it? >> that's correct. i think a lot of businesses in america would love to have the government's accounting system. >> exactly. >> the next point is on reform. maybe i'll throw it it back to mr. anderson and anybody else. the captain as well. maybe we can just reform this, but as some of you indicated before, we've been done this road before, we reformed it before. passed legislation just a few years ago. we instructed treasury to do something and we instructed xm to enter new agreements. and we tried to have xm do cost benefit analysis. neither of those things were completed, correct? >> you were totally ignored. >> so the question i have before i think about re-re-reforming something, if we do that, you don't have to answer this, i'm wondering why i anticipate being here two or three years from now after this re-reform has been

ignored again? >> that's why we thought this problem was fixed last time. and then we worked over the course of the last two years to try to get the reforms that both sides of the aisle enacted. lowell braynard told me they were not going to interact with the subsidies right across in the treasury department. >> in the meantime while we wait for reform to be implemented and find out it's not going to be implemented, how many jobs will we lose in the interim? >> we're going to lose thousands. that's why our position has changed. last time, we thought we had it fixed. now our position is if there's not a stop on wide-body financing for state-owned. >> i appreciate that, mr. wilburn, what you're doing, i appreciate your service as well as your entrepreneurial spirit. i just have one bone to pick

with you. i know you say you're a free market-type of guy. i think you said i pledged my collateral, you can only pledge that once. and i get that. but i guesses that the way the free markets work. if i have an idea or product or business and i have capital, i can only pledge it once. and i guess the industry in front of us, they can only pledge it -- that's the idea why you're a big guy or little guy. you only pledge it once. even though i've got lots of great business ideas doesn't seem like anybody would want to invest in them. just because you have a great business idea and great business model doesn't mean that you can look to somebody else to finance it. you can try to seek somebody else to finance it. and that's what you're trying to do. and it's great that you're on tv maybe today so people will help you out there. but -- >> with all due respect -- >> well, my point is, we should not be asking the american public to step in and be the one

to be the one to ultimately finance, once any business, big or small, pledges their collateral once. independent investors should be the one who are responsible for doing that. we should not ask the taxpayer to step in. and i'll close then with dr. de rugy -- sorry -- can you quantify, any of what we're talking about here? mr. anderson's tried to, as far as without a cross-benefit analysis being done like xm should have done, what we're really looking at when we continue down this road or path of picking winners and losers in this current system that we have as far as job losses. do you want to talk on that? >> well, it's very hard to know exactly how many jobs are lost. one of the things which we know is who the beneficiary are. and we also know that the xm bank picked winners and losers. and that is very different from the free market. and also we have 200 years of

economic literatures that explains that free market is the way to go. and protectionism is then because it hurts consumers by raising prices. and with the xm bank it is not free market -- >> the time of the gentleman has expired. >> the chair recognized -- >> mr. chairman, i would request unanimous consent for mr. wilburn to respond to the teaching that he just received from mr. garrett on oil and gas subsidies that he mentioned in response to mr. garrett's claim that the government should not be subsidized. >> i'm sure there are many members on your side of the aisle that would be happy to yield more time to mr. wilburn. the chair now recognizes the gentleman from massachusetts. the ranking member of the housing insurance subcommittee for five minutes. >> i thank the panel for being

here. mr. wilburn, i just want to thank you for your common sense approach. it amazing me that people can disagree on substance. you deserve more respect than you received here today. and i regret that approach. mr. anderson and captain moak, i think you raised very interesting points i actually worked on a similar issue just in massachusetts, using taxpayer dollars to help encourage wealthy foreign airlines. i'm more than happy to look at this. and mr. campbell and others have suggested that. however, i am not willing to shut down the bank. because very simply, miss de rugy, i've got to tell you, i don't live in the ivory tower. in the ivory tower what you say makes sense. and if every country in the world would legitimately shut down their xm bank or a comparable one to it, i'd consider it. i don't disagree this should be unnecessary. but i don't live in the world. i live in the real world of get position. when france has 4600 people

working for their xm bank and we have 400, if we're to compete, we need to do business. i'd like to yield my time to mr. hochberg who knows a lot more than i do. >> thank you congressman. first i want to thank mr. wilburn and captain moak for their service. it's deeply appreciated. mr. wilburn, i'm interested, as a small business person out there trying to build something for his family and his employees, kind of one day at a time. one contract at a time. whether or not you would be surprised that the company to your right which has claimed such material damage, and is represented by its own spokespeople is now the most profitable airline in the united states. and arguably the world, indeed, made $2.7 billion in profits last year. which i'm grateful for. i think that's a good thing.

i'm really glad. i'm not asking the question of you, mr. anderson. would it surprise you that the company has paid no federal income taxes for the last six years and is projected not for the next three years? >> are you talking -- >> mr. chairman, it's my time. not mr. anderson's? would it surprise you, mr. wilburn? >> i don't know if i'm surprised. i can't characterize it as surprise. it's new information to me. i was not aware of it. >> mr. wilburn, i'm wondering if you would consider what the gentleman to your right has repeatedly said. again, i want to interject here. my gratitude for living in a bu airplanes in the world, flown by the most competent pilots. i did 150,000 miles last year, and i didn't lose one wink of sleep about my personal safety. and i thank you all for that quite genuinely.

but mr. wilburn, the gentleman to your right said repeatedly in his opening testimony -- i want to make sure i get it exactly right. i don't believe in subsidies. mr. wilburn, would you consider a subsidy that the federal government through its pension benefit guarantee corporation took over the pension liabilities of delta and at the point of which the captain collects his will be provided by the taxpayers of the united states? would you consider that a subsidy? >> again, with all due respect, i don't think i'm really qualified to answer that, but i think i understand your point. subsidies exist in a variety of different ways. i'm faced with that unlevel playing field every day. i'd have to have some more information on that, but you've piqued my interest. >> so lastly then, i'm wondering whether or not you would consider it at least inconsistent that the company has argued that the existence of

the export-import bank to loan money to their competitors, would you consider it inconsistent that they have that view when, in fact, that same company bo r rrrowed from the kd wan import authority what i deem short-hop airplanes? >> again, i'm not familiar with those facts. i'm learning things -- a lot of things today in real time. as a small business guy, i'm more focused on my issues, but i can tell you this. there are a number of issues raised here today, including the ones you mentioned, that lead us to a broader discussion. the broader discussion is, what role does the xm bank really play? and these gentlemen have opined and they've given their opinion. i can tell you just from my perspective without the export-import bank of the united states, people are going to buy in the philippines, not my goods, but they're going to buy korean goods. they're going to do that because it's financed by the korean export-import bank.

so i think we need to get to their reasonable position and do some reforms and save the export-import bank of the united states. >> time of the gentleman is expired. the chair now recognizes the gentleman from texas, charmt of the housing and insurance subcommittee. >> thank you, mr. chairman. mr. anderson, i detected you might want to respond to some of the questions that were raised a while ago. would you like to -- >> well, i'd start by saying boeing got a refund, didn't pay any taxes. but delta accrues its taxes at the full federal tax rate. we don't have any offshore subsi areas. the reason year not a cash taxpayer is because we went through a very painful bankruptcy and restructured our company without any subsidies from the government. we paid our premiums into the pension benefit guarantee corporation, and unfortunately for our pilot, we had to terminate their pension plan. so captain moek, i would correct

the record, doesn't have a pension because his pension was terminated. and we were able, with the help of this committee, to pass the pension protection act in 2006 and save the pensions by getting an amendment to the law so that delta can pay out over $1 billion of pensions to our retirees today. and we're overfunding those pensions. so you hit a raw nerve when you looked back at these people who went through a really tough restructuring and were a full taxpayer in this country. and these people bore the brunt of a tough bankruptcy, and a lot of them lost their pensions. >> i thank you. and i want to expand on something that's been brought up that i don't think people realize to the scope of that. that is i was shocked to learn that 14 of the largest 20 state-owned or state-supported airlines receive xm funding. so just to put that in

perspective, so these countries that -- many of them who have fairly substantial sovereign wealth funds are able to get financing backed by the u.s. taxpayers to compete with u.s. companies. you mentioned, mr. anderson, i think a couple. i think india. emeritus, china. there's a long list of airlines that the american taxpayers are subsidizing to compete with your airline. and that puts you at a disadvantage. >> that's exactly right. the prime examples would be singapore airlines, which is owned by the largest sovereign wealth fund in the world. our government finances the airplanes. the largest oil company -- oil-owning company in the world is abu dhabi. it has the largest oil reserves

in the world and owns and operates a government airline. our treasury finances their airplanes well below market to fly into our markets. >> now, one of the things you mentioned in your testimony, too, is that you said that you did not support reauthorization of xm bank because you kind of felt like you got double crossed on the last reauthorization. but you would support possibly a reauthorization that had some reforms. do you want to elaborate a little bit on that? >> absolutely. our position has been consistent. it was consistent at the last reauthorization. language was put in the bill to fix these issues that hurt american jobs, and it was ignored. so we've take an harder line position this time, along with all the employees i have here and the 3,000 employees we have in seattle, washington, to require that there be real reform this time. we aren't talking about small

businesses. i respect small businesses. i want him to be successful. we want all small businesses to be successful. and this isn't about small business. this is about 90%, 95% of the money that this bank uses are for the top ten corporations. so let's not confuse the small business issue. this is about putting safeguards in place so that you, as members of congress, are not picking and choosing which companies win and which companies lose. i think these jobs are just as important as the manufacturing jobs. if they aren't, i would invite any congressman here to just tell my employees that their jobs are not as important. >> i thank you. i had a question for mr. wilburn. has your firm ever received any federal grants, loans, guarantees? >> no, sir. >> okay.

