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30–533 PDF 2006

REAUTHORIZATION OF THE EXPORT–IMPORT

BANK OF THE UNITED STATES

HEARING

BEFORE THE

SUBCOMMITTEE ON 

DOMESTIC AND INTERNATIONAL 

MONETARY POLICY, TRADE, AND TECHNOLOGY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

APRIL 5, 2006

Printed for the use of the Committee on Financial Services

Serial No. 109–83

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chair 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

CAMPBELL, JOHN, California 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin, 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON DOMESTIC AND INTERNATIONAL MONETARY POLICY, TRADE, AND

TECHNOLOGY

DEBORAH PRYCE, Ohio, Chair

JUDY BIGGERT, Illinois, Vice Chair 

JAMES A. LEACH, Iowa 

MICHAEL N. CASTLE, Delaware 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

MARK R. KENNEDY, Minnesota 

KATHERINE HARRIS, Florida 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

MICHAEL G. OXLEY, Ohio 

CAROLYN B. MALONEY, New York 

BERNARD SANDERS, Vermont 

MELVIN L. WATT, North Carolina 

MAXINE WATERS, California 

BARBARA LEE, California 

PAUL E. KANJORSKI, Pennsylvania 

BRAD SHERMAN, California 

LUIS V. GUTIERREZ, Illinois 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin 

JOSEPH CROWLEY, New York 

BARNEY FRANK, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

April 5, 2006 ..................................................................................................... 1

Appendix: 

April 5, 2006 ..................................................................................................... 33

WITNESSES 

WEDNESDAY, APRIL 5, 2006

Harmon, James, Chairman, World Resources Institute ....................................... 25

Lambright, Hon. James H., Chairman and President (acting), Export-Import 

Bank of the United States ................................................................................... 9

Morrison, James, President, Small Business Exporters Association of the 

United States ........................................................................................................ 23

Rice, Edmund B., President, Coalition for Employment Through Exports ........ 21

APPENDIX 

Prepared statements: 

Oxley, Hon. Michael G. .................................................................................... 34

Velazquez, Hon. Nydia ..................................................................................... 35

Harmon, James ................................................................................................. 40

Lambright, Hon. James H. .............................................................................. 44

Morrison, James ............................................................................................... 55

Rice, Edmund B. ............................................................................................... 67

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Pryce, Hon. Deborah: 

Statement of Brett N. Silvers .......................................................................... 78

(1)

REAUTHORIZATION OF THE EXPORT–IMPORT 

BANK OF THE UNITED STATES 

Wednesday, April 5, 2006

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON DOMESTIC AND

INTERNATIONAL MONETARY POLICY, TRADE, AND TECHNOLOGY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:05 p.m., in the 

Rayburn House Office Building, Hon. Deborah Pryce [chairwoman 

of the subcommittee] presiding. 

Present: Representatives Pryce, Kelly, Manzullo, Biggert, 

Neugebauer, Maloney, Velazquez, Watt, and Sherman. 

Ex officio: Representative Oxley. 

Chairwoman PRYCE. Good afternoon. This hearing will come to 

order. I am pleased to welcome you all here today, to this legislative hearing on H.R. 5068, which reauthorizes the Export-Import 

Bank. 

I would like to thank our witnesses for being here with us today, 

and also my colleagues, who have been very supportive of this legislation—Mrs. Maloney and Mrs. Biggert, thank you very much. 

We have drafted a good bill that brings to the Bank greater 

transparency, increased oversight, and improvements in outreach, 

especially to small businesses. 

I would like to thank Chairman Manzullo for his leadership on 

this issue, specifically. His assistance was vital in drafting language to formally establish a small business division within the 

Bank, which will make it easier for small business exporters to access the medium-term credit programs. 

In the new charter, we have required numerous reforms and 

structural changes to the Bank. These will take time to implement. 

And as such, we have extended the charter date to 2011. 

To address any oversight concerns that the Bank may fall into—

an all-too-familiar trap of being required to make changes by Congress and then not acting on those requirements—we have included 

reports to Congress on implementation progress. 

Going further, we have also required that in those reports we 

have the board sign off before it comes to Congress and include any 

dissenting views. Additionally, we ask for the name of the person 

responsible for that section of reform within the Bank, so that Congress is aware of whom to address its focus. 

One of the most frequent criticisms of the Bank that my subcommittee has heard is that there is no staff designated exclusively 

2

for small business. When a small business calls to begin an application, they may get someone who has just finished a large contract and doesn’t understand what small business exporters need. 

This can lead to frustration and failed service to the exporter. 

To address this concern, this legislation establishes a small business division that will provide outreach and advocacy of small businesses and advise them on Bank programs. Additionally, this division would specifically give advice to women and minority-owned 

small businesses that, as statistics show, are increasingly becoming 

the most successful of all small businesses in America. 

According to the U.S. Census, in 1992, there were 6.2 million 

women-owned small businesses. In 1997, there were 5.4 million, 

and today, there are over 10 million. All women and minorityowned businesses contribute over $4 trillion to the U.S. economy. 

So, to cut through any administrative red tape, we have instituted a direct line for the senior vice president of the small business division to report directly to the president of the Bank. 

And to further guarantee that the Bank must have small business staff who work solely on, and truly understand, the needs of 

small business exporters, we have required staff budgetary resources and staff be dedicated to the small business division. The 

division shall include staff dedicated exclusively to outreach, training, and advice concerning various programs. 

Though the Bank is not an aid agency, it can do much to support 

developing nations through the Sub-Saharan Africa Advisory Committee. We have added this division into the Bank’s charter, and 

extended the charter until 2011. This section would see that a master guarantee agreement would be in place with appropriate banks 

in Africa, and require a report on the working relationship with the 

African Development Bank, and the Africa Ex-Im Bank. 

This provision would also encourage the Bank to work for closer 

cooperation with U.S. agencies in Africa, especially foreign service, 

which would encourage African buyers towards transactions supported by the Bank. 

As many of my colleagues can recall, we have heard, over the 

last few years, of instances where the board refused to take up a 

vote on an application. Non-actions like these by the board only result in hurting our economy. When the board refuses to act, our 

American exporters lose. As such, we have required the board to 

vote in all cases when an economic impact study has taken place. 

We’ve placed in the charter that the Bank will notify applicants 

of application status within 45 days after receipt, and send notices 

for additional information, if needed. 

Now, some of my colleagues here today believe that even 45 days 

is too long, and I hope to hear more on this from the witnesses. 

It has been almost 5 years now, since my predecessor required 

Ex-Im to put in place an interactive Internet site where applicants 

can go to check the status of their loan request, and to track its 

progress, and Ex-Im still does not have this Web site functioning. 

We require in this new charter that the Bank have this online site 

up and properly functioning by September 1st of this year. 

This section of the legislation will also require: reports by the 

Bank related to technology to assist small businesses; analysis of 

money appropriated for this area; and a report by the inspector 

3

general which examines the total amount expended on technology, 

and what efforts are being made in assisting small business concerns. 

In working on this legislation, my subcommittee has heard from 

exporters that the Bank may not be as competitive as other banks, 

such as Canada and Japan. To gather further information on this, 

we have asked the Bank to provide a report to Congress that focuses on the competitiveness initiatives, as compared to the size of 

program accounts at the Bank, and other ECA’s, and how the 

Bank’s rates, terms, and other conditions compare with those offered by other governments, directly or indirectly. 

I believe this legislation is a solid foundation by which the Bank 

can become more competitive, transparent, and rise to address the 

needs of our American exporters. 

We welcome our witnesses here today, and I look forward to 

hearing their testimony. I would now like to recognize my friend 

and colleague, Mrs. Maloney, for her opening statement. 

Mrs. MALONEY. Thank you, and I thank the Chair for holding 

this hearing, and all of our witnesses for being here today. I particularly would like to welcome Mr. James Harmon, who happens 

to be a constituent of mine. He is now the chairman of the World 

Resources Institute, and a former chair of the Ex-Im Bank. 

The future of the Export-Import Bank is of great concern to all 

of us on this subcommittee, and, I would say, to all Members of 

Congress. We are faced today with the need to pass the reauthorizing legislation for our Nation’s export credit agency at a time 

when the demands of the global marketplace seem increasingly 

pressing and increasingly difficult, and the agenda of Ex-Im appears more critical to our economy than ever before. 

As the independent U.S. governmental agency that assists in financing the exports of U.S. goods and services to markets around 

the world, through export credit insurance, loan guarantees, and 

direct loans, the Ex-Im Bank has long played a vital role in the 

economy of many of the districts we represent, including the one 

that I represent. 

But in a year when the single best-selling non-fiction book, ‘‘The 

World is Flat,’’ argues that the most important event of the new 

millennium is not 9/11, but the explosive growth of the global market, the Bank’s mission of creating and maintaining U.S. jobs 

through financing exports takes on a new urgency and importance. 

And I would say, as our gap in trade grows, the importance of this 

Bank grows. 

Whether we like it or not, the coming together of events that 

have brought India, China, and many other countries into the global supply chain for service and manufacturing has created an explosion of wealth in the middle classes of the world’s two biggest 

nations, giving them a huge new stake in globalization. 

As former Chairman Greenspan was fond of telling the subcommittee, ‘‘All of a sudden a huge number of highly educated people from formerly non-competitive countries have entered the global workforce.’’ We cannot afford to be uncompetitive in the rapidly 

changing global market, or complacent about our status. Our current account deficit is increasing, and each year sets new records. 

4

Indeed, the new alarming news is that in the last quarter of 

2005, we lost ground on the two factors that have traditionally 

been in our favor: the balance on income shifted to a deficit from 

a surplus; and the surplus on services decreased. 

As leadership on both sides of this subcommittee recognize, we 

must empower and support Ex-Im now, more than ever. I am very 

happy to report that the Ex-Im reauthorization bill introduced last 

week is truly a bipartisan piece of legislation, as evidenced by the 

fact that the original co-sponsors include not only the majority and 

minority leadership of this committee and subcommittee, but also 

of the small business committee. And we are pleased to be joined 

by Mrs. Velazquez, who is here with us today. 

We have worked together in this bill to fairly address the concerns of many viewpoints, and I look forward to the comments from 

the witnesses. 

I would like to commend, particularly, the staff of the committee—Jackie Moran, Paul Kangas, Eleni Constantine, and Scott 

Morris—for their long hours and hard work, and a bipartisan effort 

to listen to many points of view, and to produce a bill that we all 

agree on. 

The bill responds to some concerns that we have had for a long 

time, and that we heard repeatedly as we began to work on this 

bill. First, the bill reaffirms Congress’s intent that the Bank support small business to a greater extent than at present, consistent 

with sound lending policies. To this end, the bill creates a small 

business division within the Bank, run by a senior VP who reports 

directly to the chairman. 

