EXAMINING THE EXPORT-IMPORT BANK’S 

REAUTHORIZATION REQUEST AND THE 

GOVERNMENT’S ROLE IN EXPORT FINANCING 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 3, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–29 

( 

EXAMINING THE EXPORT-IMPORT BANK’S REAUTHORIZATION REQUEST AND THE 

GOVERNMENT’S ROLE IN EXPORT FINANCING 

U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

96–990 PDF 2016

EXAMINING THE EXPORT-IMPORT BANK’S 

REAUTHORIZATION REQUEST AND THE 

GOVERNMENT’S ROLE IN EXPORT FINANCING 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 3, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–29 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

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 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

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 

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 

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 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

June 3, 2015 ...................................................................................................... 1 

Appendix: 

June 3, 2015 ...................................................................................................... 109 

WITNESSES 

WEDNESDAY, JUNE 3, 2015 

Boyle, Michael P., President and CEO, Boyle Energy Services & Technology, 

Inc. ......................................................................................................................... 65 

Cox, Rachael, Vice President, Business Development, Conway Machine, Inc. .. 63 

Hirst, Richard B., Executive Vice President and Chief Legal Officer, Delta 

Air Lines ............................................................................................................... 70 

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

the United States ................................................................................................. 5 

Ikenson, Daniel J., Director, Herbert A. Stiefel Center for Trade Policy Studies, Cato Institute ................................................................................................ 61 

McCarthy, Michael T., Deputy Inspector General, Export-Import Bank of 

the United States ................................................................................................. 7 

Murphy, John, Senior Vice President, International Policy, U.S. Chamber 

of Commerce ......................................................................................................... 68 

Smith, Clifford, Executive Vice President, Business Development, Cliffs Natural Resources Inc. ............................................................................................... 66 

APPENDIX 

Prepared statements: 

Beatty, Hon. Joyce ............................................................................................ 110 

Sinema, Hon. Kyrsten ...................................................................................... 113 

Boyle, Michael P. .............................................................................................. 114 

Cox, Rachael ..................................................................................................... 118 

Hirst, Richard B. .............................................................................................. 121 

Hochberg, Hon. Fred P. .................................................................................... 144 

Ikenson, Daniel J. ............................................................................................. 170 

McCarthy, Michael T. ....................................................................................... 180 

Murphy, John .................................................................................................... 189 

Smith, Clifford .................................................................................................. 196 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hensarling, Hon. Jeb: 

Letter from Delta Air Lines to Ex-Im Bank, dated April 23, 2014 .............. 199 

Written statement of the National Association of Manufacturers ............... 203 

Fincher, Hon. Stephen: 

Letter to Members of Congress from 1,053 organizations urging support 

for long-term reauthorization of the Export-Import Bank ........................ 211 

Foster, Hon. Bill: 

Chart entitled, ‘‘U.S. Manufacturing Jobs Since 1961’’ ................................. 224 

Sherman, Hon. Brad: 

‘‘Treasury Report to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services of 

the House of Representatives on Export Credit Negotiations,’’ dated 

November 2012 ............................................................................................. 225 

Page

IV 

Sherman, Hon. Brad—Continued 

‘‘Treasury Report to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services of 

the House of Representatives on Export Credit Negotiations,’’ dated 

December 2013 .............................................................................................. 230 

‘‘Treasury Report to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services of 

the House of Representatives on Export Credit Negotiations,’’ dated 

December 2014 .............................................................................................. 236 

Wagner, Hon. Ann: 

Letter to Members of Congress from 1,053 organizations urging support 

for long-term reauthorization of the Export-Import Bank ........................ 241 

Waters, Hon. Maxine: 

Letter to Members of Congress from 1,053 organizations urging support 

for long-term reauthorization of the Export-Import Bank ........................ 241 

Written statement of the Bankers Association for Finance and Trade 

(BAFT) and the Financial Services Roundtable (FSR) .............................. 254 

‘‘GOL Issues $41 Million Ex-Im Bank-Guaranteed Bond for Services Exported by Delta TechOps, MRO Division of Delta Air Lines,’’ dated 

March 25, 2014 .............................................................................................. 263 

Hochberg, Hon. Fred P.: 

Written responses to questions for the record submitted by Representatives Murphy and Westmoreland ................................................................ 266 

(1) 

EXAMINING THE EXPORT-IMPORT BANK’S 

REAUTHORIZATION REQUEST AND THE 

GOVERNMENT’S ROLE IN EXPORT FINANCING 

Wednesday, June 3, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:05 a.m., in room 

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

Members present: Representatives Hensarling, King, Royce, 

Lucas, Garrett, Neugebauer, McHenry, Pearce, Posey, Fitzpatrick, 

Westmoreland, Luetkemeyer, Huizenga, Duffy, Hurt, Stivers, 

Fincher, Stutzman, Mulvaney, Hultgren, Ross, Pittenger, Wagner, 

Barr, Rothfus, Messer, Schweikert, Guinta, Tipton, Williams, 

Poliquin, Love, Hill, Emmer; Waters, Maloney, Velazquez, Sherman, Meeks, Capuano, Hinojosa, Clay, Lynch, Green, Cleaver, 

Moore, Ellison, Himes, Carney, Sewell, Foster, Kildee, Murphy, 

Delaney, Sinema, Beatty, Heck, and Vargas. 

Chairman HENSARLING. The Financial Services Committee will 

come to order. 

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

the committee at any time. 

Today’s hearing is entitled, ‘‘Examining the Export-Import 

Bank’s Reauthorization Request and the Government’s Role in Export Financing.’’ This is our third hearing on Ex-Im this Congress, 

and our fifth in the last 24 months. So, for better or for worse, 

rarely has such a small agency received so much attention by our 

committee. 

I now recognize myself for 3 minutes to give an opening statement. I begin my comments by admitting that Republicans on my 

side of the aisle are split on the issue of Ex-Im reauthorization. I 

certainly respect the arguments of those who support H.R. 597, and 

I look forward to continuing our debate. I do understand that one 

person’s corporate welfare and politically driven capital allocation 

is another person’s vital export support program and level playing 

field. 

However, understanding my Democrat colleagues’ arguments is 

proving to be more challenging. They claim that Ex-Im is essential 

to supporting jobs, but I would ask most of my Democratic friends, 

where was your concern for jobs when you voted for ObamaCare, 

which according to the Congressional Budget Office is going to lead 

to 2.5 million fewer jobs in our economy? Where was your concern 

2 

for jobs when your party voted against the Keystone Pipeline and 

the 42,000 jobs the State Department says are connected to it? 

Where was your concern for 45,000 jobs when most of your caucus 

voted against legislation to advance construction of LNG export 

products? 

Democrats claim Ex-Im is essential to U.S. trade, but almost 99 

percent of all U.S. exports are financed without Ex-Im. If my Democrat friends are so concerned about trade, why are so many of 

them opposing trade promotion authority (TPA)? No less a Democrat than President Obama himself says that TPA will create more 

jobs and expand economic opportunities for middle-income Americans. 

The National Association of Manufacturers reports that over half 

of the structural cost disadvantage suffered by American exporters 

comes from our corporate tax system. Yet few, if any, Democrats 

support a fairer, flatter tax system, much less reducing our corporate tax rate, the highest in the industrialized world. Now, how 

many times have we heard Democrats vilify Wall Street banks, yet 

the big banks profit off Ex-Im like few others. The latest data I 

have seen shows JPMorgan Chase received $5.1 billion in assistance; Citigroup, $1.5 billion; Wells Fargo, $.5 billion; and HSBC, almost $1 billion. They all profit from Ex-Im, and as far as I can see, 

they all vigorously support its reauthorization. After all, they have 

hard-working taxpayers to bail out any Wall Street losses. 

As one Citigroup managing director recently said, ‘‘There is nothing that a commercial bank loves more than guaranteed financing.’’ 

Another Wall Street banker was quoted in the press saying that 

Ex-Im guarantees are ‘‘free money’’ for the big banks. By reauthorizing Ex-Im, my Democratic colleagues are simply throwing Wall 

Street a big wet kiss. 

Just 6 weeks ago, the ranking member asked the question, ‘‘Why 

is it that the richest of the folks in the businesses in this country 

who have so many paid lobbyists are able to direct the public policy 

in ways the average citizen cannot do?’’ 

Boeing, which receives fully one-third of Ex-Im support, spent 

$35 million in lobbying expenses in the last Congress to help keep 

Ex-Im afloat. Their top 5 executives made $48.6 million in 2013 

alone. The public reports from other top beneficiaries like GE, Caterpillar, and Exxon Mobil all look pretty similar. So I would say 

to my friend the ranking member, perhaps their paid lobbying is 

so successful and their executives are getting so rich because you 

are doing everything you can to help them. 

To support more robust economic growth and economic justice, 

not to mention economic equal opportunity for all, it is time to 

wind down Ex-Im. I now recognize the ranking member for 3 minutes. 

Ms. WATERS. Thank you, Mr. Chairman. 

It is the eleventh hour for the Export-Import Bank, only 14 legislative days remain until this engine of economic growth shuts 

down. 

For 2 years, Democrats on this committee and many Republicans 

have asked the chairman to listen to reason with respect to the Export-Import Bank’s reauthorization. We have pushed for action in 

this committee because for the thousands of American jobs and 

3 

businesses across every one of our States and districts that count 

on Ex-Im support, the stakes are high. With 190 Democrats on 

record in support of a multiyear extension of the Bank’s charter, 

and 59 Republicans on a separate reauthorization measure, including 5 on this very committee, the facts are unequivocal: A majority 

of the Members of the Financial Services Committee and of the 

House of Representatives support keeping the Export-Import Bank 

up and running for the long term. 

In light of the staunch opposition from this chairman, I would 

like to take a minute to thank Representative Stephen Fincher for 

having the courage to stand up for what he believes is right by offering legislation that commits to a long-term reauthorization of 

the Bank. Unfortunately, despite the fact that the Bank faces closure in just 14 legislative days, these two bills to reauthorize its 

charter are gathering dust in the chairman’s office. 

Mr. Chairman, while you continue playing games with the Export-Import Bank, today we will do our best to remind you of the 

real people who will be impacted by shutting it down. Later in this 

hearing, you will hear from Michael Boyle, chief executive officer 

of Boyle Energy Services and Technology. Mr. Boyle is a Republican, and his energy firm is located in Manchester, New Hampshire, right from the district of Representative Guinta. He is going 

to tell this committee about how the Export-Import Bank took his 

business of 8 employees and helped it expand to 60 presently. For 

some reason, that engine of economic growth which allowed Mr. 

Boyle to grow and expand his business is the latest ideological target of this committee. 

Mr. Chairman, we are not legislating in a vacuum. Closing the 

Export-Import Bank will have real consequences for businesses trying to survive in an increasingly competitive marketplace. I am disappointed that this game continues, and I yield back my time. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, the chairman of our Monetary Policy and Trade Subcommittee, for 2 minutes. 

Mr. HUIZENGA. Thank you, Mr. Chairman. I appreciate you holding this hearing to further examine the Export-Import Bank’s reauthorization request. As I have stated before, I am dismayed that 

some of the best American companies believe that they need special 

programs and carve-outs like Ex-Im to remain competitive on the 

global stage as opposed to dealing with what I believe are the true 

hurdles, tax reform as well as regulatory reform. 

If we allow a select few companies to determine the outcome of 

the Ex-Im Bank, what happens when we do try to work out reform 

of our Tax Code? What happens when we actually try to close loopholes? How can we address social entitlement programs if Congress 

is unwilling to address corporate entitlement programs as well? 

In 2012, although I voted ‘‘no,’’ Congress reauthorized Ex-Im 

while mandating several modest reform provisions that shared 

broad bipartisan support. These reforms were viewed as vital. I 

voted ‘‘no’’ because I was concerned that the bill was actually nothing more than window dressing. Although these reforms were intended to better protect taxpayers and make the Export-Import 

Bank more accountable, the Bank and Treasury continued to igVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
4 

nore congressional intent and instead operated with too little accountability with regard to the interests of hard-working American 

taxpayers. It looks like, unfortunately, I was right in 2012. American taxpayers have been unwittingly propping up foreign stateowned programs in Saudi Arabia, Russia, Colombia, Ethiopia, 

South Africa, et cetera, while others have done nothing but work 

against the best interests of American taxpayers. 

Additionally, the Export-Import Bank has an unsavory track 

record involving corruption, bribery, and fraud. The acting inspector general of the Export-Import Bank testified in our joint hearings with the Oversight and Government Reform Committee that 

47 people have been convicted of defrauding the Bank in the past 

5 years, and that there are at least 31 open investigations with a 

potential for even more indictments. The more that is unearthed 

about the Export-Import Bank, the more concerned I become. While 

the goals and objectives of the Bank may be admirable, the current 

state of the Bank is abhorrent at best. Why should Congress spend 

taxpayer dollars on an organization that has reestablished a track 

record of corruption? Why should American tax dollars be used to 

finance foreign government-owned or operated companies that compete against American workers? Why should the hard-working taxpayers take on unnecessary risk when private companies refuse to 

do so? Unfortunately for the folks at Ex-Im, I have come to the conclusion that the Export-Import Bank is beyond broken, and that it 

is time for the Bank’s charter to expire. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Wisconsin, Ms. 

Moore, ranking member of our Monetary Policy and Trade Subcommittee, for 1 minute. 

Ms. MOORE. Thank you so much, Mr. Chairman. 

This is an important hearing, as the Export-Import Bank’s charter expires at the end of this month. After several of these hearings, what do we know? In 2012, a number of substantive reforms 

were made by Congress, and the Bank has implemented an overwhelming number of them. We know that private finance supports 

the Bank, cannot fill the void, and that the Bank is not crowding 

out private capital. And it is a straw man fallacious argument 

about it being corporate welfare designed to undermine the social 

safety net for people. 

We know that the Bank operates with a low default rate with 

meaningful and vigorous oversight by the inspector general (IG). 

We know the Bank supports good jobs and small businesses in the 

United States of America. The counterpoint we will hear today 

from some libertarian academics is the claim that the Bank somehow creates hidden costs for some companies. But I think the best 

evidence against this case they are trying to make is that several 

firms mentioned in the research as being hurt by the Bank, such 

as Nucor and AK, still support the Bank. I yield back. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Washington, Mr. 

Heck, for 1 minute. 

Mr. HECK. Thank you, Mr. Chairman. 

We should be skeptical of government lending programs because 

private markets are generally better at allocating credit and it is 

5 

easy, maybe even reasonable, to become cynical about our political 

process. 

If a company comes to me and says they are hurt by Ex-Im, I 

worry for their employees, but we owe this topic more than a gutlevel skepticism and easy cynicism. Our job as Members of Congress is to get information on how the world actually works and 

base our policy on that. 

Stephen Fincher has set the example. He came to Congress as 

a skeptic of Ex-Im, asked questions, voted ‘‘no’’ initially, replaced 

that skepticism with facts, and came to see the critical need for the 

Bank. Today is an opportunity for all of us to do that. 

Afraid that the Ex-Im is undercutting private banks? Ask Mr. 

Murphy whether the banks see it that way. 

Cynical that Ex-Im only helps big companies like Boeing? Go to 

Ex-Im and see who gets support in your district. 

Skeptical that there is really a need for government to be making 

these loans? Ask Mr. Boyle about the alternatives for small business. Frankly, there are none. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

We will now turn to our witnesses. 

For our first panel, we welcome the testimony of the Honorable 

Fred Hochberg, the president and chairman of the Export-Import 

Bank; and Mr. Michael McCarthy, the deputy inspector general of 

the Export-Import Bank. Each of you will be recognized for 5 minutes to give an oral summary of your testimony. 

And without objection, each of your written statements will be 

made a part of the record. 

Chairman Hochberg, you are now recognized for your testimony. 

STATEMENT 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 distinguished members of the committee, thank you for inviting me 

today to testify before you about how Ex-Im equips small businesses, U.S. businesses, to compete in the global economy and add 

jobs here at home. Ex-Im complements and works with the private 

sector. We provide private sector backstop financing so American 

entrepreneurs can seize global opportunities, create jobs, and not 

get left behind by their foreign rivals. And we have been successful, 

supporting 164,000 jobs last year alone. Ex-Im does not pick winners and losers, rather it serves any eligible American business 

seeking competitive financing to export. We are, by definition, demand-driven. 

Of course, our customers pay fees and interest for this service, 

and as a result, Ex-Im is completely self-sustaining. Last year 

alone, Ex-Im generated $675 million for the taxpayers for deficit reduction. If Ex-Im Bank is not reauthorized, we will no longer generate $.5 billion for the taxpayer. On top of this, we have truly focused on risk management, demonstrated by our low default rate 

of 0.167 percent as of March 2015. And as you know, in 2012 ExIm was reauthorized by overwhelming bipartisan support. And 

6 

today, 250 House Members have cosponsored legislation aimed at 

giving Ex-Im a long-term reauthorization. 

I take seriously my duty to implement the will of Congress. That 

is why I have provided each of you with all of the documentation 

outlining Ex-Im’s implementation of every single requirement from 

the 2012 reauthorization, and why I will work diligently to implement any future requirements that Congress chooses to impose. In 

addition, Ex-Im continuously acts to proactively implement riskmanagement improvements to further ensure that we remain faithful stewards of taxpayer dollars. To name just two, we increased 

our staffing in asset monitoring by 33 percent, and we went beyond 

all Federal requirements and required mandatory ethics training of 

every single employee. 

Of course, any organization can experience a bad apple, and let 

me underscore, Ex-Im has zero tolerance for fraud, waste, and 

abuse, and works closely with the IG to take thorough and immediate action when any hint of misconduct is detected. 

In the last 6 years, there has been exactly one indictment involving an Ex-Im employee, a situation that was uncovered thanks to 

a tip from a fellow employee. This infraction goes back to 2006 during the Bush Administration, before Ex-Im had an inspector general. 

Unfortunately, there are always those outside of the agency who 

will try and defraud the government. Ex-Im has 31 such cases. The 

Social Security Administration had over 16,000 in the last 2 years, 

and DOD had more than 6,000 last year alone. The point is, there 

will always be outsiders who attempt to defraud the government. 

But, frankly, thanks to our focus on fraud detection and risk management, Ex-Im has a track record of successfully protecting the 

public trust. 

Meanwhile, global competition has ramped up, and since our last 

reauthorization, it will continue to. American businesses and workers aren’t simply competing against their Chinese, Russian, and 

French counterparts. Often, they are competing against countries. 

However, Congress has made it clear; they have asked the Treasury Secretary to ratchet down export credits. And while it is the 

Secretary’s responsibility, as I said, I take the will of Congress seriously. 

As a result, I recently met with many of my foreign counterparts 

to discuss exactly that topic. And here is what I heard: To the contrary, our counterparts intend to accelerate financial backing for 

exports. Their role is clear: When commercial banks constrict financing, export credit agencies fill the gap so their domestic exporters don’t lose sales or jobs. 

Ex-Im Bank is like a firetruck in that sense. You don’t sell off 

the firetruck just because there is a fire currently burning. 

In closing, as this committee is aware, businesses need certainty 

to make long-term plans to grow, hire, and innovate. There are 

now about 80 other export credit agencies around the world fighting for jobs. And unlike Ex-Im Bank, one of China’s export credit 

agencies recently noted that they doubled their activity in 2014 and 

expect to double it again in the next year or two. We look forward 

to working with you to continue empowering your constituents to 

export more and to hire more American workers. 

7 

Thank you, and I look forward to your questions. 

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

144 of the appendix.] 

Chairman HENSARLING. Thank you, Chairman Hochberg. 

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

STATEMENT OF MICHAEL T. MCCARTHY, DEPUTY INSPECTOR 

GENERAL, EXPORT-IMPORT BANK OF THE UNITED STATES 

Mr. MCCARTHY. Thank you, Chairman Hensarling, Ranking 

Member Waters, and members of the committee. I am pleased to 

be here to present the work of the Export-Import Bank Office of Inspector General (OIG). The committee has my written testimony 

which highlights the work that our professional auditors, inspectors, and special agents have done to promote efficiency and detect 

and deter fraud at Ex-Im Bank. The committee has asked me to 

discuss investigations into fraud at the Bank, recent court activity, 

and recommendations to improve risk management and prevent 

misconduct. Let me briefly cover a few highlights. 

Since 2009, OIG investigations into fraud schemes that target 

Ex-Im Bank have yielded 84 criminal indictments and informations, 50 convictions, and $255 million in judgments and repayments. The most common fraud schemes we have encountered involve outside parties obtaining loans or guarantees through false 

representations and submission of false documents. We work closely with the Bank’s Asset Management Division, which makes referrals of transactions or claims with indicators of fraud. We currently 

have 30 open investigations, and nearly all of them address outside 

persons committing fraud against the Bank and have no indications of Ex-Im employee involvement. However, one of those fraud 

cases involves former Ex-Im loan officer Johnny Gutierrez, who recently pleaded guilt to one count of bribery of a public official. Mr. 

Gutierrez admitted accepting more than $78,000 in bribes in return 

for recommending the approval of unqualified loan applications, 

among other misconduct. This case remains an active fraud investigation against other parties. 

We have closed other employee integrity cases in the past year 

that led to findings of misconduct and personnel being separated 

from employment at the Bank but not criminal charges. As I have 

previously testified, our open investigations are at various stages, 

and working with the Department of Justice, some cases may result in prosecutions for bank fraud and money laundering. At this 

time, I would not expect charges against any other Ex-Im Bank 

employees from our current caseload. 

As to our recommendations, we have 48 open and unresolved recommendations: 24 from the current fiscal year; and 24 from prior 

fiscal years. My written testimony summarizes our most recent 

audit and inspection work. Our independent audit of the Bank’s financial statements found that they were fairly presented in all material respects and had no material weaknesses. Our audits also 

found substantial compliance with the cybersecurity requirements 

of the Federal Information Security Management Act (FISMA) and 

found that internal controls for the short-term multibuyer insurance program provided reasonable assurance of compliance. Our inspection of transactions in Ghana found that one project was apVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
8 

propriately structured and was performing, while we identified engineers issues with another transaction and made recommendations for improvement going forward. 

Finally, a recent annual audit found noncompliance with the Improper Payments Act, and we recommended changes to the risk-assessment process, which the Bank is implementing. 

Every year, we review our work and identify the top management challenges facing the Bank. Last fall, the OIG reported that 

the top challenge was managing risk, specifically, managing the 

Bank’s core business activities to reduce the risk of loss to the 

Treasury and, by extension, the taxpayer. To manage that risk, we 

have recommended the Bank design an agency-wide risk-management framework so that in addition to rating the risk of any individual transaction, the Bank is also evaluating and mitigating the 

risks generated by the overall composition of the portfolio and any 

outside exposures the Bank has in certain regions, industry sectors, 

or single companies. 

To accomplish this, we have recommended a chief risk officer, 

which the Bank has established. The Bank has also conducted 

stress testing and monitoring of exposure levels. We hope the Bank 

will build on these steps by developing and implementing key risk 

policies covering both credit and noncredit risks. We have also recommended improvements to due diligence, and know-your-customer policies, and the Bank has deployed improvements in those 

areas. 

Finally, we previously found that internal policies providing clear 

guidance to staff had not been prevalent at Ex-Im Bank. So we recommended that the Bank rely more on clear policies, controls, and 

documentation, and less on institutional knowledge. 

Many of our recommendations have been for specific internal 

control policies which the Bank is working on implementing. 

Mr. Chairman, this concludes my statement. I am happy to answer questions. 

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

180 of the appendix.] 

Chairman HENSARLING. Thank you. 

The Chair now recognizes himself for 5 minutes of questions. 

Chairman Hochberg, last month the Richmond Federal Reserve 

updated a report called the ‘‘Bailout Barometer.’’ Is there any 

chance that this might have come across your desk? 

Mr. HOCHBERG. No, it did not. 

Chairman HENSARLING. In this report, the Richmond Fed states 

that roughly 60 percent of all financial transactions in our economy 

are now either explicitly or implicitly backed by the Federal Government, up about a third since the financial crisis. In your testimony, you have a chart showing that taxpayer exposure has roughly doubled from $58 billion to $112 billion over this same time period, is that correct? 

Mr. HOCHBERG. Yes, that sounds right. 

Chairman HENSARLING. In the ‘‘Bailout Barometer’’ report, the 

Richmond Fed says, ‘‘This protection could make financial crises 

and bailouts more likely.’’ 

I would commend it to your reading at some time. 

9 

Chairman Hochberg, in our last hearing we spoke about Ex-Im 

financing different foreign state-owned enterprises. In fact, do you 

have a statistic of the financial assistance, how much of it goes to 

state-owned enterprises? 

Mr. HOCHBERG. I couldn’t give you a precise number. I think the 

difference, Mr. Chairman, is that we have a capitalist society. We 

have far more private sector enterprises— 

Chairman HENSARLING. But you admit that it includes a number 

of state-owned enterprises like Pemex in Mexico, which I believe is 

one of the largest recipients; Air India in India; and ICBC Leasing 

in China. We had a rather robust discussion about Ex-Im’s support 

of China. I think there is currently, at the end of the last fiscal 

year, $4.5 billion in exposure to China. And I think the vast majority of that, according to your records, is to state-owned enterprises. 

Several Members, including myself, essentially asked you the question, ‘‘How are we supposed to compete with China by subsidizing 

China?’’ And your reply was, ‘‘It is a complicated world out there.’’ 

Let me try to ask simple questions, then. In your opinion, do 

state-owned Ex-Im-supported foreign airlines like Air China compete with American carriers and their employees? 

Mr. HOCHBERG. We deploy an economic impact review any time 

we do a loan to any— 

Chairman HENSARLING. I understand that. I am just asking your 

opinion. Do you believe they compete or not? 

Mr. HOCHBERG. Everybody is competing for airline passengers, 

yes. 

Chairman HENSARLING. So you believe that China Air is competing with American carriers. How about the Ex-Im-supported foreign refineries like STAR Refinery in Turkey. Do they compete 

with American refineries? 

Mr. HOCHBERG. Yes. It is a global world, sir. 

Chairman HENSARLING. Okay. In your written testimony, you 

state more than once, and you also say in your oral testimony that 

Ex-Im doesn’t pick winners and losers. I don’t know what is on 

your schedule for this afternoon. I would commend that you stick 

around for the second panel. Maybe you would change your mind 

because when you finance a state-owned airline, you are making 

Boeing a winner, and Delta a loser. You can hear Delta’s testimony 

later on today. When you finance a Turkish refinery, you make 

Fluor a winner, and you make Valero a loser. When you finance 

an Australian mining project, you make Caterpillar a winner, and 

you make Cliffs Natural Resources a loser. You can hear their testimony later on today. And according to the Congressional Budget 

Office, if you were forced to use fair value accounting like the rest 

of America, you would be making the taxpayer a loser as well. So 

if you have the time, I would commend the second panel to your 

attention. 

You also brought up in your testimony, and you have it here as 

well, a report as an appendix to your testimony entitled, ‘‘Every Reform Completed,’’ but when you look at the reforms, so-called reforms of the 2012 reauthorization, what I see in your report are the 

words ‘‘plan,’’ ‘‘study,’’ ‘‘monitor,’’ ‘‘report,’’ ‘‘notice,’’ ‘‘comment,’’ 

‘‘categorize,’’ ‘‘examine,’’ and ‘‘review.’’ I know this was something 

that was authorized by Congress, but Chairman Hochberg, I think 

10 

there are only two real reforms for most people in the 2012 reauthorization. One is Section 11, which mandated that Treasury initiate negotiations to substantially reduce, with the ultimate goal of 

eliminating, subsidized export financing. You stated that this is 

completed annually by the U.S. Department of the Treasury. Not 

only is it not completed, there is scant evidence it has ever been 

started. 

Section 12 requires the Bank to develop and make publicly available methodological guidelines to be used for conducting economic 

analysis. I think, according to The Wall Street Journal, in conducting this analysis, you allegedly allowed your largest customer, 

Boeing, the ultimate beneficiary, to write the rules—as The Wall 

Street Journal said itself, ‘‘an extraordinary level of cooperation.’’ 

Also, according to The Wall Street Journal, ‘‘The collaboration appears to have worked. In the nearly 2 years since the rule went 

into effect, no Boeing sales have been nixed as a result. 

My point is, Chairman Hochberg, you might report, you might 

plan, you might study, but I am not sure you actually manage to 

enforce the only reforms that counted in the reauthorization. I see 

I am over my time. 

I now yield to the ranking member for 5 minutes. 

Ms. WATERS. Mr. Hochberg, I thank you for coming over one 

more time to explain to my chairman and the members on the opposite side of the aisle what harm they are doing to the American 

economy and how they are disrespectful of and not recognizing the 

trade deficit that we have and how the work that the Bank is doing 

with 2 percent of our exports and dealing with our competitiveness 

issue. 

I thank you for all of that. But what I would like you to do is 

to take China and two or three other countries that give such support to the export industry and talk about how they hope we will 

not reauthorize this Bank and what this means for their economy 

and what it means for our economy. 

Mr. HOCHBERG. Thank you, Ranking Member Waters. China 

alone is not a part of any OECD, any part of global framework. So 

one of the difficulties we have is that they don’t follow the rules. 

They are not transparent. They don’t follow any guidelines. And 

they have said point blank that they will do whatever it takes to 

further their exports and further their trade increase. 

China has up to four different export credit agencies that actually finance their exports, all government-sponsored, all government-backed, with not a lot of transparency and not a lot of accountability. 

One of them alone, Sinosure, which does insurance long term and 

short term, did about $670 billion in the last 2 years. It took ExIm Bank 80 years to get to $590 billion, and they have done that 

in 2 years. They have also indicated they doubled, and they plan 

to double again in the next 1 to 2 years. And Korea is also exceedingly aggressive, as are Japan and a number of others, particularly 

in Asia. 

Ms. WATERS. Also, I would like for you to give us some idea of 

what has been happening in this space where we have been debating whether or not we are going to do reauthorization, and how 

11 

some have lost faith in our ability to help with our own exports, 

and how we are losing out already to other countries. 

Mr. HOCHBERG. Mike Boyle, who is going to be on the second 

panel, can speak directly to that. Additionally, a number of the 

banks that we work with to get working capital loans, overwhelmingly for small businesses, have simply pulled back while they are 

waiting to see what happens. They don’t want to go out there and 

issue a working capital guarantee and then find the rug pulled out 

from under them in 14 legislative days from now. So we are finding 

a reduction in working capital applications. 

And on insurance, which is the bulk of what our small businesses 

use, there has also been a reluctance and a wait-and-see to make 

sure that we are really going to be there to execute those policies. 

Ms. WATERS. On this business about the private sector, who is 

stopping the private sector from investing or supporting exports? 

Who is stopping them? What barriers do they have for not exercising their right to finance and support any business that they 

want to support? What is this business about we are somehow 

interfering with the private sector’s ability to finance and support 

exports? 

Mr. HOCHBERG. Oh, you are absolutely right. The private sector 

does a spectacular job, a better job in our country than any other 

country. And it is the private sector that brings us in when they 

hit a barrier or a roadblock that they can’t surmount. So if the private sector tries to do it on their own, and they can’t, is when they 

call us in for a guarantee to make sure a loan gets done. 

Ms. WATERS. When you referred to ‘‘call us in’’ or when you have 

businesses who come to you and say, ‘‘I can’t get private sector 

funding, can you take a look at my business and see what you can 

do to help me,’’ et cetera, et cetera, who is it you are helping, aside 

from those that my chairman would have you believe all of the support is going to one company? Are you supporting small businesses, 

and why do they come to you? 

Mr. HOCHBERG. Ranking Member Waters, I was a small-business 

owner of a family business for 20 years. Small businesses always 

have difficulty getting access to credit. Ninety percent of our clients 

are actually small businesses, direct small businesses, and 39 percent of the exports we finance are shipped directly from a small 

company. Then, there are many, many small businesses in the supply chain of some of the larger companies we work with that are 

carried along in the process. But they come to us, their banks come 

to us saying, this is a risk we cannot take on. Maybe it is a country. Maybe it is the size of the transaction. Maybe it is the product 

category. 

Ms. WATERS. And so, does Mr. Hensarling have any of these 

small businesses in Texas? 

Mr. HOCHBERG. We have a lot in Texas. We actually have a couple right in his district as well. 

Ms. WATERS. Okay, so it is not that some in his district are not 

benefiting from it. All over the United States, we have these small 

businesses that are benefiting from Ex-Im, not just in California or 

some of the other States of these Representatives. Is that right? 

Mr. HOCHBERG. That is correct. 

Ms. WATERS. Thank you. I yield back the balance of my time. 

12 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, chairman of our Monetary Policy and Trade Subcommittee, for 5 minutes. 

Mr. HUIZENGA. Thank you, Mr. Chairman, and I am astounded 

that once again, the shifting sands of political expediency is rearing 

its ugly head here today. I wasn’t necessarily going to go in this 

direction, but I feel it needs to be addressed. There was a call towards our trade deficits. I am curious as to then why many of my 

colleagues who are in support of the Export-Import Bank oppose 

tax reform, oppose regulatory reform, and even oppose something 

called the Trans-Pacific Partnership (TPP); and TTIP, an agreement with the Europeans; and the vehicle to get there, TPA. 

I am curious what kind of reaction they have when we are able 

to read quotes such as this: ‘‘I am not a Democrat who believes 

that we can or should defend every government program just because it is there. The Export-Import Bank has become little more 

than a fund for corporate welfare, but if we hope to meet the challenges of our time, we must make difficult choices,’’ said President, 

then-candidate, Barack Obama. 

You probably would be hard-pressed to guess who actually said 

this quote as well: ‘‘Most Americans do not understand that we put 

$1 billion into this Export-Import Bank; many would see this as 

simply corporate welfare.’’ 

Now, this was in 2002, so closely on the heels of when they actually did have to put money into the Export-Import Bank. By the 

way, it is interesting to note that the corruption and the fraud 

cases that are talked about here in the last 6 years conveniently 

leave out the fact that we had one of our Democrat colleagues, William Jefferson, go down and spend, I believe it is 13 to 15 years, 

in Federal prison for bribery surrounding his actions in this Bank. 

Another quote: ‘‘Unfortunately, the Bank has a history of providing assistance to companies that have been exporting American 

jobs and hiring cheap foreign labor.’’ 

And then, this is just a good kicker: ‘‘I urge my colleagues to oppose Senate Bill 1372, the Export-Import Bank Reauthorization Act 

of 2002.’’ That was none other than our ranking member, Ms. 

Waters from California. 

So it seems to me the only thing that has really shifted and 

changed is that there is a different person in the White House at 

this point. I would argue that seeing what happened in 2009, and 

now most recently with the Gutierrez case, things have gotten 

worse, not better, in the Bank itself. 

It does lead me to then go to something that I want to touch on, 

which is, I think, more evidence that we are beyond broken here 

with the Export-Import Bank. In 2012, there were some requirements for some of these checks and balances to be put in, something that I am sure is very familiar. The due diligence standards 

and the know-your-customer requirements were finalized on May 

20, 2014, after the NewSat deal was approved. And for those of you 

who haven’t been following this, NewSat was—I believe it was an 

Australian company. Is that correct, Mr. Hochberg? 

Mr. HOCHBERG. Yes, it is. 

13 

Mr. HUIZENGA. An Australian company that at this point appears to be handing you a $100 million loss. And there was a report 

given to Ex-Im by an outside consultant, Brendan Rudd, who found 

that NewSat’s management showed ‘‘a complete lack of control on 

reigning in costs. They included a $1.5 million raise for the CEO; 

$400,000 in undisclosed payments to a yacht business owned by the 

CEO’s son; $10,000 dinners; and various irregularities in trading 

and tax reporting.’’ 

