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Senate Banking Committee CFIUS Nomination Hearing

Senate Banking Committee

Committee on Foreign Investments in the United States (CFIUS) Nomination Hearing

Wednesday, April 6, 2022

Topline

  • Questioning focused on the balance between protecting U.S. capital from foreign threats while remaining open to benign investments.
  • The hearing was generally amicable towards both nominees.

Witnesses

  • Ventris C. Gibson, Director of The Mint Designate, Department of the Treasury
  • Paul M. Rosen, Assistant Secretary of The Treasury for Investment Security Designate, Department of the Treasury

Opening Statements
Chairman Sherrod Brown (D-Ohio)

In his opening statement, Brown said the Assistant Secretary of the Treasury for Investment Security is an important national security position. He commended Rosen’s experience and shared bipartisan letters supporting his confirmation.

Ranking Member Patrick J. Toomey (R-Pa.)

In his opening statement, Toomey juxtaposed foreign direct investment (FDI) as an asset to the U.S. economy but also as a known tool for foreign adversaries to access technology and undermine U.S. companies.

Testimony
Ms. Ventris C. Gibson, Director of The Mint Designate, Department of the Treasury

In her testimony, Gibson touted her credentials and said she will focus on people, the Mint’s programs – from commemorative medals to collectible coins to circulating coins – and the Mint’s results-oriented, high performance.

Mr. Paul M. Rosen, Assistant Secretary of The Treasury for Investment Security Designate, Department of the Treasury

In his testimony, Rosen said his experience uniquely positions him to execute Congress’s statutory mandate as set forth in the Foreign Investment Risk Review Modernization Act (FIRRMA) and that he intends to preserve an open investment environment that supports economic growth and innovation while protecting U.S. national security interests.

Question & Answer

Personal Data

Brown asked Rosen how he would consider personal data in transactions. Rosen stated the importance of protecting personal data and FIRRMA’s enhanced authority to address non-controlling investments, which can be used to access and exploit personal data.

FDI

Toomey asked how Rosen will safeguard tech while also maintaining proper FDI. Rosen said it is a balance. He emphasized the importance of moving benign FDI through efficiently. Sen. Bill Hagerty (R-Tenn.) added that investments should be facilitated while protecting against bad actors.

China

Toomey asked Rosen for his assessment of China as a threat to the U.S. Rosen characterized China as a significant threat having operated as an adversary using investments often designed to evade CFIUS jurisdiction. Sen. Catherine Cortez Masto (D-Nev.) expressed her confidence that Rosen could effectively address the Chinese Communist Party’s targeting of tech firms.

Russia

Sen. Elizabeth Warren (D-Mass.) asked, in reference to Russian Oligarchs, why identifying the beneficial owners of shell companies was important. Rosen stated identifying real owners is crucial to understanding who controls the investment and where cashflows originate. Warren highlighted a know your customer (KYC) loophole allowing foreign investors to operate through private equity and asked Rosen if these private equity firms are required to comply with KYC guidelines. Rosen said no. Warren asked if private equity firms should be allowed to go on blindly regarding KYC. Rosen stated that customer analysis is a key feature of security.

Cybersecurity and Counterterrorism

Masto asked how Rosen’s experience in cybersecurity and counterterrorism will inform his work. Rosen stated his experience will critically inform his role in hardening both government and commercial infrastructure against cybersecurity and terrorist threats. 

Investment Screening

Hagerty asked Rosen about his assessment of working with allied nations in investment screening. Rosen stated the importance of enhancing allies’ capabilities in this matter because weak points may provide entry for bad actors to access U.S. investment opportunities.

Non-Notified Transactions

Hagerty asked how Rosen will address the burdensome process of unwinding cases of non-notified transactions. Rosen said there is an informal process available to open a dialogue with CFIUS to address questions concerning potential transactions. He emphasized that non-notified transactions need to be a point of focus. Hagerty asked how talent acquisition will be addressed in tackling this technical work. Rosen stated he has not yet fully assessed their human resources but noted it has grown and will continue to increase.

For more information on this hearing, please click here.

For an archive of past SIFMA hearing coverage, please click here.