Canton Repository

March 26, 2003

Timken would like to give investor organization a higher public profile
Copley Washington correspondent

WASHINGTON — A congressionally chartered corporation that protects investors but is unknown to most people could become more of a household name if W.R. “Tim” Timken Jr. becomes its next chairman.

Timken, the chairman of Canton, Ohio-based Timken Co., said during a Senate confirmation hearing Tuesday that the Securities Investor Protection Corp. should make more of an effort to educate the public about its mission.

President Bush has nominated Timken to be a member and chairman of the board of the SIPC. The nonprofit corporation has recovered $14 billion in assets for investors who lost securities when the brokerages handling their accounts went out of business.

It is the first time that Timken, a financial contributor to Bush, has been nominated by a president to serve in the federal government. The committee also questioned Thomas W. Grant and Noe Hinojosa Jr., also nominated to serve on the committee. With no apparent opposition to the nominees, the committee could vote as early as next week to send them to the full Senate for consideration.

During the hearing before the Senate Banking Committee, the chairman, Sen. Richard Shelby, R-Ala., and Sen. Paul Sarbanes, D-Md., told Timken that many investors misunderstand the role of the SIPC and need more education.

“I agree,” Timken said. Noting that the organization already has launched a public-awareness campaign, he said, “I think we can do a better job, and that would certainly be one of the things that I would definitely attempt to undertake.”

Timken said he accepted Bush’s call to serve because he wanted to help increase public confidence in the financial markets. “I just don’t believe our democracy will survive without strong capital markets,” he said.

As Timken addressed the senators, his wife, Sue, and sons, Kurt and Beau, sat in the audience. The night before, all four had flown in from the West Coast, where the sons live. When the hearing ended, they headed for a quick visit with Rep. Ralph Regula, R-Bethlehem Township, whose district includes several Timken facilities.

In his prepared remarks, Timken acknowledged he lacks experience in the securities industry.

“Although I have never been involved in the securities business, in addition to The Timken Co., I have served on the board of directors of three other public corporations and personally have been a substantial investor in securities,” he said. The Timken Co. is a world leader in the manufacture of tapered bearings and specialty steel.

After the hearing, Timken noted that two members of the board must come from outside the securities industry. And he said there are advantages to his lack of experience.

“I certainly have no preconceived concepts about any of the issues, because I haven’t been working on them on a daily basis,” he said. “I certainly have no financial interests in this, nor do I have any contacts with anybody in the industry, and as a result, I’m truly independent, I think.”

Timken previously served as chairman of the National Association of Manufacturers.

Although few people have heard of the SIPC, Sarbanes spoke passionately about it.

“The system needs to be tightened up,” he said. “I think there are a lot of stresses on investors now.” He expressed concern that the organization could underestimate the amount of money it needs and be caught off guard by a large liquidation.

“We hear that and understand that and will certainly take that into account as we proceed forward,” Timken said.

Timken believes the corporation needs to be more aggressive in assessing the risk of brokerage liquidations. But he said its $1.2 billion in reserves are sufficient for the near term. The organization is financed through dues paid by member brokers, not tax dollars.

Another member of the committee, Sen. Elizabeth Dole, R-N.C., welcomed Timken as a friend and “man of tremendous commitment.” Asked about her remarks later, Timken said the friendship goes back many years. Timken backed her husband, former Sen. Bob Dole, when he ran for president and also supported Elizabeth Dole’s Senate campaign.

“Timken Co. has substantial facilities in North Carolina,” he said. “She’s senator for a lot of Timken associates,” the term the company uses for its employees.

Because the SIPC has no enforcement power, Timken said he is not required to put his investments in a blind trust.