November 18,2003

Baucus Hearing Statement on Nomination of Arnold I. Havens

Mr. Chairman, today this Committee meets to consider the nomination of Mr. Arnold Havens to
become the chief legal and policy advisor to the U.S. Treasury Secretary. Mr. Havens, I’d like to
welcome you and your family. Public service is a noble undertaking. While serving requires
sacrifices by you, your family will also share this burden. We appreciate your willingness to
accept this important position.

The Treasury General Counsel is responsible for the supervision of more than 1,400 Treasury
Department lawyers. These attorneys are actively engaged in tax, banking, finance, and
international affairs. Their legal analyses and decisions affect us all. But the position of General
Counsel is not just the managing partner of one of the government’s largest law firms. The
General Counsel carries a heavy, substantive load.

The General Counsel serves as the Chairman of the National Security Council policy
coordinating committee on terrorist financing. He is the Secretary’s representative on the
Department of Justice Corporate Fraud Task Force and counsel to the Committee on Foreign
Investment in the U.S.

In addition, the General Counsel is responsible for overseeing the Treasury Department and
IRS’s vast rule- making authority. Rule-making is one of the most important tasks that Treasury
performs. The General Counsel has a special responsibility to ensure that Treasury facilitates
rule-making procedures in a manner consistent with Congressional intent.

As the top lawyer at Treasury, the General Counsel has direct oversight over Treasury’s
economic sanctions program, financial crime investigations and USA Patriot Act regulatory
responsibilities. Mr. Havens, you will have plenty on your plate, and for the time being, you will
not have much help. There are many empty seats at Treasury. This is a troubling fact,
particularly when considering the important role Treasury is playing in the war on terrorism.

These vacancies include the Deputy Secretary, the Under Secretary for Domestic Finance, the
Assistant Secretary for Economic Policy, the Under Secretary for Enforcement, the Assistant
Secretary for Enforcement, the Inspector General for Tax Administration, and the IRS Chief
Counsel. It is important that these positions be filled.

Today’s hearing provides an opportunity to hear your plans for the Office of General Counsel. I
am particularly interested in the role you personally expect to play in the war on terrorism. As
you know, the Treasury Department is the principal policy- maker in five areas of enforcement
that concern national security: 1) terrorist financing, 2) money laundering, 3) economic
sanctions, 4) counterfeiting, and 5) the development of resilient financial infrastructure.

Your predecessor, David Aufhasuer, recently testified before Congress about the war on
terrorism. He said “nothing in this shadow war is more achievable and more sustainable --
nothing has more immediate real world consequence -- than to deny terror of its currency. There
may be an infinite number of ways that a terrorist cell can divine how best to apply one hundred
thousand dollars in funds to jihad. But all such violent invention is forfeit if the money never

However, Mr. Aufhauser recently acknowledged that what is frequently lacking at Treasury is
direct authority and resources to ensure that policy initiatives for which Treasury is held
accountable are put into practice. He said “Treasury no longer has a police force to investigate
counterfeiting. It does not have auditors to ensure compliance with the Patriot Act. It does not
have investigators to pursue the priorities of the National Money Laundering Strategy. And
Treasury does not have an intelligence office that is fully integrated into the national intelligence

Last year, the Department of Homeland Security was created to concentrate resources for the
protection of our borders against terrorism. In doing so, however, it broke apart much of the
system for pursuing financial crimes, which was once housed in the Treasury Department. I
concur with the comments by Mr. Aufhauser: “while it is plain that there must be shared
responsibilities between Justice, Treasury and Homeland Security in the borderless war on terror,
someone’s hand has to be at the helm to protect the integrity of the U.S. financial system.”

Today, there is no longer a central venue within the Federal government for developing,
coordinating and implementing an effective strategy for combating financial crimes. I think
there should be one. And I think it should be part of Treasury. Treasury is undergoing
significant structural, resource and management changes. I would like to get your thoughts on
how the government can better combat financial crimes.