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S. HRG. 109–931 NOMINATIONS OF: FREDERIC S. MISHKIN, LINDA MYSLIWY CONLIN, J. JOSEPH GRANDMAISON, EDMUND C. MOY, AND GEOFFREY S. BACINO HEARING BEFORE THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS SECOND SESSION ON NOMINATIONS OF: FREDERIC S. MISHKIN, OF NEW YORK, TO BE A MEMBER, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM LINDA MYSLIWY CONLIN, OF NEW JERSEY, TO BE FIRST VICE PRESIDENT, EXPORT-IMPORT BANK OF THE UNITED STATES J. JOSEPH GRANDMAISON, OF NEW HAMPSHIRE, TO BE A MEMBER OF THE BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES EDMUND C. MOY, OF WISCONSIN, TO BE DIRECTOR, U.S. MINT, U.S. DEPARTMENT OF THE TREASURY GEOFFREY S. BACINO, OF ILLINOIS, TO BE DIRECTOR, FEDERAL HOUSING FINANCE BOARD JULY 12, 2006 Printed for the use of the Committee on Banking, Housing, and Urban Affairs ( Available at: http: //www.access.gpo.gov /congress /senate/senate05sh.html U.S. GOVERNMENT PRINTING OFFICE WASHINGTON 36–235 PDF : 2007 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS RICHARD C. SHELBY, Alabama, Chairman ROBERT F. BENNETT, Utah PAUL S. SARBANES, Maryland WAYNE ALLARD, Colorado CHRISTOPHER J. DODD, Connecticut MICHAEL B. ENZI, Wyoming TIM JOHNSON, South Dakota CHUCK HAGEL, Nebraska JACK REED, Rhode Island RICK SANTORUM, Pennsylvania CHARLES E. SCHUMER, New York JIM BUNNING, Kentucky EVAN BAYH, Indiana MIKE CRAPO, Idaho THOMAS R. CARPER, Delaware JOHN E. SUNUNU, New Hampshire DEBBIE STABENOW, Michigan ELIZABETH DOLE, North Carolina ROBERT MENENDEZ, New Jersey MEL MARTINEZ, Florida KATHLEEN L. CASEY, Staff Director and Counsel STEVEN B. HARRIS, Democratic Staff Director and Chief Counsel PEGGY R. KUHN, Senior Financial Economist MARK A. CALABRIA, Senior Professional Staff Member ANDREW OLMEM, Counsel JOHN EAST, Legislative Assistant STEPHEN R. KROLL, Democratic Special Counsel SARAH KLINE, Democratic Counsel LEE PRICE, Democratic Chief Economist JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator GEORGE E. WHITTLE, Editor (II) VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN C O N T E N T S WEDNESDAY, JULY 12, 2006 Page Opening statement of Chairman Shelby ................................................................ Opening statements, comments, or prepared statements of: Senator Sarbanes .............................................................................................. Senator Allard ................................................................................................... Senator Dodd .................................................................................................... Senator Sununu ................................................................................................ Senator Menendez ............................................................................................ 1 3 5 6 7 8 NOMINEES Frederic S. Mishkin, of New York, to be a Member of the Federal Reserve System ................................................................................................................... Biograpical sketch of nominee ......................................................................... Response to written questions of Senator Bunning ....................................... Linda Mysliwy Conlin, of New Jersey, to be First Vice President, the ExportImport Bank of the United States ...................................................................... Prepared statement .......................................................................................... Biograpical sketch of nominee ......................................................................... J. Joseph Grandmaison, of New Hampshire, to be a Member of the Board of Directors of the Export-Import Bank of the United States .......................... Biograpical sketch of nominee ......................................................................... Edmund C. Moy, of Wisconsin, to be Director, the U.S. Mint, U.S. Department of the Treasury ..................................................................................................... Prepared statement .......................................................................................... Biograpical sketch of nominee ......................................................................... Geoffrey S. Bacino, of Illinois, to be a Director of the Federal Housing Finance Board ..................................................................................................................... Biograpical sketch of nominee ......................................................................... 9 27 87 10 51 52 11 60 12 59 71 13 79 (III) VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN NOMINATIONS OF: FREDERIC S. MISHKIN, OF NEW YORK, TO BE A MEMBER OF THE FEDERAL RESERVE SYSTEM LINDA MYSLIWY CONLIN, OF NEW JERSEY, TO BE FIRST VICE PRESIDENT J. JOSEPH GRANDMAISON, OF NEW HAMPSHIRE, TO BE A MEMBER OF THE BOARD OF DIRECTORS OF THE EXPORT-IMPORT BANK OF THE UNITED STATES EDMUND C. MOY, OF WISCONSIN, TO BE DIRECTOR, THE U.S. MINT U.S. DEPARTMENT OF THE TREASURY AND GEOFFREY S. BACINO, OF ILLINOIS, TO BE A DIRECTOR OF THE FEDERAL HOUSING FINANCE BOARD WEDNESDAY, JULY 12, 2006 U.S. SENATE, URBAN AFFAIRS, Washington, DC. The Committee met at 10:40 a.m., in room SD–538, Dirksen Senate Office Building, Senator Richard Shelby (Chairman of the Committee) presiding. COMMITTEE ON BANKING, HOUSING, AND OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY Chairman SHELBY. The hearing will come to order. This morning, we will consider several nominations. I appreciate the willingness of the nominees to appear before the Committee this morning. This panel of nominees, if confirmed, will have important responsibilities for overseeing our Nation’s financial institutions, payments systems, housing and community development finance, and export trade financing. Our first nominee is Frederic Mishkin, of New York, who was nominated to serve as a Member of the Board of Governors of the Federal Reserve System. If confirmed by the Senate, Mr. Mishkin would fill the seat vacated by Roger Ferguson in April and serve the remainder of the 14-year term expiring in January 2014. Dr. Mishkin has served the Federal Reserve System in several capacities. From 1994 to 1997, he headed the Research Department of (1) VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 2 the Federal Reserve Bank of New York and has served as a consultant. He was also an economist with the Board of Governors early in his career. Currently, Dr. Mishkin is the Alfred Lerner Professor of Banking and Financial Institutions at the Graduate School of Business, Columbia University, as well as a Research Associate at the National Bureau of Economic Research; a Senior Fellow at the FDIC Center for Banking Research, too. Dr. Mishkin has extensive experience with central banks around the globe, having held positions with the Ministry of Finance in Japan, the Reserve Bank of Australia, the Financial Supervisory Service of South Korea, the Bank of England, the International Monetary Fund, and the World Bank. Since receiving his Ph.D. from the Massachusetts Institute of Technology in 1976, Dr. Mishkin has taught at the University of Chicago, Northwestern University, Princeton University, and Columbia University, with which he has been affiliated since 1983. Dr. Mishkin’s research focuses on the effects of monetary policy on financial markets and the economy, a particularly useful area of expertise for a Governor at the Federal Reserve. A few years ago, Dr. Mishkin wrote ‘‘Inflation Targeting: Lessons from the International Experience’’ with Chairman Bernanke, who now serves as the Chairman of the Fed, as we know. We also have two nominees with us this morning who have been nominated to very important positions outside the Fed, the U.S. Export-Import Bank: Ms. Linda Mysliwy Conlin, of New Jersey, who has been nominated to serve as First Vice President of the Bank; and Joseph Grandmaison, of New Hampshire, who has been nominated to the Bank’s Board of Directors. Ms. Conlin presently serves as a Member of the Board of Directors of the Export-Import Bank, a position she has held since 2004. Prior to joining the Bank, Ms. Conlin was Assistant Secretary for Trade Development at the U.S. Department of Commerce from 2001 to 2004. She has also served as Director for Travel and Tourism at the New Jersey Commerce and Economic Growth Commission from 1994 to 1999, as Assistant Secretary for Tourism and Marketing at the U.S. Department of Commerce from 1989 to 1993, and as an Associate Director at the U.S. Information Agency from 1986 to 1989. Ms. Conlin holds an undergraduate degrees from the University of Massachusetts and completed graduate studies at Indiana University. Mr. Joseph Grandmaison, nominated to the Board of Directors of the Export-Import Bank, previously served as Director of the ExIm Bank from 2001 to 2005. He served as Director of the U.S. Trade and Development Agency from 1993 to 2001 and as an adjunct professor at the College of Communications at Boston University. He is a graduate of the Kennedy School of Government at Harvard University and Burdett College. Our fourth nominee, Geoffrey Bacino, of Illinois, is President Bush’s nominee to the Federal Housing Finance Board. If confirmed, he will fill the vacant Board seat held by Franz Leichter. Mr. Bacino is currently Senior Vice President of Legislative and Regulatory Affairs at Centrix Financial, a firm specializing in the subprime auto loan market and serving more than 180 credit unions nationally. Previously, he was president of his own firm, a VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 3 law firm headquartered in Washington, DC. President Clinton nominated him to the Board of the National Credit Union Administration where he served from 2000 to 2001. He was co-founder of the National Association of State Chartered Credit Unions and served as Executive Director of the National Association of Share Insurance Corporations. He received his undergraduate degree in political science from Indiana University. Our final nominee today is Mr. Edmund C. Moy, of Wisconsin, who has been nominated to serve as Director of the U.S. Mint, one of our oldest and most venerable institutions. Mr. Moy currently serves as Special Assistant to the President for Presidential Personnel at the White House. Previously, he worked with venture capitalist firms and entrepreneurs and served on the boards of several companies and nonprofit organizations. He served in the Administration of President George H.W. Bush at the Federal Health Care Financing Administration. If confirmed, Mr. Moy will replace Henrietta Holsman Fore, whom President Bush nominated to be Under Secretary of State for Management. Mr. Moy graduated from the University of Wisconsin with a triple major in economics, international relations, and political science. I welcome all of you here this morning. Senator Sarbanes. STATEMENT OF SENATOR PAUL S. SARBANES Senator SARBANES. Thank you very much, Mr. Chairman, and I am pleased to join with you in trying to move the President’s nominees forward through the nomination process. I think just as a basic requisite, we need an efficient appointment and confirmation process so that able appointees can assume the varied responsibilities for which they have been selected, and I think this Committee over the years has had a very good record in that regard. Occasionally, we have someone we feel maybe is not up to standard, and that obviously calls for a different kind of hearing. But I am pleased to say that, looking over these papers here this morning, I am looking forward to moving these nominees ahead as promptly as we can. I hold public service in high esteem, and I congratulate all of our nominees. We appreciate their willingness to serve the country. I will be very quick because I know you want to get to them, but I just want to mention a couple of points. First of all, I want to welcome Professor Mishkin. He has had a distinguished academic career, including serving as the Research Director of the Federal Reserve Bank of New York and as a leading authority on U.S. and foreign monetary policy. He has been a consultant overseas to a number of central banks and other countries. I just want to underscore—and I may get to it in the question period if time permits—that the Fed has a dual mandate: Maximum employment and stable prices. For the last 3 months, jobs have grown at a sluggish pace, 108,000 this last month. This is in a period where we have had slower job growth than has been typical of past expansions, combined with falling real wages. The issue of inflation targeting has been raised. I do not quite know why at this particular juncture this issue has been introduced into the discussion, and Professor Mishkin has—one of the VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 4 problems with being a distinguished professor like Fred Mishkin