U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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

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

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

39–788 PDF 2008

FULL COMMITTEE HEARING ON

OVERSIGHT OF THE U.S. EXPORTIMPORT BANK’S IMPLEMENTATION

OF ITS SMALL BUSINESS MANDATE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

JANUARY 17, 2008

Serial Number 110-66

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

STANDING SUBCOMMITTEES 

Subcommittee on Finance and Tax

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

DEAN HELLER, Nevada, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Urban and Rural Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1

Chabot, Hon. Steve .................................................................................................. 2

WITNESSES

PANEL I: 

Lambright, Honorable James H., Chairman and President, Export-Import 

Bank of the United States ................................................................................... 4

PANEL II: 

Alford, Harry, National Black Chamber of Commerce ......................................... 18

Warfield, Paul, First National Bank of Omaha, on behalf of the Independent 

Community Bankers Association ........................................................................ 20

Yager, Dr. Loren, Government Accountability Office ........................................... 22

Thiry, Steven, AMT - The Association for Manufacturing Technology ............... 24

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 35

Chabot, Hon. Steve .................................................................................................. 37

Altmire, Hon. Jason ................................................................................................. 38

Lambright, Honorable James H., Chairman and President, Export-Import 

Bank of the United States ................................................................................... 39

Alford, Harry, National Black Chamber of Commerce ......................................... 43

Warfield, Paul, First National Bank of Omaha, on behalf of the Independent 

Community Bankers Association ........................................................................ 47

Yager, Dr. Loren, Government Accountability Office ........................................... 54

Thiry, Steven, AMT - The Association for Manufacturing Technology ............... 71

(V) 

(1)

FULL COMMITTEE HEARING ON OVERSIGHT 

OF THE U.S. EXPORT-IMPORT BANK’S 

IMPLEMENTATION OF ITS SMALL BUSINESS 

MANDATE 

Thursday, January 17, 2008

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

2360 Rayburn House Office Building, Hon. Nydia Vela ́zquez [chairman of the Committee] presiding. 

Present: Representatives Vela ́zquez, Clarke, Sestak, Higgins, 

Chabot and Davis. 

OPENING STATEMENT OF CHAIRWOMAN VELA ́ ZQUEZ 

Chairwoman VELA ́ ZQUEZ. I call this hearing to order. Today, the 

Committee will review the Export-Import Bank’s efforts to assist 

small businesses. Congress established the Bank seven decades ago 

to promote national competitiveness in an increasingly globalized 

economy. It was envisioned that this Agency will serve as a critical 

resource for domestic firms of all sizes, as they began to look 

abroad for new opportunities. But, unfortunately, this has not fully 

materialized. 

Currently, it is small U.S. firms that dominate foreign market 

sales, and operate at a trade surplus in numerous industries. Due 

to the ingenuity of this sector, small exporters are growing two 

times faster than their corporate counterparts. However, many still 

face hurdles when it comes to fully accessing the international 

marketplace. 

In order to provide assistance for these small firms, Congress has 

revised the Bank’s charter multiple times. In 2006, with the input 

of this Committee’s members, legislation was enacted that refocuses the Agency’s structure to better promote small exporters. 

Since adoption, it has been working and meeting its obligation 

under the legislation. However, there is still a long way to go before it is fully implemented. Overall, if I were to assign a grade, 

it will be an incomplete. 

While the Bank will point out that they have met their small 

business goal, the facts tell a different story. The number of small 

business loans is on the decline. In 2005, right before the legislation was enacted, there were 2,600 awards, but today there are 

only 2,300, a drop of more than 10 percent. 

2

These figures indicate that affordable trade financing is on the 

decline. The reality is that a smaller number of businesses are getting larger loans. What we need to see is more loans and more dollars. Until we see increases in both, it will be questionable if small 

businesses are the priority they are supposed to be. 

If it had fully implemented the 2006 legislation, perhaps these 

numbers would have been better. The Bank has failed to establish 

several key initiatives, including changes aimed at increasing bank 

lending, and reducing regulatory burden for both of which little 

progress has been made. 

The 2006 law also provides the authority to put U.S. firms on 

equal footing against heavily subsidized foreign firms. But, again, 

this is a tool that has failed to be used, and, again, small firms are 

left waiting. 

The effect of these delays is significant. By not implementing 

these programs, the Bank’s actions are tantamount to cutting off 

assistance to small firms that are trying to access foreign markets. 

It is also deterring greater private sector involvement with export 

financing programs, which is a critical step to their expansion. 

Without the system mandated in the re-authorization legislation, 

many firms will be left at a disadvantage against their foreign competitors. 

As a result of the Bank’s failure to establish key provisions of the 

2006 re-authorization legislation, the Committee wants quick and 

decisive action on implementing these reforms. Going forward, we 

will continue to conduct regular oversight of its progress. 

Small exporters must be the priority at the Bank that Congress 

had envisioned. The 2006 legislation should be administered in a 

way that fulfills the mandated specific requirements, as well as its 

underlying purpose, which is to expand trade opportunities across 

the small business sector. 

As small firms increasingly look to international markets, and 

the nation’s trade deficit remains unbalanced, Congress, Ex-Im 

Bank, and small business leaders must collaborate to promote U.S. 

interest in a global economy. 

I look forward to hearing ideas from the Bank, as well as industry representatives, on ways to improve its outreach and services 

to small exporters. 

Thank you all for your attendance today, and I now recognize the 

Ranking Member, Mr. Chabot, for his opening statement. 

OPENING STATEMENT OF MR. CHABOT 

Mr. CHABOT. Thank you. I’d like to thank the Chairwoman for 

holding this hearing today to evaluate the U.S. Export-Import 

Bank’s ability to serve the needs of the American small business 

community. 

I’d also like to thank our witnesses for being here today, and I 

appreciate their willingness to engage in this important discussion. 

Over the past two decades, obstacles to trade have been crumbling at a staggering pace. In the last 20 years, for example, the 

United States has entered into 14 separate free trade agreements 

with negotiations currently underway for several more. 

The benefits of disintegrating trade barriers for the average 

American, and American businesses, abound, including increased 

3

employment opportunities, increased wages, and increased profits 

for businesses that export their goods, and import material used to 

make their goods. This spike in trading opportunities also encourages businesses to produce a better product, and sell that product 

at a lower price to both Americans, and to consumers in other 

countries. 

The process of becoming a successful exporter can be extremely 

daunting for a small business, whether it’s determining if you need 

a license to export your product, or making sure you have the proper insurance, the maze of tasks to be completed can prove to be a 

minefield. Financing your new exports can be a very considerable 

challenge, and sometimes the ultimate challenge. 

Established in 1934, the Export-Import Bank provides financing, 

insurance, and exporting advice to U.S. businesses that export. Although some, including myself, have had concerns in the past regarding the types of businesses the Export-Import Bank has financed, our focus today is on America’s small businesses that export, and making sure they benefit from the Bank that we’re talking about here today, and make sure that all the services provided 

are done in a very good manner. 

The 2006 Export-Import Bank Re-Authorization Act require the 

Export-Import Bank to take several steps to maximize opportunities with small businesses. The Re-Authorization put in place a 

structure, the Small Business Division, that bears the sole responsibility of insuring that small businesses have equal access to ExIm Bank products.In order to accomplish this, the Small Business 

Division should provide outreach and manage feedback from small 

businesses. 

Additionally, they should maintain a liaison for the Small Business Administration, advise small business concerns on financing 

products offered by the Bank, and provide insight of the technology 

department to strengthen the small business outreach. 

With these thoughts in mind, today we hope to ascertain just 

how productive these new standards put in place by the Re-Authorization of 2006 have been for small businesses. Adherence would 

most certainly help to put U.S. small businesses on a more level 

playing field with other small companies around the world. 

Once again, I thank the witnesses for joining us today and look 

forward to your testimony. I might note that I’m also a member of 

the Foreign Affairs Committee, and we have a classified briefing on 

the recent assassination of President Bhutto, which I am hoping to 

attend, and it’s my understanding that Congressman Davis will be 

substituting for me during that period of time, at least for some of 

the hearing, but I hope to be back. And so I’ll be here for some, 

and away for some. So, again, thank you for holding this hearing. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Chabot. 

Now it is my pleasure to welcome Mr. James H. Lambright. He’s 

the President and Chairman of the Board of the Export-Import 

Bank of the United States, the U.S. government’s official export 

credit agency. Prior to his work with Ex-Im Bank, he served as an 

investment banker, an attorney specializing in real estate, and venture capital. 

Sir, welcome, and you have approximately five minutes to make 

your presentation. 

4

STATEMENT OF THE HONORABLE JAMES H. LAMBRIGHT, 

CHAIRMAN AND PRESIDENT OF THE EXPORT-IMPORT BANK 

OF THE UNITED STATES 

Mr. LAMBRIGHT. Good morning. Thank you, Chairwoman 

Vela ́zquez, Ranking Member Chabot, and Members of the Committee. It’s my pleasure to be here with you today. 

Each passing day, the U.S. grows more economically interdependent with other nations across the globe, both as partners 

and competitors. For decades, the industries, both large and small, 

that drive the American economy have provided an example to the 

world, and many competitors have proved to be fast learners. 

As a result, the divide that once existed between the United 

States economy and that of the rest of the world has narrowed, not 

because our economy has taken a step back, but rather because 

other nations’ economies have advanced. This is a reminder that 

America’s preeminence in the global economy is the product of 

achievement, not birthright. 

Our station can only be maintained through the hard work and 

entrepreneurial spirit of American businesses and workers. Our 

GDP growth has increasingly been driven by exports, and exports 

have increasingly been driven by small exporters. Ninety-seven 

percent of all U.S. exporters are small firms, and they sell over a 

quarter of the value of U.S. manufactured exports. 

These small exporters create opportunity. Workers in such firms 

can expect, on average, 15 percent higher wages. Women and minorities are particularly strong drivers of job growth right now. 

Women own more than a quarter of all American businesses today, 

and that number is growing. And Hispanic Americans are opening 

their own businesses at a rate three times the national average. 

It’s a great time for these firms to export. Ninety-five percent of 

the world’s population lives outside of the United States. The buying power of these customers continues to grow. Yet, only a tiny 

percentage of America’s small businesses export, and of the nearly 

quarter million that do, the majority sell into only one market. 

That’s because exporting poses a variety of challenges; from the 

time and money required to deal with documentation, travel, and 

shipping, to increased risks from unfamiliar languages, relationships, and business practices. 

This is why in 2006, I directed our network of seven regional 

business development offices to dedicate their outreach and marketing efforts exclusively to small businesses. And these offices are 

working closely with the local export assistance centers to reach as 

many small businesses as possible. 

The Export-Import Bank can help small businesses reach new 

markets and shoulder new risks through a variety of financial 

products. We offer loans, insurance, and guarantees as a lender of 

last resort to insure U.S. companies are able to finance export sales 

that otherwise would not go forward. 