And Mr. Rudd in his report concluded, ‘‘I have never seen nor 

heard of more appalling corporate behavior than at NewSat.’’ 

So, Mr. Hochberg, if the Bank had successfully implemented the 

2012 bill and the ‘‘reforms’’ that have been put in place, then we 

wouldn’t even be confronting NewSat, is that correct? 

Mr. HOCHBERG. I think we did a thorough due diligence and underwriting of that transaction. It was voted on by the board unanimously in 2012, and there was a revote in 2013 where there was 

a change in the transaction. 

Mr. HUIZENGA. So you are saying that this was a good loan? 

Mr. HOCHBERG. Congressman, we are in the business of making 

loans and supporting exports, about 250 direct exports from Lockheed Martin and 650 indirect. Every loan we make is not going to 

perform perfectly and flawlessly, and this is one that is, frankly, 

right now troubled. We are working through a solution. We are nowhere near a solution at this point. 

Mr. HUIZENGA. It seems to me that either you knew about it and 

had some suspicions and went ahead with it, which would obviously be a bad decision, or you didn’t have the systems in place to 

actually root it out. Either one of those is a bad scenario from my 

perspective, and again, I come to the conclusion that it is beyond 

broken. And we simply are not going to be able to save the ExportImport Bank from itself. 

With that, Mr. Chairman, my time has run out. 

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. Thank you, Mr. Chairman. 

And welcome, Mr. Hochberg. I feel that if there is a challenge 

such as my Republican colleague put forward, then correct it. 

But with 15 more working days for the House before the Ex-Im 

charter expires, I think it is important to look at an index of numbers which shows the good that it has done for the American economy: 60, that is the approximate number of export credit agencies 

operated by our competitors in an increasingly competitive global 

market, and they are just waiting for a chance to grab new businesses away from American exporters if our Bank folds; 3,340, that 

is the number of small businesses directly supported by the services of the Bank; 164,000, that is the number of American jobs that 

will be lost without congressional action; $1.3 million, that is the 

number of private sector jobs the Bank has supported since 2009, 

at no cost to the American taxpayer; and finally, zero, that is the 

good that will accrue if we allow our Export-Import Bank to die. 

And if you look at recent numbers in the last year alone, they supported $27.4 billion of exports, U.S. exports, at no cost to the taxpayer, absolutely no cost to the taxpayer. 

14 

I ask unanimous consent to place in the record the export data 

analysis, and in this, China provided 17 times more support for 

their exports than the United States with approximately half the 

GDP. 

Chairman HENSARLING. Without objection, it is so ordered. 

Mrs. MALONEY. And Canada alone provided more than 3 times 

more support for their exports than the United States, and the 

United States had a GDP over 9 times larger than Canada. There 

are 60 different countries that are providing support for their exports. So I strongly believe that we should not unilaterally disarm 

if there is a challenge. If there is a problem, correct it. That is the 

American way. And go forward in supporting good jobs and our exports. What I find so troubling is that in this committee, we have 

hearing after hearing on access to capital, how difficult it is for 

startups and small businesses to find access to capital. Well, this 

is our access to capital. This is a way to help small businesses and 

large businesses export and create more American jobs. 

So I would like to ask you, Mr. Hochberg, have you seen the private sector trade lenders stepping up during this period where you 

said there is uncertainty, and people are looking for the financing— 

they don’t know if they can get it—but are these private sector 

lenders coming in and providing the support? Or have these businesses simply been moving their production abroad to take advantage of other countries’ export agencies? 

Mr. HOCHBERG. Thank you, Congresswoman Maloney. What we 

have seen in the last 2 years, frankly, is the private sector, generally speaking, has stepped up a lot more. There is a lot more liquidity. There is a lot more bank lending, and there has been less 

of a requirement for our work, which is a good thing. It shows that 

the private sector is working better. However, in the small business 

space, they always have a difficulty. We have not really seen the 

private sector stepping up that strongly in small business. And to 

your last point, I think that there are—you will see a number of 

companies, but most of the larger companies that actually have the 

ability to move production may well move production offshore. 

You also may see that companies that were looking to locate here 

in the United States because we have a great workforce, rule of 

law, cheap energy, or inexpensive energy, one of the things they 

also come here for is so they can export from here, and we are an 

important part of that factor. 

Mrs. MALONEY. Great. Have you seen with our competitors, are 

they increasing their support for their export credit agencies or decreasing their support? 

Mr. HOCHBERG. By and large, they are overwhelmingly increasing, and more and more, they are also getting into short-term lending, which actually benefits their small businesses. So I think we 

are going to see more competitive pressure on small business exporters as a result of more and more entities getting into the game. 

Mrs. MALONEY. Thank you. 

My time has expired. 

Chairman HENSARLING. The time of the gentlelady has expired. 

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

Garrett, chairman of our Capital Markets Subcommittee. 

15 

Mr. GARRETT. I thank the chairman for holding this very important hearing and when I was listening, Mr. Chairman, to your 

questions, I was reminded of the essay, ‘‘What Is Seen and What 

Is Not Seen’’ by Frederic Bastiat, who wrote that essay to analyze 

our economies. Some things you can see, and some things you can’t. 

With Ex-Im, as the chairman was going down the list, you often 

report on what you can see. I understand you use a ratio or an 

analysis to come up with your figure of how many jobs are either 

saved or created by looking at the billions of dollars of sales that 

multinational corporations make and then multiplying that by 

some job ratio to come up with, this is what all of the good is that 

you are doing. Is that not an appropriate analysis of how you come 

up with your job creation, in short? 

Mr. HOCHBERG. The jobs that we support are based on the actual 

authorizations we have made to support U.S. exports, large companies and small. 

Mr. GARRETT. Right, and so you do that by a job ratio by the 

sales? 

Mr. HOCHBERG. Right. The Bureau of Labor Statistics. Not ours, 

we use the Department of Labor. 

Mr. GARRETT. Do you do a similar study of what the chairman 

was running down as far as the jobs that are lost or not created? 

Mr. HOCHBERG. We do it in a form which we update. We do an 

economic impact study. We do it on every transaction to make sure 

that any benefits to our economy outweigh any possible harm. 

Mr. GARRETT. Right, and so what it comes down to is that you 

really don’t go through a list of all of the winners and losers that 

the chairman was listing. Basically, you sit there and make that 

decision unilaterally; we are going to help these people, and we are 

going to hurt those people. We are going to help these sovereign 

countries. We are going to hurt American workers. We are going 

to help foreign institutions. We are going to hurt local businesses. 

You basically make that decision. 

And so, listening to the chairman’s question as you ran down the 

list of U.S. companies, small and large, that are hurt in this manner, I think, how do you actually do that? How do you think 

about—or do you think about that man, that worker here in the 

United States who has just lost his job because of your decision; 

the woman who now no longer can make her mortgage payment because her U.S. job has been outsourced to another country because 

of your actions; the child who no longer is able to go to college because they have lost their American job because of your action; 

about the harm that you are doing to American families on a daily 

basis because you are sitting there picking winners and losers? It 

is a trauma to people when they lose their jobs. It is a trauma to 

people when they are looking at having worked a lifetime with a 

small company and seeing that job is now going to be exported 

overseas because of your decisions at the Ex-Im Bank. And I wonder just how does anybody sit there on a daily basis and make 

those decisions, support multi-international companies, support foreign countries, and do that knowing that you are hurting the litany 

of companies that the chairman just listed here? 

And it is not the companies; it is the people that you are hurting. 

How do you make those decisions on a daily basis knowing that 

16 

you are hurting families, hurting people, hurting children with 

those decisions? I just find that unimaginable. And you do it at the 

same time that you are saying you have an entity that is self-sustaining. 

Really? You are self-sustaining? If that is true, then I guess you 

don’t need to be here at all. We can separate the Export-Import 

Bank as a self-sustaining—your words, not mine—entity without 

any U.S. Government backstop, without any U.S. Government support and allow them, allow it, allow you to be in that position without the Government backstop. So was your word a flippant word 

when you were saying ‘‘self-sustaining,’’ or is there more to it than 

that? 

Mr. HOCHBERG. Ex-Im is self-sustaining because of the fact that 

we collect fees for our work that fully pay for all of our costs, including loan loss reserves, and the excess— 

Mr. GARRETT. Of course, that is not actually true over the history 

of Ex-Im Bank because Ex-Im Bank has been bailed out in the 

past. So it is not truly self-sustaining in that sense, and also in the 

sense that when you say, you take on the loans that banks won’t. 

You take on the bank loans when banks won’t step up to the plate 

and do it. And I have to think, why is it that the banks aren’t making those loans? Is it because they are looking at it and saying, ‘‘As 

a president and CEO or CFO of a bank, I have a fiduciary duty 

to my stockholders, my investors, and the mom-and-pops who invest in my banks not to do something that is too risky, so I am not 

going to make this loan to a risky venture?’’ 

But you are all too willing to do so, aren’t you? You are willing 

to do so not with your personal money, not with any of the people 

who are sitting in front of us right now with your money. You are 

willing to do it with my money and everybody else’s money, that 

person that maybe that you just put out of a job, his money. 

So when you are saying that banks aren’t willing to do it, you 

are willing to do it and put the American taxpayer, the worker, 

that very same worker that you put out of business, you are using 

his dollars and putting them at risk. 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

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

Velazquez. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Mr. Hochberg, small businesses are central to U.S. international 

trade, comprising the overwhelming majority of all exporting firms. 

Small or medium-sized companies with fewer than 500 employees 

comprise 97 percent of all export firms and were responsible for 33 

percent of goods exported by value. So I would like to discuss with 

you the bank lending levels for small businesses. 

Since 2002, Ex-Im’s reauthorization, the Bank must provide at 

least 20 percent of total assistance directly to small businesses. 

Since 2007, the percentage has steadily declined and fell below the 

20-percent mandates each year between 2010 and 2013. It recently 

grew to 25 percent in 2014 as a result of a sharp decrease in the 

Bank’s large business lending activity. So it is not, I believe, that 

because the Bank did more to increase lending to small businesses, 

but because of the sharp decrease in lending to large businesses. 

17 

My question to you is, given the fact that—and we are all using 

the argument here about the important role that the Bank plays 

in lending for small businesses—we assisted 3,200 out of 25,000 

small businesses in this country. I would like to see, first, that 

there is a commitment to increase the 25 percent, and what type 

of outreach will you do to make sure that we go beyond the 3,000 

when we know that 97 percent of all exporters are small businesses, but yet they get less than 25 percent on small business 

lending? 

Mr. HOCHBERG. Congresswoman, I thank you. 

Ms. VELAZQUEZ. You know that I have been very critical of the 

Bank regarding lending to small businesses for ages now. 

Mr. HOCHBERG. We are, right now, above 20 percent. Our lending to small businesses directly is north of $5 billion. It was in the 

3s when I joined the Bank. We have also, although we don’t count 

it, a lot of indirect small business exporters. We now have an 800 

number that is answered 8 to 8, Monday to Friday. 

Ms. VELAZQUEZ. But we are not here to discuss the indirect lending. 

Mr. HOCHBERG. You asked about outreach. 

Ms. VELAZQUEZ. We are talking about direct lending to small 

businesses. 

Mr. HOCHBERG. You asked about outreach. I said, we have telephone operators, 8 to 8, Monday to Friday. If you are on our 

website and you can’t figure something out, we have online assistance there. We now have representation in about 12 different cities. We work very closely with the Small Business Administration 

(SBA) and the Commerce Department. And on top of that, many 

members of this committee have invited me to their districts and 

we have done half-day workshops. I just did one with Congressman 

Reed in upstate western New York last week. 

Ms. VELAZQUEZ. Okay, given the fact that the Bank plays such 

an important role in providing financing, that the private market, 

private financial institutions do not make, would you support an 

amendment to increase the mandate to 25 percent? 

Mr. HOCHBERG. I think the 20 percent is a good level to have. 

I don’t want to, as was discussed at this meeting, pick winners and 

losers. I don’t want to not do a certain transaction to simply meet 

a target, making sure that we hit a certain target that has been 

established by Congress. 

Ms. VELAZQUEZ. Since the reauthorization in 2002, the mandate 

has been 20 percent, and you never reached that mandate. 

Mr. HOCHBERG. We did that the last 2 years. We exceeded it last 

year. We are exceeding it this year. 

Ms. VELAZQUEZ. Until last year. I just want to see that there is 

a strong commitment, given the fact that 97 percent of all exporters are small businesses, that should be reflected into the kind of 

financing that the Bank is providing to small businesses. 

Mr. HOCHBERG. Mr. Boyle will be on the second panel as a smallbusiness owner. You might be able to ask him what his experience 

has been. 

Ms. VELAZQUEZ. I understand, sir. I just want to make sure that 

the lending to small businesses is reflected in terms of the 25,000 

small businesses that we have, only 3,200 were served. 

18 

And I yield back, Mr. Chairman. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy, chairman of our Oversight and Investigations Subcommittee. 

Mr. DUFFY. Thank you, Mr. Chairman, and thank you for holding today’s hearing. For my good friend, the ranking member, I 

have to give a couple of her quotes from earlier today. I think she 

said the Ex-Im Bank was an engine of economic growth. And she 

also said that letting the Ex-Im Bank expire would be harmful to 

the American economy. 

And, as Mr. Huizenga pointed out, that hasn’t always been the 

case with my friends across the aisle or the Democrat Party because when Barack Obama was running for office, he called the ExIm Bank corporate welfare. And my good friend, the ranking member, she too called the Ex-Im Bank corporate welfare. She also told 

us that it would ship American jobs overseas because of cheap foreign labor. 

In the dissenting opinion from the ranking members and one 

Bernie Sanders from the House report from 2002, they said there 

are many examples of the Export-Import Bank subsidizing corporations that lay off American workers and move their production facilities overseas. But today, they are telling us that it is the engine 

of economic growth. So the question is, what has changed? What 

is different today than what they were saying in 2012? 

Mr. Hochberg, have you ever stayed at the White House? 

Mr. HOCHBERG. In the 1990s. 

Mr. DUFFY. With Mr. Clinton? 

Mr. HOCHBERG. Yes, sir. 

Mr. DUFFY. In the Lincoln bedroom? 

Mr. HOCHBERG. No, it was actually a different bedroom. 

Mr. DUFFY. And you were an Obama bundler, correct? You were 

an Obama bundler? 

Mr. HOCHBERG. I raised money for Mr. Obama. 

Mr. DUFFY. Okay. Is it fair to say we could probably deduce from 

those answers what your political affiliation is? 

Boeing, the largest beneficiary of Ex-Im financing, their top lobbyist since 2008 is a former aide to Bill Clinton. In 2009, Secretary 

Clinton—President Clinton’s wife, if you don’t know—made a 

shameless pitch in Russia that Russian airlines should buy Boeing 

airplanes, and while I would like all airlines to buy great American 

jets, she was making a pitch as Secretary of State. And then, in 

2010, a short while later, actually, Boeing got a contract for $3.7 

billion. And after that, it is amazing, Boeing made a $900 million 

contribution to the Clinton Foundation—$900,000, I’m sorry. 

Thank you, Bill. 

Boeing Director William Daley was named President Obama’s 

chief of staff in 2011. In June of 2011, Boeing Director John Bryson 

was named Obama’s Commerce Secretary. Boeing’s top lobbyist in 

2014 hosted a fundraiser for Ready for Hillary, the PAC that is 

supporting her campaign for President. 

And so I think what has changed is, when you have Democrats 

who think they can get support from corporate welfare, they will 

support it. If, through corporate welfare, they can get campaign 

19 

contributions, they will support it. And then, it is about the American workers, the American economy. 

But if they are not getting contributions and they don’t have 

their bundlers in the CEO/president position, all of a sudden it is 

bad for the American worker, and it is bad for the American economy. 

Mr. Hochberg, did you say that you, the Ex-Im Bank, supports 

any eligible American business that seeks exports? Was that your 

quote? 

Mr. HOCHBERG. That can’t find financing in the private sector. 

Mr. DUFFY. Right. And you don’t pick winners and losers? 

Mr. HOCHBERG. That is correct. 

Mr. DUFFY. I was reading an article from Reuters from a couple 

of years ago that says, ‘‘The U.S. Export-Import Bank Board of Directors voted on Thursday not to proceed with the financing of U.S. 

exports to help build a coal-fired powerplant in Vietnam, following 

a plea from U.S. environmental groups to stop the project.’’ So isn’t 

it fair to say that you support American jobs as long as it meets 

your ideological standards, but you don’t support all American jobs, 

because you would admit that the American jobs that would have 

come from building a coal-fired powerplant are still American jobs? 

Mr. HOCHBERG. Congressman, in 1992 Congress put into our 

charter that we must take into account the environmental impact 

as well as the reasonable assurance of repayment. That has been 

on our charter for 23 years. The Bank was sued under President 

Bush for not following that mandate that is in our charter, and we 

lost. 

Mr. DUFFY. So it is fair to say you support some American jobs, 

but not all American jobs, correct? 

Mr. HOCHBERG. We support jobs that fall within the mandates 

set forth by Congress in our charter. 

Mr. DUFFY. So if you are making mining equipment in Wisconsin, or you work for a company that is trying to build powerplants overseas, those jobs are the ones that won’t fall into the financing of the Ex-Im Bank. Other clean energy jobs will, but not, 

in your view, dirty jobs? 

Mr. HOCHBERG. Actually, we support a lot of mining equipment 

from Wisconsin. We support coal exports. 

Mr. DUFFY. After much pressure from the Wisconsin delegation, 

I might add. 

Mr. HOCHBERG. No, we supported fully and freely mining equipment, coal exports as well. 

Mr. DUFFY. We will talk about that later. 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Hinojosa. 

Mr. HINOJOSA. Thank you, Chairman Hensarling and Ranking 

Member Waters, for holding this hearing today. 

And thank you to our panelists for your testimony. 

I would like to take a moment to state my unwavering support 

for the Export-Import Bank, and I call on our honorable chairman 

to let the majority of the House work its will and allow a vote on 

the reauthorization of the Bank. 

20 

The Export-Import Bank is a vital free market, economic engine 

for our manufactures, producers, and exporters, as has been pointed out before me. This March alone, the Bank financed over $1 million in exports in my south Texas congressional district. Additionally, the Bank has supported thousands of jobs in my district over 

the past 5 years. These are good jobs in a very high-need area that 

would not have been possible without the Bank. 

Chairman Hochberg, many claim the Bank is not needed and 

that it only supplements would-be private capital. Part of the 

Bank’s mandate is that the Bank is not to compete with private 

capital. Can you tell us how the Bank ensures that its loans go to 

support U.S. exports that would not otherwise be able to secure 

other financing? 

Mr. HOCHBERG. Certainly, Congressman. Thank you. On every 

application, the applicant must state why they are seeking Ex-Im 

financing. And they have to state whether it is because they can’t 

secure financing in the private sector, or they have to meet foreign 

competition. So that is part of the application, just like their financial statements on everything else. They certify that, and in most 

cases, we also can verify it independently. 

Mr. HINOJOSA. Considering that the Bank is a lender of last resort that began when private financing alone is not available, do 

you believe the Bank distorts the U.S. market negatively? 

Mr. HOCHBERG. I believe we support—we supplement the private 

sector because the private sector is the one that brings us in. If you 

go to a bank and you are looking for export finance, if the bank 

can’t make the loan happen, they will come. They will say, well, 

with an Ex-Im guarantee, we can. I was in Detroit, and a small engineering business wanted to export to the Mideast, and their bank 

was at the same roundtable. The banker said that the Bank of 

America, without an Ex-Im guarantee, told their client that they 

would not take on that risk. So, in that case, it was the bank that 

brought us in and said if we can get some guarantee, we can make 

that. And that small engineering firm is now providing services to 

the airport authority in Doha. 

Mr. HINOJOSA. Thank you for that explanation. 

Chairman Hochberg, as you well know, the Bank supports about 2 percent of U.S. exports. Last year, 2014, that amounted to $27.5 

billion worth, and 164,000 jobs. I find it funny that the Bank’s detractors love to point to that 2-percent figure as evidence that the 

Bank’s role is minuscule and unnecessary but then, without a hint 

of irony, turn around and argue that the Bank has huge negative 

market-distorting effects. What do you think? 

Mr. HOCHBERG. I very much value the 164,000 jobs. Those are 

family-sustaining jobs. Those are jobs in every State of this country. And those are jobs—exporter after exporter has said that without our support, those jobs just go away. Don Nelson has a company out in Bakersfield, California, and he said, ‘‘We would probably have to lay off 50 or 60 people without Ex-Im Bank support.’’ 

Dave Ickert in the State of Texas, in Olney, Texas, has said, ‘‘We 

would have to lay off as many as 68 employees if the Ex-Im Bank 

is not reauthorized.’’ So there is a very direct impact on jobs whether or not we are reauthorized. 

Mr. HINOJOSA. I thank you. 

21 

Mr. Chairman, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from South Carolina, 

Mr. Mulvaney, for 5 minutes. 

Mr. MULVANEY. I thank the chairman. 

Mr. Hochberg, I promised you before the hearing that I wouldn’t 

badger you today. I am actually going to ask you some questions. 

I am looking forward to the change of pace. 

I do want to come back and talk about the NewSat bankruptcy, 

however, very briefly for folks who aren’t familiar with it. I think 

you all made a direct loan, a rare direct loan of roughly $100 million or a little bit more than that to aid an Australian startup that 

was going to buy a satellite made by an American company. So you 

lent the money to the Australian company so they could buy an 

American satellite. The Australian company has since gone bankrupt. And it looks like you might be on the hook for $100 million. 

That is not my specific question. My questions deal with some of 

the comments made by the bankruptcy court, that apparently the 

bankruptcy court gave you the opportunity to protect your investments or your loan by finishing the project. You chose not to do so. 

And then, more troubling, and let’s start with this, apparently you 

had no security interest in the collateral. How is that possible? 

Mr. HOCHBERG. We had security in the company itself, but the 

company is in bankruptcy. 

Mr. MULVANEY. No, the satellite. 

Mr. HOCHBERG. But the satellite is right now being manufactured by Lockheed Martin. 

Mr. MULVANEY. And who owns the satellite? 

Mr. HOCHBERG. At the current time, Lockheed Martin has possession. 

Mr. MULVANEY. Free and clear of any security interest of the Export-Import Bank of the United States of America, right? 

Mr. HOCHBERG. Which is typical because they are making the 

products. They actually have possession of it. 

Mr. MULVANEY. You lent $100 million to Australian startup and 

kept no security interest, no collateral at all? 

Mr. HOCHBERG. We would have had collateral at the completion 

of the satellite, not while it is being built. 

Mr. MULVANEY. And you had the ability to fund to the completion of the satellite, and you chose not to do so? 

Mr. HOCHBERG. We chose not to complete the satellite until we 

knew there was going to be an actual buyer who was going to take 

it. 

Mr. MULVANEY. And, ultimately, that has not happened. 

Mr. HOCHBERG. Right now, that is in negotiations. 

Mr. MULVANEY. I am reading from an article in Space News, 

from just 2 days ago: ‘‘The Export-Import Bank, for reasons that 

were not clearly explained, the U.S. Justice Department lawyer 

representing the Bank referred vaguely to ‘policy/business decisions,’ refused to put up any funds to preserve its sunk cost in the 

project. The bankruptcy court judge in the May 21st hearing expressed surprise that the Ex-Im Bank with so much at stake, was 

unable to present a credible go-forward scenario by the May 18th 

deadline.’’ 

22 

It then goes on to say the status of the satellite—you are out $100 million, and I think it is Lockheed Martin has a satellite free 

and clear that they can sell. You lost $100 million. And you have 

given a several hundred million dollar windfall to Lockheed Martin 

at the expense of the taxpayer. How do you defend that type of 

lending? 

Mr. HOCHBERG. First of all, sir, this transaction is still in negotiations. We are still negotiating for an ultimate buyer of the satellite. 

Mr. MULVANEY. Did the bankruptcy court give you a May 18th 

deadline? 

Mr. HOCHBERG. We had a May 18th deadline. 

Mr. MULVANEY. How did that go? 

Mr. HOCHBERG. And we could not find a secure buyer. We could 

not identify a clear buyer by May 18th. We asked for a few extra 

days, and Lockheed Martin refused. 

Mr. MULVANEY. So it is a correct statement in the article where 

it says that $193 million was mainly Ex-Im money lent to NewSat 

in addition to equity NewSat had raised on its own. It is now in 

the form of a nearly completed spacecraft that Lockheed Martin 

owns and is free to sell without having to pay anything to Ex-Im. 

That is an accurate statement, isn’t it? 

Mr. HOCHBERG. No. We are fully backed by NewSat. So NewSat 

still has control over that satellite. 

Mr. MULVANEY. NewSat is bankrupt. 

Mr. HOCHBERG. NewSat may be bankrupt, but we are secured by 

NewSat. And frankly Congressman, when we had an opportunity 

to simply ‘‘throw good money after bad’’ without a clear exit plan, 

we chose not to do that. 

Mr. MULVANEY. I will come back. I guess, Mr. McCarthy, I will 

ask you this: Was one of your recommended reforms at the Bank 

that they actually start looking at their lending practices with an 

eye towards getting security interest and collateral? I don’t know 

of any bank that would lend money like that with no collateral at 

all. 

Mr. MCCARTHY. In the 2012 reauthorization, one of the requirements is that the Bank not be a subordinate lender. And so, it 

would be first in line. As far as the due diligence process— 

Mr. MULVANEY. Let me cut you off right there. Hold on a second. 

That was part of the 2012 reauthorization. Earlier today, Mr. 

Hochberg, you said that this loan was reviewed twice. It was originally reviewed by your Board and approved, I can’t remember 

when, but it was reviewed and approved, reapproved by the Board 

in 2013, after the 2012 reauthorization. Did you— 

Mr. HOCHBERG. We were not subordinate in any of those cases, 

sir. 

Mr. MULVANEY. Okay. Mr. McCarthy, help me here, so they are 

not subordinate, but why don’t they have collateral? I guess the 

point is, the reason you would not have to be subordinate is that 

would put them in a second position where the collateral, if any, 

would be impaired, correct? 

Mr. MCCARTHY. That is correct. 

Mr. MULVANEY. And essentially, what you have is a position 

where your collateral is impaired because you don’t have any to 

23 

begin with. So I guess, Mr. Hochberg, again, I promised I wouldn’t 

badger you. I have 14 seconds. I am sure that is what people think 

that I am doing. Do you think you followed good process when you 

made the NewSat loan? 

Mr. HOCHBERG. At the time, yes. 

Mr. MULVANEY. How about now? 

Mr. HOCHBERG. And I believe now we are working towards a solution. This is not over yet, sir. 

Mr. MULVANEY. If you make a new loan today, will you get collateral in whatever it is you are financing? 

Mr. HOCHBERG. We have the collateral in NewSat. We have the 

collateral in the actual entity. 

Mr. MULVANEY. Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Massachusetts, 

Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. Mr. Chairman, I don’t 

have any questions for the witnesses because the truth is, I don’t 

know how I am going to vote on Ex-Im. I am leaning towards voting for it, mostly because of competitive reasons. As I have said 

many times, every other country we compete with has one; therefore, we should have one. That doesn’t mean everything you have 

done is wonderful. It doesn’t mean I have agree with every loan. 

It doesn’t mean there shouldn’t be reform. I came over because as 

I was watching this, I probably shouldn’t have done that. I probably should have had something else on, but as I am watching this 

hearing, I have to be honest. The people who are arguing against 

this most vociferously, not all of them, but many of them are losing 

the argument because they turned it into a personal attack on a 

political basis. This is an important, substantive issue, one that I 

am open to discussing, and one that I am certainly open to amending. And yet, all I hear is, well, 100 years ago somebody did this, 

and somebody said that, and somebody voted this way and somebody changed their mind. 

God forbid an elected official ever changes their mind on an important and complicated issue like the Ex-Im Bank. God forbid any 

of you ever change your mind—and by the way, if you really want 

to win the issue, you really need to change some minds, because 

you lost the Republican Conference in 2012 when we voted for it: 

147 Republicans voted to reauthorize the Ex-Im; only 93 voted 

against it. If you want to change our minds, you really have to do 

a little bit better than attacking the President and attacking the 

people who did change their minds. You really have to stick to the 

subject matter. 

And I respect people who disagree with me. But I have to tell 

you, I completely lose respect, I lose interest, on the fact, oh, you 

changed your mind. I really am—I have the whole list of names of 

the Republican side who voted for it in 2012, many of whom are 

here right this very minute. 

Now, you may change your mind. If you do, God bless you. But 

if you ever change your mind on anything else and you keep this 

nonsense up, I guarantee you, I will be keeping score. And we will 

all get down in the gutter. We will all get down in the street and 

24 

call each other names and accomplish nothing. This is an important, difficult issue that reasonable people can disagree on. 

And, honestly, that is, I appreciate some of the things, even some 

of the things I don’t agree with. Okay. But I came to ask my colleagues to stop the nonsense. If you really don’t like the Ex-Im 

Bank because you really think it is corporate welfare and bad for 

America, fine. Argue to win the hearts and minds of the American 

people and your colleagues, whom you lost in 2012. You want some 

people to change their minds. How are you going to get people to 

change their minds when you constantly say anyone who changes 

their mind is somehow inherently wrong and evil? Then you are 

going to lose again based on your own Republican Conference. Almost all of the people who voted on this in 2012 are still here. 

So that is what I came to say. I was actually thinking about 

reading out names, but I don’t want to denigrate down to that nonsense. I will, and I think you all know I can if I want to. But on 

this issue, I really would rather hear substantive facts, and important questions. I think the last series of questions was pretty good. 

They raised some serious issues. I have to be honest, just because 

there have been some problems in the past, I am not interested in 

shutting something down because if that is the case, we have to 

shut down the DOD. They have had people steal money. We should 

shut down the entire Defense Department because somebody stole 

money; the entire Agriculture Department because someone once 

took a loan that they shouldn’t have gotten. I am not saying you 

shouldn’t raise the issue, but that doesn’t go to the basis of whether we need to open or close the Bank. That might open up some 

discussion about reforms. And I am more than interested in hearing it. I have actually told—who was it?—Delta, that is so opposed 

to this, I have also told them, ‘‘Look, you raise some good issues. 

Let’s talk about how we deal with the issues you raise.’’ 

But I don’t get that. All I get is personal attacks, political attacks, which I am pretty good at, but on this one, if you really 

think you are going to win elections, you are going to change people’s minds, you are going to win the issue, you are going to have 

to explain to me how the very people you need to change their 

minds, you are calling them names. 

With that, Mr. Chairman, I apologize for not asking any questions of the witnesses, but I look forward to going back to my office, 

turning the TV back on, and learning something, I hope. And if 

not, I will just change the channel like the rest of America. 

With that, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Oklahoma, Mr. 

Lucas, for 5 minutes. 

Mr. LUCAS. Thank you, Mr. Chairman, I appreciate the opportunity to question our good friends. 

And I don’t know that I have a particular series of questions I 

wanted to ask. I just would like to observe that in my time on this 

committee, now 20-plus years, I have observed lots of discourse and 

lots of discussion. We have always been a very philosophical group. 

We have argued the joys of Karl Marx and Adam Smith, and we 

have ground on each other day in and day out on a variety of 

things. 

25 

But the issue that we have now had hearings on into almost ad 

nauseam is not just a philosophical issue. It is a real economic 

issue. It is a real bread-and-butter issue back home amongst the 

good folks. 

Everyone knows that my perspective is that in a competitive 

world economically, you have to be able to go punch for punch, 

blow for blow. You have to do what is necessary to give our fellow 

citizens a chance to prosper economically, to have good jobs, to 

grow our economy. I view the Export-Import Bank as one of those 

tools in the battle with 60 other countries around the world. 

I sincerely believe that, whether it is 14 days, or 14 weeks, or 

14 months, this institution will be reauthorized. It may take a 

number—if it is allowed to officially expire—of occasions where 

U.S. companies lose business, substantial business, around the 

world to help us focus. I prefer not to have that happen, but that 

is what it may take. 

I would ask all of my colleagues, the course we are on here leads 

us in the direction of either allegedly ending the Bank completely 

or, I fear, reauthorizing it in the exact form it was or is this moment. That is missing out on an opportunity to build on the reforms of the previous reauthorization. That is missing out on an 

opportunity to address legitimate problems that have been brought 

up. It is missing out on an opportunity, I think, ultimately, to give 

the participants in our economy more effective tools to compete 

around the world. 

Right now, this moment, the Agriculture Committee, another 

committee I serve on, is having a hearing about foreign subsidies 

and how it affects food sales around the world and production and 

all of those kinds of things. You might be surprised to know that 

it is a pretty tough place out there competing economically. It is 

really kind of vicious. Do whatever you have to do, my friends, 

from your philosophical perspectives, but don’t—don’t—in a competitive world say that we are going to establish a principle so perfect, so idealistic, so philosophically straightforward that everyone 

else will flock to it. That is not the way it works, just not the way 

it works. 

You don’t negotiate from a position of surrender. You negotiate 

from a position of strength. Again, I have enjoyed these philosophical hearings. It is reminiscent of many different periods in the 

last 20 years on this committee. But in 14 days, 14 weeks, or 14 

months, we will reauthorize Export-Import, and we will, I fear, reauthorize exactly what we have. That would be a horrible opportunity missed. 

With that, Mr. Chairman, I am going to do something out of 

character in Congress. I am going to yield back some time. 

Chairman HENSARLING. The gentleman yields back. 

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 ranking member as well. 

Mr. Chairman, it has been my experience that there is a process 

that can extricate us from differences. We have policy that we differ on, and the process is the thing that can give us an opportunity 

26 

to resolve these differences in policy positions. I recall very vividly 

the process that allowed us to make a policy decision with reference to life and death in the Schiavo case. I recall coming back 

after having just landed in Houston, Texas, and on short notice, to 

take a vote. It was very late at night when we ultimately took that 

vote. But the process allowed us to resolve a question involving life 

and death. 

The process is the means by which we resolve questions of war 

and peace. We can have our differences about where we should station our military, what the military should be doing, but ultimately, when these differences are to be resolved, we have a process that allows us to do so. We vote. And we have voted in this 

Congress, not this particular Congress, but in the Congress of the 

United States of America on questions of war and peace, the budget. We have our differences about whether or not we should cut or 

expand certain programs, whether sequestration is a proper process, and when we confronted the question of sequestration, we allowed the process itself to dictate a resolution to a policy question. 

That process was to vote. 

I am calling on all of our leadership to allow the process to work, 

not just on the committee level. But let’s take this to the Floor of 

the Congress of the United States of America. And let’s do what 

we were sent here to do, debate the great issues of our time. And 

let us, after having a robust debate, have a process function as intended. Let us vote. I may not like the results. But I will respect 

the process. I believe the American people are expecting us to take 

a vote as to whether or not the Ex-Im Bank will continue or whether it will become a part of the ash heap of history. 

Personally, I will vote to extend the Ex-Im Bank. It has done 

meaningful things. It has made a difference in the lives of the people that I represent. I and Mr. Hochberg had an opportunity to 

visit with a business in Houston, Texas, and there is an interesting 

thing about these businesses. Many of the small businesses that 

benefit don’t benefit directly. They benefit indirectly from larger 

businesses that they associate themselves with. Many of them are 

off the radar in the sense that we can identify them immediately 

as beneficiaries. But because of their connectivity and their association with larger businesses, there is an emolument that inures to 

the benefit of the people that I represent. 

I want the process that has worked with this country, that has 

time-honored positive benefits, to continue. I call on all of our leadership to, please, give the process a chance. The policy can be resolved if the process is allowed to function. And I will yield back 

the balance of my time. 

Chairman HENSARLING. I thank the gentleman. 