is you have a lot of writings that people can make reference to. Chairman SHELBY. A lot of good questions. [Laughter.] Senator SARBANES. My concern, as I expressed it when we had the Bernanke hearing, is that inflation targeting carries with it, I think, the serious risk of slighting one side of the Fed’s dual mandate. I do want to observe that the mandate of the Fed is established by the Congress by statute, not by the Fed. The Fed does not have a wide-open blank check to write its own mandate. And the statute has the dual mandate in it, and I for one will keep an eye on maintaining that dual mandate. The other is that we need to discuss the Basel II capital requirements, and I think that is a major issue. Chairman SHELBY. Absolutely. I brought it up yesterday. Senator SARBANES. Actually, Basel II had the initial goal of improving incentives for banks engaging in complex financial transactions to control risk without markedly lowering capital requirements. They moved ahead on an international agreement for Basel II before a careful quantitative impact study of what implementation would mean for the required level of buying capital had been undertaken. When that study came along, called QIS–IV, it found that the Basel rules would lower the required bank capital for half of the participating U.S. institutions by at least 25 percent. One institution had a capital reduction of just shy of 50 percent. And aggregate capital declined over 15 percent. Actually, Professor Mishkin’s own research has shown the importance of capital requirements when economic hard times come along, both here and abroad, and we need to proceed in a prudent way on this Basel II. And, actually this Committee has been raising that issue time and time again. Chairman SHELBY. Absolutely. Senator SARBANES. And I think it is an important matter. I want to welcome the two nominees for the Export-Import Bank. The Bank finances U.S. exports in cases in which commercial financing might not be available or where sales might not otherwise occur in order to create U.S. jobs. That is the charge for the Bank, and I want to underscore that. Ms. Conlin is now serving as a Board Member. She has been nominated now to become Vice Chairman of the Board. She is former Assistant Secretary of the Department of Commerce for Trade Development. She has been on the Board of the Bank now for, I guess, a couple of years, if I am not mistaken. We look forward to her becoming the Vice Chair. And, of course, Joe Grandmaison is a veteran of the trade area of our policy, Director of the U.S. Trade and Development Agency, and he has been on the Board, well, from 2001 to 2005 and has now been renominated for another term. We look forward to his continued service. I hope, Mr. Chairman, we can move Mr. Grandmaison, Ms. Conlin, and Jim Lambright through pretty quickly so the Board gets—I would note there is still one vacancy on the Board, and I urge the Administration to send another nominee so we can get the Board up to full strength, particularly as we consider its reauthor- VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 5 ization, which is an issue that we have to deal with in the next few months. Mr. Moy, you have a big assignment to be the Director of the Mint. It is the largest coin manufacturer in the world, and it is a big administrative job, and so it is a real challenge, although you have done important administrative work in the past, and I know you have now been working closely with President Bush in Presidential Personnel. I do not see your nomination here to be the Director of the Mint as analogous to Dick Cheney becoming the Vice Presidential candidate. [Laughter.] He was in charge of finding the candidates, and it ended up he was the candidate. And Mr. Moy has been in charge in Presidential Personnel, and here he is nominated. Chairman SHELBY. Maybe Mr. Moy found a good candidate here. [Laughter.] He found the best candidate. We hope so. Mr. MOY. Purely coincidental. Chairman SHELBY. We hope you are the best candidate. We believe you are well-qualified. Senator SARBANES. Mr. Bacino, we welcome you before the Committee. You have serious corporate governance and risk management problems at several of the Federal Home Loan Banks. We may ask you a bit about that, if time permits, and, you know, the Federal Home Loan Banks have assets totaling almost $1 trillion. They are one of the world’s largest issuers of debt. We are concerned about some of the practices at some of the Federal Home Loan Banks, and, of course, once you go on the Board, you will have a major responsibility for that. Thank you very much, Mr. Chairman. Chairman SHELBY. Senator Allard. STATEMENT OF SENATOR WAYNE ALLARD Senator ALLARD. First of all, Mr. Chairman, I want to thank you for holding this hearing today. We have some very important nominations for consideration before us. I look forward to hearing their testimony and having the opportunity to discuss issues related to their agencies. First, I would like to welcome all of you to the Banking Committee. Dr. Mishkin, monetary policy is an important issue to this Committee, to the Senate, and to the country. You have a big job ahead of you upon confirmation, but I am sure you are aware of this already. And there are many important issues facing our economy, and I am eager to discuss a few items with you. Ms. Conlin and Mr. Grandmaison, your previous experience at the Export-Import Bank obviously makes you well-qualified to continue serving. I look forward to hearing your thoughts on the Bank’s reauthorization. I would like to take this opportunity to express my disappointment that the Bank still does not have an Inspector General. I was frustrated that although an Inspector General was authorized in 2002, Congress failed to appropriate the necessary money until last year. However, I would note that the Senate included funding in VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 6 each of those years. The appropriations bill containing the Inspector General funding was signed into law last November, 8 months ago, yet the White House has still failed to come forward with a nominee. It will become increasingly difficult to support nominees for the Export-Import Bank while the White House leaves what I consider to be an equally important position, the Inspector General, vacant. Ms. Conlin and Mr. Grandmaison, I would hope that you would use your positions to help pressure the Administration to move quickly on this critical vacancy. Mr. Bacino, we appreciate your willingness to serve on the Federal Housing Finance Board, particularly when there are a number of us that are looking forward to the day when we would actually eliminate the Board. Your point of view will be helpful to the Committee as we continue our attempts to create a new regulator for the housing GSE’s. Mr. Moy, it is nice to see you in front of the Committee as well. As you already know, Denver is proud to be the home of a Mint facility. The Denver Mint is one of only two Mints in the United States that produce coinage for circulation. I am sure that if you are confirmed, we will be working together in the future. Again, thank you, Mr. Chairman, for holding this hearing today, and I look forward to hearing from our witnesses. Chairman SHELBY. Thank you, Senator Allard. Senator Dodd. STATEMENT OF SENATOR CHRISTOPHER J. DODD Senator DODD. Mr. Chairman, I will be very brief. You, Senator Sarbanes, and Senator Allard covered the ground pretty well here. Let me congratulate all of you on being nominated and for your willingness to serve in these important positions and roles. I am particularly interested, as you know, Mr. Chairman, in the Export-Import Bank and the fact that we have had an incomplete board for too long a time, and that is putting that institution in a very precarious situation. Chairman SHELBY. You know a lot about that Board. Senator DODD. I know a lot about that Board. Truth in advertising here, my wife is a former Vice Chairman of the Board, and so I have a great familiarity with it and a great respect for it. The point that Senator Sarbanes made— Senator SARBANES. You have huge shoes to fill. [Laughter.] Senator DODD. I did not say that, Ms. Conlin. Senator Sarbanes said that. Ms. CONLIN. I understand. Senator DODD. But the role of the Bank, since its charter in 1934, in fact, it almost should be called, ‘‘the Export Bank.’’ The import side of it, I do not know why that name is even in the title. I guess originally they thought more about the import aspects of all of this. But the job creation in this country as a result, particularly with smaller businesses, I must say, going back to people like Ken Brody and others in the past who really expanded that role. Historically, in fact, there were major corporations that took advantage of it, and under new leadership over the last several years, we have watched the Bank expand its operations to really reach out VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 7 to smaller enterprises in the country that have really increased job opportunities here at home and created opportunities for the United States in these businesses overseas. And I just want to commend him. Joe has done a great job here, and I am delighted you are willing to do this again, Joe. As Paul pointed out correctly, you bring a wealth of experience to this job. You have been there a long time. You know it well. Ms. Conlin, you now have several years there as well. We are still missing one member, as Senator Sarbanes points out, and I hope the Administration would send up a nominee and, Mr. Chairman, we could move quickly on it so we would have the full five-member complement of the Board there to function and operate. But this is great news to have a quorum now that can be achieved and really give great legal authority to the decisions the Board makes and not raise questions about whether or not they are adequate. So, I commend you both, and particularly my relationship with Joe goes back a long time. I am grateful to you, Joe, for doing this again. To the other members, I am interested in your testimony and some questions will be raised appropriately, with congratulations on your willingness to serve. Thank you, Mr. Chairman. Chairman SHELBY. Senator Sununu. STATEMENT OF SENATOR JOHN E. SUNUNU Senator SUNUNU. Thank you, Mr. Chairman. I welcome all the nominees, and I do want to offer a special welcome to a good friend, Joe Grandmaison, or as his friends on the west side of Manchester would say, ‘‘Joe Grand-may-sohn.’’ We have a long friendship, although Senator Dodd is much, much older than I am. [Laughter.] Your friendship may actually go back even a little bit further. Senator DODD. He is going to learn eventually how this works. [Laughter.] Senator SUNUNU. Actually, Mr. Moy, Senator Dodd gave me what may be the best advice I have received in the Banking Committee so far, and that is, do one coin bill and do only one coin bill. [Laughter.] And I look forward to working with you on that, on the implementation of the dollar coin bill, which is now the law of the land. But Joe really is, in addition to an experienced individual along the lines described by the Chairman and Senator Sarbanes, a great public servant, and I think that needs to be emphasized, because that is the kind of individual and experience we look for in any of these Presidential appointees, going back to his National Guard service as a young man and working as a one-time alderman in the city of Nashua, and New Hampshire local politics is by far the toughest job there is. He has been a delegate to the New Hampshire Constitutional Convention, which is taken very seriously in a State like New Hampshire, and, of course, as was mentioned, his work at U.S. Trade and Development and his previous work as a Board member at the Bank all has made the people of New Hampshire very proud of the work that he has done here. