Import bank with chair Kimberly Reed. This is an hour and 20 minutes. [inaudible conversations] the committee will come t the committee will come to order. Today the committee turns its focus to the export import of the United States. Just last month the Senate Confirmed Kimberly Reed to be president and chairman of the Export Import Bank along with board member spencer bach cuss and judith pryor. The nominations of claudia slei Board Members are approved by this committee and pending on the full senate floor. United states exporters are able to compete very effectively in intern International Markets on the basis of price and quality. However, when foreign governments provide subsidies as a matter of policy and general practice to their exporters, u. S. Exporters are placed at a competitive disadvantage purely because of such financing arrangements. According to the 2017 xm bank, competitiveness report, chinese export credit agencies provided more medium and longterm investment support than the rest of the world combined. As President Trump and other senior officials in his administration have noted, a fully functioning Export Import Bank has the ability to provide financing and level the Playing Field in response to governments like china which can provide almost limitless subsidies from its treasury and place the u. S. Exporters at a disadvantage. Director of the National Economic council, larry kudlow, recently noted that the xm bank is vitally necessary in the current trade environment in order for the United States to compete and succeed in International Markets, calling it a financial tool and a National Security weapon. During her confirmation process, chairman reed committed to focusing on strong standards of conduct, increased transparency, sound Risk Management practices and eliminating waste, fraud and abuse at the bank. Now that shes been confirmed, i look forward to hearing about the work that shes doing and that which still needs to be done to process the backlog of pending export deals and how the reforms that congress initiated in the 2015 reauthorization are being implemented. In addition, we will begin the debate about what changes, if any, should be included in the reauthorization for the xm banks charter which is set to expire at the end of september. Weve been seeking feedback from stakeholders, our colleagues and the administration as a part of the reauthorization process. In the 2006 reauthorization i worked on a number of provisions to make sure that Small Business communities have advocates to help address their needs and concerns. However, the bank historically has had trouble meeting its 20 Small Business mandate in terms of authorizations as opposed to sheer number of transactions. I look forward to discussing what changes should be considered to promote small and medium sized businesses while continuing to ensure that any risk to american taxpayers is minimized. Despite only being on the job a short time, chairman reeds perspective is very valuable to this process and she will be a critical partner throughout the reauthorization. Senator brown. Thank you, mr. Chairman, for calling this important hearing. Welcome. Im so glad youre here for a whole lot of reasons. Thank you. I want to thank the chairman for his work to advance xms board nominees. Weve restored finally xms board quorum but the full senate needs to consider the nominations of paul and claudia so they can provide their expertise as the bank resumes full operations. Today well hear from the banks new president , Kimberly Reed. Been at work for seven weeks. Shes hit the ground i dont use cliches so id say shes hit the ground sprinting. Thank you for that, traveling the world, promoting u. S. Economic interests. Im grateful the full Senate Confirmed ms. Reed last month. Every single democrat in the senate voted for you and i can see the gratitude as each of us arrived and you walked up here. Thank you for that. She was confirmed 7917. I especially want to call out senator rounds. He couldnt be here today for this hearing but for his support and work on all that hes done on reauthorizing and getting these nominees through. These overwhelming votes make it clear we have strong bipartisan support for the banks mission of helping american businesses and American Workers compete. Look around the world, there are now 109, 109, export credit agencies and credit programs that support foreign, non u. S. Manufacturers. Every other major nation has been aggressively helping their Companies Win sales and the jobs that come with us, jobs that could be in the United States if xm had been functioning the past four years and it wasnt functioning because of this president and this Vice President and this republican majority not wanting to move forward. China has multiple massive export credit agencies. In 2017 chinas two official credit export agencies provided onethird of the worlds medium and longterm export credit and their broader and medium chinese exports are greater than the rest of the world combined. Chinese export Credit Agency activity is key to their plans to sell chinese made infrastructure throughout asia, africa and europe under their belt and road initiative. Senators or anyone else who travels on any of those continents see the chinese presence. Chinese provided more than 500 billion in insurance to belt and road projects just in the last five or six years. Chinas far from alone. The term weaponization is used to describe what european and asian nations are doing to make their export credit agencies more aggressive, more flexible, more proactive. If congress is serious about it, we must have a robust Credit Report agency. We all know what happened in congress in 2015 during the last debate on reauthorizing the bank. A small group of opponents tried to kill the bank all together. When that didnt work, i thank the chairman for his work on this. When they didnt work they decided to block all nominees to the banks board and block all transactions greater than 10 million, essentially straight jacketing, handcuffing American Companies and American Workers. That had real consequences