The staff of this new division are dedicated exclusively to small 

business transactions, reflecting the fact that these deals and these 

clients need and require unique skills. Within this division, the bill 

creates an office charged with expanding outreach to women and 

minority-owned businesses, also underrepresented in the Bank’s effort in a very important new addition. 

Based on numerous comments, I might add, particularly from my 

own constituency that are interested in exporting, we should—we 

worked on making it more transparent. And many of my constituents say they were very frustrated by the lack of transparency and 

unfriendliness in the bank process; it was not user friendly. Several 

said that their applications, and I’m using their words, ‘‘simply disappeared.’’ 

And at my initiative, the bill contains several transparency reforms that respond to this concern, and I expect that these relatively low-cost changes will provide significant benefits to Ex-Im’s 

clients. They include notification requirements so that applicants 

know what is happening to their application and a requirement for 

board action on applications that have been subject to economic impact analysis, among others. 

Some of my constituents said that an economic impact analysis 

may have been called by some of their competitors, and that it was 

a way of just killing a project before the Bank. 

And I just want to add on what my colleague, the chairwoman, 

mentioned. My daughter is now going through the process of applying to colleges. She can go through any college application, find out 

what papers are missing, what needs to be done, and where it 

5

stands in the process. Why can’t we do this, as was required 5 

years ago? 

The bill also has a new activity to increase activity in Sub-Sahara Africa, and it has many other additions that I think are important, particularly in the competition area. In particular, the bill 

gives the Bank authority to use the Tied Aid Fund, a fund established several years ago by Congress to combat unfair export practices by other countries. 

It has many new additions. I just ask to revise and extend my 

remarks, and add the rest of it to the official record. We look forward to your testimony, and I look forward to a swift passage of 

this important legislation. 

Chairwoman PRYCE. Without objection, your full statement will 

certainly be put in the record. 

We are very pleased to welcome our chairman. Chairman Oxley, 

you are recognized. 

The CHAIRMAN. Thank you, Chairwoman Pryce. And I am going 

to submit my statement for the record, and only say welcome to 

Mr. Lambright, and to say that this is the second go-around on the 

Export-Import Bank reauthorization since I have been chairman. 

And I am reasonably optimistic, given the tenor of the opening 

statements, and the bipartisan support we have for this legislation, 

of going forward. 

I recall some fits and starts when we went through this process 

in 2002. Well, we finally got it done, got to a conference committee, 

and worked out our differences. And I think some of the recommendations, particularly in the small business area, make a lot 

of sense, and certainly, I think, will add some support here on the 

Hill for the reauthorization this time around. 

So I want to thank Chairwoman Pryce for her support on this, 

and Carolyn Maloney, and others, who have really put together, I 

think, a bill that we can be proud of, and that gets us to our goal 

of increasing exports by American producers. 

And with all of the rhetoric we hear about trade and outsourcing, 

and the like, this is something very positive that this Congress can 

do to send a strong signal that we are reauthorizing the ExportImport Bank, and we understand the goals that they have, that the 

witnesses will be talking about. And at the end of the day, we will 

have a solid package that we can pass over to the Senate, and hope 

to have the President’s signature by the end of this calendar year. 

So, with that, Madam Chairwoman, I yield back the balance of 

my time, and ask unanimous consent that my full statement be a 

part of the record. 

Chairwoman PRYCE. Without objection. Thank you very much, 

Mr. Chairman. 

I now recognize Mr. Sherman. 

Mr. SHERMAN. Thank you. I think that the trade deficit of the 

United States, which is the largest any country has ever had in 

history, by far, is the greatest threat to world economic order, and 

to American prosperity. And so, I welcome the efforts of the ExportImport Bank—which I hope would someday change its name to Export Bank—to try to deal with that problem, although your efforts 

are, at most, a few drops in the bucket. 

6

A second concern I have is the Export Bank’s dealing with small 

business. I have dealt with the chairman on that directly, and I 

think that we can deal effectively with particular small businesses 

in my area. 

And then, finally, I have been concerned—and I realize this is 

more a foreign policy issue, and this is not the Foreign Policy Committee of the Congress, but you have an effect on foreign policy—

about the financing that the Export Bank has done with regard to 

projects in the Caucuses. You have financed a pipeline that can 

only be called ‘‘The War Pipeline’’. It is a pipeline to go from 

Ajarbaijan, around Armenia, into Georgia, and then into Turkey. 

The effect of this pipeline will be disastrous. The route of this 

pipeline is the exact opposite of what it would be if it was a ‘‘peace 

pipeline.’’ If it was a peace pipeline, it would take the shortest distance, and it would link Ajarbaijan and Armenia. By going around 

Armenia, you have given some voice to the extremists in 

Ajarbaijan, who say, ‘‘Look, once we pump out the oil and the Armenians can’t stop us, we will somehow get enough money to reverse our defeats on the battlefield, and we will start a new war.’’ 

Now, that’s not only a problem for our policy in the Caucuses, 

but it’s also a problem for the Export Bank, because we established 

firmly during World War II that oil pipelines are legitimate strategic targets of war. And so, when we get to the questions, I will 

ask the chairman whether you have reserved in full for what may 

very well happen, the total destruction of that pipeline in a war 

that may very well occur precisely because the pipeline was built 

with U.S. funds. 

My current concern now is that you may match the war pipeline 

with a war railroad designed, again, not to go from Ajarbaijan 

through Armenia and to Turkey, but rather, to go around. 

And, I will point out again, that during World War II, we clearly 

established that railroads are legitimate strategic targets in war. 

And I would hate to see you or one of your successors try to reverse 

what has been established U.S. policy and somehow say, ‘‘Oh, we 

lost money. It’s Armenia’s fault. They shouldn’t hit pipelines, they 

shouldn’t hit railroads.’’ Well, we have in every war that we have 

had in the last 60 years, and I suggest that we make sure that this 

railroad be a peace railroad and not a war railroad. And I yield 

back. 

Chairwoman PRYCE. The gentlewoman from Illinois, who has 

worked very hard on this issue, Mrs. Biggert. 

Mrs. BIGGERT. Thank you very much, and thank you, Chairwoman Pryce, for holding this legislative hearing today. I am going 

to try and just take a few minutes and submit my testimony, or 

my statement, for the record. 

But I would like to express my thanks for Mr. Lambright and his 

team for coming out to my district in Illinois for a roundtable recently. In an effort to ensure that we had the best bill possible, we 

met with Chicago area manufacturers, large and small, and financial services industry representatives, to discuss what the Bank is 

doing well, and how it could improve. I think we had a very productive discussion, and I would like to thank the Ex-Im Bank team 

for listening to my constituents and taking into consideration some 

of their suggestions for the Bank. 

7

And I would also like to encourage my colleagues to hold similar 

sessions, for they’re a great way to hear directly from those who 

are on the front lines. And thanks to the advice of those who participated in the roundtable, there were just a couple of suggestions 

that I would just like to touch on briefly. 

First, we should encourage the Bank and other financial institutions to increase their outreach efforts with businesses, and spread 

the word about export financing opportunities. 

Second, several of my constituents expressed concern that the approval criteria for the Bank financing is too strict. 

Third, the Bank should explore opportunities to streamline applications. 

Fourth, the Bank should work with other Federal agencies in the 

private sector to develop greater expertise in the financing of exports to developing countries. And then, on a related note, I would 

hope that the Bank could expand expertise in specific sectors, and 

facilitate increasing exports in those sectors. I would particularly 

like to see this in the energy sector that I think we talked about, 

giving increased—increasing the global demand for clean, efficient, 

and cheap energy. 

And lastly, I hope that the Bank will find ways to more accurately assess the economic impact that its larger transactions have 

on smaller businesses. So it was a great meeting, and such an important issue, that in our increasingly competitive global environment, we must ensure that we can provide every advantage, and 

remove every disadvantage, for U.S. businesses to win this sale. 

So, I look forward to working with the Bank. I look forward to 

working with the chairman and my colleagues on both sides of the 

aisle to reauthorize the Bank, and to ensure that it has targeted 

directives, adequate financing and staff, and the capabilities to facilitate increased U.S. exports, and most importantly, U.S. jobs. 

With that, I yield back. 

Chairwoman PRYCE. Thank you. Mrs. Kelly? 

Mrs. KELLY. Thank you, Madam Chairwoman. I would like to 

ask Mr. Lambright, you expressed support for a 5-year reauthorization— 

Chairwoman PRYCE. We are in the period of opening statements. 

Mrs. KELLY. Oh, I am sorry. I don’t have an opening statement. 

I thought you were in questions. 

Chairwoman PRYCE. All right. That’s all right. Mr. Manzullo, do 

you have an opening statement? 

Mr. MANZULLO. I just want to thank you for the hearing. I look 

forward to Mr. Lambright’s testimony. He has brought a lot of 

fresh air and a new culture to Ex-Im, and I look forward to his 

being accepted by the honorables over on the other side. And he 

has already worked with us very closely in implementing some very 

strategic small business issues. So I thank you for having the hearing. 

Chairwoman PRYCE. And I thank Mrs. Kelly and Mr. Manzullo 

for your input and assistance in this bill. Thank you very much for 

your interest. 

And now, without objection, the Chair would recognize Ms. 

Velazquez for an opening statement. 

8

Ms. VELAZQUEZ. Thank you, Chairwoman Pryce, and Ranking 

Member Maloney, and I would like to really thank you for the work 

that you have done on this reauthorization. And as the ranking 

Democrat on the Small Business Committee, of course this is an 

important issue for me, and we have worked with the committee 

staff to have input into this language, reauthorization language. 

As you know, small exporters are key components of a successful 

export strategy. They are the Nation’s leading exports, dominating 

many export sectors, and growing 2 times faster than large exports. 

However, these firms face obstacles trading internationally. They, 

therefore, require assistance from the Export-Import Bank to obtain adequate and timely financing, as well as business development and outreach resources. 

In the Export-Import Bank’s Reauthorization Act of 2002, Congress required small and medium-sized exporters to receive at least 

20 percent of the Bank’s authorizations. However, the Bank has 

not fulfilled its mandate since this was enacted. The unfulfilled 

mandate demonstrates inadequate institutional focus on, and commitment to, small exporters to promote a sustainable export sector. 

The Export-Import Bank must take steps to support the growth of 

the country’s lead exporters, small businesses. 

To support small exporters, the Bank’s financing procedures and 

resources must be geared, in part, to the particular needs of these 

businesses. The reauthorization proceeding provides a new opportunity to ensure that the Bank’s small business financing is commensurate with overall need. 