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 8 He also has private sector experience, and, in particular, I think that is why he has been such a great advocate for the small and medium-sized businesses that Senator Dodd mentioned. He has been a great voice for them at the Bank. I will close by noting that my staff has indicated that 6 weeks ago Joe called at about 8 o’clock in the morning and spent an hour and a half just chatting about things the Bank and its work and his thoughts about the economy and business and how Ex-Im might continue to make a bit of a difference in that area. And that is an indication of one of two things: Either he loves my staff, or he loves the Ex-Im Bank. And my sense it is a little bit of both because my staff has really enjoyed working with him as well and with this nomination and his confirmation, and I look forward to many more years. Thank you, Mr. Chairman. Senator SARBANES. What are we to make of the fact that he called at 8 a.m. in the morning in order to have that chat? Chairman SHELBY. He is up early working for jobs. Senator SUNUNU. Well, a good sign there is that he knew my staff would be in, so that is a credit to both parties. Chairman SHELBY. Senator Menendez. STATEMENT OF SENATOR ROBERT MENENDEZ Senator MENENDEZ. Thank you, Mr. Chairman. I want to congratulate all the nominees on their nomination by the President. Mr. Bacino, I actually hope that you will have a long-term engagement. I think there is still a role for the Federal Home Loan Bank, and as I talk to bankers not only in my State but also across the country, they tell me that there is still a need for them and a real opportunity to create homeownership as part of the reality that we want for as many Americans as possible. So, I hope you have a long-term engagement. I appreciate the assignments that all of the nominees will have. I particularly want to share Senator Dodd’s comments about the Export-Import Bank, and I know we have two excellent nominees there. I hope to work with both of you, particularly from a State that is still looking to enhance the opportunity from New Jersey, to enhance the opportunity to get many more small and mid-sized businesses into this global marketplace and to enhance those who are in it already. Part of our challenge in trade as we take trade votes is to have the connection to people in their everyday lives become more and more real, and that means being able to have more and more people benefit, whether by employment or by expansion of businesses in that regard. And it makes these trade issues a lot more easy. And so we hope that as we look at a variety of new initiatives in New Jersey, creating something we call the ‘‘Liberty Corridor,’’ a place to go from idea to marketplace and do everything in between, that we will be able to work with both of you in promotion of those opportunities. We appreciate Mr. Grandmaison. When I was in the House, we often had the opportunity before the International Relations Committee, looking at some of those issues, and we appreciate your great expertise, and we are honored that a New Jerseyan has been VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 9 designated to be the First Vice President of the Bank. And, Ms. Conlin, with your background, I know it is going to further enhance the Bank’s capabilities, and we look forward to having your specific insights, as it relates to your history in New Jersey as well, be an asset. So, with that, Mr. Chairman, I look forward to being supportive, and thank you for the opportunity. Chairman SHELBY. Would all of you stand and be sworn? Hold up 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? Mr. MISHKIN. I do. Ms. CONLIN. I do. Mr. GRANDMAISON. I do. Mr. MOY. I do. Mr. BACINO. I do. Chairman SHELBY. Do you agree to appear and testify before any duly-constituted committee of the U.S. Senate? Mr. MISHKIN. I do. Ms. CONLIN. I do. Mr. GRANDMAISON. I do. Mr. MOY. I do. Mr. BACINO. I do. Chairman SHELBY. Thank you. All of your written testimony will be made part of the hearing record in its entirety, and, Dr. Mishkin, we will start with you, if you will just sum up briefly, because we have got a big panel. STATEMENT OF FREDERIC S. MISHKIN, OF NEW YORK, TO BE A MEMBER, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. MISHKIN. Chairman Shelby, Senator Sarbanes, and Members of the Committee, I am honored to have been nominated by President Bush to serve as a member of the Board of Governors of the Federal Reserve System. I thank you for the opportunity to appear today and for the expeditious scheduling of the hearing. After receiving my Bachelor of Science in Economics from MIT in 1973, I went on to earn my Ph.D. in economics from the same institution in 1976. I have been a Professor at the University of Chicago, Northwestern University, Princeton University, and, since 1983, have been a Professor at the Graduate School of Business, Columbia University. My research has focused on monetary policy and the financial system, and I am the author of more than 100 professional articles and more than 10 books on these topics. I currently as a research associate of the National Bureau of Economic Research, serve on six editorial boards of academic journals, and have been a past President of the Eastern Economic Association. In addition to my academic background, I also have substantial policy experience. From 1994 to 1997, I was an Executive Vice President and Director of Research at the Federal Reserve Bank of New York and, in that capacity, attended Federal Open Market Committee meetings on a regular basis. I continue to be a consultant to the Federal Reserve Bank of New York and currently am a member of its Economic Advisory Panel. I also have consulted for VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 10 numerous central banks throughout the world, as well as for the World Bank and the International Monetary Fund. As Members of this Committee know, Congress has assigned to the Federal Reserve considerable responsibilities, among which are: Fostering price stability while maintaining maximum sustainable employment; promoting a safe and sound banking and a stable and efficient payments system; and promoting financial literacy and fair dealing for consumers. If confirmed by the Senate, working with Chairman Bernanke and my fellow Board members, I will do my utmost to fulfill these responsibilities. I believe that my experience as a scholar whose research has focused on issues of direct concern to central banks and my prior experience within the Federal Reserve System will enable me to substantially contribute to the operations of the Federal Reserve System. I look forward to responding to your questions. Thank you very much. Chairman SHELBY. Ms. Conlin. STATEMENT OF LINDA MYSLIWY CONLIN, OF NEW JERSEY, TO BE FIRST VICE PRESIDENT, EXPORT-IMPORT BANK OF THE UNITED STATES Ms. CONLIN. Mr. Chairman, Senator Sarbanes, distinguished Members of the Committee, I am pleased to come before you today as the President’s nominee to become First Vice President of the Export-Import Bank of the United States. I appreciate the confidence that the President has placed in me, and I am grateful for another opportunity to contribute to an institution where I have had the privilege to serve these past 2 years. If confirmed, I look forward to working with the members and staff of the Committee to help sustain and increase the number of high-paying U.S. jobs by financing export transactions that otherwise would not go forward. I would like to recognize my husband, Joe, and my dear friend, Louise Wheeler, who are both with me here today, and the fine team from Ex-Im Bank. Chairman SHELBY. Do you want them to stand up? Ms. CONLIN. Stand up, please. Or a slight wave. He is so tall, a slight wave would do. [Laughter.] It was not that long ago on February 26, 2004, that I came before the Committee as the President’s nominee to be a Director of the Export-Import Bank. Since that time, I have endeavored to honor the confidence that you have placed in me and the commitment I made to you: Simply stated, to ensure that U.S. exporters have the financing tools they need to succeed in today’s highly competitive global economy. As a Board member, I have been given the responsibility of overseeing a key Congressional mandate: Increasing the Bank’s financing of environmentally beneficial goods and services, including renewable energy. We continue to make a difference in that area. ExIm Bank has supported more than $1.1 billion of U.S. exports of environmentally beneficial goods and services over the past 4 years. And in this regard, it has been personally gratifying for me to work with the Bank’s Environmental Exports Team, a group of VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 11 enthusiastic and dedicated professionals from various departments who have helped implement this program. As a former small business owner, I am also pleased to be working with the many small and medium-sized companies that make up the lion’s share of the U.S. environmental sector. These entrepreneurs serve as the backbone of the American economy, and their risk-taking fuels our free market system. I want to do everything to help them to grow. A key to that growth is Ex-Im financing that can help shoulder the risk of opening up new markets overseas. I have personally witnessed the positive results of the Bank’s expanded small business program over the past year. Assuming that the Bank is provided sufficient administrative resources going forward, I firmly believe that the Bank’s efforts focused on small businesses will continue to grow. I, therefore, welcome the opportunity to assist Acting Chairman Jim Lambright in helping these companies succeed in the global marketplace. It has also been my pleasure to work with Ex-Im’s Sub-Saharan Africa Advisory Committee and the business development team to increase financing in that region, building upon the hard work and success of my former colleague and Ex-Im Board Member-Designate, Joe Grandmaison. I am pleased to say that we are now implementing many of the Advisory Committee’s recommendations. If confirmed as First Vice President, I will use my experience both at Ex-Im Bank and in trade development at the U.S. Department of Commerce to leverage the resources of Federal agencies and industry organizations to accomplish our shared goals. I welcome the opportunity to work with Ex-Im Bank’s Chairman and executive leadership and the talented professional staff at the Bank to ensure that Ex-Im Bank’s programs and policies remain competitive. Mr. Chairman, Senator Sarbanes, Members of the Committee, I respectfully ask for your favorable consideration of my nomination, and I will be pleased to respond to your questions. Chairman SHELBY. Mr. Grandmaison. STATEMENT OF J. JOSEPH GRANDMAISON, OF NEW HAMPSHIRE, TO BE A MEMBER OF THE BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES Mr. GRANDMAISON. Mr. Chairman, Members of the Committee, I am honored to once again appear before you today as the President’s nominee to be reappointed as a member of the Board of Directors at the Export-Import Bank. I am deeply appreciative to President Bush for giving me the opportunity to continue in public service. I am also most appreciative to Majority Leader Reid, Senator Sarbanes, and Senator Dodd for their support of my renomination. I would also like to thank Senator Sununu for saying generous words about me. I was a little worried given that he mentioned he had reviewed my contributor list. [Laughter.] But as a New Hampshire Democrat, as you would expect, there happen to be a lot of Democrats that I supported. A few of them have been successful. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 12 You can be assured that, if confirmed, I will continue to serve with the same dedication, zeal, and purposefulness as I have in my previous Government service at the Bank and at the U.S. Trade and Development Agency. As we all know, what with reauthorization, this is an especially important year for the Bank. While my term ended prior to discussions having begun relative to reauthorization, be assured that I have followed the debate as well as having attended three of the Congressional hearings. I am aware of the concerns expressed by several Senators and Members of the House and, if confirmed, will reflect those concerns in my voice and in my vote. Ex-Im Bank is all about creating U.S. jobs in this ever-changing world marketplace. I welcome the opportunity to continue to work with you toward that end and ask for your support and would obviously welcome any questions you might have. Thank you. Chairman SHELBY. Mr. Moy. STATEMENT OF EDMUND C. MOY, OF WISCONSIN, TO BE DIRECTOR, U.S. MINT U.S. DEPARTMENT OF THE TREASURY Mr. MOY. Chairman Shelby, Senator Sarbanes, Members of the Committee, thank you for the opportunity to appear before you today to discuss my nomination to become the 38th Director of the U.S. Mint. Joining me today is my wife, Karen, and without her support and love and partnership, I would not be here today. So thank you. I am pleased and honored by the trust that President Bush has placed in me by asking me to serve in this important position, and I recognize that, if confirmed, I will join the ranks of those privileged to be Directors since President Washington asked David Rittenhouse to become the first Mint Director in 1792. The background that I bring I think will be extremely helpful to the Mint at this point of its history. I have 10 years as a sales and marketing and branding executive with a major corporation, 8 years working with venture capital firms, creating value. I have had Federal Government experience managing a fairly sizable staff at the Department of Health and Human Services, overseeing $7 billion of annual Federal expenditures, and being in Presidential Personnel, I certainly understand the human resources component of what I am about to do. If confirmed, there are a couple immediate priorities that I see myself focusing on. Most important is implementing the Presidential $1 Coin Act, which this Committee has approved. The second is providing information to Congress on dealing with the rising costs of producing coins, as you have read with the penny and the nickel. And, finally, reviewing and, if necessary, refining all the various business plans and operational plans that the Mint has, because some of the environment has changed since those original plans were developed. Thank you for the honor and privilege of appearing before you today. Chairman SHELBY. Thank you, sir. Mr. Bacino. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 13 STATEMENT OF GEOFFREY S. BACINO, OF ILLINOIS, TO BE DIRECTOR, FEDERAL HOUSING FINANCE BOARD Mr. BACINO. Thank you. Senator Shelby, Ranking Member Sarbanes, and Members of the Committee, I, too, want to thank you for the opportunity to appear before you today and for the expeditious scheduling of this hearing. I would also like to express my thanks to President Bush for nominating me and to Minority Leader Reid for recommending me for the position of Board member at the Federal Housing Finance Board. If confirmed, I will work to the utmost of my abilities to fulfill the responsibilities of this office. With me today, I would also like to thank my wife, Nathalie, and my oldest daughter, Evan. A major component of the American Dream has been and should continue to be homeownership. With the involvement of the Federal Home Loan Banks and the mortgage lending process, the Housing Board and its oversight of this important purchase remain an integral part of the process. Having previously served as a Federal regulator for credit unions as a Board member at the National Credit Union Administration, I understand the need for a reasonable and rational regulator. During my time at NCUA, the Board advanced a regulatory framework where ‘‘one size fits all’’ gave way to a more progressive approach that took into account the capabilities of each institution. I often equate being a good regulator with the same qualities as being a good umpire. It is not the umpire’s job to tell the manager who to start, when to change pitchers, or whether to hit and run. It is, however, the umpire’s job to decide if a ball is a ball or a strike, decide if it is fair or foul, and if a runner is out or safe. Although the umpire is not playing the game, his role is essential to ensuring the integrity of the game. And so it is with a regulator. As the Federal Home Loan Banks continue on a daily basis to uphold their mission and commitment to help meet community housing and lending needs, the integrity in that process is essential. Integrity in the safety and soundness of the Federal Home Loan Bank system, integrity in their role in the capital markets. An effective regulator helps create an environment in which that integrity is ensured. Let me conclude by saying I look forward to working with this Committee and its counterpart on the House side as we address important housing and finance issues in the years to come through the Federal Home Loan Bank system. Thank you very much. Chairman SHELBY. Thank you. I will start with you, Dr. Mishkin. Your research and writing suggests that you are a proponent of inflation targeting. What are your views on whether the FOMC should adopt an explicit inflation-targeting regime? Would you say, for example, that the Federal Reserve under Alan Greenspan implicitly practiced inflation targeting? Mr. MISHKIN. First of all, the law of the land is that the Federal Reserve has a dual mandate: Not only is it supposed to preserve price stability, but it is also supposed to get maximum employment. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 14 This is clearly what the Federal Reserve was doing under Chairman Greenspan. I think it is definitely what the Federal Reserve should be doing in the future. The benefits of inflation targeting have actually been very similar to the benefits that were pursued under the Greenspan Fed and now under Chairman Bernanke’s Federal Reserve in that the view that price stability is very critical to the economy—that you anchor inflation expectations—is, in fact, a good way to not only control inflation but also to produce maximum sustainable employment. Any decisions about what will happen in the future—that I will be participating in, that what is appropriate in terms of the form of the Federal Reserve policymaking—is something that has to be deliberated on. Moving from an academic to a policymaker means that I have to keep an open mind. And I intend to bring my expertise to help in that process. Chairman SHELBY. Doctor, given the importance of price stability, do you see any downside to the pursuit of an inflation-targeting regime? Mr. MISHKIN. There are many forms of an inflation-targeting, and, in fact, there are forms of an inflation-targeting regime that could be problematic. I have thought about this issue and discussed it in some of my research. What is very important is that if you move in a direction along these lines, you need to make sure that you do not increase output and employment fluctuations. Chairman SHELBY. During the past 10 years or so, the monetary policy process has certainly become more transparent as an increasing amount of information is now being released than in years past. Would you favor any additional specific actions to make the Fed more transparent to the public, aside from inflation targeting, which we have already discussed? And do you believe there would be a point at which transparency would be counterproductive to effective implementation of monetary policy? In other words, it seems like maybe we do not need to know everything or every move you make, at least when you make it—or before you make it. Mr. MISHKIN. Right. I share your concerns about this issue of transparency. I think there are potential improvements in transparency that the Federal Reserve System can pursue. This is actually under study at the Federal Reserve currently, and I will actively participate in that discussion, if confirmed. I am concerned that you can go too far in transparency. I have a paper that says, ‘‘Can central bank transparency go too far?’’ And the answer is sometimes yes. So there is a critical balance here. The key to transparency is that it actually helps make the Federal Reserve more accountable to the political process and to the public, but too much information can confuse. So it is an appropriate balance which is what I would seek. Chairman SHELBY. I know a lot of people will be talking to you, as we do all the Fed members, why are you raising the cost of money, interest rates, so to speak. But price stability is very important to this economy, too. It is not just low interest rates. Do you want to touch on that just a minute? Mr. MISHKIN. Yes, Senator. Chairman SHELBY. What do you mean by that? VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 15 Mr. MISHKIN. Your point is very well—— Chairman SHELBY. I know what you mean, but—— Mr. MISHKIN. Your point is very well taken. If you do not get price stability, that is when you actually get very high interest rates. And, unfortunately, we have had periods in the past where interest rates in the early 1980’s went up close to 20 percent. We do not want to return to that again, and, in fact, price stability, which has been the hallmark of Federal Reserve policymaking in recent years, has helped produce low interest rates. So a key issue here is that low interest rates are a good thing. Chairman SHELBY. Keeping inflation under control, right? Mr. MISHKIN. Keeping inflation under control is an important and critical way of producing that. Chairman SHELBY. Ms. Conlin and Mr. Grandmaison, like Senator Sarbanes. I will ask you both this: The Export-Import Bank’s impact procedures have been criticized for taking too long to complete and injecting an uncertainty about what transactions the Bank can support. What can be done to streamline the Bank’s economic impact procedures while at the same time making sure they protect U.S. businesses? Senator Sarbanes and Senator Dodd were talking about this. We are interested in jobs, creating jobs for our people, and you can play a role there. Also, do you think that the Bank’s economic impact procedures could be made more transparent so that it is easier for effective U.S. companies to have a better opportunity to comment on transactions? We will start with you, Ms. Conlin. Ms. CONLIN. Yes, Mr. Chairman, if confirmed, I certainly would welcome the opportunity to work with the Members of the Committee to increase transparency and predictability where economic impact procedures are concerned. As Ranking Member Sarbanes pointed out, our mission is to help create and sustain jobs in the United States. And we should not be providing financing or extending credit if this indeed adversely affects the U.S. economy, employment, or production. Having said that, the transactions that have come before the Board and that have involved economic impact considerations have been among the most challenging and difficult because typically they pit one set of U.S. workers against another set of U.S. workers. So, I firmly believe that we should continue our current practice of vetting these transactions, of making sure that all interested parties have a voice and are included; and at the same time, we should make sure that we consider exporters and make sure that the process is timely, is predictable, that our exporters in the process have some certainty so that their commercial relationships are not jeopardized, and so that we can make sure that our exporters and not their foreign competitors are getting those sales and supporting those jobs. Chairman SHELBY. Do you have anything to add, sir? Mr. GRANDMAISON. The only thing I would add, Senator, is that the criticism is justified, and hopefully during the past several months, given that several Senators have raised the issue that it can be handled internally at the Bank, I do agree with you that VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 16 transparency is a key to it, but also responsiveness. The fact is that we have to be more open to both sides of any particular issue and to be able to explain clearly why the Board or management of the Bank may indeed feel one way or the other. Chairman SHELBY. Thank you. Mr. Moy, I have a question for you, sir. Mr. MOY. Yes, sir. Chairman SHELBY. You mentioned that base metal prices have been rising in recent years, and this has begun to cause industry concern. As Director of the Mint, you will be the largest maker of coinage, I guess, in the world. Is that correct? Mr. MOY. That is correct. Chairman SHELBY. What impact will the rising prices of metal have on production and unit costs? And how will the Mint work to keep the cost of coinage in America efficient and cost-effective? I know Senator Allard has a Mint in Denver that he is very interested in, too. We all are because of the—go ahead, sir. Mr. MOY. Senator, that is exactly right, and the primary driver behind the increased costs of both the penny and the nickel has been the metal composition. So it is the rising cost of metals that is the primary contributor to these rising costs. What I have discovered in what little time I have had to study the Mint, they have done an outstanding job keeping all the other production costs down. That has actually had a flat trend over time. This is an area that, as I mentioned in my opening statement, I am going to spend a considerable amount of time studying and bringing options before the Congress, because I recognize Congress’ responsibility to determine not only the denominations we make, but also the metal composition of those coins. Chairman SHELBY. Senator Sarbanes. Senator SARBANES. Thank you very much, Mr. Chairman. Mr. Bacino, why don’t we start with you? The Chairman got as far as you, and then his time ran out. In recent years, the Finance Board has made several significant decisions that I think have widespread implications for the Federal Home Loan Bank System without any prior notice or the opportunity for public comment. For example, the Mortgage Partnership Finance Program and the Shared Funding Program, operated by the Chicago Bank, both of which were major departures from the banks’ traditional business of making advances, were initially simply authorized by the Board and only subsequently addressed through a formal rulemaking process. Furthermore, recently the Board allowed the Chicago Bank to issue subordinated debt, to include that debt in calculating the bank’s minimum capital ratio. Let me repeat that. It issued subordinated debt and then allowed them to include that subordinated debt in calculating the bank’s minimum capital ratio. That is unprecedented in the Federal Home Loan Bank System. This decision was also made with no notice or opportunity for public comment. So, I would just put this very basic question to you: How important is it for a regulator to seek public input, proceed in a transparent