for our businesses and for our workers. The amount of jobs xm supported dropped from think about this 164,000 to just 34,000 while the bank was hobbled. I had dozens of Ohio Companies. They werent boeing. They werent the large companies. They were supply chain companies, many of whom i had never heard of. Dozens of Ohio Companies came to me representing thousands and thousands of jobs that couldnt deliver because of our inability to pass this. That obstruction hurt ohio manufacturers. Ohio Companies Exported 400 million a year in products using xm credit assistance. That amount has been cut roughly in half. We know, ms. Reed, the work that you have to do to make up for that. We can turn the page. We need to provide the bank a longterm reauthorization of seven years or longer as the house has done. American exporters, particularly Small Businesses, need a reliable partner. Xm steps in when private banks and insurers cant assist or deple deple complete a transaction. The greatest pain will be felt not by boeing and the big guys but by Small Businesses, including the Small Businesses on the supply chain for these larger companies. Last year xm initiated 2. 2 billion in authorizations that supports Small Businesses. 315 Small Business exporters used xm Small Business products for the first time. Congress must also increase the banks authorization limit or exposure cap which is currently set at 135 billion. Xm must be ready to assist new transactions. Finally, mr. Chairman, a renewed bank must be dedicated to transparency and accountability. Xm is carefully managed risks associated with its transactions as we see from its extremely low default rate. The bank must continue to be vigilant in monitoring risks and preventing fraud, also be vigorous in complying with requirements set out for the bank to monitor and mitigate environmental and social impacts of projects that receive financing. President reed and the new board have taken the long overdue steps of finishing the implementation of reforms from the 2015 export reauthorization. Thank you for that. I look forward, madam president , to hearing about that. If President Trump and republicans in congress are serious about helping American Manufacturing manufacturers after years of obstruction, they need to work with us to reauthorize the bank before the end of september. I urge my colleagues to visit some of the businesses in ohio or in montana or rhode island or minnesota or georgia or pennsylvania or idaho and see the work around the country that xm is doing. We have a choice, do we care about these businesses . Do we want to promote American Manufacturing, American Workers, or do you care more about extreme special interests. The choice is ours, thank you. Thank you. As i indicated we are joined today by the honorable kimberly a. Reed, president and chairman of the Export Import Bank of the United States. I thank you for joining the committee this morning. Chairman reed, you may proceed. Good morning. Chairman, Ranking Member brown, members of the committee, thank you for inviting me to testify exactly seven weeks after i was sworn in as president and chairman of the Export Import Bank of the United States. This is my third time to come before this committee. I have taken our conversations over the past two years to heart. Under my leadership, its a new day for xm. Im committed to working with you to transform this agency. Let me set the stage by share k my priorities that i related to my nearly 400 dedicated xm colleagues on day one. I am committed to fully reopening, reforming, reauthorizing xm and providing positive results for americas workers and businesses while protecting taxpayers so that we can better compete with countries like china. As i have testified, i am prioritizing Small Business. Since my first day, we have approved 260 Small Business authorizations, and again, that was just 49 days ago. We will build on the success such as with agriculture exports in collaboration with the u. S. Department of agriculture. President trump understands that xm supports his agenda of creating jobs and bringing manufacturing back to the usa. He asked me to fight to give American Workers a level Playing Field and to expand foreign markets for American Made goods. He also knows that xm advances u. S. Strategic interests around the world. Its a tool in our economic and National Security toolbox at a time when global competition has never been more intense. Today xm offers a full range of financing but only as the lender of last resort. Xm is selffinancing because of the fees and interest it charges to its international customers. After covering costs, xm has been able to send nearly 10 billion to the u. S. Treasury since 1992. Xm has had an average default rate of less than. 5 over the past decade because of the diligence that goes into the review and structuring of these transactions. With nearly 40 billion in the pipeline and more applications on the way, xms staff estimate that 20 billion in transactions will be presented to the board for consideration in our first year of full functionality. But we must be responsible and protect taxpayers. Thats why im focused on reform. During my confirmation hearing here, i committed to increased transparency, strength in taxpayer protections, improved protection for domestic companies, ensure xm does not crowd out private financing options, crack down on bad actors and work to the reliance on export credit agencies globally. Under my leadership, we have made progress on these efforts over the past 49 days. Immediately after being sworn in, i went to china for the annual g 12 export Credit Agency meeting. I made clear to my foreign counterparts my commitment to boosting transparency, leveling the Playing Field and reducing the reliance on financing by export agencies globally. As an outcome, i secured support for the United States to host the 2020 g 12 here in washington so that we can make our case more directly. And we will be in a lot of discussions with our g 12 colleagues between now and then. We also held our first Board Meeting at xm in nearly four years and satisfied