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EXAMINING REAUTHORIZATION OF THE 

EXPORT-IMPORT BANK: CORPORATE 

NECESSITY OR CORPORATE WELFARE? 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 25, 2014 

Printed for the use of the Committee on Financial Services 

Serial No. 113–87 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

GARY G. MILLER, California, Vice Chairman 

SPENCER BACHUS, Alabama, Chairman 

Emeritus 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

TOM COTTON, Arkansas 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

STEVEN HORSFORD, Nevada 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

June 25, 2014 .................................................................................................... 1 

Appendix: 

June 25, 2014 .................................................................................................... 115 

WITNESSES 

WEDNESDAY, JUNE 25, 2014 

Anderson, Richard H., Chief Executive Officer, Delta Air Lines ......................... 10 

de Rugy, Veronique, Senior Research Fellow, Mercatus Center, George Mason 

University ............................................................................................................. 12 

Elmendorf, Douglas W., Director, Congressional Budget Office (CBO) .............. 72 

Gratacos, Hon. Osvaldo Luis, Inspector General, Export-Import Bank of the 

United States ........................................................................................................ 69 

Hochberg, Hon. Fred P., President and Chairman, Export-Import Bank of 

the United States ................................................................................................. 68 

Moak, Lee, President, Air Line Pilots Association, International ....................... 13 

Scire, Mathew J., Director, Financial Markets and Community Investment, 

U.S. Government Accountability Office .............................................................. 71 

Wilburn, Steven P., Founder, Chief Executive Officer, and President, 

FirmGreen, Inc. .................................................................................................... 15 

APPENDIX 

Prepared statements: 

Anderson, Richard H. ....................................................................................... 116 

de Rugy, Veronique .......................................................................................... 131 

Elmendorf, Douglas W. .................................................................................... 146 

Gratacos, Hon. Osvaldo Luis ........................................................................... 159 

Hochberg, Hon. Fred P. .................................................................................... 167 

Moak, Lee .......................................................................................................... 174 

Scire, Mathew J. ............................................................................................... 182 

Wilburn, Steven P. ........................................................................................... 194 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hensarling, Hon. Jeb: 

Written statement of Air Liquide Advanced Technologies US LLC ............. 201 

Written statement of the American Conservative Union .............................. 202 

Written statement of Cliffs Natural Resources, Inc. ..................................... 203 

30 Groups to Congress: Let the Export-Import Bank Expire ....................... 207 

Written statement of the National Taxpayers Union .................................... 210 

Article from The Wall Street Journal entitled, ‘‘End Corporate Welfare? 

Start With the Ex-Im Bank,’’ dated June 15, 2014 .................................... 211 

Campbell, Hon. John: 

Discussion Draft to reauthorize the Export-Import Bank of the United 

States for 3 years, and for other purposes .................................................. 213 

Green, Hon. Al: 

Written statement of Export Import Strategies ............................................. 233 

Written statement of the Greater Houston Partnership ............................... 234 

Written statement of the Hallmark Sales Corporation ................................. 235 

Editorial from the Houston Chronicle entitled, ‘‘No time for games: Export-Import Bank loans support American jobs, including Houston-area 

jobs,’’ dated June 25, 2014 ........................................................................... 236 

Page

IV 

Green, Hon. Al—Continued 

Written statement of Manufacturers of Valves and Strainers ..................... 238 

Written statement of Grafitec ......................................................................... 239 

Written statement of South Coast Products .................................................. 240 

Maloney, Hon. Carolyn: 

Written statement of the National Association of Manufacturers ............... 241 

Written statement of the National Conference of State Legislatures .......... 243 

Written statement of 865 organizations urging support of reauthorization 

of the Export-Import Bank ........................................................................... 245 

Written statement of various organizations which support swift reauthorization of the Export-Import Bank .............................................................. 255 

Written statement of the U.S. Chamber of Commerce .................................. 257 

McCarthy, Hon. Carolyn: 

Written statement of the International Association of Machinists and 

Aerospace Workers ....................................................................................... 264 

Written statement of the International Federation of Professional & Technical Engineers .............................................................................................. 267 

Written statement of the American Federation of Labor and Congress 

of Industrial Organizations (AFL–CIO) ...................................................... 268 

Written statement of the Maritime Trades Department .............................. 269 

Pittenger, Hon. Robert: 

Written statement of The Babcock & Wilcox Company ................................ 270 

Stivers, Hon. Steve: 

Written statement of the Nuclear Energy Institute ...................................... 272 

Written statement of PPG Industries ............................................................. 276 

Waters, Hon. Maxine: 

Written statement of Air Tractor, Inc. ............................................................ 277 

Written statement of Fritz-Pak Corporation .................................................. 278 

Written statement of Greenergy Solutions Inc. ............................................. 280 

Elmendorf, Douglas W.: 

Written responses to questions for the record submitted by Representative Royce ....................................................................................................... 281 

Hochberg, Hon. Fred P.: 

Written responses to questions for the record submitted by Chairman 

Hensarling ..................................................................................................... 284 

(1) 

EXAMINING REAUTHORIZATION OF THE 

EXPORT-IMPORT BANK: CORPORATE 

NECESSITY OR CORPORATE WELFARE? 

Wednesday, June 25, 2014 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:06 a.m., in room 

2128, Rayburn House Office Building, Hon. Jeb Hensarling [chairman of the committee] presiding. 

Members present: Representatives Hensarling, Bachus, King, 

Royce, Capito, Garrett, Neugebauer, McHenry, Campbell, Bachmann, Pearce, Posey, Fitzpatrick, Westmoreland, Luetkemeyer, 

Huizenga, Duffy, Hurt, Stivers, Fincher, Stutzman, Mulvaney, 

Hultgren, Ross, Barr, Cotton, Rothfus, Messer; Waters, Maloney, 

Sherman, Meeks, Capuano, Hinojosa, Clay, McCarthy of New York, 

Lynch, Scott, Green, Cleaver, Moore, Ellison, Himes, Peters, Sewell, Foster, Kildee, Murphy, Delaney, Sinema, Beatty, Heck, and 

Horsford. 

Chairman HENSARLING. The committee will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the committee at any time. 

This hearing is entitled, ‘‘Examining the Reauthorization of the 

Export-Import Bank: Corporate Necessity or Corporate Welfare?’’ 

I now recognize myself for 6 minutes to give an opening statement. 

Today, we will examine the Obama Administration’s request to 

reauthorize the Export-Import Bank (Ex-Im or the Bank). 

First, we should examine where the money comes from to finance 

Ex-Im. Whose money is it? Obviously, it is taxpayers’ money—the 

cashier at the corner grocery store, the cop on the beat, your children’s teachers, the small business owner struggling to keep the 

doors open in a tough economy. 

And where does the money go? It goes to foreign countries and 

foreign companies in the way of direct loans and credit guarantees. 

The taxpayer money goes overseas to China and Russia, nations 

that openly challenge our economic and security interests. Taxpayer money goes to oil-rich countries like Saudi Arabia and the 

United Arab Emirates. The taxpayer money even goes to countries 

with a demonstrated history of atrocious human rights abuses like 

the Congo and the Sudan. 

So, who benefits? Overwhelmingly and indisputably, it is some of 

the largest, richest, most politically connected corporations in the 

2 

world, like Boeing, General Electric, Bechtel, and Caterpillar. In 

fact, in 2013 over half of Ex-Im’s financing went to a handful of 

Fortune 500 companies. And big Wall Street Banks apparently 

benefit, as well. As reported in the press recently, one former 

JPMorgan and Citigroup banker said of Ex-Im’s credit guarantees, 

‘‘It is free money.’’ 

So if you are a politically connected bank or company that benefits from Ex-Im, no doubt you would like it to continue. After all, 

it is a sweetheart deal for you. Taxpayers shoulder the risk; you 

get the reward. But if you work at a small business or another 

American company competing in the global marketplace, it is unfair. Ex-Im effectively taxes you, while subsidizing your foreign 

competitors. 

We hear a lot from powerful voices on K Street and Wall Street 

about the Bank, but we also should listen carefully to some voices 

from Main Street, like Hal Richards of Terrell, Texas, in my district. Quote: ‘‘As a small business owner who exports, I think it is 

outrageous that my own government puts my business and other 

small businesses at a competitive disadvantage through the Export-Import Bank. How is that fair?’’ 

Now, Ex-Im tells us sending taxpayer money to foreign interests 

supports jobs for Americans. But the government’s chief auditor reported that programs like Ex-Im ‘‘largely shift production among 

sectors within the economy, rather than raise the overall level of 

employment in the economy.’’ 

Delta Air Lines, whose CEO will testify shortly, points out that 

Ex-Im’s loans to foreign airlines have killed as many as 7,500 domestic airline jobs because the Bank will subsidize Delta’s foreign 

competitors. 

Caterpillar was a recent beneficiary of Ex-Im’s taxpayer financing that went to an iron ore mining project controlled by Australia’s richest citizen. An American iron ore company called Cliffs 

Natural Resources said it will no longer be able to effectively compete with its Australian competitors due to the subsidy, and they 

are now having to cut employees’ hours. 

Another American competitor feeling the sting of Ex-Im is Valero 

Energy in my native Texas. Ex-Im is lending $641 million to a 

Turkish company to build a new petroleum refinery. Valero’s CEO 

stated that Ex-Im’s actions ‘‘jeopardize U.S. refining jobs and undermine the strength of the U.S. refining infrastructure.’’ 

Professor Donald Boudreau of George Mason University summed 

it up neatly when he stated, ‘‘At best, the Ex-Im Bank creates jobs 

in export industries by destroying jobs in non-export industries.’’ 

Now, the Bank tells us it is essential to U.S. exports, but over 

98 percent of all U.S. exports occur without risking taxpayer dollars—again, over 98 percent. And most of the others who take advantage of Ex-Im could certainly do it without taxpayer support. 

Even Boeing, the Bank’s biggest beneficiary, has admitted it 

doesn’t really need Ex-Im and could ‘‘arrange alternative financing’’ 

without it. 

The Bank has also told us it doesn’t cost taxpayers a dime. The 

Congressional Budget Office respectfully disagrees and tells us if 

the Bank were to use fair-value accounting, the accepted accounting method for almost every bank and private company in America, 

3 

Ex-Im’s ledger would actually show a net loss to taxpayers in the 

neighborhood of $200 million a year. That is the difference between 

Washington accounting and Main Street accounting. 

Perhaps what is most disturbing about the Ex-Im Bank is its ideological and crony-based lending practices. It has a green energy 

quota. It permits no assistance for coal projects. It has a mandate 

to specifically support exports going to Sub-Saharan Africa. 

Last year, more than 60 percent of Ex-Im’s financing benefited 

just 10 mega-corporations that clearly have a strong political and 

lobbying presence in this town. Recently, a Spanish multinational 

corporation received a $33-million Ex-Im loan while former Energy 

Secretary Bill Richardson simultaneously sat on its advisory board 

and Ex-Im’s as well. 

Ex-Im guaranteed $10 million in loans to benefit the politically 

favored Solyndra, which clearly did not favor taxpayers. 

And just yesterday, we woke up to the report in The Wall Street 

Journal that, ‘‘The U.S. Export-Import Bank has suspended or removed four officials in recent months amid investigations into allegations of gifts and kickbacks as well as attempts to steer Federal 

contracts to favored companies.’’ Ex-Im may not just be guilty of 

cronyism; it may be guilty of corruption, as well. 

Now, I will admit that Republicans may disagree on whether ExIm should be reformed or allowed to expire, and I certainly hope 

that this hearing will help illuminate that decision. But we are 

united in believing that we cannot reauthorize the status quo. And 

we are also united in believing that the smarter and fairer way to 

promote American exports is by fundamental tax reform; strong 

trade agreements, a regulatory freeze, with the exception of health 

and safety; and greater American independence, with projects like 

the Keystone pipeline. 

I now recognize the ranking member for 51⁄2 minutes. 

Ms. WATERS. Thank you, Mr. Chairman. 

I would like to thank you for finally holding this hearing on the 

reauthorization of the Export-Import Bank, even though it comes 

less than 3 months before its charter expires. It has been over a 

year since this committee even discussed the Bank at a subcommittee hearing to assess its progress on reforms. 

But let’s be serious. This hearing is not going to be a forthright 

discussion on the merits of the Bank. Mr. Chairman, we know your 

position on the Bank. We know you have made ending the Bank 

your top priority, regardless if it is at the expense of thousands of 

American companies trying to compete against businesses in 

China, Russia, Korea, and countries across Europe, all of which 

have their own version of the Ex-Im Bank. 

I am dismayed to see that the Republican leader-elect, Kevin 

McCarthy, has also changed his view on the Export-Import Bank. 

I am saddened that he has followed the lead of the extremists in 

an effort to shows his Tea Party credentials. 

At one time, programs like the Ex-Im Bank were so apolitical 

that they did not even require a vote. Now, policies that create 

thousands of jobs and increase American competitiveness are under 

constant attack. 

I am becoming more and more concerned that the Republican 

Party’s willingness to work together on issues like flood insurance, 

4 

TRIA, and the Export-Import Bank has fallen victim to fringe elements who put their agenda over the well-being of our country’s 

workers, manufacturers, business owners, and the broader economy. 

As the extremists celebrate, I have to admit, I mourn it as a loss 

for our country. Our new reality is government shutdowns and 

debt-ceiling crises. It is constant uncertainty. It is not knowing 

whether the government is going to help pick up the pieces after 

a major flood or a terrorist attack. It is about telling businesses, 

large and small, you are on your own to go up against competitors 

who are backed by global superpowers. 

And now they have set their sights on ‘‘exiting’’ the Export-Import Bank, an entity that creates or sustains hundreds of thousands of jobs, and over the past 5 years has supported $233 billion 

in U.S. exports. 

I would like to take a minute and thank Representatives Denny 

Heck and William Lacy Clay, who have just yesterday introduced 

a clean Ex-Im reauthorization bill with 200 original Democratic cosponsors. 

Mr. Chairman, I am not an expert at whipping votes, but if you 

add these cosponsors to the 41 Republicans who recently signed a 

letter in support of Ex-Im’s renewal, I believe you have a majority 

of the House in support of extending the Bank’s charter for the 

long term. 

Opponents of the Bank like to use the term ‘‘crony capitalism.’’ 

Over the past few weeks, we have been working hard to learn more 

about the so-called crony capitalists that have been supported by 

the Bank. Their stories have been astounding. Mr. Chairman, did 

you know there are 12 exporters in your district that I guess are 

crony capitalists and 11 of them are small businesses? 

Over the course of this hearing, Democratic members of this committee will share with you the truth about these hardworking 

Americans, not cronies, who are assisted by the Bank. 

They are companies like SpaceX, an ambitious and revolutionary 

firm based in Hawthorne, California, in my district, that designs, 

manufactures, and launches rockets and spacecraft. It is the first 

private company to build, launch, and dock spacecraft at the International Space Station. And it is a company that has been strongly 

supported by the majority leader-elect, Kevin McCarthy, who went 

so far as to call its founder, Elon Musk, the Wright Brothers of the 

next generation. 

In just a few short years, the Ex-Im Bank has authorized close 

to $900 million in support of exports from SpaceX, creating thousands of quality high-tech jobs across California and in the United 

States. I wonder when Mr. McCarthy decided that he no longer 

could support his friend, Elon Musk, or support the Bank that 

keeps SpaceX innovating and competing, despite the fact that he 

has identified himself as a big supporter of SpaceX. 

I, too, believe in SpaceX because I know the pain in my district 

that has been felt over the years after losing our manufacturing 

base. Supporting companies like SpaceX is critical because they are 

bringing manufacturing jobs back and they ensure the United 

States will remain a world leader in the manufacturing economy of 

the future. 

5 

So I thank you, Mr. Chairman. I look forward to this hearing, 

and I yield back the balance of my time. 

Chairman HENSARLING. The Chair now recognizes the gentlelady 

from West Virginia, Mrs. Capito, chairwoman of our Financial Institutions Subcommittee, for 2 minutes. 

Mrs. CAPITO. Thank you, Mr. Chairman. And thank you for holding today’s hearing. 

For the last 2 years, the Export-Import Bank has joined the 

Obama Administration’s assault on our Nation’s coal industry. In 

December of 2013, the Bank imposed guidance that would prevent 

the financing of coal-fired power plants in all but the world’s poorest countries. This guidance, combined with the EPA’s proposed 

regulations to ban domestic coal-fired power plants, will irrevocably 

hinder the development of new clean coal technologies. This is another example of this Administration’s intent to pick winners and 

losers in our economy, and I can no longer support the authorization of the Ex-Im Bank. 

I have expressed my concerns to the Bank to no avail. In a letter 

to, and in a meeting with, Chairman Hochberg, I discussed my opposition to this guidance. I have been absolutely clear that it is inappropriate to use the Bank’s financing mechanisms to drive an 

idealogical agenda rather than promote U.S. exports. 

The Administration’s policies come at a time when we should be 

ensuring the United States is leading the world in developing new 

coal plant technologies. We won’t see carbon capture and sequestration developed by U.S. companies if we choke off the market for 

coal technology. 

The Ex-Im Bank’s guidance is bad for our Nation’s economy, bad 

for the development of future technologies, and bad for the environment. For these reasons, I do not support the extension of this 

charter. 

I yield back. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman, for 2 minutes. 

Mr. SHERMAN. Mr. Chairman, a point of order. We had those 

clocks going for the national debt. They are going too slowly. You 

are proposing to eliminate the Ex-Im Bank, which will add billions 

of dollars to our national debt. And you have been unwilling, unless 

you change your mind, to join with me in tax increase measures 

that would replace that revenue. 

Now, whenever somebody wants to increase the national debt, 

they always say, ‘‘Change the accounting system,’’ and that Ex-Im 

Bank would be costing us money if we used fairytale-value accounting. I don’t think we should. The fact is we should use GAAP, not 

GOP, accounting—G–A–A–P, not G–O–P, accounting. 

What is the underlying theory of fair-value accounting? It is that 

we look not at the profits and losses of the Ex-Im Bank, properly 

accounting for the risk they take, but we look at what their costs 

would be if they weren’t the Ex-Im Bank but at a higher cost of 

funds. That is like saying Pizza Hut is over-reporting its income because they report accurately the cost they pay to the Bank for the 

money they borrow, not the higher amount they would pay if they 

were Jack’s Pizzeria instead. The fact that Pizza Hut has a lower 

6 

cost of funds doesn’t mean they should report higher interest costs 

and report a loss. But that is what you do under fairytale-value accounting. 

I am also on the Foreign Affairs Committee. I sit there while Republicans say that Democrats might support unilateral disarmament, that we would give up our arms and then go into the 

arms-limitation talks asking others to follow our lead. That is what 

we are doing here. 

Germany has an export credit authority that is 3 times as large, 

they have total exports 3 times as large per capita, and they run 

a trade surplus. And we would go into negotiations with Germany 

giving up the Ex-Im Bank. Why don’t we give up our missile— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Jersey, Mr. 

Garrett, the chairman of our Capital Markets Subcommittee, for 2 

minutes. 

Mr. GARRETT. First of all, thank you, Mr. Chairman, for holding 

this hearing. 

Thank you also, Mr. Chairman, for all of your efforts on fostering 

not only in this area but also, in general, economic growth and job 

creation in this country, including manufacturing. As the ranking 

member has bemoaned the fact that she has lost it in her district, 

I would just note that the chairman is encouraging economic 

growth and manufacturing but not on the backs of the American 

taxpayer. 

Thank you also, Mr. Chairman, for holding this hearing in a very 

timely manner, as well. 

And thank you to the panelists. 

You know, panelists, I was struck by an article on the front page 

of The Wall Street Journal. It was entitled, ‘‘Officials at Ex-Im 

Bank Face Probes.’’ What I found especially interesting and concerning in this article, notwithstanding the fact that four Bank employees have been suspended or removed for allegations of kickbacks, was a statement of the agency spokesman that, ‘‘The ExportImport Bank takes seriously its commitment to taxpayers and its 

mission to support U.S. jobs.’’ 

Really? To begin with, I would question the Bank’s seriousness 

to taxpayers, given in this committee we only learned of the allegations of potential criminal misconduct by reading the front page of 

The Wall Street Journal. I guess this so-called serious commitment 

to taxpayers did not reach the level of the requisite seriousness 

that would result in Congress being notified of various serious allegations like this. 

While we need to be certain that we have the facts, and ensure 

that this committee does not jump to proverbial conclusions, I do 

find it curious that these examples of employee misconduct were 

withheld against the backdrop of this debate over the Bank’s future 

as well as the well-funded lobbying campaign to ensure the Bank’s 

continued existence. 

If true, these allegations would go to the heart of the concern 

about this Bank, its lending, and of the special interests of multibillion-dollar corporations. I only need to look at the lobbying disclosures of some of our largest businesses to know that when you 

7 

mix corporations and taxpayer guarantees, you get something that 

looks a lot like crony capitalism. 

And, with that, I yield back. 

Chairman HENSARLING. The Chair now recognizes the gentlelady 

from New York, Mrs. McCarthy, for 11⁄2 minutes. 

Mrs. MCCARTHY OF NEW YORK. Thank you, Mr. Chairman. And 

I appreciate this hearing. 

I am a little confused on what I am hearing. This is about jobs. 

And I can talk about my district. I work in my district. I try to 

bring, certainly, businesses into my district. And I know in the last 

several years I have been able to help my small businesses—$86 

million just into my district alone, and a lot more jobs added over 

the last 7 years. That is what our job is, to make sure that we can 

bring jobs home. 

And as the ranking member mentioned, Mr. Hensarling—who, 

unfortunately, didn’t bring a lot of money into his district, but 

maybe he didn’t work the district, I don’t know. And Mr. McCarthy, who always supported the Ex-Im Bank, did have over $69 million that came into his district. 

This is about jobs. My colleagues on the other side keep saying, 

we are going to do jobs, we are going to do jobs. Where are they? 

People seem to have a very short memory. When we went 

through the great crisis, nobody went after the Banks, nobody went 

after the insurance companies. And when we look at the Ex-Im 

Bank and we hear my colleagues talking about how they found four 

employees, can I remind everybody, yes, they found four employees. 

They did an investigation, and they let them go. That is the way 

the system works. Anybody who understands any business, there 

are always going to be people who are going to try to rig the system. 

If we brought this bill up onto the House Floor, we would get it 

passed. So stop with this. Let’s do jobs and let’s— 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Illinois, Mr. 

Hultgren, for 1 minute. 

Mr. HULTGREN. Thank you, Mr. Chairman. 

I want to take a hard look at the current structure of the ExportImport Bank. Protecting taxpayer dollars by keeping government 

out of tasks that the private sector can perform itself is central to 

a nation based on free enterprise. 

An estimated 760 jobs in the 14th District alone rely on the Bank 

to ensure their exports reach their customers. Miner Elastomer in 

Geneva, Illinois, who exports truck and shovel parts, has asked me 

to support the Bank. The Crystal Lake Matthews Company, a manufacturer of agriculture equipment, has jobs dependent on the 

Bank. We can’t overlook the 29 smaller production suppliers who 

fulfill Boeing orders in my district. 

Since 2007, the Bank has supported almost $6 billion in Illinois 

exports from 301 exporters, including 204 small businesses. An outright elimination leaves U.S. jobs in peril. 

We must ask the hard questions: Do we know the job impact of 

eliminating the Bank without a proper glide path in place? Have 

we addressed the worldwide subsidies offered by our competitors 

8 

through trade agreements? Can we put a reform plan on the table 

to ensure a more limited scope for the Bank? 

I am committed to working together to put a viable alternative 

forward. 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Arizona, Ms. 

Sinema, for 1 minute. 

Ms. SINEMA. I strongly support the operation of the Export-Import Bank, because helping Arizona businesses expand their manufacturing capacity and exporting ability creates jobs and grows our 

economy. The Export-Import Bank fills gaps in private financing, 

stepping up where the private sector can’t or won’t. 

Last year, Ex-Im Bank Chairman Fred Hochberg visited my district to help small and growing businesses increase their global exports right in our own backyard. From Fiscal Years 2007 to 2014, 

the agency supported $176 million in exports from companies in my 

district. 

One of those companies, MarTech, Inc., was reluctant to sell 

their semiconductor equipment to customers in Asia. They were 

concerned that once the equipment left their building, there was no 

guarantee they would get paid. The Ex-Im Bank offered MarTech 

a solution. The Bank issued an insurance policy so MarTech could 

make sales and have a guarantee they would get paid. Thanks to 

the Bank, they now export to companies in Asia, Europe, and the 

Americas. 

Allowing the Bank’s current charter to expire would threaten the 

competitiveness of these and many other Arizona businesses. And 

that is why I am a cosponsor of legislation to extend the Bank’s authorization and I will continue to work to reauthorize this important investment in American jobs. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Georgia, Mr. Westmoreland, for 1 minute. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

The problem with the Export-Import Bank is the entire mission 

and structure. Simply, the Export-Import Bank is designed to advantage one U.S. industry at the expense of another. Even if Congress directed the Bank to make changes, as it did in 2012, we 

have seen that this massive bureaucracy will not yield to even 

modest reforms. 

People talk about the cost of jobs that would be lost if it is not 

reauthorized. How about the new jobs and the more capital for 

growth created by finally being competitive with foreign competitors? 

The Bank has shown it is not able to conduct mandated economic 

impact analysis, and the Bank regularly employs fuzzy math and 

accounting. Congress mandated the Export-Import Bank be more 

transparent, and, quite simply, they have failed to follow this mandate. 

I am happy to join the chairman and the new majority leader in 

this effort. 

And I yield back the balance of my time. 

9 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Missouri, Mr. Clay, the ranking member of our Monetary Policy Subcommittee, for 1 minute. 

Mr. CLAY. Mr. Chairman, the mission of the Ex-Im Bank is to 

support American jobs by facilitating the export of U.S. goods and 

services. The Ex-Im Bank does not compete with private sector 

lenders but provides export financing that fills gaps in trade financing. The Bank assumes credit and country risks that the private sector is unable or unwilling to accept. The Ex-Im Bank helps 

to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters. 

Refusing to reauthorize the Ex-Im Bank would reduce the number of ECAs from 60 to 59, hurting only U.S. exporters and workers 

that they employ. And in my home State of Missouri, the Ex-Im 

Bank supported $1 billion in exports and $339 million in exports 

from the district that I represent. Mr. Chairman, those are American jobs— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Washington, Mr. 

Heck, for 1 minute. 

Mr. HECK. Thank you, Mr. Chairman. 

Just because somebody says something that is untrue over and 

over and over again doesn’t make it one whit less untrue. Let’s 

start this hearing with the truth. 

Here is the truth: The Ex-Im creates jobs, 205,000 last year. 

Here is the truth: The Ex-Im supports small businesses. Ninety 

percent of its transactions go to small businesses. 

And an appalling lack of understanding of how the private sector 

works. Even large corporations are dependent on small businesses. 

The greatest plane manufacturer in the word is dependent upon 

15,000 suppliers, 6,600 of which are small businesses which would 

be put at risk by your position. 

Here is the truth: There are no tax dollars involved in subsidizing the Ex-Im. In fact, the Ex-Im transferred over a billion dollars to the Treasury. Where is the proof that the Treasury ever 

transferred any money to the Ex-Im? 

And, finally, here is the truth: If we abandon the Ex-Im, we will 

engage in unilateral disarmament—unilateral disarmament. Every 

other developed nation in the world has an export credit authority. 

Don’t render the United States the only one without one. 

Chairman HENSARLING. The time of the gentleman has expired. 

We will now turn to our first panel of witnesses. And to introduce our first witness, I will yield to the gentleman from Georgia, 

Mr. Westmoreland. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

It is my pleasure to introduce Richard Anderson, the chief executive officer of Delta Air Lines. Richard has been the CEO of Delta 

since 2007 and has more than 25 years in the aviation industry. 

As you probably know, Delta Air Lines is one, if not the largest 

employer in my district and across Georgia. Delta has been placed 

at a competitive disadvantage by the actions of the Export-Import 

Bank, and the time has come to level the playing field. 

Richard, welcome to you and the members of the Delta family 

team who are with you, and I look forward to your testimony. 

10 

Chairman HENSARLING. Our next panelist, Dr. Veronique de 

Rugy, is a senior research fellow at the Mercatus Center at George 

Mason University, where her primary research interests include 

the U.S. economy, the Federal budget, and various financial issues. 

Captain Lee Moak is the president of the Air Line Pilots Association, which represents almost 50,000 professional airline pilots in 

the United States and Canada. Before becoming an airline pilot, 

Captain Moak served as a Marine Corps fighter pilot. 

Last, but not least, Steven Wilburn is the chief executive officer 

of FirmGreen, a Newport Beach-based energy company that participates in virtually all aspects of the global green energy business. 

Before we proceed, Mr. Wilburn, we have one clerical matter to 

clean up with you. We received two different copies of your testimony, one at 6:00 last night. In that testimony, in that version, 

when describing why your commercial Bank officer could not provide financing to a Brazilian company, you said, ‘‘Simply out of the 

question, given the new TARP regulations and the then-new DoddFrank legislation.’’ A couple of hours later, from the Democratic 

staff we received a new copy of your testimony that struck that language and included the reason: ‘‘reluctance of Banks to support 

small business exports.’’ 

To ensure that we have the correct copy of your written testimony for the record, which did you intend, the one we received 

from you at 6:00 or the one that we received from the Democratic 

staff at 8:00? 

Mr. WILBURN. Mr. Chairman, I apologize— 

Chairman HENSARLING. I’m sorry, could you hit the button 

there? Just for the record, we need to know which testimony it is 

your intention to include? 

Mr. WILBURN. My intention is to provide an accurate written 

statement. I was flying from California on an airplane WiFi, trying 

to respond to your staff. And I was working realtime— 

Chairman HENSARLING. Well, is it— 

Mr. WILBURN. —editing. The last version— 

Ms. WATERS. Mr. Chairman? 

Chairman HENSARLING. The last version is the one you intend to 

use? 

Mr. WILBURN. —is my official written statement. 

Chairman HENSARLING. Okay. Thank you. Thank you, sir. That 

is what we needed to know. 

Without objection, each of your written statements will be made 

a part of the record. 

Not unlike a traffic light, if you are new to this, there is a green 

light, a yellow light, and a red light system. The yellow light will 

tell you there is 1 minute remaining. The red light means that it 

is time to wrap up so we can move on to the next witness. 

Mr. Anderson, you are now recognized for your testimony. 

STATEMENT OF RICHARD H. ANDERSON, CHIEF EXECUTIVE 

OFFICER, DELTA AIR LINES 

Mr. ANDERSON. Thank you very much for having me here today. 

As a private citizen, it is a privilege to be in the halls of Congress 

and have the opportunity, regardless of what the issue is, to parVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
11 

ticipate in the process. And, second, it is a real privilege to be here 

on behalf of the 80,000 people that I serve at Delta Air Lines and 

the 165 million passengers that the Delta family serves around the 

world with over 6,000 flights a day. 

I would note that we are one of the largest operators of Boeing 

airplanes and GE engines in the world. We currently have 100 Boeing airplanes on order with GE engines, and we are paying cash 

for them. And there are not many airlines in the world that buy 

100 Boeing airplanes and pay cash for them. So let’s make sure we 

put our discussions here in context. 

I was pleased to hear that we are talking about jobs, because I 

have about 100 Delta employees here with me who have my back 

today; they are the pilots and the flight attendants who provide the 

best airline service in the world. 

I am here to talk about their jobs, because the Ex-Im Bank takes 

their jobs. And if that is really what we are serious about, we 

should be serious about reforming the Bank. You tried to reform 

the Bank in a bipartisan way the last time, and your reforms were 

ignored. And it is our jobs that are at risk. 

I have a slide up here. The Ex-Im Bank finances the wealthiest, 

most profitable airlines in the world with huge amounts of our 

Treasury dollars. And you can see on this slide, we have an example of an Ex-Im Bank financing that was just done and a marketbased financing that was just done. And those financing numbers 

show you that a very wealthy airline that goes in the private market on a regular basis to finance airplanes gets, over the life of the 

airplane, about a $20-million advantage. 

And these airlines are also owned by governments and deeply 

subsidized by their own government, in addition to being deeply 

subsidized by our government. 

Our focus here today is on a narrow issue. I am pleased to hear 

the job growth. My business depends upon job growth. We have no 

objection to anything that anybody does in the halls of Congress on 

either side of the aisle that grows jobs in this country. My business, 

our business, the Delta family serves people at work at all the 

great companies in the United States. 

But we shouldn’t have a government policy that sacrifices the 

jobs of hardworking people at the Delta family in order to subsidize 

the wealthiest, most creditworthy airlines in the world. 

I was elected the chairman of the International Air Transport 

Association by the CEOs of all the airlines of the world. In the 

course of doing that, I have had many conversations with the CEOs 

of the most profitable airlines in the world. And they tell me, look, 

I don’t really need the Ex-Im Bank financing, but it is so cheap, 

I might as well take it. This is effectively a free airplane every 

eighth airplane. 

All I want is a level playing field. The story of Delta Air Lines 

is a great American story. We are now the most successful, profitable airline in the world. But we have to compete against deeply 

subsidized government airlines that are, in turn, deeply subsidized 

by our government. 

And the prime example is Air India, a government-owned, government-subsidized airline that drove us out of the marketplace 

12 

with a billion dollars of Ex-Im Bank financing. That cost about 

1,000 jobs. 

So when we talk about creating jobs, why can’t we navigate a 

policy? And our objection is a narrow objection. It is wide-body financing for creditworthy, state-owned and state-subsidized airlines. 

We have no objection to narrow bodies; we have no objection to 

small business. Our focus is on the policy junction of where U.S. 

jobs are destroyed by the Bank. So if we are serious about creating 

jobs, this Bank needs to be reformed. 

I yield my time. 

[The prepared statement of Mr. Anderson can be found on page 

118 of the appendix.] 

Chairman HENSARLING. Dr. de Rugy, you are now recognized for 

your testimony. 

STATEMENT OF VERONIQUE DE RUGY, SENIOR RESEARCH 

FELLOW, MERCATUS CENTER, GEORGE MASON UNIVERSITY 

Ms. DE RUGY. Thank you, Chairman Hensarling, Ranking Member Waters, and members of the committee. It is a pleasure to be 

here today. 

We don’t agree on much in Washington, but I think we can all 

agree that the Federal Government shouldn’t be sending our limited resources to the wealthiest and most politically connected corporations. And, yet, that is what the Ex-Im Bank does. 

Some say that there are good reasons for doing this. They say 

that the Ex-Im Bank promotes exports, supports jobs, returns 

money to Treasury, and helps taxpayers. None of these arguments 

withstand scrutiny, as my written testimony has shown, and I will 

briefly address in my statement today. 

However, my main focus will be on groups who are affected by 

Ex-Im activity that have gone ignored. These people don’t have connections in Washington. They don’t have access to press offices and 

lobbyists, but they matter, too. It is difficult but extremely important that we consider the unseen costs of political privilege, whatever form it takes, whether it is market distortions, job losses, potential destroyed, or higher prices. 

So, let’s start. First, the Bank claims it is essential to promote 

U.S. exports. Economists disagree. We have long known that export-subsidy schemes, like Ex-Im, do not meaningfully improve national exports, and, in fact, the data prove this point. Ex-Im backs 

less than 2 percent of U.S. exports. 

Ex-Im likes to tout subsidized firm successes, but they do not 

consider the unseen costs imposed on everyone else involved with 

the other 98 percent of unsubsidized exports. In these cases, it is 

firms’ own government, not foreign government, that puts them at 

a competitive disadvantage. 

For instance, Ex-Im harms these firms’ export opportunities by 

making it harder for unsubsidized buyers to secure their own financing. That is because Ex-Im gives lenders an incentive to shift 

resources away from unsubsidized projects toward subsidized 

projects regardless of the merits of the business. 

These capital market distortions have ripple effects. Subsidized 

projects attract more private capital, while other worthy projects 

are being overlooked. The subsidized get richer, and the unsubVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
13 

sidized get poorer or, worse, get out of business. Unfortunately, we 

will never see the businesses that could have been. Perhaps they 

would have been better, more profitable, and more responsible than 

the well-connected subsidized businesses. 

Second, the Bank claims to have supported 205,000 jobs in 2013. 

This number, however, should be taken with a grain of salt since 

GAO has criticized the Bank’s job calculation methodology for failing to consider how many jobs would have been created without 

Ex-Im, among other flaws. 

But even if we accept the Bank’s questionable jobs claim, that 

means that it only supported 1.8 percent of all export-related jobs 

in 2013. The Bank doesn’t promote jobs as much as it promotes 

jobs for favored companies at the expense of everyone else. 

The other 98.2 percent of unsubsidized export jobs are placed at 

a competitive disadvantage by Ex-Im. Unsubsidized employers may 

not expand hiring, they may not increase wages, and they may 

even have to fire employees because they face competition from 

subsidized projects. 

Third, the Bank claims that it benefits taxpayers. A recent CBO 

report debunks claims of future Ex-Im profitability. Ex-Im is projected to yield losses for taxpayers over the next decade. 

