[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





                    EXAMINING REAUTHORIZATION OF THE

                     EXPORT-IMPORT BANK: CORPORATE

                    NECESSITY OR CORPORATE WELFARE?

=======================================================================


                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 25, 2014

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 113-87
                           
                           
                                     ______

                      U.S. GOVERNMENT PUBLISHING OFFICE 

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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California, Ranking 
    Chairman                             Member
SPENCER BACHUS, Alabama, Chairman    CAROLYN B. MALONEY, New York
    Emeritus                         NYDIA M. VELAAZQUEZ, New York
PETER T. KING, New York              BRAD SHERMAN, California
EDWARD R. ROYCE, California          GREGORY W. MEEKS, New York
FRANK D. LUCAS, Oklahoma             MICHAEL E. CAPUANO, Massachusetts
SHELLEY MOORE CAPITO, West Virginia  RUBEEN HINOJOSA, Texas
SCOTT GARRETT, New Jersey            WM. LACY CLAY, Missouri
RANDY NEUGEBAUER, Texas              CAROLYN McCARTHY, New York
PATRICK T. McHENRY, North Carolina   STEPHEN F. LYNCH, Massachusetts
JOHN CAMPBELL, California            DAVID SCOTT, Georgia
MICHELE BACHMANN, Minnesota          AL GREEN, Texas
KEVIN McCARTHY, California           EMANUEL CLEAVER, Missouri
STEVAN PEARCE, New Mexico            GWEN MOORE, Wisconsin
BILL POSEY, Florida                  KEITH ELLISON, Minnesota
MICHAEL G. FITZPATRICK,              ED PERLMUTTER, Colorado
    Pennsylvania                     JAMES A. HIMES, Connecticut
LYNN A. WESTMORELAND, Georgia        GARY C. PETERS, Michigan
BLAINE LUETKEMEYER, Missouri         JOHN C. CARNEY, Jr., Delaware
BILL HUIZENGA, Michigan              TERRI A. SEWELL, Alabama
SEAN P. DUFFY, Wisconsin             BILL FOSTER, Illinois
ROBERT HURT, Virginia                DANIEL T. KILDEE, Michigan
STEVE STIVERS, Ohio                  PATRICK MURPHY, Florida
STEPHEN LEE FINCHER, Tennessee       JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana          KYRSTEN SINEMA, Arizona
MICK MULVANEY, South Carolina        JOYCE BEATTY, Ohio
RANDY HULTGREN, Illinois             DENNY HECK, Washington
DENNIS A. ROSS, Florida              STEVEN HORSFORD, Nevada
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania
LUKE MESSER, Indiana

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
                    
                    
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 25, 2014................................................     1
Appendix:
    June 25, 2014................................................   115

                               WITNESSES
                        Wednesday, June 25, 2014

Anderson, Richard H., Chief Executive Officer, Delta Air Lines...    10
de Rugy, Veronique, Senior Research Fellow, Mercatus Center, 
  George Mason University........................................    12
Elmendorf, Douglas W., Director, Congressional Budget Office 
  (CBO)..........................................................    72
Gratacos, Hon. Osvaldo Luis, Inspector General, Export-Import 
  Bank of the United States......................................    69
Hochberg, Hon. Fred P., President and Chairman, Export-Import 
  Bank of the United States......................................    68
Moak, Lee, President, Air Line Pilots Association, International.    13
Scire, Mathew J., Director, Financial Markets and Community 
  Investment, U.S. Government Accountability Office..............    71
Wilburn, Steven P., Founder, Chief Executive Officer, and 
  President, FirmGreen, Inc......................................    15

                                APPENDIX

Prepared statements:
    Anderson, Richard H..........................................   116
    de Rugy, Veronique...........................................   131
    Elmendorf, Douglas W.........................................   146
    Gratacos, Hon. Osvaldo Luis..................................   159
    Hochberg, Hon. Fred P........................................   167
    Moak, Lee....................................................   174
    Scire, Mathew J..............................................   182
    Wilburn, Steven P............................................   194

              Additional Material Submitted for the Record

Hensarling, Hon. Jeb:
    Written statement of Air Liquide Advanced Technologies US LLC   201
    Written statement of the American Conservative Union.........   202
    Written statement of Cliffs Natural Resources, Inc...........   203
    30 Groups to Congress: Let the Export-Import Bank Expire.....   207
    Written statement of the National Taxpayers Union............   210
    Article from The Wall Street Journal entitled, ``End 
      Corporate Welfare? Start With the Ex-Im Bank,'' dated June 
      15, 2014...................................................   211
Campbell, Hon. John:
    Discussion Draft to reauthorize the Export-Import Bank of the 
      United States for 3 years, and for other purposes..........   213
Green, Hon. Al:
    Written statement of Export Import Strategies................   233
    Written statement of the Greater Houston Partnership.........   234
    Written statement of the Hallmark Sales Corporation..........   235
    Editorial from the Houston Chronicle entitled, ``No time for 
      games: Export-Import Bank loans support American jobs, 
      including Houston-area jobs,'' dated June 25, 2014.........   236
    Written statement of Manufacturers of Valves and Strainers...   238
    Written statement of Grafitec................................   239
    Written statement of South Coast Products....................   240
Maloney, Hon. Carolyn:
    Written statement of the National Association of 
      Manufacturers..............................................   241
    Written statement of the National Conference of State 
      Legislatures...............................................   243
    Written statement of 865 organizations urging support of 
      reauthorization of the Export-Import Bank..................   245
    Written statement of various organizations which support 
      swift reauthorization of the Export-Import Bank............   255
    Written statement of the U.S. Chamber of Commerce............   257
McCarthy, Hon. Carolyn:
    Written statement of the International Association of 
      Machinists and Aerospace Workers...........................   264
    Written statement of the International Federation of 
      Professional & Technical Engineers.........................   267
    Written statement of the American Federation of Labor and 
      Congress of Industrial Organizations (AFL-CIO).............   268
    Written statement of the Maritime Trades Department..........   269
Pittenger, Hon. Robert:
    Written statement of The Babcock & Wilcox Company............   270
Stivers, Hon. Steve:
    Written statement of the Nuclear Energy Institute............   272
    Written statement of PPG Industries..........................   276
Waters, Hon. Maxine:
    Written statement of Air Tractor, Inc........................   277
    Written statement of Fritz-Pak Corporation...................   278
    Written statement of Greenergy Solutions Inc.................   280
Elmendorf, Douglas W.:
    Written responses to questions for the record submitted by 
      Representative Royce.......................................   281
Hochberg, Hon. Fred P.:
    Written responses to questions for the record submitted by 
      Chairman Hensarling........................................   284

 
                    EXAMINING REAUTHORIZATION OF THE

                     EXPORT-IMPORT BANK: CORPORATE

                    NECESSITY OR CORPORATE WELFARE?

                              ----------                              


                        Wednesday, June 25, 2014

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:06 a.m., in 
room 2128, Rayburn House Office Building, Hon. Jeb Hensarling 
[chairman of the committee] presiding.
    Members present: Representatives Hensarling, Bachus, King, 
Royce, Capito, Garrett, Neugebauer, McHenry, Campbell, 
Bachmann, Pearce, Posey, Fitzpatrick, Westmoreland, 
Luetkemeyer, Huizenga, Duffy, Hurt, Stivers, Fincher, Stutzman, 
Mulvaney, Hultgren, Ross, Barr, Cotton, Rothfus, Messer; 
Waters, Maloney, Sherman, Meeks, Capuano, Hinojosa, Clay, 
McCarthy of New York, Lynch, Scott, Green, Cleaver, Moore, 
Ellison, Himes, Peters, Sewell, Foster, Kildee, Murphy, 
Delaney, Sinema, Beatty, Heck, and Horsford.
    Chairman Hensarling. The committee will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    This hearing is entitled, ``Examining the Reauthorization 
of the Export-Import Bank: Corporate Necessity or Corporate 
Welfare?''
    I now recognize myself for 6 minutes to give an opening 
statement.
    Today, we will examine the Obama Administration's request 
to reauthorize the Export-Import Bank (Ex-Im or the Bank).
    First, we should examine where the money comes from to 
finance Ex-Im. Whose money is it? Obviously, it is taxpayers' 
money--the cashier at the corner grocery store, the cop on the 
beat, your children's teachers, the small business owner 
struggling to keep the doors open in a tough economy.
    And where does the money go? It goes to foreign countries 
and foreign companies in the way of direct loans and credit 
guarantees. The taxpayer money goes overseas to China and 
Russia, nations that openly challenge our economic and security 
interests. Taxpayer money goes to oil-rich countries like Saudi 
Arabia and the United Arab Emirates. The taxpayer money even 
goes to countries with a demonstrated history of atrocious 
human rights abuses like the Congo and the Sudan.
    So, who benefits? Overwhelmingly and indisputably, it is 
some of the largest, richest, most politically connected 
corporations in the world, like Boeing, General Electric, 
Bechtel, and Caterpillar. In fact, in 2013 over half of Ex-Im's 
financing went to a handful of Fortune 500 companies. And big 
Wall Street Banks apparently benefit, as well. As reported in 
the press recently, one former JPMorgan and Citigroup banker 
said of Ex-Im's credit guarantees, ``It is free money.''
    So if you are a politically connected bank or company that 
benefits from Ex-Im, no doubt you would like it to continue. 
After all, it is a sweetheart deal for you. Taxpayers shoulder 
the risk; you get the reward. But if you work at a small 
business or another American company competing in the global 
marketplace, it is unfair. Ex-Im effectively taxes you, while 
subsidizing your foreign competitors.
    We hear a lot from powerful voices on K Street and Wall 
Street about the Bank, but we also should listen carefully to 
some voices from Main Street, like Hal Richards of Terrell, 
Texas, in my district. Quote: ``As a small business owner who 
exports, I think it is outrageous that my own government puts 
my business and other small businesses at a competitive 
disadvantage through the Export-Import Bank. How is that 
fair?''
    Now, Ex-Im tells us sending taxpayer money to foreign 
interests supports jobs for Americans. But the government's 
chief auditor reported that programs like Ex-Im ``largely shift 
production among sectors within the economy, rather than raise 
the overall level of employment in the economy.''
    Delta Air Lines, whose CEO will testify shortly, points out 
that Ex-Im's loans to foreign airlines have killed as many as 
7,500 domestic airline jobs because the Bank will subsidize 
Delta's foreign competitors.
    Caterpillar was a recent beneficiary of Ex-Im's taxpayer 
financing that went to an iron ore mining project controlled by 
Australia's richest citizen. An American iron ore company 
called Cliffs Natural Resources said it will no longer be able 
to effectively compete with its Australian competitors due to 
the subsidy, and they are now having to cut employees' hours.
    Another American competitor feeling the sting of Ex-Im is 
Valero Energy in my native Texas. Ex-Im is lending $641 million 
to a Turkish company to build a new petroleum refinery. 
Valero's CEO stated that Ex-Im's actions ``jeopardize U.S. 
refining jobs and undermine the strength of the U.S. refining 
infrastructure.''
    Professor Donald Boudreau of George Mason University summed 
it up neatly when he stated, ``At best, the Ex-Im Bank creates 
jobs in export industries by destroying jobs in non-export 
industries.''
    Now, the Bank tells us it is essential to U.S. exports, but 
over 98 percent of all U.S. exports occur without risking 
taxpayer dollars--again, over 98 percent. And most of the 
others who take advantage of Ex-Im could certainly do it 
without taxpayer support. Even Boeing, the Bank's biggest 
beneficiary, has admitted it doesn't really need Ex-Im and 
could ``arrange alternative financing'' without it.
    The Bank has also told us it doesn't cost taxpayers a dime. 
The Congressional Budget Office respectfully disagrees and 
tells us if the Bank were to use fair-value accounting, the 
accepted accounting method for almost every bank and private 
company in America, Ex-Im's ledger would actually show a net 
loss to taxpayers in the neighborhood of $200 million a year. 
That is the difference between Washington accounting and Main 
Street accounting.
    Perhaps what is most disturbing about the Ex-Im Bank is its 
ideological and crony-based lending practices. It has a green 
energy quota. It permits no assistance for coal projects. It 
has a mandate to specifically support exports going to Sub-
Saharan Africa.
    Last year, more than 60 percent of Ex-Im's financing 
benefited just 10 mega-corporations that clearly have a strong 
political and lobbying presence in this town. Recently, a 
Spanish multinational corporation received a $33-million Ex-Im 
loan while former Energy Secretary Bill Richardson 
simultaneously sat on its advisory board and Ex-Im's as well.
    Ex-Im guaranteed $10 million in loans to benefit the 
politically favored Solyndra, which clearly did not favor 
taxpayers.
    And just yesterday, we woke up to the report in The Wall 
Street Journal that, ``The U.S. Export-Import Bank has 
suspended or removed four officials in recent months amid 
investigations into allegations of gifts and kickbacks as well 
as attempts to steer Federal contracts to favored companies.'' 
Ex-Im may not just be guilty of cronyism; it may be guilty of 
corruption, as well.
    Now, I will admit that Republicans may disagree on whether 
Ex-Im should be reformed or allowed to expire, and I certainly 
hope that this hearing will help illuminate that decision. But 
we are united in believing that we cannot reauthorize the 
status quo. And we are also united in believing that the 
smarter and fairer way to promote American exports is by 
fundamental tax reform; strong trade agreements, a regulatory 
freeze, with the exception of health and safety; and greater 
American independence, with projects like the Keystone 
pipeline.
    I now recognize the ranking member for 5\1/2\ minutes.
    Ms. Waters. Thank you, Mr. Chairman.
    I would like to thank you for finally holding this hearing 
on the reauthorization of the Export-Import Bank, even though 
it comes less than 3 months before its charter expires. It has 
been over a year since this committee even discussed the Bank 
at a subcommittee hearing to assess its progress on reforms.
    But let's be serious. This hearing is not going to be a 
forthright discussion on the merits of the Bank. Mr. Chairman, 
we know your position on the Bank. We know you have made ending 
the Bank your top priority, regardless if it is at the expense 
of thousands of American companies trying to compete against 
businesses in China, Russia, Korea, and countries across 
Europe, all of which have their own version of the Ex-Im Bank.
    I am dismayed to see that the Republican leader-elect, 
Kevin McCarthy, has also changed his view on the Export-Import 
Bank. I am saddened that he has followed the lead of the 
extremists in an effort to shows his Tea Party credentials.
    At one time, programs like the Ex-Im Bank were so 
apolitical that they did not even require a vote. Now, policies 
that create thousands of jobs and increase American 
competitiveness are under constant attack.
    I am becoming more and more concerned that the Republican 
Party's willingness to work together on issues like flood 
insurance, TRIA, and the Export-Import Bank has fallen victim 
to fringe elements who put their agenda over the well-being of 
our country's workers, manufacturers, business owners, and the 
broader economy.
    As the extremists celebrate, I have to admit, I mourn it as 
a loss for our country. Our new reality is government shutdowns 
and debt-ceiling crises. It is constant uncertainty. It is not 
knowing whether the government is going to help pick up the 
pieces after a major flood or a terrorist attack. It is about 
telling businesses, large and small, you are on your own to go 
up against competitors who are backed by global superpowers.
    And now they have set their sights on ``exiting'' the 
Export-Import Bank, an entity that creates or sustains hundreds 
of thousands of jobs, and over the past 5 years has supported 
$233 billion in U.S. exports.
    I would like to take a minute and thank Representatives 
Denny Heck and William Lacy Clay, who have just yesterday 
introduced a clean Ex-Im reauthorization bill with 200 original 
Democratic cosponsors.
    Mr. Chairman, I am not an expert at whipping votes, but if 
you add these cosponsors to the 41 Republicans who recently 
signed a letter in support of Ex-Im's renewal, I believe you 
have a majority of the House in support of extending the Bank's 
charter for the long term.
    Opponents of the Bank like to use the term ``crony 
capitalism.'' Over the past few weeks, we have been working 
hard to learn more about the so-called crony capitalists that 
have been supported by the Bank. Their stories have been 
astounding. Mr. Chairman, did you know there are 12 exporters 
in your district that I guess are crony capitalists and 11 of 
them are small businesses?
    Over the course of this hearing, Democratic members of this 
committee will share with you the truth about these hardworking 
Americans, not cronies, who are assisted by the Bank.
    They are companies like SpaceX, an ambitious and 
revolutionary firm based in Hawthorne, California, in my 
district, that designs, manufactures, and launches rockets and 
spacecraft. It is the first private company to build, launch, 
and dock spacecraft at the International Space Station. And it 
is a company that has been strongly supported by the majority 
leader-elect, Kevin McCarthy, who went so far as to call its 
founder, Elon Musk, the Wright Brothers of the next generation.
    In just a few short years, the Ex-Im Bank has authorized 
close to $900 million in support of exports from SpaceX, 
creating thousands of quality high-tech jobs across California 
and in the United States. I wonder when Mr. McCarthy decided 
that he no longer could support his friend, Elon Musk, or 
support the Bank that keeps SpaceX innovating and competing, 
despite the fact that he has identified himself as a big 
supporter of SpaceX.
    I, too, believe in SpaceX because I know the pain in my 
district that has been felt over the years after losing our 
manufacturing base. Supporting companies like SpaceX is 
critical because they are bringing manufacturing jobs back and 
they ensure the United States will remain a world leader in the 
manufacturing economy of the future.
    So I thank you, Mr. Chairman. I look forward to this 
hearing, and I yield back the balance of my time.
    Chairman Hensarling. The Chair now recognizes the 
gentlelady from West Virginia, Mrs. Capito, chairwoman of our 
Financial Institutions Subcommittee, for 2 minutes.
    Mrs. Capito. Thank you, Mr. Chairman. And thank you for 
holding today's hearing.
    For the last 2 years, the Export-Import Bank has joined the 
Obama Administration's assault on our Nation's coal industry. 
In December of 2013, the Bank imposed guidance that would 
prevent the financing of coal-fired power plants in all but the 
world's poorest countries. This guidance, combined with the 
EPA's proposed regulations to ban domestic coal-fired power 
plants, will irrevocably hinder the development of new clean 
coal technologies. This is another example of this 
Administration's intent to pick winners and losers in our 
economy, and I can no longer support the authorization of the 
Ex-Im Bank.
    I have expressed my concerns to the Bank to no avail. In a 
letter to, and in a meeting with, Chairman Hochberg, I 
discussed my opposition to this guidance. I have been 
absolutely clear that it is inappropriate to use the Bank's 
financing mechanisms to drive an idealogical agenda rather than 
promote U.S. exports.
    The Administration's policies come at a time when we should 
be ensuring the United States is leading the world in 
developing new coal plant technologies. We won't see carbon 
capture and sequestration developed by U.S. companies if we 
choke off the market for coal technology.
    The Ex-Im Bank's guidance is bad for our Nation's economy, 
bad for the development of future technologies, and bad for the 
environment. For these reasons, I do not support the extension 
of this charter.
    I yield back.
    Chairman Hensarling. The gentlelady yields back.
    The Chair now recognizes the gentleman from California, Mr. 
Sherman, for 2 minutes.
    Mr. Sherman. Mr. Chairman, a point of order. We had those 
clocks going for the national debt. They are going too slowly. 
You are proposing to eliminate the Ex-Im Bank, which will add 
billions of dollars to our national debt. And you have been 
unwilling, unless you change your mind, to join with me in tax 
increase measures that would replace that revenue.
    Now, whenever somebody wants to increase the national debt, 
they always say, ``Change the accounting system,'' and that Ex-
Im Bank would be costing us money if we used fairytale-value 
accounting. I don't think we should. The fact is we should use 
GAAP, not GOP, accounting--G-A-A-P, not G-O-P, accounting.
    What is the underlying theory of fair-value accounting? It 
is that we look not at the profits and losses of the Ex-Im 
Bank, properly accounting for the risk they take, but we look 
at what their costs would be if they weren't the Ex-Im Bank but 
at a higher cost of funds. That is like saying Pizza Hut is 
over-reporting its income because they report accurately the 
cost they pay to the Bank for the money they borrow, not the 
higher amount they would pay if they were Jack's Pizzeria 
instead. The fact that Pizza Hut has a lower cost of funds 
doesn't mean they should report higher interest costs and 
report a loss. But that is what you do under fairytale-value 
accounting.
    I am also on the Foreign Affairs Committee. I sit there 
while Republicans say that Democrats might support unilateral 
disarmament, that we would give up our arms and then go into 
the arms-limitation talks asking others to follow our lead. 
That is what we are doing here.
    Germany has an export credit authority that is 3 times as 
large, they have total exports 3 times as large per capita, and 
they run a trade surplus. And we would go into negotiations 
with Germany giving up the Ex-Im Bank. Why don't we give up our 
missile--
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Garrett, the chairman of our Capital Markets Subcommittee, for 
2 minutes.
    Mr. Garrett. First of all, thank you, Mr. Chairman, for 
holding this hearing.
    Thank you also, Mr. Chairman, for all of your efforts on 
fostering not only in this area but also, in general, economic 
growth and job creation in this country, including 
manufacturing. As the ranking member has bemoaned the fact that 
she has lost it in her district, I would just note that the 
chairman is encouraging economic growth and manufacturing but 
not on the backs of the American taxpayer.
    Thank you also, Mr. Chairman, for holding this hearing in a 
very timely manner, as well.
    And thank you to the panelists.
    You know, panelists, I was struck by an article on the 
front page of The Wall Street Journal. It was entitled, 
``Officials at Ex-Im Bank Face Probes.'' What I found 
especially interesting and concerning in this article, 
notwithstanding the fact that four Bank employees have been 
suspended or removed for allegations of kickbacks, was a 
statement of the agency spokesman that, ``The Export-Import 
Bank takes seriously its commitment to taxpayers and its 
mission to support U.S. jobs.''
    Really? To begin with, I would question the Bank's 
seriousness to taxpayers, given in this committee we only 
learned of the allegations of potential criminal misconduct by 
reading the front page of The Wall Street Journal. I guess this 
so-called serious commitment to taxpayers did not reach the 
level of the requisite seriousness that would result in 
Congress being notified of various serious allegations like 
this.
    While we need to be certain that we have the facts, and 
ensure that this committee does not jump to proverbial 
conclusions, I do find it curious that these examples of 
employee misconduct were withheld against the backdrop of this 
debate over the Bank's future as well as the well-funded 
lobbying campaign to ensure the Bank's continued existence.
    If true, these allegations would go to the heart of the 
concern about this Bank, its lending, and of the special 
interests of multibillion-dollar corporations. I only need to 
look at the lobbying disclosures of some of our largest 
businesses to know that when you mix corporations and taxpayer 
guarantees, you get something that looks a lot like crony 
capitalism.
    And, with that, I yield back.
    Chairman Hensarling. The Chair now recognizes the 
gentlelady from New York, Mrs. McCarthy, for 1\1/2\ minutes.
    Mrs. McCarthy of New York. Thank you, Mr. Chairman. And I 
appreciate this hearing.
    I am a little confused on what I am hearing. This is about 
jobs. And I can talk about my district. I work in my district. 
I try to bring, certainly, businesses into my district. And I 
know in the last several years I have been able to help my 
small businesses--$86 million just into my district alone, and 
a lot more jobs added over the last 7 years. That is what our 
job is, to make sure that we can bring jobs home.
    And as the ranking member mentioned, Mr. Hensarling--who, 
unfortunately, didn't bring a lot of money into his district, 
but maybe he didn't work the district, I don't know. And Mr. 
McCarthy, who always supported the Ex-Im Bank, did have over 
$69 million that came into his district.
    This is about jobs. My colleagues on the other side keep 
saying, we are going to do jobs, we are going to do jobs. Where 
are they?
    People seem to have a very short memory. When we went 
through the great crisis, nobody went after the Banks, nobody 
went after the insurance companies. And when we look at the Ex-
Im Bank and we hear my colleagues talking about how they found 
four employees, can I remind everybody, yes, they found four 
employees. They did an investigation, and they let them go. 
That is the way the system works. Anybody who understands any 
business, there are always going to be people who are going to 
try to rig the system.
    If we brought this bill up onto the House Floor, we would 
get it passed. So stop with this. Let's do jobs and let's--
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Hultgren, for 1 minute.
    Mr. Hultgren. Thank you, Mr. Chairman.
    I want to take a hard look at the current structure of the 
Export-Import Bank. Protecting taxpayer dollars by keeping 
government out of tasks that the private sector can perform 
itself is central to a nation based on free enterprise.
    An estimated 760 jobs in the 14th District alone rely on 
the Bank to ensure their exports reach their customers. Miner 
Elastomer in Geneva, Illinois, who exports truck and shovel 
parts, has asked me to support the Bank. The Crystal Lake 
Matthews Company, a manufacturer of agriculture equipment, has 
jobs dependent on the Bank. We can't overlook the 29 smaller 
production suppliers who fulfill Boeing orders in my district.
    Since 2007, the Bank has supported almost $6 billion in 
Illinois exports from 301 exporters, including 204 small 
businesses. An outright elimination leaves U.S. jobs in peril.
    We must ask the hard questions: Do we know the job impact 
of eliminating the Bank without a proper glide path in place? 
Have we addressed the worldwide subsidies offered by our 
competitors through trade agreements? Can we put a reform plan 
on the table to ensure a more limited scope for the Bank?
    I am committed to working together to put a viable 
alternative forward.
    I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from Arizona, Ms. 
Sinema, for 1 minute.
    Ms. Sinema. I strongly support the operation of the Export-
Import Bank, because helping Arizona businesses expand their 
manufacturing capacity and exporting ability creates jobs and 
grows our economy. The Export-Import Bank fills gaps in private 
financing, stepping up where the private sector can't or won't.
    Last year, Ex-Im Bank Chairman Fred Hochberg visited my 
district to help small and growing businesses increase their 
global exports right in our own backyard. From Fiscal Years 
2007 to 2014, the agency supported $176 million in exports from 
companies in my district.
    One of those companies, MarTech, Inc., was reluctant to 
sell their semiconductor equipment to customers in Asia. They 
were concerned that once the equipment left their building, 
there was no guarantee they would get paid. The Ex-Im Bank 
offered MarTech a solution. The Bank issued an insurance policy 
so MarTech could make sales and have a guarantee they would get 
paid. Thanks to the Bank, they now export to companies in Asia, 
Europe, and the Americas.
    Allowing the Bank's current charter to expire would 
threaten the competitiveness of these and many other Arizona 
businesses. And that is why I am a cosponsor of legislation to 
extend the Bank's authorization and I will continue to work to 
reauthorize this important investment in American jobs.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Georgia, Mr. Westmoreland, for 1 minute.
    Mr. Westmoreland. Thank you, Mr. Chairman.
    The problem with the Export-Import Bank is the entire 
mission and structure. Simply, the Export-Import Bank is 
designed to advantage one U.S. industry at the expense of 
another. Even if Congress directed the Bank to make changes, as 
it did in 2012, we have seen that this massive bureaucracy will 
not yield to even modest reforms.
    People talk about the cost of jobs that would be lost if it 
is not reauthorized. How about the new jobs and the more 
capital for growth created by finally being competitive with 
foreign competitors?
    The Bank has shown it is not able to conduct mandated 
economic impact analysis, and the Bank regularly employs fuzzy 
math and accounting. Congress mandated the Export-Import Bank 
be more transparent, and, quite simply, they have failed to 
follow this mandate.
    I am happy to join the chairman and the new majority leader 
in this effort.
    And I yield back the balance of my time.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Missouri, Mr. Clay, the ranking member of our Monetary 
Policy Subcommittee, for 1 minute.
    Mr. Clay. Mr. Chairman, the mission of the Ex-Im Bank is to 
support American jobs by facilitating the export of U.S. goods 
and services. The Ex-Im Bank does not compete with private 
sector lenders but provides export financing that fills gaps in 
trade financing. The Bank assumes credit and country risks that 
the private sector is unable or unwilling to accept. The Ex-Im 
Bank helps to level the playing field for U.S. exporters by 
matching the financing that other governments provide to their 
exporters.
    Refusing to reauthorize the Ex-Im Bank would reduce the 
number of ECAs from 60 to 59, hurting only U.S. exporters and 
workers that they employ. And in my home State of Missouri, the 
Ex-Im Bank supported $1 billion in exports and $339 million in 
exports from the district that I represent. Mr. Chairman, those 
are American jobs--
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Washington, Mr. 
Heck, for 1 minute.
    Mr. Heck. Thank you, Mr. Chairman.
    Just because somebody says something that is untrue over 
and over and over again doesn't make it one whit less untrue. 
Let's start this hearing with the truth.
    Here is the truth: The Ex-Im creates jobs, 205,000 last 
year. Here is the truth: The Ex-Im supports small businesses. 
Ninety percent of its transactions go to small businesses.
    And an appalling lack of understanding of how the private 
sector works. Even large corporations are dependent on small 
businesses. The greatest plane manufacturer in the word is 
dependent upon 15,000 suppliers, 6,600 of which are small 
businesses which would be put at risk by your position.
    Here is the truth: There are no tax dollars involved in 
subsidizing the Ex-Im. In fact, the Ex-Im transferred over a 
billion dollars to the Treasury. Where is the proof that the 
Treasury ever transferred any money to the Ex-Im?
    And, finally, here is the truth: If we abandon the Ex-Im, 
we will engage in unilateral disarmament--unilateral 
disarmament. Every other developed nation in the world has an 
export credit authority. Don't render the United States the 
only one without one.
    Chairman Hensarling. The time of the gentleman has expired.
    We will now turn to our first panel of witnesses. And to 
introduce our first witness, I will yield to the gentleman from 
Georgia, Mr. Westmoreland.
    Mr. Westmoreland. Thank you, Mr. Chairman.
    It is my pleasure to introduce Richard Anderson, the chief 
executive officer of Delta Air Lines. Richard has been the CEO 
of Delta since 2007 and has more than 25 years in the aviation 
industry.
    As you probably know, Delta Air Lines is one, if not the 
largest employer in my district and across Georgia. Delta has 
been placed at a competitive disadvantage by the actions of the 
Export-Import Bank, and the time has come to level the playing 
field.
    Richard, welcome to you and the members of the Delta family 
team who are with you, and I look forward to your testimony.
    Chairman Hensarling. Our next panelist, Dr. Veronique de 
Rugy, is a senior research fellow at the Mercatus Center at 
George Mason University, where her primary research interests 
include the U.S. economy, the Federal budget, and various 
financial issues.
    Captain Lee Moak is the president of the Air Line Pilots 
Association, which represents almost 50,000 professional 
airline pilots in the United States and Canada. Before becoming 
an airline pilot, Captain Moak served as a Marine Corps fighter 
pilot.
    Last, but not least, Steven Wilburn is the chief executive 
officer of FirmGreen, a Newport Beach-based energy company that 
participates in virtually all aspects of the global green 
energy business.
    Before we proceed, Mr. Wilburn, we have one clerical matter 
to clean up with you. We received two different copies of your 
testimony, one at 6:00 last night. In that testimony, in that 
version, when describing why your commercial Bank officer could 
not provide financing to a Brazilian company, you said, 
``Simply out of the question, given the new TARP regulations 
and the then-new Dodd-Frank legislation.'' A couple of hours 
later, from the Democratic staff we received a new copy of your 
testimony that struck that language and included the reason: 
``reluctance of Banks to support small business exports.''
    To ensure that we have the correct copy of your written 
testimony for the record, which did you intend, the one we 
received from you at 6:00 or the one that we received from the 
Democratic staff at 8:00?
    Mr. Wilburn. Mr. Chairman, I apologize--
    Chairman Hensarling. I'm sorry, could you hit the button 
there? Just for the record, we need to know which testimony it 
is your intention to include?
    Mr. Wilburn. My intention is to provide an accurate written 
statement. I was flying from California on an airplane WiFi, 
trying to respond to your staff. And I was working realtime--
    Chairman Hensarling. Well, is it--
    Mr. Wilburn. --editing. The last version--
    Ms. Waters. Mr. Chairman?
    Chairman Hensarling. The last version is the one you intend 
to use?
    Mr. Wilburn. --is my official written statement.
    Chairman Hensarling. Okay. Thank you. Thank you, sir. That 
is what we needed to know.
    Without objection, each of your written statements will be 
made a part of the record.
    Not unlike a traffic light, if you are new to this, there 
is a green light, a yellow light, and a red light system. The 
yellow light will tell you there is 1 minute remaining. The red 
light means that it is time to wrap up so we can move on to the 
next witness.
    Mr. Anderson, you are now recognized for your testimony.

  STATEMENT OF RICHARD H. ANDERSON, CHIEF EXECUTIVE OFFICER, 
                        DELTA AIR LINES

    Mr. Anderson. Thank you very much for having me here today.
    As a private citizen, it is a privilege to be in the halls 
of Congress and have the opportunity, regardless of what the 
issue is, to participate in the process. And, second, it is a 
real privilege to be here on behalf of the 80,000 people that I 
serve at Delta Air Lines and the 165 million passengers that 
the Delta family serves around the world with over 6,000 
flights a day.
    I would note that we are one of the largest operators of 
Boeing airplanes and GE engines in the world. We currently have 
100 Boeing airplanes on order with GE engines, and we are 
paying cash for them. And there are not many airlines in the 
world that buy 100 Boeing airplanes and pay cash for them. So 
let's make sure we put our discussions here in context.
    I was pleased to hear that we are talking about jobs, 
because I have about 100 Delta employees here with me who have 
my back today; they are the pilots and the flight attendants 
who provide the best airline service in the world.
    I am here to talk about their jobs, because the Ex-Im Bank 
takes their jobs. And if that is really what we are serious 
about, we should be serious about reforming the Bank. You tried 
to reform the Bank in a bipartisan way the last time, and your 
reforms were ignored. And it is our jobs that are at risk.
    I have a slide up here. The Ex-Im Bank finances the 
wealthiest, most profitable airlines in the world with huge 
amounts of our Treasury dollars. And you can see on this slide, 
we have an example of an Ex-Im Bank financing that was just 
done and a market-based financing that was just done. And those 
financing numbers show you that a very wealthy airline that 
goes in the private market on a regular basis to finance 
airplanes gets, over the life of the airplane, about a $20-
million advantage.
    And these airlines are also owned by governments and deeply 
subsidized by their own government, in addition to being deeply 
subsidized by our government.
    Our focus here today is on a narrow issue. I am pleased to 
hear the job growth. My business depends upon job growth. We 
have no objection to anything that anybody does in the halls of 
Congress on either side of the aisle that grows jobs in this 
country. My business, our business, the Delta family serves 
people at work at all the great companies in the United States.
    But we shouldn't have a government policy that sacrifices 
the jobs of hardworking people at the Delta family in order to 
subsidize the wealthiest, most creditworthy airlines in the 
world.
    I was elected the chairman of the International Air 
Transport Association by the CEOs of all the airlines of the 
world. In the course of doing that, I have had many 
conversations with the CEOs of the most profitable airlines in 
the world. And they tell me, look, I don't really need the Ex-
Im Bank financing, but it is so cheap, I might as well take it. 
This is effectively a free airplane every eighth airplane.
    All I want is a level playing field. The story of Delta Air 
Lines is a great American story. We are now the most 
successful, profitable airline in the world. But we have to 
compete against deeply subsidized government airlines that are, 
in turn, deeply subsidized by our government.
    And the prime example is Air India, a government-owned, 
government-subsidized airline that drove us out of the 
marketplace with a billion dollars of Ex-Im Bank financing. 
That cost about 1,000 jobs.
    So when we talk about creating jobs, why can't we navigate 
a policy? And our objection is a narrow objection. It is wide-
body financing for creditworthy, state-owned and state-
subsidized airlines. We have no objection to narrow bodies; we 
have no objection to small business. Our focus is on the policy 
junction of where U.S. jobs are destroyed by the Bank. So if we 
are serious about creating jobs, this Bank needs to be 
reformed.
    I yield my time.
    [The prepared statement of Mr. Anderson can be found on 
page 118 of the appendix.]
    Chairman Hensarling. Dr. de Rugy, you are now recognized 
for your testimony.