In essence, the Bank exists to bolster the U.S. economy and employment through trade finance. So my priority since assuming my 

current position has been to make sure we at Ex-Im Bank are 

doing everything we can to be as effective and efficient as possible 

in serving small businesses within the bounds of the niche we fill 

in the financial world. 

5

We’ve listened to the small business community, and to Congress, and we’ve made changes accordingly. And our changes have 

addressed every stage of the small business experience inside ExIm Bank. In addition to more organizational focus on outreach, 

we’ve made technological improvements to allow customers to use 

the internet to apply for our small business programs. Today, every 

short-term insurance and medium-term application can be filed 

and tracked through Ex-Im online. 

We’ve also identified small business specialists in each of our operating units to provide our customers with professional staff 

knowledgeable about, and sensitive to, the particular characteristics of small businesses. 

Processing transactions involves nearly every division of the 

Bank. That’s why we established an Ex-Im Bank Small Business 

Committee, chaired by the Senior Vice President for Small Business, and comprising senior members of each division to coordinate, 

evaluate, and make recommendations for a successful small business strategy involving all of the Bank’s functions. 

We’ve also retooled our claims process, so that insurance claim 

denials can be appealed to a senior level committee that includes 

the Senior Vice President for Small Business. 

I appreciate the Congressional guidance that shaped these reforms. And I want to extend an ongoing invitation to all the Members of this Committee to continue to work with me, the Bank’s 

Board, and the Bank’s staff on our service to America’s small businesses, because I agree with Chairwoman Vela ́zquez, that more can 

always be done on this critical front. 

So far, the results have been good. Our small business continues to grow. In fiscal year 2007, we authorized $3.4 billion in direct 

support of small business transactions, up from $3.2 billion the 

year before. For the past two fiscal years, we’ve exceeded the target 

set for us by Congress that the value of our small business authorizations be at least 20 percent of our overall authorizations, with 

the 2007 ratio coming in at 26.7 percent. In terms of numbers of 

transactions, over 85 percent of our total were directly for small 

businesses. 

I should note, we’re equally proud of the indirect support our 

financings provide small businesses, that act as suppliers to larger 

exporters. 

While important, the data only tell part of the story, that we supported nearly 2,400 transactions with small business exporters this 

past year. I’ll limit myself to just one illustration of the Bank’s impact on a customer. 

The Robbins Company of Solon, Ohio, used a $25 million Ex-Im 

Bank working capital guarantee to fulfill $130 million contract for 

the export of two large tunnel-boring machines to India. The machines will dig a 27 mile long tunnel to supply potable water to 

drought-stricken farmland in 516 villages in Andhra Pradesh. The 

tunnel will be built 300 feet below the Nagarjuna Sagar Tiger Reserve to avoid disturbing the tigers’ habitat. 

This export provides a significant environmental benefit, but 

what makes Ex-Im Bank’s ability to support the sale so gratifying 

is that to satisfy the contract, this company with fewer than 200 

employees has added 50 new employees to its payroll. 

6

While I can’t guarantee increases in our small business numbers 

every year, I can promise you that we’ll continue our work to improve the quality of the small business experience at Ex-Im Bank, 

and I can assure you this is a commitment shared by staff and 

Board members alike. 

I’m pleased that this effort will benefit from the leadership of 

Diane Farrell, our newest Board member, whose enthusiasm and 

insight make her a terrific fit for this portfolio. 

When given a level playing field, America’s small firms have 

proven to be resourceful, creative, and a reliable engine for the 

economy. 

I look forward to working with the Members of this Committee 

to insure that small businesses continue to enjoy the financial support they require as they make foreign sales and provide jobs for 

hardworking Americans. 

Thank you, again, for the opportunity to appear today. I look forward to your questions. 

[The prepared statement of Mr. Lambright may be found in the 

Appendix on page 39.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Lambright. 

And I would like to ask my first question regarding the Bank’s 

2006 Re-Authorization that required the establishment of a preferred lending program for medium-term transactions. This was designed to increase small business access to products with longer repayment terms for higher volume transactions. Although the Bank 

has taken steps to implement the program, one year later it’s still 

not in operation. 

I would like to know the following. First, when will the final regulations for the program be implemented? Two, when will the Bank 

alter its standard operating procedures to implement the program? 

And, third, what will borrowers and lenders be able to utilize, 

when they will be able to utilize the program? 

Mr. LAMBRIGHT. This is an important new program for Ex-Im 

Bank that was approved by our Board in October, and work had 

begun on it shortly after the new charter was passed by Congress. 

And the time that it has taken is to make sure that when we offer 

this new program, that we get it right, and that it’s something that 

the market will appreciate and use. So there has been significant 

vetting with potential users, including small business exporters. 

But this is a program that creates new relationships with lending 

partners that gives them true delegated authority to approve transactions without going through the Ex-Im Bank processes. And what 

that will give small businesses is quicker processing, but creates a 

new relationship between Ex-Im Bank and lenders where they 

share some of the risk, and we will cover about 90 percent of the 

commercial risk for your typical transaction, if it’s a small business 

exporter, slightly more of the risk will be borne by Ex-Im Bank. 

And to answer your question on timing, we have put out the final 

set of documents for review by the pool of lending partners, so 

we’re awaiting their comments and feedback, and hope that at our 

annual conference in April, we can roll this out so that all of the 

exporters and lenders that attend that conference can learn exactly 

what the product offers, and begin to use it. 

7

Chairwoman VELA ́ ZQUEZ. When is your expectation as to the 

time line for borrowers and lenders to be able to utilize the program? 

Mr. LAMBRIGHT. In April, when we would roll this out, and have 

final documents. 

Chairwoman VELA ́ ZQUEZ. One interesting dichotomy following 

the enactment of the Re-Authorization, is that while the Bank has 

met the small business financing goal, the number of small business awards has decreased by 10 percent since 2005. 

Do you think this drop is reflective of the intent of the Re-Authorization legislation? 

Mr. LAMBRIGHT. No. I agree with your observation that that’s a 

trend in the direction that we shouldn’t be happy with. I think we 

should aspire to do more for small businesses, both in terms of dollar amounts, and in terms of numbers of transactions, and so your 

observation is correct. 

Chairwoman VELA ́ ZQUEZ. How do you intend to accomplish that? 

Mr. LAMBRIGHT. Well, all of the changes that the charter directed 

us to make, that we have made, focus more organizational effort 

on outreach to small businesses, because awareness is really the 

biggest hurdle that we have in reaching the community of small 

businesses, getting them to understand the financing that we do 

offer, and so we have all of our branch office staff focused exclusively on reaching more small businesses. 

This year, for example, we had about 370 small businesses that 

were first-time users of the Bank as a result of that outreach. 

You’re correct that the average size of the transaction went up, and 

so I agree with you that we would like to do more in terms of numbers and outreach and education, and making the whole process of 

using Ex-Im Bank easier, is the way to accomplish that. 

Chairwoman VELA ́ ZQUEZ. Mr. Lambright, I am concerned about 

the General Accounting Office report that stated that in 2006, 

‘‘That the Bank is inflating its small business financing numbers, 

which include loans and other products.’’ And the General Accounting Office asserts that the Bank is including awards that did not 

go to small firms. 

My question, do your small business numbers include any 

awards that went to firms that were not small? 

Mr. LAMBRIGHT. In the dollars reported, the answer is no, and 

the GAO has confirmed our methodology, and made accomodations 

for internal control improvements that we have executed. 

The one remaining area of disagreement between their recommendations and our practices gets to reporting the numbers of 

transactions, not the dollars. And there is a set of transactions that 

we make available to banks to use for their customers. And those 

support more small business transactions than the numbers of policies, and so we report the number of policies. 

GAO makes the correct observation that some of those at the end 

of the year may not, in fact, have been used for small businesses. 

But in our assessment of the data, we believe we’re actually underreporting the number of transactions for small business, but they 

make a correct factual statement. 

Chairwoman VELA ́ ZQUEZ. So would it be more accurate to leave 

those numbers out until you can determine who they went to? 

8

Mr. LAMBRIGHT. Ideally, yes, it would be. But we have a volume 

of transactions underneath some of those policies where we may 

not know until after our reporting period whether that policy has 

been used, and so because the trend has been more transactions 

supported than the number of policies, we believe we’re being conservative by reporting the number of policies. 

Chairwoman VELA ́ ZQUEZ. Well, I’ve been in this predicament before in dealing with the Small Business Administration reporting 

of contracts awarded to women, minorities, and small businesses. 

And years after years, they were saying we are achieving their 

goals, and what we found through not only a report that we did 

in this Committee, but the General Accounting Office, and their 

own Inspector General was that they were miscoding, and that 

awards that they claim went to small businesses, in fact, $12 billion in one year to small businesses, went to large firms. So I don’t 

want this to happen here, because as you know, the intent of the 

Re-Authorization was clear. And we need to increase not only the 

volume of loans, and the amount of money that is going to small 

businesses. 

So let’s talk about what are you doing in terms to outreach, or 

how can you increase the number of loans going to small businesses? 

I want to ask you, you have dedicated staff located in regional 

offices, but they lack the authority to make loans, so why hasn’t 

the Bank sent small business underwriters out into the field, or 

provided the regional offices with the authority and training to 

make those loans? 

Mr. LAMBRIGHT. Well, the staff in the regional offices do have the 

training to work with small businesses on all of the products that 

they might use, and to walk them through the process. 

Small businesses use all of our products, and so each of those 

products units is located here in Washington to maximize efficiency 

of processing. And because we now have the online application system, the underwriters being here in Washington really don’t slow 

down the processing of those transactions, and so the most value 

that those branch office staff can provide is in finding new small 

businesses that would be eligible for our support, and educating 

them, and working with them, and then advocating within Ex-Im 

Bank for increased support to those businesses. 

Chairwoman VELA ́ ZQUEZ. Well, let’s talk about the Office of Minority and Women Exporters, which was designed to expand your 

outreach. Can you talk to us as to what type of outreach you’re 

doing to reach out to minority and women? That’s a way where you 

can expand the number of small businesses, trying to access financing through the Bank. 

Mr. LAMBRIGHT. You’re exactly right, Chairwoman Vela ́zquez. In 

fact, as a result of the chartering process, and the discussions that 

we’ve had with you and other members, we created an Office of Minority and Women-Owned Exports, and dedicated four full-time 

staff to that office. And, also, all of our branch officers who work 

on outreach support their effort in identifying women and minorityowned businesses. 

Collectively, that staff attended and participated in over 80 

events and conferences focused directly on either minority-owned 

9

businesses or women-owned businesses, and that effort has led to 

a significant increase in the amount of business that we see in that 

sector. 

Chairwoman VELA ́ ZQUEZ. This is what I hear. Well, let me just 

say this. The Bank currently provides just 2 percent of its financing to minority exporters. And this is clearly insufficient given that 

nearly one in five of these entrepreneurs export goods and services 

to markets around the globe. So why is the Bank’s lending to minorities so low? 

