. >> our community outreach with a dhs we are working hard with police agencies throughout california so if there is a deficit of training or something that teeeight just might help in ontario we are more than happy to have that discussion to make sure that training is available. >> thank you. i want to thank each of you for being here today i have heard and i am amazed at your depth of knowledge and your dedication to the mission for right echo my sentiments of my colleagues but appreciate we we're doing to keep the country safe. but i want to talk about the comments made and i want to make sure we are clear. i was a federal prosecutor 20 years to routinely

engages sophisticated wiretaps surveillance program and our investigation benefit did briefly as the cybertelephone industry developed as many technologies that first we could not monitor. just to make sure what we are talking about for those internet sites and places out there that are dark, you're talking about to have access to them but not to monitor a without a court order but obviously if there is probable cause to monitor those sites? >> absolutely correct. >> this isn't forcing them to go public to monitor everything but with probable cause to go forward. >> go to the court for the court's order. >> very good. mr. taylor you mentioned cbe

to be our best defense with a violent extremism event riccio to be the best defense for i could not agree more and i was with the chairman to talk to our foreign partners to see firsthand the issues of the task force and there are security gaps overseas that we cannot control. and we conclude the best chance to stop this in the united states of fortune of a is on our soil. not overseas yet. but what would you envision what is the best ways to build this program? and now we have private programs - - pilot program. >> you mean in terms of community engagement?

this is all a part of a broad set of strategies of community engagement. i think we learned a lot of lessons from los angeles denver, boston and minneapolis. now the challenges to propagate those lessons learned to communities across the country that we are continuing to reduce. we believe the first line of defense from radicalization is the community to go from there is of the promulgation of the training and engagement will help us achieve a better outcome in terms of what we try to reduce. >> now we have the model of the law-enforcement ciba from community our reach most attorneys' offices have coordinators you envision

that? direct absolutely. it is a shared responsibility between t h. as a and fbi and of the justice department and it is all whole of government and local government ever not just the federal government the whole community. >> but said j.t. t as the backbone of the anti-terrorism efforts have done a terrific job but lately they are under more stress with the additional things they have to look into on a regular basis. it seems there is more of a reliance to get state and local law-enforcement involved. is it a concern billing for word there isn't enough federal agencies -- agents going forward question mark i've been happy to with that

question. >> because you want more money left of. >> last week we were completely wrong. we are fully staffed. and we rely on of robust partnership of state, local federal tribal agencies. those resources are there. i have not waned cancer in the we are now struggling to keep pace but we have to prioritize our targets without robust torture that relies heavily on the 17000 state and local agencies around the country. >> i agree completely and i was the commander of the air force office of special investigation and the concept was created. i support it today as the best law enforcement process

to get at the terrorist issue is. the other thing rehab done but the jttf relies on the 18,000 police organizations and first responders to do a significant amount of training as they see something say something they are the force multiplier for the investigators as they focus on the investigation specific cases for i cannot speak for the resources but i can wear homeland security has invested a significant amount of training and effort so people understand the threat and the risk and what to look for and to report that information on a continuous basis or for intelligence. >> one brief question.

so the take away is if there is a resource issue of the cb side with community of reach that if we can help you with that wide help with messaging senegal and the ongoing efforts. >> thank you very much. >> mr. chairman into incidents this week demonstrated to me the prevalence of what the community hearing is about with a recruitment of vice and we get close to home. one of them was the killing. he was educated went to school a few miles from where my children went to school and became

radicalized. and as you are aware he was on the fbi most wanted list and one of the major architects of what we discuss today with the internet message is and a very sophisticated way. but then secondly in the area i used to represent is a the legislature where the terrorist incident occurred and i will congratulate you on your firework with the reports that was linked with the ongoing investigation and to the on going recruitment for the internet i looked at those things and i understand the importance

of information sharing. but we concluded with the boston marathon bombing with the local stadium and federal government to share that information and want to congratulate you to move that forward to improve that situation. it is very clear although not at this moment but in terms of actionable threats of the incidents that have occurred every half to understand local state and federal government and international because it is just a matter of time before many materialize in a concrete fashion. given the fact it is for areas we understand the