To implement changes, the reauthorization legislation proposes 

to establish reforms to the Bank’s institutional structure, and decisionmaking procedures. The Bank structure will better serve small 

businesses through the creation of a small business division. The 

division will represent small exporters and advocate for their interests within the Bank, and to private lending institutions. 

However, if it is to be relied upon as the representative of small 

business needs, the division must have real resources, real responsibilities, and real decisionmaking authority. A weak small business division will not be able to enforce its mandates. 

A newly established small business division staff should possess 

both knowledge of these exporters’ particular needs, and be authorized to review and approve small business financing applications. 

Knowledge and advocacy are meaningless if they do not impact the 

bottom line, which is to provide these firms with financing assistance. 

I am also concerned with the Bank’s level of assistance to minority and women-owned export businesses. These firms are growing 

at double the rate of all firms in the country, and possess immense 

potential to become top exporters. Yet, the Bank currently provides 

them with just over 2 percent of the total financing. To support the 

growth, these businesses require additional resources for business 

development and a higher mandatory setaside from the Bank’s 

total authorizations. 

Chairwoman, I just want to say, look, in 2002, I was a member 

of this subcommittee. I was sitting here when we were dealing with 

the reauthorization language. And here we are again, pointing and 

raising the same concerns that small business exporters were facVerDate 0ct 09 2002 10:24 Nov 14, 2006 Jkt 030533 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 F:\DOCS\30533.TXT HFIN PsN: TERRIE
9

ing back then. So, I hope you do a better job, and I hope that we 

can accomplish that with this legislation. Thank you. 

Chairwoman PRYCE. The gentlelady’s time has expired. 

Well, as we begin, I would like to thank chairman and acting 

president of the Bank, Jim Lambright, for being here today with 

us. Mr. Lambright has made—has been in this role since July of 

2005, and has been doing a very good job working with the Members of Congress in addressing their concerns in many areas, and 

also making the Bank more competitive and responsive. 

We welcome you here today. We will recognize you for a 5-minute 

summary of your testimony, without objection. Your entire written 

statement will be part of the record, and then we will get to the 

meat of other concerns as we ask questions. Go right ahead, Mr. 

Lambright. 

STATEMENT OF JAMES H. LAMBRIGHT, CHAIRMAN AND 

PRESIDENT (ACTING), EXPORT–IMPORT BANK OF THE 

UNITED STATES 

Mr. LAMBRIGHT. Thank you so much. Chairwoman Pryce, Congresswoman Maloney, and members of the subcommittee, I am 

pleased to be here today to testify on the 2006 reauthorization for 

the Export-Import Bank of the United States. 

Since my testimony before this subcommittee on November 10th 

of last year, I have had the pleasure of meeting with a number of 

the distinguished members of the subcommittee, and I look forward 

to continuing this dialogue. 

The mandate of the Bank, as expressed in our charter, is to create and sustain U.S. jobs by supporting exports that otherwise 

would not go forward, either because of government-supported competition, or because the private sector is unwilling or unable to assume the risk. We do this through loans, guarantees, and insurance. 

That mandate remains the core of why the Bank exists, and why 

it should be reauthorized. We are requesting the extension of the 

charter for 5 years, to September 2011. We are also requesting that 

our existing authority to approve dual-use transactions, as well as 

the life of the Sub-Saharan Advisory Committee be extended to the 

same date. 

And except for these changes, we at Ex-Im Bank believe the current charter language provides the institution with sufficient powers and flexibility to meet the challenges of the next 5 years. 

Our charter provides guidance as to how to meet our mandate. 

We then must set our course by those beacons, one representing 

the aggressive support we provide U.S. workers and exporters, and 

the other representing responsible stewardship of taxpayer dollars. Since our 2002 reauthorization, we have authorized roughly $48 billion in financing support of an estimated $63 billion in U.S. exports. Some of those have been big ticket items, such as aircraft or 

power generation equipment. But over 80 percent of those transactions have been made available to directly support small business exports. 

For fiscal year 2005, every taxpayer dollar invested in the Bank’s 

program and administrative budgets yielded financing in support of 

over $50 in U.S. exports. 

10

Since I was appointed acting president about 8 months ago, no 

topic has received more attention at Ex-Im Bank than small business. There have been numerous meetings between Ex-Im staff and 

the staff of the House Committee on Small Business since my last 

testimony before this subcommittee. 

We have also worked closely with small business representatives. 

And as a result of this collaborative process, we have made a number of creative and innovative changes to our business operations. 

These include: improving the claims process; establishing a new division for small business outreach; assigning small business specialists in each division; and expanding our online capabilities. 

We are forward-leaning in reaching out to the small business 

community, and we will continue to adapt our policies and practices to be as flexible and responsive as possible to meet the needs 

of small businesses. 

And we have already laid a strong foundation for growing the 

small business program. In the last fiscal year, Ex-Im Bank authorized 47 percent more in dollar volume than in fiscal year 2002, 

at the time of our last rechartering, and 21 percent more, in terms 

of transactions. 

We also remain mindful of the policy considerations that exist in 

our mandate, and we try to achieve the objectives set by Congress. 

And to this end, it’s worth highlighting, first, that the Sub-Saharan 

Africa Advisory Committee has proved to be a valuable source of 

knowledge for the Bank, as we attempt to increase our exports to 

this important part of the world that offers great potential for our 

exporters. 

Second, since the establishment of the Bank’s Environmental Export Program in 1994, our environmental transactions have grown 

significantly, with a total portfolio in excess of $2 billion. This has 

allowed U.S. environmental companies to compete in promising 

emerging markets. 

And, third, we at Ex-Im Bank are striving to help the American 

export community be more competitive by working to increase our 

transactions involving women and minority-owned businesses. In 

the last fiscal year, Ex-Im Bank staff participated in 70 events 

aimed at this targeted audience. 

And in looking to the future, industrialized countries which are 

not OECD members, are emerging as significant exporters of capital goods. And we have to decide what Ex-Im Bank’s response 

should be to these growing challenges. 

I have every confidence that Ex-Im Bank will continue to serve 

American workers, and preserve American jobs for years to come. 

I look forward to working with you in this reauthorization process, 

and I would be happy to take your questions. Thank you. 

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

44 of the appendix.] 

Chairwoman PRYCE. Thank you very much. We all appreciate 

your time-sensitive testimony. 

And I would like to talk a little bit about the proposals for limiting time limits on processing the applications. Do you believe this 

would approve or hinder the process, in determining whether or 

not to approve a loan? 

11

And I would also like your honest assessment of the 45-day period, and whether that, from your perspective, and from the applicants’, is too long, too short, or just right. Would you give us your 

thoughts on that, please? 

Mr. LAMBRIGHT. Yes. I don’t want to take a day longer than is 

necessary to satisfy our customers’ needs. Customer service is an 

important part of what we do. And we are assessing ways to meet 

our customers’ needs in a more time-sensitive manner. 

One thing that we’re doing is introducing the Ex-Im Online program, which some members have mentioned in their opening statements, as a way we can provide faster response and more transparency for our customers, particularly our small business customers. 

And to your particular point about the 45 days, it strikes me as 

reasonable that any customer should be contacted by Bank staff in 

that timeframe to acknowledge receipt of an application, and to 

start the discussion about what further information may be needed 

to proceed. 

Chairwoman PRYCE. Start the discussion? That means you don’t 

think you could complete the evaluation within 45 days? 

Mr. LAMBRIGHT. As I read the bill, it was 45 days to reach out 

to customers to ask questions or to express concerns about an incomplete application. And that struck me as something that would 

be reasonable to expect staff to do. 

Chairwoman PRYCE. And how long does the typical application 

process take? 

Mr. LAMBRIGHT. It would be a different answer for different programs. If you look at our primary small business program, the typical case is evaluated and approved within 20 business days. And 

so, the 45 days would, of course, be well within that timeframe. 

When you start to look at our more complicated transactions in 

the medium term, the typical turnaround time is 40 to 45 business 

days. And when you go into the longer-term credits for assetbacked financing, or structured projects, those are measured in 

months, or perhaps even years. But when I hear complaints about 

our cycle time—and I’m sure that the complaints that you hear 

about Ex-Im Bank’s responsiveness—they generally relate to the 

medium term or the shorter-term products. 

Chairwoman PRYCE. And so, would it be valuable for us to require a time limit? Would it be valuable, in terms of your internal 

processes, and would it be valuable for the applicants themselves? 

Mr. LAMBRIGHT. I agree with the premise that customers having 

some clarity as to when they can reasonably expect feedback from 

the Bank is appropriate. Whether that requires legislation or 

whether it’s something that we should be evaluating currently, I 

would leave to the committee. But it seems like a reasonable direction to be going. 

Chairwoman PRYCE. And the online review process that this will 

require you to put into place by the first of September, is there 

anything that you know of that would limit your ability to do that? 

Mr. LAMBRIGHT. Well, our plan is to reveal or activate the online 

program on June 1st. And that would be for our primary small 

business programs. And the medium-term program would follow, 

12

and I would need to investigate whether that could reasonably be 

expected to be online by September. 

It may be that the medium-term program is more likely to be 

ready for activation at the end of the calendar year than at the end 

of the fiscal year. But we would be onstream with the major component of the online program by June. 

Chairwoman PRYCE. And is there any reason that you can give 

us for this not having been put in place over the last 5 years? 

Mr. LAMBRIGHT. Well, the major reason is that the Bank underwent a major reorganization in 2002. At the time of that reorganization, the decision was made to table the online effort so that 

when we did take up programming the online functions, they would 

be more cleanly tied to the new business flows that would be developed in this reorganization. And so, some significant time was lost 

in meeting this goal. 

Chairwoman PRYCE. I agree. All right. Thank you very much. 

Mrs. Maloney? 

Mrs. MALONEY. Okay. On making the Bank’s operations more 

user-friendly, will people be able to apply online? We have the online applications. I think probably the barrier is bigger for women 

and minority businesses, so being able to apply online would be 

very helpful. Are you moving— 

Mr. LAMBRIGHT. That is the part of our online functions that we 

anticipate rolling out on June the 1st. 

Mrs. MALONEY. So you expect that? 

Mr. LAMBRIGHT. Yes. 

Mrs. MALONEY. Okay, great. Well, listen. I tell you, basically, I’m 

just concerned about our account deficit. It’s just getting bigger and 

bigger. We have the largest trade deficit in history, the largest of 

any country in the world, and we need to do something about it. 

And I certainly support any efforts that you have. 

I do want to raise one of the criticisms that you hear of the 

Bank, and listen to your response. And one of the criticisms is that 

by supporting large corporations doing business abroad, the Bank 

is effectively moving American jobs overseas, as many of these corporations move their offices offshore. 