My understanding is that you signed an MOU with the National 

Suppliers Council, and now it is MIA, missing in action. They 

haven’t heard back from you guys from the Export-Import Bank. So 

you have an opportunity to tell me what’s going on here. 

Mr. LAMBRIGHT. Thank you. I think if you look at the numbers 

of our support to minority and women-owned businesses, it’s a 

trend that is improving with the increase in organizational focus 

that we’ve given it. 

Last year, we supported $524.6 million in exports to women and 

minority-owned businesses, a little over $400 million of that was 

small businesses owned by minorities and women. But if you look 

at our universe of small business support, about 12 percent of our 

small business support was to small businesses owned by minorities and women. And if you look at the products where the exporter 

is itself directly the borrower, and that’s our working capital line 

of products, women and minority-owned businesses received over 

20 percent of that financing, and so we would like to continue this 

trend of increased support, because it is a growing and important 

sector. 

Chairwoman VELA ́ ZQUEZ. Mr. Lambright, numbers don’t like. 

Just 2 percent of financing is going to minorities. You’ve got to do 

better. It will be good for you, it will be good for our economy. And 

with that, I recognize Mr. Chabot. 

Mr. CHABOT. Thank you, Chairwoman. 

Mr. Lambright, as I had mentioned in my opening statement, 

there are some who have reservations, including myself, just philosophically about the Export-Import Bank; not that we don’t think 

you do a good job, or that you have good people, you do. But who 

just believe that when you’re giving out loans, and people—businesses get those loans, basically claiming that there’s excessive political or commercial risk, and, therefore, they have difficulty getting them in the private sector. And those of us, like myself, just 

believe philosophically that risk should be reflected in the amount 

of the loan, and it just ought to be done through the private sector, 

philosophically. And that’s traditionally where I have been on that 

issue. But the fact is, we have not prevailed in that effort, those 

of us that basically believe the government is doing things that 

were never intended to be done by our Founding Fathers, and we 

sort of lost that battle over the years. So you do exist, and so my 

concern here as the Ranking Member of the Small Business Committee, is that if you’re going to give loans to the business community, that the small businesses in this country ought to get their 

fair share. And that’s what the purpose of this hearing is. So in 

that spirit, I just have a few questions. 

10

Since the creation of your enhanced web site, have you noticed 

any increased interest by small businesses via the internet? Could 

you discuss that briefly? 

Mr. LAMBRIGHT. Of course. I will note that our Small Business 

program, like our overall program, is not intended to compete with 

commercial lenders, so we’re not trying to compete with the private 

sector. And all of our programs are created with an eye on supporting U.S. employment, and keeping U.S. companies from having 

to compete with foreign competition supported by its government. 

And we do price our products according to the risk that we perceive. And, in fact, have been consistently returning money to the 

Treasury in excess of our appropriation, so we believe that we have 

been operating in a responsible manner. 

With respect to our technology upgrades, we have increased the 

dollars supported for small business year over year, but I think the 

real benefit of it is not in the numbers that have increased, but 

really in the ease of working with Ex-Im Bank. So, for us moving 

from paper submissions and paper files to an electronic system has 

made it easier for small businesses to submit their information, 

and not just submit an application, but track it so that they know 

where their application is in the pipeline as it goes through the 

system. And so, really, I look at the benefit primarily being one of 

customer service, not simply a business development tool, even 

though we have been able to boost the numbers with the new system. 

Mr. CHABOT. Thank you. 

What type of feedback is received by Ex-Im Bank from small 

businesses concerning the Bank products, and how does the Bank 

go about obtaining feedback from small businesses? 

Mr. LAMBRIGHT. We receive a lot of anecdotal feedback just 

through the course of working with exporters. They may make comments to loan officers, or even write a note to me, or pick up the 

phone, so we hear a lot anecdotally, but we have tried in the spirit 

of these organizational changes to be more formal about it. And so, 

our Small Business Division and the Small Business Committee 

have conducted focus groups, and have sent out questionnaires to 

be more disciplined in our soliciting of feedback. And that feedback 

is very useful to us. 

I would say that the feedback could be categorized broadly into 

two buckets, one is customer service, just pushing us to be faster 

and more responsive, which we are always trying to do, and the 

new computer system will be helpful on that front. And the second 

broad category is in our product limitations. And this is where we 

have less freedom to respond, because our products come with limitations that a lot of commercial lending products or foreign competition, their export credit agencies may not have all the same restrictions that we have from a policy point of view. So our charter 

creates certain policy restrictions on us in terms of U.S. content, 

or shipping requirements, and environmental and economic impact 

standards that prevent us from supporting every potential small 

business exporter that may be seeking our help. So we take all of 

that feedback from both of those broad categories, and within the 

narrow niche that we fill, try to be as effective as we can in serving 

that community. 

11

Mr. CHABOT. Thank you. If a small business would apply for a 

capital loan, what’s the average time for the application process, 

and to receive the loan? I know that’s going to vary on a case-bycase basis, but just what kind of parameters do you work with 

that? 

Mr. LAMBRIGHT. As you noted, it varies on a case-by-case basis. 

It also varies by product type, so working capital, which is the preexport financing, most of that is done through delegated authority, 

so that the lenders are processing those transactions, and our approval comes concurrent with the lender’s approval, so there’s really no added time by Ex-Im. 

On short-term insurance, we try to turn those around and typically do within 10 days. Where that turn-around time becomes 

more of an issue, and where we would hear more negative comments in that feedback that we solicit, is when you start to move 

into longer terms, say five or seven-year financings, where we need 

to spend more time underwriting the credit risk of a foreign borrower, and we start to have more entities involved in a transaction, 

so we need to be more careful. Those transactions can take 60 days, 

and so given the pace of commercial life, if we need to ask a lot 

of questions to get comfortable with the transaction, that can create some negative feedback. So for the shorter terms, it’s usually 

a week or two, and for the longer terms, it could be around 60 

days. 

Mr. CHABOT. Okay. Thank you very much. 

I yield back the balance of my time. 

Chairwoman VELA ́ ZQUEZ. Mr. Sestak. 

Mr. SESTAK. Thank you. 

I was going to ask that same question. You said 60 days for the 

larger ones? 

Mr. LAMBRIGHT. Right. 

Mr. SESTAK. And what was it for the small ones? 

Mr. LAMBRIGHT. Ten days or less. 

Mr. SESTAK. Ten days. 

The question I had was, you had, to the Chairwoman’s question 

about moving underwriters out to the regional offices, we’re going 

to hear from community lenders. And the value I found of the community lenders is they’re there, they understand the community. 

They are quite responsive. 

You responded to her question by saying for efficiency purposes, 

if I heard you correctly, we like to do it down in Washington. But 

how about for effectiveness purposes? I mean, the statistics show 

they were not quite as effective this year as last year, so are we 

giving up effectiveness for efficiency? And, if so, should you be asking for additional resources in order to make this happen? 

I mean, my perspective, just from my background, is decentralization. You actually garner a lot of effectives and efficiencies 

if the right management is done. Why don’t we look at the effectiveness of this? 

Mr. LAMBRIGHT. I think it’s a very good question, and one that 

we have spent time on. And, really, the resources aspect that you 

highlight is a large constraint on moving large numbers of people 

around the country. 

12

We have staff in seven regional offices to identify, and work with, 

and cultivate new business, but small businesses that we then 

bring in as applicants could use one of any number of our products. 

Each product has a dedicated staff that specializes in processing 

that product, so the difficulty would be in sending one or two people out to a branch office. They have expertise in one product, but 

not another. And so, by having them housed in Washington, it actually does serve both efficiency and effectiveness. 

I think with unlimited resources— 

Mr. SESTAK. But aren’t you, to some degree, able to do some of 

that under the Export Assistance Centers? I mean, because they do 

financing packages right there on-site. I mean, haven’t they had to 

deal with this problem? 

And in your answer, then my question is, you’re making, understandably, an argument here that it going to be less deficient, so 

I assume you’ve studied this. Do you have a study on it? I mean, 

because those are nice general statements, but what’s the study 

that actually shows the statistics between your assertion? 

Mr. LAMBRIGHT. We don’t have a formal study to give you, Congressman. 

Mr. SESTAK. But we do show that we’re less effective this year 

than last year to the Chairwoman’s point. So why don’t we do a 

study to see if we can’t be more effective, because I understand 

those good general words. We use them all the time in the military, 

but what’s the real facts on this? Because I do think we have to 

think about the value I see community lenders do, because they’re 

there. And I don’t think they’re ineffective. I think they’re pretty 

darned efficient, so could we take that to the next step? 

Chairwoman VELA ́ ZQUEZ. Yes. Mr. Sestak, would you yield for 

just a second? 

Mr. Lambright, if I understand correctly, you’re saying that 

you’re compromising your outreach because you lack the resources, 

in terms of having underwriters in those regional offices. Correct? 

Mr. LAMBRIGHT. I’m saying that there are resource considerations. I think there are also organizational considerations. 

Chairwoman VELA ́ ZQUEZ. But I don’t understand, because my understanding is that last year you proposed to terminate Ex-Im 

Bank subsidy, and that—so why do you do that? 

Mr. LAMBRIGHT. Well, by terminating the subsidy, and moving to 

self-sustaining financing, that wouldn’t necessarily increase the 

amount of resources we have available, because our appropriators 

would still set a cap on the funds available to us for admin and 

program uses. Even if we have excess revenue coming in—we consistently have more revenue than we spend - but the accounting of 

it has been that all of that revenue goes to the Treasury Department. So we still have limited funds available to us, as set by our 

appropriators. 

Mr. SESTAK. My only issue here is, there has to be a tipping 

point for efficiency and effectiveness. And you can —I understand 

your assertions, and I’m not saying they’re wrong. I think they 

might be, but I think this should be studied before we assert it. 

Mr. LAMBRIGHT. Congressman, I appreciate your remarks about 

the value of community banks, which is a view I share. We have 

13

relationships with about 100 community banks throughout the 

country. 

Mr. SESTAK. I think it’s larger than that. 

Mr. LAMBRIGHT. We have slightly over four hundred banks that 

we have relationships with. In the past year, we signed up 17 new 

ones. Developing those relationships is part of the goals that we 

give our outreach staff, because those banks in the local communities can serve as gatekeepers for us, and multipliers of our outreach efforts. So we work with them to cultivate new business. 

And, in fact, in many cases, we then delegate authority to some of 

these banks to approve transactions for us. 

Mr. SESTAK. Madam Chair, may I make—I know I’m over time. 

I just want to thank you, also. And I wish I could remember his 

name, your Expert Assistant Center in the Philadelphia region was 

tremendous. They helped us on our second Economic Development 

Summit. I saw the value of this outreach out there, but I’m in a 

district that’s lost 762 small businesses net in the last six years, 

and so that’s why I’m interested in this effectiveness and decentralization. But thank you for the assistance they gave us. Tony 

Caballos. Thank you. 