thank you. and doctor, you've done some analysis on xm and their financing and their structure. i see my time is out. i'll submit it to you in writing. >> time of the gentleman has expired. the chair now recognizes the gentleman from missouri, mr. clay. >> thank you, mr. chairman. dr. rugy, do you believe there's an appropriate role for government to make sure financing is available for u.s. businesses in cases where the private sector is unable or unwilling to provide financing to legitimate business ventures? for example, what about commercial exports for nuclear power projects? i understand that these deals are often untenable for

commercial banks. is it appropriate for the government to help finance such deals? >> i don't think the government should be in the capital market business because the way government allocates money is based on politics and not on sound economics. and more importantly, you have to understand that when the capital market does not allocate funds to someone because they're cash poor, it's a feature of the capital market, not a bug. and it's unfair for congress to demand that taxpayers be the one footing the bill because some people want to borrow money and are not able to find lenders to actually lend them that money because they don't think it's a worthy or a safe bet enough. >> well, doctor, isn't it true that congress picks winners and losers every year as far as through our tax code? >> i agree. >> and so -- >> and i'm against that too.

>> oh, you're against that too? >> i'm against the government picking winners and losers. i think the general rule should apply. >> and you've lobbied your members of congress on that, i assume. >> well, i don't lobby. i write research papers. >> at least you've talked to them. >> yeah, i mean, i'm not -- i specialize mostly on the budget, but when i've talked about tax reforms, i've talked about leveling the playing field. i don't believe in giving tax credit to some companies or to taxpayers based on the fact that they're buying a house rather than renting. i believe in the general rule. i believe in a flat tax, for instance, rather than the system that we have today. yes, i am against the government picking winners and losers across the board, whether it's through taxes or whether it's through government funding, whether it's through long guarantee. >> thank you. mr. anderson, a review of u.s. airline purchases by u.s.

carriers between 2012 and 2014 reveals that all of the recent capital market deals have been on more affordable terms and would have been available if the carriers had used the export credit that is made available to foreign purchasers of u.s. aircraft. given this, how do you defend the claim that the u.s. is providing below-market rates to our foreign competitors? >> this is a competitive business. and depending upon what your interest rates are, your interest rates are determined by your capital structure. and when the government gets involved and takes that market component out, we're no longer competing on who's the best at managing capital. you've distorted the market. just because we have lower interest rates, that means because we pay our debts better. and we should have lower interest rates. and if a competitor gets lower

rates for an artificial reason, they're getting a subsidy. they should be in the marketplace raising capital the way we raise capital and having to pay a market-based interest rate and compete on that basis. >> you don't think france or england uses their ability to level the playing field for their airline makers like air bus? >> no, because there's something called the gentleman's agreement between air bus and boeing. it's an oral understanding that creates something called the home market rule. so the united states, britain, germany, france, and spain do not use and are not allowed to use export credit. >> okay. thank you. i want to yield the remainder of my time to my colleague from missouri, mr. cleburne. >> thank you. mr. anderson, some of your

points i actually think are good. i think everything becomes partisan here. but let me ask you one question. you were talking about the employees behind you and what do you say to them. what would you say to the 16 exporters in kansas city, missouri, my congressional district which supports -- because xm bank supports about $84 million in exports each year. what do i say to them when i say that the xm bank is closed? >> i think we should put both our employees and your employees and say we're going to preserve and grow both of their jobs, and that's the reform that needs to take place. >> time of the gentleman has expired. the chair now recognizes the gentleman from georgia, mr. wes mooreland. >> thank you, mr. chairman and mr. anderson. thank you again for being here and bringing the crowd with you. so i guess to put it in really

simple terms, if a european government subsidized, or any government subsidized airline, buying a plane from boeing, you compete with them on some of the same routes. is that not true? >> you compete on virtually all the routes internationally. in some form or fashion over the hub system. >> and so if you're buying 60 planes from boeing, is that not correct? >> right now we have about 100 airplanes on order from boeing. >> 100 airplanes. and if you maybe had some of the same -- even though you said you're paying cash, if you had some of the financing options that some of your competitors had, you may even buy more planes from boeing and give boeing more work to do.

is that true? >> well, the market needs to dictate how many airplanes we own. i am not in favor of opening up export financing for u.s. carriers because i don't think that's a free market. >> thank you. ms. rugy, could you please tell me why it's misleading for the export-import bank to claim that 90% of its loans actually go to small businesses? >> well, the number is correct only if you look at number of transactions. >> i'm sorry. i'm not sure your microphone is on. >> no, it's on. that number is only correct -- actually, it's not 90%. it's a little less than that. but when you look at the money, when you see is it's roughly 19% of the money goes to small businesses.

that's less than even the bank's charter asks. by the way, they have a very expensive definition of small business. even the -- you know, when you talk about small business, people think about mom and pop stores or 10, 50 companies. the definition of xm for small can go to a company of at least 1,700 employees. these are big businesses, in my book. but what it means is, really, over 80% of the money goes to very big companies. and we know that they go to leading manufacturers. the number one u.s. exporter, boeing, is obviously leading the pack. >> thank you. >> yes, congressman, i just wanted to add one other thing that might have gotten missed earlier. airplanes, if you want to have an apples-to-apples, airline

manufacture -- we're actually getting impacted twice. not only by what the u.s. xm bank does by financing airlines at below-market rates, but what happens, since we don't have the ability to access that along with a few other countries that manufacture airplanes, countries like the middle eastern countries not only are they using xm bank financing and putting them on routes and costing us jobs, they're also using european credit agency airbus airplanes, overlaying our routes at a number like $3 million per year per airplane. so you start out the beginning of the year $3 million behind. it's hard to catch up. we have to pull out of markets, and we lose jobs. so we're getting hit not just by xm bank practices but also by eca practices, and that's why we came before this group, to ask them to negotiate taking that down. because the middle eastern countries are taking advantage

of it. >> and so mr. moak, would it be true when the other side of the aisle says that labor is for the reauthorization of the xm bank, that would not be entirely true? >> labors for reform, fair practices, competing in the world. we have the best workers in the world. we need to be given the opportunity to compete. because when we have a fair opportunity to compete, we win. and we're coming to this place because government policy matters. we need your help or we wouldn't be here. >> and mr. anderson, just one last thing. you had made an attempt at the last reauthorization to do the right thing. you're back here today because it didn't work, and they did not do the things that were promised. is that not true? >> correct. >> time of the gentleman is expired. chair now recognizes gentlelady from new york, ms. mccarthy, for

five minutes. >> thank you, mr. chairman. i appreciate the opportunity. number one, i think it should be noted that we're not against any of the unions. we're not against any of our american airlines. we certainly support them. and i think that what i would like to ask mr. anderson on one quick question, are there any other american airlines that are experiencing the same problems you are? >> yes. >> captain? >> i represent 51,000 pilots, 31 different properties, all the major u.s. airlines, and the answer to that is absolutely yes. we're getting hit by this. we need reform. >> all right. so let me go baa to mr. anderson. we did negotiate two years ago, which we thought was a fair agreement. so here we are at this point. what do you think would be a fair agreement? where would you want to change the language? is it only enforcing xm bank?

is it something different? >> it needs to be mandatory. the language that was precatory last time needs to be made mandatory. and it's specific in our business. look, we've tried to be narrow because there's plenty of merit to what happens with small business. there's no question. and we've tried to be targeted to try to just go at the very issues that hurt our employment. and the issue that hurts is that our government further subsidizing deeply subsidized foreign airlines. >> let me say something. number one, i doubt very much whether you'd ever get language that would mandatory. it's just not going to happen. people here, many included, don't like to use the word mandatory. so if we don't get the language in as mandatory and you're basically saying that we should,

you know, abolish the bank, then, to be very honest with you, your union, all the other unions are going to have a problem. a lot of my constituents will have a problem. so we have to come up with some sort of solution with that. but with that being said, too, you know, i know that you are probably the most profitable airline. that's great. we want to see that. and i know you had your ups and downs, especially when you had to go through the bankruptcy. but wasn't going through the bankruptcy more because of what was going on in the world that day -- that year, as far as oil prices and everything else like that? and you had to reconstruct. >> well, the terrible tragedy of 9/11 -- and i sat in one of these rooms on september 15th, 2001, representing the industry. so we lived through that. and it dealt a devastating blow to our industry. you know, our capacity fell off