    STATEMENT OF VERONIQUE DE RUGY, SENIOR RESEARCH FELLOW, 
            MERCATUS CENTER, GEORGE MASON UNIVERSITY

    Ms. de Rugy. Thank you, Chairman Hensarling, Ranking Member 
Waters, and members of the committee. It is a pleasure to be 
here today.
    We don't agree on much in Washington, but I think we can 
all agree that the Federal Government shouldn't be sending our 
limited resources to the wealthiest and most politically 
connected corporations. And, yet, that is what the Ex-Im Bank 
does.
    Some say that there are good reasons for doing this. They 
say that the Ex-Im Bank promotes exports, supports jobs, 
returns money to Treasury, and helps taxpayers. None of these 
arguments withstand scrutiny, as my written testimony has 
shown, and I will briefly address in my statement today.
    However, my main focus will be on groups who are affected 
by Ex-Im activity that have gone ignored. These people don't 
have connections in Washington. They don't have access to press 
offices and lobbyists, but they matter, too. It is difficult 
but extremely important that we consider the unseen costs of 
political privilege, whatever form it takes, whether it is 
market distortions, job losses, potential destroyed, or higher 
prices.
    So, let's start. First, the Bank claims it is essential to 
promote U.S. exports. Economists disagree. We have long known 
that export-subsidy schemes, like Ex-Im, do not meaningfully 
improve national exports, and, in fact, the data prove this 
point. Ex-Im backs less than 2 percent of U.S. exports.
    Ex-Im likes to tout subsidized firm successes, but they do 
not consider the unseen costs imposed on everyone else involved 
with the other 98 percent of unsubsidized exports. In these 
cases, it is firms' own government, not foreign government, 
that puts them at a competitive disadvantage.
    For instance, Ex-Im harms these firms' export opportunities 
by making it harder for unsubsidized buyers to secure their own 
financing. That is because Ex-Im gives lenders an incentive to 
shift resources away from unsubsidized projects toward 
subsidized projects regardless of the merits of the business.
    These capital market distortions have ripple effects. 
Subsidized projects attract more private capital, while other 
worthy projects are being overlooked. The subsidized get 
richer, and the unsubsidized get poorer or, worse, get out of 
business. Unfortunately, we will never see the businesses that 
could have been. Perhaps they would have been better, more 
profitable, and more responsible than the well-connected 
subsidized businesses.
    Second, the Bank claims to have supported 205,000 jobs in 
2013. This number, however, should be taken with a grain of 
salt since GAO has criticized the Bank's job calculation 
methodology for failing to consider how many jobs would have 
been created without Ex-Im, among other flaws.
    But even if we accept the Bank's questionable jobs claim, 
that means that it only supported 1.8 percent of all export-
related jobs in 2013. The Bank doesn't promote jobs as much as 
it promotes jobs for favored companies at the expense of 
everyone else.
    The other 98.2 percent of unsubsidized export jobs are 
placed at a competitive disadvantage by Ex-Im. Unsubsidized 
employers may not expand hiring, they may not increase wages, 
and they may even have to fire employees because they face 
competition from subsidized projects.
    Third, the Bank claims that it benefits taxpayers. A recent 
CBO report debunks claims of future Ex-Im profitability. Ex-Im 
is projected to yield losses for taxpayers over the next 
decade.
    But taxpayers are unseen victims in other ways. The Ex-Im 
Bank transfers risk away from lenders and toward every single 
U.S. taxpayer that you represent. This creates what economists 
call ``moral hazard.'' Since well-connected lenders like 
CitiBank and JPMorgan bear almost no risk when a company 
defaults, they have less incentive to apply transaction 
oversight. They collect high fees on billion-dollar loans in 
good times, but normal taxpaying Americans must pick up the tab 
in bad times.
    Everyone in this room knows who will benefit if the Bank is 
reauthorized, because the beneficiaries are few enough in 
number that they can effectively organize and are wealthy 
enough to apply significant political pressure. But what about 
the forgotten firms, workers, taxpayers, and consumers whose 
voices are so easily drowned out by the corporate beneficiaries 
of government privilege? They should not matter less than 
Boeing, GE, and Caterpillar. This is your opportunity.
    Thank you.
    [The prepared statement of Dr. de Rugy can be found on page 
133 of the appendix.]
    Chairman Hensarling. Captain Moak, you are now recognized 
for your testimony.

STATEMENT OF LEE MOAK, PRESIDENT, AIR LINE PILOTS ASSOCIATION, 
                         INTERNATIONAL

    Captain Moak. Mr. Chairman, Ranking Member Waters, and 
members of the committee, I am Captain Lee Moak. I am the 
president of the Air Line Pilots Association (ALPA), and it is 
an honor to represent our more than 51,000 pilots.
    As a labor leader, I believe that airline employees should 
work with their companies to better our industry. ALPA's goal 
is to make the pie bigger, rather than focusing on getting a 
bigger share. Ensuring our company's ability to compete is 
essential in safeguarding U.S. jobs and our national economy.
    I don't believe in subsidies. If we are going to grow our 
economy, it must be based on fair competition. Fair competition 
is good. And on a level playing field, I am here to tell you, 
U.S. airlines can compete with anyone in the world.
    However, we compete in a global economic environment. And 
it is one thing to compete with foreign airlines that are 
subsidized by their government and I know I can't do anything 
about them, but it is an entirely different matter to compete 
with foreign airlines that are subsidized by our government. We 
need to do something about that.
    This is where the Export-Import Bank comes in. I don't take 
issue with the historic mission of the Bank, but the Bank has 
lost its way. Today, the Bank is being used to provide 
subsidies to foreign companies--companies that don't need the 
financing but use the advantage to undercut U.S. companies.
    Recently, the House of Representatives voted unanimously to 
require the U.S. DOT to simply follow the law when it considers 
foreign air carrier applications. Why does this matter? Because 
Norwegian Air Shuttle is attempting to subvert U.S. law and 
international policy to establish a flag-of-convenience 
operation. Norwegian has also applied for Ex-Im Bank financing 
that it does not need and that will hand it an unfair economic 
advantage which threatens U.S. airlines, U.S. jobs, the U.S. 
economy, and, I am going to tell you, U.S. national interests. 
We thank this committee for recognizing that unfair business 
practices such as NAI should be rejected.
    International flying is crucial for U.S. airlines. Tens of 
thousands of flight crews at the three largest U.S. carriers 
fly international operations, so our jobs are directly at risk 
from this competitive and inappropriate imbalance.
    Since the United States first implemented its open-skies 
policy, the U.S. share of international wide-body fleet has 
dropped from 45 percent to 17 percent, and the share is now 
forecast to be at 5 percent by 2025. And if that doesn't 
concern you, well, it should concern you.
    The threat affects airports such as Los Angeles 
International, where in 2013 American, Delta, and United flew 
only about 16 percent of the total international passengers. 
International jobs at mainline carriers are in jeopardy, but so 
are jobs at the small regional airports that are U.S. 
destinations for many of these international passengers.
    In 2013, the Ex-Im Bank approved $7.9 billion in financing 
for U.S.-made aircraft that will be operated by our foreign 
competitors. Ex-Im financing is not available to U.S. airlines, 
and, through this financing, the Bank is effectively providing 
a subsidy to foreign airlines that operate on routes that are, 
have been, and could be served by U.S. airlines.
    As a result, U.S. airlines have been forced to withdraw 
from or not enter key international routes. One example 
mentioned earlier is Air India. Using its Ex-Im Bank-subsidized 
airplanes, the state-owned airline flooded the U.S.-India 
market. And, in 2008, this excess capacity forced Delta Air 
Lines out of the New York-Mumbai route, displacing U.S. workers 
due to unfair competition. And that was U.S. jobs that we lost 
directly as a result of actions by the Ex-Im Bank.
    In 2012, the reauthorization, Congress rightly directed the 
Treasury Department to negotiate with the European Union to end 
wide-body aircraft financing. ALPA encourages this committee to 
seek a full accounting of that effort.
    And I am going to say, because I could go on and on, thank 
you, and I am looking forward to all your questions, every one 
of them. Thanks a lot.
    [The prepared statement of Captain Moak can be found on 
page 176 of the appendix.]
    Chairman Hensarling. Mr. Wilburn, you are now recognized 
for your testimony.

   STATEMENT OF STEVEN P. WILBURN, FOUNDER, CHIEF EXECUTIVE 
            OFFICER, AND PRESIDENT, FIRMGREEN, INC.