Now the gentleman from Georgia, Mr. Westmoreland, is recognized for 5 minutes. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

Mr. Hochberg, in November of 2012 the board approved the economic impact analysis guidelines that were required in Section 12 

of the 2012 Ex-Im Bank reauthorization. Would it surprise you if 

the analysis was engineered to favor one company or another? 

Mr. HOCHBERG. Congressman, we actually revised our entire economic impact procedures. Congress asked us to review that in 

27 

2012, and we made some adjustments throughout the entire process of economic impact. 

Mr. WESTMORELAND. You made adjustments. Did you make those 

adjustments in consultation with any of your customers? 

Mr. HOCHBERG. Without question. We, of course, consulted many 

of our customers because we wanted to have a policy that works 

for our customers, that works for our exporters. So we, of course, 

did that. 

Mr. WESTMORELAND. I am just a slow, country boy from Georgia, 

but reading some of the emails, some of the correspondence between your staff and Boeing’s staff, something just doesn’t smell 

right to me. I don’t know if you have ever heard the word ‘‘collusion,’’ but have you read those emails? 

Mr. HOCHBERG. I have read the reports in the paper, sir. 

Mr. WESTMORELAND. Have you read the emails? 

Mr. HOCHBERG. I have seen some of them, yes. 

Mr. WESTMORELAND. And do they seem funny to you? 

Mr. HOCHBERG. Out of context, they look rather funny, but they 

are out of context. What we are trying to do, sir, is, if we were writing regulations, guidelines for farm equipment, we would talk to 

the five companies that make farm equipment. 

Mr. WESTMORELAND. Okay. 

Mr. HOCHBERG. So in this case, we only have one aircraft manufacturer. 

Mr. WESTMORELAND. Okay. I want to read one or part of one 

from Mr. Moran, and he was advising the Boeing capital that subjecting and applying transactions through detailed analysis under 

economic impact procedures has had the effect of killing most of 

those aircraft deals. 

Mr. McCarthy, have you read these emails? 

Mr. MCCARTHY. We are familiar with those emails. We are familiar with them. 

Mr. WESTMORELAND. You are. And you didn’t find anything 

funny with them? 

Mr. MCCARTHY. Right now, we are working on a report on the 

economic impact guidelines. We had a report in 2010 that made 

certain recommendations. We are doing a follow-up report that is 

looking at not only implementation of our 2010 recommendations, 

but also implementation of the requirements in the 2012 reauthorization. And we are including this matter that you are raising as 

part of that— 

Mr. WESTMORELAND. Okay. Well, 2012. It has taken you a while 

to get to that. But there is another email where Mr. Cruz told the 

board, ‘‘Given the historical distribution in nature of aircraft cases, 

it is anticipated only 10 to 15 percent of the cases would go 

through the new procedure.’’ This comes after a series of emails 

that he had had. And besides that, and the fact that Mr. Moran 

didn’t want the complete transparency, I just wonder if it was 

brought to the board’s attention of these specific requests for analysis that would influence their acceptance of these new procedures? 

Mr. HOCHBERG. We have had—just to go back, we have had economic impact procedures back to 1968. And we have adjusted them 

periodically over time. We actually voluntarily added aircraft seats 

as part of that category on our own because of concerns from the 

28 

public, so these are things we have done voluntarily. And we are 

constantly updating them. We updated them in 2012. We voted on 

them. And we actually conduct a review of every transaction, and 

if we find there are enough findings, then we do an in-depth review. But every transaction is reviewed for its economic impact 

procedure. 

Ours is at the threshold of 1 percent. If it adds 1 percent or more 

to foreign production capacity of a good of comparable U.S. production, it would trigger a more detailed analysis. 

Mr. WESTMORELAND. I know it all depends on what—if you use 

the twin aisle, the single aisle, the number of seats. All of that is 

discussed in the emails between the Boeing staff and your staff, as 

far as what numbers to use. 

And as Mr. Green, my friend from Texas stated, the process 

needs to work. When you are trying to get this information, do you 

think it is proper that your staff would be conversing with Boeing 

staff in to how to make these numbers look right to justify your 

ability to make them the loans? 

Mr. HOCHBERG. It is a public process. We had a low number of 

public meetings. We actually invited committee staff to join us. We 

post every transaction in the Federal Register. This is standard 

procedure and process at the Bank for economic impact. 

Mr. WESTMORELAND. I don’t think that is a standard procedure 

process, but my time has expired. I thank the gentleman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Cleaver, ranking member of our Housing and Insurance Subcommittee. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Thank you, Mr. Hochberg, for visiting some of the subcontractors 

who are involved with Ex-Im Bank in the Fifth District of Missouri. 

Mr. McCarthy, I would like to ask you a couple of questions. Do 

you have any information that would lead you to believe that ExIm Bank is competing with private sector banks or lending institutions? 

Mr. MCCARTHY. We haven’t done that particular analysis. We did 

do a report on the direct loan program a few years back looking at 

how the Bank tracked that information and made recommendations that needed to do a better job of requesting documentation 

from applicants as to why they were unable to obtain private sector 

financing, and they have implemented changes there. 

Mr. CLEAVER. But the Bank is self-funding and self-sufficient? 

Mr. MCCARTHY. Yes. Our audited financial statements have 

found that they are fairly presented. 

Mr. CLEAVER. I am not sure, but prior to Ronald Reagan being 

sworn in as President, there was very little controversy as it relates to the Ex-Im Bank. Since that time, there have been times 

when Democrats and Republicans have challenged the existence of 

the Ex-Im Bank. I am not sure why or so forth. 

But about a year ago, I think, I attended a meeting on the second 

floor, I believe, and the amazing thing at that meeting was that as 

I sat there with other Members of Congress, all of the business 

leaders sitting in front of us, asking that we support the Ex-Im 

29 

Bank were people who had given money to my opponents and to 

the opponents of most of us sitting up listening to these folks. 

It was one of the amazing moments in Congress. I talk about this 

when I am out speaking. Business leaders from all over are asking 

me to support something that they felt strongly about, even though 

they had given money to my opponents. It is just amazing. And so 

I have come to the conclusion that, I guess, both sides switch and 

swap and do silly stuff, and sometimes it is at the detriment of the 

agency. 

Mr. Hochberg, a couple of things. I think there are 60 or 70 other 

nations with similar banks. Are most of them in the industrialized 

world? 

Mr. HOCHBERG. Most of them are, and actually we did a survey 

this year, and the number is now above 80, 80 different export 

credit agencies that are doing long-, short-, and medium-term financing. 

Mr. CLEAVER. And so if we discontinue the Ex-Im Bank, we are 

actually withdrawing from what most of the western world is 

doing, trying to support the exploitation of goods to foreign countries? 

Mr. HOCHBERG. Exactly. It would be unilaterally disarming. We 

would have no seat at the table if we want to ratchet down export 

credits. We would have no say in the matter because we wouldn’t 

be a participant. 

Mr. CLEAVER. The way the Export-Import Bank debate is going, 

do you think that it is having any impact right now, for example— 

because of the uncertainty—are you able to do any long-term planning, long-term considerations of the requests? 

Mr. HOCHBERG. We have authority until June 30th. Larger 

transactions over $100 million come to Congress for a 35-day review. That period has passed. So we have a number of transactions 

that are up here during that 35-day review period. We hope to consider those before the end of June. But any large transactions are 

considered from now on. If we are not reauthorized, we are not getting a final approval by the Bank. 

Mr. CLEAVER. Okay. Thank you. 

Mr. McCarthy, a one-word answer might be okay since my time 

is running out, have you found that there is waste and fraud and 

abuse in the Ex-Im Bank? 

Mr. MCCARTHY. We are the inspector general; we always find 

waste, fraud, and abuse. We have had some cases, as I reported, 

we have had some serious cases of employee misconduct. 

Mr. CLEAVER. Yes, I am familiar with those. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. Pittenger, for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Mr. Hochberg, there was a review which found that many businesses had been categorized improperly that were big corporations, 

foreign conglomerates who were categorized as small businesses, 

those owned by Warren Buffett and others. One business had 

53,000 employees. How do you account for that categorization? 

Mr. HOCHBERG. Congressman, we obviously take data accuracy 

very seriously. It is one of the key principles we have applied this 

30 

year. The Reuters report went back over 6, 7, 8 years. It found a 

3 percent error rate. We strive for a 0 percent error rate. I will tell 

you one other thing, as a business owner, this is the dynamics. You 

may be a small business one year and then sold to a large business 

the next. 

Mr. PITTENGER. 53,000 is quite a number. 

Let me ask you this: Is it accurate that 40 percent of the ExportImport’s authorizations in 2014 went to one company, Boeing? 

Mr. HOCHBERG. I think it is a little less than that, but it is 

around a third. 

Mr. PITTENGER. That is a very significant amount. 

Mr. HOCHBERG. It didn’t go to Boeing. It went to customers of 

Boeing. Boeing does not get one penny from the Export-Import 

Bank. Boeing does not derive a single dime from the Export-Import 

Bank. 

Mr. PITTENGER. According to your own data, 60 percent of the 

Ex-Im Bank’s financing has benefited just 10 large corporations in 

2013, is that correct? 

Mr. HOCHBERG. And about 39 percent of the total value of exports financed went to small businesses directly. 

Mr. PITTENGER. But to just the 10 companies, 10 companies, 60 

percent. How big is your loan portfolio? 

Mr. HOCHBERG. Our portfolio is about $112 billion. 

Mr. PITTENGER. At the end of 2014, less than 45 percent of ExIm import’s exposure is concentrated to just air transportation, correct? 

Mr. HOCHBERG. Air transportation and aircraft is our largest single export in the country. 

Mr. PITTENGER. Exactly, and you had 45 percent. And I say that 

in light of just folks in small business. There is a lady who runs 

a machine business in South Carolina, Rachael Cox. It has 30 employees. They have a machine business. Here is her comment. She 

said, ‘‘When I researched the Ex-Im Bank and especially the signup process, it became clear that it is designed for large businesses. 

The amount of information that was required was overwhelming at 

best and invasive at least. After some consideration, I decided 

against it.’’ 

Now, by the direction or design or how the Ex-Im Bank executes 

its plans, it appears very strongly that your efforts are sizably favoring very large businesses. Ten businesses, 60 percent of your financing. Here is a small business who says it is too cumbersome 

for me. It is too overwhelming. So we multiply that times many 

times. 

How do you justify that in a way of performing an institution 

that is really supposed to be favoring small business, and yet here 

is someone who can’t get access? 

Mr. HOCHBERG. I would actually like to meet that customer and 

speak with her. But I will tell you directly, we are trying to balance 

ease of doing business with risk management. This committee has 

made it very clear that it wants to see our default reports every 

90 days, so we are trying to balance risk— 

Mr. PITTENGER. She couldn’t even get to your reports to get access. 

31 

Mr. HOCHBERG. We are trying to balance the information so we 

can do good underwriting, but at the same time don’t make it too 

cumbersome for customers. And we are constantly working to find 

the better balance. I would be happy to talk to your constituent to 

find out what was it, because I would like to learn more about our 

customers. 

Mr. PITTENGER. Just one other thing, the CBO accounting reflected that the methods that she used, if you use fair value accounting, that you would have—significantly higher subsidy rates 

would be revealed. You have stated, of course, that you are profitable. How do you justify not using fair value accounting, and do 

you believe that you should? 

Mr. HOCHBERG. The law of the land is the Federal Credit Reform 

Act of 1990. So we follow the law of the land and we used that accounting method. I was in business for 20-plus years. You have one 

set of books and you follow the law of the land. 

Mr. PITTENGER. The CBO says if you use fair value accounting, 

you would cost taxpayers $2 billion. Do you believe, on your own 

account, that you should be using fair value accounting? 

Mr. HOCHBERG. I follow the law of the land, and I also dispute 

that number from CBO. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Wisconsin, Ms. 

Moore, ranking member of our Monetary Policy and Trade Subcommittee. 

Ms. MOORE. Mr. Chairman, I would like to raise a point of personal privilege, and not be charged time for it. 

Chairman HENSARLING. Do you have a point of order? 

Ms. MOORE. Point of personal privilege, yes, sir. 

Chairman HENSARLING. You can make a parliamentary inquiry. 

I am uncertain as to what the point of personal privilege is. 

Ms. MOORE. My point, I would like to make a point of personal 

privilege. 

Chairman HENSARLING. We will certainly hold the clock and 

allow the gentlelady to make her point. 

Ms. MOORE. Thank you, Mr. Chairman. 

I would just like to thank this committee on both sides of the 

aisle for really supporting me during a very painful couple of 

weeks, due to the death of my sister. I have gotten flowers and 

cards and calls. And you just don’t know how important that has 

been to me, and I am just overwhelmed with gratitude, and I wanted to thank you, Mr. Chairman, and you, Madam Ranking Member, for caring about me as a person and not just as a committee 

member. 

Chairman HENSARLING. I know I speak for the entire committee 

on both sides of the aisle to let you know what a valued friend and 

colleague you are and how our hearts were heavy with your loss. 

Ms. MOORE. Thank you so much. 

Chairman HENSARLING. And now the clock can start anew, and 

we will yield the gentlelady her 5 minutes. 

Ms. MOORE. Thank you so much. I want to thank the panel for 

appearing again here. And I can tell you that I am sort of unhappy 

that Mr. Huizenga, my very good friend from the midwest, is not 

here, because I really want to clear something up. I think the notVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
32 

so-surreptitiously-veiled strategy to pluck the low-hanging fruit of 

the Ex-Im Bank from the vine as a raison d’etre to get into Social 

Security, Medicare, Medicaid, SNAP, the so-called entitlement programs. 

Mr. Huizenga said it very straightforwardly. We heard it time 

and again that, how can you pluck into these social programs if you 

can’t even bring down the Ex-Im Bank? So I think it is a straw 

man argument. I guess my for first question—and I had intended 

to engage in a colloquy with him and if the chairman or someone 

else would like to do that, I will yield time—is for Mr. Hochberg. 

How is the structure of the Ex-Im Bank similar to Social Security, 

Medicare, Medicaid, and SNAP, such that it is persistently called 

corporate welfare? How is it similar or dissimilar from the gas and 

oil business who, through our tax expenditures every year, get 

about $4.8 billion from the government? Can you share with us the 

structure of the Ex-Im Bank as compared to SNAP? 

Mr. HOCHBERG. I am a little confused as well by some of these 

comparisons. Customers, clients, exporters pay a fee for their service. It is a fee-for-service. They pay a fee. The fee fully covers all 

of our operating costs, all of our loan lost reserves, and then generates a surplus that goes to the taxpayers for deficit reduction. So 

we are not transferring money from one group of taxpayers to another. We are actually transferring money from customers to the 

taxpayers, from outside entities to the taxpayers, and many times, 

those are foreign buyers. So I don’t understand the comparison. 

Ms. MOORE. I don’t either. I thought maybe you would understand it better than I do. 

Let me ask you, one of the things that seems to get under the 

call of some of our members of our committee is the mandate that 

you all have to do clean energy stuff, and that you are picking winners and losers. I am reflecting on the $4.8 billion that is transferred to the oil and gas industry through tax expenditures. And 

I want to compare that $4.8 billion a year to whatever subsidy that 

the government perceives that you get from them, even using their 

accounting system. How does $4.8 billion a year compare to what 

the government does for the Ex-Im Bank? 

Mr. HOCHBERG. We transfer money to the government from the 

Ex-Im Bank. We don’t receive money from the government. So 

there is no subsidy that goes to Ex-Im. And by World Trade Organization, WTO, we need to be self-sustaining, meaning the fees we 

collect have to, at a minimum, cover all of our costs, and in this 

case, they cover more than our costs. 

Ms. MOORE. We usually have a debt clock running, and I am 

wondering to what extent would our trade deficit increase were we 

not to reauthorize the Bank, in your opinion? 

Mr. HOCHBERG. I can only tell you that in the last 20 years, we 

have transferred just under $7 billion for deficit reduction to reduce 

the debt. Just under $7 billion over that 20-year period. $675 million as recently as October. 

Ms. MOORE. Okay. So this notion that you pick winners and losers, I am wondering, Mr. McCarthy, have you seen anything in 

your examination of the Ex-Im Bank which suggests that they pick 

winners and losers? 

33 

Mr. MCCARTHY. We haven’t received any allegations along the 

lines of the process being skewed in favor in particular transactions. The Bank has controls and processes in place. They have 

to do due diligence. The applicants have to meet certain credit 

standards. We haven’t seen any evidence of cases where they seem 

to be favoring one particular party or another and not following 

their own guidelines on that. The structure of the guidelines are 

set by Congress and set by bank policy. 

Ms. MOORE. Thank you. My time has expired. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Kentucky, Mr. 

Barr. 

Mr. BARR. Thank you, Mr. Chairman. 

Mr. Hochberg, you and I have talked extensively about the ExIm Bank’s announcement following President Obama’s climate action plan in June of 2013, and the Bank’s guidelines for high-carbon projects in December. I know you have answered this question 

before, but in light of that policy adopted by the Bank’s board of 

directors, do you believe that the Export-Import Bank chooses winners and losers in U.S. industries? 

Mr. HOCHBERG. No, we don’t, but we have a standard that Congress has put in our charter since 1992 that we must take the environment into account. 

Mr. BARR. So you have the charter, which is a policy of picking 

winners and losers, a policy that favors renewables over fossil energy projects, and then you have this additional codification of the 

policy of picking winners and losers, which was the December 13th 

guidelines. 

Mr. HOCHBERG. What you referred to, much of this is actually in 

our charter. 

Mr. BARR. Right. So the charter is inherently part of the policy 

of the Bank, which interjects political judgments about what energy projects are worthy of financing versus others. What is wrong 

with that analysis? 

Mr. HOCHBERG. It is Congress’ judgment that makes the decision 

on what guides our behavior. So these have all been passed by Congress. 

Mr. BARR. Right. So, okay, fine, you can blame it on Congress. 

Mr. HOCHBERG. We are not blaming them. 

Mr. BARR. But you, sir, in response to President Obama’s climate 

action plan, and in announcing your board’s discriminatory policy 

against coal-fired power said, ‘‘Without guidelines or limits, ever increasing numbers of new coal plants worldwide will just continue 

to emit more carbon pollution into the air we breathe. I strongly 

support the Administration’s efforts to build international consensus such that other nations follow our lead in restricting financing of new coal-fired power plants.’’ 

How is that not a policy of picking winners, renewables or nuclear or non-coal fossil energy over coal, a loser? How is that not 

picking winners and losers? 

Mr. HOCHBERG. Sir, we finance a lot of coal exports. We finance 

coal-mining equipment. But we have a restriction about financing 

coal-fired powered plants except in very poor countries. 

34 

Mr. BARR. Right. You are not letting the marketplace dictate 

this. So what has the marketplace said? Here is what the marketplace is saying right now. The marketplace is saying that the demand for coal-fired power, particularly in lesser-developed countries, is skyrocketing. The International Energy Agency (IEA) concludes that 1,000 gigawatts of coal capacity will be built by 2040 

at a cost of $2.5 trillion, irrespective of American policy. 

Here is what the IEA says, ‘‘In the world energy outlook, the use 

of coal for power generation will continue to increase until at least 

2035 to 2040 and will remain an integral part of the energy mix 

long after that.’’ Here is the sad conclusion that I draw: The United 

States has the best, most environmentally-friendly, energy technology on the planet with respect to coal-fired power. 

Your Bank’s decision to not finance coal-fired power projects 

overseas with American clean coal technology is resulting in China 

financing these projects and using inferior electric generation technology. The Bank’s policy, ironically, is contributing to a worse environmental result. Is there any response to that in China’s export 

credit agencies doing the job that you won’t do? 

Mr. HOCHBERG. First of all, we will finance coal-fired power 

plants in poorer countries. In those developing countries, we will 

certainly do so. We haven’t had an opportunity— 

Mr. BARR. Okay. You are citing an exception with poor countries. 

So my question is this: Since you announced the guidelines, has 

your board agreed to finance a coal-fired power plant in a lesserdeveloped country? 

Mr. HOCHBERG. We have not received an application. 

Mr. BARR. Have you invoked that inception? Because China is 

not. China is financing coal-fired power. India is financing coalfired power projects. Do you think they have better technology in 

generating coal power than we do? 

Mr. HOCHBERG. The U.S. Government is in negotiations with 

China and others to restrict it globally. 

Mr. BARR. Okay, so in 2030, and if you trust China, that is a 

great assumption, but doesn’t allowing an exception for lesser-developed countries actually imply in the policy itself that coal-fired 

power plants have benefits as cheap and reliable sources of energy 

for poor countries? 

Chairman HENSARLING. Short answer from the witness, please. 

Mr. HOCHBERG. There is a benefit for poor countries, exactly. 

That is why the exception is there. 

Mr. BARR. Okay. My time has expired, but I think we have proven the point that the Bank will always pick winners and losers— 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Illinois, Mr. Foster. 

Mr. FOSTER. Thank you, Mr. Chairman, for holding this hearing. 

I have a graphic that I would like displayed, and without objection, entered into the record. It is simply a plot of the number of 

manufacturing jobs in the United States over the last several Administrations. It is interesting to look at the trend here that you 

see, for example, in the Kennedy Administration, we had the 

strongest period of job growth in our country’s history, in the Kennedy and Johnson Administrations. 

35 

Then in the Nixon and Ford Administrations, the number of 

manufacturing jobs dropped. It went up the during the Carter 

years, down during the Reagan years, down further during the first 

Bush Administration, roughly level during the Clinton Administration, and then we suffered a catastrophic drop due to the policies 

of the second Bush Administration. We now are continuing to grow 

manufacturing jobs again, largely by returning to the policies that 

had historically supported strong growth of U.S. manufacturing. 

I am best known as being, I guess, the last Ph.D. scientist in 

Congress, but I am also a manufacturer. The company that my 

younger brother and I started with 500 bucks from my parents now 

manufacturers the majority of theater lighting equipment in the 

United States. We do hardware, software, sheet metal painting, 

customer support, and we have kept all those jobs in the midwest, 

which is something I am extremely proud of. 

And so as much as anything, it is this collapse that got me to 

lead my career in science and in business, to go into one to try and 

make a difference here. Because you can see, it makes a difference 

what the policies are. Both parties talk as though their policies are 

pro-job, pro-growth, pro-manufacturing, but you can see there is a 

real difference in the actual result. And the statistics on the number of Administrations, the number of times we have gone back 

and forth between what we support. And, as a scientist, I think the 

conclusions here are pretty clear. I leave it up to the audience or 

the students here to deduce what the color coding on the arrows 

means. 

And so actually, with that out of the way, it is interesting to talk 

about what was responsible for this tremendous drop, that we lost 

over a third of our manufacturing jobs in the last decade. The three 

biggest causes of that, in my mind, are, first and foremost, currency manipulation. We led China and the World Trade Organization without any agreement that they not manipulate their currency. And the U.S. manufacturers, as a result, have a significant 

artificial cost disadvantage for most of a decade or longer than a 

decade now. 

We also had a wave of subsidized or guaranteed credit for exporters in other countries that frankly we did not match. That is the 

subject of this hearing, whether guaranteed export credit is actually an important countervailing thing that we have to do. In a perfect world, we would not need the Export-Import Bank, but I think 

it provides in the presence of subsidized credit from around the 

world, for their exports, I think it is essential. My attitude is very 

much that we should put down our weapon when they put down 

theirs and not before. 

The third factor, of course, is the enormous tax breaks for those 

already wealthy that happened during the Bush Administration, 

where those already wealthy, instead of reinvesting their productive assets back into the United States simply turned the money 

over to their money managers, who more and more invested that 

money offshore. Very different than what happened during the 

Kennedy Administration, for example, when we had very different 

tax rates. 

But since we are concentrating on the second item there, the 

credit, the guaranteed credit for exports. I have a couple of quesVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
36 

tions for Chairman Hochberg. First, you received some criticism 

early in this hearing about your dealings with foreign state-owned 

enterprises. Do you run a profit or a loss in your dealings with foreign state-owned enterprises? 

Mr. HOCHBERG. We run an overall profit at the agency, and we 

turn it over to the taxpayers every October. 

Mr. FOSTER. Okay. And does that include your dealings with foreign-owned enterprises? 

Mr. HOCHBERG. Yes, it certainly does. 

Mr. FOSTER. So the taxpayer is better off because of your dealings with foreign state-owned enterprises. 

And the second thing is, I am increasingly concerned with these 

eleventh hour reauthorizations that you are suffering through. It 

seems to me that creates exactly the kind of uncertainty that ruins 

deals, and drives equipment purchasers to foreign competitors. 

What kind of impact along those lines might you have seen already 

because of the brinksmanship going on here? 

Mr. HOCHBERG. We have already seen—there was testimony last 

year from Steve Wilburn who lost a deal to the Philippines that 

was taken over by South Korea, and we have also seen banks and 

insurance brokers pull back and deny credit to small businesses. 

Mr. FOSTER. Okay. Thank you. It looks like I am out of time, and 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Rothfus. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Chairman Hochberg, Michael Grunwald, in a Politico Magazine 

article from earlier this year, the article titled, ‘‘The Real Bank of 

America’’ described the more than $3 trillion in loans that the Federal Government—that is the hardworking American taxpayers— 

are on the hook for in case of defaults. And that $3 trillion does 

not count the more than $15 trillion in other guarantees for which 

the Federal Government is on the hook. 

At a time when our national debt exceeds $18 trillion, and in the 

wake of the massive bailouts at Fannie Mae and Freddie Mac, it 

is imperative that any efforts, I believe, to reauthorize Ex-Im must 

take steps to ensure that taxpayers are fully protected from the 

possibility of potential losses. And here, Mr. McCarthy identified 

one of Ex-Im’s biggest challenges is risk management. 

One way that we could potentially create additional protections 

for American taxpayers is by requiring full collateralization, or sovereign guarantees for all direct loans or loan guarantees issued by 

the Bank. As noted in the Bank’s Fiscal Year 2016 congressional 

budget justification, only 77 percent of the Bank’s portfolio is currently backed by a form of asset or collateral security. 

The percentage increases to 80 percent when including sovereign 

guarantees. A reasonable person might think this should be 100 

percent collateralization. Would you be supportive of making that 

sort of requirement for Ex-Im loans or loan guarantees? 

Mr. HOCHBERG. I would not. 

Mr. ROTHFUS. Another way that we can protect the American 

taxpayer from potential Ex-Im losses is by requiring additional 

guarantees from U.S. exporters who directly benefit from the banks 

37 

providing of loans or loan guarantees to the foreign purchasers of 

their products. 

Specifically, we could require that as a prerequisite for any loan 

or loan guarantee, the U.S. exporter must both guarantee full repayment for any money extended to a foreign purchaser and take 

the necessary steps to ensure that this guarantee is senior to other 

obligations. 

This would create an additional barrier and source of repayment 

before any losses would be placed on the backs of the taxpayer. 

Would you support this reform? 

Mr. HOCHBERG. No, I would not. 

Mr. ROTHFUS. It is interesting to read—I am just learning about 

the NewSat bankruptcy. And in this article in Space News, it says 

that $193 million was mainly Ex-Im money lent to NewSat in addition to equity NewSat had raised on its own. It is now in the form 

of a nearly complete spacecraft that Lockheed Martin owns and is 

free to sell without having to repay anything to Ex-Im. 

Now, if Lockheed sells the satellite, you have no agreement right 

now with Lockheed that they would have to go back and pay ExIm for that loss; is that right? 

Mr. HOCHBERG. We are still working on a solution to this transaction. It is simply in an early stage, sir, and so we are trying to 

find an actual buyer together. 

Mr. ROTHFUS. But you have no legal document that you can go 

back to if Lockheed goes and sells? Because it owns the satellite, 

and it is certainly free to go and sell it, correct? 

Mr. HOCHBERG. Lockheed has possession of it, but we are working with Lockheed and other creditors to find a solution so that we 

do not suffer a loss in this particular case. 

Mr. ROTHFUS. The 2012 reauthorization directed Treasury to 

pursue negotiations to substantially reduce, with the ultimate goal 

of eliminating, subsidized export financing programs and other 

forms of export subsidies. There has been essentially no progress 

on this front at all, as most recently confirmed by Treasury’s Under 

Secretary for International Affairs, Nathan Sheets, in testimony 

before the committee on April 15, 2015. Whom do you blame for 

that failure? 

Mr. HOCHBERG. First, this is the Secretary of the Treasury’s responsibility. He has issued three reports about their efforts to reign 

in export finance globally. I understand this is the Treasury Secretary’s responsibility, but it is to reign it in. We have to get outside parties like China, Brazil, India, and Russia that aren’t even 

a party to it before we ratchet down everybody else. Let’s make 

sure we get everybody following the rules then we can ratchet everybody down. 

Mr. ROTHFUS. Have you done anything personally to make sure 

that this requirement is fulfilled? 

Mr. HOCHBERG. As I mentioned in my own testimony, although 

this is the Treasury Secretary’s responsibility, I have gone out of 

the way to speak to all of my colleagues and ask them how we 

would do this. 

Mr. ROTHFUS. Ex-Im is currently open to support foreign purchases for U.S. exports. In almost 200 countries around the world, 

the Bank is prohibited from extending credit and insurance to cerVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
38 

tain countries, for example, those that are in armed conflict with 

the United States. But it can still provide services in many countries that have horrific records on issues pertaining to human trafficking and the protection of internationally-recognized human 

rights, including the freedom of religion. 

Would you support simple commonsense reforms that would further limit the Bank’s country limitation schedule to prohibit countries that are refusing to take the necessary steps to prevent 

human trafficking within their borders and those who are engaged 

in or tolerate particularly severe violations of religious freedom? 

Mr. HOCHBERG. We actually subject all transactions to review by 

the State Department and follow their guidance in terms of whether it is an allowable country or not. So that policy decision is made 

by the State Department, not by us. 

Mr. ROTHFUS. So you would take no position on any of the reforms that we propose. 

I thank the chairman, and I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. Mr. Chairman, in a second I will yield to you for 

the answer to a question. 

But I think there are some things we all agree on. This is a very 

important issue. We have debated it at length. Reasonable and 

good-spirited people can reach different conclusions, and democracy 

ought to determine what our policy should be. 

So, Mr. Chairman, will you be doing everything possible so that 

this committee or the House is voting on whether to reauthorize 

the Ex-Im Bank in the next couple of weeks? 

Chairman HENSARLING. Is the gentleman yielding to the chairman? 

Mr. SHERMAN. Yes. 

Chairman HENSARLING. The Chair will not make a decision until 

after this hearing. I will listen to all colleagues. I am not aware of 

any bill that is supported by a majority of the House, much less 

a majority of this committee. If I am made aware of such, I assure 

you, it will influence my thinking. 

I thank the gentleman for yielding. 

Mr. SHERMAN. We may have a chance to look at bills supported 

by a majority, or perhaps a 60 percent majority of the United 

States Senate. And there are many, many bills that come to this 

committee that we mark up that are not cosponsored by a majority 

of the House or a majority of the members of this committee. 

I think if this committee has a markup, we will devise a bill that 

has majority support, perhaps taking into consideration the comments of the gentleman from Pennsylvania, that we have restrictions on not allowing Ex-Im Bank to operate in those countries 

which have horrific records on human trafficking. 

Also, the gentleman from Pennsylvania focuses on the need to try 

to get other countries to ratchet down their export promotion authorities. That is a responsibility of the Department of the Treasury. Without objection, I would like to put in the record the last 

three annual reports of the Department of the Treasury. 

Chairman HENSARLING. Without objection, it is so ordered. 

39 

Mr. SHERMAN. And I will point out that I don’t think they are 

doing as much as they should. But the next Administration hopefully will, and the next Administration will have nothing—like 

going to a gunfight without even a knife—in its arsenal if we don’t 

have an export promotion authority. If you go into arms talks 

working for disarmament and you have already unilaterally disarmed, there is no reason for anybody to listen to you. 

Accounting. My favorite subject. Mr. Hochberg, with generally accepted accounting principles (GAAP), you have a profit of $750 million, is that correct? 

Mr. HOCHBERG. Last year was $675 million, to be precise. 

Mr. SHERMAN. Okay. And up on the board, whenever a Republican is speaking we have the debt clock, so that debt would be 

$675 million higher if we had abolished your Bank a year ago? 

Mr. HOCHBERG. Yes. And furthermore, CBO has actually scored 

the Ex-Im budget initially at $1 billion. Deficit reduction has cut 

that about in half to, again, uncertainty of the reauthorization. 

Mr. SHERMAN. And that is with reserves for the risk that you are 

taking of default. Just like any insurance company, any lender can 

calculate its profit only after determining what is an actuarially 

sound reserve for bad debts; is that correct? 

Mr. HOCHBERG. That is correct. 

Mr. SHERMAN. Now, I have heard that there is this thing called 

fair value accounting—I think it is better called fantasy value accounting—which would say that you should determine your profit 

or loss not based on whether you have a profit or loss, but whether 

you would have a profit or loss in some artificially constructed fair 

world. 

And as you have heard me say before, in a fair world, Jack’s Pizzeria would have the same cost of funds as Pizza Hut. Now, if you 

really know Jack, you would not lend him money. But in a fair 

world, he might have the same cost of funds and then he would 

have a profitable—or Pizza Hut would have a higher cost of funds. 

But if Pizza Hut had to pay when it borrowed money, the risk premium that is appropriate for Jack, they would be out of business. 

So in the real world, generally accepted accounting principles are 

the same principles used by all the other lenders in the country, 

is that correct, and do you show a profit? 

Mr. HOCHBERG. The U.S. Government uses the Federal Credit 

Reform Act (FCRA). And by that, we put aside reserves, as you 

have mentioned, Congressman, about $5 million worth of reserves, 

and the rest goes to the taxpayers. Any change in accounting would 

actually just increase reserves and then they would be released to 

the taxpayer. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Arizona, Mr. 

Schweikert. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

Mr. McCarthy, I would love for your help in just trying to make 

sure I have my head around some of the mechanics I see here. I 

am looking at a report, an audit from September 2012, if you are 

willing to track with me to page 6. But I am going to do this—I 

think it is the second paragraph—a little bit backwards. 

40 

Apparently, in 2011 it was determined that because of the way 

the law is structured, the Ex-Im Bank did not need to report impairment of assets. So I guess, 2011, they just stopped the impairment. And it is really important for this conversation. There is a 

difference between impaired assets and write-offs. Can we at least 

agree to that? Because last time, we had some fussing back and 

forth where we were sort of mixing the two, I think quite disingenuously. 

Mr. McCarthy, have there been any attempts since 2011 to start 

to say, here is actually what the impairments are on this book? 

Mr. MCCARTHY. The Bank has some separate reports that it prepares. One of the reports that it prepares is the default rate report, 

and that is— 

Mr. SCHWEIKERT. I am not asking the default. Impairment. 

Mr. MCCARTHY. There is a different report that is prepared 

about impaired assets and a watch list. 

Mr. SCHWEIKERT. Okay. So it does exist. But in the last discussion, the Honorable Mr. Hochberg looked at me as if I were deaf, 

that no such thing existed. I am not overstating it. You can go back 

and see the video. 

So right now, if, as Mr. Mulvaney was talking about with 

NewSat, would I see that on the impairment report, and was it a 

half million dollars? Would I see that as now the impairment setaside on that report? 

Mr. MCCARTHY. I don’t know the timing of it, but I would expect 

that would be something that would appear on that report, given 

the recent developments. 

Mr. SCHWEIKERT. So in some of the opening discussion here and 

opening testimony, I am hearing these repeated statements about 

how low our default rate is. According to that report, if you know 

off the top of your head, what is the actual default? And remember, 

default is defined as, ‘‘I am late on a payment. I am out of compliance in my reps and warrants.’’ 

I am trying to—like for like, my ceteris paribus of here is the 

rest of the world that ensures, or does guarantees and this institution, so we have at least an honest discussion going on here. 