Chairwoman VELA ́ ZQUEZ. Time has expired. 

Mr. Davis. 

Mr. DAVIS. Thank you, Madam Chairwoman. And, Mr. 

Lambright, thank you for being here with us today. Appreciate you 

taking part in this hearing. 

In the 2002 Re-Authorization of the legislation, there was a mandate that 20 percent of the financing goals, can you tell me where 

we’re at right now on that 20 percent? 

Mr. LAMBRIGHT. Yes. The reference in the charter is to making 

available at a minimum 20 percent of our authorizations to small—

of our total authorizations to small business, and in fiscal year 

2007, that ratio was 26.7 percent of our total authorizations going 

directly to small businesses. 

Mr. DAVIS. Thank you. 

Currently, there are over 200,000 small exporters in the United 

States. The Bank has, therefore, provided just 1 percent of the 

firms with resources to competitively compete abroad. Can you tell 

me why that just 1 percent, why you think it’s so low? 

Mr. LAMBRIGHT. Well, first of all, I think it should be bigger, and 

I want to do everything we can to make that as big as possible. But 

the reasons for the low percentage reflect the nature of our business. There are constraints on what we can and cannot do. 

We are not intended to compete with the private sector, so much 

of that trade finance is being provided by commercial lenders and 

insurers, which is terrific. That’s the way the market should work. 

Second, we have certain policy constraints on what we can provide for small business exporters. There are requirements as to the 

U.S. content of shipments. There are shipping requirements, environmental and economic impact considerations, and so not every 

small business export is eligible for our consideration. 

And then I would say the last consideration is really awareness. 

We have our work cut out for us in educating those several hundred thousand small exporters about the financing that is available 

to them in the U.S. government, because when I go meet with 

14

small businesses around the country, I find that most of our time 

is spent explaining who we are, and what we do. And so, we need 

to get out there and meet as many of them as possible. 

Mr. DAVIS. You mentioned the private sector. What are some of 

the advantages for a small business firm to actually go through the 

private industry, rather than go through the Export Bank? 

Mr. LAMBRIGHT. Well, if they have a credit worthy transaction to 

a borrower or to a market that the commercial lenders are comfortable with, the advantage of working with a commercial lender 

then is that they would get cheaper products. We are not designed 

to compete with the private sector, and so we are there to take 

riskier positions, and serve really as a lender of last resort. So 

when we are providing assistance to exporters, it’s because the 

commercial market isn’t available to them, and yet they want to 

proceed with a sale, and so we are underwriting the political and 

commercial risk of those transactions. 

Mr. DAVIS. One of the requirements that you have is to lower the 

fees that you charge. Can you talk to me about some of the things 

you’re doing to move in that direction? 

Mr. LAMBRIGHT. We have—we try to price our products both to 

reflect the risk we’re taking, and to avoid competing with private 

sources of capital. And in the universe of our small business products, we have certain policies where there are benefits provided if 

the exporter is a small business. So there’s a multi-buyer insurance 

product that offers small businesses a fixed rate regardless of the 

risk of the export market. 

We talked a little bit about our new medium-term delegated authority program, where we will retain a bit more risk where the exporter is a small business. So we’re constantly looking across our 

offerings of products to find areas where we can enhance the experience for small businesses. 

Mr. DAVIS. Okay. One last question, if you look at statistics, larger firms typically will compete in about five countries around the 

world, small firms, if they compete at all, will be about one. Can 

you tell me why you think that’s the case? 

Mr. LAMBRIGHT. Well, your observation is correct. The last statistic I saw was that about three-fifths of small businesses that export, export to only one market, and typically that would be Mexico 

or Canada. So one reason is that it’s easier to export to a neighbor 

than to start exploring far away lands. And there are challenges 

to exploring those foreign markets, in terms of the time and money 

required to deal with complicated documentation, and the risks of 

undertaking new relationships with foreign business practices, so 

it is a challenge to start to sell overseas. And financing can also 

be difficult, when there aren’t as many lenders financing for overseas sales as there are for domestic activity. And small businesses, 

unfortunately, often are involved in transactions that may be too 

small to be attractive to those commercial lenders, so we at Ex-Im 

Bank take pride in the fact that nothing is too small for us to consider, that we will work on very small transactions so that small 

business exporters have financing available to reach those overseas 

markets. 

Mr. DAVIS. Thank you, and I yield back. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

15

Ms. Clarke. 

Ms. CLARKE. Thank you very much, Madam Chair. 

Honorable Mr. Lambright, it’s good to have you here, because I 

think that this hearing is very, very important, given where we are 

with regard to our economy right now. 

I am a native New Yorker, Brooklynite of Jamaican descent, and 

so this whole issue of how we do import/export utilizing your institution as a tool is very important to me. My district has entrusted 

me to insure that small exporters are united with their Caribbean 

partners, Latin American partners, and the global marketplace, 

and capitalize on the great trading opportunities that we have 

available. 

It’s been my observation, particularly coming from New York 

City, that many immigrants who are now second, third, fourth generation, come with an entrepreneurial spirit, so the disconnect between our ability to help them finance businesses with real nature 

connections to other parts of the globe is something that I find very 

interesting; that we can’t help them make that connection. 

I think that your institution is poised right where we need it. 

And I think that it takes some ingenuity, and it takes some real 

aggressiveness to make the marriage, to make a win-win. 

You spoke in your testimony today about the global competition 

that exists for the American small business. Your description about 

the growth and aggressiveness of the international interest outside 

of the United States, having reached a point where they’re approaching the level that we have maintained. I find that interesting, because shouldn’t we be concerned about that? 

Your observation is very similar to ones that I’ve had. When you 

look at what is happening with nations like China, India, and the 

EU, and their ability to be strident in their globalization, moving 

their businesses forward, not only throughout the globe, but right 

here in the United States should be of real interest to your organization. 

It seems to me that it should be key to raising the bar for U.S. 

preeminence and competition in the global economy. Do you have 

a strategy in place to be more aggressive in outreach in getting 

American business into the game? 

And let me also say this. As we sit here today, you are sitting 

on the goods. Our Congress is poised to initiate an economic stimulus plan. Small businesses are our employers. What can you see 

your institution doing to help in an economy that has become sluggish, many believe is about at the advent of a recession? What role 

should your institution be playing in partnering with Congress 

around this whole economic stimulus? Are we missing something? 

Is there a disconnect? And if we admit that today, what is the 

plan? What is the strategy for making that connection? That’s what 

we should be talking about here today. 

Mr. LAMBRIGHT. You’ve covered a lot of ground, Congresswoman, 

and I agree with much of what you’ve said. 

We notice a trend that you notice, which is oftentimes in difficult 

export markets, the first people in from America are people that 

came from those markets, and they understand those markets the 

best, and so they’re very good partners for us to support in that effort. And we are always looking for ways to reach those groups 

16

through the right trade associations, or the right events to help introduce them to Ex-Im Bank, and find ways to work with them. 

And I think doing more of that reaches your second main point 

on U.S. competitiveness. There are a lot of things to talk about in 

terms of U.S. competitiveness, but in the context of this hearing, 

I think it’s important to emphasize the growing role of exports in 

the U.S. economy. And exports are approaching 12 percent of our 

economy. They were just five years ago well below 10 percent, and 

so the growth of exports is exceeding the growth of our economy. 

And it really has become a driver of the economy. And so focusing 

our efforts on helping companies compete overseas, and providing 

a level playing field against foreign competition is what we can be 

working on together to help U.S. competitiveness. 

Ms. CLARKE. Mr. Lambright, I hear you saying that. What I don’t 

hear coming from you is the sense of urgency. And we’re really in 

a time where that level of urgency is one that we really need to 

express through all the work that we do. 

And my time is up, but I want to suggest to you that expanding 

your operations, and fortifying them, particularly in the seven 

banks that you have, is a very, very critical tool at this point. If 

there is a need for additional resource to make that happen, you 

need to make that plain, because like I said, you’re sitting on the 

goods. And we need to get them into the hands of capable people 

to make this thing happen, and happen in real time. 

So I want to thank you for testifying here. Thank you, Madam 

Chair. 

Chairwoman VELA ́ ZQUEZ. Thank you, Ms. Clarke. 

Mr. Lambright, I guess that our frustration is that given the 

state of our economy, and the fact that our trade deficit is so huge, 

how can the Bank, Ex-Im Bank, meet the legislative goals that 

were set in the 2006 Re-Authorization? 

My question is, should the Bank develop new programs and customize its policies so that it is on par with what is going on in today’s economy, and today’s challenges? What are you doing, what 

is the plan, what is the strategy? Are you making such offerings 

available? 

Mr. LAMBRIGHT. With our new Small Business Committee, we 

are undertaking that exercise of reviewing all of our products, and 

all of our divisions. 

Chairwoman VELA ́ ZQUEZ. Can you mention to us, or discuss some 

of the new services and products? 

Mr. LAMBRIGHT. Well, there are revisions to, say, the commission 

schedule on insurance products that create incentives for brokers 

to put more energy into policies benefiting small business exporters. I mean, there are very detailed adjustments that have been 

made to, as you say, customize our products to benefit small businesses, and so at the very granular level, we are constantly refining our offerings to benefit small businesses. But then at a very 

broad strategic level, we also have to think about what are we 

doing competitively to serve all of our exporters, as well as possible, because there’s a lot going on with China’s economic rise, and 

changes going on with European integration that really create competitive challenges for a government export credit agency like ours. 

And the rechartering process really gives us the opportunity to 

17

work with Congress on making those adjustments. So as we implement the new charter and look forward to the next reauthorization 

process, now is the time to have that dialogue about what’s going 

on in the world, and what do we need to be doing. But I agree with 

you that there are challenges, both big and small. 

Chairwoman VELA ́ ZQUEZ. In that revision, you should keep in 

mind the fact that 97 percent of all exporters are small firms. And 

to give you an example, other countries are just in a proactive way 

looking for new products to be able to compete. Canada’s Export 

Credit Agency launched a new program last year helping small 

businesses compete for larger export contracts. The year before, an 

initiative was implemented to help small exporters meet new custom security guidelines. Is Ex-Im Bank undertaking similar efforts? 

Mr. LAMBRIGHT. We are evaluating all of our products and programs, and looking at the efforts of export credit agencies like that 

in Canada to see what we can do. But I should note that there are 

also different government philosophies in these countries. We purposefully do not compete with the private sector, so our offerings 

are inherently limited; whereas, Canada’s export credit agency isn’t 

bound by the same policy constraints as our’s. And, in a resource 

sense, they have about five times our staff to support an economy 

one-tenth our size, so what they are able to do for small businesses, 

I would expect would greatly exceed what we have done. 

Chairwoman VELA ́ ZQUEZ. Well, what I’m saying is, what can you 

establish, and how can you come up with new products within the 

mandate? 