    Mr. Wilburn. Thank you, Chairman Hensarling, Ranking Member 
Waters, and the honorable members of this committee, for 
allowing me the great honor to be here.
    Mr. Chairman, I do apologize. I am a disabled veteran, and 
I have post-traumatic stress disorder. I am not using that as 
an excuse, but I don't have a staff to write my reports or 
anything, or my written statement. So when I got that email 
from one of your staff members that said they had to have my 
statement right away, I was editing it in realtime on an 
airplane coming from California with WiFi.
    So I don't want to take up more of my time than that, but I 
just thought--hopefully, that clears the record. No one 
influences my statement. No one ever will influence my 
statement. I guarantee you that, sir.
    With that said--
    [applause.]
    Mr. Wilburn. And that is--I wasn't looking for that, but 
thank you.
    My name is Steve Wilburn, and I am the CEO of FirmGreen. I 
am married to Margaret Wilburn, the proud father of five 
children, nine grandchildren, and one great granddaughter. I 
won't bother with their names right now because it would take 
up too much of my time, but I love them.
    I work hard for them. I built this business for my family 
first and my employees second. My employees are treated like 
family. We are a small company. I want to put a face on small 
business today, if I can, okay? It is an awesome burden, 
because there are thousands of small businesses out there. I 
don't have the authority to speak for all of them; I can only 
give you my story.
    And Semper Fi to you, sir, and thank you for your service.
    I started pursuing the FirmGreen dream 10 years ago. I am a 
firm believer in the Lord, my God. And serving as a Marine in 
Vietnam, I fought for equal rights for all, for free trade, 
limited government. But I do not share, nor do I understand, 
the rabid antigovernment animus that seems to be motivating the 
current attacks on the Export-Import Bank. Government, in my 
view, is simply people working collectively to accomplish 
things for the greater good that can't be done by individuals 
alone. In combat, I could not have survived without my fellow 
Marines. We cooperated. That is the way I thought we acted in 
America.
    I firmly believe that the Ex-Im Bank delivers enormous 
value to Main Street America. It provides small businesses like 
mine with the opportunity to grow in a prospering commerce 
without borders. We are not limited to domestic markets; we 
dare to reach out to the world's markets.
    For example, in my award-winning biogas project in Brazil, 
my client asked me how we intended to present our ECA-financed 
proposal for the project. I was embarrassed. I had to ask him 
what ``ECA'' meant. They laughed and said, that meant the 
export credit agency, your Ex-Im Bank. That is how I was 
introduced to the concept of Ex-Im Bank support. I was that 
naive.
    I was competing with Air Liquide and Linde Corporations, 
billion-dollar companies, much more prepared for that type of 
discussion and finance plan than me. But my clients and I went 
to the Export-Import Bank of the United States, my clients went 
through a very rigorous underwriting, and, thankfully, they 
were approved for that financing that I could not obtain 
through my private Bank. At that time, it was Wells Fargo, and 
they just basically told me that it didn't meet their 
underwriting criteria.
    I am going to deviate from my prepared remarks a bit more 
and just say that, due to the air of uncertainty swirling 
around the reauthorization, in large part, I think, by harmful 
words uttered by the Bank's opponents in an orchestrated, 
unprecedented, nonstop public smear campaign, I feel I lost a 
valuable contract in the Philippines.
    Words do have consequences, especially when they are 
uttered by people in power and position. I am a small man. I 
cannot combat the machines that are out there saying what they 
are saying. I am not a crony capitalist. I don't receive any 
welfare, corporate welfare, whatever you want to call it. We 
work hard.
    As a result of losing the memorandum of understanding--
because the Korean Bank came in with my Korean competitor who 
had lost to me, and they basically came up and said, ``The Bank 
is not going to be reauthorized, he is not going to get to 
deal''--now my employees, including Ms. Dena Elbayoumy, my 
general counsel, are on furlough. We are scrambling.
    Please, words have consequences. Be careful.
    I will yield back the balance of my time.
    [The prepared statement of Mr. Wilburn can be found on page 
196 of the appendix.]
    Chairman Hensarling. Thank you--
    Ms. Waters. Mr. Chairman, if the gentleman needs extra 
time, I would request the same time that was allotted to Ms. de 
Rugy when she went over her 5 minutes.
    Do you need extra time, Mr. Wilburn?
    Mr. Wilburn. Not at this time. Hopefully I will have some 
adequate time in my answers. Thank you so much.
    Ms. Waters. Thank you very much.
    Chairman Hensarling. The Chair yields himself 5 minutes for 
questions.
    First, Mr. Wilburn, thank you very much for your service to 
your country, as I thank Captain Moak, as well.
    I used to be, prior to coming to Congress, an officer in a 
green energy company, myself. I don't know that much about your 
particular company, but it is a subject in which I am highly 
interested.
    But, Mr. Wilburn, I am still a little curious. I understand 
that you were on a flight, I guess, when you were sending your 
testimony. But I guess my first question is, was it simply a 
clerical mistake, or did you change your mind on whether or not 
TARP regulations in Dodd-Frank played a role in failing to 
finance the Brazilian company that sought your product? So is 
it a clerical error, or did you change your mind about 
including that in the testimony?
    Mr. Wilburn. No, it is not a clerical error. I didn't have 
exactly all the facts in hand.
    Chairman Hensarling. Okay.
    Mr. Wilburn. You will see, the rest of my written 
statement, I think it speaks to some of those issues 
surrounding that--
    Chairman Hensarling. Okay.
    Mr. Wilburn, you heard the testimony of others on this 
panel. You were very passionate with your testimony, but, 
frankly, so was Captain Moak, and Mr. Anderson, as well.
    I have spoken to people, particularly those, for example, 
at Cliffs Natural Resources, who said that they are having to 
cut hours for working people, single parents.
    And so I guess my question is one of fairness. Perhaps Ex-
Im is--I have no doubt Ex-Im helps your business, but do you 
acknowledge that it can hurt other businesses?
    Mr. Wilburn. I can't speak to hurting other businesses 
directly unless I had a more specific example, Mr. Chairman, 
but I can say this, that it is not my intent to harm anyone. 
But if I don't compete through the Export-Import Bank, I know 
who is going to be harmed. Because my competitors in foreign 
countries, financed by their Banks, will get those deals.
    And I believe the same would happen to the aircraft 
industry. If Boeing doesn't sell those aircraft, I think--
    Chairman Hensarling. Let me, then, ask you this question. 
``Fairness'' is a very subjective term, I understand that. But 
we seem to have a Federal policy that says, if you create a 
product and you want to sell it to foreigners, if you want to 
sell it to the Chinese, the Federal Government will step in and 
subsidize you, but if you want to sell your product to 
hardworking Americans, then, no, no subsidies for you.
    And so, I am thinking about small businesses in my own 
district. At Annexus Personnel and Business Services in 
Mesquite, the owner said: ``My mother and stepfather opened up 
the business without any government subsidies. They used their 
own retirement, 401(k), other resources to pay for rent. We had 
to go to auctions to buy office furniture. Small businesses 
like ours can't rely on the government.''
    So, again, I guess, by definition, you received the 
subsidy, you believe it is necessary to your business model. I 
accept that. But how is that fair to the other millions and 
millions of small businesses who sell to Americans but don't 
get their products subsidized by the Federal Government?
    Mr. Wilburn. Sir, I would love to compete on a fair basis 
in America with my green technology to take biogas into 
methane. I don't get a subsidy. I take exception to your 
remark. My point is that 15 percent--
    Chairman Hensarling. Does Ex-Im not subsidize the financing 
for your product?
    Mr. Wilburn. I don't believe that I am subsidized.
    Chairman Hensarling. Okay.
    Mr. Wilburn. I don't believe that at all--
    Chairman Hensarling. Okay.
    Mr. Wilburn. --sir. Let me speak to that point, if I may, 
Mr. Chairman, with all due respect. And I do respect you from 
the bottom of my heart.
    My point is that--you asked a question. I can't sell my 
technology here because there are barriers to entry to the 
market, and the barrier to entry to the market is that the oil 
and gas industry is subsidized with a 15-percent oil and gas 
depletion allowance. I don't get that, as a biogas producer. I 
can't put my biogas into the pipelines in California that is a 
pipeline equivalent because--
    Chairman Hensarling. Mr. Wilburn, we would be happy to work 
with you and try to make you--
    Mr. Wilburn. Well--
    Chairman Hensarling. --so much more competitive in--
    Mr. Wilburn. --I am trying to be responsive, Mr. Chairman.
    Chairman Hensarling. --that area. I have limited time.
    Dr. de Rugy, the proponents of keeping Ex-Im as the status 
quo have painted an apocalyptic vision should the Bank fail to 
be reauthorized. Is that an accurate vision, in your opinion? 
And if not, why not?
    Ms. de Rugy. I don't think it is an accurate version, Mr. 
Chairman. For one thing, as I said in my testimony, less than 2 
percent of U.S. exports are backed by Ex-Im, and that doesn't 
consider the possibility that these exports would happen 
independently of the existence, absent the Bank.
    More importantly, we have to think about some of what the 
other witnesses have said. So, for instance, a large part of 
the activity of the Bank is to subsidize big companies, Boeing, 
in particular.
    In the loan guarantee, 66 percent of the activity of loan 
guarantees through Ex-Im benefits Boeing. Boeing is selling 
planes to companies that could get access to credit, as we have 
heard, without the loan guaranteed.
    More importantly, Boeing has a really important and wealthy 
financing arm and it could do a lot of things itself, and it 
does.
    Chairman Hensarling. My time has expired.
    The Chair now recognizes the ranking member.
    Ms. Waters. Thank you very much, Mr. Chairman.
    I would like to explain to those who are wondering why 
there are three individuals presenting who all seem to be 
opposed to the reauthorization--let me explain the rules. These 
three individuals were invited by the opposite side of the 
aisle and we only get one witness, and that is Mr. Wilburn, who 
is here.
    So I don't want you to think that somehow these witnesses 
were objectively chosen and that there are more people against 
reauthorization than for reauthorization. We just only get one 
witness to come here today.
    Having said that, I would like to enter this letter into 
the record. This is a letter that our witness told us about 
where he lost a multi-million-dollar contract because of 
uncertainty regarding the future of Ex-Im.
    Chairman Hensarling. Without objection, it is so ordered.
    Ms. Waters. The letter reads, ``Dear Mr. Wilburn, In view 
of the uncertainty of the reauthorization of the Ex-Im Bank and 
project finance structure you propose have become problematic, 
we have made the decision in May this year not to proceed with 
your project offering. Our previous partner developer has 
provided us assurance of the certainty of obtaining 
satisfactory finance from the Export-Import Bank of Korea for 
our carbon biomass waste-to-energy project. With previous 
discussions with you, we had the impression that your company, 
FirmGreen, can provide the best technology for our project, but 
without terms similar to that being offered by the Ex-Im Bank 
of Korea, it would be impossible for our company to conclude a 
transaction.''
    Thank you for entering that.
    I have other letters that I would like to read and share 
with you.
    This is from your district, Mr. Chairman, from Mr. Gabriel 
Ojeda, who is the president of the Fritz-Pak Corporation. I 
will read an excerpt:
    ``During the past 5 years, we have grown our international 
sales from 15 percent to over 35 percent of our business. We 
now have major trading partners in over 30 different countries 
including Brazil, Russia, India, and Taiwan. Most recently, we 
exhibited our products at the BAUMA International Trade Fair in 
Munich, Germany. In addition, our products were used in the 
construction of the Sochi Winter Olympics in Russia.
    ``So what is Fritz-Pak Corporation today? We are an 
American manufacturer of the best concrete admixtures in the 
world, and we sell them as far north as Yellowknife, Canada, 
and as far south as Wellington, New Zealand. We may be small, 
but we think big. In an age where everything seems to be made 
someplace else, we are thriving here in the United States. And 
it is in no small part due to the services provided by Ex-Im 
Bank.''
    Mr. Neugebauer, we also have a letter from your district, 
from Air Tractor, Inc., and I will read an excerpt:
    ``As a small business that employs 265 people, 25 percent 
of those employees are supported by the Ex-Im Bank. We use Ex-
Im Bank to create jobs in rural America. Ex-Im Bank levels the 
playing field so that small businesses can grow.
    ``Ex-Im Bank is a self-sustaining operation that has a 
solid history of making money for U.S. taxpayers. It has 
created millions of new jobs in the United States. 
Reauthorization of the Ex-Im Bank is a simple issue. Ex-Im 
creates and sustains jobs, strengthens the brand of American-
made goods, and reduces our national deficit. If Ex-Im Bank 
ceases to exist, the deficit will increase, and we will lose 
jobs in Olney, Texas.''
    Mr. Chairman and Members, you are going to hear a lot from 
small business here today because we have received any number 
of letters from all over America, many of them from small 
businesses talking about the importance of the Ex-Im Bank.
    Jobs, jobs, jobs. As was said earlier, we all talk about 
jobs. We have been through a recession. We almost went into a 
Depression. We still have high unemployment in many of our 
areas, and we are all saying to our constituents that we are 
going to do everything that we can to provide jobs.
    But when we look at how we lost our manufacturing base in 
this country and how Ex-Im is helping us to re-create and 
develop and sustain manufacturing, which creates jobs, we say 
that is what we want. But here we are talking about not 
reauthorizing Ex-Im, which is responsible for these jobs and 
job creation.
    And so I submit to you these letters. I would ask my 
colleagues here on this side of the aisle--if you have letters 
or information from your businesses in your district, now is 
the time to share them.
    And, with that, Mr. Chairman, I won't use up all of the 
time that you allotted me because you used extra time. I just 
think the message is clear. Jobs, jobs, jobs.
    I yield back the balance of my time.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from California, Mr. Campbell, chairman of our Monetary Policy 
Subcommittee.
    Mr. Campbell. Thank you, Mr. Chairman.
    You know, I sat in this very room however many years ago it 
was--I guess 3 or 4 or whatever--when the Ex-Im Bank was 
reauthorized for its current reauthorization, and there were 
about 6 people sitting out there.
    The vast majority of the American people never heard of the 
Ex-Im Bank. This American had never heard of the Ex-Im Bank 
before being elected to Congress.
    I doubt that the Ex-Im Bank's footprint on the American 
economy has grown or contracted since that time. But, yet, this 
room is full, and I understand there is an anteroom that is 
also full.
    And it seems that the debate over this Bank has become a 
proxy for a bunch of other things. But amongst the things that 
it has become a proxy for, in my view, is how we operate around 
here and how we operate in this place.
    And it seems there are only two options that are being 
discussed. One is the complete elimination of the Ex-Im Bank, 
and the other is the complete reauthorization of it as it is.
    But you know what? I think there is a third option. I think 
there is another way to do this that doesn't involve complete 
elimination and doesn't involve assuming that the Bank has 
nothing wrong with it and that it is absolutely perfect the way 
it is.
    Some months ago I formed--as the subcommittee chairman of 
the relevant subcommittee, I formed a working group to work on 
reforms for the Ex-Im Bank.
    Regrettably, none of my friends on the other side of the 
aisle--that is my fault, not theirs--were in that working 
group. But amongst the Republicans on our side of the aisle, we 
had a broad spectrum of Republicans.
    It included people who were and probably are still opposed 
to the Ex-Im Bank and its reauthorization and others who came 
in favoring it, and we did develop a work product, which until 
now, I have not released to anyone.
    But, Mr. Chairman, I have a discussion draft. This is the 
work product of that working group, which I would request be 
entered into the record.
    Chairman Hensarling. Without objection, it is so ordered.
    Mr. Campbell. And for those of you out there, this will be 
up on my Web site very soon, and I will be issuing a press 
release on the same as well.
    Now, this is a discussion draft. It is in bill form. It has 
about 20 different reforms to the Ex-Im Bank. Certainly I 
don't, and I don't believe the members of the working group, 
think that this is the final answer or the only way or 
whatever.
    But it is an idea and I believe an idea that we need to 
have not only about this subject, but perhaps about other 
subjects as well, where we need to--rather than we are going to 
do this over here or this over here, that perhaps there is 
something where we can agree that there are some problems we 
need to fix.
    But maybe we can fix them and maybe this thing can do what 
it was originally intended to do, what we all would like it to 
do, which is support American jobs and American export and 
enable us to compete against all those other export-import 
banks around the world and do so in a more objective, a more--
just a better manner than it is right now.
    And in my last little bit of time, Mr. Anderson, I heard 
you say that you felt the Bank should be reformed. I didn't 
hear you say that it should be eliminated. Is that correct?
    Mr. Anderson. That is correct. And our position, by the 
way, the last time around when we were here, the reason there 
were only 6 people in the room, we have been working on this 
for 5 years because it has hurt us. And we got reforms and they 
were ignored.
    So that is why our position the second time around is, if 
it is not reformed, it needs to be abolished. Because we got 
all the reforms, and they were totally ignored. I can read you 
the language, but it is very--the language was strong, and the 
Bank has totally ignored it.
    Mr. Campbell. Okay. Mr. Anderson--and I don't know whether 
the reforms--this working group, we didn't have you, we didn't 
have Boeing, we didn't have anybody in the room. It was just us 
working on what we felt was right.
    Mr. Anderson. That was probably good.
    Mr. Campbell. And so--and what we felt was right. And we 
did something which we believe begins to address your issue. It 
doesn't necessarily eliminate your issue, but we believe it 
begins to address it. But that is what we tried to do.
    Mr. Wilburn, just picking someone on the other side of the 
issue, do you have--you obviously are supportive of the Bank.
    Do you have any objection to looking at things we can do to 
reduce the taxpayer risk, but perhaps continue its mission?
    Mr. Wilburn. Helping businesses compete, whether they are 
small or large on the global stage, I am all for that. I am a 
free market guy.
    Basically, I agree with 95 percent of what has been said 
here today. So, I applaud the Delta chairman and the other 
Members for stating that they don't want to abolish the Bank.
    Mr. Campbell. Thank you. I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from New York, Mrs. 
Maloney, ranking member of our Capital Markets Subcommittee.
    Mrs. Maloney. I thank the chairman and all the panelists 
and the ranking member.
    I believe we live in a very inconvenient truth right now, 
especially in global capitalism, and as much as we like to 
think that American businesses may not need any help, but what 
they are competing against is that total support, in some 
cases, subsidy, in some cases, is even owned by the foreign 
government.
    And if we were not, we would be unilaterally disarming in 
the international stage, putting American jobs and exporters at 
risk.
    Oftentimes what we hear in Congress is, ``We are not 
exporting enough. Why isn't America exporting enough?''
    Our number one exporter is Boeing. Boeing exports a lot of 
planes, but they are competing against Airbus that is 
subsidized, financed, and even owned by a government.
    And a lot of the areas where we are exporting and 
competing, the subsidies from their governments are far deeper 
and stronger than ours.
    I fail to understand why we would in any way want to 
disrupt an agency that is helping export American goods, create 
American jobs, and is not costing taxpayers any money. I think 
this is something that we should expand.
    I was at one export meeting where, literally, a company in 
New York was exporting clothing to China. I thought that was a 
great thing. Why in the world would I want to stop an agency 
that is helping them to do that?
    Therefore, I ask unanimous consent to place in the record a 
document that has been signed by 865 organizations and 
businesses in America supporting the Ex-Im Bank, including the 
Chamber of Commerce and, also, the National Association of 
Manufacturers.
    Chairman Hensarling. Without objection, it is so ordered.
    Mrs. Maloney. I have to think that 865 organizations and 
businesses can't be wrong, I tell you.
    And I just wanted to ask Mr. Wilburn: The opponents of the 
Bank claim that trade finance should be left to the private 
sector. What has been your experience with finding commercial 
lenders willing to extend credit to foreign buyers who want to 
purchase your company's services?
    Mr. Wilburn. Recently, I just obtained some private finance 
for my three works in progress in Brazil. The problem is that I 
had to pledge my house, my intellectual property, my inventory, 
everything I own.
    I am a risk-taker. I am willing to do that. But I can only 
do that once, because once I pledge that collateral for those 
three, I can't take care of the next six, seven that we are 
working on.
    And if there are those sources out there and the committee 
members know them, the chairman or anybody--or anybody hearing 
these words today--if you know these sources of private 
finance, please get in contact with me and the other small 
business people. I know they desperately would like to have 
that as a solution.
    Thank you.
    Mrs. Maloney. I have all these stacks of letters from 
businesses in support of the Ex-Im Bank. I would also like to 
ask unanimous consent to put it in the record and, also, one 
from labor. Labor is supporting it on the basis that this 
creates jobs in America.
    I ask unanimous consent to place this in the record.
    Chairman Hensarling. Without objection, it is so ordered.
    Mrs. Maloney. And in response to Mr. Anderson, I am a big 
fan of Delta. I fly it about once a week. I love the airline.
    Mr. Anderson. Thank you.
    Mrs. Maloney. And I was pleased to vote for the support for 
the bailout by the Federal Government after September 11th.
    I think we voted to transfer the pilots' pension 
obligations to the Federal Pension Benefit Corporation. So, we 
have provided that help. And that is a subsidy, I would say, 
and we needed to do that. And I supported it. I voted for it.
    And I think, also, that to this day, we have passed bills 
that restrict and prohibit foreign air carriers from competing 
with Delta by flying routes within the United States, that we 
are trying, in our own way, to help the private sector compete 
and win in a world economy and provide the wonderful service 
that you do.
    But I, for one, am going to be writing Boeing and asking 
them to write in their own words whether they think the Ex-Im 
Bank has been helpful in allowing them to compete and win and 
who are their competitors and compare how much they are 
subsidized, if they are, to their foreign competitors in Asia 
and in Europe and, also, to GE and to every small company that 
is getting any help from the Ex-Im Bank.
    And all of our Members should do the same. And let's create 
our own--
    Chairman Hensarling. The time of the gentlelady has 
expired.
    Mrs. Maloney. --report on what we are hearing from American 
workers and businesses.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Alabama, the chairman emeritus of the committee, Mr. 
Bachus, for 5 minutes.
    Mr. Bachus. I thank the chairman.
    And I would say to all Members, Mr. Anderson, what he is 
saying is identical to what he and the Air Line Pilots 
Association and the union representatives were saying when we 
reauthorized this bill in May of 2012.
    And I met with Chairman Hochberg in March. In fact, several 
Members on both sides expressed the same concern that Mr. 
Anderson had. And I was told at that time that they would sit 
down with Delta, and I was also told that Boeing would take a 
look at it.
    We then put in the language of the reauthorization, 
directing the Treasury Secretary to initiate and pursue 
multilateral negotiations for reducing and eliminating 
government export subsidies for aircraft.
    We specifically told them that we were concerned about 
wide-body aircraft, two companies that had government-owned 
subsidies, rich companies, as Mr. Anderson said, and everybody 
expressed a great sensitivity to this. And we documented losses 
by American air carriers on overseas routes.
    And that is what we are talking about. We are not talking 
about routes within the United States. That has nothing to do 
with this. Our American Airlines used to lead the world in 
these overseas routes.
    From the time that we reauthorize this, which, really, I 
say it is strong language, but it turned out it wasn't that 
strong because it didn't forbid these sales. And I could tell 
you that they are going to--as long as we don't just forbid 
them, they are going to have them.
    Because when Mr. Hochberg met with my office--and I am 
going to later--when he testifies, I am going to show you my 
letter to him and his response, which was a nonresponse. We 
have always gotten those.
    Members also expressed to me some great concern on the 
Australian loan, but there were Members on both sides. I wrote 
Chairman Hochberg about that on behalf of several Members on 
August the 2nd. We then inquired about the status of our 
letter, and we were told they were going to respond.
    On December the 20th, I woke up to read in The Wall Street 
Journal that the loan had been approved after my August letter. 
No response.
    Finally, on February the 19th, 2 months after the loan was 
approved and announced, and the iron ore industry, the miners; 
there were all sorts of union groups that were expressing 
concern--he wrote me back and he said, ``We approved it.''
    In my letter, I asked him to get with us and we wanted--
there was no detailed analysis of the financing request or how 
it would affect U.S. jobs, and I asked him to share that 
information with me.
    And I know Mr. Hochberg is here. I look forward to maybe 
some explanation. But no one from Ex-Im gave us any of this 
information.
    They didn't even give it to us--he just said, if I have 
questions, I should call him. This is for a loan that had 
already been made.
    I had what I considered a commitment from Ex-Im Bank and so 
did Mr. Anderson on a directed prohibition that was costing 
probably 10,000 U.S. jobs. These jobs have been being 
eliminated since 1978, when they started doing this.
    There are estimates that this one mine produces more iron 
ore than our entire U.S. production, and it shut down iron ore 
production in this country as a result, a lot of it.
    But we got a lot of promises and then we reauthorized and 
then--and even the Treasury Department, when I asked them--and 
I will say, if I could have 30 seconds, I asked them, ``What 
are you going to do about these negotiations?'', they basically 
told us, ``What are you going to do? Are you negotiating?'' 
``Well, we formed a talking group.'' And they basically just 
blew us off, the staff.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from California, Mr. 
Sherman.
    Mr. Sherman. The ranking member notes that only Mr. Wilburn 
here is outnumbered three to one, but I will point out his 
arguments are 3 times as good; and, therefore, I think it is 
fair.
    It has been noted that Ex-Im Bank is financing the sale of 
airplanes to airlines that could get credit from somewhere 
else. That is entirely true.
    Every one of those airlines could get credit from the 
export credit agencies of Germany and France. There is only one 
catch. They would have to buy an Airbus.
    So the question here is not whether the buyer could make 
the purchase. The question here is whether the buyer will 
purchase the U.S.-made product.
    And we are told that only 2 percent of American exports are 
at stake here. America is running the largest trade deficit in 
the history of the world. We can't afford to give up 2 percent 
of our exports. We can't afford to give up half a percent of 
our exports.
    We are told that there has been a scandal involving some 
officers of Ex-Im Bank. There has also been a scandal involving 
officers of the United States Navy dealing with the repair of 
our ships in the Pacific. Yet, no one is proposing that we 
deauthorize the United States Navy.
    I look forward to working, hopefully, with the chairman, 
and perhaps the gentleman from California, to improve Ex-Im 
because I don't think our position is that everything is 
perfect and none of these criticisms deserve any attention.
    One of those reforms would be to have language and even 
more clear language to say that they can't make a loan or 
guarantee a loan without looking at the total effect on U.S. 
jobs.
    One particular area is airplanes. We are supposed to have 
an Ex-Im Bank to finance exports. If you're talking about a 
power plant being built in India, the turbine is an export. If 
the power plant is in Indiana, it is not an export. It doesn't 
matter whether the company that owns the plant is in Germany or 
the United States or India.
    Planes are different. They fly. And whether a plane has 
been exported or not doesn't or shouldn't depend upon the 
headquarter's building of the buyer. It should depend upon 
where the airplane will be used.
    There are two approaches we could take.
    One is to allow U.S. airlines to consider an export and, 
therefore, get Ex-Im financing on a plane that they are going 
to use in international routes in competition with foreign 
airlines that are also eligible for Ex-Im financing, should 
they buy American planes.
    The second approach is to deny Ex-Im financing to those 
foreign airlines when they are buying a plane that is going to 
be used to fly to and from the United States.
    But these are things to explore. I think to throw out 2 
percent of our total exports because of one issue affecting 
flights to Asia and the Middle East would be a mistake.
    Now, Mr. Anderson, you have financial statements that you 
send to shareholders and maybe you really have a choice. You 
could use GAAP accounting--generally accepted accounting 
principles--or some have suggested that we use fairytale-value 
accounting.
    When you produce a P&L statement, one of the biggest items 
on it is your interest expense. Do you report the interest 
expense you have based on the deals that you have made with 
your Banks and bondholders or do you instead report the 
interest expense you would have had if you lived in a fair 
world?
    When I read your income statement, do I see as interest 
expense what you are actually going to pay your lenders or some 
notion of fairness as to what you would be paying if only the 
world were fair? It is an easy question.
    Mr. Anderson. No, it is not.
    Generally accepted accounting principles have various 
methods for how you account for different--
    Mr. Sherman. Do any of them involve you reporting as your 
interest expense what the interest expense would be in a fair 
world?
    Mr. Anderson. Yes. In some instances, in the case of a 
merger where you have to go back to fresh-start accounting--
    Mr. Sherman. Okay. In some limited--
    Mr. Anderson. No. It is not limited. We have a--
    Mr. Sherman. You just had a merger.
    Mr. Anderson. We have a lot of interest expense on our 
balance sheet that is not the actual interest we pay because 
the generally accepted accounting principles require you to 
market-to-market.
    Mr. Sherman. That may be. But you don't do it and say, in a 
fair world, interest rates would be the same for you as they 
are for the Emirates.
    You don't say Pizza Hut should report the same interest 
cost as the local pizzeria or the Pellicola Pizzeria reports 
the same interest cost as Pizza Hut.
    You report--you just had a merger. I know you are an expert 
on merger accounting--or at least you have had a big experience 
with it.
    In the ordinary case and without a merger--I don't think 
Ex-Im Bank is going to do a merger with its German competitor--
you report interest expense based on the deal you negotiated, 
not based on an imaginary fair world.
    Mr. Anderson. Look, I am not trying to obfuscate.
    In some instances, you do. In some instances, you have to 
come to a fair accounting standard. I wish it were that simple.
    Mr. Sherman. None of those reflect a really fair world.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from West Virginia, 
Mrs. Capito, chairwoman of our Financial Institutions 
Subcommittee.
    Mrs. Capito. Thank you, Mr. Chairman.
    Mr. Anderson, how many employees does Delta Air Lines have 
in the United States?
    Mr. Anderson. We have about 78,000 employees in the United 
States and probably a quarter of a million retirees.
    Mrs. Capito. Is that up or down or pretty steady?
    Mr. Anderson. Actually, we are hiring quite a bit right 
now. We are hiring about 600 pilots a year and over 1,000 
flight attendants a year. So we are growing our employment 
without any government aid, by the way.
    Mrs. Capito. And you made a mention in your comments that 
with the Ex-Im Bank's behavior in financing wide-bodies around 
the world, you kind of quantified it as to maybe 1,000 jobs it 
might have cost you.
    Could you expand on that a little bit?
    Mr. Anderson. Well, that was a specific instance of Air 
India.
    And when I hear the notion of this arms battle, what the 
Ex-Im is doing is putting our employees in the crossfire 
because it is U.S. airline jobs that are lost when heavily 
subsidized foreign-owned airlines are able to then also get a 
subsidy from our Treasury.
    And it has reduced the growth of our company. This is the 
first year we will actually have any real growth in the last 5 
years. And we see it in the marketplace by the entry of 
carriers with Ex-Im Bank finance below-market financing.
    Mrs. Capito. So the argument to either relook and reshape, 
like Mr. Campbell is saying, or deauthorize, as I was--it is 
small business jobs, but it is businesses that have 75,000 
employees at the same time.
    Mr. Anderson. Exactly. And the point is I don't understand 
why we don't have the same view about jobs that are hurt by the 
Bank as we do about small business jobs. These are all really 
important jobs.
    And the small business part of what Ex-Im does is actually 
really small and is pretty new to the Bank because, after the 
last reauthorization fight, the Bank went into a really 
aggressive marketing mode to small business so that it would 
have constituents in every congressional district.
    Mrs. Capito. Right.
    Mr. Anderson. Let's set that aside.
    The real issue is 90 percent of this goes to the top 10 
biggest companies in the United States that are well-funded and 
well-capitalized. And that is what we are focused on.
    Mrs. Capito. Thank you.
    Mr. Wilburn, I don't know if you remember, but in my 
opening comments I commented about the Administration--the Ex-
Im Bank's policy of not funding coal-fired power facilities, 
including coal technologies, except in developing countries.
    You are a green energy company developer, and I love green 
energy jobs. We love our coal jobs. They are just as important 
to us as a green energy job is to you.
    Do you think, in thinking about this, that it is proper for 
an entity such as the Ex-Im Bank, because it has a certain 
environmental belief, to disenfranchise one American job over, 
say, one of the jobs in your company as a green energy company? 
Don't you think those jobs should be treated equally if we are 
going to be looking at financing exporting across the globe?
    Mr. Wilburn. Let me respond that, basically, I am very 
supportive of technologies that are good for the environment, 
and I think the coal industry--particularly my family has a 
background in that and were affected by it.
    I think the point here is, though, that the Bank is looking 
at an environmental policy. Okay? And I am not an expert on it. 
I serve on the advisory committee of the Ex-Im Bank on the 
environmental and renewable energy committee.
    And what I have tried to advise them of is to be cautious 
when we are taking a look at the environmental impact, make 
sure they have the data, make sure that they have the studies 
and the reports; don't just make arbitrary decisions.
    And I think, for the most part, they have been listening to 
me, but I understand your argument. And all I can say is that I 
want an environmentally sound policy by Ex-Im Bank that creates 
and protects American jobs.
    Mrs. Capito. Thank you.
    I looked at your list of your vendors and you are in and 
around in the State of Virginia. You just need to slip over the 
border there and bring a few over to West Virginia. Importing 
those jobs into West Virginia will be--
    Mr. Wilburn. Give me the names and the addresses. I will be 
happy to talk to them.
    Mrs. Capito. All right. Thank you so much.
    Chairman Hensarling. The gentlelady yields back.
    The Chair now recognizes the gentleman from New York, Mr. 
Meeks, ranking member of our Financial Institutions 
Subcommittee, for 5 minutes.
    Mr. Meeks. Thank you, Mr. Chairman.
    And I thank the ranking member.
    First, I want to just say thank you to Mr. Anderson. Delta 
Air Lines is one of the largest employers in our district, and 
we really appreciate what you have been doing at JFK airport, 
the expansion there and the folks that you have been adding. 
So, we want to thank you for that.
    And, as a result, I have made sure that I was reading your 
testimony very, very carefully because we do want to create 
jobs and I think that is tremendously important.
    But in looking at it, I just wanted to double-check, 
because I would just like to ask first outright, and I will 
start--I think I know where Mr. Wilburn is in reference to the 
reauthorization of Ex-Im.
    But I just was wondering, to, first, Captain Moak, do you 
think that we should do away with Ex-Im or should Ex-Im be 
reauthorized? I just want to know ``yes'' or ``no'' before we 
get into--what do you think about Ex-Im?
    Captain Moak. First, I want to thank the Congressman. I fly 
out of Kennedy. You have done an incredible job up there.
    I have been there since 1994, flying a Boeing airplane 767. 
Great airplane. I want to thank you and what you have done for 
my members. We have thousands of our members up there.
    The Ex-Im Bank needs to be reformed because we have lost 
jobs at John F. Kennedy Airport because of actions by the Ex-Im 
Bank. It needs to be reformed, period.
    Mr. Meeks. So do you think that it would be okay if Ex-Im 
was not reauthorizing all of the jobs that are created by Ex-
Im?
    I know we have to figure this out, but Ex-Im was not there. 
Because one of the things that concerns me--I am one of the 
largest supporters of trade. And the reason why I support trade 
is because I want to export our goods to other places.
    And then, when I hear an example--for example--and trying 
to level the playing field. There is an example that I know 
took place in 2011, for example.
    Brazil had the largest landline telephone company and the 
Republic chose to purchase the network equipment with China's 
technology because of access to China Development Bank's $30 
billion credit line, which came with a 2-year grace period on 
payments and an interest rate of 2 percentage points below the 
market rate.
    Now, that is just one example that I could give on how 
China has used its Banks to win new exports. This is our 
competition. And there are hundreds of other examples which I 
could give from all over the world.
    So my concern is and--to all of you--so wouldn't you agree 
that several industries and export jobs throughout, which would 
devastate America?
    I wish I could just say I am focused only on JFK, but I 
have to think bigger than JFK in this one.
    I have to think about how I am a Member of the United 
States Congress who represents--I represent my district, but, 
also, my first--when I took--swore in is the overall benefit.
    And sometimes you have to figure out on a balance that--
wouldn't we be really jeopardizing export jobs without Ex-Im 
Bank?
    Captain Moak. Sir, just to follow, we are here because we 
need your help to level the playing field. Right now, we are 
not able to compete, and we are losing jobs out of Kennedy. So 
we need leadership to reform the Bank. The Bank hasn't followed 
the will of the Congress.
    Mr. Meeks. But what I am getting at is this--and, as I 
said--and Mr. Anderson, I will go to you, also.
    See, because what I have to weigh here is the overwhelming 
balance of companies that come to me because I am a pro-trader 
that say this is absolutely important to them.
    And if I would show you the number of companies that have 
come to me and the jobs that they represent--because it 
absolutely would be devastating to them compared to one company 
that I like who have done something like, I have to say good, 
but compared to one company, then I have a decision to make, as 
a Member of Congress, especially me because I have to defend my 
own record of wanting to export things all over the world and 
making it easier so we can compete.
    And when I look at, for example--I know that there are 
other ECAs, almost upwards of 60 export credit agencies (ECAs) 
that exist in all of the other foreign countries, many of whom 
who do not even comply with international export credit 
standards established by OECD, and that such countries as China 
and Brazil and India offer below-market and concessionary 
financing alternatives.
    So I would think that--wouldn't you agree that is what we 
need to look at so we can level those playing fields and, if we 
don't level those, then we are putting at risk hundreds of 
thousands of American jobs because we cannot export to these 
other countries because there is no level playing field here?
    I see I am out of time.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Garrett, chairman of our Capital Markets Subcommittee.
    Mr. Garrett. And I thank the chairman.
    There are a number of different areas that we can talk 
about here, and I think the gentlelady to the right of me may 
go into this in more detail.
    But just as a beginning, I will just do the highlight, and 
that is the fact that although there is a statement from the 
other side of the aisle saying that Ex-Im has never lost money, 
I think we have some documents to show that has not been the 
case over its somewhat sordid history of mismanagement, severe 
losses, and a past history of having to have been bailed out 
and recapitalized by the American taxpayer in the past.
    But I will let the gentlelady address that, if she chooses, 
later on.
    Secondly, to a technical point, Mr. Anderson, with regard 
to accounting and all those sort of things, GAAP accounting, 
under FASB rules--I think it is 157 because we have been in 
this on other hearings before. Fair value accounting. Right? 
That is part and parcel of your process, isn't it?
    Mr. Anderson. Absolutely. I think most companies in America 
would love to have the government's accounting system.
    Mr. Garrett. Yes, exactly.
    The next point is on reform. And maybe I will throw it back 
to Mr. Anderson or anybody else.
    So, the idea is maybe we can just reform this. But as some 
of you indicated before, we have been down this road before. We 
reformed it before, passed legislation just a few years ago. We 
instructed Treasury to do something, and we instructed Ex-Im to 
do something.
    We instructed Treasury to try to enter into new 
negotiations and we tried agreements and we tried to have Ex-Im 
do cost-benefit analysis.
    Neither of those things were completed. Correct? You are 
nodding your--
    Mr. Anderson. You were totally ignored.
    Mr. Garrett. Okay. So the question I have is: Before I 
think about re-re-re-re-reforming something, if we do that--and 
you don't have to answer this--I am wondering why I will not 
anticipate being here 2 or 3 years from now after this re-
reform has not been--or has been ignored again.
    Mr. Anderson. That is why we thought this problem was fixed 
last time and then we worked over the course of the last 2 
years to try to get the reforms that both sides of the aisle 
agreed to enacted.
    Mr. Garrett. Right.
    Mr. Anderson. Lael Brainard told me they were not going to 
negotiate with the Europeans over Ex-Im Bank subsidies right 
across the table in the Treasury Department.
    Mr. Garrett. And, in the meantime, while we wait for the 
re-reform to be implemented and find out that it is not 
implemented, how many jobs will we lose in the interim?
    Mr. Anderson. We are going to lose thousands. And that is 
why our position now has changed. Last time we tried to--we 
thought we had it fixed.
    Now our position is, if there is not a hard stop on wide-
body financing for state-owned, creditworthy airlines, the Bank 
should be ended.
    Mr. Garrett. And I appreciate it.
    Our small business guy at the end, Mr. Wilburn, for what 
you are doing, I appreciate your service as well, and I 
appreciate your entrepreneurial spirit.
    I just have one bone to pick with you. I know you say you 
are a free market type of guy. And I think you said, ``I 
pledged my collateral. I can only pledge that once.'' And I get 
that, but I guess that is the way the free markets work.
    If I have an idea or a product or a business and I have 
capital, I can only pledge it once. And I guess the industry in 
front of us, they can only pledge it once. That is the rule 
whether you are a big guy or a little guy. You can only pledge 
it once.
    And even though--I have had lots of great business ideas 
but nobody wanted to invest in them. That doesn't mean they 
weren't great business ideas.
    But just because you have a great business idea and a great 
business model doesn't mean that you can look to somebody else 
to finance it. You can try to seek somebody else to finance it.
    And that is what you're trying to do, and it is great that 
you are on TV today, maybe. So maybe it will help you out 
there. But--
    Mr. Wilburn. That is not the reason I am here, with all due 
respect.
    Mr. Garrett. My point is we should not be asking the 
American public to step in and be the one to ultimately finance 
once any business, big or small, pledges their collateral once. 
Independent investors should be the ones who are responsible 
for doing that. We should not ask the taxpayer to step in.
    And I will close, then, with Dr. de Rugy. Can you quantify 
any of what we are talking about here--Mr. Anderson has tried 
to--as far as, without a cost-benefit analysis being done like 
Ex-Im should have done, what we are really looking at when we 
continue down this road or path of picking winners and losers 
in this current system that we have as far as job losses. Do 
you want to talk about that?
    Ms. de Rugy. It is very--it is very hard to know exactly 
how many jobs are lost. One of the things that we know is who 
the beneficiaries are. We also know that the Ex-Im Bank picks 
winners and losers and that is very different from the free 
market.
    And, also, we have 200 years of economic literature which 
explains that free market is the way to go and protectionism 
isn't because it hurts consumers by raising prices. And with 
the Ex-Im Bank, it is not free market. It is protectionism.
    Chairman Hensarling. The time of the gentleman has expired.
    Ms. Waters. Mr. Chairman, I would request unanimous consent 
for Mr. Wilburn to have an opportunity to respond to the 
teaching that he just received from Mr. Garrett on oil and gas 
subsidies that he mentioned in response to Mr. Garrett's claim 
that the government should not be subsidizing anything or 
anybody.
    Chairman Hensarling. I am sure there are many Members on 
your side of the aisle who would be happy to yield more time to 
Mr. Wilburn.
    The Chair now recognizes the gentleman from Massachusetts, 
the ranking member of our Housing and Insurance Subcommittee, 
Mr. Capuano, for 5 minutes.
    Mr. Capuano. Thank you, Mr. Chairman.
    And I thank the panel for being here.
    Mr. Wilburn, I just want to thank you for your commonsense 
approach. It amazes me that people can disagree on substance, 
but you deserve more respect than you have received here today, 
and I regret that approach, as one member.
    Mr. Anderson and Captain Moak, I think you raise 
interesting and very good points. I have actually worked with 
the ALPA in the past on a similar issue just in Massachusetts 
using taxpayer dollars to help encourage wealthy foreign 
airlines. I am more than happy to look at this. And Mr. 
Campbell and others have suggested that.
    However, I am not willing to shut down the Bank because, 
very simply, Ms. de Rugy, I have to tell you, I don't live in 
the ivory tower. In the ivory tower, what you say makes sense.
    And if every country in the world would legitimately shut 
down their ex-im bank or their comparable one to it, I would 
consider it because I don't disagree. This should be 
unnecessary.
    But I don't live in that world. I live in the real world of 
fair competition. And when France has 4,600 people working for 
their ex-im bank and we have 400, if we want to compete, we 
need to do this.
    Ms. de Rugy. But we have 200--
    Mr. Capuano. So, for me, that is part of the problem.
    With that, I would like to yield the remainder of my time 
to Mr. Heck, who knows a lot more about the Ex-Im Bank than I 
do.
    Mr. Heck. Thank you, Congressman.
    First, I want to thank especially Mr. Wilburn and Captain 
Moak for their service. It is deeply appreciated.
    Mr. Wilburn, I am interested, as a small businessperson out 
there trying to build something for his family and his 
employees kind of one day at a time, one contract at a time, 
whether or not you would be surprised that the company to your 
right, which has claimed such material damage and is 
represented by its own spokespeople, is now the most profitable 
airline in the United States, and arguably the world, and 
indeed made $2.7 billion in profits last year, for which I am 
grateful. I think that is a good thing. I am really glad.
    I am not asking the question of you, Mr. Anderson.
    Would it surprise you that the company has paid no Federal 
income taxes for the last 6 years and is projected not to for 
the next 3 years?
    Mr. Anderson. Are you talking--
    Mr. Heck. Mr. Chairman, it is my time, not Mr. Anderson's.
    Would it surprise you, Mr. Wilburn?
    Mr. Wilburn. I don't know if I'm surprised. I can't 
characterize it as surprise. It is new information to me I was 
not aware of.
    Mr. Heck. Mr. Wilburn, I am wondering if you would consider 
what the gentleman to your right has repeatedly said.
    Again, I want to interject here my gratitude for living in 
a Nation that builds the greatest airplanes in the world, which 
are flown by the most competent pilots.
    I did 150,000 miles last year and I didn't lose one wink of 
sleep about my personal safety. And I thank you all for that, 
quite genuinely.
    But, Mr. Wilburn, the gentleman to your right said 
repeatedly in his opening testimony--I want to make sure I get 
it exactly right--``I don't believe in subsidies.''
    Mr. Wilburn, would you consider it a subsidy that the 
Federal Government, through its Pension Benefit Guaranty 
Corporation, took over the pension liabilities of Delta and, at 
the point at which Captain Moak collects his, will, in fact, be 
provided by the taxpayers of the United States? Would you 
consider that a subsidy?
    Mr. Wilburn. Again, with all due respect, I don't think I 
am really qualified to answer that, but I understand your 
point.
    Subsidies exist in a variety of different ways, and I am 
faced with that unlevel playing field every day. And I would 
have to have some more information on that, but you have piqued 
my interest.
    Mr. Heck. So, lastly, then, I am wondering whether or not 
you would consider it at least inconsistent that the company 
has argued that the existence of the Export-Import Bank to loan 
money to their competitors--will you consider it inconsistent 
that they have that view when, in fact, that same company 
borrowed from the Canadian export credit authority to buy what 
I deem short-hop airplanes?
    Mr. Wilburn. Again, I am not familiar with those facts, and 
I am learning a lot of things today in realtime and, as a small 
business guy, I am more focused on my issues.
    But I can tell you this. There are a number of issues 
raised here today, including the ones you mentioned, that lead 
us to a broader discussion.
    And the broader discussion is: What role does the Ex-Im 
Bank really play? These gentleman have opined and they have 
given their opinion.
    I can tell you just from my perspective, without the 
Export-Import Bank of the United States, people are going to 
buy in the Philippines, not my goods, but they are going to buy 
Korean goods, and they are going to buy that because it is 
financed by the Korean Export-Import Bank.
    So I think we need to get to their reasonable position and 
do some reforms, but get and save the Export-Import Bank of the 
United States.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Neugebauer, chairman of our Housing and Insurance Subcommittee.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    Mr. Anderson, I detected that you might want to respond to 
some of the questions that were raised awhile ago. Would you 
like to--
    Mr. Anderson. I would start by saying Boeing got a refund, 
didn't pay any taxes. But Delta accrues its taxes at the full 
Federal tax rate. We don't have any offshore subsidiaries.
    The reason why we are not a cash taxpayer is because we 
went through a very painful Bankruptcy and restructured our 
company without any subsidies from the government.
    We paid our premiums into the insurance--into the Pension 
Benefit Guaranty Corporation and, unfortunately for our pilots, 
we had to terminate their pension plan. And so Captain Lee 
Moak, I would correct the record, doesn't have a pension 
because his pension was terminated.
    We were able, with the help of this committee, to pass the 
Pension Protection Act in 2006 and save the pensions by getting 
an amendment to the law so that Delta can pay out over a 
billion dollars of pensions to our retirees today, and we are 
overfunding those pensions.
    So you hit a raw nerve when you look back at these people 
who went through a really tough restructuring--and we are a 
full taxpayer in this country--and these people bore the brunt 
of a tough Bankruptcy and a lot of them lost their pensions.
    Mr. Neugebauer. I thank you.
    And, I want to expand on something that has been brought 
up, but I don't think people realize the scope of that, and 
that is I was shocked to learn that 14 of the largest 20 state-
owned or state-supported airlines receive Ex-Im funding.
    And so, just to put that in perspective, these countries--
many of whom have fairly substantial sovereign wealth funds, 
are able to get financing backed by the U.S. taxpayers to 
compete with U.S. companies.
    Mr. Anderson, you mentioned, I think, a couple--India, 
Emirates, China. There is a long list of airlines that American 
taxpayers are subsidizing to compete with your airline, and 
that puts you at a disadvantage.
    Mr. Anderson. That is exactly right. The prime examples 
would be Singapore Airlines, which is owned by Temasek, the 
largest sovereign wealth fund in the world. Our government 
finances the airplanes.
    The largest oil-owning company in the world is Abu Dhabi. 
It has the largest oil reserves in the world and it owns and 
operates a government airline, and we, our Treasury, finances 
their airplanes well below market to fly into our markets.
    Mr. Neugebauer. Now, one of the things that you mentioned 
in your testimony, too, is that--you said that you did not 
support reauthorization of Ex-Im Bank because you kind of felt 
like you got double-crossed on the last reauthorization, but 
you would support possibly a reauthorization that had some 
reforms.
    Do you want to elaborate a little bit on that?
    Mr. Anderson. Absolutely. Our position has been consistent. 
It was consistent at the last reauthorization. Language was put 
in the bill to fix these issues that hurt American jobs, and it 
was ignored.
    So we have taken a harder-line position this time, along 
with all the employees I have here and the 3,000 employees we 
have in Seattle, Washington, to require that there be real 
reform this time.
    We aren't talking about small businesses. I respect small 
businesses. I want him to be successful. We want all small 
businesses to be successful. And this isn't about small 
business.
    This is about 90 percent--95 percent of the money that this 
Bank uses are for the top 10 corporations. So, let's not 
confuse the small business issue.
    This is about putting safeguards in place so that you, as 
Members of Congress, are not picking and choosing which 
companies win and which companies lose.
    I think these jobs are just as important as the 
manufacturing jobs. If they aren't, I would invite any 
Congressman here to just tell my employees that their jobs are 
not as important.
    Mr. Neugebauer. I thank you.
    I had a question for Mr. Wilburn.
    Mr. Wilburn, has your firm ever received any Federal 
grants, loans, guarantees?
    Mr. Wilburn. No, sir.
    Mr. Neugebauer. Okay. Thank you.
    And Dr. de Rugy, you have done some analysis on Ex-Im and 
their financing and their structure. I will have to--I see my 
time has expired, so I will submit it to you in writing.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Clay, ranking member of our Monetary Policy Subcommittee.
    Mr. Clay. Thank you, Mr. Chairman.
    Dr. de Rugy, do you believe that there is an appropriate 
role for government to make sure financing is available for 
U.S. businesses in cases where the private sector is unable or 
unwilling to provide financing to legitimate business ventures?
    For example, what about commercial exports for nuclear 
power projects? I understand that these deals are often 
untenable for commercial Banks. Is it appropriate for the 
government to help finance such deals?
    Ms. de Rugy. I don't think the government should be in the 
capital market business because the way government allocates 
monies is based on politics and not on sound economics.
    And, more importantly, you have to understand that when the 
capital market does not allocate funds to someone because they 
are cash-poor, it is a feature of the capital market, not a 
bug, and it is unfair for Congress to demand that taxpayers be 
the one footing the bill because some people want to borrow 
money and are not able to find lenders to actually lend them 
that money because they don't think it is a worthy or a safe 
enough bet.
    Mr. Clay. Well, Doctor, isn't it true that Congress picks 
winners and losers every year as far as through our Tax Code?
    Ms. de Rugy. I agree. And I am against that, too.
    Mr. Clay. Oh. You are against that, too?
    Ms. de Rugy. I am against the government picking winners 
and losers. I think the general rule should apply.
    Mr. Clay. And you have lobbied your Members of Congress on 
that, I assume?
    Ms. de Rugy. I don't lobby. I write research papers.
    Mr. Clay. Well, at least you talk to them.
    Ms. de Rugy. Yes. I specialize mostly on the budget. But 
when I have talked about tax reforms, I have talked about 
leveling the playing field.
    I don't believe in giving tax credit to some companies and 
not others, or to taxpayers based on the fact that they are 
buying a house rather than renting. I believe in the general 
rule. I believe in a flat tax, for instance, rather than the 
system that we have today.
    Yes, I am against the government picking winners and losers 
across-the-board, whether it is through taxes, through 
government funding, or through loan guarantees.
    Mr. Clay. Thank you.
    Mr. Anderson, a review of U.S. airline purchases by U.S. 
carriers between 2012 and 2014 reveals that all of the recent 
capital market deals have been on more affordable terms and 
would have been available if the carriers had used the export 
credit that is made available to foreign purchasers of U.S. 
aircraft.
    Given this, how do you defend the claim that the United 
States is providing below-market rates to our foreign 
competitors?
    Mr. Anderson. This is a competitive business and, depending 
upon what your interest rates are--your interest rates are 
determined by your capital structure.
    And when the government gets involved and takes that market 
component out, we are no longer competing on who is the best at 
managing capital. You have distorted the market.
    Just because we have lower interest rates, that just means 
we pay our debts better, and we should have lower interest 
rates. And if a competitor gets lower rates for an artificial 
reason, they are getting a subsidy.
    Mr. Clay. You don't think it--
    Mr. Anderson. They should be in the marketplace--
    Mr. Clay. Okay.
    Mr. Anderson. They should be in the marketplace raising 
capital the way we raise capital and having to pay a market-
based interest rate and compete on that basis.
    Mr. Clay. You don't think France or England--
    Mr. Anderson. Pardon?
    Mr. Clay. You don't think France or England uses their 
ability to level the playing field for their airline-makers 
like Airbus?
    Mr. Anderson. No. Because there is something called the 
gentleman's agreement between Airbus and Boeing. It is an oral 
understanding that creates something called the ``home market 
rule.'' So the United States, Britain, Germany, France, and 
Spain do not use and are not allowed to use export credit.
    Mr. Clay. Okay. Thank you.
    I am going to yield the remainder of my time to my 
colleague from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you.
    Mr. Anderson, some of your points I actually think are 
good. I hate that everything becomes partisan here. Let me ask 
you one question. You were talking about the employees behind 
you and what you would say to them. What would you say to the 
16 exporters in Kansas City, Missouri, my congressional 
district, which supports--because Ex-Im Bank supports about $84 
million in exports each year. What do I say to them when I say 
that the Ex-Im Bank is closed?
    Mr. Anderson. I think we should put both our employees and 
your employees and say we are going to preserve and grow both 
of their jobs, and that is the reform that needs to take place.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Georgia, Mr. 
Westmoreland.
    Mr. Westmoreland. Mr. Anderson, thank you, again, for being 
here and for bringing the crowd with you.
    So I guess to put it in just really simple terms, if a 
European government-subsidized or any government-subsidized 
airline buys a plane from Boeing, and you buy a plane from 
Boeing, you compete with them on some of the same routes. Is 
that not true?
    Mr. Anderson. We compete on virtually--in a global network, 
you complete on virtually all of the routes internationally in 
some form or fashion over the hub system.
    Mr. Westmoreland. And it is so if you were buying 60 planes 
from Boeing. Is that not correct?
    Mr. Anderson. Right now, we have about 100 airplanes on 
order from Boeing.
    Mr. Westmoreland. A hundred airplanes. If you had some of 
the same--even though you said you were paying cash, if you had 
some of the financing options that some of your competitors 
had, you may even buy more planes from Boeing and give Boeing 
more work to do. Is that true?
    Mr. Anderson. The market needs to dictate how many 
airplanes we own. I am not in favor of opening up export 
financing for U.S. carriers because I don't think that is a 
free market.
    Mr. Westmoreland. Thank you.
    Ms. de Rugy, could you please tell me why it is misleading 
for the Export-Import Bank to claim that 90 percent of its 
loans actually go to small businesses?
    Ms. de Rugy. That number is only correct if you look at 
the--it is actually not 90 percent. It is a little less than 
that, but when you look at the number of transactions, when you 
look at the money, what you see is that roughly 19 percent of 
the money goes to small businesses, and that is less than even 
the Bank's charter asks. What it means is that--and by the way, 
they have a very expensive definition of small business. When 
you talk about small business, people think about mom-and-pop 
stores or 10/50 companies. The definition of Ex-Im for 
``small'' can go to a company of at least 1,700 employees. 
These are big businesses in my book.
    But what it means is that really over 80 percent of the 
money goes to very big companies. And we know that they go to 
leading manufacturers, the number one U.S. exporter, Boeing is 
obviously leading the pack.
    Mr. Westmoreland. Thank you.
    Mr. Moak?
    Captain Moak. Congressman, I just wanted to add one other 
thing that might have gotten missed a little earlier. If you 
want to have apples to apples, airlines manufacture seats. That 
is essentially what we do, and we are actually getting impacted 
twice, not only by what the U.S. Ex-Im Bank does by financing 
airlines below market rates, but what happens since we don't 
have the ability to access that along with a few other 
countries that manufacture airplanes, countries like the Middle 
Eastern companies, not only are they using Ex-Im Bank financing 
and putting them on routes and costing us jobs, they are also 
using European credit agency Airbus airplanes overlaying our 
routes at a number like $3 million per year, per airplane, so 
you start out at the beginning of the year $3 million behind. 
It is hard to catch up. We have to pull out of markets, and we 
lose jobs, so we are getting hit not just by Ex-Im Bank 
practices but also by ECA practices, and that is why we came 
before this group to ask them to negotiate taking that down 
because the Middle Eastern countries are taking advantage of 
it.
    Mr. Westmoreland. So, Mr. Moak, would it be true that when 
the other side of the aisle says that labor is for the 
reauthorization of the Ex-Im Bank, that would not be entirely 
true?
    Captain Moak. Labor is for reform, fair practices, 
competing in the world. We have the best workers in the world. 
We need to be given the opportunity to compete because when we 
have a fair opportunity to compete, we win, and we are coming 
to this place because government policy matters. We need your 
help or we wouldn't be here.
    Mr. Westmoreland. And, Mr. Anderson, just one last thing. 
You had made an attempt at the last reauthorization to do the 
right thing. You are back here today because it didn't work, 
and they did not do the things that were promised. Is that not 
true?
    Mr. Anderson. Correct.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from New York, Mrs. 
McCarthy, for 5 minutes.
    Mrs. McCarthy of New York. Thank you, Mr. Chairman, and I 
appreciate the opportunity.
    Number one, I think it should be noted that we are not 
against any of the unions. We are not against any of our 
American airlines. We certainly support them, and I think I 
would like to ask Mr. Anderson one quick question, are there 
any other American airlines that are experiencing the same 
problems as you?
    Mr. Anderson. Yes.
    Mrs. McCarthy of New York. Captain?
    Captain Moak. I represent 51,000 pilots, 31 different 
properties, all the major U.S. airlines, and the answer to that 
is absolutely yes, we are getting hit by this. We need reform.
    Mrs. McCarthy of New York. Let me go back to Mr. Anderson. 
We did negotiate 2 years ago, which we thought was a fair 
agreement. So here we are at this point. What do you think 
would be a fair agreement? Where would you want to change the 
language? Is it only enforcing Ex-Im Bank? Is it something 
different?
    Mr. Anderson. It needs to be mandatory. The language that 
was prefatory last time needs to be made mandatory. And it is 
specific in our business. We have tried to be narrow because 
there is plenty of merit to what happens with small business. 
There is no question. And we have tried to be targeted to try 
to just go at the very issues that hurt our employment. And the 
issue that hurts is our government further subsidizing deeply 
subsidized foreign airlines?
    Mrs. McCarthy of New York. Let me say something. Number 
one, I doubt very much whether you would ever get language that 
was mandatory. It is just not going to happen. People here, 
myself included, don't like to use the word ``mandatory.'' So 
if we don't get the language in as mandatory and you are 
basically saying that we should abolish the Bank, then, to be 
very honest with you, your union, all the other unions, are 
going to have a problem. A lot of my constituents will have a 
problem, so we have to come up with some sort of solution to 
that.
    But with that being said, too, I know that you are probably 
the most profitable airline. That is great. We want to see 
that, and I know you had your ups and downs, especially when 
you had to go through the Bankruptcy. But wasn't going through 
the Bankruptcy more because of what was going on in the world 
that day--that year, as far as oil prices and everything else 
like that and you had to reconstruct?
    Mr. Anderson. The terrible tragedy of 9/11, and I sat in 
one of these rooms in September 15, 2001, representing the 
industry, so we lived through that. And it dealt a devastating 
blow to our industry. Our capacity fell off 25 percent. It has 
taken 10 years to get back. So I would have to say that between 
very high oil prices--and we could have another discussion on 
the depletion allowance--and the 9/11 tragedy, and then the 
aftermath of that really wreaked havoc on our industry.
    Mrs. McCarthy of New York. I am only trying to bring out 
that unfortunately whether small businesses or large 
corporations, we really want to support them because that is 
jobs, but sometimes we, even in the government, can't do 
everything.
    I want to also say that as someone who has been always 
supporting my unions, I would like to insert in the record, Mr. 
Chairman, statements from four other labor unions.
    Chairman Hensarling. Without objection, it is so ordered.
    Mrs. McCarthy of New York. Thank you.
    So I think one of the things that fascinates me about this, 
as it did 2 years ago, is trying to find that common ground, 
which is really difficult around here. It seems all or nothing 
the last several years. And so I hope we can come to an 
understanding because I do believe in the Ex-Im Bank. I do 
believe that it helps an awful lot of our people in this 
country. I do believe it brings good jobs and keeps good jobs 
here in this country. But with that being said, I want to turn 
over the rest of my time to my colleague. You wanted extra 
time?
    Mr. Heck. Are you pointing at me?
    Mrs. McCarthy of New York. Yes, I am.
    Mr. Heck. Thank you very much.
    Mr. Chairman, I would seek unanimous consent to enter into 
the record verified excerpts of the speech given by former Vice 
President Richard Cheney.
    Chairman Hensarling. Without objection, it is so ordered.
    Mr. Heck. And with your permission, I would like to just 
quote him briefly. There are those who say that the Bank is 
just some form of so-called corporate welfare. They obviously 
don't know that for every dollar appropriated in the last 5 
years, Ex-Im has returned approximately $20 worth of export. 
That is the kind of successful government program that even a 
fiscal conservative such as me can embrace.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from New York, Mr. 
King.
    Mr. King. Thank you, Mr. Chairman.
    Thank you for holding today's hearing. It is a vital issue, 
and I want to thank all the witnesses. I want to thank Mr. 
Anderson. Certainly, Delta is a good employer in my district. 
In fact, I just got my flight confirmed for tomorrow on Delta, 
so I want to thank you for that.
    Dr. de Rugy, besides your testimony today, I want to thank 
you for the work you have done on Homeland Security, and I have 
sometimes plagiarized some of your words without giving you 
credit, so let me do that now. Okay?
    Also, Captain Moak, I have had a very good relationship 
with the airline pilots.
    And, Mr. Wilburn, you do, I believe, represent an American 
success story.
    So, with all of that, I think I am trying to find a way we 
can all be on the same page. I was impressed by what Mr. 
Campbell said about trying to find reforms.
    Mr. Anderson, you believe that reform is necessary. I 
believe we have to find a way to reauthorize the Export-Import 
Bank. I know we hear of crony capitalism, and that may happen 
in some cases, but certainly the businesses in my district are 
small businesses. We have a musical string instrument 
manufacturer, a woodworking tool manufacturer, and a seafood 
distributor. I believe there are 10 companies in my district. I 
know Mrs. McCarthy mentioned a number in her district, which is 
next to mine. And in downstate New York, our districts are one 
on top of the other, so probably within adjacent four or five 
districts, there already hundreds of employees in each of our 
districts who work in businesses in adjacent districts. So, it 
is important.
    I have also voted for every free trade agreement that has 
come before Congress in the 22 years I have been here. I 
believe in free trade. I also don't like the idea of 
unnecessary government intervention. But I also know that 
countries such as Germany, France, China, Brazil, India, and 
Korea provide up to 7 times the support that Export-Import 
does. And to me, that is not a level playing field. What we 
have to do, I believe, is find a way to level the playing 
field. And with our Export-Import Bank, I believe we are 
definitely giving advantage to our foreign competitors. I think 
of former CBO Director Douglas Holtz-Eakin, who is, if I can 
use the partisan term, a Republican economist. And he said, 
``The reality is you would like to live in a world and I would 
love to live in a world that does not have a need for an 
Export-Import Bank, one where international transactions were 
done on a level playing field. That is just not the reality. 
Many other countries, notably China, have an export credit 
agency. They are all out there trying to gain market shares. 
The West simply has to not disarm.''
    Jim Nussle, who was a former Republican Congressman--I 
served with him on this committee--and ended up being the 
Director of OMB said, ``Export-Import is self-funding and has 
generated income for the Treasury since 1992.''
    I bring these arguments out not just to make the appeal to 
authority, which they taught us in law school is one of the 
easiest things you can do; find somebody who agrees with you 
who supposedly is on the other side and if it sounds good. I 
just feel what Mr. Campbell said is important. I don't see how 
we can just end our involvement with Export-Import now. I don't 
know if we should end it, but obviously, reforms are necessary. 
We have seen the stories of corruption that are there, and 
obviously, that has to be changed. But on the other hand, I 
think the blow to our economy by suddenly ending Export-Import, 
putting small businesses and also larger businesses at risk is, 
especially at this time, when we still have not fully recovered 
from the crash of 2008, at a time when there is the increased 
burdens of Obamacare, of EPA, of regulations, of burdens, that 
it is just not appropriate, and it is not the responsible thing 
to do to end the authorization of Export-Import.
    At the same time, I believe reforms are necessary. If a way 
can be found before the expiration date to bring that about, I 
would strongly support that, work with that. I think the 
chairman has raised some important issues, but I think we go 
too far if we just say that we are going to end it.
    And as we saw today, there is always some government 
involvement in the company. Bankruptcy is the government 
involvement. I support that fully, but that is the government 
getting involved in the economy to help businesses get back 
together. So we use that. Protections given to labor unions 
that are in our economy. We have veterans. We have senior 
citizens. Everyone has some government involvement. My goal is 
to keep that to a minimum, but I think we would be going too 
far if we do not reauthorize Export-Import, but we should do 
it, I believe, with reforms.
    I certainly look forward to looking at the work and paper 
of the gentleman from California, Mr. Campbell, and I thank him 
for his efforts.
    And, Mr. Anderson, if nothing else, you have certainly 
forced Congress to pay more attention to you now maybe than was 
done 2 years ago.
    With that, I yield back the balance of my time.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Massachusetts, 
Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman.
    I want to thank the witnesses for their willingness to come 
before the committee and help us with our work. I have been 
involved on the Oversight Committee and this committee in 
dealing with some of our trade agreements and just trying to 
rebalance our Export-Import imbalance with a number of 