But taxpayers are unseen victims in other ways. The Ex-Im 

Bank transfers risk away from lenders and toward every single 

U.S. taxpayer that you represent. This creates what economists call 

‘‘moral hazard.’’ Since well-connected lenders like CitiBank and 

JPMorgan bear almost no risk when a company defaults, they have 

less incentive to apply transaction oversight. They collect high fees 

on billion-dollar loans in good times, but normal taxpaying Americans must pick up the tab in bad times. 

Everyone in this room knows who will benefit if the Bank is reauthorized, because the beneficiaries are few enough in number 

that they can effectively organize and are wealthy enough to apply 

significant political pressure. But what about the forgotten firms, 

workers, taxpayers, and consumers whose voices are so easily 

drowned out by the corporate beneficiaries of government privilege? 

They should not matter less than Boeing, GE, and Caterpillar. This 

is your opportunity. 

Thank you. 

[The prepared statement of Dr. de Rugy can be found on page 

133 of the appendix.] 

Chairman HENSARLING. Captain Moak, you are now recognized 

for your testimony. 

STATEMENT OF LEE MOAK, PRESIDENT, AIR LINE PILOTS 

ASSOCIATION, INTERNATIONAL 

Captain MOAK. Mr. Chairman, Ranking Member Waters, and 

members of the committee, I am Captain Lee Moak. I am the president of the Air Line Pilots Association (ALPA), and it is an honor 

to represent our more than 51,000 pilots. 

As a labor leader, I believe that airline employees should work 

with their companies to better our industry. ALPA’s goal is to 

make the pie bigger, rather than focusing on getting a bigger 

share. Ensuring our company’s ability to compete is essential in 

safeguarding U.S. jobs and our national economy. 

14 

I don’t believe in subsidies. If we are going to grow our economy, 

it must be based on fair competition. Fair competition is good. And 

on a level playing field, I am here to tell you, U.S. airlines can compete with anyone in the world. 

However, we compete in a global economic environment. And it 

is one thing to compete with foreign airlines that are subsidized by 

their government and I know I can’t do anything about them, but 

it is an entirely different matter to compete with foreign airlines 

that are subsidized by our government. We need to do something 

about that. 

This is where the Export-Import Bank comes in. I don’t take 

issue with the historic mission of the Bank, but the Bank has lost 

its way. Today, the Bank is being used to provide subsidies to foreign companies—companies that don’t need the financing but use 

the advantage to undercut U.S. companies. 

Recently, the House of Representatives voted unanimously to require the U.S. DOT to simply follow the law when it considers foreign air carrier applications. Why does this matter? Because Norwegian Air Shuttle is attempting to subvert U.S. law and international policy to establish a flag-of-convenience operation. Norwegian has also applied for Ex-Im Bank financing that it does not 

need and that will hand it an unfair economic advantage which 

threatens U.S. airlines, U.S. jobs, the U.S. economy, and, I am 

going to tell you, U.S. national interests. We thank this committee 

for recognizing that unfair business practices such as NAI should 

be rejected. 

International flying is crucial for U.S. airlines. Tens of thousands 

of flight crews at the three largest U.S. carriers fly international 

operations, so our jobs are directly at risk from this competitive 

and inappropriate imbalance. 

Since the United States first implemented its open-skies policy, 

the U.S. share of international wide-body fleet has dropped from 45 

percent to 17 percent, and the share is now forecast to be at 5 percent by 2025. And if that doesn’t concern you, well, it should concern you. 

The threat affects airports such as Los Angeles International, 

where in 2013 American, Delta, and United flew only about 16 percent of the total international passengers. International jobs at 

mainline carriers are in jeopardy, but so are jobs at the small regional airports that are U.S. destinations for many of these international passengers. 

In 2013, the Ex-Im Bank approved $7.9 billion in financing for 

U.S.-made aircraft that will be operated by our foreign competitors. 

Ex-Im financing is not available to U.S. airlines, and, through this 

financing, the Bank is effectively providing a subsidy to foreign airlines that operate on routes that are, have been, and could be 

served by U.S. airlines. 

As a result, U.S. airlines have been forced to withdraw from or 

not enter key international routes. One example mentioned earlier 

is Air India. Using its Ex-Im Bank-subsidized airplanes, the stateowned airline flooded the U.S.-India market. And, in 2008, this excess capacity forced Delta Air Lines out of the New York-Mumbai 

route, displacing U.S. workers due to unfair competition. And that 

15 

was U.S. jobs that we lost directly as a result of actions by the ExIm Bank. 

In 2012, the reauthorization, Congress rightly directed the Treasury Department to negotiate with the European Union to end widebody aircraft financing. ALPA encourages this committee to seek a 

full accounting of that effort. 

And I am going to say, because I could go on and on, thank you, 

and I am looking forward to all your questions, every one of them. 

Thanks a lot. 

[The prepared statement of Captain Moak can be found on page 

176 of the appendix.] 

Chairman HENSARLING. Mr. Wilburn, you are now recognized for 

your testimony. 

STATEMENT OF STEVEN P. WILBURN, FOUNDER, CHIEF 

EXECUTIVE OFFICER, AND PRESIDENT, FIRMGREEN, INC. 

Mr. WILBURN. Thank you, Chairman Hensarling, Ranking Member Waters, and the honorable members of this committee, for allowing me the great honor to be here. 

Mr. Chairman, I do apologize. I am a disabled veteran, and I 

have post-traumatic stress disorder. I am not using that as an excuse, but I don’t have a staff to write my reports or anything, or 

my written statement. So when I got that email from one of your 

staff members that said they had to have my statement right away, 

I was editing it in realtime on an airplane coming from California 

with WiFi. 

So I don’t want to take up more of my time than that, but I just 

thought—hopefully, that clears the record. No one influences my 

statement. No one ever will influence my statement. I guarantee 

you that, sir. 

With that said— 

[applause.] 

Mr. WILBURN. And that is—I wasn’t looking for that, but thank 

you. 

My name is Steve Wilburn, and I am the CEO of FirmGreen. I 

am married to Margaret Wilburn, the proud father of five children, 

nine grandchildren, and one great granddaughter. I won’t bother 

with their names right now because it would take up too much of 

my time, but I love them. 

I work hard for them. I built this business for my family first 

and my employees second. My employees are treated like family. 

We are a small company. I want to put a face on small business 

today, if I can, okay? It is an awesome burden, because there are 

thousands of small businesses out there. I don’t have the authority 

to speak for all of them; I can only give you my story. 

And Semper Fi to you, sir, and thank you for your service. 

I started pursuing the FirmGreen dream 10 years ago. I am a 

firm believer in the Lord, my God. And serving as a Marine in 

Vietnam, I fought for equal rights for all, for free trade, limited 

government. But I do not share, nor do I understand, the rabid 

antigovernment animus that seems to be motivating the current attacks on the Export-Import Bank. Government, in my view, is simply people working collectively to accomplish things for the greater 

good that can’t be done by individuals alone. In combat, I could not 

16 

have survived without my fellow Marines. We cooperated. That is 

the way I thought we acted in America. 

I firmly believe that the Ex-Im Bank delivers enormous value to 

Main Street America. It provides small businesses like mine with 

the opportunity to grow in a prospering commerce without borders. 

We are not limited to domestic markets; we dare to reach out to 

the world’s markets. 

For example, in my award-winning biogas project in Brazil, my 

client asked me how we intended to present our ECA-financed proposal for the project. I was embarrassed. I had to ask him what 

‘‘ECA’’ meant. They laughed and said, that meant the export credit 

agency, your Ex-Im Bank. That is how I was introduced to the concept of Ex-Im Bank support. I was that naive. 

I was competing with Air Liquide and Linde Corporations, billion-dollar companies, much more prepared for that type of discussion and finance plan than me. But my clients and I went to the 

Export-Import Bank of the United States, my clients went through 

a very rigorous underwriting, and, thankfully, they were approved 

for that financing that I could not obtain through my private Bank. 

At that time, it was Wells Fargo, and they just basically told me 

that it didn’t meet their underwriting criteria. 

I am going to deviate from my prepared remarks a bit more and 

just say that, due to the air of uncertainty swirling around the reauthorization, in large part, I think, by harmful words uttered by 

the Bank’s opponents in an orchestrated, unprecedented, nonstop 

public smear campaign, I feel I lost a valuable contract in the Philippines. 

Words do have consequences, especially when they are uttered by 

people in power and position. I am a small man. I cannot combat 

the machines that are out there saying what they are saying. I am 

not a crony capitalist. I don’t receive any welfare, corporate welfare, whatever you want to call it. We work hard. 

As a result of losing the memorandum of understanding—because the Korean Bank came in with my Korean competitor who 

had lost to me, and they basically came up and said, ‘‘The Bank 

is not going to be reauthorized, he is not going to get to deal’’—now 

my employees, including Ms. Dena Elbayoumy, my general counsel, 

are on furlough. We are scrambling. 

Please, words have consequences. Be careful. 

I will yield back the balance of my time. 

[The prepared statement of Mr. Wilburn can be found on page 

196 of the appendix.] 

Chairman HENSARLING. Thank you— 

Ms. WATERS. Mr. Chairman, if the gentleman needs extra time, 

I would request the same time that was allotted to Ms. de Rugy 

when she went over her 5 minutes. 

Do you need extra time, Mr. Wilburn? 

Mr. WILBURN. Not at this time. Hopefully I will have some adequate time in my answers. Thank you so much. 

Ms. WATERS. Thank you very much. 

Chairman HENSARLING. The Chair yields himself 5 minutes for 

questions. 

First, Mr. Wilburn, thank you very much for your service to your 

country, as I thank Captain Moak, as well. 

17 

I used to be, prior to coming to Congress, an officer in a green 

energy company, myself. I don’t know that much about your particular company, but it is a subject in which I am highly interested. 

But, Mr. Wilburn, I am still a little curious. I understand that 

you were on a flight, I guess, when you were sending your testimony. But I guess my first question is, was it simply a clerical mistake, or did you change your mind on whether or not TARP regulations in Dodd-Frank played a role in failing to finance the Brazilian company that sought your product? So is it a clerical error, 

or did you change your mind about including that in the testimony? 

Mr. WILBURN. No, it is not a clerical error. I didn’t have exactly 

all the facts in hand. 

Chairman HENSARLING. Okay. 

Mr. WILBURN. You will see, the rest of my written statement, I 

think it speaks to some of those issues surrounding that— 

Chairman HENSARLING. Okay. 

Mr. Wilburn, you heard the testimony of others on this panel. 

You were very passionate with your testimony, but, frankly, so was 

Captain Moak, and Mr. Anderson, as well. 

I have spoken to people, particularly those, for example, at Cliffs 

Natural Resources, who said that they are having to cut hours for 

working people, single parents. 

And so I guess my question is one of fairness. Perhaps Ex-Im 

is—I have no doubt Ex-Im helps your business, but do you acknowledge that it can hurt other businesses? 

Mr. WILBURN. I can’t speak to hurting other businesses directly 

unless I had a more specific example, Mr. Chairman, but I can say 

this, that it is not my intent to harm anyone. But if I don’t compete 

through the Export-Import Bank, I know who is going to be 

harmed. Because my competitors in foreign countries, financed by 

their Banks, will get those deals. 

And I believe the same would happen to the aircraft industry. If 

Boeing doesn’t sell those aircraft, I think— 

Chairman HENSARLING. Let me, then, ask you this question. 

‘‘Fairness’’ is a very subjective term, I understand that. But we 

seem to have a Federal policy that says, if you create a product and 

you want to sell it to foreigners, if you want to sell it to the Chinese, the Federal Government will step in and subsidize you, but 

if you want to sell your product to hardworking Americans, then, 

no, no subsidies for you. 

And so, I am thinking about small businesses in my own district. 

At Annexus Personnel and Business Services in Mesquite, the 

owner said: ‘‘My mother and stepfather opened up the business 

without any government subsidies. They used their own retirement, 401(k), other resources to pay for rent. We had to go to auctions to buy office furniture. Small businesses like ours can’t rely 

on the government.’’ 

So, again, I guess, by definition, you received the subsidy, you believe it is necessary to your business model. I accept that. But how 

is that fair to the other millions and millions of small businesses 

who sell to Americans but don’t get their products subsidized by 

the Federal Government? 

Mr. WILBURN. Sir, I would love to compete on a fair basis in 

America with my green technology to take biogas into methane. I 

18 

don’t get a subsidy. I take exception to your remark. My point is 

that 15 percent— 

Chairman HENSARLING. Does Ex-Im not subsidize the financing 

for your product? 

Mr. WILBURN. I don’t believe that I am subsidized. 

Chairman HENSARLING. Okay. 

Mr. WILBURN. I don’t believe that at all— 

Chairman HENSARLING. Okay. 

Mr. WILBURN. —sir. Let me speak to that point, if I may, Mr. 

Chairman, with all due respect. And I do respect you from the bottom of my heart. 

My point is that—you asked a question. I can’t sell my technology here because there are barriers to entry to the market, and 

the barrier to entry to the market is that the oil and gas industry 

is subsidized with a 15-percent oil and gas depletion allowance. I 

don’t get that, as a biogas producer. I can’t put my biogas into the 

pipelines in California that is a pipeline equivalent because— 

Chairman HENSARLING. Mr. Wilburn, we would be happy to work 

with you and try to make you— 

Mr. WILBURN. Well— 

Chairman HENSARLING. —so much more competitive in— 

Mr. WILBURN. —I am trying to be responsive, Mr. Chairman. 

Chairman HENSARLING. —that area. I have limited time. 

Dr. de Rugy, the proponents of keeping Ex-Im as the status quo 

have painted an apocalyptic vision should the Bank fail to be reauthorized. Is that an accurate vision, in your opinion? And if not, 

why not? 

Ms. DE RUGY. I don’t think it is an accurate version, Mr. Chairman. For one thing, as I said in my testimony, less than 2 percent 

of U.S. exports are backed by Ex-Im, and that doesn’t consider the 

possibility that these exports would happen independently of the 

existence, absent the Bank. 

More importantly, we have to think about some of what the other 

witnesses have said. So, for instance, a large part of the activity 

of the Bank is to subsidize big companies, Boeing, in particular. 

In the loan guarantee, 66 percent of the activity of loan guarantees through Ex-Im benefits Boeing. Boeing is selling planes to 

companies that could get access to credit, as we have heard, without the loan guaranteed. 

More importantly, Boeing has a really important and wealthy financing arm and it could do a lot of things itself, and it does. 

Chairman HENSARLING. My time has expired. 

The Chair now recognizes the ranking member. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

I would like to explain to those who are wondering why there are 

three individuals presenting who all seem to be opposed to the reauthorization—let me explain the rules. These three individuals 

were invited by the opposite side of the aisle and we only get one 

witness, and that is Mr. Wilburn, who is here. 

So I don’t want you to think that somehow these witnesses were 

objectively chosen and that there are more people against reauthorization than for reauthorization. We just only get one witness to 

come here today. 

19 

Having said that, I would like to enter this letter into the record. 

This is a letter that our witness told us about where he lost a 

multi-million-dollar contract because of uncertainty regarding the 

future of Ex-Im. 

Chairman HENSARLING. Without objection, it is so ordered. 

Ms. WATERS. The letter reads, ‘‘Dear Mr. Wilburn, In view of the 

uncertainty of the reauthorization of the Ex-Im Bank and project 

finance structure you propose have become problematic, we have 

made the decision in May this year not to proceed with your project 

offering. Our previous partner developer has provided us assurance 

of the certainty of obtaining satisfactory finance from the ExportImport Bank of Korea for our carbon biomass waste-to-energy 

project. With previous discussions with you, we had the impression 

that your company, FirmGreen, can provide the best technology for 

our project, but without terms similar to that being offered by the 

Ex-Im Bank of Korea, it would be impossible for our company to 

conclude a transaction.’’ 

Thank you for entering that. 

I have other letters that I would like to read and share with you. 

This is from your district, Mr. Chairman, from Mr. Gabriel 

Ojeda, who is the president of the Fritz-Pak Corporation. I will 

read an excerpt: 

‘‘During the past 5 years, we have grown our international sales 

from 15 percent to over 35 percent of our business. We now have 

major trading partners in over 30 different countries including 

Brazil, Russia, India, and Taiwan. Most recently, we exhibited our 

products at the BAUMA International Trade Fair in Munich, Germany. In addition, our products were used in the construction of 

the Sochi Winter Olympics in Russia. 

‘‘So what is Fritz-Pak Corporation today? We are an American 

manufacturer of the best concrete admixtures in the world, and we 

sell them as far north as Yellowknife, Canada, and as far south as 

Wellington, New Zealand. We may be small, but we think big. In 

an age where everything seems to be made someplace else, we are 

thriving here in the United States. And it is in no small part due 

to the services provided by Ex-Im Bank.’’ 

Mr. Neugebauer, we also have a letter from your district, from 

Air Tractor, Inc., and I will read an excerpt: 

‘‘As a small business that employs 265 people, 25 percent of those 

employees are supported by the Ex-Im Bank. We use Ex-Im Bank 

to create jobs in rural America. Ex-Im Bank levels the playing field 

so that small businesses can grow. 

‘‘Ex-Im Bank is a self-sustaining operation that has a solid history of making money for U.S. taxpayers. It has created millions 

of new jobs in the United States. Reauthorization of the Ex-Im 

Bank is a simple issue. Ex-Im creates and sustains jobs, strengthens the brand of American-made goods, and reduces our national 

deficit. If Ex-Im Bank ceases to exist, the deficit will increase, and 

we will lose jobs in Olney, Texas.’’ 

Mr. Chairman and Members, you are going to hear a lot from 

small business here today because we have received any number 

of letters from all over America, many of them from small businesses talking about the importance of the Ex-Im Bank. 

20 

Jobs, jobs, jobs. As was said earlier, we all talk about jobs. We 

have been through a recession. We almost went into a Depression. 

We still have high unemployment in many of our areas, and we are 

all saying to our constituents that we are going to do everything 

that we can to provide jobs. 

But when we look at how we lost our manufacturing base in this 

country and how Ex-Im is helping us to re-create and develop and 

sustain manufacturing, which creates jobs, we say that is what we 

want. But here we are talking about not reauthorizing Ex-Im, 

which is responsible for these jobs and job creation. 

And so I submit to you these letters. I would ask my colleagues 

here on this side of the aisle—if you have letters or information 

from your businesses in your district, now is the time to share 

them. 

And, with that, Mr. Chairman, I won’t use up all of the time that 

you allotted me because you used extra time. I just think the message is clear. Jobs, jobs, jobs. 

I yield back the balance of my time. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from California, Mr. Campbell, chairman of our Monetary Policy 

Subcommittee. 

Mr. CAMPBELL. Thank you, Mr. Chairman. 

You know, I sat in this very room however many years ago it 

was—I guess 3 or 4 or whatever—when the Ex-Im Bank was reauthorized for its current reauthorization, and there were about 6 

people sitting out there. 

The vast majority of the American people never heard of the ExIm Bank. This American had never heard of the Ex-Im Bank before 

being elected to Congress. 

I doubt that the Ex-Im Bank’s footprint on the American economy has grown or contracted since that time. But, yet, this room 

is full, and I understand there is an anteroom that is also full. 

And it seems that the debate over this Bank has become a proxy 

for a bunch of other things. But amongst the things that it has become a proxy for, in my view, is how we operate around here and 

how we operate in this place. 

And it seems there are only two options that are being discussed. 

One is the complete elimination of the Ex-Im Bank, and the other 

is the complete reauthorization of it as it is. 

But you know what? I think there is a third option. I think there 

is another way to do this that doesn’t involve complete elimination 

and doesn’t involve assuming that the Bank has nothing wrong 

with it and that it is absolutely perfect the way it is. 

Some months ago I formed—as the subcommittee chairman of 

the relevant subcommittee, I formed a working group to work on 

reforms for the Ex-Im Bank. 

Regrettably, none of my friends on the other side of the aisle— 

that is my fault, not theirs—were in that working group. But 

amongst the Republicans on our side of the aisle, we had a broad 

spectrum of Republicans. 

It included people who were and probably are still opposed to the 

Ex-Im Bank and its reauthorization and others who came in favoring it, and we did develop a work product, which until now, I have 

not released to anyone. 

21 

But, Mr. Chairman, I have a discussion draft. This is the work 

product of that working group, which I would request be entered 

into the record. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. CAMPBELL. And for those of you out there, this will be up on 

my Web site very soon, and I will be issuing a press release on the 

same as well. 

Now, this is a discussion draft. It is in bill form. It has about 20 

different reforms to the Ex-Im Bank. Certainly I don’t, and I don’t 

believe the members of the working group, think that this is the 

final answer or the only way or whatever. 

But it is an idea and I believe an idea that we need to have not 

only about this subject, but perhaps about other subjects as well, 

where we need to—rather than we are going to do this over here 

or this over here, that perhaps there is something where we can 

agree that there are some problems we need to fix. 

But maybe we can fix them and maybe this thing can do what 

it was originally intended to do, what we all would like it to do, 

which is support American jobs and American export and enable us 

to compete against all those other export-import banks around the 

world and do so in a more objective, a more—just a better manner 

than it is right now. 

And in my last little bit of time, Mr. Anderson, I heard you say 

that you felt the Bank should be reformed. I didn’t hear you say 

that it should be eliminated. Is that correct? 

Mr. ANDERSON. That is correct. And our position, by the way, the 

last time around when we were here, the reason there were only 

6 people in the room, we have been working on this for 5 years because it has hurt us. And we got reforms and they were ignored. 

So that is why our position the second time around is, if it is not 

reformed, it needs to be abolished. Because we got all the reforms, 

and they were totally ignored. I can read you the language, but it 

is very—the language was strong, and the Bank has totally ignored 

it. 

Mr. CAMPBELL. Okay. Mr. Anderson—and I don’t know whether 

the reforms—this working group, we didn’t have you, we didn’t 

have Boeing, we didn’t have anybody in the room. It was just us 

working on what we felt was right. 

Mr. ANDERSON. That was probably good. 

Mr. CAMPBELL. And so—and what we felt was right. And we did 

something which we believe begins to address your issue. It doesn’t 

necessarily eliminate your issue, but we believe it begins to address 

it. But that is what we tried to do. 

Mr. Wilburn, just picking someone on the other side of the issue, 

do you have—you obviously are supportive of the Bank. 

Do you have any objection to looking at things we can do to reduce the taxpayer risk, but perhaps continue its mission? 

Mr. WILBURN. Helping businesses compete, whether they are 

small or large on the global stage, I am all for that. I am a free 

market guy. 

Basically, I agree with 95 percent of what has been said here 

today. So, I applaud the Delta chairman and the other Members for 

stating that they don’t want to abolish the Bank. 

Mr. CAMPBELL. Thank you. I yield back. 

22 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from New York, Mrs. 

Maloney, ranking member of our Capital Markets Subcommittee. 

Mrs. MALONEY. I thank the chairman and all the panelists and 

the ranking member. 

I believe we live in a very inconvenient truth right now, especially in global capitalism, and as much as we like to think that 

American businesses may not need any help, but what they are 

competing against is that total support, in some cases, subsidy, in 

some cases, is even owned by the foreign government. 

And if we were not, we would be unilaterally disarming in the 

international stage, putting American jobs and exporters at risk. 

Oftentimes what we hear in Congress is, ‘‘We are not exporting 

enough. Why isn’t America exporting enough?’’ 

Our number one exporter is Boeing. Boeing exports a lot of 

planes, but they are competing against Airbus that is subsidized, 

financed, and even owned by a government. 

And a lot of the areas where we are exporting and competing, the 

subsidies from their governments are far deeper and stronger than 

ours. 

I fail to understand why we would in any way want to disrupt 

an agency that is helping export American goods, create American 

jobs, and is not costing taxpayers any money. I think this is something that we should expand. 

I was at one export meeting where, literally, a company in New 

York was exporting clothing to China. I thought that was a great 

thing. Why in the world would I want to stop an agency that is 

helping them to do that? 

Therefore, I ask unanimous consent to place in the record a document that has been signed by 865 organizations and businesses in 

America supporting the Ex-Im Bank, including the Chamber of 

Commerce and, also, the National Association of Manufacturers. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mrs. MALONEY. I have to think that 865 organizations and businesses can’t be wrong, I tell you. 

And I just wanted to ask Mr. Wilburn: The opponents of the 

Bank claim that trade finance should be left to the private sector. 

What has been your experience with finding commercial lenders 

willing to extend credit to foreign buyers who want to purchase 

your company’s services? 

Mr. WILBURN. Recently, I just obtained some private finance for 

my three works in progress in Brazil. The problem is that I had 

to pledge my house, my intellectual property, my inventory, everything I own. 

I am a risk-taker. I am willing to do that. But I can only do that 

once, because once I pledge that collateral for those three, I can’t 

take care of the next six, seven that we are working on. 

And if there are those sources out there and the committee members know them, the chairman or anybody—or anybody hearing 

these words today—if you know these sources of private finance, 

please get in contact with me and the other small business people. 

I know they desperately would like to have that as a solution. 

Thank you. 

23 

Mrs. MALONEY. I have all these stacks of letters from businesses 

in support of the Ex-Im Bank. I would also like to ask unanimous 

consent to put it in the record and, also, one from labor. Labor is 

supporting it on the basis that this creates jobs in America. 

I ask unanimous consent to place this in the record. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mrs. MALONEY. And in response to Mr. Anderson, I am a big fan 

of Delta. I fly it about once a week. I love the airline. 

Mr. ANDERSON. Thank you. 

Mrs. MALONEY. And I was pleased to vote for the support for the 

bailout by the Federal Government after September 11th. 

I think we voted to transfer the pilots’ pension obligations to the 

Federal Pension Benefit Corporation. So, we have provided that 

help. And that is a subsidy, I would say, and we needed to do that. 

And I supported it. I voted for it. 

And I think, also, that to this day, we have passed bills that restrict and prohibit foreign air carriers from competing with Delta 

by flying routes within the United States, that we are trying, in 

our own way, to help the private sector compete and win in a world 

economy and provide the wonderful service that you do. 

But I, for one, am going to be writing Boeing and asking them 

to write in their own words whether they think the Ex-Im Bank 

has been helpful in allowing them to compete and win and who are 

their competitors and compare how much they are subsidized, if 

they are, to their foreign competitors in Asia and in Europe and, 

also, to GE and to every small company that is getting any help 

from the Ex-Im Bank. 

And all of our Members should do the same. And let’s create our 

own— 

Chairman HENSARLING. The time of the gentlelady has expired. 

Mrs. MALONEY. —report on what we are hearing from American 

workers and businesses. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Alabama, the chairman emeritus of the committee, Mr. Bachus, for 5 minutes. 

Mr. BACHUS. I thank the chairman. 

And I would say to all Members, Mr. Anderson, what he is saying is identical to what he and the Air Line Pilots Association and 

the union representatives were saying when we reauthorized this 

bill in May of 2012. 

And I met with Chairman Hochberg in March. In fact, several 

Members on both sides expressed the same concern that Mr. Anderson had. And I was told at that time that they would sit down 

with Delta, and I was also told that Boeing would take a look at 

it. 

We then put in the language of the reauthorization, directing the 

Treasury Secretary to initiate and pursue multilateral negotiations 

for reducing and eliminating government export subsidies for aircraft. 

We specifically told them that we were concerned about widebody aircraft, two companies that had government-owned subsidies, 

rich companies, as Mr. Anderson said, and everybody expressed a 

great sensitivity to this. And we documented losses by American 

air carriers on overseas routes. 

24 

And that is what we are talking about. We are not talking about 

routes within the United States. That has nothing to do with this. 

Our American Airlines used to lead the world in these overseas 

routes. 

From the time that we reauthorize this, which, really, I say it 

is strong language, but it turned out it wasn’t that strong because 

it didn’t forbid these sales. And I could tell you that they are going 

to—as long as we don’t just forbid them, they are going to have 

them. 

Because when Mr. Hochberg met with my office—and I am going 

to later—when he testifies, I am going to show you my letter to 

him and his response, which was a nonresponse. We have always 

gotten those. 

Members also expressed to me some great concern on the Australian loan, but there were Members on both sides. I wrote Chairman Hochberg about that on behalf of several Members on August 

the 2nd. We then inquired about the status of our letter, and we 

were told they were going to respond. 

On December the 20th, I woke up to read in The Wall Street 

Journal that the loan had been approved after my August letter. 

No response. 

Finally, on February the 19th, 2 months after the loan was approved and announced, and the iron ore industry, the miners; there 

were all sorts of union groups that were expressing concern—he 

wrote me back and he said, ‘‘We approved it.’’ 

In my letter, I asked him to get with us and we wanted—there 

was no detailed analysis of the financing request or how it would 

affect U.S. jobs, and I asked him to share that information with 

me. 

And I know Mr. Hochberg is here. I look forward to maybe some 

explanation. But no one from Ex-Im gave us any of this information. 

They didn’t even give it to us—he just said, if I have questions, 

I should call him. This is for a loan that had already been made. 

I had what I considered a commitment from Ex-Im Bank and so 

did Mr. Anderson on a directed prohibition that was costing probably 10,000 U.S. jobs. These jobs have been being eliminated since 

1978, when they started doing this. 

There are estimates that this one mine produces more iron ore 

than our entire U.S. production, and it shut down iron ore production in this country as a result, a lot of it. 

But we got a lot of promises and then we reauthorized and 

then—and even the Treasury Department, when I asked them— 

and I will say, if I could have 30 seconds, I asked them, ‘‘What are 

you going to do about these negotiations?’’, they basically told us, 

‘‘What are you going to do? Are you negotiating?’’ ‘‘Well, we formed 

a talking group.’’ And they basically just blew us off, the staff. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. The ranking member notes that only Mr. Wilburn 

here is outnumbered three to one, but I will point out his arguments are 3 times as good; and, therefore, I think it is fair. 

25 

It has been noted that Ex-Im Bank is financing the sale of airplanes to airlines that could get credit from somewhere else. That 

is entirely true. 

Every one of those airlines could get credit from the export credit 

agencies of Germany and France. There is only one catch. They 

would have to buy an Airbus. 

So the question here is not whether the buyer could make the 

purchase. The question here is whether the buyer will purchase the 

U.S.-made product. 

And we are told that only 2 percent of American exports are at 

stake here. America is running the largest trade deficit in the history of the world. We can’t afford to give up 2 percent of our exports. We can’t afford to give up half a percent of our exports. 

We are told that there has been a scandal involving some officers 

of Ex-Im Bank. There has also been a scandal involving officers of 

the United States Navy dealing with the repair of our ships in the 

Pacific. Yet, no one is proposing that we deauthorize the United 

States Navy. 

I look forward to working, hopefully, with the chairman, and perhaps the gentleman from California, to improve Ex-Im because I 

don’t think our position is that everything is perfect and none of 

these criticisms deserve any attention. 

One of those reforms would be to have language and even more 

clear language to say that they can’t make a loan or guarantee a 

loan without looking at the total effect on U.S. jobs. 

One particular area is airplanes. We are supposed to have an ExIm Bank to finance exports. If you’re talking about a power plant 

being built in India, the turbine is an export. If the power plant 

is in Indiana, it is not an export. It doesn’t matter whether the 

company that owns the plant is in Germany or the United States 

or India. 

Planes are different. They fly. And whether a plane has been exported or not doesn’t or shouldn’t depend upon the headquarter’s 

building of the buyer. It should depend upon where the airplane 

will be used. 

There are two approaches we could take. 

One is to allow U.S. airlines to consider an export and, therefore, 

get Ex-Im financing on a plane that they are going to use in international routes in competition with foreign airlines that are also eligible for Ex-Im financing, should they buy American planes. 

The second approach is to deny Ex-Im financing to those foreign 

airlines when they are buying a plane that is going to be used to 

fly to and from the United States. 

But these are things to explore. I think to throw out 2 percent 

of our total exports because of one issue affecting flights to Asia 

and the Middle East would be a mistake. 

Now, Mr. Anderson, you have financial statements that you send 

to shareholders and maybe you really have a choice. You could use 

GAAP accounting—generally accepted accounting principles—or 

some have suggested that we use fairytale-value accounting. 

When you produce a P&L statement, one of the biggest items on 

it is your interest expense. Do you report the interest expense you 

have based on the deals that you have made with your Banks and 

26 

bondholders or do you instead report the interest expense you 

would have had if you lived in a fair world? 

When I read your income statement, do I see as interest expense 

what you are actually going to pay your lenders or some notion of 

fairness as to what you would be paying if only the world were 

fair? It is an easy question. 

Mr. ANDERSON. No, it is not. 

Generally accepted accounting principles have various methods 

for how you account for different— 

Mr. SHERMAN. Do any of them involve you reporting as your interest expense what the interest expense would be in a fair world? 

Mr. ANDERSON. Yes. In some instances, in the case of a merger 

where you have to go back to fresh-start accounting— 

Mr. SHERMAN. Okay. In some limited— 

Mr. ANDERSON. No. It is not limited. We have a— 

Mr. SHERMAN. You just had a merger. 

Mr. ANDERSON. We have a lot of interest expense on our balance 

sheet that is not the actual interest we pay because the generally 

accepted accounting principles require you to market-to-market. 

Mr. SHERMAN. That may be. But you don’t do it and say, in a 

fair world, interest rates would be the same for you as they are for 

the Emirates. 

You don’t say Pizza Hut should report the same interest cost as 

the local pizzeria or the Pellicola Pizzeria reports the same interest 

cost as Pizza Hut. 

You report—you just had a merger. I know you are an expert on 

merger accounting—or at least you have had a big experience with 

it. 

In the ordinary case and without a merger—I don’t think Ex-Im 

Bank is going to do a merger with its German competitor—you report interest expense based on the deal you negotiated, not based 

on an imaginary fair world. 

Mr. ANDERSON. Look, I am not trying to obfuscate. 

In some instances, you do. In some instances, you have to come 

to a fair accounting standard. I wish it were that simple. 

Mr. SHERMAN. None of those reflect a really fair world. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from West Virginia, 

Mrs. Capito, chairwoman of our Financial Institutions Subcommittee. 

Mrs. CAPITO. Thank you, Mr. Chairman. 

Mr. Anderson, how many employees does Delta Air Lines have 

in the United States? 

Mr. ANDERSON. We have about 78,000 employees in the United 

States and probably a quarter of a million retirees. 

Mrs. CAPITO. Is that up or down or pretty steady? 

Mr. ANDERSON. Actually, we are hiring quite a bit right now. We 

are hiring about 600 pilots a year and over 1,000 flight attendants 

a year. So we are growing our employment without any government aid, by the way. 

Mrs. CAPITO. And you made a mention in your comments that 

with the Ex-Im Bank’s behavior in financing wide-bodies around 

the world, you kind of quantified it as to maybe 1,000 jobs it might 

have cost you. 

27 

Could you expand on that a little bit? 

Mr. ANDERSON. Well, that was a specific instance of Air India. 

And when I hear the notion of this arms battle, what the Ex-Im 

is doing is putting our employees in the crossfire because it is U.S. 

airline jobs that are lost when heavily subsidized foreign-owned 

airlines are able to then also get a subsidy from our Treasury. 

And it has reduced the growth of our company. This is the first 

year we will actually have any real growth in the last 5 years. And 

we see it in the marketplace by the entry of carriers with Ex-Im 

Bank finance below-market financing. 

Mrs. CAPITO. So the argument to either relook and reshape, like 

Mr. Campbell is saying, or deauthorize, as I was—it is small business jobs, but it is businesses that have 75,000 employees at the 

same time. 

Mr. ANDERSON. Exactly. And the point is I don’t understand why 

we don’t have the same view about jobs that are hurt by the Bank 

as we do about small business jobs. These are all really important 

jobs. 

And the small business part of what Ex-Im does is actually really 

small and is pretty new to the Bank because, after the last reauthorization fight, the Bank went into a really aggressive marketing 

mode to small business so that it would have constituents in every 

congressional district. 

Mrs. CAPITO. Right. 

Mr. ANDERSON. Let’s set that aside. 

The real issue is 90 percent of this goes to the top 10 biggest 

companies in the United States that are well-funded and well-capitalized. And that is what we are focused on. 

Mrs. CAPITO. Thank you. 

Mr. Wilburn, I don’t know if you remember, but in my opening 

comments I commented about the Administration—the Ex-Im 

Bank’s policy of not funding coal-fired power facilities, including 

coal technologies, except in developing countries. 

You are a green energy company developer, and I love green energy jobs. We love our coal jobs. They are just as important to us 

as a green energy job is to you. 

Do you think, in thinking about this, that it is proper for an entity such as the Ex-Im Bank, because it has a certain environmental 

belief, to disenfranchise one American job over, say, one of the jobs 

in your company as a green energy company? Don’t you think those 

jobs should be treated equally if we are going to be looking at financing exporting across the globe? 

Mr. WILBURN. Let me respond that, basically, I am very supportive of technologies that are good for the environment, and I 

think the coal industry—particularly my family has a background 

in that and were affected by it. 

I think the point here is, though, that the Bank is looking at an 

environmental policy. Okay? And I am not an expert on it. I serve 

on the advisory committee of the Ex-Im Bank on the environmental 

and renewable energy committee. 

And what I have tried to advise them of is to be cautious when 

we are taking a look at the environmental impact, make sure they 

have the data, make sure that they have the studies and the reports; don’t just make arbitrary decisions. 

