small and growing
businesses, a very important constituency of the Export-Import
Bank, also working with public companies, banks, and insurance
companies. Most of them have been U.S. based; some have been
foreign.
I have helped these clients in a variety of commercial
transactions--lending, raising capital, addressing their legal
compliance challenges. In recent years, I have spent a lot of
time advising boards on governance matters, including the
demands of the Sarbanes-Oxley act and guiding them through
special investigations of allegations of fraud and illegality.
Before graduating from law school, I was at the business
school at Rice University, which, interestingly, is named for
Jesse Jones, the second Chairman of Export-Import Bank, a
fellow Texan who was a key adviser to President Roosevelt in
establishing the Bank. I have had a CPA certificate for a
number of years, and while I do not hold myself out as being an
expert in accounting, I believe that background will be
helpful, and, if confirmed, it will prove valuable in serving
the Bank as well.
My investigation of the Export-Import Bank since my
nomination has confirmed that it is well regarded here and
abroad and that its leadership and staff are highly expert and
motivated in carrying out the Bank's mission and the policy
directives of the Congress as reflected in its statute. The
Bank's reauthorization last fall in the final days of that
Congress is, I think, a testament to the regard and bipartisan
support the Bank enjoys with this Committee and the Congress as
a whole.
My conversations with Chairman Lambright and General
Counsel Schweitzer have confirmed that they are supportive of
the job I am going to be doing, if confirmed, and that they are
looking forward to working together to advance the quality and
the responsiveness of the Bank's compliance and other functions
that I will be responsible.
The chance to serve as the first Inspector General at the
Bank represents a unique chance to bring together all of my
varied experiences and training to create a new and very
important function. I am committed to and comfortable
maintaining the degree of independence that that position
requires and that Senator Allard and Senator Martinez and
others have encouraged me to maintain. At the same time I hope,
if confirmed, to be the sort of approachable Inspector General
that I have been counseled is often the most effective.
I believe my background is a good fit with the varied
responsibilities of the position as an independent voice in the
agency with responsibility for audits, investigations, and
charged with preventing fraud, waste, abuse, and promoting
economy and effectiveness and efficiency. If confirmed, I will
particularly look forward to working with this Committee as an
independent point of communication and with other interested
Members of Congress.
I am grateful that the President has offered me this
opportunity to serve our Nation. I considered public service
when I was getting out of law school in 1980, and I have
harbored lingering regret that I did not do it at that time. My
family, friends, and loved ones have been very supportive of my
decision to seek out this opportunity, and if confirmed, I
expect that will continue. In that regard, I would like to
introduce to the group my very good friend, Karen Cornell, who
is here with me today. The rest of my family were otherwise
committed.
I appreciate you considering my nomination today, and if
you have any questions for me now or in the future, I would
look forward to answering them. Thank you.
Senator Reed. Thank you very much, Mr. Tankersley.
Dr. Van Hanh, if there is anyone you would like to
introduce, please do so and then proceed to your statement.
STATEMENT OF NGUYEN VAN HANH, MEMBER OF THE BOARD OF DIRECTORS-
DESIGNATE, NATIONAL CONSUMER COOPERATIVE BANK
Mr. Van Hanh. Thank you, Mr. Chairman.
Mr. Chairman, I am honored to appear here today as the
nominee to become a Member of the Board of Directors of the
National Consumer Cooperative Bank. I would like to thank
President Bush for this very special nomination.
To my parents and my family goes my deep appreciation for
their love and support, for my education and involvement with
the community for many decades. Mr. Chairman, I am here because
I believe my combined experience as an economic development
professional and a community leader is consistent with the
mission of the National Consumer Cooperative Bank, also known
as NCB.
NCB was established to serve the needs of the underserved
communities across the Nation, primarily through user-owned
cooperatives. From its founding and continuing through today,
an important element of its mission has been assisting low-
income persons and communities.
I was born in Vietnam, and I was naturalized as a U.S.
citizen. My professional experience includes many years working
with refugee and low-income populations. Currently, I am
teaching economics at the California State University in
Sacramento and working on international programs in financial
education as an affiliate professor at George Mason University.
I received my Ph.D. degree in economics from the University of
California, Davis.
In the late 1970's, when thousands of refugees from
Southeast Asia arrived in the U.S., I helped found the Bach
Viet Association in collaboration with a group of local
community leaders to provide socioeconomic assistance to
Southeast Asian and Russian refugees. My work continued in the
subsequent years at the national level. The refugees,
immigrants, and minorities share the same common barriers in
gaining access to investment capital as they were often
perceived collectively as high-risk borrowers without track
records or collateral.
Most recently, from 2001 through early 2006, as Director of
the Office of Refugee Resettlement, I had the unique
opportunity to expand existing programs and to initiate new
ones to address the financial needs of the growing community.
For example, funds were allocated to the microenterprise and
the individual development account, or IDA, programs, as well
as the newly established Refugee Rural Initiative.
I was very encouraged to learn that NCB has successfully
provided effective banking and financial services to many
communities across the Nation, the type of financial resources
necessary to address the needs of the minorities I was working
with. NCB has directly provided over $3 billion in specialized
lending, investment, and technical assistance to underserved
communities across the country, especially benefiting those in
need of help in health care, education, affordable housing, and
small business development. These needs are similar to those
experienced by the growing population of new Americans.
Problems created by poverty in America are being addressed
by innovative community lending and expert technical assistance
which has been built into NCB's nonprofit affiliate NCB Capital
Impact. NCB Capital Impact is designed to empower the
underserved communities through self-help, democratic control,
and community participation. In the past 3 years alone, NCB
Capital Impact has financed over 4,700 units of affordable
housing, 14,800 school seats, 8,700 affordable assisted living
units for seniors and persons with disabilities.
Being trained as an economist with extensive experience
working with the low-income communities, I believe I am
qualified to serve on the Board of Directors of NCB. If
confirmed, I intend to promote the best practices of NCB in
developing access to investment capital and financial services
to the low-income, to expand the partnership between the
cooperative banking sector and the communities across the
Nation, and to make a substantive contribution to the Board of
Directors of NCB.
Your consideration is very much appreciated, and thank you
for the honor to be here. Please allow me to respond to any
questions you may have at this time. Thank you.
Senator Reed. Thank you very much, Dr. Van Hanh.
