[Senate Hearing 117-319]
[From the U.S. Government Publishing Office]
S. Hrg. 117-319
NOMINATIONS OF TODD M. HARPER, JUDITH DELZOPPO PRYOR, AND OWEN EDWARD
HERRNSTADT
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
ON
NOMINATIONS OF:
TODD M. HARPER, OF VIRGINIA, TO BE CHAIR OF THE NATIONAL CREDIT UNION
ADMINISTRATION
__________
JUDITH DELZOPPO PRYOR, OF OHIO, TO BE FIRST VICE PRESIDENT OF THE
EXPORT-IMPORT BANK OF THE UNITED STATES
__________
OWEN EDWARD HERRNSTADT, OF MARYLAND, TO BE A MEMBER OF THE BOARD OF
DIRECTORS OF THE EXPORT-IMPORT BANK OF THE UNITED STATES
__________
SEPTEMBER 30, 2021
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available at: https: //www.govinfo.gov /
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-160PDF WASHINGTON : 2022
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey RICHARD C. SHELBY, Alabama
JON TESTER, Montana MIKE CRAPO, Idaho
MARK R. WARNER, Virginia TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia KEVIN CRAMER, North Dakota
STEVE DAINES, Montana
Laura Swanson, Staff Director
Brad Grantz, Republican Staff Director
Elisha Tuku, Chief Counsel
Mohammad Aslami, Counsel
Dan Sullivan, Republican Chief Counsel
John Crews, Republican Policy Director
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Charles J. Moffat, Hearing Clerk
(ii)
C O N T E N T S
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THURSDAY, SEPTEMBER 30, 2021
Page
Opening statement of Chairman Brown.............................. 1
Prepared statement....................................... 31
Opening statements, comments, or prepared statements of:
Senator Toomey............................................... 3
Prepared statement....................................... 32
NOMINEES
Todd M. Harper, of Virginia, to be Chair of the National Credit
Union Administration........................................... 5
Prepared statement........................................... 33
Biographical sketch of nominee............................... 35
Responses to written questions of:
Chairman Brown........................................... 84
Senator Toomey........................................... 89
Judith DelZoppo Pryor, of Ohio, to be First Vice President of the
Export-Import Bank of the United States........................ 6
Prepared statement........................................... 61
Biographical sketch of nominee............................... 62
Responses to written questions of:
Chairman Brown........................................... 98
Senator Toomey........................................... 100
Senator Menendez......................................... 103
Senator Tillis........................................... 106
Senator Kennedy.......................................... 108
Senator Cramer........................................... 110
Owen Edward Herrnstadt, of Maryland, to be a Member of the Board
of Directors of the Export-Import Bank of the United States.... 8
Prepared statement........................................... 72
Biographical sketch of nominee............................... 73
Responses to written questions of:
Chairman Brown........................................... 114
Senator Toomey........................................... 114
Senator Menendez......................................... 118
Senator Kennedy.......................................... 120
Senator Cramer........................................... 121
Additional Material Supplied for the Record
Letter submitted by NAFCU........................................ 126
Letter submitted by CUNA......................................... 130
(iii)
NOMINATIONS OF TODD M. HARPER, JUDITH DELZOPPO PRYOR, AND OWEN EDWARD
HERRNSTADT
----------
THURSDAY, SEPTEMBER 30, 2021
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 9:28 a.m., via Webex and in room 106,
Dirksen Senate Office Building, Hon. Sherrod Brown, Chairman of
the Committee, presiding.
OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
Chairman Brown. The Senate Committee on Banking, Housing,
and Urban Affairs will come to order.
Today's hearing is hybrid. Our witnesses are in person.
Members have the option to appear both in person or virtually.
For those joining remotely, a few reminders: There will be a
slight delay before you are displayed on the screen. When you
start speaking, please click the mute button until it is your
turn to speak. You should all have a box on your screen labeled
``clock.'' For those of you joining virtually, you will have a
bell ring at 30 seconds, then when your time is up. We will
move on if there is a technology issue.
Our speaking order, as usual, will be by seniority of the
Members who have checked in before the gavel came down, either
in person or virtually, and then by seniority of Members
arriving late, alternating between Democrats and Republicans.
The Committee meets today to consider the nominations of
Todd Harper to be Chair of the National Credit Union
Administration, Judith Pryor to be First Vice President of
Export-Import, Owen Herrnstadt to be a member of the board of
directors of the Export-Import Bank. We thank the nominees for
appearing. We extend a warm welcome to their family and friends
in attendance.
To the nominees, thank you for your willingness to serve in
these important roles. For Ms. Pryor and Mr. Harper, thank you
for your continuation of service.
If confirmed, the nominees before us today would play
pivotal roles in ensuring the safety and soundness of our
credit union system and supporting U.S. workers and
manufacturers as they compete in a global marketplace.
As Chair of the NCUA, Mr. Harper, would lead an independent
agency responsible for regulating and chartering Federal credit
unions, ensuring the deposits of some 5,000 federally insured
credit unions, protecting the millions of credit union members.
As First Vice President and member of the board of directors,
Ms. Pryor and Mr. Herrnstadt would be two of five directors of
EX-IM, play an important role in helping level the playing
field by stepping in to offer export financing when the private
sector is unwilling or unable to provide it. The nominees
before us are well qualified for these roles. They possess the
background, training, and experience to take on the many
challenges that this country faces today.
Mr. Harper is President Biden's nominee for Chair. He was
first confirmed by the Senate with a bipartisan vote to the
three-member board in 2019, designated as Chairman this year.
Prior to serving, he was the Director of the NCUA's Office of
Public and Congressional Affairs and Chief Policy Advisor to 2
former chairs. As the first NCUA career staff member to serve
on the board, he understands the role that credit unions play
in local communities. He is the first openly gay leader of any
Federal financial regulatory agency. Mr. Harper previously
served as a staff in the U.S. House of Representatives,
including Staff Director for the Subcommittee on Capital
Markets, Insurance, and Government Sponsored Enterprises.
Congratulations, Mr. Harper, on being renominated and
welcome back to the Committee.
In July, President Biden renominated Judith Pryor to the
board of directors. She is proudly a native Ohioan, hailing
from the eastern Cleveland suburb of Richmond Heights. She has
more than 25 years of international business, finance, and
public policy experience. The Banking and Housing Committee
supported her nomination as a board member of EX-IM in 2018 and
2019. She worked with former Chair, Republican Kimberly Reed,
and current board member, Spencer Bachus, to reopen EX-IM after
a 4-year shutdown of all medium and large transactions, which
abandoned workers and stalled the creation of more
manufacturing jobs. Prior to joining EX-IM, Ms. Pryor served as
Vice President for External Affairs at OPIC.
It is always good to see an Ohioan on the panel. Ms. Pryor
knows how important EX-IM is to my State, so many States
represented by Democrats and Republicans on this Committee.
Congratulations and welcome.
The final nominee today is Owen Herrnstadt. For 30 years,
Mr. Herrnstadt has served in various roles at the International
Association of Machinists and Aerospace Workers, an
organization representing hundreds of thousands of workers from
across the country and a very important organization in my
State. He currently serves as Chief of Staff to the
International President and Director of Trade and
Globalization. He assists in running one of the largest
manufacturing and transportation unions in the country,
spanning several industries, working with many leading export
companies. At IAM, he has developed policy on international
trade and human rights and international labor standards, all
very important to me and to this Committee. He served on the
EX-IM Advisory Committee.
Welcome, Mr. Herrnstadt. Thank you for your many years,
especially on behalf of working people.
A confirmed board is important to continue the bipartisan
work started under President Trump to rebuild the capability of
the Bank. American workers and businesses need a fully
functioning EX-IM. The pandemic slowed all economic activity,
but China continued its massive deployment of export financing
to assist their State-backed companies. 2020 EX-IM's medium and
long-term export credit financing was one-tenth the amount
offered by the Chinese Government to their exporters.
I worked with Chair Crapo, Chairwoman Waters, and Ranking
Member McHenry on the 2019 reauthorization to ensure that EX-IM
is focused on economic competitiveness with China and expanding
small business support. Our nominees today will be charged with
continuing implementation of that bipartisan reauthorization.
Ranking Member Toomey.
OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY
Senator Toomey. Thank you, Mr. Chairman.
Mr. Harper, Ms. Pryor, Mr. Herrnstadt, welcome to the
Committee.
Mr. Harper has served on the NCUA's bipartisan board since
being confirmed in 2019 before he was named NCUA's Chair in
January of '21. He appeared to have a reasonable approach to
regulation and a good working relationship with his colleagues.
However, since being named Chair, it seems that Mr. Harper has
been prioritizing the Administration's global warming agenda in
a way that raises some questions that I would like to explore.
Just last month, in a meeting on August 19, 2021, with the
NCUA's newly formed Climate Financial Risks Working Group, Mr.
Harper noted, ``Credit unions feel that membership is often
tied to a specific work site or an industry like an oil
refinery or agriculture.'' And then a separate quote, ``To
remain resilient, such credit unions will need to consider
adjusting their fields of membership, altering their loan
portfolios, or protecting the collateral that backs their
homes.'' I hope that these quotes are not intended to suggest
that there should be an allocation of credit based on perceived
climate risks, and I look forward to exploring that with Mr.
Harper.
Turning to the EX-IM Bank, Ms. Pryor has been nominated to
serve as the First Vice President, and Mr. Herrnstadt has been
nominated to serve on the board of directors. I continue to
remain deeply skeptical of the EX-IM Bank and its mission and
its role in the global economy. Since joining the Senate, I
have advocated for sensible reforms to EX-IM, but proponents of
EX-IM continue to block these reforms. In my view, it was ill
advised for Congress to reauthorize EX-IM in 2019 for an
historic 7 years, without a major reform at all, to protect
Federal taxpayers, and taxpayers ultimately bear the risk that
is taken by EX-IM Bank.
And let us be clear. EX-IM wins business by either
systemically underpricing the risk that private markets would
otherwise absorb or taking on risk the private markets would
not bear at any price. Since 2018, EX-IM's default rate has
tripled to 1.5 percent, and it may soon breach the 2 percent
statutory caps on defaults. Now Congress has laid out a clear,
corrective measure in the event that the default rate cap is
breached, and that is that EX-IM must temporarily freeze
lending that exceeds its current book of business until the
default rate drops back below the 2 percent statutory cap.
Unfortunately, the Biden administration wants to avoid such
reasonable taxpayer protections. Instead, the Biden
administration is asking that Congress double the EX-IM Bank's
default rate cap to 4 percent. So instead of fixing a default
problem, the Biden administration wants to ignore the problem
of rising defaults by changing the metrics and simply
tolerating still more defaults. But as I say, these defaults
can lead to taxpayer bailouts of EX-IM as has happened in the
past.
As part of EX-IM's reauthorization in 2019, Congress
created a new EX-IM China program to compete with the People's
Republic of China and its massively subsidized export credits.
Just as I feared then, the Administration is now proposing that
we engage in a race to the bottom with the Chinese Government,
of all people. Specifically, as the Chinese Government
increases their giveaways to their exporters, the
Administration is looking to match those giveaways at the
expense of U.S. taxpayers. We should not be competing with
China by adopting their worst practices. This is not the way to
win a competition with the Chinese Communist Party.
I am concerned that propping up exports for this program
will lead to further Government subsidies. A U.S. export
economy dependent on Federal credit subsidies is not a recipe
for long-term success. Rather, it leads to crony capitalism and
the ossification of an economy.
And of course, there is already crony capitalism at play in
EX-IM financing. Take, for example, one transaction that Ms.
Pryor voted for in 2021. It is a deal guaranteeing an $85
million loan from JPMorgan to Qantas Airline for the purpose of
buying jet engines from General Electric.
So let us see. JPMorgan is the largest bank in America.
Qantas is the largest airline in Australia. General Electric is
one of the largest industrial companies in the world. Why do
these companies need the American taxpayer to subsidize the
deal? The obvious answer is they do not. These are some of the
biggest, most sophisticated companies in the world with full
access to the capital markets every single day of the week.
Now I recognize that my views are not the consensus views
on this Committee. I would prefer that we did not have Federal
taxpayers subsidizing these transactions at all. But still, I
would hope that there is at least an agreement among our
nominees that EX-IM should not be the lender of first resort
and, as required per statute, EX-IM ``should supplement and
encourage, and not compete with, private capital.''
I look forward to hearing Ms. Pryor and Mr. Herrnstadt on
this aspect of EX-IM activity and their plans should they be
confirmed.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Ranking Member Toomey.
Would the witnesses please stand and raise their right
hands. Do you swear or affirm the testimony you are about to
give is the truth, the whole truth, and nothing but the truth,
so help you God?
Mr. Harper. I do.
Ms. Pryor. I do.
Mr. Herrnstadt. I do.
Chairman Brown. And do you agree to appear and testify
before any duly constituted committee of the U.S. Senate?
Mr. Harper. I do.
Ms. Pryor. I do.
Mr. Herrnstadt. I do.
Chairman Brown. Thank you. Please be seated.
If you would like to introduce family or friends as you
begin your testimony, feel free to. Mr. Harper, you are now
recognized for 5 minutes.
STATEMENT OF TODD M. HARPER, OF VIRGINIA, NOMINATED TO BE CHAIR
OF THE NATIONAL CREDIT UNION ADMINISTRATION
Mr. Harper. Chairman Brown, Ranking Member Toomey, and
Members of the Committee, I am humbled to appear before you
today and grateful to President Biden for nominating me to
serve a full term on the NCUA board. I am also thankful to my
longtime partner, Thomas Beers, for supporting my commitment to
public service.
Since the late 1990s, I have worked as an advisor, manager,
and executive on banking, insurance, and securities legislation
and regulation. These jobs have given me broad knowledge of
financial services policy and a deep understanding of the many
issues facing our Nation's $2 trillion credit union system.
These experiences have also deepened my appreciation for the
role that the system of cooperative credit plays in the lives
of one in three Americans.
In speeches, I often talk about my parents, Dr. Ronald and
Christine Small, and how they showed me the importance of
forging consensus and bipartisan agreement. Today, I would like
to share another story about them, one that led me to become an
NCUA member and also to study business at Indiana University.
In 1974, we moved to a new neighborhood, and I started
earning $2 a week for completing chores. Two blocks away from
our house was a candy store, a terrible temptation for a 7-
year-old. Soon, to pay for my purchases, I was spending my
entire allowance and even dipping into my other assets, a coin
collection of silver quarters, nickels, and dimes. So when the
holidays arrived, I had no money for gifts. I was in a tough
spot. Fortunately, I obtained an interest-free loan from a
local cooperative, the ``Bank of Mom and Dad,'' and learned
important lessons about budgeting and saving that changed my
habits. Soon, I was teaching my older brother about compound
interest and calling banks to determine which paid the highest
interest on deposits.
Looking back, I realize how lucky I was to learn about
budgeting and saving at an early age. Many Americans do not
learn these lessons in either the home or the classroom. While
at the NCUA, I have worked to close that gap in financial
education. The Agency also works to expand access to safe, fair
and affordable financial services, especially for households of
modest means. This commitment to serving the underserved
inspires me.
Likewise, my experience in working through several
financial crises has informed my regulatory philosophy.
Independent regulators like the NCUA need to be fair and
forward-looking, innovative and inclusive, risk-focused and
ready to act when needed, and engaged appropriately with all
stakeholders to develop effective regulation and efficient
supervision.
This thinking has guided my response to the pandemic's
fallout. Accordingly, my colleagues and I have worked to adopt
temporary liquidity reforms and implement targeted capital
standards to address a dramatic rise in insured shares.
Alongside other regulators, we have also encouraged lenders,
the pandemic's financial first responders, to work with
borrowers experiencing difficulties. And I have advanced
economic equity by emphasizing fair lending oversight and
supporting grant initiatives to expand fair access to financial
services.
If confirmed, I would continue focusing on credit union
members, the system's resilience and strength, and the NCUA's
readiness to address expected increases in credit defaults as
pandemic relief programs end. Consistent with the law, I would
also continue prioritizing capital and liquidity,
cybersecurity, consumer financial protection, and diversity,
equity, and inclusion.
In closing, our Nation stands at a critical crossroad. We
should pursue a path that will strengthen the system of
cooperative credit, increase access to affordable credit in
underserved communities, and create greater economic stability
for families. My experience, knowledge, and dedication have
well prepared me to navigate this road.
If I am fortunate enough to be confirmed for a full term on
the NCUA board, it would be an honor to continue working with
the talented and dedicated staff at the Agency to protect
consumers and maintain safety and soundness of credit unions.
Thank you for considering my nomination. I look forward to your
questions.
Chairman Brown. Thank you, Mr. Harper.
Ms. Pryor. Welcome to the Committee, Ms. Pryor.
STATEMENT OF JUDITH DELZOPPO PRYOR, OF OHIO, NOMINATED TO BE
FIRST VICE PRESIDENT OF THE EXPORT-IMPORT BANK OF THE UNITED
STATES
Ms. Pryor. Thank you, Mr. Chairman, Ranking Member Toomey,
Members of the Committee. I am honored to appear before you
today as the nominee for First Vice President of the Export-
Import Bank of the United States. I am deeply grateful to
President Biden for nominating me, and I welcome the
opportunity to continue to serve my country.
I would like to acknowledge my husband, David Pryor, Jr.,
and the virtual presence of family and friends around the
country. I would not be here today without their steadfast
support and encouragement. My son, Hampton, cannot be here
today, but I feel his presence and acknowledge his
perseverance, which inspires me daily.
If confirmed, I pledge to carry out EX-IM's mission with
honor and integrity and to be a responsible steward of taxpayer
dollars. I thank you, Chairman Brown, and the Members of the
Committee and staff who have supported me, encouraged me, and
placed their trust in me. I have met many of you since I was
first nominated in 2017, and I have learned of your priorities
related to EX-IM and how we can work together to help American
exports succeed globally. Should I be confirmed, I look forward
to continuing to work with each of you to support American jobs
through exports.
I spent 25 years in leadership roles in the business
community, including 17 in the satellite communications
industry. This was followed by 6 years at OPIC and 2 years on
EX-IM's board. I would bring a unique combination of leadership
experience to the role of First Vice President, and my
international business experience provides helpful context for
the challenges U.S. exporters face when navigating new overseas
markets.
There are more than 110 export credit agencies globally.
Today's American exports compete on quality, service, and in
many cases, against Government-backed financing. A fully
functional EX-IM with Senate-confirmed leadership can better
support U.S. jobs by facilitating exports as EX-IM fills the
gap in private sector financing. When the transaction is too
small for a private sector institution to take on or the
company wants to sell to a riskier market or they have
liquidity issues due to financial events such as the ongoing
global pandemic, EX-IM can help. Many of my meetings as a board
member introduced me to workers and entrepreneurs who have sold
their products overseas with EX-IM's support, from makers of
specialized bottling equipment and custom weaving looms to
satellite launch service providers.
Ninety-five percent of consumers live outside of the United
States, presenting tremendous opportunity for American workers.
Foreign buyers have a choice. Let us make sure American goods
and services are top of mind. The U.S. makes and creates high
quality, exceptional products, and American industry is more
likely to adhere to high environmental and social standards,
which become a certainty with EX-IM. As a tool in the U.S.
Government toolbox, EX-IM helps these export-ready companies
reduce risk, access capital, and sell with globally competitive
payment terms.
I am grateful to this body for confirming me in 2019 to
serve on EX-IM's board. I am exceptionally proud of the work we
did to reinvigorate EX-IM and to support thousands of American
jobs after a nearly 4-year absence of a board. And I am proud
of our efforts to modernize policies and provide tools to
support U.S. jobs when the COVID-19 pandemic shut down the
global economy.
Should I be confirmed, I would look forward to building on
those accomplishments and returning to work with a team of
highly qualified, passionate professionals, including
Congressman Bachus, who remains on the board. I would also hope
to continue my outreach efforts with a focus on clean energy
and exports to Sub-Saharan Africa. These areas provide enormous
opportunity for overseas growth, and EX-IM can play an
important role in leveling the playing field.
Distinguished Members of the Committee, thank you again for
the opportunity to appear before you today as I respectfully
ask for your support to serve as First Vice President of EX-IM.
I believe my experience and background demonstrate my
commitment to EX-IM's mission and to modernizing the Agency so
it can be effective for years to come. If confirmed, I look
forward to working with you, the business community in your
States, insurance brokers, and lenders across the country to
accomplish EX-IM's mission of supporting and sustaining
American jobs through exports. Thank you.
Chairman Brown. Thank you, Ms. Pryor.
Mr. Herrnstadt is recognized for 5 minutes.
STATEMENT OF OWEN EDWARD HERRNSTADT, OF MARYLAND, NOMINATED TO
BE A MEMBER OF THE BOARD OF DIRECTORS OF THE EXPORT-IMPORT BANK
OF THE UNITED STATES
Mr. Herrnstadt. Chairman Brown, Ranking Member Toomey, and
distinguished Members of the Committee, I am honored to appear
before you today as a nominee to serve on the Export-Import
Bank of the United States board of directors. I want to begin
by thanking President Biden for his confidence in nominating me
to this important position. I would also like to thank the
Committee for scheduling this hearing and considering my
nomination.
Before I share more about my experience for the position, I
would also like to recognize and thank my family who have
joined me today: my wife, Stacey Grundman; my son, Eli; and my
daughter, Dana, who is watching from her home.
I am truly honored to be nominated for the board of
directors of the Export-Import Bank. If confirmed, I believe
that I could provide a critical voice in fulfilling EX-IM's
mission of creating and supporting U.S. jobs by providing
support to exporters of all sizes across our Nation's
industrial and service sectors.
I currently serve as the Chief of Staff for the
International Association of Machinists, starting out in the
IAM's Legal Department in 1987. I also have served on the
Advisory Committee to EX-IM, the U.S. State Department's
Advisory Committee on International Economics, and was a
member of the board of directors of the Baltimore branch of the
Federal Reserve Bank of Richmond. I am a member of the Council
on Foreign Relations and served as Co-Chair of the American Bar
Association's International Employment and Labor Law Committee.
I have also taught as an adjunct professor of law at American
University and Georgetown University, teaching employment law
and international labor law.
All of these experiences have contributed to my
understanding of the critical role that EX-IM serves in
assisting the United States and its exporting industries to
meet the challenges of growing global competition, especially
from countries like China. I am also well aware of EX-IM's
critical role in supporting the creation of jobs here at home
as well as bringing vital manufacturing supply chains back to
the United States. I understand the critical importance of a
diversified EX-IM portfolio that expands support for businesses
and industrial sectors of all sizes, including businesses that
may not now be familiar with its programs. I am deeply
committed to assisting EX-IM become more transparent,
strengthening its efforts to minimize risk to American
taxpayers, and working with Members of this Committee to better
fulfill its mission.
Over the years, I have had the opportunity to learn about
and be involved in strategic analysis and policymaking matters
related to different aspects of the global economy that have
emerged during my professional career. I have witnessed the
importance of the global economy to the lives of workers, their
families, and communities throughout this country. I have seen
them prosper when global competition is fair and seen lives and
communities ruined when global competition is unfair. EX-IM
provides key tools that can be used to level the global playing
field for U.S. businesses and workers as they meet challenges
of international competition.
In my many roles, I have voiced issues relevant to American
workers in many contexts. I have always sought to do so in a
professional and pragmatic manner that allows consensus
building and progress on key matters. I have repeatedly shown
that I am committed to the task at hand and can get the job
done by listening, learning, and working with everyone. I
believe I have the expertise, keen perspective, and insights to
support and contribute to the critical mission of EX-IM as a
member of its board of directors.
Thank you again for the opportunity and honor to appear
before you today. I look forward to your questions.
Chairman Brown. Thank you, Mr. Herrnstadt.
I will start the questioning with Mr. Harper. Please be as
brief as you can because I have 5 minutes and I want to ask a
question of each of you.
Mr. Harper, one thing we have tried to do in this Committee
is make sure that the economy and financial system work for
everyone. Credit unions play, as we discussed yesterday, a
critical part. Now what are some of the ways we can strengthen
consumer protection and make sure credit union members can have
access to affordable financial products and services?