countries. I spent a little time in China recently, as well as 
South Korea, India, France, and Germany. I travelled to South 
Korea for a few days in connection with the South Korean trade 
agreement, and I couldn't help but notice that--this is just 
anecdotal, but I was there for several days. And the only U.S. 
cars--now South Korea is a booming economy, very modern, big 
highways, and the only U.S. cars I saw there on the days that I 
was there was the one I was riding in and the one that had my 
security detail from the Embassy, so no U.S. cars. In Japan, 
same thing. You need a detective to find an American car in 
Japan.
    So those companies obviously have closed markets in order 
to boost their domestic car production. I walk outside this 
door here, and I can't spit without hitting a Japanese or a 
Korean car, so they are doing massive investments and highly 
protective structures to protect their domestic markets so that 
they can export goods. And as Mr. King pointed out just 
recently, they are pumping in about 7 times what we are doing 
in terms of credit assistance through their versions of their 
ex-im banks.
    In addition, in my State of Massachusetts, the French 
government just came in and took over one of our rail systems, 
a commuter rail system. They backed one of their companies, 
Alstom. France's idea is they want to become the world's rail 
company. They want to manufacture the rails. They want to go 
out into other countries and dominate those markets, kind of 
like what Boeing is trying to do in the aircraft industry on 
behalf of American machinists and American workers.
    Spain is gobbling up a lot of the construction firms. It 
has become a globalized strategy, and they are there to push 
their workers, and I understand the theoretical arguments I am 
hearing today about it would be nice--we want a level playing 
field. The playing field is going to become much less level if 
we exit the battlefield, which is what you are suggesting that 
we do right now.
    I wish that our exit from the Ex-Im Bank--let's make no 
mistake. We are not talking about reforming the Export-Import 
Bank here. It is going away. So it is going to increase the 
imbalance here, but it will tip it drastically in favor of 
foreign competition. We are opening up our markets. We are 
walking off the battlefield. We will no longer try to protect 
our workers in this iteration the way we have been doing, and 
it hasn't been smooth. It hasn't been fair to smaller 
businesses. I will agree with that. We are protecting a whole 
boatload of workers right here. The reality I am dealing with 
is if you succeed, if the Ex-Im Bank goes away--and it looks 
like that will happen, because no other nation is going to 
disarm--we are going to be at a huge disadvantage. And foreign 
manufacturers will be handed a huge advantage, and I think it 
will be a very, very good day for Airbus. I think you will see 
their stock go right up. It will be a great day for them.
    But at the end of the day, when the Ex-Im Bank goes away, 
government will still be picking winners and losers. It just 
won't be the U.S. Government. And the governments that are 
picking the winners and losers will be the foreign governments, 
and those winners, you have to be kidding me if you don't 
believe those foreign governments are going to pick their own 
companies, their own workers--you see what China's doing, you 
see what South Korea and India, all these other countries. It 
is a nice theoretical argument you have here, but when this 
goes away, it will be a bad day for America, a bad day for the 
American worker.
    Chairman Hensarling. The time of the gentleman has expired.
    Dr. de Rugy, I think I have been informed that you have 
asked to be excused from the panel at this time because you 
have a prior commitment. Is this correct?
    Ms. de Rugy. Yes, I have a plane to catch.
    Chairman Hensarling. In that case, Members--I won't ask 
which plane, and I won't even ask which airline--will have 5 
legislative days to submit questions to Dr. de Rugy. We would 
ask that you respond as quickly as possible.
    Ms. de Rugy. Can I add just one thing?
    Chairman Hensarling. Not substantively. Process-wise, yes. 
Substantively, no. In which case, we will excuse you at this 
time.
    The Chair now recognizes the gentlelady from Minnesota, 
Mrs. Bachmann, for 5 minutes.
    Mrs. Bachmann. Thank you, Mr. Chairman.
    And if Ms. de Rugy would like to make her comment right 
now, I would be more than happy to let her make her comment. If 
you would like to make your comment, Ms. de Rugy, that you 
wanted to make, make your comment right now during the course 
of my time.
    Ms. de Rugy. Thank you. Based on the discussion, I think it 
is important to remember that the Bank itself only justifies 30 
percent of its activity based on the need to countervail 
foreign subsidies, so the idea that everything that the Bank 
does is to compete with foreign government is not accurate, 
based on the Bank's data itself.
    And finally, I will say that we are talking a lot about 
jobs. We are talking a lot about businesses, but we are 
forgetting consumers. Protectionism, which is what the Ex-IM 
Bank is doing, hurts consumers in the form of higher prices, 
and economists care about producers and consumers, too. We have 
many years of economic studies which show that basically 
protectionism tends to the benefit--even for the beneficiary of 
the protectionism does not outweigh the cost to all the unseen 
victims.
    Mrs. Bachmann. Thank you so much.
    That goes to my point. A lot of what I have heard here 
today is that we need to continue to provide subsidies and stay 
on the subsidy train because the rest of the world is on the 
subsidy train. And to continue that logic means that nations of 
the world have to continue one-upmanship on subsidy, so it is 
subsidy versus subsidy, and it is a complete rejection of the 
free market.
    I don't think that is the direction we want to go. The free 
market has built up the most magnificent economies of this 
world. I remain a defender of the free economy. One of our 
former Presidents said that nothing is more representative of 
eternal life than a government program. And I think we heard 
the defenders here today of this program, despite the 
mismanagement, despite the fraud, despite the failures, we have 
an executive summary in front of me that says, as a matter of 
fact, that Export-Import Bank operated at a loss every year 
from 1982 to 1995. And when reform was passed, the FCRA, that 
meant the losses were backfilled by the taxpayer, and Ex-Im 
Bank received $9.92 billion in direct appropriations from the 
government between 1992 and 1996.
    When we talk about free economies, the United States used 
to be considered under the category of a free economy. We are 
not the freest economy in the world. We are not the fifth 
freest economy in the world. We are not even the 10th freest 
economy in the world. We have actually fallen out of the status 
called free economy. We have now dropped out of the top 10. We 
are considered a mostly free economy. And while the fault isn't 
at the foot of the Ex-Im Bank, it is death by a thousand cuts. 
This is just one example.
    I think that Congress needs to look at itself in the mirror 
and to see what we have done to contribute to a less free 
economy. I think there are four areas. One is we have the 
highest--look at the tax code in the United States. We have the 
highest corporate tax rate in the world, bar none, 35 percent. 
Then you add on to that the Obama new tax rate, the 3.8 
percent, various state--corporate tax rates, and you see how 
uncompetitive the United States is. We need massive tax reform.
    Then you look at the next factor, regulatory burden. The 
Dodd-Frank Act was brought up today. Obamacare was brought up 
today. The new EPA rules are new regulations. We have heaped 
upon American businesses the uncompetitive factor of a tax rate 
you might say through increased regulatory burden. That is 
number two.
    Number three is the United States Government, which has 
exceeded growth beyond the taxpayers' ability to pay for 
government services. We are growing the cost of government.
    And number four, the lack of sound money. We have seen 
through what the Federal Reserve has been doing, the increased 
inefficiency with sound money.
    Those four reasons alone aren't your fault. Those are the 
fault of the United States Congress and this Government. We are 
the ones who need to look in the mirror at how we have made 
this a less free economy.
    Regarding the Ex-Im Bank and the 4 firings that just 
occurred, that also doesn't include the 74 cases since April of 
2009, when Bank officials were forced to act on the basis of 
integrity investigations by the Office of Inspector General. 
There are dozens of other fraud cases involving the Ex-Im 
beneficiaries that have now been referred to the Department of 
Justice for prosecution. I see that my time is gone, but I ask 
unanimous consent to enter into the record several recent 
stories about the fraud that is going on at this Bank.
    Chairman Hensarling. Without objection, it is so ordered.
    Mrs. Bachmann. I want to stand on record that I oppose the 
continuation of this Bank because reform hasn't worked. We have 
been ignored.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from Georgia, Mr. 
Scott.
    Mr. Scott. Thank you very much.
    Mr. Chairman, this has, indeed, been a very, very 
interesting hearing, a very important one. Let me say at the 
outset that Atlanta is the world's busiest airport. And I 
always like to tell people that whenever you land at the 
airport in Atlanta, you land in Congressman Scott's district. 
So I say welcome to that. Certainly welcome to you, Mr. 
Anderson. I have listened to this discussion with a very 
jaundiced ear, and I don't see where the success and the 
movement forward of the Ex-Im Bank is not mutually--is mutually 
exclusive to addressing the concerns of our airlines. I would 
like to see the committee, Mr. Chairman, give some very 
thoughtful--we have a very talented, we have a very skillful 
committee, and it seems to me that we ought to be able to 
address these concerns narrowly focused on what Mr. Anderson 
and what Captain Moak are saying without interfering with the 
forward progress and the very basic need the Ex-Im Bank has 
provided for small businesses that Mr. Wilburn has done. There 
may be some on this committee who want to do away with the Ex-
Im Bank altogether. I am not one of those because it has been 
very beneficial. But I think we would be very derelict in our 
duty as a legislative body to ignore the very pointed concerns 
that have been raised by Mr. Anderson and Mr. Moak. I think we 
can have some folks from both sides go to work to try to put 
some language into this Ex-Im extension that will address those 
concerns.
    So, with that, Captain Moak and Mr. Anderson, let's narrow 
in specifically. I think what concerns you most is the 
competition with the wide-body or the Boeing 777. What can we 
do to put in some language that could address that? It could be 
a trigger mechanism. It could be an assessment, as Mrs. 
McCarthy said, mandating things that are rather difficult. What 
could we do to address those concerns and move this thing 
forward?
    Captain Moak. Thank you, Congressman Scott.
    First, I just want to thank you. I don't know if you 
remember, but you stood by my side in front of 1,000 Delta 
pilots in ``Keep Delta My Delta,'' and your speech is still 
viewed in that light when you stood up and said this is truly a 
David and Goliath, and when David was walking back and said, Is 
there a cause? There is a cause. He turned around and went 
back. The cause here is Ex-Im Bank reform. And I commit all our 
resources, everything, to work on that narrow part of the 
reform that we need so that we meet a fellow veteran's needs, 
small business needs, but we meet our needs so that we stop 
losing jobs. I would be happy to help. Our team will help. 
Anything we can do. Thank you again for that day. You know 
where we have come from there.
    Mr. Scott. Absolutely. And I certainly understand.
    Mr. Anderson, what would be the narrowest scope of language 
that we could add that would address your problem as we move 
the Ex-Im Bank forward?
    Mr. Anderson. The Bank would not finance below market wide-
body airplanes for state-owned, state-subsidized airlines that 
are otherwise creditworthy. There won't be a need, and that 
would solve the competitive issue, because what we are dealing 
with is a much broader competitive issue. And I think both 
sides of the aisle have addressed this. We don't compete in my 
business against other companies. In our business, we compete 
against government. So my big competitors, our big competitors 
internationally are governments that happen to have a 
department that is an airline. They get huge, huge subsidies, 
and it really hurts us when our government gives them a subsidy 
on top of the huge subsidy they already collect.
    Mr. Scott. My time is running out.
    Mr. Chairman, I think it might be wise that we could make a 
point of order that as we move forward with this, that we could 
develop some language--I would be delighted to work with your 
side on that--that I think could accomplish that as we move 
this forward.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from New Mexico, Mr. 
Pearce.
    Mr. Pearce. Thank you. I appreciate each one of you making 
the appearance here today.
    Mr. Wilburn, you had mentioned barriers to entry in 
subsidies to oil and gas as being one of the problems that you 
have as a business unit. Could you tell me a little bit more 
about those obstacles?
    Mr. Wilburn. I'm sorry, Congressman. Could you repeat your 
question? I didn't quite catch it.
    Mr. Pearce. I was asking if you could go a little bit 
deeper into the obstacles that you face as a small business. 
You had mentioned the barriers to entry and the subsidies to 
oil and gas, and I think you specified the depletion allowance. 
How is it those keep you out of the domestic market or make it 
less available to you?
    Mr. Wilburn. They make it less available to me because I am 
basically competing with the price of natural gas. Trust me, I 
am an advocate of strong natural gas resources here. But I go 
to landfills and I go to pollution sources, and I take that 
organic material, and I make methane. That methane has a cost, 
but it also has some benefits to it. It doesn't go to a 
landfill. Oil and gas has a subsidy if you want to call it 
that, that allows an advantage over my product. I don't have 
access to that, so I have to go to markets where I have a 
chance to compete, and those markets are where there is not 
natural gas reserves, and they don't receive those subsidies. 
That is the barrier entry of which I was speaking.
    Mr. Pearce. The oil and gas company has to pay for that. 
They don't just get the oil and gas for free. They have to pay 
for it, and so, basically, all that is is a depreciation of 
what they have paid.
    Mr. Wilburn. --the same benefit.
    Mr. Pearce. When you go to a landfill, do you have to pay 
to get the right to harvest that gas?
    Mr. Wilburn. Absolutely.
    Mr. Pearce. And so you don't get a writeoff for creating 
that gas? You don't get a writeoff?
    Mr. Wilburn. No.
    Mr. Pearce. That is probably something that we should 
consider. But in contrast, it is not the major producers that 
would provide a barrier to entry that don't get the depletion 
allowance. It is just the independents, the small producers. 
That is about 12 percent of the market.
    Mr. Chairman, we have talked today about the catastrophic 
effects that we are going to have on the job market if we don't 
take action one way or another, and there have been all sorts 
of suggestions here. But I don't think what we do here is going 
to affect jobs nearly as much as other things. And the 
gentlelady from Minnesota had gotten this covered pretty well. 
The corporate tax rate the President has set is probably one of 
the biggest impediments to business in America, and I sent him 
a letter personally saying I will work with you on that, sir, 
across party lines, across any other lines, because I agree 
that one of the greatest impediments to manufacturing in this 
country is the corporate tax, but I have yet to hear from the 
President, and that has been 4 years ago. But the regulations 
are where we really are killing the job market. For instance, 
the timber industry: 85 percent of timber jobs are now gone 
from America; 123 mills in New Mexico closed because of a 
government regulation, one government regulation that said the 
spotted owl is going extinct because of logging, and the 
government came back this last year and said, oops, logging 
wasn't the problem, so not only do we have a government that 
intervenes, but we have a stupid government that intervenes; 
23,000 agriculture jobs in the San Joaquin Valley went begging 
because of a 2-inch Delta smelt, another regulation. Now we are 
importing 80 percent of our vegetables from areas that spray 
things that we could not spray before, and that has hurt the 
job market in America more than what we do on the Ex-Im Bank.
    We, in 2007, passed a bill through this Congress that 
outlawed incandescent light bulbs. That killed the incandescent 
light bulb industry. That last manufacturing facility closed 
down, and China is able to produce the small curly bulbs that 
require more labor because of actions like this; and that was 
not an Ex-Im problem. We have continually put the consumers at 
risk by driving the price of electricity up, and the President 
has said, yes, electricity is going to be necessarily higher 
because of our regulations. And we are a 70 percent retail 
economy, and yet I hear no one on this committee who is 
defending the job creation of the Ex-Im Bank addressing that. 
We are killing the consumer market by higher electricity. It is 
the government that is at fault. The government is not the 
solution.
    I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Green, ranking member of our Oversight and Investigations 
Subcommittee.
    Mr. Green. Thank you, Mr. Chairman.
    I thank the witnesses for appearing, and I especially thank 
our two veterans who are part of this panel.
    And, Mr. Wilburn, I thank you because you indicated that 
you may be impacted by PTSD, and that says to me that you have 
had some experiences that are less than pleasant, and my 
prayers are with you.
    I am reminded of Chairman Barney Frank, who, on the topic 
of reality versus desires, would often say he wished that he 
could eat more and lose weight. I wish that I had options other 
than end it or extend it. I would dearly like to have options 
other than end it or extend it. But these are the options that 
we seem to be confronting, and I am a person who believes in 
compromise, and I am willing to work across lines to do 
something other than end or extend.
    But given that these are the options, let me just share 
some of the comments associated with the options that are 
before us. A Houston Chronicle editorial published on June 25, 
2014, that would be today: ``No time for games. Export-Import 
Bank loans support American jobs, including Houston area 
jobs.'' Apparently, Mr. Hochberg was interviewed by the 
Chronicle and gave his commentary. The Chronicle goes on to 
indicate large or small Export-Import Bank loans support 
American jobs, including jobs in the Houston area. Bank 
officials told the Chronicle that its financing has supported 
$11 billion in export sales from the area since 2009 with $3.5 
billion of that attributable to small businesses. The Bank also 
cost taxpayers nothing. It supports itself through the fees and 
interest it charges and regularly sends money to the U.S. 
Treasury to reduce the debt. This is from the Houston 
Chronicle.
    I concur with the ranking member with reference to there 
being persons of note who were not here to testify today. And 
if they were here to testify, I believe they would say, some of 
them, what the Greater Houston Partnership says. The Greater 
Houston Partnership indicates, and this is an excerpt: ``Small 
and medium-sized businesses in our region also benefit directly 
from Export-Import. Small businesses account for nearly 85 
percent of Ex-Im Bank's transactions. Further, these 
transaction figures do not include the tens of thousands of 
small and medium-sized businesses that support goods and 
services to large exporters using the Bank. We trust--this is 
addressed to me--you will carefully consider the impact Ex-Im 
Bank has on our region and our position as a global economic 
leader.''
    Now this letter, while sent from the Greater Houston 
Partnership, appears to be supported by the Bay Area Houston 
Economic Partnership, the Baytown Chamber of Commerce, the 
Brenham Washington County Chamber of Commerce, the Clear Lake 
Chamber of Commerce, the Greater Beaumont Chamber of Commerce, 
the Greater Houston Partnership, the Greater Tomball Area 
Chamber of Commerce, the Houston East End Chamber of Commerce, 
the Houston Northwest Chamber of Commerce, the Lake Houston 
Area Chamber of Commerce, the League City Chamber of Commerce, 
the Pearland Chamber of Commerce, the West Chambers County 
Chamber of Commerce, and the Wharton Chamber of Commerce.
    Finally, there are some small businesses in the Houston 
area which, if they were given the opportunity to testify, 
would indicate that they are supportive of the Ex-Im Bank as 
well. This would include the South Coast Products business. It 
would also include the Hallmark Sales Corporation in Houston--
this is not the card company--and the Everest Valve Company in 
Houston and others.
    Thank you, Mr. Chairman. I will yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Luetkemeyer.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    And I thank the witnesses for being here today. I certainly 
appreciate your testimony.
    Mr. Anderson and Captain Moak, thank you for your comments 
and concerns. I appreciate the fact that you have brought some 
issues to light with regards to the aircraft manufacturing 
sales portion or financing portion of the Bank. I think those 
need to be addressed, but I congratulate Mr. Wilburn also on 
being here and thank you for your testimony from the standpoint 
that we have several different things to look at and discuss 
here today, and that is the small business portion of this as 
well.
    In 2013, aircraft manufacturing made up only 40 percent of 
Ex-Im's financing; 40 percent went to other manufacturing; and 
20 percent went to oil and gas, base telecommunication 
services, and mining. So it does have a lot of other financing 
interests that it takes care of and works with. I think the 
statement has been made many times this afternoon and this 
morning that about 3,400 of the 3,800 loans it made were to 
small businesses, and so I think that at the end of the day, it 
is something that we need to consider, how we can find a way to 
reform it, make it work for everybody.
    I get this crony capitalism comment, and it kind of sticks 
in my craw a little bit from the standpoint that crony 
capitalism is truly when you hand out favors for somebody as a 
favor for them having done something for you. And yet the 
Federal Government helps with SBA loans. Is that crony 
capitalism? It helps with VA loans, helps a veteran own a home. 
Is that crony capitalism? We have in our treaties and in our 
export and trade tariffs and all sorts of treaty protections 
with regards to everything from automobile manufacturing, to 
agricultural products, to intellectual property to be able to 
protect and incentivize businesses here in this country to be 
able compete internationally and protect their products so they 
can compete and provide jobs here.
    Dr. de Rugy a while ago made the comment that she would 
like to see it all go away. Well, that would be great. If we 
lived in a perfect world, that would be fine. But if that would 
happen and none of the rest of the world disarmed, as the 
comment has been made before a couple of times, what would 
happen? Let's stop and think about that for a second. What 
would happen if we did away with all our tariffs, all the 
intellectual property protections, and the rest of the world 
could really come in and rape and pillage our industries 
through the this country. We would have no ability to protect 
them. They could compete, subsidize, and take all of our jobs 
away. Yes, we would lower the price of products at the 
supermarket and the hardware stores and whatever, but our jobs 
would certainly be gone, wouldn't they? And we would suffer. 
Quality of life would go down, and some things would be a 
national security problem for us because we would lose the 
ability to be able to build things, provide services for things 
that are of national importance to ourselves. In my district 
alone, we had the last lead smelter in this country, and it 
went out of business because of the EPA in the beginning of 
January. You know what we do with the lead that is mined in my 
district? We send it to China. You know what we do when we want 
to build a bullet? We have to go to China and buy our lead 
back. That is what would happen if you continue down this path 
of forgetting about how to protect the ability of our 
industries to compete.
    Is it a perfect world? No, it is not. It is not what I 
would like to have either. But at the end of the day, I think 
that we have to find a way to come together to realize that 
there has to be a way to find a middle ground on this, to 
reform this thing. I am a banker. I can tell you there are a 
half dozen things I would love to see changed about this thing. 
I am working with Congressman Campbell on trying to do that 
because I believe that this can be done. I believe that there 
is enough good about this thing, this entity that we can use it 
for the good of our people, our country and our industries. 
Does it need to be reformed, absolutely. There are a few things 
in there that drive me up a wall.
    And I am glad, Mr. Anderson and Mr. Moak, that you brought 
those to light today.
    Mr. Wilburn, you also make a great point from the 
standpoint of the importance of how this Bank can help small 
businesses compete, can grow, can market a product that may not 
be able to even be marketed here in this country but can be in 
other countries around the world. And by enabling our markets, 
our entrepreneurs in this country to be able to build that 
product, can market it and bring revenue to our country instead 
of sending it out.
    Mr. Chairman, I yield back the balance of my time. I 
appreciate the opportunity today.
    Chairman Hensarling. The gentleman yields back.
    The Chair now recognizes the gentlelady from Wisconsin, Ms. 
Moore.
    I'm sorry, if the gentlelady would suspend, I will 
recognize the gentleman from Texas briefly for unanimous 
consent.
    Mr. Green. Thank you, Mr. Chairman. I ask unanimous consent 
that the letters and documents that I referenced be submitted 
for the record.
    Chairman Hensarling. Without objection, it is so ordered.
    Now, I recognize the gentlelady from Wisconsin.
    Ms. Moore. Thank you so much, Mr. Chairman, for having this 
hearing. I think it is extremely important to everyone.
    I do want to raise a bit of caution to Captain Moak and to 
Mr. Anderson here. I have heard you say continuously that you 
want the Bank to be reformed and not dismantled. I have clearly 
heard that, but I want you to be clear that this hearing is 
about whether or not we are going to reauthorize this Bank, and 
the authorization is going to expire in 90 days or so. And 
there are not many days left in this session.
    Our chairman has been very articulate in indicating that he 
does not believe in this kind of government activity. We had a 
very passionate witness, Dr. de Rugy. I am sorry that she had 
to leave before I had a chance to ask her some questions. Very, 
very passionate, given her economic view that this is bad.
    So I want you to be clear that you are sitting on the side 
of people who do not want this to be extended.
    I also want to associate myself with many of the excellent 
questions and comments that have been made by my colleagues on 
both sides of the aisle and just really want to remind people 
that we are not talking about just Boeing or the airline 
industry here. I represent an area that is home to six Fortune 
1,000 companies, manufacturers like Johnson Control, Rockwell, 
and Harley-Davidson. We are second in the country in 
manufacturing, and we are dominated by small to medium-sized 
metal fabricators that export all over the world and really 
need the Ex-Im Bank, so we are not just talking about one group 
of employees, and I am very, very sympathetic and empathetic to 
them, but there are hundreds of thousands of other employees 
who rely on these activities.
    And, indeed, Delta got a $45.5 million subsidy from the 
Export-Import Bank for their engine maintenance services, 400 
jobs that rely on the Export-Import Bank in order to do 
maintenance, I believe for Brazil. I see you shaking your head 
over there. Maybe I will give you a chance to answer.
    I have a chart up here because there are a couple of things 
that I really want to point out. We have heard a lot of 
testimony about how the Export-Import Bank creates competition, 
and that green line below shows the last nine brand new 
airplanes that were built by Boeing. That is the interest rate 
and the price that they paid as compared to the commercial Bank 
financing rate in the red, and the blue line there is the OECD 
agreement, the gentleman's agreement that we have heard so much 
about, with regard to what export credit agencies can provide. 
So Delta is buying planes at that green level. We are not 
squeezing out the private sector.
    One other thing that I continue to hear over and over again 
was about the Cliff Mine in Michigan and how the Export-Import 
Bank was creating an uncompetitive situation. And I am 
disturbed because Caterpillar is headquartered in the Midwest, 
and they have a huge operation in Mr. Ryan's district right 
across the street from my district. Many of my constituents 
work at Caterpillar. And the iron ore that was coming out of 
the mine in Australia and the one coming out in Michigan were 
two different iron ores, two different applications. Apples and 
oranges are both fruit, but they are not the same. That was not 
the truth.
    I don't have much time, so I will yield the rest of my time 
to Mr. Heck.
    Mr. Heck. I would just like to make the point that the 
threat to the American manufacturing base is existential. It is 
very real. As we sit here, the Chinese, at considerable state 
investment, are developing an airplane to complete with both 
Airbus and Boeing--the C919, I believe. They have an export 
credit authority that is larger than ours, that is a larger 
percentage of their GDP than ours, and be assured that when 
they successfully complete development of their airplane, they 
will compete with us on the open market. More to say later.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from Tennessee, Mr. 
Fincher.
    Mr. Fincher. Thank you, Mr. Chairman.
    I am going to give Mr. Anderson briefly a chance to 
respond. I also have the question that you guys did receive 
financing from a Canadian import-export.
    Mr. Anderson. I am glad you asked the question about GOL 
Airways. First of all, Delta is a huge manufacturing company. 
We have 7,000 manufacturing jobs, and we are one of the largest 
engine overhaul companies in the United States. We run the 
largest shop in the United States. And GOL is a terrible 
example for the Ex-Im Bank, and I think it was something they 
contrived to try to say it created jobs at Delta, as we are an 
opponent of the Bank. In 2010, we won a worldwide competition 
to overhaul engines at GOL Airways in Brazil. It had nothing to 
do--the Ex-Im Bank wasn't involved, and we won it against 
Lufthansa and against GE to overhaul their engines in Atlanta. 
Two years later, the Bank went down to Brazil and gave them a 
loan for .622 percent--and I know about this because we own 
part of that airline--and then issued a press release saying it 
created 40 jobs at Delta. That is just false.
    Mr. Fincher. Okay. Mr. Anderson, let me start by saying, as 
someone who lives 60 miles north of Memphis, I love Delta Air 
Lines. And the pilots and the airline, the flight attendants, 
you do a great job, so please don't hold anything I say against 
me today as we fly in the future. I was born at night but not 
last night.
    I didn't support reauthorization last time of Ex-Im Bank 
because I felt that reforms that needed to be made were not 
made. But today, listening to the testimony from all three of 
you--and the doctor is gone--reforming Ex-Im Bank with reforms, 
I think you all would support reauthorization. Correct?
    Mr. Anderson. With reforms.
    Mr. Fincher. With reforms. As we have been talking, and I 
have a whole package of reforms here that we have been working 
on for the last 6 weeks, 2 months. A thousand jobs in the 
Eighth Congressional District of Tennessee, my district, are 
supported by the investment of Ex-Im Bank. This is not about--I 
have heard some people today talk about 10 big companies or 
whatever. This is not about leadership and our party. I think, 
as Republicans, we are all trying to get to the same place of 
having a government that is more accountable and more 
transparent and more responsible with taxpayer dollars. This is 
about, for me, the jobs in my district.
    And it is going to be hard for me to go back home, Mr. 
Anderson and Captain Moak and Mr. Wilburn, and have my 
constituents ask, ``Congressman, have you balanced the 
budget?'' And I am going to say, ``Well, we are working on 
it.'' And they are going to ask, ``Congressman, did you get rid 
of Fannie Mae and Freddie Mac?'' And I am going to say, ``Well, 
we are working on it with the PATH Act.'' ``Well, Congressman, 
the only thing that you have done is you have gotten rid of an 
investment that was creating a thousand jobs in our district, 
and now I am on unemployment. I don't have a job.''
    I have a paper right here: ``U.S. economy shrank at steep 
at 2.9 percent rate in quarter one.'' The Commerce Department 
says the first quarter contraction was even more severe than 
the 1 percent annual decline it estimated a month ago. Another 
major factor was a bigger trade deficit than initially 
estimated.
    Again, if we don't reform Ex-Im Bank, then we will have 
some real problems. And as a lot has been said today about the 
way that Ex-Im Bank is being operated, Mr. Hochberg, if they 
won't respond to the changes that we are trying to make, maybe 
Ex-Im Bank needs to be--maybe we will need to clean house 
there. But please, let's not overreact. Let's try to fix this 
investment. Let's make it better. Let's get back to the 
original mission of Ex-Im Bank, and don't hurt jobs in our 
districts.
    I am going to have a hard time, I am just going to tell 
you, going back home to my district and telling my people, my 
folks, that the only thing I have done is kill jobs for my 
district. Let's try to work this out. I think we can.
    Again, I have a whole list of reforms here I will be glad 
to talk to anybody about. I appreciate Mr. Campbell and the 
work he has done.
    And I appreciate all of you gentleman, and we are going to 
reform this hopefully and make it better.
    And with that, I yield back, Mr. Chairman.
    Chairman Hensarling. The gentleman yields back.
    The Chair now recognizes the gentleman from Maryland, Mr. 
Delaney.
    Mr. Delaney. Thank you, Mr. Chairman.
    I want to thank all the witnesses for joining us here 
today.
    Mr. Wilburn and Captain Moak, thank you.
    And, Mr. Anderson, I want to thank you, in particular, for 
joining us and for bringing so many of your colleagues. Delta 
is an important and iconic company. I think you all should be 
congratulated for the great work you have done positioning this 
airline as such a successful business. And the fact that all 
your colleagues joined you here today is a reflection of the 
good culture of the airline and your good leadership. So I just 
want to make it clear that I think what you are doing is 
terrific.
    Mr. Anderson. Thank you.
    Mr. Delaney. My question is actually more of a factual 
question. And perhaps, unlike some of my colleagues, I don't 
actually know the answer to my question before I ask it.
    But I was struck by this page when you put it up, and I was 
very concerned by it because, as I think many of my colleagues 
know, I care deeply about free markets and believe that market 
pricing should dictate all of, kind of, government financing. 
And when I saw this, I was very concerned about that, because 
it said that the government is making a loan at 3.4 percent and 
the same loan in the market would be made at 6.1 percent, and 
that is obviously a very big subsidy.
    But, as someone who is used to reading footnotes, I did 
read the footnote, and it said that the private-market example 
is something called Doric Nimrod Air Finance Alpha. I looked 
that up. And that is a special-purpose entity based in Ireland 
that owns 58 airplanes and leases those 58 airplanes to about a 
dozen carriers, including the Emirates. And it leases those 
airplanes on an operating lease basis, not a capital lease 
basis, which means the risk of ownerships and the benefit of 
ownerships are not fully transferred to the lessee.
    And so, when I saw this, recalling my days in the credit 
business, I said, well, this strikes me as a worse credit, 
because I would much rather lend directly to Emirates and have 
their full faith and credit saying that they are going to pay 
back every penny of the loan on a fixed amortization, which is 
what Ex-Im finances, versus the loan to a special-purpose 
entity that has, structurally and contractually, certain 
limited recourse.
    Now, I may be wrong about this, because, again, I am just 
reading the footnotes and I just did some searching on my 
little Google device here. But my question is, first, is that 
accurate?
    And, second, do you think, as the CEO of Delta, if you were 
to borrow directly from a Bank and put the--and I recognize you 
didn't have to borrow to buy your planes, which is great. But 
if you were to put the full faith and credit of Delta Air Lines 
on the line, as well as a lien on the aircraft you purchased, 
wouldn't you expect to borrow at a lower rate than if you were 
to set up an unrelated company that purchases the airlines and 
signs a lease to you with certain limited recourse and then you 
were to get a loan for that special-purpose entity?
    So I am really just trying to figure out what the apples-
to-apples pricing comparison is.
    Mr. Anderson. What we were to do here is make it apples-to-
apples. Okay? And if you go down through the footnotes, 
obviously, the coupon--these were both public market 
financings.
    Mr. Delaney. Right.
    Mr. Anderson. The one on the left had an Ex-Im Bank 
guarantee attached. Right? And you can see the collateral. The 
coupon is beyond question--
    Mr. Delaney. Yes, that is obvious.
    Mr. Anderson. The coupon was obvious. The loan-to-value 
ratio--with the Ex-Im, you get a higher loan-to-value ratio 
because you don't need as much equity. And what you have 
approximated here is that this is the Emirates credit, and--
    Mr. Delaney. But isn't it true that it is actually not the 
Emirates credit?
    Mr. Anderson. No. But it is the Emirates credit, based on 
what Moody's said. I can give you--
    Mr. Delaney. I read the Moody's credit report on my device 
here, and it talked about how the lessor had risk of the value 
of the asset at the end of the term and that it wasn't fully 
recoursed to the Emirates.
    Mr. Anderson. Pardon?
    Mr. Delaney. That it wasn't really recoursed to Emirates?
    Mr. Anderson. No, this is an apples-to-apples, because they 
were both issued at the same time and both of them were public 
financings.
    Mr. Delaney. Right, but--
    Mr. Anderson. And one of them decided they were going to 
lease, so I think the market-based financing was a lease-based 
financing on the A380s.
    Mr. Delaney. Right. But at the end of the lease term, the 
lessor takes back that airplane if the lessee doesn't--like, if 
you leased a plane, at the end of 10 years, if you didn't want 
the plane, you would give it back. And if--
    Mr. Anderson. Correct.
    Mr. Delaney. --someone had a loan on that plane, that loan 
won't be your obligation.
    Mr. Anderson. But airlines lease--we tend to want to own, 
right, because you get the residual value. But part of what the 
market is reflecting here is that they are going to return--
they want the option to be able to return the airplane in 5.7 
years, because that is the average life of the lease.
    Mr. Delaney. So, just a quick question. Do you think you 
should pay less for the direct Delta credit in the market 
secured by assets than you do for a lease?
    Mr. Anderson. Well, yes. You will--I think you are better 
off--well, it depends on the airplane. And that is probably 
what they are doing here. They probably want to own the 777s, 
but they probably only want to lease A380s.
    Chairman Hensarling. Time--
    Mr. Anderson. And this is what a lease looks like for 
Emirates at their credit.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from South Carolina, 
Mr. Mulvaney.
    Mr. Mulvaney. Thank you, Mr. Chairman.
    When we started today, I believe it was somebody on the 
other side--in fact, I know it was somebody on the other side, 
I believe it was Mr. Heck; I wish he was still here--who 
challenged us not to believe false statements regardless of the 
number of times they are repeated. And I think that is always 
good advice.
    I would think it is similarly good advice to not believe 
statements that you can't prove. And one of the things that I 
think he said--and I don't want to put words in his mouth, but 
I couldn't find the transcript--was that the Export-Import Bank 
had created 255,000 jobs last year. If I have that number 
wrong, I apologize. If I got the exact verbiage wrong, I 
apologize. But that was the general extent of things. Nobody 
can prove that number.
    And I want to explore that a little bit. I want to explore 
the weaknesses in these job numbers. Mr. Fincher talked about 
1,000 jobs in his district. Nobody can prove that number.
    Mr. Anderson, you have mentioned in your testimony that the 
Export-Import financing in the aviation sector has cost you all 
7,500 jobs. Ex-Im says that its Boeing-related activities 
created 51,000 jobs. Who am I supposed to believe between those 
two?
    Mr. Anderson. Me.
    Mr. Mulvaney. Why?
    Mr. Anderson. In the instance of Delta, in the example that 
we used with Air India, that actually happened. We went through 
a reduction in force. Fortunately, we were able to get enough 
employees to take voluntary early retirement. But when we 
pulled all that flying out of India--we had a very successful 
business flying to Mumbai. And we bought, by the way, two 777s 
and financed them ourselves to be able to do that service. And 
so, I know those jobs are there.
    I think you make a correct intellectual point on both sides 
of the debate, honestly, in that it is very difficult to put a 
precise number, for you or for any of us here.
    And so I guess what I rely back on is, I see what goes on 
in the marketplace. We have one going on right now in JFK to 
Milan, Italy, with Emirates Airlines, which has financed 
airplanes from the Ex-Im Bank. And they have dumped 65--they 
have increased the capacity in Milan to JFK 65 percent. That is 
going to have an impact on jobs in the United States over time. 
And they are deeply subsidized, which probably really gets to 
the deeper point of trade subsidies.
    But, look, you make the right intellectual point. These are 
estimates; they are estimates by everyone. And they are a best 
judgment. I will tell you, the Air India numbers are right, 
because I was involved in pulling it down and having to do the 
reductions in force.
    Mr. Mulvaney. And if you do scratch a little bit deeper at 
the Export-Import Bank numbers, what you will see is they are 
using formulas that use information from 2002.
    If Ms. de Rugy was here, I would talk to her about the 
foreign components. Boeing advertises that 30 percent of the 
787 is made overseas. And it is unclear how many of those 
255,000 jobs, Mr. Heck, are actually jobs overseas. In fact, 
when the GAO asked the Export-Import Bank about that in its May 
report, it said that Ex-Im officials told us they had not 
assessed the extent to which this limitation affects the 
overall jobs estimate.
    ``Supported'' versus ``created'' is another little twist of 
the language. ``Supported'' and ``created'' are not the same 
thing. Just because a job is supported, doesn't mean it is 
going away if the Export-Import Bank financing goes away at the 
same time.
    I think it is important to recognize one thing as we deal 
with these things and we start using these numbers when we talk 
about jobs: The only reason the Export-Import Bank counts jobs 
is because of us. That is it. That is the only reason they 
count jobs, is so they can come in here and try and justify 
their existence.
    I am not making this up myself. I am looking at the GAO 
report, and it says, ``Export-Import officials told us they use 
the results of its jobs calculations for reporting purposes 
only. According to the Ex-Im officials, Ex-Im calculates the 
number of jobs supported for the transactions reviewed by the 
board of directors at the request of one of its board members. 
Ex-Im board members stated that the purpose of reporting these 
numbers is to give Congress a sense of the employment effects 
of Ex-Im activities. They do not use them for decision-
making.''
    The only reason they are giving you the 255,000 number is 
because they want--excuse me--255,000 jobs is because they want 
to continue to exist. And at some point we have to decide which 
numbers are real and which numbers are fake.
    And I would suggest to friends of mine on both sides of the 
aisle that, as between a government agency and bureaucracy that 
is trying to make an argument for getting more money and 
continuing to exist and a private sector company that is simply 
saying, please leave us alone so that we can compete, it is the 
latter that is the more reliable number. And the 255,000 is not 
a real number. But the 7,500 jobs that Delta lost are real, and 
that is what we should be focusing on.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair recognizes the gentleman from Washington, Mr. 
Heck.
    Mr. Heck. Thank you, Mr. Chairman.
    And to clarify the record, it is 205,000 jobs for 2013. I 
believe it was 255,000 in 2012, as reported by the industry, 
actually, to the Export-Import Bank.
    Mr. Anderson, I want to ask you a question to which I 
suspect I know the answer. Would you favor continuation of the 
Small Business Administration?
    Mr. Anderson. I don't know anything about the Small 
Business Administration. I am a large business. I could 
certainly go learn about it, but I--
    Mr. Heck. Please don't.
    Mr. Anderson. --don't know. I just don't know. I have never 
done any studies. I have never had anything to do with the 
Small Business--I don't even really know what it does.
    Mr. Heck. I asked because I thought I knew the answer, 
which I did, and I thought you would have said ``yes.'' And I 
was--
    Mr. Anderson. I can say ``yes'' if you want me to.
    Mr. Heck. It is nice to know what kind of thought you give 
to your testimony here today, sir.
    Mr. Anderson. Well, no, I am just totally--if you think 
that it is--
    Mr. Heck. No, I--
    Mr. Anderson. --a worthwhile program, I am happy to--
    Mr. Heck. Time out. Time out.
    Mr. Anderson. --support it.
    Mr. Heck. I--
    Mr. Anderson. I didn't come here to testify about the Small 
Business Administration.
    Mr. Heck. Admittedly.
    And I wanted to make the analogous point that the SBA, in 
some ways, functions as the Export-Import credit does. The SBA 
enjoys an enormous amount of public support and is kind of a 
given. And I wanted to give color to your earlier remarks that 
it was a reformed Ex-Im going forward you were seeking, not 
elimination of it. That was my only motivation.
    I do want to make the point that those of you who are 
aggressively seeking reforms, which may or may not enable the 
continued existence of Ex-Im in any kind of meaningful way, are 
playing with fire. You are playing with fire.
    I want to go back to how I ended up, in my brief time that 
the gentlelady from Wisconsin gave--we could wake up in 20 
years and still have a duopoly in terms of airplane production 
in this world, but unfortunately it would be Airbus and the 
state of China and their C919. I don't think America would be 
better off for that. I think America would be worse off.
    It is the broader point I seek to make, however, which is 
the importance of aerospace production, which is one of the 
important beneficiaries of the Export-Import Bank, and the 
domestic industrial base of this great Nation. We don't want to 
lose it.
    We have lost really key components of our industrial base 
over the last several decades, and most of us have lived to 
regret it. But the difference is this is not one we can 
reconstitute very easily. And, in fact, it is not unrelated to 
this Nation's security. The hundreds of thousands of people who 
put together those great airplanes and, frankly, those national 
security products are a part of keeping this Nation safe.
    And, again, I think we are playing with fire if we think 
that we can do away with the Export-Import Bank and not have 
that critical part of our industrial base decline. I think we 
are playing with fire if we think we can be as aggressive about 
certain kinds of reforms that would have that effect and not 
acknowledge it.
    I was delighted to hear my friend, Mr. Campbell, indicate 
that he had come up with a bill. I respect him a great deal. 
This institution is going to miss him. Frankly, I am going to 
miss him. This committee is going to miss him. And I thought it 
was an act of considerable integrity that he accepted 
responsibility for the development of that which he presented 
today, having been just done on that side.
    He knows that I talked to him on the Floor months ago and 
asked that our side be a party to those conversations. But we 
are where we are. And Mr. Campbell has taken the constructive 
step to put a bill on the Floor, which--or a bill on the table, 
which none of us have had the opportunity to read, so we know 
not what its impacts will be.
    But here would be my point about that, and granting him 
credit for that work, which I know was hard: The exact number 
is 97. Ninety-eight days from now, the doors of the Export-
Import Bank will shutter, and America will be worse off for it.
    And the alternative is that we have a hearing on an actual 
bill that Mr. Campbell has developed and begin the give-and-
take about what the path forward might be. Because, in fact, we 
only have 97 days.
    And I don't want to wake up in 20 or 30 years, should I 
have the great blessing to still be around, and look back and 
rue that we were the ones that allowed another enormous 
degradation of our Nation's domestic industrial base, as we 
have in so many other sectors. This Nation cannot afford it. 
Our quality of life cannot afford it, our standard of life 
cannot afford it, and the health of our economy cannot afford 
it.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Kentucky, Mr. 
Barr.
    Mr. Barr. Thank you, Mr. Chairman.
    Thanks to the witnesses for your patience and for your 
persistent testimony here today.
    First, for Mr. Wilburn, I appreciate that you are a small 
business owner and you are an entrepreneur. You mentioned that 
you were ``a free-market guy.''
    Are there other means that you could identify making your 
company more competitive in the global marketplace besides 
reauthorization of the Ex-Im Bank? For example, lowering the 
highest corporate tax rate in the developed world? Ending the 
war on domestic energy production to make sure that we have an 
affordable and reliable supply of industrial energy costs? 
Repealing Obamacare, for example? Promoting free trade? 
Lessening the regulatory burden on U.S. companies, which is 
estimated to cost the American economy $1.8 trillion annually?
    Do you see some of these policies, which produce 
impairments to our competitiveness, as equally or even more 
important than reauthorization of the Ex-Im Bank to your bottom 
line?
    Mr. Wilburn. Speaking to my bottom line, I think all these 
things that you mentioned need to be considered in the argument 
that they are going to have in the next couple of days here 
really.
    And it is important, I think, to give you a number, if I 
may just diverge from the question for a moment. There were 165 
jobs that we created. We audited those. We will be happy to 
share that with the committee. But--with our project in Brazil.
    But, to your point, without the Export-Import Bank existing 
in a form that would allow me to compete with the ECAs of the 
world, for my products to get there, I can't imagine my company 
surviving.
    But I also think, as a free-market person, that a lot of 
the reforms that you are talking about and a lot of the 
policies you are talking about need to be debated, need to be 
debated civilly. We don't need to use words like ``crony 
capitalist'' and insult some of my people and small business 
people with that. We need to get into the productive words like 
you just mentioned, have a discourse.
    Mr. Barr. Just to conclude, you would agree, then, that 
there are many, many ways to make the United States and our 
businesses here, including yours, much more competitive 
independent of the Ex-Im Bank issue?
    Mr. Wilburn. Absolutely.
    Mr. Barr. Okay.
    Let me just ask the other witnesses to comment on that, as 
well, just very, very briefly.
    Captain Moak. The one thing I would focus on is, it is one 
thing competing in a free marketplace, and it is another when 
our government subsidizes our competitor.
    That is what we are here about. We are not here about all 
these other things that people are bringing in. We have 
somebody, our own government, government policy subsidizing 
someone, putting a piece of equipment on top of us. We are 
losing jobs. That is what we are about.
    Mr. Barr. Thank you, Captain Moak.
    And, Mr. Anderson, when you answer the question, I would 
also put something else out there for you to comment on. In 
response to my colleague Mr. Capuano's argument earlier in the 
hearing today--and I will summarize his argument: Since 
everybody else is doing it, we should, too. And we have heard 
that in some form or fashion from a number of my colleagues 
here today.
    Is that the right attitude? That because everybody else is 
doing it, we should do it? And how would you respond to that?
    Mr. Anderson. In our specific instance, it is not everybody 
else; it is three countries. It is England, France, and 
Germany, our three closest allies and trading partners. So, in 
terms of aircraft finance, this is--and everything else we do 
with those three countries, this is something that is 
immediately solvable with respect to financing.
    On the broader question, I think the really broader 
question is, I don't think we are very good at negotiating 
trade agreements in our country. And while we all support, I 
think on both sides of the aisle, the free trade, what ends up 
happening is we all--in our industry, we don't have free-trade 
agreements. We have unfair-trade agreements.
    And I think the biggest thing we could do as a country is 
make sure our trade agreements are, in reality, free-trade 
agreements and that U.S. companies are not put at a 
disadvantage.
    Mr. Barr. Mr. Anderson, in my remaining time, I will note 
that I appreciated your comments about lost pensions at your 
company. In my congressional district and just outside of my 
congressional district, my constituents in the coal industry 
have not only lost their pensions, they have lost their jobs. 
And what the Export-Import Bank looks to do is to harmonize 
their policies with the Administration's job-killing policies 
that have put those people out of work.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Michigan, Mr. 
Huizenga.
    Mr. Huizenga. Thank you, Mr. Chairman. I appreciate that.
    Mr. Anderson, I know you were being quizzed about the Small 
Business Administration. I won't ask you about the EPA, I won't 
ask you about NLRB, I won't ask you about a lot of other things 
that have been going on in the Administration. But it does 
strike me, after doing a little basic Internet research here, 
that we might be talking about the ``big business 
administration'' here, with Ex-Im.
    General Electric has $656.6 billion in assets on their 
balance sheet, which includes a financing arm, GE Capital, with 
$517 billion in total assets. That makes them the eighth-
largest Bank holding company in the United States. The Boeing 
Company, with $92.7 billion in assets on their balance sheet, 
with their finance arm with $3.9 billion in total assets. 
Caterpillar--I am familiar with heavy equipment. I own a small 
sand and gravel operation, and have owned Caterpillar products 
in the past. Their assets are $89.9 billion on their balance 
sheet.
    I guess maybe my question is, companies--and you are very 
familiar with how you finance large companies. And as you are 
going through--and you said earlier you paid cash, or will be 
paying cash--I am not sure exactly how that works, if it is up 
front or afterwards--but you are purchasing 100 airplanes. How 
does financing of these large companies work?
    Mr. Anderson. Typically, financing in the large companies 
work through public markets in the United States. So those big 
firms will go to the public bond markets. The Bank markets have 
really dried up after Dodd-Frank and the economic reforms. So 
there is still some Bank financing, but, by and large, it is 
both public market equity financing, public market secured 
financings, and public market financings.
    I will note that GECAS and the Bank compete all the time. 
So we own a stake in a company called Aeromexico, and 
Aeromexico bought some Boeing airplanes. And after it was over 
with, General Electric was competing against the Ex-Im Bank to 
finance the fleet. So GE kind of has a foot in both camps. They 
are the largest aircraft--
    Mr. Huizenga. Hey, if you can have your cake and eat it, 
too, that is a pretty good spot to be in.
    Mr. Anderson. They are the largest aircraft financier in 
the world, with GECAS, and at the same time they make engines 
and they are a participant in Ex-Im Bank financing. But then 
they compete all the time against the Ex-Im Bank financing arm 
to see if they can get the airline business around the world.
    Mr. Huizenga. I guess my question is, couldn't these 
companies find traditional financing?
    And, you had put up the Emirates Air situation. I think it 
is a $100-billion sovereign wealth fund that they have. And the 
number that we have heard is 98.4 percent of all exports don't 
use Ex-Im financing; they are done the traditional way. That 
means about 1.6 percent that do, of which about a third 
probably could not get that kind of traditional financing.
    I know, Mr. Wilburn, you might fall into that. But if I 
were you, frankly, sir, I would be a little concerned that you 
have major companies like that literally sopping up any 
opportunity that you have and other small business owners might 
have to access some of these programs. And yet you get trotted 
around as the showpiece of why we need to keep this, when, in 
fact, it is clearly going to these massive, massive companies.
    I don't know if you care to comment.
    Mr. Wilburn. With all due respect, nobody trots me around--
    Mr. Huizenga. Okay.
    Mr. Wilburn. --except me.
    Mr. Huizenga. I'm sorry. I did not mean specifically you, 
but--
    Mr. Wilburn. No, I understand that, sir, and I--
    Mr. Huizenga. --I have a number of companies that come in.
    Mr. Wilburn. I understand.
    Mr. Huizenga. I can tell you this. They don't come in with 
the big companies. They come in trying--
    Mr. Wilburn. I will give you my--
    Mr. Huizenga. --to play the small.
    Mr. Wilburn. I will give you my balance sheet. I am a 
private company. To put it in perspective, it is $5 million 
right now. Okay? So you are right, I am competing with 
billionaires. Okay?
    But there is a lot in common with these billionaires that I 
am hearing today that encourages me. Because if I can get these 
types of executives to give this kind of focus to small 
business and say that they are willing to work and negotiate to 
keep to the Export-Import Bank alive, I am all for that. I want 
to sit down with these gentlemen again.
    Mr. Huizenga. That is great. In my last 10 seconds, I guess 
I would express to you I am not concerned that is the focus of 
the Ex-Im.
    And, Mr. Anderson, I will gently remind you that, actually, 
Canada is our largest--as Chair of the Inter-Parliamentary 
Group with Canada, I have to point that out they are our 
largest trading partner.
    Chairman Hensarling. Time--
    Mr. Huizenga. Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Ohio, Mr. 
Stivers.
    Mr. Stivers. Thank you, Mr. Chairman.
    Before I begin my remarks, I would ask unanimous consent to 
submit a letter from PPG, which is a company that has 200 
employees in my district. I would like to submit their letter 
for the record.
    Chairman Hensarling. Without objection, it is so ordered.
    Mr. Stivers. Thank you.
    Thank you for being here. I would like to thank all the 
witnesses for being here. I guess Ms. de Rugy could not stay. I 
am sorry to hear that.
    I actually care what the panel thinks. I am not going to 
make a 5-minute statement. I am going to ask you some questions 
because I came to learn from you. And I appreciate the chairman 
putting this panel together.
    So you have all spoken earlier. Could you please raise your 
hand if you could support Ex-Im Bank reauthorization with 
meaningful mandatory reforms? With meaningful mandatory 
reforms, could you support reauthorization?
    Mr. Anderson. Provided it addresses the issues that I have 
laid out--
    Mr. Stivers. Sure.
    Mr. Anderson. --and we stop--
    Mr. Stivers. You have passionately laid those out.
    Mr. Anderson. Yes.
    Mr. Stivers. Let's assume it addresses your issues with 
mandatory reforms.
    Could we see that again? Could you raise your hand?
    Captain Moak. Could I just say--
    Mr. Stivers. Mr. Wilburn, are you for reauthorization 
with--
    Captain Moak. Could I say, reforms, accountability, and 
compliance?
    Mr. Stivers. Sure. Okay. Reforms, accountability, and 
compliance.
    Could you please raise your hand if you are for 
reauthorization of the Ex-Im Bank with reforms, accountability, 
and compliance is mandatory, that sticks, and that addresses 
the issues you--
    Mr. Anderson. That stop wide-body financing--
    Mr. Stivers. So did everybody raise their hand? Okay.
    Chairman Hensarling. I am not sure your microphone is on, 
Mr. Wilburn.
    Mr. Stivers. Okay. He wants to know what the mandatory 
reforms are.
    But you could support it--
    Mr. Wilburn. The concept? Yes. There needs to be--
    Mr. Stivers. --with reforms?
    So I just want to show everybody who happens to be watching 
that the panel unanimously--I'm sorry Ms. de Rugy could not 
stay. The irony is that she is from France--
    Mr. Anderson. She would probably vote ``no.''
    Mr. Stivers. She might vote ``no,'' but she didn't stay, so 
the panel is unanimous in supporting reauthorization with 
meaningful mandatory reforms.
    Many of my colleagues, I think, do very well in the 
theoretical world, but I live in the real world. And 41 
countries have export finance agencies. And, I think Mr. 
Sherman from California talked about unilaterally disarming. I 
think that is a bad idea. But I think there is a way forward 
here.
    Mr. Anderson, you passionately argued for some meaningful 
reforms. And you talked about the handshake agreement between 
Boeing and Airbus of France, and they now agree to exclude some 
things and not cover certain things.
    If the United States completely walked away and did not 
reauthorize the Ex-Im Bank, do you believe Airbus would hold 
firm to the handshake agreement? It is kind of like--the 
handshake agreement is like mutually assured destruction, 
right? So they each have something, and they agree not to use 
it. If Boeing didn't have it, do you think Airbus would stick 
with the handshake agreement?
    Mr. Anderson. The commercial leader, John Leahy, at Airbus 
has said yes, that if the United States--and you hear this from 
both sides. I have heard it from Boeing, and I have heard it 
from Airbus: ``If the other side stops using Ex-Im Bank 
financing, we will stop using it.'' And I have that from the 
chief commercial officer of Airbus, and I have had it from 
Boeing executives.
    Mr. Stivers. I hope that is right.
    And I will tell you that I believe that--and I am sending a 
letter to the U.S. Trade Representative and trying to get some 
of my colleagues to support it, to ask that we immediately 
enter into negotiations with the OEDC and with all the 
countries around the world, the 41 countries that have export 
finance agencies to end them simultaneously.
    But I think if we end ours with the hope of goodwill that 
they might do the same thing, that might be a little 
shortsighted. I am sure that Ms. de Rugy and the academic world 
thinks that is a great idea, but I am not sure it works in the 
real world.
    Yes?
    Captain Moak. I just have one point of clarification--
    Mr. Stivers. Yes, Captain?
    Captain Moak. --Congressman. Thank you.
    This unilateral-disarmament talking point that people use 
all the time that I hear, the buzz word, the reality is, this 
government policy here, we are arming our competitors.
    Mr. Stivers. No, I--
    Captain Moak. Right now, our competitors are--
    Mr. Stivers. I recognize the need for reform.
    Captain Moak. We need that to come out.
    Mr. Stivers. I recognize the need for reform. But if we 
completely walk away from the entire thing--90 percent of these 
transactions are small business, like our other witness, Mr. 
Wilburn.
    And I have one last question. Did anybody read the 
Financial Times today?
    Mr. Anderson. No. I was getting ready to do this.
    Mr. Stivers. Okay. I am sure you were.
    So Mr. Luetkemeyer from Missouri mentioned earlier that 40 
percent of our finance transactions globally were covered by 
the OEDC rules. This year, it is down to 34 percent.
    The real risk is the rise of transactions that are not 
covered by the OEDC rules. That is why it is so important for 
us to engage in negotiations to fix this simultaneously across 
the world.
    Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Wisconsin, Mr. 
Duffy.
    Mr. Duffy. Thank you, Mr. Chairman.
    Listen, on our side of the aisle, we oftentimes like to 
talk about free markets and free enterprise, how we are big 
advocates of that. But oftentimes we advocate that in theory, 
and sometimes in practice we are not so great at it.
    I think this has been a fascinating debate and conversation 
about Ex-Im reauthorization and, kind of, how we fall into the 
debate. None of us wants to see us lose American jobs. No one 
wants to see Ex-Im go away and Boeing see some substantial job 
losses. And we don't like to see the American taxpayer arm our 
competitors, which causes Delta to lose 7,500 jobs or more.
    I was sensitive to Mr. Fincher's comments about all of us 
who talk about balanced budgets and cutting spending, and one 
of the big first things we do is we cut Ex-Im Bank, and he has 
to go home and explain why he has lost a thousand jobs as the 
one big cost-cutting measure that he has done in Congress. That 
is a tough one.
    I think it brings us back to the budget debates we had at 
the start of this year, where we talked about cutting spending 
all over the place, but the first place we go is to cut the 
cost-of-living benefit increases to our retired veterans. Our 
veterans would all be onboard to cut spending, but if they are 
to say, listen, we are the first place you are going to go? You 
are going to cut us first? There are a lot of places you can 
cut. We will do our part, like we always have, but don't come 
to us first.
    Just a comment on our debate that we always have in the 
House.
    I appreciate Mr. Stivers' comments about the panel's 
commitment to--or, reserved commitment to reauthorization of 
Ex-Im.
    Mr. Anderson, what kind of reform do you think is 
necessary?
    And I know that, Mr. Moak, you talked about reform 
compliance and accountability.
    But what is needed on the reform front? Not just window-
dressing, what is the real reform that is necessary to make Ex-
Im work and get you to buy in?
    Mr. Anderson. Stop arming my competitors and taking my jobs 
away.
    Mr. Duffy. Throw me some specifics. You are advising the 
committee.
    Mr. Anderson. The specifics were the ones that were ignored 
the last time we did this and the Bank thumbed its nose at this 
committee.
    Mr. Duffy. Okay.
    Mr. Anderson. And it was very specific. We have to stop 
providing U.S. Government subsidies to foreign-flag, 
government-owned airlines that are usually subsidized on their 
own and have enormous creditworthy balance sheets.
    Mr. Duffy. No, no, I--you have made that point for 3 hours.
    Mr. Anderson. Let me be very blunt about this.
    Mr. Duffy. Sure.
    Mr. Anderson. Let's be very clear what happens with this 
financing. It improves the profit margins of the top 10 
companies in the United States that use it all the time. Okay? 
That is really what it does.
    Mr. Duffy. Mr. Wilburn?
    Mr. Wilburn. I have one reform that I would like to 
suggest--
    Mr. Duffy. Sure.
    Mr. Wilburn. --to the committee and to the Ex-Im Bank. Put 
more focus on small business job growth. It is as simple as 
that. Set not some kind of specious goals but some real goals. 
That is what I would like to see. I would like to really see it 
become the Bank of small business.
    Mr. Duffy. Just, I want to go to the gentlemen's agreement 
because I find that fascinating, that those countries who are 
providing the financing--oh, I'm sorry.
    Mr. Moak?
    Captain Moak. I just want to make that point. It is getting 
missed here because we are here, but over in Europe, British 
Airways, Lufthansa, and Air France want this to come down also 
because they can't access it. Okay? Airbus shouldn't be allowed 
to access ECA subsidies. They are getting--
    Mr. Duffy. Right.
    Captain Moak. --killed the same way Delta Air Lines is.
    Mr. Duffy. Well, in a sense--
    Captain Moak. So we need that reform there also. That is 
what is missed here.
    Mr. Duffy. And on the gentlemen's agreement, I find it 
interesting that the countries that provide the subsidy, if you 
want to call it a subsidy, are the very countries who are hurt. 
Where if you said, listen, we are going to allow the United 
States, Delta Air Lines, to say, well, listen, we are--all 
things being equal, I would say that Boeing makes a better 
plane, but if Boeing and Airbus were equal--
    Mr. Anderson. Not always.
    Mr. Duffy. --you could say--we will debate that later--you 
could say, listen, I am not buying any Boeing airplanes, 
because I am going to go buy Airbus, and I am going to get 
subsidized just like the rest of the world gets subsidized.
    But you don't have that option, right?
    Mr. Anderson. Well, no, you don't get--we don't get 
subsidized.
    Mr. Duffy. I know you don't, because you can't get--because 
of the gentlemen's agreement?
    Mr. Anderson. There is the gentlemen's agreement between--
it is between Airbus and Boeing. It is the gentlemen's 
understanding--
    Ms. Duffy. Okay.
    Mr. Anderson. --that Ex-Im Bank financing won't be used in 
the United States, England, France, Germany, or Spain, because 
those are home-market countries where Airbus and Boeing 
airplanes--it will be an interesting question when Airbus 
starts making them in Alabama.
    Mr. Duffy. Fair enough.
    I yield back.
    Chairman Hensarling. The gentleman yields back.
    The Chair now recognizes the gentleman from Indiana, Mr. 
Stutzman.
    Mr. Stutzman. Thank you, Mr. Chairman.
    And thank you, gentlemen, for being here today. I have 
enjoyed the testimony and your comments so far.
    Obviously, this is something that is a big concern to a lot 
of us and especially those of us who want to see the private 
sector handle as much capacity as possible, especially when you 
are hearing a lot of discussion about Banks having plenty of 
capital, that people are looking to help.
    One of the folks that I spoke with in Indiana used to be a 
customer of Ex-Im Bank, and because of just the volatility 
around it and also his particular interest in finding another 
solution, he was able to.
    And so I guess maybe my first question would be directed to 
you, Mr. Wilburn, because I am a small business owner, as well. 
I understand the difficulties, the pressures that are on small 
businesses trying to make things work and trying to find new 
markets.
    Can you tell us a little bit, what else did you look at to 
see if there was another replacement besides Ex-Im, whether it 
was financing through a bank and some sort of insurance in 
executing transactions, anything like that you would have 
looked at before Ex-Im?
    Mr. Wilburn. I looked at all of those options with, 
primarily, my Bank, Wells Fargo, which was gracious enough to 
give me that working capital loan we talked about, where I had 
to leverage everything to support those export activities. But 
I am always, always constantly searching for those types of, I 
will call them, private solutions with Banks. And they are 
responsive, they will listen to me, but they don't respond with 
the funding.
    And, again, it is not my credit that is really called into 
question. When I am exporting my product to those exporting 
countries, I am relying on their credit and their 
creditworthiness. And it is difficult for my Banks to get that 
collateral and seize it, if you know what I mean--
    Mr. Stutzman. How long have you been in business?
    Mr. Wilburn. Ten years.
    Mr. Stutzman. Ten years. So did you see any difference 
before the Banking collapse? Was there better access to credit? 
When did you start using Ex-Im?
    Mr. Wilburn. I had a partner--my partner was one of the 
major investment Banks that was the last--I am underneath a 
nondisparagement agreement, so I have to be cautious. But, yes, 
they went Bankrupt. I didn't. My company was strong. It cost me 
$11 million to unwind that and 3 years to unwind that 
relationship.
    Mr. Stutzman. And that was before you started using Ex-Im?
    Mr. Wilburn. Yes, absolutely.
    Mr. Stutzman. So do you think--
    Mr. Wilburn. I was funded with a $25-million revolving 
credit line by that particular agency.
    Mr. Stutzman. So do you think the pressure today on Banks, 
whether through just the regulatory environment, Dodd-Frank, do 
you think that is putting more pressure on Banks and their 
ability to lend to small businesses and helping them in 
situations like yours?
    Mr. Wilburn. I tried to understand it and I have tried to 
address it in my remarks, and I was a little clumsy at it doing 
my research, but all I can say is that I think there are some 
barriers to entry for small business guys like me. And we have 
to take a look at the rules and the risk profiles to make it a 
more level playing field for us to have access to those capital 
markets.
    Mr. Stutzman. Mr. Anderson or even Captain Moak, would you 
have any information regarding that and just your experience 
around Ex-Im? And I know you are focused more on the bigger 
side, but smaller business, are there other opportunities and 
other solutions for smaller businesses to work outside?
    And would you make any comments about just the difficulty 
with credit today and the regulatory environment in which we 
live?
    Mr. Anderson. I can talk generally, that the credit 
environment is a much, much tighter credit environment. And 
with the mark-to-market rules, a lot of the Bank lending that 
we used to rely on, particularly in Europe, to finance 
airplanes is gone.
    So the number of sources for large structured finance, 
particularly given the Basel II requirements and the mark-to-
market requirements, have really tightened up credit quite a 
bit in our industry. And a number of sources we used to have, 
where you could get a mortgage on an airplane, you can still 
get it, it just takes what Fannie Mae requires for a home, a 
bigger downpayment, a better credit rating--
    Mr. Stutzman. Yes.
    Mr. Anderson. --a better FICO score.
    Mr. Stutzman. And those are all the hard things with which 
small businesses have to deal.
    Captain Moak, you wanted to make a comment?
    Captain Moak. Yes. The only thing I would add is, we are 
going back to 2008 with the collapse. Okay? The U.S. Congress 
over a few days in 2008 was able to deal with that and come out 
with legislation. I am confident this body can address reform 
in less than 90 days on this issue.
    Mr. Stutzman. And, Mr. Chairman, if I could just make the 
comment, I think that we are focusing on something here that is 
a symptom with the regulatory environment that we live in, and 
we are trying to reauthorize a Bank that isn't part of the 
solution. We should be focusing on the--
    Chairman Hensarling. Time--
    Mr. Stutzman. --regulatory environment that we have.
    Thank you. I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    There are no other Members in the queue. So, Mr. Anderson, 
Captain Moak, Mr. Wilburn, we thank you for your testimony.
    We will excuse the first panel at this time.
    We would invite the members of our second panel to please 
make their way to the witness table.
    The committee will come to order.
    We will now turn to our second panel of witnesses, many of 
whom are familiar faces to this committee, so my introductions 
will be brief.
    If staff can be instructed to shut the hearing room doors.
    First, the Honorable Fred Hochberg currently serves as 
Chairman of the Export-Import Bank, a position he has held 
since 2009. The Honorable Osvaldo Gratacos currently serves as 
the Inspector General of the Ex-Im Bank. He has served in this 
capacity since 2010. Matthew Scire is the Director of Financial 
Markets and Community Investment at the GAO. Finally, Dr. Doug 
Elmendorf is the Director of the nonpartisan Congressional 
Budget Office.
    We welcome you each to the committee today.
    Without objection, your written statements will be made a 
part of the record.
    I believe all of you, hopefully, have testified before the 
committee before. You know the lighting system, so I will not 
go into that.
    Chairman Hochberg, at this time you are recognized for your 
testimony.

