the persian gulf? guess what? today's the day. what is the burden of proof on the american intelligence community? number one, to come to that judgment, number two to get the american political leadership to accept that judgment, and number three, then to sell that judgment in one way or another to a broader international community without giving up critical sources and methods? this is really hard john. and so the presence of inspectors, the ability to go anywhere at anytime i think, is absolutely essential. >> even with all that i mean how do you think about this one-year breakout time that the administration has put so much focus on not only the ability to detect but as you say, the ability then to mobilize an effective and quick response within the scope of a year, perhaps getting the rest of the international community to come along to something that could include a military attack. based on your experience --

>> look, they have written about this. we tried to show how you can use up a year pretty easily, actually. first of all you know the clock doesn't -- the clock doesn't start when you detect it. the one-year clock starts when they begin to violate the agreement. there's a gap between the violation and the detection. and then all of that dynamic, i suggest to you, has to take place before you get to a meaningful political decision. then happens after you have detected it and built up enough personal confidence that you want to take to the president the worst news he's going to hear in his entire administration. so number one, i think our estimate that we've got more than a year has an awful lot of kentucky windage in the estimate. and even if it was provable it may prove insufficient. >> okay, senator -- a technical

term kentucky windage? >> yeah, i have been fond of senators from kentucky. >> the senator will define that for you. >> senator bayh, one of the other big issues outstanding in the talks appears to be this issue of the pace and scope of sanctions relief iran is going to get under this deal. and there's also a related question of how quickly you could revise these sanctions kind of term that everyone has latched onto now is snapback sanctions. you and senator lieberman were heavily involved and watched how long it took to actually get in place the kind of effective sanctions architecture we have in place now. in looking at this, how realistic do you find this idea of snapback? >> as i indicated in my opening remarks, i think it would be very difficult to achieve a snapback once you've

significantly reduced the sanctions regime. as you pointed out, it took a lot of time and effort to put it into effect. we made them projesgressively more stringent and they have exacted a toll oin the iranian economy. we backed off some, but the sanctions were in significant degree responsible for slower economic growth a devaluation of the iranian currency, a high level of inflation within iran and the regime has been very concerned about that. once we back off that clearly what they're going to want is as much relief as soon as they can get it. and so we'll have to negotiate over all that. but once you backed off, once the europeans, the chinese, and others have begun to re-enter the iranian market, sign a variety of economic agreements, you know money flowing back and forth, it is very, very hard -- let alone the russians very very difficult to put humpty

dumpty back together again. if you want to be practical about it practically impossible to accomplish. so the real answer to your question is if the decision about reimposing sanctions was going to be made solely in washington, d.c., that would be one thing. but without all of our allies and even those who aren't our allies, it would be important to any sort of meaningful sanctions regime coming along it's just not going to happen. and they're going to be highly reluctant to go back once they have really reestablished meaningful financial and economic relations. so it's just not practical i think. >> senator lieberman, do you want to make a quick comment on that? >> yeah, i agree with everything evan said. there is a danger in this next weeks of negotiation that the u.s. will agree to suspend a lot of the sanctions on iran. and the reassurance that the

administration will give us is that they'll be prepared to snap them back. but as evan said it's not going to be so easy. soreally in my opinion we ought to be halting and demanding in our lifting of sanctions until we see that the iranians are substantially complying with whatever promises they make as a final agreement. because a backstop that you're going to snap back after you suspend a lot of the sanctions early on before the iranians a ss have proved anything to us about their behavior is really not much of a guarantee at all. something i can add here. there's a natural sort of rhythm to congressional focus, as we and probably a lot of other people in the room can tell you. congress did something extremely important and quite unique in

adopting the corker/menendez corker/menendez/cardin corker/menendez/cardin/et cetera legislation legislation. i don't remember anything like it. let me digress for a moment. one of the wonderful opportunities i had in the last few years since i left the senate is i taught a course at columbia law school and one of the few legal subjects i know something about, the role of congress in american foreign and defense policy. there's a wonderful quote from a political scientist and i paraphrase who said the constitution invites the president and congress to compete forever, for the privilege of determining american foreign and defense policy. in this case, first with the sanctions and then with this extraordinary requirement that this agreement come to congress for review and possible rejection, congress has done something really significant, which is a measure of the broad

bipartisan anxiety about the direction of these negotiations and i think what members of congress and both parties are hearing from their constituents, which is also anxiety about what's happening in the negotiations with the iranians. so coming back to the rhythm of congress, it's a natural way in which congress will now step back and wait for the agreement to occur. i wish as a logical corollary or a follow-on of adopting the corker legislation that congress could get together on a similarly bipartisan basis and essentially say to the administration and the people and iran by a letter, by a joint resolution here are conditions that we consider minimal for us to accept and not reject an agreement that you reach. i don't know that that's going to happen, but i think that would be important. >> if i could add just two other

quick points, john. the interpretive differences that i referenced and that general hayden spoke about, it is very important that there be a meaningful period for verification. if we just allow the iranians to get a significant amount of sanctions relief until we can assure ourselves that we actually have a quote/unquote agreement, not just -- and that both sides have a consensus on what the words on the document mean, it would be folly to grant relief. you would be granting relief only to discover possibly quickly you don't have a meeting of the minds. you need some period, a meaningful period to verify, a, you have an agreement. test the bona fides of the iranians, and the second point refresh my memory. were the french being fairly hard hf hard-nosed, was it about anywhere anytime sanctions or

the phasingen on inspections? >> inspections. >> you asked about inspections relief. i was going to say it should be a matter of some concern that the french are being more hard nosed than we are in the course of the negotiations. it might be a sign that something is amiss. >> senator lieberman, i want to come back quickly on corker/cardin, but first i want to probe you on this. kind offend the anomaly we face where the united states has led a negotiation on this deal, two of our primary international rivals for power and influlsh, china and russia, seem to like the deal and are going to sign on. on the other hand, some of our best allies in the region seem to hate this deal, despite what president obama said in a recent interview that no one will have more at stake in this nuclear deal than himself i think somef oour allies might dispute that. how should we think about that?

that countries like israel, the saudis, some of our allies in the gulf, really feel threatened by this deal? how do we weigh that in the balance of deciding whether or not this makes sense or not? >> well, we, the united states, should weigh it heavily, way the reaction of our allies who are in iran's neighborhood heavily as we consider going forward. because they're in the neighborhood. and they're the target of iranian hatred, anger. we've all talked to them talking about the israelis and the arabs. and they can't believe that we're negotiating as wholesomely as we are with the iranians because they say this regime since 1979, has given us no reason to trust them. you have to have a very

demanding agreement with really anytime, anywhere inspections that really ended the iranian nuclear program for our best allies israel and so-called moderate arabs, too, feel unthreatened by it. and so it has -- going forward, has really diminished our credibility with our allies in the region. and our influence with our allies in the region. and i think it will diminish our ability to keep the region peaceful. my colleagues have talked about the fact that the saudis will definitely, they have said it will definitely match every step that they know that the iranians are taking to develop nuclear weapons. the israelis still reserve the right to take military action to disable the iranian program because they think it is that much of an existential threat

and beyond the immediate region this is the age of instant global communications. our allies in the rest of the world, begin with asia, go to eastern europe particularly. go to africa go to latin america. they're watching this. and part of what they're seeing is that we have not involved or listened to our closest allies in the middle east as we have gone ahead with these negotiations. and that makes them anxious that we will pay as little attention to them if the hedge uammanic power in their region begins to move on them. i know the u.s. may feel that we can sell more arms to our allies than the middle east. we can promise to put an umbrella over them should the iranians go nuclear, but i'm afraid as a result of the way we

have conducted ourselves including in these negotiations, they don't trust that promise of american guarantee of their security the way they used to. >> general hayden i wonder if i could just ask you on israel and the question of vieability of an israeli military strike to set back the iranian nuclear program, either with a deal or without a deal but just how viable is the technical matter do you think that is? >> john, my consistent judgment has been it's not all that viable. it's not to discount the iaf and the professionalism and the excellence of intelligence, but physics enter in quickly. it's far, 1,000 miles. the air force is small the targets are numerous, many are hardened, and frankly neither we nor the israelis are sure we

know where this is. if they get to do it, it's a raid, not a campaign. they get it do it once. and because of the great distances involved, even some of the fighter aircraft would have to buddy refuel the weapons carriers in order to get into the target area and have enough time to maneuver and safely to get home. so my judgment is this is a really hard do for them. i don't think there's anyone i know of in the idf or israeli intelligence who thinks this is a really great idea. they'll do what they're told and they'll do it well but then the strategic question becomes, john would any israeli government put the only strategic relationship on which the survival of the israeli state depends at risk for a single raid that would probably set the program back if successful three to six months. my sense is the answer to that is no. >> can i just ask our senator there is quite a bit of discussion now about the kinds of benefits in the aftermath of

the deal that the united states might provide some of our allies. talking about israel in particular in some of the questions that general hayden raised, there's been a little bit of talk i don't know how realistic it would be, that we ought to provide israel with the kinds of capabilities specifically something like the massive ordinance penetrator, our biggest bunker buster as well as a platform to deliver those, to establish kind of the credibility of the israeli option that the iranians have to worry about the israelis in terms of violating deals. would you be supportive? >> i would. i have been -- between the u.s. government, but there's great bipartisan support for israeli security, great concern about the impact of a nuclear iran on

israeli security, so it's possible the discussion will get to that, and it does have a -- it should have a deterrent effect on iran. incidentally, and no one in israel is really talking actively about a military strike, but for it to happen it seems to me, the israelis would have to have intelligence that there was a break-out occurring. in other words it couldn't -- i don't see how plausibly for the reasons general hayden said that the israelis could just say this is a bad deal. they're going to get nuclear weapons in ten years. we have to stop them now. i think there would have to be evidence of a breakout intelligence, tough decision for any israeli government at that point that you share it with, as general hayden said, or the israelis foremost strategic ally, and challenge the united states to take action or do you take action yourself?