We have been joined by my colleague, Senator Bob Casey of
Pennsylvania, and although we expect Representative Holden to
come and make some comments, Ms. Herschkowitz, there is an
opportunity for Senator Casey to make his comments and also
introduce you, and then you can present your friends and family
and your statement.
Ms. Herschkowitz. Thank you.
Senator Reed. Senator Casey.
STATEMENT OF SENATOR ROBERT P. CASEY
Senator Casey. Mr. Chairman, thank you very much.
I want to thank Senator Reed for bringing us together today
and thank all those who are in attendance for the time you are
taking and the service that you are providing to the country. I
have a particular honor today to introduce someone from my home
State, Janis Herschkowitz from Lebanon County, Pennsylvania,
which is a place that actually I know where it is and I have
been there.
Ms. Herschkowitz. Very good.
Senator Casey. We will not get into campaigns and
elections, but I have been to that county, and it is a great
community. But I did want to say a few words about Janis and
also about the importance of this hearing.
First of all, Janis is President and CEO of PRL,
Incorporated, which consists of four manufacturing companies,
including a foundry and a machine shop, and she also serves on
the Pennsylvania Chamber of Business and Industry, on the board
of that organization. She has been a strong advocate for small
business for a number of years. She has also helped to remove
obstacles from the path of Pennsylvanians, especially small
business owners when they try to redevelop brownfields. She has
been named one of the top 50 Best Pennsylvania Women in
Business by the Pennsylvania Department of Economic
Development, and she has been nominated to the Board of the
National Cooperative Bank, and we are honored that a
Pennsylvanian has been so nominated. And I happy to be here
today to support her nomination. Maybe I can ask you just in
the short period I have right now if you would introduce your
family or just tell us if they are here and if you could
identify them.
Ms. Herschkowitz. I would love to introduce my family, and
also thank you very much for those kinds words.
I would like to introduce my mother, Barbara Herschkowitz;
my sister, Pat Herschkowitz; and my boyfriend, Lieutenant
Colonel Wallace Vitez who managed to get out of Fort Dix to be
here today.
Senator Casey. Wow. Thank you very much. We are honored
that your family is here.
Ms. Herschkowitz. I would also like to thank them for their
ongoing support.
Senator Casey. Well, thank you. We especially appreciate
when a member of the armed services is here. We are honored.
This gentleman on my left, Senator Reed, has a proud
service record, and we are honored to be in his presence all
the time, but especially when he is educating fellow members of
the caucus about defense issues and national security issues.
And I am also indebted to him today in a very special personal
way because, as you noticed, when I came in this room, I went
all the way down to my seat, and Senator Reed was so kind to a
first-year Senator. He instructed the staff to bring me closer
to the Chair. I am only inches away from the gavel.
[Laughter.]
But I do not want to get my hopes up.
I am grateful for Senator Reed's leadership on this
Committee and in so many other capacities, and I will wait
until a little later to get some questions in. Thank you very
much.
Senator Reed. Thank you, Senator Casey, for those very kind
words and for your introduction of Ms. Herschkowitz.
Ms. Herschkowitz, if you would like to make your statement
now, please.
STATEMENT OF JANIS HERSCHKOWITZ, MEMBER OF THE BOARD OF
DIRECTORS-DESIGNATE, NATIONAL CONSUMER COOPERATIVE BANK
Ms. Herschkowitz. Yes. Mr. Chairman and Senator Casey, I am
honored to appear before you today on my nomination as the
Small Business Representative to the Board of Directors of the
National Consumer Cooperative Bank. I am President and CEO of
PRL, Inc. I became President of PRL, Inc., in 1989 upon the
death of my father. Prior to joining the company, I was
financial manager of a $186 million division of Zenith
Financial Corporation.
Despite PRL's small size and the fact that we only have 122
employees, PRL is a proud supplier of high-specification
castings. As an example, we manufacture pumps and valve bodies
which are currently used in nuclear submarines and power plants
around the world. We have a highly skilled labor force, feel we
have the most vertically integrated foundry in the country, and
play a critical role in our Nation's defense.
Our team's dedication to quality is reflected in our
customer base, which includes such important military suppliers
as Electric Boat, Northrop Grumman, and Curtiss-Wright. Under
my leadership, PRL has overcome many challenges, including
opening a foundry, being highly leveraged while losing the
majority of our customer base due to defense cuts, and
surviving the onslaught of foreign outsourcing. I know the
stress of trying to cover cash-flow while still meeting payroll
obligations. I also know what it takes to borrow money as, at
the age of 29, I was able to obtain a bank loan to open a
foundry.
One of our proudest accomplishments is that as a small
manufacturer, PRL has managed to thrive in an environment where
the vast majority of our competitors have been forced to close
their doors. I feel this business experience, coupled with my
strong financial and board background, makes me an ideal
candidate as the Small Business Representative for the Board of
Directors for NCB.
I have an MBA in finance from the University of Texas and
was fortunate enough to serve as Chairman of the Business
Advisory Council for the Federal Reserve Board of Philadelphia.
I have also served on numerous other State and local boards in
leadership positions, including community service organizations
as well as chambers. In addition, I have a very diverse
background. I have a Bachelor of Arts in international
relations from Penn State University, grew up in Bolivia, speak
Spanish, and started my career working at Maquiladoras and
Matamoros in Juarez, Mexico, as a financial analyst for Zenith
Corporation. This provides me with a unique perspective which
helps me to better understand other cultures and enhances my
decisionmaking abilities.
However, what truly makes me particularly qualified to be a
Member of the Board of Directors is my newly found passion for
NCB and what they are able to do. Having undergone an extensive
briefing process, I now understand NCB represents what a
lending institution can accomplish when it enables people to
help themselves and as a role model of public and private
sector cooperation.
In the small business market, NCB leverages relationships
it builds with cooperatives to provide the best possible
products to its consumers. NCB is also an SBA National
Preferred Lender and has provided almost $30 million in loans
to small businesses. In addition, the Bank is also preferred
lender to Ace Hardware, which is one of the largest
cooperatives in the country.
The bottom line is NCB understands--and it is an issue I am
very passionate about--that small business is the engine that
runs today's economy and that NCB provides a mechanism for
small business to not only survive but also prosper. Given my
business and life experiences, I feel I can play a significant
role in further realizing the Bank's mission.
In closing, I would be proud to serve as a Board Member to
the National Consumer Cooperative Bank, appreciate your
consideration, and would welcome the opportunity to answer any
questions.