difficulties with our allies not moving forward with passenger knee records that we take for granted here. and porter security even on the exteriors european borders. that is not moving the way it should or as quickly as it should or the technical support that we offer tears some of these countries how to do deal with it not being utilized for:i still think we can work together with the country's comment on how we are dealing with the information sharing local state federal and the individual countries because we found some are more receptive than others in terms of information in

sharing not just their but here at home. with the idea that we're doing a good job to swat mosquitos. but we try as much as recant her coquettish comment on that counter message? through the internet with those competing messages and what more could be done? >> i will jump in on the first piece with regard to my colleagues are better at pushing the information but we are consciously trying to push the knowledge gleaned

down to the local so they're more fully informed and we have to keep pushing that on the international peace at times it becomes on a real play as say multilateral issue to establish close bilateral in for rick -- relationships. but the challenge is if you try to address these challenges in the efficient way you need to air insurer a broader range behalf of the equipment so that is a longer term objective. in terms of the overall counter this is jane, our federal government has a interagency process that works at the speed of government and as you understand it has constraints and the real

secret will be to broaden the messaging so they can participate in the process. >> first this committee has been very clear to me in my role as the undersecretary of intelligence analysis that the core customer for the intelligence me do is we have worked very hard to transform how we approach the dissemination to state and local partners with the colleagues and the fbi and in ctc but specifically focusing to get relevant information out quickly to state and local partners for :i know how many bulletin's we have done but it is a record over last year. that is our commitment to

receive information to get into the hands of first responders estate local federal trouble private sector. when real talk about our foreign partners you mention the e.u. that is reluctant to use across all the e.u. and rehab individual dialogues merit certain in countries are moving forward but with their own country but tears talked-about the resolution in 1267 per grey think there's more pressure and rigo continue to press to get but to also emphasized all of these waiver

countries have been dependent bilateral agreements on information in sharing with the intelligence service, fbi or law-enforcement their robust agreements we continue to press for the exchange of that information and. it is not perfect for the state and local partners and also the of foreign partners to improve on a daily basis. >> thank you for being here of all the hearings we have had i think this is the most productive and informative i have sat in on. one of the things we're doing away offices this is a with local law enforcement within the district because what i see with though long wolf attacks:for those already in the u.s., with

the recent attacks it is a reminder to all of us they are not against us as individuals or citizens but by those were threatened or diametrically opposed to what we are as a people and the freedom that we have freedom of thought, ideas come religion it in the case of garland texas was the freedom of speech. that was really what was attacked. with that in mind, the america freedom of defense initiative and the contest seems to be that they incited the attacks nobody is cited those attacks but it would leave us to believe it is a potential target.

how far in defense of the event did the counterterrorism no this event was happening? was their coordination? >> we knew about it several weeks in advance and more specifically as he has the last friday and every event like this redo go to those organizers and individuals to lay out the threat. of course, we don't try to take them out but we knew several weeks in advance. >> you knew they were coming. hall about the local law-enforcement? >> it is multifaceted. 2.0 the joint intelligence bulletin that lays out the week ended vance and in this particular case we pushout

the communication tool that collection emphasis message that asks agencies to collect intelligence on the threats and the event to put out tactical reports. with the size of the event of preparatory meetings to identify who has crowd control, emergency restored -- responses a wrought-iron their approach. >> the question is do we have 15 years to track terrorists and their activities or their threats to the chatter? we got to where we can filter through what is chatter or valid threat. of responses to that threats ? do they take them seriously? >> yes.

we spend a lot of time pushing that message at the local level have the field offices as well as the executive level. two weeks ago we had of video teleconference led by the director of komen security to lay out the threat. redo that periodically so there is multiple levels of the engagement. >> i would add we have created a network across this country there is the impact on my community with the intelligence network with the fbi. though local law-enforcement partners understand the primary responsibility to protect their communicant -- trendies then the risks and

they're hungry for information that is what we try to design is what information we can get out to them to take appropriate action. >> if more of these questions are in a classified nature we can respond to those later but of the communications that we know that happened between the attackers and bad players how much of that torino before verses forensic information and how much plays into the warning that recent to the locals price limit or three happy to answer that but not in this setting. >> and the reverse flow to rehab their channels of communications for intelligence gathering from local law-enforcement?