Mr. Harper. Certainly. First of all, we are the only
Federal financial institutions regulator that does not conduct
and assign a separate consumer compliance rating for credit
unions. I believe that for credit unions that are large, a
billion dollars-plus, have become very sophisticated--we have
392 of them at this point in time, with 86 million members--we
should be going in and looking at their consumer compliance
systems, how they are performing, to help them. It is really a
tune-up and an oil change and a safety check so that if they
find problems they can fix them before they become bigger. That
is the biggest way.
The second is to stay focused on fair lending. We have been
increasing our fair lending program at the Agency in recent
years, and we are doing targeted reviews at any risk-focused
exam this year on fair lending. And we need to continue to
expand that to make sure that there is fair and equal access to
credit out there. Thank you.
Chairman Brown. Thank you very much, Mr. Harper.
Ms. Pryor, thank you, as a board member, and Mr. Bachus and
Chair Reed, for the work that you all did to reopen EX-IM. If
you are confirmed as First Vice President, what have you
learned from the EX-IM reopening and from the pandemic that
will inform your future work at the Bank?
Ms. Pryor. Senator Brown, it was a pleasure serving with
Chairman Reed and Spencer Bachus as we reopened EX-IM after a
4-year absence for long-term financing. There is an incredibly
passionate, dedicated staff at EX-IM, and we helped with
outreach efforts--business development efforts, if you will--as
we worked to remind everyone that EX-IM was again open for
business.
We also took a look at a number of policies with an eye to
modernizing those, some of which were from EX-IM's
reauthorization, including the appointments of a chief ethics
officer and a chief risk officer. And we also reviewed a number
of policies that are designed to not only help exporters but to
ensure that we are protecting U.S. taxpayer resources. Those
include economic impact and crowding in the private sector, or
what we call our additionality policy.
Last, related to COVID-19, we acted quickly as a board to
provide temporary liquidity relief measures, to put those in
place for supply chains and workers around the country, in
response to the pandemic.
If I am confirmed, I would continue to carry out these
activities moving forward, first and foremost, supporting the
Bank's mission of supporting U.S. jobs through exports.
Chairman Brown. Thank you, Ms. Pryor.
Mr. Herrnstadt, the 2019 reauthorization authorized the
programs on China and transformational exports to help American
workers and exporters compete fairly with China in emerging
industries like renewable energy. You have had a long history
of advocating for workers in a really important way, putting
workers at the center of your career. What lessons concerning
China's industrial policy and strategic goals will guide your
work as a member of the EX-IM Bank?
Mr. Herrnstadt. Thank you, Senator. I have sounded the
alarm for many years over the growing threat of China to our
Nation's economy, our Nation's businesses, and our Nation's
workers. I have seen firsthand how it is for U.S. businesses
and U.S. workers to compete with a country like China that does
not play by the rules, that relies on subsidies, massive
funding of its own export credit agencies, if I understand it
correctly, to the tune of $18 billion, its lack of
transparency, and its unwillingness to abide by international
social and environmental standards, let alone labor and human
rights.
I have spent much of my career supporting American exports
and American jobs and the high environmental and labor
standards we have. I know that when competing head-on American
workers and American businesses can win. That is why I also
welcome the bipartisan transformational program that Congress
passed when reauthorizing the Bank. Thank you.
Chairman Brown. Thank you, Mr. Herrnstadt.
Senator Toomey is recognized.
Senator Toomey. Thank you, Mr. Chairman.
Mr. Harper, as I noted in my opening statement, I am
concerned about financial regulators attempting to impose a
climate change agenda even though financial regulators are not
actually environmental regulators and tend not to have
expertise in this area. You have had a lot to say about the
risks of climate change and extreme weather. You have talked
about rising sea levels and extreme weather events. You said
recently, ``The NCUA should now focus on the financial risks
related to climate change.''
In the many decades that credit unions have flourished in
this country, all across this big continental Nation of ours,
as you know, we have extreme weather events every year. They
have always happened. They continue to happen.
I am aware of a grand total of one credit union that failed
as a result of an extreme weather event, and that was related
to hurricane Katrina, which of course, nobody knows whether or
to what extent that had anything to do with climate change, but
it was certainly a severe hurricane. That particular failure
cost the insurance fund, Credit Union Insurance Fund, $500,000.
Are you aware of any other credit union failures as a result of
extreme weather?
Mr. Harper. I had staff look into this issue. There is a
second credit union that also failed after Katrina, and there
were a large number that were merged because of declining
membership bases as their population----
Senator Toomey. Do you know how much the second one cost
the insurance fund?
Mr. Harper. I do not know off the top of my head. We will
get back to you.
Senator Toomey. OK. So for a sense of scale here, the
$500,000 loss that we know of for the credit union that failed
as a result of a storm that may or may not have had anything to
do with climate change, that compares to losses to the
insurance fund that are unrelated to climate. Do you happen to
have any idea how much the insurance fund lost or had payouts
it had to make post-2007?
Mr. Harper. So there was a recent GAO study that said we
had lost $1.5 billion on the Share Insurance Fund over I
believe it was the last 15 years, but I would need to double-
check that.
Senator Toomey. Yes. So the figure I have is $2 billion,
but maybe we are looking at slightly different periods of time
or something like that.
I just want to point out that the $2 billion in losses, the
GAO report did not suggest that any of that had anything to do
with extreme weather or rising sea levels. Instead, they cited
deficiencies in NCUA's oversight and weaknesses at the credit
unions themselves in their risk management that had nothing to
do with climate. Of course, $2 billion is 4,000 times $500,000.
My point in this is that the real risks to the insurance
fund, to the credit unions themselves are the more mundane,
ordinary management of their lines of business, and I hope that
in your role that that is what your focus will be on.
Mr. Harper. So we as an agency, we should be looking at all
material risks. I know that I was talking with a number of our
examiners in the wake of hurricane Ida and how much time they
had spent working on disaster recovery plans with the credit
unions, urging them to step up. That is part of the all
material risks that we should be looking at overall.
Senator Toomey. I just hope you appreciate the scale of
this.
Let me move on because I have got limited time here. Ms.
Pryor, I mentioned during my opening comments that the largest
and, arguably, most successful bank in America got an EX-IM
guarantee to provide financing for the largest airline in
Australia and one of the most successful in the world so that
they could buy engines one of the largest industrial companies
in the world. Do these companies have access to private
capital?
Ms. Pryor. Senator, we look at each of the transactions
that come before the board, weigh them against our statutory
requirements and EX-IM policies.
Senator Toomey. I know. I understand. But it is a simple
question, though.
Ms. Pryor. Yeah.
Senator Toomey. Does Qantas Airline, does JPMorgan, and
General Electric, do they have access to private capital?
Ms. Pryor. One of the policies that we implement on the
board is what we call, as I mentioned in my opening remarks,
additionality or crowding in the private sector, to make sure
that if private sector financing is available that is the
first----
Senator Toomey. I will try a third time. Do these three
firms have access to private capital?
Ms. Pryor. Senator----
Senator Toomey. It is not a hard question. I think we both
know the answer.
Ms. Pryor. Yes, you are right; it is not.
Senator Toomey. OK.
Ms. Pryor. And I cannot speak to them. I know that these
came before us, that we followed OECD pricing guidelines, that
we review all of our internal policies, including those related
to whether or not the private sector can fund the transaction.
Senator Toomey. I am sure you followed internal policies. I
just wish you could be direct about this. We all know that the
largest and most successful firms in the world, in the history
of the world, have access to private capital. They can borrow
money to buy airlines. I am sorry, to buy airplanes and to buy
components for airplanes.
The only reason they would turn to EX-IM instead of doing
it the way most transactions are done is if they got more
favorable terms, which makes my point. The taxpayers are
subsidizing these giveaways to these big, very, very successful
companies and clearly displacing private capital. This is a
transaction that illustrates that.
Chairman Brown. Senator Tester is recognized from his
office, remote.
Senator Tester. Thank you, Mr. Chairman, Ranking Member
Toomey.
Look, I would be hard to disagree with Ranking Member as
the taxpayers are subsidizing some of the big businesses so
they can be competitive because, quite frankly, other countries
are subsidizing their biggest businesses in order to be
competitive. That is why we need the EX-IM Bank.
And I will also point out that the taxpayer also subsidizes
climate change, and that is why we do not have the bank
failures we have or credit union failures. We have got forest
fires. We have got drought. We have got floods. I had the worst
year I have ever had on the farm, not by a little bit, by a
lot. We have got hurricanes. I am going to stay in business
because of the Federal Government, on my farm. And my neighbors
are going to stay in business because of the Federal
Government. And you can say that same thing about the
hurricanes. And by the way, if they would not have stayed in
business, those banks would be in a world of hurt and they
would go broke, too.
So I think you are right on both counts. You know, the
taxpayer subsidizes climate change, and it subsidizes some of
the biggest businesses. For good reason on both, I might add.
I have a question for Pryor and Herrnstadt. Sorry for using
your last names. For Judith and Owen. And it goes to what many
of us are passionate about, and that is small businesses and
how can EX-IM help small businesses export their goods and
services. So what steps do each of you--and we will start with
Judith--do you think the Bank can take to increase its presence
and outreach in rural States to help more small manufacturers
export?
Ms. Pryor. Thank you, Senator. It is nice to see you again.
Small businesses are very important to EX-IM, and if I am to be
confirmed, I will make sure that this remains a top priority.
EX-IM helps reduce the risk of exporting. In fact, 90 percent
of EX-IM's transactions are with small businesses. We acted
quickly during COVID to ensure that we could ease paperwork
deadlines and waived fees so that we could keep workers working
and keep small businesses afloat. We have expanded our digital
outreach capabilities. Everything had to go online, as you
know: webinars, online events. We really leaned in to help the
staff with their outreach efforts here.
This is a top priority, and if I am confirmed, it would
remain a top priority. And I would very much welcome the
opportunity to work with you and other Members of the Committee
in your States to help us continue to grow this educational
effort so that we can help more small businesses succeed in the
international marketplace.
Senator Tester. Owen, would you like to respond to that,
too?
Mr. Herrnstadt. Yes. Thank you, Senator. Small business
means jobs for American workers, and it means support for
American communities. And if confirmed, expanding the Agency's
engagement with small businesses that are ready to export is a
priority. Should I be confirmed, I look forward to working with
your office and stakeholders in your States to helping more
small businesses become aware and learn about the valuable and
critical tools the Bank has to offer them.
Senator Tester. Another question for both Pryor and
Herrnstadt. Look, our largest manufacturing competitors,
including China, operate large-scale export credit agencies,
unfortunately, true. And the fact is according to the 2020
Competitiveness Report there are 115 export credit providers
around the world.
Look, I want business to be done in America. I want
manufacturing to be done in America. Can you guys share your
views on the importance of the EX-IM Bank when it comes to not
only competing with China but keeping manufacturing in this
country?
Ms. Pryor. Senator, you are absolutely right. China poses a
real threat to the United States, and to its $18 billion-
supported, the U.S. was a mere $1.8 billion in 2020 numbers. We
recognize that China poses a unique challenge for the U.S.
There are two elements in the 2019 reauthorization, one
that helps--involves the State Department so that we can rely
on them to assure we are looking at the transaction thoroughly
if there is Chinese involvement in the deal. The other is the
China and Transformational Exports Program, and this is
designed to help the U.S. compete. It allows us to offer
competitive rates and terms in 10 key sectors, everything from
water desalination to renewable energy to quantum computing.
One example of how we have been able to level the playing
field is Weldy-Lamont. This is a small business in Illinois. It
will build out a distribution network in Senegal, 400 rural
communities, including microgrids. It is a true success story
of how when all of Government works together we can accomplish
things for American exporters.
I would just say that foreign buyers have choices and we
need to make sure that we are on top of that list. We provide
quality products, transparency, value, and we follow high
environmental and social standards.
Senator Tester. Thank you. I would just like to have you
write that answer for the record because I do not want to hold
Tillis up. All right? Thanks.
Chairman Brown. The Senator from North Carolina is
recognized from his office, remote.
Senator Tillis. Thank you, Mr. Chairman, and thank you,
Senator Tester.
Ms. Pryor, the U.S. Department of Commerce estimates that
the international nuclear reactor export market is valued at
between 500 and 750 billion dollars. I read another report that
estimates export revenues in total could range between $1.3
trillion and $1.9 trillion between now and 2050. Of course, the
EX-IM Bank can play a key role in enabling U.S. energy and
technology companies to access and lead these markets through
the 21st century. What can you do specifically to ensure that
EX-IM is fostering U.S. access to this potentially $1.9
trillion market?
Ms. Pryor. Senator, each transaction that comes before EX-
IM is reviewed individually. We are demand-driven. We will
follow the statutory requirements as well as policies to ensure
that we are managing risks and mitigating risks that might be
supported with a particular project. It is very clear in our
charter; on one hand, we cannot discriminate by sector. So as I
mentioned earlier, we will look at each transaction
individually based on the merits of that transaction and
proceed from there.
Senator Tillis. Thank you, Ms. Pryor.
Mr. Harper, I think you are probably aware of the proposal
being advanced by my colleagues on the other side of the aisle
to make financial institutions report nearly all transactions
made in personal checking accounts. There is a one proposal for
any transaction over $600. There is another proposal--I am
trying to figure out exactly what the details are--that would
be a gross of $10,000 in deposits on an annual basis. I think
both the proposals are bad in my view. But, can you confirm for
me that credit unions would be included under this, what I
consider to be, an overreach of policy?
Mr. Harper. So I have not looked at the details of
legislation, but the reports I have seen is that credit unions
are included along with banks.
Senator Tillis. Do you believe that--I think the big banks,
with their underlying information systems and compliance, are
probably going to be able to absorb the regulatory burden, the
incremental cost for reporting relatively easy. But, would you
also agree that between credit unions and small banks that
there is going to be a disproportionate impact in terms of
these banking operations besides the individuals being reported
on?
Mr. Harper. So I will agree that there will be
administrative costs to the proposal, but I can't comment as to
whether it would be disproportional or not because I do not
know what the proposal is in its entirety.
Senator Tillis. I think that what the American people need
to wake up to is that this is a massive overreach into the
privacy of people who are using banking institutions to
deposit. The $10,000 threshold would pretty much capture as
large a swath over a period of time. I mean, somebody making
minimum wage or just above minimum wage would likely be
triggered either in the $10,000--certainly be triggered in the
$600 transaction amount, but most likely in the $10,000
transaction amount. I think it is an overreach, and I hope it
is something that does not get passed to the President's desk.
Mr. Chairman, I am going to yield back the rest of my time.
And I look forward to both of you. Congratulations on your
nominations. I intend to support both of you.
Thank you, Mr. Chair.
Chairman Brown. Thank you, Senator Tillis.
Simply because I cannot see who is in their office and
maybe about to click on their camera, I will call on Senator
Warren, remote, if she is available or Senator Van Hollen,
remote from his office, if he is available. I know they will be
back but whether they are ready now.
[No audible response.]
Chairman Brown. Senator Cortez Masto, from her office.
[No audible response.]
Chairman Brown. Senator Warnock, from his office.
[No audible response.]
Chairman Brown. Senator Menendez, from his office.
[No audible response.]
Chairman Brown. Senator Kennedy, from Louisiana is
recognized, in person.
Senator Kennedy. Thank you, Mr. Chairman.
Congratulations to you all.
Ms. Pryor, I wanted to ask you a couple of questions. I
looked at your resume. You certainly have an impressive amount
of experience, particularly with the Export-Import Bank. In the
past, EX-IM--and I am not saying this is your fault, but EX-IM
has confected a lot of transactions with companies that owe
huge amounts of money through final judgments in back taxes.
How come?
Ms. Pryor. Senator, I am not sure that I can help here. I
am not sure to whom you are referring. What I can tell you is
that each of the transactions that come to the board for long-
term financing we review very thoroughly and do tremendous
background checks and review them against statutory
requirements, reauthorization language, internal policies,
including things like economic impact, ultimately, to ensure a
reasonable assurance of repayment.
Senator Kennedy. Yes, ma'am. Well, I think that it is not--
I guess it is not altogether EX-IM's fault because I think EX-
IM has a rule, correct me if I am wrong, that companies are
supposed to self-certify that they are current in their taxes.
And unfortunately, in our world sometimes people lie. If you
return to EX-IM, would you agree to access the data bases that
we have to review applications to make sure that the companies
are current in their taxes? And I am not talking about someone
with a tax dispute with the IRS. I am talking about somebody
who is subject to a final judgment in favor of the IRS, that
they just did not pay their taxes.
Ms. Pryor. Senator, I will confirm that I would continue to
ensure that the staff, to the best of their ability, gather the
necessary information----
Senator Kennedy. Right.
Ms. Pryor. ----to review these transactions. I am not sure
whether this is one of the items that is considered, but I have
made a note to look at that.
Senator Kennedy. Sure.
Ms. Pryor. And if I am confirmed, I am happy to work with
your office to do----
Senator Kennedy. Right. Yes, let us work together because
there is plenty of data bases out there. All you have got to do
is run the name through and you get a clean tax record or they
say, whoa, there is a problem here.
Ms. Pryor. Right.
Senator Kennedy. Let me ask you one other question based on
your experience at EX-IM. What would you say to the allegation
that I have heard that EX-IM helps too many companies that do
not really need it, that they could access capital on their own
and that that uses a scarce resource inefficiently and takes
away money from companies that really do need your help?
Ms. Pryor. Senator, what I would say is every time we look
at a transaction we follow what is included in our charter, and
one of those elements says that we must ensure a competitive
playing field for American exports. So--and along with that,
our mission, of course, to support U.S. jobs through exports.
So what I would say is that when EX-IM is able to level the
playing field for American exporters they can win. We produce
quality products. We are transparent. We hold our projects to
high environmental and social standards, especially when EX-IM
is involved, and ultimately support our mission of growing and
supporting U.S. jobs through exports.
Senator Kennedy. Last question. In light of the escalation
of America's tensions with China--and by ``China,'' I do not
mean the people of China; I mean the Communist Party of China--
do you think EX-IM Bank's role has changed at all or should
change?
Ms. Pryor. Well, in our 2019 reauthorization, Congress has
asked us to address China through a program that we fondly call
CTEP--because we would not be an agency if we did not have an
acronym--but the China and Transformational Exports Program,
and that is designed to help the U.S. be more competitive in 10
key sectors. Now we were just starting the work on this before
I left the Agency in July.
Senator Kennedy. Yes, ma'am.
Ms. Pryor. There is a lot to do. It is a new program. It is
going to require a lot of attention. And if I am confirmed, I
will commit to you that I will continue to make sure that the
staff pushes forward with this. I recognize that China poses a
unique challenge for the United States, but it is something
that we have to keep top of mind when we are helping U.S.
exporters and supporting jobs.
Senator Kennedy. OK. Thanks very much.
Ms. Pryor. OK.
Senator Kennedy. Congratulations to all of you.
Ms. Pryor. Thank you so much.
Chairman Brown. Thank you, Senator Kennedy.
Senator Cortez Masto, from her office, is recognized.
Senator Cortez Masto. Thank you, Mr. Chairman, and
congratulations to all of the nominees. Appreciate you being
here this morning as well.
Chairman Harper, let me start with you. Discussion around
cybersecurity. In your August written testimony, you noted that
NCUA's efforts to address cyber threats. I guess my question to
you is: How does NCUA's Community Development Revolving Loan
Fund grant initiative support cybersecurity investments, and
can you talk a little bit about how the NCUA is working to
address cybersecurity threats?
Mr. Harper. Certainly, Senator. The Community Development
Revolving Loan Fund is a fund that is appropriated by Congress
each year. We assume the administrative cost. So every dollar
that goes into the fund, that is appropriated, we put out. This
year we brought back our cybersecurity grants. We gave out
approximately $500,000 worth of them. The maximum was $7,000.
These went to smaller, low-income credit unions, typically less
than $100 million size in assets, so that they could take and
get the programs and the support that they need to support them
on cybersecurity overall.
Taking a bigger step back on cybersecurity, certainly our
goal is to try and stop all material risks, both within the
Agency and within the system. We have been increasing our
sophistication in examination systems. We currently have a
program that is in pilot called InTREx-CU, and we hope to roll
that later next year so that we can improve our cybersecurity
oversight. Thank you, Senator.
Senator Cortez Masto. That is wonderful to hear. Thank you.
Another question I have: I was supportive of the Anti-
Money Laundering and Corporate Transparency Act of 2020. How is
the NCUA implementing the significant changes occurring under
the Act, and are there any concerns that we need to be aware
about in Congress with respect to implementation of the Act?
Mr. Harper. I very much appreciate the question. First,
staff at all of the agencies are meeting on a weekly basis to
develop the draft materials as well as to refine the plans for
implementing the law. In addition, the principals at the
agencies meet on a monthly basis. I met with my counterparts
just earlier this week on Monday, working through those issues.
At this point in time, I am not aware of any concerns about
implementing the law except that it does take us some time, and
we are working as quickly as possible.
Senator Cortez Masto. I appreciate that. And so as you work
to implement it please work with my office if there are any
concerns in the implementation or anything that we would need
to be aware of. I would appreciate knowing that so we can
correct it if need be.
Ms. Pryor, let us talk about supply chain constraints. I
know that EX-IM plays an important role in financing U.S.
exports. In July of 2020, EX-IM's board utilized the
temporarily expanded Supply Chain Finance Guarantee program and
Working Capital Guarantee program to help ensure that a
liquidity crisis did not become an insolvency crisis. A year
later, what are some of the consistent COVID-19-related
problems, specifically the supply chain problems, still being
felt, and what can Congress do to help alleviate those pains
for U.S.-based exporters?
Ms. Pryor. Thank you, Senator. Yes, you are right. We
implemented those during my time when I was still on the board.
Within a month after COVID-19 began shutting down the global
economy, we implemented liquidity relief measures designed to
help small businesses and workers with liquidity issues. One
example of a supply chain guarantee that you referred to is 60
suppliers that were small businesses and fed into a U.S.-based
steel exporter just needed liquidity relief. So we were able to
provide them help so that they could keep their employees
working.
And the same thing with working cap. For Embraer, in
Melbourne, Florida, we were able to support through that
transaction 800 jobs, and they actually hired 70 new workers.
Their payment terms provided that they would be fully paid once
their business jets were delivered to the buyers. But with the
global economy shutdown, nobody could go get those planes.
So continuing to help small businesses by limiting or
easing restrictions, requirements, deadlines for their
paperwork is another way.
Senator, I am not at the Bank right now, but I very much
would look forward to working with you, if I am confirmed, to
discuss ways moving forward that we can continue to help small
businesses and workers and other businesses around the country
remain solvent and liquid, and I look forward to that
opportunity if I am confirmed.
Senator Cortez Masto. Thank you. I will take you up on
that.
Mr. Chairman, I know my time is expired. I will submit the
rest of my questions for the record.
Congratulations again to all the nominees.
Chairman Brown. Thank you, Senator Cortez Masto.
Senator Cramer from North Dakota is recognized.
Senator Cramer. Thank you, Mr. Chairman. Thank you, Senator
Toomey.
Thanks to all of you and congratulations to each of you.
I am going to jump right to you have been talking about
China and the authorization, a real responsibility we gave to
the Export-Import Bank in the reauthorization to focus on
competitiveness, particularly to mitigate some of the
challenges of doing work in China. We have also had, I
understand, a pretty robust discussion about climate. And so I
am going to try to combine the two and talk specifically at the
Export-Import Bank about the opportunity, I think, the China
challenge presents and a recognition that transferring U.S.
climate guilt through policies that embolden our competitors,
who have no climate conscience, makes no sense.
So given the fact that the United States is the leader in
reducing greenhouse gas emissions and China is like the world's
worst polluter and accelerating greenhouse gas emissions, is
there opportunity within the energy sector, the entire energy
sector, to help both develop and then market technologies such
as carbon capture, utilization, and storage, other clean coal
technologies, nuclear most certainly, other clean energies,
hydrogen, a lot of emerging opportunities?
So I would like to hear each of you from the Export-Import
Bank. Just maybe help me envision a little bit the opportunity
to solve all kinds of problems at the Export-Import Bank.
Ms. Pryor. Thank you, Senator. A couple of thoughts on
that. First, you know, we are demand-driven. So any energy
project that comes before the board is weighed on the merits of
that particular transaction. EX-IM's mission is to support U.S.
jobs through exports. Those companies need to be export ready.