28 

And I think, for the most part, they have been listening to me, 

but I understand your argument. And all I can say is that I want 

an environmentally sound policy by Ex-Im Bank that creates and 

protects American jobs. 

Mrs. CAPITO. Thank you. 

I looked at your list of your vendors and you are in and around 

in the State of Virginia. You just need to slip over the border there 

and bring a few over to West Virginia. Importing those jobs into 

West Virginia will be— 

Mr. WILBURN. Give me the names and the addresses. I will be 

happy to talk to them. 

Mrs. CAPITO. All right. Thank you so much. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from New York, Mr. 

Meeks, ranking member of our Financial Institutions Subcommittee, for 5 minutes. 

Mr. MEEKS. Thank you, Mr. Chairman. 

And I thank the ranking member. 

First, I want to just say thank you to Mr. Anderson. Delta Air 

Lines is one of the largest employers in our district, and we really 

appreciate what you have been doing at JFK airport, the expansion 

there and the folks that you have been adding. So, we want to 

thank you for that. 

And, as a result, I have made sure that I was reading your testimony very, very carefully because we do want to create jobs and 

I think that is tremendously important. 

But in looking at it, I just wanted to double-check, because I 

would just like to ask first outright, and I will start—I think I 

know where Mr. Wilburn is in reference to the reauthorization of 

Ex-Im. 

But I just was wondering, to, first, Captain Moak, do you think 

that we should do away with Ex-Im or should Ex-Im be reauthorized? I just want to know ‘‘yes’’ or ‘‘no’’ before we get into—what 

do you think about Ex-Im? 

Captain MOAK. First, I want to thank the Congressman. I fly out 

of Kennedy. You have done an incredible job up there. 

I have been there since 1994, flying a Boeing airplane 767. Great 

airplane. I want to thank you and what you have done for my 

members. We have thousands of our members up there. 

The Ex-Im Bank needs to be reformed because we have lost jobs 

at John F. Kennedy Airport because of actions by the Ex-Im Bank. 

It needs to be reformed, period. 

Mr. MEEKS. So do you think that it would be okay if Ex-Im was 

not reauthorizing all of the jobs that are created by Ex-Im? 

I know we have to figure this out, but Ex-Im was not there. Because one of the things that concerns me—I am one of the largest 

supporters of trade. And the reason why I support trade is because 

I want to export our goods to other places. 

And then, when I hear an example—for example—and trying to 

level the playing field. There is an example that I know took place 

in 2011, for example. 

Brazil had the largest landline telephone company and the Republic chose to purchase the network equipment with China’s technology because of access to China Development Bank’s $30 billion 

29 

credit line, which came with a 2-year grace period on payments and 

an interest rate of 2 percentage points below the market rate. 

Now, that is just one example that I could give on how China has 

used its Banks to win new exports. This is our competition. And 

there are hundreds of other examples which I could give from all 

over the world. 

So my concern is and—to all of you—so wouldn’t you agree that 

several industries and export jobs throughout, which would devastate America? 

I wish I could just say I am focused only on JFK, but I have to 

think bigger than JFK in this one. 

I have to think about how I am a Member of the United States 

Congress who represents—I represent my district, but, also, my 

first—when I took—swore in is the overall benefit. 

And sometimes you have to figure out on a balance that— 

wouldn’t we be really jeopardizing export jobs without Ex-Im 

Bank? 

Captain MOAK. Sir, just to follow, we are here because we need 

your help to level the playing field. Right now, we are not able to 

compete, and we are losing jobs out of Kennedy. So we need leadership to reform the Bank. The Bank hasn’t followed the will of the 

Congress. 

Mr. MEEKS. But what I am getting at is this—and, as I said— 

and Mr. Anderson, I will go to you, also. 

See, because what I have to weigh here is the overwhelming balance of companies that come to me because I am a pro-trader that 

say this is absolutely important to them. 

And if I would show you the number of companies that have 

come to me and the jobs that they represent—because it absolutely 

would be devastating to them compared to one company that I like 

who have done something like, I have to say good, but compared 

to one company, then I have a decision to make, as a Member of 

Congress, especially me because I have to defend my own record 

of wanting to export things all over the world and making it easier 

so we can compete. 

And when I look at, for example—I know that there are other 

ECAs, almost upwards of 60 export credit agencies (ECAs) that 

exist in all of the other foreign countries, many of whom who do 

not even comply with international export credit standards established by OECD, and that such countries as China and Brazil and 

India offer below-market and concessionary financing alternatives. 

So I would think that—wouldn’t you agree that is what we need 

to look at so we can level those playing fields and, if we don’t level 

those, then we are putting at risk hundreds of thousands of American jobs because we cannot export to these other countries because 

there is no level playing field here? 

I see I am out of time. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Jersey, Mr. 

Garrett, chairman of our Capital Markets Subcommittee. 

Mr. GARRETT. And I thank the chairman. 

There are a number of different areas that we can talk about 

here, and I think the gentlelady to the right of me may go into this 

in more detail. 

30 

But just as a beginning, I will just do the highlight, and that is 

the fact that although there is a statement from the other side of 

the aisle saying that Ex-Im has never lost money, I think we have 

some documents to show that has not been the case over its somewhat sordid history of mismanagement, severe losses, and a past 

history of having to have been bailed out and recapitalized by the 

American taxpayer in the past. 

But I will let the gentlelady address that, if she chooses, later 

on. 

Secondly, to a technical point, Mr. Anderson, with regard to accounting and all those sort of things, GAAP accounting, under 

FASB rules—I think it is 157 because we have been in this on 

other hearings before. Fair value accounting. Right? That is part 

and parcel of your process, isn’t it? 

Mr. ANDERSON. Absolutely. I think most companies in America 

would love to have the government’s accounting system. 

Mr. GARRETT. Yes, exactly. 

The next point is on reform. And maybe I will throw it back to 

Mr. Anderson or anybody else. 

So, the idea is maybe we can just reform this. But as some of 

you indicated before, we have been down this road before. We reformed it before, passed legislation just a few years ago. We instructed Treasury to do something, and we instructed Ex-Im to do 

something. 

We instructed Treasury to try to enter into new negotiations and 

we tried agreements and we tried to have Ex-Im do cost-benefit 

analysis. 

Neither of those things were completed. Correct? You are nodding your— 

Mr. ANDERSON. You were totally ignored. 

Mr. GARRETT. Okay. So the question I have is: Before I think 

about re-re-re-re-reforming something, if we do that—and you don’t 

have to answer this—I am wondering why I will not anticipate 

being here 2 or 3 years from now after this re-reform has not 

been—or has been ignored again. 

Mr. ANDERSON. That is why we thought this problem was fixed 

last time and then we worked over the course of the last 2 years 

to try to get the reforms that both sides of the aisle agreed to enacted. 

Mr. GARRETT. Right. 

Mr. ANDERSON. Lael Brainard told me they were not going to negotiate with the Europeans over Ex-Im Bank subsidies right across 

the table in the Treasury Department. 

Mr. GARRETT. And, in the meantime, while we wait for the rereform to be implemented and find out that it is not implemented, 

how many jobs will we lose in the interim? 

Mr. ANDERSON. We are going to lose thousands. And that is why 

our position now has changed. Last time we tried to—we thought 

we had it fixed. 

Now our position is, if there is not a hard stop on wide-body financing for state-owned, creditworthy airlines, the Bank should be 

ended. 

Mr. GARRETT. And I appreciate it. 

31 

Our small business guy at the end, Mr. Wilburn, for what you 

are doing, I appreciate your service as well, and I appreciate your 

entrepreneurial spirit. 

I just have one bone to pick with you. I know you say you are 

a free market type of guy. And I think you said, ‘‘I pledged my collateral. I can only pledge that once.’’ And I get that, but I guess 

that is the way the free markets work. 

If I have an idea or a product or a business and I have capital, 

I can only pledge it once. And I guess the industry in front of us, 

they can only pledge it once. That is the rule whether you are a 

big guy or a little guy. You can only pledge it once. 

And even though—I have had lots of great business ideas but nobody wanted to invest in them. That doesn’t mean they weren’t 

great business ideas. 

But just because you have a great business idea and a great 

business model doesn’t mean that you can look to somebody else to 

finance it. You can try to seek somebody else to finance it. 

And that is what you’re trying to do, and it is great that you are 

on TV today, maybe. So maybe it will help you out there. But— 

Mr. WILBURN. That is not the reason I am here, with all due respect. 

Mr. GARRETT. My point is we should not be asking the American 

public to step in and be the one to ultimately finance once any 

business, big or small, pledges their collateral once. Independent 

investors should be the ones who are responsible for doing that. We 

should not ask the taxpayer to step in. 

And I will close, then, with Dr. de Rugy. Can you quantify any 

of what we are talking about here—Mr. Anderson has tried to—as 

far as, without a cost-benefit analysis being done like Ex-Im should 

have done, what we are really looking at when we continue down 

this road or path of picking winners and losers in this current system that we have as far as job losses. Do you want to talk about 

that? 

Ms. DE RUGY. It is very—it is very hard to know exactly how 

many jobs are lost. One of the things that we know is who the 

beneficiaries are. We also know that the Ex-Im Bank picks winners 

and losers and that is very different from the free market. 

And, also, we have 200 years of economic literature which explains that free market is the way to go and protectionism isn’t because it hurts consumers by raising prices. And with the Ex-Im 

Bank, it is not free market. It is protectionism. 

Chairman HENSARLING. The time of the gentleman has expired. 

Ms. WATERS. Mr. Chairman, I would request unanimous consent 

for Mr. Wilburn to have an opportunity to respond to the teaching 

that he just received from Mr. Garrett on oil and gas subsidies that 

he mentioned in response to Mr. Garrett’s claim that the government should not be subsidizing anything or anybody. 

Chairman HENSARLING. I am sure there are many Members on 

your side of the aisle who would be happy to yield more time to 

Mr. Wilburn. 

The Chair now recognizes the gentleman from Massachusetts, 

the ranking member of our Housing and Insurance Subcommittee, 

Mr. Capuano, for 5 minutes. 

Mr. CAPUANO. Thank you, Mr. Chairman. 

32 

And I thank the panel for being here. 

Mr. Wilburn, I just want to thank you for your commonsense approach. It amazes me that people can disagree on substance, but 

you deserve more respect than you have received here today, and 

I regret that approach, as one member. 

Mr. Anderson and Captain Moak, I think you raise interesting 

and very good points. I have actually worked with the ALPA in the 

past on a similar issue just in Massachusetts using taxpayer dollars to help encourage wealthy foreign airlines. I am more than 

happy to look at this. And Mr. Campbell and others have suggested 

that. 

However, I am not willing to shut down the Bank because, very 

simply, Ms. de Rugy, I have to tell you, I don’t live in the ivory 

tower. In the ivory tower, what you say makes sense. 

And if every country in the world would legitimately shut down 

their ex-im bank or their comparable one to it, I would consider it 

because I don’t disagree. This should be unnecessary. 

But I don’t live in that world. I live in the real world of fair competition. And when France has 4,600 people working for their exim bank and we have 400, if we want to compete, we need to do 

this. 

Ms. DE RUGY. But we have 200— 

Mr. CAPUANO. So, for me, that is part of the problem. 

With that, I would like to yield the remainder of my time to Mr. 

Heck, who knows a lot more about the Ex-Im Bank than I do. 

Mr. HECK. Thank you, Congressman. 

First, I want to thank especially Mr. Wilburn and Captain Moak 

for their service. It is deeply appreciated. 

Mr. Wilburn, I am interested, as a small businessperson out 

there trying to build something for his family and his employees 

kind of one day at a time, one contract at a time, whether or not 

you would be surprised that the company to your right, which has 

claimed such material damage and is represented by its own 

spokespeople, is now the most profitable airline in the United 

States, and arguably the world, and indeed made $2.7 billion in 

profits last year, for which I am grateful. I think that is a good 

thing. I am really glad. 

I am not asking the question of you, Mr. Anderson. 

Would it surprise you that the company has paid no Federal income taxes for the last 6 years and is projected not to for the next 

3 years? 

Mr. ANDERSON. Are you talking— 

Mr. HECK. Mr. Chairman, it is my time, not Mr. Anderson’s. 

Would it surprise you, Mr. Wilburn? 

Mr. WILBURN. I don’t know if I’m surprised. I can’t characterize 

it as surprise. It is new information to me I was not aware of. 

Mr. HECK. Mr. Wilburn, I am wondering if you would consider 

what the gentleman to your right has repeatedly said. 

Again, I want to interject here my gratitude for living in a Nation that builds the greatest airplanes in the world, which are 

flown by the most competent pilots. 

I did 150,000 miles last year and I didn’t lose one wink of sleep 

about my personal safety. And I thank you all for that, quite genuinely. 

33 

But, Mr. Wilburn, the gentleman to your right said repeatedly in 

his opening testimony—I want to make sure I get it exactly right— 

‘‘I don’t believe in subsidies.’’ 

Mr. Wilburn, would you consider it a subsidy that the Federal 

Government, through its Pension Benefit Guaranty Corporation, 

took over the pension liabilities of Delta and, at the point at which 

Captain Moak collects his, will, in fact, be provided by the taxpayers of the United States? Would you consider that a subsidy? 

Mr. WILBURN. Again, with all due respect, I don’t think I am 

really qualified to answer that, but I understand your point. 

Subsidies exist in a variety of different ways, and I am faced 

with that unlevel playing field every day. And I would have to have 

some more information on that, but you have piqued my interest. 

Mr. HECK. So, lastly, then, I am wondering whether or not you 

would consider it at least inconsistent that the company has argued that the existence of the Export-Import Bank to loan money 

to their competitors—will you consider it inconsistent that they 

have that view when, in fact, that same company borrowed from 

the Canadian export credit authority to buy what I deem short-hop 

airplanes? 

Mr. WILBURN. Again, I am not familiar with those facts, and I 

am learning a lot of things today in realtime and, as a small business guy, I am more focused on my issues. 

But I can tell you this. There are a number of issues raised here 

today, including the ones you mentioned, that lead us to a broader 

discussion. 

And the broader discussion is: What role does the Ex-Im Bank 

really play? These gentleman have opined and they have given 

their opinion. 

I can tell you just from my perspective, without the Export-Import Bank of the United States, people are going to buy in the Philippines, not my goods, but they are going to buy Korean goods, and 

they are going to buy that because it is financed by the Korean Export-Import Bank. 

So I think we need to get to their reasonable position and do 

some reforms, but get and save the Export-Import Bank of the 

United States. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Neugebauer, chairman of our Housing and Insurance Subcommittee. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. 

Mr. Anderson, I detected that you might want to respond to some 

of the questions that were raised awhile ago. Would you like to— 

Mr. ANDERSON. I would start by saying Boeing got a refund, 

didn’t pay any taxes. But Delta accrues its taxes at the full Federal 

tax rate. We don’t have any offshore subsidiaries. 

The reason why we are not a cash taxpayer is because we went 

through a very painful Bankruptcy and restructured our company 

without any subsidies from the government. 

We paid our premiums into the insurance—into the Pension Benefit Guaranty Corporation and, unfortunately for our pilots, we had 

to terminate their pension plan. And so Captain Lee Moak, I would 

correct the record, doesn’t have a pension because his pension was 

terminated. 

34 

We were able, with the help of this committee, to pass the Pension Protection Act in 2006 and save the pensions by getting an 

amendment to the law so that Delta can pay out over a billion dollars of pensions to our retirees today, and we are overfunding those 

pensions. 

So you hit a raw nerve when you look back at these people who 

went through a really tough restructuring—and we are a full taxpayer in this country—and these people bore the brunt of a tough 

Bankruptcy and a lot of them lost their pensions. 

Mr. NEUGEBAUER. I thank you. 

And, I want to expand on something that has been brought up, 

but I don’t think people realize the scope of that, and that is I was 

shocked to learn that 14 of the largest 20 state-owned or state-supported airlines receive Ex-Im funding. 

And so, just to put that in perspective, these countries—many of 

whom have fairly substantial sovereign wealth funds, are able to 

get financing backed by the U.S. taxpayers to compete with U.S. 

companies. 

Mr. Anderson, you mentioned, I think, a couple—India, Emirates, China. There is a long list of airlines that American taxpayers 

are subsidizing to compete with your airline, and that puts you at 

a disadvantage. 

Mr. ANDERSON. That is exactly right. The prime examples would 

be Singapore Airlines, which is owned by Temasek, the largest sovereign wealth fund in the world. Our government finances the airplanes. 

The largest oil-owning company in the world is Abu Dhabi. It has 

the largest oil reserves in the world and it owns and operates a 

government airline, and we, our Treasury, finances their airplanes 

well below market to fly into our markets. 

Mr. NEUGEBAUER. Now, one of the things that you mentioned in 

your testimony, too, is that—you said that you did not support reauthorization of Ex-Im Bank because you kind of felt like you got 

double-crossed on the last reauthorization, but you would support 

possibly a reauthorization that had some reforms. 

Do you want to elaborate a little bit on that? 

Mr. ANDERSON. Absolutely. Our position has been consistent. It 

was consistent at the last reauthorization. Language was put in 

the bill to fix these issues that hurt American jobs, and it was ignored. 

So we have taken a harder-line position this time, along with all 

the employees I have here and the 3,000 employees we have in Seattle, Washington, to require that there be real reform this time. 

We aren’t talking about small businesses. I respect small businesses. I want him to be successful. We want all small businesses 

to be successful. And this isn’t about small business. 

This is about 90 percent—95 percent of the money that this Bank 

uses are for the top 10 corporations. So, let’s not confuse the small 

business issue. 

This is about putting safeguards in place so that you, as Members of Congress, are not picking and choosing which companies 

win and which companies lose. 

35 

I think these jobs are just as important as the manufacturing 

jobs. If they aren’t, I would invite any Congressman here to just 

tell my employees that their jobs are not as important. 

Mr. NEUGEBAUER. I thank you. 

I had a question for Mr. Wilburn. 

Mr. Wilburn, has your firm ever received any Federal grants, 

loans, guarantees? 

Mr. WILBURN. No, sir. 

Mr. NEUGEBAUER. Okay. Thank you. 

And Dr. de Rugy, you have done some analysis on Ex-Im and 

their financing and their structure. I will have to—I see my time 

has expired, so I will submit it to you in writing. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Clay, ranking member of our Monetary Policy Subcommittee. 

Mr. CLAY. Thank you, Mr. Chairman. 

Dr. de Rugy, do you believe that there is an appropriate role for 

government to make sure financing is available for U.S. businesses 

in cases where the private sector is unable or unwilling to provide 

financing to legitimate business ventures? 

For example, what about commercial exports for nuclear power 

projects? I understand that these deals are often untenable for 

commercial Banks. Is it appropriate for the government to help finance such deals? 

Ms. DE RUGY. I don’t think the government should be in the capital market business because the way government allocates monies 

is based on politics and not on sound economics. 

And, more importantly, you have to understand that when the 

capital market does not allocate funds to someone because they are 

cash-poor, it is a feature of the capital market, not a bug, and it 

is unfair for Congress to demand that taxpayers be the one footing 

the bill because some people want to borrow money and are not 

able to find lenders to actually lend them that money because they 

don’t think it is a worthy or a safe enough bet. 

Mr. CLAY. Well, Doctor, isn’t it true that Congress picks winners 

and losers every year as far as through our Tax Code? 

Ms. DE RUGY. I agree. And I am against that, too. 

Mr. CLAY. Oh. You are against that, too? 

Ms. DE RUGY. I am against the government picking winners and 

losers. I think the general rule should apply. 

Mr. CLAY. And you have lobbied your Members of Congress on 

that, I assume? 

Ms. DE RUGY. I don’t lobby. I write research papers. 

Mr. CLAY. Well, at least you talk to them. 

Ms. DE RUGY. Yes. I specialize mostly on the budget. But when 

I have talked about tax reforms, I have talked about leveling the 

playing field. 

I don’t believe in giving tax credit to some companies and not 

others, or to taxpayers based on the fact that they are buying a 

house rather than renting. I believe in the general rule. I believe 

in a flat tax, for instance, rather than the system that we have 

today. 

36 

Yes, I am against the government picking winners and losers 

across-the-board, whether it is through taxes, through government 

funding, or through loan guarantees. 

Mr. CLAY. Thank you. 

Mr. Anderson, a review of U.S. airline purchases by U.S. carriers 

between 2012 and 2014 reveals that all of the recent capital market deals have been on more affordable terms and would have been 

available if the carriers had used the export credit that is made 

available to foreign purchasers of U.S. aircraft. 

Given this, how do you defend the claim that the United States 

is providing below-market rates to our foreign competitors? 

Mr. ANDERSON. This is a competitive business and, depending 

upon what your interest rates are—your interest rates are determined by your capital structure. 

And when the government gets involved and takes that market 

component out, we are no longer competing on who is the best at 

managing capital. You have distorted the market. 

Just because we have lower interest rates, that just means we 

pay our debts better, and we should have lower interest rates. And 

if a competitor gets lower rates for an artificial reason, they are 

getting a subsidy. 

Mr. CLAY. You don’t think it— 

Mr. ANDERSON. They should be in the marketplace— 

Mr. CLAY. Okay. 

Mr. ANDERSON. They should be in the marketplace raising capital the way we raise capital and having to pay a market-based interest rate and compete on that basis. 

Mr. CLAY. You don’t think France or England— 

Mr. ANDERSON. Pardon? 

Mr. CLAY. You don’t think France or England uses their ability 

to level the playing field for their airline-makers like Airbus? 

Mr. ANDERSON. No. Because there is something called the gentleman’s agreement between Airbus and Boeing. It is an oral understanding that creates something called the ‘‘home market rule.’’ So 

the United States, Britain, Germany, France, and Spain do not use 

and are not allowed to use export credit. 

Mr. CLAY. Okay. Thank you. 

I am going to yield the remainder of my time to my colleague 

from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you. 

Mr. Anderson, some of your points I actually think are good. I 

hate that everything becomes partisan here. Let me ask you one 

question. You were talking about the employees behind you and 

what you would say to them. What would you say to the 16 exporters in Kansas City, Missouri, my congressional district, which supports—because Ex-Im Bank supports about $84 million in exports 

each year. What do I say to them when I say that the Ex-Im Bank 

is closed? 

Mr. ANDERSON. I think we should put both our employees and 

your employees and say we are going to preserve and grow both of 

their jobs, and that is the reform that needs to take place. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Georgia, Mr. 

Westmoreland. 

37 

Mr. WESTMORELAND. Mr. Anderson, thank you, again, for being 

here and for bringing the crowd with you. 

So I guess to put it in just really simple terms, if a European 

government-subsidized or any government-subsidized airline buys 

a plane from Boeing, and you buy a plane from Boeing, you compete with them on some of the same routes. Is that not true? 

Mr. ANDERSON. We compete on virtually—in a global network, 

you complete on virtually all of the routes internationally in some 

form or fashion over the hub system. 

Mr. WESTMORELAND. And it is so if you were buying 60 planes 

from Boeing. Is that not correct? 

Mr. ANDERSON. Right now, we have about 100 airplanes on order 

from Boeing. 

Mr. WESTMORELAND. A hundred airplanes. If you had some of 

the same—even though you said you were paying cash, if you had 

some of the financing options that some of your competitors had, 

you may even buy more planes from Boeing and give Boeing more 

work to do. Is that true? 

Mr. ANDERSON. The market needs to dictate how many airplanes 

we own. I am not in favor of opening up export financing for U.S. 

carriers because I don’t think that is a free market. 

Mr. WESTMORELAND. Thank you. 

Ms. de Rugy, could you please tell me why it is misleading for 

the Export-Import Bank to claim that 90 percent of its loans actually go to small businesses? 

Ms. DE RUGY. That number is only correct if you look at the— 

it is actually not 90 percent. It is a little less than that, but when 

you look at the number of transactions, when you look at the 

money, what you see is that roughly 19 percent of the money goes 

to small businesses, and that is less than even the Bank’s charter 

asks. What it means is that—and by the way, they have a very expensive definition of small business. When you talk about small 

business, people think about mom-and-pop stores or 10/50 companies. The definition of Ex-Im for ‘‘small’’ can go to a company of at 

least 1,700 employees. These are big businesses in my book. 

But what it means is that really over 80 percent of the money 

goes to very big companies. And we know that they go to leading 

manufacturers, the number one U.S. exporter, Boeing is obviously 

leading the pack. 

Mr. WESTMORELAND. Thank you. 

Mr. Moak? 

Captain MOAK. Congressman, I just wanted to add one other 

thing that might have gotten missed a little earlier. If you want to 

have apples to apples, airlines manufacture seats. That is essentially what we do, and we are actually getting impacted twice, not 

only by what the U.S. Ex-Im Bank does by financing airlines below 

market rates, but what happens since we don’t have the ability to 

access that along with a few other countries that manufacture airplanes, countries like the Middle Eastern companies, not only are 

they using Ex-Im Bank financing and putting them on routes and 

costing us jobs, they are also using European credit agency Airbus 

airplanes overlaying our routes at a number like $3 million per 

year, per airplane, so you start out at the beginning of the year $3 

million behind. It is hard to catch up. We have to pull out of marVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
38 

kets, and we lose jobs, so we are getting hit not just by Ex-Im Bank 

practices but also by ECA practices, and that is why we came before this group to ask them to negotiate taking that down because 

the Middle Eastern countries are taking advantage of it. 

Mr. WESTMORELAND. So, Mr. Moak, would it be true that when 

the other side of the aisle says that labor is for the reauthorization 

of the Ex-Im Bank, that would not be entirely true? 

Captain MOAK. Labor is for reform, fair practices, competing in 

the world. We have the best workers in the world. We need to be 

given the opportunity to compete because when we have a fair opportunity to compete, we win, and we are coming to this place because government policy matters. We need your help or we 

wouldn’t be here. 

Mr. WESTMORELAND. And, Mr. Anderson, just one last thing. You 

had made an attempt at the last reauthorization to do the right 

thing. You are back here today because it didn’t work, and they did 

not do the things that were promised. Is that not true? 

Mr. ANDERSON. Correct. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from New York, Mrs. 

McCarthy, for 5 minutes. 

Mrs. MCCARTHY OF NEW YORK. Thank you, Mr. Chairman, and 

I appreciate the opportunity. 

Number one, I think it should be noted that we are not against 

any of the unions. We are not against any of our American airlines. 

We certainly support them, and I think I would like to ask Mr. Anderson one quick question, are there any other American airlines 

that are experiencing the same problems as you? 

Mr. ANDERSON. Yes. 

Mrs. MCCARTHY OF NEW YORK. Captain? 

Captain MOAK. I represent 51,000 pilots, 31 different properties, 

all the major U.S. airlines, and the answer to that is absolutely 

yes, we are getting hit by this. We need reform. 

Mrs. MCCARTHY OF NEW YORK. Let me go back to Mr. Anderson. 

We did negotiate 2 years ago, which we thought was a fair agreement. So here we are at this point. What do you think would be 

a fair agreement? Where would you want to change the language? 

Is it only enforcing Ex-Im Bank? Is it something different? 

Mr. ANDERSON. It needs to be mandatory. The language that was 

prefatory last time needs to be made mandatory. And it is specific 

in our business. We have tried to be narrow because there is plenty 

of merit to what happens with small business. There is no question. And we have tried to be targeted to try to just go at the very 

issues that hurt our employment. And the issue that hurts is our 

government further subsidizing deeply subsidized foreign airlines? 

Mrs. MCCARTHY OF NEW YORK. Let me say something. Number 

one, I doubt very much whether you would ever get language that 

was mandatory. It is just not going to happen. People here, myself 

included, don’t like to use the word ‘‘mandatory.’’ So if we don’t get 

the language in as mandatory and you are basically saying that we 

should abolish the Bank, then, to be very honest with you, your 

union, all the other unions, are going to have a problem. A lot of 

my constituents will have a problem, so we have to come up with 

some sort of solution to that. 

39 

But with that being said, too, I know that you are probably the 

most profitable airline. That is great. We want to see that, and I 

know you had your ups and downs, especially when you had to go 

through the Bankruptcy. But wasn’t going through the Bankruptcy 

more because of what was going on in the world that day—that 

year, as far as oil prices and everything else like that and you had 

to reconstruct? 

Mr. ANDERSON. The terrible tragedy of 9/11, and I sat in one of 

these rooms in September 15, 2001, representing the industry, so 

we lived through that. And it dealt a devastating blow to our industry. Our capacity fell off 25 percent. It has taken 10 years to 

get back. So I would have to say that between very high oil 

prices—and we could have another discussion on the depletion allowance—and the 9/11 tragedy, and then the aftermath of that 

really wreaked havoc on our industry. 

Mrs. MCCARTHY OF NEW YORK. I am only trying to bring out 

that unfortunately whether small businesses or large corporations, 

we really want to support them because that is jobs, but sometimes 

we, even in the government, can’t do everything. 

I want to also say that as someone who has been always supporting my unions, I would like to insert in the record, Mr. Chairman, statements from four other labor unions. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mrs. MCCARTHY OF NEW YORK. Thank you. 

So I think one of the things that fascinates me about this, as it 

did 2 years ago, is trying to find that common ground, which is 

really difficult around here. It seems all or nothing the last several 

years. And so I hope we can come to an understanding because I 

do believe in the Ex-Im Bank. I do believe that it helps an awful 

lot of our people in this country. I do believe it brings good jobs and 

keeps good jobs here in this country. But with that being said, I 

want to turn over the rest of my time to my colleague. You wanted 

extra time? 

Mr. HECK. Are you pointing at me? 

Mrs. MCCARTHY OF NEW YORK. Yes, I am. 

Mr. HECK. Thank you very much. 

Mr. Chairman, I would seek unanimous consent to enter into the 

record verified excerpts of the speech given by former Vice President Richard Cheney. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. HECK. And with your permission, I would like to just quote 

him briefly. There are those who say that the Bank is just some 

form of so-called corporate welfare. They obviously don’t know that 

for every dollar appropriated in the last 5 years, Ex-Im has returned approximately $20 worth of export. That is the kind of successful government program that even a fiscal conservative such as 

me can embrace. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from New York, Mr. 

King. 

Mr. KING. Thank you, Mr. Chairman. 

Thank you for holding today’s hearing. It is a vital issue, and I 

want to thank all the witnesses. I want to thank Mr. Anderson. 

40 

Certainly, Delta is a good employer in my district. In fact, I just 

got my flight confirmed for tomorrow on Delta, so I want to thank 

you for that. 

Dr. de Rugy, besides your testimony today, I want to thank you 

for the work you have done on Homeland Security, and I have 

sometimes plagiarized some of your words without giving you credit, so let me do that now. Okay? 

Also, Captain Moak, I have had a very good relationship with the 

airline pilots. 

And, Mr. Wilburn, you do, I believe, represent an American success story. 

So, with all of that, I think I am trying to find a way we can all 

be on the same page. I was impressed by what Mr. Campbell said 

about trying to find reforms. 

Mr. Anderson, you believe that reform is necessary. I believe we 

have to find a way to reauthorize the Export-Import Bank. I know 

we hear of crony capitalism, and that may happen in some cases, 

but certainly the businesses in my district are small businesses. 

We have a musical string instrument manufacturer, a woodworking tool manufacturer, and a seafood distributor. I believe 

there are 10 companies in my district. I know Mrs. McCarthy mentioned a number in her district, which is next to mine. And in 

downstate New York, our districts are one on top of the other, so 

probably within adjacent four or five districts, there already hundreds of employees in each of our districts who work in businesses 

in adjacent districts. So, it is important. 

I have also voted for every free trade agreement that has come 

before Congress in the 22 years I have been here. I believe in free 

trade. I also don’t like the idea of unnecessary government intervention. But I also know that countries such as Germany, France, 

China, Brazil, India, and Korea provide up to 7 times the support 

that Export-Import does. And to me, that is not a level playing 

field. What we have to do, I believe, is find a way to level the playing field. And with our Export-Import Bank, I believe we are definitely giving advantage to our foreign competitors. I think of 

former CBO Director Douglas Holtz-Eakin, who is, if I can use the 

partisan term, a Republican economist. And he said, ‘‘The reality 

is you would like to live in a world and I would love to live in a 

world that does not have a need for an Export-Import Bank, one 

where international transactions were done on a level playing field. 

That is just not the reality. Many other countries, notably China, 

have an export credit agency. They are all out there trying to gain 

market shares. The West simply has to not disarm.’’ 

Jim Nussle, who was a former Republican Congressman—I 

served with him on this committee—and ended up being the Director of OMB said, ‘‘Export-Import is self-funding and has generated 

income for the Treasury since 1992.’’ 

I bring these arguments out not just to make the appeal to authority, which they taught us in law school is one of the easiest 

things you can do; find somebody who agrees with you who supposedly is on the other side and if it sounds good. I just feel what 

Mr. Campbell said is important. I don’t see how we can just end 

our involvement with Export-Import now. I don’t know if we should 

end it, but obviously, reforms are necessary. We have seen the stoVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
41 

ries of corruption that are there, and obviously, that has to be 

changed. But on the other hand, I think the blow to our economy 

by suddenly ending Export-Import, putting small businesses and 

also larger businesses at risk is, especially at this time, when we 

still have not fully recovered from the crash of 2008, at a time 

when there is the increased burdens of Obamacare, of EPA, of regulations, of burdens, that it is just not appropriate, and it is not 

the responsible thing to do to end the authorization of Export-Import. 

At the same time, I believe reforms are necessary. If a way can 

be found before the expiration date to bring that about, I would 

strongly support that, work with that. I think the chairman has 

raised some important issues, but I think we go too far if we just 

say that we are going to end it. 

And as we saw today, there is always some government involvement in the company. Bankruptcy is the government involvement. 

I support that fully, but that is the government getting involved in 

the economy to help businesses get back together. So we use that. 

Protections given to labor unions that are in our economy. We have 

veterans. We have senior citizens. Everyone has some government 

involvement. My goal is to keep that to a minimum, but I think we 

would be going too far if we do not reauthorize Export-Import, but 

we should do it, I believe, with reforms. 

I certainly look forward to looking at the work and paper of the 

gentleman from California, Mr. Campbell, and I thank him for his 

efforts. 

And, Mr. Anderson, if nothing else, you have certainly forced 

Congress to pay more attention to you now maybe than was done 

2 years ago. 

With that, I yield back the balance of my time. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Massachusetts, 

Mr. Lynch. 

Mr. LYNCH. Thank you, Mr. Chairman. 

I want to thank the witnesses for their willingness to come before the committee and help us with our work. I have been involved 

on the Oversight Committee and this committee in dealing with 

some of our trade agreements and just trying to rebalance our Export-Import imbalance with a number of countries. I spent a little 

time in China recently, as well as South Korea, India, France, and 

Germany. I travelled to South Korea for a few days in connection 

with the South Korean trade agreement, and I couldn’t help but 

notice that—this is just anecdotal, but I was there for several days. 

And the only U.S. cars—now South Korea is a booming economy, 

very modern, big highways, and the only U.S. cars I saw there on 

the days that I was there was the one I was riding in and the one 

that had my security detail from the Embassy, so no U.S. cars. In 

Japan, same thing. You need a detective to find an American car 

in Japan. 

So those companies obviously have closed markets in order to 

boost their domestic car production. I walk outside this door here, 

and I can’t spit without hitting a Japanese or a Korean car, so they 

are doing massive investments and highly protective structures to 

protect their domestic markets so that they can export goods. And 

42 

as Mr. King pointed out just recently, they are pumping in about 

7 times what we are doing in terms of credit assistance through 

their versions of their ex-im banks. 

In addition, in my State of Massachusetts, the French government just came in and took over one of our rail systems, a commuter rail system. They backed one of their companies, Alstom. 

France’s idea is they want to become the world’s rail company. 

They want to manufacture the rails. They want to go out into other 

countries and dominate those markets, kind of like what Boeing is 

trying to do in the aircraft industry on behalf of American machinists and American workers. 

Spain is gobbling up a lot of the construction firms. It has become a globalized strategy, and they are there to push their workers, and I understand the theoretical arguments I am hearing 

today about it would be nice—we want a level playing field. The 

playing field is going to become much less level if we exit the battlefield, which is what you are suggesting that we do right now. 

I wish that our exit from the Ex-Im Bank—let’s make no mistake. We are not talking about reforming the Export-Import Bank 

here. It is going away. So it is going to increase the imbalance 

here, but it will tip it drastically in favor of foreign competition. We 

are opening up our markets. We are walking off the battlefield. We 

will no longer try to protect our workers in this iteration the way 

we have been doing, and it hasn’t been smooth. It hasn’t been fair 

to smaller businesses. I will agree with that. We are protecting a 

whole boatload of workers right here. The reality I am dealing with 

is if you succeed, if the Ex-Im Bank goes away—and it looks like 

that will happen, because no other nation is going to disarm—we 

are going to be at a huge disadvantage. And foreign manufacturers 

will be handed a huge advantage, and I think it will be a very, very 

good day for Airbus. I think you will see their stock go right up. 

It will be a great day for them. 

