Thank you, Mr. Chairman.
I'd like to express my appreciation to you and to Ranking Member Sarbanes for agreeing to hold this hearing on the President's nominations to the board of the National Consumer Cooperative Bank and to the board of the Securities Investor Protection Corporation, known as SIPC. The President has indeed nominated fine individuals with diverse backgrounds.
The National Consumer Cooperative Bank plays an important role by serving as a key source of financing to cooperative endeavors which serve both the interests of the consumer and society very well. The SIPC serves a critical need in our nation by providing certain protections against losses to customers from the failure of a securities firm. This function gives a floor of protection to our securities markets and assures investors and pension holders won't be wiped out due to the failure of a securities firm.
The protections afforded by SIPC carry greater importance when the market drops and the economy struggles especially when the fundamentals of the market are under such scrutiny. While SIPC does not cover market losses, it does cover investors when a securities firm fails, especially if there were unauthorized trades made before the firm failed or if a Ponzi scheme was involved in the failure. However, many investors may be confused as to what protections SIPC affords and what conditions must be met to access them.
According to a May 2001 General Accounting Office (GAO) report investors may confuse SIPC with other financial guarantee programs, and opportunities exist to improve the disclosure of SIPC's policies. In addition, some investors who have gone through the process to receive compensation from SPIC have questioned what the SIPC appointed trustee's priorities are: the protection of investors or the protection of the SIPC fund. These are important issues, and I look forward to discussing some of them with the nominees.
Our nominees are to be thanked for their commitment to our nation in devoting some of their time to these positions. The President is to be congratulated for seeking such qualified individuals with such diverse backgrounds. Their different experiences should bring a great deal to the table when reviewing the policies they will oversee. I especially want to welcome my friend William Robert Timken, known as Tim to his friends. He is a gentleman of honor and distinction, and SIPC and investors will greatly benefit from his expertise and dedication.