and of course the general is right about the relative capacity of the israelis to do damage. i believe they could do some damage. they might have some surprising allies along the distance from israel to iran who would help them refuel, et cetera but it's still a very difficult mission. you know the iranians have been preparing for this for a long time. they have been active defensively. unlike the iraqi facility, this is a dispensed operation. and a great man who i used to work for said to me there's not been a time in the last 25 years where there hasn't been a part of the iranian nuclear program that we haven't known about. so you have to assume that's probably true today. >> senator bayh one of the big

i guess criticisms that the administration throws back at the skeptics of this deal is that while the deal is not perfect, it's good enough and it's better than any alternative that the opponents of this particular deal have put forward, that nothing that has been put forward as an alternative in in fact particularly realistic. it tends to be very idelistach, i think the administration would say. i wonder what your view of that is. was it ever true is it true now? and if there is an alternative out there, what do you think are the outlines of it? >> well first, with regard to your last question, john i would be for all forgiving the state of israel any weapons they need to defend themselves. with regard to launching a pre-emptive strike against iranian nuclear facilities i think we would need to think about that. the reason for that is not that i would be reluctant to have

them have such weapons systems it might be a distinction without a difference. there's no way the iranians wouldn't believe we were completely involved in such a thing and would probably react toward us the way they would react if we just did it ourselves. so i think we need to think through the whole idea of pre preemption and whether by outsourcing it to the israelis, if you have gotten yourself anything. it's not clear that you have. and the other thing the general knows far more about it than i do, but my understand is to really do this right it would take a longer period of time. you would beneed to insurance, you're going to thak the downside, and the downside would be scission kntignificant. and in order to do that, you would need to bring down the iranian air defense capabilities. you need to be able to revisit the target from time to time.

it's a bigger undertaking than probably we and we alone are presently situated to do. so that's with regard to that. i'm not sure really what you bought yourself by doing what you have indicated. with regard to is a better -- look, i think candidly you do encounter situations in life where there are just not great alternatives. and this may be one of them. this is a difficult situation if it weren't, it would have been solved a long time ago. one of the reasons it's so difficult, it does deal with the essential nature of the iranian regime, and are they willing to essentially change themselves and their aspirations in pretty significant ways? you have to be skeptical about that. and so in terms of alternatives, i would say if i were still voting on these things i think the status quo is better than a bad deal.

the counter argument is that the iranians will just break out and try to achieve a nuclear capability if they can't get some sanctions relief. if that's how they're going to behave, you really know who you're dealing with. if you think that's how they're going to behave, what does it suggest about their good faith and an agreement you're striking with them. their economy has come back some. sanctions have been relaxed some. but it's still not great there domestically now. so i think a legitimate alternative would be to just say, look, we tried and tried, and to put it back on the iranians and say you just haven't been willing to come far enough in terms of meaningful inspections, in terms of a reasonable period where each side can verify the good faith of the other and we just can't get there. and to kind of maintain the status quo and see how they behave. i think that is a perfectly legitimate alternative, and a

situation where there are no perfect or great ones. >> senator lieberman i don't know if you want to comment on your idea of an alternative. one thing you suggested could happen in theory, although i would like your likelihood if the congress gets 67 votes to approve this deal and override any presidential veto but what would be the consequences of that's, do you think the administration talks a lot about the iranians either racing ahead. this will be an iranian bomb or war and the collapse of our position with our international friends who have signed up for this particular deal. is any of that realistic? >> let me start with the -- my own prediction about what happens, assuming there's an agreement, and assuming it's as bad as i believe it will be it's still -- i believe congress will reject the agreement, which as evan said before, should not

be minimized. it's quate a remarkable statement to the world that the president has negotiated an agreement which bipartisan majorities in congress will reject. and then really it is his agreement. then the question is he vetoes it presumearily. is it possible to get two thirds in both houses? it's difficult. it really is. but i think it's doable. i think you need about a third of the democrats to join most of the republicans. i don't know that all of the republicans will vote to override a veto. and i believe at that point there's going to be a massive mobilization of people who feel that we're at a turning point in history, that if a bad deal goes forward and the iranians are on the road to nuclear weapons, it compromised the security, first and foremost of us, our children and grandchildren, and as evan

said, i'll just say it a little differently. they're working on these ballistic missiles not because they want -- iranians not because they want to be in range of israel or saudi arabia. they already are in range. they already have missiles in range of their regional antagonists, if i can put it that way. these are missiles long range that are -- that have europe and the u.s. in mind and a potential kind of cold war or hot war situation. so i think it's possible. i mean, bottom line, hard to get two thirds in both chambers. but possible if the deal is as bad as i think it's going to be. i forgot the second part. >> no, no. >> what happens? real short, toughen sanctions. access to the u.s. banking system is still the -- i was about to say the gold standard. a little mixing of metaphors

there. it's what you have to have in world business. so if we stick with it and add to the sanctions we still have the capacity, what to hopefully bring them back to the table for a more reasonable negotiation. >> if i could just add two things, john. the first of which involves congress. i do think this very intense debate we're having about the fast track for potential trade agreements has required the administration to send a significant amount of political capital, coming just a few months thereafter to have another very difficult heavy lift in congress where there's significant substantive skepticism and concern would be even more difficult. so i think as i said, i think the 60 votes would be there to get to 67, that's -- you know that's hard. but i think you would be within two or three votes of such a thing, maybe a vote of such a

thing. so i think this trade debate that's taking place and the internal dynamics particularly in the democratic party over that, do affect this to some extent. the other thing i would say is i think the most effective argument made by the administration and their allies is something along the following lines. look, who are we kidding here? the chinese and the russians and possibly some others are about to head south on the sanctions anyway. it's about to go away whether we want it to or not because they're going to head for the hills on this thing. so we may as well try to get whatever we can, even though kind of we won't say it publicly, but even though we know it's not really what any of us would like. and i think the counterargument to that is, you probably have -- that's why i get back to the status quo. the economy is not good in iran right now. my guess is you have a better chance of convincing those countries who are perhaps

contemplating taking themselves out of the sanctions regime a better chance of getting them to remain in place for some period of time than you do at this moment of really hammering out an agreement that a majority of congress would look at and say that's a good agreement. we can verify it. i think your chances of maintaining what we currently have are better than getting an acceptable agreement. >> thanks. i'm getting the notice that we need to move to the oddgence q & a. i think we've got some microphones out there. why don't we go first to here in the second row. can you please state your name and afiltiation and the form of a question. >> my name is jim. a portfolio manager. the effectiveness of the

sanctions depending on u.s. control of the dollar and by extension control of our allies of a swift payment system. in addition to acquiring uranium, irain with russia and china have acquired gold and are building out an alternative payment system. my question is, the panel talked about how snapback may be problematic. even if you did snap back, it is possible it could be ineffective because iran would have extraitated itself from the dollar payment system before that happens. >> i'll comment on that but not too much because it's a bit out of my lane but at the geopolitical level, i take the point as a serious one. senator lieberman mentioned about the banking system being the gold standard, and we know nat. frankly, targeted sanctions and what we're able to do with regard to global finance i would say, become the pgms, precision guided munitions of the 21st century. that said, the moria use it, the

more you motivate other people to use an alternative system. i don't know that the chinese are doing that because of this. i think they're doing that because of their own economic self-interest, but it does make our use of these kinds of tools more challenging in the future because our control is less exhaustive. i don't know that it's in place, quickly enough to do what you said for this problem. but it's something that is facing us if not over this ridgeline, over the second or third. >> i put in one for the sanctions which is looking at precisely this kind of threat in economic warfare. right here in the fourth row. >> rachel oswald. my question is a bit of a hypothetic, but assuming there is a nuclear deal that follows

the preliminary framework, and assuming that congress is not able to overcome a veto ofgy any resolution of the approval, what would the panel like to see in 2017 when there's a new u.s. president? >> anyone? >> you know, when i was in elected office my staff told me never answer a hypothetical. now that i'm out there you know, born free again that's a really interesting question assuming there is an agreement it's rejected. president veto is not overridden, what happens? well, first question is does the new president in 2017 continue to abide by the agreement? there's a real pressure on any administration not to break an agreement that a predecessor made. so there will be pressure on that. a new president, whoever it is,

might -- i should say, whoever he or she is might be tougher on the details and the implementation of the agreement. the other thing that would probably happen up here on capitol hill is that there would be -- i hope there would be first, a very aggressive oversight of the sanctions and the lifting of sanctions that's occurred after the agreement is implemented, and there would probably be particularly with regard to israel an attempt to mandate that the administration hopefully with the support of the administration, provide weapons systems to israel with which they could defend themselves or if the circumstance arose be more effective in an initiative against an iranian nuclear breakout, all hoping that that would be a deterrent.