Mr. MCCARTHY. Right. So as you recognize, default can mean different things. It can mean a payment default; it can mean impairment. 

Mr. SCHWEIKERT. Impairment. Impairment. Default is—they are 

different things. 

Mr. MCCARTHY. Let me try to explain. I understand what you 

are getting at, and let me try to explain it from our point of view 

as the IG. The Bank reports their—what they report as the default 

rate was called the default rate by the 2012 reauthorization, and 

Congress provided the formula to how the Bank calculates that. 

They have reported that. They have been transparent about that 

formula. 

That formula, as you say, is more of a net loss rate than a default rate. Looking at a default rate as more broadly used, as you 

say, of things that are potentially impaired but haven’t yet generated a loss but could potentially do so in a future would have a 

different calculation. 

41 

Mr. SCHWEIKERT. But any other institution out there, when 

someone’s out of compliance in arrests and warrants, there is often 

a scaling of, we need to set aside for this. We heard a little while 

ago there is—what was it, $5 billion that is ultimately set aside for 

losses. Does that scale in accordance with the percentage of the 

book that is an impairment, like every other institution would be 

required to? And if so, how come a couple of weeks ago when we 

had this very discussion, I couldn’t get near an answer of such a 

thing as actually scored and kept. 

Mr. MCCARTHY. On the impairment list, and I can go in and try 

to look and answer your question more specifically, some of the impairments are more qualitative in nature than quantitative. So in 

some ways, it is difficult to calculate an actual— 

Mr. SCHWEIKERT. No, it is not. No, the industry has been doing 

this for about a couple of centuries. And there are industry standards in how you do this. So what you are telling me is our institution here doesn’t at least just do what is common practice in the 

rest of the banking and investment world? 

Mr. MCCARTHY. The institution has an impaired asset list and a 

watch list. 

Mr. SCHWEIKERT. Okay. Impaired asset and then the reserve calculation for it. 

Mr. MCCARTHY. The reserve calculation is based on the loss experience historically under FCRA. 

Mr. SCHWEIKERT. Mr. Chairman, one more time, I yield back. 

One day, I might get an answer. 

Chairman HENSARLING. The time of the gentleman has expired. 

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

Meeks. 

Mr. MEEKS. Thank you, Mr. Chairman. 

I keep hearing this thing about winners and losers, winners and 

losers. It seems to me that what we are talking about is making 

the American workers the winners here. Clearly, from my experience, I understand—and I don’t understand why, especially my 

friends and colleagues who are supporters of trade, this seems like 

a no-brainer. Americans are selling more goods and services abroad 

than ever before, and every $1 million in U.S. exports supports an 

average of more than 5,000 jobs here at home. 

American exports supported more than 11.3 million U.S. jobs in 

2013. Ninety-five percent of the world’s customers live outside of 

the United States, and we need to continue to help American businesses to export more, so we should all be talking about how we 

can export more overseas. I just give you the benefit of my experience from my small, little State of New York, something like—in 

Maine. 

Ex-Im has committed over $11 billion in total export value. That includes $7 billion in insured shipments, guarantees of disbursed 

loans, and an additional $4 billion in approved authorizations. 

There are 350 New York-based exporters that benefited from ExIm Bank trade facilities last year, of which, and this is very significant to me, 201 were small businesses. And 26, I know Chairman 

Hochberg, and Vice Chair Felton have been working very hard are 

minority businesses. They were minority-owned businesses, giving 

them the opportunity to export. 

42 

And these businesses operate in various sectors that are creating 

jobs here in America. We have exports in food manufacturing, machinery manufacturing, transportation services, computer and electronics, insurance, banking, finance, and the list goes on and on 

and on. And so we need to be exporting more, not less, and that 

is what the Ex-Im Bank does. 

So let me just ask Chairman Hochberg, first, I believe, isn’t it 

true that Ex-Im operates more like, in this case, a lender of last 

resort, in one second correcting the market failures when private 

trade finances are unable or unwilling to invest in U.S. exports at 

competitive rates? So when that happens, the bank of last resort, 

Ex-Im, if you no are longer there to help these companies move, 

what happens to them? 

Mr. HOCHBERG. Thank you, Congressman. I have often said that 

we are plan B. Plan A is the private sector. Plan C would be China. 

They would be more than happy to fill in the gap that is the vacuum that we would create if we are not there. 

I was talking yesterday with an exporter in Chattanooga, Tennessee. A company that we are working with is going to finance an 

export to China. He has hired up for this thing. And he said that 

if it wasn’t for Ex-Im, he probably would not have hired those 20 

people, and he would lay off another 20 people, so 40 to 50 people’s 

jobs are at stake on this single order to China. 

Mr. MEEKS. And so, it just seems, that is why I am just baffled 

that some of my colleagues don’t believe we need Ex-Im Bank, and 

they say that the private sector can do it all. But when we look at 

between 2008 and 2009, the private sector trade financing fell by 

40 percent. And as of today, isn’t it true, Mr. Hochberg, that many 

of these private banks are still not willing to extend export financing without additional guarantees from Ex-Im Bank? 

And can you also talk about the gaps our financial crisis—you 

know, we had one in 2008—left in trade financing, and how the ExIm Bank filled that void then and continues to fill that void now. 

Mr. HOCHBERG. Our authorizations hit an all-time high in 2012. 

We financed over $36 billion of financing, financing over $50 billion 

worth of goods. We are operating at about half of that level now, 

which is a good sign that the financial markets are recovering. The 

banks are more liquid. They are not liquid in every market. They 

certainly make it tougher for small businesses. 

But the good news is that when there was a crisis, we stepped 

in. We were like the fire truck, my analogy. And now that the fires 

of the recession are more behind us, we have been less active, 

which is a good sign that the capital markets, banking markets are 

recovering. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Texas, Mr. Williams. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

Throughout this process, I have heard from many of the stakeholders involved. I have heard from the Bank, from businesses, and 

my constituents, who are the taxpayers. And some of the biggest 

complaints I hear are what about taxpayer liability, and does the 

Bank pick winners and losers? And as we have heard today, ExIm Bank financed $27.5 billion in exports in 2014. Now, I personVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
43 

ally believe that the Bank needs reform. We don’t seem to talk 

about reforms. We just defend positions. But I have yet to see a set 

of reforms that fixes the two chief complaints I mentioned before. 

Mr. Chairman, you know my background is in retail. I have been 

a small business owner for 44 years, a family business founded in 

1939. I am Main Street America. I am a car dealer. And in my industry, when a car needs to be financed, I often will guarantee the 

note for the person to whom I am selling the car. In other words, 

I let the bank know that if for some reason the buyer defaults on 

his loan, I, as the seller, will be responsible for the balance of the 

loan. In my business, we call that recourse paper. 

Now, I am a deal maker. So I want to help you make a deal 

today. Chairman Hochberg, why couldn’t we do something similar 

with the Bank? Why couldn’t we say that any money being loaned 

out by the Bank be subject to similar requirements and guarantees? In other words, the seller guarantees the note to Ex-Im, 

which gets the taxpayers out of their liability. The taxpayers are 

gone then, and that reduces that question. Why can’t we do that? 

Mr. HOCHBERG. Congressman, we work in a very competitive 

world, and that is simply not a competitive practice. There are 80- 

plus export credit agencies. Without Ex-Im’s financing, we put U.S. 

companies at a severe disadvantage to their global competitors. 

And besides which, our default rate which we report to Congress 

every 90 days is less than one fifth of 1 percent, it doesn’t indicate 

there is a problem here that needs to be fixed. 

Mr. WILLIAMS. Okay. I hear what you are saying. The taxpayers, 

though, the taxpayers are guaranteeing this. We need to get the 

taxpayers out of this. And I understand competition as good as 

anybody, okay. So I know you have mentioned there are points and 

fees that you charge. But that doesn’t come anywhere near covering the entire liability of the loan, correct? 

Mr. HOCHBERG. We have about $5 billion in reserves to back up 

any possible default— 

Mr. WILLIAMS. But it doesn’t cover all the loans. 

Mr. HOCHBERG. You never have reserves to cover 100 percent. 

Mr. WILLIAMS. Yes, you would if you go resource paper. 

Okay, now, my next question is this: You said the default rate 

for Ex-Im Bank is actually very small, something less than 1 percent, correct? 

Mr. HOCHBERG. It is running less than one fifth of 1 percent. 

Mr. WILLIAMS. Okay. That is another reason to go recourse 

paper. 

So in my head, if the businesses are benefiting from Ex-Im Bank, 

have skin in the game, like a lot of us do in the private sector, have 

skin in the game on the loan, and the default rate is so low, which 

you talked about, basically zero, all the more reason for them to 

guarantee the note. And, in fact, as you know, if they guarantee 

the note, you can give them a better rate and make them more 

competitive across the world, which you just talked about. 

So the point I am trying to make, Mr. Chairman, is if the average taxpayer sees the Bank as doing exactly what I said before, 

and just as with other Federal agencies who have been bailed out, 

the taxpayer wants to know what happens if all the loans go bad. 

I know the possibility of that might be small, which is good, but, 

44 

again, we have said that for agencies like Fannie and Freddie, and 

guess what, they are bailed out and the taxpayer pays the money. 

I don’t know if something like this could actually save the Bank 

during this conversation, but by removing the taxpayer from the 

equation, again, removing the taxpayer from the equation, I think 

it would go a long way to solving a lot of the problems. So, again, 

why can’t you do this? Think about it. It is a solution that nobody 

seems to be talking about. It fixes. It fixes the questions that I 

have, and it fixes the questions that Americans have on the way 

they have to support this. 

So I would also say in closing, I have heard my colleagues talk 

about why the private sector has left. How about Dodd-Frank? 

Maybe start thinking about that. 

Mr. Chairman, I yield back. 

Chairman HENSARLING. The gentleman yields back. 

The Chair now recognizes the gentleman from Massachusetts, 

Mr. Lynch. 

Mr. LYNCH. Thank you, Mr. Chairman. And thanks to the ranking member. 

Thank you, gentlemen, for your willingness to come here to help 

the committee with its work. I tend to look at things from the 

worker perspective. I was a welder and an ironworker down at the 

Quincy Shipyard in the Boston area, down in Quincy, Massachusetts, for a while, until that shipyard closed down because of the 

foreign competition. Some foreign ex-im banks supported shipbuilding in their countries and put us out of business. 

And I worked at the General Motors plant in Framingham, Massachusetts, and they closed that plant down and a couple of others 

and moved them over to Mexico. So I tend to see the effects of what 

other countries are doing. 

I just had an opportunity to travel to South Korea, and also to 

Japan. And I make it a point of, during my travels, and I was in 

both those countries for several days, to try to look for American 

products to see how we are doing in Korea and South Korea and 

in Japan. 

We were in South Korea for several days. It is a major industrialized country, big highways, millions of cars. I was there for 3 

days, and was stuck in plenty of traffic. I saw two U.S. cars out 

of hundreds of thousands of cars in South Korea. The only two cars 

I saw were the one I was driving in from the U.S. Embassy, and 

the one behind me that had the U.S. Embassy security team for my 

detail. That was it. I was in Japan, the same thing. It looked like 

nobody’s business trying to find a U.S. car. Nothing. So it just bothers me to no end that the Korean ex-im banks and the Japanese 

ex-im banks are picking winners and losers. And they are picking 

Korean winners, South Korean winners, and Japanese winners. 

And we are criticizing our Ex-Im Bank because you are picking 

American winners. 

And I have a real problem with what is going to happen here 

once America gets off the field, once we surrender, once we surrender and say: Okay, China, you can push Chinese manufacturing, and we are going to tie our hands behind our back. 

And what will this do? What will this do to creating U.S. jobs? 

I have to say that I hope and understand that your job is to create 

45 

American jobs. And there has been some criticism here today of the 

way you are going about it, but I do think it is in the best interest 

of the American worker to be in the game, to be trying to push 

American companies. And I have said before, your support for Boeing doesn’t support necessarily Massachusetts jobs in my district. 

But it is okay if you are putting Americans to work in Washington 

State, God bless you for doing that, and any other American company that you help. I don’t think we can be parochial at that level. 

And can you just tell me what your ideas are about what is going 

to happen if we walk off the playing field and leave it to these foreign export-import banks to drive the creation of manufacturing 

jobs and other jobs around the world? 

Mr. Hochberg? 

Mr. HOCHBERG. Thank you for that. We take very seriously our 

jobs mandate. We are about U.S. jobs and not really about U.S. 

companies. When a U.S. company or a company makes goods in 

America, we support it. As I have said before, 164,000 jobs last 

year alone. And even when you make the comment about Boeing, 

I suspect there are many, many Boeing suppliers in the State of 

Massachusetts. So every time a Boeing plane is delivered to a foreign customer, many small businesses benefit. 

I was just in Erie, Pennsylvania, a town that without the exports 

from GE locomotive would be a very quiet town with not very many 

good jobs. And I met with a number of small businesses that actually supply machine parts, tools, and die parts that actually go into 

the locomotives. 

One company I met with, ISM, with 175 employees, a full 15 percent of their work is tied to GE exports. So they are very much tied 

to the state of those larger companies making those exports. But 

I think what we are putting in jeopardy is 164,000 jobs. That is a 

lot of jobs. That is a lot of families in their homes. That is a lot 

of families who are relying on these export jobs and the financing 

we do to make sure that export happens. And, again, 90 percent 

of those companies are small businesses, some in the chairman’s 

district itself. 

Mr. LYNCH. All right, thank you. 

I yield back. 

Mr. HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Maine, Mr. 

Poliquin. 

Mr. POLIQUIN. Thank you, Mr. Chairman. 

Gentlemen, thank you very much for being here. I appreciate it. 

Mr. Hochberg, since 2009 you have run this independent Ex-Im 

Bank. It is an entity that was created by the Federal Government 

here in the 1930s. You have about 440, 450 employees. And you 

folks provide low-interest-rate loans to foreign entities that turn 

around and buy U.S. products from U.S. companies, of course. Now, 

if these foreign companies cannot repay their loans and the taxpayers are on the hook, in fact, the reason why you are able to provide foreign companies with cheaper credit than nongovernment 

banks is because of the taxpayers’ backstop. 

So where I want to go down this path, sir, if I may, is I have 

heard today from you and from other folks here in this hearing 

room that there is no cost to the taxpayer. 

46 

There is no free lunch, Mr. Hochberg, everybody knows that. Of 

course, there is a cost to the taxpayer. For example, if you have a 

worker at a company and across the street is a competitor that has 

the same, roughly the same product, and that company is financed 

in part by you folks, so that product is purchased but not the product from the company that the other gentleman works for, then you 

have picked that winner, and he loses. There is a cost to that individual. 

Second of all, is that the only reason why, again, that a nongovernment bank isn’t able to provide credit to some of these foreign companies is because you folks step in, and you are backstopped by the U.S. taxpayer who is at risk if something goes 

wrong. And so those U.S. banks who might be able to extend those 

loans aren’t able to do so. So there is a cost to those banks, sir, 

in the nongovernment sector and also the people they employ. 

Now, there is one other cost I would like to talk about today that 

hasn’t been discussed, and that is reputational risk for the U.S. 

Government. Now, I understand that you are appointed by the 

President and you also serve as the chairman of the board of your 

own directors. And you have stated here today in testimony that 

you raise money for the President. I don’t see any way, sir, that 

Congress is able to hold you accountable. We don’t appropriate any 

money to you. 

Now, what does it say to investors around the world who run 

companies who are thinking about investing in our economy, 

whether in Maine’s Second District or throughout the country, that 

we have an Export-Import Bank where, if my notes are right—and 

I know, Mr. McCarthy, you are the inspector general for Ex-Im, so 

correct me if I am wrong—over the last 5 years, you have had 48 

people associated with the Bank who have been convicted of fraud. 

You have 37 ongoing investigations for fraud and corruption right 

now. There has been about 66 years of prison time that has been 

dished out to these folks over the last 5 years and about $224 million of fines. Now, there was a Bank employee not long ago who 

accepted $78,000 in cash as a bribe to help folks out, foreign companies out to receive your credit, your cheap credit, and I guess he 

is going to be sentenced in July. There is a former Member of Congress who is in jail in Louisiana right now, and they found $90,000 

of cash in his freezer that was associated with lending practices at 

the Bank. 

So I am asking myself, Mr. Hochberg—I represent 650,000 of the 

hardest working, most honest people that you could ever find in 

this country in Maine’s Second District. And now you come before 

us. And the only way we have accountability, we can hold you accountable, is to determine whether or not we reauthorize your 

charter. I would like to find out how I can go back to the people 

that I represent with this trail of mismanagement, ongoing mismanagement and vote to reauthorize your Bank. 

Now, I would like to turn it over to your inspector general who 

is internally working at your Bank. Sir, you are also appointed by 

the President, is that correct? 

Mr. MCCARTHY. The position is appointed by the President. I am 

currently— 

Mr. POLIQUIN. Do you have subpoena authority? 

47 

Mr. MCCARTHY. Yes, we do. 

Mr. POLIQUIN. You do. Do you have the ability to make criminal 

referrals? 

Mr. MCCARTHY. We do. 

Mr. POLIQUIN. Good. And do you have the ability to investigate 

employees who are no longer at the Bank but have left the Bank? 

Mr. MCCARTHY. We do. 

Mr. POLIQUIN. Do you have enough independence from the gentleman sitting right beside that you work with under the same roof 

that you think you can do your work effectively? 

Mr. MCCARTHY. Yes, we do. Under the Inspector General Act, we 

have organizational independence. We also have our own separate 

appropriation and manage our own budget. 

Mr. POLIQUIN. Good. Mr. McCarthy, you keep doing your work 

and keep digging. If you need help, you call our office. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Washington, Mr. 

Heck. 

Mr. HECK. Thank you, Mr. Chairman. 

I am reminded of a presentation I was a party to while in college. 

One of the faculty members of my school did some of the seminal 

field research on the correlation between the presence of DDT and 

eggshell damage among peregrine falcons. In his presentation to 

us, he had a scatter graph on the correlations between the presence 

and mortality rates among peregrine falcon eggs. And almost all of 

the dots were concentrated on, they died. And there was one or two 

way up there where they didn’t. And when he made that presentation to the manufacturer of DDT, their response was, what about 

those two? I feel a little bit like I am living through that again almost 50 years later. 

There is a lot of semantics going on here as it relates, for example, to default rates. But the fact is that the Export-Import Bank 

has a default rate and a loss ratio that is the envy of commercial 

banks. That is the fact. 

Mr. McCarthy, you are an incredibly patient human being. 

Thank you so much for being here. I want to make sure I understood you correctly. Is it accurate and fair for me to infer from your 

remarks, both in your opening statement and in answers to questions, that your opinion is that the Export-Import Bank has made 

a good-faith and reasonable effort to embrace and implement the 

recommendations you have made? 

Mr. MCCARTHY. We have made our recommendations. The Bank 

has to implement them. We have closed a number of those recommendations, and we continue to make progress on them. 

Mr. HECK. Thank you. 

Mr. Hochberg, I want to get at the issue of harm. At its essence, 

some of this has to do with those who advocate that there will be 

no harm done if the Export-Import Bank’s charter expires. I happen to share the concerns and worries of Speaker Boehner, who 

said he believes there will be lots of job loss if that happens. 

I am beginning to believe that the opponents are beginning to 

worry about that as well insofar as their wish casting, my new favorite word, that the private sector will step in. Let’s break it 

48 

down. First, for small businesses, I think often overlooked is the 

fact that a preponderance of the transactions aren’t direct loans, 

but loan guarantees, revolving lines of credit, and what I call accounts receivable insurance. I think of Pexco in my district, which 

manufactures traffic cones, with little tiny quantities sold to Belgium; or Manhasset music stands, one of the largest music stands 

in America in Yakima, Washington. 

Is there any evidence to suggest that there is anyplace within the 

commercial sector where a bank would step in and guarantee such 

small amounts of exports even though those exports, for example, 

in Manhasset’s case, would constitute over 30 percent of its business? Is there any evidence to that effect, Mr. Hochberg? 

Mr. HOCHBERG. Congressman, the reason we are brought in, and 

a bank brings us in, as I said, generally, or brokers is because they 

can’t do it on their own, or they refuse to because it goes beyond 

their credit standards, beyond their risk profile. 

Mr. HECK. So let’s scale up and deal with the large business 

part. Obviously, the name of the manufacturer of the finest airplane on the face of the planet has been invoked many times here. 

I just want to remind everybody that they assemble planes. They 

don’t manufacture them. Their supply chain is 15,000 businesses, 

6,000 to 8,000 of which are small businesses. They make the parts. 

I have always thought that the way the Boeing Company would 

deal with this is that they would provision for it if the Ex-Im goes 

away on their balance sheet. Now, I come from the private sector, 

and I think anybody who does understands what that means. That 

means there will be a lot less money available to invest in attracting and retaining a quality workforce, research and development, 

remembering that the manufacturing of commercial airplanes is an 

exceedingly competitive business now between Boeing and Airbus, 

but soon to be China, and that they would therefore be harmed by 

it. But here is my question, Mr. Hochberg. That is how I thought 

this would play out. And that it would cause the loss of jobs. But 

I have recently read that I think the chairman and the CEO of the 

company had indicated that if we unilaterally disarm, the company 

would be compelled to consider moving certain parts of their manufacturing production offshore. 

Do you find that to be a plausible response to our shutting of 

your bank? And if so, what would the damage be to the manufacturing sector in America? 

Mr. HOCHBERG. Without question, that is a very real possibility, 

and certainly with the company you mentioned, but there are many 

others, such as GE, that have facilities all over the world, and can 

very easily begin to offshore their work permanently. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. McHenry, vice chairman of the committee. 

Mr. MCHENRY. Thanks so much, Mr. Chairman, and thank you 

all for being here. It has been a long day. But Mr. Hochberg, I 

think what Members, policymakers, want to know here with reauthorization coming at the end of the month, it is some sort of basic 

admission that there are some challenges in running an organization, right? There have been discussions of indictments. The IG is 

49 

sitting next to you. There are ongoing investigations there. So, 

what would you say? 

Mr. HOCHBERG. I should probably let the IG answer himself, but 

we have had one indictment. 

Mr. MCHENRY. No, I am asking you. 

Mr. HOCHBERG. We have had one indictment, sir. One indictment. And the person pled guilty and that came to light because 

another employee saw something that didn’t look proper. In the 

other investigation, the inspector general said at this point in the 

investigation, none of them involve employees, but you can ask him 

directly. 

Mr. MCHENRY. Okay. So are there any management challenges? 

Mr. HOCHBERG. Sir, I have run a company for 20 years. Every 

organization has management challenges. 

Mr. MCHENRY. So this is no different? 

Mr. HOCHBERG. Every organization is different. But of course, 

there are management challenges. We are trying to move forward. 

We are trying to be responsive to Congress, responsive to exporters, 

work with the private sector, not compete with the private sector, 

make sure we are competitive globally and get more small businesses to export. There are a number of those challenges. 

Mr. MCHENRY. A government survey of your employees at ExIm—government employees, not your employees, you had the organization, but they don’t work for you, they work for the American 

taxpayer. Only 42 percent of Export-Import Bank employees agree 

with the statement, ‘‘My organization’s leaders maintain high 

standards of honesty and integrity.’’ Is that sufficient? 

Mr. HOCHBERG. Pardon me? Forty-two percent said that, and 

about 30 percent had no opinion. 

Mr. MCHENRY. So that is fantastic, is what you are telling me? 

Mr. HOCHBERG. No— 

Mr. MCHENRY. As a policymaker, am I supposed to look at this 

and say, ‘‘Keep going man, you are doing fantastic?’’ 

Mr. HOCHBERG. Without question, sir, I take this very seriously. 

We all take this seriously at the Bank and we put a much higher 

priority on improving the workplace environment than we have at 

Ex-Im Bank. Of course, I am disappointed in those results. 

Mr. MCHENRY. Okay, some sort of admission is sort of helpful. 

I am not trying to inject humility to a grown man here, but I am 

simply saying that should not be in any way acceptable. And there 

should be a firm desire to improve the standards you have within 

the organization that you head. 

Mr. HOCHBERG. One of the— 

Mr. MCHENRY. I am giving you an opportunity to say that, is 

what I am telling you. 

Mr. HOCHBERG. Yes. One of the key objectives we have established. 

Mr. MCHENRY. Just because you say, ‘‘We have only had one indictment,’’ how is that a sales pitch for reauthorization of the organization that you head up that you explain in great detail the importance of what you do, and your defense is one indictment? We 

have only had one indictment. Would the American people look at 

Congress and say, ‘‘Gosh, they have only had one indictment. Wow, 

that is good. We are happy?’’ Walk me through this. 

50 

Mr. HOCHBERG. I would be happy to, sir. Some have asserted on 

this committee that the organization is full of corruption. What I 

tried to indicate is that there is one indictment, one employee. The 

other investigations involved outside entities, companies and individuals trying to defraud the government. That is what I was referring to. 

In terms of improving the workplace environment, last fall we established four objectives for the Bank, and amongst the top four 

was making this a first-tier place to work, improving management 

development, improving opportunities, and making this a better 

place to work. So, we are working hard at that. 

Mr. MCHENRY. Sir, in the same survey, you have half of your 

employees agree, or half of the employees at the organization you 

had, agree that if they disclosed suspected violations of any law, 

rule, or regulation, they will not fear—actually, only half say that 

they would not fear reprisal for that. 

Mr. HOCHBERG. If you look at the data, sir, only 20 percent actually disagreed with that statement. Not—20 percent of the employees said they actually did not feel— 

Mr. MCHENRY. That is like bragging, ‘‘I am firmly middle management.’’ Or, ‘‘I am a solid C student.’’ Like this sort of—you 

should be making a better effort on this to acknowledge that, yes, 

there are failures. That would be a helpful thing, I would think. I 

am not trying to change your sales pitch, but I am just telling you 

that it is just not working. We are not buying it when you say that 

the management practices are sufficient and good, and just because 

you have raised this as a higher priority, that is sufficient, and we 

should be happy as policymakers when we look at your charter. All 

right, something has to change. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Ohio, Mrs. Beatty. 

Mrs. BEATTY. Thank you, Mr. Chairman. 

Thank you, Ranking Member Waters, and thank you to our witnesses today. 

First, let me say to you, Mr. Hochberg, welcome back to our committee. And I certainly want to take this opportunity to thank you 

for coming to my district. And not just coming to give a speech or 

be there for an hour, but to stay there and walk through the district, and hear concerns from a panel of some 50 people. It was also 

my pleasure to have you visit with a small company, Davenport 

Aviation, which utilizes Ex-Im resources to finance exports of its 

aircraft products internationally. 

Today has been interesting, and disappointing. It has been about 

a whole lot of issues for me, from where you slept, what room you 

slept in, how much money you took, to this whole concept of winners and losers. I believe this Congress should work to lift up 

America, and we should work day and night to support small businesses, to help our veterans, to invest in innovation, but clearly, 

some of my colleagues on the other side of the aisle want to pick 

winners and let the rest of America suffer as losers. If we are going 

to have that discussion, since all morning we have been hearing 

about winners and losers, and Democrats are being accused of flipping our opposition on the Ex-Im Bank, I am going to follow Mr. 

51 

Capuano’s example and not read off the list of people who have 

switched their votes on both sides. 

But I would like to draw this committee’s attention to some of 

the losers under the current Republican Leadership. Last Congress, 

if the Majority had its way, the Supplemental Nutrition Assistance 

Program (SNAP), the Food Stamp program, would have suffered 

over $20.5 billion in cuts. These cuts would have cost millions of 

our most at-risk Americans, seniors, children, and veterans to go 

hungry. And later today, the House will vote on another appropriations bill, subject to the drastic spending caps created under the sequester, the Commerce-Justice-Science Appropriation bill, where 

funding for the Legal Services Corporation is cut by $75 million, reducing it to just $300 million, and thousands of people who qualify 

for legal representation from LSC will be turned away. Well, that 

is just another example of losers. 

So I get confused when sometimes we are accused of supporting 

the big folks, well, in this case, we supported a lot of folks. And 

we made the losers the small people. 

So I went to my district, and I started asking the small companies what they thought. And here is a statement: ‘‘The Ex-Im is 

100 percent necessary for my company,’’ the president of Davenport 

Aviation said. ‘‘My company without Ex-Im Bank would not be able 

to exist.’’ 

One of my central Ohio Republican colleagues said that he had 

heard from employers in central Ohio and how they directly benefitted from the Ex-Im Bank and the consequences of not reauthorizing it. So my point is this, you have been criticized; you have 

been asked a lot of questions about the small businesses. Critics of 

the Ex-Im claim that the Bank promotes production in one sector 

of the economy to the detriment of the other. And we have heard 

all of those critics and that the Ex-Im picks winners and losers. 

So can you dispel this notion of Ex-Im picking winners and losers, and speak to how the Bank actually extends loans and guarantees to all applicants that meet its strict lending requirements? 

Mr. HOCHBERG. Thank you, Congresswoman. 

It was very good to be out in your district with you. As I said 

in my testimony, I will be brief, because we do not pick winners 

and losers. Companies come to us when they can’t secure the financing they need to make their exports sales and support jobs. 

And there was a comment in Maine, if there are two companies, 

if one doesn’t need our support and the other one does, one can find 

it in the private sector, we are delighted with that, but we want 

to make sure it is a level playing field and that financing is not 

the thing that gets in the way, we don’t want that to stop creating 

jobs in America versus jobs overseas. 

Mrs. BEATTY. Thank you, and I yield back. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Luetkemeyer, chairman of our Housing and Insurance Subcommittee. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

It is interesting—I had a meeting the other day with the CEO 

of a large company that buys a lot of large items like airplanes, 

train cars, heavy equipment, and I asked him the question, if ExVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
52 

Im went away, what would you do? And his first response was, the 

first thing I would do is I would quit buying Boeing planes and go 

buy Airbuses, and all of the jobs would go away. Boeing isn’t a 

manufacturing company. They are a design and assembly company. 

They have 1,800 small manufacturers, small businesses that 

produce their parts. So those 1,800 small manufacturers which are 

relying on this Bank to be able to exist, to be able to make a profit, 

to hire people. I think your numbers, Mr. Hochberg, indicated a 

minute ago 160,000-plus was created recently, the last year or so. 

It is interesting, also—I sit on the Small Business Committee as 

well. I am vice chairman of the committee, and we have had a couple of hearings. And in those hearings we have, obviously, smallbusiness people all the time talk about their concerns, whether it 

is taxes, regulation, whatever, and the discussion eventually gets 

around to Ex-Im Bank. If it doesn’t, I get there with it. And I ask 

them, what is your opinion of it? And every single one, not one 

time in the committee hearings that we have had has there been 

one person who said, we don’t need it. Every single one says, we 

need it. It is important. We have to compete. 

So I guess my first question to you, sir, would be, do you have 

any idea of all of the other suppliers that are affected by—I think 

the number of small businesses that you loan to directly is like 

3,400, but I am interested if you have Boeing with 1,800, how 

many other small businesses do you have calculated that are affected by your Bank? 

Mr. HOCHBERG. It is hard to get a precise number of the small 

businesses in the supply chain, but as you mentioned, I visited a 

company called LMI that is a Boeing supplier in Missouri. There 

is a company called Tomco that supplies GE with fire suppression 

equipment that is used in their power plants that they export overseas. So, over and over again, the company that Congresswoman 

Beatty referred to sells replacement parts for Boeing aircraft overseas to airlines in sub-Saharan Africa. And so, there are many 

small businesses, both direct and indirect. The indirect are like in 

a campaign who provides the catering and the yard signs and the 

printing; those are indirect beneficiaries. In the same way, we have 

Boeing has 15,000 suppliers and I want to say that about 6,000 

small businesses. 

Mr. LUETKEMEYER. What is the percentage of small businesses 

that access your Bank as it is now versus the big guys? In other 

words— 

Mr. HOCHBERG. Well, 90 percent of our customers, direct customers, direct beneficiaries are small businesses. In 2014, we financed about $27 billion, of which about 39 percent or about $10 

billion of Ex-Im’s supported export value of the goods and services 

financed were from those small companies, and that doesn’t count 

all of the indirects, as you referenced. 

Mr. LUETKEMEYER. I also have a lady in my district who builds 

log homes out of oak logs. I come from central Missouri. Oak logs 

are very plentiful, and that is what she does. She also takes those 

oak logs, packages them up into a kit, and sells them to China, and 

your bank helps finance that. I thank you for that. If you go away, 

she goes away. 

53 

And I think that those jobs are going to go away with it. One of 

the arguments that seems to be out there is that these jobs would 

all find someplace else to go. I think my first example was, no, they 

are not. They are going to go to France to buy Airbuses. They will 

not be created at all because that lady will be no longer to be able 

to finance the kits that she sells to China. 

And it is interesting that my side is interested in dynamic scoring. So if you have a job and you do something that—an exponential economic increase off of that is something, I would think, 

that we would be very interested in, and would really score—this 

bill would really score well from the standpoint of the job creation 

that is out there. 

So I think it is a point that needs to be made, and I think that 

I understand that sometimes there is—I know our vice chairman 

was making some reference to some of the internal problems that 

you have in the Bank, and we can’t deny that. But I think that if 

we are going to throw the baby out with the bath water, you never 

go out, and you don’t throw away the whole police department if 

there is problems in the police department. You clean it up. You 

make it better. And I think that is the responsibility of Congress. 

For us to disregard that responsibility and just say no, we don’t 

need the Bank, is disregarding our responsibility. 

It is also interesting to me that I have heard the words, ‘‘level 

playing field for our companies,’’ ‘‘creating jobs,’’ ‘‘must be able to 

compete with China,’’ ‘‘if we don’t, they are going to fill the void,’’ 

which sounds like some of the rhetoric that I use when I am trying 

to defend Ex-Im Bank. Yet, that is the same rhetoric that my colleagues use to support the TPA, in going with the trade agreement 

or the Trans-Pacific—trade agreement. And yet they are going to 

vote against versus for, and I really fail to see the situation here. 

But I see I am over my time, and I appreciate the opportunity 

to voice a few concerns, and I yield back to the chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Colorado, Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. Mr. Hochberg and Mr. 

McCarthy, thank you for taking the time to be here. 

Mr. Hochberg, I think I would like to follow up a little bit along 

the lines of Mr. Williams’ questioning in regards to the need for 

Ex-Im Bank given that we have the private sector. Can you name 

for me a bank in the country with, if we have a default rate of 

0.167 percent, a bank that would not take a loan? 

Mr. HOCHBERG. The reasons we have a low default rate of 0.167 

percent are twofold. One is our underwriting, but most importantly, it is backed by the full faith of the U.S. Government. People 

don’t default on the U.S. Government. That is a very strong incentive for people to pay and to make sure we have a good credit rating. 

Mr. TIPTON. So no private sector banks can sell this? 

Mr. HOCHBERG. Private sector banks are those who bring us to 

the transaction. That is the only reason we are there. We don’t 

muscle them out. They actually bring us in because of the example 

I gave earlier of a company in Detroit where the fact is, their bank 

would not provide financing unless Ex-Im guaranteed the loan. 

54 

Mr. TIPTON. And that is because regulatorily they can’t make the 

loan, is that correct? 

Mr. HOCHBERG. Either it is outside of their strike zone, it is outside of their risk profile— 

Mr. TIPTON. But the risk profile is going to be driven by the regulations that come out of the Federal Government. 

Mr. HOCHBERG. Part of it is also coming through Basel III, sir, 

where banks have severe penalties for lending more than 5— 

Mr. TIPTON. So we are getting the FSB, the FSOC that is going 

to be involved. The bottom line is we are getting back to regulations which are coming out of FSB or FSOC that are coming in telling banks what those profiles can actually be. So there is—we are 

squeezing out the private sector, leaving you as the sole source of 

capital. 