And what response do you have to this? This is an issue that is 

constantly, or usually, raised by Congressman Sanders, that we are 

giving the support to corporations that are moving entire divisions, 

and therefore, American jobs, overseas. And part of your mandate 

from your creation in 1934 was not only exports, but the creation 

and saving of American jobs. 

Mr. LAMBRIGHT. That’s exactly right, Congresswoman. When we 

make our program and policy decisions, we do so with U.S. jobs in 

mind, as opposed to the corporate structure involved in those jobs. 

So, yes, U.S. companies—some U.S. companies—are moving jobs 

overseas. But when U.S. Ex-Im Bank participates in a transaction, 

our financing is only connected with the goods and services produced by U.S. workers. And so, we feel like the function we serve 

is in helping keep more of those jobs here in the United States. 

Mrs. MALONEY. And does the economic impact analysis required 

by law capture this problem of a major corporation maybe moving 

tens of thousands of jobs overseas, but then wanting to have a little 

help over here, with another export? Is it— 

13

Mr. LAMBRIGHT. Well, when we evaluate an application, we are 

looking at the U.S. production and the jobs associated with those 

overseas sales. Our economic impact procedures really address 

something slightly different, which is weighing the benefit of the 

immediate export against the longer-range implications of increased commodity production overseas that may cause some 

threat to U.S. producers. 

Mrs. MALONEY. Could you give us some comments—I’m sure 

you’ve put a lot of thought into it—on the fact that in this global 

economy, we are losing so many jobs. I literally had a case where 

they were trying to outsource the flight attendant jobs—it was before bankruptcy court, and they lost—but they were trying to literally fly people in from other countries to fly all around the 

United States. 

And it used to be you would think it’s just going to be a certain 

type of job. It seems to be growing into practically every job. If 

you’re not chained to your seat, there are attempts to outsource 

those jobs. And do you think we need to look at different policies 

at home to try to combat this? 

I mean, this is a phenomenon that is huge, the number of jobs 

that are being outsourced, and really, the trade gap. Even though 

we work hard at the Ex-Im Bank, and we work in all these other 

places to do things, the trade gap seems to be just growing bigger 

and bigger and bigger. And what is your overall thoughts on how 

we should confront this as a Nation? It’s a growing challenge, to 

say the least. 

Mr. LAMBRIGHT. I share your views, that we are all grappling 

with some pretty big questions right now, on this front. 

At Ex-Im Bank, we are looking at how we can keep up with the 

pace of change in the economy, and the structure of U.S. exports. 

As services become a bigger part of exports, for example, we at ExIm have to ask ourselves how can we keep up with that, and help 

support those exporters with financing for their exports, without 

losing sight of our historical focus on manufactured goods? 

And so, those are the sorts of things that we are looking at. It’s 

also becoming a harder question to answer what is an American 

good, as components come from all over the world, and assembly 

may take place here or elsewhere. We need to figure out the right 

approach for the new kind of products that are getting exported. 

Mrs. MALONEY. Okay. Thank you very much. My time is up. 

Chairwoman PRYCE. Mrs. Biggert. 

Mrs. BIGGERT. Thank you. Mr. Chairman, how does the Bank’s 

approval of large business transactions also help small businesses? 

Mr. LAMBRIGHT. Well, many of the larger exports that we support are big capital goods, like a piece of agricultural equipment, 

or construction equipment, or a commercial aircraft. And any piece 

of large equipment is going to have many components to it. And a 

lot of those components are supplied by America’s small businesses. 

Mrs. BIGGERT. Well, how does the Bank—do you track the benefits that those large business deals— 

Mr. LAMBRIGHT. It can be very difficult, because a large exporter 

may not be able to invoice for us all of the exact suppliers for any 

particular good that we help finance. 

14

But we have exporters who have offered us information on their 

supplier data, and we look at that and can try to look at how much 

indirect benefit we are providing to America’s small businesses. 

In fact, the last time such a study was done of our top dozen exporters, which was a few years ago, indicated over 35,000 SME’s 

contributing to their larger exports. 

Mrs. BIGGERT. But you don’t include that when you’re determining how much—the percentage of small business versus the 

large— 

Mr. LAMBRIGHT. No, we do not. 

Mrs. BIGGERT. Okay. Then we have, in the bill that’s been talked 

about, something called Tied Aid. And that’s—can that be used to 

level the playing field, with respect to the government subsidies on 

foreign exports? 

Mr. LAMBRIGHT. Tied Aid is a U.S. Government tool to combat 

trade distorting aid from other governments. And this is something 

with a long history at the OECD in Europe, and is something that 

Ex-Im Bank and other U.S. Government agencies have been monitoring for a long time now. 

Mrs. BIGGERT. But you don’t really use Tied Aid very often. 

Mr. LAMBRIGHT. It’s not a tool that we use frequently, no. 

Mrs. BIGGERT. Are the Bank’s main competitors, other export 

credit agencies in Asia and Europe, using the Tied Aid? 

Mr. LAMBRIGHT. Many of them do. If you look back, though, over 

15 years, the global level of Tied Aid has come down dramatically 

through international negotiations and through our use of Tied 

Aid. 

So now we are dealing with a far lower level of Tied Aid, but it 

does continue to exist. And some exporters would like to access 

Tied Aid funds to help level the playing field. 

Mrs. BIGGERT. Thank you. I yield back. 

Chairwoman PRYCE. Mr. Manzullo. 

Mr. MANZULLO. I have a comment. We have, in our district, the 

northern part of the State of Illinois, probably close to 2,000 factories. And Boeing Aircraft has close to a $200 million presence, 

even though there is no Boeing plant there. Caterpillar, about $100 

million. John Deere, close to $100 million. 

And these are all—without the exception of Hamilton Sun—very 

small machine shops, and hundreds and hundreds of machine 

shops that do specialty machine work. My understanding is that if an item is worth, say, $100 that you’re going to export, that at least $50 of that has to represent 

U.S. content. Is that correct? 

Mr. LAMBRIGHT. That’s correct for our short-term programs, yes. 

Mr. MANZULLO. Okay. The other question I have is, first of all, 

I want to thank you and your staff for working with my staff on 

the small business issues. 

One of the questions I have is on the 5-year reauthorization. I 

might have problems with that. I think if you go a couple of years, 

it gives everybody an opportunity to review periodically, from time 

to time. What is your—I know you’re in favor, but there may be 

some room for compromise in between. 

Mr. LAMBRIGHT. My reaction to that is to welcome Congressional 

guidance throughout the life of the reauthorization. So, however 

15

long we would be reauthorized, I would expect an open line of communication to continue between the Bank and the committee. 

I guess I would have two reactions to a shorter reauthorization. 

One would simply be that there are many changes contemplated in 

this bill, and I would appreciate the time to implement them and 

administer them before we took a measure of their success or failure. 

And secondly, I would think that exporters, our customers, would 

benefit from a longer-term certainty of Congressional support of the 

Bank’s availability. 

Mr. MANZULLO. I appreciate that. The second question is on the 

turnaround in the application process. You have been the acting 

president now for how long? 

Mr. LAMBRIGHT. A little over 8 months. 

Mr. MANZULLO. Okay. Could you tell us, anecdotally, what you 

have seen under your direct watch, in terms of the turnaround 

process? 

Mr. LAMBRIGHT. Well, this—the cycle time turnaround is something that we have been trying to improve for some time now. I 

think that our—one thing that we have taken some staff off the 

front line and devoted them to is the online project, so that when 

we can get that fully implemented and up and running, that cycle 

time for the short-term program should come down, to reflect the 

ease of administration with the online program. 

But right now, we have a number of people focused on that. And 

so I don’t have— 

Mr. MANZULLO. You don’t have any figures on it at this point? 

Mr. LAMBRIGHT. Right, I don’t have something to show you— 

Mr. MANZULLO. Okay. I understand. The third thing is compliments to your webmaster. That is a very interesting Web site. 

And when you were in the office last time, or a couple of times, 

when you talked about doing some corny caricatures and walking 

people through, what’s the progress of that, Jim? 

Mr. LAMBRIGHT. Well, we have come up with a flowchart that explains our insurance product and the claims process, so that it’s 

very simple for exporters who may be new to Ex-Im Bank, to understand what steps are required and what is expected of them. 

And actually, as of today, we have a special small business portal 

on the Web site that presents an even simpler format to introduce 

small businesses to the Bank’s services. 

Mr. MANZULLO. Great. Thank you very much. 

Chairwoman PRYCE. Mr. Watt? Welcome, and you’re recognized. 

Mr. WATT. Thank you, Madam Chairwoman. I am sorry, first of 

all, that I missed your testimony, but I did have an opportunity, 

several weeks ago, to meet with representatives of the Ex-Im Bank 

through a task force of the Congressional Black Caucus, and I want 

to thank you for that opportunity. 

I thought it might be helpful, just if you haven’t already done so, 

to give you the opportunity to put on the record the fact that the 

name of this Bank doesn’t necessarily reflect the—what the Bank 

actually does. So I will throw you a nice little softball here. 

What, if any, import assistance are you providing, as opposed to 

export assistance? 

16

Mr. LAMBRIGHT. One hundred percent of our activity is devoted 

to export support, Congressman. You correctly note that the name 

is something of a misnomer. And every time we visit the question 

of changing the name, we discover through conversations what a 

valuable brand name it is globally, in markets around the world. 

And so, it is a name that we have lived with for 72 years now. 

Mr. WATT. Thank you. I just—I thought it was important to, if 

you have not already put that in the record—because, to the extent 

that there is controversy about the Ex-Im Bank, my experience has 

been that most of it relates to the perception that the Ex-Im Bank 

is supporting the import of product from other countries, as opposed to supporting our own businesses in exporting things to other 

countries, which I think all of us agree is a wonderful, wonderful 

thing. 

We are planning to take more aggressive steps to be engaged 

with the Ex-Im Bank to increase support for minority businesses 

who may be exporting abroad, and facilitating those efforts. And I 

wanted to put that in the record, that undertaking has been—is in 

process through our small business—small minority business task 

force of the Congressional Black Caucus. 

And I thank you for being here. And if there are any other 

softballs you want me to throw you, I will do that. But, otherwise, 

I will just yield back the balance of my time. 

Chairwoman PRYCE. Thank you. Mr. Neugebauer. 

Mr. NEUGEBAUER. Thank you, Madam Chairwoman. I appreciate 

Mr. Lambright coming back. I see you’re still acting. So I guess we 

need to talk to your friends in the Senate; we would like to make 

that a more permanent position. 