So I would think that this was a great opportunity for a whole-
of-Government approach, for other U.S.G. agencies to help along
those early stage businesses or technologies that will help
transition us to less carbon-intensive projects, including
carbon capture and sequestration or fusion, hydrogen, et
cetera.
Mr. Herrnstadt. Thank you, Senator. I think it presents a
great opportunity for U.S. workers and U.S. businesses and the
Bank's mission to support exporters that support jobs. I must
confess I am not at the Bank now, and if confirmed, I am
looking very forward to discussing this matter with you and
getting your ideas and, of course, discussing the matter with
EX-IM's staff, other members of the board and stakeholders, to
find out their ideas, how we can move forward.
Senator Cramer. Thanks to both of you. You will be invited.
I helped lead the charge to reauthorize the Bank a couple years
ago with Senator Sinema, and the China obligations, it is a
challenge for sure. It is an important one but so are these
other things.
And I just think I loved your answer, by the way, about a
whole-of-Government approach because that is one of the
challenges I see in our Government are all these silos that do
not necessarily work together, and we talk at each other
instead of with each other. And I really do think there are
solutions out there that bridge all of this.
With that said, I want to just quickly switch to you, Mr.
Harper, to talk a little bit about I have a number of credit
unions that are very concerned about concentration rules and
particularly in the ag sector. In fact, it is so interesting
that we have this discussion today. Just yesterday, I was
talking about the fact that the crop insurance program RMA over
USDA does not differentiate in its risk management between
confectionary sunflowers and seed sunflowers in assessing the
risk but uses enterprise units. I just think we need to do a
lot more.
So for many of our credit unions in rural America, the lack
of sort of differentiating crop types and, rather, using
concentration rules just to sort of lump them all together is
not an appropriate assessment of risk in my view. I just would
love to talk to you more about it when we have more time but
maybe get some initial thoughts about what we should be doing.
Mr. Harper. No, no, certainly. And I had a chance to talk
to your staff before we began today. Certainly, one of the
complaints I do hear out of credit unions is in ag lending it
is our examiners, they do not know the particular crop; they do
not know how this type of farm works. And so that is--
certainly, I would commit to you, if confirmed, to working with
you to make sure that we get more specialized training for our
examiners and help in our exams of credit unions in that way.
Senator Cramer. Thanks to all of you.
Thank you, Mr. Chairman.
Chairman Brown. Thank you.
Senator Warren from Massachusetts is recognized.
Senator Warren. Thank you, Mr. Chairman, and
congratulations to all of you on your nominations.
I want to talk about credit unions. Credit unions play a
critical role in our economy. They provide Americans; they
provide borrowers; they provide consumers, with high quality,
no-nonsense financial services that they need. They are unique
among financial institutions. Credit unions strive to put their
customers ahead of profits. And that is, after all, the credit
union motto: ``Not for profit, not for charity, but for
service.'' In keeping with their service mission, credit unions
are required to comply with Federal consumer protection laws
that help ensure that their members are treated fairly and are
safe from the kinds of predatory tricks and traps and scams
that risk blowing up families' finances.
Chairman Harper, the NCUA recently conducted a review of
credit unions' compliance with our consumer protection laws. So
can you say something about what you found in your review and
whether credit unions could do a better job of protecting
consumers from predatory and discriminatory practices?
Mr. Harper. Thank you, Senator. I really appreciate the
question. We did quality control reviews of our credit unions
that were examined last year, and we had approximately seven,
eight consumer financial protection rules that we looked at. In
some areas, credit unions were doing very well, but there were
three areas that stood out where we saw a higher
proportionality of problems. The first was the Electronic Fund
Transfer Act. The second was the Truth in Lending Act. And the
third was the Fair Credit Reporting Act.
And not having proper programs in place there could result
in faulty credit reports, which leads to higher cost of credit
or not getting claims fixed in time. So we are working on
education for credit unions about how they can improve there. I
will leave it at that.
Senator Warren. Good. You know, I appreciate that you have
conducted this review because credit union customers are
counting on NCUA to protect them from unsafe financial
practices and products, especially because most credit unions
are exempt from the oversight of our dedicated consumer
watchdog, the Consumer Financial Protection Bureau.
But I am concerned that NCUA is not doing enough to ensure
that credit unions are living up to their responsibilities.
Unlike other agencies, the NCUA does not currently have a
formal process to supervise and enforce credit unions'
compliance with consumer protection laws. This is even as
credit unions customers are facing growing risks. The number of
large credit unions, which tend to offer more complex and
riskier financial products, similar to what big banks have to
offer, continues to grow every year.
So, Chairman Harper, how could a dedicated consumer
protection compliance program at the NCUA help credit unions
and their customers?
Mr. Harper. Great question. I want to put it in context
just a little bit about what you said there. Today, we have 392
credit unions with more than $1 billion in assets.
Senator Warren. More than $1 billion, ``B.''
Mr. Harper. One billion.
Senator Warren. Mm-hmm.
Mr. Harper. And they serve 86 million members. So it is
quite a sizable part of the credit union system.
Right now, in the banking world, the banking regulators go
and they will do a separate consumer compliance exam and assign
a separate rating for consumer compliance outside of the CAMEL
system. We do work within the CAMEL system. We incorporate it
into the management rating, but we do not look at the
comprehensive picture. We look at discrete laws separately, and
we do that on a rolling basis.
By going in and looking at a dedicated program focused on
our larger credit unions, we would be able to see where
problems are and help credit unions fix the problems before
they grow into big ones.
Senator Warren. I think that is a really helpful move to
think about here. You know, our financial institutions need to
be built around meeting consumers' needs, not taking advantage
of them, and that is why a thriving and healthy credit union
system is so important and why it is so critical that the NCUA
take consumer protection seriously and look at it in the
strongest possible terms. The NCUA's oversight needs to keep up
with the changing credit union landscape and the heightened
risks that it presents to customers. So I look forward to
working with you to make that happen, Chairman Harper. Thank
you.
Thank you, Mr. Chairman.
Chairman Brown. Senator Daines is recognized from his
office, remote.
Senator Daines. Thanks, Chairman Brown.
I would like to start by discussing the very troubling
proposal we have seen from the Democrats to impose these
burdensome and intrusive IRS reporting requirements for
financial institutions. This proposal, frankly, is chilling. It
would require credit unions to report sensitive financial
account information for nearly all of their customers. Beyond
the burdens it will place on financial institutions, this is an
intrusion on the privacy of law-abiding Montanans and
Americans. In the wake of several cyber attacks on, and
potential insider leaks of, information from Treasury and IRS,
I think there is a real question as to whether taxpayers can
reasonably trust the IRS to safeguard this information.
The Credit Union National Administration, the National
Association of federally Insured Credit Unions, and others have
all voiced their serious opposition to this proposal, noting
correctly that credit unions already face a wide range of
reporting responsibilities. These include Forms 1099 and 1098,
suspicious activity reports, currency transaction reports, and
many others.
Question for Chair Harper: Do you have an opinion on this
proposal, and could you describe how this might impact your
ability as a regulator?
Mr. Harper. So thank you. I am aware of the proposal. I
have not gotten down into the details of the proposal, but what
I would like to do is to take a look at it more closely and get
back to you if that is OK.
Senator Daines. Does it seem like a bit of an overreach?
Mr. Harper. Again, I have not looked at the details of it.
I was asked earlier whether there would be administrative costs
associated with this. Yes, there would be administrative costs,
but I cannot characterize how big, how much, without taking a
deeper look at it.
Senator Daines. I would like to turn to the next question
and get your opinion on the structure of the NCUA board.
Mr. Harper. Sure.
Senator Daines. Generally speaking, I believe boards with
larger numbers of members foster diversity of thought and
opinion. Group thinking Government, though, can be a dangerous
thing, and it is very easy to slip into when there are fewer
people around to voice opinions. The NCUA has a three-member
board but only had two people from 2016 through 2019. In fact,
since the NCUA came into existence back in 1979, the board has
had a total of only 22 members over that span of time. Chair
Harper, do you think NCUA may benefit from having a larger
board, or do you think the current three-member board is
sufficient?
Mr. Harper. So I think there are advantages and
disadvantages. Certainly, a disadvantage of going to a larger
board would be higher costs for those boards and perhaps
slowing down the process. On the flip side of that, though, it
would create more voices at the table, as you pointed out, in
order to have more informed decisionmaking. In addition to
that, I know that State regulators have long called for an
increase in the size of the NCUA board.
And one last observation, the Sunshine Act rules make it
difficult for me to talk one on one with my fellow board
members because when you have a three-member board two people
talking together is a majority and you have to notice that. So
a larger board would facilitate the board-member to board-
member interaction.
Senator Daines. Thank you for the comment. I just would
note that looking at the reality of how many board members have
actually been in these positions, and given again we had nearly
a 4-year run of having only two board members--with the
vacancies and so forth, and only 22 members since 1979, I think
there is an argument here that just based on the reality of how
many board members actually are sitting in the assigned seats
we may consider making that larger.
It seems to me that everyone agrees the recent and
temporary drop in the National Credit Union Shared Insurance
Fund's equity ratio was due primarily to unprecedented shared
growth, resulting from Government stimulus and changes in
consumer spending because of COVID-19. Thus, it seems that NCUA
should think very carefully before taking any drastic action
regarding how the NCUSIF is managed. Chair Harper, would you
agree with that overall assessment?
Mr. Harper. I certainly think that we have seen a large
number of insured shares coming into the system because of the
Government stimulus programs as well as changes in consumer
habits. We need to continue to watch where the equity ratio is.
It is currently at 1.23 percent. It is expected to grow up to
1.28 percent by the end of the year, which will be above the
1.2 percent where we are required to develop a plan for
bringing the fund up to its normal operating level.
Certainly, I recognize this is not the right time to be
charging a premium. I would like to see actually a
countercyclical approach, where we are building reserves in
good times so that when bad times hit you are not trying to
shake the premiums and assessments precisely at the moment when
the credit union may be experiencing losses.
Senator Daines. Chair Harper, thank you.
Chairman Brown. Senator Menendez is recognized for 5
minutes.
Senator Menendez. Mr. Harper, last time you were before
this Committee, you recognized that ``Hispanic hiring is a
weakness for the Agency, and we are underperforming there, and
we are going to be working on that to bring more people in.''
How has the NCUA addressed this weakness in Hispanic hiring?
Mr. Harper. So first of all, I was not able to say it at
the time, but I am now able to say that our new head of the
Office of Minority and Women Inclusion is somebody of Hispanic
descent. In addition to that, the board, as part of its mid-
session budget, just authorized two things. One is to look at
culture and diversity in how we do the hiring process to
address the very issue of improving hiring. The second thing
that we have done is a pay equity report that we have funded
that we are going to be taking a look at to make sure that
people are getting what they earned and that there are not
disparities based on race, sex, or other factors.
Senator Menendez. Well, I appreciate pay equity. That cuts
across many lines. And it is nice to have a culture diversity
engagement. I am looking forward to see the individual who, as
you say, was hired.
But this is not a new issue for the NCUA. The Agency's 2021
Office of Minority and Women Inclusion Report found that
``NCUA's Hispanic-Latino population continues to be an
underrepresented group as compared to the civilian labor
force.'' Knowing this, I would hope you would have a plan to
increase Hispanic hiring. It is the largest minority in the
country as of the last census. It has a $1.7 trillion domestic
marketplace. I do not understand how we serve that universe
when we are woefully underrepresented with it.
So if you are confirmed as Chairman, and it is an open
question in my mind, you will have the power to actually
diversify the senior staff, and that is something that I would
be looking forward to seeing a commitment on.
Mr. Harper. And, Senator, first of all, if confirmed for a
full term, you have my full commitment. My first hiring
decision that I made when I came onto the NCUA board was to
hire Katherine Galicia, who is of Hispanic heritage. I knew
that that would be an important issue. She was qualified. She
had the skills, the knowledge, and having worked here in
Washington, DC, You have my full commitment that if confirmed I
will work to ramp up our Hispanic hiring to the extent that we
can find and identify issues.
One issue that we have found is that because so many of our
jobs are examiners and they are on the road quite often, that
is often something that Hispanic populations do not necessarily
want to be on the road as much. We are reengineering the way in
which we do work, and I am hopeful that will be more on a
virtual basis. That will help to solve that problem.
Senator Menendez. Thank you.
Ms. Pryor and Mr. Herrnstadt, the most recent EX-IM
competitiveness report noted that only 14.6 percent of EX-IM's
direct small business support went to minority and women-owned
businesses. There is a mountain of evidence that these
businesses were among the hardest hit by the pandemic. So it is
critical that they have access to the tools and assistance to
remain competitive. What would you do, if confirmed, to improve
the accessibility of EX-IM's services for minority and women-
owned businesses?
Ms. Pryor. Senator Menendez, nice to see you again. Thank
you for that question. Minority and women-owned businesses play
an important role for the Bank, and there is a team dedicated
to support outreach efforts. In fact, once the Bank had
reopened and we had a board quorum again, I and Chairman Reed
and Spencer Bachus spent much of our time helping with outreach
efforts and business development efforts to minority and women-
owned businesses and other small businesses around the country,
vet-owned and those with disabilities as well.
As our charter dictates, we are trying to lean in as best
we can. I would commit to you that we will continue to do this,
were I to be confirmed. Outreach is paramount to our success in
supporting small businesses of all kinds. And I would be happy
to work with you and your State and other States to increase
those efforts so that more small businesses are educated about
how EX-IM can help them derisk their export sales.
Senator Menendez. Would you like to opine, Mr. Herrnstadt?
Mr. Herrnstadt. Yes. Thank you very much, Senator. I deeply
share with you your commitment to equality, equal opportunity,
inclusion, accessibility, and diversity. On that, if confirmed,
I very much look forward to working with you and others from
this Committee, elsewhere, as well as the Export-Import Bank
staff to see how things can be done better, how things can be
improved to address this incredibly important issue.
Senator Menendez. Well, I appreciate those answers. I will
just make an overall comment for all on this panel and for
others. You know, the commitment to diversity starts at the
very top. If there is not a clear message from the top that
others in your overall domain will be judged in part by how
they create a diverse workforce, it will never happen. So all
the good intentions in the world will not ultimately realize in
making a difference. So I hope that you take that to heart.
I have other questions which I will submit to the record.
Thank you very much.
Chairman Brown. Thank you, Senator Menendez.
Senator Warnock is recognized from his office if his screen
is turned on.
[No audible response.]
Chairman Brown. Senator Ossoff from Georgia is recognized.
Senator Ossoff. Thank you, Mr. Chairman.
Thank you to our panel. Congratulations on your
nominations.
Ms. Pryor, Georgia, like all of the States represented by
Members of this Committee, has a thriving network of producers
exporting agricultural products, manufactured goods, aerospace
products, and services globally. We also host, as you know, the
largest single container terminal in the United States and the
fastest growing deepwater port in the United States at the Port
of Savannah.
I was looking at a comparison of U.S. export financing with
major commercial powers around the world. China has provided,
in 2020, $18 billion in medium and long-term export credit.
France, $12.1 billion. Germany, $8.6 billion. Italy, $8.4
billion. Republic of Korea, $5 billion. EX-IM authorized $1.8
billion in official medium and long-term export credit
financing. It is not the only agency doing that work, but it
does the bulk of that work. How would you compare U.S. export
promotion policies and financing with other great economic
powers and major competitors?
Ms. Pryor. Senator, first, let me say that after a 4-year
absence of a board quorum, the Bank was unable to authorize any
medium or long-term financing. So we were focused on small
business during the time--I should say, ``the Bank was.'' I was
not at the Bank then.
This is something that if I were to be confirmed I would
continue to focus on. Outreach and business development efforts
are the best way to remind people that EX-IM is back in
business, that we are here to help and support their overseas
projects, that we can finance buyers who are interested in
American goods and services, and that we can level the playing
field.
Senator Ossoff. Ms. Pryor, how would you contrast the
quality, not just the quantity, but the quality and the
quantity of U.S. financing for exports with other major
commercial powers and international competitors?
Ms. Pryor. I would say that EX-IM is more constrained than
many of its counterparts, other ECAs. China--not transparent at
all, so it is really hard to know exactly what is happening
there. But with our fellow ECAs, European ECAs, G7, G20, I
would like to see us work more closely with them. But at the
end of the day, they are supporting their exports, and so we
are often in competition with them.
Senator Ossoff. Right. And so, for example, France, $12.1
billion, 2020, medium and long-term export credit, dwarfing
ours. Now maybe that is because we are taking a more prudent
approach. Are the constraints in place appropriate, or does the
Agency or does Congress need to modify the law in order to
authorize and encourage more of this activity to help Georgia
producers and other producers get their products to global
markets?
Ms. Pryor. Thank you, Senator. If I am confirmed, this is
something that I would like the board and the EX-IM staff to
take a closer look at. We really need to determine ways to
continue to put exports first, put U.S. workers and jobs first
by modernizing our policies or taking a look at those, working
with you, remaining within our statute and the law, if you
will, but figuring out ways that we can help promote exports
because in the end, you know, Americans produce quality
products, we are transparent, we hold these projects to high
economic and social standards, and many other ECAs in the world
do not do that.
Senator Ossoff. OK. Well, it is not a trick question.
Ms. Pryor. Yeah.
Senator Ossoff. I am earnestly seeking your guidance based
on your experience, whether we in Congress need to legislate in
order to remove constraints that may be unnecessary impediments
to supporting Georgia's exporters and others.
A question, please, for you, Mr. Harper. How do the
authorities that the NCUA would have, and has, to promote sound
cybersecurity practices at credit unions contrast with the
authorities that regulators of commercial banks can apply?
Mr. Harper. So one very big difference is that banks, bank
regulators have the ability to go and see third-party vendors.
The NCUA does not have that authority. So it is a blind spot
for us. It is a blind spot, in fact, that FSOC, GAO, and our
own inspector general have asked us to close.
Senator Ossoff. And do you have the authority to close that
without congressional action?
Mr. Harper. No. That would require a statutory----
Senator Ossoff. OK. Well, if confirmed, will you sit down
with me and my staff and the Chairman and determine whether
there is some action that we should take swiftly?
Mr. Harper. Absolutely. We are working on a white paper
that I will provide to you as soon as possible, if confirmed.
Senator Ossoff. Thank you.
Thank you, Mr. Chairman.
Chairman Brown. The Senator from Minnesota is recognized
for 5 minutes.
Senator Smith. Thank you, Chair Brown and Ranking Member
Toomey.
And welcome to all of our panelists. Thank you so much for
being here and thank you for your willingness to serve.
I am going to, this morning, direct my questions to Mr.
Harper. Mr. Harper, thank you very much for our conversation
recently and also for your work on the NCUA board over the last
couple of years.
I appreciated the conversation that we had recently about
on my bipartisan bill the Credit Union Employee and Member
Safety Act, which is designed to simplify the process for
expelling a credit union member who violates credit union
rules. And this bill, as you and I discussed, came to be
because I heard alarming concerns from Minnesota credit unions,
talking about experiencing members who were harassing of staff,
stealing credit union assets, or committing other crimes. And
luckily, Minnesota's State legislature has already changed the
law for State-chartered credit unions so that they can address
these challenges, but I think that this is something that we
need to address for federally chartered credit unions as well.
So I just wanted to say that I look forward to working with you
on this issue.
Mr. Harper. Absolutely.
Senator Smith. I want to address my other question to you
also. This is around the issues of climate risk. We had Chair
Powell here in front of this Committee earlier this week, and I
have asked him several times, though not this week, about
climate-related risks in the financial system. And as the top
regulator of credit unions, what do you see as the climate risk
affecting credit unions.
Mr. Harper. So there are certainly several. We have seen
increasing number of storms, sizable storms, overall increasing
costs, and those affect credit unions in different ways
depending on where they are situated and located throughout the
country. Our focus on climate financial risk is really taking a
look at all material risks.
For some credit unions, it may be that they are attached to
a particular industry that is undergoing structural changes,
and that credit union may need to consider expanding its
charter, becoming a multiple common bond charter, so it can
continue serving its existing members but also have a base to
continue to grow in the future.
We also need to make sure that credit unions, for example,
who have high concentrations perhaps in agricultural areas,
where you may see changes in the environment that crops no
longer can be grown there as well--they need to be thinking
about what are they making loans toward, how are they making
those loans, and how are they laying off potential risks, the
risk-sharing agreements or participations with other credit
unions on some of those loans.
As well as, you know, when you think about areas that are
more prone to flood, they also, too, need to make sure that
they are properly managing that risk. And that is part of our
job as a regulator.
Senator Smith. So, Mr. Harper, we would be wrong to assume
that if you were a credit union in a small community or in a
rural community that you would somehow not be--you would be
somehow immune from climate risk. Right?
Mr. Harper. I think it will affect every community and
credit union slightly differently, but we should be cognizant
and working to manage those risks.
Senator Smith. You were also a member of the Financial
Stability Oversight Council, FSOC.
Mr. Harper. Yeah.
Senator Smith. Could you please tell us how you plan to use
your position on FSOC as it relates to climate risk?
Mr. Harper. So currently, FSOC is working on a report that
we anticipate releasing, I believe it is by the middle of
November, on this issue. We are working through that right now
at the staff level. I have not seen the final report, but there
will be a review and discussion at the entire council level
before it is voted out.
Senator Smith. Thank you. And do you think your role as
Chair of the NCUA and as a member of FSOC interact? Do these
roles interact when we are considering certain financial
stability policies in either position? How do they connect, do
you think?
Mr. Harper. So, great question. One real way in which they
connect is, you know, my job within the credit union world is
to see where are there problems, where are there risks, where
are there black holes, to make sure that that is informed at
the council level. One thing that the council has repeatedly
found since its inception is that the NCUA's lack of vendor
authority does create risks for the broader financial system,
and so there is an interconnection there.
Senator Smith. Thank you.
Mr. Harper. Thank you.
Senator Smith. Thank you very much. I yield back, Mr.
Chair.
Chairman Brown. The Senator from Georgia is recognized for
5 minutes, Senator Warnock.
Senator Warnock. Thank you so much, Mr. Chair.
Congratulations to our witnesses for their nominations to
the NCUA and EX-IM.
Credit unions and community banks are vitally important in
the State of Georgia, especially when it comes to servicing
smaller towns, rural areas. Some are even located in churches.
They provide not only checking and savings accounts for their
communities, but they help families to afford a mortgage or to
afford an automobile for that matter, small business loans to
entrepreneurs to get their companies off the ground. And MDIs
and CDFIs also play a key role in this area, servicing
communities that otherwise have trouble accessing credit.
When COVID-19 began to spread last year, it hit the
communities served by these institutions particularly hard and
brought into sharp focus the inequities that we see all the
time.
Mr. Harper, what will you do as head of the NCUA to support
these vital sources of basic financial services and capital in
underserved areas, and what is your plan?
Mr. Harper. I completely agree with you about the
importance of CDFIs and MDIs. It is that church credit union
that is only open for 4 hours on a Sunday. It is making some
$4,000 loans on a personal need to somebody to help them get
through a hard time or help them to afford something that they
need for their family. And we do not want those to go away.
First, we are working to increase awareness about MDIs. We
actually today, this morning, had our third roundtable with
regional MDIs out in the western region, where we are
soliciting input from MDIs about how can we improve our MDI
program. The board is dedicated to increasing staffing for our
MDI program so that we can actually provide more support to
minority depository institutions.
Interestingly enough, we have actually seen growth in the
number of MDI credit unions during the last year. More have
actually self-selected and identified themselves as MDIs. And
one of the reasons why is we have been making them aware of the
resources that we provide.
One last thing on MDIs and their support, we have been
pushing for them to use the Emergency Capital Investment
Program that Treasury has created. We have quite a few
applications from credit unions there, to use as secondary
capital. And in addition to that, certainly increasing funding
for the Community Development Revolving Loan Fund. We
dedicate--at least 50 percent of the MDIs that apply will get
grants through the Community Development Revolving Loan Fund.
If we had more money, we could support MDI efforts better.
Senator Warnock. Great. I think this is often a missed
opportunity, and so I am grateful for any efforts to lean in
there. There is a lot of entrepreneurial interest in many of
these communities, community development opportunities, but the
issue is capital often.