Senator Reed. Thank you very much, Ms. Herschkowitz. Thank
you all for your very excellent testimony.
We will begin a round of 7 minutes of questioning. As I
indicated previously, Chairman Dodd has submitted questions in
writing, and those questions and your responses will be made
part of the record, as well as any additional questions
submitted by my colleagues.
Let me start with Mr. Nason, and thank you again for your
service as you go forward. One of the issues that this
Committee and the Nation are struggling with is the
competitiveness in a global economy of our financial markets,
and in your position, you are going to have a critical role in
that review. I wonder if you might comment on any of the
proposed reforms that Treasury is contemplating in terms of
this competitiveness between, for want of better terms, Wall
Street and many other financial markets?
Mr. Nason. Thank you for that question, Senator. That is
something that I will be focused on very closely with Secretary
Paulson on this. As you know, we recently had a large
conference where a series of ideas were provided to dealing
with this, and there are three baskets of issue that the
Secretary has identified that he would like me to focus on, if
confirmed.
The first is our regulatory structure in the United States
as to whether or not our regulatory structure for financial
institutions and capital markets is optimal for changing and
more dynamic capital markets.
The second basket of issues that he would like me to focus
on specifically is the challenges facing the auditing
profession. The auditing profession has developed and has
changed dramatically in the last few years. There is a greater
amount of concentration among the accounting firms, and it is
an issue, and the accounting profession is critically important
to our capital markets, and they deserve more attention and
more analysis from the Treasury Department.
And the third issue that we will be focusing on is the
corporate governance issue and legal reform issues within the
FIRN because there are a lot of changing dynamics going on
right there, so we will be studying that as well.
Senator Reed. Thank you very much. Let me follow up with
another question. One of the burning issues at the moment are
hedge funds, their operations, their activities. There is
concern lately about the leverage that hedge funds are
deploying in the marketplace. And I know the President's
Working Group has looked at this very closely. Can you talk to
us about what further steps they might be taking, what further
advice they might have for the Congress?
Mr. Nason. Certainly. I am glad you raise the issue.
As you refer to, the President's Working Group on Capital
Markets recently released a Statement of Principles and
Guidelines regarding private pools of capital and hedge funds,
and these were an opportunity for the members of the
President's Working Group, which is the Treasury Secretary and
the other financial regulators, to speak with one voice about
what needs to occur to reflect a changing marketplace that
hedge funds are participating in. These principles and
guidelines are not a reflection or an endorsement of the status
quo. They are a reflection of all the regulators suggesting
that each of them needs to do more and heightened vigilance
within the current regulatory structure.
So what the Secretary has asked me to do and other members
of the domestic finance team is to reach out to the regulators,
reach out to the community and the constituents that are
involved in the private pools of capital space, the managers,
the people that lend private pools of capital money, and the
regulators to ensure that people are taking these guidelines
seriously, that people are following up on them, and if there
is more that we need to do on the Government side, that we
should do it.
Senator Reed. Thank you very much, Mr. Nason.
Let me suspend my questions right now and recognize
Representative Tim Holden of Pennsylvania. I had the privilege
of serving with Tim in the House of Representatives. He is a
remarkable Representative not only for Pennsylvania but for the
Nation, and we are respectful of the busy schedule of House
Members, Tim, so please take your opportunity to make your
comments about Ms. Herschkowitz.
STATEMENT OF TIM HOLDEN, U.S. REPRESENTATIVE FROM THE STATE OF
PENNSYLVANIA
Representative Holden. Thank you, Mr. Chairman, Senator
Casey. I apologize for being a little bit late, but, Mr.
Chairman, you remember in the House days that the schedule
cannot really be predicted.
But I just wanted to take a moment really to recommend my
constituent, Jan Herschkowitz, who has been nominated to serve
on the Board of Directors for the National Consumer Cooperative
Bank. I have had the privilege of knowing Jan over the last 5
years when redistricting occurred in Pennsylvania and Lebanon
County became part of the 17th Congressional District, which I
represent.
She is a remarkable woman, a tremendous business person,
served as CEO for her company, since the passing of her father,
for 19 years. It is a company, PRL Industries, which is a very
successful company, does a lot of defense work, does a lot of
submarine work, Mr. Chairman, which I know is near and dear to
Rhode Island. And Jan is also very, very active in our
community. She is a Past Chairman of the Lebanon Valley Chamber
of Commerce, appointee of the White House Conference on Small
Business, recipient of the Pennsylvania Top 50 Best
Businesswomen Business Award, and Chairman of the Reserve Bank
of Philadelphia.
Mr. Chairman, I have to admit I did not know a heck of a
lot about the National Consumer Cooperative Bank until Jan was
nominated for this position, but I have had a chance to review
what their mission is and what their goals are, and I would
just take this opportunity to highly recommend Jan. I think she
would be a successful and very, very positive Board Member.
So thank you, Mr. Chairman, and thank you, Senator Casey.
Senator Reed. Thank you.
Senator Casey, do you have a comment?
Senator Casey. Well, I just want to reiterate what I had
said earlier, first of all, to commend the work of Congressman
Tim Holden. I have known him a long time as well, and, by the
way, I should say he does better in Lebanon County than I do.
[Laughter.]
But I am grateful for his presence here and his knowledge
of your work, and it is critically important that we have
Members of the House of Representatives and the Senate who
understand all of our constituents, those we have known a long
time and those we are just getting to know. So we are honored
to second what Congressman Tim Holden just said.
Senator Reed. Thank you very much, and I know how hectic it
is in the house, and thank you so much for coming by,
Congressman.
Representative Holden. Thank you, Mr. Chairman, Senator
Casey.
Senator Reed. Let me resume my questioning.
Mr. Mancuso, in your role you have significant
responsibilities about the export control system, and there is
an inherent tension between trade and security. I would be
curious about your reflections about those close calls between
security and trade. Are we in balance? Are we not doing enough
to protect security in order to encourage trade? Or are we
restricting trade unnecessarily? Do you have some initial
thoughts at least?
Mr. Mancuso. Yes, I do, Mr. Chairman. What I would like to
say is that, to some extent--I would not say that those values
are contradictory. I think sometimes they are divergent and
they just have to be balanced very, very carefully, which is
why the efficient administration of the export control regime
is so important, which is why it is important to reach out to
industry, to reach out to the interagency to make them as
multilateral as possible.