You know, I have a number of companies in my district that use 

the Bank, and particularly the small businesses. And you know, I 

think it is so important that we, who are moving in a global economy that is—that train has left the station—it’s important that we 

help those small businesses be able to learn how, and be able to 

facilitate that. 

I got kind of a quick glimpse of how that can happen. A few 

years ago I was in Italy in a small, remote community where the 

FedEx guy, and the UPS guy, have to drive their truck up the hill 

part of the way, and then push a cart up into the village. 

But here is this little company that’s been making pottery—it’s 

a family—for probably 200 or 300 years, and they are literally selling their commodity around the world. And so, you know, the technology is in place, the transportation is in place for a lot of small 

businesses to do that. 

I think it’s intimidating to a lot of our small business people, you 

know, ‘‘How do I get started in that?’’ So one of the things I want 

to commend you is the fact that I think you are making an effort 

to reach out to small businesses. 

And you know, the last time you were here, we talked a little bit 

about getting that participation rate up to the 20 percent, and you 

have said that I think you were going to actually have people designated not only to be processing that, but to do some outreach. 

Can you kind of roll out kind of your strategy in that area a little 

bit? 

17

Mr. LAMBRIGHT. Of course. Since I was here in November, I have 

spent a great deal of time meeting with representatives of the 

small business community, including members of the Small Business Committee of the House, and a number of interests emerged 

from those—from that dialogue. 

One was having advocacy at a senior level, having direct access 

to the chairman and the rest of the board, representing the interests of small business. Another interest was having some kind of 

formal structure to indicate the Bank’s institutional commitment to 

small business. And a third interest was having staff interact with 

small exporters who were expert in small business, who were sensitive to the special needs of small businesses. 

And I appreciate that some may envision different ways of addressing those interests, but I have made a number of changes 

since our last testimony, that I feel most effectively and efficiently 

meets those interests. And the first is that we now do have a senior 

vice president for small business, focused on outreach and advocacy. He is a direct report of the chairman of the Bank, and has 

unfiltered access to the board of directors. 

We have also instituted a small business committee that was formalized by the board of directors. And this will be a committee designed to monitor our progress on the small business initiatives 

and develop new initiatives to better serve small businesses. And 

we have also designated small business specialists in each of the 

business units, so that small businesses are dealing with familiar 

faces when they deal with the Bank. 

Mr. NEUGEBAUER. One of the things that—I don’t know if you 

have done this before, but I think it would be helpful if you had 

the personnel to be able to do that, but I would certainly like to, 

you know, invite some of your people, or one of your folks, to my 

district to put together, you know, kind of a seminar on what the 

Bank can do, and what are some of the programs that you have 

available. 

Because I think one of the jobs that we have, as Members of Congress, is that—is to help get the word out on some of those programs. And again, I think some of them find that they think, ‘‘You 

know, that’s the Export-Import Bank, that’s for the big boys.’’ 

And so, I would be anxious for maybe some of your folks to contact mine, and see what the possibilities of that would be. 

Mr. LAMBRIGHT. I will make sure we follow up with that. It’s also 

helpful for Ex-Im Bank to get out and hear the concerns of U.S. 

business people, and so it’s a two-way street, and we would love the 

chance to do that. 

Mr. NEUGEBAUER. Yes, I think we could actually have a panel 

and have some of your folks on it, and then have some of your customers that are in my district also talk about their experiences 

with the Bank, as well as give an opportunity to give an orientation to those folks that might be thinking about it. 

I yield back the balance of my time. Thank you for your comments. 

Chairwoman PRYCE. Thank you. Mrs. Kelly? 

Mrs. KELLY. Thank you, Madam Chairwoman. I would like to 

ask you, Mr. Lambright, I want to go back to the question I started 

to ask during the beginning of this hearing. 

18

You are supportive of a 5-year reauthorization period in your testimony. But we are starting something brand new with you in the 

small business area. We in Congress can—yes, we can get reports 

and so forth, but officially, it would be a good thing, I believe, that 

we have a chance to have some kind of control over the report. 

In the past, there have been instances where the Ex-Im Bank 

has had very good intentions to start various things that, in fact, 

never have occurred. One of the problems is that Administrations 

change. You are here, we are hoping that you will step in and do—

you have been doing a good job—we hope you will step in and get 

that assurance from the Senate, that you will be the chairman. 

But this Administration has two-and-a-half more years to go. 

There will then be 3 years, or two-and-a-half more years, of a new 

Administration, and possibly new people. And if we have a 5-year—

5 years going without a look-back, I am afraid—have very serious 

concerns that there is no guarantee that any of this small business 

work that we have all been working on and wanting to have happen will continue, if we have a new Administration. 

And so, what I am asking is if you are at all open to having a 

2-year look-back, just to come and report on how you’re doing. That 

gives us a chance to give you more flexibility quickly, give you 

whatever you need to get this implemented and in place, so it can’t 

get changed with a new Administration. 

Mr. LAMBRIGHT. I am certainly open to working with the Congress, however Congress deems necessary. If a 2-year reauthorization is the way Congress would like to go, we will cooperate with 

that. But I would reiterate my concerns about making sure we give 

this program enough time so that our measurement of its success 

is measuring something that has had enough time to grow to fruition. 

And also, I would want to make sure that exporters wouldn’t 

have any reason to be concerned about Congress’s support of the 

Bank. 

Mrs. KELLY. I—you can clearly hear on this committee that everybody here seems to be very supportive of what you’re doing. And 

my concern is not that we are given a final measure of success of 

what you’re doing, but how you’re doing on implementing it. 

There are instances—I well remember when a business in my 

district came in and begged me to talk to Ex-Im Bank, because 

there was a certain time that they had to get a bid in. They lost 

that bid. They lost that bid to a foreign country in a—a foreign 

company in a foreign country, because the Ex-Im Bank couldn’t get 

the processing done fast enough. 

They lost the bid, in part, because they didn’t get what they 

needed back from the Bank that they had to go to to get the loan. 

That time period when a bank is doing a short, or a small or medium-sized loan up to the $500 million—and other people are shaking their heads; you know what I’m talking about—these are problems that need to be addressed, and I am hopeful they are going 

to be addressed in this new small business piece that you’re putting in. 

However, that was in—in 1999, we were assured that the Ex-Im 

Bank was going to process these things in 30 days. That didn’t 

happen. Why? Because there was an election. I am very concerned 

19

that this not happen again. Our small businesses in the United 

States need that competitive edge, and they need it now. And it’s 

important that we move this along. 

That’s why I feel so strongly that you be able to come back here 

and tell us, ‘‘Yes, this is working. We are able to make this move,’’ 

and we get some kind of process in place, and not wait 5 years to 

find out whether it’s working or not. By then, we’ve got a lot of 

small businesses out there that are going to be not in business. 

And I mean, I—if you want to—I’m not answering—asking you 

a direct question, so I will. What do you think about that? 

Mr. LAMBRIGHT. I appreciate your concerns, and I understand 

the concerns about timing of Administrations. To that end, it may 

be—I have not been here during the change of Administration to 

understand how difficult it might be to focus the Bank on a rechartering and a change of Administration at the same time. I can 

imagine that may cause some difficulties. 

But I do appreciate your concerns about continually monitoring 

and refining our small business efforts, and I would be willing to 

continue the dialogue throughout the life of the authorization, assuming I am given the opportunity to be staying at the Bank. 

Mrs. KELLY. Thank you. 

Chairwoman PRYCE. Ms. Velazquez. 

Ms. VELAZQUEZ. Yes. Mr. Lambright, I just would like to continue the point raised by Mrs. Kelly. I don’t think that the problem 

is, or the issue here is, about changing Administrations. It is the 

institutional commitment from Ex-Im Bank to follow the law. 

And here we are, 5 years later, still discussing the fact that you 

have not been able to fulfill the statutory goal of 20 percent financing for small businesses. 

So, let me ask you my first question. We have seen the total financing grow of Ex-Im Bank by 18 percent since 1995. At the same 

time, the total amount of small business financing has increased by 

just over 9 percent. Can you explain why the Bank’s financing 

growth trend isn’t carrying over to small businesses? 

Mr. LAMBRIGHT. Congresswoman, I am not aware of the data you 

are citing. When I came to the Bank in 2001, right before the last 

reauthorization exercise was getting going, at that time the amount 

of small business the Bank was—was $1.6 billion. In fiscal year 

2005 it was $2.6 billion, directly to small businesses. That’s a $1 

billion increase, an increase of 47 percent. 

The overall volume of the Bank’s business is roughly 35 percent 

in that time. So the pace of growth for our small business exceeds 

the pace of growth for our overall volume of business. 

Ms. VELAZQUEZ. But you are not telling me that it is evidence 

that you have a problem by the Bank’s inability to meet its 20 percent small financing mandate. 

Mr. LAMBRIGHT. Congresswoman, I fully agree with you that the 

Bank is not doing enough for small business, that there is certainly 

more that the Bank can and should be doing. 

Ms. VELAZQUEZ. Does the Bank have a limit on financing small 

exporter transactions? 

Mr. LAMBRIGHT. A limit? 

Ms. VELAZQUEZ. Yes. 

20

Mr. LAMBRIGHT. There is no limit to what we can do for small 

businesses. 

Ms. VELAZQUEZ. Okay. What steps are you taking to develop and 

implement specific lending assistance targeted to small exporters? 

Mr. LAMBRIGHT. Very recently, we have established an office of 

small business for outreach and advocacy, headed by a senior vice 

president, and this division has a large staff focused exclusively on 

outreach to small businesses, including minority and women-owned 

small businesses. 

And they are working with outside entities, pursuing a strategy 

that we call multiplier effects, where we are looking to work with 

other government agencies, partners at the local level, brokers, 

lenders, and trade groups, so that we can magnify our voice when 

we’re trying to communicate with small businesses, because in my 

time at the Bank, and my travels and my conversations with small 

businesses, what I have discovered is that the key to bringing in 

more business is simply one of awareness, and that a lot of small 

businesses just simply don’t know that this Federal Government 

resource exists. 

And so, we’re putting a lot of energy into making sure that more 

small businesses are aware of the financial support that Ex-Im 

Bank can provide. 

Ms. VELAZQUEZ. Okay, so let’s talk about the personnel at the 

Bank. For personnel in the Bank processing and approving loans, 

do they take into account the unique circumstances of small businesses, or do they process these applications with the same criteria 

used for large businesses? 

Mr. LAMBRIGHT. Well, one of the components of the changes that 

have been made recently has been to identify small business specialists in each of the business units, so as they process transactions, the people who are handling the small business applications are people who have an expertise and a sensitivity to the particular characteristics of small businesses. 