i'm really blue skying there. because i think we would be in a very bad situation. the real -- that move would be for a new president to say this is a bad deal and find a way to get out of it. not easy. right here and then to the book. >> thank you, my question is for senator lieberman. >> identify yourself. >> yes, conor wolf with the daily caller news foundation. lindsey graham has positioned himself with having a lot of experience with foreign policy, and that's why he should be president. in your personal view, does this experience -- would this experience be good with this type of deal in maintaining or helping future deals? is he the leader we need? >> he's a great friend.

so i'm going to answer you quickly because i know the others want to talk about the negotiations with iiran. lindsey is extraordinarily experienced and informed on matters of foreign and defense policy and is capable of making tough decisions. so i have a lot of respect in addition to affection for him. he has been quite outspoken on the question of these negotiations. probably as outspoken against the direction they're taking as anybody has been. so you could expect that -- well, between now and then, and his role in congress including as the chair now of the foreign operations appropriations subcommittee, the senate appropriations, that he will be trying to use that leverage in

various ways to either inhintbit a bad agreement or strengthen our allies in the region. >> fred in the back. >> i have a question for senator lieberman. senator, a member of the panel has said that iran has yet to provide an explanation for why it is enriching uranium. now, prime minister netanyahu said it's only one purpose to make nuclear bombs. the center for security policy believes there's no possible reason for an agreement that allows iran to operate thousands of centrifuges and develop its centrifuges in an agreement. my question for you, senator, do you think it's possible to have a meaningful nuclear agreement with iran that allows it to continue to enrich uranium? >> quite simply, no, i don't.

i thought the original purpose of these negotiations was to stop the iranian nuclear enrichment program in return for the sequenchal reduction which is significant for iran, and quite significant when you think is has nothing to do with the terrible human rights record, with its expansionism in the region with its support of terrorism, but to let that enrichment go on, to me, just shows that -- as the ayatollah said himself last fall the americans obviously want this agreement much more than we do, said he. that's never where you want to be in a negotiation.

>> huffington post. general hayden there is talk about how the deal would put an incredible burden on the intelligence community to detect violations in teamime to give the president enough time to react. can you explain to me why the proposed deal would require iran to follow the protocol to exband inspections. does that put the intelligence community in a better situation than they are now to detect breakouts. >> anything that adds to the ability of the iaea to visit quickly where they believe to be suspect activity would give me greater confidence in our ability to verify the information. american intelligence is not without tools here, and frankly, i don't think i'm betraying any national secrets saying the iaea is open to suggestions from member states on issues they raise concern.

there could be a very positive and open way, a cooperative relationship here that then gets us to the level of confidence we need. if iran is not cheating and if iran is truly serious about this agreement, that sort of thing is precisely the sort of thing they should welcome in terms of -- i think the term we used when we negotiated with the soviets was confidence building measures. >> go to the back here. >> thank you. the frederation of american scientists. thank you all for great presentations. very informative. i would like to follow up on something senator bayh talked about. the issue of going with the status quo. if we go with the scattatus go, that means somebody probably walked away. how significant if it's the iranians who walk away versus the u.s. especially if the other p-5 members might want to stay with a negotiation?

>> i think that would certainly be a relevant factor. certainly would affect public opinion about how the american people and possibly other publics perceive such a thing. it may also be -- it's conceivable we're going to get do a deadline and it's not unknown in these situations for the deadlines to be extended again. i know we said june 30th is the final, final drop dead deadline, but it might be we achieve the status quo by both sides realizing it was in neither of their interests to be perceived as quote, walking away, so the talks went into a hiatus of some kind and would give each side the ability to put a spin on why the agreement was not reached. clearly, it would benefit our situation if they were seen as in intransigent and walking away. >> i agree that the status quo

is better than a bad deal. unless we're all shocked by what comes out of the negotiations it's going to be a very bad deal. but probably in some ways the best of all if i could put it that way barring a really good deal, would be that the iranians walk away. that their stubbornness stops a very good deal for them. and then i think you have the possibility of increasing the economic sanctions on iran. and having that be done by more than the united states. and that gives us at least some small hope that some time in the future iran would return to the table for a better negotiation. >> just a follow up. i'm expecting a deal. so i'm not expecting, you know the situation that you're positing, but i also wouldn't

expect us to announce we have given up and are walking away. i don't think we would put ourselves in that posture. i think we would say we haven't given up hope. we haven't gotten there by the deadline, so both sides need a period for reflection to see if there's not more they can do, something along those lines to allow each side to avoid the stigma of being the cause of an agreement not having been reached. >> a question over here in the front. >> hi. i wanted to see any of your gentleman's comments on the efficacy of the sanctions. whether in the status quo or the snapback, when we're seeing the impact, if the goal and intent for economic sanctions is to target behavior and change behavior but you're still having very real impacts on retail,

commercial interests in iran how does the context of the snapback or status quo achieve the goal? >> well my first, my hat's off to the people in the treasury who did great work over an extended period of time and repeatedly coming up with more effective ways to put sanctions in place. so the treasury department did a great job. look, the history of sanctions is that they're not perfect. there was a previous question about the iranians finding ways to work around them and so forth. but they are imposing a real cost on the iranian economy. which the regime is not entirely impervious to. they're willing to see their public absorb a fair amount of pain, but they're sensitive to unrest in their society and a variety of other things. so to the extent the iranian

economy is not growing as robustly as it otherwise might, by definite, that means they haveless resources with which to pursue their other objections. so it's not a perfect instrument, and in particular, when you're dealing -- and there are other countries you're familiar with, i'm sure that we have imposed sanctions on and they're willing to see their publics have imposed upon them a fair amounltd of economic heart isn't, but that doesn't mean they're completely oblivious to the tools. i don't think they would be at the table talking today if they weren't feeling some urgency about getting the sangs removed which in itself is probably an argument for trying to maintain a meaningful sanctions regime for as long as we can. >> i agree with that. as you know, there's billions of dollars ss being held now, which some has been let go for every month since the interim agreement, but that will be a tremendous capital into iran. they have been hurting.

and while they're a totalitarian government in that sense they're not unmindful -- they're not a popular government. from everything we know in their own country. and to the extent that there's economic deprivation in the country, it creates the possibility of instability. and an uprising. so i think that incidentally, i want to pat congress on the back maybe because we were here patting ourselves on the back, but this is going back to what i said about law school teaching experience, this has been a case where congress inserted itself into foreign policy, and incidentally, going back to what john said, it didn't matter what the party of the administration in the white house was. they didn't want grezcongress getting involved in this for a lot of reasons. they had a broader range of issues they were dealing with, bilaterally, multilaterally but

congress got focused on it in a bipartisan way adopted it. the administration through the treasury department the last two administrations did a tremendous job of implementing, and i agree with evan. that's the only reason the iranians came to the table and what agitates me is they're going to walk away from the table with the sanctions being removed, and they're going to have given us very little in terms of the elimination -- won't be elimination. they'll dial down a little bit on nuclear weapons program, enrichment, and all the rest. that's why i keep saying i'm fearful it's going to be a very bad deal. >> can i add one point on that? for multiple purposes for sanctions as you know, there's punishment, changing behavior, and finally, reducing capacity. you've all got our view on whether we're getting a good or bad or no deal. we think likely a deal and no

good. but let's just assume for a minute, let's fantasize we get a good deal. all right. you still have to live, and i think that's what senator lieberman was suggesting, you still have to live with massively increased iuranium capacity because you have now relieved them of sanctions and allowed them to gather resources to use for all the other activities about which they're unrepentant. >> i was going to add one final thing. there are no -- there are no great alternatives here. you're running risks no matter which course of action you take. but one of the risks we could conceivably be taking under the quote/unquote bad agreement would be that the iranians at some point would get their hands on billions of additional dollars that have piled up in bank accounts they don't have access to right now. if they're allowed to fully export their petroleum capacity

one against, reduce the price offile a little bit, but still 10s of billions of dollars flowing into the iranian treasury, so if we have not given ourselves a grace period to verify their good faith if we don't have in place strict inspections to assure ourselves that they're abiding by the agreement, there's going to be huge additional resources for their ballistic missile program for what they're doing in syria and yemen if they haven't in their hearts given up their nuclear aspirations for possible additional covert activities there. we're really empowering them with the potential do doa lot of things. and this is outside the subject of the conference and negotiations, but clearly, they're a state sponsor of terrorism, and giving someone like that 10s of billions of additional dollars will lead to adverse consequences. >> i wonder if i can just impose on our two senators here to give