Mr. Harper. Yes. And I have said repeatedly in speeches,
just the numbers of small businesses of people of color who
went out of business at the start of the pandemic, it was 17
percent of businesses overall, but it was 41 percent of Black-
owned small businesses.
I have said credit unions have a moral imperative to step
up and help fill that hole, and I have certainly been talking
to them about it. I am certainly working to make sure that they
are aware of the programs that can be done to support it. And
certainly, many of them did step up through the PPP program to
provide those short-term, temporary loans that helped keep many
businesses alive and afloat.
Senator Warnock. And speaking of small businesses, the
latest unemployment data for Georgia----
Mr. Harper. Yes.
Senator Warnock. ----shows an unemployment rate of 3.5
percent, which is lower than it was in March 2020, before the
pandemic. The number of unemployed Georgians is now what it was
pre-pandemic. So that is good news, and it is indicative that
the programs put in place, the CARES Act, actually worked. And
this year the American Rescue Plan solidified those efforts.
Still, we are not out of this. There are folks who are
still struggling, particularly in small businesses, and we know
that businesses are critical to the American economy. And
providing tools to help small business exports will only help
in our recovery.
Ms. Pryor, between 2014 and 2020, 76 percent of exporters
supported by EX-IM in Georgia were small businesses. Could you
explain to me your commitment to small businesses and how you
plan on potentially increasing EX-IM's support?
Ms. Pryor. Senator, small businesses have always been a
priority for the Bank. Last year, in 2020, 90 percent of the
transactions were with small businesses. We have outreach
efforts designed to help educate them about the services that
are available to them, the tools, if you will, in the U.S.
Government's tool box. And what is so important to keep in mind
is that with 95 percent of consumers living outside of U.S.
borders there is tremendous opportunity and our Nation's
economy depends on many small businesses and entrepreneurship.
Companies that export tend to grow faster. Their employees
tend to make a higher wage. They tend to be more profitable.
And they also tend to weather financial crises, such as COVID-
19, better.
So, Senator, I would look forward to working with you, if I
am confirmed to the position of First Vice President at EX-IM,
to see how we can continue to keep that number high in Georgia
and grow it even further.
Senator Warnock. I know I am a little over time, but, Mr.
Herrnstadt, you seem to agree with Ms. Pryor. Can you say
something about your own commitment in this regard?
Mr. Herrnstadt. Yes. I believe that small business is a
priority at the Bank, and if confirmed, I am looking forward to
working with you and your staff and the EX-IM staff to make
sure that it is expanded and that more U.S. jobs are supported
by more U.S. exports. Thank you.
Senator Warnock. Thank you so very much.
Chairman Brown. Thank you, Senator Warnock.
As we close, Senator Toomey has a statement.
Senator Toomey. Thank you, Mr. Chairman. I will be brief,
but I want to inform you and our witnesses I have noticed a
disturbing trend whereby nominees who have come before this
Committee have responded to the written questions that we
submit, that we call the QFRs or Questions for the Record--
witnesses have provided identical answers and in other cases
very nearly identical answers. So I would just like to remind
witnesses that I certainly expect that their answers will be
their own. Thank you.
Chairman Brown. Thank you, Senator Toomey.
Thanks to the three nominees for joining us today. Useful
discussion of the issues. I hope we can work together as a
committee to move forward quickly on the nomination of these
three very qualified nominees.
For Senators who wish to submit questions for the hearing
record, these questions are due close of business Tuesday,
October 5th. To the nominees, we would like to have your
responses on Monday, October 11th.
Thank you again for your testimony today. With that, the
hearing is adjourned.
[Whereupon, at 11:08 a.m., the hearing was adjourned.]
[Prepared statements, biographical sketches of nominees,
responses to written questions, and additional material
supplied for the record follow:]
PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
The Committee meets today to consider the nominations of: Todd
Harper to be Chairman of the National Credit Union Administration;
Judith Pryor to be First Vice President of the Export-Import Bank; and
Owen Herrnstadt to be a Member of the Board of Directors of the Export-
Import Bank.
We thank the nominees for appearing here today, and extend a warm
welcome to their families and friends in attendance.
To the nominees, thank you for your willingness to serve in these
important roles, and for Ms. Pryor and Mr. Harper--your willingness to
continue to serve.
If confirmed, the nominee before us today would play pivotal roles
in ensuring the safety and soundness of our credit union system and
supporting U.S. workers and manufacturers as they compete in a global
marketplace.
As Chairman of the National Credit Union Administration, or NCUA,
Mr. Harper would lead an independent agency responsible for regulating
and chartering Federal credit unions, insuring the deposits of more
than 5,000 federally insured credit unions, and protecting the millions
of credit union members.
As First Vice President and Member of the Board of Directors,
respectively, Ms. Pryor and Mr. Herrnstadt would be two of five
Directors of the Export-Import Bank, or EX-IM. EX-IM plays a critical
role in helping level the playing field by stepping in to offer export
financing when the private sector is unwilling or unable to provide it.
The nominees before us are well-qualified for these roles. They
possess the background, training, and experience to take on many of the
challenges we face today.
Mr. Harper is President Biden's nominee for Chairman of the NCUA
Board. He was first confirmed by the Senate with bipartisan support to
the three-member NCUA board in 2019, and designated as Chairman in
2021. Prior to serving on the NCUA board, Mr. Harper served as the
Director of NCUA's Office of Public and Congressional Affairs and chief
policy advisor to former chairs Debbie Matz and Rick Metsger.
As the first NCUA career staff member to serve on the NCUA board,
he understands the role that credit unions play in local communities.
He is also the first openly gay leader of any Federal financial
regulatory agency.
Mr. Harper previously served as a staffer in the U.S. House of
Representatives in various roles, including Staff Director for the
Subcommittee on Capital Markets, Insurance, and Government-sponsored
Enterprises.
Congratulations, Mr. Harper, on being renominated to the NCUA board
and welcome back to the Committee.
In July, President Biden renominated Judith Pryor to the EX-IM
Board of Directors. Ms. Pryor is proudly a native Ohioan--hailing from
Richmond Heights. She has more than 25 years of international business,
finance, and public policy experience. The Banking and Housing
Committee supported her nomination as a board member of EX-IM in 2018
and 2019, and she worked with former Chairman Kimberly Reed and current
board member Spencer Bachus to reopen EX-IM after a 4-year shutdown of
all medium and large transactions, which abandoned American workers and
stalled the creation of more manufacturing jobs.
Prior to joining the EX-IM board, Ms. Pryor served as Vice
President for External Affairs at the Overseas Private-Investment
Corporation, now the U.S. International Development Finance
Corporation.
It's always good to see an Ohioan on the panel. Ms. Pryor knows how
important EX-IM is to small and medium-sized companies from our home
State and so many States that are represented by Democrats and
Republicans on this Committee.
Congratulations on being renominated and welcome back, Ms. Pryor.
Our final nominee today is Owen Herrnstadt.
For more than 30 years, Mr. Herrnstadt has served in various roles
at the International Association of Machinists and Aerospace Workers-an
organization representing hundreds of thousands of workers from across
the country, including my home State of Ohio.
He currently serves as Chief of Staff to the International
President and Director of Trade and Globalization. In this capacity,
Mr. Herrnstadt assists in running one of the largest manufacturing and
transportation unions in the country-spanning several industries and
working with many leading export companies. At IAM, he also develops
policy on international trade, human rights, and international labor
standards, and he has served on the EX-IM advisory committee.
Welcome, Mr. Herrnstadt, and thank you for your many years of work
on behalf of working people.
A confirmed EX-IM board is important to continue the bipartisan
work started under President Trump to rebuild the capability of the
Bank. American workers and businesses need a fully functioning EX-IM to
ensure a level playing field for American exports.
The pandemic slowed all economic activity, but China continued its
massive deployment of export financing to assist their State-backed
companies. In 2020, EX-IM's medium- and long-term export credit
financing was a tenth of the amount offered by the Chinese Government
to their exporters.
I worked with former Chairman Crapo, Chairwoman Waters and Ranking
Member McHenry on the 2019 reauthorization to ensure that EX-IM is
focused on economic competitiveness with China and expanding small
business support.
Our nominees today will be charged with continuing implementation
of the bipartisan reauthorization.
We are grateful to the nominees for appearing here today and I look
forward to your testimonies.
______
PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
Mr. Chairman, thank you. Mr. Harper, Ms. Pryor, and Mr. Herrnstadt,
welcome.
First, Mr. Harper has been nominated to serve another term as a
member of the National Credit Union Administration. Mr. Harper has
served on the NCUA's bipartisan board since being confirmed in 2019.
Before he was named NCUA's chair in January 2021, he appeared to
have a reasonable approach to regulation and a good working
relationship with his colleagues. However, since being named Chair, Mr.
Harper's been too willing to put the Administration's global warming
agenda ahead of the sensible regulation of our country's credit unions.
Just last month, in a meeting on August 19, 2021, with NCUA's newly
formed Climate Financial Risks Working Group, Mr. Harper noted: ``A
credit union's field of membership is often tied to a specific worksite
or an industry, like an oil refinery or agriculture.'' And ``[t]o
remain resilient, such credit unions will need to consider adjusting
their fields of membership, altering their loan portfolios, or
protecting the collateral that backs their homes.''
I hope to understand exactly what he meant by these statements. Our
Nation's credit unions and the 120 million members they serve deserve a
regulator that's focused on the risks in front of them, not a regulator
that's more interested in misusing its authority to pursue extreme
policies for which it has no expertise.
Now turning to the Export-Import Bank. Ms. Pryor has been nominated
to serve as First Vice President and Mr. Herrnstadt has been nominated
to serve on the Board of Directors at EX-IM.
I continue to remain deeply skeptical of EX-IM and its role in the
global economy. Since joining the Senate, I've advocated for sensible
reforms to EX-IM, but proponents of EX-IM continue to block any reform
efforts. In my view, it was ill-advised for Congress to reauthorize EX-
IM in 2019 for a historic seven years without major reforms to protect
Federal taxpayers. Taxpayers ultimately bear the consequences of undue
risk taking at the Bank.
Let's be clear: EX-IM wins business by either systemically
underpricing risk that private markets would otherwise absorb or taking
on risk that private markets would not bear at any price. Since 2018,
EX-IM's default rate has tripled to 1.5 percent, and may soon breach
the 2 percent statutory cap on defaults.
Congress has laid out a clear corrective measure in the event the
default rate cap is breached. EX-IM must temporarily freeze lending
that exceeds its current book of business until the default rate drops
back below the 2 percent statutory cap.
Unfortunately, the Biden administration wants to avoid such
reasonable taxpayer protections. Instead, the Biden administration is
asking that Congress double EX-IM's default rate cap to 4 percent.
Instead of fixing the problem, the Biden administration wants to ignore
the problem of rising defaults by changing the metrics and simply
tolerating still more defaults. These defaults can lead to taxpayer
bailouts of EX-IM as has happened in the past.
As part of the EX-IM's reauthorization in 2019, Congress created a
new EX-IM China program to compete with the People's Republic of China
and its massively subsidized export credits. Just as I feared then, the
Administration is now proposing that we engage in a race to the bottom
with the Chinese Government. Specifically, as the Chinese Government
increases their giveaways to their exporters, the Administration is
looking to match those giveaways at the expense of the U.S. taxpayer.
That is not the way to win a competition with the Chinese Communist
Party.
I'm concerned that propping up exports for this program will only
lead to further Government subsidies. A U.S. export economy dependent
upon Federal credit subsidies is not a recipe for long-term success.
Rather, it will lead to crony capitalism and an ossification of our
economy. Of course, EX-IM already represents crony capitalism at its
worst.
In the case of EX-IM, crony capitalism is providing taxpayer
financed subsidies to some of the world's largest multinational
companies who have access to deep and liquid capital markets. Take for
example one transaction that Ms. Pryor voted to approve in 2021. It's a
deal guaranteeing an $85 million loan from JPMorgan to Qantas for the
purpose of buying jet engines from General Electric.
JPM is the largest bank in America. Qantas is the largest airline
in Australia. And GE is one of the largest industrial companies in the
world. Why do these companies need the American taxpayers standing to
subsidize any of behind their deal? The obvious answer is they don't.
These are some of the biggest, most sophisticated companies in the
world with full access to the capital markets.
I recognize that my views are not the consensus views of this
Committee. I would prefer that we did not require Federal taxpayers to
subsidize these transactions at all. Still, I would hope there is an
agreement among our nominees that EX-IM should not be a lender of first
resort.
As required per statute, EX-IM ``should supplement and encourage,
and not compete with, private capital.'' I look forward to hearing from
Ms. Pryor and Mr. Herrnstadt on this aspect of EX-IM activity and their
plans should they be confirmed.
______
PREPARED STATEMENT OF TODD M. HARPER
To Be Chair of the National Credit Union Administration
September 30, 2021
Chairman Brown, Ranking Member Toomey, and Members of the
Committee: I am humbled to appear before you today and grateful to
President Biden for nominating me to serve a full term on the NCUA's
Board. I am also thankful for my long-time partner, Thomas Beers, for
supporting my commitment to public service.
Since the late 1990s, I have worked as an advisor, manager, and
executive on banking, insurance, and securities legislation and
regulation. These jobs have given me broad knowledge of financial
services policy and a deep understanding of the many issues facing our
Nation's $2 trillion credit union system. These experiences have also
deepened my appreciation for the role that the system of cooperative
credit plays in the lives of one in three Americans.
In speeches, I often talk about my parents--Dr. Ronald and
Christine Small--and how they showed me the importance of forging
consensus and bipartisan agreements. Today, I would like to share
another story about them, one that led me to study business at Indiana
University and become an NCUA Board Member.
In 1974, we moved to a new neighborhood, and I started earning two
dollars each week for completing chores. Two blocks away from our house
was a candy store, a terrible temptation for a 7-year-old. Soon, to pay
for my purchases, I was spending my entire allowance and even dipping
into my other assets--a collection of silver quarters, nickels, and
dimes.
So, when the holidays arrived, I had no money for gifts. I was in a
tough spot. Fortunately, I obtained an interest-free loan from a local
cooperative--the ``Bank of Mom and Dad''--and learned important lessons
about budgeting and saving that changed my habits. Soon, I was teaching
my older brother about compound interest and calling banks to determine
which paid the highest interest on deposits.
Looking back, I recognize how lucky I was to learn about budgeting
and saving at an early age. Many Americans do not learn these lessons
in either the home or the classroom. While at the NCUA, I have worked
to close that gap in financial education. The agency also works to
expand access to safe, fair, and affordable financial services,
especially for households of modest means. This commitment to serving
the underserved inspires me.
Likewise, my experience in working through several financial crises
has informed my regulatory philosophy. Independent regulators, like the
NCUA, need to be fair and forward looking; innovative and inclusive;
risk focused and ready to act when needed; and engaged appropriately
with all stakeholders to develop effective regulation and efficient
supervision.
This thinking has guided my response to the pandemic's economic
fallout. Accordingly, my colleagues and I have worked to adopt
temporary liquidity reforms and implement targeted capital standards to
address a dramatic rise in insured shares. Alongside other regulators,
we have also encouraged lenders, the pandemic's financial first
responders, to work with borrowers experiencing difficulties. And, I
have advanced economic equity by emphasizing fair lending oversight and
supporting grant initiatives to expand fair access to financial
services.
If confirmed, I would continue focusing on credit union members,
the system's resilience and strength, and the NCUA's readiness to
address expected increases in credit defaults as pandemic-relief
programs end. Consistent with the law, I would also continue
prioritizing capital and liquidity, cybersecurity, consumer financial
protection, and diversity, equity, and inclusion.
In closing, our Nation stands at a critical crossroad. We should
pursue a path that will strengthen the system of cooperative credit,
increase access to affordable credit in underserved communities, and
create greater economic stability for families. My experience,
knowledge, and dedication has well prepared me to navigate that road.
If I am fortunate enough to be confirmed for a full term on the
NCUA Board, it would be an honor to continue working with the talented
and dedicated staff at the agency to protect consumers and maintain the
safety and soundness of credit unions. Thank you for considering my
nomination. I look forward to your questions.
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PREPARED STATEMENT OF JUDITH DELZOPPO PRYOR
To Be First Vice President of the Export-Import Bank of the United
States
September 30, 2021
Mr. Chairman, Ranking Member Toomey, and distinguished Members of
the Committee, I am honored to appear before you today as the nominee
for First Vice President of the Export-Import Bank of the United States
(EX-IM). I am deeply grateful to President Biden for nominating me and
welcome the opportunity to continue to serve my country.
I would like to acknowledge my husband, David Pryor, Jr., and the
virtual presence of friends and family around the country. I would not
be here without their steadfast support and encouragement. My son
Hampton cannot be here today, but I feel his presence and acknowledge
his perseverance, which inspires me daily.
If confirmed, I pledge to carry out EX-IM's mission with honor and
integrity and to be a responsible steward of taxpayer resources. I
thank you, Chairman Brown, and the Members and staff who have supported
me, encouraged me, and placed their trust in me. I've met many of you
since I was first nominated in 2017 and have learned of your priorities
related to EX-IM and how we can work together to help American exports
succeed globally. Should I be confirmed, I look forward to continuing
to work with each of you to support American jobs through exports.
I spent 25 years in leadership roles in the business community,
including 17 years in the satellite communications industry. This was
followed by six years at the Overseas Private Investment Corporation
and two years on EX-IM's board. I would bring a unique combination of
leadership experience to the role of First Vice President. My
international business experience provides helpful context for the
challenges U.S. exporters face when navigating new overseas markets.
There are more than 110 export credit agencies globally. Today's
American exports compete on quality, service, and in many cases,
against Government-backed financing. A fully functional EX-IM with
Senate-confirmed leadership can better support U.S. jobs by
facilitating exports as EX-IM fills gaps in private sector financing.
Whether the transaction is too small for a private sector institution
to take on, or the company wants to sell to a riskier market, or they
have liquidity issues due to financial events like the ongoing global
pandemic, EX-IM can help. Many of my meetings as a Board Member
introduced me to workers and entrepreneurs who have sold their products
overseas with EX-IM's support--from makers of specialized bottling
equipment and custom weaving looms to satellite launch service
providers.
Ninety-five percent of consumers live outside of the United States,
presenting tremendous opportunity for American workers. Foreign buyers
have a choice. Let's make sure American goods and services are top of
mind. The U.S. makes and creates high-quality, exceptional products,
and American industry is more likely to adhere to high environmental
and social standards--which becomes a certainty with EX-IM. As a tool
in the U.S. Government toolbox, EX-IM helps these export-ready
companies reduce risk, access capital, and sell with globally
competitive payment terms.
I am grateful to this body for confirming me in 2019, to serve on
EX-IM's Board. I am exceptionally proud of the work we did to
reinvigorate EX-IM and to support thousands of American jobs, after a
nearly 4-year absence. And I am proud our efforts to modernize policies
and provide tools to support U.S. jobs when the COVID-19 pandemic shut
down the global economy. Should I be confirmed I would look forward to
building on those accomplishments and returning to work with a team of
highly qualified, passionate professionals, including Congressman
Bachus, who remains on the Board. I would also hope to continue my
outreach efforts, with a focus on clean energy and exports to Sub-
Saharan Africa. These areas provide enormous opportunity for overseas
growth. And EX-IM can play an important role in leveling the playing
field.
Distinguished Members of the Committee, thank you again for the
opportunity to appear before you today as I respectfully ask for your
support to serve as First Vice President of EX-IM. I believe my
experience and background demonstrate my commitment to EX-IM's mission,
and to modernizing the agency so it can be effective for years to come.
If confirmed, I look forward to working with you, the business
community in your States, insurance brokers, and lenders across the
country to accomplish EX-IM's mission of supporting and sustaining
American jobs through exports.
Thank you and I am happy to answer any questions.
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PREPARED STATEMENT OF OWEN EDWARD HERRNSTADT
To Be a Member of the Board of Directors of the Export-Import Bank of
the United States
September 30, 2021
Chairman Brown, Ranking Member Toomey, and distinguished Members of
the Committee, I am honored to appear before you today as a nominee to
serve on the Export-Import Bank of the United States (EX-IM) Board of
Directors. I want to begin by thanking President Biden for his
confidence in nominating me to this important position. I would also
like to thank the Committee for scheduling this hearing and considering
my nomination.
Before I share more about my experience for the position, I would
also like to recognize and thank my family who have joined me today, my
wife, Stacey Grundman, my son, Eli, and my daughter Dana, who is
watching from home.
I am truly honored to be nominated for the Board of Directors of
the Export-Import Bank of the United States. If confirmed, I believe
that I could provide a critical voice in fulfilling EX-IM's mission of
creating and supporting U.S. jobs by providing support to exporters of
all sizes across our Nation's industrial and service sectors.
I currently serve as the Chief of Staff for the International
Association of Machinists (IAM), starting out in the IAM's legal
department in 1987. I also have served on the Advisory Committee to EX-
IM, the U.S. State Department's Advisory Committee on International
Economics, and was a member of the Board of Directors of the Baltimore
Branch of the Federal Reserve Bank of Richmond. I am a member of the
Council on Foreign Relations and served as cochair of the American Bar
Association's International Employment and Labor Law Committee. I also
have taught as an adjunct professor of law at American University and
Georgetown University, teaching employment law and international labor
law.
All these experiences have contributed to my understanding of the
critical role that EX-IM serves in assisting the United States and its
exporting industries to meet the challenges of growing global
competition, especially from countries like China. I am also well aware
of EX-IM's critical role in supporting the creation of jobs here at
home, as well as bringing vital manufacturing supply chains back to the
United States. I understand the critical importance of a diversified
EX-IM portfolio that expands support for businesses and industrial
sectors of all sizes, including businesses that may not be familiar
with its programs. I am deeply committed to assisting EX-IM become more
transparent, strengthening its efforts to minimize risk to American
taxpayers, and working with Members of this Committee to better fulfill
its mission.
Over the years, I have had the opportunity to learn about and be
involved in strategic analysis and policymaking matters related to
different aspects of the global economy that have emerged during my
professional career. I have witnessed the importance of the global
economy to the lives of workers, their families, and communities
throughout our country. I have seen them prosper when global
competition is fair and seen lives and communities ruined when global
competition is unfair.
EX-IM provides key tools that can be used to level the global
playing field for U.S. businesses and workers as they meet the
challenges of international competition.
In my many roles, I have voiced various issues relevant to American
workers in many contexts. I have always sought to do so in a
professional and pragmatic manner that allows consensus building and
progress on key matters. I have repeatedly shown that I am committed to
the task at hand and can get the job done by listening, learning, and
working with everyone.
I believe I have the expertise, keen perspective, and insights to
support and contribute to the critical mission of EX-IM as a member of
its Board of Directors.
Thank you again for the opportunity and honor to appear before you
today. I look forward to your questions.
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RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM TODD M. HARPER
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
A.1. During my time as a Board Member and Chairman of the NCUA,
I have prioritized supporting the agency's diversity programs
and initiatives, which include--but are not limited to--
attracting, hiring, and promoting people of color.
Since I joined the NCUA Board in 2019, the percentage of
people of color in five out of six employee grade-level
categories (CU-04 through executives) has increased. This
change resulted from placing a greater focus and intentionality
on diverse recruitment efforts and broader outreach to diverse
talent. In 2020, two out of every five new NCUA hires were
people of color.
Throughout my tenure as an NCUA Board member and Chairman,
I have set the tone for diverse selections by hiring and
promoting the most highly qualified applicants into the
executive ranks. For example, my first hiring selection was a
female of color who serves as the agency's Chief of Staff. Most
recently, I selected a person of color to serve as the director
of the NCUA's Office of Minority and Women Inclusion.
At a broader level, the NCUA continues to increase
awareness of potential employment opportunities among pools of
diverse talent through recruitment and outreach. These efforts
focus on groups with less-than-expected participation in the
workforce (per Section 342 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act) and individuals with disabilities
(per Executive Order 13548).
Each year, the NCUA's Office of Minority and Women
Inclusion and Office of Human Resources participates in
recruitment and outreach events that include Historically Black
Colleges and other minority serving institutions, organizations
that serve individuals with disabilities, and veterans' events.