What I would say is that this position is a national
security position, but as I mentioned in my opening comments,
it really depends on your definition of ``national security.''
We do not have the luxury of defining it narrowly. Economic
power is critically important. The contributions of industry
are critically important.
What I would say, sir, is that in the challenges as I
understand the challenges that BIS is facing right now, it is
this careful balance. How do you participate in a globalizing
and very complex economy while at the same time minimizing the
risks that come with that? The balance is difficult to strike,
but what I would say, sir, is this: The Under Secretary for BIS
must be mindful of national security; however, at all times the
export control regime has to balance these sometimes divergent
interests, has to balance them carefully, with full
consultation with the private sector, with members of the
interagency, obviously with this Committee, so that it fulfills
its mandate.
Senator Reed. Thank you. Recently, Secretary Gutierrez
submitted a proposal for reauthorizing the Export
Administration Act, and I presume you have had a chance at
least to take a look at that. Your role, if you are confirmed,
would be to help move that legislation through the Congress,
and in that regard, are there any specific issues there that
you think are most critical to focus on?
Mr. Mancuso. Mr. Chairman, well, I would start by saying it
is critically important to have it reauthorized, for a variety
of, frankly, independently sufficient reasons.
One is that what the Act would do, as I understand it, is
expand the authorities under which BIS' enforcement agents
would operate, which are key to its mission.
Second, it would heighten penalties, so create a better
incentive structure for BIS to carry out its enforcement
function. But I think I would like to take a step back and talk
about the BIS mission holistically.
BIS, as I mentioned in my statement, has a policy function;
it issues regulations. And it also has this enforcement
function. Both of those two are synergistic, which is why it is
critically important to pass this legislation. And if I would
be confirmed, I would look forward to working with this
Committee and working with Congress to try to get it passed.
Senator Reed. Thank you, Mr. Mancuso.
I have questions for all the panel, but let me at this
moment recognize Senator Casey for his round of questioning,
and then we will have a second round, at least.
Thank you, Senator.
Senator Casey. Thank you, Mr. Chairman.
Janis, I think I will start with you and leave it open to
others as well. But one of the things that we are struggling
with in the Senate today--and it has been a challenge for many
years now, but especially in the last couple of years--and I
have only been here a couple of months, but I heard about this
everywhere across our State. It is the issue of health care. I
think most people, even though who believe we could have, that
we should have health care for all Americans, the 47 million--
and that number keeps going up--who do not have health
insurance, that that is not going to happen anytime soon, but
we should take substantial steps in that direction.
One of the ways we are going to do that this year, that we
must do--we cannot fail in this, and I think the administration
is--to say they are shortsighted on this is an understatement.
I have to say that in all candor. But it is the State
Children's Health Insurance Program, to make sure that gets
reauthorized so we can have it in place for the millions of
children across the country who benefit from that.
After that, after children's health insurance, there is
very little consensus on what we should do next in terms of
taking a positive step or a substantial step in the right
direction.
I want to ask you, as someone who has not only run a
business under difficult circumstances, but also someone who
has been part of groups that deal with all kinds of business
issues across the State and across central Pennsylvania: What
do you think this Senate, this Congress could do to help in
terms of taking a positive step on creating opportunities for
small businesses to have the benefit of expanded health care or
other steps that would help you insure more of your employees
or to give other businesses the opportunity to do that?
Ms. Herschkowitz. Well, it is obviously a very sticky
issue, and we have put up, particularly with our workforce,
because they tend to be older and primarily men, because it is
the foundry industry, and they tend to be in the worst
demographics because they really do not take care of their
health when they are younger and tend to go to the doctor at
the last moment, so it becomes very costly at later ages.
I think small business can play a role in this. I strongly
believe that small business and sole proprietors should be
allowed to deduct their health insurance. I think that would
help. I am a huge mandate for health competition. I also
believe in health savings accounts, and very similar to
cooperatives such as the National Consumer Cooperative Bank,
where small businesses can pull together to gather their
resources together in order to have more purchasing power. But
it is probably one of the top three issues that we are
confronted with.
I also think if you want to take a look at Governor
Rendell's plan, he has an awful lot of good advice on the cost
side in terms of cutting health care costs so it can be more
competitive. And then once we determine the cost savings that
can be realized, we can get a budget to decide if the other
part of it becomes applicable.
Senator Casey. Can you tell us, just in the last--I am
trying to give some good boundaries here. Just within the last
year, if you compare, let's say, the calendar years 2005 to
2006--we are in the middle of 2007, but 2005 to 2006, a 1-year
increase in health care costs in terms of your business, and
then maybe look back 5 years. Can you give us a ball park
number in terms of how that has gone up or whether it has gone
up substantially?
Ms. Herschkowitz. It has gone up significantly. I tend to
not have a broker and I negotiate it myself, and I have found
that if you take it to the end, you can get a further
reduction. But I do know 1 year the initial increase was 32
percent, and we managed to get it down to 8 percent. This past
year, we had a better experience. Because we are experience-
rated with 122 employees, we were able to--I think last year's
increase was around 5 percent. And it is sort of ironic in our
business where you are not allowed to increase costs when you
are happy when you have a 5-percent increase. But it is truly a
problem that we grapple with every day, and it has become a
higher percentage of our benefit costs.
Senator Casey. Well, you have figured out something that
Washington has not figured out by keeping those costs down, so
we may have to have you back.
But I also want to direct at least one question, or two, to
other members of this panel, and in particular, I know that
this issue of health care is pervasive. It is in every agency
and every business. And I am just wondering if anyone else has
a point of view in terms of what you think this Congress must
do on this issue. Anyone who wants to chime in? No volunteers?
[Laughter.]
Well, we got a consensus on that.
The other question that I wanted to ask was--and if you
have comments that you want to submit in writing, that is fine.
We will try to keep them, not make them as public. But in terms
of HUD, the Community Development Block Grants, that has been
slated to be cut back. That program has been slated to be cut
back. I think it is a big mistake. It has a particularly
adverse impact on Pennsylvania in a lot of our communities, and
not just some cities. A lot of town will benefit from that. So
I would ask you if you could comment on where we are with that
proposal and what your perspective is from the administration's
point of view.
Mr. Couch. Yes, Senator, I would be glad to comment on it,
but it is really nothing that is within my purview. It falls
with the Community Planning and Development Office within HUD,
and I can certainly get to you a response in writing about
that.