the outstanding 2015 reauthorization reforms, including achieving a chief first officer and chief Ethics Officer and strengthened our economic procedures. I also value feedback and advice. As such, we are reestablishing in seeking nominations for our advisory and our Subsaharan Africa Advisory Committees. This is just a glimpse of all thats been happening. One of the major challenges facing our u. S. Exporters will be highlighted in a report which examines how deeply and widely foreign export financing has changed over the past decade. Competition is fierce. There are now, as you will see in the report that you will receive tomorrow, 112 export credit agencies in other countries, up from 95 when i testified before you in 2017. Today china is the largest provider of official export credit, providing an estimated 39 billion in medium and lon longterm export financing, more than the next three combined. The administration looks forward to working with this committee and congress to reauthorize xm so that the United States is fully able to act as a marketoriented counter weight to china and other nations that use export and traderelated financing in increasingly strategic and predatory ways with longterm consequences to u. S. Economic and National Security. As i previously testified, the United States will not unilaterally disarm. In closing, i again want to thank President Trump for his support. The president told me that the world needs to and i quote see more products stamped with those four beautiful words, made in the usa, close quote. Americas workers need congress to reauthorize xm to help make this happen. I look forward to your questions. Thank you very much, chairman reed. As weve already both mentioned, weve heard a lot about china. Weve heard from the president , members of his senior team, and from many in congress about the opportunity to make better use of xm to combat actions by china that are preventing u. S. Businesses from being able to compete on a level Playing Field. Many see the reauthorization of the bank as an opportunity for congress to strengthen xms role. You discussed some aspects of this in your testimony, and i just want you to further describe if you will how you see what role you see xm being able to play in helping u. S. Businesses level this Playing Field. Thank you. Its been a very intense 49 days but a great 49 days and i again want to thank this committee for your vote in support of me and the full senate. We have had a lot of discussions internally and ive had a lot of discussions externally. I spent time with 20 financial institutions, backtoback halfhour meetings where i heard over and over again the u. S. Is back in business but the paradigm has changed. And that paradigm includes, as we know, china. The world is looking for the u. S. To be part of whats happening right now, so certainty through reauthorization is the number one key thing that we can do to ensure that we are having u. S. Businesses of all sizes. And i know there are constituents in every single state who benefit from xm so that they can make products and provide services that go e everywhere in the world where theres a need and we provide a special tool in the toolbox when theres a fwgap in financing. We want the see the world buying us products not only for Economic Security but also for National Security. China is there right now and i know many of you have traveled all over the many of you have d all over the world. They are everywhere. We dont want to fall behind anymore, so we need to be there. Thank you. And again we touched on this as well in your full submitted testimony, during your nomination process, you suggested to this committee your priorities included Greater Transparency and accountability as well as other reforms to the bank. Can you update us on your agenda in this area including which matters you believe you can accomplish without further congressional direction and which gena Items Congress may need to first address and reauthorization before youre able to proceed. Absolutely. I am committed to transparency. As you know, i worked on capitol hill for seven years doing oversight and reform of federal agencies. So from day one, as chairman now, i am meeting with staff and learning what were doing. Its a lot of work to come up to speed very quickly but im constantly asking questions internally about what more we could be doing to be transparent and ensure that taxpayers are being protected. So ive announced were going to be reviewing two key provisions, our economic exact analysis and other analysis that look at competition from around the world. We want to ensure that we are that addition. We feel that special gap when theres a need. There are things we can do to help make some of these documents we received internally, perhaps, more public. So its a thoughtful process. I want to be smart about it but we also want to protect the taxpayers. So ill be looking for input and i will also work with you and well be coming back to you with more on that. I know those are key things. I also want to say we are looking at what those 113 other export credit agencies are doing, and i want to point out a fine fellow here, jim cruz. Hes been at the import export bank for 35 years. Hes started and father of eca competitive report youll be receiving tomorrow. Were the only company that begins to look at whats happening around the world through a report like this. So while we want to be more transparent, we also dont want to hurt our u. S. Businesses by revealing information thats proprietary. So again i look forward to working with you. And our chief Ethics Officer and our chief risk officer are now confirmed, appointed, at the helm and were working with them. All right. Thank you. We look forward to input from you as we move forward in the reauthorization. Whatever you feel we made need to statutorily include in assisting in this process. Senator brown. Thank you, president reed. I hesitate to say president reed rather than chair reed, if i do jack might show up at president ial debates tonight. Madam chair chairman likes that, too. Anyway ill state to