Mr. HOCHBERG. Sir, we did, as I mentioned, last year about $20 

billion worth of loans. The private sector did a spectacular job. We 

only came into those few situations— 

Mr. TIPTON. I understand that, sir, but I guess the point I am 

trying to be able to get at is that we have to be able to have the 

government backstop on this. Can it be filled by the private sector, 

and what I am asking you is, is this really regulatory in nature 

coming out of policies, be it the FSB, the FSOC, out of Dodd-Frank, 

and the implications that are coming in that are going to be inhibiting the private sector from being able to participate in this? 

Mr. HOCHBERG. You would have to ask a commercial banker that 

question. I can only tell you that we are brought in when the banks 

said we cannot— 

Mr. TIPTON. Ironically, I have asked banks that, and it may not 

be in Ex-Im’s particular portfolio, loans that they would like to be 

able to make, but because of regulations, they cannot make, and 

this is an opportunity, actually, for the private sector to be able to 

step in and to be able to service that need, and maybe to be able 

to create actually more jobs. 

Do you think this is actually maybe—your very existence is an 

indictment of—and we all know there need to be some regulations, 

but overregulation that is literally coming out of expansive government policy that is being now collaborative with our European 

counterparts? 

Mr. HOCHBERG. Ex-Im Bank today—and I look at our foreign 

counterparts—we exist when there are crises in the financial markets globally. That is why we did so much in loans 2 years ago because of the severe contraction of credit globally in the aftermath 

of the worst recession since the 1930s Depression. 

Mr. TIPTON. Exactly, and we could have probably a great, great 

argument on who helped precipitate that crisis in terms of government policy that was being put forward. But if we look at really 

the regulations and if we are talking about being able to be competitive, right now we are seeing businesses in this country paying 

$2 trillion in regulatory costs. We see the lowest labor participation 

rate. We have a broken Tax Code. I just visited with a company 

that has a 32-percent effective tax rate. What if we were to shift 

that policy to be able to make the United States a place where people want to be able to come and do business, to where it is easier 

to be able to get a loan, where we put risk not on the Federal GovVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
55 

ernment, not ultimately on the American taxpayer, but back into 

the private sector, where it actually should belong? Would you dispute that is a bad idea? 

Mr. HOCHBERG. We have the best private sector in the world. We 

have the best private banking system in the world, and it is the 

most expansive. It is just not 100 percent. We try and fill in a gap 

when there are certain gaps based on economic conditions or certain countries or industries at a certain time. The nuclear industry 

is a good example of that since it is very hard to get private sector 

financing no matter what you do with the regulations, so we fill in 

that market. 

Mr. TIPTON. Again, I think we could probably have a discussion 

over whether or not the private sector wouldn’t do it as long as 

there is going to be the government backstop, there is no incentive 

for the private sector to be able to step in. The risks can actually 

be taken through that private sector. 

And Mr. Chairman, my time should be up. I yield back. 

Chairman HENSARLING. The time of the gentleman is yielded 

back. For what purpose does the ranking member seek recognition? 

Mrs. WATERS. I ask unanimous consent to enter documents into 

the record from: the Bankers Association for Finance and Trade, 

and the Financial Services Roundtable; and 1,053 organizations 

from across the country that are urging support for long-term reauthorization. 

Chairman HENSARLING. Without objection, it is so ordered. 

The Chair now recognizes the gentleman from Minnesota, Mr. 

Emmer. 

Mr. EMMER. Thank you, Chairman Hensarling and Ranking 

Member Waters, and thank you, Mr. Hochberg, and Mr. McCarthy 

for being here. I am relatively new to this committee, and I am 

working to get up to speed quickly. Again, I appreciate your being 

here today and answering these questions. It has been very informative for me. 

Now, Mr. Hochberg, in your opening statement, you reminded us 

that Ex-Im was created to support American jobs. And I believe the 

mission statement, for example, provides specifically that it is to 

contribute to maintaining or increasing employment of U.S. workers by subsidizing the export of U.S. goods and services to foreign 

markets. Further, it is my understanding that the Ex-Im Bank is 

primarily a bank that is—it works for a few large multinational 

corporations. In fact, according to some of the information that I 

have recently been going through, I think it was 2013, 75 percent 

of the loans guarantees and insurance issued through Ex-Im were 

to 10 large companies. 

That number remained pretty much the same last year in 2014. 

I hear all the time that it is important for small businesses to have 

the Ex-Im Bank. And I actually have some constituents who have 

used the Ex-Im Bank. The mandate is 20 percent. I am interested 

to know, if you can do it briefly, how do you define a small business? 

Mr. HOCHBERG. Small businesses are actually defined by the 

Small Business Administration. We don’t make our own definition. 

We use the SBA’s definition. 

Mr. EMMER. What is your understanding of the definition? 

56 

Mr. HOCHBERG. It basically depends on the industry. If you are 

a manufacturer, it is less than 500 employees, but it actually varies 

industry wide. A small car dealer— 

Mr. EMMER. If you are a manufacturer, it is less than 500. 

Mr. HOCHBERG. Yes, but it varies, as I say, industry to industry. 

Mr. EMMER. All right, I believe I am correct, and please correct 

me if I am wrong, the Ex-Im Bank provides less than 2 percent of 

the loan guarantees and insurance, in other words the financing, 

for American exports? 

Mr. HOCHBERG. About 2 percent of U.S. exports, that is correct. 

Mr. EMMER. And, again, 75 percent of that goes to large businesses, correct? 

Mr. HOCHBERG. As I said earlier, Ex-Im financed $27 billion last 

year, and 39 percent of the total value of the exports we financed 

was shipped directly from small companies. 

Mr. EMMER. Actually, Mercatus just put out the one for 2014, 

and it had 76 percent going to the top 10 largest companies. 

I am going to move on from that because my time is limited. You 

have focused on how other countries are aggressively supporting 

their commercial sectors as a means to enhance their sphere of influence, and you used China as the example and the ranking member this morning talked about China. In fact, I think you said at 

one point, in the near future, they will double the financing for 

their exports. And yet, according to some information that I have, 

your Bank last year guaranteed, I think it was $18 million, for a 

deal the Chinese ex-im bank was doing. Why is the Ex-Im Bank 

in this country helping to guarantee this wonderfully successful 

and aggressive Chinese ex-im bank? 

Mr. HOCHBERG. We do a number of transactions with China. A 

lot of them are—for the company I mentioned earlier, Tuftco in 

Chattanooga, Tennessee, the debt is guaranteed by the China ExIm bank. So— 

Mr. EMMER. I understand— 

Mr. HOCHBERG. —with the buyer in China, we actually have a 

government guarantee. 

Mr. EMMER. Mr. Hochberg, let me put it this way, if they are so 

successful and they are so aggressive, it doesn’t seem to make 

sense that you are guaranteeing their deals. They should be able 

to do it on their own. I will also ask you this: Apparently last year 

before they ran in sanctions, your Bank was actively working with 

a Russian bank that is doing business with Russian arms dealers 

and you didn’t stop that until the sanctions were put in place. All 

I would suggest is that in my initial review of this, it looks like we 

are not staying in accordance with our mission. 

And Mr. Chairman, I would yield my last 30 seconds to the 

Chair. 

Chairman HENSARLING. I thank the gentleman. 

Chairman Hochberg, you have heard several members speak of 

this NewSat scandal today. We are under the impression that you, 

the Ex-Im, have in your possession the report by the consultant 

Brendan Rudd, I believe is his name. Our staff has asked your staff 

for a copy of this. It is my understanding that your staff has refused. Will you provide the Rudd report on NewSat to the committee? 

57 

Mr. HOCHBERG. Mr. Chairman, there is not a report. It is an 

email we received from Mr. Rudd which outlines a number of allegations that we are working with the legal authorities on to run 

them down, to find out what is true and what is not true so we 

don’t have a lot of— 

Chairman HENSARLING. Okay, sir, will you provide a copy of this 

to the committee? 

Mr. HOCHBERG. Right now, it is still business confidential. We 

would like to keep this so we can actually move forward. I am trying to find a way we can get to a good answer and a good outcome 

for the American taxpayers and for Ex-Im Bank. 

Chairman HENSARLING. Okay, the committee has requested this. 

We will put in an official request. I hope we don’t have to subpoena 

it. We would hope that you would voluntarily supply this. 

The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Tennessee, Mr. 

Fincher. 

Mr. FINCHER. Thank you, Mr. Chairman. 

And thank you, Chairman Hochberg and Mr. McCarthy, for 

being here today. 

A lot has been said today, many comments on both sides of the 

aisle, pro and con. I was just thinking, as I was looking over some 

notes, about one of our greatest Presidents, President Reagan, and 

how he was able to guide the country in the direction of prosperity 

and growth, was able to make things work, and I was thinking 

about a lot of the policies that he championed, and I wonder, in today’s political world, on the Republican side of the aisle, how many 

of my colleagues would politically go after President Reagan because he wasn’t, in their mind, conservative enough, which is really 

ridiculous because he was able to do a lot for this country with his 

leadership? 

Also today, as I have been listening to a lot of the comments, I 

guess I have to get on my staff, I thought we had introduced a bill 

with 60 cosponsors earlier in the year, H.R. 597, to reauthorize and 

reform the Ex-Im Bank. So many of the issues that have been 

brought up today we are addressing in our reform package. I was 

just looking over some of the things making the Office of Ethics 

statutory. 

To my good friend Mr. Williams from Texas, we allowed the 

Bank to build its own earnings now. So if there is ever a place and 

time that there is a failure, we allow the Bank to build its own capital so the taxpayer will not be on the hook. We are actually 

strengthening and making this—what is frustrating as a good conservative Republican is we are sent to Washington to make the 

government more accountable, more transparent, and more responsible, and to work for our constituents. 

Last night, I had a lot of thoughts go through my head, and I 

asked my wife, ‘‘Am I sure I am doing what is right?’’ 

And she said, ‘‘You know in your heart you are doing what is 

right.’’ 

And I said: ‘‘Well, it is very difficult on me having a disagreement with the chairman.’’ 

And she said, ‘‘Well, honey—and she has been wrong before, but 

I think she was right this time—you don’t work for the Chairman. 

58 

You don’t work for the President. You don’t work for the Speaker. 

You work for your district. You work for the hard-working Americans all over this country, and you are sent to Washington to do 

the best you can with what you have.’’ 

Now, look, the easiest thing for us to do here politically is to blow 

this thing up and go back home to our districts, and blame everybody else for it. And you know who is going to be left holding the 

bag? The workers who lose their jobs because these companies are 

buying products from people in other places around the world. 

Now, we have a challenge here. Are we going to step up and try 

to do the right thing? Roger Williams brought up a great point 

when it came to reforming this part of the nonrecourse loan. Do 

you know how we do that? We do that by bringing something before this committee in regular order. Chairman Hensarling has 

been a champion of regular order. Allow us to have our day, allow 

us to have our say, and if the opponents of this win out, then we 

lose and the Bank won’t be reauthorized. But we have all of these 

reforms. We have been working on a conservative approach to fixing the problems with this Bank, but yet we somehow can’t seem 

to come together and at least have an open and honest debate. 

The hearings are good. I know they serve their purpose. But this 

is getting a little old doing the same thing over, and over, and over, 

when we could have a markup. We could have regular order. The 

people could offer amendments, amendments if they wanted to end 

the Bank, amendments to have nonrecourse, whatever amendment 

they wanted to offer. And we could all vote. We could all have our 

say. We could all show people where we stand on these issues. Or 

we can continue to play the game—it expires in, what, 14 days? We 

have an obligation to do what is right for the American people. And 

I have an obligation to work for my district: 160,000 jobs nationwide; 8,300 jobs in the State of Tennessee; 116 exporting companies 

in the State of Tennessee. The American people deserve better and 

we need to give it to them. 

And I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Hampshire, 

Mr. Guinta. 

Mr. GUINTA. Thank you, Mr. Chairman. 

And thank you, Chairman Hochberg, for being here today to talk 

about this issue. I have listened to a lot of the testimony and a lot 

of the questions, and I think this is a very serious and complex 

issue before this committee, and before Congress. 

I served back in the 112th Congress when this was reauthorized. 

And I have met with you, and I have listened to your testimony. 

I have read your testimony, and I have tried to look at this in a 

way that gives me as much information as I can possibly have as 

I try to make a decision. I have met with companies back home 

who favor and support reauthorization. I have talked to constituents who oppose reauthorization for different reasons. 

There are two areas that I think I would like to focus on, on 

which I need some clarification. You stated in your testimony this 

morning, I think in your written testimony, a very basic statement: 

‘‘To be clear, every action and study required in the Bank’s 2012 

bipartisan reauthorization has been completed and implemented or 

59 

is being compiled with on an ongoing basis.’’ And you have the attachment to identify that. 

What I would like you to walk me through as I looked through 

all of these recommendations, I see a number of them that are fully 

implemented, but I see quite a number that say, ‘‘concur, working 

to implement.’’ 

Mr. HOCHBERG. Concur what? 

Mr. GUINTA. ‘‘Concur, working to implement.’’ And a number of 

them going back to 2010, 2012, 2013, so I wonder if you could clarify for me why would it be taking so long to implement some of 

these recommendations? And I can be specific on some of them, but 

if you just want to answer generally or broadly then I can get more 

specific. 

Mr. HOCHBERG. Well, for example, for me—the inspector general’s are ongoing studies, ongoing audits, ongoing proposals for improvement. They are currently standing at 145. We have closed out 

97 of them. Two-thirds of them are closed out. Since we last had 

a hearing here 6 weeks ago, we have closed out another 9 or 10 

of them in that period. So we are continually working through that. 

We reviewed it, and have agreed with the inspector general on 143 

out of 145 recommendations. So once we agree, then the next work 

is to do a work plan together to actually implement it. That is what 

we are working on. 

Mr. GUINTA. What about in the area of portfolio risk and loss reserve allocation policy? Under recommendation 5, it says: ‘‘Create 

a position of chief risk officer to oversee the design implementation 

of an agencywide risk management.’’ 

And it says, ‘‘concur, working to implement.’’ Is that accurate? 

Mr. HOCHBERG. I added a chief risk officer, C.J. Hall. He joined 

the Bank in the fall of 2013. 

Mr. GUINTA. So are there reports from him? 

Mr. HOCHBERG. C.J. Hall, he chairs the Enterprise Risk Committee, and then—there are two people under him, two long-serving employees who are actually the two sort of deputies on that 

committee who meet on a regular basis, review the portfolio; review 

credit policy; when appropriate, make recommendations to me and 

the Board if it requires board approval; but work closely on providing an enterprise-wide review of all risk whatsoever. That was 

one—that was an earlier recommendation before the 2012 reauthorization that we implemented voluntarily. 

Mr. GUINTA. So are there reports which C.J. Hall creates that 

Congress should be looking at or can look at? 

Mr. HOCHBERG. One of these they approve is the default report, 

which comes to Congress every 90 days. 

Mr. GUINTA. How about other reports? 

Mr. HOCHBERG. There are other reports. Some of them they send 

to the audit committee of the Bank. Some come to me. Some will 

go to the inspector general. I prefer that the inspector general answer the rest of that question. 

Mr. GUINTA. What about—there is another one from September 

28, 2012, Export-Import Bank Short-Term Insurance Program. It is 

recommendation 6: ‘‘Development and implement a monitoring 

processor for periodically reviewing a sample of authorizations.’’ It 

says, ‘‘concur, working to implement.’’ Is that not completed? 

60 

Mr. HOCHBERG. I would be probably better served by having 

Mike McCarthy respond directly. 

Mr. MCCARTHY. Which one are you referring to? 

Mr. GUINTA. Recommendation 6, from September 28, 2012, under 

Export-Import Bank Short-Term Insurance Program. It is recommendations 6 and 7; both say, ‘‘concurring, working to implement.’’ I guess my question is, if that is accurate, if you are working to implement, why would it take from September 2012 to today 

to not complete? 

Mr. MCCARTHY. I think our view overall is that we have been 

working with the Bank to implement these recommendations. We 

have drawn a distinction, and I did in my testimony today, between 

current recommendations they have been issued in this fiscal year 

and older ones. The older ones we would like to see more progress 

on. 

Mr. GUINTA. Okay, thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

There are no other Members in the queue, so we will excuse our 

first panel. 

Mr. McCarthy, Chairman Hochberg, thank you very much for 

your testimony. 

The Chair wishes to alert all Members that there are currently 

votes taking place on the Floor. Thus, we will not at this time convene the second panel, but we will excuse the first panel. 

We expect to be on the Floor for quite some time. We anticipate 

convening the second panel in approximately an hour and a half. 

Until then, the committee stands in recess. 

[recess] 

Chairman HENSARLING. The committee will come to order. Before 

we recessed for Floor votes, we heard testimony from our first 

panel of witnesses. We have now impaneled our second panel, and 

we will introduce them. 

Starting on my left, Mr. Daniel Ikenson is the director of the 

Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. 

I now wish to yield to the gentleman from Arkansas, Mr. Hill, 

to introduce our next witness. 

Mr. HILL. Mr. Chairman, thank you so much. 

It is a pleasure for me to introduce Rachael Cox, who is vice 

president of business development for Conway Machine, Inc., a 

small, successful, family-owned manufacturer located in Conway, 

Arkansas, which is in the Second Congressional District. Like 

many small businesses, Conway Machine faced tough economic 

times during our Great Recession. But they adapted and innovated, 

largely by increasing exports around the world. And in 2013, 

Conway Machine received the Governor’s Award for Excellence in 

Global Trade for small businesses. 

I appreciate Mrs. Cox taking time away from her family to be 

with us today. Her husband is deployed overseas, and we appreciate their family’s service to our country. And I look forward to her 

testimony. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. Thank you. 

I now recognize the gentleman from New Hampshire, Mr. 

Guinta, to introduce our next witness. 

61 

Mr. GUINTA. Thank you, Mr. Chairman. 

It is an honor today to introduce my fellow Granite Stater, Mike 

Boyle. Mike is the CEO and president of Boyle Energy Services and 

Technology, Inc., which is located in New Hampshire’s largest City 

and my hometown, Manchester. After serving in the Navy, Mike 

utilized the skills gained in his training to start his very successful 

company, Boyle Energy, back in 1990. He has served our country 

and he served our great State, and I very much appreciate him 

being here. I look forward to hearing his testimony, and I believe 

he’ll be a great witness. 

Chairman HENSARLING. Our next witness, Mr. Clifford Smith, is 

the executive vice president of business development at Cliffs Natural Resources. He graduated from the South Dakota School of 

Mines and Technology with a degree in mining engineering, and 

previously held mine management positions with other concerns. 

Mr. John Murphy is the senior vice president for international 

policy at the U.S. Chamber of Commerce. He graduated Phi Beta 

Kappa from the University of Colorado at Boulder, with a Master’s 

degree from the School of Foreign Service at Georgetown. He previously served as the Chamber’s vice president for western hemisphere affairs. 

Richard Ben Hirst is the executive vice president and chief legal 

officer of Delta Air Lines. He graduated from Harvard College, 

Harvard Law School. He previously served in general counsel positions for Northwest Airlines, the Minnesota Twins, Burger King, 

KB Home, and Continental Airlines. 

I know we have several witnesses who have never testified before 

Congress. It is not quite as difficult as it looks, but there is a little 

button system and a light system. When it is your turn, if you can 

please make certain that your microphone is on. Green means go, 

yellow means really go because you are about to run out of time, 

and red means stop. Hopefully, that will be abundantly clear to all. 

And at this time, Mr. Ikenson, you are now recognized for 5 minutes to give a summary of your testimony. 

STATEMENT OF DANIEL J. IKENSON, DIRECTOR, HERBERT A. 

STIEFEL CENTER FOR TRADE POLICY STUDIES, CATO INSTITUTE 

Mr. IKENSON. Thank you, Chairman Hensarling, Ranking Member Waters, and members of the committee. I am Dan Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at 

the Cato Institute. Thank you for the invitation to share my views 

with you today, which are my own and should not be construed as 

representing any official positions of the Cato Institute. 

Americans tend to view the global economy as an us-versus-them 

proposition, where exports are team U.S.A.’s points, imports are 

the foreign team’s points, the trade account is the scoreboard, and 

the deficit on that scoreboard means the home team is losing at 

trade. Given the exalted status of exports in the public’s mind, ExIm’s self-portrayal as indispensable to U.S. export success insulates 

it from the level of scrutiny it deserves. 

Trade is not a competition between us and them. It is not a national sport played between countries. The goal of trade policy is 

not to secure a national trade surplus. Why should U.S. taxpayers 

62 

underwrite and U.S. policymakers promote the interests of exporters anyway, when the benefits of those exports accrue primarily to 

the shareholders of the companies enjoying the subsidies? 

There is no national ownership of private export revenues. Policymakers should stop conflating the interests of exporters with the 

national interest. Instead, they should aim to make the United 

States a more attractive place for companies, both domestic and 

foreign, to invest, hire, and engage in production and commerce. 

For example, most of the value of U.S. imports in 2014 consisted 

of intermediate goods, capital equipment, and raw materials, which 

are the purchases of U.S. businesses. Yet many of those imports, 

products like sugar, steel, magnesium, and polyvinyl chloride are 

subject to Customs duties which raise the cost of production for the 

U.S.-based companies that need them, making those firms less 

competitive at home and abroad. 

Now, that is fairly easy to grasp. But just as U.S. steel tariffs 

raise costs for U.S. manufacturers of appliances and auto parts, 

subsidies to exports steel have the same adverse effect on steelusing industries: diverted supply leading to higher domestic input 

cost and lower input prices for competitors abroad. What is seen 

and celebrated is the tariff or export subsidy that benefits the steel 

industry. What goes unseen but is every bit as real are the costs 

imposed on the downstream industries. 

Ex-Im financing helps two sets of companies: U.S. firms whose 

exports are subsidized through direct loans or loan guarantees; and 

the foreign firms who purchase those subsidized exports. But those 

same transactions impose costs on two different sets of U.S. companies: competing U.S. firms in the same industry who do not get ExIm backing; and U.S. firms in downstream industries whose foreign 

competition is now benefiting from reduced capital costs courtesy 

of the U.S. Government. 

Nearly 55 percent of U.S. manufacturing output is purchased by 

other U.S. manufacturers as inputs to their own production. So 

subsidizing its diversion abroad amounts to a policy that does pick 

winners and losers. Ex-Im financing enables the lucky U.S. exporter to offer more favorable sales firms to the foreign customer 

to win the sale, and it reduces the cost of capital for that foreign 

customer. Those two parties are the beneficiaries. 

But hurt by that same transaction are U.S. competitors of the 

U.S. exporter, in other words, U.S. firms in the same industry as 

the subsidized exporter and U.S. competitors of the foreign customer who are put at a relative cost disadvantage. If Ex-Im provides a $50 million loan to a foreign farm equipment manufacturer 

to purchase steel from U.S. Steel, the transaction may benefit U.S. 

Steel, but it hurts competitors like Nucor, Steel Dynamics, AK 

Steel, and the other steel firms in the United States that compete 

for the same customers at home and abroad. 

These are what I call the intra-industry costs. The $50 million 

subsidy of U.S. Steel is a $50 million cost to the other steel firms. 

And while Ex-Im would call that a $50 million benefit to the U.S. 

economy, it is really a $50 million benefit to U.S. Steel, not the 

broader economy. What is given to U.S. Steel is taken from Nucor 

and other firms. 

63 

But there is more, the downstream industry cost of those imposed by the transaction on the U.S. companies that compete with 

the foreign customer. When that foreign farm machinery producer 

purchases steel on credit at subsidized interest rates, it obtains an 

advantage over its competitors, including its U.S. competitors. 

Some percentage of that $50 million loan to the foreign farm equipment producer is a cost borne by U.S. farm equipment producers 

such as John Deere, Caterpillar, New Holland, et cetera, who compete in the United States and abroad with foreign producers whose 

costs are lower courtesy of the U.S. taxpayer. 

Ex-Im measures its success by the exports it underwrites. Last year, it supported $27.4 billion of U.S. exports, but the analysis 

doesn’t simply end there. Those are, at best, the gross benefits. 

Costs need to be taken into account, considering only the downstream costs and not the intra-industry costs or the opportunity 

costs. A recent Cato Institute paper found that Ex-Im policies 

amount to an annual tax on the U.S. manufacturing sector of approximately $2.8 billion, and the victims include companies across 

the manufacturing spectrum and across the United States. 

The average firm in four of every five manufacturing industries 

is made worse off by the Export-Import Bank. Market interventions 

like these, no matter how well-intentioned, have secondary effects 

that must be considered when rendering judgment about the efficacy of policy; in other words, costs and not just the shiny benefits, 

must be taken into account. And when they are, the case is clear, 

Congress should allow Ex-Im to expire at the end of the month and 

refrain from subsequent reauthorization. 

Thank you. 

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

170 of the appendix.] 

Chairman HENSARLING. Thank you. 

Mrs. Cox, you are now recognized for 5 minutes for your testimony. 

STATEMENT OF RACHAEL COX, VICE PRESIDENT, BUSINESS 

DEVELOPMENT, CONWAY MACHINE, INC. 

Ms. COX. Thank you, Chairman Hensarling. My name is Rachael 

Cox. I am the vice president of business development for Conway 

Machine. We are a woman-owned, small business specializing in 

precision machining, Swiss style and standard CNC turning and 

milling, as well as the manufacturer of replacement parts for the 

printing and packaging industries. 

I am an Air Force wife. My husband is presently deployed. I, 

therefore, rely heavily on my network of family and friends in the 

caretaking of my two young daughters. My parents purchased the 

business when I was about 8 years old, so I have a lifetime of experience in the industry. And in 2010, as the economy was crashing 

and it looked like it was going to take us down with it, my parents 

requested that I join the business, and like any good daughter, I 

obliged them. 

When I came on board, we regrouped, refocused, and decided if 

the U.S. economy could not provide the sales that we needed, we 

would find the sales in new markets overseas. And it didn’t take 

long to start seeing results. As we began our recovery, we were 

64 

overwhelmed with work. And any small business owner can tell 

you that on any given day, you are wearing about five different 

hats, of which all you are the expert. So as we reintroduced 

Conway Machine to the international stage, we began to hire new 

employees as well. 

Now, my first full year with the family business saw a total export of over $300,000 in 2011, and that was 13 percent of overall 

sales. And at that time, the shop was running a day shift with 

about 15 employees. The next year in 2012, it grew slightly, 

$441,000 in exports, about 16 percent of overall sales. 

But in 2013, after we did a trade show in Germany, we saw a 

nearly 50 percent increase to $809,000 in exports, about 25 percent 

of our overall sales. That same year, as Congressman Hill mentioned, we did receive the Governor’s Award for Excellence in Exporting. We maintained these new customers the following year 

with $875,000 in exports, in 2014, again 25 percent of overall sales. 

And it looks like this year we are going to maintain that growth. 

We have doubled our workforce, and we now employ an average 

of 30 full-time workers. We run a day and a night shift and are 

in the process of adding a weekend shift as well. Last year, Conway 

Machine made a large investment of $1 million in new equipment, 

and by the end of this summer, we will be moved into our new expansion of over 5,000 square feet of production facility. All of these 

have served to increase our capacity, technological expertise, and 

overall quality of product and price. 

Our 50 percent increase in exports was accomplished without the 

assistance of the Ex-Im Bank. That is not to say Conway Machine 

is adverse to government resources for small businesses. We have 

good relationships with the folks at the Arkansas World Trade 

Center, and I am currently taking classes with the Small Business 

Administration. 

However, Conaway Machine is not dependent on the government 

for its success. When I researched the Ex-Im Bank, and especially 

the sign-up process, it became clear that it was designed more for 

large businesses. The amount of information required was pretty 

overwhelming at best and invasive at worst. And after some consideration, I did decide against it. 

As an Air Force wife, I consider myself a bit of a patriot. It is 

important to remember that our servicemen sign up because they 

wish to protect and defend the Constitution. They understand and 

cherish the fact—and I will quote from the Declaration of Independence—‘‘ that All men are created equal, endowed by their Creator with certain unalienable Rights, that among these are Life, 

Liberty and the pursuit of Happiness.—That to secure these rights, 

Governments are instituted among Men...’’ 

As you consider the renewal of the Ex-Im Bank, I would ask you 

to consider our founding documents and the principles from which 

they were derived. What is the purpose of government? And in fulfilling that purpose, what is the role of government? It seems that 

if government aims to aid small businesses and their exports and 

thereby grow the domestic economy, it would be much more beneficial to create more free trade agreements with other countries 

and decrease the red tape barriers to trade. 

65 

While the Ex-Im Bank may work for some companies in other industries, it has not been a resource for Conaway Machine. As previously stated, we have grown our exports by 50 percent and doubled our workforce without the use of the Ex-Im Bank. Given the 

complaints that we have seen today, it may be time to consider 

whether a good intention by the government has gone awry yet 

again. 

Thank you, Mr. Chairman. 

[The prepared statement of Mrs. Cox can be found on page 118 

of the appendix.] 

Chairman HENSARLING. Thank you. 

Mr. Boyle, you are now recognized for 5 minutes for your testimony. 

STATEMENT OF MICHAEL P. BOYLE, PRESIDENT AND CEO, 

BOYLE ENERGY SERVICES & TECHNOLOGY, INC. 

Mr. BOYLE. Thank you, Chairman Hensarling and Ranking 

Member Waters. 

I am Mike Boyle of Boyle Energy Services & Technology. I have 

a unique business. I don’t manufacture a product or machine parts. 

I am a service provider, a unique person in the Ex-Im world. My 

company helps transition the world’s largest energy facilities from 

construction to operation, a very unique niche of services that we 

started 25 years ago, I guess, now, in 1990. 

I went on, 10 years of that time, as a sort of ‘‘me too’’ organization working mostly domestically here in the United States. And 

then, we invented a new technology that we patented here in the 

United States and decided that our best markets for penetration 

during the downturn would be overseas, and we were right. Our 

opportunities were great because the technology that we provided 

as an American engineering corporation were greater than were 

available overseas. 

During that time, I was very concerned as a small business that 

the cash flow for the company be supported, more so for my vendors and employees than for the benefit of the company as a whole. 

But, in fact, that was our greatest fear, our ability to collect the 

receivables that we were able to produce overseas. 

Having done so, we had a couple of successes, but the projects 

grew in large scale. Much, much bigger than a simple terms of payment would be available to some of these companies. We were competing with companies such as Abener Abengoa that had terms of 

180 days of payment, which was unconscionable for a small business. It is impossible for us to work with that environment. 

So what we did is we secured a working capital line of credit 

through our bank after we had applied to Bank of America and 

were rejected, because our receivables were not able to be secured 

overseas, so they were discounted to zero, and therefore not creditworthy. It wasn’t whether or not the process that we were doing 

was risky; we had been performing more than 200 of these projects 

in the United States at that time. 

Having secured that, we went on to become one of the leading 

technologists in the industry. We are considered the foremost technological leader in the world at what we do. We patented our program here in the United States. We are seeing 4 times growth in 

66 

revenue since that time, and 6 times the amount of employees are 

now at Boyle Energy Services. 

We actually have just made an offer and it was accepted to buy 

a 70,000-square foot building, which would now bring us up to 

nearly 100,000 square feet in New Hampshire. We are the only 

company, outside of Houston in the Texas marketplace, that has 

ever done this globally in the commissioning energy industry from 

New Hampshire. And this is all from a service I learned while I 

was in the Navy. I bill myself as the world’s most successful U.S. 

Navy-enlisted boiler technician. So until somebody challenges me 

on it, I am going to hang that hat on my award wall. 

We have had great success with the Ex-Im Bank. We are the success story. We have used it appropriately, and as such, we have repatriated 100 percent of our profits. We pay a nominal tax rate of 

26 percent on those profits, all returned to the Treasury. We were 

advised recently on the structure of our corporation, because we 

have gone global. We have offices in Brazil, Mexico City, and Bahrain. We have a laydown yard in Saudi Arabia. 

I have been working in 22 countries, and I think we are in 11 

countries tonight, all with American employees. We have equipment purchased from the United States and shipped overseas, $75 

million since we started exporting. All of that is at work in support 

of our working capital line of credit through the Ex-Im Bank. When 

I have asked my banks if I could get additional credit without ExIm, they answered, ‘‘no.’’ Plain and simple. 

I don’t know of any other instruments or facilities that can support. We have sought that out across the United States and have 

been unsuccessful. We want to go forth, we want to continue with 

our growth. I am hiring at a rate that—I am putting seats in my 

office faster than I can hire people right now. We have enjoyed success, and we have projects going forward, and we continue to believe that we will be successful with the Export-Import Bank supporting us. 

I am in favor of the Export-Import Bank, and I would ask that 

the House of Representatives call for its reauthorization. Thank 

you. 

[The prepared statement of Mr. Boyle can be found on page 114 

of the appendix.] 

Chairman HENSARLING. Thank you, Mr. Boyle. 

Mr. Smith, you are now recognized for 5 minutes for your testimony. 

STATEMENT OF CLIFFORD SMITH, EXECUTIVE VICE PRESIDENT, BUSINESS DEVELOPMENT, CLIFFS NATURAL RESOURCES INC. 

Mr. SMITH. Thank you, Chairman Hensarling, Ranking Member 

Waters, and members of the committee for allowing me to testify 

today. My name is Clifford Smith, and I am the executive vice 

president of business development for Cliffs Natural Resources. We 

have five major mines in the States of Minnesota and Michigan, 

and we are the largest producer of iron ore pellets for the steelmaking industry in the United States. I am here to speak about the Ex-Im Bank and its $694 million 

direct loan to the Roy Hill project in Western Australia that we beVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
67 

lieve exposes serious flaws in the Bank’s governance and has contributed to the decimation of the global iron ore trade. 

In May of 2013, following the release of the economic impact notice for the Roy Hill project, Cliffs conducted an independent economic study on the proposed transaction which found that the 

transaction would cause a loss of almost $600 million worth of U.S. 

exports and the loss of $1.2 billion of U.S. domestic sales due to 

price degradation of our products supplying iron ore. 

The total impact to Cliffs over the term of the loan was esti- mated to exceed $1.8 billion. These pricing estimates were based on 

an assumption that global oversupply would lead seaborne prices 

to degrade from an average of $135 a ton in 2013 to $96 a ton in 

2018. And, in fact, the global oversupply of iron ore has become 

much worse than our own economic analysis predicted. Today, the global seaborne iron ore price is in the low $60-a-ton range, and has dipped as low as $45 in the month of April of this 

year. The oversupply situation has been caused by new projects 

and the conscious decision of major iron ore producers like Rio 

Tinto and BHP Billiton to add unneeded iron ore capacity, even as 

the Chinese economy continues to slow down and demands less 

iron ore. 

Over the past 9 months, we have been reshaping Cliffs to be a 

peer U.S.-centric company and to remove us from the iron ore trade 

with China. While we still have an international iron ore mining 

operation in Australia that participates in the seaborne iron ore 

trade, we have initiated court-supervised proceedings for our Canadian operations to complete our exit from Canada in an orderly 

fashion. 

This was a difficult but necessary step after considering and exploring other alternatives for these assets. In addition, let me point 

out that there is a direct correlation between low seaborne iron ore 

pricing and U.S. steel imports. Low-cost iron ore is facilitating Chinese steel producers to flood the United States with cheap steel. 

The U.S. steel market is experiencing all-time record levels of imports. A staggering 34 percent of finished goods hit the United 

States in the first quarter of this year. 

To put this in perspective, when the Roy Hill transaction was approved, the U.S. iron ore industry was producing at or near capacity and at full employment. Today, there are over 1,200 workers in 

the domestic iron ore business who are currently on layoff or have 

been notified of an impending layoff, including 350 employees at 

Cliffs Empire Mine in the State of Michigan. 

