Two new Treasury Department nominees will have substantial influence over a spectrum of sanctions if they are hired on staff at the Office of Terrorist Financing and Financial Crimes. A bipartisan group of Senators wants to make sure they will stick to the letter of sanctions law against China and other countries.
The Senate Committee on Banking, Housing, and Urban Affairs, which is responsible for signing off on Treasury Department nominees, heard testimony on Tuesday from the two potential newcomers: Brian Nelson is nominated for Undersecretary for Terrorism and Financial crimes, and Elizabeth Rosenberg is nominated for Assistant Secretary for Terrorist Financing. Both individuals are not part of the Office of Foreign Assets Control, where sanctions rules are enforced, but are in parallel offices inside the Offices of Terrorism and Financial Intelligence.
We need a strong Treasury to enforce sanctions across the board – whether capital market sanctions or terrorism and financial crimes. A strong and effective Treasury is one that understands the vital importance of sanctions on bad actors and bad acting countries.
Treasury over time has become increasingly interwoven with Wall Street. BlackRock, Goldman Sachs, JP Morgan, have long and deep ties to Treasury. It is often a revolving door between those three firms and the Treasury Department for senior-level staff. Nelson and Rosenberg have never worked in finance. So, the concern from the Senate could be taken as keeping these new potential hires honest.
Foreign Relations Committee chairman Sen. Bob Menendez (D-NJ), and ranking member Sen. Pat Toomey (R-PA) mostly said during the hearing that the two nominees had to uphold sanctions, primarily against Iranian oil. They made passing remarks about a recent removal of Treasury sanctions on the Russia-to-Germany natural gas pipeline run by Nord Stream 2, a consortium of companies led by Russia’s Gazprom.
China was only mentioned 9 times and never in relation to the recent capital markets ban. The closest anyone came to getting a sense of future enforcement of such rules was when Toomey said China was “flagrantly violating our sanctions law. If adversaries perceive that the U.S. is unwilling to enforce our own sanctions — then they’re going to violate the sanctions,” he said to them.
Nelson was not aware of any breach of sanctions policies, but said “assuming there are violations, then I would agree we need to act appropriately.”
Rosenberg said she agreed that violating U.S. sanctions law needed to be addressed if it was occurring, regardless of which sanction, and who was finding clever ways around it. This includes our own companies, by the way. “The credibility and strength of U.S. sanctions ends on their effective implementation and enforcement,” she said.
Capital markets were only mentioned once, based on a transcript of the hearing.
Sen. Bill Hagerty (R-TN) was not singling out the recent China ban, though he should have when he said, “America’s financial markets are the envy of the world. We worked very hard to create the most liquid, the most efficient, and the greatest provider of low-cost capital in the world. And it’s a privilege to access the American capital markets. Those that would act against U.S. interest should clearly be denied that privilege. That’s the important role that the two of you are undertaking today,” he said.
Last month, CPA applauded the announcement by the NYSE that it would follow the requirements of Trump’s Executive Order 13959 to delist three Chinese telecom carriers: China Mobile Ltd., China Unicom Ltd., and China Telecom Corp. We expect to see more CCP companies added to the ongoing Pentagon list and the EO’s newly revised list for Treasury’s Office of Foreign Assets Control sanction purposes due to their involvement in surveillance and helping enhance the capabilities of the People’s Liberation Army.
“The historically close relationship between Wall Street and the Treasury Department deserves serious scrutiny,” says CPA chief executive Michael Stumo. “It remains to be seen whether Treasury will take decisive action to add to this list of 59 companies in the future.”
Investment firms have roughly a year to divest from those securities.
Nelson has been out of Washington since 2011. He worked for the California Department of Justice as a general counsel and as a chief legal advisor for the Los Angeles 2028 Summer Olympics. He has his law degree from Yale.
Rosenberg has worked at Treasury as Counselor to the Deputy Secretary since January. Prior to that, she spent roughly seven years as Program Director of the Energy, Economics and Security at the Center for a New American Security, a Washington DC-based think tank. She has a masters degree in Near Eastern and Arabic Studies from New York University.