news report, several of them, that stated that amtrak regional 188 had a fist sized area of severe damage on its windshield. possibly consistent with that of being struck by some rock or object. 20 minutes before the crash of 18 8 a regional commuter train in the same area had to stop service after its window was hit by an object. finally, also around the same time, amtrak 2173 was apparently also struck by an object while traveling southbound in the very same area. there's an old saying that while once is an accident, twice is a coincidence coincidence, and three times is a pattern. do you think, mr. hart that that applies here? >> that was part of the process before leaving the station. we are confident the damage

occurred after leaving the station, but we don't know if it was before the accident or after the accident. we know it was not a weapon fired, the fbi helped us determine that. we know that. we know rocks are thrown all the time, and it often cracks the wind windshield windshield, but it could be post accident damage as well. >> there's been no revelations or findings during the investigation of individual or individuals culprits responsible for the damage done to the other two trains as well? have we found out anything in that regard? >> no, we do not have information yet in that regard. >> >>. >> any other panelists like to address that, the possibility of damage to the windshield?

>> i think we have had people from time to time throw rocks at trains, but what's the specific question in terms of -- >> realmwell, you know, i have family that lives in manhattan, and they ride this train. i rode the train several times along the same corridor, and i've remarked to myself and others there's certainly a lot of availability and possibility of vandalism, somebody pitching something over on to a train or firing a weapon, whatever and i wonder if there's been investigation ongoing you? any addressing of this possibility by ntsb or any of the other agencies? >> the way we address the particular area we have difficulty including this one is with our amtrak police department and partnerships we

have with the police departments along the way, so as we've been there, we're looking to see where those rocks might have been, might have come anywhere else that we have that kind of difficulty on the corridor, we do have an investigation that goes into see if we can find the when and the where and who that might be tossing rocks and it's generally an immature person, some kind of kids or something that are doing that, and it's not just at trains, but to busses, cars, and other kinds of conveyances as well. >> okay, mr. chairman, i yield back thank you very much. >> mr. hunt, what time is it? >> 1:06. i got 1:06. that has 1:05.

do seconds matter on a train going 100 miles per hour. >> very crucial yes. >> my presumption, correct me if i'm wrong, at this point as we speak, you have general knowledge of what occurred with that cell phone, is that a fair assumption or had you just not looked at all? >> yes, we are looking at it intentively with respect to may 12th. >> dotal i's and crossing t's? >> that's crucial we get that right. we're not going to be -- we're not going to be hurried into a wrong answer. >> is that the normal course of the events? >> question. >> we are surprised because we are experts, looking at cell phones because it's so frequent in every mode. >> i appreciate that. again, i -- like everyone else, i'm frustrated the cell phone is not settled yet, but i presume you've got some general information about what happened. >> yes. >> reluctant to say it because you are dotting is, and crossing ts, what i want you to do would

be nice if you could do that now, but i hope it's soon. i assume it will be, but nonetheless, i am willing to wait. on seat belts ms. feinberg, you're not as old as i am. when i was a kid, you know we didn't have is thes in the car. we had them but -- i take that back, i'm not sure that we had them. i was thrown in the back of the station wagon and played all day long and run around in the back until my mother or father turned around and made that threat, sit down, i'll stop this car, you know, every kid my age heard that yet we put seat belts in the cars. you restricted my freedom! you have seat belts in airplanes. you restricted my freedom. yet, i can still get up and go to the bathroom in the back. i understand the structure of current trains make it not much

use. i get that. i get the fact it could take 15 years to get where we. to be on seat belts but at some point, again, on the presumption that seat belts help, assume they do because the automobile and airplane industry instituted them, and some people do not wear them. i'm not perfect myself. i did not start wearing a seat belt until i screamed at my own kids to put a seat belt on and then i realized i was a hypocrite, so i wore my own seat belt, which like it or not it's better for me. i get that. i'm not suggesting we have to put seat belts on the train now but to pretend they are somehow going to restrict people's freedom and drive the ridership down is absurd. and i would simply encourage you, if it is a safety feature, again, i'm not the expert, i listen to the ntsb, if they save lives or stop injuries, then we should start planning on the

implementation of them. if it can't be done on current train implementations, fine, i get that. at some point mr. boardman, you'll order new trains and when you do, implement seat belts. those are two thing and with that, one other thing. mr. chairman, i ask unanimous consent to include in the record materials from the fcc showing what the fcc has done to -- i won't say help but help and/or hinder the move towards positive train control. >> without objection, so ordered. >> i yield back. see, i gave you time. >> mr. stanford were here, he would take note. obviously, there's a lot of frustration in the committee, and, certain, a lot of tension to the lack of answers thereof, and it's been three weeks now, and this is all over the media, rightly so loss of life and there are americans that are still looking for answers and just as well.

i know you'll continue to do your research but you've come before the entire committee of congress without cell phone information, whether the cell phone was on or off, operateble, to not understand what the records are after three weeks, and to not have an idea if there was a mechanical failure when you have the train. service was put in a year ago, and we can't do an autopsy on the train to understand whether there was a mechanical failure? it sounds like, wow, the engineer does not have recollection seconds before the crash, but he's being cooperative. we have to have assumptions or some facts on whether or not there could have been an operator error or operator that actually created some type of

malfunction. there are few answers right now. three weeks after one of the most horrific crashes our nation has ever seen so because of that, we're going to ask you for a timely response to the questions that have come here today. we need to make a determination whether or not this body will have another hearing several weeks from now. so with that i would ask unanimous consent that the record of today's hearing remain open until such time witnesses provided answers to questions submitted to them in writing, and unanimous consent that the record remain open for 15 days for additional comments, and that witnesses provide answers to the questions for the record within 15 days of today's hearing. without objection, so order the i thank each of the witnesses for being here today, and, again, i'd like to thank our witnesses for your expedient response to the crash site

itself and collaboration to work together to resolve that, and mr. hart? >> yes. a final comment. we have not found anomalies with respect to the locomotive for clarification, not the tracks, or signals or locomotive to explain the accident. >> thank you, mr. hart. if no other members have anything to add the committee stands adjourned. on the next "washington journal," nelson schwartz and homeland security general, clark kent ervin talks tsa screenings and fake explosionvesexplosives. david shepherdson has the latest on the takata air bag recall

included to 30 million vehicles. we'll take calls and comments on facebook and twitter. "washington journal" live every day at 7:00 a.m. eastern on c-span. the new congressional directorydirect directydirect directory is a handy guide to the 114th congress with color photos for every senator and house member and bio and contact information, twitter handles, district maps, a foldout map of capitol hill, congressional committeeings, president's cabinet, federal agencies, and state governors. order the .95, shipping and handling through the cspan online store at cspan.org. authorization for the export-import bank set to expire at the end of this month. the senate banking committee heard this week from the agency's president and chair about current operations and