Virtual recruitment outreach events the NCUA attended in 2020
include:
Howard University, Bowie State University, and
George Washington University's fall virtual career
fairs for women and students of color;
the Accounting and Financial Women's Alliance Women
Who Count National Conference;
Prospanica Conference and Career Expo; and
the National Black MBA Association Career Expo.
The NCUA uses multiple outreach and job networking tools to
reach top talent in diverse populations. For example, our most
frequently advertised position is our entry-level credit union
examiner position. Our qualification requirements for this
position provide a broad set of opportunities to bring in
diverse talent because of the many ways that individuals can
qualify. We also conduct extensive outreach to recent graduates
by posting our positions to hundreds of universities and
colleges across the country. Lastly, we partnered with Montel
Williams to develop a video to increase outreach and attract
veterans and military spouses to apply to NCUA positions. This
video highlights a diverse group of our veterans at the NCUA
who explain how they transitioned from the military to the
NCUA. All of our vacancy announcements include this video.
I firmly believe that advancing diversity, equity,
inclusion, and belonging is a journey rather than a
destination. This work does not end when certain milestones are
achieved, but continuously evolves and progresses. While the
NCUA will continue to expand outreach to bring more people of
color into its talent pool, we must also move forward with our
work to increase retention and create an inclusive culture
where all employees feel a sense of belonging.
Special emphasis programs and events are a first step
toward achieving this goal. Initiatives that take this work
further--such as employee resource groups, mentoring, and
leadership development programs--also have my full support. I
regularly participate in such programs and encourage all
employees, from those just entering the workforce to our senior
executives, to participate in these special emphasis
opportunities.
If confirmed for a full term on the NCUA Board, I would
continue improving each of these initiatives. I would also
enhance existing mentoring and leadership development and
expand the reach and the effectiveness of the agency's
recruitment program.
Q.2. What specific measures will you use to evaluate the
success of National Credit Union Administration in
understanding and addressing the needs of Black, Indigenous,
and people of color (BIPOC)? And, will you keep Congress
apprised, as appropriate, on the progress being made on these
measures?
A.2. To ensure the agency remains focused on understanding and
addressing the needs of Black, Indigenous, and people of color,
I meet regularly with the heads of both the Office of Human
Resources and the Office of Minority Women and Inclusion to
review our progress and efforts to make even more progress. If
confirmed for a full term on the NCUA Board, I am committed to
keeping Congress apprised on the NCUA's progress in these areas
on a regular basis, as appropriate or as requested.
The NCUA takes a multifaceted approach to understanding and
addressing the needs of our BIPOC employees, and metrics are
the cornerstone for quantitatively measuring progress towards
the agency's goals and objectives. As such, the NCUA has
invested in standing up advanced analytical capabilities for
disseminating key workforce metrics tracking diversity and
inclusion data to key stakeholders across the agency.
Dashboards allowing leaders to view the latest demographic
composition of their office are available at the click of a
link. Two slices of data closely monitored at the agency are
the percentage of employees who identify as a minority and the
percentage of employees by race and national origin category.
In addition, OMWI publishes a dashboard on a quarterly basis
with demographic information for all employees to access. The
agency also incorporates demographic information in the
agency's OMWI Annual Report to Congress. \1\
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\1\ See https://www.ncua.gov/about/diversity-inclusion/reports-
congress.
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To supplement the quantitative perspective, the agency's
employee resource groups provide valuable qualitative feedback
from BIPOC employees. Senior leadership sponsorship of these
groups provides direct access for this community to communicate
their needs to agency decision makers. Presidents of each
employee resource group also serve as representatives on the
NCUA's Culture, Diversity and Inclusion Council, tasked with
assessing the organizational culture and providing
recommendations to enhance diversity, equity, inclusion, and
belonging for all employees.
Most recently, the NCUA completed a culture climate study
to assess the agency's culture and make improvements to drive
diversity, equity, inclusion, and belonging. The agency also
continues embarking on further studies to promote these
principles.
Q.3. What is your plan for creating an inclusive working
environment for employees within your office?
A.3. My plan for creating an inclusive work environment goes
back to one of my early mentors, Pat Neale. Pat once had a
poster in her cubicle that read: ``When Differences End,
Understanding Begins''. When Pat died, I got that poster, which
hangs in my office to remind me of acting on this goal every
day.
Later, during my time on Capitol Hill, I also learned about
the importance of using public policy to advance diversity,
equity, and inclusion from lawmakers like Congresswoman Maxine
Waters and Congressman Barney Frank. They showed me how to
advance diversity and inclusion to a broader scale, which is
what I strive to achieve as a Board Member at the NCUA. By
shining a light on diversity and inclusion, we can create
better workplaces, a more responsive Government, and a credit
union system that works for everyone.
If confirmed for a full term on the NCUA Board, one of my
priorities will be to foster an inclusive working environment
for employees throughout the agency. The NCUA's efforts to
create an inclusive workplace is well-established, as outlined
in both the NCUA's 2018-2022 Strategic Plan and in the NCUA's
2018-2022 Diversity and Inclusion Strategic Plan. I would work
to update these plans with the goal of continuing to cultivate
an inclusive workplace where employees' unique talents, skills,
and perspectives are valued and leveraged. Progress toward this
goal will result in stronger organizational performance.
Since establishing these goals, the NCUA has developed
several initiatives to support inclusion within the workplace,
including:
Employee Resource Groups, which continuously
contribute in meaningful ways to foster a more
inclusive work environment for all employees. These
groups help connect employees by providing resources,
coordinating special presentations and events, and
creating a support system to help address barriers and
obstacles that group members might face. There are 269
members in the NCUA's seven employee resource groups,
representing 23.4 percent of NCUA employees in 2020.
This figure is more than double the industry benchmark
of 10 percent employee participation in ERGs within an
organization.
Open to all employees, the NCUA's employee resource groups
are:
APIC: Asian Pacific Islander Connection (Asian
and Pacific Islander employees and allies);
CULTURA: Creating Unity, Learning to Understand,
Recognizing All (Hispanic and Latinx employees and
allies);
MPower: Mobility, power, and empowerment
(Employees with disabilities and allies);
NCUA PRIDE: People Recognizing Individual
Differences Equally (LGBTQ+ employees and allies);
SWAN: Supporting Women At NCUA (Female employees
and allies);
Umoja: Unity (Black and African American
employees and allies); and
VANS: Veterans At NCUA Serving (Veterans,
military family members and allies).
VIBE, which is an ongoing campaign to create a
stronger sense of belonging by encouraging all
employees to make a conscious and deliberate effort to
adopt inclusive behaviors and habits. VIBE launched in
early 2018 and includes a speaker series, leadership
panel discussions, special events, newsletters, and
more. The VIBE initiative focuses on four specific
behaviors that cultivate an inclusive culture among the
agency's employees:
Value differences,
Intentionally include,
Break biases, and
Embrace change.
OMWI Talks, which are facilitated discussions for
NCUA employees to discuss sensitive diversity and
inclusion-related topics. OMWI Talks create a safe
space for employees to have conversations about
differences, broaden awareness and understanding of
others, learn how to leverage diversity to achieve
better outcomes, and foster greater inclusion and
belonging. These discussions give employees
opportunities to analyze and discuss complex topics and
learn how to manage challenges that may affect them and
their colleagues in the workplace environment.
NCUA's Culture, Diversity, and Inclusion Council,
which includes employee representatives at all levels
(executives, supervisors, and non-supervisors from
multiple grade levels) and a diverse spectrum of
functional areas (such as the agency's examination
program, legal, human resources, and technology). In
addition, members are comprised of a cross-section of
the agency's staff representing different types of
diversity (including race, ethnicity, gender, age,
sexual orientation, disability, veteran status, and
experience). A National Treasury Employees Union
representative is also a member. Additionally, the
council includes up to eight presidents of the agency's
employee resource groups.
In 2020, the agency embarked on a significant effort to
assess the culture of the agency with the deployment of
a culture climate survey covering all staff within the
agency. The NCUA designed the survey with guidance from
the council's representatives. The majority of the
NCUA's staff (59 percent) responded to the survey.
These survey results were combined with results from
subsequent focus groups to provide an assessment of
employee perceptions of the NCUA's culture. In the near
future, the council will present a set of
recommendations to the agency's senior leadership to
guide the agency in addressing issues within the
agency's culture.
Special Emphasis Program events, which are a
significant component of the NCUA's efforts to build
inclusion and understanding within the agency's
workplaces. The agency's Office of Minority and Women
Inclusion hosts events featuring a guest speaker who
provides a range of experiences and insights into how
to be more intentionally inclusive in the workplace.
These recurring events include observances of:
National Black History Month (February);
National Women's History Month (March);
Asian and Pacific Islander Heritage Month (May);
LGBTQ+ Pride Month (June);
Hispanic Heritage Month (September 15-October
15);
National Disability Employment Awareness Month
(October);
Veterans Day (November 11); and
Native American Heritage Month (November).
If confirmed for a full term on the NCUA Board, I would
continue to grow the agency's employee resource groups, advance
the agency's VIBE initiative, participate in and conduct OMWI
Talks and special emphasis program events, and work with my
fellow Board members to implement the recommendations made by
the Culture, Diversity, and Inclusion Council.
Q.4. In the bipartisan appropriations package last December, we
authorized an Emergency Capital Investment Program to help low-
and moderate-income community financial institutions--like
minority depository institution (MDI) and community development
financial institution (CDFI) credit unions--to serve their
members. If confirmed, will you commit to making sure that
these credit unions can take full advantage of the program?
A.4. Yes, I commit to ensuring that eligible credit unions take
full advantage of the program.
The NCUA's outreach on the Emergency Capital Investment
Program is part of the agency's broader mission to support
expanded access to insured, affordable financial services in
low- and moderate-income communities. It is also consistent
with the mission of the Federal Credit Union Act in meeting the
credit and savings needs of consumer members, including those
of modest means.
The NCUA has strongly encouraged eligible credit unions to,
``step in and step up'' to participate in this program. During
2021, the agency conducted outreach to the credit union
industry through briefings, written communications, and
webinars to discuss the Emergency Capital Investment Program
and highlight the key features and benefits of the program. The
outreach generated significant interest in the program with
approximately 90 credit unions applying for funding
(representing 44 percent of all Emergency Capital Investment
Program applicants) totaling $3.1 billion (representing 34
percent of the total appropriation).
On September 24, 2021, I spearheaded the NCUA Board's
approval of a proposed rule to amend the definition of
``grandfathered secondary capital'' in the NCUA's approved
subordinated debt rules to include any secondary capital issued
to the U.S. Government or one of its subdivisions, irrespective
of when it is issued. This proposed change would benefit
eligible low-income credit unions by allowing them to accept
secondary capital investments beyond January 1, 2022, under the
Emergency Capital Investment Program, without the need to
reapply to the NCUA for regulatory capital treatment.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM TODD M. HARPER
Q.1. Congressional Oversight--Please provide your philosophy on
how NCUA will approach and respond to Congressional information
requests (both for documentary information and oral testimony),
if you are confirmed.
A.1. If confirmed for a full term on the NCUA Board, I would
continue to quickly and transparently respond to information
requests from Congress. The agency will confirm receipt within
one business day and work with requestors to identify the best
way to address their particular request.
Q.2. If confirmed, do you intend to respond to information
requests differently depending on who is making the
Congressional information request (whether it's the chair of
the Congressional committee, the Ranking Member, or another
member of Congress)? Please answer ``yes'' or ``no.'' If your
answer is ``yes,'' please explain.
A.2. No.
Q.3. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me? Please answer ``yes'' or ``no.'' If your answer is
``no,'' please explain.
A.3. Yes.
Q.4. Will you commit that, if confirmed, you will make yourself
and any other NCUA employee expeditiously available to provide
oral testimony (including but not limited to briefings,
hearings, and transcribed interviews) to the Committee on any
matter within its jurisdiction, upon the request of either the
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If
your answer is ``no,'' please explain why.
A.4. Under the Federal Credit Union Act, the NCUA Chairman is
the spokesman for the Board and represents the Board and the
agency. As such, if confirmed for a full term on the NCUA
Board, I commit to making myself available, consistent with
scheduling availability and other duties. I will also work with
the Committee regarding the availability of other senior
leadership at the agency.
Q.5. Climate Change--In September 27, 2021, answers to
questions for the record, \1\ you noted that ``[s]pecific
supervisory policies and examination strategies addressing
climate vulnerability will be considered as we continue to
study the effects of climate change on credit unions and the
credit union system.'' However, in August 2021, you told an
NCUA group tasked with studying financial climate risk that
``the data about rising sea levels and extreme weather events,
as well as climate financial risks, are clear.''
---------------------------------------------------------------------------
\1\ NCUA, Responses to the Questions for the Record: United States
Senate Committee on Banking, Housing, and Urban Affairs ``Oversight of
Regulators: Does Our Financial System Work for Everyone?'' Hearing,
August 3, 2021, prepared on Sep. 27, 2021.
---------------------------------------------------------------------------
What specific ``data about . . . climate financial risks''
were you referencing?
A.5. Climate change is an emerging threat to the financial
stability of the United States. Globally and within the United
States, climate-related impacts in the form of warming
temperatures, rising sea levels, droughts, wildfires,
intensifying storms, and other climate-related events are
already imposing significant costs upon the public and the
economy. In 2020, the U.S. experienced 22 extreme events
causing $96 billion in property damage. \2\ The last year was
not unique. In fact, the increase in extreme weather events
last year is part of a long-running trend. As illustrated in
the chart below, the frequency and cost of weather-related
catastrophic events have been rising over the past 20 years.
---------------------------------------------------------------------------
\2\ NOAA National Centers for Environmental Information (Billion-
Dollar Disasters: Calculating the Costs).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Q.6. How does the ``data about . . . climate financial risks''
compare quantitatively to other risks facing credit unions,
such as ordinary business cycles and existing weather-related
---------------------------------------------------------------------------
risks?
A.6. Through its examinations and supervision, the NCUA aims to
consider all material risks to the credit unions it insures and
regulates. Climate-related financial risk is one of many risks
and that risk may differ from credit union to credit union
depending on its location, composition of its loan portfolio,
and other factors.
The quantified economic impacts of transition and physical
risks must be linked to changes in the values of financial
sector assets and liabilities--to measure credit, liquidity,
and other risks to financial institutions or sectors. Many of
these linkages may be familiar--with links between losses in
income and credit losses, for example, potentially following
patterns similar to typical relationships used in financial
modeling.
However, the dynamic patterns of the economic impacts of
climate risks may differ sizably from those of typical business
cycle shocks. These differences may require research including
the development of multiple modeling approaches. Other risks,
such as certain operational and legal risks, may be more
difficult to quantify, necessitating a qualitative evaluation.
The NCUA's internal working group is focused on developing
in-house expertise on climate-related financial risks and their
implications for credit unions, credit union members, and the
Share Insurance Fund. How best to measure and model those risks
is a component of that effort.
Q.7. What specific climate-related supervisory policies and
examination strategies is the NCUA considering or planning to
consider?
A.7. The NCUA's Climate Financial Risks Working Group is
assessing the NCUA's current regulatory framework and whether
it is sufficient for addressing climate risk to credit unions.
To this end, the group is currently reviewing the seven risk
indicators--credit risk, interest rate risk, liquidity risk,
transaction risk, compliance risk, strategic risk, and
reputation risk--and examiner review procedures for compliance
with the Flood Disaster Protection Act and disaster
preparedness planning. Once complete, the group may present
recommendations for revisions to examination scoping, risk
assessments, review procedures, and corrective actions.
Q.8. How is the NCUA's Climate Financial Risks Working Group
(Working Group) structured? Please describe how many members
there are; how they are chosen; how meetings are organized and
how often they occur; decisions are reached, and what
deliverables and work products are underway as well as
associated timelines.
A.8. The working group is composed of 11 staff members from
across the agency. Members were drawn from all credit union
supervisory-related areas of the NCUA that have a perspective
on climate financial risk, including the agency's three
regional offices, the Office of Examination and Insurance, the
Office of the Chief Economist, the Office of National
Examinations Supervision, the Office of Consumer Financial
Protection, the Office of Credit Union Resources and Expansion,
the Office of General Counsel, and the Office of External
Affairs and Communications. The group's composition was
developed in consultation with the Office of the Executive
Director. The NCUA's Climate Financial Risks Working Group held
its first meeting on August 19, 2021. Meetings occur as
frequently as needed.
The group is still in its initial study phase. Preliminary
efforts are aimed at developing internal expertise on the
financial risks associated with climate change and their
implications for credit unions, credit union members, and the
National Credit Union Share Insurance Fund. The working group
is also taking stock of the agency's existing regulatory tools,
policies, and examination procedures and assessing whether the
current risk-monitoring framework is sufficient for capturing
and addressing climate-related financial risks. A separate
workstream will consider how to model and estimate risks to the
National Credit Union Share Insurance Fund. The goal of this
broad approach is to establish the infrastructure necessary to
ensure that the credit union system and Share Insurance Fund
remain resilient to climate-related financial risks.
Currently planned deliverables and work products include a
request for information from credit unions and other
stakeholders to determine whether and how climate change
factors into credit unions' risk-monitoring framework, business
strategy, and product offerings. The group is also considering
recommendations for revisions to examination scoping, risk
assessments, review procedures, and corrective actions if
deficiencies are identified relating to the seven risk
indicators, the Flood Disaster Protection Act, and disaster
preparedness planning. The working group aims to complete both
projects within the next several months.
Q.9. Does the NCUA have specific policies and procedures
governing the Working Group to ensure their analysis remains
free from political interference? If so, please submit copies
of all of these materials.
A.9. The NCUA is an independent agency, and it approaches
issues through fact finding.
The working group is comprised of seasoned Federal
employees who have each taken the constitutional oath all
Federal employees take upon entering Federal service. Each of
the working group's members is committed to the core mission of
the NCUA and regularly demonstrates the hallmarks of public
service: stewardship of public trust and commitment to the
public good.
Q.10. How long will the Working Group operate?
A.10. No timeline has been determined.
Q.11. In order to provide greater transparency, will you commit
to making the Working Group's findings public?
A.11. Yes, to the extent possible, the agency will make such
findings public at an appropriate time. Material involving
supervisory information about a specific institution or
privileged and confidential information will be excluded.
Q.12. As the NCUA and other bank regulators analyze this issue,
do you commit to follow the data, as it relates to credit
unions, no matter where it leads?
A.12. Yes.
Q.13. Climate models are ill-suited to predicting financial
risk due to their uncertainties and complexities, and the fact
that climate models have a time horizon of decades or longer.
In fact, one recent paper by a group of climate researchers
found that current climate models cannot provide financially
meaningful information. \3\ In addition, the international
Financial Stability Board issued a report in July 2021
acknowledging that the difficulty in modeling climate risks and
lack of reliable historical data create greater uncertainty in
assessing financial institutions' exposures to climate risks
than other risks. \4\ However, in a March meeting of the
Financial Stability Oversight Council (FSOC), you stated that
FSOC ``should focus on the financial risks related to climate
change'' and NCUA ``needs to manage that risk within our
regulatory and supervisory frameworks.'' Given the uncertainty
of both climate models and actual risks to financial
institutions, on what basis do you believe FSOC involvement is
warranted or regulatory action is supportable?
---------------------------------------------------------------------------
\3\ Nature Climate Change, ``Business Risk and the Emergence of
Climate Analytics'', https://www.nature.com/articles/s41558-020-00984-
6.epdf, Feb. 2021.
\4\ Financial Stability Board, ``Availability of Data With Which
To Monitor and Assess Climate-Related Risks to Financial Stability'',
https://www.fsb.org/wp-content/uploads/P070721-3.pdf, Jul. 2021.
A.13. While the Nature Climate Change article you cite does
indicate concerns about existing models and tools, it also
describes climate change as a very significant threat and
recognizes that the problem is systemic. Moreover, it does not
suggest that the problematic nature of existing models warrants
inaction. For example, for business, it asserts that: `` . . .
there are opportunities for effective integration of existing
climate information that are aligned with the motivations
already discussed; first, to genuinely assess risk for the
purpose of minimizing vulnerability (including to an
investment); second, to utilize such assessments in the
building of resilience; third, to meet the requirements of
regulators who require such risks to be assess; and fourth,
given the emergence of CSPs [Climate Service Providers], to
assess the vulnerability of an entity to analysis undertaken by
others.'' \5\
---------------------------------------------------------------------------
\5\ Nature Climate Change, ``Business Risk and the Emergence of
Climate Analytics'', https://www.nature.com/articles/s41558-020-00984-
6.epdf, Feb. 2021.
---------------------------------------------------------------------------
According to the National Oceanic and Atmospheric
Administration, there were a record-breaking 22 separate
billion-dollar weather and climate disasters in the United
States in 2020. \6\ These hurricanes, severe storms, drought,
and wildfires caused a combined $95 billion in damages. Going
forward, extreme weather events like these will have
implications for regulated and insured financial institutions.
The risks they pose to financial institutions are real and well
documented.
---------------------------------------------------------------------------
\6\ Data is from the NOAA National Centers for Environmental
Information (``Billion-Dollar Disasters: Calculating the Costs'').
---------------------------------------------------------------------------
In addition to the physical risks due to damages from the
frequency and intensity of storms, drought, and wildfires,
there are also transition risks that arise as economies shift
to a less carbon-reliant economy. The physical and transition
risks associated with climate change will manifest themselves
in traditional risk categories such as credit risk, market
risk, operational risk, liquidity risk, and to a lesser extent
legal and reputational risks. Based on the foregoing, FSOC
involvement is warranted and regulatory action is supportable.
Q.14. In the March 2021 FSOC meeting you went on to state that:
``Most credit unions focus on mortgage, auto, and small
business lending. Over time, climate change will affect the
value of collateral like homes and commercial properties,
especially in areas affected by extreme weather, and vehicles,
as we transition to electric and hybrids.'' The risk associated
with consumers moving from one source of energy to another is
not much different than the risks financial institutions face
when consumer purchasing habits change from new inventions,
cause some businesses to be created and others to be destroyed.
Placing restrictions or costly regulatory burdens on credit
unions' ability to offer auto lending, mortgage lending, and
small business lending to deal with one category of risk may
significantly harm individuals seeking to purchase low-cost
vehicles, families looking to buy a home, and small businesses
owners and entrepreneurs trying to remain competitive. This is
particularly true for low-income consumers, who are impacted
the most by greater restrictions and increased costs of credit.
Do you intend to target auto lending, mortgage lending, and
small business lending for climate-related supervisory or
regulatory tools?
A.14. No. If confirmed for a full term on the NCUA Board, my
goal is to ensure that our regulated institutions remain
resilient against all material risks, including the risks to
collateral held for security for a loan that is subject to
risks posed by climate change and the increase in climate-
related natural disasters. In our oversight, the NCUA should
evaluate whether credit unions are addressing those risks
through insurance or other risk-mitigation techniques.
Q.15. What auto lending, mortgage lending, and small business
lending climate-related supervisory policies and examination
strategies is the NCUA considering?
A.15. No specific policies are currently under consideration.
As the prudential regulator and insurer for credit unions, the
agency must assess ways in which climate change poses financial
risk to federally insured credit unions and the Share Insurance
Fund.
Q.16. Has the NCUA studied the potentially harmful effects of
climate-related lending restrictions on credit unions, low-
income consumers, families, and small businesses?
A.16. The NCUA does not have any intention of implementing
climate-related lending restrictions. Hence, we have not
studied their potential effects. The agency is aware that the
adverse effects of climate change may be felt more acutely by
financially vulnerable communities and that these communities
will have a difficult time recovering from a climate disaster
or adapting to climate change.
Q.17. In 2019, the FSOC unanimously approved guidance to
implement an activities-based approach for identifying
potential risks to financial stability. Under this approach,
FSOC works with entities to mitigate systemic risk via ``off-
ramps,'' and designates individual entities as systemically
important only as a last resort. The Chairman of the NCUA has a
statutory seat on the FSOC. If confirmed, would you seek to
preserve the FSOC's current approach to designation?
A.17. The FSOC is not actively considering a change to the
existing Guidance on Nonbank Designations, which was published
in December 2019. To the extent the FSOC decides to make
changes to the ``activities-based approach'' or other elements
of the Guidance, if confirmed for a full term on the NCUA
Board, I will carefully consider changes in accordance with the
Council's statutory responsibilities.