The Roy Hill project proposes to add even more iron ore to the 

market, and then the U.S. industry and aggregate will compound 

this oversupply situation when the project begins later this year in 

2015. The Ex-Im Bank’s charter precludes the extension of financing for a material that will be in a state of global oversupply, and 

prohibits the Bank from funding the project that will harm one set 

of U.S. producers, iron ore miners, over others, equipment manufacturers. 

How then could the Bank justify the Roy Hill loan? The Bank’s 

own economic analysis found an adverse economic impact to the 

U.S. producers of only $25 million, compared to our study of $1.8 

billion in harm. To reach that outcome, there were widely unsupVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
68 

ported claims that the 55 million metric tons of production for the 

Roy Hill project would not affect the global supply demand dynamics. 

In short, the Ex-Im Bank second-guessed Cliffs’ economic impact 

and largely refused to acknowledge our outlook on our own industry. Going forward, we look forward to working with the committee 

to share our thoughts on the necessary amendments to the Bank’s 

charter to ensure that the Bank can never again fund a fatallyflawed project such as Roy Hill. 

Thank you. 

[The prepared statement of Mr. Smith can be found on page 196 

of the appendix.] 

Chairman HENSARLING. Thank you, Mr. Smith. 

Mr. Murphy, you are now recognized for 5 minutes for your testimony. 

STATEMENT OF JOHN MURPHY, SENIOR VICE PRESIDENT, 

INTERNATIONAL POLICY, U.S. CHAMBER OF COMMERCE 

Mr. MURPHY. Chairman Hensarling, Ranking Member Waters, 

and members of the committee, thank you very much for the opportunity to be here today. I am pleased to testify on the importance 

of reauthorizing the Ex-Im Bank. I represent the U.S. Chamber of 

Commerce, the world’s largest business federation representing the 

interests of more than 3 million businesses of every size, sector, 

and State. 

At this point in the hearing, you have heard most of the fundamentals. From the perspective of our business members of all 

sizes, the idea that Congress would even consider making the 

United States the one major trading nation in the world without 

an official export credit agency has left many baffled. 

This morning, the Chamber and the National Association of 

Manufacturers sent a letter to Congress signed by more than 1,000 

companies of every size, sector, and State, calling for the Bank to 

be reauthorized swiftly. Consider how refusing to reauthorize the 

Bank would put specific sectors and industries at a competitive disadvantage in global markets. 

First, shutting down Ex-Im would mean many small businesses 

couldn’t even export because commercial banks often refuse to accept foreign receivables as collateral for a loan without an Ex-Im 

guarantee. For these small firms, Ex-Im is often indispensable. In 

fact, buyers overseas nowadays expect vendors to offer financing in 

many cases. Without Ex-Im’s accounts receivable insurance and 

lines of credit, many U.S. small businesses would be unable to extend terms to foreign buyers and would have to ask for cash in advance. 

In such a case, the business will most likely go to a firm from 

another country that is able to offer financing. For these small 

businesses, Ex-Im isn’t just nice to have; it is indispensable. Nor 

is there any assurance that eliminating Ex-Im would cause commercial banks to step into the breach. In addition to these direct 

small business beneficiaries, tens of thousands of smaller businesses that don’t even always recognize it are also benefiting as 

they supply goods and services to large exporters that benefit from 

Ex-Im support. 

69 

Second, it is par for the course for expensive capital goods such 

as Canadian planes, Chinese trains, and Russian nuclear reactors 

to be sold worldwide with unashamed backing from these firms’ national export credit agencies. In past years, we have seen major 

tenders for locomotives and a number of emerging markets hang in 

the balance. 

These tenders, worth hundreds of millions of dollars, require that 

the supplier finance a significant portion of the transaction. Chinese competition, in these cases, has been fierce, and they come 

well-prepared with generous financing from one of China’s several 

export credit agencies. Again, in these circumstances, the calculus 

is clear: No Ex-Im, no sale. 

Third, with regard to foreign infrastructure opportunities, closing 

Ex-Im would shut American exporters out of these huge and growing business opportunities overseas, because export credit agencies 

support is often required for a company to even bid on overseas infrastructure projects. 

Fourth, nuclear power is another sector where the fate of Ex-Im 

will have a major impact. According to the Nuclear Energy Institute, 5 nuclear power plants are under construction in the United 

States, but 61 are under construction overseas. So for the U.S. nuclear industry, which directly employees more than 100,000 American workers in high-skill, high-wage jobs, it is export or die. 

But here is the rub: Export credit agency support is always a bidding requirement for international nuclear power plant vendors. 

Without Ex-Im, U.S. nuclear power companies won’t even be able 

to bid for business overseas. Make no mistake, executives in a 

number of these industries will face the hard question of whether 

to shift production to locations abroad where export credit agency 

support is available. 

Ex-Im’s critics would like to have it both ways. On the one hand, 

the Bank is a colossus with the power to distort free markets; but 

on the other hand, it is such a small agency that its abolition 

would do no harm to U.S. companies or their workers. It can’t be 

both. In fact, Ex-Im is modestly and appropriately scaled, acting 

mostly in the circumstances I have described where it is necessary 

to U.S. competitiveness. 

In closing, Ex-Im does not skew the playing field; it levels it for 

U.S. exporters facing head-to-head competition with foreign firms 

backed by their own export credit agencies. It doesn’t pick winners 

and losers, but refusing to reauthorize Ex-Im is picking foreign 

companies as winners and U.S. exporters as losers in many headto-head competitions. 

Ex-Im’s opponents have attempted to tie it to unsavory customers overseas. We believe this is just a diversion from the true 

beneficiaries of Ex-Im, the tens of thousands of American workers 

who hope and expect to see Congress vote on a reauthorization bill 

here in the short term. Thank you. 

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

189 of the appendix.] 

Chairman HENSARLING. Thank you, Mr. Murphy. 

And Mr. Hirst, you get to bat cleanup. You are now recognized 

for 5 minutes for your testimony. 

70 

STATEMENT OF RICHARD B. HIRST, EXECUTIVE VICE 

PRESIDENT AND CHIEF LEGAL OFFICER, DELTA AIR LINES 

Mr. HIRST. Thank you very much, Mr. Chairman, and members 

of the committee. On behalf of the more than 80,000 employees of 

Delta Air Lines, I very much appreciate the opportunity to testify 

on the need for substantial reform of the Export-Import Bank of 

the United States. My testimony today is an update for you of what 

has happened since Delta last appeared before this committee one 

year ago. And we believe the events of the past year continue to 

highlight the need for reform of the Bank. 

I would like to make three main points in my testimony today: 

first, despite the reforms of the 2012 reauthorization bill, the Bank 

continues with business as usual, financing more than $6.8 billion 

in aircraft transactions in 2014, without any real analysis as to 

whether Ex-Im’s actions cause harm to airlines or their employees; 

second, the courts have recently ruled that there is no judicial review of the Bank’s actions because of gaps and ambiguities in the 

Bank’s statutory charter; and third, if there is to be any meaningful progress to ensure that all U.S. employees are treated fairly, 

Congress must take a leadership role to ensure that the Bank only 

acts as a lender of last resort. 

Since its inception in 1934, the Export-Import Bank has been 

charged with promoting U.S. jobs, while ensuring that its efforts do 

not harm other U.S. businesses. When it comes to the airline industry, however, the Bank’s loan guarantees to foreign competitors 

provide a significant unfair advantage in the form of low-cost financing, which hurts Delta’s competitive position. 

Moreover, the biggest users of Ex-Im financing are some of the 

most profitable foreign airlines in the world, which regularly access 

the private markets for capital, and do not need export financing 

from Ex-Im. Almost half of the Bank’s financial capacity is used to 

finance these airlines, which means that a substantial portion of 

the Bank’s financial capacity is used to harm Delta. 

In 2012, we worked with many of you to include two reform provisions in Ex-Im’s reauthorization. The first reform provision requested that Ex-Im make publicly available the procedures and 

methodology for its economic impact analysis. As we have learned 

in the past year from the Bank’s own emails and documents obtained through a Freedom of Information Act (FOIA) request, this 

effort was never undertaken by the Bank in good faith; rather, it 

was engineered to produce a specific result that would not upset 

the status quo. 

The second reform provision requested that Treasury undertake 

negotiations to reduce, and eventually eliminate, export credits, a 

directive included in the Bank’s charter. We thought that this reform held the greatest promise to ensure that a level playing field 

exists for everyone. Regrettably, there has been no good faith effort 

to negotiate. 

Recently, as I said, the courts have ruled against Delta and others in lawsuits challenging Ex-Im’s lack of economic impact analysis in specific transactions. What the committee may not appreciate is the magnitude of the court’s ruling: first, because of gaps 

and ambiguities in the Bank’s enabling statute, the court ruled 

that Ex-Im has near total discretion about how and whether to conVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00076 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
71 

sider economic impact, effectively eliminating any ability for an injured party to obtain judicial review; second, the court took the 

view that Congress and only Congress can impose any meaningful 

restrictions on Ex-Im’s discretion, and to date, Congress has not 

done so. 

It is now clear that Congress must act if any real reform is to 

occur. We continue to believe that the best solution is a mutuallynegotiated reduction in international exports subsidies, a negotiation that really needs to take place only with the three countries 

that provide export credit subsidies for Airbus’s wide-body aircraft: 

France; the U.K.; and Germany. 

For there to be any urgency behind these negotiations, we continue to believe that Congress must take the lead and require ExIm to adhere to its statutory mandate as a lender of last resort. If 

private market financing is available to a foreign airline, Ex-Im 

should not be permitted to undercut the private sector. 

Throughout this debate, Delta’s sole aim has been to advocate on 

behalf of our 80,000 employees, at least one of whom resides in the 

State of every member of this committee. Their request is a simple 

one, that their government consider their jobs to be as important 

as the jobs of every other American. 

Chairman Hensarling, Ranking Member Waters, thank you 

again for the invitation to appear before the committee. I look forward to answering any questions that you may have. 

[The prepared statement of Mr. Hirst can be found on page 121 

of the appendix.] 

Chairman HENSARLING. Thank you, Mr. Hirst. 

I want to thank all of the panelists. Without objection, your full 

written statements will be made a part of the record. The Chair 

now recognizes himself for 5 minutes for questioning. 

Mr. Murphy, in your testimony, you are a very articulate, effective advocate for Ex-Im. Indeed, this is some old ground that is getting plowed here. But having said that, you used a phrase that 

Chairman Hochberg used in his testimony, and that was, ‘‘Ex-Im 

does not pick winners and losers.’’ Now that you have heard the 

testimony of Cliffs Natural Resources, now that you have heard the 

testimony of Delta Air Lines, do you still stand by that line? 

Mr. MURPHY. I do. 

Chairman HENSARLING. Okay. 

Mr. MURPHY. In many cases around the world, we have seen instances where it is very clear that a purchase is going to be made. 

And the question is whether or not the U.S. company that is making an export can get the business or not, and often, it is the presence or the absence of export credit finance that will determine 

that. 

Chairman HENSARLING. Let me ask this question, then. So in the 

vaunted 2012 reforms, I believe it was Section 12 that had to do 

with the economic impact statement. And Mr. Hirst, I think, alluded to it in his testimony. Do you believe that Ex-Im has executed that reform effectively in the 2012 reauthorization bill, that 

they effectively take the detrimental impact on other U.S. companies into account before engaging in the process of credit allocation? 

Mr. MURPHY. I do. 

72 

Chairman HENSARLING. Okay. 

Mr. MURPHY. And I would cite the court case that was mentioned 

earlier as a source of that. The court— 

Chairman HENSARLING. Mr. Murphy, I will take ‘‘yes’’ for an answer. So that is your answer. Maybe I will get a ‘‘yes’’ answer to 

this, as well. 

I think it was a Mr. Brilliant—what a wonderful name—Myron 

Brilliant, executive VP head of International Affairs at the U.S. 

Chamber who said that, ‘‘TPA is the Chamber’s top priority before 

Congress.’’ 

Tom Donahue, President and CEO, U.S. Chamber, March 9, 

2015, ‘‘Renewal of TPA is priority number one.’’ 

Is renewal of TPA the number one priority of the Chamber? 

Mr. MURPHY. As a very broad business organization, it is difficult 

to prioritize, but we have spared no effort on TPA. 

Chairman HENSARLING. Apparently, Mr. Donahue and Mr. Brilliant— 

Mr. MURPHY. And I am not going to differ from my bosses on 

that, Mr. Chairman. 

Chairman HENSARLING. You are a wise man, Mr. Murphy. You 

are a wise man. 

I respect the right of all Americans to petition their government 

for the redress of grievances. Last I looked, the Chamber had a 

pretty healthy lobby budget. But just out of curiosity, are you expending greater resources on lobbying for the reauthorization of 

Ex-Im or are you spending more on the renewal of TPA? 

Mr. MURPHY. Mr. Chairman, we believe it is a false choice. What 

TPA can do— 

Chairman HENSARLING. It may be a false choice, but can you answer the question? 

Mr. MURPHY. We have a nationwide effort going on to back TPA. 

Chairman HENSARLING. I am just asking which are you spending 

more on. And if you don’t know the answer, I will accept, ‘‘I don’t 

know the answer.’’ But if you do know the answer, I would appreciate the answer. 

Mr. MURPHY. I believe we have more resources dedicated to TPA 

right now. 

Chairman HENSARLING. Okay. Thank you. 

Mr. MURPHY. But it does no good to open a foreign market if, in 

fact, we don’t have the tools that will allow American exporters to 

be competitive— 

Chairman HENSARLING. The last I looked, particularly at my 

friends on this side of the aisle, you might want to look at investing 

a few more resources in that particular effort. 

You referenced also, I guess, a letter with the National Association of Manufacturers (NAM). According to NAM, over 50 percent 

of our competitive disadvantage with our trading competitors is as 

a result of our tax structure, and specifically the corporate tax advantage. Does the Chamber agree with NAM’s analysis? 

Mr. MURPHY. I am not familiar with the details of it, but certainly, the world beating high corporate tax rate is a major factor— 

Chairman HENSARLING. Okay. So they seem to cite the number 

one problem being our tax structure, and not necessarily the presVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
73 

ence or absence of an export credit agency. I just wanted to note 

that for the record. 

Mrs. Cox, I want to thank you for coming here today, and thank 

you for your family’s service to our country. I take note that as a 

small business person, you don’t use Ex-Im. Apparently, you don’t 

begrudge those who do. But I have heard from other small businesses, one in Pullman, Washington, who said, ‘‘If the Ex-Im Bank 

were to disappear, I believe buyers and sellers would find attractive commercial options unencumbered by politics and special interests.’’ 

I heard another one from Cook, Illinois, in the airline logistics 

business say, ‘‘Over the long run, Ex-Im subsidies from foreign carriers creates a tilted playing field that makes fewer U.S. airline 

jobs and translates into economic pain for our employees.’’ Is that 

a fair assessment of your small business and other small businesses of which you are familiar? 

Ms. COX. I really can’t speak for other small businesses. I will 

say that the industry for which we are exporting is rather niche, 

and so it is a small network and we are able to know that those 

companies that we are working with we are able to—we get credit 

references from them just like we do any other kind of domestic 

customer and try to establish a good business relationship with 

them before extending terms of credit. 

So I can only speak for my small business and the industry that 

we are serving. I hope that is helpful. 

Chairman HENSARLING. Thank you. I am way over my time. The 

Chair now recognizes the ranking member for 5 minutes. 

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

We have been in a discussion and somewhat of a debate for a 

long time about the reauthorization of Export-Import, and we have 

said about everything that could be said about it. My colleagues on 

the opposite side of the aisle have mentioned over and over again 

that back in 2002, I voted against the Bank. And they did not mention that in 2006, I think it passed on a voice vote and nobody objected on either side of the aisle. So there is a mixed history about 

Ex-Im on this committee. 

But I think it is important for me to say that we have gone 

through some very difficult times; 2008 was not a good year. And 

we ended up having to bail out some of the biggest banks in this 

country because of a failed oversight by regulators, et cetera. We 

witnessed a decline in employment, and there was a lot of unemployment, and people suffered quite a bit. 

I am joining with the Chamber of Commerce in ways that I have 

never done before, because I am focused on jobs and job creation. 

There is a lot of talk now—you are going to hear it even on both 

sides of the aisle—about income inequality and discussion about 

wealth building, et cetera, et cetera. 

I make no apology for the fact that SpaceX is in my district. I 

make no apology for the fact that I have a great number of suppliers to Boeing in my district. They create jobs, and I am very 

proud and I am very pleased about that. And I think that Ex-Im 

is doing what was designed for them to do. That is their mission, 

to create jobs. 

74 

I have been involved in working on Ex-Im for reform. I have been 

involved in supporting small businesses to make sure that we have 

as many small businesses as possible supported by Ex-Im. I have 

also worked on other reforms in Ex-Im. And for those on the opposite side of the aisle, we have been interested in reform, we join 

them in looking at ways by which it could be stronger and better. 

What is very interesting about this discussion is that we have 

members on the opposite side of the aisle who point to that one indictment and they try to paint Ex-Im with a broad brush of corruption and mismanagement. What you don’t hear is anybody on the 

opposite side of the aisle painting the big banks in America with 

the same kind of brush no matter how many crimes they commit, 

no matter how much fraud they are responsible for. 

We are watching as we look recently at the manipulation of 

LIBOR, which determines the interest rates. We have watched as 

the attorneys general in this country had to penalize some of the 

big banks for the servicing mismanagement that they were involved in, on and on and on. 

So I think it is important for me to say this, as quickly as I can 

with the minute that is left: I support Ex-Im. I support the job creation. I support the fact that they have put money into our Treasury. I support the fact that we are more competitive with Ex-Im, 

and the fact that we consider ourselves the number one country in 

the world, and we are having our clocks cleaned by China and 

some of the other nations, and I don’t think we want to do that. 

We have always had a deficit for too long in export, and we 

should be proud of the fact that we have an agency that is dedicated to the proposition that we can do better. So there are problems; if there are, they should be worked out. But to talk about 

killing this Bank, not reauthorizing this Bank, is radical. That is 

a radical decision. And it does not make good sense for our country, 

which prides itself on innovation and creation and business expansion and job development. So I am hopeful that for all of those who 

may be unhappy, find a way to work with Mr. Hochberg and the 

Bank to work out these problems. 

I am thankful that you are here, Mr. Boyle, because you are the 

poster child for what this Bank is all about. And so I would just 

implore not only those who are here criticizing the Bank, to say it 

is all right to have criticism, but to talk about the killing the Bank 

is a radical response to whatever your concerns are. 

And for my friends on the opposite side of the aisle who have 

painted this as chronic—what do you call it?—corporate welfare, et 

cetera, I think that is an extreme way to deal with this. 

And for you, Mr. Duffy, I must point out to you that you kind 

of crossed the line when you implied that there was some kind of 

connection between campaign contributions and support for Ex-Im. 

I went and took a look at your record and everybody else’s record, 

and if you want to get into that debate, I am ready for that one, 

okay. 

I yield back the balance of my time. 

Chairman HENSARLING. The gentlelady’s time has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, the chairman of our Monetary Policy and Trade Subcommittee. 

75 

Mr. HUIZENGA. Thank you, Mr. Chairman. I’m glad to see this 

has continued to be a high-brow debate here. 

Unfortunately, especially for Mrs. Cox and Mr. Boyle and Mr. 

Smith, I think you are seeing some of the reasons why people in 

America believe that their government is dysfunctional. That is a 

sad commentary. 

And especially for the three of you, I want to thank you for taking your time out of your family businesses. I know from Michigan, 

Mr. Smith from Cliffs, I am very familiar that when I served in the 

State legislature, I was able to go up and see a number of your facilities in the upper peninsula. And as well as, Mr. Hirst, from the 

private sector. 

I do have a quick question for Mr. Murphy. Mr. Murphy, what 

would have more impact on the U.S. economy in our standing 

internationally, tax reform or Ex-Im? 

Mr. MURPHY. Again, tax reform is a big issue that it is difficult 

to assess— 

Mr. HUIZENGA. Okay. How about regulatory reform versus Export-Import Bank? 

Mr. MURPHY. When I work for such a broad business organization with many issues before the Congress, you see clear the linkages and the importance of moving forward on a variety of fronts, 

including reauthorization of Ex-Im Bank. 

Mr. HUIZENGA. Okay. I take that as a regulatory reform. 

How about TPA and TPP and TTIP? 

Mr. MURPHY. Opening up foreign markets for American exports 

is vital. Making sure that American exporters have the tools to be 

able to serve those foreign markets is also important. 

Mr. HUIZENGA. Okay. So are you comfortable with direct loans to 

companies such as NewSat? Foreign companies. Direct loans. We 

are not talking loan guarantees. We are talking direct loans. 

Mr. MURPHY. In the course of today’s hearing, there has been a 

lot of discussion about different overseas customers for American 

exporters. At a time when we need economic growth and job creation here at home, we see the primary beneficiaries of Ex-Im as 

the workers in American companies who are able to sell their 

goods— 

Mr. HUIZENGA. Are you comfortable putting those same workers’ 

hard-earned taxpayer dollars at risk in a foreign company with a 

direct loan, yes or no? 

Mr. MURPHY. In the case of Ex-Im where the many controls are 

in place and where the active default rate is below a quarter of 1 

percent, we are comfortable with the system that does that, and 

also welcome reforms that have been proposed in a number of bills 

now before the Congress. 

Mr. HUIZENGA. Okay. Which would not get rid of direct loans, by 

the way, I might add. All right. 

So Mr. Smith, could you just, again, maybe give us a quick picture on what you think is going to be happening and how this deal 

that put you at an economic disadvantage has really, I think, two 

things have happened: one, you have obviously seen the world market change; but two, you have seen your competitive playing field 

change, correct? 

76 

Mr. SMITH. That is correct. The one-off equipment sales really 

contributed to a decade of additional global supply. Picking winners 

and losers and selling equipment, now this installed capacity that 

will come online later this year. We have struggled to secure further overseas sales in exports, and we actually ceased exporting 

pellets from Michigan and Minnesota in the third quarter of last 

year as global oversupply continued to build. 

We have lost our ability to export any iron ore pellets to any 

steel makers in Europe or anywhere else. So we have lost that export capacity, and now we are seeing the compounding effect as 

cheaply made steel from South Korea and China enters the country 

and puts pressure on our customer base. Because iron is only used 

for one thing: making steel. There is nothing else that we can do, 

no substitute that we can seek out for our markets. 

Mr. HUIZENGA. Okay. Mr. Hirst, really quickly, I know that there 

may be some other options for purchases and leases out there that 

are in the private sector or in the nongovernmental sector, is that 

the case as people would be looking for aircraft for their particular 

airline? Are there lease programs? 

Mr. HIRST. There are many options, and there are leasing companies that currently make aircraft available to virtually any buyer. 

Mr. HUIZENGA. Virtually any buyer, even someone who might 

have some dubious credit? 

Mr. HIRST. Even some that may have difficulty obtaining credit 

to purchase aircraft outright. 

Mr. HUIZENGA. But it would be easier to use the loan guarantee? 

Mr. HIRST. It is much easier to use loan guarantees when the effect is that you are— 

Mr. HUIZENGA. Mr. Chairman, I am just reminded of a few other 

conversations being had in this committee and others, and it goes 

like this: The Feds currently do X. And X either, ‘‘has always been 

done’’ or we have seen, as we have seen with FHA and some other 

agencies, new responsibilities have been expanded massively. And 

now that argument is that there is no proof that the nongovernmental sector can handle it, and suddenly we are stuck. And it is 

time that we actually move beyond stuck. This is beyond broken. 

Thank you. 

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. 

Mr. Chairman, I love my country. I love what it stands for. I love 

the great and noble ideals expressed in the Gettysburg Address, 

‘‘Government of the people, by the people, for the people.’’ I love the 

words in the pledge of allegiance: ‘‘liberty and justice for all.’’ 

But as much as I love these, there is something that I love, I believe, even more, and it is the respect that we have for the vote. 

In this country, every 2 years, Representatives are elected; every 

4 years, a President is elected; every 6 years, Senators are elected. 

We in this country allow power to change hands from one President to another the passage of the keys to the nuclear arsenal, 

every 4 years because of a vote that we respect. 

77 

So Mr. Ikenson, my dear friend, you and I have a lot in common. 

As you can see, we both have beards. But my suspicion is we have 

something else in common. I believe you have respect for the vote. 

And I just believe that you, while you may not agree with the results as I might not agree with the results. There are many elections that I don’t agree with, but I respect the results even when 

I differ. 

Would you respect the will expressed by the Congress of the 

United States of America, the will of the American people expressed by and through their elected representatives? Would you 

respect a vote, Mr. Ikenson? A simple yes or no would suffice. The 

chairman and I have that in common. We have a proclivity to ask 

for yes-or-no answers, kind sir. 

Mr. IKENSON. Yes. 

Mr. GREEN. You would. Thank you, sir. 

By the way, others, please take note of the paradigm that has 

been established here. Excellent job. In court, we would probably 

call this voir dire. It is a French term and it means—or voir dire, 

depending on where you are from, it means to speak the truth. So 

this is sort of the truth-telling portion of this hearing. 

Let me just go down the line and I will ask Mrs. Cox, and I will 

go to each of you. Would you respect the will of the people expressed by and through their duly-elected Representatives, ma’am? 

Ms. COX. That is a trick question there. 

Mr. GREEN. Not really. 

Ms. COX. I am just considering the percentage of people who actually vote anymore. It has kind of gotten to where, is it really representative of the citizenry? I don’t know that you can really say 

that anymore. 

Mr. GREEN. I can say this: I bemoan the fact that they don’t vote, 

but I respect the vote. 

Ms. COX. I do, too. 

Mr. GREEN. I respect the vote. When we cease to respect the 

vote— 

Ms. COX. Right. 

Mr. GREEN. —we are going to lose a lot of what we call respect 

for law and order in the country. So Mrs. Cox, I will pass on you, 

I see you are not prepared. I’m sorry. 

Ms. COX. It is not a lack of preparation. I would love to debate 

political theory with you. 

Mr. GREEN. I will just pass on you and go to Mr. Boyle. 

Would you respect a vote, sir? 

Mr. BOYLE. Yes, sir. 

Mr. GREEN. All right. Mr. Smith, do you respect a vote? 

Mr. SMITH. Yes. 

Mr. GREEN. Mr. Murphy, do you respect a vote? 

Mr. MURPHY. Yes, sir. 

Mr. GREEN. Sir? 

Mr. HIRST. Of course. 

Mr. GREEN. All right. And the truth be told, that is what we are 

looking for, a vote. And while Mr. Murphy and I agree on many 

things, I am sure there are things that we differ on, Mr. Murphy. 

But you and I respect the vote. This is all about whether or not 

78 

we will have an opportunity to go to the well of the Congress, have 

a robust debate, and then take a vote. 

TTP, there would be a vote if it is brought before the Congress. 

Ms. Waters, if I may say so, my ranking member whom I admire 

greatly, a vote resolved all of the issues. I respect the vote. She respects the vote. We need to vote and then let the votes fall wherever they may. And whether one side wins or loses, I promise you, 

I will respect the vote even when I differ with the results. 

I yield back, Mr. Chairman. 

Chairman HENSARLING. The time of the gentlemen has expired. 

The Chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy, the chairman of our Oversight and Investigations Subcommittee. 

Mr. DUFFY. Thank you, Mr. Chairman. 

Listen, it has been a fascinating, not just day of testimony, but 

also a fascinating couple of months of hearing the debate go on of 

Ex-Im Bank, and it is pretty obvious that we have pretty high passions on both sides. I think a lot of folks can argue, as we have 

heard, that Ex-Im Bank helps create and save American jobs; I 

think a lot of other people say, well, it also costs American jobs. 

I think that has been the root divide of folks in this debate. 

Mr. Hirst, does Delta analyze the consequence of Ex-Im Bank to 

cost American jobs in Delta Air Lines? 

Mr. HIRST. It is very hard to have a precise analysis of the total 

effect of what Ex-Im does, but Ex-Im’s support of Boeing means 

that it supports our competitors. And we include in our testimony 

an analysis of the financing that Emirates Airlines did a couple of 

years ago which showed that Ex-Im’s support for Emirates provides 

them with a subsidy of about $20 million in aircraft, and that kind 

of subsidy, that level of impact has an impact on Delta’s ability to 

compete with Emirates. And in the case of Emirates, we are dealing with an airline that is already subsidized by its own government. It is an instrument of state policy. It is owned by the government. And so the impact is significant and severe, given the magnitude of the Bank’s financing activities in the aircraft sector. 

Mr. DUFFY. Mr. Murphy, I appreciate the position of the Chamber. I have had my local Chambers, my State Chambers, my neighboring Chambers, the national Chamber, all of your members, a lot 

of them have come through to chat with me over the 51⁄2 years I 

have been in Congress, and they usually talk to me about taxes; 

say, listen, we can’t compete internationally, because we have the 

highest tax rate in the industrialized world. We in Congress here 

vote inversions where American companies are buying foreign 

counterparts and moving their headquarters overseas because we 

pay too much in American taxes. They talk about rules and regulations. 

I have to tell you, over the 41⁄2 years that I have been here, one 

of the main things I hear from the Chamber or your members is 

not, oh, my gosh, the world is going to fall apart if we don’t have 

Ex-Im Bank. 

I am troubled with your testimony when you say Ex-Im doesn’t 

pick winners and losers. Mr. Hirst, right next to you with Delta, 

would say, listen, yes, it helps Boeing and saves Boeing jobs, but 

how do you say that Delta sees a subsidy to a—its competitors and 

79 

doesn’t hurt Delta and the American employees with Delta, and the 

bank therefore isn’t picking winners and losers? 

Mr. MURPHY. There are, at present, two vendors of wide-body 

aircraft in the world today, and soon there will be more out of 

China. Every time a foreign airline goes to buy aircraft, export 

credit agency support is there from Airbus. In those situations, if 

a foreign airline wants to purchase planes, the absence of Ex-Im 

support can be determinative. 

Mr. DUFFY. So what you are telling this committee is, we value 

the Boeing jobs more than the Delta jobs, because Delta is telling 

you that they are losing jobs because of Ex-Im, and you are telling 

me, I know that, but— 

Mr. MURPHY. I am telling you that if the foreign airline buys an 

Airbus plane, it doesn’t— 

Chairman HENSARLING. The time belongs to the gentleman from 

Wisconsin. 

Mr. DUFFY. You are telling me that you care about the Boeing 

jobs, and so do I. I am sensitive to the Boeing jobs as well. I want 

Boeing to thrive and sell all over the world, but we can’t turn a 

blind ear to what Delta experiences as a competitive loss. Even Mr. 

Boyle is saying—listen, I have been to the mines in northern Minnesota. They can’t compete, and we are going to say that, listen, 

I am going to come in and have—with an honest face, which you 

usually have, and say there are not winners and losers being 

picked with Ex-Im Bank. That is—listen, I am all about the debate, 

but to tell me that Ex-Im, through its subsidies, through its financing, isn’t picking winners and losers, I have a hard time buying 

that. 

And with Mr. Hochberg, I pointed out, even on the environmental front, you have to point out—you have to recognize that 

loans in the carbon space aren’t being made. And so we will say 

the green jobs in America, we love those jobs, but if it is a carbon 

job, not so much. Again, you would agree in green versus carbon, 

Ex-Im does pick winners and losers? Yes? 

Mr. MURPHY. It is plain that in the aircraft space— 

Mr. DUFFY. Yes or no? 

Mr. MURPHY. —since 2011— 

Mr. DUFFY. I am asking about green. I am not talking about 

that. Green versus carbon, winners or losers? 

Mr. MURPHY. You know— 

Mr. DUFFY. Mr. Murphy, come on. It’s easy. 

Mr. MURPHY. We support a nondiscriminatory approach to what 

Ex-Im supports— 

Mr. DUFFY. I will take, Mr. Murphy— 

Mr. MURPHY. —and doesn’t. 

Mr. DUFFY. I will take your nonanswer as a ‘‘yes’’ to that question. 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Wisconsin, Ms. 

Moore, ranking member of our Monetary Policy and Trade Subcommittee. 

80 

Ms. MOORE. Thank you so much, Mr. Chairman, and Ranking 

Member Waters. And I thank the panel for your patience and the 

time you are spending here with us this afternoon. 

I am particularly impressed with you, Mrs. Cox. Being a womanowned business and being in the heavy equipment area, I think 

you are a fantastic role model for women, and I applaud you and 

thank you for being here this afternoon. 

I want to ask a little bit about Conway Machine and what you 

do. First of all, I am happy to see that you are a participant in the 

SBA Step Program, which, by the way, is a government-funded program, but in addition to that, I was wondering if you were—if you 

supplied parts and services to Galley Support Innovations? 

Ms. COX. Hi, Ms. Moore. Thank you for your kind words. 

We do supply parts to Galley Support Innovations. 

Ms. MOORE. And Galley Support Innovations is a supplier to 

Boeing and Gulfstream and other aircraft manufacturers. So you 

are part of this supply chain that we have been talking about, and 

so even though you may not—and I can understand it if you say 

the paperwork is too onerous. So even though you don’t directly 

benefit, you benefit as part of this supply chain that I believe the 

Chamber has talked about constantly. I know in my own district, 

for example, I visited a company called Maxin, which has 30 employees, but they are part of this huge supply chain, and they pay 

well, because they are. So I want to thank you for that. 

Let me ask Mr. Ikenson from the Cato Institute, I went on your 

website, and I just want to make sure that I have your objection 

to the Ex-Im Bank put into some sort of context. You guys believe 

climate change is a hoax, and are against central banking, the Fed, 

against public education, want voucher schools, and you are 

against the Ex-Im Bank, right? I just want to sort of get a profile 

of the Cato Institute. 

Mr. IKENSON. We all have our own opinions, Congresswoman. 

Ms. MOORE. That is true. 

Mr. IKENSON. So— 

Ms. MOORE. I just want to make sure that backdrop was there. 

Mr. IKENSON. There was some mischaracterization there, but— 

Ms. MOORE. Okay. 

Mr. IKENSON. —go on. 

Ms. MOORE. You will allow it. 

But you do agree with—do you think we should have the TPP? 

Mr. IKENSON. Well, I want to see it. I support trade liberalization. And I think in order for us to see TPP, we need to pass TPA 

first— 

Ms. MOORE. Okay. 

Mr. IKENSON. —and then we can evaluate TPP. 

Ms. MOORE. All right. You quoted Milton Friedman, and we all 

disagree. He was very brilliant, we know that. You quoted him, and 

he said, according to your testimony, that the real benefits of trade 

are transmitted through imports and not through exports. 

Now, 95 percent of the consumers on the entire planet are somewhere other than the United States of America, but we ought to 

measure it by imports. So if we get a lot of these foreign—Asian, 

China, like Vietnam, cheaper products imported into the United 

81 

States, that is how we ought to measure our progress, versus exporting our goods. Was that your testimony? I am reading it here. 

Mr. IKENSON. Yes. I have made the point that exports are the 

things that we produce but don’t get to consume. 

Ms. MOORE. And we have jobs here in the United States when 

we export. 

Mr. IKENSON. Right. And— 

Ms. MOORE. Versus importing and supporting some other economy. 

Mr. IKENSON. Right. So the purpose of exchange, like, when you 

go to the grocery store, you want to part with as few dollars as possible for your purchases. That is the same thing we want to do. We 

want to give up— 

Ms. MOORE. But I deliberately don’t go to a certain big box store 

typically, unless I just have to, because I want to support American 

jobs. 