25%. it's taken ten years to get back. so i would have to say that between very high oil prices -- and we could have another discussion on the depletion allowance -- very high oil prices and the 9/11 tragedy and then the aftermath of that really wreaked ha eed havoc on industry. >> i'm only trying to bring out whether corporations or small businesses, we really want to support them, because that is jobs. but sometimes we, even in the government, can't do everything. and we can't. i want to also say that someone that's been always supporting my unions, i'd like to insert the record, mr. chairman, from four other labor unions. >> without objection. >> thank you. so i think one of the things that fascinates me about this, as we did two years ago, was trying to find that common

ground. you know, which is really difficult around here. it seems all or nothing the last several years. so i hope we can come to an understanding because i do believe in the export bank. i do believe it helps an awful lot of our people in this country. i do believe it brings good jobs and keeps good jobs here in this country. but with that being said, i want to turn over the rest of my time to my colleague. you wanted extra time? >> are you pointing at me? >> yes, i am. >> yeah, sure. thank you very much. mr. chair, i'd seek unanimous consent to enter into the record verified excerpts of a speech given by former vice president richard cheney. >> without objection. >> and with your permission would like to just quote him briefly. there are those who say the bank is just some form of so-called corporate welfare. they obviously don't know that for every dollar appropriated in the last five years, xm has

returned approximately $20 worth of export. that's the kind of successful government program that even a fiscal conservative such as me can embrace. thank you, mr. chair. >> time of the gentlelady has expired. chair now recognizes the gentleman from new york, mr. king. >> thank you, mr. chairman. thank you for holding today's hearing. it's a vital issue. i want to thank all the witnesses. i want to thank mr. anderson. certainly delta is a good employer in my district. in fact, i just got my flight confirmed for tomorrow on delta. so i want to thank you for that. dr. rugy, besides your testimony today, i want to thank you for the work you've done on homeland security over the years. i've sometimes plagiarized some of your words without giving you credit. let me do that now. thank you. also, captain moak, i've had a good relationship with the airline pilots. mr. wilburn, you do, i believe, represent an american success story. so with all of that, i think i'm trying to find a way if we can be on the same page. i was impressed by what mr.

campbell said about trying to find reforms. mr. anderson, you believe reform is necessary. i believe we have to find a way to reauthorize the export-import bank. i know we hear of crony capitalism. that may happen in some cases. certainly the businesses in my district are small businesses. we have a musical instrument string manufacturer, a woodworking tool manufacturer, a seafood distributor. i believe there's ten companies in my district. i know mr. mccarthy mentioned a number in her district, which is next to mine. in downstate, new york, districts are one on top of the other. so probably within adjacent four or five districts, there are hundreds of employees from each of our districts that works in businesses in adjacent districts. so it is important. i also voted every free trade agreement that's come before congress since i've been here in 22 years. i believe in free trade. i also don't like the idea of unnecessary government

intervention. but i also know that countries such as germany, france, china, brazil, india, and korea provide up to seven times the support that export-import does. and to me, that is not a level playing field. and what we have to do, i believe, is find a way to level the playing field. if we just end our export-import bank, i believe we are definitely giving advantage to our foreign competitors. and, you know, i think of former cbo director who s if i can use the partisan term, a republican economist. he's said the reality is he would like to live in a world and i would love to live in a world that does not have a need for an export-import bank. one where international transactionings were done on a level playing field. that's just not the reality. many other countries, notably china, have an export credit agency. they're all out there trying to gain market shares. the west simply has to not disarm. end of quote.

then jim russell, a former republican congressman, i served with him on this committee. he ended up being the director of omb. he said, export-import is self-funding and has generated income for the treasury since 1992. now, i bring these arguments out not to just, you know, make the appeal to authority, which they taught us in law school is one of the easiest things you can do. find somebody who agrees with you who supposedly is on the other side and sounds good. but i just feel what mr. campbell said is important. i don't see how we can just end our involvement with export-import now. i don't know if we should end it. obviously reforms are necessary. we've seen the stories of corruption that's there. obviously, that has to be changed. but on the other hand, i think the blow to our economy by suddenly ending export-import, putting small businesses and larger businesses at risk is -- especially at this time. at this time when we're still have not fully recovered from the crash of 2008, at a time

when there is, you know, the increased burdens of obamacare, of the epa, of regulations, of burdens. it's just not appropriate and it's not the responsible thing to do to end the authorization of export-import. at the same time, i believe reforms are necessary. if a way can be found before the expiration dates bring that about, i would springily support that, work with that. i think it's essential we do it. i think the chairman has raised important issues. i think we go too far if we just say we're going to end it. as we saw today, there's always some government involved in the company. bankruptcy is a government involvement. i support that fully. but that is the government getting involved in the economy to help businesses get back together. so we use that. protections given to labor unions that are in our economy. we have veterans. we have senior citizens. everyone has some government involvement. my goal is to keep that to a minimum. but i think we'd be going too far if we did not reauthorize

export-import. but we should do, i believe, with reforms. i certainly look forward to looking at the working paper of the gentleman from california, mr. campbell. mr. anderson, if nothing else, you've certainly forced congress to pay more attention to you now maybe than was done two years ago. >> chair now recognizes the gentleman from massachusetts, mr. lynch. >> thank you, mr. chairman. i want to thank the witnesses for their willingness to come before the committee and help us with our work. i've been involved on the oversight committee and this committee on dealing with some of our trade agreements just trying to rebalance our export-import balance with a number of countries. spent a little time in china recently, south korea, india, france, germany. i noticed in my trip to south korea in connection with the south korean trade agreement,

travel there for a few days. i couldn't help but notice that this is just anecdotal, but we're there for several days, and the only u.s. cars -- now, south korea is a booming economy, very modern, big highways. the only u.s. cars i saw there in the days that i was there was the one i was riding in and the one that had my security detail from the embassy. so no u.s. cars. okay. in japan, same thing. you need a detective to find an american car in japan. so those countries obviously have closed markets in order to boost their domestic car production. i walk outside this door here, i can't spit without hitting a japanese or a korean car. so they are doing massive

investments and highly protective structures to protect their domestic markets so that they can export goods. as mr. king pointed out just recently, they are pumping in about seven times this morning in terms of what we're doing with credit assistance through their versions of their xm banks. in addition, in my state in massachusetts, the french government just came in and took over one of our rail systems, the commuter rail system. they backed one of their companies. france's idea is they want to become the world's rail company. they want to manufacture the rails. they want to go out into other countries and dominate those markets. kind of like what boeing is trying to do in the aircraft industry on behalf of american machinists and american workers.

spain gobbling up a lot of the construction firms. it's become a globalized strategy. and they are there to push their workers, and i understand the theoretical arguments i'm hearing today about it would be nice, we want a level playing field. well, the playing field is going to become much less level if we exit the battlefield, which is what you're suggesting that we do right now. i wish, i wish that our exit from the xm bank -- and let's not mistake anything. we're not talking about reforming the xm bank here. it's going away. so it's going to increase the imbalance here, but it'll tip it in favor, drastically in favor,

of foreign competition. we're opening up our markets. we are walking off the battlefield. we will no longer try to protect our workers in this iteration the way we have been doing. and it hasn't been smooth. it hasn't been fair to smaller businesses. i'll agree to that. but we are protecting a whole boat load of workers right here. but the reality i'm dealing with is if you succeed, if the xm bank goes away, and it looks likely that will happen, the result will -- because no other nation is going to disarm. we're going to be at a huge disadvantage. and foreign manufacturers will be handed a huge advantage. and i think it will be a very good day for airbus. you'll see their stock go right up. it'll be a great day for them. but at the end of the day, when the xm bank goes away, government will still be picking winners and losers.