But at the end of the day, when the Ex-Im Bank goes away, government will still be picking winners and losers. It just won’t be 

the U.S. Government. And the governments that are picking the 

winners and losers will be the foreign governments, and those winners, you have to be kidding me if you don’t believe those foreign 

governments are going to pick their own companies, their own 

workers—you see what China’s doing, you see what South Korea 

and India, all these other countries. It is a nice theoretical argument you have here, but when this goes away, it will be a bad day 

for America, a bad day for the American worker. 

Chairman HENSARLING. The time of the gentleman has expired. 

Dr. de Rugy, I think I have been informed that you have asked 

to be excused from the panel at this time because you have a prior 

commitment. Is this correct? 

Ms. DE RUGY. Yes, I have a plane to catch. 

Chairman HENSARLING. In that case, Members—I won’t ask 

which plane, and I won’t even ask which airline—will have 5 legislative days to submit questions to Dr. de Rugy. We would ask that 

you respond as quickly as possible. 

Ms. DE RUGY. Can I add just one thing? 

Chairman HENSARLING. Not substantively. Process-wise, yes. 

Substantively, no. In which case, we will excuse you at this time. 

43 

The Chair now recognizes the gentlelady from Minnesota, Mrs. 

Bachmann, for 5 minutes. 

Mrs. BACHMANN. Thank you, Mr. Chairman. 

And if Ms. de Rugy would like to make her comment right now, 

I would be more than happy to let her make her comment. If you 

would like to make your comment, Ms. de Rugy, that you wanted 

to make, make your comment right now during the course of my 

time. 

Ms. DE RUGY. Thank you. Based on the discussion, I think it is 

important to remember that the Bank itself only justifies 30 percent of its activity based on the need to countervail foreign subsidies, so the idea that everything that the Bank does is to compete 

with foreign government is not accurate, based on the Bank’s data 

itself. 

And finally, I will say that we are talking a lot about jobs. We 

are talking a lot about businesses, but we are forgetting consumers. 

Protectionism, which is what the Ex-IM Bank is doing, hurts consumers in the form of higher prices, and economists care about producers and consumers, too. We have many years of economic studies which show that basically protectionism tends to the benefit— 

even for the beneficiary of the protectionism does not outweigh the 

cost to all the unseen victims. 

Mrs. BACHMANN. Thank you so much. 

That goes to my point. A lot of what I have heard here today is 

that we need to continue to provide subsidies and stay on the subsidy train because the rest of the world is on the subsidy train. And 

to continue that logic means that nations of the world have to continue one-upmanship on subsidy, so it is subsidy versus subsidy, 

and it is a complete rejection of the free market. 

I don’t think that is the direction we want to go. The free market 

has built up the most magnificent economies of this world. I remain a defender of the free economy. One of our former Presidents 

said that nothing is more representative of eternal life than a government program. And I think we heard the defenders here today 

of this program, despite the mismanagement, despite the fraud, despite the failures, we have an executive summary in front of me 

that says, as a matter of fact, that Export-Import Bank operated 

at a loss every year from 1982 to 1995. And when reform was 

passed, the FCRA, that meant the losses were backfilled by the 

taxpayer, and Ex-Im Bank received $9.92 billion in direct appropriations from the government between 1992 and 1996. 

When we talk about free economies, the United States used to 

be considered under the category of a free economy. We are not the 

freest economy in the world. We are not the fifth freest economy 

in the world. We are not even the 10th freest economy in the world. 

We have actually fallen out of the status called free economy. We 

have now dropped out of the top 10. We are considered a mostly 

free economy. And while the fault isn’t at the foot of the Ex-Im 

Bank, it is death by a thousand cuts. This is just one example. 

I think that Congress needs to look at itself in the mirror and 

to see what we have done to contribute to a less free economy. I 

think there are four areas. One is we have the highest—look at the 

tax code in the United States. We have the highest corporate tax 

rate in the world, bar none, 35 percent. Then you add on to that 

44 

the Obama new tax rate, the 3.8 percent, various state—corporate 

tax rates, and you see how uncompetitive the United States is. We 

need massive tax reform. 

Then you look at the next factor, regulatory burden. The DoddFrank Act was brought up today. Obamacare was brought up 

today. The new EPA rules are new regulations. We have heaped 

upon American businesses the uncompetitive factor of a tax rate 

you might say through increased regulatory burden. That is number two. 

Number three is the United States Government, which has exceeded growth beyond the taxpayers’ ability to pay for government 

services. We are growing the cost of government. 

And number four, the lack of sound money. We have seen 

through what the Federal Reserve has been doing, the increased 

inefficiency with sound money. 

Those four reasons alone aren’t your fault. Those are the fault 

of the United States Congress and this Government. We are the 

ones who need to look in the mirror at how we have made this a 

less free economy. 

Regarding the Ex-Im Bank and the 4 firings that just occurred, 

that also doesn’t include the 74 cases since April of 2009, when 

Bank officials were forced to act on the basis of integrity investigations by the Office of Inspector General. There are dozens of other 

fraud cases involving the Ex-Im beneficiaries that have now been 

referred to the Department of Justice for prosecution. I see that my 

time is gone, but I ask unanimous consent to enter into the record 

several recent stories about the fraud that is going on at this Bank. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mrs. BACHMANN. I want to stand on record that I oppose the continuation of this Bank because reform hasn’t worked. We have been 

ignored. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Georgia, Mr. 

Scott. 

Mr. SCOTT. Thank you very much. 

Mr. Chairman, this has, indeed, been a very, very interesting 

hearing, a very important one. Let me say at the outset that Atlanta is the world’s busiest airport. And I always like to tell people 

that whenever you land at the airport in Atlanta, you land in Congressman Scott’s district. So I say welcome to that. Certainly welcome to you, Mr. Anderson. I have listened to this discussion with 

a very jaundiced ear, and I don’t see where the success and the 

movement forward of the Ex-Im Bank is not mutually—is mutually 

exclusive to addressing the concerns of our airlines. I would like to 

see the committee, Mr. Chairman, give some very thoughtful—we 

have a very talented, we have a very skillful committee, and it 

seems to me that we ought to be able to address these concerns 

narrowly focused on what Mr. Anderson and what Captain Moak 

are saying without interfering with the forward progress and the 

very basic need the Ex-Im Bank has provided for small businesses 

that Mr. Wilburn has done. There may be some on this committee 

who want to do away with the Ex-Im Bank altogether. I am not 

one of those because it has been very beneficial. But I think we 

would be very derelict in our duty as a legislative body to ignore 

45 

the very pointed concerns that have been raised by Mr. Anderson 

and Mr. Moak. I think we can have some folks from both sides go 

to work to try to put some language into this Ex-Im extension that 

will address those concerns. 

So, with that, Captain Moak and Mr. Anderson, let’s narrow in 

specifically. I think what concerns you most is the competition with 

the wide-body or the Boeing 777. What can we do to put in some 

language that could address that? It could be a trigger mechanism. 

It could be an assessment, as Mrs. McCarthy said, mandating 

things that are rather difficult. What could we do to address those 

concerns and move this thing forward? 

Captain MOAK. Thank you, Congressman Scott. 

First, I just want to thank you. I don’t know if you remember, 

but you stood by my side in front of 1,000 Delta pilots in ‘‘Keep 

Delta My Delta,’’ and your speech is still viewed in that light when 

you stood up and said this is truly a David and Goliath, and when 

David was walking back and said, Is there a cause? There is a 

cause. He turned around and went back. The cause here is Ex-Im 

Bank reform. And I commit all our resources, everything, to work 

on that narrow part of the reform that we need so that we meet 

a fellow veteran’s needs, small business needs, but we meet our 

needs so that we stop losing jobs. I would be happy to help. Our 

team will help. Anything we can do. Thank you again for that day. 

You know where we have come from there. 

Mr. SCOTT. Absolutely. And I certainly understand. 

Mr. Anderson, what would be the narrowest scope of language 

that we could add that would address your problem as we move the 

Ex-Im Bank forward? 

Mr. ANDERSON. The Bank would not finance below market widebody airplanes for state-owned, state-subsidized airlines that are 

otherwise creditworthy. There won’t be a need, and that would 

solve the competitive issue, because what we are dealing with is a 

much broader competitive issue. And I think both sides of the aisle 

have addressed this. We don’t compete in my business against 

other companies. In our business, we compete against government. 

So my big competitors, our big competitors internationally are governments that happen to have a department that is an airline. 

They get huge, huge subsidies, and it really hurts us when our government gives them a subsidy on top of the huge subsidy they already collect. 

Mr. SCOTT. My time is running out. 

Mr. Chairman, I think it might be wise that we could make a 

point of order that as we move forward with this, that we could develop some language—I would be delighted to work with your side 

on that—that I think could accomplish that as we move this forward. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Mexico, Mr. 

Pearce. 

Mr. PEARCE. Thank you. I appreciate each one of you making the 

appearance here today. 

Mr. Wilburn, you had mentioned barriers to entry in subsidies to 

oil and gas as being one of the problems that you have as a business unit. Could you tell me a little bit more about those obstacles? 

46 

Mr. WILBURN. I’m sorry, Congressman. Could you repeat your 

question? I didn’t quite catch it. 

Mr. PEARCE. I was asking if you could go a little bit deeper into 

the obstacles that you face as a small business. You had mentioned 

the barriers to entry and the subsidies to oil and gas, and I think 

you specified the depletion allowance. How is it those keep you out 

of the domestic market or make it less available to you? 

Mr. WILBURN. They make it less available to me because I am 

basically competing with the price of natural gas. Trust me, I am 

an advocate of strong natural gas resources here. But I go to landfills and I go to pollution sources, and I take that organic material, 

and I make methane. That methane has a cost, but it also has 

some benefits to it. It doesn’t go to a landfill. Oil and gas has a 

subsidy if you want to call it that, that allows an advantage over 

my product. I don’t have access to that, so I have to go to markets 

where I have a chance to compete, and those markets are where 

there is not natural gas reserves, and they don’t receive those subsidies. That is the barrier entry of which I was speaking. 

Mr. PEARCE. The oil and gas company has to pay for that. They 

don’t just get the oil and gas for free. They have to pay for it, and 

so, basically, all that is is a depreciation of what they have paid. 

Mr. WILBURN. —the same benefit. 

Mr. PEARCE. When you go to a landfill, do you have to pay to get 

the right to harvest that gas? 

Mr. WILBURN. Absolutely. 

Mr. PEARCE. And so you don’t get a writeoff for creating that 

gas? You don’t get a writeoff? 

Mr. WILBURN. No. 

Mr. PEARCE. That is probably something that we should consider. 

But in contrast, it is not the major producers that would provide 

a barrier to entry that don’t get the depletion allowance. It is just 

the independents, the small producers. That is about 12 percent of 

the market. 

Mr. Chairman, we have talked today about the catastrophic effects that we are going to have on the job market if we don’t take 

action one way or another, and there have been all sorts of suggestions here. But I don’t think what we do here is going to affect jobs 

nearly as much as other things. And the gentlelady from Minnesota 

had gotten this covered pretty well. The corporate tax rate the 

President has set is probably one of the biggest impediments to 

business in America, and I sent him a letter personally saying I 

will work with you on that, sir, across party lines, across any other 

lines, because I agree that one of the greatest impediments to manufacturing in this country is the corporate tax, but I have yet to 

hear from the President, and that has been 4 years ago. But the 

regulations are where we really are killing the job market. For instance, the timber industry: 85 percent of timber jobs are now gone 

from America; 123 mills in New Mexico closed because of a government regulation, one government regulation that said the spotted 

owl is going extinct because of logging, and the government came 

back this last year and said, oops, logging wasn’t the problem, so 

not only do we have a government that intervenes, but we have a 

stupid government that intervenes; 23,000 agriculture jobs in the 

San Joaquin Valley went begging because of a 2-inch Delta smelt, 

47 

another regulation. Now we are importing 80 percent of our vegetables from areas that spray things that we could not spray before, 

and that has hurt the job market in America more than what we 

do on the Ex-Im Bank. 

We, in 2007, passed a bill through this Congress that outlawed 

incandescent light bulbs. That killed the incandescent light bulb industry. That last manufacturing facility closed down, and China is 

able to produce the small curly bulbs that require more labor because of actions like this; and that was not an Ex-Im problem. We 

have continually put the consumers at risk by driving the price of 

electricity up, and the President has said, yes, electricity is going 

to be necessarily higher because of our regulations. And we are a 

70 percent retail economy, and yet I hear no one on this committee 

who is defending the job creation of the Ex-Im Bank addressing 

that. We are killing the consumer market by higher electricity. It 

is the government that is at fault. The government is not the solution. 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Green, 

ranking member of our Oversight and Investigations Subcommittee. 

Mr. GREEN. Thank you, Mr. Chairman. 

I thank the witnesses for appearing, and I especially thank our 

two veterans who are part of this panel. 

And, Mr. Wilburn, I thank you because you indicated that you 

may be impacted by PTSD, and that says to me that you have had 

some experiences that are less than pleasant, and my prayers are 

with you. 

I am reminded of Chairman Barney Frank, who, on the topic of 

reality versus desires, would often say he wished that he could eat 

more and lose weight. I wish that I had options other than end it 

or extend it. I would dearly like to have options other than end it 

or extend it. But these are the options that we seem to be confronting, and I am a person who believes in compromise, and I am 

willing to work across lines to do something other than end or extend. 

But given that these are the options, let me just share some of 

the comments associated with the options that are before us. A 

Houston Chronicle editorial published on June 25, 2014, that would 

be today: ‘‘No time for games. Export-Import Bank loans support 

American jobs, including Houston area jobs.’’ Apparently, Mr. 

Hochberg was interviewed by the Chronicle and gave his commentary. The Chronicle goes on to indicate large or small ExportImport Bank loans support American jobs, including jobs in the 

Houston area. Bank officials told the Chronicle that its financing 

has supported $11 billion in export sales from the area since 2009 

with $3.5 billion of that attributable to small businesses. The Bank 

also cost taxpayers nothing. It supports itself through the fees and 

interest it charges and regularly sends money to the U.S. Treasury 

to reduce the debt. This is from the Houston Chronicle. 

I concur with the ranking member with reference to there being 

persons of note who were not here to testify today. And if they were 

here to testify, I believe they would say, some of them, what the 

48 

Greater Houston Partnership says. The Greater Houston Partnership indicates, and this is an excerpt: ‘‘Small and medium-sized 

businesses in our region also benefit directly from Export-Import. 

Small businesses account for nearly 85 percent of Ex-Im Bank’s 

transactions. Further, these transaction figures do not include the 

tens of thousands of small and medium-sized businesses that support goods and services to large exporters using the Bank. We 

trust—this is addressed to me—you will carefully consider the impact Ex-Im Bank has on our region and our position as a global 

economic leader.’’ 

Now this letter, while sent from the Greater Houston Partnership, appears to be supported by the Bay Area Houston Economic 

Partnership, the Baytown Chamber of Commerce, the Brenham 

Washington County Chamber of Commerce, the Clear Lake Chamber of Commerce, the Greater Beaumont Chamber of Commerce, 

the Greater Houston Partnership, the Greater Tomball Area Chamber of Commerce, the Houston East End Chamber of Commerce, 

the Houston Northwest Chamber of Commerce, the Lake Houston 

Area Chamber of Commerce, the League City Chamber of Commerce, the Pearland Chamber of Commerce, the West Chambers 

County Chamber of Commerce, and the Wharton Chamber of Commerce. 

Finally, there are some small businesses in the Houston area 

which, if they were given the opportunity to testify, would indicate 

that they are supportive of the Ex-Im Bank as well. This would include the South Coast Products business. It would also include the 

Hallmark Sales Corporation in Houston—this is not the card company—and the Everest Valve Company in Houston and others. 

Thank you, Mr. Chairman. I will yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Luetkemeyer. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

And I thank the witnesses for being here today. I certainly appreciate your testimony. 

Mr. Anderson and Captain Moak, thank you for your comments 

and concerns. I appreciate the fact that you have brought some 

issues to light with regards to the aircraft manufacturing sales portion or financing portion of the Bank. I think those need to be addressed, but I congratulate Mr. Wilburn also on being here and 

thank you for your testimony from the standpoint that we have 

several different things to look at and discuss here today, and that 

is the small business portion of this as well. 

In 2013, aircraft manufacturing made up only 40 percent of ExIm’s financing; 40 percent went to other manufacturing; and 20 

percent went to oil and gas, base telecommunication services, and 

mining. So it does have a lot of other financing interests that it 

takes care of and works with. I think the statement has been made 

many times this afternoon and this morning that about 3,400 of 

the 3,800 loans it made were to small businesses, and so I think 

that at the end of the day, it is something that we need to consider, 

how we can find a way to reform it, make it work for everybody. 

I get this crony capitalism comment, and it kind of sticks in my 

craw a little bit from the standpoint that crony capitalism is truly 

49 

when you hand out favors for somebody as a favor for them having 

done something for you. And yet the Federal Government helps 

with SBA loans. Is that crony capitalism? It helps with VA loans, 

helps a veteran own a home. Is that crony capitalism? We have in 

our treaties and in our export and trade tariffs and all sorts of 

treaty protections with regards to everything from automobile manufacturing, to agricultural products, to intellectual property to be 

able to protect and incentivize businesses here in this country to 

be able compete internationally and protect their products so they 

can compete and provide jobs here. 

Dr. de Rugy a while ago made the comment that she would like 

to see it all go away. Well, that would be great. If we lived in a 

perfect world, that would be fine. But if that would happen and 

none of the rest of the world disarmed, as the comment has been 

made before a couple of times, what would happen? Let’s stop and 

think about that for a second. What would happen if we did away 

with all our tariffs, all the intellectual property protections, and the 

rest of the world could really come in and rape and pillage our industries through the this country. We would have no ability to protect them. They could compete, subsidize, and take all of our jobs 

away. Yes, we would lower the price of products at the supermarket and the hardware stores and whatever, but our jobs would 

certainly be gone, wouldn’t they? And we would suffer. Quality of 

life would go down, and some things would be a national security 

problem for us because we would lose the ability to be able to build 

things, provide services for things that are of national importance 

to ourselves. In my district alone, we had the last lead smelter in 

this country, and it went out of business because of the EPA in the 

beginning of January. You know what we do with the lead that is 

mined in my district? We send it to China. You know what we do 

when we want to build a bullet? We have to go to China and buy 

our lead back. That is what would happen if you continue down 

this path of forgetting about how to protect the ability of our industries to compete. 

Is it a perfect world? No, it is not. It is not what I would like 

to have either. But at the end of the day, I think that we have to 

find a way to come together to realize that there has to be a way 

to find a middle ground on this, to reform this thing. I am a banker. I can tell you there are a half dozen things I would love to see 

changed about this thing. I am working with Congressman Campbell on trying to do that because I believe that this can be done. 

I believe that there is enough good about this thing, this entity 

that we can use it for the good of our people, our country and our 

industries. Does it need to be reformed, absolutely. There are a few 

things in there that drive me up a wall. 

And I am glad, Mr. Anderson and Mr. Moak, that you brought 

those to light today. 

Mr. Wilburn, you also make a great point from the standpoint of 

the importance of how this Bank can help small businesses compete, can grow, can market a product that may not be able to even 

be marketed here in this country but can be in other countries 

around the world. And by enabling our markets, our entrepreneurs 

in this country to be able to build that product, can market it and 

bring revenue to our country instead of sending it out. 

50 

Mr. Chairman, I yield back the balance of my time. I appreciate 

the opportunity today. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentlelady from Wisconsin, Ms. 

Moore. 

I’m sorry, if the gentlelady would suspend, I will recognize the 

gentleman from Texas briefly for unanimous consent. 

Mr. GREEN. Thank you, Mr. Chairman. I ask unanimous consent 

that the letters and documents that I referenced be submitted for 

the record. 

Chairman HENSARLING. Without objection, it is so ordered. 

Now, I recognize the gentlelady from Wisconsin. 

Ms. MOORE. Thank you so much, Mr. Chairman, for having this 

hearing. I think it is extremely important to everyone. 

I do want to raise a bit of caution to Captain Moak and to Mr. 

Anderson here. I have heard you say continuously that you want 

the Bank to be reformed and not dismantled. I have clearly heard 

that, but I want you to be clear that this hearing is about whether 

or not we are going to reauthorize this Bank, and the authorization 

is going to expire in 90 days or so. And there are not many days 

left in this session. 

Our chairman has been very articulate in indicating that he does 

not believe in this kind of government activity. We had a very passionate witness, Dr. de Rugy. I am sorry that she had to leave before I had a chance to ask her some questions. Very, very passionate, given her economic view that this is bad. 

So I want you to be clear that you are sitting on the side of people who do not want this to be extended. 

I also want to associate myself with many of the excellent questions and comments that have been made by my colleagues on both 

sides of the aisle and just really want to remind people that we are 

not talking about just Boeing or the airline industry here. I represent an area that is home to six Fortune 1,000 companies, manufacturers like Johnson Control, Rockwell, and Harley-Davidson. We 

are second in the country in manufacturing, and we are dominated 

by small to medium-sized metal fabricators that export all over the 

world and really need the Ex-Im Bank, so we are not just talking 

about one group of employees, and I am very, very sympathetic and 

empathetic to them, but there are hundreds of thousands of other 

employees who rely on these activities. 

And, indeed, Delta got a $45.5 million subsidy from the ExportImport Bank for their engine maintenance services, 400 jobs that 

rely on the Export-Import Bank in order to do maintenance, I believe for Brazil. I see you shaking your head over there. Maybe I 

will give you a chance to answer. 

I have a chart up here because there are a couple of things that 

I really want to point out. We have heard a lot of testimony about 

how the Export-Import Bank creates competition, and that green 

line below shows the last nine brand new airplanes that were built 

by Boeing. That is the interest rate and the price that they paid 

as compared to the commercial Bank financing rate in the red, and 

the blue line there is the OECD agreement, the gentleman’s agreement that we have heard so much about, with regard to what exVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
51 

port credit agencies can provide. So Delta is buying planes at that 

green level. We are not squeezing out the private sector. 

One other thing that I continue to hear over and over again was 

about the Cliff Mine in Michigan and how the Export-Import Bank 

was creating an uncompetitive situation. And I am disturbed because Caterpillar is headquartered in the Midwest, and they have 

a huge operation in Mr. Ryan’s district right across the street from 

my district. Many of my constituents work at Caterpillar. And the 

iron ore that was coming out of the mine in Australia and the one 

coming out in Michigan were two different iron ores, two different 

applications. Apples and oranges are both fruit, but they are not 

the same. That was not the truth. 

I don’t have much time, so I will yield the rest of my time to Mr. 

Heck. 

Mr. HECK. I would just like to make the point that the threat to 

the American manufacturing base is existential. It is very real. As 

we sit here, the Chinese, at considerable state investment, are developing an airplane to complete with both Airbus and Boeing—the 

C919, I believe. They have an export credit authority that is larger 

than ours, that is a larger percentage of their GDP than ours, and 

be assured that when they successfully complete development of 

their airplane, they will compete with us on the open market. More 

to say later. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Tennessee, Mr. 

Fincher. 

Mr. FINCHER. Thank you, Mr. Chairman. 

I am going to give Mr. Anderson briefly a chance to respond. I 

also have the question that you guys did receive financing from a 

Canadian import-export. 

Mr. ANDERSON. I am glad you asked the question about GOL Airways. First of all, Delta is a huge manufacturing company. We 

have 7,000 manufacturing jobs, and we are one of the largest engine overhaul companies in the United States. We run the largest 

shop in the United States. And GOL is a terrible example for the 

Ex-Im Bank, and I think it was something they contrived to try to 

say it created jobs at Delta, as we are an opponent of the Bank. 

In 2010, we won a worldwide competition to overhaul engines at 

GOL Airways in Brazil. It had nothing to do—the Ex-Im Bank 

wasn’t involved, and we won it against Lufthansa and against GE 

to overhaul their engines in Atlanta. Two years later, the Bank 

went down to Brazil and gave them a loan for .622 percent—and 

I know about this because we own part of that airline—and then 

issued a press release saying it created 40 jobs at Delta. That is 

just false. 

Mr. FINCHER. Okay. Mr. Anderson, let me start by saying, as 

someone who lives 60 miles north of Memphis, I love Delta Air 

Lines. And the pilots and the airline, the flight attendants, you do 

a great job, so please don’t hold anything I say against me today 

as we fly in the future. I was born at night but not last night. 

I didn’t support reauthorization last time of Ex-Im Bank because 

I felt that reforms that needed to be made were not made. But 

today, listening to the testimony from all three of you—and the 

52 

doctor is gone—reforming Ex-Im Bank with reforms, I think you all 

would support reauthorization. Correct? 

Mr. ANDERSON. With reforms. 

Mr. FINCHER. With reforms. As we have been talking, and I have 

a whole package of reforms here that we have been working on for 

the last 6 weeks, 2 months. A thousand jobs in the Eighth Congressional District of Tennessee, my district, are supported by the investment of Ex-Im Bank. This is not about—I have heard some 

people today talk about 10 big companies or whatever. This is not 

about leadership and our party. I think, as Republicans, we are all 

trying to get to the same place of having a government that is more 

accountable and more transparent and more responsible with taxpayer dollars. This is about, for me, the jobs in my district. 

And it is going to be hard for me to go back home, Mr. Anderson 

and Captain Moak and Mr. Wilburn, and have my constituents 

ask, ‘‘Congressman, have you balanced the budget?’’ And I am 

going to say, ‘‘Well, we are working on it.’’ And they are going to 

ask, ‘‘Congressman, did you get rid of Fannie Mae and Freddie 

Mac?’’ And I am going to say, ‘‘Well, we are working on it with the 

PATH Act.’’ ‘‘Well, Congressman, the only thing that you have done 

is you have gotten rid of an investment that was creating a thousand jobs in our district, and now I am on unemployment. I don’t 

have a job.’’ 

I have a paper right here: ‘‘U.S. economy shrank at steep at 2.9 

percent rate in quarter one.’’ The Commerce Department says the 

first quarter contraction was even more severe than the 1 percent 

annual decline it estimated a month ago. Another major factor was 

a bigger trade deficit than initially estimated. 

Again, if we don’t reform Ex-Im Bank, then we will have some 

real problems. And as a lot has been said today about the way that 

Ex-Im Bank is being operated, Mr. Hochberg, if they won’t respond 

to the changes that we are trying to make, maybe Ex-Im Bank 

needs to be—maybe we will need to clean house there. But please, 

let’s not overreact. Let’s try to fix this investment. Let’s make it 

better. Let’s get back to the original mission of Ex-Im Bank, and 

don’t hurt jobs in our districts. 

I am going to have a hard time, I am just going to tell you, going 

back home to my district and telling my people, my folks, that the 

only thing I have done is kill jobs for my district. Let’s try to work 

this out. I think we can. 

Again, I have a whole list of reforms here I will be glad to talk 

to anybody about. I appreciate Mr. Campbell and the work he has 

done. 

And I appreciate all of you gentleman, and we are going to reform this hopefully and make it better. 

And with that, I yield back, Mr. Chairman. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Maryland, Mr. 

Delaney. 

Mr. DELANEY. Thank you, Mr. Chairman. 

I want to thank all the witnesses for joining us here today. 

Mr. Wilburn and Captain Moak, thank you. 

And, Mr. Anderson, I want to thank you, in particular, for joining us and for bringing so many of your colleagues. Delta is an imVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
53 

portant and iconic company. I think you all should be congratulated for the great work you have done positioning this airline as 

such a successful business. And the fact that all your colleagues 

joined you here today is a reflection of the good culture of the airline and your good leadership. So I just want to make it clear that 

I think what you are doing is terrific. 

Mr. ANDERSON. Thank you. 

Mr. DELANEY. My question is actually more of a factual question. 

And perhaps, unlike some of my colleagues, I don’t actually know 

the answer to my question before I ask it. 

But I was struck by this page when you put it up, and I was very 

concerned by it because, as I think many of my colleagues know, 

I care deeply about free markets and believe that market pricing 

should dictate all of, kind of, government financing. And when I 

saw this, I was very concerned about that, because it said that the 

government is making a loan at 3.4 percent and the same loan in 

the market would be made at 6.1 percent, and that is obviously a 

very big subsidy. 

But, as someone who is used to reading footnotes, I did read the 

footnote, and it said that the private-market example is something 

called Doric Nimrod Air Finance Alpha. I looked that up. And that 

is a special-purpose entity based in Ireland that owns 58 airplanes 

and leases those 58 airplanes to about a dozen carriers, including 

the Emirates. And it leases those airplanes on an operating lease 

basis, not a capital lease basis, which means the risk of ownerships 

and the benefit of ownerships are not fully transferred to the lessee. 

And so, when I saw this, recalling my days in the credit business, I said, well, this strikes me as a worse credit, because I would 

much rather lend directly to Emirates and have their full faith and 

credit saying that they are going to pay back every penny of the 

loan on a fixed amortization, which is what Ex-Im finances, versus 

the loan to a special-purpose entity that has, structurally and contractually, certain limited recourse. 

Now, I may be wrong about this, because, again, I am just reading the footnotes and I just did some searching on my little Google 

device here. But my question is, first, is that accurate? 

And, second, do you think, as the CEO of Delta, if you were to 

borrow directly from a Bank and put the—and I recognize you 

didn’t have to borrow to buy your planes, which is great. But if you 

were to put the full faith and credit of Delta Air Lines on the line, 

as well as a lien on the aircraft you purchased, wouldn’t you expect 

to borrow at a lower rate than if you were to set up an unrelated 

company that purchases the airlines and signs a lease to you with 

certain limited recourse and then you were to get a loan for that 

special-purpose entity? 

So I am really just trying to figure out what the apples-to-apples 

pricing comparison is. 

Mr. ANDERSON. What we were to do here is make it apples-toapples. Okay? And if you go down through the footnotes, obviously, 

the coupon—these were both public market financings. 

Mr. DELANEY. Right. 

54 

Mr. ANDERSON. The one on the left had an Ex-Im Bank guarantee attached. Right? And you can see the collateral. The coupon 

is beyond question— 

Mr. DELANEY. Yes, that is obvious. 

Mr. ANDERSON. The coupon was obvious. The loan-to-value 

ratio—with the Ex-Im, you get a higher loan-to-value ratio because 

you don’t need as much equity. And what you have approximated 

here is that this is the Emirates credit, and— 

Mr. DELANEY. But isn’t it true that it is actually not the Emirates credit? 

Mr. ANDERSON. No. But it is the Emirates credit, based on what 

Moody’s said. I can give you— 

Mr. DELANEY. I read the Moody’s credit report on my device here, 

and it talked about how the lessor had risk of the value of the asset 

at the end of the term and that it wasn’t fully recoursed to the 

Emirates. 

Mr. ANDERSON. Pardon? 

Mr. DELANEY. That it wasn’t really recoursed to Emirates? 

Mr. ANDERSON. No, this is an apples-to-apples, because they 

were both issued at the same time and both of them were public 

financings. 

Mr. DELANEY. Right, but— 

Mr. ANDERSON. And one of them decided they were going to 

lease, so I think the market-based financing was a lease-based financing on the A380s. 

Mr. DELANEY. Right. But at the end of the lease term, the lessor 

takes back that airplane if the lessee doesn’t—like, if you leased a 

plane, at the end of 10 years, if you didn’t want the plane, you 

would give it back. And if— 

Mr. ANDERSON. Correct. 

Mr. DELANEY. —someone had a loan on that plane, that loan 

won’t be your obligation. 

Mr. ANDERSON. But airlines lease—we tend to want to own, 

right, because you get the residual value. But part of what the 

market is reflecting here is that they are going to return—they 

want the option to be able to return the airplane in 5.7 years, because that is the average life of the lease. 

Mr. DELANEY. So, just a quick question. Do you think you should 

pay less for the direct Delta credit in the market secured by assets 

than you do for a lease? 

Mr. ANDERSON. Well, yes. You will—I think you are better off— 

well, it depends on the airplane. And that is probably what they 

are doing here. They probably want to own the 777s, but they probably only want to lease A380s. 

Chairman HENSARLING. Time— 

Mr. ANDERSON. And this is what a lease looks like for Emirates 

at their credit. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from South Carolina, 

Mr. Mulvaney. 

Mr. MULVANEY. Thank you, Mr. Chairman. 

When we started today, I believe it was somebody on the other 

side—in fact, I know it was somebody on the other side, I believe 

it was Mr. Heck; I wish he was still here—who challenged us not 

55 

to believe false statements regardless of the number of times they 

are repeated. And I think that is always good advice. 

I would think it is similarly good advice to not believe statements 

that you can’t prove. And one of the things that I think he said— 

and I don’t want to put words in his mouth, but I couldn’t find the 

transcript—was that the Export-Import Bank had created 255,000 

jobs last year. If I have that number wrong, I apologize. If I got 

the exact verbiage wrong, I apologize. But that was the general extent of things. Nobody can prove that number. 

And I want to explore that a little bit. I want to explore the 

weaknesses in these job numbers. Mr. Fincher talked about 1,000 

jobs in his district. Nobody can prove that number. 

Mr. Anderson, you have mentioned in your testimony that the 

Export-Import financing in the aviation sector has cost you all 

7,500 jobs. Ex-Im says that its Boeing-related activities created 

51,000 jobs. Who am I supposed to believe between those two? 

Mr. ANDERSON. Me. 

Mr. MULVANEY. Why? 

Mr. ANDERSON. In the instance of Delta, in the example that we 

used with Air India, that actually happened. We went through a 

reduction in force. Fortunately, we were able to get enough employees to take voluntary early retirement. But when we pulled all that 

flying out of India—we had a very successful business flying to 

Mumbai. And we bought, by the way, two 777s and financed them 

ourselves to be able to do that service. And so, I know those jobs 

are there. 

I think you make a correct intellectual point on both sides of the 

debate, honestly, in that it is very difficult to put a precise number, 

for you or for any of us here. 

And so I guess what I rely back on is, I see what goes on in the 

marketplace. We have one going on right now in JFK to Milan, 

Italy, with Emirates Airlines, which has financed airplanes from 

the Ex-Im Bank. And they have dumped 65—they have increased 

the capacity in Milan to JFK 65 percent. That is going to have an 

impact on jobs in the United States over time. And they are deeply 

subsidized, which probably really gets to the deeper point of trade 

subsidies. 

But, look, you make the right intellectual point. These are estimates; they are estimates by everyone. And they are a best judgment. I will tell you, the Air India numbers are right, because I 

was involved in pulling it down and having to do the reductions in 

force. 

Mr. MULVANEY. And if you do scratch a little bit deeper at the 

Export-Import Bank numbers, what you will see is they are using 

formulas that use information from 2002. 

If Ms. de Rugy was here, I would talk to her about the foreign 

components. Boeing advertises that 30 percent of the 787 is made 

overseas. And it is unclear how many of those 255,000 jobs, Mr. 

Heck, are actually jobs overseas. In fact, when the GAO asked the 

Export-Import Bank about that in its May report, it said that ExIm officials told us they had not assessed the extent to which this 

limitation affects the overall jobs estimate. 

‘‘Supported’’ versus ‘‘created’’ is another little twist of the language. ‘‘Supported’’ and ‘‘created’’ are not the same thing. Just beVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
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cause a job is supported, doesn’t mean it is going away if the Export-Import Bank financing goes away at the same time. 

I think it is important to recognize one thing as we deal with 

these things and we start using these numbers when we talk about 

jobs: The only reason the Export-Import Bank counts jobs is because of us. That is it. That is the only reason they count jobs, is 

so they can come in here and try and justify their existence. 

I am not making this up myself. I am looking at the GAO report, 

and it says, ‘‘Export-Import officials told us they use the results of 

its jobs calculations for reporting purposes only. According to the 

Ex-Im officials, Ex-Im calculates the number of jobs supported for 

the transactions reviewed by the board of directors at the request 

of one of its board members. Ex-Im board members stated that the 

purpose of reporting these numbers is to give Congress a sense of 

the employment effects of Ex-Im activities. They do not use them 

for decision-making.’’ 

The only reason they are giving you the 255,000 number is because they want—excuse me—255,000 jobs is because they want to 

continue to exist. And at some point we have to decide which numbers are real and which numbers are fake. 

And I would suggest to friends of mine on both sides of the aisle 

that, as between a government agency and bureaucracy that is trying to make an argument for getting more money and continuing 

to exist and a private sector company that is simply saying, please 

leave us alone so that we can compete, it is the latter that is the 

more reliable number. And the 255,000 is not a real number. But 

the 7,500 jobs that Delta lost are real, and that is what we should 

be focusing on. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair recognizes the gentleman from Washington, Mr. Heck. 

Mr. HECK. Thank you, Mr. Chairman. 

And to clarify the record, it is 205,000 jobs for 2013. I believe it 

was 255,000 in 2012, as reported by the industry, actually, to the 

Export-Import Bank. 

Mr. Anderson, I want to ask you a question to which I suspect 

I know the answer. Would you favor continuation of the Small 

Business Administration? 

Mr. ANDERSON. I don’t know anything about the Small Business 

Administration. I am a large business. I could certainly go learn 

about it, but I— 

Mr. HECK. Please don’t. 

Mr. ANDERSON. —don’t know. I just don’t know. I have never 

done any studies. I have never had anything to do with the Small 

Business—I don’t even really know what it does. 