Q.18. FSOC's 2019 guidance also established that, before the
FSOC uses its authority under Section 120 of the Dodd-Frank Act
to issue nonbinding recommendations to a primary financial
regulatory agency, it will ascertain whether the agency expects
to perform a cost-benefit analysis. In cases where the agency
would not, the FSOC will conduct its own cost-benefit analysis.
This commitment is critical given the importance of engaging in
analytical rigor when developing regulatory standards. Do you
commit to retain the cost-benefit analysis requirement if
confirmed?
A.18. Under Section 120, the Dodd-Frank Wall Street Reform and
Consumer Protection Act mandates that a recommended activity or
practice ``shall take cost to long-term economic growth into
account.'' Such a requirement is prudent and, if confirmed for
a full term on the NCUA Board, I would commit to ensuring that
the requirement is retained.
Q.19. Consumer Compliance Rating--At the September 30, 2021,
Senate Banking Committee hearing, you indicated in response to
questions that the NCUA does not conduct and assign a separate
consumer compliance rating for credit unions.
At the hearing you also mentioned NCUA has been increasing
its fair lending program and is conducting targeted risk-
focused reviews. What are the criteria for selecting credit
unions for these risk-focused consumer compliance reviews?
A.19. The NCUA does not assign a separate consumer compliance
numerical rating during risk-focused examinations of Federal
credit unions. Instead, our examiners determine the level of
overall compliance risk--along with six other areas of risk--a
credit union presents. \7\ In determining a credit union's
level (low/medium/high) and directionality (increasing/
decreasing/unchanged) of compliance risk, the NCUA's examiners
follow the same principle-based framework as the other Federal
banking agencies defined by the Federal Financial Institutions
Examination Council's (FFIEC) Uniform Interagency Consumer
Compliance Rating System.
---------------------------------------------------------------------------
\7\ The other areas of risk include credit risk, interest rate
risk, liquidity risk, transaction risk, strategic risk, and reputation
risk.
---------------------------------------------------------------------------
The compliance risk rating assigned by examiners
encompasses all laws as well as compliance with exam reports,
prudent ethical standards, contractual obligations, and
exposure to litigation. Compliance risk can blend into
operational risk, transaction risk, and even legal risk,
increasing the difficulty of identifying this risk. So, while
we do determine a credit union's overall level of compliance
risk, it covers a broad universe of compliance risk.
The NCUA's fair lending program has evolved over the last
decade. Most notably, prior to the creation of the Office of
Consumer Financial Protection--originally established as the
Office of Consumer Protection--the agency's fair lending
program was implemented by each regional office, with
potentially conflicting policies and procedures. When the NCUA
created the Office of Consumer Financial Protection, the fair
lending program was centralized into one office for consistency
and a more efficient use of agency resources. Under this
centralized framework, the NCUA utilizes the FFIEC's
Interagency Fair Lending Examination Procedures.
During the last decade, the NCUA has assumed a more
proactive role in fair lending oversight and referred its first
ever cases of potential fair lending discrimination to the U.S.
Department of Justice. In 2020, the NCUA increased the number
of onsite fair lending examinations from 25 to 30. The NCUA
continues to perform at least 40 offsite supervision contacts.
The agency selects credit unions for fair lending
examinations and supervision contacts based on a variety of
factors. They include results of reviews of HMDA data,
observations during regular safety and soundness examinations,
information from consumer complaints, and credit union size. In
addition to those examinations and contacts, the agency
generally reviews some aspect of fair lending in all regular
safety and soundness examinations. For example, throughout 2021
NCUA examiners have reviewed specific aspects of each credit
union's fair lending policies and procedures during each risk-
focused examination to help establish a fair lending baseline
or health check. Together with other consumer lending
information, the agency will be better equipped to scope fair
lending examinations, conduct necessary training, and provide
outreach to the industry going forward.
Q.20. Based on NCUA's 2021 Annual Performance Plan, NCUA has
conducted less than the targeted 30 fair lending examinations
per year since 2018. \8\ This suggests that NCUA has found
extremely low consumer compliance risks, considering less than
0.56 percent (30 credit unions out of 5,300) were targeted for
these reviews. How does this justify rolling out an entirely
new consumer compliance rating system?
---------------------------------------------------------------------------
\8\ NCUA, 2021 Annual Performance Plan, https://www.ncua.gov/
files/agenda-items/AG20210114Item7b.pdf, Jan. 2021.
A.20. Prior to 2020, the agency met its annual performance plan
goal of 25 onsite fair lending examinations and at least 40
offsite fair lending supervision contacts. Starting in 2020,
the NCUA increased the number of fair lending examinations from
25 to 30. The number of fair lending examinations performed is
not related to findings. Since 2017, the NCUA has referred nine
credit unions to the U.S. Department of Justice for suspected
fair lending violations, as required by the Equal Credit
Opportunity Act. The agency continuously monitors credit
unions, reviewing available data and other information, to
inform our fair lending review areas and selection of credit
unions for onsite and offsite examination.
The NCUA's fair lending examination program is a separate
subset of consumer compliance oversight. The agency continues
to utilize the same rating system parameters for general
consumer compliance, but indicators from our current limited
consumer compliance reviews suggest the NCUA should be
conducting more in-depth consumer compliance examinations to
ensure credit unions provide members with required protections.
The enhanced consumer compliance exam program the agency is
developing is intended to start with those large credit unions
soon to transition to the Consumer Financial Protection Bureau
for oversight of consumer financial protection laws and
regulations. This enhanced examination program will educate
those credit unions on what their obligations will be when
supervised by the Consumer Financial Protection Bureau.
Q.21. Please describe how you plan on implementing this ratings
system, including estimated time, cost, and organizational
changes needed to implement the ratings system?
A.21. For clarity, what the agency is studying is the efficacy
of an enhanced consumer compliance examination program, which
would review in more detail a credit union's ability to
effectively adhere to required consumer financial protection
laws and regulations. The NCUA currently anticipates completing
that study--including any costs and resources needed to
implement such a program--and receiving recommendations in
2022. Any material changes to the agency's program, including
implementing a separate compliance rating and necessary
resources would require Board approval.
Q.22. NCUA's Enterprise Risk Management System--In a March 19,
2021, letter to my office in response to a March 1, 2021,
letter requesting information on the NCUA's enterprise risk
management system (i.e., MERIT) and other items, you mentioned
your current plan was to fully deploy the system in 2021. Can
you provide an update as to those plans?
A.22. For clarification, MERIT is not the NCUA's enterprise
risk management system. Instead, MERIT is the NCUA's new
examination tool, configured using a governance, risk, and
compliance platform. Examiners will use the tool to document a
credit union's examination scope, findings, and final report.
As noted in March, the NCUA will fully deploy MERIT to all
NCUA examiners and State regulators in 2021. Training began in
August and will conclude in November. Examiners will start
using the tool to conduct examinations immediately after
training. Credit unions may also use the tool to provide
examination documents, respond to findings, and view
examination reports.
The agency and I have worked to inform credit unions about
this change and what to expect through website updates, a
letter to credit unions on the Implementation of Modernized
Systems, and a webinar on September 8, 2021, on the NCUA's
Modernized Examination Tools. On-demand training is also
available for credit unions.
Q.23. NCUA Board Member Appointments--According to the Federal
Credit Union Act (FCUA), Board members shall not be appointed
to succeed themselves except that ``members appointed to fill
unexpired terms may be reappointed for a full 6-year term.''
Ms. Deborah Matz, your predecessor on the NCUA Board, was
appointed to fill a 6-year term. That term ended in April 2015,
and Ms. Matz remained a board member in a holdover status. She
voluntarily left the NCUA Board in 2016. You were nominated for
this open seat in February 2019, and confirmed in April 2019 to
fill the 6-year term that began when Ms. Matz's term expired.
Please explain:
How is your appointment permissible given the FCUA's
prohibition on board members being appointed to succeed
themselves?
A.23. My appoint is permissible pursuant to Section 102(c) of
the Federal Credit Union Act (12 U.S.C. 1751) which states,
``future members appointed to fill unexpired terms may be
reappointed for a full 6-year term.''
Q.24. How was the term you were appointed to, which was vacant
because Ms. Matz's 6-year term had expired, an ``unexpired
term''?
A.24. I was appointed to fill the remaining time on a term,
which ran through April 10, 2021, so my original appointment in
2019 was to that unexpired term.
Q.25. Has NCUA legal counsel offered any opinions on the
definition of ``unexpired term'' in the FCUA? If so, please
share with the Committee.
A.25. Not that I am aware of.
Q.26. In the context of the FCUA, how does NCUA define
``unexpired term''?
A.26. This has been a question for the White House.
Q.27. In the context of the FCUA, how does NCUA define
``expired term''?
A.27. This has been a question for the White House.
Q.28. Are there any other examples of NCUA Board members being
reappointed after completing their terms when they replaced a
holdover board member and not a member who left their 6-year
term early?
A.28. Not that I am aware of.
Q.29. Answering Questions for the Record--Please describe with
particularity the process by which you answered these questions
for the record, including identifying who assisted you in
answering these questions along with a brief description of
their assistance.
A.29. Initially, I reviewed each of these questions and
developed an outline for the answers reflecting my knowledge
and views. Appropriate policy and program offices within the
agency then reviewed those initial answers, supplemented the
material as requested, and ensured accuracy in the responses.
The material was subsequently compiled into one document for
final review by the Office of the General Counsel and the
Office of External Affairs and Communications, my staff, and
me.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM JUDITH DELZOPPO PRYOR
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
A.1. Throughout my career, I am proud of the work that I have
done in supporting people of color in the workplace. For
example, during my time at WorldSpace, which was a minority-
owned and operated company, I placed a priority on having a
very diverse staff representing many voices--Hispanic, Black,
Middle Eastern, Indigenous American, and White. In my
experience, the more diverse voices there are at the table, the
better the outcome or decision.
During my 2 years serving on EX-IM's Board of Directors, I
expressed concern about the lack of diversity on the agency's
advisory committees and secured a commitment from the Chairman
to prioritize the recruitment of women and people of color
going forward.
Q.2. What specific measures will you use to evaluate the
success of the Export-Import Bank in understanding and
addressing the needs of Black, Indigenous, and people of color
(BIPOC)?
And, will you keep Congress apprised, as appropriate, on
the progress being made on these measures?
A.2. If confirmed, I will work with EX-IM's President and staff
to better understand how the agency is working to address the
needs of its workforce, particularly as it relates to
historically disadvantaged groups, including Black, Indigenous,
and people of color. I believe that recruitment, retention, and
professional advancement are among the key metrics to
evaluating the success of these efforts. I will work with EX-
IM's President and staff to ensure the agency is transparent
with Congress on these efforts.
Q.3. What is your plan for creating an inclusive working
environment for employees within your office?
A.3. I believe there needs to be constant engagement with and
outreach to employees. As an EX-IM Board Member during the
height of COVID-19, I put a high priority on reaching out to
employees from across the agency to remind staff that they are
appreciated.
The agency should make use of surveys, multi-level
conversations, all-employee meetings, suggestion boxes, and
other methods to gather inputs to improve the work environment.
I genuinely care about the employees of EX-IM--I want them to
recognize their value, the importance of their work, that they
are being heard and that together we can create a sound,
productive environment for everyone.
While I do not know how many employees I will directly
oversee if I am confirmed to this role, I will place a high
priority on fostering an inclusive work environment in my
office.
Q.4. In 2016, EX-IM created the Environmental and Social
Project Information and Concerns web portal. That portal allows
for communities to submit grievances about project impacts.
Financial and development institutions often review their
accountability mechanisms every 4 or 5 years and solicit public
input to improve their processes. The COVID-19 pandemic has
limited the ability of EX-IM and its contractors to undertake
project assessments and monitoring.
If confirmed, do you believe that it is important for the
EX-IM Board of Directors to ensure project monitoring and
accountability processes are robust, and do you believe that
public consultation to improve EX-IM practices is important?
A.4. Public comment and input are essential to EX-IM and to me
personally. Greater inputs--voices from all corners of an issue
or concern--can only serve to better inform a decision and
ensure EX-IM has truly considered the inputs of a wide variety
of interested parties.
If I am confirmed, I will request an update on our
accountability mechanisms, discuss with EX-IM experts and
determine what actions, if any, should be taken to modernize or
update these policies to ensure projects on the ground adhere
to high environmental and social standards. I believe that
stakeholder and public engagement should be a critical part of
that process.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM JUDITH DELZOPPO PRYOR
Q.1. Congressional Oversight--Please provide your philosophy on
how the Export-Import Bank of the United States (EX-IM) will
approach and respond to Congressional information requests
(both for documentary information and oral testimony), if you
are confirmed.
A.1. If confirmed, I will support EX-IM's efforts to respond in
a timely fashion to inquiries from Congress, in accordance with
regulation and statute.
Q.2. If confirmed, do you intend to respond to information
requests differently depending on who is making the
Congressional information request (whether it's the chair of
the Congressional committee, the Ranking Member, or another
member of Congress)? Please answer ``yes'' or ``no.'' If your
answer is ``yes,'' please explain.
A.2. If confirmed, to the extent practicable, I will seek to
respond to congressional inquiries in a timely, consistent
fashion regardless of requestor, in accordance with regulation
and statute.
Q.3. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me? Please answer ``yes'' or ``no.'' If your answer is
``no,'' please explain.
A.3. If confirmed, I will respond in a timely fashion to
information requests in accordance with regulation and statute.
Q.4. Will you commit that, if confirmed, you will make yourself
and any other EX-IM employee expeditiously available to provide
oral testimony (including but not limited to briefings,
hearings, and transcribed interviews) to the Committee on any
matter within its jurisdiction, upon the request of either the
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If
your answer is ``no,'' please explain why.
A.4. If confirmed, I will make myself or my staff available to
provide oral testimony in accordance with regulation and
statute.
Q.5. COVID-19 Temporary Measures--During your tenure as an EX-
IM Board member, four ``temporary'' measures were adopted in
March 2020 that put U.S. taxpayers at greater risk, such as
increasing the guaranteed coverage option to 95 percent. These
measures were extended for an additional year to April 2022. If
confirmed, will you commit to ending the temporary measures
that EX-IM adopted during the pandemic?
A.5. Should I be confirmed, I would review each measure--
temporary or permanent--brought before the Board with an eye to
understanding the demonstrated need for the program, the gap it
is filling in private sector finance, how it would support U.S.
jobs, if it is needed to address U.S. export competitiveness,
and what the risk would be to U.S. taxpayers.
COVID-19 has had a profound impact on the global economy.
EX-IM, like other lenders around the world, took swift action
to provide temporary liquidity relief to its borrowers. These
measures were renewed in 2021 as the pandemic continued its
disruption of the global economy.
Should I be confirmed, I would ask for an update on the
continued need for these temporary measures. It is important to
me that EX-IM is taking action to support U.S. exports and
workers when needed to counter the effects of COVID-19-related
disruptions in the global economy.
Q.6. Do you commit to ensuring these ``temporary measures'' do
not become permanent policies of EX-IM?
A.6. EX-IM's Board adopted temporary measures and I believe
that when the effects of COVID-19 have substantially subsided,
those temporary measures should not automatically be made
permanent.
However, EX-IM's product offerings need to be regularly
reviewed to ensure they meet the needs of today's exporters and
fulfill EX-IM's statutory requirements, including reasonable
assurance of repayment, which ultimately reduces taxpayer risk.
Should I be confirmed, I would review any proposals for new
financing tools or modifications to EX-IM's existing financing
tools to understand the demonstrated need for the tool, the gap
it is filling in private sector finance, how it would support
U.S. jobs, if it was needed to address U.S. export
competitiveness, and what the risk would be to U.S. taxpayers.
Q.7. China Program--In December 2020, the EX-IM Board of
Directors unanimously approved lowering the domestic content
policy for its Program on China and Transformational Exports
(CTEP) to 51 percent, with the potential to be even lower.
What is the lowest domestic content percentage that you
would personally support?
A.7. Congress directed EX-IM to establish the Program on China
and Transformational Exports with rates, terms and other
conditions that are fully competitive with those offered by the
People's Republic of China. In recognition of this
Congressional mandate, EX-IM's Board of Directors approved a
policy lowering the minimum domestic content required to
receive full EX-IM financing for the ten statutorily defined
transformational export areas. The Board established various
criteria for transformational exports that would have to be
considered for full EX-IM financing if the U.S. supply contract
had less than 51 percent domestic content. I supported this
proposal and, if confirmed, would look to review any
transaction with less than 51 percent domestic content against
these Board-approved criteria. If confirmed, I will review each
transaction individually with an eye to understanding how it
fulfills EX-IM's mission of supporting jobs through exports.
Q.8. The EX-IM Advisory Committee recommended a U.S. content
minimum of 20-30 percent to purportedly better level the
playing field with our foreign competitors. Would you support a
20 percent domestic content for a loan guarantee? If so, can
you explain how this fits within the mission statement of
supporting U.S. jobs when 80 percent of the product will be
made elsewhere?
A.8. As a Board Member I supported EX-IM's content policy
revision for transformational exports. The Board did not
consider the recommendation from the Advisory Committee and
based on my understanding of their proposal, I did not agree
with their recommendation.
Q.9. Reviews by the Board of Directors--Please explain the
review process that occurs for the EX-IM Board of Directors
when considering an application for a loan, loan guarantee, or
insurance.
A.9. As a Board Member, I was informed by EX-IM staff that the
Chair of the Board intended to bring a transaction to the Board
for consideration and received a memorandum from staff
outlining the details of the transaction. This included: a
review of the proposed financing structure and terms; the
agency's experience with the transaction participants; a
description of how EX-IM is supplementing but not supplanting
private capital; a description of the jobs supported; a summary
of the credit analysis; legal analysis; interagency comments;
character and reputational transaction integrity review;
economic impact analysis; environmental and social impact
analysis; and country risk, among other items.
I then reviewed these Board memoranda in detail and met
with staff to discuss the transactions in depth to address any
concerns I had about the transactions.
For transactions that require a Congressional or Federal
Register notification, I would then review any comments
submitted through that process and prior to the vote on
authorization.
Q.10. In your view, what are the most important metrics to
examine when considering an application?
A.10. Should I be confirmed, I will review each transaction
that comes before Board to understand how it meets the
requirements laid out in EX-IM's Charter as established by
Congress. This includes support for U.S. jobs, the need to fill
gaps in private sector financing or level the playing field
against foreign Government-backed export financing, reasonable
assurance of repayment, and the potential adverse environmental
and economic impacts of a transaction.
Q.11. Please thoroughly describe the environmental review
process that occurs at EX-IM and how you personally used the
results of that process when considering applications.
A.11. EX-IM's Board-approved Environmental and Social Due
Diligence Procedures and Guidelines govern the environmental
and social review each transaction undergoes and, depending on
the type of EX-IM financing being offered and in accordance
with the Organisation for Economic Cooperation and
Development's Common Approaches. Board-level transactions are
categorized according to their potential for environmental
risks and impacts and are reviewed accordingly. Applications
for financing projects that are categorized as Category A are
required to include an Environmental and Social Impact
Assessment, which is made available to the public for at least
30 days prior to EX-IM consideration for final approval.
EX-IM's Engineering and Environment Division is responsible
for reviewing transactions in accordance with the Environmental
and Social Due Diligence Procedures and Guidelines and provides
a thorough written and oral briefing on each transaction's
potential environmental risks and mitigants or the
transaction's environmental benefits. In accordance with EX-
IM's Charter and congressional direction I took into account
the environmental effects for the proposed transaction. During
my previous tenure at EX-IM, I weighed the information provided
very carefully. Should I be confirmed, I will continue to
review transactions closely for their environmental impacts and
will consider those risks, mitigants, and benefits in the
context of the broader transaction and how the transaction as a
whole meets EX-IM's Charter requirements.
Q.12. EX-IM Reforms--Your 26 months of service on the EX-IM
Board of Directors provided you with exposure to how EX-IM
operates. Based on that experience, what reforms would you seek
to implement as EX-IM's First Vice President that will lower
the risk of EX-IM's operations for Federal taxpayers?
A.12. Should I be confirmed and return to EX-IM, I would look
forward to an update on implementation of the reforms
undertaken during President and Chairman Kimberly Reed's
tenure, including the new additionality checklist to ensure EX-
IM is not supplanting private capital, and updated economic
impact procedures.
As First Vice President, I would support modernizing EX-IM
programs as appropriate to balance efforts to fulfill EX-IM's
mission of supporting jobs through exports without putting
taxpayer resources at undue risk. I would also hope to
undertake aggressive business development efforts that would
expand EX-IM's portfolio, thereby reducing potential
concentration risk.
Q.13. Answering Questions for the Record--Please describe with
particularity the process by which you answered these questions
for the record, including identifying who assisted you in
answering these questions along with a brief description of
their assistance.
A.13. I worked with EX-IM's Office of Congressional and
Intergovernmental Affairs to review my answers for accuracy and
completeness.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR MENENDEZ FROM JUDITH DELZOPPO PRYOR
Q.1. I am increasingly concerned that the United States is not
well positioned to engage in economic statecraft for the 21st
century, including promoting U.S. jobs, business and economic
interests, engaging in development financing for infrastructure
and other needs, including climate change-related resiliency,
and setting standards for emergent technologies and the digital
economy.
Can you expand upon how you view your role at the Ex-Im
Bank, if you are confirmed, in helping to renew and replenish
U.S. economic statecraft?
A.1. If confirmed to serve as EX-IM's First Vice President, I
believe I could play an important role in contributing to
significant economic dialogue with foreign Governments and
business leaders to advance EX-IM's mission of supporting U.S.
jobs by facilitating U.S. exports. I believe that working with
U.S. Government partners including the Departments of Commerce,
State, and Energy, and the Development Finance Corporation and
U.S. Trade and Development Administration, EX-IM can encourage
foreign Governments and business leaders to see the value in
purchasing high quality American goods and services. While EX-
IM's mission is to support U.S. jobs, I am keenly aware of how
important its financing can be in building economic ties that
strengthen American leadership and foster constructive
relationships that support U.S. interests.
Q.2. Where do you see the biggest challenges? Biggest
opportunities?
A.2. EX-IM operates at the intersection of demand for U.S.
exports, lack of private capital or the need to level the
playing field, and a reasonable assurance of repayment. One of
EX-IM's greatest challenges is in ensuring that it is
effectively serving U.S. exporters and foreign buyers from all
sectors that meet these statutory requirements but may not have
historically participated in EX-IM financing.
One of EX-IM's biggest opportunities is represented by the
China and Transformational Exports Program, which has ten key
sectors that the agency is mandated to lean into in order to
advance the comparative leadership of the United States. The
key sectors, including renewable energy, semiconductors, and
5G, may have significant opportunities where EX-IM can
facilitate the export of U.S. goods and services and support
U.S. jobs.
Q.3. In past recessions, EX-IM has typically expanded its
support as private commercial banks scale back their trade
financing. For example in fiscal year 2009, during the Great
Recession, EX-IM's credit assistance grew 46 percent over the
prior year, and much of that new assistance was in support of
American small businesses.
If confirmed, what steps will you take to ensure EX-IM is
prepared to respond to the needs of small exporters during the
COVID recovery?
A.3. Small business exporters are always top-of-mind for me.
Early in the pandemic EX-IM staff conducted outreach to learn
what exporters, especially small businesses, needed from EX-IM.
In March 2020, the Board approved a variety of flexibilities
that sought to quickly reduce burdens on U.S. exporters facing
extreme challenges brought about by COVID-19. EX-IM also
reinvigorated the Supply Chain Financing Guarantee Program to
provide liquidity relief to businesses that contribute to
exports through supply chains.
Should I be confirmed, I would continue to keep small
businesses top of mind and would look forward to an update on
what if any programmatic changes need to be made to meet the
changing needs of exporters during the COVID recovery era.
Q.4. As the United States increases its focus on clean energy
and creating good-paying green tech jobs here at home, there
has been some public criticism that EX-IM has inadequately done
its part to reach out to the clean energy industry, educate
them about the opportunities EX-IM provides, develop a clean
tech project pipeline, and in turn create competitive American
made climate tech industries and jobs.