us some, a peek inside come july let's say we've got a deal. we've got a deal, as problematic as you all say, you're a democratic senator. >> yeah. >> what is it like? what kind of -- we saw the administration, the president earlier in the year, i think, call critics of the deal warmongers. we saw them say, accuse certain members of maybe being political opportunists who are playing more attention to a domestic constituency than to u.s. national interests. but he's a lame duck president. what are the kinds of pressures and calculations you face that make it so difficult to get 13 or 14 or 15 democratic senators to say this is not a good deal. >> well this is -- this is all about what the democrats do. i presume the republican leadership will try to keep all the republicans in the moment which will be the moment of truth here on the vote to override the president's veto of

a rejection or not. the president is essentially the head of the democratic party. there are a lot of democrats who like him, who feel a kind of responsibility to him. the president hasn't done this a lot, but he probably will in this case, meet with people, call people. there hasn't been a lot of outreach democratic leadership make it a test of loyalty. on the other side, there will be i believe, a very substantial organization of people in the district of the swing democratic voters in the senate and house. the undecided, and they'll -- the members will have to put this together, and part of it will be, i mean, in some sense, not this simple, really royalty to the president, maybe some of them will agree. well, the ones who agree it's not a bad deal and a good deal

will be in the category of those who will not vote to override a veto. but the group in the middle will be affected by it. evan said a fascinating thing which i think is really important to remember which is that the democrats in the house particularly are going to be squeezed in the coming days and weeks about the trade promotion authority. and therefore, they're going to come to this vote if it happens over the summer, with that kind of feeling in their minds. give me just a moment, old war stories. you took me back to a point, i guess it was 1997, i think. in the clinton administration, we had been through the balance budget act, the clinton white house had to really work on democrats to support it. this was bill clinton and newt gingrich coming to this incredible agreement, and it had stuff in it that a lot of democrats didn't like, although it ended up creating a surplus in the federal government. anyway, a short period of time

after that, by historic irony comes the trade promotion authority bill. as in right now. passed the senate to the house. i get a call from the white house, john bro and i were both active in the democratic leadership county, a moderate democrat group, there were more moderate democrats those days, but they said the president is inviting about 30 of the moderate center left democrats who are undecided on trade promotion authority to come down to the white house tomorrow. will you and browe and i forget who else came maybe you were there, to join us in the pits. the president came out, he spoke movingly, we all just spoke from from our gut. i taught it was going really well. john podest at that was the

chief of staff to the president then. i said i thought that went well, what do you think? he said a lot of these people are not happy with us about the balanced budget bill that we just passed. he said, you and everybody else, the president, were really fantastic today and here is my prediction it. tomorrow they're going to feel really badly when they vote against this. okay. long story, but it shows the human dimension to really enormous national security and global issues. i think evan may have had a very good point today. many good points, but that one really struck me. >> first time for everything. >> any other questions? yeah. >> thank you. i'm an adviser to apec. my question is addressed to senator lieberman. you suggested it might be a good

idea for legislators to lay out the minimal criteria for an acceptable deal. could you lay out for us what would be the list of minimal criteria for a good deal. >> thank you for asking that question because i think this is a really critical interim period. probably it's going to be hard to get time on the floor for this -- i suppose it's possible somebody could put it on the national defense authorization act but probably not. it's just as effective, maybe expressed in a letter i'm thinking. we is it this congress does this all the time a letter to the president to the secretary of state, basically saying here we are legislation passed now sh it and this will presumably if there's an agreement come to us and we want you to know, mr. president, secretary kerry that we will have a vote. and these are minimal terms to accept an agreement.

i mean, it's up to congress what they want to say. i would certainly say first anytime anywherein specs. bottom line. second, to the extent that you can state it that sanctions be -- not be removed until there is some real proof, evidence that the iranians are keeping their part of the bargain. but, i mean, other in congress may have other points of view. i just think it's an important preface to those ultimate votes because now congress has set up the procedure in the corker legislation -- frankly in some ways in fairness, but also to make a point, that they ought to express themselves hopefully on an equally bipartisan basis as they voted for corker's bill about what standards they will bring to the vote they will cast on the agreement. >> anybody else in the audience?

one more right here. okay. >> mark do you want to do -- >> all right. thanks very much. thank you very much to the co-chairman of the task force to john. i just want to ask a question that actually hasn't been touched upon. two dimensions of iran's nuclear program that are of concern certainly to the task force. one is this issue of the sunset provision, this idea and i think you've alluded to this that this nuclear idea regardless of the restrictions many of the restrictions are going to be sunsetting disappearing in 10 years, most will be gone in 15 years and in fact iran will emerge with an industrial sized nuclear infrastructure not with one year break out but actually with zero break out and that may happen even earlier according to president obama, it may happen at year 13. so the issue of the sunset provision, this temporary nature of the nuclear restrictions in exchange for permanent sanctions relief. and the second key element,

we've talked about verification inspection but the iranians have been installing the iaea for years. cuff a proper verification an inspection regime without full disclosure on pmd's and the ability to actually talk to the scientists and get the documentation to determine what iran has actually done in the past and what it may still be doing? >> mark, i think all of us therefore comment but i will just jump in quickly. i want to talk -- if we get that -- >> can you just say who that is quickly. >> he is the oppenheimer of the iranian nuclear program. i want to talk it to him and i want to do it at par chan which is a facility these guys have been trying to get to in a decade. they're not going to find

anything at parchan it's been destroyed and paved over but they still can't get there. if you look at the four-page white paper about what it was we think was agreed, pmd's, previous military dimensions are going sthag remain a hope to be resolved at some point in the future. her not a prerequisite to signing an agreement. just going back to my narrow intelligence lane, all right, it creates an increased burden on verification if i don't have high confidence in where the iranians actually are, not just in if i say siel material development, but in their weaponization program. we do have intelligence estimates, but they remain estimates and they have -- for a country that says that's not our objective, this he refuse to come clean on their past and i -- and i realize mark that if we insist on that it's a deal breaker for the iranians but i

don't know why we have to accept that -- that premise. how can we know their intent how can we know their capacity for breakout or sneakout without high can have tens in where it is they are right now? >> absolutely. i mean, i couldn't agree with you more. i would add that as another element to the whatever expression by members of the congress on the pmd particularly. it probably is a deal breaker, but how can you make a deal with a country that won't agree to that kind of reasonable term and has stiff armed the iaea which i need to the remind this audience is not a branch of the united states government, but of the united nations. with apologies i have to go. thank you, it's been a wonderful discussion. [ applause ] >> all right.

with that we're going to close it out. mark dubowitz has got a few final comments and people can -- >> thank you. thank you very much. and i want to especially thank ray take a from the foreign relations who was the orange senator behind of the idea of the iran task force. thanks for inviting me to be your partner in this. the task force has ten memos that we put out, ten reports, 11 memo will be coming out in the next week. i want to thank alley line nan who has been a great participant in the task force and brings his experience with the iaea. he is one of the few people in washington who had to spend a lot of time negotiating with iranian scientists and he has a lot of expertise and war stories about that most pleasant experience. task force on iran.org is where you will find the materials look for more memos and reports coming from the task force. we welcome a vigorous debate over had this issue over the

coming month and again look toered to seeing all of you at future events. thank you again. [ applause ]forward to seeing all of you at future events. thank you again. [ applause ] squloo is this summer book tv will cover book festivals from around the country. this weekend we're live for the chicago tribune rinters row lit fest including our three hour live in-depth program with lawrence wright and your phone calls. near the end of june watch for the annual roosevelt reading festival from the franklin d

roosevelt presidential library. at the end of the july we're live at the harlem book fair. and at the beginning of september we're live from the nation's capital for the national book festival celebrating it's 15th year. that's a few of the events this this summer on c-span 2's book tv. tonight on c-span 3, a senate hearing on the export-import bank. then the house oversight committee looks at how federal agencies comply with freedom of information act requests. and the defense department holds a news briefing on an incident where a live anthrax virus was accidentally sent to over 50 research labs. the export-import bank is a federally backed institution that guarantees loans for purchases of u.s. export. the program is set to expire at the end of the month. export-import bank president

fred hochberg testified on renewing their authorization. this is an hour and 40 minutes. >> the hearing will come to order. on tuesday the banking committee heard a range of perspectives from a panel of ex and industry representatives who testified on the future of the export-import bank. today the committee will receive the testimony of fred p.hochberg, president and chairman of the bank as we consider any next steps in the light of xm's expiring authorization. as i said earlier it this week after years of calls to reform the bank right here i'm not convinced in a long-term reauthorizing is merited. many criticisms of xm involve failures in risk management

which are particularly disturbing considering the 40% increase in kpchl m's exposure employment which i opposed in 2012. at a hearing last year the inspector general testified on concerns related and i'm quoting, to several challenges facing the export-import bank in managing the risk inherent in the core business activities. in recent years both the inspector general and the government accountability office, gao, have identified hundreds of recommendations related to xm's financial and operational weaknesses. i understand that mr. hochberg will address several of these in his testimony before us today. i think it goes without saying that taxpayers is should not be asked to back stock xm's $110 billion portfolio if the bank cannot adequately manage its risk of loss.