because this was the national event for you could have a local event that could be a high threat target. >> is a great question and under the direction from this committee, and reworked to expand local intelligence gathered and reported relevant to the icy but the fbi that is working independently with the center is in the field but we created up process called field activity reporting where they will do reports from the state level perspective so we have created that opportunity but

to share the information on a continuous basis. >> i will highlight that. the reason we push that out is to make use of the 400,000 state local tribal offices. there the first response going to the first responders will be for any of us see it. it allows for reporting of information quickly into the fusion centers to act on that. that is the foundation of the process. >> they give for your testimony today as your task force and we have had conversations and classifying settings.

with the recruitment of women and girls from our country that their active the recruiting and i can imagine the draw but here we have american girls with of life of rape and slavery. with a 200 americans and flowing to the region thought. what about those efforts and with the targeting of women and girls. >> but fivers six years ago those is almost nil.

it is a good ballpark but the fact it went from zero to where it is no is a significant uptick. so the reasons why individuals are recruited the specific a young adult males and females what draws them? that is a process to understand the motivation of radicalization and we see a wide variety. to motivate the young women to take a chance to go overseas. >> to engage the community you will be in slavery and repeatedly raped and to counter that with the graphic reality of what they are recruited for testimony of individuals that have experienced this you counter message with a stronger message.

we are doing that at the local level as well? >> yes. through the fusion center we are reaching out to the communities because of the dangers to be on line because of pedophile's or cybercriminals or fear of recruitment. >> with the use of social media for fund-raising could you comment? anything to raise funds and crowds nursing and law in dash crowd sourcing are you working with the department of treasury offices whole successful have they ben? is an arduous process to

rebuild our understanding that is inflated caribbean would also played down - - point out in the expansion of the caliphate they're taking possession of a number of resources to exploit that so they can draw on those resources for financing and funding but nevertheless because of the fact they are the extended organization they have to manage that infrastructure that intelligence effort that is under way. >> it is minuscule i know black market and the region but those that we're focusing on but specifically on line fund-raising. >> i don't think we see the same degree of on line fund-raising that we have seen in the past.

>> by word to concur. >> isis tries to motivate people but obviously i was is the military those are the most secure areas with softer targets they could go after but if you -- save recruit to someone who has a base we could have a major impact from the and are you working with the department to counter that? billerica's gentleman mentioned said department of defense takes this very seriously and how it might manifest themselves in the

country. it is a secure place but to identify people by addresses to work with the military on strategies for individuals to protect themselves at this point but to try to derive a military engagement is to you draw that croatian and we have to be responsive especially to military rivers. >> we think the witness is four years testimony and service to our country per tree we have additional questions in writing. in pursuing to the hearing is a friend for 10 days. we are adjourned.

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where a live anthrax virus was accidentally sent to over 50 research labs. the export-import bank is a federally backed institution that guarantees loans for purchases of u.s. export. the program is set to expire at the end of the month. export-import bank president fred hochberg testified on renewing their authorization. this is an hour and 40 minutes. >> the hearing will come to order. on tuesday the banking committee

heard a range of perspectives from a panel of ex and industry representatives who testified on the future of the export-import bank. today the committee will receive the testimony of fred p.hochberg, president and chairman of the bank as we consider any next steps in the light of xm's expiring authorization. as i said earlier it this week after years of calls to reform the bank right here i'm not convinced in a long-term reauthorizing is merited. many criticisms of xm involve failures in risk management which are particularly disturbing considering the 40% increase in kpchl m's exposure employment which i opposed in 2012. at a hearing last year the inspector general testified on concerns related and i'm quoting, to several challenges facing the export-import bank in managing the risk inherent in

the core business activities. in recent years both the inspector general and the government accountability office, gao, have identified hundreds of recommendations related to xm's financial and operational weaknesses. i understand that mr. hochberg will address several of these in his testimony before us today. i think it goes without saying that taxpayers is should not be asked to back stock xm's $110 billion portfolio if the bank cannot adequately manage its risk of loss. much has been said about how xm historically returns money to the taxpayer each year and i'm sure we'll hear that today. this does not take into account losses that could occur based on a variety of factors, including economic uncertainty and xm's disproportionate exposure to several industries geographic

