Mr. Chairman, Senator Sarbanes and Members of the Committee, I am honored to appear before you as President Clinton's nominee to head the Office of Thrift Supervision. I want to thank you for holding this hearing. I also want to thank President Clinton and Secretary Rubin for their Confidence in me; my family -- my husband Walt Slocombe and my son Will Slocombe -- for their support and patience; and Nic Retsinas, Jonathan Fiechter and the staff at the Office of Thrift Supervision for their hard work and good spirits. And I want to thank the Committee's staff director, Howard Menell. for reminding me of our years together at New Rochelle High School.
Mr. Chairman, the prospect of serving as the Director of OTS is humbling and exciting. As I spoke to many Committee members during my courtesy calls, I was inevitably asked "why do you want this job?' Quite simply, I think it is one of the best public service jobs in Washington today.
These are dynamic times in the financial services industry, and OTS and the institutions it regulates are playing an important part in the industry's evolution. As you know, the country's first internet 'bank" was a thrift, and new companies are entering the thrift industry, even as consolidation continues to reduce the total number of institutions supervised by OTS. At the same time, thrifts continue their critical role as home mortgage lenders, with residential whole loans comprising well over 50% of the industry's assets, and traditional home lenders leading the industry in profitability.
These have been good years for the thrift industry, but OTS's primary responsibility must always be to make certain that the industry continues to be safe and sound, no matter what the economic conditions. Depositors and taxpayers are counting on OTS to understand what the risks are, to establish sound and sensible rules, and to make certain those rules are followed. In contrast to thrift regulation of the 1980s, OTS has the statutory and regulatory tools, the resources, and the public and political support to accomplish this mission. My responsibility, if confirmed, will be to support and enhance what has been accomplished, both leading and backing the agency's staff as they take sometimes difficult actions.
OTS must also encourage the institutions it supervises to meet their responsibilities to make certain financial services - including loans -- are available on a fair and equitable basis in all communities the institutions serve. This is not only good for consumers and communities, it is good for business. As has become clear over these last several years, if communities have access to capital and are part of the financial mainstream, economic development follows, as do jobs and profits for the businesses serving those communities.
The challenges for the industry, and thus for OTS, are many, but what makes the prospect of leading the agency exciting is that each challenge brings opportunities. Homogenization of different types of financial services and consolidation in financial services can bring increased access to capital and the advantages of greater scale, particularly in development and deployment of new products and the best new technology. But these trends challenge management and morale. They challenge institutions to continue to effectively serve their customers and their communities. And they challenge regulators to fully understand and effectively supervise a broader array of activities and of risks.
Technology, too, is the source of opportunities and challenges. Technology not only provides better tools for understanding the business but also the ability to serve customers in new ways and more efficiently. But technology's challenges are legion: preparing for the year 2000; protecting the security and privacy of institutions' systems and customers' accounts; understanding the tools so that management and regulators can use, them rather than becoming trapped in a world of black boxes; and finally, making the benefits of technology available to all. That means being careful that credit scoring tools, which can clearly enhance productivity, are used to free up underwriters to analyze applications that don't fit the scoring systems precisely, rather than to restrict access to credit. And it means enhancing, not restricting, access to ATMs and electronic banking as those technologies become more and more prevalent.
And, finally, there is the challenge of the changing legal structure. One cannot be nominated to be the Director of OTS without being aware that people have been talking about abolishing OTS virtually since it was founded. The office needs full-time leadership and direction so it can be part of determining its future and that of the thrift industry, and to implement that future, whatever it may be. in a manner that protects depositors, the insurance funds and taxpayers, and is sensitive and responsive to the needs of employees.
Mr. Chairman, Senator Sarbanes and Members of the Committee, thank you for consideration of my
nomination. If confirmed, I look forward to working with you to meet the challenges of this new era.
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