it just won't be the u.s. government. and the governments that are picking the winners and losers will be the foreign governments. and those winners, you got to be kidding me. if you don't believe those foreign governments are going to pick their own companies, their own workers. you see what china's doing. you see what japan's doing. you see what south korea and india and all these other countries. it's a nice theoretical argument you have here, but when this goes away, it'll be a bad day for america. bad day for the american worker. >> time of the gentleman has expired. dr. de rugy, i think i have been informed that you have asked to be excused from the panel at this time. you have a prior commitment. is this correct? >> yes, i have a plane. >> in that case, members who -- i won't ask which plane, and i won't even ask which airline. but members will have five legislative days to submit

questions to dr. de rugy. we would ask you respond as quickly as possible. >> can i add just one thing? >> not substantively. processwise, yes. substantively, no. in which case we will excuse you at this time. the chair now recognizes the gentlelady from minnesota, ms. bachmann, for five minutes. >> thank you, chair. if ms. de rugy would make to make her comment, i would be more than happy to let her. >> thank you. based on the discussion, i think it is important to remember that the bank itself only justified 30% of its activity based on the need to contra vail foreign subsidies. so the idea that everything that the bank does is to compete with foreign government is not accurate based on the bank's data itself. and finally, i mean, i will say that we're talking a lot about

jobs. we're talking a lot about businesses, but we're forgetting consumers. i mean, it hurts consumers in the form of higher prices. economists care about producers and consumers too. i think we have many years of economic studies that show that basically protectionism tends to benefit -- even for the beneficiary of the protectionism does not outweigh the cost to all the unseen victims. >> thank you so much. that goes to my point. a lot of what i've heard here today is that we need to continue to provide subsidies and stay on the subsidy train because the rest of the world is on the subsidy train. and to continue that logic means that nations of the world have to continue one upsmanship on subsidy. so it's subsidy versus subsidy and it's a complete rejection of the free market. i don't think that's the direction we want to go. the free market has built up the

most magnificent economies of this world. i remain a defender of the free economy. one of our former presidents said that nothing is more representative of eternal life than a government program. and i think we heard the defenders today here of this program, despite the mismanagement, despite the fraud, despite the failures. we have an executive summary in front of me that says, as a matter of fact, the export-import bank operated a loss every year from 1982 to 1995. when reform was passed back in -- when reform was passed, the fcra, that meant then that the losses were back filled by the taxpayer and xm bank received $9.92 billion in direct appropriations from the government between '92 and '96. when we talk about free

economies, the united states used to be considered under the category of a free economy. we're not the freest economy in the world. we're not the fifth freest economy in the world. we're not even the tenth freest economy in the world. we have actually fallen out of the status called free economy. we've now dropped out of the top ten. we're considered a mostly free economy. and while the fault isn't at the foot of the xm bank, it is death by a thousand cuts. this is just one example. and i think that congress needs to look at itself in the mirror and see what we have done to contribute to a less free economy. and i think there are four areas. one is we have the highest -- look at the tax code in the united states. we have the highest corporate tax rate in the world, bar none. 35%. then you add on to that the obama new tax rate, the 3.8%, various state corporate tax rates, and you see how

uncompetitive the united states is. we need massive tax reform. then you look at the next factor. regulatory burden. dodd-frank was brought up today. obamacare was brought up today. the new epa rules are new regulations. we have heaped upon american businesses the uncompetitive factor of a tax rate, you might say, through increased regulatory burden. that's number two. number three is the united states government, which has exceeded growth upon the taxpayers' ability to pay for government services. we are growing the cost of government. and number four, the lack of sound money. we have seen through what the federal reserve has been doing the increased inefficiency with sound money. those four reasons alone aren't your fault. those are the fault of the united states congress and this government. we are the ones who need to look in the mirror at how we have

made this a less free economy. regarding the export-import bank and the four firings that just occurred, that also doesn't include the 74 cases since april of 2009 when bank officials were forced to act on the basis of integrity investigations by the office of inspector general. there are dozens of other fraud cases involved in the xm beneficiaries that have now been referred to the department of justice for prosecution. i see that my time has gone, but i will enter into the record several recent stories about the fraud that's going on at this bank. >> without objection. >> i want to stand on record. i opposed continuation of this bank because reform hasn't worked. we've been ignored. >> time of the gentlelady has expired. the chair now recognizes the gentleman from georgia, mr. scott. >> thank you very much, mr. chairman. this has indeed been a very, very interesting hearing. a very important one. let me say at the outset that

atlanta is the world's busiest airport. i always like to tell people that whenever you land at the airport in atlanta, you land in congressman david scott's district. so i say welcome to that. certainly welcome to you, mr. anderson. now, i've listened to this discussion with a very john tised air, and i don't see where the success and the movement forward of the xm bank is not mutually -- is mutually exclusive to addressing the concerns of our airlines. i would like to see the committee, mr. chairman, give some very thoughtful -- we have a very talented, we have a very skillful committee. and it seems to me that we ought to be able to address these concerns narrowly focused on

what mr. anderson and captain moak are saying without into fearing with the forward progress and the very basic need that the bank has provided for small businesses that mr. wilburn has done. there may be some on this committee that want to do away with the xm bank altogether. i'm not one of those because it has been very beneficial. but i think we would be very derelict in our duty as a legislative body to ignore the very pointed concerns that have been raised by mr. anderson and mr. moak. i think we can have some folks from both sides go to work to try to put some language into this xm extension that will address those concerns. so with that, captain moak and mr. anderson, let's narrow in

specifically. i think what concerns you most is the competition with the wide body or the boeing 777. what can we do to put in some language that could address that? it could be a trigger mechanism. it could be an assessment, as ms. mccarthy said. mandating things are rather difficult. what could we do to address those concerns and move this forward? >> congressman scott, i want to first thank you. i don't know if you remember, but you stood by my side in front of 1,000 delta pilots on keep delta my delta, and your speech is still viewed in that light with when you stood up and said this is truly a david and goliath. when david was walking back and said, is there a cost, there is a cause. he turned around and went back. the cause here is xm bank reform. and i commit all our resources,

everything to work on that narrow part of the reform that we need so that we meet a fellow veteran's needs, small business needs, but we meet our needs so we stop losing jobs. i'd be happy to help. our team will help. anything we can do. and thank you again for that day. you know where we've come from there. >> oh, absolutely. i certainly understand. mr. anderson, what would be the narrow scope of language that we could add that could address your problem as we move the xm bank forward? >> the bank would not finance below market wide-body airplanes for state-owned, state-subsidized airlines that are otherwise credit worthy. there won't be a need. and that would solve the competitive issue. because what we're dealing with is a much broader competitive issue. i think both sides of the aisle have addressed this.

we don't compete in my business against other companies. in our business, we compete against government. so my big competitors, our big competitors interfacially are governments that happen to have a department that's an airline. and they get huge, huge subsi dies. and it really hurts us when our government gives them a subsidy on top of the huge subsidy they already collect. >> my time is running out. mr. chairman, i think it might be wise if we could make a point of order that as we move forward with this that we could develop some language. i would be delighted to work with your side on that, that i think could accomplish that as we move this bill forward. >> time of the gentleman is expired. the chair now recognizes the gentleman from new mexico, mr. pierce. >> thank you, mr. chairman.

appreciate each one of you making the appearance here today. mr. wilburn, you had mentioned barriers to entry and subsidies to oil and gas being one of the problems you have as a business unit. could you tell me a little more about those obstacles? >> i'm sorry, congressman. could you repeat your question? i didn't quite catch it. >> yeah, i was asking if you could go a little bit deeper into the obstacles that you face as a small business. you had mentioned the barriers to entry and the subsidies to oil and gas. i think you specified the depletion allowance. how is it that those keep you out of the domestic market or make it less available to you? >> make it less available to me because i'm basically competing with the price of natural gas. trust me, i'm an advocate of strong natural gas resources

here. but i go to landfills and pollution sources, and i take that organic material and make methane. and that methane has a cost. but it also has some benefits to it. doesn't go to a landfill, okay. oil and gas has a subsidy, if you want to call it that, that allows them an advantage over my product. i don't have access to that. so i have to go to markets where i have a chance to compete. and those markets are where there's not the natural gas reserves and they don't receive those subsidies. that's the barrier entry i was speaking of. >> the oil and gas company has to pay for that. in other words, they don't just get the oil and gas for free. they have to pay for it. so basically, all that is, is a depreciation of what they've paid. now -- >> the same benefit. >> well, when you go to a

landfill, do you have to pay to get the right to harvest that gas? >> absolutely. >> and so you don't get a write-off for creating that gas? you don't get a write-off? >> no. >> that is probably something that we should consider. but in contrast, it's not the major producers that would provide a barrier to entry don't get the depletion allowance. it's just the independents, the small producers. that's about 12% of the market. mr. chairman, we've talked today about the catastrophic effects that we're going to have on the job market if we don't take action one way or another, and there's been all sorts of suggestions here. but i don't think what we do here is going to affect jobs nearly as much as other things. the gentlelady from minnesota had gotten this covered pretty

well. the corporate tax rate, the president has said, is probably one of the biggest impediments to business in america. i sent him a letter personally saying i'll work with you on that, sir, across party lines, because i agree one of the greatest impediments to manufacturing in this country is the corporate tax. i have yet to hear from the president. that's been four years ago. but the regulations are where we really are killing the job market. for instance, the timber industry, 85% of timber jobs are now gone from america. 123 mills in new mexico closed because of a government regulation. one government regulation that said the spotted owl is going extinct because of logging. and the government came back this last year and said, oops, logging wasn't the problem. so we have not only a government that intervenes, but we have a stupid government that intervenes. 23,000 agriculture jobs in the san joaquin valley went begging because of a two-inch delta

smelt. another regulation. now we're importing 80% of our vegetables that spray things we could not spray before. that has hurt the job market in america more than what we do in the xm bank. we, in 2007, passed a bill through this congress that outlawed incandescent lightbulbs. that killed that industry. that last manufacturing facility closed down, and china is able to produce the small curly bulbs that require more labor because of actions by this. and that was not an xm problem. we have continually put the consumers at risk by driving the price of electricity up. and the president has said, yes, electricity is going to be higher because of our regulations. we're a 70% retail economy, yet i hear no one in this committee who's defending the job creation of the xm bank addressing that. we're killing the consumer market by higher electricity. it's the government. it's the government that's at