Mr. LAMBRIGHT. That’s exactly our challenge of how to do as 

much as we can within the limitations that we have, both in a resource, and a policy sense. And I have to tell you that I come to 

work every day asking myself that question, and thinking about 

how to help U.S. employment stay strong by helping all of our exporters win overseas sales. And all of our staff and our Board members ask themselves the same question, and so with all of these institutional reforms that we’ve undertaken, they’re just a year old. 

We’re trying to institutionalize those and really challenge everybody involved in their new roles to ask themselves how we can be 

doing as much as possible for small business. And it’s a challenge 

that will continue, because no matter what we do, we will always 

be able to aspire to do more, and I hope that we will. 

Chairwoman VELA ́ ZQUEZ. Okay. Mr. Davis. 

Well, not only as the Chair of this Committee, we will continue 

to monitor the implementation of the 2006 Re-Authorization, but as 

a Member of Financial Services that has jurisdiction over ExportImport Bank, I will tell you that I was planning to introduce an 

amendment to the 2006 Re-Authorization to limit the re-authorization for only three years, to make sure that you will implement the 

intent of the law. 

I’m not planning to leave Congress pretty soon, so I guess I’ll be 

here for the next re-authorization, and I hope that we will not have 

to make changes because of the lack of progress, as intended by the 

re-authorization that we just passed in 2006. 

My challenge to you is, we can do better within the mandate, and 

we expect for you to do better when it comes to financing, not only 

18

in terms of the numbers of loans, and the volumes of loans, but the 

amount of money that is provided to small businesses. And, particularly, don’t forget the new face of small businesses; more 

women, Blacks and Latinos. 

Thank you very much for your participation today. 

Mr. LAMBRIGHT. Thank you, Chairwoman. 

Chairwoman VELA ́ ZQUEZ. The gentleman is excused. 

I will ask for the second panel to please come forward and take 

your seats. 

Mr. Lambright, I will ask if there is going to be any staff that 

will remain in this hearing. 

Mr. LAMBRIGHT. I believe we will have a representative. 

Chairwoman VELA ́ ZQUEZ. Very good. Thank you. 

I welcome the second panel, and our first witness is Mr. Harry 

Alford. Mr. Alford is the President, CEO, and co-founder of the National Black Chamber of Commerce, which has 100,000 members. 

He is also on the Board of Directors for the U.S. Chamber of Commerce and serves on the National Advisory Council for the Small 

Business Administration. 

Welcome, Mr. Alford, and you will have five minutes to make 

your presentation. 

STATEMENT OF MR. HARRY ALFORD, PRESIDENT & CEO, NATIONAL BLACK CHAMBER OF COMMERCE, WASHINGTON, 

D.C. 

Mr. ALFORD. Thank you, Madam Chair, Ranking Member 

Chabot—Davis I guess right now. Thank you for allowing the National Black Chamber of Commerce to provide some input. 

You have my written testimony. I am just going to have some 

comments in addition to that, and will be glad to entertain any 

questions. 

I must say, when I saw the invitation to come and talk about ExIm Bank and that they had a small business and a small disadvantaged business, minority business outreach program, I was quite 

surprised and very curious, and somehow I want to chuckle, but at 

the same time something inside me says you should be enraged, because if they do have a minority business program, and the National Black Chamber of Commerce, which is the largest black 

business association in the world, with 150 chapters in 41 states, 

interfacing in those communities where they have regional offices, 

having annual conventions and conferences and workshops about 

international trade, having trade missions around the world multiple times every year, has yet to see an official manager from ExIm Bank any place. 

I have done a search in preparation of my testimony through our 

membership, trying to find that one black business that does business with Ex-Im Bank. There are rumors. There may be one in 

Chicago, I understand. But we are still trying to identify them. 

I would like Ex-Im Bank to provide a list of the top 10 AfricanAmerican-owned businesses utilizing their services. I want to see 

10, and I wonder if we can get one. And if they cannot come up 

with that list, Congresswoman Clarke, I would recommend to the 

Congressional Black Caucus that they need a civil rights audit, and 

19

perhaps we should expunge them from the federal budget, if they 

are taking tax money and discriminating with it. 

Discrimination is a hard term. But when we are in your face, and 

we send you invitations to come, to have international trade meetings, no charge, be our guest, just tell us what you do, and you 

don’t come, you don’t show, you are not around, something is terribly wrong. 

Now, when we have these trade missions, and when we interact 

with Spain, with France, with Africa, with the Dominican Republic 

last November, with Brazil, when we have these—and these countries tell us, ‘‘You joint venture with our businesses, and we have 

got all of these programs for you. We have all of these financial 

programs to help you interact in business.’’

And then, the word gets around that African-American businesses, there are a million African-American businesses. AfricanAmericans account for $970 billion in expendable income. And 

when Ghana tells us that that 972—excuse me, Kenya tells us that 

that $972 billion, if they just got 1 percent of that, it would triple 

their GDP. We become very attractive. And they know that we are 

vulnerable, should I say approachable, because we don’t have programs here in our country like they have in their country. 

The Canary Islands, which has programs from Spain and the 

EU, and it was aggressively trying to do business in Africa, wants 

to match with us where we have in-roads into Africa, naturally, 

and can provide opportunities, and they have got the programs and 

everyone can make money. 

That is to the detriment of this country, and I think that it does 

a disservice in total, that America is at risk in this globalization 

where other countries can utilize the talents and the skills of African-Americans, of Hispanics, and of Asian-Americans to further 

along their business, because the United States Government is on 

deaf ears to being inclusive. 

I think that is a national disgrace, and I for one, as an American, 

as a veteran of this country, can’t stand to sit here and see an entity of the United States Government that thinks it is a country club 

and can utilize an entrepreneur from China has a better chance of 

working with Ex-Im Bank than an African-American business. 

I understand in my research through Wikipedia Ex-Im Bank financed two Mexican drug cartels. I guess that is the Minority Business Program—two Mexicans, who happen to be in the drug business, from Mexico. They have it easier in working with Ex-Im Bank 

than a Hispanic-American trying to get into the export-import business in South America. Something is terribly wrong. 

So I challenge the Committee to really get firm with Ex-Im 

Bank, and after that you can go to the Trade Development Agency, 

and after that you can go to OPEC, because they are pretty much 

the same. We don’t have the luxury, or should I say the opportunity, to utilize incentive programs that Congress has written for 

us. 

Thank you, ma’am. 

[The prepared statement of Mr. Alford may be found in the Appendix on page 43.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Alford. 

20

Our next witness is Mr. Paul Warfield. Mr. Warfield is the Vice 

President and Director of Global Banking at First National Bank 

of Omaha. He serves on the U.S. Department of Commerce, Nebraska District Export Council, and the Nebraska Department of 

Agricultural Directors’ Advisory Panel on International Trade. He 

is also a member of, and is representing today, the Independent 

Community Bankers Association. 

Welcome, Mr. Warfield. 

STATEMENT OF MR. PAUL WARFIELD, DIRECTOR OF GLOBAL 

BANKING, FIRST NATIONAL BANK OMAHA, OMAHA, NE; ON 

BEHALF OF THE INDEPENDENT COMMUNITY BANKERS ASSOCIATION 

Mr. WARFIELD. Thank you. Madam Chairwoman, Ranking Member, and members of the Committee, my name is Paul Warfield. I 

am Director of Global Banking for First National Bank Omaha. 

I am pleased to appear this morning to testify on behalf of the 

Independent Community Bankers of America on the Export-Import 

Bank’s trade finance programs. The ICBA represents nearly 5,000 

community-based financial institutions nationwide. 

Trade financing is a fast-growing area of opportunity for our nation’s community banks and the small businesses they serve. I 

strongly support the valuable programs provided through the U.S. 

Export-Import Bank. Community banks like First National Bank 

have increased their involvement with the Ex-Im Bank programs 

to the benefit of our small business exporters and local economies. 

The Ex-Im Bank’s programs represent a success story of how the 

Federal Government, working with private sector lenders, can assist small businesses to support greater U.S. trade, small business 

job creation, and economic growth. The ICBA supports the Ex-Im 

Bank and wants to ensure Ex-Im Bank programs reach their full 

potential. 

Specifically, the Ex-Im Bank programs and activities should be 

structured and managed so they work well for lenders and borrowers of all sizes. This Committee helped to mandate that 20 percent of Ex-Im’s transactions support small businesses, and I believe 

that is working. 

We are all aware of the recent decline in the value of the U.S. 

dollar and the rapid growth in global economies. Combined, these 

developments have created an environment ripe for greater U.S. 

exports worldwide. This offers U.S. lenders, and particularly small 

businesses, the ability to better reach new markets, to expand their 

sales, and create jobs using Ex-Im’s programs. 

While there has been a small increase in the number of lenders 

and small businesses participating in the Ex-Im programs in recent 

years, ICBA believes many more can and should be involved. In addition to the valuable support provided for large- and mid-sized 

businesses, the Ex-Im Bank should continue to enhance its ongoing 

small business-focused efforts, trade promotion, and engage even 

more community banks in its trade finance activities and programs. 

ICBA recommends enhancing the Ex-Im Bank’s program budget 

funding for small business outreach. A portion of any Ex-Im Bank 

earnings should be allowed to be retained to further advance small 

21

business outreach. Today, Ex-Im returns funds back to the U.S. 

Treasury that could be retained for outreach. 

ICBA suggests additional Ex-Im Bank budget resources be applied to better staff and support community lenders’ and small 

businesses’ outreach nationwide, including enhancing community 

bank programs. Additionally, Ex-Im Bank should ensure solid community bank representation on the Ex-Im Bank Advisory Committees. This would help to engage more community lenders and their 

small business customers in the mix. 

The Ex-Im Bank currently has about 200 lenders participating at 

some level in the Bank’s trade finance programs. In 2007, Ex-Im 

Bank added 26 new lenders to the roles, with about half representing community lenders. With a total of 8,560 FDIC-insured 

banks nationwide, there is ample opportunity to reach even more 

community lenders with the products and services offered through 

the Ex-Im Bank. 

Since its initial contact with Ex-Im, First National Bank Omaha 

has grown its trade services and trade finance business. In just 

seven years, the global banking group at First National has grown 

from six employees to 14. Using the Ex-Im programs, First National has been able to meet the needs of more small business customers across the Midwest. 

I would like to mention just a couple of examples. By using the 

Ex-Im Bank letter of credit policy, First National Bank has been 

able to successfully offer letter of credit confirmations for small 

businesses. Using this tool, First National can assign proceeds to 

small business suppliers, extend payment terms to foreign buyers, 

and utilize working capital financing. 

These activities have helped our local exports. Products often exported by our local small businesses include center pivot irrigation 

systems, scientific equipment, water purification systems, construction equipment, and various professional services. 

First National undertook a challenging transaction with a Nigerian buyer. They were seeking Ex-Im Bank medium-term financing 

for the purchase of used equipment from a small business supplier. 

The assistance Ex-Im Bank offered as exceptional. The transaction 

was successful, and we are now awaiting approval for a second 

shipment to the same buyer. 