much has been said about how xm historically returns money to the taxpayer each year and i'm sure we'll hear that today. this does not take into account losses that could occur based on a variety of factors, including economic uncertainty and xm's disproportionate exposure to several industries geographic areas and large single foreign customers. any discussion of the bank's future i believe must include a serious examination of whether or not xm can substantially improve its accounting for these and other risks. i'm concerned that the reforms that are necessary may simply not be achievable. nevertheless i look forward today to hear mr. hochberg's remarks as the committee takes another hard look at the export-import bank. senator brown. >> thank you, mr. chairman or holding today's hearings and thank you care man hochberg for joining us again today. i especially want to thank you chairman hochberg for the outreach you've done to small

businesses in my state, to the global access for small business forums that you held in cincinnati and mentor, ohio and northeast ohio and youngstown and the round tables in both toledo and columbus. i know you've done the same kinds of outreach virtually almost everywhere in the country. congress does our country no favors when it lunches from oneself-inflicted crisis to another. at the end of the year we saw an ideological fight over an event actual expiration of the terrorism risk insurance program. last sunday portions of the national security agency's authority expired. when we've dealt with the highway trust fund it's been in the short -- it's been in the form of short-term patches one after another. i believe 30 extensions something like that. now we're 27 face away from the export-import bank's authority expiring expiring. one member of the republican leadership is committed to a floor vote in june, another said

it should happen on the highway bill extension at the end of july which most notably is after had this expires. this is not a way to do business for this committee, for this senate, for this congress. xm should be bipartisan and always has been since first authorized at the end of world war ii. according to the wall street journal prior to 2012 the senate had only once required a roll call vote only once in 70 years, a roll call vote to reauthorize x. am. the bank was reauthorized for example, by unanimous consent for the senate in 2006 under president bush and republican majorities if in the house and senate. the 2006, five-year reauthorization was followed by a five-month reauthorization in 2011, a two-year reauthorization in 2012 a nine-month reauthorization at the end of last year. this history, this this recent history, the long-term history has been done right, this recent

history of limping from one short-term authorization to another is bad for small business owners who want certainty to plan their investment and hiring, but can't make long-term decisions because of congressional inaction. it's bad for the export-import bank to attract business that will expand u.s. exports and retain the necessary number of talented employees to oversee an expanding portfolio. it's bad for our economy because it makes the bank riskier, not safer, it makes it riskier it hurts our competitiveness. of course, xm is not perfect no person or institution in a country had large can be, but the work is so important and in today's global economy we need to support businesses when they sell their products around the globe. many on this committee have argued for fast track authority and will support the trans-pacific partnership which arguably, very arguably may or may not mean an increase, a net increase in jobs, but there's no question the xm bank means jobs it's not easy for small

businesses to export but making sure they are aware of and have access to tools like xm can help them grow. we know that competitors around the world have their own version of export-import bank. there are about 60 export credit agencies worldwide. we shouldn't put our manufacturers and our exporters at a disadvantage to china, india, to european countries. it means more manufacturing, more exports more jobs particularly higher paying hurg jobs, it's why the work of xm is so important and why reauthorizing it by june 30 is essential. i look forward to working with colleagues, especially appreciated the comments on tuesday from smarts kirk and heitkamp and donnelly and others who are committed to ensuring that this authority doesn't lapse for the first time in seven decades. mr. chairman. >> mr. chairman, your written testimony we've reviewed it, it will be made part of the record in its entirety. if you would sum up your testimony we're going to --

after that we will -- if the senate is on schedule we will have a vote and break but we will wait and see. you're recognized. >> thank you. chairman ranking member, distinguished members of the committee, thank you for inviting me to testify about how xm ee kwips u.s. businesses to complete -- compete in the global economy and add jobs here at home. xm compliments and works with the private sector. we provide backstop financing so american entrepreneurs can seize global opportunities to create jobs and not get left behind by their foreign rivals. and we've been successful supporting 164,000 jobs last year alone. xm does not pick winners and losers, rather it serves any eligible american business seeking competitive financing. we are by definition demand driven. of course our customers pay fees

and interest for this service and as a result x am m is completely self-sustaining. last year alone xm generated $675 million for deficit reduction reduction. if xm is not reauthorized xm would only be able to generate half a billion dollars in ref muse for the tack pairs. in may of 2012 xm was reauthorized with overwhelming bipartisan support. a know our exporters and their workers are pleased to see movement in the senate with two bills introduced this congress. i take very seriously my duty to implement the will of congress, that's why i provided each of you with all the documentation outlining xm's implementation of every single requirement from the 2012 reauthorization. and why i will work diligently to implement any future requirements congress chooses to enact. on top of that mr. chairman we

are keenly focused on risk management demonstrated by our low default rate of 0.167% as of march 2015. in addition, xm continues to proactively implement risk management improvements to further ensure we remain faithful stewards of the taxpayer. let me just name two. we increased staffing in our asset monitoring division by 33% and we went beyond all federal requirements to implement mandatory ethics training for all employees. having run a small business i know how important it is to continually identify ways to become stronger and sleeker. and we can always do better. and we continually strive to be better and improve the way we operate and serve small businesses. two particular examples tachb port aviation in columbus ohio and zchl ante print printing in mobile alabama. in xm we help exporters to

pursue export sales, create jobs and compete more effectively in global market. global competition has ratcheted up dramatically since our last reauthorization and it will continue to do so. american businesses and workers aren't simply competing against their chinese russian or french counterparts, often they're competing against countries. congress has made it clear. they have asked the treasury secretary to ratchet down export credits. and while that is the secretary's responsibility as i said i take the will of congress very seriously. as a result i recently met with many of my counterparts to discuss exactly that topic. here is what i heard. to the contrary, our counterparts intend to accelerate the financial backing for exporters. their role is clear. when commercial banks constrict financing export credit agencies fill the gap. so that their domestic exporters

don't lose sales or workers. xm bank is like a firetruck in that sense, you don't sell off the firetruck because because there isn't a fire currently burning. in closing, as this committee is aware, businesses need certainty to make long-term plans to grow hire and a innovate. there are now about 80 other export credit agencies around the world, aggressively fighting for jobs, unlike xm bank. one of china's export credit agencies recently noted that they doubled their financing in 2014 and they plan to tunnel it again in the next year or two. we look forward to working with you, mr. chairman, and the committee to continuing empowering your con is stit wents to export more and hire more american workers. >> since we haven't called a vote yet we will move on to questions. in 2012 export-import bank's inspector general reported that xm's narrow definition of

default may result in an jund statement of the bank's hi or cal defaults. among other things the inspector general noted that xm's definition on default does not include technical defaults which reflect a failure to comply with specific conditions in the loan agreement. do you think, mr. chairman that it's a problem that xm is not properly estimated historical defaults and what are you doing about it? are you changing it? how can you assess future performance at the bank if you do not have a good ens is of historical defaults? >> well mr. chairman, we issue this default report to congress every 90 days, one one of the reforms in congress. the defaults in here are actually cash outlaid claims paid by the export-import bank. they currently are running less than 1/5 of 1%. in addition in this report we indicate delinquent payments which is an indicator of what

might possibly default in the future because they are late. in terms of a technical default sometime that is something such as a filing of a financial statement could be can running a week or two late or could be -- could be some kind of compliance issue like that. so we are on top of that we monitor that but thea not in the definition that congress has given us. we have -- congress, by the way has updated the definition of our default four times since 2012. >> would a technical default also include maybe a violation of loan covenants? >> it would depend -- technical default could be as i said -- >> it could be substantive could it not in nature? >> it could be substantive but it would not have any material effect on the ability to repay, if it does we have a watch list that we produce every single month of credits that are requiring extra scrutiny or troubled credits. >> mr. chairman, according to the xm bank's annual report the ocp, a more can government owned

mining company with a questionable history of human rights violations received over $92 million in xm loan guarantees. several news sources have reported that ocp donated millions to the clinton foundation and just recently hosted a clinton foundation fundraiser at a five-star luxury hotel in morocco. my question is this: how do you ensure to the people american people that none of the money guaranteed by the american taxpayer has not been used to fund the clinton foundation or other unrelated activities once the money is there? >> well, for one, the money has not been disbursed yet. at the moment the money -- we've approved this loan we have not finished documentation and dispersed it so no money has been used for that purpose. secondly, all money that is borrowed for a specific transaction relates to the purchase of u.s. goods and services and the other attendant

services around that. they have to show invoices of where -- of what the money is used for and that's when the disbursement is made. >> does it bother you at all that if ocp is donating millions to the clinton foundation and just recently hosted a fundraiser and we're making them a loan it does that raise a red flag with you or that doesn't bother you? >> senator, we look at every transaction, we look in terms of -- look at reputation risk integrity of the transaction. this is a large mining operation in morocco. >> state owned? >> state owned -- let's understand one thing about state owned. in the rest of the world much of the infrastructure in country after country in state owned power plants transportation, rail utilities, water services, mining is frequently state owned. so that is -- that's the way the business -- whether we like it is regrettably done around the world. this is a good project,th buying

almost $100 million of u.s. goods, creating a lot of jobs here in america and we obviously make sure that it's credit worthy environmentally sound and has no reputation nl risk. >> mr. chairman, in the area of subsidies and free markets, we have that debate and i think it's a healthy debate. in your written testimony you state and i will wrote, it is incumbent upon america to strive to level the playing field in the global export area. restoring free market factors to their rightful place at center stage of competition. what does that mean to you? >> it means -- it means very clearly the rest of the world has a lot more government engagement with their industries and their companies. as you just mentioned, mr. chairman, we want to make sure that by our financing we level the playing field. so if we use ocp as an example, we want to make sure that the financing package that backs up u.s. exporters is the same

financing package that backs up our competitorser in china or germany or much of europe so that the buyer picks from a free market the best product best service is best quality not because someone has their finger on the scale and has provided off market financing to give it their country an advantage. >> we heard testimony a couple of days ago that a little less than 2% of american exports rely on or do business with export-import bank, but 98% don't but they're still exporting. is that figure about right? >> that's right and that's a good thing. >> okay. >> the private sector is a really good job. >> senator brown. >> thank you, mr. chairman. mr. hochberg, your charter says that xm financing should quote, supplement and encourage, no the compete with private capital, unquote. a lot of wide bodied jets for example, are sold without kpflt m help.