How can EX-IM better engage the clean energy sector in
order to fulfill its mission both at home and abroad?
A.4. During my time at EX-IM, I worked with our business
development team to reach out to a number of renewable energy
sector companies. I focused on outreach to renewable energy,
energy storage, and energy efficiency companies.
All EX-IM transactions are required by law to have a
reasonable assurance of repayment and must demonstrate an
inability to access private sector financing or a need to
compete on a level playing field with foreign Government-backed
export financing.
By educating U.S. exporters and foreign buyers, including
sovereigns, about the tools EX-IM can provide, we can support
the export of clean energy goods and services. I conducted
extensive outreach through one-on-one meetings, keynote
speeches at conferences, and panel participation to reach
buyers, exporters, and lenders.
EX-IM must build out and engage a robust pipeline of
potential projects, which can be done through business
development and education. U.S. Government resources, tools,
and support beyond EX-IM may also be helpful in getting
companies export-ready so that EX-IM can step in and provide
financing at the appropriate time. If confirmed, I hope to
bolster EX-IM's outreach in these clean energy sectors and
others, and ensure as many U.S. companies as possible
understand how we can be helpful to them.
Q.5. Section 2(b)(1)(C) of the EX-IM Charter requires the Board
to appoint an officer to work with industry and other
Government agencies to promote more clean energy applications
and more sustainable projects for EX-IM to support.
Has this officer been appointed?
A.5. Yes.
Q.6. If so, who is this officer and how have they advanced this
mission?
A.6. Craig O'Connor is EX-IM's Renewable Energy and
Environmental Exports Officer. He engages the sector, speaks at
conferences, and has a network of contacts across the spectrum
of U.S. clean energy companies. When I was at EX-IM, Craig and
I worked together to expand outreach efforts in the renewable
energy sector.
Q.7. If not, what progress has been made towards appointing
this officer?
A.7. N/A.
Q.8. Section 11 of the EX-IM Charter allows the Board of EX-IM
to engage in increased scrutiny of projects that could have
significant adverse environmental impacts, including impacts to
the ``global commons''.
How do you view EX-IM's Section 11 authorities as it
pertains to climate change?
A.8. My understanding is that Section 11 gives EX-IM's Board
the authority to establish environmental procedures and
guidelines that consider, among other things, the potential
effect that project emissions can have on the global commons,
such as causing or contributing to climate change.
Q.9. Section 3(I) of the EX-IM Charter states that the duty of
EX-IM's Chief Risk Officer is to be ``responsible for all
matters related to managing and mitigating all risk . . . .''
Does the Chief Risk Officer account for the risk of climate
impacts on EX-IM projects?
A.9. While the Chief Risk Officer has an obligation to set the
framework for and establishes policy related to risk mitigation
for transactions, EX-IM's Board of Directors is specifically
mandated by law to establish procedures for evaluating the
potential adverse environmental effects of transactions under
Section 11 of its Charter. The Board last revised its
Environmental and Social Due Diligence Procedures and
Guidelines in 2013.
Should I be confirmed, I would welcome the opportunity to
discuss with EX-IM staff how climate impacts are currently
accounted for in the Environmental and Social Due Diligence
Procedures and Guidelines, and to work with your office to get
your input on how the Board can ensure its procedures and
guidelines are effectively addressing these concerns.
Q.10. Does the Chief Risk Officer account for policy risks of
carbon intensive projects becoming stranded assets?
A.10. When underwriting financing for a project, EX-IM
evaluates the potential environmental and operational risks
associated with the project. Should I be confirmed, I would
welcome the opportunity to discuss with EX-IM staff to better
understand how the risk of stranded assets is accounted for and
I would be pleased to work with your office to get your input
on how the agency can effectively address these concerns.
Q.11. Do you think the Chief Risk Officer should account for
such climate impacts and climate policy risks?
A.11. Climate change is an urgent threat and I believe EX-IM
should account for climate risk in accordance with U.S.
statutory requirements and industry and global best practices.
Should I be confirmed, I would welcome the opportunity to
discuss with EX-IM staff how risks are currently accounted for,
and to work with your office to get your input on how the
agency can effectively address these concerns.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS
FROM JUDITH DELZOPPO PRYOR
Q.1. In the past month we have seen agreements signed by Poland
and Ukraine with U.S. companies to build U.S. nuclear reactor
designs abroad. In addition, the International Atomic Energy
Agency (IAEA) estimates that about 30 countries are currently
considering or newly embarking on nuclear power. This presents
an incredible market opportunity for the dozens of U.S.
companies developing the next generation of nuclear power.
What will you do to ensure that American nuclear companies
are able to secure deals with these ready markets?
A.1. If confirmed, I would work to ensure EX-IM staff is
effectively conducting its outreach efforts. I understand that
nuclear energy-related projects are highly complex and
typically involve significant interagency coordination and I
look forward to learning more about how we can partner with the
Departments of State, Energy, and Commerce; the Nuclear
Regulatory Commission; and others to ensure EX-IM is fulfilling
its mission of supporting U.S. exports.
Q.2 How will you ensure the EX-IM bank is proactively engaging
with private companies looking to build aboard to ensure they
can procure commitments from international partners?
A.2. If confirmed, I would work to ensure EX-IM staff is
effectively conducting its outreach efforts. I understand that
nuclear energy-related projects are highly complex and
typically involve significant interagency coordination and I
look forward to learning more about how we can partner with the
Departments of State, Energy, and Commerce; the Nuclear
Regulatory Commission; and others to ensure EX-IM is fulfilling
its mission of supporting U.S. exports.
Q.3. The International Atomic Energy Agency (IAEA) recently
issued the 41st edition of ``Energy, Electricity and Nuclear
Power Estimates for the Period up to 2050''. This report
presents projections for nuclear energy generation. In the
high-case scenario, nuclear capacity increases by about 20
percent by 2030, and more than doubles by 2050 relative to 2020
capacity. In order to reach these goals, the U.S. will have to
play a significant role in the export of new nuclear reactor
technologies. If we do not, then we lose that market
opportunity.
What do you see as the biggest challenge for the EX-IM Bank
to support new nuclear projects abroad?
A.3. During my time at EX-IM, no nuclear transactions came
before the Board. It is my understanding that nuclear
transactions are highly complex, with significant legal and
operational matters that need to be resolved prior to Board
consideration. It is my understanding that most of these
complexities are due to factors that are external to EX-IM.
I am not aware of any significant challenges specific to
EX-IM that would limit its ability to finance new nuclear
projects. I would welcome the opportunity to learn more from
your office and stakeholders about what concerns, if any, there
may be regarding EX-IM's ability to support new nuclear
projects.
Q.4. What will you do to ensure that nuclear energy is a key
technology for the EX-IM Bank to support?
A.4. EX-IM is a demand-driven institution and does not
discriminate on the basis of industry or sector. If confirmed,
I would work to ensure EX-IM staff is effectively conducting
its outreach efforts. I understand that nuclear energy-related
projects are highly complex and typically involve significant
interagency coordination and I look forward to learning more
about how we can partner with the Departments of State, Energy,
and Commerce; the Nuclear Regulatory Commission; and others to
ensure EX-IM is fulfilling its mission of supporting U.S.
exports.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR KENNEDY
FROM JUDITH DELZOPPO PRYOR
Q.1. The United States has become one of the global leaders in
exporting liquified natural gas (LNG), supporting hundreds of
thousands of jobs at home while building upon important
relationships overseas. America has exported LNG to 40
different countries, many of which remain dependent on
significantly more carbon intensive forms of energy sourced
from China and natural gas supplied from Russia. Other
recipients of LNG are currently facing severe shortfalls of
renewable generation due to drought or low wind power
production, demonstrating that LNG is a critical tool for
keeping power grids reliable as the world moves to higher
levels of renewable energy.
LNG also serves as the foundation to decarbonize hard to
electrify sectors and for the deployment of the next generation
of energy technologies such as clean hydrogen. U.S. LNG exports
provide America with an unparalleled asset to reduce global GHG
emissions, provide good paying jobs here at home, and advance
our Nation's geopolitical and national security interests,
particularly with respect to China and Russia--necessitating
continued support by the Administration.
What role do you see for the Export-Import Bank in helping
ensure the United States continues to be a leader in the export
of LNG to emerging economies around the world?
A.1. EX-IM operates at the intersection of demand for U.S.
exports, lack of private capital or the need to level the
playing field, and a reasonable assurance of repayment. EX-IM
is a demand-driven institution and is mandated not to
discriminate on the basis of industry or sector. Should I be
confirmed, I will review each transaction in accordance with
all applicable legal requirements, always being mindful of the
agency's mission to support U.S. jobs through exports.
Q.2. If confirmed, will you support eligible projects overseas
that rely on U.S. LNG exports--particularly those aimed at
curbing China's influence through coal-powered energy projects
in the far east and Russia's influence through natural gas
supply to Europe?
A.2. EX-IM is a demand-driven institution and is mandated not
to discriminate on the basis of industry or sector. Should I be
confirmed, I will review each transaction in accordance with
all applicable legal requirements, always being mindful of the
agency's mission to support U.S. jobs through exports.
Congress directed EX-IM to establish the Program on China
and Transformational Exports with rates, terms and other
conditions that are fully competitive with those offered by the
People's Republic of China. Should I be confirmed, I will take
that responsibility seriously.
Q.3. If confirmed, will you commit to exploring ways the
Export-Import Bank can more directly support domestically
produced U.S. LNG exports to emerging economies overseas?
A.3. EX-IM is a demand-driven institution and is mandated not
to discriminate on the basis of industry or sector. If
confirmed, I would work to ensure EX-IM staff is effectively
conducting its outreach efforts to support U.S. exports and
utilizing financing tools at the agency's disposal to support
the competitiveness of U.S.-made goods and services.
Q.4. President Biden's Executive Order 14008, Tackling the
Climate Crisis At Home and Abroad, directs the Secretaries of
State, Treasury, and Energy to work with the Export-Import Bank
``to identify steps through which the United States can promote
ending international financing of carbon-intensive fossil fuel-
based energy while simultaneously advancing sustainable
development and a green recovery.''
A.4. In response to the Executive Order, the Treasury
Department announced guidance in August of this year
restricting support for financing of natural gas projects
overseas. Treasury's guidance further confounds the uncertainty
surrounding President Biden's support for U.S. LNG exports and
thousands of high-paying jobs here in the United States.
Furthermore, the Treasury guidance creates uncertainty for
U.S.-led LNG projects that are already underway overseas as
foreign partners and private investors worry that broader
financing restrictions by other Federal agencies may be coming.
This will lead to U.S. engineering and manufacturing companies
competing, without the support of the U.S. Government, with
other companies supported by their Government--case in point,
the Chinese Belt and Road Initiative and Russian efforts to
capture markets for their coal and natural gas resources.
In your view, can financing of U.S.-led LNG projects
overseas help to advance or facilitate sustainable energy
development in emerging countries that are otherwise wholly
dependent on carbon-intensive coal from China or natural gas
from Russia?
EX-IM is a demand-driven institution and is mandated not to
discriminate on the basis of industry or sector. As a general
matter, I believe that U.S.-led power projects can help a
country advance, grow their economy, and support the demand for
future sustainable economic development, ideally using
technology and exports developed by and manufactured in the
United States. To the extent EX-IM provides financing that
makes U.S. exports competitive, those transactions are then
subject to EX-IM's high environmental and social standards.
Q.5. If confirmed, will you commit to look for ways to support
U.S.-led LNG projects overseas that provide a cleaner energy
alternative for emerging countries to meet their energy demands
today, while also helping to pave the way for renewable energy
development in the future?
A.5. EX-IM is a demand-driven institution and is mandated not
to discriminate on the basis of industry or sector. If
confirmed, I would work to ensure EX-IM staff is effectively
conducting its outreach efforts to support U.S. exports and
utilizing financing tools at the agency's disposal to support
the competitiveness of U.S.-made goods and services.
Q.6. If confirmed, will you commit to reassuring foreign and
commercial partners that the Export-Import Bank will continue
to support eligible U.S.-led LNG projects overseas?
A.6. If confirmed, I commit to following EX-IM's Charter,
bylaws, and policies in support of U.S. jobs. I look forward to
engaging in business development to encourage foreign buyers to
choose American-made goods and services and educate American
exporters about EX-IM's tools and resources. Should I be
confirmed I will review transactions for their adherence to all
applicable statutory requirements and agency policies.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAMER
FROM JUDITH DELZOPPO PRYOR
Q.1. The U.S. Department of Commerce estimates that the
international nuclear reactor export market is valued at $500-
740 billion, and another independent report estimates nuclear
market revenues could range between $1.3 trillion and $1.9
trillion through 2050. The EX-IM Bank can play a key role in
enabling U.S. companies to access these markets.
What will you do to ensure that the EX-IM Bank is enabling
access to this potentially $1.9 trillion dollar market?
A.1. EX-IM's mission is to support U.S. jobs through exports,
without regard to sector. EX-IM is an important tool in the
U.S. Government toolbox to facilitate American exports, in
accordance with all export rules, regulations, and statutory
requirements.
During my time at EX-IM, no nuclear transactions came
before the Board. Should I be confirmed, it will be important
to continue the agency's business development efforts, ensuring
both buyers and exporters are aware of how EX-IM can support
these exports that will play an important role in supporting
American leadership. I understand that nuclear energy-related
projects are highly complex and typically involve significant
interagency coordination and I look forward to learning more
about how we can partner with the Departments of State, Energy,
and Commerce; the Nuclear Regulatory Commission; and others to
ensure EX-IM is fulfilling its mission of supporting U.S.
exports.
Q.2. The EX-IM charter states that an organizational objective
is to ``seek to minimize competition in Government-supported
export financing.'' Today, China and Russia are clearly
dominating the international export market for nuclear energy.
For example, between 2009 and 2018, Russia accounted for about
half of the 53 units under construction around the world today.
These countries, due to their State-owned enterprises, can
offer extremely competitive financing packages. Organizations
like the EX-IM Bank and International Development Finance
Corporation can help U.S. companies compete with these
incredible packages.
How will you ensure that the EX-IM Bank works to make U.S.
companies more competitive on the international market,
especially for technologies like nuclear energy which are used
as geopolitical tools by adversarial countries?
A.2. EX-IM has been directed to level the playing field for
U.S. exports so that goods and services compete on quality, not
financing terms. If confirmed, I would work to ensure EX-IM
staff is effectively conducting its outreach efforts. I
understand that nuclear energy-related projects are highly
complex and typically involve significant interagency
coordination and I look forward to learning more about how we
can partner with the Departments of State, Energy, and
Commerce; the Nuclear Regulatory Commission; and others to
ensure EX-IM is fulfilling its mission of supporting U.S.
exports.
Q.3. There is a significant market for nuclear energy abroad.
However, if we lack a cost-competitive reactor design to sell,
we will continue to cede our global leadership on nuclear
energy to countries like China and Russia. To export these
designs, we will also need better financing opportunities
through the Export-Import Bank and International Development
Finance Corporation.
How can we better work with our allies to combat the
financing China and Russia offer to developing countries that
are allowing them to dominate the nuclear export market?
A.3. EX-IM is an important tool in the U.S. Government toolbox
to provide competitive financing to export-ready American-made
goods and services. Should I be confirmed, I would hope to work
with my colleagues across the executive branch in a whole-of-
Government approach to supporting American exports. Working
with the Departments of State and the Treasury, I believe EX-IM
can improve coordination among allies to support U.S.
leadership in this sector.
Q.4. How can we modernize our export process, which not only
has clean energy benefits but supports U.S. interests and
national security?
A.4. I do not know the specifics related to the full range of
processes associated with nuclear energy exports; it is my
understanding these processes generally fall under the
jurisdiction of other Federal departments and agencies. EX-IM
requires that all exports obtain the necessary permits and
licenses to qualify for agency financing. If confirmed, I would
be willing to consider what steps, if any, EX-IM can take to
modernize its processes to support the effectiveness and
efficiency of the agency in meeting the needs of U.S.
exporters.
Q.5. We need to work with our allies to supersede the
competitive financing packages of international competitors.
The EX-IM Bank has previously helped finance four nuclear
reactors in the UAE, where, even though the UAE selected South
Korea to build their reactor designs, the EX-IM Bank provided
$2 billion in financing to U.S. companies participating in the
construction project. This deal supported 5,000 U.S. jobs in 17
States.
How will you ensure that the EX-IM Bank better supports the
U.S. nuclear energy industry by providing financing to U.S.
companies interested in executing these deals internationally?
A.5. EX-IM has been directed to level the playing field for
U.S. exports so that goods and services compete on quality, not
financing terms. If confirmed, I would work to ensure EX-IM
staff is effectively conducting its outreach efforts. I
understand that nuclear energy-related projects are highly
complex and typically involve significant interagency
coordination and I look forward to learning more about how we
can partner with the Departments of State, Energy, and
Commerce; the Nuclear Regulatory Commission; and others to
ensure EX-IM is fulfilling its mission of supporting U.S.
exports.
Q.6. How will you make sure that the EX-IM Bank is proactive in
engaging with U.S. companies and countries that are looking to
build new projects?
A.6. EX-IM has been directed to level the playing field for
U.S. exports so that goods and services compete on quality, not
financing terms. If confirmed, I would work to ensure EX-IM
staff is effectively conducting its outreach efforts. I
understand that nuclear energy-related projects are highly
complex and typically involve significant interagency
coordination and I look forward to learning more about how we
can partner with the Departments of State, Energy, and
Commerce; the Nuclear Regulatory Commission; and others to
ensure EX-IM is fulfilling its mission of supporting U.S.
exports.
Q.7. In recognition of China's growing international
investment, the International Development Finance Corporation
(DFC) was authorized in 2018 to counter State-directed
investments by authoritarian Governments. Last administration,
the DFC removed its restriction on funding nuclear energy. EX-
IM does not have a restriction on financing nuclear export
projects, and historically has provided financing to nuclear
projects.
How important is supporting nuclear energy projects to the
EX-IM Bank?
A.7. EX-IM is a demand-driven institution and does not
discriminate on the basis of industry or sector. I understand
that EX-IM financing for nuclear energy projects is important
because exporters in this sector have identified gaps in
private sector financing and competition with foreign
Government-backed export financing as putting U.S. exports and
workers at a competitive disadvantage.
Q.8. What steps will you take to ensure that the EX-IM Bank is
coordinating with other Government agencies to level the
playing field with authoritarian Governments to support private
industry?
A.8. If confirmed, I would work to ensure EX-IM staff is
effectively conducting its outreach efforts. I understand that
nuclear energy-related projects are highly complex and
typically involve significant interagency coordination and I
look forward to learning more about how we can partner with the
Departments of State, Energy, and Commerce; the Nuclear
Regulatory Commission; and others to ensure EX-IM is fulfilling
its mission of supporting U.S. exports.
Q.9. In the past month we have seen agreements signed between
Poland and Ukraine with U.S. companies to build U.S. nuclear
reactor designs abroad. In addition, the International Atomic
Energy Agency (IAEA) estimates that about 30 countries are
currently considering or newly embarking on nuclear power. This
presents an incredible market opportunity for the dozens of
U.S. companies developing the next generation of nuclear power.
What will you do to ensure that American nuclear companies
are able to secure deals with these ready markets?
A.9. If confirmed, I would work to ensure EX-IM staff is
effectively conducting its outreach efforts. I understand that
nuclear energy-related projects are highly complex and
typically involve significant interagency coordination and I
look forward to learning more about how we can partner with the
Departments of State, Energy, and Commerce; the Nuclear
Regulatory Commission; and others to ensure EX-IM is fulfilling
its mission of supporting U.S. exports.
Q.10. How will you ensure the EX-IM bank is proactively
engaging with private companies looking to build aboard to
ensure they can procure commitments from international
partners?
A.10. If confirmed, I would work to ensure EX-IM staff is
effectively conducting its outreach efforts. I understand that
nuclear energy-related projects are highly complex and
typically involve significant interagency coordination and I
look forward to learning more about how we can partner with the
Departments of State, Energy, and Commerce; the Nuclear
Regulatory Commission; and others to ensure EX-IM is fulfilling
its mission of supporting U.S. exports.
Q.11. I helped lead the effort to reauthorize the Export-Import
Bank last Congress with Sen. Sinema. Included in the bill was
the Program on China and Transformational Exports, which
directs EX-IM to provide financial products to directly
neutralize export subsidies offered by the PRC. The United
States has cut emissions more than anyone in the world and
unlike China, our energy producers, whether nuclear or natural
gas or carbon capture for coal, are the best innovators and
entrepreneurs.
With EX-IM's mandate to compete with China and our shared
desire to reduce global emissions, should the Bank use its
authorities to focus on the exportation of American energy
innovation overseas, including advanced nuclear, carbon capture
and natural gas technology?
A.11. EX-IM is a demand-driven institution and is mandated not
to discriminate on the basis of industry or sector. Should I be
confirmed, I will review each transaction in accordance with
all applicable legal requirements, always being mindful of the
agency's mission to support U.S. jobs through exports.
Furthermore, Congress has mandated that the agency seek to
increase its financing for exports related to renewable energy,
energy storage, and energy efficiency. These provide great
opportunities for U.S. exports and EX-IM should be active in
engaging U.S. businesses and foreign buyers to support American
jobs through the export of these goods and services.
Q.12. To reiterate, the U.S. has reduced emissions more than
any other Nation specifically because of our efficient use of
natural gas, carbon capture, and nuclear power. Does EX-IM have
a role to play, making the U.S. a model for other Nations by
exporting these goods and technologies?
A.12. EX-IM is a demand-driven institution and is mandated not
to discriminate on the basis of industry or sector. Should I be
confirmed, I will review each transaction in accordance with
all applicable legal requirements, always being mindful of the
agency's mission to support U.S. jobs through exports.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM OWEN EDWARD HERRNSTADT
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
A.1. As Chief of Staff for a large industrial union, I have
worked hard to attract, hire and promote people of color. As
always, there is room for improvement in recruiting.
Q.2. What specific measures will you use to evaluate the
success of the Export-Import Bank in understanding and
addressing the needs of Black, Indigenous, and people of color
(BIPOC)? And, will you keep Congress apprised, as appropriate,
on the progress being made on these measures?
A.2. If confirmed, I look forward to learning more about how
EX-IM addresses the needs of Black, Indigenous, and people of
color and working with our Board, staff, you and Members of the
Committee to improve EX-IM's effectiveness in these efforts.
Q.3. What is your plan for creating an inclusive working
environment for employees within your office?
A.3. I believe in an open, transparent working environment that
reflects the values I have displayed in all of my positions--
respect, equality, dignity and honesty. I plan to collaborate
closely with EX-IM's President and my fellow Board Members to
identify ways in which we can instill those values in all of
our work.
Q.4. In 2016, EX-IM created the Environmental and Social
Project Information and Concerns web portal. That portal allows
for communities to submit grievances about project impacts.
Financial and development institutions often review their
accountability mechanisms every 4 or 5 years and solicit public
input to improve their processes. The COVID-19 pandemic has
limited the ability of EX-IM and its contractors to undertake
project assessments and monitoring.
If confirmed, do you believe that it is important for the
EX-IM Board of Directors to ensure project monitoring and
accountability processes are robust, and do you believe that
public consultation to improve EX-IM practices is important?
A.4. Yes, I believe that it is important for the EX-IM Board of
Directors to ensure project monitoring and accountability
processes are robust. I believe that public consultation to
improve EX-IM practices is important.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM OWEN EDWARD HERRNSTADT
Q.1. Congressional Oversight--Please provide your philosophy on
how the Export-Import Bank of the United States (EX-IM) will
approach and respond to Congressional information requests
(both for documentary information and oral testimony), if you
are confirmed.
A.1. I support a philosophy of transparency in which EX-IM
complies with Congressional information requests in a
responsive and timely manner as consistent with all statutory,
regulatory, and policy requirements and in consultation with
the General Counsel and others, as appropriate.
Q.2. If confirmed, do you intend to respond to information
requests differently depending on who is making the
Congressional information request (whether it's the chair of
the Congressional committee, the ranking member, or another
member of Congress)? Please answer ``yes'' or ``no.'' If your
answer is ``yes,'' please explain.