areas and large single foreign customers. any discussion of the bank's future i believe must include a serious examination of whether or not xm can substantially improve its accounting for these and other risks. i'm concerned that the reforms that are necessary may simply not be achievable. nevertheless i look forward today to hear mr. hochberg's remarks as the committee takes another hard look at the export-import bank. senator brown. >> thank you, mr. chairman or holding today's hearings and thank you care man hochberg for joining us again today. i especially want to thank you chairman hochberg for the outreach you've done to small businesses in my state, to the global access for small business forums that you held in cincinnati and mentor, ohio and northeast ohio and youngstown and the round tables in both toledo and columbus. i know you've done the same kinds of outreach virtually almost everywhere in the country. congress does our country no favors when it lunches from

oneself-inflicted crisis to another. at the end of the year we saw an ideological fight over an event actual expiration of the terrorism risk insurance program. last sunday portions of the national security agency's authority expired. when we've dealt with the highway trust fund it's been in the short -- it's been in the form of short-term patches one after another. i believe 30 extensions something like that. now we're 27 face away from the export-import bank's authority expiring expiring. one member of the republican leadership is committed to a floor vote in june, another said it should happen on the highway bill extension at the end of july which most notably is after had this expires. this is not a way to do business for this committee, for this senate, for this congress. xm should be bipartisan and always has been since first authorized at the end of world war ii. according to the wall street journal prior to 2012 the senate

had only once required a roll call vote only once in 70 years, a roll call vote to reauthorize x. am. the bank was reauthorized for example, by unanimous consent for the senate in 2006 under president bush and republican majorities if in the house and senate. the 2006, five-year reauthorization was followed by a five-month reauthorization in 2011, a two-year reauthorization in 2012 a nine-month reauthorization at the end of last year. this history, this this recent history, the long-term history has been done right, this recent history of limping from one short-term authorization to another is bad for small business owners who want certainty to plan their investment and hiring, but can't make long-term decisions because of congressional inaction. it's bad for the export-import bank to attract business that will expand u.s. exports and retain the necessary number of talented employees to oversee an

expanding portfolio. it's bad for our economy because it makes the bank riskier, not safer, it makes it riskier it hurts our competitiveness. of course, xm is not perfect no person or institution in a country had large can be, but the work is so important and in today's global economy we need to support businesses when they sell their products around the globe. many on this committee have argued for fast track authority and will support the trans-pacific partnership which arguably, very arguably may or may not mean an increase, a net increase in jobs, but there's no question the xm bank means jobs it's not easy for small businesses to export but making sure they are aware of and have access to tools like xm can help them grow. we know that competitors around the world have their own version of export-import bank. there are about 60 export credit agencies worldwide. we shouldn't put our manufacturers and our exporters at a disadvantage to china,

india, to european countries. it means more manufacturing, more exports more jobs particularly higher paying hurg jobs, it's why the work of xm is so important and why reauthorizing it by june 30 is essential. i look forward to working with colleagues, especially appreciated the comments on tuesday from smarts kirk and heitkamp and donnelly and others who are committed to ensuring that this authority doesn't lapse for the first time in seven decades. mr. chairman. >> mr. chairman, your written testimony we've reviewed it, it will be made part of the record in its entirety. if you would sum up your testimony we're going to -- after that we will -- if the senate is on schedule we will have a vote and break but we will wait and see. you're recognized. >> thank you. chairman ranking member, distinguished members of the committee, thank you for inviting me to testify about how xm ee kwips u.s. businesses to complete -- compete in the

global economy and add jobs here at home. xm compliments and works with the private sector. we provide backstop financing so american entrepreneurs can seize global opportunities to create jobs and not get left behind by their foreign rivals. and we've been successful supporting 164,000 jobs last year alone. xm does not pick winners and losers, rather it serves any eligible american business seeking competitive financing. we are by definition demand driven. of course our customers pay fees and interest for this service and as a result x am m is completely self-sustaining. last year alone xm generated $675 million for deficit reduction reduction. if xm is not reauthorized xm would only be able to generate half a billion dollars in ref