you. Thank you. Mr. Cruz, thank you for your decades of service to our country and to american jobs. Thank you so much. You talked in your confirmation hearing about your familiarity with small and mediumsized businesses in your home state, West Virginia mine and ohio bordering each other. If you were a Small Business owner who real estate on xm financing or Small Business that sells components to larger exporter who needs xm for the deal, what happens if congress lets xms charter lapse at the he said of september. How immediately will Small Businesses be hurt and how many Small Businesses will be harmed . Im committed to Small Business. One of my first meetings i held at xm was a roundtable with Small Businesses from maryland, virginia, i wanted to hear firsthand the value we provided to them. Thousands of Small Businesses not only directly through them providing widgets and to Foreign Countries but also the supply chain benefit from ex im. They were able to proof 10 million and under deals. Expires, it is pencils down september 30th for every business in our country. That will have a tangible impact if we dont do our jobs. Absolutely. House Financial Committee continuing to work on sevenyear reauthorization. The administration has not made its own proposal but does a longer reauthorization, seven years, ten years, is that a Better Climate, is that a Better Climate for companies to use, x eximfinancing. I hear loud and clear the world is looking for certainty so it would be a good thing. House looking for changes in charter, secretary of treasury and commerce to serve as voting members when the banks board lacks a quorum. I would assume you dont want to comment on specific legislative proposals. Would you agree if the bank maintained that quorum eximcould support jobs. I think a quorum is important. Thats not my question. I know you think its important. Do you think if you had that quorum we would have seen at least 130,000 jobs each of those years . I assume given whats in the pipeline right now, some of those transactions would have been approved and supporting u. S. Jobs. I know we lost jobs works associated with the bank because it has not been fully functional. If it was that number, that multiple billion dollars, it certainly would have been tens of thousands of jobs, correct . Yes, sir. Im all for stopping china hes stateowned enterprises. I made it clear dismantling should be one of the objectives. In china talks if we want to get tough on chinese enterprises, i would urge sthat to look at bill with grassley that would scream for investment in the u. S. , particularly Chinese State owned enterprise investment to make sure its good for our economy longterm. Do you have any thoughts, madam chair, about we should limit exim financing depending on who the purchaser is . Thank you, sir. I know the house and senator looking at legislation right now and it can be contentious decision, so im going to leave that to the legislative branch. Okay. Fair enough. Last question, what does exim need to do . What does Congress Need to ensure that its able to p match finance programming by other credit programs around the world . Right now we have our charter that allows us to do that. You dont need additional language . I believe the charter allows us to do that. Okay. Thank you. Senator. Thank you very much and congratulations, madam president. Thanks for coming by my office yesterday. I enjoyed our discussion. More importantly i appreciate your continued public commitment to the reforms that we discussed and that you committed to in your confirmation hearings. I fully recognize given the very brief period youve been in office thus far, you would not have had a chance to implement these yet, but i do want to underscore why i continue to believe these are important and why i look forward to working with you on these reforms. One of them is in your testimony and you alluded to it during your commence is the fact that exim financing is not supposed to crowd out private financing and, in fact, is supposed to be the learned of last resort. I think thats well established thats the way its supposed to work. So interestingly we have a kind of controlled experiment, i think, in exims role and whether or not it had been a lender of last resort and what the consequences might be for a lack of exim financing because we just went through several years when exim was not able to do large transactions. Specifically, if you think about it, you would assume that exims largest customers would presumably run into head winds in the sudden absence of exim financing. In 2014, the last year for which exim was fully functional, boeing accounted for about 40 of exims book of business by dollar value. As we all know the next year exim basically went out of business. The charter lapsed. After it was reauthorized exim lacked a quorum sooon could not prove an aircraft. Begs the question, what was the result . How badly did exims largest customer suffer when it was no longer able to obtain any exim financing . Well, the answer is, of course, they thrived. In september of 2018, this is before the 737 max design clause discovered, the wall street journal ran an article. The headline was bogey factory unfinished 737s pileup. What was the big problem causing the jets to pile up . The problem was suppliers couldnt keep up with record pace boeing was selling their planes without a dime of exim financing for the buyers. Or think about boeings january 2019 press release that announced it set a new annual record for deliveries in 2018, a year in which there was not a dime of exim financing for buyers of boeing jets. By the way, the 2018 record exceeded the previous record, which was 2017, another year in which there was not a dime available from exim finance. So what it suggests to me and what i want to underscore, madam president , it doesnt look to me like exim was the lender of last resort. It looks to me like they may have been the learned of first resort. In fact, when exim was not functioning in this marketplace, private creditors came along and financed the acquisition of boeing jets all around the world