The Administration's FY 2008 budget request for the CDBG
program represents the fact that difficult choices must be made
with respect to discretionary domestic spending. Nonetheless,
the Administration is seeking slightly more than $3 billion for
CDBG in FY 2008, similar to the prior fiscal year.
The Administration's FY 2008 budget also proposes several
significant reforms to the CDBG program. Enactment of the
Administration's CDBG reform proposal would replace the
existing dual formula approach with a single formula, which
better reflects existing community development needs. While
some Pennsylvania CDBG grantees would experience a funding
reduction, other grantees such as Allentown, Lancaster,
Philadelphia and Reading would see funding increases under the
revised formula when appropriation levels are held constant.
CDBG grantees would also be eligible to seek additional funding
through the proposed CDBG Challenge Fund, which would serve as
an incentive to grantees to target development resources to the
neediest neighborhoods in their communities.
I did sit in on the budget hearings last week before the
Appropriations Committee and heard the Secretary remark on the
difficult situation that we have. You know, it is a tight
budget and difficult decisions have to be made.
I know that I also overheard the discussion about trying to
make the CDBG process more equitable so that formulas that may
have gotten somewhat outdated can be revisited. But I really
would defer to the Assistant Secretary for CPD on that
question.
Senator Casey. I would ask if you would make sure you
submit an answer to that question.
Mr. Couch. I will make sure she does.
Senator Casey. And, Mr. Mancuso, I wanted to ask you a
question about trade. We have seen our trade deficit spiral out
of control, especially in the last couple of years, and we are
forever told that trade agreements that this country has
already entered into and those that we are planning to debate
in the years ahead will solve some of our major trade problems
and the tremendous deficit that we have right now.
Upon confirmation, you will be playing a role in this, and
I want to get your sense of where we are in terms of a strategy
from this administration to lower that trade deficit.
Mr. Mancuso. Thank you, sir. Thank you, Senator.
You know, I was struck by the testimony that was given by
Ms. Herschkowitz on the plight of PRL Industries and how it
struggles, in her case, with health care, and I am sure with
other issues. But it is precisely those kinds of companies,
those kinds of stories, that kind of input that is critical, I
think, to a Government official, in my instance, should I be
confirmed as an Under Secretary, in thinking about the export
control regime specifically, but also in thinking about trade.
As I understand it from my briefings at Commerce, Commerce
has taken the position, which is the administration position,
that as these trade agreements are negotiated--which, of
course, are larger than BIS' purview--dual-use export control
regimes--that the elements of export control, having effective
export controls have been integrated into those trade
administrations.
That is the extent to which Commerce would be involved from
a trade perspective, but I would just underscore what I think
is the nub of your question, that the impacts on American
workers and jobs and companies are critically important, and
should I be confirmed, to the extent that the dual-use export
control system implicates those interests, which it does a
tremendous amount, I as Under Secretary working with the men
and women of BIS, working with our interagency colleagues,
working with industries, companies like Ms. Herschkowitz's
company, will take that into account as best we can, balancing
the equities.
Senator Casey. Thank you.
Mr. Mancuso. Thank you.
Senator Casey. Thank you, Mr. Chairman.
Senator Reed. Thank you very much, Senator Casey.
Mr. Couch, this is another question which is not under your
purview as nominee for legal counsel, but you might indicate to
Secretary Jackson that I for one--and I think I am not alone--
am concerned about the fact that in the Section 8 housing
program, it is my understanding that HUD has not yet told State
housing agencies and local housing agencies what level of
funding they are getting for fiscal year 2007 and we are
halfway through. I know there are some technical issues here,
but the faster they can notify people about what they can
expect, the better off we will be. And we will communicate in
writing to the Secretary, but you might see him sooner than he
gets the note, and let him know that is coming.
On an issue that is within your responsibilities
prospectively as the legal counsel, on April 30th HUD issued a
notice that it will no longer provide vouchers to replace each
unit of public housing that is being demolished or sold. This
is a tremendous potential loss of support for people who
desperately need it. They lose their public housing, there is
no voucher, they are sometimes literally out in the cold.
It is interesting that this proposal was made but rejected
by Congress just 2 months previously. It was not incorporated
in the continuing resolution for fiscal year 2007. So that
raises a legal issue. To what extent do you think it is wise to
essentially by policy announce a decision that was proposed for
a legislative change that was rejected, if you can follow that
tortured logic, Mr. Couch.
Mr. Couch. Senator Reed, in all honesty this is the first
time that this has come to my attention from a legal
standpoint. The Office of General Counsel, I do not believe,
was asked nor offered an opinion. But I can certainly go back
and look at it and submit to you in writing a policy stand.
Senator Reed. I understand that, you know, as someone
awaiting appointment to the job, all these details might not be
immediately available. But as you go forward, this is a
situation that happens all too often, where legislative
proposals are made, effectively rejected, and suddenly there is
an administrative policy. I would hope you would be very
sensitive to the effect that has and also whether or not it
would be your advice to do that.
Mr. Couch. Yes, sir, I will be very sensitive to that.
Senator Reed. Well, excuse me. You are currently acting, so
that you were not consulted?
Mr. Couch. No, sir, I was not.
Senator Reed. That might be another thing you could bring
up with the Secretary. Why weren't you consulted? I would think
that would call for a legal, if not opinion, at least some
informal advice about the proprietary of doing that.
Mr. Couch. Normally, yes, Senator, I think you would be
correct. In this case, I do not know what the timing was of
that particular issue. It may have preceded my involvement with
the Office of General Counsel.
Senator Reed. And let me raise another issue that is
somewhat analogous, and that is, in the 2006 Appropriations
Act, Congress directed HUD to extend moving-to-work contracts
that were expiring that year for a period of 3 additional
years. Now we understand that HUD may soon be offering all MTW
agencies 10-year contract extensions. And, again, taking those
actions seems to be contradictory to what legislatively we were
proposing. And this is an area that we very well might be
examining in the next several months in Congress.
It raises the question of what is the legal basis for the
10-year contract extension. Do you have an ability to comment
on that?
Mr. Couch. No, sir. This is, once again, an issue that I am
unaware of. To the best of my knowledge, under the legislation
there would not be a restriction in extending the contract for
a longer period of time, but I would have to go back and do the
research.