  STATEMENTS OF THE HONORABLE FRED P. HOCHBERG, PRESIDENT AND 
       CHAIRMAN, EXPORT-IMPORT BANK OF THE UNITED STATES

    Mr. Hochberg. Thank you.
    Chairman Hensarling, Ranking Member Waters, and committee 
members, thank you for inviting me to testify before you as the 
committee considers our reauthorization and progress that Ex-Im 
Bank has made in supporting U.S. jobs through exports.
    Since our last reauthorization just 2 short years ago, Ex-
Im has supported nearly half-a-million American jobs while 
generating nearly $2 billion for the taxpayers. Ex-Im Bank has 
met all of the reporting requirements set forth in our 
reauthorization bill and has implemented several other reforms. 
At Ex-Im Bank, we are committed to continuous improvement and 
effective risk management.
    When I testified before this committee last June, I 
committed to hiring a chief risk officer before years end, and 
we completed that on time. Under his leadership, the Enterprise 
Risk Committee assesses comprehensive risk issues, reports 
semiannually to the Bank's audit committee, and provides me as 
well as our other directors with a monthly update.
    We have implemented a number of other reforms making Ex-Im 
more transparent and accountable, including: we post in the 
Federal Register all transactions of $100 million or more; we 
reviewed, revised, and posted our economic impact procedures on 
our Web site; we have implemented enhanced Iran sanctions 
provisions; we have added a textile industry member to our 
advisory committee; and we have implemented portfolio stress-
testing and reported that to Congress. Frankly, the list goes 
on and on. The longer list is included in my written testimony.
    At the height of the financial crisis in 2008, our default 
rate was 1.1 percent. And today, in our most recent report of 
March of this year, which we issue to Congress as part of those 
reforms every 90 days, it is 0.211 percent, or less than a 
quarter of a percentage point.
    Customers who use the Bank pay a service fee, which covers 
all of our reserves and operating costs. We make no grants. 
Money is not given away; it is loaned and repaid. And Ex-Im 
Bank does not engage in corporate welfare.
    Since I last appeared before you, we have accomplished much 
in our efforts to support small businesses. In 2013, the Bank 
financed a record 3,413 small businesses, nearly 90 percent of 
Ex-Im's transactions. That amounted to about $6 billion for 
small business financing, of which $5.2 billion was direct.
    The Bank supports tens of thousands of additional small 
businesses, whose goods are incorporated into larger exports. 
We are critical to small businesses exporting directly and 
indirectly across the world. These businesses are operating in 
an extremely competitive environment.
    This morning, we are releasing Ex-Im Bank's Competitive 
Report. In 1999, just 15 years ago, nearly 100 percent of 
export credit financing globally was done within an agreed-upon 
framework and it was transparent. As this report shows, it is 
down to one-third, and it continues to drop. In other words, 
two-thirds of all official government support for exports today 
is opaque and unregulated.
    Countries like China and Russia frequently engage in 
market-distorting financing that threatens U.S. workers and 
their jobs. This is deeply concerning to me and should be to 
every American worker. U.S. businesses are not competing 
against Chinese companies on a level playing field; they are 
competing against ``China, Inc.''
    In 1999, official Chinese financing was almost nonexistent. 
Today, it is well over $100 billion, dwarfing what Ex-Im Bank 
does. South Korea, an economy less than one-tenth our size, now 
finances $100 billion, nearly 4 times the $27 billion that we 
refinanced last year.
    Other ECAs, such as South Korea, are using the uncertainty 
surrounding Ex-Im's reauthorization to steal contracts. You 
heard that clearly on panel 1 from Steve Wilburn, about how 
this is harming his business.
    In closing, I want to thank Inspector General Osvaldo 
Gratacos for his years of service at Ex-Im as he heads to new 
endeavors. He has helped us, without question, to run a better 
Bank. We have worked cooperatively with GAO and accepted all of 
their recommendations since the last reauthorization.
    Lastly, I also want to commend the outstanding professional 
work of our 400-plus employees.
    We live in an extremely competitive world, and the playing 
field is not level. I wish everyone played by the rules, but, 
as our competitiveness report starkly points out, they do not. 
The stakes could not be higher. We should not cede American 
jobs to China, Russia, or other countries. That is why I ask 
for your support in reauthorizing Ex-Im Bank for 5 years with a 
lending cap of $160 billion.
    Thank you for your support, and I look forward to answering 
your questions and working with you on reauthorization.
    [The prepared statement of Mr. Hochberg can be found on 
page 169 of the appendix.]
    Chairman Hensarling. Mr. Gratacos, we welcome your 
testimony now.

  STATEMENT OF THE HONORABLE OSVALDO LUIS GRATACOS, INSPECTOR 
        GENERAL, EXPORT-IMPORT BANK OF THE UNITED STATES

    Mr. Gratacos. Good afternoon, Mr. Chairman, Ranking Member 
Waters, and the distinguished members of this committee.
    And I thank Chairman Hochberg for his kind words.
    Thank you for the invitation and opportunity to testify 
before you about the Office of Inspector General (OIG) and Ex-
Im Bank oversight as it relates to its lending reauthorization.
    Before I continue, I would like to thank the Almighty for 
the opportunity, and my family, and the members of the Ex-Im 
Bank OIG staff for their hard work.
    Last year, I testified before this committee about the need 
for Ex-Im Bank to enhance its risk management framework. Back 
then, we stated that Ex-Im Bank should proactively manage the 
risk of its growing portfolio in line with common practices of 
commercial and multilateral development Banks.
    Specifically, we recommended that Ex-Im Bank should 
establish a chief risk officer or create a risk management 
office with independent reporting requirements to the Chairman; 
assign qualified and experienced staff to that office; conduct 
periodic stress-testing on its entire portfolio reflecting 
different market industry and microeconomic scenarios; and 
actively monitor industry, geographic, and obligor exposure 
levels.
    As of today, Ex-Im Bank has taken steps towards improving 
its risk management framework, some of them described by 
Chairman Hochberg in his statement. However, we think the 
opportunity for improvement still exists.
    For example, Ex-Im Bank established and hired a CRO and 
restructured reporting lines to separate origination functions 
from risk management functions. However, the CRO was 
established with additional management responsibility, 
supervising the legal and administrative functions of the Bank, 
which could dilute the focus of the position on credit risk 
issues.
    In addition, Ex-Im Bank has initiated some stress testing 
for its portfolio utilizing a top-down analysis of the 
portfolio as well as a bottom-up approach on some obligors. The 
results of the first stress-testing process were conveyed to 
Congress in the default report dated September 2013. The Bank 
has also established an Enterprise Risk Committee and recently 
provided documentation on its activities to the OIG.
    Finally, Ex-Im Bank commenced the use of several 
qualitative factors in its re-estimate process to account for 
the impact of such factors in the portfolio. The application of 
such factors in the re-estimate process commenced in the fall 
of 2012 and resulted in an upward revision of its loss 
reserves.
    Lastly, let me address some recent press reporting on 
employee integrity investigations. I cannot confirm or deny 
particular investigations or comment on specific personnel 
matters. What I can say is that we have a number of active 
investigations involving also an external participant or Ex-Im 
Bank, and they are being reported in the semiannual report to 
Congress and we have had a fully cooperative working 
relationship with Bank management on these matters.
    Bank management employees have referred issues to us for 
review, and the Bank has taken employment actions based on 
information we have referred to them. Some of these matters are 
nearing conclusion, and I expect to be able to share some 
information on them in the coming months, while others are in 
early stages and may or may not be substantiated. We work 
closely with the Justice Department on these issues, and I hope 
you understand that I am not in a position to comment further 
at this time on these matters.
    Mr. Chairman, Ranking Member Waters, and members of this 
committee, thank you once again for the opportunity to testify 
before you today. I would be pleased to respond to any 
questions you may have. Thank you.
    [The prepared statement of Mr. Gratacos can be found on 
page 161 of the appendix.]
    Chairman Hensarling. Mr. Scire, you are now recognized for 
your testimony.