so much so that boeing set alltime records in the volume of their sales. So i would just ask you to keep that in mind when you think about the obligation for exim to serve only as a lender of last resort. The other point i would make, as we all know, china does not have a competitor to boeing. Really airbus is the only competitor to boeing in the wide body jet category. So it seems to me that this could be a great moment to prioritize another obligation thats in statute with respect to exim, and that is to work towards a mutual and reciprocal phasing out of these credit export agencies that distort markets and risk taxpayer money. Here we have om one other competitive. Its not china. Its airbus. And their sales are strong. Boeing sales have been through the roof. It strikes me as a good moment to pursue mutual reduction on financing at least for wide body jets. Im wondering if you have a reaction to that. Its a new day ex portimport bank under my leadership. Were going to look at impact test. I will also say im not going to comment on specific companies. Those companies can comment for themselves. My job is to support our mission, which is u. S. Jobs, and do all we can to ensure that we have a level Playing Field and can compete all around the world. If i could just rely run out of time, i want to make one other point. Theres another element to reform weve talked about. That is to ensure when we finance and overseas purchaser, that we not unwittingly or unintentionally facilitate a competitor to a domestic industry. Case in point, i believe that it was announced last year exim may have been considering, may be considering financing a very large natural gas liquefaction in mozambique. All kinds of problems in mozambique, financial, corruption, and otherwise, which im sure youll consider. I would ask you to consider the fact we have become pennsylvania and United States recently have become really significant natural gas exporters for the first time. And this a new market for us. We are thriving in this market. We have virtually unlimited supply of natural gas. I would hope that you would seriously consider the impact on this young new but tremendously industry with tremendous potential as we consider whether to finance a competitor on a very large scale project in mozambique. Senator reed. Chairman reed, that has a nice ring to it. The chinese, their belt and road projects, thats where they have their significant investments and actual military posts there but throughout the coast of africa and other ports. And the question i think we have to come up with is how exim bank will be part of an overall strategy to help u. S. Companies compete not just in china but around the globe. Your comments would be appreciated. Absolutely. Ive had detailed conversations with colleagues in the administration. We have members of exim, Us Ambassador lighthizer and wilbur ross, our secretary acosta and many others, including those in the white house. Exim is a special tool in that toolb toolbox. We want to be there an offer this tool when its needed. Ambassador bolton before he began with this administration he wrote an oped on the importance of exim and National Security. Were there. Were going to make ourselves be more known. The world is excited were back open for business and American Workers are, too. I think one of your comments suggest, and just let me hone in on it, the need for take National Strategy. Not just an exim strategy but a National Strategy which gives alternatives to these countries, particularly developing countries, to the chinese bla blandishments of easy loans under very vague terms. Youre again, i think you are. Youre pursuing or helping pursue this National Strategy and who might be the lead element in the strategy . Absolutely. I went to africa, to south africa. The president asked me to head his president ial delegation to the inauguration of president ramapho ramaphosa. There were representatives from nec. I cant tell you how honored i was to be on stage with president s of africa and heads of state and then have a roundtable discussion with our Embassy Staff there, with businesses no only from south africa but subsarahan africa. Ive heard firsthand how important it is for us to get our products and services into africa because china is there. So we work with all of our administration colleagues to make that happen and will continue to do so. Economic security is National Security. I concur. One issue raised by several comments, including mr. Toomeys comment, were really very much interested in Small Business thriving. As toomey pointed out, Big Enterprises if denied this usually have alternative ways. What are you going to do proactively to get the word out to Small Businesses throughout the country in conjunction with this strategy of trying to be competitor to china in the world market. Do you have an active plan to do that . We have. Im so delighted my Board Members are here with us today. Spencer has been charged with getting out on Small Businesses, and he has many stories to already tell you. Judith used to work at opic and she is so smart on interagency process and how we can be an effective tool in the world of development around the world. Small business is my priority. I come from rural West Virginia, cannon West Virginia, i have the endorsement of the Community Bankers association. We want to work with Small Businesses. We are doing workshops. We are doing webcasts. I made a video that is going to be shared with 3 million members internationally of the chamber of commerce. I really want to come to your states if you would have us there to do workshops together. You have an open invitation to come to providence. Whatever you see, please buy. And well export. Let me recognize my former colleague. Thank you, senator cotton. Thank you, miss reed, for your appearance this morning. The exim bank recently released reports on global export credit competition. That report said that since the financial crisis of the last decade, that foreign versions, other countrys versions of the Exportimport Bank, other countries export Credit Facilities are being