Senator Reed. Well, thank you, Mr. Couch. I have had the
opportunity to work with you and you bring a superb background
to a very challenging job. I look forward to going forward to
working with you. But, again, there is a certain sensitivity to
administrative actions that appear, at least on the surface, to
contradict the specific intent of the Congress, and we should
be sensitive to that.
Mr. Couch. I pledge to you, Chairman Reed, to be sensitive
to that issue.
Senator Reed. Thank you, Mr. Couch.
Mr. Tankersley, again, you are the first Inspector General
of the Export-Import Bank, if you are confirmed, and I am just
curious. How do you see this new role? You have really the
ability to kind of write the script, if you will.
Mr. Tankersley. It is a unique opportunity to do that. I
have taken the opportunity to, you know, read the Inspector
Generals Act, and there is a wealth of material available among
the Inspector General community. I had a chance to speak to at
least one of them about their views of how to startup an
office. The Inspector Generals have only been in business
since, I believe, 1978, so it is still within living memory of
most agencies, the work they had to do to get one in place.
The Export-Import Bank is a little bit unusual when you
look at the range of Inspector Generals. It is much closer to a
private sector financial institution than an agency that makes
regulations or distributes grants, and because it is in the
business of, you know, putting money out and bringing it back
and assisting business, my preliminary thoughts are that
something closer to what you would find in a well-run
compliance function of an international financial institution
is what will be called for. And I am expecting, if confirmed,
to approach it in that way, which would be to analyze where the
risks are in the agency, both financial fraud risks as well as
policy compliance risks, and address those constructively as
they appear, including with input from this Committee in the
areas of policy implementation, particularly that the members
and the staff are concerned about.
I have not wanted to get ahead of myself, anticipating this
hearing and the confirmation process to come, but assuming
things go well, you can expect I am going to be spending quite
a lot of time working up the learning curve and developing that
function.
Perhaps the one piece of advice I got that was the most
interesting from a fellow who is serving as a compliance
officer for an international financial institution, he said,
``Well, how many people work at the agency?'' And I said,
``About 400.'' He said, ``Well, that is a good number to have
in your compliance group.'' He emphasized that it really is the
responsibility of everybody at the agency to carry forward the
objectives of the Office of IG, and I think I am looking
forward to my role of helping them do things that they are
already doing.
Senator Reed. One of the things that strikes me about
Inspector Generals--and this comes more from my experience in
the military--is that the executive you work with is not your
client. In fact, sometimes you have to tell him or her some
very difficult facts and truths. The real client is the public,
and to maintain not only organizationally but also kind of
intellectually that separation is challenging. I am sure you
have thought about that.
Mr. Tankersley. It is something I have thought about. My
father was an auditor his entire career, very highly regarded
among his clients. I think my partners would tell you that I am
perhaps more independently minded than I need to be sometimes.
And so I think I am prepared to engage in the intellectual and
the emotional aspects of balancing that independence, and
delivering difficult news at times if that is what needs to
happen.
I will say my impression from speaking with Chairman
Lambright and with General Counsel Schweitzer is that they are
very mature, confident people, and their attitude expressed to
me is that if there is a problem, we want to be the first to
know about it and we want to be the first on the job to fix it.
And I think with that attitude, the job of the Inspector
General should be not overly difficult to implement.
Senator Reed. Thank you very much, Mr. Tankersley.
Senator Casey, if you have questions.
Senator Casey. Yes, thank you, Mr. Chairman.
I wanted to follow up on that, Mr. Tankersley, the question
of the role you play and the independence that you must
exercise. I was happy to hear what you just said. I had a
position, an elected position, in State government in
Harrisburg, Pennsylvania, by the name of Auditor General. In
some States it is called State Auditor. But that is a position
where you have to maintain independence, and I was struck by--
and I was not here for the testimony you provided initially,
but I was reading your statement where it says in part, on page
2, ``Preventing fraud, waste, and abuse and promoting economy,
effectiveness, and efficiency.'' It is music to the ears of any
auditor, but also to, I think, the public. And it is a
significant responsibility that you will take on upon
confirmation, and I know you will discharge that with the
integrity you have brought to your other work. But it is very
important because the one thing that crumbles very quickly in a
public agency or in an administration or any public office or
agency, if trust takes a hit, almost like a piece of China
dropping on the ground, you cannot recover. And I think you
have a significant responsibility that you are taking on, and I
appreciate you doing that. It is critically important.
I know we are limited on time, but I did want to move to
Mr. Nason with regard to Treasury. I was looking at your
statement as well, and at the bottom of the page 1, when you
are talking about some of the responsibilities that you would
have, you list carrying out the responsibilities relating to
financial institutions' policy, critical infrastructure
protection, and financial education. We could talk a long time
about all of those, but financial education especially in this
era not just of complex financing arrangements or in some cases
schemes, but also in the context of this predatory lending mess
and scandal that we have seen across the country about which we
need to have a lot of crackdowns, and maybe some cracked
heads--figuratively speaking, of course. But I think financial
education is going to be critically important in that dynamic
for consumers who--and it could happen to any one of us, and
those of us who talk about this cannot talk about it in a
pejorative way, that somehow there are people out there who do
not understand what they are doing and we here in Washington
have to help them. That is pejorative. This could happen to any
one of us, what we have seen.
But I want to have you talk for a couple of minutes about
what your--two parts, really. First of all, what you think your
job, your main job is upon confirmation, but specifically about
this issue of financial education.
Mr. Nason. Thank you for that question, and I share your
views about the importance of financial education. The reason
that my statement had those three segments is that those are
the direct lines that will report to me, so they are the three
formal baskets of issues that I will have to cover if confirmed
as the Assistant Secretary for Financial Institutions.
But I am very dedicated and very interested in pursuing
financial education, and although this was not part of my
specific job, right now my current job as the Deputy Assistant
Secretary one of the more rewarding experiences I had while in
my last year and a half at Treasury was on the financial
education front.
Chairman Reed, I went back to the home State of Rhode
Island, taught a class at Warrick Vets High School, and it was
part of Treasury's outreach for ``Get Smart About Credit Day.''
And so you go into a high school, and, you know, a bunch of
teenagers, and you are trying to reach out to them and talk to
them about credit card policy and debit cards. And it is hard.
It is hard to talk to teenagers about this issue, and you
wonder whether or not you are connecting, and I tried a variety
of different techniques to connect with these individuals. And
I thought I was moderately successful.