why can't everything be financed solely by the private sector? >> i wish it was such, but it isn't. i guess there are a couple of reasons, senator. one, we face in the commercial jet area intense competition with airbus, backed by the governments of germany, france and britain. each of them have an export credit agency that backs all airbus purchases. so if we want a level playing field, we want to make sure there is a level playing field between american-produced aircraft made through 15,000 suppliers of the boeing company and airbus backed by three governments we need to provide a comparable financing package when warped. additionally from time to time we have just come through the worst financial crisis since the depression when liquidity tightened up and constricted and we had to really step in and fill at that gap to keep trade growing and jobs being supported in this country. since there's more liquidity since that recession there's

more and more in our rearview mirror our lending has dropped. we're doing about half of what we did two years ago because banks have come back into the fore and there's less need for us today than there was even two years ago. >> some opponents of xm, and we've heard them come out with increasing volume express concerns about management risk oversight at the bank, be the bank's portfolio has grown in the last five or six years since 2009 but the number of employees has not grown by much. your inspector general in april no eted uncertainty about xm bank's long-term reauthorization is hindering recruitment. we know there is a whole host of reasons that the fits and starts and short term reauthorization that congress seems to inflict on a whole lot of government programs including certainly yours, have had -- have had

negative impact on investment on long-term decisions, on predictability. talk to me if you would about how this repeated short terl reauthorizations and possible he can operations affect your ability to recruit. >> well, i think it has certainly made it a challenge to recruit. there's also a bit of a brain drain as people get concerned. our employees are no different than the 164,000 jobs we support around the country. they're worried about their mortgage, about making twig payments this fall and the start and stop about what they do. we have about 450 workers at xm bank. i care about them they do a spectacular job. why we have a default rate of 0.167% percent is because we've got good underwriting and good asset management. i fear this debate can jeopardize our ability to retain those people and bring in new people as it goes on and on. >> so these -- talk further, if

you would, you touched on your testimony the repeated short term reauthorizations the continued let's that xm won't exist after june 30th. how does it affect your small business customers? i've had -- you mentioned davenport in columbus, ohio you mentioned a company in alabama. i met with probably a dozen businesses businesses, mostly companies i had not heard of as many companies as i visit around ohio there are obviously hundreds and hundreds that i don't know yet that people that came in this that really depend -- that gave up their time and costing their companies money to come here and push visit senators and house members to push for reauthorization. what effect do you see this has on small business customers? >> we've seen it firsthand with one of the tools that small businesses use is a working capital program, we work with their bank provide a 90% guarantee to induce the bank to

make a working capital loan to support exports. more than a few banks have pulled back in light of the uncertainty they don't want to get into a situation where they have made a commitment and then if approximate our authorization should expire they're not able to execute that. so we've seen some constriction in working capital lines forcing -- if you are a small exporter with very small percentage you might be able to fit that in your regular working capital loans. if exporting is 20 or 30% it probably is too large to fit within your domestic working capital line. we've seen that. a lot of what we do for small businesses is provide credit insurance. when they sell overseas we insure their receivable. they go to a commercial broker for that. commercial brokers are loath to write a policy that may only have 20 days left. >> thank you, mr. chairman. senator corker. >> thank you, mr. chairman. thank you for your service. we had a hearing, i guess a

couple days ago and it became pretty evident that we're involved in a race to the bottom with these export credit agencies that in essence the national manufacturers association had had a witness in here and i guess it really highlighted more than ever that that's really what we're about is we are competing with other countries, as you mentioned, many of the companies that are in these countries are state owned enterprises the export credit agencies in other countries he are putting you putting our nation in a place where we're in a race to the bottom to try to quote level the playing field and i assume you agree with that. is that correct? >> yes. i mean, that's what -- the oecd, organization for economic cooperation development which has something called the arrangement where most industrial lysed countries are a party to but china russia, inn i can't, brazil are not. we all have a standard, we all have a minimum fee we have to

charge so there is not a race to the bottom. the challenge is can you please trees that are not a am member can do whatever they want, they can be opaque about it and they cause some of the most severe challenges to u.s. competitiveness. >> well, i will say in their testimony they made it pretty clear that it was all about market conditions and it was about meeting the -- especially in the case of -- i use the case of boeing because their name came up i have nothing against boeing, as i mentioned i like flying in their airplanes, but she did lay out the fact that it is that, it's a race to the bottom. we're competing with other countries. and i guess i would ask this question: how do you when you're making these loans to a manufacturer like this and you know that they are -- you're doing this to make it so that a company in another country is able to buy some type of equipment, just name whatever type at a lower rate and yet

those companies are competing with other u.s. companies that don't have the benefit of that export credit agency yours. how do you reconcile that? in other words, in some cases you're actually making american companies disadvantaged because foreign companies are able to purchase goods that are made here in the country at better financing arrangements than they can here dom clee. >> we do the best we can to level the playing field. i was in south africa about a year ago actually this week and i met with trans net which is the rail authority in south africa. they had a large tender for locomotives. in the end they divided it half to the chinese half to the u.s. i asked the head of trans sent what kind of financing terms are the chinese offering you so i boo know as a businessman what the competition is. they said, well what would i like, 10 years, 15 years 20

years, a grace period? what do i want to make the deal? we don't do that. we offered the most we could offer is 14 years. however, by offering 14 years maybe we didn't equal precisely the chinese offer, but we got close enough that we at least were able to get half that order and not lose the entire order to the chinese. >> i might just add one last thing is not surprisingly about a month or so before the tender was determined china made a $5 billion loan to the rail authority for upgrading tracks, signaling and so forth. what happens that's a coincidence, perhaps not. >> i think you can see why this would be -- we understand the business you're in and i was going to allude to you after 2012 needing to try to get other countries to lower this amount of activity. you alluded to that in your opening comment. but you can tell -- i mean, this is an unseemly business to those of us sitting here where basically we've created had this

entity to create financing to complete with other countries that are based -- basically racing to the bottom. the other, i guess part of your quote, agenda is to make sure that smaller enterprises have access to credit and yet we've looked at your application form and there's really no -- nothing there that requires them to make sure that -- or requires you to make sure that you are the lender of last resort. i mean, you can check other on the application form and sign it. i had an amendment a couple years ago to make sure that xm was actually the lender of last resort. i know you didn't support that. i know steven fincher over in the house is leading an effort to reform xm. do you support those types of things, for us to know that you, in fact, are the lender of last resort and just don't allow borrowers just to easily check another box? >> well there are actually four questions they have to answer

with seven subparts. >> but would you be supportive of that being much stronger so we know in fact you are the lender of last resort? >> it should be stronger but let's be clear, you're signing this application you're committing perjury fines an imprisonment if you falsify. >> not if you check other. so will you support much stronger legislation to absolutely ensure that you are the lender of last resort in those cases? >> well, senator i guess i believe that -- i believe in the certifications and we verify those when warranted. >> i think the answer is no. let me just -- i think we're going to be pressing for that and i'd love to talk to your office about it. i will just close with this, i was in eastern europe -- i was in eastern europe recently dealing with a number of different issues and i have to tell you was peril offended to realize that the xm bank basically had taken on some of the administration's policies

without congress being involved in any way. as i understood xm was no longer financing coal exports. that somehow or another you without a congressional mandate had decided that if a company wanted to export to eastern europe, which is a great market for our coal suppliers, you had decided, the xm bank had had decided because the administration had had laid out this policy that you would no longer do that. i find that to be offensive, not that i'm a lover of coal or not a lover of coal, but that you would be able to do that and i wonder if you could respond to why kpflt m would take on administration policies when congress has not legislated that >> well congress actually put in our charter 23 years ago that we must take the environment into account before making any loan agreement and during the bush administration the bank was