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

failures in risk management which are particularly disturbing considering the 40 % increase in xms exposure limit that i opposed in 2012. in a hearing last year the inspector general testified on concerns related, now quoting, to several challenges facing the export-import bank in managing the risk inherent in its core business activities. in recent years, the inspector general and the government accountability office, gao, have identified hundreds of recommendations relating to the weaknesses. i understand you'll address these in the testimony before us today. i think it goes without saying a taxpayer should not be asked to backstop xm's over $110 million portfolio if the bank cannot accurately manage its risk of

loss. much has been said about how they historically returned tax money to the taxpayer each year and i'm sure we'll hear that today, but does not take in losses of what could occur including economic uncertainty and the disproportioned exposure to several industries geographic areas, and large single foreign customers. it is a discussion of the bank's feature, i believe, to include a serious examination of whether or not xm can substantially approve accounting for these and other risks. i'm concerned the reforms necessary may not be achievable. nevertheless, i look forward to hear your remarks as the committee takes another hard work at export-import bank. >> mr. brown. >> thank you for holding today's hearings, and thank you, chairman, for joining us again today. i especially want to thank you for the outreach to small

businesses, and the state to the global access, small business forums and northeast ohio youngston, and in toledo and columbus. you've done the same outreach, virtually everywhere in the country. congress does our country no favors when it lurches from one self-inflikted crisis to another. at the end of the year, we saw a fight over expiration to the terrorism risk insurance program. last sunday, the security agency expired. when we deal with the trust fund, it's been in the short, in the form of short term patches, one after another, and i believe 30 extensions, something like that. now we're 27 days away from the export-import bank's authority 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, most notably after 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 xm. the bank was reauthorized by unanimous consent for the senate in 2006 under president bush and republican majorities 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 recent history, the long term history's

been done right, and recent history of limping from one short term authorization to another is bad for small business owners who want certainty in planning investment in hiring, but cannot 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, and it makes it riskier, hurts our competitiveness. of course xm's not perfect, no person or institution in a country this large can be, but its work is so important, and in today's global economy, we have to support businesses selling products around the globe. many on the committee argued for fast track authority and support the partnership that arguably, very arguably may or may not mean 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 ensuring they are weaware had and we know competitors around the world have their own version of the banks and there's about 60 export credit agencies worldwide. we shouldn't put our manufacturers and our exporters in a disadvantage to china to india, to european countries. means more manufacturing, more exports, more jobs particularly higher paying manufacturing jobs. it's why the work of xm is so important, and why reauthorizing by june 30 is essential. i look forward to working with colleagues especially to appreciate the comments tuesday from senators kirk and highcamp and others committed to ensuring this authority does not lapse for the first time in seven decades. mr. chairman. >> mr. chairman your written testimony, we reviewed it, made part of the record in its entirety if you sum up your system we're going to after

that, we're going to -- if the senate is on schedule, we'll have a vote and break, but we'll wait and see. >> rouryou're recognized. >> thank you. chairman, ranking member distinguished members of the committee, thank you for inviting me to testify about how xm e quips u.s. businesses to compete in the global economy and add jobs here at home. xm compliments for the private sector, we provide backstop financing so they 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 winner rs and losers. rather, if serves any eligible american business seeking competitive financing. we are, by definition demand driven. of course, our customers pay

fees and interests for this service, and as a result, xm is completely self-sustaining. last year alone, xm generated 6735 -- $675 million. if not reauthorized, xm not only able to generate half billion in revenue for the taxpayers, and as you know, in may in 2012, xm was reauthorized with overwhelming bipartisan support. 78 members of the senate and 330 in the house. and i know our exporters and their workers are pleased to see movement in the senate for two bills introduced this congress. i take very seriously my duty to implement the will of congress, and i provided each of you with all the documentation outlining xm's implementation of every single requirement from the 2012 reauthorization. while i work diligently to implement any future requirements congress chooses to

enact. on top of that mr. chairman, we're keenly focused on risk management demonstrated by a low default rate of 0.167% as of march 2015. they continue to implement risk management approvements to further ensure we remain faith faithfulfaith faithful stewards of the taxpayer. for example, i have two. we increase staffing on the monitoring division by 33 % and 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 continuely identify ways to become stronger and sleeker, and we can always do better. we continuely strive to be better and improve how we operate and improve small businesses. for example, aviation and ohio, and printing in alabama. xm, we help u.s. exporters to

pursue sales, create jobs and compete more effectively in global markets. global competition has ramped up dramatically since the last reauthorization and continues to do so. american businesses and workers are not simply competing against the chinese russian, or french koumpbt parts counter parts, but against russian countries. they made it clear. ratchet down export credits. 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 counterparts to discuss exactly that topic. here's 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 agencies fill the gap so they do not lose sales or workers. xm bank is like a fire truck in that sense. you don't sell off the fire truck because there's no fires. in closing, as this committee is aware, businesses need certainty to make long term plans to grow higher and innovate. there's now about 80 other export credit agencies around the world aggressively fighting for jobs unlike xm bank. one of the agencies recently noted they doubled their financing in 20 14and plan to double again in the next year or two. we look forward to working with you, mr. chairman, and the committee to continuing empowering your constituents to export more and hire more american workers. thank you, and i look forward to the question. >> because we have not called a vote yet we'll move on to the questions. in 2012, export-import banks inspector general reported that

xm's narrow definition of default may result in an understatement of the bank's historical default and among other things, the inspector general noted xm's definition of default does not include technical defaults, refleblgting ing -- reflecting failure to comply. do you think they have not properly implemented 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 sense of historical defaults? >> well, mr. chairman we actually just submitted a full report to congress every 90 days, one of the reforms in congress. the default in here is outlaid claims paid by the export-import bank. they currently run less than one fifth of 1%. in addition, in this report we indicate the late may wants an