weaponized. That was the term the report used, weaponized, to support strategic interest. Do you believe that . I do. Which countries are weaponizing their export Credit Facilities. China. Many other countries. I have met with a lot of my colleagues who head their exhort credit agencies around the world. The first act i did after being sworn in was going on a plane and go to china and attend our annual g 12 meeting. You will receive tomorrow, as mandated by congress, the update to that report. Its the 2019 competitiveness report. Youre going to see more clearly whats going on in the world. Thank you for that. Ill look forward to seeing it. You said china twice and other countries twice as well. Is that because chinas use of export Credit Facilities dwarfs all other countries in this Strategic Global competition . Absolutely. China does more than the next three countries combined . What are the next three countries combined . Italy, germany and korea. They ought to do a little bit less, but they are all american allies, one is a treaty ally, two of them are treaty allies as well. What can we do to counter chinas use of its versions of exim through our own exim . We have a very specific role, and thats to fill the gap where there are financing needs. So we are letting the world know were back open for business. The best thing we can do is reauthorize exim without a break, without a gap. I know that happened during the 2015 reauthorization. Thats the most important thing we can do. Ive had everyone tell me the world is looking at us, the paradigm has changed. We need to be there. Thats the most important thing we can do. Also the usa thats the best goods in the world. I would say that many countries prefer our goods over other goods. So lets be sure that our workers have a chance to compete on a level Playing Field with all the other workers and products around the world. I believe usa will be number one when it comes to quality and Everything Else we care about, especially National Security. We want our things. Power, energy, satellites. We want the world buying usa. How many whats the dollar value of exports that exim under writes into china, american exports into china. I dont have that number readily available, but i will tell you our authorization is 135 billion and congress is looking to increase that cap. I also know that china is a very sensitive subject. As we go through reauthorization well be pleased to work with you and the house of representatives to fin Good Solutions to what makes sense. China is everywhere through its belt and road initiative, and we need to be there as well. Do you have any sense of scale of that 135 billion cap, how much would be going into china . A lot some a little . Not a lot. But again would the main thing be the sale of aircraft and airline like air china. And energy things, energy products. Also i want to say our mission at exim is u. S. Goods. Our charter does not allow us to discriminate. We look at the application that comes in, and we have a very good underwriting staff that evaluates everything. Congress has set out the charter of what we can do and cannot do. There are only a very few reasons why we can deny applications right now. We cant pick winners and losers. We evaluate it on the merits, on the risk. And so if Congress Wants to look at that again, we fully understand. Our care about china, and i care about the United States. China is a state supported and firm in china. The Energy Business we do in china, do you know if those are state supported or state owned firms as well . Some are, yes. Okay. Again, this is a new day under my leadership. I understand its a new day. I appreciate that. I think the president brought some clarity about the risk china brings to this country. I think we should think about exim in the future and the role is plays in supporting Chinese Stateowned industries. We live in a world of nations. Not that many of them, 220 or so. We dont have to write abstract rules to apply to every single one of them. We can apply rules to nations that are allies like korea. We dont have to write individualized rules for every country when you have china that poses a unique threat given their size, economy, military capabilities and leader stated intention. Thank you for your testimony. Thank you. Senator menendez. Thank you. Madam president i thought i was going to get to use that term more often. But in any event, i like to use it when i can. I was struck by some of the statistics in exims 2017 competitive report. As has been said here, china extended 36. 3 billion in medium and longterm export financing while the United States provided just. 2 billion. Thats an enormous difference. Even smaller countries like finland, denmark, hungary provided several times more export financing than exim bank. As a matter of fact, i think were listed 25th among all countries of this regard. You touched on this in your testimony. But can you discuss in more details the trends youre seeing in export Credit Finance globally. As youll see in the report that is going to be delivered to you in the morning, other countries are starting to weaponize their export credit agencies and being very aggressive. We have very rigorous tests, standards. Unlike any other export Credit Agency in the world. We look at a lot of things such as u. S. Content, u. S. Flagships, things like this. Other countries pay no attention to things like this. So in the report you receive tomorrow, you will see that the world is going like this, and we are just now back in business. We want to be good to American Workers. I want to see every worker in our country having an opportunity, not being denied to them because exim is not there, and look forward to working with you on the reauthorization. What efforts what effects, i should say, have those trends had on u. S. Exporters and exims ability to stay competitive . Im not going to comment on specific companies but ive heard that some Multinational Companies actually are taking some of their supply chain to other countries that provide export Credit Agency financing. Those are jobs that our workers are