sued and in a settlement way before i got to the bank had to do a consent decree about how we actually had a more rigorous environmental policy so that goes back to 2006 '7 and '8 before i got to the bank. over the 23 years we have had to adjust our environmental policy to meet the needs of science and industry over and over again. so this is not a recent -- something that was just inserted recently. >> but if we were to change that you would be perfectly fine with that? >> let me say this i mean -- well we have an environmental standard, that's up to congress to determine it and we try and comply with other -- the world bank, other -- other export credit agencies around the world. but i want to be clear, we actually do support the administration's climate action plan to restrict coal fired power plants except to the poorest countries which total 80 can you please trees which have no restrictions in the wealthier countries we do support that

provision. >> mr. chairman, thank you. i didn't know we were carrying out environmental policy through xm bank. >> i didn't, either. we found out something today didn't we? thank you, senator. senator menendez. >> thank you, mr. chairman. before i move on to my questions i'd like to enter into the record a list of 244 new jersey companies over 70% which are small businesses that have received xm financing since 2007. okay. i fully support a timely reauthorization of the bank and i hear regularly from our con stit wednesday of the irreplaceable role that the bank plays in making new jersey exports competitive on the international market. many of these companies have come to washington to explain how kpchl m has supported their efforts around the world, others have written to me in support of xm's reauthorization and i'm

speaking for them here today. now, i'd like to share with my colleagues a story about a situation in ukraine something that provides a great example of how the export-import bank can play a critical role in furthering u.s. national security and economic interest. ukraine gets fully half of its electricity from nuclear power. historically they have been dependent on russia to manage the used fuel from its plants. after the orange revolution ukraine moved to break that tie by establishing its own spent fuel storage facility. i know about this issue because a new jersey firm hol tech international won the contract to construct that facility. because of russia's military aggression the government in ukraine did not have the resources to go forward with that new jersey form.

that's where the xm bank comes in, to help manage the risk of investing in this strategically important done re, something that the senate has clearly ex poused on by virtue of that it has had in the ukraine freedom support act that i wrote with senator corker xm can make this possible. it will bring income into new jersey where hol tech is expanding its presence it would support ukraine's ability to develop it's on expertise and infrastructure and remove a lever of russian influence in ukraine, ukraine would also keep over $1.5 billion in fees that would otherwise be sent to russia. unfortunately since the contract was awarded the security situation in ukraine has not permitted the pro correct to go forward. now, we heard some argument on tuesday that american firms should essentially sink or swim on their own in international market, that we don't need

additional options to pursue our diplomatic and security goals even as other nations including our most significant trading partners and rivals continue to pour more resources into promoting their exports. in a world where all countries wished us well, in a world with no other nations provided support for the international operations of their industries that would be an appealing idea, but that is not the world that we live in. so here is a median sized business ngs no, not some major cooperation that is on the front line of both nuclear technology an ongoing national security challenge that would be an important beneficiary of the kind of work that xm does. president hochberg how do you see the role that xm bank plays in bolstering u.s. national security and foreign policies of the services that it provides u.s. companies? >> well, thank you, senator menendez and thank you for your support and the many companies

you work with in new jersey. our number one right is u.s. jobs, that's what we're here to do we're here to support u.s. jobs through the financing of exports. that said, obviously economic security and national second is writ go hand in hand. the number of defense contractors who are now moving into commercial fields, osh kosh is a good example, darling is another example, there are a number of them financing theirs, but most importantly it's about u.s. jobs but clearly if you have energy security and you mentioned nuclear -- uk clear is one of the areas that we've been active in, it's one of the areas commercial banks are reluctant to engage in and certainly reluctant to engage in without our assistance an guarantees. so i think there is a very close relationship between those national security interests, economic security and jobs. >> let me ask you one or question. china has been particularly aggressive in export fpsing.

as of 2013 it extended over $45.5 billion in export credits, three times the amount extended by xm. so you touch on this in your written and oral testimony. could you elaborate on the tends you're seeing by major economic competitors. >> china is right now the largest exporter am in the world, we were number one a dozen years ago, i actually believe we could be the number one exporter again because of the technology and invasion. that said china has four different state-owned banks that do export credit. we have one. just one of those called cynas had hore has done about $267 billion in loans and guarantees. it took us 80 years to get to $590 billion. and they have indicated they have no interest in stopping whatsoever. that said the secretary of the treasury we have been working on

negotiating that they join an international framework so we have transparency and we try and tamp that down, but that is an ongoing negotiation and it's taking time. >> mr. chairman, i just had think that we should not engage in unilateral disarmament and that is exactly what we will do if we let xm expire and we are facing global competitors and many countries china bra glil and others that are helping their companies create the opportunity to penetrate markets which means jobs here at home. thank you. >> senator toomey. >> thank you, mr. chairman. you know, i think -- i think we should hopefully reach an understanding of what is and what isn't going on here. one of the arguments that supporters of the xm bank made is that this is somehow a free policy choice this is a free lunch. the xm bank creates jobs, no

jobs are destroyed no cost to the taxpayer. in economics there is no such thing as a free lunch, there's a cost to everything that is provided. the chairman states in his testimony that over the last couple of decades the xm bank has sent nearly $7 billion to the u.s. treasury. i'm sure that's true. but if you go back a little further behind that then we had a pert when the xm bank was costing the taxpayer direct money in the form of bailouts in the '80s, $3 billion bailout in the mid '90s about $10 billion in taxpayer bailouts and that was at a time when the xm bank was a fraction of the size that it is today. the chairman also it he was that xm bank is restoring free market factors to their rightful place. i don't understand how we could come to such a conclusion. it's clear to me that the xm bank interferes with the free market. you may decide that the interference is worthwhile and is desireable but let not

pretend that it's not an interference in the free market. that's my point. chairman refers to the xm bank finances as filling in the gaps. well, if there is a gap then that tells youing is. here's another way to look at this. if the xm bank is creating jobs, if this is -- if this is to be believed, then it seems to me it must necessarily be the case that the x mflt is providing financing that would not otherwise occur or its providing it on terms that it would not be obtained in the market, right? that's the only possible way in which you can say that it's creating jobs. but if that's the case, if the xm bank is financing at rates and terms that the market is either unable or unwilling to offer, then that's not the free market. in fact, thea the definition of

a subs is dee. it's the sub dee that the taxpayers are being forced to pay not in the form at the moment of writing a check but in the form of not being adequately compensated for the risk that taxpayers are being required to take. so i don't think there is even a question that taxpayers are being forced to take this risk, the question is for whom? if it's to large politically connected corporations then that strikes me as crony capitalism. if it's less that happen credit worthy foreign corporations then we're putting taxpayers at risk to benefit them. none of these outcomes in my view make sense is. let me ask one specific question of the chairman. when we talk about the jobs that are created, do you net out the lost jobs in the industries where the competitive disadvantage that the xm confers occurs? so we know for instance,

airline companies that have to compete with foreign airlines that get the subsidy of cheaper aircraft miners that have to compete with overseas mining operations they get the subsidy of mining equipment refineries in the united states that have to compete with foreign refineries that benefit in a similar fashion. it seems to me the last job out to count. do you include that in your analysis? >> senator, thank you and thank you for coming today. first of all, there are a couple of things you mentioned. we never -- xm has not received a single bailout. from 1934 to 1992 we sent a billion dollars to the taxpayers. after federal credit reform act of 1990 from '92 to 2014 we've sent $6.9 billion. that's cash that leaves the checking account of the export-import bank and goes to the treasury. it is the sadest day for a cfo each year as that money leaves our bank account. let me be clear about that.

we don't pick winners and losers, companies come to us if they need our financing to compete with overseas competition and sometimes the markets are not fully free and open in the overseas international market. that's where we compete, that's where we step in when there's a gap in the marketplace. we also do something put in congress since 1968 called and mic income review. it said if we're going to support the export of capital equipment, use the example of mining equipment, we have to make sure that the benefit to the u.s. economy from that will make sure there's a net benefit to our economy. so is we do that each and every one of those -- we in fact look at every single transaction to ensure -- >> so if it you're looking at the net you're acknowledging that there are some who win and some who lose and then you add it up and see on balance is it a net positive. is that the way -- >> we make sure that there's a net benefit and the board the board that senate confirmed

takes that into account. >> how does that not include winners and losers? you have of' kind of acknowledged that there are winners and we count them and there are losers which we create, but as long as the net we think is po testify in our analysis then it's okay. >> well the net winners are the united states economy and u.s. jobs. the choice, sir is they're going to build that mine and we're either going to have u.s. mining equipment or chinese or japanese or korean. so we wanted the u.s. economy to win and make sure those jobs are here not elsewhere. >> i've run out of time, mr. chairman. i appreciate the indulgence. let me point out the gao has come to the con crucial that this does not create net new jobs, it shifts job creation and in that process in my view it certainly is picking winners and losers. >> thank you. senator warren. >> thank you mr. chairman. i just want to follow up on this question on jobs. we talk a lot about the xm and about jobs and i believe that the xp bank helps create american jobs and pur economic

growth, but i also think that the bank's operations can be improved in certain areas so i want to follow up on some questions i asked you the last time that you were before this committee. as i noted at the hearing last year the core of the bank's work is to promote trade by providing financing for foreign companies to be able to buy u.s. goods. obviously that helps the u.s. economy and we want to sell those goods as you have been testifying to this morning. but in some cases the foreign company purchasing those goods also has u.s. competitors so helping that foreign company can mean that the foreign buyer gets a benefit not available to their u.s. competitors. so i want to start where i left off last time. before agreeing to finance a deal i just want to make sure i hear this right, does the bank determine whether the number of u.s. jobs that could be lost by helping a foreign competitor is counted into the calculation? >> what we look at, senator warren we look at, one, we review every transaction.