 STATEMENT OF MATHEW J. SCIRE, DIRECTOR, FINANCIAL MARKETS AND 
  COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Scire. Mr. Chairman, Ranking Member Waters, and members 
of the committee, thank you for the opportunity to be here 
today to discuss the actions Ex-Im has taken in response to 
recommendations we made last year.
    Our reports were completed in response to the Export-Import 
Reauthorization Act of 2012. We reported that Ex-Im's business 
volume had grown dramatically in recent years and that this 
rapid growth posed challenges to Ex-Im. Outstanding financial 
commitments were about $114 billion in 2013, nearly double the 
level of 2008 when Ex-Im began to experience rapid growth.
    Among the challenges we cited is understanding the risk of 
loss. This is particularly challenging for Ex-Im because of the 
need to anticipate losses far into the future and because of 
weaknesses in its data. To improve its loss modeling, the Bank 
added certain qualitative factors. These include minimum loss 
rates, global economic risk, and portfolio concentration risks, 
whether by region, industry, or obligor.
    These should help Ex-Im better capture risks that may be 
different than historical experience might suggest, but we 
found that its technique for assessing global economic risk 
could be improved by considering longer-term default forecasts. 
We, therefore, recommended that Ex-Im consider whether it is 
using the best available data for adjusting loss estimates for 
longer-term transactions to account for global economic risk. 
In response, in November Ex-Im replaced its 1-year forecast 
with a 5-year forecast.
    We also found that Ex-Im had not maintained historical data 
on defaults that might be used in evaluating the performance 
and loss potential of the current portfolio. That is, Ex-Im had 
not maintained records that would permit comparing the 
performance of a transaction with that of a like transaction at 
a similar age. We, therefore, recommended that Ex-Im retain 
point-in-time historical data on credit performance. Ex-Im has 
since begun retaining such data.
    Ultimately, loss estimates can never be certain. For this 
reason, it is useful to conduct stress tests to better 
understand and inform the Congress of the potential outcomes of 
alternate scenarios. Ex-Im planned to conduct such stress 
tests, and we recommended that it report to the Congress their 
content and results. Ex-Im has since begun to include such 
information it its quarterly default rate reports.
    Another challenge facing the Bank is understanding what to 
expect in terms of future activity. In this regard, we found 
the methods used by Ex-Im to forecast its total exposure for 
2013 and 2014 had certain weaknesses. Specifically, Ex-Im had 
not reassessed its assumptions to reflect changing conditions 
or conducted a sensitivity analysis to assess and report the 
range of potential outcomes. We, therefore, recommended that 
Ex-Im do so. In response, in its 2015 budget justification Ex-
Im has incorporated historical experience into the forecast and 
prepared a range of authorization and exposure estimates.
    Another challenge facing Ex-Im is the sufficiency of its 
resources. We noted that the rapid growth in business volume 
coupled with the more modest growth in staff levels created 
potential operational risks for Ex-Im. And Ex-Im recognizes 
this risk, but it had not formally determined the level of 
business it can prudently manage, either agency-wide or within 
specific functional areas, with a given level of resources. 
Likewise, we reported that Ex-Im's business plan had not 
sufficiently assessed the adequacy of resources for meeting 
certain congressional mandates to support small business and 
renewable energy.
    We recommended that Ex-Im develop benchmarks to monitor and 
manage workload levels and provide Congress with more 
information on resources associated with meeting the mandates. 
In response, Ex-Im hired a contractor to develop workload 
benchmarks and a workload modeling tool. This effort is 
ongoing.
    Going forward, it will be important for Ex-Im to sustain a 
commitment to improving its understanding of factors that drive 
demand for its programs, the performance of its products, and 
the potential operational risks it may face.
    This concludes my opening remarks. Thank you again for the 
chance to speak today. I would be glad to take any questions 
you may have.
    [The prepared statement of Mr. Scire can be found on page 
184 of the appendix.]
    Chairman Hensarling. Dr. Elmendorf, you are now recognized 
for your testimony.

  STATEMENT OF DOUGLAS W. ELMENDORF, DIRECTOR, CONGRESSIONAL 
                      BUDGET OFFICE (CBO)