Ms. VELAZQUEZ. And regarding the 10 percent aside for minority 

and women-owned export businesses, according to current bank reports, it already provides 12 percent of the 20 percent small business financing set aside to these firms. Do you see this provision 

in the legislation as a step backwards for these firms? And would 

you agree to increase it to 15 percent? 

Mr. LAMBRIGHT. Well, I am reluctant to embrace any particular 

target, because the Ex-Im Bank is demand-driven, and it’s always 

troubling when the Bank is held to a particular quantified target 

when we don’t control the characteristics of the economy, or the 

market at any given time. 

But you correctly note that we have already done, in fiscal year 

2005, 12 percent of our small business activity went to minority 

and women-owned businesses. And I would note, Congresswoman, 

that that is probably underreported, because we cannot mandate 

that our customers disclose their status. And so that 12 percent 

only reflects those who are willing to report their status. 

And so, I think the number is probably really larger, and I would 

like to see it get even larger and larger, as we focus more on that 

outreach side. 

Ms. VELAZQUEZ. Thank you. 

21

Chairwoman PRYCE. Well, thank you very much, Mr. Chairman. 

Your testimony has been invaluable, and working with you is a 

pleasure. We appreciate your cooperation, and we will be back with 

you again. 

Mr. LAMBRIGHT. Thank you very much. 

Chairwoman PRYCE. At this time, as Chairman Lambright exits, 

we can seat our next panel. 

We expect a series of votes at about 3:45 or 4:00, and so we will 

try to get through this testimony and as many questions as we get 

in. Hopefully, we will wrap this up before our vote. 

So, before I introduce our second panel, I would like to ask unanimous consent to include in the record a written statement by Brett 

Silvers. Mr. Silvers is the president and CEO of World Business 

Capital. Mr. Silvers has worked extensively with the Bank, and we 

believe his written statement adds much to this discussion. Without objection, I will add his statement to the record. 

And for our second panel, we are pleased to welcome here today 

Mr. Ed Rice, president of the Coalition for Employment Through 

Exports. The company specializes in issues of export financing and 

export promotion, and is comprised of 35 major U.S. exporters. 

And Jim Morrison, president of the Small Business Exporters Association. The Small Business Exporters Association is the largest 

non-profit organization of small and medium-sized exporting companies in the United States. Mr. Morrison is a member of the 

President’s advisory committee on trade policy and negotiation. 

And finally, Mr. James Harmon, whom I will allow Mrs. Maloney 

to introduce, since he happens to be a constituent of hers. 

Mrs. MALONEY. I am delighted to welcome James Harmon from 

the great City of New York. And Mr. Harmon was the president 

and CEO of the Ex-Im Bank from 1997 to 2001, and is now the 

head of Harmon and Company, a financial advisory firm. 

Both in his capacity at Ex-Im and in his present capacity with 

the World Resources Institute, he has made substantial contributions to a number of the concepts reflected in this bill. He is also 

a former chairperson and CEO of the investment banking firm of 

Wertheim Schroder. 

He has been deeply involved in education, serving on the boards 

of Barnard and Brown, and currently Columbia, and is acutely 

aware of the problems that our young people face in the economy 

by the global marketplace, and the need for a strong role for ExIm in promoting U.S. companies and making them competitive. 

Thank you for your many years of service. We are delighted to 

have you here today, Mr. Harmon. Thank you. 

Chairwoman PRYCE. And now we will begin testimony. We will 

first hear from Mr. Rice, then Mr. Morrison, and, finally, Mr. Harmon. Mr. Rice, you may proceed, thank you. And your full remarks 

can be included in the record, if you would like to summarize. 

Mr. RICE. Yes. 

Chairwoman PRYCE. Thank you. 

STATEMENT OF EDMUND B. RICE, PRESIDENT, COALITION 

FOR EMPLOYMENT THROUGH EXPORTS 

Mr. RICE. Thank you, Madam Chairwoman, Representative 

Maloney, and members of the subcommittee. First, let me commend 

22

the sponsors of H.R. 5068. This is a thoughtful and careful proposal. It is an excellent basis, from our viewpoint, for the legislative process moving forward. And we commend your staff in supporting your leadership on this. It is a very good proposal. Doubtless, refinements and amendments will be considered and made as 

the process goes forward, and we certainly want to contribute to 

that, as you consider this legislation. 

Let me make three points very briefly. First, the need for Ex-Im 

Bank for our exporters is increasing, as the data from Chairman 

Lambright indicated. Financing is an increasing point of competitiveness, internationally. Ex-Im Bank fosters commercial export 

loans through its guaranteeing and insurance business, and that’s 

virtually all that Ex-Im is doing now, is guarantees and insurance 

of private financing. 

It has the authority to make direct loans, but last year, of their 

3,100 transactions, none were direct loans. And the year before, 

there were only five. So, Ex-Im really is supporting the private sector. 

As you look at other government activity, export credit agencies 

around the world are expanding and becoming more aggressive. In 

2004, which is the most recent year for data, the total ECA activity 

was approaching $800 billion a year, globally. And that’s getting 

close to about 10 percent of world trade flows. So export credit 

agencies are playing a growing role. 

There are new entrants that are coming onstream, including in 

China, and there are new services from the existing export credit 

agencies, as well. 

The second point is that H.R. 5068 will strengthen Ex-Im Bank’s 

programs. You have included provisions, as you have discussed, in 

small business to encourage co-financing, to reauthorize the socalled dual use program, to sharpen the board’s role in the economic impact cases, and to expand transparency and outreach to 

exporters. And, in my view, the most important provisions are increasing the reporting, and therefore, your oversight of the Bank. 

The third point is that Ex-Im Bank is both fiscally and financially sound. And in the era of steadily worsening deficit situations—this is an extremely important point, I think, for the Congress to take into account—Ex-Im Bank generates revenues. This 

is a fee-based operation. It charges fees and interest. These are 

risk-based, and they are market-level. There is no subsidy of interest rates at all in Ex-Im Bank’s programs, and that’s according to 

the annual OMB report to Congress on all lending programs. 

Last year, Ex-Im Bank generated a net income, positive income 

to the United States Government, of $2.6 billion, up roughly $500 

million from the year before. Further, Ex-Im Bank maintains reserves against its exposure. It currently has—or at least at the beginning of the fiscal year, it had—approximately 7.6 billion in reserves against its $63 billion in exposure. This committee, more 

than all others, will understand that that’s a very healthy reserve 

rate for a bank. 

I raise these points because it’s often not clear to the Congress 

that Ex-Im Bank is really operating as a net positive benefit to the 

government, and it certainly is no drain on the budget or on the 

taxpayer. 

23

Madam Chairwoman, let me conclude there, so we can move on 

to your questions. 

[The prepared statement of Mr. Rice can be found on page 67 of 

the appendix.] 

Chairwoman PRYCE. Thank you very much. 

Mr. Morrison? 

JAMES MORRISON, PRESIDENT, SMALL BUSINESS EXPORTERS 

ASSOCIATION OF THE UNITED STATES 

Mr. MORRISON. Representatives Pryce and Maloney, and members of the subcommittee, good afternoon. I thank you for inviting 

me to appear here today. 

I am Jim Morrison, the president of the Small Business Exporters Association of the United States. We are, as you noted, the oldest and largest association dedicated exclusively to small and midsized exporting companies. We also serve as the international trade 

council of the National Small Business Association, and we represent their 22,000 exporters on all international trade issues. 

SBEA and NSBA strongly support the reauthorization of ExportImport Bank. In our written testimony, we explain why in greater 

detail. But suffice it to say without Ex-Im, smaller exporters in this 

country would have virtually no way of offering terms to most of 

their foreign buyers. 

The larger the export sale that a small business is attempting, 

the more indispensable that Ex-Im is. So we want to thank the 

subcommittee, its staffers, as well as many people from the full Financial Services Committee, for helping craft H.R. 5068. It’s an excellent bill. You have listened carefully to the Bank and to the private sector, and you have done a remarkable job of addressing the 

challenges that the Bank faces going forward. 

My colleagues on the panel have, and will, speak to other aspects 

of the bill. But I want to mention some items relating to small 

business. 

First, the bill wisely leaves intact the key mandate from the last 

reauthorization, that Ex-Im provide at least 20 percent of the dollar value of its financing directly to small businesses. The Bank 

has met this threshold in the past, and it can do so again. What 

it needs now are product and process upgrades, as well as additional outreach. 

Second, the bill gives the Bank a well-deserved pat on the back 

for its innovative small business committee concept. This committee would tap into small business expertise all across the Bank 

to suggest improvements in helping smaller companies. 

Third, the bill gets the Bank to delegate more authority for medium-term financing to banks and brokers, as Ex-Im has done for 

other products. Medium-term financing is what propels some of our 

country’s most valuable capital equipment exports by both small 

companies and large, and the financing process needs to be as efficient as possible. 

We would also encourage the subcommittee to consider additional medium-term measures, suggested to you in the letter you 

just entered into the record by Mr. Brett Silvers, an SBEA member 

whose financial institutions have extraordinary records of supporting small business exporters. 

24

All in all, H.R. 5068 makes some very positive changes for small 

business. We would suggest some further refinement in one area 

of the bill, however. The bill creates a small and medium-sized enterprise division at the Bank, answering directly to the Bank president, which is a step that SBEA has strongly backed, and we thank 

you for doing that. 

But we have always believed that the SME division must have 

authority commensurate with its responsibility. The subcommittee 

clearly intends for the SME division and the person heading it to 

be responsible for improved SME performance at the Bank. 

Yet the division and the person heading it, under this legislation 

as it stands now, would not have the authority to do underwriting. 

It would not have the authority to set credit standards, it would 

not have the authority to change any products or processes, to approve transactions, or to require anyone in the transaction cycle to 

do anything. 

The SME division would be focused on giving advice to other elements of the Bank, on training, on outreach to the public, and on 

business development. These are useful and fine activities for this 

division, and certainly input is necessary to get output. 

But what matters now is how companies are treated once they 

get in the door. What matters is how the transactions are handled, 

and the Bank’s output. If we have to choose between having business outreach people in the SME division and having underwriters 

in it, as some have suggested, then Congress ought to take the underwriters. The business outreach people can be assigned elsewhere. 

It is a core small business team, with underwriters, that has 

spelled success for OPEC, for Canada’s export credit agency, and 

for private sector lenders like GE Capital. We, frankly, do not see 

how the SME division can succeed in its responsibilities without 

the authority to handle products, processes, and transactions, and 

without creating a stable and meaningful institutional environment 

for Bank employees that want to focus on SME’s. 

We suggest that the subcommittee clarify this by calling the 

SME division the ‘‘SME Finance Division,’’ and by assuring that it 

has the authority to manage the responsibilities that Congress is 

giving it. 