fault. the government is not the solution. i yield back. >> time of the gentleman has expired. the chair now recognizes the gentleman from texas, mr. green, ranking member of our oversight investigation subcommittee. >> thank you, mr. chairman. i thank the witnesses for appearing. i especially thank our two veterans who are part of this panel. and mr. wilburn, i thank you because you indicated that you may have -- or may be impacted by ptsd, and that says to me you've had some experiences that were less than pleasant. and my prayers are with you. i'm reminded of chairman barney frank, who on the topic of reality versus desires would

often say he wished that he could eat more and lose weight. i wish that i had options other than ended or extended. i would dearly like to have options other than ended or extended. but these are the options that we seem to be confronting. and i'm a person who believes in compromise, and i'm willing to work across lines to do something other than end or extend. but given that these are the options, let me just share some of the comments associated with the options that are before us. "houston chronicle" published on june 25th, 2014, which would be today. editorial, no time for games. export-import bank loans support

american jobs, including houston-area jobs. apparently mr. hockburg was interviewed by "the chronicle." they go on to indicate, large or small, export-import loans support american jobs, including jobs in the houston area. bank officials told "the chronicle" that its financing has supported 11 billion in export sales from the area since 2009 with 3.5 billion of that attributable to small businesses. the bank also costs taxpayers nothing. it supports itself through the fees and interest it charges and regularly sends money to the u.s. treasury to reduce the debt. this is from "the houston

chronicle." i concur with the ranking member with reference to there being persons of note who were not here to testify today. and if they were here to testify, i believe they would say, some of them, what the greater houston partnership says. the greater houston partnership indicates -- and this is an excerpt -- small and medium-sized businesses in our region also benefit directly from export-import. small businesses account for nearly 85% of xm bank's transactions. further, these transactions' figures do not include the tens of thousands of small and medium-sized businesses that support goods and services to large exporters using the bank. we trust -- this is addressed to me. we trust you will carefully consider the impact xm bank has

on our region and our position as a global economic leader. now, this letter, while sent from the greater houston partnership, appears to be supported by the bay area houston economic partnership, the bay town chamber of commerce, the brenam washington county chamber of commerce, the clear lake chamber of commerce, the greater houston partnership, the houston each inn chamber of commerce, the houston northwest chamber of commerce, the lake houston area chamber of commerce, the league city chamber of commerce, the paraland chamber of commerce, the west chambers county chamber of commerce, and the warden chamber of commerce. finally, there are some small businesses in the houston area, if they were given the opportunity to testify, would indicate that they're supportive of the xm bank as well.

this would include the south coast products business. also includes the hallmark sales corporation in houston. this is not the card company. also include the everest valve company in houston. and others. thank you, mr. chairman. i will yield back. >> time of the gentleman has expired. the chair now recognizes the gentleman from missouri, mr. liukin mire. >> thank you, mr. chairman. and thank the witnesses for being here today. i certainly appreciate your testimony. mr. anderson and captain moak, thank you for your comments and concerns. i appreciate the fact that you have brought some issues to light with regards to the aircraft manufacturing sales portion, our financing portion of the bank. i think those need to be addressed. but i congratulate mr. wilburn, also, on being here.

and thank you for your testimony from the standpoint we have several different things to look at and discuss here today. that's the small business portion of this as well. in 2013 aircraft manufacturing made up only 40% of xm's financing. 40% went to other manufacturing. 20% went to oil, gas, telecommunications services, and mining. so it does have a lot of other financing interest it takes care of and works with. i think the statement has been made many times this afternoon and morning about 3400 of the 3800 loans it made were to small businesses. so i think that at the end of the day, it's something we need to consider how we can find a way to reform it, make it work for everybody. you know, i get this crony capitalism comment, and it kind of sticks a little bit from the standpoint that, you know, crony capitalism is truly when you hand out favors for somebody else as a favor for them having done something for you. and yet, the federal government

helps with sba loans. is that crony capitalism? helps with va loans, helps veterans own a home. is that crony capitalism? we have in our treaties and export and trade tariffs and all sorts of treaty protections with regards to everything from automobile manufacturing to agricultural products to intellectual property to be able to protect and incentivize businesses here in this country, to be able to compete internationally and protect their products so they can compete and provide jobs here. you know, dr. de rugy made the comment she'd like to see it all go away. that'd be great if we lived in a perfect world. that would be fine. you know, but if that would happen and none of the rest of the world disarmed as the comment has been made before a couple times, what would happen? let's stop and think about that for a second. what would happen if we went and did away with all our tariffs, all intellectual property protections and the rest of the

world could really come in and rape and pillage our stris throughout this country? they would have no ability to protect them. they can compete, subsidize, and talk all our jobs away. yeah, we'd lower the price of products at the supermarket and other hardware stores and whatever, but our jobs would certainly be gone, wouldn't they? and we'd suffer. quality of life would go down. and some things would be a national security problem for us because we lose the ability to be able to build things, provide services for things that are of national importance. in my district alone, we had the last lead smelter in this country, and it went out of business because of epa beginning in january. now you know what we do with the lead mined in my district? we send it to china. now you know what we want to do when we want to build a bullet? we have to go to china and buy our lead back. that's what would happen if you continue down this path of kind of forgetting about how to protect our industries, protect our ability of our industries to

compete. is it a perfect world? no. it's not. it's not what i would like to have either. but at the end of the day, i think that we have to find a way to come together to realize that there has to be a way to find a middle ground on this, to reform this bank. i'm a banker. i could tell you there's a half a dozen things i'd love to see changed about this thing, and i'm working with congressman campbell. i'm trying to do that because i believe this can be done. i believe that there's enough good about this thing, this entity, that we can use it for the good of our people, our country, and our industries. does it need to be reformed? absolutely. there's a few things in there that drive me up the wall. and i'm glad that mr. anderson, mr. moak, you brought those to light today. but mr. wilburn, you also make a great point from the a great po standpoint of importance of how this bank can help small business compete, can grow, market a product that may not be able to market in the country but can be around the world.

by enabling our entrepreneurs to build that product, market it and bring revenue to our country instead of sending it out. yield back the balance of my team. >> recognize gentlelady from wisconsin. i'm sorry, if the gentlelady will consent, recognize -- >> without objection, now the againel lady. >> thank you very much for having this hearing. i think it's extremely important to everyone. i do want to raise a bit of caution to captain and mr.

anderson here. i've heard you say continuously you want the bank to be reformed and not dismantle it. i've clearly heard that. i want you to be clear that this hearing is about whether or not we are going to reauthorize this bank and the authorization is going to expire in 90 days or so. there are not many days left in this session. our chairman has been very articulate in indicating that he does not believe in this kind of government activity. we had a very passionate witness, the doctor. i'm sorry she had to leave before i had a chance to ask her some questions. very passionate, giving her economic view this was bad. i want you to be clear you are sitting on the side of people who did not want this to be extended. i also want to associate myself with many of the excellent questions and comments that have

been made by my colleagues on both sides of the aisle and just really want to remind people that we're not talking about just boeing or the airline industry here, i represent an area that is home to six fortune 1,000 companies. manufacturers like johnson control, rockwell, harley davidson. we're second in the country in manufacturing and we're dominated by small to medium-sized metal fabricators that export all over the world and really need the xm bank. we're not just talking about one group of employees. i'm very, very sympathetic and empathetic to them, but there are, you know, hundreds of thousands of other employees that rely on these activities. indeed, delta got $45.5 million subsidies from the export, import bank for engine,

maintenance services. 400 jobs that rely on the export/import bank in order to do maintenance for brazil. i see you shaking your head over there. maybe i'll give you a chance to answer. >> i have a chart up here, because there are a couple of things that i really want to point out. we've heard a lot of testimony about how the export/import bank bank creates competition and green line below shows last nine airlines built by boeing. that is the interest rate and the price that they paid as compared to the commercial bank financing rate in the red and the blue line there is the oecd

agreement, the gentleman's agreement we've heard about, with regard to text a export it provide. delta is buying planes at that green level. we're not squeezing out the private sector. one of the things i continue to hear over and over again is about the cliff mine in michigan, how the export-import bank was creating an uncompetitive situation. i'm disturbed because caterpillar is red quarterheadq the southwest, huge operation right across the street from my district. many of my constituents work at caterpillar. the iron ore that was coming out of the mine in australia and the ones coming out in michigan were two different iron ores, two different applications. apples and oranges are both fruit but they are not the same.

so that was not true. i don't have much time, so i will yield the rest of my time. >> i just like to make the point that the threat to american manufacturing base is existential. it's very real. as we sit here chinese considerable state investment are developing an airplane to complete with both airbus and boeing, c-919. they have an export credit authority larger than ours, larger percentage of gdp than hours. be assured when they successfully complete their airplane they will compete on the open market. >> time expired. the chair recognizes the gentleman from tennessee. >> thank you. i'm going to give mr. anderson a chance to briefly respond.

also have the question you received financing from canadian import-export. >> i'm glad you asked the question about airways. first of all, a huge manufacturing company. we have 7,000 manufacturing jobs and we're one of the largest engine overhaul companies in the united states. we run the largest shop in the united states. it's a terrible example from the bank. it's something they tried to say an opponent of delta. in 2010 we won a worldwide competition to overhaul engines at the airway in brazil. we won against lufthansa and ge. two years ago the bank went to brazil and gave them a loan at

6.22%. i know this because we own part of that airline. then released a press release saying it added 40 jobs to delta. that's false. >> someone who lives 60 miles north of memphis, i love delta air lines. the pilots, airline, flight attendants do a great job, so please don't hold anything i say against me today as we fly in the future. i was born at night but not last night. i didn't support reauthorization of xm bank because i felt that the reforms that needed to be made were not made. today listening to the testimony of all three of you and the doctor is gone, reforming xm bank with reforms, i think you all would support reauthorization, correct?