Mr. HECK. I asked because I thought I knew the answer, which 

I did, and I thought you would have said ‘‘yes.’’ And I was— 

Mr. ANDERSON. I can say ‘‘yes’’ if you want me to. 

Mr. HECK. It is nice to know what kind of thought you give to 

your testimony here today, sir. 

Mr. ANDERSON. Well, no, I am just totally—if you think that it 

is— 

Mr. HECK. No, I— 

Mr. ANDERSON. —a worthwhile program, I am happy to— 

Mr. HECK. Time out. Time out. 

57 

Mr. ANDERSON. —support it. 

Mr. HECK. I— 

Mr. ANDERSON. I didn’t come here to testify about the Small 

Business Administration. 

Mr. HECK. Admittedly. 

And I wanted to make the analogous point that the SBA, in some 

ways, functions as the Export-Import credit does. The SBA enjoys 

an enormous amount of public support and is kind of a given. And 

I wanted to give color to your earlier remarks that it was a reformed Ex-Im going forward you were seeking, not elimination of 

it. That was my only motivation. 

I do want to make the point that those of you who are aggressively seeking reforms, which may or may not enable the continued 

existence of Ex-Im in any kind of meaningful way, are playing with 

fire. You are playing with fire. 

I want to go back to how I ended up, in my brief time that the 

gentlelady from Wisconsin gave—we could wake up in 20 years and 

still have a duopoly in terms of airplane production in this world, 

but unfortunately it would be Airbus and the state of China and 

their C919. I don’t think America would be better off for that. I 

think America would be worse off. 

It is the broader point I seek to make, however, which is the importance of aerospace production, which is one of the important 

beneficiaries of the Export-Import Bank, and the domestic industrial base of this great Nation. We don’t want to lose it. 

We have lost really key components of our industrial base over 

the last several decades, and most of us have lived to regret it. But 

the difference is this is not one we can reconstitute very easily. 

And, in fact, it is not unrelated to this Nation’s security. The hundreds of thousands of people who put together those great airplanes and, frankly, those national security products are a part of 

keeping this Nation safe. 

And, again, I think we are playing with fire if we think that we 

can do away with the Export-Import Bank and not have that critical part of our industrial base decline. I think we are playing with 

fire if we think we can be as aggressive about certain kinds of reforms that would have that effect and not acknowledge it. 

I was delighted to hear my friend, Mr. Campbell, indicate that 

he had come up with a bill. I respect him a great deal. This institution is going to miss him. Frankly, I am going to miss him. This 

committee is going to miss him. And I thought it was an act of considerable integrity that he accepted responsibility for the development of that which he presented today, having been just done on 

that side. 

He knows that I talked to him on the Floor months ago and 

asked that our side be a party to those conversations. But we are 

where we are. And Mr. Campbell has taken the constructive step 

to put a bill on the Floor, which—or a bill on the table, which none 

of us have had the opportunity to read, so we know not what its 

impacts will be. 

But here would be my point about that, and granting him credit 

for that work, which I know was hard: The exact number is 97. 

Ninety-eight days from now, the doors of the Export-Import Bank 

will shutter, and America will be worse off for it. 

58 

And the alternative is that we have a hearing on an actual bill 

that Mr. Campbell has developed and begin the give-and-take 

about what the path forward might be. Because, in fact, we only 

have 97 days. 

And I don’t want to wake up in 20 or 30 years, should I have 

the great blessing to still be around, and look back and rue that 

we were the ones that allowed another enormous degradation of 

our Nation’s domestic industrial base, as we have in so many other 

sectors. This Nation cannot afford it. Our quality of life cannot afford it, our standard of life cannot afford it, and the health of our 

economy cannot afford it. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Kentucky, Mr. 

Barr. 

Mr. BARR. Thank you, Mr. Chairman. 

Thanks to the witnesses for your patience and for your persistent 

testimony here today. 

First, for Mr. Wilburn, I appreciate that you are a small business 

owner and you are an entrepreneur. You mentioned that you were 

‘‘a free-market guy.’’ 

Are there other means that you could identify making your company more competitive in the global marketplace besides reauthorization of the Ex-Im Bank? For example, lowering the highest corporate tax rate in the developed world? Ending the war on domestic energy production to make sure that we have an affordable and 

reliable supply of industrial energy costs? Repealing Obamacare, 

for example? Promoting free trade? Lessening the regulatory burden on U.S. companies, which is estimated to cost the American 

economy $1.8 trillion annually? 

Do you see some of these policies, which produce impairments to 

our competitiveness, as equally or even more important than reauthorization of the Ex-Im Bank to your bottom line? 

Mr. WILBURN. Speaking to my bottom line, I think all these 

things that you mentioned need to be considered in the argument 

that they are going to have in the next couple of days here really. 

And it is important, I think, to give you a number, if I may just 

diverge from the question for a moment. There were 165 jobs that 

we created. We audited those. We will be happy to share that with 

the committee. But—with our project in Brazil. 

But, to your point, without the Export-Import Bank existing in 

a form that would allow me to compete with the ECAs of the world, 

for my products to get there, I can’t imagine my company surviving. 

But I also think, as a free-market person, that a lot of the reforms that you are talking about and a lot of the policies you are 

talking about need to be debated, need to be debated civilly. We 

don’t need to use words like ‘‘crony capitalist’’ and insult some of 

my people and small business people with that. We need to get into 

the productive words like you just mentioned, have a discourse. 

Mr. BARR. Just to conclude, you would agree, then, that there are 

many, many ways to make the United States and our businesses 

here, including yours, much more competitive independent of the 

Ex-Im Bank issue? 

59 

Mr. WILBURN. Absolutely. 

Mr. BARR. Okay. 

Let me just ask the other witnesses to comment on that, as well, 

just very, very briefly. 

Captain MOAK. The one thing I would focus on is, it is one thing 

competing in a free marketplace, and it is another when our government subsidizes our competitor. 

That is what we are here about. We are not here about all these 

other things that people are bringing in. We have somebody, our 

own government, government policy subsidizing someone, putting a 

piece of equipment on top of us. We are losing jobs. That is what 

we are about. 

Mr. BARR. Thank you, Captain Moak. 

And, Mr. Anderson, when you answer the question, I would also 

put something else out there for you to comment on. In response 

to my colleague Mr. Capuano’s argument earlier in the hearing 

today—and I will summarize his argument: Since everybody else is 

doing it, we should, too. And we have heard that in some form or 

fashion from a number of my colleagues here today. 

Is that the right attitude? That because everybody else is doing 

it, we should do it? And how would you respond to that? 

Mr. ANDERSON. In our specific instance, it is not everybody else; 

it is three countries. It is England, France, and Germany, our three 

closest allies and trading partners. So, in terms of aircraft finance, 

this is—and everything else we do with those three countries, this 

is something that is immediately solvable with respect to financing. 

On the broader question, I think the really broader question is, 

I don’t think we are very good at negotiating trade agreements in 

our country. And while we all support, I think on both sides of the 

aisle, the free trade, what ends up happening is we all—in our industry, we don’t have free-trade agreements. We have unfair-trade 

agreements. 

And I think the biggest thing we could do as a country is make 

sure our trade agreements are, in reality, free-trade agreements 

and that U.S. companies are not put at a disadvantage. 

Mr. BARR. Mr. Anderson, in my remaining time, I will note that 

I appreciated your comments about lost pensions at your company. 

In my congressional district and just outside of my congressional 

district, my constituents in the coal industry have not only lost 

their pensions, they have lost their jobs. And what the Export-Import Bank looks to do is to harmonize their policies with the Administration’s job-killing policies that have put those people out of 

work. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga. 

Mr. HUIZENGA. Thank you, Mr. Chairman. I appreciate that. 

Mr. Anderson, I know you were being quizzed about the Small 

Business Administration. I won’t ask you about the EPA, I won’t 

ask you about NLRB, I won’t ask you about a lot of other things 

that have been going on in the Administration. But it does strike 

me, after doing a little basic Internet research here, that we might 

be talking about the ‘‘big business administration’’ here, with ExIm. 

60 

General Electric has $656.6 billion in assets on their balance 

sheet, which includes a financing arm, GE Capital, with $517 billion in total assets. That makes them the eighth-largest Bank holding company in the United States. The Boeing Company, with 

$92.7 billion in assets on their balance sheet, with their finance 

arm with $3.9 billion in total assets. Caterpillar—I am familiar 

with heavy equipment. I own a small sand and gravel operation, 

and have owned Caterpillar products in the past. Their assets are 

$89.9 billion on their balance sheet. 

I guess maybe my question is, companies—and you are very familiar with how you finance large companies. And as you are going 

through—and you said earlier you paid cash, or will be paying 

cash—I am not sure exactly how that works, if it is up front or 

afterwards—but you are purchasing 100 airplanes. How does financing of these large companies work? 

Mr. ANDERSON. Typically, financing in the large companies work 

through public markets in the United States. So those big firms 

will go to the public bond markets. The Bank markets have really 

dried up after Dodd-Frank and the economic reforms. So there is 

still some Bank financing, but, by and large, it is both public market equity financing, public market secured financings, and public 

market financings. 

I will note that GECAS and the Bank compete all the time. So 

we own a stake in a company called Aeromexico, and Aeromexico 

bought some Boeing airplanes. And after it was over with, General 

Electric was competing against the Ex-Im Bank to finance the fleet. 

So GE kind of has a foot in both camps. They are the largest aircraft— 

Mr. HUIZENGA. Hey, if you can have your cake and eat it, too, 

that is a pretty good spot to be in. 

Mr. ANDERSON. They are the largest aircraft financier in the 

world, with GECAS, and at the same time they make engines and 

they are a participant in Ex-Im Bank financing. But then they 

compete all the time against the Ex-Im Bank financing arm to see 

if they can get the airline business around the world. 

Mr. HUIZENGA. I guess my question is, couldn’t these companies 

find traditional financing? 

And, you had put up the Emirates Air situation. I think it is a $100-billion sovereign wealth fund that they have. And the number 

that we have heard is 98.4 percent of all exports don’t use Ex-Im 

financing; they are done the traditional way. That means about 1.6 

percent that do, of which about a third probably could not get that 

kind of traditional financing. 

I know, Mr. Wilburn, you might fall into that. But if I were you, 

frankly, sir, I would be a little concerned that you have major companies like that literally sopping up any opportunity that you have 

and other small business owners might have to access some of 

these programs. And yet you get trotted around as the showpiece 

of why we need to keep this, when, in fact, it is clearly going to 

these massive, massive companies. 

I don’t know if you care to comment. 

Mr. WILBURN. With all due respect, nobody trots me around— 

Mr. HUIZENGA. Okay. 

Mr. WILBURN. —except me. 

61 

Mr. HUIZENGA. I’m sorry. I did not mean specifically you, but— 

Mr. WILBURN. No, I understand that, sir, and I— 

Mr. HUIZENGA. —I have a number of companies that come in. 

Mr. WILBURN. I understand. 

Mr. HUIZENGA. I can tell you this. They don’t come in with the 

big companies. They come in trying— 

Mr. WILBURN. I will give you my— 

Mr. HUIZENGA. —to play the small. 

Mr. WILBURN. I will give you my balance sheet. I am a private company. To put it in perspective, it is $5 million right now. Okay? 

So you are right, I am competing with billionaires. Okay? 

But there is a lot in common with these billionaires that I am 

hearing today that encourages me. Because if I can get these types 

of executives to give this kind of focus to small business and say 

that they are willing to work and negotiate to keep to the ExportImport Bank alive, I am all for that. I want to sit down with these 

gentlemen again. 

Mr. HUIZENGA. That is great. In my last 10 seconds, I guess I 

would express to you I am not concerned that is the focus of the 

Ex-Im. 

And, Mr. Anderson, I will gently remind you that, actually, Canada is our largest—as Chair of the Inter-Parliamentary Group with 

Canada, I have to point that out they are our largest trading partner. 

Chairman HENSARLING. Time— 

Mr. HUIZENGA. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Ohio, Mr. Stivers. 

Mr. STIVERS. Thank you, Mr. Chairman. 

Before I begin my remarks, I would ask unanimous consent to 

submit a letter from PPG, which is a company that has 200 employees in my district. I would like to submit their letter for the 

record. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. STIVERS. Thank you. 

Thank you for being here. I would like to thank all the witnesses 

for being here. I guess Ms. de Rugy could not stay. I am sorry to 

hear that. 

I actually care what the panel thinks. I am not going to make 

a 5-minute statement. I am going to ask you some questions because I came to learn from you. And I appreciate the chairman putting this panel together. 

So you have all spoken earlier. Could you please raise your hand 

if you could support Ex-Im Bank reauthorization with meaningful 

mandatory reforms? With meaningful mandatory reforms, could 

you support reauthorization? 

Mr. ANDERSON. Provided it addresses the issues that I have laid 

out— 

Mr. STIVERS. Sure. 

Mr. ANDERSON. —and we stop— 

Mr. STIVERS. You have passionately laid those out. 

Mr. ANDERSON. Yes. 

Mr. STIVERS. Let’s assume it addresses your issues with mandatory reforms. 

62 

Could we see that again? Could you raise your hand? 

Captain MOAK. Could I just say— 

Mr. STIVERS. Mr. Wilburn, are you for reauthorization with— 

Captain MOAK. Could I say, reforms, accountability, and compliance? 

Mr. STIVERS. Sure. Okay. Reforms, accountability, and compliance. 

Could you please raise your hand if you are for reauthorization 

of the Ex-Im Bank with reforms, accountability, and compliance is 

mandatory, that sticks, and that addresses the issues you— 

Mr. ANDERSON. That stop wide-body financing— 

Mr. STIVERS. So did everybody raise their hand? Okay. 

Chairman HENSARLING. I am not sure your microphone is on, 

Mr. Wilburn. 

Mr. STIVERS. Okay. He wants to know what the mandatory reforms are. 

But you could support it— 

Mr. WILBURN. The concept? Yes. There needs to be— 

Mr. STIVERS. —with reforms? 

So I just want to show everybody who happens to be watching 

that the panel unanimously—I’m sorry Ms. de Rugy could not stay. 

The irony is that she is from France— 

Mr. ANDERSON. She would probably vote ‘‘no.’’ 

Mr. STIVERS. She might vote ‘‘no,’’ but she didn’t stay, so the 

panel is unanimous in supporting reauthorization with meaningful 

mandatory reforms. 

Many of my colleagues, I think, do very well in the theoretical 

world, but I live in the real world. And 41 countries have export 

finance agencies. And, I think Mr. Sherman from California talked 

about unilaterally disarming. I think that is a bad idea. But I think 

there is a way forward here. 

Mr. Anderson, you passionately argued for some meaningful reforms. And you talked about the handshake agreement between 

Boeing and Airbus of France, and they now agree to exclude some 

things and not cover certain things. 

If the United States completely walked away and did not reauthorize the Ex-Im Bank, do you believe Airbus would hold firm to 

the handshake agreement? It is kind of like—the handshake agreement is like mutually assured destruction, right? So they each have 

something, and they agree not to use it. If Boeing didn’t have it, 

do you think Airbus would stick with the handshake agreement? 

Mr. ANDERSON. The commercial leader, John Leahy, at Airbus 

has said yes, that if the United States—and you hear this from 

both sides. I have heard it from Boeing, and I have heard it from 

Airbus: ‘‘If the other side stops using Ex-Im Bank financing, we 

will stop using it.’’ And I have that from the chief commercial officer of Airbus, and I have had it from Boeing executives. 

Mr. STIVERS. I hope that is right. 

And I will tell you that I believe that—and I am sending a letter 

to the U.S. Trade Representative and trying to get some of my colleagues to support it, to ask that we immediately enter into negotiations with the OEDC and with all the countries around the 

world, the 41 countries that have export finance agencies to end 

them simultaneously. 

63 

But I think if we end ours with the hope of goodwill that they 

might do the same thing, that might be a little shortsighted. I am 

sure that Ms. de Rugy and the academic world thinks that is a 

great idea, but I am not sure it works in the real world. 

Yes? 

Captain MOAK. I just have one point of clarification— 

Mr. STIVERS. Yes, Captain? 

Captain MOAK. —Congressman. Thank you. 

This unilateral-disarmament talking point that people use all the 

time that I hear, the buzz word, the reality is, this government policy here, we are arming our competitors. 

Mr. STIVERS. No, I— 

Captain MOAK. Right now, our competitors are— 

Mr. STIVERS. I recognize the need for reform. 

Captain MOAK. We need that to come out. 

Mr. STIVERS. I recognize the need for reform. But if we completely walk away from the entire thing—90 percent of these transactions are small business, like our other witness, Mr. Wilburn. 

And I have one last question. Did anybody read the Financial 

Times today? 

Mr. ANDERSON. No. I was getting ready to do this. 

Mr. STIVERS. Okay. I am sure you were. 

So Mr. Luetkemeyer from Missouri mentioned earlier that 40 

percent of our finance transactions globally were covered by the 

OEDC rules. This year, it is down to 34 percent. 

The real risk is the rise of transactions that are not covered by 

the OEDC rules. That is why it is so important for us to engage 

in negotiations to fix this simultaneously across the world. 

Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy. 

Mr. DUFFY. Thank you, Mr. Chairman. 

Listen, on our side of the aisle, we oftentimes like to talk about 

free markets and free enterprise, how we are big advocates of that. 

But oftentimes we advocate that in theory, and sometimes in practice we are not so great at it. 

I think this has been a fascinating debate and conversation about 

Ex-Im reauthorization and, kind of, how we fall into the debate. 

None of us wants to see us lose American jobs. No one wants to 

see Ex-Im go away and Boeing see some substantial job losses. And 

we don’t like to see the American taxpayer arm our competitors, 

which causes Delta to lose 7,500 jobs or more. 

I was sensitive to Mr. Fincher’s comments about all of us who 

talk about balanced budgets and cutting spending, and one of the 

big first things we do is we cut Ex-Im Bank, and he has to go home 

and explain why he has lost a thousand jobs as the one big costcutting measure that he has done in Congress. That is a tough one. 

I think it brings us back to the budget debates we had at the 

start of this year, where we talked about cutting spending all over 

the place, but the first place we go is to cut the cost-of-living benefit increases to our retired veterans. Our veterans would all be onboard to cut spending, but if they are to say, listen, we are the first 

place you are going to go? You are going to cut us first? There are 

64 

a lot of places you can cut. We will do our part, like we always 

have, but don’t come to us first. 

Just a comment on our debate that we always have in the House. 

I appreciate Mr. Stivers’ comments about the panel’s commitment to—or, reserved commitment to reauthorization of Ex-Im. 

Mr. Anderson, what kind of reform do you think is necessary? 

And I know that, Mr. Moak, you talked about reform compliance 

and accountability. 

But what is needed on the reform front? Not just window-dressing, what is the real reform that is necessary to make Ex-Im work 

and get you to buy in? 

Mr. ANDERSON. Stop arming my competitors and taking my jobs 

away. 

Mr. DUFFY. Throw me some specifics. You are advising the committee. 

Mr. ANDERSON. The specifics were the ones that were ignored the 

last time we did this and the Bank thumbed its nose at this committee. 

Mr. DUFFY. Okay. 

Mr. ANDERSON. And it was very specific. We have to stop providing U.S. Government subsidies to foreign-flag, governmentowned airlines that are usually subsidized on their own and have 

enormous creditworthy balance sheets. 

Mr. DUFFY. No, no, I—you have made that point for 3 hours. 

Mr. ANDERSON. Let me be very blunt about this. 

Mr. DUFFY. Sure. 

Mr. ANDERSON. Let’s be very clear what happens with this financing. It improves the profit margins of the top 10 companies in 

the United States that use it all the time. Okay? That is really 

what it does. 

Mr. DUFFY. Mr. Wilburn? 

Mr. WILBURN. I have one reform that I would like to suggest— 

Mr. DUFFY. Sure. 

Mr. WILBURN. —to the committee and to the Ex-Im Bank. Put 

more focus on small business job growth. It is as simple as that. 

Set not some kind of specious goals but some real goals. That is 

what I would like to see. I would like to really see it become the 

Bank of small business. 

Mr. DUFFY. Just, I want to go to the gentlemen’s agreement because I find that fascinating, that those countries who are providing the financing—oh, I’m sorry. 

Mr. Moak? 

Captain MOAK. I just want to make that point. It is getting 

missed here because we are here, but over in Europe, British Airways, Lufthansa, and Air France want this to come down also because they can’t access it. Okay? Airbus shouldn’t be allowed to access ECA subsidies. They are getting— 

Mr. DUFFY. Right. 

Captain MOAK. —killed the same way Delta Air Lines is. 

Mr. DUFFY. Well, in a sense— 

Captain MOAK. So we need that reform there also. That is what 

is missed here. 

Mr. DUFFY. And on the gentlemen’s agreement, I find it interesting that the countries that provide the subsidy, if you want to 

65 

call it a subsidy, are the very countries who are hurt. Where if you 

said, listen, we are going to allow the United States, Delta Air 

Lines, to say, well, listen, we are—all things being equal, I would 

say that Boeing makes a better plane, but if Boeing and Airbus 

were equal— 

Mr. ANDERSON. Not always. 

Mr. DUFFY. —you could say—we will debate that later—you 

could say, listen, I am not buying any Boeing airplanes, because I 

am going to go buy Airbus, and I am going to get subsidized just 

like the rest of the world gets subsidized. 

But you don’t have that option, right? 

Mr. ANDERSON. Well, no, you don’t get—we don’t get subsidized. 

Mr. DUFFY. I know you don’t, because you can’t get—because of 

the gentlemen’s agreement? 

Mr. ANDERSON. There is the gentlemen’s agreement between—it 

is between Airbus and Boeing. It is the gentlemen’s understanding— 

Ms. DUFFY. Okay. 

Mr. ANDERSON. —that Ex-Im Bank financing won’t be used in 

the United States, England, France, Germany, or Spain, because 

those are home-market countries where Airbus and Boeing airplanes—it will be an interesting question when Airbus starts making them in Alabama. 

Mr. DUFFY. Fair enough. 

I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Indiana, Mr. 

Stutzman. 

Mr. STUTZMAN. Thank you, Mr. Chairman. 

And thank you, gentlemen, for being here today. I have enjoyed 

the testimony and your comments so far. 

Obviously, this is something that is a big concern to a lot of us 

and especially those of us who want to see the private sector handle as much capacity as possible, especially when you are hearing 

a lot of discussion about Banks having plenty of capital, that people 

are looking to help. 

One of the folks that I spoke with in Indiana used to be a customer of Ex-Im Bank, and because of just the volatility around it 

and also his particular interest in finding another solution, he was 

able to. 

And so I guess maybe my first question would be directed to you, 

Mr. Wilburn, because I am a small business owner, as well. I understand the difficulties, the pressures that are on small businesses 

trying to make things work and trying to find new markets. 

Can you tell us a little bit, what else did you look at to see if 

there was another replacement besides Ex-Im, whether it was financing through a bank and some sort of insurance in executing 

transactions, anything like that you would have looked at before 

Ex-Im? 

Mr. WILBURN. I looked at all of those options with, primarily, my 

Bank, Wells Fargo, which was gracious enough to give me that 

working capital loan we talked about, where I had to leverage everything to support those export activities. But I am always, always constantly searching for those types of, I will call them, priVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00069 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
66 

vate solutions with Banks. And they are responsive, they will listen 

to me, but they don’t respond with the funding. 

And, again, it is not my credit that is really called into question. 

When I am exporting my product to those exporting countries, I am 

relying on their credit and their creditworthiness. And it is difficult 

for my Banks to get that collateral and seize it, if you know what 

I mean— 

Mr. STUTZMAN. How long have you been in business? 

Mr. WILBURN. Ten years. 

Mr. STUTZMAN. Ten years. So did you see any difference before 

the Banking collapse? Was there better access to credit? When did 

you start using Ex-Im? 

Mr. WILBURN. I had a partner—my partner was one of the major 

investment Banks that was the last—I am underneath a nondisparagement agreement, so I have to be cautious. But, yes, they 

went Bankrupt. I didn’t. My company was strong. It cost me $11 

million to unwind that and 3 years to unwind that relationship. 

Mr. STUTZMAN. And that was before you started using Ex-Im? 

Mr. WILBURN. Yes, absolutely. 

Mr. STUTZMAN. So do you think— 

Mr. WILBURN. I was funded with a $25-million revolving credit 

line by that particular agency. 

Mr. STUTZMAN. So do you think the pressure today on Banks, 

whether through just the regulatory environment, Dodd-Frank, do 

you think that is putting more pressure on Banks and their ability 

to lend to small businesses and helping them in situations like 

yours? 

Mr. WILBURN. I tried to understand it and I have tried to address 

it in my remarks, and I was a little clumsy at it doing my research, 

but all I can say is that I think there are some barriers to entry 

for small business guys like me. And we have to take a look at the 

rules and the risk profiles to make it a more level playing field for 

us to have access to those capital markets. 

Mr. STUTZMAN. Mr. Anderson or even Captain Moak, would you 

have any information regarding that and just your experience 

around Ex-Im? And I know you are focused more on the bigger 

side, but smaller business, are there other opportunities and other 

solutions for smaller businesses to work outside? 

And would you make any comments about just the difficulty with 

credit today and the regulatory environment in which we live? 

Mr. ANDERSON. I can talk generally, that the credit environment 

is a much, much tighter credit environment. And with the markto-market rules, a lot of the Bank lending that we used to rely on, 

particularly in Europe, to finance airplanes is gone. 

So the number of sources for large structured finance, particularly given the Basel II requirements and the mark-to-market requirements, have really tightened up credit quite a bit in our industry. And a number of sources we used to have, where you could 

get a mortgage on an airplane, you can still get it, it just takes 

what Fannie Mae requires for a home, a bigger downpayment, a 

better credit rating— 

Mr. STUTZMAN. Yes. 

Mr. ANDERSON. —a better FICO score. 

67 

Mr. STUTZMAN. And those are all the hard things with which 

small businesses have to deal. 

Captain Moak, you wanted to make a comment? 

Captain MOAK. Yes. The only thing I would add is, we are going 

back to 2008 with the collapse. Okay? The U.S. Congress over a 

few days in 2008 was able to deal with that and come out with legislation. I am confident this body can address reform in less than 

90 days on this issue. 

Mr. STUTZMAN. And, Mr. Chairman, if I could just make the comment, I think that we are focusing on something here that is a 

symptom with the regulatory environment that we live in, and we 

are trying to reauthorize a Bank that isn’t part of the solution. We 

should be focusing on the— 

Chairman HENSARLING. Time— 

Mr. STUTZMAN. —regulatory environment that we have. 

Thank you. I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

There are no other Members in the queue. So, Mr. Anderson, 

Captain Moak, Mr. Wilburn, we thank you for your testimony. 

We will excuse the first panel at this time. 

We would invite the members of our second panel to please make 

their way to the witness table. 

The committee will come to order. 

We will now turn to our second panel of witnesses, many of 

whom are familiar faces to this committee, so my introductions will 

be brief. 

If staff can be instructed to shut the hearing room doors. 

First, the Honorable Fred Hochberg currently serves as Chairman of the Export-Import Bank, a position he has held since 2009. 

The Honorable Osvaldo Gratacos currently serves as the Inspector 

General of the Ex-Im Bank. He has served in this capacity since 

2010. Matthew Scire is the Director of Financial Markets and Community Investment at the GAO. Finally, Dr. Doug Elmendorf is the 

Director of the nonpartisan Congressional Budget Office. 

We welcome you each to the committee today. 

Without objection, your written statements will be made a part 

of the record. 

I believe all of you, hopefully, have testified before the committee 

before. You know the lighting system, so I will not go into that. 

Chairman Hochberg, at this time you are recognized for your testimony. 

STATEMENTS OF THE HONORABLE FRED P. HOCHBERG, 

PRESIDENT AND CHAIRMAN, EXPORT-IMPORT BANK OF THE 

UNITED STATES 

Mr. HOCHBERG. Thank you. 

Chairman Hensarling, Ranking Member Waters, and committee 

members, thank you for inviting me to testify before you as the 

committee considers our reauthorization and progress that Ex-Im 

Bank has made in supporting U.S. jobs through exports. 

Since our last reauthorization just 2 short years ago, Ex-Im has 

supported nearly half-a-million American jobs while generating 

nearly $2 billion for the taxpayers. Ex-Im Bank has met all of the 

reporting requirements set forth in our reauthorization bill and has 

68 

implemented several other reforms. At Ex-Im Bank, we are committed to continuous improvement and effective risk management. 

When I testified before this committee last June, I committed to 

hiring a chief risk officer before years end, and we completed that 

on time. Under his leadership, the Enterprise Risk Committee assesses comprehensive risk issues, reports semiannually to the 

Bank’s audit committee, and provides me as well as our other directors with a monthly update. 

We have implemented a number of other reforms making Ex-Im 

more transparent and accountable, including: we post in the Federal Register all transactions of $100 million or more; we reviewed, 

revised, and posted our economic impact procedures on our Web 

site; we have implemented enhanced Iran sanctions provisions; we 

have added a textile industry member to our advisory committee; 

and we have implemented portfolio stress-testing and reported that 

to Congress. Frankly, the list goes on and on. The longer list is included in my written testimony. 

At the height of the financial crisis in 2008, our default rate was 

1.1 percent. And today, in our most recent report of March of this 

year, which we issue to Congress as part of those reforms every 90 

days, it is 0.211 percent, or less than a quarter of a percentage 

point. 

Customers who use the Bank pay a service fee, which covers all 

of our reserves and operating costs. We make no grants. Money is 

not given away; it is loaned and repaid. And Ex-Im Bank does not 

engage in corporate welfare. 

Since I last appeared before you, we have accomplished much in 

our efforts to support small businesses. In 2013, the Bank financed 

a record 3,413 small businesses, nearly 90 percent of Ex-Im’s transactions. That amounted to about $6 billion for small business financing, of which $5.2 billion was direct. 

The Bank supports tens of thousands of additional small businesses, whose goods are incorporated into larger exports. We are 

critical to small businesses exporting directly and indirectly across 

the world. These businesses are operating in an extremely competitive environment. 

This morning, we are releasing Ex-Im Bank’s Competitive Report. In 1999, just 15 years ago, nearly 100 percent of export credit 

financing globally was done within an agreed-upon framework and 

it was transparent. As this report shows, it is down to one-third, 

and it continues to drop. In other words, two-thirds of all official 

government support for exports today is opaque and unregulated. 

Countries like China and Russia frequently engage in marketdistorting financing that threatens U.S. workers and their jobs. 

This is deeply concerning to me and should be to every American 

worker. U.S. businesses are not competing against Chinese companies on a level playing field; they are competing against ‘‘China, 

Inc.’’ 

In 1999, official Chinese financing was almost nonexistent. 

Today, it is well over $100 billion, dwarfing what Ex-Im Bank does. 

South Korea, an economy less than one-tenth our size, now finances $100 billion, nearly 4 times the $27 billion that we refinanced last year. 

69 

Other ECAs, such as South Korea, are using the uncertainty surrounding Ex-Im’s reauthorization to steal contracts. You heard that 

clearly on panel 1 from Steve Wilburn, about how this is harming 

his business. 

In closing, I want to thank Inspector General Osvaldo Gratacos 

for his years of service at Ex-Im as he heads to new endeavors. He 

has helped us, without question, to run a better Bank. We have 

worked cooperatively with GAO and accepted all of their recommendations since the last reauthorization. 

Lastly, I also want to commend the outstanding professional 

work of our 400-plus employees. 

We live in an extremely competitive world, and the playing field 

is not level. I wish everyone played by the rules, but, as our competitiveness report starkly points out, they do not. The stakes could 

not be higher. We should not cede American jobs to China, Russia, 

or other countries. That is why I ask for your support in reauthorizing Ex-Im Bank for 5 years with a lending cap of $160 billion. 

Thank you for your support, and I look forward to answering 

your questions and working with you on reauthorization. 

[The prepared statement of Mr. Hochberg can be found on page 

169 of the appendix.] 

Chairman HENSARLING. Mr. Gratacos, we welcome your testimony now. 

STATEMENT OF THE HONORABLE OSVALDO LUIS GRATACOS, 

INSPECTOR GENERAL, EXPORT-IMPORT BANK OF THE 

UNITED STATES 

Mr. GRATACOS. Good afternoon, Mr. Chairman, Ranking Member 

Waters, and the distinguished members of this committee. 

And I thank Chairman Hochberg for his kind words. 

Thank you for the invitation and opportunity to testify before you 

about the Office of Inspector General (OIG) and Ex-Im Bank oversight as it relates to its lending reauthorization. 

Before I continue, I would like to thank the Almighty for the opportunity, and my family, and the members of the Ex-Im Bank 

OIG staff for their hard work. 

Last year, I testified before this committee about the need for ExIm Bank to enhance its risk management framework. Back then, 

we stated that Ex-Im Bank should proactively manage the risk of 

its growing portfolio in line with common practices of commercial 

and multilateral development Banks. 

Specifically, we recommended that Ex-Im Bank should establish 

a chief risk officer or create a risk management office with independent reporting requirements to the Chairman; assign qualified 

and experienced staff to that office; conduct periodic stress-testing 

on its entire portfolio reflecting different market industry and 

microeconomic scenarios; and actively monitor industry, geographic, and obligor exposure levels. 

As of today, Ex-Im Bank has taken steps towards improving its 

risk management framework, some of them described by Chairman 

Hochberg in his statement. However, we think the opportunity for 

improvement still exists. 

For example, Ex-Im Bank established and hired a CRO and restructured reporting lines to separate origination functions from 

70 

risk management functions. However, the CRO was established 

with additional management responsibility, supervising the legal 

and administrative functions of the Bank, which could dilute the 

focus of the position on credit risk issues. 

In addition, Ex-Im Bank has initiated some stress testing for its 

portfolio utilizing a top-down analysis of the portfolio as well as a 

bottom-up approach on some obligors. The results of the first 

stress-testing process were conveyed to Congress in the default report dated September 2013. The Bank has also established an Enterprise Risk Committee and recently provided documentation on 

its activities to the OIG. 

Finally, Ex-Im Bank commenced the use of several qualitative 

factors in its re-estimate process to account for the impact of such 

factors in the portfolio. The application of such factors in the reestimate process commenced in the fall of 2012 and resulted in an 

upward revision of its loss reserves. 

Lastly, let me address some recent press reporting on employee 

integrity investigations. I cannot confirm or deny particular investigations or comment on specific personnel matters. What I can say 

is that we have a number of active investigations involving also an 

external participant or Ex-Im Bank, and they are being reported in 

the semiannual report to Congress and we have had a fully cooperative working relationship with Bank management on these matters. 

Bank management employees have referred issues to us for review, and the Bank has taken employment actions based on information we have referred to them. Some of these matters are nearing conclusion, and I expect to be able to share some information 

on them in the coming months, while others are in early stages and 

may or may not be substantiated. We work closely with the Justice 

Department on these issues, and I hope you understand that I am 

not in a position to comment further at this time on these matters. 

Mr. Chairman, Ranking Member Waters, and members of this 

committee, thank you once again for the opportunity to testify before you today. I would be pleased to respond to any questions you 

may have. Thank you. 

[The prepared statement of Mr. Gratacos can be found on page 

161 of the appendix.] 

Chairman HENSARLING. Mr. Scire, you are now recognized for 

your testimony. 

STATEMENT OF MATHEW J. SCIRE, DIRECTOR, FINANCIAL 

MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. SCIRE. Mr. Chairman, Ranking Member Waters, and members of the committee, thank you for the opportunity to be here 

today to discuss the actions Ex-Im has taken in response to recommendations we made last year. 

Our reports were completed in response to the Export-Import Reauthorization Act of 2012. We reported that Ex-Im’s business volume had grown dramatically in recent years and that this rapid 

growth posed challenges to Ex-Im. Outstanding financial commitments were about $114 billion in 2013, nearly double the level of 

2008 when Ex-Im began to experience rapid growth. 

71 

Among the challenges we cited is understanding the risk of loss. 

This is particularly challenging for Ex-Im because of the need to 

anticipate losses far into the future and because of weaknesses in 

its data. To improve its loss modeling, the Bank added certain 

qualitative factors. These include minimum loss rates, global economic risk, and portfolio concentration risks, whether by region, industry, or obligor. 

These should help Ex-Im better capture risks that may be different than historical experience might suggest, but we found that 

its technique for assessing global economic risk could be improved 

by considering longer-term default forecasts. We, therefore, recommended that Ex-Im consider whether it is using the best available data for adjusting loss estimates for longer-term transactions 

to account for global economic risk. In response, in November ExIm replaced its 1-year forecast with a 5-year forecast. 

We also found that Ex-Im had not maintained historical data on 

defaults that might be used in evaluating the performance and loss 

potential of the current portfolio. That is, Ex-Im had not maintained records that would permit comparing the performance of a 

transaction with that of a like transaction at a similar age. We, 

therefore, recommended that Ex-Im retain point-in-time historical 

data on credit performance. Ex-Im has since begun retaining such 

data. 

Ultimately, loss estimates can never be certain. For this reason, 

it is useful to conduct stress tests to better understand and inform 

the Congress of the potential outcomes of alternate scenarios. ExIm planned to conduct such stress tests, and we recommended that 

it report to the Congress their content and results. Ex-Im has since 

begun to include such information it its quarterly default rate reports. 