SBEA, like you, as the oversight committee, is pinning many 

hopes on this division, and on the individual who leads it. You, as 

the oversight committee, will want to be able to bring this person 

up here, and to get answers about what is working and what is not 

working in the way the Bank handles its SME transactions. Answers and action. 

But right now, the way the bill is written, the only honest answer such a person could give you is, ‘‘I don’t know, and I can’t do 

it, because I’m not in charge of it.’’ You need better accountability 

than this, and so do smaller exporters. 

We again thank the subcommittee for its excellent work thus far, 

and we urge that Ex-Im be speedily reauthorized. 

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

55 of the appendix.] 

Chairwoman PRYCE. You were right on the money. 5 minutes, exactly. Thank you. 

25

All right, Mr. Harmon? 

STATEMENT OF JAMES HARMON, CHAIRMAN, WORLD 

RESOURCES INSTITUTE 

Mr. HARMON. Thank you, Madam Chairwoman. And thank you, 

Congresswoman Maloney, for the nice comments that you made 

about me. It’s always good to come to Washington, because the introductions are always better than they are in New York. 

I am going to zip through what I have written, because you all 

have seen it, and so that I can cover the time period. You should 

know that most of the first page is devoted to the good work that 

Congress has done. 

And I didn’t appreciate it when I was chairman at Ex-Im Bank, 

which clearly, I was honored to be, but I often saw Congress not 

being as productive as it could have been. I now look back on it 

and I think that without the small business exports target, we 

would not have done what we did do, even though it’s not as much 

as you would wish. 

Clearly, without the environmental procedures, we would not 

have been in the game where we should have been. Thank goodness we did that. And clearly, without AGOA, we would never have 

done what we did in Africa. I might add that, in 1945, establishing 

the Ex-Im Bank as a sunset agency of the United States Government was a very wise decision. 

I look back on the excellence of the staff at the Ex-Im Bank, and 

the wisdom of Congress as critical to the success of the Agency. 

Having said that, I would like to think that you would apply that 

experience and wisdom to continue to improve Ex-Im Bank. 

So, I’m going to jump ahead to what I see as some of the critical 

areas, very briefly. First, economic impact needs a more precise 

definition and a designated referee. For example, the issues like 

oversupply. I struggled a lot with this at the Bank. I think they 

probably still struggle with these issues. 

Secondly, Tied Aid needs clarification, purpose, and control in today’s world. If not, give the money back to the Treasury. It takes 

too much time and too much grief for everybody—Ex-Im Bank, 

from my experience, not to deal more clearly with this issue of Tied 

Aid. I have said this already to the Treasury. 

Third, you are already extending the Sub-Saharan African Advisory Committee, and the work there, which I think is so essential 

right now for, well, small business needs, enhanced resources, and 

a greater focus by the Bank’s leadership. I am going to make one 

other comment on that in a moment. 

Fourth, the environment. I have three comments on the environment that I would like to make. I would create a 15 percent target 

for renewable energy products and services. I would apply the target against long and medium-term energy transactions, excluding 

hydro. That would make the Bank reach to do more, and the Bank 

can do more in all the things you want. When the Congress sets 

targets, people at the Bank respond, and do what they can to reach 

those targets. 

A second area that I would create is a renewable energy advisory 

committee, which I know you’ve done before. I would either recreate it or create it to meet at least semi-annually, each year for 5 

26

years, with five members, at least two of which should come from 

the relevant NGO world. Each year the committee must issue a report to Congress on progress in and constraints to increasing renewable energy activity in the Ex-Im Bank. 

Third, I think the report language is critical. Congress should 

send a clear signal to the Ex-Im Bank and the Executive Branch 

to keep pushing for highest environmental standards and the 

OECD common approach process this year. The U.S. Government 

should continue its long-standing bipartisan effort to raise the bar 

on environmental standards for exports, while creating a level playing field in the ECA community. 

Now, since I have left the public sector, I have worked closely 

with a lot of U.S. companies expanding into the developing world, 

and I have been channeling institutional money into investing in 

the emerging markets. These are critical markets for the future. 

That is, the entire developing world. 

I support what the committee wants to do regarding small business, although I am somewhat concerned about the lack of funds 

available from Ex-Im Bank to execute this program. I always believed then, and I believe now, that delegated authority, concurrent 

with some risk sharing, was the key to dramatically increasing 

marketing to small business exporters. 

The concept of a public/private form of joint venture could 

achieve what all of us want for small business exporters. We don’t 

have a marketing capacity. No one in the United States Government markets well. Ex-Im is the closest thing to being in the private sector within the government, but it doesn’t have a marketing 

arm. It’s not expected to. But the banks could play such a role, if 

we wanted them to. 

Then, Tied Aid and economic impact, in my mind, are yesterday’s 

issues. Today, business and labor face a much different kind of 

challenge. China’s export credit agency is bigger than the U.S. ExIm Bank. In my opinion, it’s the largest in the world. Moreover, it 

is growing faster than all the other export credit agencies in the 

G7. And no one is focusing on it. 

Within the—without OECD restrictions, without environmental 

standards, China is playing on a different field. The world may be 

flat, but because of China’s industrial policy, it is tilted in its favor. 

If you add India, Brazil, and other large developing countries, I am 

concerned that the United States and, in fact, the G7—are no 

longer competitive. 

This is today’s and tomorrow’s challenge. And this committee, or 

this subcommittee, should be studying the impact of this development. In fact, I would suggest that Congress commission a study 

on this matter. 

The current Ex-Im Bank reauthorization is focused a bit too 

much on old business, some of which must be done, but Congress 

has a responsibility to look ahead and think long-term. If the level 

playing field continues to be tilted, what will happen to our industries and to our jobs? I believe these questions can have positive 

answers with real leadership today. 

I believe we can restore U.S. export competitiveness, and I believe, with the appropriate guidance and support of this body, the 

Ex-Im Bank can play a defining role in achieving this goal. 

27

I appreciate the opportunity to appear before you. I tried to zip 

through so I could get it done. It’s good to see everybody, and I will 

take whatever questions you have. 

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

40 of the appendix.] 

Chairwoman PRYCE. Well, thank you very much, Mr. Harmon. 

Let me start. 

You say this legislation deals a bit too much with yesterday’s 

issues, and you put Tied Aid in that category. And you say the 

world is flat. Well, what—let’s get into that a little bit more. How 

do you see this legislation, Ex-Im making the world a little less tilted toward China, if we don’t make use of the Tied Aid, and how 

would you propose we proceed there? 

Mr. HARMON. The first comment is it’s a little embarrassing for 

all of us who worked at Ex-Im for the 4 years, and for, in my opinion, a lot of people in Congress, that we haven’t done a Tied Aid 

case at the Ex-Im Bank—I think it’s 5 years, or something like 

that. 

Chairwoman PRYCE. And why not? 

Mr. HARMON. And it’s because, you know, in coming back I have 

nothing to lose from being candid with you all. And that’s not always done, maybe. 

But Treasury has a different attitude than Ex-Im Bank. Treasury, in all good intentions, has a different position on Tied Aid 

than most other parts of the United States Government. Treasury 

frustrated every effort that I tried to do to move forward on Tied 

Aid cases in the last year or two while I was at the Ex-Im Bank, 

and I am certain—without evidence—that they have not done 

much more since then. 

So, unless Treasury changes its attitude, or unless you get an official referee in this matter, nothing will get done on Tied Aid 

cases. 

Secondly, what is happening now in the world is that the customers of Ex-Im Bank have become, or are becoming, the competitors. So while China was a principal large source—or you might 

say customer—for our products, now China has an export credit 

agency. In fact, China itself is what I call the mother of all export 

credit agencies, because they are financing so much of our purchases of their goods and services. 

Therefore, most people haven’t focused on their export credit 

agency. Their export credit agency is growing at a terrific rate. It 

doesn’t have to live within the standards that we have, so it’s very 

tough to compete with them. 

To use Tied Aid funds to match China would eat up our Tied Aid 

funds in a month. It’s not an answer. We don’t have enough resources, in my opinion. I think—I’m guessing—at the Tied Aid capital fund, maybe 250 million, or something like that. That would 

not be adequate to do what we need to do in meeting the challenge 

of China. Not to mention other developing world countries. 

So, that’s a big problem for the future. I’m not, by the way, being 

critical of this bill. I think you make a lot of steps in the right direction. Unfortunately, as I listen to the questions and answers, I 

thought to myself the deja vu of this is—I could have played this 

28

script out for the years that I was there, and I was there from 1997 

to 2001. What— 

Chairwoman PRYCE. Well, we don’t want to have a deja vu. We 

want to progress into the global economy. And do you have solutions that we should be considering when it comes to China? 

Mr. HARMON. I think that’s the hardest question to answer. We 

have to get the facts. I mean, either this subcommittee or Congress 

should get the facts together. No one I have asked has exact information on the export credit agency of China. I believe I have some 

information, only by anecdotal basis. I know it’s very large. I think 

you should be able to find this out. 

But knowing that Treasury does not know the answer because I 

have asked there—and I think one of the things you could do is 

commission some kind of study. I don’t know if the study is done 

by—who would do that study, but there are a lot of people who are 

qualified to look into this, come back to you, and give you a report. 

If it’s as big and growing as fast and is doing what I think 

they’re doing, then this subcommittee has to take some kind of appropriate action. And I don’t think people know enough about it. 

So, the first thing I would do is gather the information. 

Chairwoman PRYCE. All right. Well, thank you. We will keep 

that on the front burner and see where we go with it. In the short 

time I have left, Mr. Rice, did you have any recommendations for 

the committee on—or Ex-Im itself—on products and services that 

would be more attractive and useful to your customers? 

Mr. RICE. Yes, I do. And I have gone into some of that in my 

statement, but let me try to highlight. And some of this is reflected 

in your bill. As a matter of fact, a good deal of it, which is why 

we support that. 

In the small business area, I think Mr. Harmon and Mr. Morrison have both indicated that delegating the authority to private 

banks under some sort of contract arrangement, I think, is the only 

way to go. It’s important to straighten out the structure within ExIm Bank. But that, in and of itself, is not going to take Ex-Im to 

the next level on small business. The private banks are where the 

lending expertise and underwriting expertise are. And that could 

be expanded greatly. 

Co-financing is going to become a very important product and 

service for Ex-Im, and that’s where you have one or more export 

credit agencies combining when you have a multi-national bid consortium. This isn’t becoming extremely important on the largest 

worldwide bids. 

Europe is way ahead of us on this. As my testimony indicates, 

there are four European governments that have taken the lead in 

basically coordinating many of the EU export credit agencies together, so they can better finance their companies against ours. We 

are way behind on this. It’s not really Ex-Im Bank’s fault, if you 

will. It’s much more that U.S. Government policies have made it 

hard to work out these agreements. That’s the second. 