But when I came back to Washington a couple of days later,
I got a stack of letters. It turns out that the kids were
listening, and they had a lot of specific points and comments
about some of the things that we were talking about. And I
thought it was very rewarding.
So what I would like to do on financial education, if
confirmed, is two things: first, I think we need to push a
literacy agenda in the schools in education, and it needs to be
part of the things that teachers talk about; and, second, it
needs to be more part of the fabric of the workplace, because
people are busy, people are overextended. If you can get
employers to participate in financial education programs on
company time, show a commitment to it, then I think you will
have a lot of progress on those fronts.
So those are the two areas where I think financial
education would be very beneficial, and I think it would be
very helpful in terms of dealing with some of the predatory
lending practices that you referred to. And I look forward to
working with you and your staff on these issues, if confirmed.
Senator Casey. Thank you.
Senator Reed. Thank you very much, Senator Casey.
I would like to first commend Dr. Van Hanh and Ms.
Herschkowitz because they bring extraordinary experience to
this very important organization, and your work, Dr. Van Hanh,
with refugees, with issues particularly affecting the rural
communities, and then, Ms. Herschkowitz, your business acumen
and your experiences, I think will add a lot.
Let me address the same question. Given your review of NCB
activities, what would you say right now is the strength and
the weakness of the operation as you approach these tasks? Dr.
Van Hanh, which you please proceed?
Mr. Van Hanh. Senator, first of all, thank you very much
for your remark. I would like to say that the strength as far
as I see NCB is, the model that NCB offers in terms of
provision of financial resources for investment to the
communities, not only for just any single group of people, but
for very diverse communities in need, for the elderly, for
those in need of housing, education, and so on. That would be
one of the strengths by itself.
The other strength is that this banking institution has
managed to operate first-class activities and programs that
clearly have quality of services provided to the underserved.
Adding to that remark, my view is that not necessarily in
terms of weaknesses but in terms of effectively meeting the
needs of the low-income population, I would like to mention
that the low-income population here in my view would constitute
not only the low-income in any ethnic group, but it covers all
of the minorities as well as any groups that would need
financial assistance.
The problem I could see is that there is a challenge ahead
of us to look into the real needs of certain communities in
areas whereby income distribution may not be at optimum as
there is a considerable level of disparity in income, and the
access to investment capital may not be currently available to
all.
So matching the supply, which is an excellent model of
banking services by NCB, and the demand from the local folks
especially where the needs are unmet in certain communities. I
would like to see the opportunity and the challenge to bring
the two together.
Senator Reed. Thank you very much, Doctor.
And, Ms. Herschkowitz, your assessment after reviewing the
goals, objectives, and programs, the strengths and weaknesses?
Ms. Herschkowitz. Yes, what strikes me with the National
Cooperative Bank is--and I think particularly as you start
having the big-box stores and other larger commercial entities
move into communities, and you sort of see the small business
decimated, I think the big strength of NCB is the opportunity
to be able to utilize a cooperative to get small businesses to
band together not only to survive but compete against the
larger stores. I think the opportunity and probably what I
could bring to the table with my entrepreneurial background is
there is a huge opportunity to exploit this even further in
terms of it is a large-scale, untapped opportunity in my view.
They do an awful lot of business. They do millions of dollars.
But I think compared to the whole small business economy, there
is a huge opportunity there to help them to be able to compete.
Senator Reed. Thank you.
Senator Casey, do you have additional questions?
Senator Casey. Just by way of conclusion, Senator, I want
to thank you for bringing us together today for this hearing,
and thank everyone who testified today, and also to not only
wish you luck on your confirmations, but also to thank you for
your willingness to serve. It is not easy to serve in any
governmental position, and we appreciate you putting yourselves
forward and bringing your talents and your experiences to these
important offices.
Thank you very much.
Senator Reed. Thank you, Senator Casey.
Let me associate myself with your remarks, Senator, and
thank you all for your commitment to public service, your
demonstrated commitment already to public service, and for your
excellent testimony and response today.
Let me again remind you that some of my colleagues may
submit written questions, and we ask you to respond to these
questions as promptly as possible in order that we may proceed
further with your nomination. There is a certain self-interest
in responding.
The witnesses are excused, and the hearing is now
adjourned. Thank you.
[Whereupon, at 4:20 p.m., the hearing was adjourned.]
[Prepared statements and response to written questions
supplied for the record follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD
FROM MARIO MANCUSO
Q.1. Export Administration Act. Mr. Mancuso, Secretary of
Commerce Gutierrez recently submitted to Congress a proposal
for reauthorizing the Export Administration Act, which expired
in 2001 and has yet to be reauthorized. Would you describe the
importance of enacting this legislation and explain your
specific qualifications for shepherding through U.S. efforts to
improve enforcement of export controls?
A.1. Mr. Chairman, the reauthorization of the Export
Administration Act (EAA) is a top priority for Secretary
Gutierrez and, if I am confirmed, it will be a top priority for
me. I believe the reauthorization of the EAA will enhance the
Bureau of Industry and Security's (BIS) ability to perform its
core mission: to keep the most sensitive dual-use items away
from the most dangerous countries, organizations, and
individuals.
With the EAA in lapse, BIS's enforcement authority rests
upon the authorities contained in the International Emergency
Economic Powers Act and certain executive orders. This legal
foundation is not optimally suited to investigate, prosecute
and deter violations of the EAA. As I understand the
Administration's proposal, it would reauthorize the EAA for
five years, provide certain enhanced authorities to BIS
criminal investigators, and increase the criminal and
administrative penalties for those who violate our export
control laws. If confirmed, I look forward to working closely
with this Committee and the Congress to see that the EAA is
reauthorized.
In light of my extensive private sector experience as a
corporate lawyer, my recent experience as a senior national
security official, and my management and leadership experience
generally, I am well-prepared to lead BIS's efforts to
administer and enforce an efficient and effective dual-use
export control regime.
Q.2. Irregular Warfare. Mr. Mancuso, as Deputy Assistant
Secretary of Defense for Special Operations, you have overseen
the ``Irregular Warfare Roadmap,'' a strategy to apparently
enlist indigenous people overseas in certain covert counter-
terrorism operations. According to some accounts, these
operations may now be conducted without explicit concurrence
from the U.S. Chiefs of Mission in the corresponding countries.