In conclusion, I want to make it very clear that the Ex-Im bank 

programs are unique and extremely valuable in helping community 

banks and U.S. businesses compete in the international trade 

arena. I know that under Ex-Im Bank Chairman Jim Lambright’s 

tenure there have been noticeable improvements in Ex-Im’s relationship with both the lending and small business community. 

First National Bank Omaha looks forward to working even more 

closely with the Small Business Committee and the Ex-Im Bank to 

ensure a more robust Ex-Im Bank in the future. The ICBA is optimistic that community banks, working more closely with Ex-Im, 

will continue to meet and exceed the challenge of serving even 

more small businesses. 

Thank you. 

[The prepared statement of Mr. Warfield may be found in the 

Appendix on page 47.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Warfield. 

22

Our next witness is Dr. Loren Yager. He is the Director, International Affairs and Trade Team, of the U.S. Government Accountability Office. He has managed a body of work on export promotion 

issues generally, and on several issues related to the Export-Import 

Bank. 

Welcome, sir. 

STATEMENT OF MR. LOREN YAGER, Ph.D., DIRECTOR, INTERNATIONAL AFFAIRS AND TRADE, GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, D.C. 

Mr. YAGER. Good morning, Madam Chairwoman, Ranking Member, and other members of the Committee. Thank you for the opportunity to appear again before the Small Business Committee, 

this time to talk about the Export-Import Bank. 

We have been involved in a number of studies of the Export-Import Bank in recent years, and we have just begun our engagement 

on a requirement of particular interest to this Committee regarding 

the performance standards related to the Bank’s small business 

program, including finances for businesses owned by women, socially and economically disadvantaged individuals. 

We look forward to reporting back to the Committee when we 

complete our work under this congressional mandate. Hopefully, 

this will contribute to the continuing oversight that you mentioned, 

Madam Chairwoman, in your opening statement. 

We would also be happy to brief the Committee on some of our 

other trade-related studies, including recent studies of the U.S. free 

trade agreements, the effectiveness of U.S. Customs in protecting 

intellectual property at the U.S. borders, and other subjects that 

you and other members raised at your last trade hearing in November of 2007. 

My statement today is based primarily on research we performed 

for the Congress in 2006 on the Bank’s efforts to assist small business. In particular, I will cover two main issues. First, I will report 

on the trends in Ex-Im’s small business financing since the fiscal 

year 2000. Second, I will briefly summarize the weaknesses GAO 

identified in our 2006 report on the tracking and reporting of small 

business financing, and I will briefly describe the steps the Bank 

has taken to address those weaknesses. 

In terms of the first issue, as Chairman Lambright has mentioned in his testimony, the share of Ex-Im financing directly benefiting small business has increased over recent years, surpassing a 

required 20 percent in both 2006 and 2007. The percentage reflects 

an increase in the value of Ex-Im financing for small businesses, 

while financing for larger businesses was noticeably lower in 2006 

and 2007 compared to 2005. 

In terms of the second topic of the statement, when we performed our 2006 work on the methods used by Ex-Im for tracking 

small business financing, we found a number of weaknesses and 

made several recommendations to the Bank. I am pleased to report 

that Ex-Im has made changes that should provide this Committee 

and other interested members of Congress greater confidence in 

Ex-Im’s reporting on its small business financing. Madam Chairwoman, you also have noted the importance of this reliability in 

your opening statement. 

23

Let me give a few illustrations of the problems that we found, 

and the kinds of changes made by the Bank. For example, we 

found that Ex-Im sometimes had conflicting information in their internal databases about the same company, so that the same company might appear as both a small company and a large company 

at the same time. In other cases, we found weaknesses in the 

Bank’s data systems that affected the reliability of the value of its 

small business financing. 

We believe the Bank has made a number of changes to address 

the weaknesses we identified. For example, Ex-Im replaced its previous data system with Ex-Im Online, as Chairman Lambright also 

mentioned. This is an interactive web site that allows exporters, 

brokers, and financial institutions to transact with Ex-Im electronically. This eliminates the need to transfer information from paper 

files to the Bank’s electronic files for the bulk of Ex-Im’s applications. 

GAO also recommended that Ex-Im contract for an audit of the 

congressionally-mandated report on the level of direct support for 

small business. Ex-Im was also responsive in this area, and the 

auditor found that the process that they have operates in accordance with the policy and approved methodology for these program 

types. 

Ex-Im disagreed with one recommendation that we made regarding the number of its authorized transactions that directly benefit 

small businesses. Ex-Im has frequently reported that about 85 percent of its authorized transactions directly benefit small business. 

For example, this includes crediting all bank-held insurance policies as directly benefiting small businesses. 

While many of the transactions under each of these policies may 

benefit small businesses, not all of the transactions under these 

policies do so. And we continue to believe that Ex-Im should consider ways to more accurately determine and report on these transactions. 

In summary, I believe that there are a number of positive developments to report regarding the Bank’s activities towards small 

business, including its success in meeting the 20 percent target and 

the improvements in its record keeping system. 

We appreciate the opportunity to contribute to the oversight of 

Ex-Im’s activities, and want to note that the Bank has indicated its 

willingness to work with us on our ongoing assignment related to 

the performance standards for financing by businesses owned by 

women and from persons of economically and socially disadvantaged groups. 

Madam Chairwoman, Ranking Member, this concludes my remarks. I would be happy to answer any questions that you have. 

[The prepared statement of Mr. Yager may be found in the Appendix on page 54.] 

Chairwoman VELA ́ ZQUEZ. Thank you very much, Mr. Yager. 

Our next witness is Mr. Steven Thiry. Mr. Thiry is Vice President of Business Development at the Association for Manufacturing 

Technology. During his tenure, he has assisted in the development 

of export-oriented programs designed to increase AMT members’ 

share of export markets for manufacturing technology. 

Welcome. 

24

STATEMENT OF MR. STEVEN A. THIRY, VICE PRESIDENT, AMT, 

THE ASSOCIATION FOR MANUFACTURING TECHNOLOGY, 

MCLEAN, VA 

Mr. THIRY. Thank you. Madam Chairman, Ranking Member, 

members of the Committee, thank you for holding the hearing 

today and giving me the opportunity to be here. Before I speak, 

and pursuant to House Rule XI, I am obliged to report that AMT, 

the Association for Manufacturing Technology, received $225,100 

from the Commerce Department’s Market Development Cooperator 

Program for a technical center in China, $207,254 of which was 

disbursed in 2005, $17,846 disbursed in 2006. 

AMT is an association whose membership represents 400 manufacturing technology providers located throughout the United 

States, almost the entire universe of machine tool builders who 

manufacture in our country. Most of these companies are small. An 

estimated 78 percent of them have less than 50 employees. Most 

are multi-generation, family-owned business. But their contribution 

is huge. 

They are the ones that build the machines that make things 

work. In fact, everything in this room, and everything in this city, 

with the exception of the people, was either built by one of their 

machines or a machine that their machines built. They are an essential part of the manufacturing base and over the past few decades, these companies have faced increasing competition from 

abroad, and seen a decline in the U.S. manufacturing base. As a 

result, they have turned heavily to the export market to keep their 

companies alive and growing, which in turn has safeguarded jobs 

here in the United States. 

Increasingly, the ability to compete in the global markets is determined by factors beyond the products offered and the manufacturers’ ability to support those products at the end user. Foreign 

competitors from countries such as Taiwan, Italy, and Brazil can 

often package their products and services with government-subsidized financing that substantially improves their competitive position. 

This support becomes even a greater differentiator when the purchasing company in those countries is a small business. As such, 

small businesses in foreign markets must often pay substantially 

greater credit insurance and interest rates, and undergo a difficult 

and uncertain application process in order to acquire American 

products. 

It is our belief that the Ex-Im Bank has made some progress in 

its efforts to support small businesses, and we cited a number of 

those in our written testimony. But, first, all small businesses are 

not created equal, and this is something we feel that is very important for everyone to understand. 

The U.S. Government defines a small business as having less 

than 500 employees. It is very important to remember that the organizational structure, as well as the specialization of skills in 

businesses ranging in size from 10 to 500 employees, is dramatically different. A business with 300 to 500 employees is likely to 

have a far more experienced and sophisticated financial organization than one with 20 to 50 employees. 

25

In fact, the chief financial officer of a 20- to 50-employee company is quite likely also to be the chief operating officer and the 

owner. Wearing multiple hats greatly limits the time he or she can 

dedicate to learning the ins and outs of getting an Ex-Im application through the approval process. 

Second, speed is of the essence. With a shrinking product life 

cycle, today’s business environment is one where first to market, 

first to produce, and first to deliver carries a greater competitive 

advantage than ever. An application approval process that exceeds 

the time allotted by the buyer for selecting a product and releasing 

an order effectively eliminates the Ex-Im Bank financing and, by 

default, the American exporter from competing even where American products might be preferred. 

Simplifying and accelerating the application and approval process needs to be a priority to improve future support. Providing delegated authority for medium-term loans to lending institutions 

with the resources and experience in these targeted markets is a 

program that offers tremendous potential for improvement. And I 

want to emphasize that this is strongly supported by AMT. We 

urge rapid authorization of that program. 

And, finally, it is our strongest recommendation that the current 

U.S. content requirements be reviewed. American manufacturers 

compete in a world market. Increasingly, customers in export markets want to reduce the number of vendors and orders they transact in order to reduce their operating costs. This often forces American exporters to bundle U.S.-produced products with products 

manufactured outside of the United States. 

When financing support is offered only in proportion to the 

American content, it puts the American exporter at a substantial 

disadvantage to foreign competition, who can and will finance the 

entire project. Although intended to ensure financing support is 

only given to American-produced products, the ultimate effect of 

this proportional support is a reduction in the sale of U.S.-exported 

product. 

Every member of AMT manufactures products in the United 

States. Each one is fiercely competitive and determined to ensure 

that American manufacturing technology remains preeminent. 

They continue to invest their time and money in their family businesses to grow their share of the world marketplace. They need 

your help to level the field that they must compete on. 

Madam Chairman, Ranking Member, and members, thank you, 

again, for giving me this opportunity. 

[The prepared statement of Mr. Thiry may be found in the Appendix on page 71.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Thiry. 

I would like to address my first question to Mr. Warfield. Currently, less than 100 commercial banks finance international transactions, and less than half of those lend to small exporters. Surveys 

have shown that most lenders involved in trading financing are 

large money-centered banks, plus a few regional and small institutions. 

My question to you is: what structural changes to the Bank’s financing programs would you recommend to increase the participation of smaller banks in these transactions? 

26

Mr. WARFIELD. I can offer a couple of comments. Early in the 

process, the credit culture of the Bank has to be willing to look at 

transactions that take the receivable outside of the U.S., and understand in that supply chain where the goods are moving, how 

they are producing, what they are producing, for what country, and 

be a better partner with that small business to understand how 

they can help them financially work through that transaction. And 

that really comes with the lenders and the Bank, the senior lender 

and the Bank to say, yes, we want to offer this type of service. 