indicator of what might possibly default in the future because they are late. in terms of a technical default, something such as a filing of a financial statement could be running a week or two late or could be some kind of compliance issue like that, so we -- we are on top of that. we monitor that, but that's not in the definition that congress gave us. we have currently -- congress updated the definition of the default four times since 2012. >> would that include maybe violation of loan governance? >> it would depend on technical default, could be -- >> subsidy in that image? >> it could be, but it would not be -- have any material effect on the ability to repay. if it does, we have a watch list that we produce every single month of credit that requires extra scrutiny or troubled credits. >> mr. chairman, according to the xm bank's annual report, the

ocp, a questionable history of human rights, and they submitted loan guarantees and several news sources 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. the question is this, how do you ensure to the american people none of the money guarantee has not been used to fund the clinton foundation or other unrelated activities once the money's there? >> well, for one, the money has not been dispersed yet, so at the moment -- we've approved the loan, but not finished documentation and dispersed it. no money has been used for that purpose. secondly all money that's borrowed for a specific transaction relates todd purchase of the u.s. goods and services and the other attending

services around that. they have to show invoices of what the money is used for and that's when the dispersement is made. that's when the shipment is made. >> bother you at all that ocp donated millions and hosted a fundraiser, and we make them a loan. is that a red flag for you or doesn't bother you? >> well, congressman, we look at every transaction, look in terms of reputational risks, critical integrity of the transaction. this is a large mining operation in morocco. >> state owned. >> understand this, there's a lot of discussion. in the rest of the world much of the infrastructure in country after country is state owned. power plantings, transportation rail, all utilities, water services mining frequently state owned. that is -- that's the way the business -- whether you like it or not itst done around the world.

this is a good project buying 100 million worth of u.s. goods, creating a lot of jobs in america, and we, obviously make sure it's credit worthy environmentally sound with no reputational risk. >> mr. chairman in the area of subsidies in free markets, we have that debate. i think it's a healthy debate. in your written testimony, you state now, quote, it is incumbent upon america to strive to level the playing feel in the import area, restoring free market factors to the rightful place at center stage of competition. what does that mean to you? >> it means very clearly the rest of the world has a lot more government engagement with their industries and companies. as you just mentioned, mr. chairman. we want to make sure that by our financing, we level the playing field. use ocp for example, we want to make sure the financial package

backing up u.s. exporters is the same package that backs up our competitors in china, germany, or much of europe. so that the buyer picks from a free market the best product best service, best kwautquality, not because there's a finger on the scale providing off market financing to give it their country an advantage. >> we heard testimony a couple days ago that a little less than 2% of american exports rely on or do business with exporting and import bank, but 98 % doernt, and there's exporting. does that figure right? >> that's right. that's a good thing. the private sector does a good job. >> senator brown. >> thank you, mr. chairman. they should encourage, not committee with private capital, unquote, and a lot of jets, for example, are sold without xm

help. why can't everything be financed by -- financed solely by the private sector? >> i wish it was such but it's not. i guess there's a couple reasons, senator. one, we face in the commercial jet area, immense competition backed by the governments of germany, france, and briton tan. each with an agency that backs all purchases. to have a level playing field make sure it's between american produced aircraft made through 15,000 suppliers of the boeing company, and air bus backed by three governments, we need to provide a comparable financing package when warranted. from time to time, we just came through the worst financial crisis since the depression, when liquidity tightened up and constrict constricted, and we had to step in and fill the gap to keep trade growing and jobs supported in the country.

since there's more liquidity since the recession it is in our rearview mirror, our lending dropped. we're doing 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 just two years ago. some opponents of xm and they come out through increasing volume, express concerns about risk oversight at the bank, and the bank's portfolio has grown in the last five or six years since 2009 and number of employees has not grown by much. your inspector general in april noted that quote, uncertainty about xm bank's long term reauthorization hinders recruitment. we know there's a whole host of reasons that fits and starts and short term reauthorization that congress seems to inflict on a whole lot of government programs including certainly yours fits

you've had negative impact on investment, on long term decisions on predictability. talk to me if you would about how this repeated short term authorizations and possible expirations affect the ability to recruit. >> well, i think that it's made it challenging to recruit. i'm -- there's also a bit of a brain train as people are concerned. our employees are no different than the 164,000 jobs we support around the country. they are worry about a mortgage tuition payment, 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% is because of the good underwriting and asset management, and i fear that this debate can jeopardize our ability to retain those people and to bring new people as it goes on and on.

>> so these talk -- talk further, if you would, touching on your testimony repeated short term reauthorization, the continued threats that xm will not exist after june 30th how does that affect your small business customers? i've had, you mentioned davenport in columbus ohio, a company in alabama, and i met with a dozen 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 that really gave up time and costing companies to come here to push members to push for reauthorization. what effect do you see this has on small business customers? >> seen firsthand with one of the tools that small businesses use is a working capital program. we work with that bank to make

loans to support exports. more than a few banks have stopped -- pulled back in light of the uncertainty. they deponentment to be mentdon't want to be in a situation where they made a loan, and if it expires they are not able to execute it. we've seen some constriction in working capital lines forcing -- if you're a small exporter with very small percentage, you might be able to fit that in the regular working capital loans. if exporting is 20 to 30%, that's too large to fit in your working capital, and 10so we've seen that. a lot of what we do for small businesses is provide credit insurance so when they ship overseas, we insurance they are receivable. commercial brokers are loathed to write a policy that may have 20 days left. >> thank you, mr. chairman. >> senator corker. >> thank you, mr. chairman, thank you for the service. we had a hearing, i guess a

couple days ago, and it came pretty evident that, you know, we're involved in a race to the bottom with these export credit agencies that -- that in essence, the national manufacturers association had a witness in here, and i guess it really highlighted more than ever that that is really what we're about is we are competing with other countries as you mentioned, many of those companies that are in these countries are state owned enterprises, import credit agencies in other countries, putting you, putting our nation in a place where we're in a race to the bottom, and to try to quote, level the playing field, and i assume you agree with that, is that correct? >> yes. i mean, the organization for economic cooperation development, which is having influence influence, some call the arrangement, where most industrialized countries are a party to but russia china, india, and brazil are not. we have a standard.