Would you explain the justification for such a policy? Were
concerns raised by the State Department on behalf of Chiefs of
Mission at the beginning that they were left in the dark about
potentially highly controversial activities? How were concerns
by State dealt with? Wouldn't such a unilaterally pursued
strategy appear to harm inter-agency cooperation which is so
critical for U.S. foreign policy in a variety of areas,
including export controls? What are the legal ramifications of
excluding the State Department from this strategy, particularly
as it relates to our obligation to uphold and comply with
universal norms and international law?
A.2. Mr. Chairman, I would like to affirmatively state that I
believe it is essential that all organs of the U.S. government
work in as close and coordinated a way as possible to achieve
the policies our government may wish to pursue, whether those
policies relate to counterterrorism or export controls. In most
instances, our laws require it; in every case, good government
demands it. For counterterrorism operations, this close
coordination between the Departments of State and Defense is
absolutely critical, especially since these operations often
have significant political dimensions which are best assessed
by--and implicate the lawful authorities of--the Chiefs of
Mission.
Sir, I want to emphasize that there are numerous
authorities that clearly define the extent of a Chief of
Mission's legal prerogatives, including the President's Letter
of Instruction to Chiefs of Mission. In my view, any
infringement of those authorities would be highly improper and
counterproductive in the near-term (especially with respect to
our ability to execute counterterrorism operations), but also
to the long-term institutional ability of the State Department
to conduct foreign policy for our country.
In my personal experience during my tenure as Deputy
Assistant Secretary of Defense, there has always been close
coordination and consultation between the Departments of State
and Defense (and the interagency generally) on all matters,
operational or otherwise, in which my office was directly
involved. In the course of such close coordination and
consultation, there have been occasional disagreements. Such
disagreements, however, have been few in number and good faith
executive branch disagreements on complex policy questions that
were resolved in the ordinary course during the interagency
process.
With respect to export controls, I share your view that
interagency consultation is necessary. I would also
respectfully suggest that, in light of the salience of export
controls and the complexity of the global economy, similar
cooperation and consultation must extend to all stakeholders,
including industry, and to our friends and allies around the
world.
Sir, in closing I would add that that the Irregular Warfare
Roadmap (the ``Roadmap'') is a capabilities-centric document,
and does not touch upon the conduct of current operations, as
is implied by your question. Most importantly, I did not
oversee, help draft or otherwise meaningfully participate in
the Roadmap. The Roadmap was a product of the Quadrennial
Defense Review, which was overseen by the Deputy Secretary of
Defense and the most senior members of the Department of
Defense leadership. To the limited extent I was involved in the
Roadmap, it was to support the Assistant Secretary of Defense
for Special Operations and Low Intensity Conflict in
facilitating the implementation of the Roadmap's long-term
capability development recommendations, and then only as they
related to special operations forces. In September 2006, I
described the Department's vision for Irregular Warfare in my
testimony before the House Armed Services Committee. A copy of
this testimony is respectfully attached for your information.
Q.3. Enemy Combatant Status. Mr. Mancuso, you have been widely
quoted championing the Administration's ``enemy combatant''/
detainee policies. In an interview with an official Pentagon
publication, the American Forces Press Service in March 2005,
you voiced adamant objections both to abiding by the Geneva
Conventions and to granting POW status to detainees at
Guantanamo Bay. POW status is ``sort of like earning `Gold
Card' status on a credit card,'' you said, ``You have to earn
it.'' What did you mean by these comments? Would you agree that
by ratifying the Geneva Conventions, they now have the weight
of domestic law? Please explain how you interpret Common
Article 3 of the Geneva Conventions and what obligations it
imposes on the United States?
A.3. Mr. Chairman, I conducted two interviews in March 2005
with the Armed Forces Press Service, an internal Department of
Defense news service, at the request of the Department of
Defense's public affairs office. At the request of your staff,
I previously provided to your office a copy of the public
affairs guidance that I used to prepare for these interviews.
During these interviews, I was asked to describe the
government's legal framework for the war on terror. I was asked
these questions in my capacity as a non-political appointee,
GS15 government lawyer.
I used the metaphor of a ``Gold Card'' to illustrate two
aspects of the government's view of the operation of the Geneva
Conventions: (i) that formal POW status must be conferred to an
individual when certain specified criteria are met (e.g., wear
uniforms); and (ii) once these specified criteria are met,
certain rights automatically follow--over and above dignified
and humane treatment. At no time did I mean to obscure one very
important point: whether formally designated a POW or not, all
captured battlefield persons are entitled to humane and
dignified treatment.
Mr. Chairman, I am a corporate lawyer by training, not a
litigator and much less a public international law expert.
During my almost two and a half years at the Department of
Defense, I have spent the past 20 months on policy matters
relating to our special operations forces, and not the very
important legal issues you raise. Moreover, during my six and a
half months as a staff attorney in the Office of the General
Counsel of the Department of Defense from late January to mid-
August 2005, I worked on legal matters unrelated to detainees.
Detainee issues were (and still are) handled by a separate
office within the Department of Defense.
While I do not have an informed personal opinion about
either the weight of the Geneva Conventions in our domestic law
or the operation of Common Article 3, I am generally aware that
the U.S. Supreme Court recently addressed both of these issues
in the Hamdan decision. It is my understanding that these
issues have been settled as a matter of law. In any event, I
recognize these are critically important issues for our
country, and appreciate that you care a great deal about them.
Q.4. International Law. Would you explain your commitment to
promoting international norms, standards and customary law in
the implementation of U.S. foreign policy. How might upholding
such standards actually strengthen our efforts to protect U.S.
dual-use technologies from falling into the wrong hands?
A.4. Mr. Chairman, it is my belief that the U.S. should set the
example for the world by adhering to international law and
promoting the highest norms and standards of responsible global
citizenship in all of our activities, including in the conduct
of our foreign policy. I believe this approach is most
consistent with our core values as a country, is critical to
our ability to exercise national leadership on a wide variety
of matters, including export controls, and most likely to
contribute to the peace and security of our country over the
long-term.
On a professional level, I have sought to embody the same
high standards in my work as a U.S. government official. And, I
can personally attest, that in my dealings with senior
officials from allied and partner governments throughout the
world, it was their personal trust and confidence in my
judgment, integrity, and leadership that secured favorable
outcomes for our country, even from those governments which had
sharp disagreements with certain of our policies.