Following up to that, it then really becomes somebody’s task. 

And I think we heard it mentioned earlier, stuff gets put on the 

side, it becomes more difficult, and they work on different transactions. Or the answer might just be, wow, good luck getting paid, 

you know, things like that. And that’s inappropriate. There needs 

to be a better initiative, working with the community banks, to better understand how they can mitigate those risks in working with 

those small businesses, and actually provide a better service to the 

small businesses. 

In your opening comments, when you referred to Ex-Im Bank’s 

ability to work with the small business mandate, maybe being incomplete, I would offer this in addition to that comment in saying 

that while maybe parts are incomplete, they are in process. But, 

more importantly, they are incomplete in the sense that we need 

to tie the bankers that work with the small businesses into the picture more efficiently and more effectively. 

And that two years ago, three years ago, at First National, we 

weren’t near as aggressive at looking to find small businesses that 

were looking to do more trade finance transactions. We were more 

on the transactional side of international trade, working with letters of credits and collections and some of the other tools. And we 

broadened our base, because I was able to add staff that could 

work specifically with that. 

It is just a matter of taking that time to make the commitment, 

move through the education process, and find the right partners, 

whether they are through the Export Assistance Center. We work 

primarily with Barry Bent and Michael Howard in the Chicago office, as well as the staff here in Washington. And once you develop 

those partnerships, you get the trust, things really fall into place. 

It just takes time. 

Chairwoman VELA ́ ZQUEZ. A follow-up question regarding the 

2006 reauthorization that required the Bank to establish a preferred lending program for its medium-term transactions. And the 

fact is that the Bank has not been able to implement this program 

as of yet. So do you think that the Bank is deterring smaller lenders from participating in Ex-Im Bank’s programs? 

Mr. WARFIELD. No, I do not believe that. And I would give our 

bank as an example, and the preferred lending in doing delegated 

authority on the medium-term transactions. I wouldn’t be ready to 

do that tomorrow. If Jim Lambright said, ‘‘Today we are going live 

with the program,’’ we rely on Ex-Im Bank to be our partner and 

help us underwrite those transactions. And I don’t have in my 

staff, in my size institution, that ability to do that. I am not a 

Wells Fargo or a J.P. Mortgage Chase, or one of those institutions. 

27

So I am still going to probably want to work with Ex-Im closely 

to make sure the transaction is getting underwritten. The last 

thing I want is that the foreign buyer can’t pay and then we have 

a loss or a default in the transaction. And so I don’t want that to 

happen. I want to use their expertise. I don’t have country officers, 

and I don’t have offices in foreign countries, so I need them as a 

partner. 

So for me that has really not been a priority. What has worked 

well on the delegated authority, very much so with us, and we have 

become an active participant, is on the working capital side, providing the pre-exporting financing, which is very valuable to the 

small businesses. 

Chairwoman VELA ́ ZQUEZ. Dr. Yager, in the study that you conducted in 2006 of Ex-Im Bank, discrepancies were found in small 

business lending reporting practices. Do you believe that the current accounting method for small business transactions is still 

overestimated? 

Mr. YAGER. Chairwoman Vela ́zquez, we believe that the Bank 

has made some very important improvements, and I believe that 

the Congress can have much greater confidence now in the reporting that the provide to you in their mandated report. 

We did have one area of continued discussion and disagreement 

with Ex-Im Bank. You mentioned it in your questions, that we 

think that the Bank should continue to look for better ways to try 

to report on these umbrella policies that they provide to different 

banks. Instead of counting 100 percent of those as oriented towards 

small business, we believe the Bank should consider different ways 

to report that information in order to be completely reliable and up 

front about what they are doing. 

But we certainly looked at what they have done and we believe 

they made some important changes which remedied many of the 

problems, all but one of the problems in fact, that we identified in 

our 2006 report. 

Chairwoman VELA ́ ZQUEZ. Okay. Mr. Thiry, in your testimony, 

you state that the Bank has failed to fulfill its small business financing mandate in the past due to budget cuts. Do you think that 

the recent restructuring of the institution and its policy will expand 

small business lending? 

Mr. THIRY. I am a little confused on your question. 

Chairwoman VELA ́ ZQUEZ. Well, it wasn’t you, it was your association in—

Mr. THIRY. Yes. 

Chairwoman VELA ́ ZQUEZ. —an article that came out. 

Mr. THIRY. Okay. 

Chairwoman VELA ́ ZQUEZ. So—

Mr. THIRY. Yes. I think if we back up and look at what Ex-Im 

Bank does and what they are trying to do, we feel very strongly 

that there needs to be a recognition of the difference in the size of 

small businesses, and that the people you have that support those 

businesses need to understand how they operate. 

Under the current structure and with the resources they have, 

and how they currently allocate those resources, we don’t believe 

adequate attention goes to the small small businesses. That is an 

28

area that, if resources are not allocated differently, then certainly 

we feel additional resources need to be brought on. 

Chairwoman VELA ́ ZQUEZ. Let me ask you about the fact that 

manufacturers are located throughout the United States, including 

in regions that are isolated from major urban areas. And so their 

lending options are quite limited. I asked Mr. Lambright why is it 

that the Bank does not locate underwriters in many areas? Do you 

think that there is a benefit to placing Ex-Im Bank underwriters 

in such local communities? 

Mr. THIRY. I do. And the biggest reason for that, frankly, is people that are local are focused on getting things done locally, and 

understand local issues. And I do believe that the right people 

when placed closer to the customer base gets things done more 

quickly. 

Chairwoman VELA ́ ZQUEZ. Yes. Mr. Alford, I heard you and your 

frustration regarding the establishment under the 2006 reauthorization of an office for minority and women exporters, and as of yet 

you haven’t heard from Ex-Im Bank. The staff is here, and my 

guess is that you will be able to discuss with them how can they 

better enhance its outreach and educational services to minority 

businesses interested in exporting? But if you have to make a recommendation, what would that be? 

Mr. ALFORD. I think—years ago, and you participated in this, we 

had a problem with the SBA and its outreach. And you wanted the 

National Black Chamber of Commerce to report to you quarterly on 

what is going on with the SBA and what changes have been made. 

I would commit that to this Committee, that—and I see a representative of the Supplier Development Council here, who they 

supposedly had an MOU with, but as we all know MOUs aren’t enforceable in a court of law, and it makes a good press conference, 

but the follow-up has to be there. 

But I would suggest that we would let them know where there 

are conferences, where there are workshops, where there are opportunities for outreach, and they should attend, and we would not 

charge or make sure that no one would have to charge them to attend. 

Chairwoman VELA ́ ZQUEZ. They will attend. They will attend. 

Mr. ALFORD. Just to come and to outreach, and then we could report back to you on their efforts. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. ALFORD. And if they don’t, we will be glad to and certain to 

let you know that they aren’t. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Davis. 

Mr. DAVIS. Thank you, Madam Chairman. 

Mr. Alford, many small businesses have difficulty in security export finance assistance through commercial banks. What are the 

greatest obstacles to small businesses in securing this type of financing? 

Mr. ALFORD. I think having some assets that they can hold as 

collateral. I think history. The easiest way, the most successful 

way, for many of our businesses to get financing is to partner with 

a big brother, more or less. Someone—let us take pineapples in 

Ghana. KDI out of Chicago, what they did, they went to the biggest 

29

pineapple importer in the United States and got them into a protege program going with them, where they could pick up the phone 

and get some lines, and let them know who are the friendly people 

in town. And from that they have been able to import enough pineapples to be in five supermarkets in the United States, and they 

are going from there. 

Those creative ways—banks are traditional and there are banking laws that you have to deal with. So it is up to the entrepreneur 

to try to find ways of doing this. 

Mr. DAVIS. You mentioned that collateral and your background, 

your history, how could the Ex-Im Bank address some of these 

challenges? 

Mr. ALFORD. All Ex-Im Bank has to do is just expose themselves, 

and we understand what Ex-Im Bank is. So if we can certainly get 

billions of dollars of business loans from Wells Fargo Bank, which 

we do, I can’t understand why we can’t get loans from Ex-Im Bank. 

Mr. DAVIS. Sounds like the—from what I hear in your testimony, 

if they will show up at your conferences, that is a good first step. 

Mr. ALFORD. That is a great step. 

Mr. DAVIS. Okay. Continue, one more question with you. What 

steps do you believe the Bank needs to take to be of greater assistance to minority and disadvantaged businesses specifically? 

Mr. ALFORD. Yes. Again, the communication. And you take two 

traditional banks—Bank of America and Wells Fargo—who I believe have a great track record in doing business with small and 

minority-owned businesses. And that is through basically their 

interaction out there in the field, letting people know what their 

products are. They aren’t bending lending laws and requirements, 

but they are there to provide access. And when that need occurs, 

it occurs. 

So I have got a lady in Brooklyn, in fact—Wandi Sheneke from 

Kenya—who has a tea business. And she got her financing through 

her family. She had a big family reunion and shook down her aunts 

and uncles and all. But today her tea is in Whole Foods, based off 

that creative way of financing. It would have been nice if she could 

have gone a traditional route. 

Mr. DAVIS. Mr. Warfield, I will direct my last question to you. 

You mentioned in your testimony that you believe more lenders 

could be working with Ex-Im Bank by participating in their programs. What do you believe is keeping more lenders from doing 

just that? 

Mr. WARFIELD. Just the knowledge of knowing how to help their 

customers and ask the right questions. Oftentimes when we make 

calls on some of our correspondent banks, other community banks, 

we ask the question, ‘‘Do you have companies that import and export?’’ And they kind of—they draw back, because they don’t typically ask that question. They don’t know what their customers are 

typically doing maybe outside of the U.S. They know what they 

doing on their business loan or real estate loan and things like 

that. 

It is asking the right questions and identifying when those lenders are present, you know, what can we do for you? And when they 

say, you know, ‘‘I have got an order to Malaysia, and the buyer 

wants two years to repay,’’ a bell needs to go off and say, ‘‘Yes, I 

30

remember Ex-Im Bank can help with that. And, if needed, I can 

get hold of the Export Assistance Center.’’ It is knowing that process and really getting in front of them, so they have those connections when they hear the right—ask the right questions and then 

hear the answers. 

Mr. DAVIS. Thank you, and I yield back. 

Chairwoman VELA ́ ZQUEZ. Ms. Clarke. 

Ms. CLARKE. Thank you, Madam Chair. 

And, Mr. Alford, I certainly hear you, and I can relate to your 

pain. It would seem to me if there is a real commitment to working 

with minority and disadvantaged small businesses, there would be 

someone in that office dedicated to the outreach, to the preeminent 

organizations around this nation. And, certainly, it wouldn’t take 

much, if one couldn’t find them, to reach out to this Committee and 

this Chairperson to say, ‘‘Who have you been working with? Who 

has been attending your hearings?’’