corporation has made it clear that if the production that would be generated by some capital equipment export exceeded 1% of u.s. production that would trigger a more in-depth review. so if a diminimus amount might go on the market less than 1% that's a threshold established by congress over 30 years ago, that actually would say that the impact would be de minimis would not be adverse. >> just so i'm understanding what you're saying here, you're saying you don't do the calculation on how many jobs might be destroyed because a foreign company got a financing benefit that was not available to the u.s. competitors, unless it hits a -- this much higher threshold. so in all the rest of those cases, even though cumulatively they may be a lot, you're not doing that calculation? >> well, what congress has established for us in 1986 or

1984, 30 years ago, is that we -- the threshold is 1%. >> i'm sorry. i think what congress established is you must do the calculation if you hit that high threshold. the question i'm asking is whether you do the calculation -- is it only in those cases and you are adding up the number of jobs lost and the number of jobs gained? >> well, for example let me be very clear let's use an airline example. we have an airline that provides low cost service in south africa. there is no impact on the u.s. economy by that low cost carrier in south africa buying u.s. equipment to fly around south africa. we don't fly there, we don't fly within south afk. >> so -- >> in those cases no there is no potential impact on the u.s. economy. >> so if you -- >> we look at every traib. >> so if the foreign buyer has no u.s. competitors then you say you don't do the calculation,

another way to say it is you've done the calculation and it's sfwloe. >> we review every single transaction. >> and if there is a domestic competitor, u.s. competitor for the foreign company that's about to get the financing do you always then do the calculation of how many jobs might be lost by the u.s. competitor? i'm just asking how this works. >> at that level we do it at the dollar level. >> what does it mean at the dollar level? >> we'll look at the benefit to the u.s. economy of selling that product, how much revenue -- >> i'm asking a jobs measure question. >> we don't do it on a per job basis. we do it on -- at that level we do it on the economic impact, what was the economic benefit to the united states versus potential any economic adverse impact to the united states. >> so is there ever a case in which the bank has decided not to finance a deal because of its potential impact on u.s. competitors? >> yeah. >> and potentially on jobs? >> yeah. >> and is that publicly

available? >> what happens is you know, you are at the university. you know, people don't -- universities issue rejection letters, people don't like them from banks. >> actually i understood banks did issue rejection letters. >> they don't like it to -- when we sit down with a customer and look at that situation we will have that conversation about do you know what, this is an economic impact here, we're going to do a more in-depth study and this may not pass muster. in those cases sometimes they withdrew. i know one particular case the entity in latin america withdrew, let me just finish for a minute -- and what happened, they still built the petrochemical built, built it all with foreign equipment and we still are competing with that petrochemical plant. >> i'm taking from what you're saying is none of this is publicly available. >> sure it is. if it gets as far as doing the study and there's a vote, but frequently a client pulls out before that time. >> i'm sorry so you're saying there is publicly available data on how many times you have

rejected a deal because it would cost american competitors jobs? >> our economic impact data is on the board -- is available after the fact to -- the fact to -- that was on the reform we put in in. >> i want to see what the economic impact study would be on this transaction. >> i think i got it. you're talking dollars here. i believe the bank helps create jobs. it does it while making money for the taxpayer. i believe the bank ought to be doing all it can to promote job growth overall. not helping at the expense of others. that's why i think that the bank needs a rigorous process for assessing how it's work affects u.s. competitors. and i think the bank should make

those redaction ss available. the bank has taken important steps while under your leadership, and you moved it in that direction, and i hope we can continue to work on this, to continue to move in this area. >> we're the only export credit agency of the 85 around the world that does this. we're the only one that actually goes to the effort to say, is there going to be a net benefit to the u.s. economy? we're the only single one. everyone else says they're going to build it anyway we could lose once or lose twice. >> i appreciate we may be more transparent than some other countries. the question we have to address is whether we are transparent enough. and those calculations are obvious enough when we're trying to evaluate jobs. >> sorry for going over this. >> i think it's important that

we find out what it does to our jobs here, and that is not been answered yet. a lot of people are concerned about it, i think some of our airlines, as you know, delta has raised that question, for example, others said, they're not getting the financing that their competitors overseas stayed home are getting. which is a subsidy which they argued and probably rightfully so it caused american jobs. >> actually i would -- i've heard delta make this claim. they've never substantiated. richard anderson just last august indicated they're adding 1800 new flight attendants this year alone. they are the most profitable airline in the country perhaps the world at this time. >> we have a vote on the floor, we're going to try to make it, we're going to come back and -- because we have -- we might have some more senators here. >> when we get back, maybe 15

minutes or so. on the next washington journal, a look at the legislation legislation. >> the committee will come back

to order. i've watched the discussions and listened toed testimony on tuesday with regard to what the bank does, and the fact that literally there are all of our competitive nations that we work with have an entity similar to the bank, that their businesses can rely on. >> it seems strange to me -- i tried to search and figure out what it is that's causing the uproar, and i want to try to get to what i think might be part of it, i want to ask you some questions here and i mean this

to try to get you to explain it. thank you, sir. i'd like to establish the question. give you the opportunity to respond as president of the bank. i understand that the bank is part of the federal government, and that as a result there are rules and regulations that they have to abide by. but i'm concerned when i see you as the head of the bank have been making rather significant political statements that i think may have caused part of the problem. it only bolsters the problem that the bank is picking winners and losers. here's the example that i'm speaking of. in 2013, you said, and i quote, the bank engages in an important balancing act in supporting our exporters, we have to weigh the potential impacts on the environment associated with our financing. without guidelines or limits, ever increasing numbers of new

coal plants will continue to emit more carbon pollution into the air we breathe. america cannot do is this alone. i strongly support the administration's efforts such that other nations follow our lead in restricting financing of new coal fired plants. would you call carbon pollution powers a lot of the homes in my home state of south dakota and used for a lot of power on farms in our part of the country as well. i'm concerned that by using what literally is a loaded carbon pollution, and making personal statements about which types of exports that you may oppose, the xm bank becomes more about advancing policy goals and less about creating american jobs. do you think that making this statement was a mistake? and gives the opponents of the

xm bank the ammunition to say that xm does pick winners and loser s losers? >> well, thank you for giving me a chance to talk about this, and we have a chance to meet in your office, i mentioned earlier, we've had an environmental policy that congress has inserted in our charter since 1992. over two decades, we have been required to look at reasonable payments and the environmental impact. that's not my doing that's been in our charter for over two decades. i mentioned earlier, and in the first part of -- on the bush administration in 2004 '05, '06, the bank got sued. and the bank agreed to a consent decree how to impact, how the bank could do a better job to adhere to the role of congress which is to take the environment

into account. the bank's been doing this, and it's been involving policy over the last two decades it's not something i inserted into a personal agenda. >> can you show me any place where the congress of the united states has identified carbon pollution as being part of your role in terms of managing the environment? >> well, the environment was put in as i said, i'm happy to share with you the lawsuit that the bank lost. and the court found that before i got there, the bank was not taking into account the environment sufficiently. part of that agreement was some restrictions, some regulation on the amount of carbon. so that was -- that precedes me at the bank. >> i understand that you have an obligation in which you can and are required or expected to promote renewable energy. but i can't find where you are in a position to determine.

i'm just going to ask the question. if the organization walks in and they say, we have an opportunity to create, to build a new power plant, is it your role to say is this a coal fired plant and if it is, it's not something we can do? >> we don't look at a coal fired -- we look at the environmental impact, and we look at the amount of high carbon intensity. we in fact, we export coal, we export coal mining equipment, the only thing we've had to do and again as part of a consent decree is to look at to what degree the environment's impacted by our expert. that was put in my congress, and again, the xm bank lost a lawsuit about that. i'm happy to share with you the section of the law, i'm happy to share with you the consent decree. >> i think what happens in this particular case is it gives those individuals concern about whether or not you're picking winners and losers. you shouldn't be picking winners

and losers i think it gives them the opportunity to point to the fact that in this particular case, when it comes to your statements on maher plants that are coal fired that you do have a desire or an interest in promoting those which are not coal fired. i bring it up, because i think it's got to be clarified, that either you are picking winners and losers and giving people who do not want to see this bank continue forward, you're giving them the ammo that they want to show that you are picking winners and losers and that's not the way it was set up in their opinion nor in their opinion. if we're misunderstanding the focus that you think the bank has gotten. >> i guess all can i say is that we're doing to the best of our ability to follow the will of congress 234in terms of taking the enviro