Another challenge facing the Bank is understanding what to expect in terms of future activity. In this regard, we found the methods used by Ex-Im to forecast its total exposure for 2013 and 2014 

had certain weaknesses. Specifically, Ex-Im had not reassessed its 

assumptions to reflect changing conditions or conducted a sensitivity analysis to assess and report the range of potential outcomes. 

We, therefore, recommended that Ex-Im do so. In response, in its 

2015 budget justification Ex-Im has incorporated historical experience into the forecast and prepared a range of authorization and 

exposure estimates. 

Another challenge facing Ex-Im is the sufficiency of its resources. 

We noted that the rapid growth in business volume coupled with 

the more modest growth in staff levels created potential operational risks for Ex-Im. And Ex-Im recognizes this risk, but it had 

not formally determined the level of business it can prudently manage, either agency-wide or within specific functional areas, with a 

given level of resources. Likewise, we reported that Ex-Im’s business plan had not sufficiently assessed the adequacy of resources 

for meeting certain congressional mandates to support small business and renewable energy. 

We recommended that Ex-Im develop benchmarks to monitor 

and manage workload levels and provide Congress with more information on resources associated with meeting the mandates. In reVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
72 

sponse, Ex-Im hired a contractor to develop workload benchmarks 

and a workload modeling tool. This effort is ongoing. 

Going forward, it will be important for Ex-Im to sustain a commitment to improving its understanding of factors that drive demand for its programs, the performance of its products, and the potential operational risks it may face. 

This concludes my opening remarks. Thank you again for the 

chance to speak today. I would be glad to take any questions you 

may have. 

[The prepared statement of Mr. Scire can be found on page 184 

of the appendix.] 

Chairman HENSARLING. Dr. Elmendorf, you are now recognized 

for your testimony. 

STATEMENT OF DOUGLAS W. ELMENDORF, DIRECTOR, 

CONGRESSIONAL BUDGET OFFICE (CBO) 

Mr. ELMENDORF. Thank you, Mr. Chairman, Ranking Member 

Waters, and members of the committee. I am pleased to be here to 

discuss CBO’s estimates of the budgetary costs of the Export-Import Bank’s credit programs. 

I want to emphasize that CBO has not analyzed the operations 

of the Bank or the economic impact of its programs. Our analysis 

has been limited to the direct effects of the Bank on the Federal 

budget. 

As you may know, CBO uses two different approaches to estimate the budgetary costs of Federal credit programs. One approach 

reflects the procedures currently used in the budget under the Federal Credit Reform Act of 1990, or FCRA. The other approach, 

known as fair value, reflects the market value of the government’s 

credit assistance. 

For Fiscal Years 2015 to 2024, CBO found that Ex-Im Bank’s six 

largest credit programs would generate budgetary savings of about 

$14 billion under FCRA accounting but cost about $2 billion under 

fair-value accounting. 

Both estimates are based on Ex-Im Bank’s projections of cash 

flows for those credit programs, as reported in the Federal credit 

supplement to the Administration’s 2015 budget. Thus, both estimates reflect the amount of lending, fees, and default rates that 

are expected to prevail under the current structure of the programs 

and the President’s budget request. 

The difference between the two estimates lies in the treatment 

of the cost of market risk, which is one component of financial risk. 

Much of the risk of financial investments can be avoided by diversifying a portfolio. Market risk is the component that remains 

even after a portfolio has been diversified as much as possible. It 

arises because most investments perform relatively poorly when 

the economy is weak and relatively well when the economy is 

strong. 

People value income from investments more when the economy 

is weak and incomes are relatively low, and so assign a higher cost 

to losses that occur during economic downturns. The higher cost of 

losses in bad times as well as lower costs in good times is captured 

in the cost of market risk. The government is exposed to market 

risk through its credit programs because when the economy is 

73 

weak, borrowers default on their debts more frequently, and recoveries from defaulting borrowers are smaller. That market risk is effectively passed along to taxpayers and beneficiaries of government 

programs because they bear the consequences of the government’s 

financial losses. Moreover, that risk is costly to those taxpayers 

and beneficiaries because they tend to value resources more highly 

when the economy is weak. 

Under the FCRA approach to accounting for Federal credit programs, Treasury borrowing rates are used to discount expected future cash flows, that is to translate future cash flows into current 

dollars. That approach essentially treats future cash flows subject 

to market risk as having the same value as Treasury securities 

that promise the same average payments with no risk. This means 

that the market risk of Federal credit assistance is treated implicitly as having no cost to the Federal Government. 

That has important consequences. For example, the cost of Federal credit programs reported in the budget is generally lower than 

the cost to private financial institutions for providing credit on the 

same terms. Also, the budgetary costs, the Federal credit programs 

are generally lower than those of grants for similar purposes that 

involve equivalent economic costs. 

In addition, purchases of loans and loan guarantees at market 

prices appear to make money for the government and conversely 

sales at market prices appear to result in losses. To incorporate the 

cost of market risk, the fair-value approach generally entails using 

the discount rates on expected future cash flows that private financial institutions would use. That approach effectively uses market 

prices to measure the cost to the public of the lower returns on 

Federal loans and loan guarantees when the economy is weak and 

incomes are relatively low. In CBO’s view, therefore, fair-value estimates provide a more comprehensive measure of the cost of Federal 

programs. 

Some analysts have expressed concern about potential drawbacks 

of using the fair-value approach in Federal budgeting. They argue, 

for example, that fair-value estimates include costs that will not be 

paid directly by the Federal Government if actual cash flows turn 

out to match expected cash flows and that including those costs 

makes comparisons with some non-credit programs more difficult. 

These analysts note that fair-value estimates are somewhat more 

volatile than FCRA estimates and more complex to produce, and 

they worry that communicating the basis for fair-value estimates 

to policymakers and the public is more difficult than doing so for 

FCRA estimates. 

Proponents of the fair-value approach respond to those concerns 

by arguing that decisions about spending the public’s money should 

take into account how the public assesses financial risks as expressed through market prices; that by taking those prices into account, fair-value estimates are unbiased estimates of the expected 

costs of loans and loan guarantees when they are offered and that 

other concerns can be mitigated through established accounting 

practices. Thank you. I am happy to take your questions. 

[The prepared statement of Dr. Elmendorf can be found on page 

148 of the appendix.] 

74 

Chairman HENSARLING. The Chair now yields himself 5 minutes 

for questions. 

Mr. Hochberg, my background is not in accounting. I have a degree in economics and a degree, a J.D., but I do know the difference 

between single-entry accounting and double-entry accounting. So, I 

just heard your latest jobs claim that seems to increase every time 

that I see you. I trust you did hear the testimony of the earlier 

panel. Is that correct? 

Mr. HOCHBERG. Yes, I did. 

Chairman HENSARLING. Okay. In the claims that you make, is 

that a net number, or is that a gross number, because we are having testimony of job loss caused by your Bank, so is the number 

that you posit a gross number or a net number? 

Mr. HOCHBERG. It is a gross number. It is the number we use— 

Chairman HENSARLING. That answered the question, Mr. 

Hochberg. I appreciate that. Also, I assume since we have a witness from GAO here, you are familiar with their May 2013 report 

that criticized the Bank for concealing methodological weaknesses 

in the jobs claim, including the fact that you do not distinguish between full-time, part-time and seasonal employment. You do not 

control for selection effects between supported firms and industries 

that may depart from the average. And, again, as I just posited, 

GAO criticized the Bank for not considering the unseen counterfactual of how many jobs would have existed without any intervention 

at all. Are you familiar with GAO’s work regarding your jobs 

claim? 

Mr. SCIRE. Yes, and we pointed out a number of weaknesses with 

the methodology and recommended that Ex-Im do more to disclose 

the weaknesses with the methodology, and since, they have done 

so. 

Chairman HENSARLING. Thank you. 

Dr. Elmendorf, FCRA applies—well, I have seen a report that 

there are roughly 10,000 Federal agencies, programs. Frankly, I 

have been here for a number of years, and I still can’t figure out 

how many there are. But how many are subject to FCRA? How 

many programs or agencies? 

Mr. ELMENDORF. I don’t know what the count is, Mr. Chairman. 

As you know, there are several trillion dollars of outstanding 

Federal loans and loan guarantees that are recorded in the budget 

on a FCRA basis. The exceptions to FCRA among credit programs 

that I am aware of are the TARP program, because Congress wrote 

into the law that we should do estimates of that program, adjusting 

for market risk, and for Fannie Mae and Freddie Mac, because that 

is something that is specified in law, and we do those on a fairvalue basis. 

Chairman HENSARLING. This is probably outside your area of expertise, and I think we had some testimony earlier today. Certainly, I have seen evidence. Doesn’t almost every other private 

Bank or private company that is subject to GAAP use fair-value accounting? 

Mr. ELMENDORF. Private financial institutions generally use fairvalue accounting, yes, Mr. Chairman. 

Chairman HENSARLING. Mr. Hochberg, we had a gentleman here 

on the earlier panel, as you well know, one of the recipients of an 

75 

Ex-Im credit guarantee. I think your latest figure is that you are 

supporting roughly 3,000 or 3,500 small businesses. Is that correct? 

Mr. HOCHBERG. Correct. 

Chairman HENSARLING. The earlier witness takes exception to 

your definition. We will accept the definition for the moment. I 

have information from the SBA; by their definition, and I don’t 

know the definitional differences, there are roughly 30 million 

small businesses across America. So if I am doing the math right, 

you are in some way, shape or form providing credit services to 

roughly 1 in 10,000. 

And I am still trying to figure out—I am struggling with this, 

Mr. Hochberg, and that is I have a number of small businesses in 

my district, including CATCO Catalytic Heater Company in 

Terrell, Texas. They export. They don’t use your services. And I 

quoted this gentleman earlier who said, ‘‘As a small business owner 

who exports, I think it is outrageous that my own government puts 

my business and other small businesses at a competitive disadvantage through the Export-Import Bank.’’ 

I see my time is starting to run out, but I say that, Mr. 

Hochberg, because I think it is important that we hear from the 

small businesses that actually have to pay for what your Bank does 

and whose balance sheets you put at risk. Those voices, I believe, 

are underrepresented in this hearing room today. I will posit that 

all 3,000 or 3,500 small businesses that receive your credit services 

would want them extended. I would posit that, and I know that you 

have traveled all around the Nation. I think somewhat reminiscent 

of Fannie and Freddie, I have no doubt that you have come close 

to finding a customer in every congressional district in America 

today. But I do think it is important that these other voices be 

heard. I noticed you said that roughly 90 percent of your transactions, but isn’t it roughly 18 percent of your exposure is small 

businesses? Is that correct, Mr. Hochberg? 

Mr. HOCHBERG. Actually, this year we are in the 23, 24 percent 

range. We have had greater use of small business and little Banks 

have come back and so some of our larger— 

Chairman HENSARLING. I will just say for the record that the 90 

percent is fairly misleading. I see that I am out of time. The Chair 

now recognizes the gentlelady from New York, Mrs. Maloney, the 

ranking member of our Capital Markets Subcommittee. 

Mrs. MALONEY. Thank you, Mr. Chairman, and welcome to all of 

the panelists. 

Mr. Hochberg, some people on this panel today have suggested 

that we could let the Export-Import Bank’s charter expire and that 

the economy would be fine, that the private sector would just step 

in and take over, and there would be no impact on the U.S. exporters or small businesses. Can you walk us through what the impact 

would be? 

Mr. HOCHBERG. Thank you. Thank you for giving me an opportunity to talk about our small businesses. One, we actually do, 90 

percent of our clients are small businesses; and that is small business as defined by the SBA. We don’t make our own definition. You 

heard on panel one, Steve Wilburn of FirmGreen made a clear articulation of the loss and harm to his business and employment 

from even just the threat of Ex-Im not being here. We had some 

76 

folks in the audience from a company that I think the chairman 

has sometimes cited, Jenny’s Pickles, a woman from North Carolina who is exporting her food products to China, Britain, and is 

looking to expand to Germany and the Mideast. We provide credit 

insurance the way that other businesses get fire insurance or theft 

insurance and credit insurance she cannot obtain in the private 

sector. So though there are many small businesses that can’t get— 

Mrs. MALONEY. How do you know these businesses cannot obtain 

the financing in the private market? 

Mr. HOCHBERG. First of all, they have to state that they needed 

us, and they were not able to obtain this privately. Second of all, 

we survey the private sector all the time, and many times, they 

will not make loans or insurance for smaller businesses. The good 

news is I will tell you the private sector has come back, and the 

private insurers are doing a better job than they did during the crisis, but I will also tell you that the word is out that you probably 

should not get insurance from the Ex-Im Bank because we may not 

be here after September 30th. 

So brokers are telling their clients, I think we have to either get 

you more expensive insurance or I can’t insure you because I don’t 

know if you want to take the risk of having a policy that will have 

a 90-day term. 

Mrs. MALONEY. You raised a point that there are people really 

concerned whether or not you will be there, and they are not providing the insurance. The statute gives Ex-Im the authority to facilitate an orderly liquidation if its charter expires, and a recent 

memo from the Congressional Research Service noted that Ex-Im 

would have considerable discretion in deciding how to manage this 

liquidation. 

Mr. HOCHBERG. If the Bank is not reauthorized on September 

30th, we would not make any new loans. We would not support any 

new businesses. I would add that small businesses in particular 

would probably be hit first, and we would simply hold—I don’t see 

a reason, and I hope Congress would not want to liquidate the 

portfolio which implies selling it off, often at a discount, but let the 

loans mature to term. We have a well-performing portfolio. Liquidation is often used for a failed Bank. The only reason we would 

be not operating is because of a political decision not to reauthorize 

us, not because of a failure at the Bank. 

Mrs. MALONEY. There is a lot of debate this morning about exporting planes, basically exporting Boeing. If the United States decided to stop providing any support or assistance for the export of 

U.S.-made planes unilaterally, what would happen? Who would 

stand to benefit? 

Mr. HOCHBERG. I think that the makers of Airbus would be quite 

excited by this. They would be cheering because, frankly, it will not 

change the amount of airplanes coming into the United States carrying passengers. It will simply change whether it is made in the 

United States by Boeing and their 15,000 suppliers—6,600 are 

small businesses—versus being made in Toulouse, Hamburg, and 

other places, so I think that we have a very real competitive threat. 

And frankly, the threat of China is coming up. They are building 

a plane to compete with 737s, which is the single-aisle general 

77 

commercial plane used, and that is coming on stream in the next 

few years. 

Mrs. MALONEY. We are often criticized for not exporting enough, 

that we have an export deficit. Have you done any work on how 

much of the American export is because of the Ex-Im Bank? 

Mr. HOCHBERG. The very rough cut number is around 2 percent, 

but that includes everything that is exported. Many things are not 

products, are not financed. I can give you some specifics. It may be 

2 percent globally, but if we look in places in Sub-Saharan Africa, 

for example; in Cameroon, it is more than 55 percent of the exports. Senegal is almost 50 percent. India, it was 30 percent in the 

last 12 months, so there is a large percentage above the 2 percent, 

depending on what country you are looking at. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Campbell, chairman of our Monetary Policy Subcommittee. 

Mr. CAMPBELL. Thank, Mr. Chairman. 

And, Dr. Elmendorf, Mr. Scire, and Mr. Gratacos—I probably 

butchered two out of those three names. First of all, I apologize for 

that. 

Dr. Elmendorf, I have said your name enough over the years that 

I know how not to butcher it. 

I hear all of your issues and agree 100 percent with the issues 

relative to the Bank’s accounting for risk, a chief risk officer having 

other responsibilities, and a number of those other factors, so I 

would mention that the discussion draft which I released earlier 

today contains attempts at least to deal with all of those issues. I 

think I agree and believe that the Bank is not properly accounting 

for risk and that if there is a reauthorization, that is something we 

need to do. 

During the remainder of my time, Mr. Hochberg, I would like to 

ask you a few questions about some things. You have actually requested an increase in the authorization of the Bank, even though 

the authorizations you are doing as you just stated, the private sector is back in the game, and the authorizations are down from 

what they were in the Bank a few years. Why would you want an 

increase in authorization then? 

Mr. HOCHBERG. Congressman, thank you for your comments and 

interest in this. We took a look at—again, we are asking for a 5- 

year reauthorization. We looked at—we are compounding the increase 3 percent per annum from the $140 billion today. I took a 

modest increase. Exports are up close to 45 percent since 2009. So 

exports are up. Banks continue to tell us, due to Basel III, DoddFrank, and other regulations, that they have less of an appetite for 

small business, less of an appetite for long-term loans, so factoring 

in those factors, export markets, more going to developing nations, 

I tried to put together a prudent estimate of what we would need. 

Mr. CAMPBELL. Even though that is not your experience right 

now? 

Mr. HOCHBERG. We had a—2 years ago, we were in great need. 

Right now, there seems to be a slight reduction in need. I am not 

looking at only 6 months of making an assessment. I am trying to 

take a broader view. I was a businessman for 20 years. You don’t 

look at 6 months at a time. 

78 

Mr. CAMPBELL. Okay. Got it. Let me ask you now, in the previous panel the CEO of Delta and others complained about things 

that were in the previous reauthorization that they are saying you 

are ignoring, which is the mandate to weigh adverse effects of 

transactions on others. What is your response to that? 

Mr. HOCHBERG. I completely disagree with Mr. Anderson. Congress asked us to simply review our economic impact procedures. 

Those procedures state we should look at the benefits of the U.S. 

economy and any potential harm. We reviewed it. On top of that, 

instead of just reviewing it, we actually published new regulations, 

put them out for comment, went to the entire industry for comment 

and adjusted our impact procedures and put it to a vote of the 

board. So we complied fully, and on top of that, every transaction 

the Bank reviews gets reviewed for economic impact. We want to 

make sure the benefits outweigh any harm. 

Mr. CAMPBELL. Okay. My time is limited so I want to get on to 

this other question. Obviously, yesterday there was some news that 

came out about potentially some accusations of things going on in 

the Bank. Now, we know that in any organization, certainly in any 

element of government that deals with the public, there can be corruption and there can be fraud. Guess what, that has occurred 

within Congress. I know that is a huge shock to everyone listening, 

but that has occurred here as well. 

But the question I have for you is this: There is, I think, a question, and it is a good one, about you are handing out loans, guarantees, and other things to the private sector and that if people have 

the ability to make that not just for kickbacks but to their friends 

to political allies to whatever it may be, that is a bad thing. So it 

would seem to me that there are not enough controls, if you will, 

within the Ex-Im Bank to stop that sort of thing from happening. 

How do you judge, how do you make the decision of who gets support and who doesn’t? 

Mr. HOCHBERG. You mean, what companies get support? 

Mr. CAMPBELL. Yes. 

Mr. HOCHBERG. Well, one is what the need is. We look at the 

need, whether there is a need for Ex-Im Bank to be a player in 

that or whether the private sector does it by itself. Frequently, we 

don’t need to engage at all. That is why close to 98 percent of exports don’t need our assistance. You have a few questions, and I 

am trying to— 

Mr. CAMPBELL. Basically, and we are running out of time, but 

the accusation is that some people got support from Ex-Im in exchange for kickbacks. That means somebody else probably didn’t, 

or those weren’t meritorious, or there was a competition or something going on. I am trying to determine what procedures you have 

in place and you are not going to have time to answer this, so 

maybe you can later, but what procedures you have in place to stop 

that sort of thing from happening because that can’t happen. 

Mr. HOCHBERG. I agree. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair recognizes the gentleman from New York, Mr. Meeks, 

the ranking member of our Financial Institutions Subcommittee. 

Mr. MEEKS. Thank you, Mr. Chairman. 

79 

The latest trade data shows that the United States trade gap has 

increased to $47.2 billion in April 2014, as imports recorded the 

highest value on record. Purchase of automobiles, capital goods, 

food, and consumer goods all hit record highs. So, in the midst of 

record trade deficits, we are here today debating—and I can’t believe this—whether or not we need to reauthorize the Ex-Im Bank. 

The Chinese and the Europeans and the Brazilians and the Japanese all must be looking at us and shaking their heads in complete 

disbelief that we are actually debating this issue, that we could actually voluntarily purposely kill American industries and hundreds 

of thousands of American jobs. Its unbelievable to me. 

And I know when start talking about other reforms, there is always the question of uncertainty that keeps coming up, that people 

want to know what the rules are in play and whether or not—certainty was important. Well, here we are now in this atmosphere of 

uncertainty. 

Chairman Hochberg, what effect is uncertainty creating for U.S. 

exports, if any? 

Mr. HOCHBERG. Thank you, Congressman. 

First of all, there is an ad in today’s Politico that says, ‘‘Meet the 

Ex-Im Banks of China, Russia and France.’’ They are delighting in 

this hearing. They are delighting in the U.S. debate. On panel one, 

there was a discussion of Steve Wilburn and the direct impact on 

his business. I heard that during the shutdown. I heard that during the potential shutdowns. We enumerate all of that in this competitiveness report. Again, two-thirds in the range of about $200 

billion of export financed globally is unregulated, opaque, one-off, 

and causes harm to American companies. 

When I am in Africa, the Chinese government offers 100 percent 

financing for anything you will buy, and they will give you 10, 15, 

20, up to 40-year terms. So there is a direct impact on our debate 

here and trying to sell U.S. products, and more importantly, support jobs here in America, small business jobs as well as at large 

companies. So we have seen a direct impact. I hear it from companies. I hear it from their customers overseas. 

One customer in Maryland during the shutdown said he lost a 

customer to Germany because he could not take the risk we would 

not be around. 

Mr. MEEKS. I was listening to some of my colleagues on the other 

side of the aisle also, and I know at the time that we had the last 

reauthorization, there were certain reforms that were in there. And 

listening to them I would think maybe Ex-Im has not implemented 

any reforms. Is that true? Has Ex-Im implemented any reforms? 

Mr. HOCHBERG. We have complied with every single reform and 

recommendation that the committee made. We have complied or 

are in the process of complying of with every single recommendation that GAO has made. We have agreed with each and every one 

of their recommendations. 

Mr. MEEKS. I want to go—because you mentioned Africa twice, 

and you know I just had an event in New York on energizing Africa, and I want to thank Ex-IM for being there. And you talk about 

China, et cetera, being there, but you also just in your testimony 

talked about Cameroon. Can you tell us what opportunities are 

80 

there for American-made goods and services on the continent of Africa? 

Mr. HOCHBERG. Africa is the home to, depending on your estimate, six or seven of the fastest growing economies in the world. 

I just returned 2 weeks ago. There are great needs in power, transportation, water. I was with the President of Angola, who agreed 

to buy a billion dollars worth of locomotives and power units, so 

there are enormous opportunities, but we face very intense competition from China, which will provide financing for any and all 

exports going to Africa. 

Quickly, I went to meet with Transnet that, as a result, split 

their order between the United States and China, and the CEO 

told me point blank China offered 10, 15, 20 years; what terms do 

you need and what rate do you need to pay, and we will make it 

work. 

Mr. MEEKS. Let me ask this in my little time that I have left: 

How does the size of Ex-Im Bank, its particular mission, and the 

terms it is able to offer compare with other foreign export credit 

agencies? 

Mr. HOCHBERG. China, as I mentioned, is more than 4 times our 

size, and that is just their Ex-Im Bank. They have two or three 

other policy Banks that support their exports. The Canadian Bank 

is about 3 times larger than the United States, and an economy 

somewhat smaller than the U.S., Korea, also does about 3 to 4 

times more than we do. We probably have the smallest footprint of 

any export credit agency to the size of our economy in the world. 

Mr. MEEKS. Thank you, and I see my time has just expired. 

Chairman HENSARLING. Indeed, it has. 

The Chair now recognizes the gentleman from Alabama, the 

chairman emeritus of the committee, Mr. Bachus. 

Mr. BACHUS. Thank you. 

Chairman Hochberg, you and I met in my office on March 27th, 

when we were considering the reauthorization of 2012. At that 

meeting, we expressed some concerns to you about transparency, 

accountability, and also the mandate requiring the Bank to review 

the economic effects of its financing to take into account, and I am 

reading statutory language, any serious adverse effect of any loan 

or guarantee on the competitive position of United States industry. 

And then we had some follow-up conversations as late as May 9th 

about Delta’s concerns. We voted that bill out on May 15th, and I 

have never had an explanation that the sale of wide-body jets to 

the Emirates did not hurt U.S. airlines and their competitive position. Several times this has come up, even I think as early as 2003. 

Have you ever done an analysis and shared it with the Congress 

of that particular issue that the president of the airlines was talking about earlier? 

Mr. HOCHBERG. Again, Congress asked us to review our economic 

impact. We not only reviewed it; we decided to revise it and to publicize it, and it is on our Web site. We also do an analysis of— 

Mr. BACHUS. Is that specifically about the effect on— 

Mr. HOCHBERG. We look at every aircraft, and we look at every 

aircraft transaction. 

Mr. BACHUS. I am talking about specifically. Could you supply 

that specific analysis that you did? That concern was directed. It 

81 

was very refined. It was to address the need to subsidize loans to 

the Emirates or rich countries of wide-body jets, of carriers that directly compete with American carriers on international routes. Is 

there an analysis of that and going back and looking at all of that? 

Mr. HOCHBERG. We did an analysis. We hired an outside firm to 

make it unbiased of, is there an oversupply in the aircraft field 

globally of wide-bodies? 

Mr. BACHUS. No. My question was not, were there too many 

wide-bodies. My question is the impact on our flag carriers. We 

didn’t ask for a study of, were there too many wide-body jets in the 

world. 

Mr. HOCHBERG. The Bank has had economic impact procedures 

for 20, 30-plus years. 

Mr. BACHUS. You are telling me something I know. I am asking 

you something; I know you have had procedures. I know you have 

had economic studies. I am asking you specifically, have you responded to our request and Mr. Anderson’s concerns that we discussed on two different occasions? 

Mr. HOCHBERG. Then the answer to that question is yes, sir. 

Mr. BACHUS. Okay. Would you supply us with those documents? 

Mr. HOCHBERG. We would be happy to you supply you. 

Mr. BACHUS. I would like copies of the loan-specific analysis on 

any sale to those countries, the effect on the flag carriers, the 

United States flag carriers, if you could just give me that. 

Mr. HOCHBERG. We will provide that. 

Mr. BACHUS. I would like to tell you something else that I am 

very concerned about. You heard what I said earlier. On August 

2nd, I wrote a letter to you all. We, obviously, faxed it over to you 

because Scott responded the same day and promised us, according 

to his letter, that before the loan was made, they would refer it to 

the policy division as well as the engineering division because there 

were two different studies, and they would share the concern with 

the board prior to a vote, and they would share with us any analysis. That was never given to us but what I am saying is, you 

didn’t do that or supply it to us before the vote. Your response to 

me was 2 months after the vote, which is not—our committee then 

couldn’t respond, couldn’t analyze, couldn’t have any input. You 

didn’t even advise us when the vote was going to be. 

Mr. HOCHBERG. Can I answer the question? 

Mr. BACHUS. Yes. 

Chairman HENSARLING. Briefly. 

Mr. HOCHBERG. Briefly. The board considered it. It comes to Congress. Congress has 35 days to comment before a final vote is taken 

by the board. Any transaction over $100 million comes to Congress 

for any Member to comment, and we got a number of comments on 

that transaction. 

Mr. BACHUS. Who does it come to? 

Mr. HOCHBERG. I don’t know precisely how it is transmitted, but 

every transaction is transmitted to Congress for a 35-day review. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from New York, Mrs. 

McCarthy. 

Mrs. MCCARTHY OF NEW YORK. Thank you, Mr. Chairman. 

82 

Chairman Hochberg, we only get 5 minutes, and I noticed that 

you have always been writing something down. Obviously, whether 

it was somebody on this panel, or I understand that you were in 

the back listening to the first panel, so I am going to stop talking. 

And any questions that you want to answer or things that you 

have heard that you want to give a rebuttal to, I am giving you 

that opportunity to do that now. 

Mr. HOCHBERG. Thank you very much. 

Let me try and answer one or two questions we have. We look 

to make sure that any benefit, any export, the benefit to the U.S. 

economy outweighs any harm. That is referred to as economic impact. So if we are financing the export of an airplane, we are going 

to make sure the dollar amount to the U.S. economy could outweigh any potential harm. We look at every transaction, not just 

aircraft, to make sure that we are complying with that because the 

last thing we want to do, the 400 people at Ex-Im Bank, is hurt 

the U.S. economy. We are here to support jobs, not take away jobs. 

That would be number one. 

Two, the committee staff receives every transaction over 35 days, 

and the committee staff, I presume, forwards it to members of the 

committee who would like to review it. Sometimes we receive many 

comments, and sometimes no comments, but the committee has 

and Congress has a full 35 days to send comments back to us before any transaction is finally voted on. 

There was a question about working with the inspector general. 

I have had a great working relationship with our inspector general. 

I think together we have made a better Bank. Our employees are 

alert to if they see something suspicious or a suspicious claim or 

a suspicious loan or something that doesn’t look right, they work 

directly with the inspector general. They don’t go through me. They 

work, whether it is in the General Counsel’s Office, the CFOs Office, anybody who sees something suspicious, and I am very proud 

of the fact that our employees are very concerned—they care about 

their reputation as well. So, I am pleased with the reputation and 

the work we do with the IG. The article that was in yesterday’s 

Wall Street Journal, in my opinion, is actually a good article because it says to our staff and it also says to any exporter, if you 

are doing any funny business, we are on to you, and we will work 

with it. A lot of this has changed since we have an inspector general, which is 2007. A number of the things discussed predate the 

inspector general. We did not have a inspector general in those 

early days. 

Mrs. MCCARTHY OF NEW YORK. One of the things I wish you 

would go over one more time, is basically I know you are not looking to hurt Delta. I know you are not looking to hurt the pilots and 

the flight attendants, that you want them to succeed. Could you go 

over one more time with their arguments that you heard today on 

why the situation is where it is, and do you see any way to work 

with them to try to come to some sort of an agreement so we don’t 

go through this every 2 years? 

Mr. HOCHBERG. We fully complied with Congress’ request on 

transparency and reforms. There were over a dozen, and we complied with each and every one of them. We have complied with everything or at least so far agreed with everything in the GAO reVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
83 

port. Delta Airlines made an assertion that our financing of planes 

to Air India caused them to lay off people. If you look at the facts, 

they did not ground any aircraft. They have added employees since, 

and they even stated at the time it was not because of competition. 

They said we have moved this, the size and scope of Delta’s operation at the Atlanta hub are best suited for the capacity of the 777- 

200LR in terms of cargo and passenger. So, for business reasons 

they moved the flight to Atlanta. It was not because of competitive 

issues or the Ex-Im Bank. 

That was a concept they came up with 3 years later. There was 

nothing in their press release. They said nothing about the fact 

that there was a global recession in 2008. They said nothing about 

high jet fuel prices, the H1N1 virus, reduced demand, and a number of other things that they also talk about impacting their business. 

But somehow this one route, this one route they decided was 

only because of Ex-Im Bank, and that doesn’t comply with any of 

their public messages. 

Mrs. MCCARTHY OF NEW YORK. Thank you. 

And the other thing, too, obviously, when I came on this committee and I had to learn a lot of new things, one of the things I 

did even before you became the chairman was reach out to the Export-Import Bank to come into my community, bring my small 

businesses in to get educated, and you did come out when you came 

on. And I am happy to say that in my district by word of mouth, 

more and more businesses have been joining, and certainly we 

have seen the growth of the amount of money that has come into 

my district. And it is not mine. It is the people working. It is jobs, 

and that is the important thing. Thank you very much for your 

time. 

Mr. WESTMORELAND [presiding]. The gentlelady yields back. 

It just so happens to be my turn, Mr. Hochberg. 

Mr. HOCHBERG. Perfect timing. 

Mr. WESTMORELAND. You said you had complied with all the requests that Congress had made at the last reauthorization and you 

referred to Mr. Anderson in that all these things had been complied with, although there are people who were at that table evidently when these things were being looked at who say they were 

not complied with. Why do you think there is a difference there? 

Mr. ANDERSON. Certainly. We complied with every requirement, 

every reform that Congress put in. We did, as I mentioned, an economic impact analysis, particularly in the aircraft field. 

Mr. WESTMORELAND. How many of those did you do in the aircraft field? 

Mr. HOCHBERG. We do one a year. We do a survey to determine 

if there is a glut in the aircraft field, which is the criteria that has 

been deployed by the Bank for 20, 30 years in looking at economic 

impact. If there is an oversupply, then any additional capacity will 

have an impact. If there is an undersupply— 

Mr. WESTMORELAND. So how many of those impact analyses have 

you done on aircraft in the last 5 years? 

Mr. HOCHBERG. Well, two things. We review every transaction. 

We do an in-depth study. 

Mr. WESTMORELAND. Every transaction? 

84 

Mr. HOCHBERG. Every transaction over $10 million we review for 

economic impact. 

Mr. WESTMORELAND. How many would that be? 

Mr. HOCHBERG. Close to 3,500. We look at all of them. We don’t 

deploy the resources to do an in-depth study on every single one. 

For example, Congressman, sometimes you have an airplane that 

is replacing an old plane. Sometimes it is an airplane that is never 

flying to America, so a number of those would have no impact. So 

we don’t waste government resources chasing things that have no 

potential impact. 

Mr. WESTMORELAND. Okay. But you have only done one analysis 

in the last 5 years on aircraft? 

Mr. HOCHBERG. The new procedures went in, in April of 2013, so 

first of all, they have been extant now for 15 months. We review 

them all. We did an in-depth analysis on one transaction because 

one transaction triggered and said, this warrants further review 

and study because the planes are new capacity, potentially flying 

to American cities, and as a result, it triggered a more in-depth 

study. Again, if it is replacement aircraft or not flying to the 

United States, we would not spend the time and money and resources to do a detailed study of something that is not going to potentially have an impact. If there is a potential of an impact, we 

will do an in-depth study. 

Mr. WESTMORELAND. Okay. If you are buying a plane from Boeing, it will still have impact on the economy, right? 

Mr. HOCHBERG. Again, the analysis that has been used in every 

industry, not just for aircraft, is we say, what are the benefits to 

the U.S. economy? How much revenue is coming to the United 

States? What is the potential loss to the U.S. economy? And we balance them against each other. So we are always looking at that. 

What is the balance? 

Mr. WESTMORELAND. Thank you. 

Is the Bank being sued right now on any of your economic impacts? 

Mr. HOCHBERG. Delta Airlines is suing us. 

Mr. WESTMORELAND. They are? 

Mr. HOCHBERG. Yes. 

Mr. WESTMORELAND. Is that because of the case you just mentioned? 

Mr. HOCHBERG. Again, they don’t—we have put together economic impact procedures that are consistent with the way we do 

it for every industry. We are not going to pick and choose and do 

a special one for aircraft. We look at how we look at economic impact, as Congress has asked us to look at economic impact. 

I should just add one more thing. We are the only export credit 

agency in the entire world that does this. No other export credit 

agency, no other country requires this. We are happy to do so, but 

I think the committee should know this is something unique to the 

United States. 

Mr. WESTMORELAND. You have really, since 2011, stopped disclosing the yearly total of the number of aircraft exports. Why 

would that be? 

Mr. HOCHBERG. I am unaware that we have made a change in 

our disclosure since 2011. 

85 

Mr. WESTMORELAND. You disclose all of them right now? Is it full 

disclosure of everything you do? 

Mr. HOCHBERG. Everything over $100 million is in the Federal 

Register for a full 25 days before a final board vote. 

Mr. WESTMORELAND. Above that amount? 

Mr. HOCHBERG. Above $100 million. 

Mr. WESTMORELAND. If it is less than that, it is just chump 

change? 

Mr. HOCHBERG. No. Less than that would be—first of all, you 

can’t buy a wide-body plane, the item of concern to Mr. Anderson 

and Delta, none of them cost less than $100 million. So, under $100 

million, and the aircraft would be two and a fraction of a 737, so 

that is what Congress asked us to say over $100 million, we would 

like in the Federal Register. I can just add, this does have an impact on our competitiveness. 

Mr. WESTMORELAND. I am going to lead by example and cut myself off. 

The gentlelady from California is now recognized. 

Ms. WATERS. I would like to go back to a discussion about how 

you guarantee and how you finance and how you supply support 

for insurance. The opposite side of the aisle has created these 

words to describe what you do that are absolutely not true. They 

talk about corporate welfare. In saying that, they are trying to lead 

the public to believe that you are giving away something to the corporate sector in foreign countries. They also talk about crony capitalism, as if you are somehow giving to persons who have some 

kind of connection with you or with Ex-Im, something that they 

don’t deserve, and so I think we need to clear this up. We need to 

talk about the difference between loan guarantees and the kind of 

financing that you do and grants. You have made it very clear that 

these are not grants, but I think we need to say it in words that 

everybody understands and nobody can deny. And, of course, for 

those who are saying it, none of them can prove that there is any 

welfare here, but they will keep saying it, unless we keep denying 

their description of Ex-Im. So would you please, in your own words, 

Mr. Hochberg, talk about how you do this? 

Mr. HOCHBERG. Thank you, Ranking Member Waters, and thank 

you for your support. We provide loans. Loans need to be repaid. 