It is my time, so I need the next 25 seconds to ask Mr. Smith 

a question about Roy Hill. You have your mining project, and it 

is—would you agree that it is a regional business, that iron ore is 

a regional kind of business? 

Mr. SMITH. It is a global business. The price of iron ore is controlled by delivered to China, and indexes are worked back from 

that delivered to northern China price based on freight rates. So 

it is a global business now. 

Ms. MOORE. Okay. I see my time has expired. May I have leeway 

to ask this question, Mr. Chairman? 

Chairman HENSARLING. I’m sorry. I didn’t hear that. 

Ms. MOORE. I just wanted to ask him a question, and I didn’t 

have time. I am wondering if I am going to get the indulgence of 

the Chair. 

Chairman HENSARLING. It depends on how quickly the member 

can ask her question. 

Ms. MOORE. Okay. You supply iron ore to Canada, right? 

Mr. SMITH. No longer. We do not. 

Ms. MOORE. Okay. Because the Roy Hill project was designated 

for Asian markets, and so I am wondering what your objection was 

to places like Caterpillar, which is a big presence in my State, 

sending equipment, creating 3,400 jobs. 

Mr. SMITH. And also creating a—contributing to the oversupply 

glut that has seen the price of our commodity drop 50 percent inside of one year, and also locking us out of other markets in Korea, 

in Japan, as Roy Hill has secured those long-term supply agreements. 

I was being polite about our Canadian operations. They are in 

bankruptcy. At this time last year, we were exporting to China and 

to Korea, and I had some 1,600 employees, and they were Canadian employees. We are down to 100 today. So, it is a seaborne 

business. 

Chairman HENSARLING. The time of the gentlelady has long expired. 

The Chair now recognizes the gentleman from Georgia, Mr. 

Westmoreland. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

82 

Mr. Hirst, I just want to ask you a simple question at first. Does 

Delta belong to the U.S. Chamber of Commerce? 

Mr. HIRST. I don’t think we do here. 

Mr. WESTMORELAND. Oh, okay. Mr. Hirst, earlier today I asked 

Mr. Hochberg about some emails between Ex-Im Bank staff and 

Boeing regarding these rules on the economic impact. Did you hear 

me ask those questions? 

Mr. HIRST. Yes, sir, I did. 

Mr. WESTMORELAND. You did? How would you characterize his 

answer that he gave me back as far as his analysis was concerned? 

Mr. HIRST. I would characterize it as incomplete. The truth is 

that the Bank is required by its charter to give full consideration 

to the effects of its actions on employment in the United States, including industries that would be affected, like Delta is, by the financing of our competitors, but rather than considering those effects on a case-by-case basis, the Bank has designed economic impact procedures that include a number of screens that a transaction has to pass through before the Bank will even consider what 

the effects are on the employees of other companies. 

And what these emails showed was that when the Bank designed 

these procedures following the 2012 Reauthorization Act, it designed them with a view in mind, the clear and intended view in 

mind to avoid having to consider individual transactions. And so in 

the last year, in 2014, of 20 large transactions which the Bank considered, averaging over $350 million in aircraft financing each, the 

Bank only considered the effects of one of those transactions out of 

20, because these screens, which set up blocks to that consideration, and that one transaction with Aeroflot, the Russian airline, 

was a fundamentally insignificant transaction to the U.S. airlines. 

Mr. WESTMORELAND. Just from me reading, not as a lawyer but 

as a builder, did it seem like they were what we would call cooking 

the books on this analysis, to you? 

Mr. HIRST. They were clearly crafting the procedures so that the 

analysis that is called for by the statute would very rarely be done. 

And, in fact, one of the documents—this is one of the documents 

that was produced by the Bank in its response to our FOIA request, and it is a chart prepared by Boeing showing all the steps 

that a transaction must go through before the Bank even begins to 

analyze its economic effect. So you can see there is one hurdle after 

another, and the effect is that very few transactions will get 

through that test, and that is intentional. 

Mr. WESTMORELAND. Yes, sir. If this committee were to craft a 

reauthorization bill, what would be some of the language in there 

that Delta or you would recommend for the ability to come up with 

a good comprehensive impact analysis? 

Mr. HIRST. Sir, we think the most important thing that the committee can do and that the Congress can do is to require that the 

Bank actually be a lender of last resort, as Mr. Hochberg repeatedly characterized. He repeatedly said that the Bank is here to provide back-up financing. 

We think that if the Congress were to adopt a reform, the most 

important reform would be actually to implement that requirement, so that a foreign airline seeking Ex-Im’s support would first 

83 

have to show that it could not obtain financing in the private market. 

Of the 20 largest recipients of Ex-Im financing over the last 10 

years, virtually every one has access to the private financial market. And that financial market is robust, it is there, it is available, 

but it is more expensive, and from Delta’s standpoint, that is the 

most single important reform. 

Mr. WESTMORELAND. Would your definition of a bank of last resort be that they had gone through all their other options as far 

as financing goes? 

Mr. HIRST. Yes. If they certified that they were unable to obtain 

private financing, then I believe an airline should then be available—or accessible—have access to the Bank, but if, in fact, an airline has access to private financing, it should not have access to 

Ex-Im. 

Mr. WESTMORELAND. You would think that Emirates Air and 

Qatar and those people would have access to cash, wouldn’t you? 

Mr. HIRST. Ex-Im has provided about $4 billion of support over 

the last 15 years to Emirates, and Emirates regularly accesses the 

private markets, they are highly profitable, they are state-supported. 

Mr. WESTMORELAND. Or a cash deal. Or cash. 

Chairman HENSARLING. The gentleman’s time has expired. I assume the gentleman yields back the remainder of his nonexistent 

time. 

So with that, the Chair recognizes Mr. Delaney for 5 minutes. 

Mr. DELANEY. Great. Thank you, Mr. Chairman. 

Mr. Hirst, it is nice to see you again. Thanks for coming in and 

testifying. I think it is important for companies to give their perspective, particularly a great company like Delta. We appreciate 

what you do. 

Mr. HIRST. Thank you, sir. 

Mr. DELANEY. But I did want to dwell again on the topic I talked 

about last year, which was understanding better this chart that 

you lay out between the financing that Emirates is able to obtain 

from Ex-Im versus the financing they are able to obtain in the market, because I do think it is important that when we are thinking 

about Ex-Im, that it does provide financing that is consistent with 

market terms, which is what they have represented that they do, 

which I believe they do. 

In fact, I have even suggested that they look at potentially selling off part of their portfolio from time to time so that people could 

get a sense as to how well it is priced according to the market, but 

I also do think it is important that things get presented on an apples-to-apples basis. And my recollection when I looked at this 

more carefully last year was that when you are comparing the ExIm terms of the financing where you show an interest rate of 3.41 

percent to the market terms, that it is not really an apples-to-apples comparison, because when Emirates borrows from Ex-Im 

Bank, they are borrowing on a recourse basis. Is that correct? 

Mr. HIRST. I am not sure that I know the answer to your question, sir. 

Mr. DELANEY. Well, I think they do. I think when Ex-Im lends 

to Emirates, they get a lien on the planes and then Emirates also 

84 

promises to pay the loan back. So the Ex-Im Bank is the lender. 

It would be like if Ex-Im was lending to Delta. On a recourse basis, 

they would get a lien on your planes. 

Mr. HIRST. Correct. 

Mr. DELANEY. Right. And then the corporation would also guarantee the loan in the event the planes were worth more than the 

debt. And it seems to me you are comparing it to examples where 

Emirates is borrowing effectively on a nonrecourse basis, where the 

market terms are set up as a special purpose entity, where the borrower is actually this entity, this Irish special purpose corporation, 

I can’t really read the name in my footnotes, but it is a special purpose corporation, it owns the planes, it leases the planes from 

Emirates, so it gets the Emirates cash flow during the terms of the 

lease, but at the end of the lease, the residual value of the planes 

cover whatever debt is outstanding, if any, so therefore it is nonrecourse. 

So my question to you is if Delta Air Lines was borrowing money 

from one bank, on what I will call a nonrecourse basis, in other 

words, just pledging the planes as collateral, and from another 

bank on a recourse basis, where you not only pledge the planes as 

collateral, but you also provide a corporate guarantee that in the 

event the collateral is worth less than the debt, that Delta would 

make up the difference, wouldn’t you expect to pay a lower rate in 

the second category and potentially a substantially lower rate? 

Mr. HIRST. I think the loan rate results from the guarantee. 

Mr. DELANEY. Right. And that is my sense. So when you point 

out that Ex-Im lends to Emirates on a lower rate, it is because they 

not only have the planes as collateral, but they also have the Emirates’ guarantee. 

Mr. HIRST. They have the guarantee of the U.S. Government. 

Mr. DELANEY. No. But the premise of your point here is that 

Emirates can actually borrow from the Ex-Im Bank at terms 

cheaper than the market. 

My point to you is the market terms you are comparing it to are 

not the same terms the Ex-Im Bank is getting. The Ex-Im Bank 

is getting a lien on the planes and a guarantee of Emirates Airline, 

which is a subsidiary of the Dubai Investment Corporation, which 

it a subsidiary of the Dubai Sovereign Wealth Fund. 

Mr. HIRST. Correct. 

Mr. DELANEY. So basically when Ex-Im is lending in your first 

column here, they not only get the planes as collateral, but they 

get a guarantee from the Sovereign Wealth Fund of Dubai, whereas your market terms, they just have the planes as collateral. So 

as a lender, I would expect to get paid a much higher rate if I was 

just lending on the planes than if I was lending on the planes plus 

a guarantee of the Sovereign Wealth Fund. 

Mr. HIRST. Mr. Delaney, my memory is that is not accurate and 

that the—and it has been about a year— 

Mr. DELANEY. Right. 

Mr. HIRST. —since I have actually read these documents, but my 

memory is that the credit of Emirates, taking into account— 

Mr. DELANEY. Yes. 

Mr. HIRST. —this provenance was, in fact, a factor. 

85 

Mr. DELANEY. Yes, during the terms of the lease. So I just think 

that—look, I want to go back to my initial premise. I don’t think 

the Ex-Im Bank should be subsidizing loans relative to the market, 

certainly material terms, and I think there are good ways for us 

to figure out if that is happening. We could have Ex-Im sell off part 

of its loan, see where the market is, but I do think this premise 

that this $20 million-per-plane subsidy that really you build a lot 

of your arguments on is, in fact, flawed, because I think the two 

credits that you lay out here were very different. It would be like 

a lender lending to a government office building and getting the 

building as collateral, but not a guarantee by the U.S. Government, 

versus if a lender lent on a government office building, got the 

building as collateral and then also had a guarantee of the U.S. 

Government. I would expect that second lender to get a much better deal, which is what is effectively happening here. 

Mr. HIRST. We do disagree, and I would be happy to talk to you 

further about it. 

Mr. DELANEY. Thank you. 

Chairman HENSARLING. The time of the gentlemen has expired. 

The Chair now recognizes the gentleman from Ohio, Mr. Stivers. 

Mr. STIVERS. Thank you, Mr. Chairman. I appreciate the chairman holding this hearing. And I think there is a group of witnesses 

with diverse views that all bring important perspectives to this debate. And I, for one, believe that Mr. Hirst and others have some 

points about some reforms that are very importantly needed, but 

I do think that we need to, with substantial reforms, reauthorize 

the Bank. 

My first question is for Mr. Murphy. Mr. Murphy, you said during your testimony that 78 different countries have export credit finance agencies, or 79 countries? 

Mr. MURPHY. Yes. 

Mr. STIVERS. Do we compete against those companies in the marketplace every day? 

Mr. MURPHY. Yes. There are 79 export credit agencies around the 

world, and there is evidence that a large majority of them are 

greatly expanding the trade finance that they are making available. By contrast, if the United States is left as the only major 

trading nation that doesn’t have an export credit agency like this, 

there will be circumstances like the ones I have described where 

American companies are uniquely disqualified from even participating in business opportunities. 

Mr. STIVERS. Even outside the uniquely disqualified, in the marketplace, if we are competing against countries that have export 

credit finance agencies and we do not, and let’s say we take the assumption on the small end that it is 1 percent of our exports, what 

would happen to that 1 percent of our exports? 

Mr. MURPHY. It is actually 2 percent, but $27 billion is—it is not 

nothing. That is more than the United States exports to Italy, 

India or Australia. 

Mr. STIVERS. What would happen to those exports without an export credit financing agency? 

Mr. MURPHY. It may be that in some cases that there can be an 

accommodation and they will find commercial support, but in many 

cases they won’t. And so—and in many of these head-to-head comVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00091 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
86 

petitions where the foreign competition, say, heavy equipment 

manufacturers from Japan or Korea that have export credit support— 

Mr. STIVERS. So who would likely win those deals? 

Mr. MURPHY. In many of those, where the customer is in a position to demand that support be available, the American company 

would lose. 

Mr. STIVERS. And where would those jobs be? 

Mr. MURPHY. They would be elsewhere. 

Mr. STIVERS. Thank you. 

Mr. Hirst, I have some real sympathy and empathy for the concern you bring up. And I think the first point you brought about 

how we really do need to—and it is clear from what Mr. Ikenson 

said and others that export credit finance agencies create an aberration in the marketplace. They are an aberration in 79 countries, 

though, and if we unilaterally disarm, that might not be the smartest strategy, but I would hope that we would put some teeth in requiring the U.S. trade representative to negotiate with France, the 

U.K., and Germany with regard to wide-body planes that we disarm together. And while we are doing that—and you only mentioned those three countries. In the next 5 years through this reauthorization, we need to be acutely aware that Brazil and China are 

working on wide-body planes, and we need to add them to the list 

that we negotiate with, even though in the marketplace today, we 

don’t face them. In the next 5 years, that could easily happen. 

Mr. HIRST. Probably not in the next 5 years, sir. 

Mr. STIVERS. Okay. But they are working on it— 

Mr. HIRST. Right. 

Mr. STIVERS. —and we need to—we definitely need to start negotiations there too, because, frankly, China’s not going to be easy to 

negotiate with on that and Brazil might not either, but I think that 

is the most important thing we can do. And you already talked 

about the lender of last resort reform, which I think is a good real 

reform. 

What about if we did a reform on the adverse impact to American businesses that made it clear that injured parties could bring 

a judicial review? Would that be a good or a bad reform? 

Mr. HIRST. No. It would be a very good reform, and I think tied 

to that would be the—placing obligation on the Bank to analyze individual transactions and not use screens to do it. There is no reason why they can’t craft regulations that would require borrowers 

to file applications far enough in advance to allow individual transactions to be analyzed. 

Mr. STIVERS. And my next question is for Mr. Ikenson. You 

talked a lot about the aberration in the marketplace that export 

credit finance agencies create. And assuming for a second that the 

Bank was to be reauthorized, what if there was a program that 

guaranteed some type of reinsurance that showed the true marketbased pricing for different transactions as a percentage—a required 

percentage of their business? Would that be a step in the right direction, from your perspective, or would that just be a waste of 

time? 

Mr. IKENSON. I think it would be a step in the right direction. 

However, there are many problems with the Ex-Im Bank, and if 

87 

they weren’t all addressed at the same time, then we would be in 

a position of possibly reauthorizing a slightly improved aberrational system. We can get rid of this thing. It is—actually, John, 

you mentioned 2 percent. It is actually 1.2 percent. So 98.8— 

Mr. STIVERS. Like I said, there are differences of opinion, so I 

even went with the lower number of 1 percent. 

I do have one question for Mrs. Cox. I appreciate that. So, Ms. 

Cox, you used the Small Business Administration, you don’t choose 

to use Ex-Im Bank. Do you think we should also do away with the 

Small Business Administration, because it also picks winners and 

losers and is an aberration in the marketplace and guarantees 

credit? 

Ms. COX. I would rather not—I think you will see with any kind 

of government welfare type of program that there can be a lot of 

overlap in services offered, and you do see that with the SBA and 

the Ex-Im Bank. However, the program that I am using is called 

the Emerging Leaders Program. It is a beneficial resource for small 

business owners, and I would recommend it. 

The way that I see it personally, and I do believe in small government, but I see it as getting some of my tax dollars back. I give 

up 30 percent of my check, and if I am able to get something back 

from the government, I am going to take a little bit of it, so— 

Mr. STIVERS. I yield back the balance of my time. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. Ah. Mr. Chairman, thank you, and I will be yielding to you in a second, because I have a question. 

We talked earlier about bringing a bill to this committee or to 

the Floor, but particularly to this committee for markup, and you 

asked me whether any bill had 218 supporters. That is a rule that 

we use for bills that involve minting a commemorative coin, but 

with that one exception, I don’t think any—90 percent of the bills 

that come before the committee don’t have 218 cosponsors when 

they start. In fact, the whole purpose of our effort here is to offer 

amendments and to improve the bill to the point where we hope 

it has majority support in the committee. So, we can have democracy where we all in this room work together to try to create a bill 

that is worthy of our support, or we can have a situation where we 

don’t get a chance to do that. 

Are you planning to bring any version of an Ex-Im reauthorization bill before the committee in the next couple of weeks? 

Chairman HENSARLING. Will the gentleman yield? 

Mr. SHERMAN. I will definitely yield. 

Chairman HENSARLING. I think I have already answered the gentleman’s question, but I was just curious, when your party was in 

the Majority, where was your voice for bringing a balanced budget 

amendment to the Floor? 

Mr. SHERMAN. I think I cosponsored the balanced budget amendment, and certainly would have supported committee consideration, 

but sometimes my voice is so soft, it cannot be heard. My shyness 

is something I am trying to overcome. 

88 

But, Mr. Chairman, do you know, will we have a chance to work 

in this room to create a bill worthy of the support of a majority of 

the House? I yield to the chairman. 

Chairman HENSARLING. The chairman has already answered 

your question. 

Mr. SHERMAN. Ah. I can’t be as tough on the chairman as I am 

on witnesses when the answer may not be a complete answer to 

a question. I will turn instead to Mr. Murphy and probably give 

him less deference than I do our chairman. 

Mr. Murphy, we have a couple of businesses here that feel that, 

on balance, Ex-Im hurts business. You represent an organization 

that pretty much sweeps across American business. Is this a close 

call for the Chamber? Is this, like, oh, 60 percent of our members 

think it helps their business—60 percent of those affected members 

are on one side and 40 percent are on another, and, gee, it may 

split our organization, or is this one of those issues where you can 

safely say that for the vast majority of your concerned members, 

this is a helpful organization? 

Mr. MURPHY. I would say there is extremely broad support in our 

membership, and I am not aware of any members that are in opposition. In fact, if you look at press clips, you will find just a small 

number of— 

Mr. SHERMAN. The gentleman sitting next to you isn’t a member? 

Mr. MURPHY. Neither of the gentlemen immediately next to me 

are members of the Chamber. 

Mr. SHERMAN. But you do have how many members in total? 

Mr. MURPHY. We have 300,000 direct members, and through our 

State and local Chambers, 3 million. 

Mr. SHERMAN. That is—and within your organization, it is overwhelming that, on balance, Ex-Im Bank helps American business? 

Mr. MURPHY. I have to tell you, I have never gotten a call from 

a member in the past months, when it has been quite public that 

the Chamber was advocating for a reauthorization of Ex-Im 

Bank—never gotten a call from a member protesting. 

Mr. SHERMAN. Now, one issue that arises is the competition in 

airlines. One approach is to say if Air India is going to fly from 

Dulles to Delhi and they get good financing on their plane, that 

might put United Airlines or even Delta at a disadvantage. Another approach is to say that if a plane is acquired by a U.S. carrier for use in an Ex-Im-eligible route, that we should regard that 

as an export, because a plane flying from Dulles to Delhi is the 

same as a plane flying from Delhi to Dulles; that is to say, United 

States Airlines flight going in one direction is the same as the Air 

India flight going in the other direction. 

Does the Chamber have a position on whether Ex-Im Bank 

would be allowed to provide financing when a U.S.-based airline is 

operating from Dulles to Delhi in the same way as one flying the 

other direction? 

Mr. MURPHY. I think our position is that this is a problem that 

has been addressed pretty successfully. There was a 2011 agreement reached at the OECD which considerably raised the fees imposed for the purchase of aircraft. It is an aircraft sector understanding. The cost of using Ex-Im to purchase aircraft has gone up 

considerably and is very comparable to commercial rates now. By 

89 

contrast, U.S. domestic airlines can access capital markets here for 

approximately one-third the cost of what export credit agency support is. So in that sense, there has been real progress in this area. 

Mr. SHERMAN. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. Pittenger. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

And thanks to each of you for enduring this process. It is important for each of us to hear from you and to better understand your 

perspective. 

And I appreciate my friend, Mr. Green, as well, addressing the 

issue of our vote. Our vote is very important to each of us. We all 

represent about 750,000 people and we want to make the right decisions that are fair and equitable for our constituents, so we are 

deliberate, we are thoughtful, and we are concerned, as we probe 

these issues to see what is really fair. 

As I have reviewed these materials and studied the information 

from the Ex-Im Bank, I have read the following, that from—according to their own data, more than 60 percent of Ex-Im Bank’s financing benefits just 10 large corporations. At the end of 2014, no 

less than 45 percent of Ex-Im’s exposure was concentrated just in 

the air transportation system. 

Mr. Murphy, how do you respond to that? How do you consider 

the weighted role that Ex-Im has in supporting large corporations 

that really don’t benefit the same folks that I am trying to represent every day? 

Mr. MURPHY. The most important market for small business isn’t 

Canada or Europe or China, it is big business, and that is why you 

see some of the largest exporters in the country have so many suppliers, like Boeing has nearly 15,000 suppliers, GE has more than 

35,000. So those are how small and medium-sized companies get 

into the export business— 

Mr. PITTENGER. Well, Mr. Murphy— 

Mr. MURPHY. —is as providers to the larger companies. 

Mr. PITTENGER. —you heard the testimony of Mrs. Cox, and 

there are others like it, how cumbersome and how difficult and 

challenging it is for a small business time-wise, information-wise, 

and cost-wise, to even begin to process this out. And I think what 

concerns many of us is the weighted interest that Ex-Im Bank has 

from individuals who have strong financial and political interest. 

You probably heard the testimony earlier today, and with recognizing the strong political role and financial role this has played 

into this entire process. 

And that is really a concern to many of us, that it seems as 

though the big guys with huge resources are putting enormous 

weight and pressure in this process. They come and they make a 

lot of noise. And I appreciate and respect the role of every business, 

I am here to represent large and small, but the reality is that even 

by the data given by the Ex-Im Bank, 10 of the large corporations 

get 60 percent of the benefit. 

Mr. Ikenson, do you have any response, do you have any 

thoughts or reflections on some of the concerns you have heard 

today? 

90 

Mr. IKENSON. Yes. I think that the problem you raise is a big 

problem. The Bank shouldn’t be there to begin with. The fact is 

that, I think, it is closer to 70, 75 percent go to the top 10 users, 

but more indicting than that is the fact that 98.8 percent of U.S. 

exports don’t go through the Ex-Im Bank. So this notion of unilateral disarmament or leveling the playing field by requiring this export credit agency implies that Americans are selling—or that this 

small percentage of Americans are selling perfect substitutes for 

other—to other products in 70 other countries with ECAs. 

Our products are distinguishable, and yet the financing terms 

are not the final say. There are lots of determinants that go into 

buying decisions. And there are humongous costs that are not 

taken into account. I heard the testimony of Mr. Hochberg this 

morning saying that they do an analysis of the costs of the policies, 

but I have never been privy to that, I have never seen the details 

of that. I did an analysis which suggests that there are profound 

costs across the economic, the manufacturing sector. 

Many of these companies are silent to respond to a question that 

was brought up earlier to Mr. Murphy about why they don’t raise 

the issue. Many don’t recognize it. The cost of an input that is subsidized for export might only be 1 or 2 or 3 percent of its total cost 

of production. For Delta, it is—airplanes are huge, it is a huge part 

of their costs, so they were able to recognize it. For Cliffs Mines, 

mining equipment is huge, so they were able to recognize the impact, but many of the companies across the manufacturing spectrum don’t realize they are being pickpocketed. 

Mr. PITTENGER. Thank you, Mr. Chairman. I yield back my time. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Washington, Mr. 

Heck. 

Mr. HECK. Thank you, Mr. Chairman. I first want to express my 

appreciation to Mr. Hirst for alluding to the litigation that has 

been brought on this, but before I do that, I want to mention in 

passing that I do not want to be accused of that which my friend, 

Mr. Duffy from Wisconsin inartfully described as turning a blind 

ear to the claims that Delta is suffering as a consequence of Export-Import Bank activity. I have a hard time squaring it with the 

performance of the last year, when they had record revenues, when 

their passenger load was at an all-time high, when they are aggressively expanding in markets, especially my own up at Seattle, and 

the chairman of the board and the CEO have press conferences 

touting their historic performance. I can’t square those two things. 

In fact, I would say if this is suffering, sign me up. 

The assertion has been made by the company that Ex-Im financing gets foreign airlines to buy new airplanes which are used to 

compete against U.S. carriers. It is pretty simple and straightforward. This point has been litigated. And for the record, I would 

like to clarify. This is what the judge said when Delta lost the case. 

The record contradicts Delta’s presumption that the availability of 

Ex-Im Bank financing sways foreign airlines to purchase new aircraft they would otherwise would not acquire, thereby causing an 

increase in competition with U.S. airlines that otherwise would not 

exist; rather, the availability of bank financing, or the lack thereof, 

is more likely to affect only the secondary decision of whether to 

91 

purchase aircraft from Boeing or Airbus when a specific need for 

new planes arises. Thus, Delta’s underlying assumption that U.S. 

airlines necessarily face less competition if the Bank does not provide financing to foreign airlines falls apart. 

I might add that Delta has litigated not once, but 4 times, and 

lost every single case. 

Mr. Murphy, it seems to me that we have been down this road 

before. I see an antecedent and an analog. I would be interested 

in your reaction. Thirty-four years ago, we had the same kind of 

policy debate in this chamber, and it was over the Federal Government’s subsidy of shipbuilding. In that instance, however, there 

was a bit of a difference. It wasn’t an indirect subsidy, as some allege, in the instance of the Export-Import Bank, in fact, it was a 

direct Treasury subsidy. Some people in this chamber advocated 

that we needed to continue that subsidy in order to continue to 

compete in the global market of shipbuilding. Congress decided instead that the United States, as some would argue in this instance, 

should lead by example and get rid of the shipbuilding subsidy. 

Mr. Murphy, how did that work out? 

Mr. MURPHY. Congressman, I appreciate that you pointed out 

that it is a somewhat imperfect analogy since, after all, in the case 

of Ex-Im, it is a curious kind of subsidy program that returns 

money to the Federal Treasury. In the case of shipbuilding, it was 

actual taxpayers’ dollars at work. But when the U.S. oceangoing 

shipbuilding industry was—when its subsidies were taken away in 

the 1980s, it could not compete, because other countries around the 

world continued with those subsidies, and today the United States 

has basically very little, or none, in the way of oceangoing shipbuilding. 

It shows the challenge of the world that we live in, where we 

would like to see free markets and free enterprise prevail in every 

case, but getting rid of Ex-Im just ourselves and not doing anything 

about those 79 export credit agencies around the world could have 

a very damaging effect for a lot of export industries. 

Mr. HECK. Finally, Mrs. Cox, thank you for being here. I think 

you have done the hardest thing in the world to do, which is stand 

up a successful small business. I also want to thank your family 

and your husband, in particular, for their service. Bluntly, painfully put, I doubt there are too many people in this room who better understand the sacrifice or potential sacrifice that such service 

can cause than my family, and I genuinely thank you for that. 

I do, however, want to note and hope you appreciate that you are 

a part of benefiting from the Export-Import Bank insofar as you 

are one of the members of the supply chain for the Boeing Aircraft 

Company, which makes the best airplanes on the face of the planet, 

in no small part due to your parts, and I thank you for that as 

well. 

With that, I yield back the balance of my time. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Missouri, Mrs. 

Wagner. 

Mrs. WAGNER. Thank you, Mr. Chairman. I would like to start 

off this hearing by asking that this letter, Mr. Chairman, the letter 

that Mr. Murphy referenced earlier in his opening statement, it 

92 

was sent out and it is dated today by over 1,000 local organizations, Chamber groups, local and the U.S., and businesses, I should 

say, of all sizes from all across the country urging reauthorization 

of the Export-Import Bank be submitted for the record, Mr. Chairman. 

Chairman HENSARLING. Without objection, it is so ordered. 

Ms. WAGNER. Thank you all for joining us today to talk about renewing the Export-Import Bank. This is an incredibly important 

debate and deals with our global competitiveness and our country’s 

economic output. However, for reauthorization, for any kind of reauthorization, Congress must take the opportunity to consider the 

merits of the program and whether any reforms or changes are 

warranted. So, let’s look at the Ex-Im Bank. 

According to its charter, the Bank works on maintaining or increasing employment of United States workers. I can vouch that in 

St. Louis and the State of Missouri, the Bank is fulfilling that goal 

in a very large way. Since 2007, the Ex-Im Bank has supported 125 

companies and 9,400 jobs in Missouri, helping finance $1.5 billion 

in goods and services for exports. 9,400 jobs. Think about all of the 

house payments and car payments and monthly grocery bills and 

college tuition payments that those jobs actually support. 

These are real jobs and these are real families, and they are depending on this and they are depending on us. In fact, just last 

month the Bank supported 3 small businesses in my district by financing over $2 million in exports. This is a packaging company, 

a children’s products company, and a plastics company. 

Now the question is whether those same companies would still 

be able to find assistance in the private market in July should the 

authorization for the Bank lapse? In addition, would such financing 

be able to adequately compete against foreign export credit agencies? 

Let me be clear, as certainly Mr. Murphy has and as my colleague, Mr. Stivers, has, that every developed country in the world 

has their own form of ex-im bank and they are constantly working 

against us in the United States of America to win business. 

Mr. Murphy, many people make the argument that if export financing is, in fact, a good deal, that the private sector is perfectly 

capable of taking on the risk of that loan. Is the private sector, at 

this time, able to step in and fill the void that the Bank’s expiration would leave behind? 

Mr. MURPHY. The reality is that the private sector does provide 

the vast majority of trade finance in this country, and that is a virtue, not a weakness of the Ex-Im Bank, but what we could not do 

is take care of those particular circumstances where Ex-Im or ECA 

support is required in order to participate in foreign markets in 

bids on infrastructure projects, in nuclear energy and in the headto-head competition. Those are areas where we would see American 

companies really competing with one arm tied behind their back. 

Ms. WAGNER. In my limited time that I have left, I want to talk 

about reforms of the Bank. I believe many of my colleagues on this 

committee, including the chairman, have some valid concerns and 

criticisms. Everybody is interested in reforms. So I personally have 

worked in the past year and a half on at least two different working groups, the Campbell group and the Fincher group here in ConVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00098 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
93 

gress, to put together reform packages that ensure the Bank is not 

crowding out private market. 

Mr. Murphy, as you listened to the debate today, what recommendations would you and the Chamber propose to address 

criticisms of the Bank, and are there any reforms that you think 

the Bank absolutely must implement? 

Mr. MURPHY. In my limited time, I have to say that we respect 

the work that has gone into the Fincher bill and also Ranking 

Member Waters’ bill. There are quite a few good reforms on the 

table there. 

What we need most of all, though, is for Congress to take up 

these bills and debate them expeditiously, because we have just 

days left until American exporters will be at a unique competitive 

disadvantage. 

Ms. WAGNER. Thank you, Mr. Murphy. And I thank all of our 

panelists. 

I thank you, as well, Mr. Chairman, and I yield back the rest of 

my time. 

Chairman HENSARLING. The gentlelady’s time has expired. 

The Chair now recognizes the gentleman from Kentucky, Mr. 

Barr. 

Mr. BARR. Thank you, Mr. Chairman. 

Thanks to all of our witnesses in this second panel. We really appreciate your testimony and your help in fleshing out some of these 

issues. 

Let me start with Mrs. Cox, because I read your written testimony, and like others, I share in extending our appreciation for 

your family’s service to our country. And I wanted to share with 

you an example of Ex-Im financing that I would like for you to 

comment on as a member of a military family. 

This is from The Wall Street Journal: ‘‘Ex-Im has given hundreds 

of millions of dollars in taxpayer-backed guarantees to the stateowned Russian bank, VEB. Ex-Im only recently suspended new 

deals after the Bank was targeted by American sanctions in the 

past year. VEB has a long and sordid history. Known until 2007 

as the Bank for foreign economic affairs of the USSR, VEB maintains an operating agreement with a Russian arms exporter to promote exports of Russian military products and boost their competitive edge in the world market. This Russian arms exporter also 

handles more than 80 percent of Russian’s weapon exports. In this 

capacity, it has become a cheap weapons supplier to Bashar alAssad’s regime in Syria and has provided advance missile systems 

to Iran, according to a reporting last year. VEB has said that its 

practices fully comply with the European Union and the United 

Nations sanctions. Americans probably assume that Washington 

wouldn’t use taxpayer money to help a company that supports 

these regimes, yet the Bank’s records indicate that VEB, this Russian bank, received a $497 million loan guarantee in 2012 and a 

further $703 million loan guarantee in 2014. American taxpayers 

still haven’t received Thank You cards from President Assad and 

the mullahs in Tehran.’’ 

As the wife of a U.S. Air Force airman, can you please comment 

on that report from The Wall Street Journal? 

94 

Ms. COX. Thank you for bringing that up. I think anybody who 

looks into the support that we have given to Syria will find that 

it is very likely that we have supplied arms to Syrian rebels that 

may have gone to ISIS, and that is very disturbing to me. 

I would say that today during this hearing, we have found that 

Ex-Im Bank may be in need of some reforms. Usually when you 

have a government entity, things can get sticky. 

Mr. BARR. Mr. Ikenson, I was very interested in your testimony 

about the World Trade Organization litigation as a potential. Much 

discussion over this reauthorization has gone into the necessity of 

an export credit agency where participation with one is required in 

order to compete as a threshold matter for American companies in 

these nuclear power plant construction projects and other examples. 

Can you elaborate on the alternative to Ex-Im in terms of pursuing litigation in the WTO so that we do achieve a level playing 

field without Ex-Im? 

Mr. IKENSON. Yes. First of all, I think characterizing the existence of our Ex-Im Bank as leveling the playing field misses an important point, which is that it is unleveling the playing field for 

downstream industries, and I have been trying to point that out. 

Ex-Im has been around since 1934. It invented this stuff. The 

People’s Republic of China didn’t come around until 1949, so it is 

not like we have to do this because others are doing it. And what 

happened to our standing in the world? 

Mr. BARR. Let me follow up with a quick question. My time is 

short. The argument that the Bank’s lending activities yield an annual return to the Treasury is another argument that we hear for 

proponents of reauthorization, but that argument, to me, suggests 

that there would be a considerable appetite in the private sector to 

enter the space exited or vacated by Ex-Im. If this is truly a profitable enterprise, it seems to me that a bank or a group of banks 

pooling and diversifying risk would enter that space. 

Mr. IKENSON. I think that is absolutely right. We need to see if 

that happens. 

Mr. BARR. Mr. Murphy, I know you have a contrary opinion to 

that, and I will give you an opportunity to respond to that. 

Mr. MURPHY. Well, just to say that hope is not a strategy. There 

are dozens and dozens of companies that we have interviewed, we 

have their stories on our website, where they have found that their 

commercial banks are unwilling to accept their foreign receivables 

as collateral and they have had no alternative to Ex-Im. 

Mr. BARR. I understand that, and you have made a big point of 

the nuclear power projects as an example. Members of the Chamber include coal-fired power and coal companies, a big part of the 

U.S. Chamber’s portfolio membership. They don’t get the same 

treatment that the nuclear power industry does. Does that concern 

you? 

Mr. MURPHY. In the past few years through an appropriations 

writer, there has been a nondiscriminatory approach. 