What I am concerned about is the lack of urgency and the lack 

of openness to really creating as many corridors for success in our 

nation. And one could say by extension that it is benign neglect, 

or take it even further and say there is some discriminatory type 

of practice taking place. So I will certainly be taking this up with 

the CBC. 

And if you have any further recommendations, I would love for 

you to make sure that I am in touch with that, so that we can 

move forward and make sure that we bridge this gap, and that it 

is sustainable, because oftentimes people will reach out, they will 

come to a conference, you will see them one year, one session, and 

after that you never see them again. 

We want sustainable relationships established, because business 

is taking place each and every day in this nation. 

Mr. ALFORD. Yes, ma’am. 

Ms. CLARKE. And we need to capture that. 

Mr. ALFORD. I think—

Ms. CLARKE. Mr. Alford, would you like to comment? 

Mr. ALFORD. There has been reticence at best, and it is not because they didn’t know, because they have been invited, and they 

have been—and many businesses have gone to their doors trying 

to find help and being discouraged. they will go back, and they will 

keep going back. But we will find a way, but it is a shame that, 

you know, that is not a resource that we can use. And last time 

I checked, it was being funded with taxpayers’ money. 

Ms. CLARKE. Very well. We will make sure that we make that 

connection, and that we hold folks accountable. 

Let me turn to Mr. Warfield at this time. In a transitional economy, there has to be robust collaboration. I think that is some of 

what I got from your testimony. For us to reach the tipping point 

in closing the gap of the U.S. trade deficit, I think that each of your 

organizations really have to play a role, bridging this disconnect. 

In theory, what do you believe would occur if the Import-Export 

Bank’s program is enhanced for small business outreach? And, secondly, would you recommend that community banks be represented 

on the Import-Export Bank’s Advisory Committee? And how would 

this help increase small business exports? 

31

Mr. WARFIELD. Thank you. I guess I would start by saying that 

the outreach—it needs to be a strong partnership, and it needs to 

be partners that are committed to working through the community 

bank process to work with small businesses across the country. 

And, yes, I myself would be willing to participate in any way I can. 

I have been active in a lot of banking organizations in my career, 

and I enjoy that a lot. It is something that adds a lot of value back 

to our banking industry. 

I am a third generation banker, and my family still holds and 

owns a couple of banks in Nebraska. So I participate at the very 

small community banking level as well. 

From an outreach standpoint, in reaching the right folks and 

being more robust about it, I think it is kind of—the saying, ‘‘You 

hit on all cylinders,’’ or ‘‘You really get the power,’’ it is really kind 

of connecting through the process, through Ex-Im Bank’s annual 

conference is an excellent way to get more people involved in what 

Ex-Im does. There is firsthand experiences there. There is people 

that have been exporting for a long time. There is new to export 

folks to network. 

Ex-Im makes themselves very available for people to attend 

those types of events on the more local level through the Export 

Assistance Centers. I get—oftentimes get offers to say, ‘‘Hey, if you 

are having a seminar or workshop in the area, we would be glad 

to send someone to speak,’’ and been open about that. It gets down 

to a matter of us committing the time on the banker’s side to make 

sure all of those things happen, and that is where I need to do a 

better job at working with Ex-Im, to get them in front of more people in the Midwest. 

From a standpoint of working through the process, helping customers and small businesses, oftentimes they are new to export. So 

it is not just getting to the financing part, it is, how do we ship 

it? How do we pack it? How do we insure it? You know, what happens here? Do I need to get credit information? 

And then, on top of that, you put know your customer, know your 

transaction, and the BSA/AML regulations. And that is usually 

about if they are still hanging in there with you, you have got 

somebody that is willing to make that commitment to export, if 

they have—you have lost them along the way, you have—it just 

takes time and it takes more of an education. 

So we could be much more robust on the educational process. I 

think we could be a lot more robust in terms of banks like myself 

that have had successes with Ex-Im Bank talking to other banks 

through our correspondent network, and saying, ‘‘Hey, we are there 

as a partner as well. We can share our experiences with you and 

participate in the transaction.’’

Ms. CLARKE. Thank you very much, Madam Chair. I yield back. 

Chairwoman VELA ́ ZQUEZ. Thank you. Mr. Chabot? 

Mr. CHABOT. Thank you, Madam Chair. 

Mr. Alford, could you tell us about a success story or two about 

a member of the National Black Chamber of Commerce in your experiences with the Bank? 

Mr. ALFORD. With Ex-Im bank? 

Mr. CHABOT. Yes. 

Mr. ALFORD. There are none, sir. 

32

Mr. CHABOT. None? 

Mr. ALFORD. None. 

Mr. CHABOT. Okay. 

Mr. ALFORD. Nada. 

Mr. CHABOT. Thank you. 

All right. Mr. Warfield, in doing business with the Bank, what 

type of problems have small businesses encountered during the 

loan process? 

Mr. WARFIELD. Problems can often arise with the U.S. content 

regulation. And that is probably the first question we ask anymore 

is: is your—is the content U.S.—is there any foreign content to 

what you are exporting? It is difficult, at best, to go to Main Street 

America and find a manufacturer that hasn’t imported some component part to be competitive in their pricing, so they can sell overseas. 

And I really—that becomes a question, ‘‘Well, the SBA can help 

them, because they don’t have the same requirement,’’ or you get 

into some of the private insurance and private providers. Once you 

get past that question, then it says, okay, then we can fit and look 

into some of these. And would say 50 percent of the time, easily, 

there is a U.S. content, and we look for some other solutions, or 

we go back to working with some of the more traditional trade 

tools. 

That is probably—in the small business arena, that is more and 

more prevalent. And I guess what we—our mantra really is that 

trade is a two-way street, and these folks are being innovative. 

They want to keep employing their people in the small towns and 

small communities, and they need to be competitive on price, and 

they have imported some of the component parts. So that is an 

issue that I think—ongoing I think we need to keep looking at. 

And if there could be some leeway for small businesses in the 

content, that would be great. And aside from that, I think to the 

extent that—just assistance with the paperwork. It is just paperwork that you have got to do, and it is a matter of, yes, nobody 

really likes to do all that, but it is finding the right partner to help 

you. And at the same time, when you go through it a couple of 

times, it gets much easier. It is just a matter of doing it. 

The enhancements they have made to the online system is wonderful. That helps a great deal speeding up the process. From the 

standpoint of customers oftentimes wanting something tomorrow, 

well, in international trade it oftentimes doesn’t happen tomorrow. 

It takes time. And when you are dealing with foreign banks and 

maybe need to get information back from them, as well as some 

other credit information and things like that, it is just a matter of 

building that expectation appropriately, so they know what time 

frames are appropriate. 

Mr. Lambright mentioned 60 days for the medium term, 10 days 

for some of the other programs. Those are pretty accurate. Some 

are more complex; they might take more time. But I don’t think 

there was any deal-breakers, because we can’t process something 

instantly. 

Mr. CHABOT. Thank you. 

Dr. Yager, you mentioned in your written testimony that the ExIm Bank’s reported increase in small business transactions was 

33

due partly to a drop in the overall level of financing provided in 

other—to other customers by the Bank. Could you discuss that a 

little further? 

Mr. YAGER. Yes, Ranking Member Chabot. We wanted to make 

sure that we looked at both components of that particular ratio. 

Obviously, you count the number of transactions or the value of 

transactions provided to small business on the top, and then the 

denominator is the entire work of the Bank. And we did notice that 

between 2005 and 2006, and continuing on into 2007, the denominator, which is all of the business of the bank, dropped off. 

So one of the reasons why the ratio went from 19 percent all the 

way up to 25 and 26 percent had to do with both of those numbers 

changing—the increase, a fairly steady increase, in the value of 

business going to small business, and somewhat of a sharper drop 

in the value of business going to larger businesses. So both of those 

things had some contribution to the fact that now Ex-Im can report 

that 26 percent of its financing value is being directed towards 

small business. 

Mr. CHABOT. Thank you very much. 

And, finally, Mr. Thiry, what type of other barriers to trade are 

small businesses experiencing now that the Ex-Im Bank may be 

able to help alleviate? 

Mr. THIRY. In our particular industry, we do struggle with some 

export control issues that I think a lot of effort is going in to improve. The real key one, though, and I do have to emphasize, is the 

content issue. And to really understand why this is such a barrier, 

put yourself in this position. I will use an example of a Mexican 

business that wants to buy manufacturing product. And let us say 

in the project he has it would involve 60 percent U.S. content, if 

it was coming from a bundled group of products here. So 40 percent 

would be foreign. To try and finance that out of here, if you can 

only finance 60 percent of it, and I am the buyer there, where do 

I come up with this other money? 

But if we are competing with Germany, Italy, or other countries, 

they might put 80 percent their content, there might be 20 percent 

American content, they will finance it. So we lose the opportunity 

for that business. None of our members really want to see foreign 

content financed, but, as you know, the real issue is: how do you 

serve that customer? And as much as we would like to see 100 percent American content on everything, that simply is not the real 

world anymore. By keeping that old constraint, we are forcing ourselves out of the world market. 

Mr. CHABOT. Thank you very much, Mr. Thiry. 

I yield back. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

I have a last question, Mr. Thiry. Out of the 205,000 exporting 

firms of manufactured products, 200,000 are small businesses. You 

indicated that time is critical to maintain the competitiveness of 

small businesses. Have your members experienced an improvement 

in the processing time for large overseas transactions? 

Mr. THIRY. Where they are dealing with a bank that has delegated authority on things such as working capital financing, that 

has helped dramatically. But in terms of attempting to work 

34

through the standard loan process, quite frankly, we have not seen 

significant differences. 

Chairwoman VELA ́ ZQUEZ. Okay. Well, you don’t have any more 

questions. With that, I just want to take this opportunity to thank 

all of you for being here today. And we will continue to monitor the 

progress in implementing the 2006 reauthorization, especially at a 

time when our economy is struggling, and our trade deficit is big. 

We have to make sure that the financing is there to help those who 

are really providing the jobs in our American economy, and those 

are the small business sector. 

So with that, I ask unanimous consent that members will have 

five days to submit a statement and supporting materials for the 

record. Without objection, so ordered. 

This hearing is now adjourned. Thank you. 

[Whereupon, at 11:56 a.m., the Committee was adjourned.]

35


39788.001
36


39788.002
37


39788.003
38


39788.004
39


39788.005
40


39788.006
41


39788.007
42


39788.008
43


39788.009
44


39788.010
45


39788.011
46


39788.012
47


39788.013
48


39788.014
49


39788.015
50


39788.016
51


39788.017
52


39788.018
53


39788.019
54


39788.020
55


39788.021
56


39788.022
57


39788.023
58


39788.024
59


39788.025
60


39788.026
61


39788.027
62


39788.028
63


39788.029
64


39788.030
65


39788.031
66


39788.032
67


39788.033
68


39788.034
69


39788.035
70


39788.036
71


39788.037
72


39788.038
73

Æ


39788.039