We do not provide any grants whatsoever, and we have a very 

tough group of people who enforce the loan covenants and make 

sure that loans are paid back and paid back on time. That is how 

we can have a default rate of 0.21 percent, less than a quarter of 

a percent. 

At the height of the financial crisis, the worst crisis since the Depression, it was 1.1 percent, and it keeps declining. So in terms of 

risk management and in terms of corporate welfare, welfare implies we are taking from someone and giving it to somebody else. 

We don’t do that. People come to us if they need our support. Also, 

according to the World Trade Organization, we have to be self-sustaining. If we are self-sustaining, that is where there is no subsidy 

from the government because the fees we collect cover the loan loss 

reserves, cover our operating expenses, and for the last several 

years, we transfer back to the taxpayer for deficit reduction, last 

year over a billion dollars. 

86 

Ms. WATERS. Mr. Hochberg, do you charge interest on loans? 

Mr. HOCHBERG. Most of the loans are guaranteed, therefore the 

Bank charges if it is a direct loan, and sometimes we do that, we 

borrow the money from Treasury. By law, we had a full percentage 

point. So if Treasury lends us the money for 2 percent, we must 

charge at least 3 percent. On top of that we add fees, like points 

on a mortgage. If we are providing ‘‘welfare,’’ if you talk to any of 

our customers, they feel like they pay a lot of money for our services. None of them feel like it is welfare. They are paying ‘‘handsomely’’ for the privilege of borrowing. 

Ms. WATERS. So is it because of the fees that you charge and interest if it is a loan that you are able to earn money, and what do 

you do with the money that you earn? 

Mr. HOCHBERG. The money we receive, a prudent portion goes to 

loan loss reserves to make sure that every loan is paid off. Congress each year appropriates a certain portion of that back to the 

agency to run. The balance we transfer to the Treasury. 

Ms. WATERS. Let me say that one more time. The balance of this 

money goes to the Treasury of the United States of America. 

Mr. HOCHBERG. Correct. One billion 57 million dollars last October. The previous October, it was $803 million. 

Ms. WATERS. So are you telling us that you actually earn money 

for the government that goes into the Treasury? 

Mr. HOCHBERG. Correct. We earn money because we are taking 

in more money than it requires to run the Bank. 

Ms. WATERS. So, in earning money there is no way that anybody 

can credibly say that you are providing welfare for corporate interests. Is that right? 

Mr. HOCHBERG. That is correct. 

Ms. WATERS. It is just an absolute misstatement. 

Mr. HOCHBERG. It is a misstatement, as crony capitalism is a 

misstatement as well. 

Ms. WATERS. Thank you very much. And I hope that as we go 

through these discussions, you will say that over and over again. 

We have to rob the opposite side of their ability to undermine the 

tremendous work that you are doing, the tremendous way that you 

are allowing the United States to at least get at the balance of payment and get us into the export business. If it wasn’t for your 2 

percent or so that you are doing, we would be out of it altogether. 

I thank you. 

And I yield back the balance of my time. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Oklahoma, Mr. 

Lucas, the chairman of the House Agriculture Committee. 

Mr. LUCAS. Mr. Hochberg, are you having fun today? 

Mr. HOCHBERG. I have a chance to tell the story of Ex-Im Bank, 

so more people will understand what we do and how we help support jobs in this country, so I enjoy doing that. 

Mr. LUCAS. That is a good response. And clearly, you are having 

a lot of rounds pitched at you politically from a variety of directions 

here today. 

If I could, to the whole panel, discuss for a moment with me the 

nature of how the rest of the world handles this situation. And if 

we were, indeed, to step away from the institution, would any of 

87 

the other countries that we are aware of around the world drop 

their similar type of programs? I address this to anyone on the 

panel who would care to touch it. Is anyone talking about getting 

out of this business that does this on the planet that you interact 

with? 

Mr. HOCHBERG. Are you asking me? 

Mr. LUCAS. Any of you. 

Mr. HOCHBERG. I would say when I meet with my colleagues in 

the G7 and the BRICs, it is the exact opposite. They are looking 

for a way to ramp up. They are adding staff, and frankly, unlike 

the Ex-Im Bank, most of them have offices around the world. I 

think China Ex-Im has something like 10 or 12 offices globally. We 

are located here in the United States. So, they are going in the opposite direction. None of them are looking to become less robust or 

handicap their Ex-Im Banks. They are looking to enhance them. 

Mr. LUCAS. To my friends from CBO and GAO, if this institution 

goes away, I know you have addressed this but one more time, 

please, the impact on the Federal budget? 

Mr. ELMENDORF. So, Congressman, under the Federal Credit Reform Act, the rules that Congress has legislated and we follow, the 

Export-Import Bank has a negative subsidy cost, and that is the 

way it is recorded in the budget and the way we include it in our 

budget projections. 

Mr. LUCAS. Okay. So if I understand the two sets of comments, 

we have a situation where we are not the only people engaged in 

this kind of activity. It would appear we are the only people discussing not continuing to engage in this activity, and the effect of 

engaging or not engaging in the activity has no real impact on the 

Federal budget? Fair observation? 

Mr. SCIRE. I think the way the Federal budget is accounted for 

right now, you really don’t yet know. You really won’t know what 

the costs of these programs are until more time has elapsed and 

the very recent books of business have had time to mature. I would 

point out that 11 of the cohorts that Ex-Im has done actually require subsidy according to Ex-Im and OMB’s estimates based upon 

re-estimation. So we really won’t know the full cost of these credits 

until they have had time to mature. 

Mr. ELMENDORF. Congressman, I want to agree with that. 

What I was careful to say in my comments was that under the 

rules that Congress has legislated and that we of course follow, the 

Ex-Im Bank is a negative subsidy. We also have said a number of 

times, including just in a recent report, that we think a more comprehensive way to measure the cost of Federal credit programs 

would show Ex-Im Bank as having a positive subsidy cost. That is 

not the way it is recorded in the budget now. 

Mr. LUCAS. Thank you for that clarification. 

Mr. HOCHBERG. Just so it is clear, a negative subsidy means we 

transfer, we make extra money we don’t use, and it goes to the taxpayers to deficit reduction. That is what a negative subsidy means. 

So we have transferred this year over a billion dollars; last year, 

$800 million; and since Federal credit reform in 1992, $6.6 billion 

has gone from the Bank to the Treasury. If I could add one last 

thing, I know our time is limited. The financial crisis from 2008, 

we have a real-life stress test. I understand what GAO says. We 

88 

have complied with everything GAO has asked for, but on top of 

that, we have seen the most stressful economic system and stresses 

on economic and Banking system the world has ever seen since the 

Depression, and our defaults are, again, 0.211 percent, less than a 

quarter of a percent. So I understand the future is uncertain, but 

we have just gotten through the worst 6 years the world has ever 

seen. 

Mr. LUCAS. Absolutely, Chairman. 

The question is always is in most issues, is the glass half full or 

half empty? What will be the impact of having a glass or not having a glass? That is a policy decision that we have to decide here, 

but it is a fascinating subject of discussion. The intensity that I 

have observed in this committee, both perspectives, is great, but 

whatever we do will impact business. It will impact individuals. It 

will impact our competitive nature around the whole planet. 

And with that, I yield back to the chairman. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

To the inspector general, there have been some problems, obviously, with the Ex-Im Bank, but has there been something so egregious, so monstrous, that Congress should give the Ex-Im Bank a 

certificate of discontinuation? 

Mr. GRATACOS. Obviously, the decision of whether Ex-Im Bank is 

still around is for Congress to decide. All we have done since we 

started the office is to look at some of the issues that were apparent to Bank operation, either from the law enforcement side—we 

have been very active on that side—or from the operational side. 

We had a hearing last year talking about risk management. We 

have done work on dealing with customers, on the complaints we 

receive from customers. We look at economic impact. We looked at 

all those aspects of the Bank that we thought needed to be addressed, and since then, the Bank is working with us in addressing 

those. Some recommendations are still outstanding, but there is 

still some progress and even the conversation is something that 2 

or 3 years ago, wasn’t even on the table. So, from our perspective, 

we focus on the operations of the Bank. 

Mr. CLEAVER. Thank you. To the GAO, if we didn’t fund the Air 

Force, would it have an impact on the budget? 

Mr. SCIRE. Of course. 

Mr. CLEAVER. That simple? 

Mr. SCIRE. You asked if we didn’t fund the Air Force? 

Mr. CLEAVER. Yes. 

Mr. SCIRE. Of course, yes. 

Mr. CLEAVER. What if we didn’t fund toilet tissue for the Capitol? 

Mr. SCIRE. That would have an impact on the budget. 

Mr. CLEAVER. Okay. Thank you. So anything we don’t fund 

would have an impact on the budget. Is that correct? 

Mr. SCIRE. I am not sure it is material for this discussion, but 

yes. 

Mr. CLEAVER. You are absolutely right. You are absolutely right. 

Now, let me go further. 

Mr. Hochberg, do you know how many times the Ex-Im Bank has 

been reauthorized? 

89 

Mr. HOCHBERG. Ex-Im Bank has been reauthorized more than 16 

times in its 80-year history. 

Mr. CLEAVER. Sixteen times. 

Mr. HOCHBERG. Correct. 

Mr. CLEAVER. Would it be a surprise to you—it probably 

wouldn’t—that most of them were unanimous votes or overwhelmingly unanimous when they went to the House Floor and to the 

Senate and that a significant number—I can’t remember the exact 

number—was actually, they were actually voice-voted out of the 

House, and then I think they called it consent in the Senate, in the 

lower House—what do they call it in the lower House? 

Mr. HOCHBERG. I think unanimous consent in the Senate. Unanimous consent. 

Mr. CLEAVER. Unanimous consent. You would be surprised at the 

number of unanimous consent. So I guess the point I am making, 

perhaps poorly, is that, what is different now? And what I am saying is, are there some problems? I think that there are some things 

we can do. I think there are some tweaks that could be made. 

There should be some reform. I think the Delta Airlines representative brought us some things that should be considered. But my 

concern is that the Ex-Im Bank has been well-received by everybody over the years, and now, all of a sudden, we have this 

partisanism over the Bank, and I am just wondering what is it 

about this moment in our history that we don’t think we can look 

at a problem and something that’s not that big a problem and then 

make changes so that our businesses can compete for business 

abroad? I am frustrated over the fact that it would seem to me that 

there are issues that need to be addressed that can be fixed. Has 

there been anything that has been discussed here today that can’t 

be dealt with if we sat down and worked? 

Mr. HOCHBERG. Congressman, I am a businessman. I came to 

this after 20 years in the private sector. We are constantly, and our 

team is looking for better ways to operate the Bank, address reforms and issues brought up by Congress so we can do a better job 

in managing risk and also serving exporters. And lastly, I would 

just add that it was President Reagan who signed a 6-year extension of the Ex-Im Bank, so a full 6-year reauthorization. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. McHenry, chairman of our Oversight and Investigations Subcommittee. 

Mr. MCHENRY. I wanted to ask you about The Wall Street Journal story from June 23rd about the employees being under investigation for accepting kickbacks and improperly steering contracts 

to favored firms. Is there an internal investigation conducted by 

the Ex-Im Bank on these matters separate from the investigation 

by the Office of Inspector General? 

Mr. HOCHBERG. Let me just begin by saying, frankly, I am outraged by the number— 

Mr. MCHENRY. I appreciate that. You have answered this question before about how you are outraged, but is there an investigation by the Ex-Im Bank separate from the Office of Inspector General? 

90 

Mr. HOCHBERG. Most of those investigations are transferred over 

to the inspector general when they reach a certain point, so they 

are under the jurisdiction of the inspector general at this point. 

Mr. MCHENRY. At this point. No further investigation from your 

staff? 

Mr. HOCHBERG. They are turned over—at this level of seriousness, they are turned over to the inspector general. 

Mr. MCHENRY. And so the status of an investigation would be 

closed there but opened at the OIG? 

Mr. HOCHBERG. Well, it is not closed. It is an open issue. But it 

is— 

Mr. MCHENRY. But if you referred it to them because of the seriousness, then you are done with the investigation, correct? 

Mr. HOCHBERG. We are waiting to hear what the Inspector General says. That may recommend other actions we take, either with 

the employee or in a procedural manner. 

Mr. MCHENRY. I understand. Okay. So as a result of this, have 

you consulted with the General Counsel’s Office about these reported incidents of fraud, waste, and abuse? 

Mr. HOCHBERG. Let me just make one statement. All of these infractions, all of these individuals you are referring to were all referred to the Inspector General by our employees. Our employees 

said, ‘‘There is something suspicious here. I need the Inspector 

General to look at that.’’ So these were all internally generated and 

sent to the Inspector General by our own employees, who said, ‘‘I 

don’t like what I see here. This doesn’t look right.’’ 

Mr. MCHENRY. Yes, I am asking about you. 

Mr. HOCHBERG. Then I am not sure I understand the question. 

Mr. MCHENRY. Okay. Fantastic. 

So have you consulted the Ethics Office about these matters? 

Mr. HOCHBERG. Matters have been handled by our General 

Counsel and the Inspector General, as is proper, so that they are 

helped— 

Mr. MCHENRY. And the General Counsel referred that over to 

the Office of Inspector General? 

Mr. HOCHBERG. On some of them, they may have been turned 

over by another employee. They don’t have to go through a particular channel. Any employee can refer a matter to the Inspector 

General. 

Mr. MCHENRY. Okay. Let me ask you a separate question. Is 

there an Office of Ethics at the Ex-Im Bank? 

Mr. HOCHBERG. An Office of Ethics? Yes, in the General Counsel’s Office, there is an Office of Ethics and Compliance. I know of 

two—I think there are two to four attorneys in the administrative 

law area that— 

Mr. MCHENRY. And they report to? Who do they— 

Mr. HOCHBERG. They report to the General Counsel. 

Mr. MCHENRY. Yes. Okay. Other ethics offices actually report directly to the head of the operation, in other parts of government. 

Would you support that? 

Mr. HOCHBERG. We have a Chief Risk Officer that this committee 

asked, that the Inspector General recommended, and I committed 

to. The Chief Risk Officer has reporting to him—it is more broader 

than just credit risk. It looks at all of it. 

91 

Mr. MCHENRY. I understand. I just asked you a simple question. 

So, I will just move on. 

Mr. HOCHBERG. The Chief Risk Officer reports to me. And he is 

in charge of— 

Mr. MCHENRY. Yes, I understand. I asked about the Ethics Office, not about the risk office. So— 

Mr. HOCHBERG. Ethics is part of that. 

Mr. MCHENRY. I understand, but I am talking about a direct report. 

I will move on because I understand you don’t want to answer 

those questions I have been asking. So I am going to ask another 

question. Are you aware of any criminal investigation about the actions that were brought to light in The Wall Street Journal report? 

Mr. HOCHBERG. These matters, I think, are better answered by 

the Inspector General since they are an ongoing investigation. I 

don’t want to invade people’s privacy— 

Mr. MCHENRY. Are you aware of a criminal investigation about 

these matters? 

Mr. HOCHBERG. I am aware that the Inspector General is conducting an investigation. 

Mr. MCHENRY. Are you aware of if there is a criminal investigation about this matter? 

Mr. HOCHBERG. I am aware of the investigation. I still feel the 

question would be better answered, so I don’t invade anyone’s privacy, by the Inspector General, who is at the table. I just don’t— 

Mr. MCHENRY. I understand. 

Mr. HOCHBERG. I don’t want to make a misstatement. 

Mr. MCHENRY. I understand. In terms of meetings with the Office of the Inspector General, that is much easier to do. And so, I 

am just trying to ask you a few questions. Mr. Chairman, I am just 

trying to get to the bottom of this. 

If I can ask you a question about the Florida construction company at the center of The Wall Street Journal story, have you had 

any contact or dealings with them personally? 

Mr. HOCHBERG. Oh, no. 

Mr. MCHENRY. Okay. 

Mr. HOCHBERG. Absolutely not. 

Mr. MCHENRY. All right. Thank you. 

And, Mr. Chairman, I yield back. Confounded, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Florida, Mr. Murphy, for 5 minutes. 

Mr. MURPHY. Thank you, Mr. Chairman. 

And thank you all for appearing before us today. 

Chairman Hochberg, thank you. It is good to see you. Thank you 

for your steadfast promotion of American jobs and American manufacturing in our country. 

As a small business owner myself, I understand that one of the 

most important things those small business folks need is access to 

capital and financing. Last year alone, Export-Import Bank financing supported over 200,000 jobs, 90 percent of which supported 

small businesses. 

If the United States unilaterally disarms the export financing 

world and allows Ex-Im to lapse, what kind of economic impact 

92 

could it have on American manufacturing, on our job creators, on 

our exporters selling goods that are stamped proudly, ‘‘Made in 

America’’ all around the world—and so many of which have relied 

on this Export-Import Bank? 

Mr. HOCHBERG. On the first panel, we had Steve Wilburn, who 

gave specific testimony how just the threat of Ex-Im Bank not 

being here in September has already impacted the awarding of a 

$57-million contract to his company that would support a lot of 

jobs. The smaller transaction of $48 million supported 165 jobs. 

This would obviously be more; it is even a larger transaction. 

We heard small businesses at the time of the shutdown, just 

even the threat of a shutdown, were losing sales because of potential we would not be there. 

Small businesses rely on us very deeply. It is 90 percent of our 

customers, 90 percent of the clients. And, frequently, they do not 

have another option. They frequently have very few options. I ran 

a small business. It is hard to get credit in general, and it is even 

harder for a small business. 

Lastly, many of the small businesses are part of the supply 

chain. So I know we focus on small businesses, direct exporters, 

but they are part of the Boeing supply chain, they are part of 

SpaceX, where Congresswoman Waters is, in her district. There is 

a large supply chain. A manufacturer like Boeing or GE, people 

like to talk about, but they don’t make 100 percent of what they 

do. Their supply chain is full of small businesses that would also 

be impacted immediately. 

Mr. MURPHY. Thank you. 

As a fiscal conservative myself, I view all government spending 

with a skeptical eye. But one of the things I say frequently is that 

it isn’t this body’s role to create jobs; rather, it is our role to create 

an environment that is conducive to job growth. And you develop 

that environment through stability and certainty. Not by shutting 

down the government, or threatening to go over fiscal cliffs and sequesters and not by putting things like the Ex-Im Bank at risk. 

Can you talk about some of that uncertainty, and if 200,000 jobs 

were supported last year, what that could potentially mean for 

these jobs in the future? 

Mr. HOCHBERG. It is obviously hard to be precise. I am thinking 

positively, that we are going to reauthorize the Bank and do it on 

time. But let’s be very clear—205,000 jobs in the past year, well 

over a million jobs over the last 5 years, just under 1.2 million, 

were supported by our exports. That is because we filled the gap 

the private sector could not fill or didn’t to meet the competition. 

So those are all at risk. 

When someone gets a loan from us, they have to state why they 

need the loan from us, or the guarantee or insurance, why can’t 

they get it in the private sector. I would rather the private sector 

do everything. We are there when the private sector can’t or won’t. 

Mr. MURPHY. To that point, I feel like I am in an alternate universe here. It just doesn’t make any sense. 

Can you talk about how on the international scene, this has affected what some of our competitors globally are doing, what some 

other countries are doing? And could you address whether you 

93 

think our global competitors’ export Banks are going to step in to 

help American manufacturers. 

Mr. HOCHBERG. As I said, there is an ad in today’s Politico that 

talks about the ex-im Banks of China, Russia, and France. And 

there are 57—there are 60 countries that all have an export Bank. 

They all would gleefully take sales from the United States and support more jobs in their communities. They are delighted to do that. 

They are looking forward to doing that. 

As I mentioned, China does more than 4 times the amount of financing for its exports than we do. We have a far more modest, 

much more careful, much more proscribed— 

Mr. MURPHY. So, if anything, some could argue we should be expanding the Export-Import Bank. 

Mr. HOCHBERG. Yes, I would agree with that. 

Mr. MURPHY. If you really care about jobs and American manufacturing— 

Mr. HOCHBERG. If you really care about jobs and you want to 

make sure we beat the competition. And, frankly, one way to get 

to the competition is to meet them toe to toe, head to head, over 

and over again and indicate we are not going to back down unless 

they play by the rules. 

Mr. MURPHY. It would be one thing if not a single other country 

in the world had the equivalent of the Export-Import Bank. But 

they do, and, in fact, they are bigger. We don’t live in that universe, so we might as well live in this reality, compete, and give 

our employees the best opportunity they can have. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Royce, chairman of the House Foreign Affairs Committee. 

Mr. ROYCE. Thank you, Mr. Chairman, very much. 

Mr. Hochberg, a stated goal of Ex-Im Bank is to provide export 

credit assistance to serve customers who are unable to obtain financing through the commercial markets. 

What policies and procedures does the Bank have in place to ensure that it is limiting its assistance to these customers and not 

crowding out opportunities for private capital markets? And does 

Ex-Im make any kind of formal analysis of what kind of private 

capital would enter markets in its absence? 

Mr. HOCHBERG. Each application must state unequivocally why 

they are looking for our support and why they can’t find it in the 

private sector. That is a requirement in reviewing a loan application, whether it is lack of financing, meeting the competition. 

Sometimes Banks have limits on what they will do in certain industries or certain countries. That is where we step in. 

Sub-Saharan Africa is a good example of that. We did a lot of 

loans in the Philippines. I have a list here. In Cameroon, I think 

I mentioned earlier, over half the exports that went to Cameroon, 

for example, we financed. Why? It is very hard to get any Bank to 

step forward. 

In places like Western Europe, we do very little business, because the banks are able to do that. In Japan, we hardly do any 

business, because there is a well-defined banking system. 

Mr. ROYCE. Let me ask Mr. Scire; let me ask the GAO. 

94 

Is Ex-Im doing enough to ensure that companies are going out 

into the private market and not finding capital before coming to 

the Bank? 

Mr. SCIRE. So I think that gets into, sort of, the underwriting 

and what they are doing in terms of looking at eligibility and the 

analysis that is done there. And we have work under way right 

now that is looking at that, but that work is not yet complete. 

I would point out that we had made some recommendations back 

in 2007. And this is just to clarify a point. Although Ex-Im has 

been very cooperative and has agreed with our recommendations, 

not all have yet been implemented. And so there are some recommendations we made in 2007, which look at some of this economic impact, that it is still working on. 

Mr. ROYCE. Okay. 

Let me ask, also, in terms of the numbers and what numbers are 

right, both sides of this debate are claiming numbers that support 

their case, based on different accounting methodologies. So the 

Bank claims estimates that it made $1.6 billion in revenues for taxpayers since 2008. Yet, as you know, and as has been cited here 

today, the CBO reported on May 22nd that if Ex-Im used the fairvalue accounting method, it would be budgeted as a $200-million 

cost to the taxpayers each year. 

Dr. Elmendorf, can you explain the large gap in numbers between these assessments? And, in your response, can you touch on 

what kind of risk assumptions you use, in terms of losses, when 

you apply this fair-value methodology? Do you look at historical experience and commercial Bank experience? And do you factor in 

loss reserves and capital? Maybe a quick explanation of how you 

do this? 

Mr. ELMENDORF. Yes, Congressman. 

When the government makes a loan or makes a loan guarantee, 

either through Ex-Im Bank or some other credit program, the ultimate budgetary effects of that are not known. Many loans, most 

loans are repaid. Some loans are not repaid or are repaid in part. 

Sometimes, some money is recovered. The ultimate budgetary effects aren’t known until after the fact. 

So, last year Ex-Im turned over some amount of money to the 

Federal Treasury. That is certainly true. 

When we give the Congress cost estimates, we are trying to give 

you a sense of what will happen going forward under a certain program from a certain program from a certain bit of financial assistance, and those estimates are operating in a world of great uncertainty. What the fair-value methodology does is to capture in the 

estimate not only the expected level of default and recoveries but 

the variation around that expectation, and to recognize how possible outcomes are— 

Mr. ROYCE. Let me put it another way. What I would be interested in is the risk-analysis framework that is employed in accounting by the private sector creditors. 

Mr. ELMENDORF. Right. 

Mr. ROYCE. If you did that— 

Mr. ELMENDORF. So private sector creditors take account of this 

market risk and put a price on it because the risk is costly to— 

95 

Mr. ROYCE. In your opinion, if you did that, would it be a $200- 

million cost to the taxpayers or would it be a— 

Mr. ELMENDORF. Yes, Congressman. When we applied that methodology to the Ex-Im Bank’s projections of the size of the credit 

programs they will run, of the default rates and recovery rates and 

so on, taking the same set of underlying cash flows that appeared 

in the credit supplement to the President’s budget and that we use 

in our standard FCRA accounting, when we use those same underlying cash flows but apply this cost for market risk, then the ExIm Bank’s programs are costly, by our estimate, to the tune of $200 

million a year, as you said. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Georgia, Mr. 

Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

In this morning’s hearing, the airlines, with the chairman of 

Delta Air Lines and the Pilots Association, made some very, very 

salient points. 

Now, I think this: We have to the move the Ex-Im Bank forward. 

It helps small businesses. It creates jobs. But I believe we can do 

this as well as address those concerns. 

So, Mr. Hochberg, I know that you know exactly what they are, 

but from what the testimony said this morning, the chairman of 

Delta Air Lines, Mr. Anderson, and the head of the Pilots Association, Mr. Moak, both made these points: that unless there is a level 

playing field in the exercise of one particular aspect of what you 

do, which is the financing of these wide-body aircraft, that puts our 

airline industry in the United States at a competitive disadvantage 

with foreign airlines who are able to get these wide-body aircraft 

flying these international routes that are very, very profitable. 

So you can see the concerns that Delta Air Lines has and the pilots and the airline industry have. Because, quite honestly, unless 

we do something to address this—and if the Ex-Im Bank is being 

used in an unfair way to subsidize, for example, the airlines in 

India, the other airlines that have been brought up, where they get 

subsidized by their government, then they turn around and they 

get subsidized by you, they are able to get those planes cheaper, 

then they can reduce their ticket prices, and that makes it very uncompetitive. 

So what I want to do is, and as I mentioned to the chairman, 

find a way that perhaps we can come up with some language as 

we move forward with this, within the 90 days that we have, that 

can address that concern. It doesn’t seem that this is mutually exclusive. 

Can you help us with that and give me a little guidance on how 

we will be able to move this forward, while at the same time addressing the concerns of Delta Air Lines? 

Mr. HOCHBERG. I will do my best. 

One, let me just—I have to say, we don’t subsidize. People pay 

us a fee, and, as a result, they are essentially paying for our guarantee so they can borrow money through a bank. And we are totally self-funding and self-sustaining. So there is not a subsidy 

going from us to anybody else. I just need to state that. 

96 

Two, in 2011, without Congress asking us, we raised the fees 

multilaterally across the world, made it more expensive to borrow 

money from us to buy aircraft, in particular. Today, foreign carriers 

all pay more than a comparable U.S. carrier would pay for the 

same airplane. So, they are already paying a premium. What Delta 

Air Lines is unhappy about is—they are paying a premium; they 

think they should pay an even bigger premium. They are paying 

more; they would like them to pay a lot more. 

So, one, we just need to understand the facts. We all can have 

different opinions, but there are the facts— 

Mr. SCOTT. But Delta Air Lines does not take any money from 

the Ex-Im Bank, but these foreign countries do. 

Mr. HOCHBERG. We look at a—that is correct. Because the need 

is—the United States has the best financial markets, the most liquid, creative financial markets. So U.S. carriers can borrow at far 

lower rates than any foreign carrier buying the same airplane. 

Mr. SCOTT. Well, here is what— 

Mr. HOCHBERG. So there isn’t an advantage going to the foreign 

carriers is what I am trying to say. 

Mr. SCOTT. Yes, but here is—granted. 

It is sort of like we are at a stalemate here, and what we have 

to do is try to lean in to one another and to try to find out where 

we can give here. Because there is absolutely no way that we can 

move forward with the progression of the Ex-Im Bank if you have 

this salient cry from an unlevel playing field for one of our most 

significant, important industries worldwide. 

Isn’t there something we can do, even if it is a trigger, even if 

it is an amount, even if it means curtailing certain routes that the 

competition can’t take? 

Mr. HOCHBERG. For 3 years, we have been asking Delta precisely 

what they would like, and they have not given us a precise recommendation. 

Mr. SCOTT. Hopefully, we will get that recommendation, and an 

amendment that can address this, too, as we move forward. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair recognizes the gentleman from Tennessee, Mr. 

Fincher. 

Mr. FINCHER. Thank you, Mr. Chairman. 

Mr. Hochberg and the rest of the witnesses, I appreciate you 

being here. 

A lot has been talked about today with Delta Air Lines, and I 

was looking over something where Delta had used the credit export 

agencies of Brazil and Canada to purchase hundreds of aircraft 

made in those countries. 

Is that true, Mr. Hochberg? 

Mr. HOCHBERG. Yes, to the best of my knowledge. 

Mr. FINCHER. So why would they be—and to their credit, they 

are for reforms, but extending the reauthorization of the Bank. But 

what would be to the advantage of Delta to borrow the money from 

those countries and not use ours? The products? 

Mr. HOCHBERG. Yes. The United States is not really in the business of making what are called regional jets, those small, somewhat uncomfortable, narrow jets that hold 50 to 75 people that a 

lot of us fly on. So, we don’t make those. They are really manufacVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00100 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
97 

tured today largely in Brazil and Canada. Japan is coming up on 

stream, Russia and China— 

Mr. FINCHER. But it is the principle of the thing. If you are 

against it, you would be against it, all of it. 

Mr. HOCHBERG. Correct. 

Mr. FINCHER. But they— 

Mr. HOCHBERG. They avail themselves of, it is estimated, be- tween $3 billion and $4 billion worth of export credits from Brazil 

and Canada. 

Mr. FINCHER. Again, I used this, this morning. The U.S. economy 

shrank at a steep 2.9 percent rate in quarter one. The Commerce 

Department says the first-quarter contraction was even more severe than the 1-percent annual decline it estimated a month ago. 

Another major factor was a bigger trade deficit than initially estimated. 

I did not support reauthorization last time because we did not 

make the reforms I think were necessary. I have a book of reforms 

now that we have been working on. 

Something that we tend to do in Congress—and now we are in 

primary election season. So things are happening. We saw elections 

last night, and elections will be next week. And elections have consequences when we forget who we work for. If I forget my district 

back at home in Tennessee, then when I go back there, the elections will have consequences. 

My district, the number of jobs supported—and I know the gentleman from South Carolina had problems with numbers a few 

minutes ago—but 1,000-plus jobs in my district, 5,000-plus in my 

State. Now, that is who I work for, the Eighth Congressional District of Tennessee. 

This is not about big business or small business. Look, we want 

the country to grow and flourish. We want to hopefully have the 

environment and the private sector where they don’t need the government and don’t need Washington. But, at the same time, I am 

looking at the debt clock. It is unbelievable. But this is a program, 

under the current guidelines, that is not costing; it is actually returning money back. We need to reform it. 

I heard former Chairman Bachus, a few minutes ago, talk about 

sending a letter to you guys and not getting a response in a timely 

manner. I think that is unacceptable. I think we have do a better 

job of being accountable to your customers. 

But to just, because it doesn’t look right or I don’t get everything 

I want—my wife and my little girl were going to be here today, but 

she is out doing something else. And I was thinking, I have been 

married 23 years, which is a long time. I don’t get everything I 

want at home. I am sure not going to get everything I want up 

here. It is just not going to happen. But my job— 

Mr. HOCHBERG. I hope you do better at home. 

Mr. FINCHER. Yes, I will have to do better at home. 

My job is not—I am a farmer. And I came to Washington 31⁄2

years ago, and I promised my constituents, the folks in my district—because I received farm subsidies before I was elected. And 

I promised them that we needed a better way. We needed to reform 

the farm bill. This is just an example. We reformed the farm bill, 

more reforms than there had been in I don’t know how many years. 

98 

We did away with the farm subsidy program. We took many steps 

in the right direction. 

Was it perfect? No. I have voted over 2,400 times since I have 

been here, and none of the bills have been perfect. But did I vote 

‘‘no’’ and say, it is not everything I want so I am just not going to 

do anything? No. That would be irresponsible on my part. 

My part is to do the best I can for my district and support an 

investment that creates 1,000 jobs in my district. And that is what 

this is about. With reforms. Without reforms, I can’t support it. 

But, hopefully, we can reform it and move it forward. 

So, with that, I yield back, Mr. Chairman. Thank you. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. Mr. Hochberg, I hope that as you administer ExIm in the future—and I do think you have a future—you will focus 

especially on small businesses and focus on new products. Because 

the future—we have been trying to maintain a wage rate way beyond the average wage rate in the world, and the only way we are 

going to do that is by making things here that they don’t make 

elsewhere. 

Now, a lot of this debate is between those who think we should 

focus on Ayn Rand’s books on libertarianism and the purity of that 

versus the practicality. The practicality is Germany has more than 

3 times the exports per person as we do in the United States. Germany has an export credit authority, or agency, that is roughly 3 

times the size of ours compared to the size of our economy. Obviously, Germany is a somewhat smaller country. And while we have 

a declining manufacturing sector and a huge trade deficit, they 

have outstanding manufacturing jobs and a huge trade surplus. So 

the practicality side leads toward us also having an export credit 

agency. 

So the question is on purity. I want to point out to this committee that the Ex-Im Bank has a little sister. It is called OPIC. 

It is also a U.S.-sponsored export credit authority. It comes under 

the jurisdiction of the Foreign Affairs Committee. We reauthorized 

them on the Floor of the House of Representatives under a bill 

written by my good friend, Chairman Royce of the Foreign Affairs 

Committee. Yes, that good friend. One hundred and six Republicans voted for that bill. 

So if you are torn and you think, well, the Ex-Im Bank is good 

practicality but I have to preserve my ideological purity, if you are 

one of those 106 Republicans who voted for the Electrify Africa Act, 

which had the OPIC reauthorization in it, you have already lost 

your ideological purity. So, come with us and be practical. 

As to ideological purity, as to the gentleman from Tennessee, I 

think, who has just left, pointed out, Delta Air Lines has no ideological purity, nor do I expect them to have it. They are practical. 

They bought Canadian aircraft and they got financing from the Canadian agency that is analogous to Ex-Im Bank. 

One thing that is practical about Ex-Im Bank is that you are 

scheduled to make, what, $14 billion over the next 10 years? Do I 

have that right, Mr. Hochberg? 

Mr. HOCHBERG. That is the CBO estimate, yes. 

99 

Mr. SHERMAN. That is the CBO estimate. Okay. Do you have a 

different estimate? 

Mr. HOCHBERG. I don’t make estimates to 10 years. We simply 

made a projection, a budget proposal for 2015, and they took those 

numbers and projected them out 10 years. 

Mr. SHERMAN. Okay. And so, we have to live under the benevo- lent tyranny of CBO, and if they say we lose $14 billion, then we 

have to adjust those debt clocks and announce to the country that 

we are increasing the national debt by $14 billion, or we have to 

wait for the chairman of this committee to join me in a pro-revenue 

bill. And that would take a long, long wait. 

But it is argued that fair-value accounting, which is not the 

law—every time somebody wants to increase the national debt by 

a proposal, they say, ‘‘Well, just change the accounting, and then 

I am not increasing the national debt.’’ I have heard this all the 

time. Dynamic scoring. Now, it is fair-value accounting. 

And I want to make sure I understand this. Fair-value accounting would mean for Pizza Hut that we don’t see whether they made 

money or lost money; we see whether they would have lost money 

if they had to pay as much to borrow money as the local pizzeria, 

which would be a very strange thing. The investors in Pizza Hut 

would be very surprised to find out that their company had lost 

money. 

Do I have that right, Mr. Hochberg? 

Mr. ELMENDORF. Congressman, that is not the way I would describe Pizza Hut’s use of fair-value accounting. 

Mr. SHERMAN. Pizza Hut is prohibited from using fair-market accounting, thank God, because— 

Chairman HENSARLING. The time of the gentleman has expired. 

Mr. SHERMAN. —it would be a phony way to report to shareholders. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from South Carolina, Mr. Mulvaney. 

Mr. MULVANEY. Thank you, Mr. Chairman. 

We have heard a lot of talk today in the last 51⁄2 hours about reforms and making a better Bank. So, let’s look at that a little bit. 

Mr. Hochberg, you were here a year ago, and, at that time, I 

asked you about the Inspector General’s report that said you had 

had some problems, that you were not routinely reporting the performance of your sub-portfolios relating to the small business, SubSaharan Africa, and renewable energy mandates. I found out from 

the IG’s Office today that you still haven’t fixed that one. 

I also said a year ago that it looked like you had trouble, according to the IG’s Office, with a lack of due diligence and asset monitoring efforts conducted by lenders, specifically the ones who have 

a history of defaulted transactions. Even though there is an expectation that such efforts are taken, Ex-Im Bank does not require 

participating lenders to conduct due diligence or asset monitoring 

of their investigations. I found out from the IG’s Office this morning that you haven’t done that one either. 