we have a minimum fee we charge so there's not race to the bottom. the challenge is countries that are not a 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 clear that it was all about market conditions, and it was about meeting the -- i use the case of boeing. their name came up, nothing against boeing, i like flying in their airplanes, but she did lay out the fact that this is really -- it is that. it's a race to the bottom, competing against other countries, and how do you when making the loans to a manufacturer like this, and you know they are -- you're doing this to make it so that a company in another country is able to buy equipment, name

whatever type, at a lower rate, and yet those companies compete with other u.s. companies without the import credit, in other words, yours, and how do you compete with that? in some cases, you make 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 domestically. how do you reconcile that? >> we do the best we can to level the playing field. for a specific example south africa this week and i met with transnet, 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 them, what kind of financing terms are the chinese offering you so i know as a businessman what the competition is. he said, well, they said to me, what would i like? 10 years, 15 years, 230 20

years, a grace period? what do i want? we don't do that. we offered the most we can offer at 14 years. however, by offering 145 -- 14 years, we got half the order, and did not lose half the order to the chinese. one last thing is not surprisingly surprisingly, a month before the tender was determined china made a $5 billion donation to the rail system. perhaps it's a coincidence perhaps not. >> you can see why this would be -- we understand the business you're in and i was going to e e lewd to you after 2012 needing 20 try to get other countries to lower this amount of activity. you alluded to that in the opening comments, but you can tell -- i mean this is an un unseemly business to those of us sitting here.

basically, we created this entity to create financing, to committee with other countries that are based basically racing to the bottom. the other, i guess, part of your your, quote, agenda, ensure smaller enterprises have access to credit yet we looked at the application form and there's really no -- nothing there that requires them to make sure r requires you to make sure you're the lender of last resort. you can check other on the form and sign it, but i had an amendment a couple years ago to make sure that xm was the lender of last resort. i know you did not support that and i know over in the house, there's 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 easy check another box? >> well there's four questions

to answer with seven sub parts. >> would you be supportive of that being much stronger so we know, in fact, you are the lender? >> it should be stronger but let's be clear. you sign the application. you are committing perjury fins, and prison. >> not if you check other. will you support much stronger legislation to absolutely ensure that you are the lender of last resort in. >> well, senator, i guess i believe that certifyications -- >> we'll be pressing and talking to the office about it and i close with this. i was in eastern europe recently dealing with a number of different issue, and i have to tell you, it was offended to realize the xm bank took on

policies without congress involved in any way. as i understand, xm was no longer financing coal exports, that somehow or another that you, without a congressional mandate, had decidesd it was a great market for the coal suppliers. you decided, the xm bank decided because they laid out the policy you would no longer do that, that i find that to be offensive, not that i'm a lover of coal or not a lover of coal, that you would be able to do that. i wonder if you could respond why, if congress has not legislated that? >> they put in the charter 23 years ago, that they have to take that into account for taking a loan agreement.

in the bush ad prgs the bank was sued in a settlement before i got to the bank had to agree how we had a rigorous environmental policy. that goes back to 2006 2007, and 2008 before i got to the bank. over the 23 years, we adjusted our environmental policy to meet the needs of science and industry over and over again so that's not a recent -- something inserted recently. >> if we change that, you're fine with that? >> we have an environmental standard up to congress to determine it, and we try to comply with other -- the world bank, other agencies around the world, but i want to be clear, we actually do support the administration's climate action plan to restrict plans rather than to the poorest countries, totaling 8 0 countries now with no restrictions, but in the wealthier countries, we support

the position. >> mr. chairman, thank you, i did not dpoeknow we carried out environmental policy through the xm bank. >> i did not either. we learned something today, didn't we? thank you,menendez. >> thank you. i'd like to enter into the record a list of 24 4 new jersey companies, over 74% that are small businesses that received xm financing since 2007. >> okay. i fully support a timely reauthorization of the bank, and i hear regularly from my constituents of the the role that the bank plays in making new jersey exports competitive on the international market. many companies come to washington to explain how xm supported their efforts around the world. others wrote to me in support of

xm's reauthorization and speaking to them here today. 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 plays a critical role in furthering u.s. national security and economic interests. ukraine gets fully half of the electricity from nuclear power. historically, they have been dependent on russia to manage the used fuel from the plants. after the orange revolution, ukraine moved to break that tie by establishing its own spent fuel storage facility. i know about the issue because a new jersey firm whole tech international won the contract to conduct the facility. because of rich sha's economic and military aggression, the new government in ukraine did not have resources to go forward with the new jersey firm. that's where the xm bank comes

in. by providing loan guarantees to help manage the risks of investing in this stra steejtegically important country, small the senate extended on in the act, they make the deal possible. this project would bring jobs and income into new jersey where they expand a presence with a new $260 million manufacturing facility supportings ukraine's ability to develop own expertise in infrastructure and remove a lever of russian influence in ukraine. ukraine could keep over 1.5 billion in fees that would otherwise be sent to russia. unfortunately, since the contract was awarded, this situation in ukraine has not been able to go forward. there were arguments tuesday that american firms should sink or swim on their own in international markets. that we don't need additional

options to pursue our diplomatic goals as other nations, including our most significant trading partners and rivals continue to pour more resources into promoting their exports. now, in a world of perfect markets, in a world where all countries wished us well, in a world where no other nation provides support for the international operations of the industry, that would be an appealing idea. that is not the world that we live in. this is an ongoing national security challenge and how do you see the role that xm bank plays in bolstering u.s. national security and the services it provides u.s. companies?