A.2. I will seek to respond to all requests in a manner
consistent with Committee rules and all statutory, regulatory,
and policy requirements and in consultation with the General
Counsel and others, as appropriate.
Q.3. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me? Please answer ``yes'' or ``no.'' If your answer is
``no,'' please explain.
A.3. I am committed to responding to all requests in a timely
manner consistent with all statutory, regulatory, and policy
requirements and in consultation with EX-IM's General Counsel
and others, as appropriate.
Q.4. Will you commit that, if confirmed, you will make yourself
and any other EX-IM employee expeditiously available to provide
oral testimony (including but not limited to briefings,
hearings, and transcribed interviews) to the Committee on any
matter within its jurisdiction, upon the request of either the
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If
your answer is ``no,'' please explain why.
A.4. I will work with the Committee Chairman and Ranking
Member, as consistent with the rules of the Committee and all
statutory, regulatory, and policy requirements and in
consultation with the EX-IM's General Counsel and others as
appropriate.
Q.5. Qualifications for Nominated Position--What specific
qualifications do you have that give you the experience and
expertise to serve as a member of EX-IM's Board of Directors?
A.5. EX-IM's mission is to support U.S. jobs through exports
and my entire career has been focused on supporting American
workers. Should I be confirmed, I believe I would be well-
qualified to review transactions to understand how the
financing would support U.S. jobs. Throughout my career, I have
had experience working with financial matters. I served as
Board Member and Chair of the Federal Reserve's Baltimore
Branch. Among other things, in that capacity, I worked closely
with a wide variety of financial institutions and business
leaders.
I understand, in addition to supporting American jobs, EX-
IM must be a responsible steward of taxpayer resources.
Therefore, I would review each transaction closely, in
conjunction with EX-IM staff, to understand how the
transactions are mitigating a wide variety of risks, including
operational and financial risks. Managing the risk is
critically important in enabling EX-IM to fully support
American jobs through exports.
For over 34 years, I have witnessed how unfair global
competition from countries like China has impacted American
businesses both large and small, American workers, their
families and their communities. I know how important EX-IM is
in helping these businesses and workers succeed, especially in
a world where other countries are utilizing their own export
credit agencies to support their own exporters at the cost of
U.S. businesses, suppliers and workers.
Q.6. During your professional career, have you ever reviewed
and approved a loan?
A.6. No.
Q.7. Role of Export-Import Bank--In your written testimony
submitted to the Banking Committee for your nomination, you
stated: ``if confirmed, I believe that I could provide a
critical voice in fulfilling EX-IM's mission of creating and
supporting U.S. jobs by providing support to exporters of all
sizes across our Nation's industrial and service sectors.''
Can you clarify how EX-IM creates jobs, and specifically
how this fits within the statutory authority of the Bank?
A.7. The mission of EX-IM, as stated in Section 2(a)(1) of its
Charter (Public Law 79-173 As Amended Through P.L. 116-94,
Enacted December 20, 2019) includes the following: `` . . . The
objects and purposes of the Bank shall be to aid in financing
and to facilitate exports of goods and services, imports, and
the exchange of commodities and services between the United
States or any of its territories or insular possessions and any
foreign country or the agencies or nationals of any such
country, and in so doing to contribute to the employment of
United States workers'' (emphasis added).
EX-IM's financing to foreign customers to purchase products
made in the U.S. by U.S. workers contributes to supporting U.S.
jobs because U.S. workers will be producing these goods for
export. This allows U.S. companies to maintain and grow their
workforce to meet foreign demand. Moreover, if EX-IM financing
does not exist, customers may be inclined to pursue financing
support from other countries' export credit agencies, resulting
in the loss of sale of U.S. exports, and the loss of U.S. jobs
and/or the loss of additional job opportunities for American
workers.
Q.8. How will you ensure that EX-IM is not competing with
private lenders in facilitating financing for exporters of all
sizes, but particularly large exporters who have access to
private capital?
A.8. If confirmed, I will work with EX-IM staff to address this
important matter consistent with statutory, regulatory, and
policy requirements. Specifically, I would review the work done
by staff to analyze the conditions that make EX-IM financing
needed in order to facilitate the exports. I will also look
forward to meeting with you and other Members of this
Committee, to hear your concerns and recommendations.
Q.9. EX-IM's charter states that ``[i]t is also the policy of
the United States that the Bank in the exercise of its
functions should supplement and encourage, and not compete
with, private capital.'' Do you commit to ensuring that large
corporations who have access to private capital do not turn to
EX-IM financing without first exhausting efforts to obtain
credit elsewhere?
A.9. I agree that each individual transaction must be reviewed
to determine that there is a legitimate need for EX-IM to be
involved in the transaction and that there is a detailed
explanation for why the requested financing is not available
from the private sector. I look forward to hearing more about
your concerns regarding this matter as well as to reviewing
each transaction that comes before me in accordance with all
statutory, regulatory, and policy requirements.
Q.10. COVID-19 Temporary Measures--In March 2020, EX-IM adopted
four ``temporary'' measures that put the U.S. taxpayers at
greater risk, such as increasing the guaranteed coverage option
to 95 percent. These measures were extended for an additional
year to April 2022. If confirmed, will you commit to ending the
temporary measures that EX-IM adopted during the pandemic?
A.10. I was not at EX-IM when the above-referenced measures
were adopted. If confirmed, I look forward to learning more
about these measures as well as your concerns.
Q.11. Do you commit to ensuring these ``temporary measures'' do
not become permanent policies of EX-IM?
A.11. I was not at EX-IM when the above-referenced measures
were adopted. If confirmed, I look forward to learning more
about these measures from EX-IM staff as well as your concerns.
Q.12. China Program--In December 2020, the EX-IM Board of
Directors unanimously approved lowering the domestic content
policy for its Program on China and Transformational Exports
(CTEP) to 51 percent, with the potential to be even lower.
What is the lowest domestic content percentage that you
would personally support?
A.12. If confirmed, I will work hard to ensure that EX-IM
fulfills its mission to offer finance support to exports that
support U.S. jobs consistent with all statutory, regulatory,
and policy requirements. I look forward to learning in more
detail EX-IM's empirical data as well as its methodology for
determining the impact that various levels of domestic content
requirements have on U.S. workers across sectors. If confirmed
as a Board member, I look forward to reviewing EX-IM's
policies, including those pertaining to domestic content, to
ensure that they are effectively enabling the Bank to fulfill
its mission regarding finance support of exports that support
U.S. jobs.
Q.13. The EX-IM Advisory Committee, which you were a party to,
recommended a U.S. content minimum of 20-30 percent to
purportedly better level the playing field with our foreign
competitors. Would you support a 20 percent domestic content
for a loan guarantee? If so, can you explain how this fit
within the mission statement of supporting U.S. jobs when 80
percent of the product will be made elsewhere?
A.13. As a member of the Advisory Committee last year, I did
not support the proposal you cite for reasons that included
process concerns as well as a lack of empirical data indicating
what impact such a change would have on EX-IM's ability to
fulfill its mission to support U.S. jobs in each of the
transformational sectors that were the subject of the proposal.
Q.14. Answering Questions for the Record--Please describe with
particularity the process by which you answered these questions
for the record, including identifying who assisted you in
answering these questions along with a brief description of
their assistance.
A.14. I completed answers to these questions. The answers were
reviewed by EX-IM's Office of Congressional and
Intergovernmental Affairs, which advised me on their accuracy
and responsiveness.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR MENENDEZ FROM OWEN EDWARD HERRNSTADT
Q.1. I am increasingly concerned that the United States is not
well positioned to engage in economic statecraft for the 21st
century, including promoting U.S. jobs, business and economic
interests, engaging in development financing for infrastructure
and other needs, including climate change-related resiliency,
and setting standards for emergent technologies and the digital
economy.
Can you expand upon how you view your role at the Ex-Im
Bank, if you are confirmed, in helping to renew and replenish
U.S. economic statecraft?
A.1. If confirmed as Member of the Board of Directors, I
believe my role will be to review policies that will assist EX-
IM to better effectuate its mission. I recognize the important
role that EX-IM can play in supporting U.S. economic
leadership. I look forward to working with you and your
colleagues, as well other agencies, on a whole-of-Government
approach concerning this very critical matter.
Q.2. Where do you see the biggest challenges? Biggest
opportunities?
A.2. The biggest challenge also represents the biggest
opportunity, namely adopting a whole-of-Government approach to
renew and replenish U.S. economic statecraft. This means
frequent exchanges with other agencies to fully understand the
interaction of each agencies mission and priorities, consistent
with all statutory, regulatory, and policy requirements.
Q.3. In past recessions, EX-IM has typically expanded its
support as private commercial banks scale back their trade
financing. For example in fiscal year 2009, during the Great
Recession, EX-IM's credit assistance grew 46 percent over the
prior year, and much of that new assistance was in support of
American small businesses.
If confirmed, what steps will you take to ensure EX-IM is
prepared to respond to the needs of small exporters during the
COVID recovery?
A.3. If confirmed, I will make small businesses who are ready
to export and support U.S. jobs one of my priorities,
especially those who have been hard hit during the COVID
recovery.
Q.4. As the United States increases its focus on clean energy
and creating good-paying green tech jobs here at home, there
has been some public criticism that EX-IM has inadequately done
its part to reach out to the clean energy industry, educate
them about the opportunities EX-IM provides, develop a clean
tech project pipeline, and in turn create competitive American
made climate tech industries and jobs.
How can EX-IM better engage the clean energy sector in
order to fulfill its mission both at home and abroad?
A.4. I agree that this should be a priority, and if confirmed,
I am committed to working with you and EX-IM staff to better
engage the clean energy sector in order to better fulfill its
mission at home and abroad.
Q.5. Section 2(b)(1)(C) of the EX-IM Charter requires the Board
to appoint an officer to work with industry and other
Government agencies to promote more clean energy applications
and more sustainable projects for EX-IM to support.
Has this officer been appointed?
A.5. Since I am not at EX-IM, I do not know the status of this
position.
Q.6. If so, who is this officer and how have they advanced this
mission?
A.6. Since I am not at EX-IM, I do not know the status of this
position or how they have advanced this work.
Q.7. If not, what progress has been made towards appointing
this officer?
A.7. Since I am not at EX-IM, I do not know the status of this
position.
Q.8. Section 11 of the EX-IM Charter allows the Board of EX-IM
to engage in increased scrutiny of projects that could have
significant adverse environmental impacts, including impacts to
the ``global commons''.
How do you view EX-IM's Section 11 authorities as it
pertains to climate change?
A.8. I am not currently at EX-IM and am not fully knowledgeable
of how EX-IM interprets its Section 11 authority regarding this
matter. Should I be confirmed, I would look to learn more about
EX-IM's implementation of Section 11 of the EX-IM Charter. I
also look forward to hearing your concerns.
Q.9. Section 3(I) of the EX-IM Charter states that the duty of
EX-IM's Chief Risk Officer is to be ``responsible for all
matters related to managing and mitigating all risk . . . .''
Does the Chief Risk Officer account for the risk of climate
impacts on EX-IM projects?
A.9. I agree that climate impact is serious and must be a
priority. As I am not currently at EX-IM, I am not familiar
with the activities and priorities of the Chief Risk Officer.
Should I be confirmed, I look forward to learning more from EX-
IM staff and hearing your concerns.
Q.10. Does the Chief Risk Officer account for policy risks of
carbon intensive projects becoming stranded assets?
A.10. As I am not currently at EX-IM, I am not familiar with
the activities and priorities of the Chief Risk Officer. Should
I be confirmed, I look forward to learning more from EX-IM
staff and hearing your concerns.
Q.11. Do you think the Chief Risk Officer should account for
such climate impacts and climate policy risks?
A.11. I agree that climate impact is serious and must be a
priority. However, as I am not currently at EX-IM, I am not
familiar with the activities and priorities of the Chief Risk
Officer. Should I be confirmed, I look forward to learning more
from EX-IM staff and hearing your concerns.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR KENNEDY
FROM OWEN EDWARD HERRNSTADT
Q.1. The United States has become one of the global leaders in
exporting liquified natural gas (LNG), supporting hundreds of
thousands of jobs at home while building upon important
relationships overseas. America has exported LNG to 40
different countries, many of which remain dependent on
significantly more carbon intensive forms of energy sourced
from China and natural gas supplied from Russia. Other
recipients of LNG are currently facing severe shortfalls of
renewable generation due to drought or low wind power
production, demonstrating that LNG is a critical tool for
keeping power grids reliable as the world moves to higher
levels of renewable energy.
LNG also serves as the foundation to decarbonize hard to
electrify sectors and for the deployment of the next generation
of energy technologies such as clean hydrogen. U.S. LNG exports
provide America with an unparalleled asset to reduce global GHG
emissions, provide good paying jobs here at home, and advance
our Nation's geopolitical and national security interests,
particularly with respect to China and Russia--necessitating
continued support by the Administration.
What role do you see for the Export-Import Bank in helping
ensure the United States continues to be a leader in the export
of LNG to emerging economies around the world?
A.1. I believe EX-IM has an important role in supporting all
industries and workers in our country (including LNG) in
accordance with all statutory, regulatory, and policy
requirements.
Q.2. If confirmed, will you support eligible projects overseas
that rely on U.S. LNG exports--particularly those aimed at
curbing China's influence through coal-powered energy projects
in the far east and Russia's influence through natural gas
supply to Europe?
A.2. At this time, I cannot confirm supporting actual
transactions that I have not reviewed. If confirmed, I am
committed to reviewing all transactions, including those
regarding LNG, consistent with all statutory, regulatory, and
policy requirements.
Q.3. If confirmed, will you commit to exploring ways the
Export-Import Bank can more directly support domestically
produced U.S. LNG exports to emerging economies overseas?
A.3. If confirmed, I commit to exploring ways the Export-Import
Bank can more directly support domestically produced U.S. LNG
exports to emerging economies overseas, in a manner consistent
with statutory, regulatory, and policy requirements.
President Biden's Executive Order 14008, Tackling the
Climate Crisis At Home and Abroad, directs the Secretaries of
State, Treasury, and Energy to work with the Export-Import Bank
``to identify steps through which the United States can promote
ending international financing of carbon-intensive fossil fuel-
based energy while simultaneously advancing sustainable
development and a green recovery.''
In response to the Executive Order, the Treasury Department
announced guidance in August of this year restricting support
for financing of natural gas projects overseas. Treasury's
guidance further confounds the uncertainty surrounding
President Biden's support for U.S. LNG exports and thousands of
high-paying jobs here in the United States. Furthermore, the
Treasury guidance creates uncertainty for U.S.-led LNG projects
that are already underway overseas as foreign partners and
private investors worry that broader financing restrictions by
other Federal agencies may be coming. This will lead to U.S.
engineering and manufacturing companies competing, without the
support of the U.S. Government, with other companies supported
by their Government--case in point, the Chinese Belt and Road
Initiative and Russian efforts to capture markets for their
coal and natural gas resources
Q.4. In your view, can financing of U.S.-led LNG projects
overseas help to advance or facilitate sustainable energy
development in emerging countries that are otherwise wholly
dependent on carbon-intensive coal from China or natural gas
from Russia?
A.4. Thank you for raising this very important matter. I am not
yet well-versed in this subject matter, however if confirmed, I
look forward to learning much more about this issue and meeting
with you and stakeholders to discuss it and any opportunities
that may exist for EX-IM
Q.5. If confirmed, will you commit to look for ways to support
U.S.-led LNG projects overseas that provide a cleaner energy
alternative for emerging countries to meet their energy demands
today, while also helping to pave the way for renewable energy
development in the future?
A.5. If confirmed, I look forward to working with you to find
ways to support U.S.-led projects overseas that provide a
cleaner energy alternative for developing countries to meet
their energy demands today and in the future, as consistent
with my role on the Board and in a manner consistent with all
statutory, regulatory, and policy requirements.
Q.6. If confirmed, will you commit to reassuring foreign and
commercial partners that the Export-Import Bank will continue
to support eligible U.S.-led LNG projects overseas?
A.6. I believe EX-IM has an important role in supporting all
industries and workers in our country in accordance with all
statutory, regulatory, and policy requirements.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAMER
FROM OWEN EDWARD HERRNSTADT
Q.1. The U.S. Department of Commerce estimates that the
international nuclear reactor export market is valued at $500-
740 billion, and another independent report estimates nuclear
market revenues could range between $1.3 trillion and $1.9
trillion through 2050. The EX-IM Bank can play a key role in
enabling U.S. companies to access these markets.
What will you do to ensure that the EX-IM Bank is enabling
access to this potentially $1.9 trillion dollar market?
A.1. If confirmed, I look forward to working with EX-IM staff
to learn what is currently being done to access this market,
consistent with statutory, regulatory, and policy requirements.
To the extent foreign buyers or U.S. exporters are unaware of
EX-IM tools, I look forward to supporting EX-IM's education
efforts across industries. If confirmed, I will also look
forward to hearing your recommendations on this matter.
Q.2. The EX-IM charter states that an organizational objective
is to ``seek to minimize competition in Government-supported
export financing.'' Today, China and Russia are clearly
dominating the international export market for nuclear energy.
For example, between 2009 and 2018, Russia accounted for about
half of the 53 units under construction around the world today.
These countries, due to their State-owned enterprises, can
offer extremely competitive financing packages. Organizations
like the EX-IM Bank and International Development Finance
Corporation can help U.S. companies compete with these
incredible packages.
How will you ensure that the EX-IM Bank works to make U.S.
companies more competitive on the international market,
especially for technologies like nuclear energy which are used
as geopolitical tools by adversarial countries?
A.2. If confirmed, I look forward to working with EX-IM staff
to learn more about what is currently being done to make U.S.
companies more competitive on the international market,
especially for technologies like nuclear energy, consistent
with statutory, regulatory, and policy requirements. To the
extent foreign buyers or U.S. exporters are unaware of EX-IM
tools, I look forward to supporting EX-IM's education efforts
across industries.
If confirmed, I will also look forward to hearing your
recommendations on this matter.
Q.3. There is a significant market for nuclear energy abroad.
However, if we lack a cost-competitive reactor design to sell,
we will continue to cede our global leadership on nuclear
energy to countries like China and Russia. To export these
designs, we will also need better financing opportunities
through the Export-Import Bank and International Development
Finance Corporation.
How can we better work with our allies to combat the
financing China and Russia offer to developing countries that
are allowing them to dominate the nuclear export market?
A.3. If confirmed, I look forward to working with EX-IM staff
and with colleagues across the U.S. Government to learn more
about how we can better work with our allies to combat the
financing China and Russia offer to developing countries,
consistent with statutory, regulatory, and policy requirements.
To the extent foreign buyers or U.S. exporters are unaware of
EX-IM tools, I look forward to supporting EX-IM's education
efforts across industries. If confirmed, I will also look
forward to hearing your recommendations on this matter.
Q.4. How can we modernize our export process, which not only
has clean energy benefits but supports U.S. interests and
national security?
A.4. I believe this requires a whole-of-Government approach. If
confirmed, I look forward to working with EX-IM staff and other
agencies to learn more about how we can modernize our export
process, if appropriate. If confirmed, I will also look forward
to hearing your recommendations on this matter.
Q.5. We need to work with our allies to supersede the
competitive financing packages of international competitors.
The EX-IM Bank has previously helped finance four nuclear
reactors in the UAE, where, even though the UAE selected South
Korea to build their reactor designs, the EX-IM Bank provided
$2 billion in financing to U.S. companies participating in the
construction project. This deal supported 5,000 U.S. jobs in 17
States.
How will you ensure that the EX-IM Bank better supports the
U.S. nuclear energy industry by providing financing to U.S.
companies interested in executing these deals internationally?
A.5. If confirmed, I look forward to working with EX-IM staff
to learn more about providing financing to U.S. companies
interested in executing nuclear energy deals internationally.
To the extent foreign buyers or U.S. exporters are unaware of
EX-IM tools, I look forward to supporting EX-IM's education
efforts across industries. I am committed to reviewing each
transaction in accordance with all statutory, regulatory, and
policy requirements.
Q.6. How will you make sure that the EX-IM Bank is proactive in
engaging with U.S. companies and countries that are looking to
build new projects?
A.6. To the extent foreign buyers or U.S. exporters are unaware
of EX-IM tools, I will work with EX-IM staff to identify those
gaps and create strategies to maximize EX-IM's education
efforts across industries. I would also like to work with you
and other Members of the Committee to identify educational
opportunities and strategies.
Q.7. In recognition of China's growing international
investment, the International Development Finance Corporation
(DFC) was authorized in 2018 to counter State-directed
investments by authoritarian Governments. Last Administration,
the DFC removed its restriction on funding nuclear energy. EX-
IM does not have a restriction on financing nuclear export
projects, and historically has provided financing to nuclear
projects.
How important is supporting nuclear energy projects to the
EX-IM Bank?
A.7. I am not currently aware of specific details of the EX-IM
portfolio. However, EX-IM supports all industries. If
confirmed, I look forward to working with EX-IM staff to learn
if there are educational gaps that EX-IM should close with
foreign buyers and U.S. exporters in the nuclear industry who
are unaware of EX-IM tools.
Q.8. What steps will you take to ensure that the EX-IM Bank is
coordinating with other Government agencies to level the
playing field with authoritarian Governments to support private
industry?
A.8. If confirmed, this will be a priority and I look forward
to working with EX-IM staff to learn more about how it can
improve coordination with other Government agencies to level
the playing field with foreign Governments to support private
industry, consistent with its statutory, regulatory, and policy
requirements.
Q.9. In the past month we have seen agreements signed between
Poland and Ukraine with U.S. companies to build U.S. nuclear
reactor designs abroad. In addition, the International Atomic
Energy Agency (IAEA) estimates that about 30 countries are
currently considering or newly embarking on nuclear power. This
presents an incredible market opportunity for the dozens of
U.S. companies developing the next generation of nuclear power.
What will you do to ensure that American nuclear companies
are able to secure deals with these ready markets?
A.9. If confirmed, I look forward to raising the awareness of
EX-IM's tools, working with EX-IM staff and stakeholders and
reviewing each transaction brought before me, consistent with
all statutory, regulatory, and policy requirements. To the
extent foreign buyers or U.S. exporters are unaware of EX-IM
tools, I look forward to supporting EX-IM's education efforts
across industries.
Q.10. How will you ensure the EX-IM bank is proactively
engaging with private companies looking to build aboard to
ensure they can procure commitments from international
partners?
A.10. If confirmed, I look forward to working with EX-IM staff
to learn more about how it can improve its proactive engagement
with private companies looking to build abroad to ensure they
can procure commitments from international partners consistent
with its statutory, regulatory, and policy requirements.
Q.11. I helped lead the effort to reauthorize the Export-Import
bank last Congress with Sen. Sinema. Included in the bill was
the Program on China and Transformational Exports, which
directs EX-IM to provide financial products to directly
neutralize export subsidies offered by the PRC. The United
States has cut emissions more than anyone in the world and
unlike China, our energy producers, whether nuclear or natural
gas or carbon capture for coal, are the best innovators and
entrepreneurs.
With EX-IM's mandate to compete with China and our shared
desire to reduce global emissions, should the Bank use its
authorities to focus on the exportation of American energy
innovation overseas, including advanced nuclear, carbon capture
and natural gas technology?
A.11. If confirmed, I look forward to working with EX-IM staff
to learn how it is focusing on the exportation of American
energy innovation overseas, including advanced nuclear, carbon
capture and natural gas technology, consistent with all
statutory, regulatory, and policy requirements. EX-IM's mission
is to support jobs through exports, and should I be confirmed,
I look forward to supporting this mission and learning from you
about opportunities to support these sectors.
Q.12. To reiterate, the U.S. has reduced emissions more than
any other Nation specifically because of our efficient use of
natural gas, carbon capture, and nuclear power. Does EX-IM have
a role to play, making the U.S. a model for other Nations by
exporting these goods and technologies?
A.12. If confirmed, I look forward to working with EX-IM staff
to learn about its precise role in making the U.S. a model for
other Nations by exporting these goods and technologies
regarding the efficient use of natural gas, carbon capture, and
nuclear power, as consistent with statutory, regulatory, and
policy requirements. I also look forward to learning your ideas
on this critical matter.
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