muse for the tack pairs. in may of 2012 xm was reauthorized with overwhelming bipartisan support. a know our exporters and their workers are pleased to see movement in the senate with two bills introduced this congress. i take very seriously my duty to implement the will of congress, that's why i provided each of you with all the documentation outlining xm's implementation of every single requirement from the 2012 reauthorization. and why i will work diligently to implement any future requirements congress chooses to enact. on top of that mr. chairman we are keenly focused on risk management demonstrated by our low default rate of 0.167% as of march 2015. in addition, xm continues to proactively implement risk management improvements to further ensure we remain faithful stewards of the

taxpayer. let me just name two. we increased staffing in our asset monitoring division by 33% and we went beyond all federal requirements to implement mandatory ethics training for all employees. having run a small business i know how important it is to continually identify ways to become stronger and sleeker. and we can always do better. and we continually strive to be better and improve the way we operate and serve small businesses. two particular examples tachb port aviation in columbus ohio and zchl ante print printing in mobile alabama. in xm we help exporters to pursue export sales, create jobs and compete more effectively in global market. global competition has ratcheted up dramatically since our last reauthorization and it will continue to do so. american businesses and workers aren't simply competing against their chinese russian or french

counterparts, often they're competing against countries. congress has made it clear. they have asked the treasury secretary to ratchet down export credits. and while that is the secretary's responsibility as i said i take the will of congress very seriously. as a result i recently met with many of my counterparts to discuss exactly that topic. here is what i heard. to the contrary, our counterparts intend to accelerate the financial backing for exporters. their role is clear. when commercial banks constrict financing export credit agencies fill the gap. so that their domestic exporters don't lose sales or workers. xm bank is like a firetruck in that sense, you don't sell off the firetruck because because there isn't a fire currently burning. in closing, as this committee is aware, businesses need certainty to make long-term plans to grow hire and a innovate. there are now about 80 other

export credit agencies around the world, aggressively fighting for jobs, unlike xm bank. one of china's export credit agencies recently noted that they doubled their financing in 2014 and they plan to tunnel it again in the next year or two. we look forward to working with you, mr. chairman, and the committee to continuing empowering your con is stit wents to export more and hire more american workers. >> since we haven't called a vote yet we will move on to questions. in 2012 export-import bank's inspector general reported that xm's narrow definition of default may result in an jund statement of the bank's hi or cal defaults. among other things the inspector general noted that xm's definition on default does not include technical defaults which reflect a failure to comply with specific conditions in the loan agreement. do you think, mr. chairman that it's a problem that xm is not

properly estimated historical defaults and what are you doing about it? are you changing it? how can you assess future performance at the bank if you do not have a good ens is of historical defaults? >> well mr. chairman, we issue this default report to congress every 90 days, one one of the reforms in congress. the defaults in here are actually cash outlaid claims paid by the export-import bank. they currently are running less than 1/5 of 1%. in addition in this report we indicate delinquent payments which is an indicator of what might possibly default in the future because they are late. in terms of a technical default sometime that is something such as a filing of a financial statement could be can running a week or two late or could be -- could be some kind of compliance issue like that. so we are on top of that we monitor that but thea not in the definition that congress has given us. we have -- congress, by the way

has updated the definition of our default four times since 2012. >> would a technical default also include maybe a violation of loan covenants? >> it would depend -- technical default could be as i said -- >> it could be substantive could it not in nature? >> it could be substantive but it would not have any material effect on the ability to repay, if it does we have a watch list that we produce every single month of credits that are requiring extra scrutiny or troubled credits. >> mr. chairman, according to the xm bank's annual report the ocp, a more can government owned mining company with a questionable history of human rights violations received over $92 million in xm loan guarantees. several news sources have reported that ocp donated millions to the clinton foundation and just recently hosted a clinton foundation fundraiser at a five-star luxury hotel in morocco.