>> thank you snavrt,enator, and thank you for the support and many companies that we work with in new jersey. let's be clear. our number one priority is u.s. jobs. that's what we are here for, to support u.s. jobs through the financing of exports. that said obviously, economic security and national security go hand in hand. we work with a number of defense contractors now moving into commercial fields oshkosh is a good example, a number of them financing theirs but most importantly, it's about u.s. jobs, but, clearly if you have energy energy, and commercial banks are reluctant to engage in without our assistance and guarantees so there's a close relationship between those national security interests and economic security and jobs. >> let me ask another question. china, they've been particularly aggressive in export financing

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 the written and oral testimony. can you elaborate on trends you see in export financing by u.s. competitors? >> well, china is right now the largest export in the world. we were number one a dozen years ago. i believe we could be the number one exporter again because of the technology and innovation. that said, china has four different banks that do export creditings. we have one. just one of those in two years has done about 670 billion worth of loans and guarantees, took us 80 years to get to 590 billion. took us 80 years to do what they did in 8 years. that r that said, the secretary

of treasury, been working on negotiations that they join an international frame work for transparency and try to tamp that down. there's an ongoing negotiation, and it is taking time. >> well, mr. chairman, i just think that we should not engage in unilateral disarmorment, and that is exactly what we'll do if we let xm expire and we are facing global competitors in many countries, china, brazil and others, that are helping their companies create the opportunity to penetrate markets, which means jobs here at home. thank you. >> senator tou? >> thank you, mr. chairman. i think we should reach an understanding of what's going on here. one of the arguments that supporters of the xm bank make, this is a policy choice a free

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

it's desirable. let's not pretend that it's not an interference on the free market. that's my point. chairman refers to the xm bank finances, as filling in the gaps. if there's a gap that tells you something. here's another way to look at this. if the xm bank creates jobs, if this is to be believed, it seems to me it must necessarily be the case they provide financing that would not otherwise occur or it's 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 xm bank is financing at rates and materials that the market is able unable or unwilling to offer, then that's not the free

market. in fact, that's the definition of a subsidy. it's the subsidy the taxpayers are 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 required to take, and so i don't think there's even a question that taxpayers are forced to take this risk. question is, for whom? if it's to large politically cooperations, that strikes me as crony capitalism. it's it credit worthy foreign corporations, we put taxpayers at risk to benefit them? none of these outcomes in my view make sense. i have one specific question to the chairman. when we talk about the jobs that are created do you net out 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 subsidy of cheaper aircraft? miners that have to compete with overseas mining operations that get the subsidy of mining equipment, refineries in the united states that have to compete with foreign refineries that benefit in a similar fashion, seems to me the lost jobs ought to count. do you include that in your analysis? >> well, senator, thank you, and thank you for coming today. first of all, there's a couple things we mentioned. we -- xm has not received a single bailout. from 193 4 to 1992, we sent a billion dollars to the taxpayers. after federal credit reform act of 1990, from 92 to 2014, we sent $6.9 billion. that's cash that leaves the checking account of the bank and goes to the treasury. it's the saddest day for our cfo each year as that money leaves our bank account.

i have to be clear about that. we don't pick winners and losers. they come to us for financing to compete with overseas competition. 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 market place. we also do something, put in congress since 1968 called an economic impact review. economic impact review said if we export the export of capital equipment, use the example of mining equipment, we have to make sure that the benefits to the u.s. economy from that will make sure there's a net benefit to our economy. so we do that each and every one of those -- we, in fact; look at every single transaction to ensure that. >> looking at the net, you acknowledge there are some who win and some who lose and you add it up and say if it's on balance, a net positive? >> we look at -- we -- we make sure 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 acknowledged that there are winners, and we count them and there are losers we create, but as long as the net we think is positive 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. we either have u.s. mineing equipment or chinese, japanese or krooen. we wanted the u.s. economy to win and ensure jobs are here and not elsewhere. >> i've run out of time mr. foreman. i appreciate the indulgence. the gao accountanted edconcluded this creates net new jobs, but shifts jobs, and in my view, it's certainly picking winners and losers. >> thank you senator warren. >> thank you, mr. chairman i have to follow up on the question around jobs. we talk about xm and about job, and i believe that the xm bank helps create american jobs and

spur economic growth but i also think that the bank's operations can be improved in certain areas, so i want 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 the goods as testified to this morning, but in some cases the foreign company purchasing those goods also has u.s. competitors, so helping that foreign company p can mean that the foreign buyer gets a ben dpitefit not available to their u.s. competitors. picking up where i left off last time, before financing a deal to ensure i hear this right does the bank determine the number of u.s. jobs lost by helping a foreign competitor is accounted in the calculation? >> what we look at, senator

warren, we look at, one, we review every transaction. congress made it clear if the production that would be generated by capital equipment export exceeded 1 % of u.s. production, that would trigger in-depth reviews. so if a amount is less than 1 % over 30 years ago determined by congress, that actually would say that the impact would be adverse. >> so i'm understanding what you're saying here, you say 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 its u.s. competitors unless it hits a higher threshold. in all of the cases, although kmulatively they are -- you're

not doing that calculation? >> congress established 30 years ago that we -- the threshold is 1 %. >> i'm sorry. i -- 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 numbers 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 the low cost carrier in south africa buying u.s. equipment to fly around south africa. we don't fly them or within south africa. in those cases, no there's no potential impact on the u.s. economy. we look at every transaction. >> so if the foreign buyer has no u.s. competitors, then you say, you know do the

calculation, otherwise say you've done the calculation at 0? >> we review every single transaction. >> and if there's a domestic u.s. competitor for the foreign company about to get the financing, do you always then do the calculation of -- >> we always do -- >> how many jobs might be lost by the u.s. competitor? just asking how it works. >> that level we do it at the dollar level. >> what that mean at the dollar level? >> we're going to look at the benefits of the u.s. economy by 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 impacts. >> so is there ever a case in which the bank decided not to finance a deal because of its potential impact on u.s. competitors and particularly on jobs? >> yeah.

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

you have rejected a deal because it would cost american competitors jobs? >> or economic impact data -- it's on the board -- it's available after the fact to -- that was one of the reforms put in. act study would be on this transaction. captions copyright national cable satellite corp. 2008 captioning performed by vitac reate 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. 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 environment into account. >> you believe it's the will of congress that we not promote as you call it carbon pollution through the creation of coal fired plants or the use of the bank to finance coal fired plants in other parts of the world? >> well, we are open for coal fired power plants in the '82

poorest countries in the world. the only -- what our current law states is that -- >> you would do it in '80 or '82? >> ida defined by the world -- those we do not have restrictions at all. in wealthier countries. countries that have options on renewable gas, nuclear the current policy, and in our appropriation bill says that we don't do nicole fired power plants in those countries where they have a lot of options. 80 countries in the world approximately today. >> is that directed by congress or is that a policy which has been created within the bank itself? >> no, that's current appropriation language. >> thank you, sir. appreciate your comments. thank you, mr. -- >> thank you, mr. chairman. i just want to kind of run through this. basically you're subject to the requirements of nefa. you have to do an eis or some