manner, when making substantive decisions of this sort that have broad implications and that represent a very sharp departure from past practice? VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 17 Mr. BACINO. Senator, I would agree that I think it is very important that anytime a regulatory agency chooses to go on any path, regardless of whether it is an extreme diversion from what they have done before or whether it is a standard regulation, I think you need input from the stakeholders. I think you need input from the members of the Bank System. And one of the things that I would work for there would be some of the stuff similar to what we did at the National Credit Union Administration, is to make sure that things went out for public comment, to make sure that there was adequate notice and that things were not done in the dead of night. I think anytime you do something like that, it raises questions, regardless of whether or not the program itself would work or not. I think you need to be able to listen to the people that have a stake in the agency. Senator SARBANES. I think that is absolutely right. I mean, the substance of the decision is complex, and people may differ on it. I happen to think that these are very risky undertakings. But at a minimum, the process should be a transparent one, and there is a whole procedure for prior notice and for public comment and so forth that was not followed in these instances. Let me ask you one other question. For the past 2 years, the Finance Board has failed to appoint any Directors to the Boards of the Federal Home Loan Banks, the so-called ‘‘public directors’’ despite the requirement in Section 7 of the Federal Home Loan Bank Act that the board make such appointments. If appointments are not made by the end of this year, the Banks will be missing more than 40 percent of their directors. It seems to me this is a very serious issue that the Finance Board should be addressing. Do you agree with that? Mr. BACINO. Yes, sir. I think this is probably going to be one of the top three or four issues, if I am fortunate enough to be confirmed, to be sitting on my desk. And I think we do need to make sure that we live up to our statutory requirements. And if we are required to make those nominations, I feel that is something that we should definitely be looking at. But if I am fortunate enough to be there, it would obviously be one of the things I would look at right away. Senator SARBANES. All right. Thank you. Mr. Moy, you have a sales and marketing background. We tried a $1 coin before just a few years ago. It did not seem to work very well. In fact, the only place you see it in is in the homes of consumers who have kept them around. Now we are going to try it again. Do you have any ideas about what went wrong before and what steps might be taken now to make it a more popular coinage? Mr. MOY. When I first considered this position of the Mint, I tried to go out to my local banking institution to get a $1 coin and found out how difficult it is for the Director nominee to even access a $1 coin. Given my background, and knowing what the Mint does, first of all, I am confident that the Mint will be able to produce a beautiful coin. It will be done on time. It will be done as efficiently as possible. And so the key here will be making Americans more aware VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 18 of the benefits of using that dollar coin, as well as to make that coin more accessible. Senator SARBANES. I have a question for the two nominees to the Ex-Im Bank. I understand the appropriators have tentatively cut $6 million from the administrative budget of the Export-Import Bank. This does not sound like a lot of money, particularly in the terms in which we deal here with the Department of Defense, the Department of Homeland Security, and so forth. But for these smaller agencies, money of this amount can really have an impact. I am told that it will lead to a cut of 10 to 15 percent in the employees at the Export-Import Bank. Is that correct? And can the Bank take that kind of cut and continue its activities? There is some concern that not enough has been done on small business, that the time framework is not tight enough, businesses want quicker answers and so forth and so on. Ms. Conlin, do you want to take that on first? You are still there. Ms. CONLIN. Senator Sarbanes, frankly I share your concern. I am deeply troubled and I am concerned about the ramifications to the operations of the Bank that this proposed reduction in our administrative budget would mean. And you have hit the nail right on the head. What this would really jeopardize is our small business effort, our small business program that Acting Chairman Lambright has dedicated so much time and effort to. We are starting to see solid results from this program. This reduction not only will it affect our ability to reach these small business exporters—and as a former small business person, you know that is near and dear to my heart—but it also will affect our ability to service these applications and requests. So, I share your concern, and I would hope that there would be consideration given to the importance of the outreach programs and small business programs at the Bank. Senator SARBANES. Well, maybe you and Mr. Lambright could visit with the appropriators, if you have not yet done so. Thank you, Mr. Chairman. Chairman SHELBY. I think Senator Sarbanes is directing some of that in a friendly way to the two of us. Senator Allard and I both are appropriators. [Laughter.] Chairman SHELBY. He is a smart man. Senator Allard, any questions? Senator ALLARD. Thank you, Mr. Chairman. I want to start my first question with Mr. Moy, and I think you are aware of the problems that we are having with some of the female employees at the Mint, and, in fact, they have filed a class complaint. And the basis for this complaint seems to be that there is a hostile environment based on gender, and there is engagement in a pattern and practice of gender discrimination and then retaliation against any woman who reports harassment claims. Specifically, one case went to the U.S. District Court in Colorado with a former female employee alleging a hostile work environment. She claims that this began with an assault and culminated in her dismissal based on gender, race, and reprisal. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 19 I would like to know what your response would be to this particular—I do not know that you can comment on the specific case if it is before a court, but what do you intend to do about the situation in Denver; and then, finally, measures that you think could be taken to prevent sexual harassment, which that seems to be a problem. Mr. MOY. Yes, Senator. First, I share your concerns with what has been going on at the Denver facility. As you mentioned, this is an ongoing case. It would be inappropriate for me to comment on the specifics of this case. But I do have some pretty strong opinions on the subject. Quite frankly, any type of sexual harassment is a repellent behavior to me. Growing up Asian American, I have been subject from time to time to racial discrimination, so I have a certain sensitivity to discrimination issues. And if confirmed as Director of the U.S. Mint, you have my commitment to do everything in my ability to make sure that discrimination does not happen at that facility, or any of our facilities. I do know that since that case, the Mint has started a program to put all the employees through a mandatory education on discrimination issues. I am fully supportive of that. I am also fully supportive of the zero tolerance policy. But, in addition, I would like you to know, sir, that if there are any accusations of discrimination, I am committed to fully investigating them, and depending on the results of that investigation, making sure appropriate action is taken. And, finally, in addition to those existing programs, I like to lead by example, and I take pride in the various management jobs that I have had in the past having no EEOC complaints, having no accusations of discrimination. And I hope to instill that esprit de corps among all the managers and employees. Senator ALLARD. I appreciate your response, and if I may be so bold as to make one suggestion, it is that you make sexual harassment awareness training regular, because you have some turnover on your employees. And I think it is a judgment call as to how often, depending on the degree of turnover that you have with your employees. But so many times in talking to people who have gone through an educational process where they become aware of what the law says and what is considered sexual harassment, they are not aware that some of the actions that may have been acceptable in past years are not acceptable in today’s environs. Mr. MOY. Sure. Senator ALLARD. And so I think a regular schedule based on what your employee turnover might be I think would be helpful, or at least look to your new employees coming in, particularly if they start moving up where people that are in charge of somebody underneath them, I think that becomes important. Mr. MOY. Senator, that is a great suggestion, and often reminders are extremely helpful in institutionalizing that behavior. Senator ALLARD. The laws have changed in that regard, and I think a lot of employers are having to deal with that particular issue and rethink their policy. I would like to now go to the Export-Import Bank, Ms. Conlin and Mr. Grandmaison. How do you view the relationship between VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 20 the Bank and the Inspector General? And how can the Inspector General help the Bank improve its performance? I would like to just hear your comments in that regard. You obviously were paying attention when I made my opening comments, and I would like to have you respond to those. Ms. CONLIN. Senator, if confirmed as First Vice President, I welcome the opportunity to work with the Inspector General nominee of the President, if confirmed by the Senate. As you know, I now serve as Chair of the Audit Committee at the Bank, so I am well aware of the importance of making sure that we have a very strong program within the Bank to address and mitigate risk, address issues of compliance, as well as issues of fraud, waste, and abuse, which would be the responsibilities of the new Inspector General. So from my perspective, I would be very supportive and would certainly welcome the nomination and confirmation of an Inspector General. Senator ALLARD. Mr. Grandmaison. Mr. GRANDMAISON. Senator, I remember when I called upon you, I guess 4 years ago, you first mentioned your specific concerns regarding an Inspector General, and you sensed my perhaps reluctance in terms of agreeing with you, but you extracted a promise from me. I promised you that if I were to be confirmed that I would do everything possible to cooperate with an Inspector General, and obviously I will meet that promise. My colleague mentioned the Audit Committee. The three nonmanaging members of the Board comprise the Audit Committee, and I must say that in the past 3 years, major changes have taken place with the support of management in terms of the independence of the Audit Committee. What will have to take place is a hand-in-glove relationship between the Audit Committee and the Inspector General to make sure that our combined efforts complement the agency’s goals. If I could just add one point on small business, my concern relative to the suggested cut in the appropriation is that the Congress this year has wisely extracted promises from the Bank relative to further prioritizing small business. And I believe Senator Sarbanes is correct that that is specifically the area that will be hit the hardest if indeed that $6 million cut becomes active. Senator ALLARD. I think you understand that the Inspector General becomes the eyes and ears of those of us in the Congress. So many of us view that as an important position to have in some of our key agencies. I have a question just for all of you. I am a strong advocate of identifying goals and objectives in a measurable fashion and then measuring outcomes, and I would like to have a response from all of you. During your tenure in these appointed positions, what key performance goals do you want to accomplish? And how will the Congress know whether you have accomplished them? It is sometimes referred to as the PART program on the administrative side. Over here it was the Government Results and Procedures Act, if I remember that correctly. So, I wonder if you would respond in that regard, all of you. We can start with Mr. Mishkin. Mr. MISHKIN. Well, consistent with the dual mandate, there are two measurable issues that you can look at; one is, how are we VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 21 doing on inflation; the other is, how are we doing on employment and economic growth. So those are fairly easy things to measure and things that I am sure everybody looks at. Senator ALLARD. Ms. Conlin. Ms. CONLIN. Senator, very simply, I would look to see that we can increase financing for U.S. exporters that would result in increasing jobs in the United States. But very specifically, I want to work with Acting Chairman Lambright to see that we can increase the financing for small and medium-sized businesses. As you know, we have a mandate from Congress to achieve 20 percent of our financing for small businesses. I do not see that as a floor and I do not see that as a ceiling. I will echo Acting Chairman Lambright’s words when he said we want to go beyond that 20 percent, if at all possible. So that is a very important performance measure. It is one that we are all dedicated to, and I would look forward to supporting it. Senator ALLARD. I would hope that you would go beyond that. I would hope that you would look at the small businesses once they got the money and see what happened to the money and, if they did, what the results were of getting that money. That is a key part, I think, of that measurement. Ms. CONLIN. I will add, if I may, Senator, that nothing has given me greater satisfaction than to talk to the businesses that have received Ex-Im financing. I recently talked with one of our environmental companies, and they said to me, ‘‘Director Conlin, without Ex-Im financing we would not have made this sale. Without Ex-Im financing we would not have been able to add the 10 to 15 jobs.’’ So, I know how important in real-life terms our financing is. Senator ALLARD. Mr. Grandmaison. Mr. GRANDMAISON. Senator, more broadly, I believe there are some issues of governance relative to the role of the Board that hopefully could be addressed in this next term. One as an example would be that, whereas the Bank has some truly exceptional professional career staff people, it should be the Board that decides what the reasonable assurance of repayment standard is when it comes to providing financing for transactions. Senator ALLARD. That is a measurement we need to have. Mr. GRANDMAISON. And without addressing that narrow issue, it is my belief there is a lot of business that we could and should be doing. The interpretation of reasonable is not absolute reassurance of repayment. The fact is we are supposed to take reasonable risk. And I would like to see us address that as a Board, and then provide that direction to the members of the professional staff. Senator ALLARD. Mr. Moy. Mr. MOY. I am fortunate that, if confirmed, the Mint is a manufacturing operation that has outstanding performance measures and metrics, and they have been operating wonderfully over the past 6 years. What I hope to do is bring some of my private equity experience where you are used to putting companies on a plan, getting them a certain amount of revenue, et cetera, sales and those types of things, applying that expertise on some of the other areas of the Mint that would benefit by having some more solid performance standards. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 22 Senator ALLARD. Mr. Bacino. Mr. BACINO. Senator, I was lucky in that, after leaving NCUA, I did a lot of strategic planning for institutions, which I think gives you an idea on making sure that you set the goals and find out if the institution meets them. I think the goals I would set for the Bank Board while I was there would be to make sure that the institutions are carrying out their lending and housing responsibilities in a safe and sound manner. In terms of the question Senator Sarbanes asked earlier, I want to make sure that we would increase transparency. And then I think you also have to take into account the stakeholders’ opinions and positions, but also understanding that, using my umpire’s analogy, at some point someone has to make a call. Senator ALLARD. Thank you, Mr. Chairman. Chairman SHELBY. Senator Sarbanes, I understand you have several questions. Senator SARBANES. Thank you. I have to depart, Mr. Chairman. I appreciate your allowing me to go out of turn. I got all the way across the table except to Mr. Mishkin. I want to put a couple of questions to him. In 1977, Congress clarified monetary policy objectives for the Federal Reserve, and the statutes says, ‘‘The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long-run growth of the monetary and credit aggregates commensurate with the economy’s long-run potential to increase production so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.’’ My first question is: How fast do you believe the long-run potential growth rate is now for the economy? Mr. MISHKIN. Senator, unfortunately, this is a very tough question to answer. Economists actually— Senator SARBANES. That is why I asked it of you. Mr. MISHKIN. I know. [Laughter.] Economists actually have a very hard time knowing what that number is. Not only is it an issue very hard to measure in real time with the data, but also we do not even know theoretically or from a modeling perspective what the right number is. Indeed, one of the problems that has sometimes faced the Federal Reserve in the past is that they picked a number and it was the wrong number. In fact, it can go both ways; you could pick a number which is too low as a growth rate, and then you actually may have the tendency to restrain growth when you should not, but also you might have a situation where you go the other direction and then lead to a lot of inflation. So, I cannot take a stand on this. I think it is actually a very tough question. I wish I could give you a better answer, but— Senator SARBANES. Well, let me take it a step further. Economists at Goldman Sachs—and we have the secretary now from Goldman Sachs—have forecast that real GDP growth will average 2.7 percent between the second quarter of this year and the end of 2007. They believe that the slowdown in housing activity and the VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 23 cash-out refinancing—ending cash-out refinancing with larger mortgages will be a sizable drag on the economy. Does that forecast sound right to you? Mr. MISHKIN. Unfortunately, at this stage I am not a forecaster. I work on many different issues. Without the base of a staff that really knows what it is doing in terms of forecasting, which I will have when I get to the Federal Reserve, if I am confirmed, I cannot really tell whether that is a good forecast. Senator SARBANES. All right. You defer on that one, too. Let me ask you, then, this question: Given this observation from Goldman Sachs and the fact that we learned last Friday that jobs have grown by only 108,000 a month for the last 3 months, do you think that the Federal Reserve should be paying more attention to the risk of the economy growing slower than its long-run potential? Mr. MISHKIN. Senator, that the Federal Reserve always has to worry about the economy potentially growing less than its long-run potential, as it also has to worry that the economy is overheating. So I think this is always part of what the Federal Reserve has to worry about, and is something that I would worry about as well. Senator SARBANES. If you were going to move down the path of having specific quantifiable targets for inflation, would you also have specific quantifiable targets for maximum employment? And if not, why not? Mr. MISHKIN. Senator, I actually would not be in favor of having a quantitative target for maximum employment or for maximum economic growth, for the reasons I mentioned earlier. I just do not think that we have enough knowledge to do that well enough so that—— Senator SARBANES. If you take that position but move ahead on specific quantifiable targets for inflation, do not you run the very real risk that you will inevitably put more weight on the inflation mandate rather than the employment mandate? That will become the focus of attention. Those numbers will be what attracts attention. That is what the entire focus will be on. Mr. MISHKIN. I share your—— Senator SARBANES. Or close to the entire focus. Mr. MISHKIN. I share your concern that you do not want to focus on inflation because you have some quantitative measure of what you would like to do in the long-run and then forget about employment and output fluctuations. Indeed, there certainly are cases where you have an economy that is much too slack and should do something about it. You should never forget about that, and so the sole focus on inflation would be a problem. But a well-designed system—I do not actually think the word ‘‘target’’ is a good word for what we should be doing in terms of the Federal Reserve—with more explicit goals should always worry about the fact that output fluctuations and employment fluctuations are important. Senator SARBANES. Well, with the current uncertainty that seems to be prevailing and with the volatility that seems to follow the statements of leading figures at the Federal Reserve, it might just be better to leave these issues to the side, it seems to me. I just throw that out as hopefully a helpful piece of advice. Mr. MISHKIN. I understand your point. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 24 Senator SARBANES. What is your view about Basel II? I know the Chairman may follow up on that, but—— Mr. MISHKIN. Well, I think that the key issue—which is something that I have found in my research—is how important it is to have sufficient capital in the banking system in promoting economic health, not just for the banking system but for the economy as a whole. The fact that the banking system has been so well capitalized was actually a tremendous help during the recession that we just had recently, which was milder than it would have otherwise been. A key issue in terms of Basel II, of course, is that you want to—— Senator SARBANES. Did you follow that QIS–IV study? Mr. MISHKIN. I have not actually spent much time on it, but I am certainly aware of the QIS–IV study. One of the concerns that that study has raised is that under the Basel II measures, as currently put in place, it would, in fact, mean a large reduction in required capital. That would be something that would concern me, that we—— Senator SARBANES. What concerns me is how did we get so far down the path in negotiating a framework internationally with respect to Basel II that when it was tested out with this study, it produced results, and everyone says, ‘‘Oh, my God, those aren’t the results’’—you have just said it yourself at the table. Those are not the results we want. Chairman SHELBY. Yet you are still going down that road. Senator SARBANES. Yes. So you have questioned the substance of it, but I am raising—I mean, you were not there—but I am raising an earlier question, and that is, how did we ever get that far down the path? Because now I understand that the Europeans and the Japanese are saying to us, ‘‘Well, you cannot pull out now. You brought us down this path, and we want to go through with it’’— even though the study shows substantial problems. Mr. MISHKIN. I have not been involved with the Basel II process and it is an extremely complicated. What I can assure you of is that I am very interested in the Basel II process and have always been very interested in issues of bank regulation and whether there is enough capital in the banking system. If I am confirmed, it is certainly something that I will want to study at the Federal Reserve. I want to make sure that the key idea in that, in fact, we do not want banks to be taking excessive risk and want to make sure that there is enough capital in the banking system so they have a cushion against bad shocks. Senator SARBANES. I will close with this observation. Thank you, Mr. Chairman. I think there is a tendency at the Federal Reserve Board. They all see monetary policy as a major charge, and they are all involved in the monetary policy decisions. Of course, they are all on the Open Market Committee, supplemented by a certain number of the Federal Reserve regional banks. The other areas of responsibility that the Fed has, which are quite extensive—I mean, very significant regulatory responsibilities in the banking area, and this Basel II is an example of that. They have important consumer protection responsibilities. My perception is there is a tendency at the Bank to assign that to one or maybe VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 25 two of the Governors, and instead of all of the Governors being involved in the decision—I understand why you do that given the workload and everything, but it seems to me this Basel II issue has risen to the level that it requires the close attention of all of the members of the Federal Reserve Board. Thank you very much. Chairman SHELBY. I just want to pick up on what Senator Sarbanes said. We will hold a hearing again on Basel II. There is deep concern on the House Financial Services Committee, too, regarding this. And one of my concerns—and I have been on this Committee a long time. Not as long as Senator Sarbanes, but we have been through the bailout