my question is this: how do you ensure to the people american people that none of the money guaranteed by the american taxpayer has not been used to fund the clinton foundation or other unrelated activities once the money is there? >> well, for one, the money has not been disbursed yet. at the moment the money -- we've approved this loan we have not finished documentation and dispersed it so no money has been used for that purpose. secondly, all money that is borrowed for a specific transaction relates to the purchase of u.s. goods and services and the other attendant services around that. they have to show invoices of where -- of what the money is used for and that's when the disbursement is made. >> does it bother you at all that if ocp is donating millions to the clinton foundation and just recently hosted a fundraiser and we're making them a loan it does that raise a red flag with you or that doesn't

bother you? >> senator, we look at every transaction, we look in terms of -- look at reputation risk integrity of the transaction. this is a large mining operation in morocco. >> state owned? >> state owned -- let's understand one thing about state owned. in the rest of the world much of the infrastructure in country after country in state owned power plants transportation, rail utilities, water services, mining is frequently state owned. so that is -- that's the way the business -- whether we like it is regrettably done around the world. this is a good project,th buying almost $100 million of u.s. goods, creating a lot of jobs here in america and we obviously make sure that it's credit worthy environmentally sound and has no reputation nl risk. >> mr. chairman, in the area of subsidies and free markets, we have that debate and i think it's a healthy debate. in your written testimony you

state and i will wrote, it is incumbent upon america to strive to level the playing field in the global export area. restoring free market factors to their rightful place at center stage of competition. what does that mean to you? >> it means -- it means very clearly the rest of the world has a lot more government engagement with their industries and their companies. as you just mentioned, mr. chairman, we want to make sure that by our financing we level the playing field. so if we use ocp as an example, we want to make sure that the financing package that backs up u.s. exporters is the same financing package that backs up our competitorser in china or germany or much of europe so that the buyer picks from a free market the best product best service is best quality not because someone has their finger on the scale and has provided off market financing to give it their country an advantage. >> we heard testimony a couple

of days ago that a little less than 2% of american exports rely on or do business with export-import bank, but 98% don't but they're still exporting. is that figure about right? >> that's right and that's a good thing. >> okay. >> the private sector is a really good job. >> senator brown. >> thank you, mr. chairman. mr. hochberg, your charter says that xm financing should quote, supplement and encourage, no the compete with private capital, unquote. a lot of wide bodied jets for example, are sold without kpflt m help. why can't everything be financed solely by the private sector? >> i wish it was such, but it isn't. i guess there are a couple of reasons, senator. one, we face in the commercial jet area intense competition with airbus, backed by the governments of germany, france and britain. each of them have an export

credit agency that backs all airbus purchases. so if we want a level playing field, we want to make sure there is a level playing field between american-produced aircraft made through 15,000 suppliers of the boeing company and airbus backed by three governments we need to provide a comparable financing package when warped. additionally from time to time we have just come through the worst financial crisis since the depression when liquidity tightened up and constricted and we had to really step in and fill at that gap to keep trade growing and jobs being supported in this country. since there's more liquidity since that recession there's more and more in our rearview mirror our lending has dropped. we're doing about half of what we did two years ago because banks have come back into the fore and there's less need for us today than there was even two years ago. >> some opponents of xm, and we've heard them come out with

increasing volume express concerns about management risk oversight at the bank, be the bank's portfolio has grown in the last five or six years since 2009 but the number of employees has not grown by much. your inspector general in april no eted uncertainty about xm bank's long-term reauthorization is hindering recruitment. we know there is a whole host of reasons that the fits and starts and short term reauthorization that congress seems to inflict on a whole lot of government programs including certainly yours, have had -- have had negative impact on investment on long-term decisions, on predictability. talk to me if you would about how this repeated short terl reauthorizations and possible he can operations affect your ability to recruit. >> well, i think it has certainly made it a challenge to recruit. there's also a bit of a brain

drain as people get concerned. our employees are no different than the 164,000 jobs we support around the country. they're worried about their mortgage, about making twig payments this fall and the start and stop about what they do. we have about 450 workers at xm bank. i care about them they do a spectacular job. why we have a default rate of 0.167% percent is because we've got good underwriting and good asset management. i fear this debate can jeopardize our ability to retain those people and bring in new people as it goes on and on. >> so these -- talk further, if you would, you touched on your testimony the repeated short term reauthorizations the continued let's that xm won't exist after june 30th. how does it affect your small business customers? i've had -- you mentioned davenport in columbus, ohio you mentioned a company in alabama. i met with probably a dozen