kind of environmental assessment on the decisions that you make. there wasn't any decisions being made regarding carbon you're sued as a result, you signed a consent decree that says yes carbon will be part of that consideration, right? >> my predecessor -- >> the bank is under a consent order by the court to take that into consideration. it's similar to what happened to epa, when epa said carbon's not a pollutant the united states supreme court said it could be and you need to take a look at massachusetts case. and so i just want to make clear this is not a policy that came into existence when the president became the president it's not something that you initiated at the bank although you're administering it. it's creating controversy here. as a result the kirk heitkamp bill puts in there you can't discriminate against any legitimate business. that's something that was vetted strongly during the negotiations

on the bill with whole companies as well. or i wouldn't sign on this bill. we've addressed a lot of the concerns that the senators have expressed regarding picking winners and losers, regarding environmental impact on carbon. and so it doesn't mean -- i guess when you look at the nondiscrimination language not something that was appreciated but obviously if that passes, it will be administered appropriately by the xm bank is that correct? >> yeah, we're -- obviously we'll totally and completely follow the will of congress. the consent decree we referred to, that's a regulation put in by the court we made everybody unhappy. we made the environmental community unhappy we made the exporters unhappy. maybe that makes a good policy, when everybody's unhappy, everybody's not happy with that outcome. >> i want to get to another issue raised here. you don't do enough for small

business. the bank really represents two major multinational corporations, and that's -- you know the piggybank for these two large corporations. i would tell you that i've had a fair amount of experience with the xm bank, first working with the xm bank and the bank of north saturdayde coat de an iconic institution they've had this long recollectionship that's been fruitful for north dakota exporters. i want to have you address what you've done to reach out to the small businesses like you've reached out in north dakota. whether you think in fact in the heitkamp bill whether we can achieve a 25% target in the next period as established by that bill? >> let me say this, and thank you for your support of the bank, and thank you for proposing one of the bills under

consideration i know our exporters and workers are keenly focused on that. i ran a small business. we have in this fiscal year, we put in an 800 number. operators are available 8:00 to 8:00, if you go on our website, we do have an online chat. >> i only have so much time, do you think you can achieve a 25% target in this period of time that we've given you in this reauthorization. >> i think that's a very steep target. the reason i say that we are demand driven. people come to us when they need us. right now, banks are doing a better job. in some ways they have more options. when there's a financial crisis, they come to us. that's the challenge. i will work on any target. we're doing better than 20%, which is our current target. but it's difficult to know because we're demand driven, what the demand is.

that's the only challenge i say, with any particular target in this regard. >> finally obviously there's a lot of concern. and i think the chairman expressed some legitimate concern about reforms. and we're very interested in ongoing activities that the bank has to address concerns that have been expressed by this committee and by gao and by the inspector general. where do you think you are in adapting and adjusting and responding to the concerns that have been expressed about governance of the bank? >> well, let me say i mentioned earlier, you know these are the reforms that were put in in 2012, they kplids with each and every one of them. there are a number of reforms that have been proposed in the heitkamp bill and the three other bills circulating. we will move forward on any of the reforms that are enacted and do our best to enact them quickly and officially. all i'm worried about is not

creating a burden for small business that makes it harder to be nimble. >> finally, when you look at the bank, and you look at the hard deadline that we have at the end of the month how disruptive will it be if we allow the charter to lapse and then try to reinstate that? how much additional cost will the bank experience even if we were able to reinstate it? >> i think the uncertainty has caused a lot of concern. the uncertainty has caused workers to be restrictive to small businesses. and my fear is that there's been a lot of uncertainty. i spent a lot of time convincing foreign buyers we're going to be there, and they can rely on us rely on the united states. i think that even a temporary lapse will have a very negative effect because it makes us less reliable. it makes u.s. companies less reliable and puts our workers in jeopardy.

>> thank you mr. chairman i want to brief you on a project near and dear to me. that is the c-919. the chinese competitor built the boeing 737 with subsidies from china. we've seen 400 of these booked. all those orders should have come to the united states. i can say to my colleagues, i'm for xm to keep winners and losers. those winners should be americans. make sure those 400 orders come to the united states. think of the -- if you know aviation as i do all the spare parts for the boeing 737 are going to be american originated. in the case of the d-919 they will be largely chinese for the

billion s billions coming to this airplane, i want to thank heidi for her work on the national defense authorization bill. make sure we win the competition against the c-919. >> thank you, mr. chairman. you may have already addressed this and if you have please let me know. but i wanted to have you explore a little bit the subsidies that chij in a gives to their export, including what we've been hearing about, the $10 billion in export credit to africa, bringing their total to $30 billion in expert credits to africa, which is roughly equivalent to xm's global valium

for the year. >> china is a particularly vulnerable competitor. total u.s. exports about 23, 24 billion, that's all exports, as you decided china's going to vote $30 billion alone. we see them everywhere, in power plants, infrastructure, mining, perhaps aircraft. they are a very, very formidable competitor. fastest growing region in the world right now. >> essentially, we have a very unlevel playing field if they're providing finance support for their industries and we're not doing the same? >> we exist to fry to level that playing field and do the best we can, but we have a little bit tied behind our back, in terms of, we abide by a number of global guidelines and rules, and

china is untethered by that. >> we've been having a debate here over the fast track and the trans pacific partnership and other potential agreements there's a real debate over whether it will create jobs in america or eliminate jobs. in this case can't we say that this is a 100% clear that this financing creates jobs here in the united states of america? >> i would say our calculations -- >> can you remind us again how many jobs there are at stake here? >> we supported 165,000 jobs last year alone about 1.2, 1.3 billion in the six years i've been at the bank. >> thank you mr. chairman, good morning. thank you for being here this morning, such an important

topic, i want to share with you two stories from two of our more important employers in south carolina and get your response to the comments that they've made to me. the first one is sage automotive interiors. because of the downturn of the economy, they decided to spin them off or get rid of them. >> unfortunately, senior management decided to get the capital together buy that company and now they are employing more than 600 employees throughout south carolina. >> they've been able to succeed because of their exporting opportunities. >> sage has used according to the company -- he's used the xm bank since its inception because it's necessary nor them to do so, and a very similar story in