    Mr. Elmendorf. Thank you, Mr. Chairman, Ranking Member 
Waters, and members of the committee. I am pleased to be here 
to discuss CBO's estimates of the budgetary costs of the 
Export-Import Bank's credit programs.
    I want to emphasize that CBO has not analyzed the 
operations of the Bank or the economic impact of its programs. 
Our analysis has been limited to the direct effects of the Bank 
on the Federal budget.
    As you may know, CBO uses two different approaches to 
estimate the budgetary costs of Federal credit programs. One 
approach reflects the procedures currently used in the budget 
under the Federal Credit Reform Act of 1990, or FCRA. The other 
approach, known as fair value, reflects the market value of the 
government's credit assistance.
    For Fiscal Years 2015 to 2024, CBO found that Ex-Im Bank's 
six largest credit programs would generate budgetary savings of 
about $14 billion under FCRA accounting but cost about $2 
billion under fair-value accounting.
    Both estimates are based on Ex-Im Bank's projections of 
cash flows for those credit programs, as reported in the 
Federal credit supplement to the Administration's 2015 budget. 
Thus, both estimates reflect the amount of lending, fees, and 
default rates that are expected to prevail under the current 
structure of the programs and the President's budget request.
    The difference between the two estimates lies in the 
treatment of the cost of market risk, which is one component of 
financial risk.
    Much of the risk of financial investments can be avoided by 
diversifying a portfolio. Market risk is the component that 
remains even after a portfolio has been diversified as much as 
possible. It arises because most investments perform relatively 
poorly when the economy is weak and relatively well when the 
economy is strong.
    People value income from investments more when the economy 
is weak and incomes are relatively low, and so assign a higher 
cost to losses that occur during economic downturns. The higher 
cost of losses in bad times as well as lower costs in good 
times is captured in the cost of market risk. The government is 
exposed to market risk through its credit programs because when 
the economy is weak, borrowers default on their debts more 
frequently, and recoveries from defaulting borrowers are 
smaller. That market risk is effectively passed along to 
taxpayers and beneficiaries of government programs because they 
bear the consequences of the government's financial losses. 
Moreover, that risk is costly to those taxpayers and 
beneficiaries because they tend to value resources more highly 
when the economy is weak.
    Under the FCRA approach to accounting for Federal credit 
programs, Treasury borrowing rates are used to discount 
expected future cash flows, that is to translate future cash 
flows into current dollars. That approach essentially treats 
future cash flows subject to market risk as having the same 
value as Treasury securities that promise the same average 
payments with no risk. This means that the market risk of 
Federal credit assistance is treated implicitly as having no 
cost to the Federal Government.
    That has important consequences. For example, the cost of 
Federal credit programs reported in the budget is generally 
lower than the cost to private financial institutions for 
providing credit on the same terms. Also, the budgetary costs, 
the Federal credit programs are generally lower than those of 
grants for similar purposes that involve equivalent economic 
costs.
    In addition, purchases of loans and loan guarantees at 
market prices appear to make money for the government and 
conversely sales at market prices appear to result in losses. 
To incorporate the cost of market risk, the fair-value approach 
generally entails using the discount rates on expected future 
cash flows that private financial institutions would use. That 
approach effectively uses market prices to measure the cost to 
the public of the lower returns on Federal loans and loan 
guarantees when the economy is weak and incomes are relatively 
low. In CBO's view, therefore, fair-value estimates provide a 
more comprehensive measure of the cost of Federal programs.
    Some analysts have expressed concern about potential 
drawbacks of using the fair-value approach in Federal 
budgeting. They argue, for example, that fair-value estimates 
include costs that will not be paid directly by the Federal 
Government if actual cash flows turn out to match expected cash 
flows and that including those costs makes comparisons with 
some non-credit programs more difficult. These analysts note 
that fair-value estimates are somewhat more volatile than FCRA 
estimates and more complex to produce, and they worry that 
communicating the basis for fair-value estimates to 
policymakers and the public is more difficult than doing so for 
FCRA estimates.
    Proponents of the fair-value approach respond to those 
concerns by arguing that decisions about spending the public's 
money should take into account how the public assesses 
financial risks as expressed through market prices; that by 
taking those prices into account, fair-value estimates are 
unbiased estimates of the expected costs of loans and loan 
guarantees when they are offered and that other concerns can be 
mitigated through established accounting practices. Thank you. 
I am happy to take your questions.
    [The prepared statement of Dr. Elmendorf can be found on 
page 148 of the appendix.]
    Chairman Hensarling. The Chair now yields himself 5 minutes 
for questions.
    Mr. Hochberg, my background is not in accounting. I have a 
degree in economics and a degree, a J.D., but I do know the 
difference between single-entry accounting and double-entry 
accounting. So, I just heard your latest jobs claim that seems 
to increase every time that I see you. I trust you did hear the 
testimony of the earlier panel. Is that correct?
    Mr. Hochberg. Yes, I did.
    Chairman Hensarling. Okay. In the claims that you make, is 
that a net number, or is that a gross number, because we are 
having testimony of job loss caused by your Bank, so is the 
number that you posit a gross number or a net number?
    Mr. Hochberg. It is a gross number. It is the number we 
use--
    Chairman Hensarling. That answered the question, Mr. 
Hochberg. I appreciate that. Also, I assume since we have a 
witness from GAO here, you are familiar with their May 2013 
report that criticized the Bank for concealing methodological 
weaknesses in the jobs claim, including the fact that you do 
not distinguish between full-time, part-time and seasonal 
employment. You do not control for selection effects between 
supported firms and industries that may depart from the 
average. And, again, as I just posited, GAO criticized the Bank 
for not considering the unseen counterfactual of how many jobs 
would have existed without any intervention at all. Are you 
familiar with GAO's work regarding your jobs claim?
    Mr. Scire. Yes, and we pointed out a number of weaknesses 
with the methodology and recommended that Ex-Im do more to 
disclose the weaknesses with the methodology, and since, they 
have done so.
    Chairman Hensarling. Thank you.
    Dr. Elmendorf, FCRA applies--well, I have seen a report 
that there are roughly 10,000 Federal agencies, programs. 
Frankly, I have been here for a number of years, and I still 
can't figure out how many there are. But how many are subject 
to FCRA? How many programs or agencies?
    Mr. Elmendorf. I don't know what the count is, Mr. 
Chairman.
    As you know, there are several trillion dollars of 
outstanding Federal loans and loan guarantees that are recorded 
in the budget on a FCRA basis. The exceptions to FCRA among 
credit programs that I am aware of are the TARP program, 
because Congress wrote into the law that we should do estimates 
of that program, adjusting for market risk, and for Fannie Mae 
and Freddie Mac, because that is something that is specified in 
law, and we do those on a fair-value basis.
    Chairman Hensarling. This is probably outside your area of 
expertise, and I think we had some testimony earlier today. 
Certainly, I have seen evidence. Doesn't almost every other 
private Bank or private company that is subject to GAAP use 
fair-value accounting?
    Mr. Elmendorf. Private financial institutions generally use 
fair-value accounting, yes, Mr. Chairman.
    Chairman Hensarling. Mr. Hochberg, we had a gentleman here 
on the earlier panel, as you well know, one of the recipients 
of an Ex-Im credit guarantee. I think your latest figure is 
that you are supporting roughly 3,000 or 3,500 small 
businesses. Is that correct?
    Mr. Hochberg. Correct.
    Chairman Hensarling. The earlier witness takes exception to 
your definition. We will accept the definition for the moment. 
I have information from the SBA; by their definition, and I 
don't know the definitional differences, there are roughly 30 
million small businesses across America. So if I am doing the 
math right, you are in some way, shape or form providing credit 
services to roughly 1 in 10,000.
    And I am still trying to figure out--I am struggling with 
this, Mr. Hochberg, and that is I have a number of small 
businesses in my district, including CATCO Catalytic Heater 
Company in Terrell, Texas. They export. They don't use your 
services. And I quoted this gentleman earlier who said, ``As a 
small business owner who exports, I think it is outrageous that 
my own government puts my business and other small businesses 
at a competitive disadvantage through the Export-Import Bank.''
    I see my time is starting to run out, but I say that, Mr. 
Hochberg, because I think it is important that we hear from the 
small businesses that actually have to pay for what your Bank 
does and whose balance sheets you put at risk. Those voices, I 
believe, are underrepresented in this hearing room today. I 
will posit that all 3,000 or 3,500 small businesses that 
receive your credit services would want them extended. I would 
posit that, and I know that you have traveled all around the 
Nation. I think somewhat reminiscent of Fannie and Freddie, I 
have no doubt that you have come close to finding a customer in 
every congressional district in America today. But I do think 
it is important that these other voices be heard. I noticed you 
said that roughly 90 percent of your transactions, but isn't it 
roughly 18 percent of your exposure is small businesses? Is 
that correct, Mr. Hochberg?
    Mr. Hochberg. Actually, this year we are in the 23, 24 
percent range. We have had greater use of small business and 
little Banks have come back and so some of our larger--
    Chairman Hensarling. I will just say for the record that 
the 90 percent is fairly misleading. I see that I am out of 
time. The Chair now recognizes the gentlelady from New York, 
Mrs. Maloney, the ranking member of our Capital Markets 
Subcommittee.
    Mrs. Maloney. Thank you, Mr. Chairman, and welcome to all 
of the panelists.
    Mr. Hochberg, some people on this panel today have 
suggested that we could let the Export-Import Bank's charter 
expire and that the economy would be fine, that the private 
sector would just step in and take over, and there would be no 
impact on the U.S. exporters or small businesses. Can you walk 
us through what the impact would be?
    Mr. Hochberg. Thank you. Thank you for giving me an 
opportunity to talk about our small businesses. One, we 
actually do, 90 percent of our clients are small businesses; 
and that is small business as defined by the SBA. We don't make 
our own definition. You heard on panel one, Steve Wilburn of 
FirmGreen made a clear articulation of the loss and harm to his 
business and employment from even just the threat of Ex-Im not 
being here. We had some folks in the audience from a company 
that I think the chairman has sometimes cited, Jenny's Pickles, 
a woman from North Carolina who is exporting her food products 
to China, Britain, and is looking to expand to Germany and the 
Mideast. We provide credit insurance the way that other 
businesses get fire insurance or theft insurance and credit 
insurance she cannot obtain in the private sector. So though 
there are many small businesses that can't get--
    Mrs. Maloney. How do you know these businesses cannot 
obtain the financing in the private market?
    Mr. Hochberg. First of all, they have to state that they 
needed us, and they were not able to obtain this privately. 
Second of all, we survey the private sector all the time, and 
many times, they will not make loans or insurance for smaller 
businesses. The good news is I will tell you the private sector 
has come back, and the private insurers are doing a better job 
than they did during the crisis, but I will also tell you that 
the word is out that you probably should not get insurance from 
the Ex-Im Bank because we may not be here after September 30th.
    So brokers are telling their clients, I think we have to 
either get you more expensive insurance or I can't insure you 
because I don't know if you want to take the risk of having a 
policy that will have a 90-day term.
    Mrs. Maloney. You raised a point that there are people 
really concerned whether or not you will be there, and they are 
not providing the insurance. The statute gives Ex-Im the 
authority to facilitate an orderly liquidation if its charter 
expires, and a recent memo from the Congressional Research 
Service noted that Ex-Im would have considerable discretion in 
deciding how to manage this liquidation.
    Mr. Hochberg. If the Bank is not reauthorized on September 
30th, we would not make any new loans. We would not support any 
new businesses. I would add that small businesses in particular 
would probably be hit first, and we would simply hold--I don't 
see a reason, and I hope Congress would not want to liquidate 
the portfolio which implies selling it off, often at a 
discount, but let the loans mature to term. We have a well-
performing portfolio. Liquidation is often used for a failed 
Bank. The only reason we would be not operating is because of a 
political decision not to reauthorize us, not because of a 
failure at the Bank.
    Mrs. Maloney. There is a lot of debate this morning about 
exporting planes, basically exporting Boeing. If the United 
States decided to stop providing any support or assistance for 
the export of U.S.-made planes unilaterally, what would happen? 
Who would stand to benefit?
    Mr. Hochberg. I think that the makers of Airbus would be 
quite excited by this. They would be cheering because, frankly, 
it will not change the amount of airplanes coming into the 
United States carrying passengers. It will simply change 
whether it is made in the United States by Boeing and their 
15,000 suppliers--6,600 are small businesses--versus being made 
in Toulouse, Hamburg, and other places, so I think that we have 
a very real competitive threat. And frankly, the threat of 
China is coming up. They are building a plane to compete with 
737s, which is the single-aisle general commercial plane used, 
and that is coming on stream in the next few years.
    Mrs. Maloney. We are often criticized for not exporting 
enough, that we have an export deficit. Have you done any work 
on how much of the American export is because of the Ex-Im 
Bank?
    Mr. Hochberg. The very rough cut number is around 2 
percent, but that includes everything that is exported. Many 
things are not products, are not financed. I can give you some 
specifics. It may be 2 percent globally, but if we look in 
places in Sub-Saharan Africa, for example; in Cameroon, it is 
more than 55 percent of the exports. Senegal is almost 50 
percent. India, it was 30 percent in the last 12 months, so 
there is a large percentage above the 2 percent, depending on 
what country you are looking at.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from California, Mr. 
Campbell, chairman of our Monetary Policy Subcommittee.
    Mr. Campbell. Thank, Mr. Chairman.
    And, Dr. Elmendorf, Mr. Scire, and Mr. Gratacos--I probably 
butchered two out of those three names. First of all, I 
apologize for that.
    Dr. Elmendorf, I have said your name enough over the years 
that I know how not to butcher it.
    I hear all of your issues and agree 100 percent with the 
issues relative to the Bank's accounting for risk, a chief risk 
officer having other responsibilities, and a number of those 
other factors, so I would mention that the discussion draft 
which I released earlier today contains attempts at least to 
deal with all of those issues. I think I agree and believe that 
the Bank is not properly accounting for risk and that if there 
is a reauthorization, that is something we need to do.
    During the remainder of my time, Mr. Hochberg, I would like 
to ask you a few questions about some things. You have actually 
requested an increase in the authorization of the Bank, even 
though the authorizations you are doing as you just stated, the 
private sector is back in the game, and the authorizations are 
down from what they were in the Bank a few years. Why would you 
want an increase in authorization then?
    Mr. Hochberg. Congressman, thank you for your comments and 
interest in this. We took a look at--again, we are asking for a 
5-year reauthorization. We looked at--we are compounding the 
increase 3 percent per annum from the $140 billion today. I 
took a modest increase. Exports are up close to 45 percent 
since 2009. So exports are up. Banks continue to tell us, due 
to Basel III, Dodd-Frank, and other regulations, that they have 
less of an appetite for small business, less of an appetite for 
long-term loans, so factoring in those factors, export markets, 
more going to developing nations, I tried to put together a 
prudent estimate of what we would need.
    Mr. Campbell. Even though that is not your experience right 
now?
    Mr. Hochberg. We had a--2 years ago, we were in great need. 
Right now, there seems to be a slight reduction in need. I am 
not looking at only 6 months of making an assessment. I am 
trying to take a broader view. I was a businessman for 20 
years. You don't look at 6 months at a time.
    Mr. Campbell. Okay. Got it. Let me ask you now, in the 
previous panel the CEO of Delta and others complained about 
things that were in the previous reauthorization that they are 
saying you are ignoring, which is the mandate to weigh adverse 
effects of transactions on others. What is your response to 
that?
    Mr. Hochberg. I completely disagree with Mr. Anderson. 
Congress asked us to simply review our economic impact 
procedures. Those procedures state we should look at the 
benefits of the U.S. economy and any potential harm. We 
reviewed it. On top of that, instead of just reviewing it, we 
actually published new regulations, put them out for comment, 
went to the entire industry for comment and adjusted our impact 
procedures and put it to a vote of the board. So we complied 
fully, and on top of that, every transaction the Bank reviews 
gets reviewed for economic impact. We want to make sure the 
benefits outweigh any harm.
    Mr. Campbell. Okay. My time is limited so I want to get on 
to this other question. Obviously, yesterday there was some 
news that came out about potentially some accusations of things 
going on in the Bank. Now, we know that in any organization, 
certainly in any element of government that deals with the 
public, there can be corruption and there can be fraud. Guess 
what, that has occurred within Congress. I know that is a huge 
shock to everyone listening, but that has occurred here as 
well.
    But the question I have for you is this: There is, I think, 
a question, and it is a good one, about you are handing out 
loans, guarantees, and other things to the private sector and 
that if people have the ability to make that not just for 
kickbacks but to their friends to political allies to whatever 
it may be, that is a bad thing. So it would seem to me that 
there are not enough controls, if you will, within the Ex-Im 
Bank to stop that sort of thing from happening. How do you 
judge, how do you make the decision of who gets support and who 
doesn't?
    Mr. Hochberg. You mean, what companies get support?
    Mr. Campbell. Yes.
    Mr. Hochberg. Well, one is what the need is. We look at the 
need, whether there is a need for Ex-Im Bank to be a player in 
that or whether the private sector does it by itself. 
Frequently, we don't need to engage at all. That is why close 
to 98 percent of exports don't need our assistance. You have a 
few questions, and I am trying to--
    Mr. Campbell. Basically, and we are running out of time, 
but the accusation is that some people got support from Ex-Im 
in exchange for kickbacks. That means somebody else probably 
didn't, or those weren't meritorious, or there was a 
competition or something going on. I am trying to determine 
what procedures you have in place and you are not going to have 
time to answer this, so maybe you can later, but what 
procedures you have in place to stop that sort of thing from 
happening because that can't happen.
    Mr. Hochberg. I agree.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair recognizes the gentleman from New York, Mr. 
Meeks, the ranking member of our Financial Institutions 
Subcommittee.
    Mr. Meeks. Thank you, Mr. Chairman.
    The latest trade data shows that the United States trade 
gap has increased to $47.2 billion in April 2014, as imports 
recorded the highest value on record. Purchase of automobiles, 
capital goods, food, and consumer goods all hit record highs. 
So, in the midst of record trade deficits, we are here today 
debating--and I can't believe this--whether or not we need to 
reauthorize the Ex-Im Bank. The Chinese and the Europeans and 
the Brazilians and the Japanese all must be looking at us and 
shaking their heads in complete disbelief that we are actually 
debating this issue, that we could actually voluntarily 
purposely kill American industries and hundreds of thousands of 
American jobs. Its unbelievable to me.
    And I know when start talking about other reforms, there is 
always the question of uncertainty that keeps coming up, that 
people want to know what the rules are in play and whether or 
not--certainty was important. Well, here we are now in this 
atmosphere of uncertainty.
    Chairman Hochberg, what effect is uncertainty creating for 
U.S. exports, if any?
    Mr. Hochberg. Thank you, Congressman.
    First of all, there is an ad in today's Politico that says, 
``Meet the Ex-Im Banks of China, Russia and France.'' They are 
delighting in this hearing. They are delighting in the U.S. 
debate. On panel one, there was a discussion of Steve Wilburn 
and the direct impact on his business. I heard that during the 
shutdown. I heard that during the potential shutdowns. We 
enumerate all of that in this competitiveness report. Again, 
two-thirds in the range of about $200 billion of export 
financed globally is unregulated, opaque, one-off, and causes 
harm to American companies.
    When I am in Africa, the Chinese government offers 100 
percent financing for anything you will buy, and they will give 
you 10, 15, 20, up to 40-year terms. So there is a direct 
impact on our debate here and trying to sell U.S. products, and 
more importantly, support jobs here in America, small business 
jobs as well as at large companies. So we have seen a direct 
impact. I hear it from companies. I hear it from their 
customers overseas.
    One customer in Maryland during the shutdown said he lost a 
customer to Germany because he could not take the risk we would 
not be around.
    Mr. Meeks. I was listening to some of my colleagues on the 
other side of the aisle also, and I know at the time that we 
had the last reauthorization, there were certain reforms that 
were in there. And listening to them I would think maybe Ex-Im 
has not implemented any reforms. Is that true? Has Ex-Im 
implemented any reforms?
    Mr. Hochberg. We have complied with every single reform and 
recommendation that the committee made. We have complied or are 
in the process of complying of with every single recommendation 
that GAO has made. We have agreed with each and every one of 
their recommendations.
    Mr. Meeks. I want to go--because you mentioned Africa 
twice, and you know I just had an event in New York on 
energizing Africa, and I want to thank Ex-IM for being there. 
And you talk about China, et cetera, being there, but you also 
just in your testimony talked about Cameroon. Can you tell us 
what opportunities are there for American-made goods and 
services on the continent of Africa?
    Mr. Hochberg. Africa is the home to, depending on your 
estimate, six or seven of the fastest growing economies in the 
world. I just returned 2 weeks ago. There are great needs in 
power, transportation, water. I was with the President of 
Angola, who agreed to buy a billion dollars worth of 
locomotives and power units, so there are enormous 
opportunities, but we face very intense competition from China, 
which will provide financing for any and all exports going to 
Africa.
    Quickly, I went to meet with Transnet that, as a result, 
split their order between the United States and China, and the 
CEO told me point blank China offered 10, 15, 20 years; what 
terms do you need and what rate do you need to pay, and we will 
make it work.
    Mr. Meeks. Let me ask this in my little time that I have 
left: How does the size of Ex-Im Bank, its particular mission, 
and the terms it is able to offer compare with other foreign 
export credit agencies?
    Mr. Hochberg. China, as I mentioned, is more than 4 times 
our size, and that is just their Ex-Im Bank. They have two or 
three other policy Banks that support their exports. The 
Canadian Bank is about 3 times larger than the United States, 
and an economy somewhat smaller than the U.S., Korea, also does 
about 3 to 4 times more than we do. We probably have the 
smallest footprint of any export credit agency to the size of 
our economy in the world.
    Mr. Meeks. Thank you, and I see my time has just expired.
    Chairman Hensarling. Indeed, it has.
    The Chair now recognizes the gentleman from Alabama, the 
chairman emeritus of the committee, Mr. Bachus.
    Mr. Bachus. Thank you.
    Chairman Hochberg, you and I met in my office on March 
27th, when we were considering the reauthorization of 2012. At 
that meeting, we expressed some concerns to you about 
transparency, accountability, and also the mandate requiring 
the Bank to review the economic effects of its financing to 
take into account, and I am reading statutory language, any 
serious adverse effect of any loan or guarantee on the 
competitive position of United States industry. And then we had 
some follow-up conversations as late as May 9th about Delta's 
concerns. We voted that bill out on May 15th, and I have never 
had an explanation that the sale of wide-body jets to the 
Emirates did not hurt U.S. airlines and their competitive 
position. Several times this has come up, even I think as early 
as 2003. Have you ever done an analysis and shared it with the 
Congress of that particular issue that the president of the 
airlines was talking about earlier?
    Mr. Hochberg. Again, Congress asked us to review our 
economic impact. We not only reviewed it; we decided to revise 
it and to publicize it, and it is on our Web site. We also do 
an analysis of--
    Mr. Bachus. Is that specifically about the effect on--
    Mr. Hochberg. We look at every aircraft, and we look at 
every aircraft transaction.
    Mr. Bachus. I am talking about specifically. Could you 
supply that specific analysis that you did? That concern was 
directed. It was very refined. It was to address the need to 
subsidize loans to the Emirates or rich countries of wide-body 
jets, of carriers that directly compete with American carriers 
on international routes. Is there an analysis of that and going 
back and looking at all of that?
    Mr. Hochberg. We did an analysis. We hired an outside firm 
to make it unbiased of, is there an oversupply in the aircraft 
field globally of wide-bodies?
    Mr. Bachus. No. My question was not, were there too many 
wide-bodies. My question is the impact on our flag carriers. We 
didn't ask for a study of, were there too many wide-body jets 
in the world.
    Mr. Hochberg. The Bank has had economic impact procedures 
for 20, 30-plus years.
    Mr. Bachus. You are telling me something I know. I am 
asking you something; I know you have had procedures. I know 
you have had economic studies. I am asking you specifically, 
have you responded to our request and Mr. Anderson's concerns 
that we discussed on two different occasions?
    Mr. Hochberg. Then the answer to that question is yes, sir.
    Mr. Bachus. Okay. Would you supply us with those documents?
    Mr. Hochberg. We would be happy to you supply you.
    Mr. Bachus. I would like copies of the loan-specific 
analysis on any sale to those countries, the effect on the flag 
carriers, the United States flag carriers, if you could just 
give me that.
    Mr. Hochberg. We will provide that.
    Mr. Bachus. I would like to tell you something else that I 
am very concerned about. You heard what I said earlier. On 
August 2nd, I wrote a letter to you all. We, obviously, faxed 
it over to you because Scott responded the same day and 
promised us, according to his letter, that before the loan was 
made, they would refer it to the policy division as well as the 
engineering division because there were two different studies, 
and they would share the concern with the board prior to a 
vote, and they would share with us any analysis. That was never 
given to us but what I am saying is, you didn't do that or 
supply it to us before the vote. Your response to me was 2 
months after the vote, which is not--our committee then 
couldn't respond, couldn't analyze, couldn't have any input. 
You didn't even advise us when the vote was going to be.
    Mr. Hochberg. Can I answer the question?
    Mr. Bachus. Yes.
    Chairman Hensarling. Briefly.
    Mr. Hochberg. Briefly. The board considered it. It comes to 
Congress. Congress has 35 days to comment before a final vote 
is taken by the board. Any transaction over $100 million comes 
to Congress for any Member to comment, and we got a number of 
comments on that transaction.
    Mr. Bachus. Who does it come to?
    Mr. Hochberg. I don't know precisely how it is transmitted, 
but every transaction is transmitted to Congress for a 35-day 
review.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from New York, Mrs. 
McCarthy.
    Mrs. McCarthy of New York. Thank you, Mr. Chairman.
    Chairman Hochberg, we only get 5 minutes, and I noticed 
that you have always been writing something down. Obviously, 
whether it was somebody on this panel, or I understand that you 
were in the back listening to the first panel, so I am going to 
stop talking. And any questions that you want to answer or 
things that you have heard that you want to give a rebuttal to, 
I am giving you that opportunity to do that now.
    Mr. Hochberg. Thank you very much.
    Let me try and answer one or two questions we have. We look 
to make sure that any benefit, any export, the benefit to the 
U.S. economy outweighs any harm. That is referred to as 
economic impact. So if we are financing the export of an 
airplane, we are going to make sure the dollar amount to the 
U.S. economy could outweigh any potential harm. We look at 
every transaction, not just aircraft, to make sure that we are 
complying with that because the last thing we want to do, the 
400 people at Ex-Im Bank, is hurt the U.S. economy. We are here 
to support jobs, not take away jobs. That would be number one.
    Two, the committee staff receives every transaction over 35 
days, and the committee staff, I presume, forwards it to 
members of the committee who would like to review it. Sometimes 
we receive many comments, and sometimes no comments, but the 
committee has and Congress has a full 35 days to send comments 
back to us before any transaction is finally voted on.
    There was a question about working with the inspector 
general. I have had a great working relationship with our 
inspector general. I think together we have made a better Bank. 
Our employees are alert to if they see something suspicious or 
a suspicious claim or a suspicious loan or something that 
doesn't look right, they work directly with the inspector 
general. They don't go through me. They work, whether it is in 
the General Counsel's Office, the CFOs Office, anybody who sees 
something suspicious, and I am very proud of the fact that our 
employees are very concerned--they care about their reputation 
as well. So, I am pleased with the reputation and the work we 
do with the IG. The article that was in yesterday's Wall Street 
Journal, in my opinion, is actually a good article because it 
says to our staff and it also says to any exporter, if you are 
doing any funny business, we are on to you, and we will work 
with it. A lot of this has changed since we have an inspector 
general, which is 2007. A number of the things discussed 
predate the inspector general. We did not have a inspector 
general in those early days.
    Mrs. McCarthy of New York. One of the things I wish you 
would go over one more time, is basically I know you are not 
looking to hurt Delta. I know you are not looking to hurt the 
pilots and the flight attendants, that you want them to 
succeed. Could you go over one more time with their arguments 
that you heard today on why the situation is where it is, and 
do you see any way to work with them to try to come to some 
sort of an agreement so we don't go through this every 2 years?
    Mr. Hochberg. We fully complied with Congress' request on 
transparency and reforms. There were over a dozen, and we 
complied with each and every one of them. We have complied with 
everything or at least so far agreed with everything in the GAO 
report. Delta Airlines made an assertion that our financing of 
planes to Air India caused them to lay off people. If you look 
at the facts, they did not ground any aircraft. They have added 
employees since, and they even stated at the time it was not 
because of competition. They said we have moved this, the size 
and scope of Delta's operation at the Atlanta hub are best 
suited for the capacity of the 777-200LR in terms of cargo and 
passenger. So, for business reasons they moved the flight to 
Atlanta. It was not because of competitive issues or the Ex-Im 
Bank.
    That was a concept they came up with 3 years later. There 
was nothing in their press release. They said nothing about the 
fact that there was a global recession in 2008. They said 
nothing about high jet fuel prices, the H1N1 virus, reduced 
demand, and a number of other things that they also talk about 
impacting their business.
    But somehow this one route, this one route they decided was 
only because of Ex-Im Bank, and that doesn't comply with any of 
their public messages.
    Mrs. McCarthy of New York. Thank you.
    And the other thing, too, obviously, when I came on this 
committee and I had to learn a lot of new things, one of the 
things I did even before you became the chairman was reach out 
to the Export-Import Bank to come into my community, bring my 
small businesses in to get educated, and you did come out when 
you came on. And I am happy to say that in my district by word 
of mouth, more and more businesses have been joining, and 
certainly we have seen the growth of the amount of money that 
has come into my district. And it is not mine. It is the people 
working. It is jobs, and that is the important thing. Thank you 
very much for your time.
    Mr. Westmoreland [presiding]. The gentlelady yields back.
    It just so happens to be my turn, Mr. Hochberg.
    Mr. Hochberg. Perfect timing.
    Mr. Westmoreland. You said you had complied with all the 
requests that Congress had made at the last reauthorization and 
you referred to Mr. Anderson in that all these things had been 
complied with, although there are people who were at that table 
evidently when these things were being looked at who say they 
were not complied with. Why do you think there is a difference 
there?
    Mr. Anderson. Certainly. We complied with every 
requirement, every reform that Congress put in. We did, as I 
mentioned, an economic impact analysis, particularly in the 
aircraft field.
    Mr. Westmoreland. How many of those did you do in the 
aircraft field?
    Mr. Hochberg. We do one a year. We do a survey to determine 
if there is a glut in the aircraft field, which is the criteria 
that has been deployed by the Bank for 20, 30 years in looking 
at economic impact. If there is an oversupply, then any 
additional capacity will have an impact. If there is an 
undersupply--
    Mr. Westmoreland. So how many of those impact analyses have 
you done on aircraft in the last 5 years?
    Mr. Hochberg. Well, two things. We review every 
transaction. We do an in-depth study.
    Mr. Westmoreland. Every transaction?
    Mr. Hochberg. Every transaction over $10 million we review 
for economic impact.
    Mr. Westmoreland. How many would that be?
    Mr. Hochberg. Close to 3,500. We look at all of them. We 
don't deploy the resources to do an in-depth study on every 
single one. For example, Congressman, sometimes you have an 
airplane that is replacing an old plane. Sometimes it is an 
airplane that is never flying to America, so a number of those 
would have no impact. So we don't waste government resources 
chasing things that have no potential impact.
    Mr. Westmoreland. Okay. But you have only done one analysis 
in the last 5 years on aircraft?
    Mr. Hochberg. The new procedures went in, in April of 2013, 
so first of all, they have been extant now for 15 months. We 
review them all. We did an in-depth analysis on one transaction 
because one transaction triggered and said, this warrants 
further review and study because the planes are new capacity, 
potentially flying to American cities, and as a result, it 
triggered a more in-depth study. Again, if it is replacement 
aircraft or not flying to the United States, we would not spend 
the time and money and resources to do a detailed study of 
something that is not going to potentially have an impact. If 
there is a potential of an impact, we will do an in-depth 
study.
    Mr. Westmoreland. Okay. If you are buying a plane from 
Boeing, it will still have impact on the economy, right?
    Mr. Hochberg. Again, the analysis that has been used in 
every industry, not just for aircraft, is we say, what are the 
benefits to the U.S. economy? How much revenue is coming to the 
United States? What is the potential loss to the U.S. economy? 
And we balance them against each other. So we are always 
looking at that. What is the balance?
    Mr. Westmoreland. Thank you.
    Is the Bank being sued right now on any of your economic 
impacts?
    Mr. Hochberg. Delta Airlines is suing us.
    Mr. Westmoreland. They are?
    Mr. Hochberg. Yes.
    Mr. Westmoreland. Is that because of the case you just 
mentioned?
    Mr. Hochberg. Again, they don't--we have put together 
economic impact procedures that are consistent with the way we 
do it for every industry. We are not going to pick and choose 
and do a special one for aircraft. We look at how we look at 
economic impact, as Congress has asked us to look at economic 
impact.
    I should just add one more thing. We are the only export 
credit agency in the entire world that does this. No other 
export credit agency, no other country requires this. We are 
happy to do so, but I think the committee should know this is 
something unique to the United States.
    Mr. Westmoreland. You have really, since 2011, stopped 
disclosing the yearly total of the number of aircraft exports. 
Why would that be?
    Mr. Hochberg. I am unaware that we have made a change in 
our disclosure since 2011.
    Mr. Westmoreland. You disclose all of them right now? Is it 
full disclosure of everything you do?
    Mr. Hochberg. Everything over $100 million is in the 
Federal Register for a full 25 days before a final board vote.
    Mr. Westmoreland. Above that amount?
    Mr. Hochberg. Above $100 million.
    Mr. Westmoreland. If it is less than that, it is just chump 
change?
    Mr. Hochberg. No. Less than that would be--first of all, 
you can't buy a wide-body plane, the item of concern to Mr. 
Anderson and Delta, none of them cost less than $100 million. 
So, under $100 million, and the aircraft would be two and a 
fraction of a 737, so that is what Congress asked us to say 
over $100 million, we would like in the Federal Register. I can 
just add, this does have an impact on our competitiveness.
    Mr. Westmoreland. I am going to lead by example and cut 
myself off.
    The gentlelady from California is now recognized.
    Ms. Waters. I would like to go back to a discussion about 
how you guarantee and how you finance and how you supply 
support for insurance. The opposite side of the aisle has 
created these words to describe what you do that are absolutely 
not true. They talk about corporate welfare. In saying that, 
they are trying to lead the public to believe that you are 
giving away something to the corporate sector in foreign 
countries. They also talk about crony capitalism, as if you are 
somehow giving to persons who have some kind of connection with 
you or with Ex-Im, something that they don't deserve, and so I 
think we need to clear this up. We need to talk about the 
difference between loan guarantees and the kind of financing 
that you do and grants. You have made it very clear that these 
are not grants, but I think we need to say it in words that 
everybody understands and nobody can deny. And, of course, for 
those who are saying it, none of them can prove that there is 
any welfare here, but they will keep saying it, unless we keep 
denying their description of Ex-Im. So would you please, in 
your own words, Mr. Hochberg, talk about how you do this?
    Mr. Hochberg. Thank you, Ranking Member Waters, and thank 
you for your support. We provide loans. Loans need to be 
repaid. We do not provide any grants whatsoever, and we have a 
very tough group of people who enforce the loan covenants and 
make sure that loans are paid back and paid back on time. That 
is how we can have a default rate of 0.21 percent, less than a 
quarter of a percent.
    At the height of the financial crisis, the worst crisis 
since the Depression, it was 1.1 percent, and it keeps 
declining. So in terms of risk management and in terms of 
corporate welfare, welfare implies we are taking from someone 
and giving it to somebody else. We don't do that. People come 
to us if they need our support. Also, according to the World 
Trade Organization, we have to be self-sustaining. If we are 
self-sustaining, that is where there is no subsidy from the 
government because the fees we collect cover the loan loss 
reserves, cover our operating expenses, and for the last 
several years, we transfer back to the taxpayer for deficit 
reduction, last year over a billion dollars.
    Ms. Waters. Mr. Hochberg, do you charge interest on loans?
    Mr. Hochberg. Most of the loans are guaranteed, therefore 
the Bank charges if it is a direct loan, and sometimes we do 
that, we borrow the money from Treasury. By law, we had a full 
percentage point. So if Treasury lends us the money for 2 
percent, we must charge at least 3 percent. On top of that we 
add fees, like points on a mortgage. If we are providing 
``welfare,'' if you talk to any of our customers, they feel 
like they pay a lot of money for our services. None of them 
feel like it is welfare. They are paying ``handsomely'' for the 
privilege of borrowing.
    Ms. Waters. So is it because of the fees that you charge 
and interest if it is a loan that you are able to earn money, 
and what do you do with the money that you earn?
    Mr. Hochberg. The money we receive, a prudent portion goes 
to loan loss reserves to make sure that every loan is paid off. 
Congress each year appropriates a certain portion of that back 
to the agency to run. The balance we transfer to the Treasury.
    Ms. Waters. Let me say that one more time. The balance of 
this money goes to the Treasury of the United States of 
America.
    Mr. Hochberg. Correct. One billion 57 million dollars last 
October. The previous October, it was $803 million.
    Ms. Waters. So are you telling us that you actually earn 
money for the government that goes into the Treasury?
    Mr. Hochberg. Correct. We earn money because we are taking 
in more money than it requires to run the Bank.
    Ms. Waters. So, in earning money there is no way that 
anybody can credibly say that you are providing welfare for 
corporate interests. Is that right?
    Mr. Hochberg. That is correct.
    Ms. Waters. It is just an absolute misstatement.
    Mr. Hochberg. It is a misstatement, as crony capitalism is 
a misstatement as well.
    Ms. Waters. Thank you very much. And I hope that as we go 
through these discussions, you will say that over and over 
again. We have to rob the opposite side of their ability to 
undermine the tremendous work that you are doing, the 
tremendous way that you are allowing the United States to at 
least get at the balance of payment and get us into the export 
business. If it wasn't for your 2 percent or so that you are 
doing, we would be out of it altogether.
    I thank you.
    And I yield back the balance of my time.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from Oklahoma, Mr. 
Lucas, the chairman of the House Agriculture Committee.
    Mr. Lucas. Mr. Hochberg, are you having fun today?
    Mr. Hochberg. I have a chance to tell the story of Ex-Im 
Bank, so more people will understand what we do and how we help 
support jobs in this country, so I enjoy doing that.
    Mr. Lucas. That is a good response. And clearly, you are 
having a lot of rounds pitched at you politically from a 
variety of directions here today.
    If I could, to the whole panel, discuss for a moment with 
me the nature of how the rest of the world handles this 
situation. And if we were, indeed, to step away from the 
institution, would any of the other countries that we are aware 
of around the world drop their similar type of programs? I 
address this to anyone on the panel who would care to touch it. 
Is anyone talking about getting out of this business that does 
this on the planet that you interact with?
    Mr. Hochberg. Are you asking me?
    Mr. Lucas. Any of you.
    Mr. Hochberg. I would say when I meet with my colleagues in 
the G7 and the BRICs, it is the exact opposite. They are 
looking for a way to ramp up. They are adding staff, and 
frankly, unlike the Ex-Im Bank, most of them have offices 
around the world. I think China Ex-Im has something like 10 or 
12 offices globally. We are located here in the United States. 
So, they are going in the opposite direction. None of them are 
looking to become less robust or handicap their Ex-Im Banks. 
They are looking to enhance them.
    Mr. Lucas. To my friends from CBO and GAO, if this 
institution goes away, I know you have addressed this but one 
more time, please, the impact on the Federal budget?
    Mr. Elmendorf. So, Congressman, under the Federal Credit 
Reform Act, the rules that Congress has legislated and we 
follow, the Export-Import Bank has a negative subsidy cost, and 
that is the way it is recorded in the budget and the way we 
include it in our budget projections.
    Mr. Lucas. Okay. So if I understand the two sets of 
comments, we have a situation where we are not the only people 
engaged in this kind of activity. It would appear we are the 
only people discussing not continuing to engage in this 
activity, and the effect of engaging or not engaging in the 
activity has no real impact on the Federal budget? Fair 
observation?
    Mr. Scire. I think the way the Federal budget is accounted 
for right now, you really don't yet know. You really won't know 
what the costs of these programs are until more time has 
elapsed and the very recent books of business have had time to 
mature. I would point out that 11 of the cohorts that Ex-Im has 
done actually require subsidy according to Ex-Im and OMB's 
estimates based upon re-estimation. So we really won't know the 
full cost of these credits until they have had time to mature.
    Mr. Elmendorf. Congressman, I want to agree with that.
    What I was careful to say in my comments was that under the 
rules that Congress has legislated and that we of course 
follow, the Ex-Im Bank is a negative subsidy. We also have said 
a number of times, including just in a recent report, that we 
think a more comprehensive way to measure the cost of Federal 
credit programs would show Ex-Im Bank as having a positive 
subsidy cost. That is not the way it is recorded in the budget 
now.
    Mr. Lucas. Thank you for that clarification.
    Mr. Hochberg. Just so it is clear, a negative subsidy means 
we transfer, we make extra money we don't use, and it goes to 
the taxpayers to deficit reduction. That is what a negative 
subsidy means. So we have transferred this year over a billion 
dollars; last year, $800 million; and since Federal credit 
reform in 1992, $6.6 billion has gone from the Bank to the 
Treasury. If I could add one last thing, I know our time is 
limited. The financial crisis from 2008, we have a real-life 
stress test. I understand what GAO says. We have complied with 
everything GAO has asked for, but on top of that, we have seen 
the most stressful economic system and stresses on economic and 
Banking system the world has ever seen since the Depression, 
and our defaults are, again, 0.211 percent, less than a quarter 
of a percent. So I understand the future is uncertain, but we 
have just gotten through the worst 6 years the world has ever 
seen.
    Mr. Lucas. Absolutely, Chairman.
    The question is always is in most issues, is the glass half 
full or half empty? What will be the impact of having a glass 
or not having a glass? That is a policy decision that we have 
to decide here, but it is a fascinating subject of discussion. 
The intensity that I have observed in this committee, both 
perspectives, is great, but whatever we do will impact 
business. It will impact individuals. It will impact our 
competitive nature around the whole planet.
    And with that, I yield back to the chairman.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman.
    To the inspector general, there have been some problems, 
obviously, with the Ex-Im Bank, but has there been something so 
egregious, so monstrous, that Congress should give the Ex-Im 
Bank a certificate of discontinuation?
    Mr. Gratacos. Obviously, the decision of whether Ex-Im Bank 
is still around is for Congress to decide. All we have done 
since we started the office is to look at some of the issues 
that were apparent to Bank operation, either from the law 
enforcement side--we have been very active on that side--or 
from the operational side. We had a hearing last year talking 
about risk management. We have done work on dealing with 
customers, on the complaints we receive from customers. We look 
at economic impact. We looked at all those aspects of the Bank 
that we thought needed to be addressed, and since then, the 
Bank is working with us in addressing those. Some 
recommendations are still outstanding, but there is still some 
progress and even the conversation is something that 2 or 3 
years ago, wasn't even on the table. So, from our perspective, 
we focus on the operations of the Bank.
    Mr. Cleaver. Thank you. To the GAO, if we didn't fund the 
Air Force, would it have an impact on the budget?
    Mr. Scire. Of course.
    Mr. Cleaver. That simple?
    Mr. Scire. You asked if we didn't fund the Air Force?
    Mr. Cleaver. Yes.
    Mr. Scire. Of course, yes.
    Mr. Cleaver. What if we didn't fund toilet tissue for the 
Capitol?
    Mr. Scire. That would have an impact on the budget.
    Mr. Cleaver. Okay. Thank you. So anything we don't fund 
would have an impact on the budget. Is that correct?
    Mr. Scire. I am not sure it is material for this 
discussion, but yes.
    Mr. Cleaver. You are absolutely right. You are absolutely 
right. Now, let me go further.
    Mr. Hochberg, do you know how many times the Ex-Im Bank has 
been reauthorized?
    Mr. Hochberg. Ex-Im Bank has been reauthorized more than 16 
times in its 80-year history.
    Mr. Cleaver. Sixteen times.
    Mr. Hochberg. Correct.
    Mr. Cleaver. Would it be a surprise to you--it probably 
wouldn't--that most of them were unanimous votes or 
overwhelmingly unanimous when they went to the House Floor and 
to the Senate and that a significant number--I can't remember 
the exact number--was actually, they were actually voice-voted 
out of the House, and then I think they called it consent in 
the Senate, in the lower House--what do they call it in the 
lower House?
    Mr. Hochberg. I think unanimous consent in the Senate. 
Unanimous consent.
    Mr. Cleaver. Unanimous consent. You would be surprised at 
the number of unanimous consent. So I guess the point I am 
making, perhaps poorly, is that, what is different now? And 
what I am saying is, are there some problems? I think that 
there are some things we can do. I think there are some tweaks 
that could be made. There should be some reform. I think the 
Delta Airlines representative brought us some things that 
should be considered. But my concern is that the Ex-Im Bank has 
been well-received by everybody over the years, and now, all of 
a sudden, we have this partisanism over the Bank, and I am just 
wondering what is it about this moment in our history that we 
don't think we can look at a problem and something that's not 
that big a problem and then make changes so that our businesses 
can compete for business abroad? I am frustrated over the fact 
that it would seem to me that there are issues that need to be 
addressed that can be fixed. Has there been anything that has 
been discussed here today that can't be dealt with if we sat 
down and worked?
    Mr. Hochberg. Congressman, I am a businessman. I came to 
this after 20 years in the private sector. We are constantly, 
and our team is looking for better ways to operate the Bank, 
address reforms and issues brought up by Congress so we can do 
a better job in managing risk and also serving exporters. And 
lastly, I would just add that it was President Reagan who 
signed a 6-year extension of the Ex-Im Bank, so a full 6-year 
reauthorization.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from North Carolina, 
Mr. McHenry, chairman of our Oversight and Investigations 
Subcommittee.
    Mr. McHenry. I wanted to ask you about The Wall Street 
Journal story from June 23rd about the employees being under 
investigation for accepting kickbacks and improperly steering 
contracts to favored firms. Is there an internal investigation 
conducted by the Ex-Im Bank on these matters separate from the 
investigation by the Office of Inspector General?
    Mr. Hochberg. Let me just begin by saying, frankly, I am 
outraged by the number--
    Mr. McHenry. I appreciate that. You have answered this 
question before about how you are outraged, but is there an 
investigation by the Ex-Im Bank separate from the Office of 
Inspector General?
    Mr. Hochberg. Most of those investigations are transferred 
over to the inspector general when they reach a certain point, 
so they are under the jurisdiction of the inspector general at 
this point.
    Mr. McHenry. At this point. No further investigation from 
your staff?
    Mr. Hochberg. They are turned over--at this level of 
seriousness, they are turned over to the inspector general.
    Mr. McHenry. And so the status of an investigation would be 
closed there but opened at the OIG?
    Mr. Hochberg. Well, it is not closed. It is an open issue. 
But it is--
    Mr. McHenry. But if you referred it to them because of the 
seriousness, then you are done with the investigation, correct?
    Mr. Hochberg. We are waiting to hear what the Inspector 
General says. That may recommend other actions we take, either 
with the employee or in a procedural manner.
    Mr. McHenry. I understand. Okay. So as a result of this, 
have you consulted with the General Counsel's Office about 
these reported incidents of fraud, waste, and abuse?
    Mr. Hochberg. Let me just make one statement. All of these 
infractions, all of these individuals you are referring to were 
all referred to the Inspector General by our employees. Our 
employees said, ``There is something suspicious here. I need 
the Inspector General to look at that.'' So these were all 
internally generated and sent to the Inspector General by our 
own employees, who said, ``I don't like what I see here. This 
doesn't look right.''
    Mr. McHenry. Yes, I am asking about you.
    Mr. Hochberg. Then I am not sure I understand the question.
    Mr. McHenry. Okay. Fantastic.
    So have you consulted the Ethics Office about these 
matters?
    Mr. Hochberg. Matters have been handled by our General 
Counsel and the Inspector General, as is proper, so that they 
are helped--
    Mr. McHenry. And the General Counsel referred that over to 
the Office of Inspector General?
    Mr. Hochberg. On some of them, they may have been turned 
over by another employee. They don't have to go through a 
particular channel. Any employee can refer a matter to the 
Inspector General.
    Mr. McHenry. Okay. Let me ask you a separate question. Is 
there an Office of Ethics at the Ex-Im Bank?
    Mr. Hochberg. An Office of Ethics? Yes, in the General 
Counsel's Office, there is an Office of Ethics and Compliance. 
I know of two--I think there are two to four attorneys in the 
administrative law area that--
    Mr. McHenry. And they report to? Who do they--
    Mr. Hochberg. They report to the General Counsel.
    Mr. McHenry. Yes. Okay. Other ethics offices actually 
report directly to the head of the operation, in other parts of 
government. Would you support that?
    Mr. Hochberg. We have a Chief Risk Officer that this 
committee asked, that the Inspector General recommended, and I 
committed to. The Chief Risk Officer has reporting to him--it 
is more broader than just credit risk. It looks at all of it.
    Mr. McHenry. I understand. I just asked you a simple 
question. So, I will just move on.
    Mr. Hochberg. The Chief Risk Officer reports to me. And he 
is in charge of--
    Mr. McHenry. Yes, I understand. I asked about the Ethics 
Office, not about the risk office. So--
    Mr. Hochberg. Ethics is part of that.
    Mr. McHenry. I understand, but I am talking about a direct 
report.
    I will move on because I understand you don't want to 
answer those questions I have been asking. So I am going to ask 
another question. Are you aware of any criminal investigation 
about the actions that were brought to light in The Wall Street 
Journal report?
    Mr. Hochberg. These matters, I think, are better answered 
by the Inspector General since they are an ongoing 
investigation. I don't want to invade people's privacy--
    Mr. McHenry. Are you aware of a criminal investigation 
about these matters?
    Mr. Hochberg. I am aware that the Inspector General is 
conducting an investigation.
    Mr. McHenry. Are you aware of if there is a criminal 
investigation about this matter?
    Mr. Hochberg. I am aware of the investigation. I still feel 
the question would be better answered, so I don't invade 
anyone's privacy, by the Inspector General, who is at the 
table. I just don't--
    Mr. McHenry. I understand.
    Mr. Hochberg. I don't want to make a misstatement.
    Mr. McHenry. I understand. In terms of meetings with the 
Office of the Inspector General, that is much easier to do. And 
so, I am just trying to ask you a few questions. Mr. Chairman, 
I am just trying to get to the bottom of this.
    If I can ask you a question about the Florida construction 
company at the center of The Wall Street Journal story, have 
you had any contact or dealings with them personally?
    Mr. Hochberg. Oh, no.
    Mr. McHenry. Okay.
    Mr. Hochberg. Absolutely not.
    Mr. McHenry. All right. Thank you.
    And, Mr. Chairman, I yield back. Confounded, I yield back.
    Chairman Hensarling. The gentleman yields back.
    The Chair now recognizes the gentleman from Florida, Mr. 
Murphy, for 5 minutes.
    Mr. Murphy. Thank you, Mr. Chairman.
    And thank you all for appearing before us today.
    Chairman Hochberg, thank you. It is good to see you. Thank 
you for your steadfast promotion of American jobs and American 
manufacturing in our country.
    As a small business owner myself, I understand that one of 
the most important things those small business folks need is 
access to capital and financing. Last year alone, Export-Import 
Bank financing supported over 200,000 jobs, 90 percent of which 
supported small businesses.
    If the United States unilaterally disarms the export 
financing world and allows Ex-Im to lapse, what kind of 
economic impact could it have on American manufacturing, on our 
job creators, on our exporters selling goods that are stamped 
proudly, ``Made in America'' all around the world--and so many 
of which have relied on this Export-Import Bank?
    Mr. Hochberg. On the first panel, we had Steve Wilburn, who 
gave specific testimony how just the threat of Ex-Im Bank not 
being here in September has already impacted the awarding of a 
$57-million contract to his company that would support a lot of 
jobs. The smaller transaction of $48 million supported 165 
jobs. This would obviously be more; it is even a larger 
transaction.
    We heard small businesses at the time of the shutdown, just 
even the threat of a shutdown, were losing sales because of 
potential we would not be there.
    Small businesses rely on us very deeply. It is 90 percent 
of our customers, 90 percent of the clients. And, frequently, 
they do not have another option. They frequently have very few 
options. I ran a small business. It is hard to get credit in 
general, and it is even harder for a small business.
    Lastly, many of the small businesses are part of the supply 
chain. So I know we focus on small businesses, direct 
exporters, but they are part of the Boeing supply chain, they 
are part of SpaceX, where Congresswoman Waters is, in her 
district. There is a large supply chain. A manufacturer like 
Boeing or GE, people like to talk about, but they don't make 
100 percent of what they do. Their supply chain is full of 
small businesses that would also be impacted immediately.
    Mr. Murphy. Thank you.
    As a fiscal conservative myself, I view all government 
spending with a skeptical eye. But one of the things I say 
frequently is that it isn't this body's role to create jobs; 
rather, it is our role to create an environment that is 
conducive to job growth. And you develop that environment 
through stability and certainty. Not by shutting down the 
government, or threatening to go over fiscal cliffs and 
sequesters and not by putting things like the Ex-Im Bank at 
risk.
    Can you talk about some of that uncertainty, and if 200,000 
jobs were supported last year, what that could potentially mean 
for these jobs in the future?
    Mr. Hochberg. It is obviously hard to be precise. I am 
thinking positively, that we are going to reauthorize the Bank 
and do it on time. But let's be very clear--205,000 jobs in the 
past year, well over a million jobs over the last 5 years, just 
under 1.2 million, were supported by our exports. That is 
because we filled the gap the private sector could not fill or 
didn't to meet the competition. So those are all at risk.
    When someone gets a loan from us, they have to state why 
they need the loan from us, or the guarantee or insurance, why 
can't they get it in the private sector. I would rather the 
private sector do everything. We are there when the private 
sector can't or won't.
    Mr. Murphy. To that point, I feel like I am in an alternate 
universe here. It just doesn't make any sense.
    Can you talk about how on the international scene, this has 
affected what some of our competitors globally are doing, what 