losing out on. So again, those companies can talk to you directly about this, but that pains me. The thing that keeps me up the most at night is the september 30th expiration of exim. The best thing we can do is provide that certainty. Let me ask you this, if we consider reauthorizing the bank, which i strongly support, how important is it to extend the lending cap so it can try to go more competitively with the global context which were in . I believe a modest increase would be welcome. Whats the definition of modest . I know there are discussions in the house bill and here in the senate, and those are appropriate. Have you had training at the state department . No. That answer is very diplomatic. I just know the legislative branch is very important. Sometimes those of us looking for expertise are looking for insight. Maybe it would be helpful. Maybe well do that offline. Let me ask you this, you mentioned the challenge. I think sometimes people look at this as corporate we create jobs in america. In my home state of new jersey, dozens of new jersey businesses export to markets around the world. One of those success stories, loan fisher in new jersey they work to develop an export for seafood and mitigate the risk of selling overseas. As a result they have been able to grow their International Sales very significantly. They hire more American Workers in new jersey to do that, and they continue to use Exim Services to expand the Global Business. But everything they have just done to expand their Global Business and to create jobs in new jersey is at risk if we fail to reauthorize the bank. So what would be the impact be on your efforts to communicate to u. S. Exporters and foreign buyers that exim is now, after years of waiting for a quorum at the board, fully operational, ready to move forward with larger transactions if the date comes and goes and there isnt a reauthorization . So as i mentioned on september 30th, it will be pencils down. We will send notification as we have now that were back in business. We sent notification to all of those in the pipeline but we will send notification very sadly to those who are in the pipeline that we are closed. Of course if a lapse happens, were going to do all we can to work with you. This is the priority of the president , and he has charged me with making sure we dont have a lapse. Im going to be working with you, if there would be a lapse, to ensure its as short as possible. I hope theres not a lapse. At the end of the day its tough to generate an expectation, eliminate expectation, generate expectation, again, and keep the competitive cycle together. Senator mcsally. Thank you, mr. Chairman. Arizonas economy is dependent on trade according to statistics from International Trade administration, arizona exported 29. 4 billion in goods in 2017. Being a part of the border trade is part of our dna especially mexico who is arizonas largest trading partner and u. S. Exports more goods and services to mexico than any other country other than canada. How does the bank assist u. S. Companies export their goods and services to mexico specifically . Again, our charter does not allow us to discriminate. We base each application on our mission, which is u. S. Jobs, and the merits of those applications. We provide services where theres a unique demand. As the lender of last resort weve done business with mexico and many other countries. I know that the congress is looking at our legislation. Again, our mission is u. S. Jobs so we want to be helpful and fill those gaps wherever we can. I want every worker to have the opportunity in our country to create a good or service that is acquired or purchased by a foreign purchaser. Great. Like many of my colleagues im concerned about china and their multiple forms of cheating. Not only do they have a similar mechanism, a governmentowned bank, unlike ours, obviously, but also governmentowned companies and governmentowned subsidiaries that really dont allow for level Playing Field for American Companies. Particularly im interested if you have any perspective how china is playing in mexico and central america. Again, using their unfair practices in order to beat out American Companies trading in those arenas. Absolutely. So as i mentioned previously, we are sending the congress our annual competitiveness report tomorrow, because exim was not functional for the last few years at our full capacity, it actually does a lookback how the world of ecas has changed over the past decade. China is front and center in that report. We know that china is at our doorstep. We want to be sure that we are at our doorstep with our goods and our services as well. Great. Thanks. According to the International Trade administration, small and medium sized businesses make up 87 of arizonas goods that are exported but account for only 23 of the value of exported goods. Ive met many Small Businesses. Obvious people have a thought these are about larger businesses. Many Small Businesses that benefit from the opportunity to compete using exim products. So what is the bank doing to increase in small and mediumsized businesses that can actually take advantage of this. Absolutely. My top priority is Small Business. We have a great team at exim who are very energized. I know that we provided to arizona between 2014 and 2018 2 billion in exim financing, and 177 million of that was to Small Business. In my prior life, i was the director of the Community Director Development Financial institutions if you said at the treasury department. And i spent a lot of time in arizona. I did roundtables. I met with your chamber of commerce, did a lot of things. I know that youre very engaged in arizona right now as well through those opportunities. So the best way we can help our Small Business is to make them know about us but also make it easy for them. And so i hosted a roundtable at exim. My first few days on the job we brought in Small Businesses and want to listen to them. So we looked forward to reporting back to you all the good things were going to be doing. Community banks are also an important part of that equation. Absolutely. I