another player, grace management group. grace has been around since 1975, they have locations in spartan berg and locations in places where senator shelby has a residence in alabama. they have done very well,ny have showcases in atlanta, alabama and las vegas. >> it's a wonderful success story from spartanburg, south carolina. because commercial banks and the u.s. are prohibited from using foreign receivables as collateral for loan ss, they have no alternative but to apply for national sales support. >> i had a chance to visit sage on a recent trip to south carolina companies come to us

when they can find finance inging sage is an excellent example of that. 90% of our customers are small businesses. of the exports we financed last year of 27 $1/2 billion a full 10 billion came directly from small businesses. >> i'll ask you this question directly. according to sage, commercial banks in the u.s. are prohibit ed from using these foreign receivables as collateral? >> that's correct. commercial banks will not value upon -- they valuated at zero, when we ensure those receivables through credit insurance. they will lend 75 80, 90% against the receivables, creating a real base so the banks can get the working capital, hire people, get the raw materials and ship the goods overseas. >> for a business having operations, making sales in 90 countries, not to be able to use

a part of those receivables to determine their cashflow would be a crippling impact if they lost that opportunity? >> it totally disables them. it impedes seeking export sales and the jobs that come from them. >> i had a conversation last night. i was invited to dinner from some members of the house. which was a rare opportunity. >> they suggested there's major players in the aviation world that are very much in opposition to the xm bank. i wonder if some of those player players access eded this. >> they're made in brazil and canada. i know for a fact that delta

airlines is a major major user of jets and a major user of financing from the canadian government and brazilian government to finance those regional jets. if any of us fly to new york on the delta shuttle you're flying on a plane in all likelihood financed by the brazilian government. >> i hope i can get a seat on that plane the next time i go to new york after this question. >> on the reform package that's been offered by senator kirk and finter, some of the questions we're pondsering is to reduce the borrowing authority your thoughts on that? >> i know there are a number of reforms. it concerns me we would reduce the amount of lending authority we have at xm bank when we have

countries like china. 400 orders china's given no indication they're going to follow any rules. i would certainly have a concern obviously we'll work with congress on the solution. i'm concerned about restricting our efforts and sending that bad signal. even if we never get there the signal and message is very important important. >> would you provide me with an additional 30 seconds? football time, 30 seconds. thank you, sir. >> how about on increasing the reserve requirements? >>. >> well, there are a snub of reforms that have been proposed, they're currently four different bills, two from your colleagues in the house, and two in the senate. >>. >> what we've done is provided technical assistance to any member who would like to review reform by reform i think that is probably a more thoughtful

way of doing it than just by shooting from the hip here. i think that we're looking for a solution, we want to work up with this committee and the house to find what is the proper oversite so we can make sure we move forward and give some certainty. >> last question. on the pilot program for reassurance, thoughts? >> i think that's a good -- we'd be interested in pursuing that pilot, if it's in our reauthorization, it would be open to that. >> and how -- >> i will support the xm bank today or in the future. we need some reforms in the process, i think it's important for us to figure out the path going-forward and frankly if we were able to negotiate a unilateral disarming i want to get your thoughts and have a

longer conversation with you about the necessity of reforms as we move forward. >> if i can add, we continually improve the bank. >> we're waiting for congress to come up with the bill. we're constantly finding better ways to improve risk the needs of workers and taxpayers. >> thank you. >> thank you, mr. chairman. yesterday one of the witnesses talked about how the xm bank was creating $140 billion in taxpayer risk to the people of the united states. i think by that they were referring to the loan guarantees the xm bank has made for your customers, the other product portfolio

portfolios. what has your loss ratio been? >>. >> we report to congress every 90 days every 90 days congress is updated. our current default rate is running less than 1/5 of 1%. >> how is that considered industry wide? >> most commercial banks are apples to apples, multiples of that. >> when they talk about that, they're talking about the loan portfolio that any bank would have. at the end of the last three years, did you have a profit or loss at the end of the last three years? >> we have sent information to the treasury. $6.9 billion, that's actual cash that leaves the checking account

and goes to the treasury for taxpayer deficit reduction. >> as you know i'm from the state of indiana. one of our mutual friends has been important in the operations has run a great company, has used the xm bank and helped in management of it and i think that's reflective of our state. it's small and mid sized businesses over 100 companies that have benefited from the bank in recent years and you know overall do you think that those 100 companies would have found comparable financing? >> you mentioned peter as they've grown with us, they are now able to find on the private sector. they couldn't three four years ago. it's now bankable by the private

sector. and if that changes, we -- >> which is pretty much almost a built-in formula for the success for you and businesses. which is, they work with you and it's also good for our banks in that now there's no need for the bank and we're sending exports overseas and jobs that stay right here in the united states of america. >> one other question i wanted to ask you. so if the financing if the xm bank wasn't there where would companies, where would some of these small companies get financing if they're sending product overseas? what other opportunities do they have? >> frequently what they have to do is demand 100% payment in advance. the problem is that's not very

competitive, so their competitors in germany, korea sell and open accounts. with xm bank we're able to provide the financing that they can meet the foreign competition. i should quickly add in the short term space, we've seen as many as 20 skbort credit agencies focused on short term and small businesses in the last couple years. i think there's even more competition for small business exporters than there has been in the past. >> i want to conclude by saying that in indiana those over 100 businesses appreciate what the xm bank has done. the families who their mom or dad have a really good job, have a chance to buy a home and take them on a vacation. those families really appreciate it as well. and that's the real world. it isn't theory, it isn't some economic poss tu lace, it is the

real world of someone who gets a job products are being shipped overseas. things were made in muncie, indiana, rather than beijing or somewhere else. >> thank you for being here this morning. on tuesday, we had a lively panel at one point we discussed was the analogy to arms control the united states shouldn't unilaterally disarm the export credit financing world there's disagreement about how much of the bank's activities are done for that reason to meet foreign competition from foreign dca's. the mercada center is a proponent of the bank.