of the thrifts, and if you lower the capital so thin you have a downturn or something, you are not only a member of the Fed, but you also are a bank regulator there, too. We do not want that to happen. We have a pretty good banking system in this country. We have not had a lot of bank failures, thank God, lately. But you never know what the future is going to be. But capital is important, I believe. Isn’t it, Doctor? Mr. MISHKIN. I definitely think that capital is extremely important. Chairman SHELBY. I hope you will—and you will go on the Fed— I believe, I am confident of that—soon. But I hope you will look at that very closely because it is very important. Mr. MISHKIN. I definitely will, Senator. Chairman SHELBY. Mr. Moy, I have a question. Going back to the coin and the dollar coin, and, you know, people pushed for that and said, My God, this is a panacea that the American people want a dollar coin and everything. You know, we are familiar with the British pound, which is worth a little more, and it is heavy. But we are used to it, and when we travel there, the British are used to it. They like it, the euro coin. What is it? Are the American people adverse to the dollar coin? What is the aversion there? What is it? Because that is something you will have to deal with. Mr. MOY. Yes, and I am beginning to look into that and finding out that there is probably a wide variety of reasons why the coin was not adopted. But sentiments change over time. Chairman SHELBY. Sure. Mr. MOY. And I am very interested in finding out what current attitudes are, and one of the things that was part of the Presidential Coin Act of 2005 was to set up some of these dollar coin forums. The Mint has just had its first one, and I think that has gotten some pretty helpful information. And if confirmed, I will be attending these as they progress. With that additional information, I think we will have a better bead on what is going to make this coin more successful. But I am very confident that there needs to be more awareness by Americans on the benefits of using the dollar coin, which I think is a very appropriate role for the Mint to take. Chairman SHELBY. Do people use the half-dollar like they used to? I see quarters everywhere. I do not see many half-dollars. Mr. MOY. If I see a half-dollar, I collect it. [Laughter.] Chairman SHELBY. Do you know? VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 26 Mr. MOY. Yes, I do not know how widespread the use of the 50cent piece is. Chairman SHELBY. You do not see it every day. You change something, it is quarters, very seldom a half-dollar. I just wondered. Mr. MOY. Very seldom. And I know that in the rare instances I have come across a Sacagawea dollar, instead of using it I keep it. Chairman SHELBY. Sure. Mr. MOY. Yes, because it is kind of a collector’s item. But I think with proper awareness and education, some of those sentiments can change. Chairman SHELBY. Have any studies been done that you know of as to people’s concern with the weight of the dollar? Mr. MOY. Yes. Chairman SHELBY. In other words, for women, if your pockets are weighted down if you have too many of them, as opposed to something—go back again to the pound. It is not a light coin. Mr. MOY. No, not a light one, and the pound has been very useful. It always works when you stick it in the Underground machines to get your tickets. And so, yes, there are a lot of benefits. I am pretty bullish on coins, especially the dollar. And I am anxious to get to work, if confirmed, to make some impact there. Chairman SHELBY. Sure. Well, we thank all of you for your appearance here today. We will try to move all of your nominations as expeditiously as possible, and we appreciate your willingness to serve. We know the President has a lot of confidence in all of you. Thank you. The hearing is adjourned. [Whereupon, at 12:02 p.m., the hearing was adjourned.] [Prepared statements, biographical skecthes of nominees, and response to written questions supplied for the record follow:] VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00031 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-1.eps 27 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00032 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-2.eps 28 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00033 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-3.eps 29 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00034 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-4.eps 30 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00035 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-5.eps 31 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00036 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-6.eps 32 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00037 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-7.eps 33 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00038 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-8.eps 34 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00039 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-9.eps 35 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00040 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-10.eps 36 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00041 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-11.eps 37 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00042 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-12.eps 38 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00043 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-13.eps 39 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00044 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-14.eps 40 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00045 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-15.eps 41 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00046 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-16.eps 42 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00047 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-17.eps 43 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00048 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-18.eps 44 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00049 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-19.eps 45 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00050 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-20.eps 46 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00051 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-21.eps 47 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00052 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-22.eps 48 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00053 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-23.eps 49 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00054 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-24.eps 50 51 PREPARED STATEMENT OF LINDA MYSLIWY CONLIN FIRST VICE PRESIDENT-DESIGNATE EXPORT-IMPORT BANK OF THE UNITED STATES JULY 12, 2006 Mr. Chairman, Senator Sarbanes, and distinguished Members of the Committee, I am pleased to come before you today as the President’s nominee to become First Vice President of the Export-Import Bank of the United States. I appreciate the confidence the President has placed in me and I am grateful for another opportunity to contribute to an institution where I have had the privilege to serve these past 2 years. If confirmed, I look forward to continuing to work with the members and staff of this Committee to help sustain and increase the number of high-paying U.S. jobs by financing export transactions that otherwise would not go forward. I would like to recognize my husband, Joe, and my dear friend, Louise Wheeler, who are with me here today, and the fine team from the Ex-Im Bank. I would like to acknowledge as well the colleagues from our sister U.S. Government agencies and the industry association representatives here today. Their cooperation and support have meant so much during my tenure as a Member of the Board at Ex-Im Bank. On February 26, 2004, I came before the Committee as the President’s nominee to be a Director at the Export-Import Bank. Since then, I have endeavored to honor the confidence that you placed in me and the commitment I made to you: Simply stated, to ensure that U.S. exporters have the financing tools they need to succeed in today’s highly competitive global economy. As a Board Member, I have been given the responsibility of overseeing a key Congressional mandate: Increasing the Bank’s financing of environmentally beneficial goods and services, including renewable energy. We continue to make a difference in this area. Ex-Im Bank has supported more than $1.1 billion of U.S. exports of environmentally beneficial goods and services over the past 4 years. In this regard, it has been personally gratifying for me to work with the Bank’s Environmental Exports Team, a group of enthusiastic and dedicated professionals from various departments who have helped implement this program. As a result, Ex-Im financing is supporting high-quality jobs in the United States, while enabling international buyers to access U.S. technology to address important global environmental needs. As a former small business owner, I am also pleased to be working with the many small and medium-sized companies that make up the lion’s share of the U.S. environmental sector. These entrepreneurs serve as the backbone of the American economy and their risk-taking fuels our free market system. I want to do everything I can to help them grow. A key to that growth is Ex-Im financing that can help shoulder the risk of opening up new markets overseas. I have personally witnessed the positive results of the Bank’s expanded small business program over the past year. Assuming the Bank is provided sufficient administrative resources going forward, I firmly believe that the Bank’s efforts focused on small businesses will continue to grow. I, therefore, welcome the opportunity to assist Acting Chairman Jim Lambright in helping these companies succeed in the global marketplace. It has also been my pleasure to work with Ex-Im’s Sub-Saharan Africa Advisory Committee and business development team to increase financing in that region, building upon the hard work and success of my former colleague and Ex-Im Bank Board Member-Designate, Joe Grandmaison. I am pleased to say that Ex-Im Bank is implementing many of the Advisory Committee’s recommendations, including strategies to expand cooperation with leading African banks and to build business in the important Gulf of Guinea region. If confirmed as First Vice President, I will use my experience both at Ex-Im Bank and in trade development at the U.S. Department of Commerce to leverage the resources of Federal agencies and industry organizations to accomplish our shared goals. I welcome the opportunity to work with Ex-Im Bank’s Chairman and executive leadership to ensure that Ex-Im Bank’s programs and policies remain competitive. I would look forward to engaging the energy and good ideas of the Bank’s bipartisan Board, the talent and innovation of the dedicated professional staff, as well as the experience and customer knowledge from Ex-Im Bank’s many important stakeholders in the exporting community. Mr. Chairman, Senator Sarbanes, and Members of the Committee, I respectfully ask for your favorable consideration of my nomination and will be pleased to respond to your questions. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00055 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00056 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-25.eps 52 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00057 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-26.eps 53 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00058 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-27.eps 54 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00059 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-28.eps 55 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00060 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-29.eps 56 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00061 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-30.eps 57 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00062 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-31.eps 58 59 PREPARED STATEMENT OF EDMUND C. MOY DIRECTOR-DESIGNATE, U.S. MINT U.S. DEPARTMENT OF THE TREASURY JULY 12, 2006 Chairman Shelby, Ranking Member Sarbanes and Members of the Committee on Banking, Housing, and Urban Affairs, thank you for this honor and opportunity to appear before you today to discuss my nomination to become the 38th Director of the U.S. Mint. Joining me today is my wife, Karen. To many Americans and me, the U.S. Mint represents the best of America. I respect its place in our history. I appreciate the beauty and artistry of its coins. I value its role in facilitating commerce, and I have learned about our collective culture through its designs on the Nation’s coinage. I am pleased and honored by the trust President Bush has placed in me by asking me to serve in this important position, joining the ranks of those privileged to serve as Directors since President Washington asked David Rittenhouse to serve as the first Director of the Mint in 1792. If confirmed, I look forward to working closely with this Committee and Congress on all the policy and legislative issues that will determine the course for American coinage now and in the future. The U.S. Mint applies world-class business practices in making, selling, and protecting our Nation’s coinage and assets. I am committed to this mission statement and the 2,000 men and women of the U.S. Mint who work to implement the practices that fulfill the requirements of Congress and the country to produce approximately 15 billion coins annually. These coins are distributed to the Federal Reserve banks and branches for commerce and trade; The U.S. Mint also maintains the physical custody and security of the Nation’s more than $100 billion in gold and silver assets. And finally, it produces numismatic coins, medals, gold, silver, and platinum bullion coins for the general public to collect. I value public service and, if confirmed, I will bring to bear all the experience I have earned through my career in management, marketing, and human resources both in the private sector and government. These are essential areas for the U.S. Mint which also shares characteristics of both a business and governmental organization, operated for the benefit of the public, with revenues approaching $2 billion. I have spent 10 years as a sales and marketing executive, 8 years working with venture capital firms and entrepreneurs, and 4 years overseeing $7 billion in annual Federal Government expenditures for managed health care programs with the Department of Health and Human Services. I am familiar with the demands of being an officer and director, having served in those capacities at several companies and nonprofits. Most recently, I have been honored to serve the President of the United States in a human resources capacity as a Member of the Office of Presidential Personnel. I have worked closely with many members of the cabinet and independent agencies to understand the results they desire, recruiting the Nation’s best and brightest to attain those results, and then making recommendations to the President for those who may serve as appointees. I understand the responsibility appointees have to the President, and their accountability to Congress and the American people to be good stewards of the public’s trust and resources. I am confident that my experience and qualifications will contribute to the continuing success of the U.S. Mint. If confirmed, I see some immediate responsibilities and challenges before me. Implementing the ‘‘Presidential $1 Dollar Coin Act of 2005,’’ which this Committee approved, is a major operational focus for the U.S. Mint that is well under way. As directed by that legislation, the U.S. Mint has, and will continue, to work with those who can influence and encourage the greater use and acceptance of dollar coins in American commerce. The rising cost of metals used in coin production is prompting some needed analysis and consideration of the impact of that trend on all denominations of coins, especially the penny and nickel. Public preferences and priorities on this subject will loom large, and the U.S. Mint will need to provide technical and manufacturing considerations to Congress, the Administration, and others who are evaluating the future course of coinage. Reviewing, refining if necessary, and implementing the U.S. Mint’s business, management, operational, and strategic plans, executing the President’s Management Agenda, and providing effective leadership, are priorities for me should I be confirmed. Thank you for the honor and privilege to appear before you today. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00063 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00064 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-32.eps 60 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00065 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-33.eps 61 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00066 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-34.eps 62 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00067 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-35.eps 63 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00068 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-36.eps 64 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00069 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-37.eps 65 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00070 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-38.eps 66 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00071 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-39.eps 67 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00072 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-40.eps 68 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00073 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-41.eps 69 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00074 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-42.eps 70 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00075 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-43.eps 71 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00076 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-44.eps 72 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00077 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-45.eps 73 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00078 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-46.eps 74 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00079 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-47.eps 75 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00080 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-48.eps 76 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00081 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-50.eps 77 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00082 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-51.eps 78 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00083 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-52.eps 79 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00084 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-53.eps 80 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00085 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-54.eps 81 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00086 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-55.eps 82 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00087 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-56.eps 83 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00088 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-57.eps 84 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00089 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-58.eps 85 VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00090 Fmt 6621 Sfmt 6621 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN jul12-59.eps 86 87 RESPONSE TO WRITTEN QUESTIONS OF SENATOR BUNNING FROM FREDERIC S. MISHKIN Q.1. What is the appropriate inflation-targeting method for the Federal Reserve? A.1. The form of inflation targeting that I advocated in the past as an academic is flexible rather than rigid or mechanical, forwardlooking and forecast-oriented rather than backward-looking, and should be fully sensitive to the dual mandate of the Federal Reserve to promote maximum sustainable employment as well as price stability. A hallmark of the approach that I have advocated is clear communication of the objectives, strategies, and outlook of the Federal Reserve to better inform the public and markets and increase the accountability of the Federal Reserve. However, my past experience as a policymaker has taught me that moving from academia to the policymaking world often necessitates a modification of views to better deal with practical considerations. Thus, I expect that there will be some evolution of my thinking once I become a Member of the Board of Governors, if I am confirmed by the Senate. I am certain that these issues will be an important focus of discussion and debate among the members of the FOMC in coming months and years, and I look forward to participating in that process, should I be confirmed. Q.2. Are there differences between your views on inflation-targeting and those of Chairman Bernanke? A.2. I have not spoken with Chairman Bernanke about his views on inflation-targeting since he became the Chairman. As my views, and I am sure his, have evolved since we wrote together on this topic, I would suspect that we would have our differences. However, because I do not know what these differences might be, I do not have a clear-cut answer to this question. Q.3. What factors or indicators do you look at when assessing inflation? Which are most important? A.3. In recent years, I have not focused intensely on inflation forecasting, but I can give you a few indications based on my observation of central banks around the world. In general, it seems to me the best approach is quite eclectic and relies on regular inspection of a broad range of indicators. Among these would be the prices of labor, commodities and materials, and other inputs into the production process; indicators of the pressures on productive resources such as the unemployment rate and the rate of capacity utilization; indicators of foreign activity and contributions to domestic inflation such as foreign rates of GDP growth, exchanges rates, and price indexes for imports; productivity growth; and a variety of measures of inflation expectations including both survey-based measures of short- and long-term expectations as well as measures of inflation compensation implicit in the relative prices of nominal and inflation-protected Treasury securities. The most important indicator of the success of a central bank is the performance of inflation itself; for that variable, a central bank must, over the long-term, be held accountable. Q.4. From your experience, do you believe that the statements and minutes released to the public accurately reflect the debates that VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00091 Fmt 6602 Sfmt 6602 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN 88 take place within the Federal Reserve when considering monetary policy decisions? A.4. I am able to give only a qualified answer to this question. I have not attended FOMC meetings for nearly a decade (that is, in the period since I resigned my position as Research Director at the Federal Reserve Bank of New York), and consequently do not have direct knowledge of the proceedings of such meetings over that interval. Moreover, I have not reviewed the minutes of the FOMC meetings for the period during the mid-1990’s in which I attended FOMC meetings. Finally, the Federal Reserve followed significantly different practices regarding its post-meeting announcements in the period during which I attended the meetings than it does at present. That said, my impression based on my experience during that interval and more generally is that the statements and minutes accurately reflect the monetary policy discussion at FOMC meetings. Q.5. The Fed has a bad track record of going too far on interest rates, most recently in 2000. What are the implications if the Fed gets it wrong this time? What will happen if the Fed overshoots or undershoots, and do you think either are a possibility in the current cycle of tightening? A.5. Monetary policy influences the economy and inflation with long lags, and consequently monetary policy must be made on the basis of forecasts. Such forecasts are always subject to considerable error. Consequently, policy ‘‘undershooting’’ or ‘‘overshooting’’ is always a possibility. For that reason, the Federal Reserve needs to monitor carefully incoming information that affects the outlook for the economy and inflation. When incoming information suggests a different outlook than had been anticipated, the Federal Reserve needs to adjust the stance of monetary policy accordingly in order to achieve a reasonable balance of risks to the attainment of its statutory objectives of maximum employment and price stability. If confirmed by the Senate, I will do my utmost to help in the Federal Reserve’s deliberations and make it less likely that the Fed will overshoot or undershoot in its setting of interest rates. VerDate 0ct 09 2002 16:33 Jul 06, 2007 Jkt 000000 PO 00000 Frm 00092 Fmt 6602 Sfmt 6602 S:\DOCS\36235.TXT SBANK4 PsN: KEVIN
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