>> with reforms. >> with reforms. as we have been talking and i have a whole package of reforms here we've been working on the last six weeks, two months. 1,000 jobs in the eighth congressional district are supported by xm bank. i've heard people talk about 10 big companies, or whatever. this is not about leadership in our party. i think as republicans we are all trying to get to the same place of having a government that's more accountable and more transparent and more responsible with taxpayer dollars. this is about, for me, the jobs in my district. it's going to be hard for me to go back home, mr. anderson, and captain and mr. wilburn. my constituents say, congressman, have you balanced the budget? i'm going to say, well, we're

working on it. they are going to say, congressman, did you get rid of fannie and freddie? i'm going to say, we're working on it. we are. well, congressman, the only thing that you've done is you've gotten rid of an investment that was creating 1,000 jobs in our district. now i'm on unemployment. i don't have a job. i have a paper right here. u.s. economy shrank at 2.9% in quarter one. commerce department said first quarter was more severe than 1% annual design it estimated a month ago. another major factor was a bigger trade deficit than initially estimated. again, if we don't reform xm bank, we've got problems. a lot has been said about the way xm bank is being operated. if they won't respond to the

changes that we're trying to make, maybe xm bank needs to be -- maybe we need to clean house there. but please, lets don't overreact. lets try to fix this investment. lets make it better. lets get back to the original mission of xm bank. don't hurt jobs in our districts. i'm going to have a hard time, i'm just going to tell you, going back home to my district and telling my people, my folks, that the only thing i've done is kill jobs for my district. so lets try to work this out. i think we can. again, i've got a whole list of reforms here i'll be glad to talk to anybody about. appreciate the work done, appreciate you gentlemen. we're going to work this out and make it better. yield back. >> thank you. mr. delanie. >> thank you, mr. chairman. i want to thank all the witnesses for joining us here

today. mr. wilburn, captain, thank you. mr. anderson, i want to thank you in particular for joining us and for bringing so many of your colleagues. delta is an important and iconic company. i think you all should be congratulated for the great work you've done positioning this airline in such a successful business. the fact that all your colleagues joined you hear today is a reflection of the good culture of the airline and your good leadership. i just want to make it clear that i think what you're doing is terrific. my question is actually more of a factual question. perhaps unlike my colleagues i don't know the answer to my question before i'm asking it. but i was struck by this page when you put it up. i was very concerned by it. as i think many of my colleagues know, i care deeply about three markets and believe that market pricing should dictate all of the kind of government financing. when i saw this, i was very

concerned about it. it says the government making 3.4% and the same loan in the market at 6.1% of that's obviously a big subsidy. as someone not reading the footnotes, i read the for the note. private market is nim rod air finance alpha. i looked that up. that's a special purpose entity that owns 58 airlines and leases those to carriers, including the emirates. it leases those airplanes on operating lease not capital lease, which means risk of ownership and benefits of ownership are not fully transferred to the lessee. so when i saw this, recalling my days in the credit business, i said, this strikes me as a worse credit. i'd rather lend directly to emirates having their full fate

and credit saying they are going to pay back every penny of the loan on fixed amortization which is what xm finances versus loans to a special purposenti entity. i may be wrong. i just did searching on my google device here. my question is, a, is that accurate? b, do you think -- as the ceo of delta, if you were to borrow directly from the bank -- i recognize you didn't have to borrow to buy your planes, which is great. if you were to put the full faith and credit of the airlines on the line as well as the lien on the aircraft you purchased wouldn't you expect to borrow at a lower rate rather than if you set up an unrelated company that purchases the airlines and signs a lease to you with certain limited recourse and then you were to get a loan for that special purpose entity. i'm trying to figure out what

the apples to apples comparison is. >> what we do is try to make it apples to apples. these were public market financing. the one on the left had an xm bank guarantee attached. you can see the collateral. the coupon is beyond question. >> that's obvious. >> the coupon was obvious. the loan to value ratio with the xm you get a higher loan development ratio because you don't need as much equity. what you've approximated here is that this is the emirates credit. >> but it's really -- isn't it true that it's actually not the emirates credit? >> no. it is the emirates credit based on what moody said. >> i read the moodys credit report on my device here. it talked about how the lessor had risk of the value of the asset at the end of the term, and that it wasn't fully

recoursed to tte the emirates. >> this is apples to apples. one of them they decided they were going to lease, so i think the market-based financing was a lease-based financing on a-380s. >> right. but at the end of the lease term, the lessor takes back the airplane -- if you leased the airplane at the end of the 10 years you'd give it back. >> correct. >> someone had a loan on the plan, that wouldn't be your obligation. >> airlines lease -- we tend to want to own, right, because you get the residual value. but part of what the market is reflecting here is that they are going to return -- they have decided they want the option to return the airplane in 5.7 years because that's the average life of the lease. >> just a quick question. do you think you should pay less for direct delta credit in the market secured by assets than

you do for a lease. >> well, yes. i think you're better off -- depends on the airplane. that's probably what they are doing here. they probably want to own the 777s but probably only want to lease a-380s. this is what a lease looks like at emirates for their credit. >> time of the gentleman expired. chair recognizes gentleman from south carolina mr. mulvaney. >> thank you, mr. chairman. what we started, i know somebody on the other side, i believe it was mr. heck, i wish he was here, charged us not to believe false statements no matter how many times it's repeated. that is always good advice. i would think similarly good advice to not believe statements you can't prove. one of the things he said, i don't want to put words in his mouth but i couldn't find transcript, export import bank -- if i have the exact verbiage wrong i apologize but

that was the general extent of things. nobody can prove that number. nobody can prove that number. i want to explore weaknesses in the job number. nobody can prove that number. mr. anderson, you have mentioned in your testimony that the export-import financing in the aviation sector has cost y'all 7500 jobs. xm says boeing related activity created 51,000 jobs. who am i supposed to believe between those two? >> me. >> why? >> well, in the instance of delta and the example we use with their india, that actually happened. we went through a reduction in force. fortunately we were able to get enough employees to take voluntary early retirement. when we pulled all that flying out of india, we had a very successful business flying to

mumbai. we bought two 777s and financed them ourselves to be able to do that service. so i know those jobs are there. i think you make a correct intellectual point on both sides of the debate, honestly. it is very difficult to put a precise number for you, or for any of us here. so i guess what i rely back on is i see what goes on in the marketplace. we have one in milan, italy, which has financed airlines from xm bank and dumped 65 -- increased the capacity milan jfk 65%. that's going to have an impact on jobs in the u.s. over time. they are deeply subsidized, which probably really gets to the deeper point of trade subsidies. look, you make the right intellectual point. these are estimates.

they are estimates by everyone, and they are a best judgment. i will tell you air india numbers are right because i was involved in pulling it down and having them do the reductions. >> if you do scratch a little bit deeper at the export import bank numbers, using formulas that use information from 2002. if she was here talk about components, 30% of 787 is made overseas and it's unclear how many of those 255,000 jobs, mr. he heck, are jobs overseas. when go asked about that, xm officials told us they had not assessed extent this limitation affects overall jobs estimate. supported versus created is another twist of the language. supported and created are not the same thing. just because a job is supported doesn't mean it's going away if export import bank financing goes away timt.