The third is more of a culture issue at Ex-Im. The U.S. Government is going to have to, I think, completely relook at its willingness to take risk in international markets. This is the single biggest difference that our members say between Ex-Im Bank and 

other export credit agencies. It’s the willingness to take risk, the 

29

aggressiveness of providing financing, and at this point, there is no 

benefit for any Ex-Im loan officer to say yes to a case. It’s all downside risk for that person working there; it didn’t used to be that 

way. 

One specific suggestion would be to have the management and 

loan officers rated each year on the amount of business that they 

write, just like a commercial institution would. 

Let me stop there. 

Chairwoman PRYCE. Yes. Well, I’m sorry, my time is way expired, and—but we will talk more. Thank you very much. Mrs. 

Maloney? 

Mrs. MALONEY. Well, I want to thank all the panelists for their 

testimony, and their really good ideas. And I certainly would like 

to work in a bipartisan way on the idea you just put out there, Mr. 

Rice, on rating their productivity. 

And I think the point that you made earlier, that we had a net 

income of $2.6 billion that we made, literally, off of the Ex-Im 

Bank, and with a deficit and a debt of over $8 trillion, to have an 

agency that’s literally making money and helping with American 

exports, should definitely be supported. 

Mr. Harmon, I really liked your idea of having a percentage target for renewable energy products. That is a bipartisan goal of our 

country for renewable energy. I think that is an excellent idea. 

Again, I am in the minority, but I would love to join with a majority person to work on that amendment. 

And your idea, also, of just getting a hand on what’s happening 

with China with their export credit agency, I certainly would support a commission to study this. But I think it would be more productive if the current head of Ex-Im Bank was a member of that 

study, as well as former presidents, that have a real feel for what’s 

going on. 

When you read the world is flat, it’s a tremendous wake-up call 

to the competitive world environment that we’re all in. And I think 

those three ideas, I think, are tremendously important. I agree that 

it’s difficult, but we have to make it work. 

We have to be more competitive. We have to export more, and 

we have to really get a handle on what’s happening with our competitors in the world economy. We don’t want to lose our—where 

we are. We don’t want to fall backwards. We certainly want to go 

forward, and we want to be competitive in this new world economy. 

I want to ask Mr. Harmon a question that I always asked Chairman Greenspan. What do we do about the outsourcing of our jobs 

in the world global economy where we seem to be losing with the 

account deficit, with the trade deficit? And his answer is always, 

‘‘Education.’’ And I notice you have a big commitment to education, 

serving on three educational boards. 

And to me, I think it is structurally more in our—structure of the 

world economy that we’re moving into, not just education. I represent some of the brightest people, very highly educated, and 

they’re out of work, or their jobs have gone out of business. And 

we continually ask Chairman Greenspan, ‘‘What do we do about 

the global economy to stay competitive,’’ and his answer is always, 

‘‘We need to invest more in education.’’ 

30

To me, that’s not—we’re investing in education. We have educated people who can’t find jobs. And I just would wonder what 

your response to that is, how we as a Nation confront the global 

challenges, not just for the Export-Import Bank, but in a broader 

sense. 

Mr. HARMON. Thank you. This is a subject which, actually, 

Chairman Greenspan and I used to toss around a lot during those 

years. It’s not an easy thing to have a simple, silver bullet answer. 

I do believe that we have to all recognize, first, that the rest of 

the world has caught up to us. The United States, with 4-1/2 percent of the world’s population, and 26 percent of the global wealth, 

that will not continue. It cannot continue. So, we are in a period 

of time where we are not going to represent that share of the 

wealth of the world. It couldn’t continue. 

Now, it is accelerated somewhat, because of the deficit that we 

have had. So, what does it mean? First, I think we have to follow 

what China and the other developing countries are doing on supporting their own exports, which I have said already. We have to 

know more of what they are doing. Because if they’re doing as 

much as I think, then we have to be competitive. And if we’re not 

competitive, we’re going to lose even more than what we’re losing. 

I do—you cannot minimize—I mean, you can’t say enough about 

education. Of course he’s right about that. That’s a long-term answer. But the other countries are doing just the same. I travel the 

world now all the time, representing investment in those countries, 

and frankly, you see how far they are coming. This is a particularly 

serious problem. 

I think that the deficit is related to it. In other words, if we continue to have the size of the deficit we have now, we are going to 

eventually have a serious decline in the dollar. That’s going to be—

that’s going to put us into even a more difficult position. 

So, we have some serious fiscal problems which we don’t want to 

get into in this committee right now. So there are some macro 

issues that are going to impact this that do concern me. 

The one that directly impacts Ex-Im Bank, Ex-Im Bank is a valuable tool. The other trade finance agencies are, too. Sadly, in the 

last 5 years, this Administration hasn’t done everything it could to 

utilize these tools, as you have heard already from us today. They 

could do a lot more on small business, they could do a lot more, 

in my judgement, about the issues that we have discussed. 

I would look seriously, if I were the—in the government, to a way 

to relate the work of the three trade finance agencies, so that 

they’re more effective, so that they communicate to each other, so 

that they can create a more competitive position for us. But we 

could increase our exports there— 

Mrs. MALONEY. Okay. Can you itemize the three trade financing 

agencies that you would like to see working together better? 

Mr. HARMON. I always—the people behind me are likely to smile 

a little bit, because they knew that was a favorite subject. I would 

have put OPIC and Ex-Im and TDA in the same building, so that 

we talk to each other. 

I was tired of going to countries, and going out one door and seeing the president of OPIC coming in that door, because we didn’t 

know they were going there. It was unnecessary. There could have 

31

been better communication. Maybe there is now. I suspect there 

isn’t. 

But, clearly, if you had at least some coordinating effort—someone at the White House could do this—to coordinate the trade finance agencies to be more effective. 

Secondly, they should really look closely into how they—what 

more they should do in the three trade finance agencies. And all 

you have to do is look at what other countries are doing. Other 

countries have made more restructuring efforts, have made more 

progress—when I left the Ex-Im Bank, we were the seventh largest 

export credit agency. 

As a measurement of our support for exports, as a percentage of 

our gross domestic product, if I remember correctly, we were way 

down the list. So we were nowhere near competitive in making our 

effort. This is a significant question we have to think about, but at 

least we can be more effective if we coordinated more, and if there 

was more overwatch. 

One other thing I did want to say. It doesn’t matter too much, 

5 years or 4 years on reauthorization. What mattered to this committee always concerned me. In other words, every time you 

asked—you called for a hearing, and I had to testify, I ran around 

and talked to everybody at the Bank, and we tried to figure what 

were we doing wrong, what did we have to do more. The power of 

this committee is very significant. It’s not just reauthorization. It’s 

that we thought a lot about what we had to do more, so in reporting to you, we could say we achieved that. So, monitoring the ExIm Bank is going to be critical. 

Lastly, when I arrived at the Ex-Im Bank in 1997, I was the fifth 

chairman in 5 years. This chairman who comes in is the fourth 

chairman in 5 years. The other countries have one chairman. They 

run it as a business. Ex-Im is the closest thing to the business sector. 

There is not much you could do about that, in my opinion, but 

it’s a huge handicap that we operate to, because you arrive, and 

even if you spent a lifetime in the financial world, as I have, it took 

me a year just to understand what Ex-Im was doing, and to be able 

to make a significant impact. 

Fortunately, this chairman has been at the Bank for some years, 

so he has a bit of a head start. So, the turnover in leadership—

I mean, you don’t want me to go on, because you have— 

Chairwoman PRYCE. We have to stop there. Our time is expired, 

except for Mrs. Biggert. 

Mrs. BIGGERT. Thank you. Mr. Morrison, some people think that 

the Bank would have to disapprove large business transactions in 

order to meet their mandated 20 percent of all transactions to go 

to small businesses. 

What would you suggest that the Bank do to meet both the 20 

percent mandate, and at the same time, not hurt other business clients at the Bank? 

Mr. MORRISON. Well, the simplest thing is for the Bank to manage for a goal of 21 percent or 22 percent. That would give the 

Bank a cushion against any unforeseen large transactions occurring toward the end of the fiscal year. If you aim for 20 percent 

32

and give yourself no margin of error, then you are, of course, vulnerable to those kinds of difficulties. 

But having said that, I think that it’s not the goal of my association, or I think Congress, to stop any export sale. We are all here 

because we believe in trade and we believe in exports. I think, in 

those situations where Ex-Im is going along toward a 20 percent 

goal, and fails to meet it, it’s an oversight responsibility of this 

committee, and it’s a reporting responsibility of Ex-Im to explain 

why it happened in very specific terms, and to talk about remedial 

efforts that will be undertaken to meet the goal going forward. 

And I also think that the committee might wish to ask for quarterly reports, rather than annual, in that situation to monitor more 

carefully Ex-Im’s movement back toward the 20 percent goal. 

Mrs. BIGGERT. Okay. Then what are some examples of exporter 

performance standards that the Bank should implement to meet 

the special circumstances of small business concerns? 

Mr. MORRISON. The standards that would be helpful to rate the 

Bank on are things like customer acquisition, customer retention, 

customer satisfaction, and the rise in the dollar value of exports by 

small companies. 

Each of those is an indication the Bank is doing its job, I would 

think. 

Mrs. BIGGERT. Are there other U.S. institutions that the Bank 

works with to streamline the processing of applications for bank assistance for small business concerns? 

Mr. MORRISON. Well, as you may know, most of the short-term 

activities of the Bank are done in a delegated way, through banks 

and brokers, and they, of course, have a competitive reason to try 

to move the transactions through more rapidly, or otherwise the 

customers will go somewhere else. 

The problem with medium term all being done by the Bank itself 

is that those competitive pressures don’t exist. That is one of the 

problems. But there are probably lots of other opportunities for the 

Bank to reach out. 

I know it does some transactions in tandem with the Small Business Administration, certain kinds of transactions that are above 

SBA’s limit. But in general, I think the simplest way to speed up 

the transactions is to work with the brokers and the banks. 

Mrs. BIGGERT. Okay. Thank you very much. I yield back. 

Chairwoman PRYCE. All right, I want to ask unanimous consent 

for Mr. Manzullo’s statement to be made a part of the record. Without objection. 

I thank our panel very much. You have provided terrific insights, 

and we value them. And thank you very much. 

I also want to thank the staff who worked so hard to put all this 

together so far, and thank you for your continued efforts. 

All right, without anything further, we are adjourned. 

[Whereupon, at 3:53 p.m., the subcommittee was adjourned.] 

(33)

A P P E N D I X

April 5, 2006

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