linda dempsey disputed we didn't have our numbers at our fingertips. can you tell us how much is made to meet competition from foreign aca's? >> it's about 2/3 to meet foreign competition. and one third where there isn't availability. frequently, it's a lot of the small businesses, it's not the availability on any competitive terms. one exporter said, yes, i can get financing in qatar. but they want 22% interest. why would we do a sale at 22% interest. i have a loss in that case. we verify that in the application. the applicant has to certify and i answered earlier under perjury, why they need the loan for us. the guarantee for us. why they need the financial assistance

assistance. >> even miss dempsey has said in a world where we weren't unilaterally disarming that she would is not think the united states needs to have an export credit agency like the xm bank. do you agree with that? they would not need to exist here? >> the challenge with that is all of us, including the xm bank filled in a gap during the financial crisis. our learneding during the -- in 2012 was about double the level today. when banks constrict lending i use this analogy, we're a little like the fire truck. we respond to an emergency. if even if everybody does -- if everybody got rid of their expert credit they would invent them when we have a financial

vice is as they were a few years ago. >> i think we would need to maintain the xm bank even if we can negotiate a treaty with the other few dozen countries. >> there are 85 expert credit agencies in the world. some are a member of an international agreement that does provide some regulation guidelines. many, china, russia brazil, india are not a member, they are very opaque, they can offer any terms they want as long as they want subsidized rates and we really are not able -- that's a real threat to the u.s. competitiveness. >> >>. >> one common point that's made, is the lack of private financing and how you can be a lender of last resort. if there is no market in the private financing markets for a particular project, the market is sending a signal that the

prophet is not -- or the project is not going to be profitable or it's too risky what's your strongest response to that? >> first of all, when the banks pull back, i mean we have the best private sector in the world, the best private sector bank. when the banks pull back something they pull back for internal reasons we are counter cyclical as i mentioned, in 2012 we did over $36 billion in loans. last year we did 20. there's less of a need for us, there's not zero need there's less of a need. projects like nuclear power plabts certain other technologies are just harder to finance they take -- nuclear power plant needs an 18 to 20 year loan. that's hard to secure in the private sector we do fill in counter cyclical and products and services that are particularly hard to finance. >> i would like to discuss one particular example to get a sense of your thinking on it.

this is reports from space news as well as the sunday morning herald. the xm bank helped underwrite loan s loans. they set up a company in australia. the bankruptcy court in delaware said that nustat is in dwee fault. lockheed martin has received $193 million for the sale owns it, much of that money came from xm bank. lockheed martin is a top teered defense contractor, they make some of the best products in the world. in australia couldn't get private market financing, does that not send a signal that now is bankrupt after widespread

reports of mismanagement and travel and luxury lots shouldn't have gotten money in the first place. >> the two countries, united states and france and frankly, we go toe to toe with them all the time. the friends expert credit agency fully supports the satellite sales. >> competition has increased and we've had to do more. similar to nuclear satellites are competitive and harder to finance. >> france's agency was part of this project, they face loss as well, they have greater chance of recovery than the american taxpayer? >> customers pay us a fee. we're far ahead of the game here. we're still under negotiation, the satellite is not completed.

it's not due to launch, there's a lot of time between now and that point. we can't write this book from the last chapter forward. we still have a ways to go, in no way is this a done deal. secondly, these are jobs we supported 250 jobs. there are a lot of jobs at stake, and we finance a number of satellites, we do a good due diligence. from time to time a deal will experience difficulties. that's what capitalism is about sometime deals do better than expected this is a project that's in labor it's difficult right now. we're working through it i still think we're going to find a better solution yes, the news sounds grim. >> i'll say in conclusion my time is well past expired. what capitalism is primarily about is putting private dollars

in risk. when profits and losses are private, then you have the best incentive s incentives mr. chairman. >> i have a couple questions, mr. chairman. what percent of the 47 billion we've been told 47 billion that you have underwritten exports. what percent of that are airplanes, roughly. in other words, the portfolio. >> you said 47 billion? >> last year we did 27 billion. >> we are talking overall. u.s. exports in 2014 was $2.35 trillion. and that you financed about 2% of 47. >> we did about $27 billion worth of exports.

some of those exports remember tourism coming to america is also an export. >> what percentage of your portfolio doubled financing airplanes. >> last year in 2014. we financed in the range of 35% the smallest number of airplanes financed last june. we had the smallest footprint we ever had. >> this question's been asked many ways, let's say we have an airline manage err and they're going to sell some planes to united arab emirates. very rich country could an

airline here like -- we'll just use southwest u.s. air, delta you name it -- could they get the same kind of financing here that you give to their world competitor overseas? >>. >> we have the best capital markets in the worlds. any time a u.s. carrier financing a plane. we run the numbers, we say if they were a foreign carrier, what would we charge to make sure we're charging more. we verify every time there's a financing. we compare that with the same credit history, same credit rating. >> you give them the same rate? >> no, the rates are determined internationally, we want to verify that the rates are proper and higher. >> we've doubled and triples our fees since 2011 to make sure we are competing fairly with u.s.

carriers to make sure the rates are higher than domestic airlines pay. >> you're saying, what's the advantage and why would you have an export import bank if somebody could access a country blue chip, all the oil and money i guess they'd ever need. they could borrow on the open market. so they cut a deal with the export import bank, obviously, it's a lower interest rate. it's got to be something. >> you saying it's not? >> the interest rate, they pay us a fee, and as a result, we can borrow at a lower rate than they may be able to borrow. i'm trying to say, it's lower than u.s. carriers pay, it's lower than they could access otherwise, the difficulty is that we are in head to head

competition with airbus. we have a level playing field. they could buy an airbus plane or boeing plane. >> our airlines here are paying more for their money than competition in the world if you finance those. >> no our airlines still pay less. i thought the question was would emirates emirates. >> who pays less? >> the u.s. carriers pay less? >> than the others do. >> yes, based on our fees, yes. >> why would an airline like the united arab emirates pay more when they could go to the market and get less? >> well u.s. carriers pay less, because they can borrow here and we had the most fluid and the deepest capital markets. foreign carriers have a much harder time accessing, they're

not usually as deep. >> let me ask you a final question. if 98% of our exports, which was 2.3$2.3 trillion did not access any credit from the export import only 2% does that give you room to think if only 2% of our exports are going through the export/import thing, do we really need the export/import bank? i think we should be proud of the fact that 98% in our country have private sector financing. the fact is we had the best sector, but it doesn't do everything everything. we talk about nuclear satellites, there are gaps in that field. we don't do very much in western europe, we don't need to but we do it in markets that are hard.

>> third world