it's important to recognize things as we start using these numbers, talk about jobs. the only reason the export-import bank counts jobs is because of us. that's it. the only reason they count jobs is to come in here and justify existence. i'm not making this up i'm looking at g affirm o report. it says export import told us they use jobs calculation for reporting purposes only. according to xm officials, xm calculates number of jobs supported for the transactions reviewed by the board of records at the request of one of its board members. xm board members said the purpose of reporting these numbers is to give congress a sense of the employment effects. they do not use them for decision making. the om reason they are giving you 55,000 jobs number is because they want to continue to

exist. at some point we have to decide which numbers are real and which numbers are fake. i suggest to friends on both sides of the aisle between government agency and beaurocracy trying to make an argument to get more money and continue to exist and a private sector company that's simply saying, please, leave us alone so we can compete, it is the latter that is the more reliable number. 255 is not a real number. 7500 jobs delta lost of real and that's what we should be focusing on. >> time of the gentleman expired. chair recognizes gentleman from washington, mr. heck. >> thank you mr. chairman. to clarify the record, it's 205,000 jobs for 2013. i believe it's 255 in 2012. as reported by the industry, actually, to the export-import bank. mr. anderson, i want to ask a question i suspect i know the answer to. would you favor continuation of

the small business administration? >> i don't know anything about the small business administration. i'm a large business. but i could certainly go learn about it. >> please don't. >> i just don't know. i've never done any studies. i've never had anything to do with the small business administration. >> i asked because i thought i knew the answer, and i thought you would say yes. >> i can say yes if you want me to. >> it's nice to know what kind of thought you give your testimony today, sir. >> if you think it's a program, i'm happy to support it. i didn't come here to testify about the small business administration. >> admittedly. and i wanted to make the analogous point that the sba functions as export-import credit does. the sba enjoys an enormous amount of public support and is kind of a given. i wanted to give color to your early remarks that it was a

reformed xm going forward. you were seeking not elimination of it. that was my only motivation. i do want to make the point that those of you who are aggressively seeking reforms, which may or may not enable the continued existence of xm in any kind of a meaningful way are playing with fire. you're playing with fire. i want to go back to how i ended up my brief time, the gentlelady was talking about. we could wake up in 20 years and still have a duopoly but unfortunately airbus and state of china and their c-9 19. i don't think america would be better off with that. i think america would be worse off. it is the broader point i seek to make, however, which is the importance of aerospace

production, one of the important beneficiaries of the export-import bank and the domestic base of this great nation. we don't want to lose it. we've lost really key components of our industrial base over the last several decades and most of us have lived to regret it. the difference is, this is not one we can reconstitute easily. in fact, it's not unrelated to this nation's security. the hundreds of thousands of people that put together those great airplanes and national security products are a part of keeping this nation safe. and again, i think we are playing with fire if we think that we can do away with export-import bank and not have that critical part of our industrial base decline. i think we are playing with fire if we think we can be as aggressive about certain kinds of reforms that would have that effect and not acknowledge it. i was delighted to hear my friend, mr. campbell, indicate

that he had come up with a bill. i respect him a great deal. this institution is going to miss him. frankly, i'm going to miss him. this committee is going to miss him. i thought it was an act of considerable integrity this he accepted responsibility for the development of that which he presented today, having been just on that side. he knows i talked to him on the floor months ago and asked our side be a party to those conversations. but we are where we are. mr. campbell has taken the constructive step to put a bill on the floor -- bill on the table which none of us have had the opportunity to read, so we know not what its impacts will be. here would be my point about that. in granting him credit for that work, which i know is hard. the exact number is 97. 98 days from now, the doors of the export-import bank will shutter and america will be

worse off for it. the alternative is that we have a hearing on an actual bill that mr. campbell has developed and begin the give-and-take about what the path forward might be. in fact, we only have 97 days. i don't want to wake up in 20 or 30 years, should i have the great blessing to still be around and look back and rue that we were the ones that allowed another enormous degradation of our nation's basic industrial base as we have in so many other sectors. this nation can't afford it. our quality of work can't afford it, standard of life can't afford it and quality of life can't afford it. thank you. >> chair recognizes the gentleman from kentucky, mr. barr. >> thank you, mr. chairman. thanks to the witnesses for your patience and for your persistent testimony here today. first for mr. wilburn, i

appreciate that you're a small business owner and you're an entrepreneur. you mentioned that you were, quote, a free market guy, unquote. are there other means you could identify of making your company more competitive in the global marketplace besides reauthorization of the xm bank. for example lowering highest tax rate in the developed world, ending the war on domestic energy production to make sure we have an affordable and reliable supply of industrial energy costs, repealing obama care, for example, promoting free trade, lessening the regulatory burden on u.s. companies, which is estimated to cost the american economy $1.8

trillion annually. do you see some of these policies which would produce impairments to our competitiveness as equally or even more important than reauthorization of the xm bank to your bottom line? >> speaking of my bottom line, i think all these things that you mentioned need to be considered in the argument that you're going to have in the next couple of days here really. it's important, i think, to give you a number, if i may just diverge from the question for a moment. there were 165 jobs we created. we audited those. we'll be happy to share that with the committee, with our project. but to your point, without the export-import bank existing in a form that would allow me to compete with ecas of the world, my product to get there, i can't

imagine my company surviving. i also think as a free market person, a lot of the reforms you're talking about, policies you're talking about need to be debated. we don't need words like crony capitalist and insult some of my people and small business people. we need productive words like you just mentioned at this point. >> just to conclude, you would agree there are many, many ways to make the united states and our businesses here, including yours, much more competitive, independent of the xm bank issue. >> absolute ly. >> let me just ask the other witnesses to comment on that just very, very briefly. >> the one thing i would focus on, it's one thing competing in a free marketplace. it's another when our government subsidizes our competitor. that's what we're here about, not all these other things people are bringing in. we have somebody, our own

government, government policy subsidizing someone putting a piece of equipment on top of us, we're losing jobs and that's what we're about. >> thank you, mr. moak. mr. anderson when you comment, i'd add something. i'll summarize the argument, since everybody else is doing it, we should, too. we've heard that in some form or fashion from a number of my colleagues here today. is that the right attitude, because everybody else is doing it, we should do it? how would you respond to that? >> in our specific instance, it's not everybody else, it's three countries. it's england, france, and germany. our three closest allies and trading partners. so in terms of aircraft finance and everything else we do with those three countries, this is

something immediately solvable with respect to financing. on the broader question, i think the really broader question is, i don't think we're very good at negotiating trade agreements in our country. and while we all support i think on both sides of the aisle the free trade, what ends up happening is in our industry, we don't have free trade agreements. we have unfair trade agreements. i think the biggest thing we could do as a country is make sure our trade agreements are in reality free trade agreements and u.s. companies are not put at a disadvantage. >> mr. anderson, my remaining time i appreciate your lost pensions at your company. in my congressional district and just outside of my congressional district, my constituents in the coal industry not only lost their pensions, they have lost their jobs. what the export-import bank looks to do is harmonize with administration's job killing

policies that put people out of work. >> time of the gentleman expired. recognize gentleman from michigan, mr. huisenga. >> i want to ask you about epa, mulch rlb, a lot of things going on in this administration. it does strike me after doing basic research we might be ta talking about general electric $606 billion finance sheet, arm capital with $117 billion assets. it makes them the eighth largest bank holding company in the united states. boeing company with $92.7 billion in assets on balance

sheet, with their finance arm with $3.9 billion in total assets. caterpillar, i'm familiar with heavy equipment. i own a small sand and gravel operation. i have owned caterpillar products in the past. their assets of $89.9 billion on their balance sheet. i guess maybe the question is, you're familiar with how do you finance large companies. as you're going through will pay cash. not sure how that works, if it's up front or afterwards, but 100 -- you're purchasing 100 airplanes. how does financing of these large companies work? >> typically financing in the large companies work through public markets in the u.s. so those big firms will go to the public bond markets. the bank markets have really dried up after dodd/frank and

economic reforms. so there's still some bank financing. but by and large it's both public market equity financing, public market secured financings and public market financings. i will note g-cast and the bank compete all the time. we own a stake in a company called aeromexico. aeromexico bought airplanes. afterwards they were competing with xm bank to finance the fleet. so ge has a foot in both camps. >> hey, if you can have your cake and eat it, too, that's pretty good. >> they are the largest aircraft financer in the world, gcas. at the same time they make engines and participants in xm bank financing. they compete all the time against xm bank financing arm to see if they can get the airline business around the world.

>> there has been -- i guess my question is this. couldn't these companies find traditional financing. you had put up the emirate air situation. i think it's $100 billion wealth fund they have. the number that we've heard is 98.4% of all exports don't use xm financing. they are done the traditional way. it means about 1.6% that do, of which about a third probably could not get that kind of traditional financing. i know, mr. wilburn, you might fall into that. if i were you, frankly, sir, i would be concerned you've got major companies like that literally sopping up any opportunity that you have and other small business owners might have to access some of these programs. and yet you get trotted around

as the showpiece of why we need to keep this, when, in fact, it's clearly going to these massive, massive companies. if you care to comment. >> with all due respect, nobody trots me around. >> i'm sorry, i did not mean specifically you. i have a number of companies that come in. i can tell you this, they don't come in with the big companies, they come in -- >> i'll give you my balance sheet. i'm a private company. it's $5 million right now. just to put it in perspective. you're right, i'm competing with billionaires. okay? but there's a lot in common with these billionaires that i'm hearing today that encourages me. because if i can get these type executives to give this kind of focus to small business and say they are willing to work and negotiate to keep export-import bank alive, i'm all for that. i want to sit down with these

gentleman at the end. >> in my last 10 seconds, i would doctor express to you i'm not concerned that's the focus of the xm, and mr. anderson i'll gently remind you canada is largest -- as chair of the parliamentary group with canada i have to point out they are the largest. >> time is up. gentleman from ohio. >> before i give, unanimous consent to commit a letter from a company with 200 employees in my district. i'd like to submit their letter for the record. >> without objection. >> thank you. thank you for being here. i'd like to thank all the witnesses for being here. i guess she could not stay.