some other countries are doing? And could you address whether 
you think our global competitors' export Banks are going to 
step in to help American manufacturers.
    Mr. Hochberg. As I said, there is an ad in today's Politico 
that talks about the ex-im Banks of China, Russia, and France. 
And there are 57--there are 60 countries that all have an 
export Bank. They all would gleefully take sales from the 
United States and support more jobs in their communities. They 
are delighted to do that. They are looking forward to doing 
that.
    As I mentioned, China does more than 4 times the amount of 
financing for its exports than we do. We have a far more 
modest, much more careful, much more proscribed--
    Mr. Murphy. So, if anything, some could argue we should be 
expanding the Export-Import Bank.
    Mr. Hochberg. Yes, I would agree with that.
    Mr. Murphy. If you really care about jobs and American 
manufacturing--
    Mr. Hochberg. If you really care about jobs and you want to 
make sure we beat the competition. And, frankly, one way to get 
to the competition is to meet them toe to toe, head to head, 
over and over again and indicate we are not going to back down 
unless they play by the rules.
    Mr. Murphy. It would be one thing if not a single other 
country in the world had the equivalent of the Export-Import 
Bank. But they do, and, in fact, they are bigger. We don't live 
in that universe, so we might as well live in this reality, 
compete, and give our employees the best opportunity they can 
have.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from California, Mr. 
Royce, chairman of the House Foreign Affairs Committee.
    Mr. Royce. Thank you, Mr. Chairman, very much.
    Mr. Hochberg, a stated goal of Ex-Im Bank is to provide 
export credit assistance to serve customers who are unable to 
obtain financing through the commercial markets.
    What policies and procedures does the Bank have in place to 
ensure that it is limiting its assistance to these customers 
and not crowding out opportunities for private capital markets? 
And does Ex-Im make any kind of formal analysis of what kind of 
private capital would enter markets in its absence?
    Mr. Hochberg. Each application must state unequivocally why 
they are looking for our support and why they can't find it in 
the private sector. That is a requirement in reviewing a loan 
application, whether it is lack of financing, meeting the 
competition. Sometimes Banks have limits on what they will do 
in certain industries or certain countries. That is where we 
step in.
    Sub-Saharan Africa is a good example of that. We did a lot 
of loans in the Philippines. I have a list here. In Cameroon, I 
think I mentioned earlier, over half the exports that went to 
Cameroon, for example, we financed. Why? It is very hard to get 
any Bank to step forward.
    In places like Western Europe, we do very little business, 
because the banks are able to do that. In Japan, we hardly do 
any business, because there is a well-defined banking system.
    Mr. Royce. Let me ask Mr. Scire; let me ask the GAO.
    Is Ex-Im doing enough to ensure that companies are going 
out into the private market and not finding capital before 
coming to the Bank?
    Mr. Scire. So I think that gets into, sort of, the 
underwriting and what they are doing in terms of looking at 
eligibility and the analysis that is done there. And we have 
work under way right now that is looking at that, but that work 
is not yet complete.
    I would point out that we had made some recommendations 
back in 2007. And this is just to clarify a point. Although Ex-
Im has been very cooperative and has agreed with our 
recommendations, not all have yet been implemented. And so 
there are some recommendations we made in 2007, which look at 
some of this economic impact, that it is still working on.
    Mr. Royce. Okay.
    Let me ask, also, in terms of the numbers and what numbers 
are right, both sides of this debate are claiming numbers that 
support their case, based on different accounting 
methodologies. So the Bank claims estimates that it made $1.6 
billion in revenues for taxpayers since 2008. Yet, as you know, 
and as has been cited here today, the CBO reported on May 22nd 
that if Ex-Im used the fair-value accounting method, it would 
be budgeted as a $200-million cost to the taxpayers each year.
    Dr. Elmendorf, can you explain the large gap in numbers 
between these assessments? And, in your response, can you touch 
on what kind of risk assumptions you use, in terms of losses, 
when you apply this fair-value methodology? Do you look at 
historical experience and commercial Bank experience? And do 
you factor in loss reserves and capital? Maybe a quick 
explanation of how you do this?
    Mr. Elmendorf. Yes, Congressman.
    When the government makes a loan or makes a loan guarantee, 
either through Ex-Im Bank or some other credit program, the 
ultimate budgetary effects of that are not known. Many loans, 
most loans are repaid. Some loans are not repaid or are repaid 
in part. Sometimes, some money is recovered. The ultimate 
budgetary effects aren't known until after the fact.
    So, last year Ex-Im turned over some amount of money to the 
Federal Treasury. That is certainly true.
    When we give the Congress cost estimates, we are trying to 
give you a sense of what will happen going forward under a 
certain program from a certain program from a certain bit of 
financial assistance, and those estimates are operating in a 
world of great uncertainty. What the fair-value methodology 
does is to capture in the estimate not only the expected level 
of default and recoveries but the variation around that 
expectation, and to recognize how possible outcomes are--
    Mr. Royce. Let me put it another way. What I would be 
interested in is the risk-analysis framework that is employed 
in accounting by the private sector creditors.
    Mr. Elmendorf. Right.
    Mr. Royce. If you did that--
    Mr. Elmendorf. So private sector creditors take account of 
this market risk and put a price on it because the risk is 
costly to--
    Mr. Royce. In your opinion, if you did that, would it be a 
$200-million cost to the taxpayers or would it be a--
    Mr. Elmendorf. Yes, Congressman. When we applied that 
methodology to the Ex-Im Bank's projections of the size of the 
credit programs they will run, of the default rates and 
recovery rates and so on, taking the same set of underlying 
cash flows that appeared in the credit supplement to the 
President's budget and that we use in our standard FCRA 
accounting, when we use those same underlying cash flows but 
apply this cost for market risk, then the Ex-Im Bank's programs 
are costly, by our estimate, to the tune of $200 million a 
year, as you said.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Georgia, Mr. 
Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    In this morning's hearing, the airlines, with the chairman 
of Delta Air Lines and the Pilots Association, made some very, 
very salient points.
    Now, I think this: We have to the move the Ex-Im Bank 
forward. It helps small businesses. It creates jobs. But I 
believe we can do this as well as address those concerns.
    So, Mr. Hochberg, I know that you know exactly what they 
are, but from what the testimony said this morning, the 
chairman of Delta Air Lines, Mr. Anderson, and the head of the 
Pilots Association, Mr. Moak, both made these points: that 
unless there is a level playing field in the exercise of one 
particular aspect of what you do, which is the financing of 
these wide-body aircraft, that puts our airline industry in the 
United States at a competitive disadvantage with foreign 
airlines who are able to get these wide-body aircraft flying 
these international routes that are very, very profitable.
    So you can see the concerns that Delta Air Lines has and 
the pilots and the airline industry have. Because, quite 
honestly, unless we do something to address this--and if the 
Ex-Im Bank is being used in an unfair way to subsidize, for 
example, the airlines in India, the other airlines that have 
been brought up, where they get subsidized by their government, 
then they turn around and they get subsidized by you, they are 
able to get those planes cheaper, then they can reduce their 
ticket prices, and that makes it very uncompetitive.
    So what I want to do is, and as I mentioned to the 
chairman, find a way that perhaps we can come up with some 
language as we move forward with this, within the 90 days that 
we have, that can address that concern. It doesn't seem that 
this is mutually exclusive.
    Can you help us with that and give me a little guidance on 
how we will be able to move this forward, while at the same 
time addressing the concerns of Delta Air Lines?
    Mr. Hochberg. I will do my best.
    One, let me just--I have to say, we don't subsidize. People 
pay us a fee, and, as a result, they are essentially paying for 
our guarantee so they can borrow money through a bank. And we 
are totally self-funding and self-sustaining. So there is not a 
subsidy going from us to anybody else. I just need to state 
that.
    Two, in 2011, without Congress asking us, we raised the 
fees multilaterally across the world, made it more expensive to 
borrow money from us to buy aircraft, in particular. Today, 
foreign carriers all pay more than a comparable U.S. carrier 
would pay for the same airplane. So, they are already paying a 
premium. What Delta Air Lines is unhappy about is--they are 
paying a premium; they think they should pay an even bigger 
premium. They are paying more; they would like them to pay a 
lot more.
    So, one, we just need to understand the facts. We all can 
have different opinions, but there are the facts--
    Mr. Scott. But Delta Air Lines does not take any money from 
the Ex-Im Bank, but these foreign countries do.
    Mr. Hochberg. We look at a--that is correct. Because the 
need is--the United States has the best financial markets, the 
most liquid, creative financial markets. So U.S. carriers can 
borrow at far lower rates than any foreign carrier buying the 
same airplane.
    Mr. Scott. Well, here is what--
    Mr. Hochberg. So there isn't an advantage going to the 
foreign carriers is what I am trying to say.
    Mr. Scott. Yes, but here is--granted.
    It is sort of like we are at a stalemate here, and what we 
have to do is try to lean in to one another and to try to find 
out where we can give here. Because there is absolutely no way 
that we can move forward with the progression of the Ex-Im Bank 
if you have this salient cry from an unlevel playing field for 
one of our most significant, important industries worldwide.
    Isn't there something we can do, even if it is a trigger, 
even if it is an amount, even if it means curtailing certain 
routes that the competition can't take?
    Mr. Hochberg. For 3 years, we have been asking Delta 
precisely what they would like, and they have not given us a 
precise recommendation.
    Mr. Scott. Hopefully, we will get that recommendation, and 
an amendment that can address this, too, as we move forward.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair recognizes the gentleman from Tennessee, Mr. 
Fincher.
    Mr. Fincher. Thank you, Mr. Chairman.
    Mr. Hochberg and the rest of the witnesses, I appreciate 
you being here.
    A lot has been talked about today with Delta Air Lines, and 
I was looking over something where Delta had used the credit 
export agencies of Brazil and Canada to purchase hundreds of 
aircraft made in those countries.
    Is that true, Mr. Hochberg?
    Mr. Hochberg. Yes, to the best of my knowledge.
    Mr. Fincher. So why would they be--and to their credit, 
they are for reforms, but extending the reauthorization of the 
Bank. But what would be to the advantage of Delta to borrow the 
money from those countries and not use ours? The products?
    Mr. Hochberg. Yes. The United States is not really in the 
business of making what are called regional jets, those small, 
somewhat uncomfortable, narrow jets that hold 50 to 75 people 
that a lot of us fly on. So, we don't make those. They are 
really manufactured today largely in Brazil and Canada. Japan 
is coming up on stream, Russia and China--
    Mr. Fincher. But it is the principle of the thing. If you 
are against it, you would be against it, all of it.
    Mr. Hochberg. Correct.
    Mr. Fincher. But they--
    Mr. Hochberg. They avail themselves of, it is estimated, 
between $3 billion and $4 billion worth of export credits from 
Brazil and Canada.
    Mr. Fincher. Again, I used this, this morning. The U.S. 
economy shrank at a steep 2.9 percent rate in quarter one. The 
Commerce Department says the first-quarter contraction was even 
more severe than the 1-percent annual decline it estimated a 
month ago. Another major factor was a bigger trade deficit than 
initially estimated.
    I did not support reauthorization last time because we did 
not make the reforms I think were necessary. I have a book of 
reforms now that we have been working on.
    Something that we tend to do in Congress--and now we are in 
primary election season. So things are happening. We saw 
elections last night, and elections will be next week. And 
elections have consequences when we forget who we work for. If 
I forget my district back at home in Tennessee, then when I go 
back there, the elections will have consequences.
    My district, the number of jobs supported--and I know the 
gentleman from South Carolina had problems with numbers a few 
minutes ago--but 1,000-plus jobs in my district, 5,000-plus in 
my State. Now, that is who I work for, the Eighth Congressional 
District of Tennessee.
    This is not about big business or small business. Look, we 
want the country to grow and flourish. We want to hopefully 
have the environment and the private sector where they don't 
need the government and don't need Washington. But, at the same 
time, I am looking at the debt clock. It is unbelievable. But 
this is a program, under the current guidelines, that is not 
costing; it is actually returning money back. We need to reform 
it.
    I heard former Chairman Bachus, a few minutes ago, talk 
about sending a letter to you guys and not getting a response 
in a timely manner. I think that is unacceptable. I think we 
have do a better job of being accountable to your customers.
    But to just, because it doesn't look right or I don't get 
everything I want--my wife and my little girl were going to be 
here today, but she is out doing something else. And I was 
thinking, I have been married 23 years, which is a long time. I 
don't get everything I want at home. I am sure not going to get 
everything I want up here. It is just not going to happen. But 
my job--
    Mr. Hochberg. I hope you do better at home.
    Mr. Fincher. Yes, I will have to do better at home.
    My job is not--I am a farmer. And I came to Washington 3\1/
2\ years ago, and I promised my constituents, the folks in my 
district--because I received farm subsidies before I was 
elected. And I promised them that we needed a better way. We 
needed to reform the farm bill. This is just an example. We 
reformed the farm bill, more reforms than there had been in I 
don't know how many years. We did away with the farm subsidy 
program. We took many steps in the right direction.
    Was it perfect? No. I have voted over 2,400 times since I 
have been here, and none of the bills have been perfect. But 
did I vote ``no'' and say, it is not everything I want so I am 
just not going to do anything? No. That would be irresponsible 
on my part.
    My part is to do the best I can for my district and support 
an investment that creates 1,000 jobs in my district. And that 
is what this is about. With reforms. Without reforms, I can't 
support it. But, hopefully, we can reform it and move it 
forward.
    So, with that, I yield back, Mr. Chairman. Thank you.
    Chairman Hensarling. The gentleman yields back.
    The Chair now recognizes the gentleman from California, Mr. 
Sherman.
    Mr. Sherman. Mr. Hochberg, I hope that as you administer 
Ex-Im in the future--and I do think you have a future--you will 
focus especially on small businesses and focus on new products. 
Because the future--we have been trying to maintain a wage rate 
way beyond the average wage rate in the world, and the only way 
we are going to do that is by making things here that they 
don't make elsewhere.
    Now, a lot of this debate is between those who think we 
should focus on Ayn Rand's books on libertarianism and the 
purity of that versus the practicality. The practicality is 
Germany has more than 3 times the exports per person as we do 
in the United States. Germany has an export credit authority, 
or agency, that is roughly 3 times the size of ours compared to 
the size of our economy. Obviously, Germany is a somewhat 
smaller country. And while we have a declining manufacturing 
sector and a huge trade deficit, they have outstanding 
manufacturing jobs and a huge trade surplus. So the 
practicality side leads toward us also having an export credit 
agency.
    So the question is on purity. I want to point out to this 
committee that the Ex-Im Bank has a little sister. It is called 
OPIC. It is also a U.S.-sponsored export credit authority. It 
comes under the jurisdiction of the Foreign Affairs Committee. 
We reauthorized them on the Floor of the House of 
Representatives under a bill written by my good friend, 
Chairman Royce of the Foreign Affairs Committee. Yes, that good 
friend. One hundred and six Republicans voted for that bill.
    So if you are torn and you think, well, the Ex-Im Bank is 
good practicality but I have to preserve my ideological purity, 
if you are one of those 106 Republicans who voted for the 
Electrify Africa Act, which had the OPIC reauthorization in it, 
you have already lost your ideological purity. So, come with us 
and be practical.
    As to ideological purity, as to the gentleman from 
Tennessee, I think, who has just left, pointed out, Delta Air 
Lines has no ideological purity, nor do I expect them to have 
it. They are practical. They bought Canadian aircraft and they 
got financing from the Canadian agency that is analogous to Ex-
Im Bank.
    One thing that is practical about Ex-Im Bank is that you 
are scheduled to make, what, $14 billion over the next 10 
years? Do I have that right, Mr. Hochberg?
    Mr. Hochberg. That is the CBO estimate, yes.
    Mr. Sherman. That is the CBO estimate. Okay. Do you have a 
different estimate?
    Mr. Hochberg. I don't make estimates to 10 years. We simply 
made a projection, a budget proposal for 2015, and they took 
those numbers and projected them out 10 years.
    Mr. Sherman. Okay. And so, we have to live under the 
benevolent tyranny of CBO, and if they say we lose $14 billion, 
then we have to adjust those debt clocks and announce to the 
country that we are increasing the national debt by $14 
billion, or we have to wait for the chairman of this committee 
to join me in a pro-revenue bill. And that would take a long, 
long wait.
    But it is argued that fair-value accounting, which is not 
the law--every time somebody wants to increase the national 
debt by a proposal, they say, ``Well, just change the 
accounting, and then I am not increasing the national debt.'' I 
have heard this all the time. Dynamic scoring. Now, it is fair-
value accounting.
    And I want to make sure I understand this. Fair-value 
accounting would mean for Pizza Hut that we don't see whether 
they made money or lost money; we see whether they would have 
lost money if they had to pay as much to borrow money as the 
local pizzeria, which would be a very strange thing. The 
investors in Pizza Hut would be very surprised to find out that 
their company had lost money.
    Do I have that right, Mr. Hochberg?
    Mr. Elmendorf. Congressman, that is not the way I would 
describe Pizza Hut's use of fair-value accounting.
    Mr. Sherman. Pizza Hut is prohibited from using fair-market 
accounting, thank God, because--
    Chairman Hensarling. The time of the gentleman has expired.
    Mr. Sherman. --it would be a phony way to report to 
shareholders.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from South Carolina, Mr. Mulvaney.
    Mr. Mulvaney. Thank you, Mr. Chairman.
    We have heard a lot of talk today in the last 5\1/2\ hours 
about reforms and making a better Bank. So, let's look at that 
a little bit.
    Mr. Hochberg, you were here a year ago, and, at that time, 
I asked you about the Inspector General's report that said you 
had had some problems, that you were not routinely reporting 
the performance of your sub-portfolios relating to the small 
business, Sub-Saharan Africa, and renewable energy mandates. I 
found out from the IG's Office today that you still haven't 
fixed that one.
    I also said a year ago that it looked like you had trouble, 
according to the IG's Office, with a lack of due diligence and 
asset monitoring efforts conducted by lenders, specifically the 
ones who have a history of defaulted transactions. Even though 
there is an expectation that such efforts are taken, Ex-Im Bank 
does not require participating lenders to conduct due diligence 
or asset monitoring of their investigations. I found out from 
the IG's Office this morning that you haven't done that one 
either.
    There is a list of 78 different things that the various 
reports since 2010 have asked you to do, 78 things either the 
IG or the GAO has asked the Export-Import Bank to do. The IG 
has been able to verify that you have done and fixed 33 of 
those 78. As to 36 of them, either the IG can't verify that you 
have fixed them, they say that you are working on it, or they 
say that they know for a fact you haven't started on them yet. 
There are 9 of the 78 that they say your responses are 
unresponsive and they don't even count you as trying to fix 
things.
    You are required by law--12 U.S.C. 635(b)(1)(B): ``In 
authorizing any loan or guarantee, the board of directors shall 
take into account any serious adverse effect of such loan or 
guarantee on the competitive position of United States 
industry, the availability of materials which are in short 
supply, and employment in the United States.''
    We heard this morning that you have done that one time--one 
time in 2001, when it comes to helping Boeing sell aircraft 
overseas. That was with, I think, Aeroflot in 2001. And staff 
tells me now that you have conducted a grand total of 24 of 
those reports, as required by law, over the last 17,000 export-
import transactions.
    In 2012, we asked for some reforms. In 2012, this body 
asked the Export-Import Bank for some reforms, one of which 
was, ``The Secretary of the Treasury shall initiate and pursue 
negotiations with other major exporting countries, including 
members of the Organization for Economic Cooperation and 
Development and non-OECD members, to substantially reduce, with 
the ultimate goal of eliminating subsidized export financing 
programs and other forms of export subsidies. That was, I 
think, almost 2 years ago. You all have managed to set a 
meeting.
    The Administration recently sent over its proposed reforms, 
I guess. They call it a reauthorization. I don't know if we 
would call it a reform. It essentially says that you want more 
money; you want to change the way you count losses; you want to 
eliminate the need for producing stuff in the Federal Register 
regarding notice, lowering the accountability and transparency.
    And--and I wish the gentleman who was here from the 
previous panel, small businesses--you want to be able to count 
towards your small business quota small businesses that sell to 
big businesses. So forget about the pickles, forget about the 
guy's green energy. Unless you are selling to one of the big 
guys, you don't get to count under the President's proposed 
reforms, which I guess you participated in, because it is under 
your signature.
    I look at all of that against a political environment where 
this Administration has regularly shown that they don't really 
care about following the law very much. They certainly haven't 
followed it on health care. They are not following it on 
immigration. They don't seem to be following it on how they are 
supposed to keep the emails over at the IRS.
    So it makes me wonder, for everybody here who says, listen, 
that is great, let's pass some reforms, that would be 
wonderful. Before you run to the reform bandwagon, I encourage 
you to ask some questions to make sure that before we do that, 
let's first see if the Bank can actually reform itself under 
the existing laws that we have already passed. Let's see if 
maybe the Bank can make the suggested reforms that the IG and 
the GAO have suggested. And let's maybe make sure that this 
Administration might actually be interested in enforcing a 
reform bill if we pass it. Until then, I suggest to you that 
the time is way, way too early for talking about reforms of 
this Bank.
    With that, I yield back the balance of my time.
    Chairman Hensarling. The gentleman yields back.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Hultgren.
    Mr. Hultgren. Thank you, Mr. Chairman.
    And thank you all for being here.
    First, Mr. Chairman, I would ask for unanimous consent that 
my full statement be inserted into the record.
    Chairman Hensarling. Without objection, it is so ordered.
    Mr. Hultgren. Thank you.
    I really would like to thank the panelists. It has been a 
long day, I know, but this is an important discussion. And I 
know, as many of my colleagues, we just want to get 
information, we want to know the truth, we want to do the right 
thing.
    As I mentioned in my opening remarks, I think Congress 
should take a hard look at the current structure of the Export-
Import Bank. But, also, I hear from my own district's 
businesses that tell me that they rely on the Bank to ensure 
that their exports reach their customers. So before Congress 
abolishes the Export-Import Bank without a reasonable exit 
strategy, I think we really, first, need to explore viable 
reforms for the Bank.
    This leads me to my first question, and I will address it 
to Chairman Hochberg.
    The Bank's role in providing export credit assistance is to 
serve markets and customers that are unable to obtain financing 
through commercial markets. What policies and procedures does 
the Bank have in place to ensure that it is limiting its 
assistance to these customers and not crowding out 
opportunities for private capital markets?
    Mr. Hochberg. Congressman, thank you for giving me a chance 
to talk a little bit about that.
    First of all, 98 percent of the transactions at Ex-Im Bank, 
we work with a private sector bank to either make the loan, 
guarantee the loan, or arrange the loan. So we are doing that 
with 98 percent of the transactions.
    Furthermore, every application needs to state unequivocally 
why they are coming to us and why they can't do this in the 
private sector. That is a requirement for us to be making a 
loan. It is called--the term that is used is ``additionality,'' 
what additional value are we providing.
    And that is one reason, quite frankly, our loan portfolio 
hasn't grown as much in the last 2 years; there has been less 
need for us of late. I don't know if that will continue, but, 
of late, there has been a little bit less need. And that is a 
good sign. That is a good sign that Banks are making more loans 
and they are also dealing more with small businesses.
    Mr. Hultgren. I would address my next question to the 
Inspector General, if I may.
    Your office regularly engages with private sector 
stakeholders to obtain input on the Bank's operations. I 
wonder, in your opinion, is the Bank effectively limiting 
itself to markets and customers not being served by private 
lenders? What steps could the Bank take to better mitigate the 
risk that it is crowding out private capital markets, and that 
the Export-Import Bank is the lender of last resort, not the 
lender of choice?
    Mr. Gratacos. Thanks for the question.
    The Bank has a requirement in the charter to only offer 
financing for three situations. One of them is another ECA 
competition, a lack of financing in the market, or 
additionality.
    So the requirement that Chairman Hochberg is talking about 
is a requirement that any transaction that goes through the 
system has to have a declaration, to some extent almost like a 
certification, saying, the reason why we come is because of 
``X.''
    Now, whether or not that is verified is another story. We 
did a report on the direct loan program, and we highlighted 
that sometimes in the loan documents, we couldn't find 
documentation backing up that statement.
    That is the extent of what we are looking to do. We haven't 
really gotten into whether or not marketing strategies of the 
Bank across the country meet the charter requirement. We 
haven't gotten that far. But as focused on the direct loan 
program, we did address some of those questions.
    Mr. Hultgren. Chairman Hochberg, back to you.
    Mr. Hochberg. Yes, I would just add, it is required in the 
loan application. So the applicant needs to certify that their 
financial records are accurate as presented, that everything 
they state is accurate as presented.
    So I would--we do an audit periodically, but I have to take 
an assumption, if an applicant is signing an application for a 
loan guarantee from the Federal Government, that they are not--
that a corporate officer is not committing fraud in doing so. 
So they have to state unequivocally why they are coming to us.
    Mr. Hultgren. Let me move on. I only have a little bit more 
time.
    The current risk management function of the Bank is 
fragmented and neither addresses the totality of enterprise 
risk nor how risks may be interrelated.
    Given the Bank's recent risk trends, including the 
increased authority to extend credit from $100 billion to $140 
billion, what additional procedures are you putting in place to 
ensure a central risk management structure?
    Mr. Hochberg. We, at the recommendation of the IG, and I 
stated, a year ago we added the position of a Chief Risk 
Officer. I work closely with the Inspector General that the 
Chief Risk Officer and the underwriting are two entirely 
separate reporting structures, both reporting to me.
    And the Chief Risk Officer looks not only at credit risk 
but employee risk, reputational risk, legal, IT, hacking--the 
entire risk portfolio. There has an Enterprise Risk Committee, 
and there are two senior career people who report up to the--
    Mr. Hultgren. My time has expired. I yield back. Thank you, 
Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    There are votes currently on the Floor. The committee will 
recess until approximately 4:45 p.m.
    The committee stands in recess.
    [recess].
    Chairman Hensarling. The committee will come to order.
    My apologies to the witnesses. Votes do happen. I hope you 
understand.
    The Chair now recognizes the gentleman from Wisconsin, Mr. 
Duffy.
    Mr. Duffy. Thank you, Mr. Chairman.
    And I appreciate the witnesses waiting as we voted.
    I was looking at a recent article that quoted a study which 
basically said that 42 percent of Ex-Im Bank employees agreed 
with the statement, ``My organization's leaders maintain high 
standards of honesty and integrity.'' Only 42 percent of Bank 
employees agreed with that.
    And I know, as, I think, what Mr. McHenry brought up 
earlier, just yesterday in The Wall Street Journal, we had an 
article about the four Ex-Im Bank employees who are under 
investigation.
    This obviously breeds some concern and actually makes sense 
as to why only 42 percent think the organization's leaders have 
honesty and integrity as values.
    Mr. Hochberg, I want to just follow up on a question that 
Mr. McHenry asked.
    Have any of those four had referrals for criminal 
investigations?
    Mr. Hochberg. I am going to need to defer again to the 
Inspector General because these are all in his hands at this 
point.
    Mr. Duffy. I know, but I am asking you.
    Mr. Hochberg. I can't comment on it. I referred these to 
the Inspector General.
    Mr. Duffy. You don't--do you not know?
    Mr. Hochberg. They are under his jurisdiction.
    Mr. Duffy. Do you know?
    Mr. Hochberg. I am not--
    Mr. Duffy. I am asking: Do you know if they have been 
referred?
    Mr. Hochberg. If they--do I--
    Mr. Duffy. Do you know if they have been referred for 
prosecution?
    Mr. Hochberg. For prosecution, I--to my knowledge, they are 
in the investigation stage.
    Mr. Duffy. Okay. Were the four employees referenced in that 
article placed on leave?
    Mr. Hochberg. I can't comment. Two of our--
    Mr. Duffy. You can comment on whether or not they were 
placed on leave. We all know they are under investigation.
    Mr. Hochberg. Two of them have already left the Bank.
    Mr. Duffy. Okay. And so the two that didn't leave, are they 
still drawing a paycheck?
    Mr. Hochberg. There is an investigation going--I am not 
allowed--I am told by counsel and by the IG that I am not 
allowed to comment on this.
    Mr. Duffy. On whether or not they are drawing a paycheck?
    Mr. Hochberg. I am told I am not allowed to comment on 
that.
    Mr. Duffy. Okay.
    Mr. Hochberg. I am not trying to evade you. I am just told 
by counsel I can't comment on that.
    Mr. Duffy. Listen, if you haven't picked up on it, there is 
a little bit of concern about whether we should reauthorize the 
Ex-Im Bank.
    I know some have presented it as an institution that should 
have a little halo on top that sparkles and it provides great 
job opportunity throughout the country and it is a pristinely 
run organization, you know, sunshine, roses, tulips, it is a 
beautiful thing.
    Some of our concerns and some of the concerns that you 
might have heard from Delta earlier today are concerns that I 
imagine don't surprise you.
    We have asked that you do an economic impact analysis on 
your activities, and we have heard testimony that you have 
17,000 authorizations. You have only done an economic impact 
analysis on 24 of them.
    Do you wonder why we sit back in surprise and ask, ``Why do 
we want to reauthorize an institution that can't even follow 
our directions from Congress?''
    Mr. Hochberg. Congressman, we do an economic impact review 
of every transaction. Not every transaction warrants a full, 
in-depth, full-blown, several-month economic--
    Mr. Duffy. Out of 17,000--do you agree with that number? 
Out of 17,000 authorizations, you only did 24?
    Mr. Hochberg. I don't know where the 17,000 comes from, so 
I can't comment on that.
    Mr. Duffy. Do you agree you have only done 24?
    Mr. Hochberg. I don't have the precise number at my 
fingertips of how many we have done. I can say the following. 
If you would like to know the process, from a process point of 
view, Congressman, we do an economic impact analysis when--when 
on the surface it says there is more to investigate here.
    Mr. Duffy. It is my understanding that the chairman has 
been given a large amount of discretion on whether this Bank is 
reauthorized or not.
    And I think it would behoove you if you just fully leveled 
with us, are fully straightforward with us, you don't dance on 
questions, you don't hedge, but honesty and being forthright 
might get you to get a few of us to buy into significant 
reforms and reauthorize.
    But when you come in and you dance on us and hedge, that 
makes me say, ``Listen, I am just going to get more of the 
same.'' Because if I vote for reform, I don't trust that you 
are going to do it. I don't.
    I hear a lot of folks tell me that this has no economic 
consequence to the taxpayer. It helps job growth. It doesn't 
have an impact on the taxpayer.
    Do you agree with that, the Ex-Im Bank?
    Mr. Hochberg. No.
    Mr. Duffy. Thank you.
    Because you know that from 1982 to 1988, on average, we 
bailed out Ex-Im about $330 million a year and then, from 1992 
to 1996, it cost the taxpayer almost $10 billion.
    So this is not cost-free to the taxpayer, necessarily. 
Correct?
    Mr. Hochberg. If I can respond to that?
    Mr. Duffy. Sure.
    Mr. Hochberg. A transfer was made because Federal credit 
reform in 9 billion--
    Mr. Duffy. Oh. So you are going to give me excuses? 
Listen--
    Mr. Hochberg. No. 1996. And then we returned--
    Mr. Duffy. My time is almost up.
    Mr. Hochberg. --9.6. So, actually, we--
    Mr. Duffy. You are not convincing me--
    Mr. Hochberg. --returned more money than we received.
    Mr. Duffy. --that I should vote for reforms and 
reauthorization. You have not convinced me here today. I would 
like you to convince me, but that takes honesty--
    Mr. Hochberg. You have not given me--
    Mr. Duffy. --and forthrightness--
    Mr. Hochberg. --a chance to answer the question.
    Mr. Duffy. --with this committee.
    And I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair recognizes the gentleman from Washington, Mr. 
Heck.
    Mr. Heck. Thank you, Mr. Chairman.
    Before I begin and use my time, I ask unanimous consent to 
submit for the record three statements of support from external 
organizations, most notably including a statement of the U.S. 
Chamber of Commerce, along with a statement by the U.S. Chamber 
of Commerce in support of H.R. 4950, the bill I introduced last 
night, with 201 signatures and sponsors.
    Chairman Hensarling. Without objection, it is so ordered.
    Mr. Heck. Thank you.
    Mr. Hochberg, how many audits have you had of the Bank 
since reauthorization?
    Mr. Hochberg. My recollection is that GAO has done nine; 
they can probably confirm that.
    Mr. Heck. They were all completed?
    Mr. Hochberg. To my knowledge, seven have been fully 
completed and two are in process.
    Mr. Heck. Mr. Chairman, at this time I would ask unanimous 
consent to submit for the record a list of all of the 
requirements and reforms as included in the Reauthorization Act 
and their status as well.
    Chairman Hensarling. Without objection, it is so ordered.
    Mr. Heck. Thank you, sir.
    Mr. Hochberg, there is a lot of conversation here today 
around what reform should be pursued with respect to the 
funding or financing of wide-body aircraft.
    At no point during the many hours we were here today, did I 
actually hear a specific proposal from Delta Air Lines, 
although I thought what I was interpreting was, ``Let's just 
prohibit them.''
    If we were to do that, what, in your opinion, would happen 
in the marketplace, especially with respect to other ECAs?
    Mr. Hochberg. My concern would be, unless it is 
multilateral and done with the Airbus countries as well, we 
would be unilaterally disarming and putting the sale of Boeing 
aircraft and the thousands upon thousands of jobs that are 
generated from that manufacturer at risk.
    It is as though the Honda dealer offers full financing and 
the Toyota dealer says cash only. It will be a tilt towards 
that vendor that provides financing.
    So if we were to prohibit--if Congress were to prohibit 
wide-body financing, it would open up that market to Airbus and 
the competition would still exist for U.S. carriers because the 
only difference would be foreign carriers would be flying more 
Airbus planes versus a mixed fleet.
    Mr. Heck. In the last 2 minutes that I have, I am going to 
ask you to stop, breathe, and then paint a picture.
    There have been lots of kind of surface projections made 
about what happens if we wake up on October 1st and your doors 
are shuttered.
    I would like you, as a long-time former businessperson, the 
former acting administrator of the Small Business 
Administration, and as the president of the Export-Import Bank, 
to look forward, not just October 1st and 2nd.
    What is the long-term consequence to America's 
manufacturing base? What happens to our economy? What happens 
to our position in the world? Paint the picture for us, please, 
Mr. Hochberg.
    Mr. Hochberg. I will paint the picture and I would actually 
include something that is frequently overlooked, Congressman, 
and that is foreign companies that are looking to invest in 
this country to make products for the U.S. market.
    But all of them have said to me, ``When we move here, it is 
also to export from the United States.'' And on--several of 
them have said, ``We would not be opening new manufacturing 
facilities in the United States if there was no possibility of 
Ex-Im support for our exports. That would be too risky, to 
actually attract U.S. manufacturing here.''
    First Solar, a company that does solar panels, manufactures 
in the United States and in Malaysia. He said that without the 
Ex-Im Bank, labor costing pretty much the same, the United 
States actually has higher taxes, but without Ex-Im Bank, he 
would probably shift more manufacturing to Malaysia.
    So I think that we will see some irrevocable changes if 
that happens. The threat of it is enough to make manufacturers 
think twice.
    If this is going to be an--on again, off again continually, 
it is hard as a businessman--I was a businessman--to make 5- 
and 10-year investments when there is so much uncertainty.
    Mr. Heck. In the very brief amount of time that I have 
left, I am fascinated to know how you have accomplished such a 
low default rate and such a low loss rate. Can you express that 
in 25 seconds? How do you get that?
    Mr. Hochberg. First of all, 80 percent of the transactions 
we have on our books are either collateralized, we actually 
have security in the actual asset, or are guaranteed by a 
sovereign nation. So we have a very high degree of 
collateralization and security.
    We do a good job of underwriting, and we do an excellent 
job at what I would call asset management, actually following 
up on credits and making sure people are current and stay 
current.
    Mr. Heck. Thank you.
    I yield back the balance of my time.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Garrett, chairman of our Capital Markets Subcommittee.
    Mr. Garrett. I would defer if you have another Member 
first.
    Chairman Hensarling. In that case, the Chair will recognize 
the gentleman from Kentucky, Mr. Barr.
    Mr. Barr. Thank you, Mr. Chairman.
    Chairman Hochberg, I appreciate you coming to my office and 
talking to me about a month ago, and I think you know what my 
principal concerns are with reauthorization of Ex-Im Bank.
    There has been a lot of talk today about jobs. And I would 
like to talk a lot about jobs and, in particular, the job 
situation in Kentucky and the Obama Administration's climate 
policies, carbon policies, and the impact that those policies 
have had on jobs, particularly in eastern Kentucky.
    And, as you may recall, on December the 3rd, I sent you a 
letter expressing my concerns about the supplemental guidelines 
for high carbon intensity projects.
    These are guidelines that your Bank adopted which 
explicitly provide that your Bank will not provide support for 
exports for high carbon intensity plants.
    And your Bank defines a high carbon intensity plant as any 
plant that uses coal as a source of fuel for the generation of 
power or the production of heat.
    My Home State of Kentucky is the third largest coal-
producing State in the country. We have lost over 7,000 coal 
jobs in eastern Kentucky over the last 2 years as a direct 
result of the regulatory assault of this Administration.
    We are talking about jobs. You want to talk about jobs. My 
dismay is that, on December 19th, in response to that letter, 
you said that the revisions and the adoption of these 
guidelines was for the purpose of harmonizing Ex-Im Bank with 
the Administration's climate change policies.
    My question to you is: Why on earth, if you are about 
creating jobs--why are you aligning yourself with a job-killing 
agenda?
    Mr. Hochberg. Congressman, we had time to meet in your 
office. And since 1992, Ex-Im Bank has had to take into account 
the creditworthiness of an export as well as the environmental 
impact.
    That was put in by Congress 22 years ago. We have had an 
environmental criteria for all exports since 1992. This is not 
a newfangled policy.
    Mr. Barr. I would just submit that, if this is really about 
jobs, then Ex-Im would not have issued or adopted these 
guidelines.
    You say in your letter, that you have reviewed this 
extensively with the Administration. And I want to know who in 
the Administration did you work with in adopting these 
guidelines? And I finally want to know whether or not Ex-Im, in 
order to be reauthorized, would consider abandoning this Bank's 
participation in the war on coal?
    Mr. Hochberg. We are active in the export of coal-mining 
equipment. We are active in the export of coal. One of our 
largest exporters in the State of Pennsylvania is a company 
called Xcoal. These regulations only apply to a coal-fired 
power plant.
    Mr. Barr. Well, I understand that.
    Let me reclaim my time really quickly.
    I would just submit, also, if the Administration is 
concerned about the environmental impacts, then what you are 
doing by discriminating against coal-fired power projects is 
you are excluding U.S. technology from the opportunity that 
these projects will be funded, but they will be funded by 
China.
    And so, if you are interested in supporting 
environmentally-sensitive policies, then support U.S. 
technology to build coal-fired power plants and deliver 
hundreds of millions of people from energy poverty across the 
globe.
    In my remaining time, I want to share a story from a 
constituent. When we talked in my office, you gave me the 
example of a small business in my district that benefitted from 
Ex-Im financing. And you said, ``Reach out to them, 
LectroDryer.'' We did.
    John McPhearson--I know this man--a small businessman, and 
he did access financing from Ex-Im. But this is what he told my 
staff on the phone yesterday, ``We reached the point where 
someone was working full-time to make sure the reporting 
documents were filled out so that we could continue to receive 
our line of credit. You simply can't take a company of only 70 
employees and dedicate one employee entirely to filling out 
this kind of paperwork. If the Export-Import Bank went away, it 
wouldn't make any difference to me.''
    This was the company that you told me benefitted from the 
Bank.
    ``We have seen no difference in sales since we stopped 
working with Ex-Im Bank. The reason we stopped working with Ex-
Im was the cost and the complexity.''
    Do you have a response to that?
    Mr. Hochberg. Congressman, we are asked by this committee 
continually to do a better job of risk management, a better job 
of oversight.
    So I am trying to find a balance between supporting jobs 
and doing the proper job of oversight. I hope to get it right. 
If we get tilted one direction, we need to adjust that.
    Mr. Barr. Thank you.
    I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Garrett, chairman of our Capital Markets Subcommittee.
    Mr. Garrett. Thank you, Mr. Chairman, again. And, once 
again, Mr. Chairman, thank you for your interest in promoting 
job creation in this country and holding a very timely hearing.
    This committee is very familiar with government lending 
programs and very familiar with government lending programs 
that have gone belly up, including Fannie and Freddie, the 
National Flood Insurance, and FHA in the sense that--you know 
their numbers.
    As such, I have come to believe that over time, when 
proponents of government lending programs tout that they 
actually make money for the Federal Government, I tend to 
remember the old adage that there is no such thing as a free 
lunch.
    So we have to look at it a little bit deeper than the 
talking points that we hear sometimes on the panel.
    According to the CBO--Congressional Budget Office--over the 
next 10 years, Ex-Im's 6 largest programs will generate $14 
billion in the government's standard accounting framework.
    However, when CBO applies the private sector's accounting 
method--and, if you were here before, that issue was discussed 
with Mr. Anderson in some detail. And I appreciate Mr. Anderson 
actually having a comprehensive understanding of that as 
opposed to some of the members of this committee.
    However, when the CBO applies the private sector's 
standards of this program to it, CBO projects the Bank is 
projected to lose about $2 billion. So between $14 billion and 
$2 billion--and I can do the math in my head right here even 
though it is late in the day--is a $16-billion swing, and that 
suggests there is a lot of downside uncertainty when it comes 
to Ex-Im.
    I will start with you, Mr. Hochberg.
    Do you believe that the current government accounting 
standards truly and honestly and fully account for the risk to 
the taxpayers of the Bank's lending programs?
    Mr. Hochberg. I do, Congressman. I can--the difference 
between--to my understanding, of fair value and the analysis 
CBO did in that swing assumes one large giant assumption that I 
believe is not true.
    Mr. Garrett. Okay. So that is--
    Mr. Hochberg. And that is we would not adjust our fees, 
would not--we could adjust our fees to compensate. If there was 
a different accounting system that was adopted by the U.S. 
Government, we could adjust our fees accordingly to make sure 
that we were at a break-even or cost no subsidy.
    Mr. Garrett. I don't know that is the only difference and--
on their appraisal of it.
    Dr. Elmendorf, can you elaborate on this, since you have 
been there.
    Mr. Elmendorf. Also, Congressman, the estimates that we 
have done, the numbers of which you describe correctly, take 
the structure of the programs as they currently are.
    So they take the fees as they currently stand. They take 
Ex-Im Bank's projections of default rates and recovery rates 
and so on.
    If the programs were to change, then we would end up 
possibly with different estimates of their cost. We have just 
done an estimate based on the way the programs stand today and 
the numbers in the President's budget request for 2014.
    Mr. Garrett. So when they talk about the fees changing, 
those fees are changing on what? On current loans or on future 
loans, Dr. Elmendorf?
    Mr. Elmendorf. So from our point of view, we have taken the 
fees that are currently in place.
    If Ex-Im Bank were to charge different fees, then we would 
have to see how that affected not just the direct payments for 
the fees, but, also, how it would affect the composition of the 
borrowing that would occur from Ex-Im Bank.
    So we have to look at the whole changed structure of those 
programs.
    Mr. Garrett. Seeing that we have legislation to this point, 
would you commit to evaluating your loan portfolio on a fair 
value basis?
    Mr. Hochberg. We follow the Federal Credit Reform Act. If 
CBO wants to do a study on that, we would work with them on 
doing a--
    Mr. Garrett. I am not asking for a study. I am just asking 
that you do your books as other agencies do, as the CBO does 
their analysis, on a fair value basis.
    Mr. Hochberg. Right now I am required--because Congress 
has--the law of the land is the Federal Credit Reform Act that 
was passed in 1990. So that is how we keep our books in 
accordance.
    I was in business. You don't pick and choose your 
accounting system. That is the accounting system of the U.S. 
Government. It is the accounting system that we comply with 
when we do our annual audit and work with the IG on that. It is 
our--
    Mr. Garrett. That is a ``no.''
    Mr. Hochberg. We don't pick and choose.
    Mr. Garrett. Mr. Chairman, I think you wanted additional 
time?
    Chairman Hensarling. Yes.
    Mr. Garrett. If not--
    Chairman Hensarling. I will take the 30 seconds here.
    Mr. Hochberg, you have used some rather apocalyptic 
language regarding what would happen if Ex-Im was not 
reauthorized.
    Again, just for the record--I believe you said it already--
but isn't it true that 98.4 percent of U.S. exports are 
financed without your Bank? Is that correct?
    Mr. Hochberg. That is correct.
    Chairman Hensarling. Is it also correct that only 5 percent 
of all transactions of Ex-Im are to meet countervailing 
subsidies?
    Mr. Hochberg. I'm not sure I understand the question, sir.
    Chairman Hensarling. It is from your records: 5 percent of 
the transactions of the Bank--you classify these--are made in 
order to meet other subsidies.
    It is in your competitiveness report. Do I need to cite the 
page?
    Mr. Hochberg. I can't remember or recall if it is 5 
percent. But one of the criteria is meeting foreign competition 
from other export credit agencies. In 2013, it was 38 percent. 
I am just looking at my records here, in 2013.
    Chairman Hensarling. That is dollar volume. Correct?
    Mr. Hochberg. That was transactions by purpose. It was on a 
transaction basis.
    Chairman Hensarling. That is on a transaction basis, 38 
percent. Okay.
    The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Michigan, Mr. 
Huizenga, vice chairman of our Monetary Policy Subcommittee.
    Mr. Huizenga. Mr. Chairman, actually, I will yield some of 
my time to you if you want to continue that line of 
questioning. As I believe that is a line that needs to be 
explored, I will yield some time back to you.
    Chairman Hensarling. I thank the gentleman for yielding.
    So, Mr. Hochberg, we have heard a lot, and I think you 
yourself have used the phrase, ``unilateral disarmament.''
    And so, again, if we have over 98 percent of all U.S. 
exports not being financed--again my reading of your report, 
and I will try to get the page number, was that it was 5 
percent of transactions, roughly a third of dollar volume, are 
there to so-called level the playing field. All in all, it is a 
fairly small percentage of all U.S. exports.
    You also said that the Bank extends credit based on need 
and where they cannot find it in the private sector--I don't 
want to put words in your mouth. I don't have the transcript in 
front of me. I think you said that.
    So GE, Boeing, based on their balance sheets, can they not 
find credit in the private sector? Is that your opinion?
    Mr. Hochberg. It is not GE or Boeing. It is their customer. 
So in the Boeing case, to use that example, I just was in 
Africa. It is--Kenya Airways or Ethiopian Airways, which are 
good customers, but don't necessarily--
    Chairman Hensarling. So the size of their balance sheets 
wouldn't allow them to extend credit to their customer. Is that 
what you are saying?
    Mr. Hochberg. They are a manufacturing company. They are 
not a Bank. And their job is to manufacture and put money into 
R&D.
    Chairman Hensarling. He doesn't have GE Capital? Boeing 
doesn't have a finance arm? Are they not financing 
transactions?
    Mr. Hochberg. Not to the extent that--of the global 
requirements. And, again--
    Chairman Hensarling. What is a global requirement?
    Mr. Hochberg. Well, to meet all their export needs. They do 
it--frankly, sometimes--
    Chairman Hensarling. What is an expert need?
    Mr. Hochberg. I'm sorry?
    Chairman Hensarling. What is an export need?
    Mr. Hochberg. What I am trying to say, Mr. Chairman, is 
that sometimes Boeing will do it when they say, ``You know 
what? This credit is too poor. We are not even going to present 
that to Ex-Im Bank.'' So we do that.
    And the other thing we have to remember is we have Airbus, 
as an example, because we are talking about Boeing, that fully 
funds their export credit agencies, particularly in Britain, 
Germany, and France, don't have the criteria we have in terms 
of--
    Chairman Hensarling. GE Capital has half a trillion dollars 
in total assets. Boeing apparently has $92 billion in assets. 
And yet, they have a need that apparently you have to fill.
    So you are telling me again some of the largest companies 
in America can't finance their customers' desire for their 
products. Correct?
    Mr. Hochberg. They cannot provide--they are not in the 
position to provide 12-year financing or 10- or 14-year 
financing.
    Chairman Hensarling. I wonder what they are doing with that 
half-a-trillion-dollar balance sheet?
    Mr. Hochberg, a couple of different times you have talked 
about government shutdown, and rightfully said, ``I believe 
this is something that is harmful to the economy, I assume 
something to be avoided.''
    Did you talk about the government shutdown earlier today?
    Mr. Hochberg. I talked about it in terms of what the impact 
was on exports and small businesses that we work with.
    Chairman Hensarling. And my takeaway from your answer was 
detrimental. Is that correct?
    Mr. Hochberg. That is correct.
    Chairman Hensarling. Okay. So if Congress decided to send 
the President a clean continuing resolution and he refused to 
sign that because it did not reauthorize the Ex-Im Bank, and 
the Administration threatened a government shutdown, would you 
counsel the Administration publicly not to do that?
    Mr. Hochberg. I am not in a position to make 
recommendations on that, sir. My job is to manage the Bank and 
to determine--
    Chairman Hensarling. You just said in your earlier 
testimony that shutdown is something that you thought was 
pretty negative to the economy.
    So the Ex-Im Bank would be something that would be 
extraneous potentially attached to a clean reauthorization to 
keep the government open.
    You have had a lot of opinions on a lot of other matters. 
You have no opinion on this matter?
    Mr. Hochberg. What I referred to, sir, was that the threat 
of a shutdown--the threat of not reauthorizing the Bank or I am 
simply reporting what I heard when I spoke to exporters and 
their customers--
    Chairman Hensarling. So do you have no opinion on the 
matter, or do you refuse to share your opinion?
    Mr. Hochberg. I haven't given it any thought, sir.
    Chairman Hensarling. Fascinating.
    Mr. Huizenga. I will reclaim my 3 seconds, Mr. Chairman.
    The exact quote, as I wrote it down earlier, is that, ``We 
are there when the private sector can't or won't.'' And the 
question mark I wrote for myself after that was, ``Really? It 
doesn't always seem to be that is the case.''
    So, with that, I yield back. Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Indiana, Mr. 
Messer.
    Mr. Messer. Thank you, Mr. Chairman.
    I yield my time back to you, the Chair, to continue your 
inquiry.
    Chairman Hensarling. I thank the gentleman for yielding.
    Again, Chairman Hochberg, I would have you take a look at 
Figure B-1 of the Ex-Im Bank transactions by purpose from your 
2012 competitiveness report, page 149, where you list the 
financing due to the fact that, ``No private sector financing 
was available,'' and that which says ``meet competition.''
    As I do the math by number of transactions, it is about 5 
percent. So--
    Mr. Hochberg. Would you repeat the page number?
    Chairman Hensarling. --I would have you take a look at that 
particular report.
    Mr. Hochberg. I have 2013 here. I did not bring 2012 
because we issued this and set this up last night.
    Chairman Hensarling. Well, thank you. But we just got 2013 
yesterday. So this is the latest data that we have. Again, 
whatever the proper number is, it appears to be a somewhat 
smaller number.
    Let's talk again about the so-called level playing field. 
Listening to some of those who are on the other side of the 
debate, you would think the only way one could be competitive 
is to take taxpayer money and subsidize Fortune 50 companies.
    Dr. Elmendorf, regrettably, we are going to drag you back 
into all of this.
    But I believe the latest--CBO's February budget and 
economic outlook said that the Affordable Care Act, also known 
as Obamacare, would reduce the number of full-time employees 
over the 10-year budget window by 2\1/2\ million.
    I assume CBO still stands by that report?
    Mr. Elmendorf. I think that was our projection for near the 
end of the budget window, Mr. Chairman. And, yes, we stand by 
those estimates.
    Chairman Hensarling. Okay. Perhaps one way we could make 
our manufacturers and our exporters more competitive would be 
to repeal Obamacare.
    Now, here is something else that makes people competitive: 
wages. Some of our competitors have a higher wage scale. Some 
of them have a lower wage scale.
    The President has called for increasing the Federal minimum 
wage. According to a February CBO report, that could reduce 
employment by half a million, but it could be as high as 1 
million. That, again, is according to a February CBO report.
    Dr. Elmendorf, does CBO stand by that report?
    Mr. Elmendorf. Yes, Mr. Chairman.
    Chairman Hensarling. Okay. I think, if I remember right, 
just about every Democrat on this committee cosponsored the 
reduction in jobs of a half a million. Perhaps they might want 
to rethink that to help make our manufacturers a bit more 
competitive.
    We have the top five proposed rules that are coming down 
the pike, most of which is coming from EPA: Tier 3 emission 
standards, with a $35-billion impact on the economy, efficiency 
standards for motors, 11.7.
    We have the highest corporate tax rate of any 
industrialized nation in the world, yet my friends on the other 
side of the aisle, the only way they can think to somehow make 
us more competitive is to take taxpayer money in subsidized 
large companies.
    In the time that is remaining, Mr. Hochberg, here is 
another question that is somewhat disturbing to me: It appears 
that you are taking taxpayer money and loaning it or 
guaranteeing the credit to some nation-states that, according 
to Human Rights Watch, are some of the worst violators of human 
rights.
    The Democratic Republic of Congo, where the Human Rights 
Watch has said, ``Government authorities have sought to silence 
dissent with threats, violence, and arbitrary arrest against 
human rights activists.''
    Freedom From Torture, another human rights group, calls it 
the rape capital of the world.
    And, yet, on behalf of the American taxpayer, apparently, 
you have extended one of the state-owned enterprises a line of 
credit.
    You have also extended lines of credit to Russia, now that 
Ukraine's peninsula, the Crimea, has been absorbed.
    Sierra Leone, Human Rights Watch, ``The government of 
Sierra Leone and the mining company that is the country's 
largest employer have undermined villagers' access to food, and 
prevented workers from challenging abusive practices.''
    United Arab Emirates continue to crack down on freedom of 
expression and association.
    Okay. What private companies do with their money is one 
thing. What you do with taxpayer money is something else.
    Why are you taking taxpayer money and consistently loaning 
it to nation-states that are some of the worst human rights 
abusers on the planet?
    Mr. Hochberg. Mr. Chairman, the example you cited in the 
Congo is from the 1980s. It is over 30 years ago. We--
    Chairman Hensarling. My data says 2012.
    Mr. Hochberg. For every transaction, the State Department 
gives a clearance of human rights conditions, and we don't make 
a transaction if the State Department has an objection on a 
human rights basis. So that is current practice.
    I can't talk about what happened in the 1980s. I can talk 
about currently. The State Department gives us a clearance on 
every transaction from a human rights point of view that the 
board considers.
    Chairman Hensarling. Mr. Hochberg, I might say it is time 
to start showing a little bit of independent judgment in this 
matter, just one man's opinion.
    The gentleman from Indiana's time has expired.
    There are no other Members in the queue. So I would like to 
thank our witnesses for their testimony today.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    The hearing is adjourned.
    
    [Whereupon, at 5:25 p.m., the hearing was adjourned.]
    
                            A P P E N D I X



                             June 25, 2014
                             
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