There is a list of 78 different things that the various reports 

since 2010 have asked you to do, 78 things either the IG or the 

GAO has asked the Export-Import Bank to do. The IG has been 

able to verify that you have done and fixed 33 of those 78. As to 

100 

36 of them, either the IG can’t verify that you have fixed them, 

they say that you are working on it, or they say that they know 

for a fact you haven’t started on them yet. There are 9 of the 78 

that they say your responses are unresponsive and they don’t even 

count you as trying to fix things. 

You are required by law—12 U.S.C. 635(b)(1)(B): ‘‘In authorizing 

any loan or guarantee, the board of directors shall take into account any serious adverse effect of such loan or guarantee on the 

competitive position of United States industry, the availability of 

materials which are in short supply, and employment in the United 

States.’’ 

We heard this morning that you have done that one time—one 

time in 2001, when it comes to helping Boeing sell aircraft overseas. That was with, I think, Aeroflot in 2001. And staff tells me 

now that you have conducted a grand total of 24 of those reports, 

as required by law, over the last 17,000 export-import transactions. 

In 2012, we asked for some reforms. In 2012, this body asked the 

Export-Import Bank for some reforms, one of which was, ‘‘The Secretary of the Treasury shall initiate and pursue negotiations with 

other major exporting countries, including members of the Organization for Economic Cooperation and Development and non-OECD 

members, to substantially reduce, with the ultimate goal of eliminating subsidized export financing programs and other forms of export subsidies. That was, I think, almost 2 years ago. You all have 

managed to set a meeting. 

The Administration recently sent over its proposed reforms, I 

guess. They call it a reauthorization. I don’t know if we would call 

it a reform. It essentially says that you want more money; you 

want to change the way you count losses; you want to eliminate the 

need for producing stuff in the Federal Register regarding notice, 

lowering the accountability and transparency. 

And—and I wish the gentleman who was here from the previous 

panel, small businesses—you want to be able to count towards your 

small business quota small businesses that sell to big businesses. 

So forget about the pickles, forget about the guy’s green energy. 

Unless you are selling to one of the big guys, you don’t get to count 

under the President’s proposed reforms, which I guess you participated in, because it is under your signature. 

I look at all of that against a political environment where this 

Administration has regularly shown that they don’t really care 

about following the law very much. They certainly haven’t followed 

it on health care. They are not following it on immigration. They 

don’t seem to be following it on how they are supposed to keep the 

emails over at the IRS. 

So it makes me wonder, for everybody here who says, listen, that 

is great, let’s pass some reforms, that would be wonderful. Before 

you run to the reform bandwagon, I encourage you to ask some 

questions to make sure that before we do that, let’s first see if the 

Bank can actually reform itself under the existing laws that we 

have already passed. Let’s see if maybe the Bank can make the 

suggested reforms that the IG and the GAO have suggested. And 

let’s maybe make sure that this Administration might actually be 

interested in enforcing a reform bill if we pass it. Until then, I sugVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00104 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
101 

gest to you that the time is way, way too early for talking about 

reforms of this Bank. 

With that, I yield back the balance of my time. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Illinois, Mr. 

Hultgren. 

Mr. HULTGREN. Thank you, Mr. Chairman. 

And thank you all for being here. 

First, Mr. Chairman, I would ask for unanimous consent that my 

full statement be inserted into the record. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. HULTGREN. Thank you. 

I really would like to thank the panelists. It has been a long day, 

I know, but this is an important discussion. And I know, as many 

of my colleagues, we just want to get information, we want to know 

the truth, we want to do the right thing. 

As I mentioned in my opening remarks, I think Congress should 

take a hard look at the current structure of the Export-Import 

Bank. But, also, I hear from my own district’s businesses that tell 

me that they rely on the Bank to ensure that their exports reach 

their customers. So before Congress abolishes the Export-Import 

Bank without a reasonable exit strategy, I think we really, first, 

need to explore viable reforms for the Bank. 

This leads me to my first question, and I will address it to Chairman Hochberg. 

The Bank’s role in providing export credit assistance is to serve 

markets and customers that are unable to obtain financing through 

commercial markets. What policies and procedures does the Bank 

have in place to ensure that it is limiting its assistance to these 

customers and not crowding out opportunities for private capital 

markets? 

Mr. HOCHBERG. Congressman, thank you for giving me a chance 

to talk a little bit about that. 

First of all, 98 percent of the transactions at Ex-Im Bank, we 

work with a private sector bank to either make the loan, guarantee 

the loan, or arrange the loan. So we are doing that with 98 percent 

of the transactions. 

Furthermore, every application needs to state unequivocally why 

they are coming to us and why they can’t do this in the private sector. That is a requirement for us to be making a loan. It is called— 

the term that is used is ‘‘additionality,’’ what additional value are 

we providing. 

And that is one reason, quite frankly, our loan portfolio hasn’t 

grown as much in the last 2 years; there has been less need for us 

of late. I don’t know if that will continue, but, of late, there has 

been a little bit less need. And that is a good sign. That is a good 

sign that Banks are making more loans and they are also dealing 

more with small businesses. 

Mr. HULTGREN. I would address my next question to the Inspector General, if I may. 

Your office regularly engages with private sector stakeholders to 

obtain input on the Bank’s operations. I wonder, in your opinion, 

is the Bank effectively limiting itself to markets and customers not 

being served by private lenders? What steps could the Bank take 

102 

to better mitigate the risk that it is crowding out private capital 

markets, and that the Export-Import Bank is the lender of last resort, not the lender of choice? 

Mr. GRATACOS. Thanks for the question. 

The Bank has a requirement in the charter to only offer financing for three situations. One of them is another ECA competition, 

a lack of financing in the market, or additionality. 

So the requirement that Chairman Hochberg is talking about is 

a requirement that any transaction that goes through the system 

has to have a declaration, to some extent almost like a certification, 

saying, the reason why we come is because of ‘‘X.’’ 

Now, whether or not that is verified is another story. We did a 

report on the direct loan program, and we highlighted that sometimes in the loan documents, we couldn’t find documentation backing up that statement. 

That is the extent of what we are looking to do. We haven’t really gotten into whether or not marketing strategies of the Bank 

across the country meet the charter requirement. We haven’t gotten that far. But as focused on the direct loan program, we did address some of those questions. 

Mr. HULTGREN. Chairman Hochberg, back to you. 

Mr. HOCHBERG. Yes, I would just add, it is required in the loan 

application. So the applicant needs to certify that their financial 

records are accurate as presented, that everything they state is accurate as presented. 

So I would—we do an audit periodically, but I have to take an 

assumption, if an applicant is signing an application for a loan 

guarantee from the Federal Government, that they are not—that 

a corporate officer is not committing fraud in doing so. So they 

have to state unequivocally why they are coming to us. 

Mr. HULTGREN. Let me move on. I only have a little bit more 

time. 

The current risk management function of the Bank is fragmented 

and neither addresses the totality of enterprise risk nor how risks 

may be interrelated. 

Given the Bank’s recent risk trends, including the increased authority to extend credit from $100 billion to $140 billion, what additional procedures are you putting in place to ensure a central risk 

management structure? 

Mr. HOCHBERG. We, at the recommendation of the IG, and I stated, a year ago we added the position of a Chief Risk Officer. I work 

closely with the Inspector General that the Chief Risk Officer and 

the underwriting are two entirely separate reporting structures, 

both reporting to me. 

And the Chief Risk Officer looks not only at credit risk but employee risk, reputational risk, legal, IT, hacking—the entire risk 

portfolio. There has an Enterprise Risk Committee, and there are 

two senior career people who report up to the— 

Mr. HULTGREN. My time has expired. I yield back. Thank you, 

Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

There are votes currently on the Floor. The committee will recess 

until approximately 4:45 p.m. 

The committee stands in recess. 

103 

[recess]. 

Chairman HENSARLING. The committee will come to order. 

My apologies to the witnesses. Votes do happen. I hope you understand. 

The Chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy. 

Mr. DUFFY. Thank you, Mr. Chairman. 

And I appreciate the witnesses waiting as we voted. 

I was looking at a recent article that quoted a study which basically said that 42 percent of Ex-Im Bank employees agreed with 

the statement, ‘‘My organization’s leaders maintain high standards 

of honesty and integrity.’’ Only 42 percent of Bank employees 

agreed with that. 

And I know, as, I think, what Mr. McHenry brought up earlier, 

just yesterday in The Wall Street Journal, we had an article about 

the four Ex-Im Bank employees who are under investigation. 

This obviously breeds some concern and actually makes sense as 

to why only 42 percent think the organization’s leaders have honesty and integrity as values. 

Mr. Hochberg, I want to just follow up on a question that Mr. 

McHenry asked. 

Have any of those four had referrals for criminal investigations? 

Mr. HOCHBERG. I am going to need to defer again to the Inspector General because these are all in his hands at this point. 

Mr. DUFFY. I know, but I am asking you. 

Mr. HOCHBERG. I can’t comment on it. I referred these to the Inspector General. 

Mr. DUFFY. You don’t—do you not know? 

Mr. HOCHBERG. They are under his jurisdiction. 

Mr. DUFFY. Do you know? 

Mr. HOCHBERG. I am not— 

Mr. DUFFY. I am asking: Do you know if they have been referred? 

Mr. HOCHBERG. If they—do I— 

Mr. DUFFY. Do you know if they have been referred for prosecution? 

Mr. HOCHBERG. For prosecution, I—to my knowledge, they are in 

the investigation stage. 

Mr. DUFFY. Okay. Were the four employees referenced in that article placed on leave? 

Mr. HOCHBERG. I can’t comment. Two of our— 

Mr. DUFFY. You can comment on whether or not they were 

placed on leave. We all know they are under investigation. 

Mr. HOCHBERG. Two of them have already left the Bank. 

Mr. DUFFY. Okay. And so the two that didn’t leave, are they still 

drawing a paycheck? 

Mr. HOCHBERG. There is an investigation going—I am not allowed—I am told by counsel and by the IG that I am not allowed 

to comment on this. 

Mr. DUFFY. On whether or not they are drawing a paycheck? 

Mr. HOCHBERG. I am told I am not allowed to comment on that. 

Mr. DUFFY. Okay. 

Mr. HOCHBERG. I am not trying to evade you. I am just told by 

counsel I can’t comment on that. 

104 

Mr. DUFFY. Listen, if you haven’t picked up on it, there is a little 

bit of concern about whether we should reauthorize the Ex-Im 

Bank. 

I know some have presented it as an institution that should have 

a little halo on top that sparkles and it provides great job opportunity throughout the country and it is a pristinely run organization, you know, sunshine, roses, tulips, it is a beautiful thing. 

Some of our concerns and some of the concerns that you might 

have heard from Delta earlier today are concerns that I imagine 

don’t surprise you. 

We have asked that you do an economic impact analysis on your 

activities, and we have heard testimony that you have 17,000 authorizations. You have only done an economic impact analysis on 

24 of them. 

Do you wonder why we sit back in surprise and ask, ‘‘Why do we 

want to reauthorize an institution that can’t even follow our directions from Congress?’’ 

Mr. HOCHBERG. Congressman, we do an economic impact review 

of every transaction. Not every transaction warrants a full, indepth, full-blown, several-month economic— 

Mr. DUFFY. Out of 17,000—do you agree with that number? Out 

of 17,000 authorizations, you only did 24? 

Mr. HOCHBERG. I don’t know where the 17,000 comes from, so I 

can’t comment on that. 

Mr. DUFFY. Do you agree you have only done 24? 

Mr. HOCHBERG. I don’t have the precise number at my fingertips 

of how many we have done. I can say the following. If you would 

like to know the process, from a process point of view, Congressman, we do an economic impact analysis when—when on the surface it says there is more to investigate here. 

Mr. DUFFY. It is my understanding that the chairman has been 

given a large amount of discretion on whether this Bank is reauthorized or not. 

And I think it would behoove you if you just fully leveled with 

us, are fully straightforward with us, you don’t dance on questions, 

you don’t hedge, but honesty and being forthright might get you to 

get a few of us to buy into significant reforms and reauthorize. 

But when you come in and you dance on us and hedge, that 

makes me say, ‘‘Listen, I am just going to get more of the same.’’ 

Because if I vote for reform, I don’t trust that you are going to do 

it. I don’t. 

I hear a lot of folks tell me that this has no economic consequence to the taxpayer. It helps job growth. It doesn’t have an 

impact on the taxpayer. 

Do you agree with that, the Ex-Im Bank? 

Mr. HOCHBERG. No. 

Mr. DUFFY. Thank you. 

Because you know that from 1982 to 1988, on average, we bailed 

out Ex-Im about $330 million a year and then, from 1992 to 1996, 

it cost the taxpayer almost $10 billion. 

So this is not cost-free to the taxpayer, necessarily. Correct? 

Mr. HOCHBERG. If I can respond to that? 

Mr. DUFFY. Sure. 

105 

Mr. HOCHBERG. A transfer was made because Federal credit reform in 9 billion— 

Mr. DUFFY. Oh. So you are going to give me excuses? Listen— 

Mr. HOCHBERG. No. 1996. And then we returned— 

Mr. DUFFY. My time is almost up. 

Mr. HOCHBERG. —9.6. So, actually, we-- 

Mr. DUFFY. You are not convincing me— 

Mr. HOCHBERG. —returned more money than we received. 

Mr. DUFFY. —that I should vote for reforms and reauthorization. 

You have not convinced me here today. I would like you to convince 

me, but that takes honesty— 

Mr. HOCHBERG. You have not given me— 

Mr. DUFFY. —and forthrightness— 

Mr. HOCHBERG. —a chance to answer the question. 

Mr. DUFFY. —with this committee. 

And I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair recognizes the gentleman from Washington, Mr. Heck. 

Mr. HECK. Thank you, Mr. Chairman. 

Before I begin and use my time, I ask unanimous consent to submit for the record three statements of support from external organizations, most notably including a statement of the U.S. Chamber 

of Commerce, along with a statement by the U.S. Chamber of Commerce in support of H.R. 4950, the bill I introduced last night, with 

201 signatures and sponsors. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. HECK. Thank you. 

Mr. Hochberg, how many audits have you had of the Bank since 

reauthorization? 

Mr. HOCHBERG. My recollection is that GAO has done nine; they 

can probably confirm that. 

Mr. HECK. They were all completed? 

Mr. HOCHBERG. To my knowledge, seven have been fully completed and two are in process. 

Mr. HECK. Mr. Chairman, at this time I would ask unanimous 

consent to submit for the record a list of all of the requirements 

and reforms as included in the Reauthorization Act and their status as well. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mr. HECK. Thank you, sir. 

Mr. Hochberg, there is a lot of conversation here today around 

what reform should be pursued with respect to the funding or financing of wide-body aircraft. 

At no point during the many hours we were here today, did I actually hear a specific proposal from Delta Air Lines, although I 

thought what I was interpreting was, ‘‘Let’s just prohibit them.’’ 

If we were to do that, what, in your opinion, would happen in 

the marketplace, especially with respect to other ECAs? 

Mr. HOCHBERG. My concern would be, unless it is multilateral 

and done with the Airbus countries as well, we would be unilaterally disarming and putting the sale of Boeing aircraft and the thousands upon thousands of jobs that are generated from that manufacturer at risk. 

106 

It is as though the Honda dealer offers full financing and the 

Toyota dealer says cash only. It will be a tilt towards that vendor 

that provides financing. 

So if we were to prohibit—if Congress were to prohibit wide-body 

financing, it would open up that market to Airbus and the competition would still exist for U.S. carriers because the only difference 

would be foreign carriers would be flying more Airbus planes 

versus a mixed fleet. 

Mr. HECK. In the last 2 minutes that I have, I am going to ask 

you to stop, breathe, and then paint a picture. 

There have been lots of kind of surface projections made about 

what happens if we wake up on October 1st and your doors are 

shuttered. 

I would like you, as a long-time former businessperson, the 

former acting administrator of the Small Business Administration, 

and as the president of the Export-Import Bank, to look forward, 

not just October 1st and 2nd. 

What is the long-term consequence to America’s manufacturing 

base? What happens to our economy? What happens to our position 

in the world? Paint the picture for us, please, Mr. Hochberg. 

Mr. HOCHBERG. I will paint the picture and I would actually include something that is frequently overlooked, Congressman, and 

that is foreign companies that are looking to invest in this country 

to make products for the U.S. market. 

But all of them have said to me, ‘‘When we move here, it is also 

to export from the United States.’’ And on—several of them have 

said, ‘‘We would not be opening new manufacturing facilities in the 

United States if there was no possibility of Ex-Im support for our 

exports. That would be too risky, to actually attract U.S. manufacturing here.’’ 

First Solar, a company that does solar panels, manufactures in 

the United States and in Malaysia. He said that without the ExIm Bank, labor costing pretty much the same, the United States 

actually has higher taxes, but without Ex-Im Bank, he would probably shift more manufacturing to Malaysia. 

So I think that we will see some irrevocable changes if that happens. The threat of it is enough to make manufacturers think 

twice. 

If this is going to be an—on again, off again continually, it is 

hard as a businessman—I was a businessman—to make 5- and 10- 

year investments when there is so much uncertainty. 

Mr. HECK. In the very brief amount of time that I have left, I 

am fascinated to know how you have accomplished such a low default rate and such a low loss rate. Can you express that in 25 seconds? How do you get that? 

Mr. HOCHBERG. First of all, 80 percent of the transactions we 

have on our books are either collateralized, we actually have security in the actual asset, or are guaranteed by a sovereign nation. 

So we have a very high degree of collateralization and security. 

We do a good job of underwriting, and we do an excellent job at 

what I would call asset management, actually following up on credits and making sure people are current and stay current. 

Mr. HECK. Thank you. 

I yield back the balance of my time. 

107 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Jersey, Mr. 

Garrett, chairman of our Capital Markets Subcommittee. 

Mr. GARRETT. I would defer if you have another Member first. 

Chairman HENSARLING. In that case, the Chair will recognize the 

gentleman from Kentucky, Mr. Barr. 

Mr. BARR. Thank you, Mr. Chairman. 

Chairman Hochberg, I appreciate you coming to my office and 

talking to me about a month ago, and I think you know what my 

principal concerns are with reauthorization of Ex-Im Bank. 

There has been a lot of talk today about jobs. And I would like 

to talk a lot about jobs and, in particular, the job situation in Kentucky and the Obama Administration’s climate policies, carbon 

policies, and the impact that those policies have had on jobs, particularly in eastern Kentucky. 

And, as you may recall, on December the 3rd, I sent you a letter 

expressing my concerns about the supplemental guidelines for high 

carbon intensity projects. 

These are guidelines that your Bank adopted which explicitly 

provide that your Bank will not provide support for exports for 

high carbon intensity plants. 

And your Bank defines a high carbon intensity plant as any 

plant that uses coal as a source of fuel for the generation of power 

or the production of heat. 

My Home State of Kentucky is the third largest coal-producing 

State in the country. We have lost over 7,000 coal jobs in eastern 

Kentucky over the last 2 years as a direct result of the regulatory 

assault of this Administration. 

We are talking about jobs. You want to talk about jobs. My dismay is that, on December 19th, in response to that letter, you said 

that the revisions and the adoption of these guidelines was for the 

purpose of harmonizing Ex-Im Bank with the Administration’s climate change policies. 

My question to you is: Why on earth, if you are about creating 

jobs—why are you aligning yourself with a job-killing agenda? 

Mr. HOCHBERG. Congressman, we had time to meet in your office. And since 1992, Ex-Im Bank has had to take into account the 

creditworthiness of an export as well as the environmental impact. 

That was put in by Congress 22 years ago. We have had an environmental criteria for all exports since 1992. This is not a newfangled policy. 

Mr. BARR. I would just submit that, if this is really about jobs, 

then Ex-Im would not have issued or adopted these guidelines. 

You say in your letter, that you have reviewed this extensively 

with the Administration. And I want to know who in the Administration did you work with in adopting these guidelines? And I finally want to know whether or not Ex-Im, in order to be reauthorized, would consider abandoning this Bank’s participation in the 

war on coal? 

Mr. HOCHBERG. We are active in the export of coal-mining equipment. We are active in the export of coal. One of our largest exporters in the State of Pennsylvania is a company called Xcoal. These 

regulations only apply to a coal-fired power plant. 

Mr. BARR. Well, I understand that. 

108 

Let me reclaim my time really quickly. 

I would just submit, also, if the Administration is concerned 

about the environmental impacts, then what you are doing by discriminating against coal-fired power projects is you are excluding 

U.S. technology from the opportunity that these projects will be 

funded, but they will be funded by China. 

And so, if you are interested in supporting environmentally-sensitive policies, then support U.S. technology to build coal-fired 

power plants and deliver hundreds of millions of people from energy poverty across the globe. 

In my remaining time, I want to share a story from a constituent. When we talked in my office, you gave me the example 

of a small business in my district that benefitted from Ex-Im financing. And you said, ‘‘Reach out to them, LectroDryer.’’ We did. 

John McPhearson—I know this man—a small businessman, and 

he did access financing from Ex-Im. But this is what he told my 

staff on the phone yesterday, ‘‘We reached the point where someone 

was working full-time to make sure the reporting documents were 

filled out so that we could continue to receive our line of credit. You 

simply can’t take a company of only 70 employees and dedicate one 

employee entirely to filling out this kind of paperwork. If the Export-Import Bank went away, it wouldn’t make any difference to 

me.’’ 

This was the company that you told me benefitted from the 

Bank. 

‘‘We have seen no difference in sales since we stopped working 

with Ex-Im Bank. The reason we stopped working with Ex-Im was 

the cost and the complexity.’’ 

Do you have a response to that? 

Mr. HOCHBERG. Congressman, we are asked by this committee 

continually to do a better job of risk management, a better job of 

oversight. 

So I am trying to find a balance between supporting jobs and 

doing the proper job of oversight. I hope to get it right. If we get 

tilted one direction, we need to adjust that. 

Mr. BARR. Thank you. 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Jersey, Mr. 

Garrett, chairman of our Capital Markets Subcommittee. 

Mr. GARRETT. Thank you, Mr. Chairman, again. And, once again, 

Mr. Chairman, thank you for your interest in promoting job creation in this country and holding a very timely hearing. 

This committee is very familiar with government lending programs and very familiar with government lending programs that 

have gone belly up, including Fannie and Freddie, the National 

Flood Insurance, and FHA in the sense that—you know their numbers. 

As such, I have come to believe that over time, when proponents 

of government lending programs tout that they actually make 

money for the Federal Government, I tend to remember the old 

adage that there is no such thing as a free lunch. 

So we have to look at it a little bit deeper than the talking points 

that we hear sometimes on the panel. 

109 

According to the CBO—Congressional Budget Office—over the 

next 10 years, Ex-Im’s 6 largest programs will generate $14 billion 

in the government’s standard accounting framework. 

However, when CBO applies the private sector’s accounting 

method—and, if you were here before, that issue was discussed 

with Mr. Anderson in some detail. And I appreciate Mr. Anderson 

actually having a comprehensive understanding of that as opposed 

to some of the members of this committee. 

However, when the CBO applies the private sector’s standards of 

this program to it, CBO projects the Bank is projected to lose about 

$2 billion. So between $14 billion and $2 billion—and I can do the 

math in my head right here even though it is late in the day—is 

a $16-billion swing, and that suggests there is a lot of downside uncertainty when it comes to Ex-Im. 

I will start with you, Mr. Hochberg. 

Do you believe that the current government accounting standards truly and honestly and fully account for the risk to the taxpayers of the Bank’s lending programs? 

Mr. HOCHBERG. I do, Congressman. I can—the difference between—to my understanding, of fair value and the analysis CBO 

did in that swing assumes one large giant assumption that I believe is not true. 

Mr. GARRETT. Okay. So that is— 

Mr. HOCHBERG. And that is we would not adjust our fees, would 

not—we could adjust our fees to compensate. If there was a different accounting system that was adopted by the U.S. Government, we could adjust our fees accordingly to make sure that we 

were at a break-even or cost no subsidy. 

Mr. GARRETT. I don’t know that is the only difference and—on 

their appraisal of it. 

Dr. Elmendorf, can you elaborate on this, since you have been 

there. 

Mr. ELMENDORF. Also, Congressman, the estimates that we have 

done, the numbers of which you describe correctly, take the structure of the programs as they currently are. 

So they take the fees as they currently stand. They take Ex-Im 

Bank’s projections of default rates and recovery rates and so on. 

If the programs were to change, then we would end up possibly 

with different estimates of their cost. We have just done an estimate based on the way the programs stand today and the numbers 

in the President’s budget request for 2014. 

Mr. GARRETT. So when they talk about the fees changing, those 

fees are changing on what? On current loans or on future loans, 

Dr. Elmendorf? 

Mr. ELMENDORF. So from our point of view, we have taken the 

fees that are currently in place. 

If Ex-Im Bank were to charge different fees, then we would have 

to see how that affected not just the direct payments for the fees, 

but, also, how it would affect the composition of the borrowing that 

would occur from Ex-Im Bank. 

So we have to look at the whole changed structure of those programs. 

110 

Mr. GARRETT. Seeing that we have legislation to this point, 

would you commit to evaluating your loan portfolio on a fair value 

basis? 

Mr. HOCHBERG. We follow the Federal Credit Reform Act. If CBO 

wants to do a study on that, we would work with them on doing 

a— 

Mr. GARRETT. I am not asking for a study. I am just asking that 

you do your books as other agencies do, as the CBO does their 

analysis, on a fair value basis. 

Mr. HOCHBERG. Right now I am required—because Congress 

has—the law of the land is the Federal Credit Reform Act that was 

passed in 1990. So that is how we keep our books in accordance. 

I was in business. You don’t pick and choose your accounting system. That is the accounting system of the U.S. Government. It is 

the accounting system that we comply with when we do our annual 

audit and work with the IG on that. It is our— 

Mr. GARRETT. That is a ‘‘no.’’ 

Mr. HOCHBERG. We don’t pick and choose. 

Mr. GARRETT. Mr. Chairman, I think you wanted additional 

time? 

Chairman HENSARLING. Yes. 

Mr. GARRETT. If not— 

Chairman HENSARLING. I will take the 30 seconds here. 

Mr. Hochberg, you have used some rather apocalyptic language 

regarding what would happen if Ex-Im was not reauthorized. 

Again, just for the record—I believe you said it already—but isn’t 

it true that 98.4 percent of U.S. exports are financed without your 

Bank? Is that correct? 

Mr. HOCHBERG. That is correct. 

Chairman HENSARLING. Is it also correct that only 5 percent of 

all transactions of Ex-Im are to meet countervailing subsidies? 

Mr. HOCHBERG. I’m not sure I understand the question, sir. 

Chairman HENSARLING. It is from your records: 5 percent of the 

transactions of the Bank—you classify these—are made in order to 

meet other subsidies. 

It is in your competitiveness report. Do I need to cite the page? 

Mr. HOCHBERG. I can’t remember or recall if it is 5 percent. But 

one of the criteria is meeting foreign competition from other export 

credit agencies. In 2013, it was 38 percent. I am just looking at my 

records here, in 2013. 

Chairman HENSARLING. That is dollar volume. Correct? 

Mr. HOCHBERG. That was transactions by purpose. It was on a 

transaction basis. 

Chairman HENSARLING. That is on a transaction basis, 38 percent. Okay. 

The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, vice chairman of our Monetary Policy Subcommittee. 

Mr. HUIZENGA. Mr. Chairman, actually, I will yield some of my 

time to you if you want to continue that line of questioning. As I 

believe that is a line that needs to be explored, I will yield some 

time back to you. 

Chairman HENSARLING. I thank the gentleman for yielding. 

111 

So, Mr. Hochberg, we have heard a lot, and I think you yourself 

have used the phrase, ‘‘unilateral disarmament.’’ 

And so, again, if we have over 98 percent of all U.S. exports not 

being financed—again my reading of your report, and I will try to 

get the page number, was that it was 5 percent of transactions, 

roughly a third of dollar volume, are there to so-called level the 

playing field. All in all, it is a fairly small percentage of all U.S. 

exports. 

You also said that the Bank extends credit based on need and 

where they cannot find it in the private sector—I don’t want to put 

words in your mouth. I don’t have the transcript in front of me. I 

think you said that. 

So GE, Boeing, based on their balance sheets, can they not find 

credit in the private sector? Is that your opinion? 

Mr. HOCHBERG. It is not GE or Boeing. It is their customer. So 

in the Boeing case, to use that example, I just was in Africa. It is— 

Kenya Airways or Ethiopian Airways, which are good customers, 

but don’t necessarily— 

Chairman HENSARLING. So the size of their balance sheets 

wouldn’t allow them to extend credit to their customer. Is that 

what you are saying? 

Mr. HOCHBERG. They are a manufacturing company. They are 

not a Bank. And their job is to manufacture and put money into 

R&D. 

Chairman HENSARLING. He doesn’t have GE Capital? Boeing 

doesn’t have a finance arm? Are they not financing transactions? 

Mr. HOCHBERG. Not to the extent that—of the global requirements. And, again— 

Chairman HENSARLING. What is a global requirement? 

Mr. HOCHBERG. Well, to meet all their export needs. They do it— 

frankly, sometimes— 

Chairman HENSARLING. What is an expert need? 

Mr. HOCHBERG. I’m sorry? 

Chairman HENSARLING. What is an export need? 

Mr. HOCHBERG. What I am trying to say, Mr. Chairman, is that 

sometimes Boeing will do it when they say, ‘‘You know what? This 

credit is too poor. We are not even going to present that to Ex-Im 

Bank.’’ So we do that. 

And the other thing we have to remember is we have Airbus, as 

an example, because we are talking about Boeing, that fully funds 

their export credit agencies, particularly in Britain, Germany, and 

France, don’t have the criteria we have in terms of— 

Chairman HENSARLING. GE Capital has half a trillion dollars in 

total assets. Boeing apparently has $92 billion in assets. And yet, 

they have a need that apparently you have to fill. 

So you are telling me again some of the largest companies in 

America can’t finance their customers’ desire for their products. 

Correct? 

Mr. HOCHBERG. They cannot provide—they are not in the position to provide 12-year financing or 10- or 14-year financing. 

Chairman HENSARLING. I wonder what they are doing with that 

half-a-trillion-dollar balance sheet? 

Mr. Hochberg, a couple of different times you have talked about 

government shutdown, and rightfully said, ‘‘I believe this is someVerDate Nov 24 2008 13:00 Apr 24, 2015 Jkt 091151 PO 00000 Frm 00115 Fmt 6633 Sfmt 6633 K:\DOCS\91151.TXT TERRI
112 

thing that is harmful to the economy, I assume something to be 

avoided.’’ 

Did you talk about the government shutdown earlier today? 

Mr. HOCHBERG. I talked about it in terms of what the impact 

was on exports and small businesses that we work with. 

Chairman HENSARLING. And my takeaway from your answer was 

detrimental. Is that correct? 

Mr. HOCHBERG. That is correct. 

Chairman HENSARLING. Okay. So if Congress decided to send the 

President a clean continuing resolution and he refused to sign that 

because it did not reauthorize the Ex-Im Bank, and the Administration threatened a government shutdown, would you counsel the 

Administration publicly not to do that? 

Mr. HOCHBERG. I am not in a position to make recommendations 

on that, sir. My job is to manage the Bank and to determine— 

Chairman HENSARLING. You just said in your earlier testimony 

that shutdown is something that you thought was pretty negative 

to the economy. 

So the Ex-Im Bank would be something that would be extraneous potentially attached to a clean reauthorization to keep the 

government open. 

You have had a lot of opinions on a lot of other matters. You 

have no opinion on this matter? 

Mr. HOCHBERG. What I referred to, sir, was that the threat of a 

shutdown—the threat of not reauthorizing the Bank or I am simply 

reporting what I heard when I spoke to exporters and their customers— 

Chairman HENSARLING. So do you have no opinion on the matter, 

or do you refuse to share your opinion? 

Mr. HOCHBERG. I haven’t given it any thought, sir. 

Chairman HENSARLING. Fascinating. 

Mr. HUIZENGA. I will reclaim my 3 seconds, Mr. Chairman. 

The exact quote, as I wrote it down earlier, is that, ‘‘We are there 

when the private sector can’t or won’t.’’ And the question mark I 

wrote for myself after that was, ‘‘Really? It doesn’t always seem to 

be that is the case.’’ 

So, with that, I yield back. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Indiana, Mr. 

Messer. 

Mr. MESSER. Thank you, Mr. Chairman. 

I yield my time back to you, the Chair, to continue your inquiry. 

Chairman HENSARLING. I thank the gentleman for yielding. 

Again, Chairman Hochberg, I would have you take a look at Figure B-1 of the Ex-Im Bank transactions by purpose from your 2012 

competitiveness report, page 149, where you list the financing due 

to the fact that, ‘‘No private sector financing was available,’’ and 

that which says ‘‘meet competition.’’ 

As I do the math by number of transactions, it is about 5 percent. So— 

Mr. HOCHBERG. Would you repeat the page number? 

Chairman HENSARLING. —I would have you take a look at that 

particular report. 

113 

Mr. HOCHBERG. I have 2013 here. I did not bring 2012 because 

we issued this and set this up last night. 

Chairman HENSARLING. Well, thank you. But we just got 2013 

yesterday. So this is the latest data that we have. Again, whatever 

the proper number is, it appears to be a somewhat smaller number. 

Let’s talk again about the so-called level playing field. Listening 

to some of those who are on the other side of the debate, you would 

think the only way one could be competitive is to take taxpayer 

money and subsidize Fortune 50 companies. 

Dr. Elmendorf, regrettably, we are going to drag you back into 

all of this. 

But I believe the latest—CBO’s February budget and economic 

outlook said that the Affordable Care Act, also known as 

Obamacare, would reduce the number of full-time employees over 

the 10-year budget window by 21⁄2 million. 

I assume CBO still stands by that report? 

Mr. ELMENDORF. I think that was our projection for near the end 

of the budget window, Mr. Chairman. And, yes, we stand by those 

estimates. 

Chairman HENSARLING. Okay. Perhaps one way we could make 

our manufacturers and our exporters more competitive would be to 

repeal Obamacare. 

Now, here is something else that makes people competitive: 

wages. Some of our competitors have a higher wage scale. Some of 

them have a lower wage scale. 

The President has called for increasing the Federal minimum 

wage. According to a February CBO report, that could reduce employment by half a million, but it could be as high as 1 million. 

That, again, is according to a February CBO report. 

Dr. Elmendorf, does CBO stand by that report? 

Mr. ELMENDORF. Yes, Mr. Chairman. 

Chairman HENSARLING. Okay. I think, if I remember right, just 

about every Democrat on this committee cosponsored the reduction 

in jobs of a half a million. Perhaps they might want to rethink that 

to help make our manufacturers a bit more competitive. 

We have the top five proposed rules that are coming down the 

pike, most of which is coming from EPA: Tier 3 emission standards, 

with a $35-billion impact on the economy, efficiency standards for 

motors, 11.7. 

We have the highest corporate tax rate of any industrialized nation in the world, yet my friends on the other side of the aisle, the 

only way they can think to somehow make us more competitive is 

to take taxpayer money in subsidized large companies. 

In the time that is remaining, Mr. Hochberg, here is another 

question that is somewhat disturbing to me: It appears that you 

are taking taxpayer money and loaning it or guaranteeing the credit to some nation-states that, according to Human Rights Watch, 

are some of the worst violators of human rights. 

The Democratic Republic of Congo, where the Human Rights 

Watch has said, ‘‘Government authorities have sought to silence 

dissent with threats, violence, and arbitrary arrest against human 

rights activists.’’ 

Freedom From Torture, another human rights group, calls it the 

rape capital of the world. 

114 

And, yet, on behalf of the American taxpayer, apparently, you 

have extended one of the state-owned enterprises a line of credit. 

You have also extended lines of credit to Russia, now that 

Ukraine’s peninsula, the Crimea, has been absorbed. 

Sierra Leone, Human Rights Watch, ‘‘The government of Sierra 

Leone and the mining company that is the country’s largest employer have undermined villagers’ access to food, and prevented 

workers from challenging abusive practices.’’ 

United Arab Emirates continue to crack down on freedom of expression and association. 

Okay. What private companies do with their money is one thing. 

What you do with taxpayer money is something else. 

Why are you taking taxpayer money and consistently loaning it 

to nation-states that are some of the worst human rights abusers 

on the planet? 

Mr. HOCHBERG. Mr. Chairman, the example you cited in the 

Congo is from the 1980s. It is over 30 years ago. We— 

Chairman HENSARLING. My data says 2012. 

Mr. HOCHBERG. For every transaction, the State Department 

gives a clearance of human rights conditions, and we don’t make 

a transaction if the State Department has an objection on a human 

rights basis. So that is current practice. 

I can’t talk about what happened in the 1980s. I can talk about 

currently. The State Department gives us a clearance on every 

transaction from a human rights point of view that the board considers. 

Chairman HENSARLING. Mr. Hochberg, I might say it is time to 

start showing a little bit of independent judgment in this matter, 

just one man’s opinion. 

The gentleman from Indiana’s time has expired. 

There are no other Members in the queue. So I would like to 

thank our witnesses for their testimony today. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

The hearing is adjourned. 

[Whereupon, at 5:25 p.m., the hearing was adjourned.] 

(115) 

A P P E N D I X 

June 25, 2014 

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