i care what the panel thinks. i appreciate putting this panel together. you all have spoken earlier. could you raise your hand if you support xm bank reauthorization with meaningful mandatory reforms? with meaningful mandatory reforms, could you support reauthorization? >> provided it addresses the issues i laid out. >> you passionately laid those out. it addresses your issue with mandatory reforms. >> are you for reauthorization. >> reforms, accountability, and compliance. >> okay. could you please raise your hand if you're for reauthorization of the xm bank with reforms, accountability and compliance, mandatory -- >> stop -- >> did everybody raise their hand? >> okay. i'm not sure your microphone is

on, mr. wilburn. you could support the concept? >> yes. >> i just want to show everybody that happens to be watching the panel unanimously. i'm sorry she could not stay. >> she would probably vote no. >> she might vote no. she didn't say. the panel is unanimous with supporting meaningful mandatory reforms. many of my colleagues do well in the theoretical world but i live in the real world. 31 countries have export finance agencies. you know, i think mr. sherman from mr. california talked about unilaterally disarming. i think that's a bad idea but i think there's a way forward. mr. anderson you passionately argued for meaningful reforms. you talked about the handshake agreement between boeing and airbus of france.

and they now agree to exclude some things and not cover certain things. if the united states completely walked away and did not reauthorize xm bank, do you believe airbus would hold firm to the handshake agreement? it's kind of like, the handshake agreement is like mutually assured destruction. they each have something and agree not to use it. if boeing didn't have it, do you think airbus would stick with the handshake agreement? >> the commercial leader john leahy and airbus said yes. the united states -- you hear this from both sides. i've heard it from boeing and airbus. if the other side stops using xm bank financing, we'll stop using it. i've had it from chief officer of airbus -- >> i hope that's right. i'll tell you i believe, and i'm sending a letter to u.s. trade representative and trying to get some of my colleagues to support

it to ask that we immediately enter into kboegss with oedc and with all the countries around the world, 41 countries that have export finance agencies to end them simultaneously. i think if we end ours with the hope of good will they might do the samening that might be short sighted. i'm sure she thinks it's a good idea in the real world but i'm not sure it works in the real world. >> this unilateral talking point we use all the time, the buzzword, the reality is, this government policy, we're arming -- >> i recognize the need for reform but if we completely walk away from the entire thing and to my previous questioner, 90%

are small business, like mr. wilburn. i have one final question. did anybody read financial times today. >> no, getting ready to do this. >> i'm sure you were. >> 40% of our finance transactions globally covered by oedc rules. this year down to 34%. the real risk is the rise of transactions not covered by oedc rules. that's why it's so important for us to engage in negotiations to fix this simultaneously across the world. >> time expired. recognize the gentleman from wisconsin, mr. duffy. >> thank you, mr. chairman. on our side of the aisle, we oftentimes like to talk about free markets and free enterprise, how we're big advocates of that. oftentimes we advocate that in theory and sometimes in practice we're not so great at it. i think this has been a fascinating debate and conversation about xm

reauthorization and how we fall into the debate. none of us want to see us lose american jobs. no one wants to see xm go away and boeing see substantial job losses. we don't like to see the american taxpayer arm our competitors, which causes delta to lose 7500 jobs or more. i was sensitive to mr. fincher's comments about all of us talk about balance budgets and spending, first thing we do is cut xm bank and he has to go home and explain why we lost 1,000 jobs as a cost-cutting measure of that's a tough one. go back to the budget debates we had at the start of this year where we talk about cutting spending all over the place but the first place is cut cost of living increases to our veterans. our veterans would be in line to cut spending. they say, listen, this is the

first place you're going to go? you cut us first? we'll do our part like we always have but don't cut us first. just to comment on our debate in the house. i appreciate mr. stivers comments on reserve commitment to reauthorization of xm. mr. anderson what type of reform do you think is necessary, talk about reform, compliance, accountability. what is needed in the reform front. not just window dressing, real reform necessary to get you to buy in. >> stop arming my competitors and taking my jobs away. >> throw me specifics. >> specifics are the last time

we did this and the committee thumbed it's nose. it's specific. we have to stop providing u.s. government subsidies to foreign flag government owned airlines that are usually subsidized on their own and have enormous creditworthy balance sheets. >> you've made that clear for three hours. >> let me be very blunt about this, lets be clear what happens with the financing. it improves the profit mrngs of the top ten countries in the u.s. that use it all the time. okay. that's really what it does. >> mr. wilburn. >> i have one reform that i'd like to suggest. >> sure. >> to the committee and to the xm bank. put more focus on small business job growth, simple as that. not some kind of spacious or specious but real goals, the

bank of small business. >> i find it fascinating that those countries who are providing the financing -- i'm sor sorry. >> i want to make the point we're missed here, lufthansa, air fans, they want this to come down also because they can't access it. airbus shouldn't be allowed to access eca subsidies. they are getting killed the same way delta air lines is. we need that reform there also. that's what's missed here. >> in the gentlemen's agreement i find it interesting the countries that provide the the subsidy, if you want to call it a subsidies are the very countries hurt. listen, we're going to allow united states, delta air lines say, listen, all things equal, i would say boeing makes a better plane. >> not always. >> boeing and airbus equal, you could say -- we'll debate that

later. i'm not buying any airplane, i'm going to go buy airbus and get subsidized just like the rest of the world gets subsidized but you don't have that option, right? >> no. we don't get subsidized. >> i know you don't, because of the gentlemen's agreement. >> it's between airbus and boeing, it's the gentleman's understanding airbus financing won't be used in u.s., epgd, grmds, france or spain because those are home market companies where airbus -- interesting question when airbus starts making them in alabama. >> fair knew enough. i yield back. >> gentleman yields back. gentleman from louisiana. >> thank you, gentlemen, for being here today. i've enjoyed your testimony and comments so far. obviously this is something that's a big concern to a lot of us and especially those of us who want to see private sector

handled as much as possible especially when you're hearing discussion about banks with planned capital, people looking to help. one of the folks that i spoke with in indiana used to be a customer of xm bank. because of the volatility around it, will his particular interest in finding another solution, he was able to. my first question directed to you, mr. wilburn. i'm a small business owner as well. i understand the difficulties, pressures that are on small businesses trying to make things work and trying to find new markets. can you tell us a little bit what else did you look at to see if there was a replacement besides xm, whether it was financing through bank and some sort of insurance, executing transactions. anything like that you would

have looked at before xm. >> i looked at all of those options with primarily my bank wells fargo who was gracious enough to give me that working capital loan we talked about i had to leverage everything for to support those export activities, but i'm always, always constantly searching, searching for those type of i'll call them private solutions with banks. they are responsive, they will listen to me but they don't respond with the funding. again, it's not my question called in question. when i'm exporting my product to those exporting countries, i am relying on their credit and their creditworthiness. it's difficult for my banks to get that collateral and seize it. >> how long have you been in business? >> ten years. >> ten years. did you see any difference before the banking collapse? was there better access to

credit? when did you start using xm? >> my partner was one of the major investments banks that was the last -- i'm underneath nondisclosure agreement so i have to use caution. yeah, they went bankrupt. i didn't. my company was strong. it cost me $11 million to unwind that in three years. >> that was before you started using xm? >> yes, absolutely. i responded with a $25 million revolving credit line by that particular agency. >> do you think the pressure today on banks, whether through just the regulatory environment, dodd/frank, do you think that's putting more pressure on banks and theirab ablability to lend small businesses and people in situations like yours. >> i tried to understand and address my remark, i was clumsy at it, doing my research, all i can say is i think there's barrier to entries for small business guys like me.

we have to take a look at the rules and risk profiles to make it a more level playing field to have access to those capital markets. >> mr. anderson or even captain moak, would you have any information regarding that, just your experience around xm? i know you're focused more on the bigger side. but smaller businesses. are there other opportunities and other solutions for smaller businesses to workouts and would you make any comments about just the difficulty with credit today and the regulatory environment we live in? >> i can talk generally that, you know, the credit environment is a much, much tighter credit environment. with the market to market rules, you know, a lot of the bank lending that we used to rely on, particularly in europe to finance airplanes is gone. so the number of sources for large structured finance,

particularly given market to market requirements have really tightened up credit quite a bit in our industry. a number of ourselves we used to have where you could get a mortgage on an airplane. you can still get it, it just takes what fannie mae requires for her own, more credit, bigger rating, fico score. >> those are all things small businesses have to deal with. captain moak, you want to make a comment. >> only thing i would add, going back to 2008 with the collapse. the u.s. congress over a few days in 2008 was able to deal with that and come out with legislation. i'm confident this body can address reform in less than 90 days on this issue. >> mr. chairman, if i can make a comment. we're focusing on something here that is a symptom with regulatory environment we live in and trying to reauthorize a bank that isn't part of the solution. we should be focusing on