Mr. BARR. Oh, I know. And I voted for it and fought for those. 

And, Mr. Murphy, I fought for those and I believe in that. The 

problem is they still haven’t provided any financing for coal-fired 

powered projects. 

95 

Mr. MURPHY. Good to include in reform. 

Mr. BARR. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

I now recognize the gentleman from Pennsylvania, Mr. Rothfus. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

I thank the panel for being with us all day. It has been a long 

day for a very important discussion. 

I think a fair number of us who are in Congress today are here 

because of what we saw happening in the late 2000s with the financial crisis, with the bailouts. I remember as a private sector citizen back in the early 2000s, some people started to raise the 

alarm about Fannie and Freddie, and attempts at that time to reform Fannie and Freddie, and then we get to the financial crisis, 

and all of a sudden there is a $150 billion bailout after individuals 

involved with Fannie and Freddie themselves have made millions 

of dollars. 

I mentioned this in the panel earlier. I cited the work that Michael Grunwald had done in Politico Magazine in an article earlier 

this year. It was titled, ‘‘The Real Bank of America.’’ It described 

the more than $3 trillion in loans that the Federal Government, 

and therefore, the American taxpayer, the hardworking American 

taxpayer is on the hook for. We usually have the debt clock running, $18 trillion in debt, and 

obviously, this is a significant concern for many of us. And so we 

look at our programs and we think, is there any way to shield taxpayers from a potential loss. And Fannie and Freddie were going 

along great until they weren’t. Mr. Ikenson, I just want to float 

with you the idea that I spoke with Chairman Hochberg about this 

morning. And one way that we could potentially create additional 

protections for American taxpayers is by requiring full 

collateralization or sovereign guarantees for all direct loans or loan 

guarantees issued by the Bank. We know that the Bank has said 

that they are 77 percent collateralized right now. What about 100 

percent collateralization? Would that not be a good idea? 

Mr. IKENSON. Why not just allow Ex-Im to expire, and just turn 

it over to the private sector? Why are we— 

Mr. ROTHFUS. Well, look at what happens in the private sector 

when a loan happens. And a private-sector bank is going to be looking for collateralization. And frankly, it has not been more than 

100 percent. When you have a piece of property that you are going 

to buy and it is going to cost a million bucks and you go down and 

put—it is commercial property and they are going to put $200,000, 

the bank will make a loan for $800,000 but it is going to take a 

security interest in the entire property, even if it is worth more 

than $800,000, in case there is a default, and then they have to go 

and liquidate and try to recover. 

And here we have a situation where I am concerned that there 

is going to be an exposure for the taxpayers as we are seeing with 

NewSat today. And I am wondering if there might be a better way 

to have constructed that transaction so that the American taxpayers aren’t out $100 million right now? 

Mr. IKENSON. Yes, I think that is problematic, and I point to the 

fact that 98.8 percent of U.S. exports don’t require the Bank, so 

somehow they are able to manage without it. I think the necessity 

96 

of this Bank has been overstated. Just because other governments 

have it, doesn’t mean we can’t differentiate our offerings on other 

terms. We can go to the WTO, the question was asked earlier. I 

didn’t get a chance to respond to that. 

Mr. ROTHFUS. What about the entity that is doing the export? 

Should there be consideration as to whether or not that entity 

which is earning a profit from the transaction may think of guaranteeing the indebtedness of the purchaser? 

Mr. IKENSON. Sure, I think that is one way of doing it. 

Mr. ROTHFUS. Just a quick question for Mr. Murphy, we have 

had some discussion today about the NewSat transaction. Can you 

think of a way that transaction could have been structured so that 

the American taxpayers aren’t looking at a $100 million loss? 

Mr. MURPHY. I am not sufficiently familiar with the case, but if 

you look at the record of Ex-Im, under the accounting rules that 

were established by Congress and required by law, it has a $4 billion loan loss reserve and a very low default rate which has been 

mentioned many times here. Yes, there will be cases like this that 

go south, but the record is not one that is bad. 

Mr. ROTHFUS. Shouldn’t there have been some collateralization? 

To me, it is just common business sense that a lender is going to 

be seeking a security in something to make sure that they are 

going to mitigate any kind of loss. 

Mr. MURPHY. As I said, I am not familiar with this particular 

case. 

Mr. ROTHFUS. I thank the chairman, and I yield back. 

Chairman HENSARLING. The gentleman yields back. Mrs. Cox, I 

have been informed that you have a plane to catch. I don’t know 

if it is a Delta plane or not. Regardless, we will excuse you from 

the panel at this time. Thank you for your testimony. We hope you 

found it to be a worthwhile experience. The Chair now recognizes 

the gentleman from South Carolina, Mr. Mulvaney. 

Mr. MULVANEY. I thank the chairman. Mr. Murphy, I had a 

chance to look very briefly at your written testimony. You mentioned a South Carolina company that I am not familiar with. But 

last week I did have a chance to go visit another South Carolina 

company that uses the Ex-Im Bank facility, Sage Automotive in 

Marietta, South Carolina. They make textiles for automobile seats. 

And they take advantage of a small line of credit that is offered by 

the Export-Import Bank, and they asked me to try and figure out 

ways to preserve that function so that it is still available to them 

in the future. Their argument is, they are not part of the problem. 

It is very small. There is no corruption. It is not the type of thing 

that really warps markets. And I told them I would give that some 

thought. 

So I am hoping that you can do that here with me today as we 

try and figure out a way to find a compromise. The U.S. Chamber 

of Commerce would not support a reform that would limit the Export-Import Bank to only doing small business transactions, would 

it? 

Mr. MURPHY. No, for the reasons that I mentioned earlier, it is 

important for others. 

Mr. MULVANEY. It is important for others. So you wouldn’t support ones that would preserve the 90 percent of transactions beVerDate Nov 24 2008 15:49 Oct 05, 2016 Jkt 096990 PO 00000 Frm 00102 Fmt 6633 Sfmt 6633 K:\DOCS\96990.TXT TERI
97 

cause you need a private transaction. So would you support a reform that would have the Export-Import Bank do the 90 percent 

of small business transactions, plus participate where we are leveling the playing field, where other export credit facilities are involved in negotiations, and we are simply meeting the competition? 

Would the U.S. Chamber of Commerce support a reform that had 

the Export-Import Bank do just those two primary functions? 

Mr. MURPHY. I think we would have to look at what are the 

other particular circumstances where it is uniquely necessary, so 

for instance, when it is a bidding requirement, and other instances 

that I have mentioned. 

Mr. MULVANEY. And my guess is, I could go through the whole 

list of adding a little bit here and adding a little bit here. But the 

bottom line is that the U.S. Chamber of Commerce supports a full 

and clean reauthorization of the Export-Import Bank without reform, doesn’t it? 

Mr. MURPHY. We express support for the Fincher bill, and think 

that there are a number of good reforms in there that are definitely 

worth considering. 

Mr. MULVANEY. But you told all of my local Chambers that you 

support full and clean reauthorization, right? 

Mr. MURPHY. Our goal at present is to find a path forward. We 

know that this is a fierce debate and there are going to have to be 

compromises made all around. 

Mr. MULVANEY. Let me switch gears with you a little bit because 

you mentioned something, and we have sort of gotten, not sidetracked, but a lot of folks were focusing on the language of winners 

and losers. I don’t want to use that language. I want to use your 

language from your opening testimony where you said you worried 

about putting American firms at a competitive disadvantage in the 

global marketplace. It was more or less your words. 

Do you believe that the Export-Import Bank puts Delta Air Lines 

at a competitive disadvantage in the global market when it facilitated the purchase of Boeing 777 airplanes by Air India? 

Mr. MURPHY. I believe that there are many cases like that where 

the foreign airline has a very clear choice between buying Airbus 

and Boeing. In those cases, if Ex-Im were not available, I believe 

that there will be instances when that can determine that the sale 

goes abroad. 

Mr. MULVANEY. Thank you, Mr. Murphy. The airplane in question was the Boeing 777, and it was going to used by Delta to fly 

nonstop from the Continental United States to India. In fact, they 

were using it for that purpose. Air India sought it for the same 

purpose. At that time in the mid-2000s, the Boeing 777 was the 

only airplane in the world capable of making that trip. 

So I would suggest to you, sir, that it was not a circumstance 

where we were competing with Airbus. We were simply trying to 

sell the Boeing airplane. So I ask you again, did that transaction 

put Delta Air Lines at a competitive disadvantage? 

Mr. MURPHY. I believe that these—there are many substitutes in 

the different classes— 

Mr. MULVANEY. And I am simply telling you, Mr. Murphy, and 

you can go look it up if you want to, there were no substitutes in 

this instance. Only the 777 extended range, long-range plane could 

98 

make the trip. So do you want to change your answer or are you 

going to stick by what you told me? 

Mr. MURPHY. I think we can agree to disagree. 

Mr. MULVANEY. No, we can’t. So what airplane could Airbus offer 

that would make the trip. 

Mr. MURPHY. Airbus has a variety of different aircraft that it 

sells aggressively around the world. 

Mr. MULVANEY. They absolutely do. So tell me the one they had 

in 2004 that could make a trip nonstop from India to the United 

States. And I can assure you, Mr. Murphy, I know this one, I got 

you on this. There was no Airbus airplane that could make it, okay. 

I don’t think there was until about 2012. So I ask you one last 

time, would you at least admit that in that one transaction, the Export-Import Bank put an American business at a competitive disadvantage? 

Mr. MURPHY. I don’t know further details about it enough to answer you. 

Mr. MULVANEY. Thank you, Mr. Murphy. I appreciate your time. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Arizona, Mr. Schweikert. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. It keeps getting 

more and more interesting. I want to run through a couple of the 

mechanics here because some of the sort of hyperbolic conversations that seem to have gone on in the last month, I want to sort 

of distill this down to what is really in debate moving here. Mr. 

Murphy, are you comfortable with the discussion that over 98 percent of U.S. exports either find loan enhancement surety credit 

through other avenues other than the Export-Import Bank? 

Mr. MURPHY. Yes, that is— 

Mr. SCHWEIKERT. All right. Mr. Ikenson, tell me if I have my 

basic understanding of credit tree set up properly. 

I am going to sell widgets around the world, often before it is 

able to get in that container and start heading overseas, I need 

to—my loan facility, I may need an enhancement on it to make the 

bank happy or to be able to make the bank’s regulators happy as 

it may ultimately be. I may need a surety device, surety bonding, 

which is technically not a type of bond. It is a type of laddering, 

or an actual credit facility from my buyers. Am I missing any particular categories? 

Mr. IKENSON. Not that I am aware of. 

Mr. SCHWEIKERT. Isn’t it true that every single day around this 

world, and maybe in the hundreds of billions of dollars every week, 

that secured—or excuse me, that syndication of risk is done? 

Mr. IKENSON. Yes. 

Mr. SCHWEIKERT. And functionally, it is just like all of us here 

who have had a home mortgage. We may have had Fannie, 

Freddie, FHA or other types of mortgage insurance. Functionally, 

that is what those loan enhancements are doing, is guaranteeing 

part of that debt instrument. 

Mr. IKENSON. Yes. 

Mr. SCHWEIKERT. So right now we are basically engaged in this 

conversation for less than 2 percent of our exports, basically saying 

that there is something that is already working for over 98 percent 

99 

of our trade, whether it be the credit, whether it be the surety, 

whether it be the enhancements. 

Mr. IKENSON. Right. 

Mr. SCHWEIKERT. So could you and I tomorrow design a way 

where the full faith and credit, which is what many of us object to, 

of my 318 million brothers and sisters in this country that their 

credit is on the line on this less than 2 percent of the transactions, 

could you and I design a mechanism where you could still call it 

the Export-Import Bank? You could still have some of the same 

employees. The fact of the matter is the majority of their book is 

actually creating loan enhancement vehicles to make the money 

center bank or whoever the lender is putting up the money, could 

you see something like Export-Import Bank being rechartered so 

we remove the taxpayers and it basically becomes a risk syndicator 

out in the marketplace? 

Mr. IKENSON. I haven’t given that a whole lot of thought. But 

perhaps that is the way to go, and—but it can have a private charter and just be a regular bank. 

Mr. SCHWEIKERT. Yes, well functionally, it is not technically— 

what is it, only about 20 percent of its book is actually true lending 

credit. 

Mr. IKENSON. Right. 

Mr. SCHWEIKERT. So in many ways, it is actually more of a lending enhancement vehicle than it really is as a bank, which there 

are hundreds of companies that do that. On occasion in these discussions you will hear one of our witnesses refer to it as the insurance brokerage industry. It is not homeowner’s insurance. It is actually lending enhancement insurance. In many ways, we are engaging in an absurd debate here. The vast majority of the world’s 

trade goes without my taxpayers, without your taxpayers, for my 

brothers and sisters who are members here being on the hook. 

Mr. IKENSON. I agree. 

Mr. SCHWEIKERT. If that is what ultimately people like me mostly object to, I can see a path where it may not give the Chamber 

ultimately what they want, which is the easiest path, but it is already out there. It exists every day. If you all were economics majors, or finance majors, you used to sit through a class of how 

Lloyd’s of London was organized and what it basically was doing 

which was enhancing or guaranteeing ships and their cargo. It is 

time to start to realize the solution is already out there in the private marketplace. We actually just need to find a way to have what 

is already working in this instance. And with that I yield back, Mr. 

Chairman. 

Chairman HENSARLING. The gentleman yields back. The Chair 

now recognizes the gentleman from Maine, Mr. Poliquin. 

Mr. POLIQUIN. Thank you, Mr. Chairman. I appreciate it. Thank 

you all for being here today, and helping us through this very important discussion. I have been listening to this discussion since, 

I don’t know, about 10 this morning, and there are about 4 things 

that I am guessing that all of us here in this room, including you 

folks at the table, agree on. Number one is that Ex-Im does pick 

winners and losers. I don’t see how we can debate that. You just 

listen to everything that we listened to today and a couple of examples right here with the nice gentleman from Delta. 

100 

Second of all, there is a cost. There is absolutely a cost. There 

is a cost to the taxpayers, because the risk that they are on if 

something goes wrong. There is a cost to the workers who work at 

a company that don’t have—have not been supported by Ex-Im. 

And I think the third thing, fourth thing that we all can probably 

agree on, is that there has been gross mismanagement at the 

Bank, gross mismanagement. When you talk about the fraud, the 

corruption, and you talk about how a Member of Congress is in jail 

down in Louisiana because he had $90,000 in his freezer as a result of a bribe related to the Bank. So there has been corruption. 

There has been gross mismanagement. 

Nobody knows what the result is going to be of this discussion. 

I know that in my experience with the private sector where I came 

from, and as a business owner currently, I would never do business 

with a bank like this. Now, I am not criticizing those who have 

chosen to do that. But there is reputational risk, and if you are 

dealing with the folks who have this sort of behavior, who knows 

what they are going to be doing. 

So my question really is to you, Mr. Murphy, and help me out 

with this: Is this normal behavior for export credit agencies around 

the world? Your members deal with the folks in every different 

space in our economy and throughout the world. Is this sort of behavior common among other ECAs around the world? 

Mr. MURPHY. Your question is a bit like asking me if I stopped 

beating my wife yet. On behalf of the Chamber’s members who do 

business around the world, I would just have to say that it is a 

tough global environment where every day they are going head to 

head with competitors from around the world. U.S. merchandise 

exports are just 8 percent of the world’s total. Everything we make 

has competition and substitutes around the world. And they face— 

and they enjoy support from their ECAs. 

Mr. POLIQUIN. Okay, where I am going with this, if I may, sir, 

and all of you, if the Bank is not reauthorized that is one avenue. 

If the Bank is reauthorized, it seems like to me, from what I have 

heard today, there will be a lot of very badly needed reforms. I 

would hope that would be the case if it goes down that path. And 

I am hopeful that those of you who have experience in dealing with 

the Bank, and with the think tank over here with Cato and the 

folks who have other experience in this room, is that we won’t be 

shy about reforms that deal with the Bank’s structure, management structure, because that, of course, is what ultimately leads to 

unacceptable behavior. 

For example, earlier this morning, we learned that Mr. Hochberg 

effectively reports to nobody. He is appointed by the President. He 

has been a fund-raiser for the President. He chairs his own board. 

So the only way that management at Ex-Im is accountable, is if we 

don’t reauthorize the Bank. So if we go down this path and Ex-Im 

is reauthorized, and I am not saying it will be, but if it is, I would 

hope that all the stakeholders in this room and outside of this room 

can bring it upon themselves to make sure that we have reforms 

in place that deal with the management structure that leads to 

their business practices such that we don’t have to come to this 

point again where it is, you are on or you are not. It is all or nothing. 

101 

And so I would hope that all of us can keep that in mind as we 

move forward. But I do appreciate all of the folks being here today. 

This has been a tough discussion. But I will tell you, I represent 

about 650,000 people in northern Maine. They play by the rules. 

They are as honest a group as you could ever find. And they see 

this, and they hear this behavior, and their hair just stands up on 

end. So I don’t know where this is going to go. But if it goes down 

the path of reform, let’s fix this thing. Thank you, Mr. Chairman. 

I yield back. 

Mr. SCHWEIKERT [presiding]. Thank you, and we are excited to 

watch your hair stand on end. 

Mr. Emmer? 

Mr. EMMER. Thank you, Mr. Chairman, and I thank the witnesses for being here today. I have limited time, Mr. Hirst, but I 

want to thank you, even though you have moved to the beautiful 

State of Georgia, we still have very good feelings about Delta, and 

especially Northwest Airlines in Minnesota. You talked a little bit 

about not being able to quantify specifically the jobs. My understanding is that Delta employs some 80,000 people. I had the number in Minnesota. I don’t have it right in front of me now. Maybe 

you know it offhand. I am interested to know what this means to 

my State, and other airlines. You are just talking about Delta, but 

is Delta the only one that this impacts or have you talked to other 

airlines? 

Mr. HIRST. No, sir, it impacts the U.S. airlines that operate in 

international markets because where the Ex-Im Bank and the European export credit agencies provide subsidies to foreign airlines, 

U.S. airlines cannot receive comparable subsidies, and we don’t 

want them. We are all affected by that. I say that in any situation 

where a foreign airline displaces a U.S. airline, or a foreign airline 

serves the market that a U.S. airline therefore can’t enter, subsidize, the effect on jobs is about 1,000 on net. About 1,000. That 

is the number that can have an impact in Minneapolis which is a 

Delta hub— 

Mr. EMMER. Thank you. And Mr. Smith, obviously, mining is a 

big deal in Minnesota, and we have had some challenges. I am glad 

you are still there. I hope you are still there next year and the year 

after. I am concerned. How is this going to affect Minnesota mining, and specifically the jobs? 

Mr. SMITH. With the 1,800 jobs we have in Minnesota, some of 

those are at risk due to the high levels of steel that are being imported into the United States. And just to correct something that 

I said earlier to Ms. Moore about our exports, we still export to 

Canada at a limited tonnage right across to Sault Ste. Marie, but 

going through Canada out to other markets into Europe, and into 

the Far East, we don’t export anymore. So we have cut back our 

production tonnage at Northshore already this year, one our mines 

in Minnesota. And we have done that through attrition, but our 

customers are struggling with high levels of imports. 

Mr. EMMER. How many jobs has that cost us in Minnesota so 

far? 

Mr. SMITH. It is right at probably 200. 

Mr. EMMER. Mr. Murphy, quickly, and then I am going to run 

out of time. I do have a question for Mr. Boyle if I can get there. 

102 

But you are talking about how we would be the only country without an Export-Import Bank. And contrary to what you may be suspecting, I want to know why it is important to maintain it. One of 

the things that caught me when you were talking was we need this 

to offset what other countries are doing. And yet, I assume you are 

aware that only a third of the Ex-Im’s portfolio, or Ex-Im’s work 

actually goes to a countervail, or to a deal with competitive ExportImport Banks from foreign countries. You are aware of that? 

Mr. MURPHY. Yes, but some of the remainder goes to the circumstances I have mentioned where it is a bid requirement, and 

so on. And I think Doug Holtz-Eakin, former head of the CBO, said 

it well when he said, ‘‘I would like to live in a world where the Export-Import Bank is not necessary, but this is not that world.’’ 

Mr. EMMER. Okay, and Mr. Boyle, quickly, you talked about initially, when you are in this niche market where you take power 

plants from construction to operation, and that you went out initially looking for a line of credit, operating capital, and your commercial bankers wouldn’t do it. They wouldn’t take a security interest in your foreign accounts receivables, I think is what you had 

said. 

Mr. BOYLE. Yes. 

Mr. EMMER. And my question is, did they ask for a security interest in your domestic accounts receivable, in domestic hard assets? 

Mr. BOYLE. They have 100 percent of my personal and corporate 

assets. 

Mr. EMMER. And last question, just because I am going to run 

out, is, what is the collateral of the security interest that Ex-Im 

Bank asked you for? 

Mr. BOYLE. Ex-Im Bank didn’t ask me for it. Bank of America 

did. 

Mr. EMMER. No, but you got the credit line with Ex-Im. 

Mr. BOYLE. No. Bank of America asked Ex-Im Bank for the backing of my credit. I asked Bank of America. I had never asked ExIm Bank for any credit. 

Mr. EMMER. What is the collateral that Ex-Im has? 

Mr. BOYLE. The same as Bank of America, because Bank of 

America would be paid first, which is 100 percent of my personal 

and business assets. 

Mr. EMMER. Thank you. That is what I want to know. I appreciate it. 

Mr. SCHWEIKERT. The gentleman from Tennessee, Mr. Fincher. 

Mr. FINCHER. Thank you, Mr. Chairman. Just a few comments. 

A few minutes ago, my colleague, Mr. Poliquin, was talking about 

Ex-Im Bank picking winners and losers, and Mr. Hochberg said 

this morning that he didn’t feel that it did. But any time that 

American workers are picked over other countries, we are winning. 

So when we are making products and selling in all of the world, 

that is a positive step in the right direction. Mr. Hirst just listening, and I love Delta Air Lines too, just so you know, it is a great, 

great airline company. At Delta Air Lines, have you ever purchased 

Airbus airplanes using foreign Ex-Im financing? 

Mr. HIRST. No, sir. 

103 

Mr. FINCHER. Are you in favor of reauthorization of the Ex-Im 

Bank with reforms? 

Mr. HIRST. Yes. 

Mr. FINCHER. Okay. Mr. Murphy, explain to us what happens, 

for example, credit insurance, if we don’t reauthorize Ex-Im Bank, 

the private sector insuring some of these deals, if it goes away, 

what happens? Who steps up? 

Mr. MURPHY. I think many small businesses have already had 

the experience that commercial banks are unwilling to provide that 

without an Ex-Im backstop. So I think a lot of those small businesses would no longer be able to export. 

Mr. FINCHER. It is a shame when we have the conversation, I 

have been watching the debt clock, 18-plus trillion dollars here of 

all of the things that we could be focusing on trying to fix the debt 

problem, but we are spending a lot of time and a lot of energy here 

focusing on something that no doubt, I will be the first to admit, 

we need to reform. We have the bill to reform it. But it is actually 

something that returns money to the Treasury every year. We are 

changing the accounting standards to GAAP accounting standards, 

so if someone has a problem with that. But also, I am troubled by 

some of my colleagues continuing to go down this path of, well, it 

is the bank of 10 big companies. The top 10 get all of the loans, 

blah, blah, blah. Well, it is no fault of Boeing, or Caterpillar, or 

John Deere, or other companies that build products that are very 

expensive. 

Boeing puts together airplanes that are built all over the country, and it just happens to cost a lot of money to sell these airplanes and to build these airplanes. So we are going to be now, a 

country of capitalism, in that you can be successful, but not too 

successful. We can be the country, and this is frustrating for me 

as a Republican, we can be the country and the land of opportunity 

and growth, but don’t grow too much. Because if you do, then you 

are the enemy. 

We somehow have to get our heads around that this goes back 

to the American worker, and being competitive around the world. 

And there are 60 other countries. I get it. In a perfect world, it 

wouldn’t be needed. But the world is not perfect, and we have to 

stay competitive. And if we don’t reauthorize this, jobs are going 

to be lost, and so we are, again, we have been beating this horse 

all day, and it seems like forever. We have to get this done. We owe 

it to the American workers. Let’s don’t punish job creators all over 

the country for something that is no fault of theirs. And let’s continue to be competitive. And with that, Mr. Chairman, I yield back. 

Chairman HENSARLING. The gentleman yields back. The Chair 

now recognizes the gentlelady from Utah, Mrs. Love. 

Mrs. LOVE. Thank you so much, Mr. Chairman. Thank you all for 

being here today. I just wanted to point out a couple of things. I 

will just get right into it. 

Mr. Hochberg said in his statement today that Ex-Im Bank does 

not pick winners and losers; rather, it serves any eligible American 

business seeking competitive finance to export goods and services. 

That sentence alone suggests that you pick winners and losers 

when you are deciding who is eligible and who isn’t eligible to receive that. 

104 

Mr. Hirst, have you ever been eligible for Ex-Im financing? 

Mr. HIRST. No. 

Mrs. LOVE. Okay. We will just leave it at that. I am having a 

hard time believing this argument that this bank doesn’t pick winners and losers. I just have a quick slide I wanted to show, just 

some pictures here. Those are employees of Delta who actually just 

finished building a park for students. The others volunteered to 

build homes, on their free time, by the way, their own vacation 

time. Other volunteers who are Delta employees, you can go 

through the pictures and you can get my gist there. 

We have been advocating for jobs. That is all I keep hearing 

about. Jobs here, jobs there. I want to know if their jobs are expendable? I want to know what about their jobs and the people 

that they serve and their families that they serve? One of the 

things that I love about my colleague on the other side of the aisle, 

Al Green, who talks about—he talked about justice for all. He 

talked about liberty and justice for all. He is incredibly passionate 

and I know that he loves this country. But where is the justice for 

some of these people who may have their jobs at risk? 

This is not about a vote. This is not about you and me. It is not 

even about the votes that we make here today. What makes this 

country exceptional is not the decision we are going to make 

whether we—whether we vote to reauthorize Ex-Im Bank. It is 

about allowing people the freedom to make decisions on their own, 

to be able to compete in a world and in a country where government is not picking winners and losers for them. 

I think that we would be doing a much better job in this body 

if we were spending our time here arguing—instead of arguing 

about how we are going to improve the Bank’s exercise in picking 

winners and losers, that we could actually be spending our time 

talking about real justice in terms of how we reduce regulatory 

burdens, tax burdens on companies that prevent them from creating jobs. Why not fight for every single job by fighting for every 

single company by reducing the corporate tax rate that we have, 

by reducing burdens that we put on every single company? Why 

not save as many jobs as possible? This is what this body should 

be doing, not making decisions for other people and saying, hey, by 

the way, we are going to choose you, and not choose you. But we 

are going to say we are going to give as many people as many options as possible so that they have the best chance in providing for 

themselves and going back and helping their communities. 

That is what I came here to do. What are we doing? If we are 

in the business of providing every—of making sure that every company is able to sell their products here and across the—across 

this—the great seas, then we are grossly underperforming. 

Again, I want to thank you all for testifying here, for being here. 

But I want to be able to live in a world where my children can be 

able to compete equally and make choices and reap the benefits of 

those choices that they make. Thank you. I yield the remainder of 

my time. 

Chairman HENSARLING. The gentlelady yields back. The Chair 

now recognizes the gentleman from Arkansas, Mr. Hill. 

105 

Mr. HILL. Thank you, Mr. Chairman. Panel, thank you for your 

indulgence and your tenacity. I appreciate you staying through this 

process. 

Mr. Hirst, you commented on, be a lender of last resort as a reform idea. And I am curious how you would see that manifest 

itself? What would that mean to you? What does that mean? 

Mr. HIRST. Any applicant for bank financing, any foreign airline 

that would apply for bank financing would have to certify that it 

was unable, it had made an effort and was unable to obtain financing in the commercial markets for the aircraft that it wants support for. 

Mr. HILL. Thank you, and Mr. Murphy, you talked a lot about 

international tenders for projects and products that companies bid 

on on a global basis. And you said that frequently financing was 

a component of that tender, and I don’t think you meant to say 

ECA-type financing as a component of the tender. Perhaps you did. 

So I want you to clarify that for me. Because why wouldn’t it just 

simply be that we are going to sell large-scale product X to a country or company and country Y, and that financing be provided, but 

are you implying that those tenders require only the ECA of the 

selling country? 

Mr. MURPHY. That is exactly what I am saying. And it is a common practice in infrastructure projects around the world which are 

big business and huge opportunities for American exporters. That 

is one of the particular instances where it is required. 

Mr. HILL. Thanks for the clarification. Would you describe that 

as a non-tariff barrier to American trade then? 

Mr. MURPHY. Absolutely. 

Mr. HILL. And in Trade Promotion Authority and when we think 

about TTIP, and TPP, should we be very cognizant of non-trade 

barriers like that when we look at those agreements, non-tariff barriers? 

Mr. MURPHY. I think that the emphasis that a number of members of the committee have put on trying to find a path forward for 

international negotiations is something that we can all support. 

But I think one of the messages here today that we hear from 

around the world is that there is very little appetite from foreign 

governments to engage in that. They are all expanding in almost 

every instance their ECAs. 

Mr. HILL. Particularly the European—we have heard a lot about 

Europe, particularly today that didn’t affect our friends in the construction business, which is global, but in the aviation business, it 

seems to be Europe is a prime part of the discussion. And they are 

the primary countries that are seeking an Atlantic TTIP treaty 

with the United States, right, so don’t we have some clout or credibility there in putting this on the table as a non-tariff barrier to 

be eliminated? 

Mr. MURPHY. It is certainly worth trying, but as has been pointed out, China has four of these banks. They are providing volumes 

of export finance that are 10 and 20 times between the four different policy banks that China has, 10 and 20 times what our little 

old Ex-Im Bank is providing, so it is an uphill struggle. 

Mr. HILL. Okay, thank you for that. 

106 

Mr. Boyle, I have never had an opportunity to question a boiler 

technician of your standing. So it is a treat. Thank you for coming, 

and thanks for your passionate story you told. Following up on Mr. 

Emmer, I had some of the same questions which was, when I meet 

people, some people apply for Ex-Im because their credit is insufficient to do a transaction. Others, it is the buyer. There is some 

buyer-seller problem in a foreign country, or the lack of credit 

standing. 

So I take it in your discussion with Mr. Emmer, it was expanding or qualifying your credit on behalf of your primary bank. Do 

you think that was the nature of your receivables, and your inventory, and your balance sheet, or— 

Mr. BOYLE. Yes and no, because my receivables are foreign-based 

and unsecure. They are with foreign corporations, Korean construction companies, GE, foreign companies overseas, GE’s companies 

overseas, and large construction companies around the world. 

Mr. HILL. I was a former commercial banker in my previous life, 

and we made loans to people who had foreign receivables, and we 

tended to take bank letters of credit from those countries, particularly if they were developed countries, or countries with a solid 

banking system. I wondered if you would explore that aspect of it 

and just get you to comment on that as well? 

Mr. BOYLE. We haven’t been able to make that become a reality. 

It is not available in the current marketplace that we can find. 

This discussion has been ongoing for some period of time, and we 

in small business across the United States that are currently working with the Ex-Im Bank, seek an answer to that question. And I 

think, hope as a strategy is what we are having a problem with at 

the moment, in that regard, is the answer isn’t out there, and you 

want us to hope that it materializes overnight. If it materialized 

beforehand, we might have a discussion. 

But there isn’t anything that we know of. We don’t have the resources to scan the globe looking for this. I have spent a great deal 

of time doing this, so you are putting the cart before the horse. 

Mr. HILL. Thank you, Mr. Boyle. My time has expired and, again, 

I thank the panel. And thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

I understand the ranking member wishes to be recognized for a 

unanimous consent request. 

Ms. WATERS. Thank you, Mr. Chairman. I seek recognition to insert into the record a document entitled, ‘‘GOL Issues $41 million 

Ex-Im Bank-Guaranteed Bond for Services Exported by Delta 

TechOps, MRO Division of Delta Air Lines.’’ 

Chairman HENSARLING. Without objection, it is so ordered. 

There are no other Members in the queue on either side of the 

aisle, so this is good news for our panel. I wish to thank all of our 

witnesses for their testimony today. 

107 

The Chair notes that some Members may have additional questions for today’s panels, 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. 

This hearing is adjourned. 

[Whereupon, at 5:30 p.m., the hearing was adjourned.] 

(109) 

A P P E N D I X 

June 3, 2015 

110 


96990.001
111 


96990.002
112 


96990.003
113 


96990.004
114 


96990.005
115 


96990.006
116 


96990.007
117 


96990.008
118 


96990.009
119 


96990.010
120 


96990.011
121 


96990.012
122 


96990.013
123 


96990.014
124 


96990.015
125 


96990.016
126 


96990.017
127 


96990.018
128 


96990.019
129 


96990.020
130 


96990.021
131 


96990.022
132 


96990.023
133 


96990.024
134 


96990.025
135 


96990.026
136 


96990.027
137 


96990.028
138 


96990.029
139 


96990.030
140 


96990.031
141 


96990.032
142 


96990.033
143 


96990.034
144 


96990.035
145 


96990.036
146 


96990.037
147 


96990.038
148 


96990.039
149 


96990.040
150 


96990.041
151 


96990.042
152 


96990.043
153 


96990.044
154 


96990.045
155 


96990.046
156 


96990.047
157 


96990.048
158 


96990.049
159 


96990.050
160 


96990.051
161 


96990.052
162 


96990.053
163 


96990.054
164 


96990.055
165 


96990.056
166 


96990.057
167 


96990.058
168 


96990.059
169 


96990.060
170 


96990.061
171 


96990.062
172 


96990.063
173 


96990.064
174 


96990.065
175 


96990.066
176 


96990.067
177 


96990.068
178 


96990.069
179 


96990.070
180 


96990.071
181 


96990.072
182 


96990.073
183 


96990.074
184 


96990.075
185 


96990.076
186 


96990.077
187 


96990.078
188 


96990.079
189 


96990.080
190 


96990.081
191 


96990.082
192 


96990.083
193 


96990.084
194 


96990.085
195 


96990.086
196 


96990.087
197 


96990.088
198 


96990.089
199 


96990.090
200 


96990.091
201 


96990.092
202 


96990.093
203 


96990.094
204 


96990.095
205 


96990.096
206 


96990.097
207 


96990.098
208 


96990.099
209 


96990.100
210 


96990.101
211 


96990.102
212 


96990.103
213 


96990.104
214 


96990.105
215 


96990.106
216 


96990.107
217 


96990.108
218 


96990.109
219 


96990.110
220 


96990.111
221 


96990.112
222 


96990.113
223 


96990.114
224 


96990.115
225 


96990.116
226 


96990.117
227 


96990.118
228 


96990.119
229 


96990.120
230 


96990.121
231 


96990.122
232 


96990.123
233 


96990.124
234 


96990.125
235 


96990.126
236 


96990.127
237 


96990.128
238 


96990.129
239 


96990.130
240 


96990.131
241 


96990.132
242 


96990.133
243 


96990.134
244 


96990.135
245 


96990.136
246 


96990.137
247 


96990.138
248 


96990.139
249 


96990.140
250 


96990.141
251 


96990.142
252 


96990.143
253 


96990.144
254 


96990.145
255 


96990.146
256 


96990.147
257 


96990.148
258 


96990.149
259 


96990.150
260 


96990.151
261 


96990.152
262 


96990.153
263 


96990.154
264 


96990.155
265 


96990.156
266 


96990.157
267 


96990.158
268 


96990.159
269 


96990.160
270 


96990.161
271 


96990.162
272 


96990.163
273 


96990.164
274 


96990.165