businesses businesses, mostly companies i had not heard of as many companies as i visit around ohio there are obviously hundreds and hundreds that i don't know yet that people that came in this that really depend -- that gave up their time and costing their companies money to come here and push visit senators and house members to push for reauthorization. what effect do you see this has on small business customers? >> we've seen it firsthand with one of the tools that small businesses use is a working capital program, we work with their bank provide a 90% guarantee to induce the bank to make a working capital loan to support exports. more than a few banks have pulled back in light of the uncertainty they don't want to get into a situation where they have made a commitment and then if approximate our authorization should expire they're not able to execute that. so we've seen some constriction in working capital lines forcing -- if you are a small

exporter with very small percentage you might be able to fit that in your regular working capital loans. if exporting is 20 or 30% it probably is too large to fit within your domestic working capital line. we've seen that. a lot of what we do for small businesses is provide credit insurance. when they sell overseas we insure their receivable. they go to a commercial broker for that. commercial brokers are loath to write a policy that may only have 20 days left. >> thank you, mr. chairman. senator corker. >> thank you, mr. chairman. thank you for your service. we had a hearing, i guess a couple days ago and it became pretty evident that we're involved in a race to the bottom with these export credit agencies that in essence the national manufacturers association had had a witness in here and i guess it really highlighted more than ever that that's really what we're about is we are competing with other countries, as you mentioned,

many of the companies that are in these countries are state owned enterprises the export credit agencies in other countries he are putting you putting our nation in a place where we're in a race to the bottom to try to quote level the playing field and i assume you agree with that. is that correct? >> yes. i mean, that's what -- the oecd, organization for economic cooperation development which has something called the arrangement where most industrial lysed countries are a party to but china russia, inn i can't, brazil are not. we all have a standard, we all have a minimum fee we have to charge so there is not a race to the bottom. the challenge is can you please trees that are not a am member can do whatever they want, they can be opaque about it and they cause some of the most severe challenges to u.s. competitiveness. >> well, i will say in their testimony they made it pretty clear that it was all about

market conditions and it was about meeting the -- especially in the case of -- i use the case of boeing because their name came up i have nothing against boeing, as i mentioned i like flying in their airplanes, but she did lay out the fact that it is that, it's a race to the bottom. we're competing with other countries. and i guess i would ask this question: how do you when you're making these loans to a manufacturer like this and you know that they are -- you're doing this to make it so that a company in another country is able to buy some type of equipment, just name whatever type at a lower rate and yet those companies are competing with other u.s. companies that don't have the benefit of that export credit agency yours. how do you reconcile that? in other words, in some cases you're actually making american companies disadvantaged because foreign companies are able to

purchase goods that are made here in the country at better financing arrangements than they can here dom clee. >> we do the best we can to level the playing field. i was in south africa about a year ago actually this week and i met with trans net which is the rail authority in south africa. they had a large tender for locomotives. in the end they divided it half to the chinese half to the u.s. i asked the head of trans sent what kind of financing terms are the chinese offering you so i boo know as a businessman what the competition is. they said, well what would i like, 10 years, 15 years 20 years, a grace period? what do i want to make the deal? we don't do that. we offered the most we could offer is 14 years. however, by offering 14 years maybe we didn't equal precisely the chinese offer, but we got close enough that we at least were able to get half that order and not lose the entire order to the chinese. >> i might just add one last

thing is not surprisingly about a month or so before the tender was determined china made a $5 billion loan to the rail authority for upgrading tracks, signaling and so forth. what happens that's a coincidence, perhaps not. >> i think you can see why this would be -- we understand the business you're in and i was going to allude to you after 2012 needing to try to get other countries to lower this amount of activity. you alluded to that in your opening comment. but you can tell -- i mean, this is an unseemly business to those of us sitting here where basically we've created had this entity to create financing to complete with other countries that are based -- basically racing to the bottom. the other, i guess part of your quote, agenda is to make sure that smaller enterprises have access to credit and yet we've looked at your application form and there's really no -- nothing