think theres two elements to it. One is ensuring small banks understand and have access to financing. The other is those already using it, are there any initiatives to increase their value and increase their opportunities for exports . I think that the world is huge. Its really huge. We need to really be working together. Thats why also i want to work with your offices and help equip offices as well as local governments. Im going to be making a video for the annual conference of mayors meeting to let them know about what were doing as well. Were also going to revamp our website and have more materials available that way. But i look forward to your input as well of what we could be doing and staff do as well. Look forward to following up with you. Thank you, mr. Chairman. Senator tester. Thank you, mr. Chairman and Ranking Member brown. I want to thank you for being here, kimberly. I appreciate your enthusiasm for the job. Let me just ask a few questions here. I dont have the answers so ive got no political agenda behind them, i just want to know. You touched on this but is your confirmed Leadership Team in place or are there more people to be confirmed. We have three of the five Board Members, including myself, judith prior and Spencer Baccus and oergs. How about in the office itself. You talked about a couple people. We approved our chief Ethics Office and chief risk officer. Anybody else you need or are you fully staffed up . Im having to staff up from day one. Ive been on the job 49 days. We have. I gotcha. Im trying to figure where you your . Are you half staffed . Full staffed sthf i have a brandnew chief adviser, chief of staff. I gotcha. You dont need to go down the list. Just tell me where youre at. Probably as far as staffing halfway there. When do you expect to be fully staffed . By next year. Absolutely. By the time we vote on reauthorization. Im working hard. You talked about the default rate being half a percent over the last 10 years, is that correct. Yes. Is that what it was for last year. It increased slightly over the past year. The reason for that is a lot of Small Businesses, they are more risky deals that we do. Okay. Look, unless you have a team beyond my imagination youre going to have default. How much money is a half percent, a half of 35 billion or what . Right now our book is 60 billion. 60 billion. Can you tell me because quite frankly weve heard a lot about this, this has been the bank for boeing. Can you tell me how much does go to boeing . I know a lot of boeing financing weve done over the last few years is rolling off our books. Im not going to speak to the exact numbers at this moment. We have staff that will be happy to give you those answers. I just think its important to know from a transparency standpoint, which is one of your goals to achieve. We just need to know. Thats all. I get its their business but its our business, too. Truthfully, this is taxpayer dollars. You touched on it with senator mcsally, do you have a plan to encourage more Small Businesses ill take it further, more Small Businesses in Rural America, to be able to have access to you or are you working on that plan . Absolutely. As i said in my testimony, we have announced applications are open for our Advisory Committee and subsarahan Advisory Committee. Thats good. Ill point something out to you. We have a challenge with the v. A. Hiring people in rural plerk. We put it up on usa website. No one in montana is going to look at a usa website that wants to work there. How are you approaching Rural America . Im from Rural America. Im working with usda because i care about our farmers. Sure, sure, sure. How are you getting the word out . Thats critical. I think you want to do it, i want to do it, the question is how are we doing it . Were going to be doing it through our local chambers of commerce, local Community Banks and through your offices and any other suggestion ys you have. I would love to know how many people youre looking for, if its a regional split because we can help you get some good people there. Can i ask on ag exports because you mentioned working on ag exports. Were those to china or did i mishear you . We are the backstop to u. S. Credit corporation where we fill those needed gaps. So we are you the backstop for commodity corporation. They are only allowed to lend up a certain amount and we come in and fill the gap. Lets touch on that for a s. E. C. If you go away, ccc potentially goes away . No. We come in and we help them when we can, when they are not fulfilling their role. Thats fine. I have a bevy of other questions to ask you. I intend to vote for reauthorization. I want to touch and im going itting. Senator menendez did touch on something thats really important for us to know. We dont know what the demand it, i dont know what the demand is, you know what the demand is, if its 135 billion, 150, 200, youre not going to get what you ask for probably but wed like to know. Okay. Thank you much. Thank you. Senator kennedy. Thank you, mr. Chairman, thank you president reed. I understand 25 of your beneficiaries are supposed to be Small Businesses, is that right. Thats the target in the last reauthorization charter. Whats the smallest business exim has ever helped . I met a pet food company that was pretty small. How small . I believe it had less than 15 employees. Do you help them . We before my time weve been providing them financing. I know theres a lot of Small Businesses and i want to help every single one export directly or through the supply chain. Okay. Do you have a formal definition at exim of Small Business. We follow sbas definition. I want to talk to you a second about l g. As you know the president wants us to become independent, energy independent. Hes correct, of course. Were doing that through the shale resolution which produces a lot of natural gas. We cant use all the natural gas so we liquefy it and sell it to our plants across the world. Mr. Ng are very expensive. To get financing you have to sign contracts, take or pay contracts up front with foreign buyers and take it to the bank to get financing. If you cant get financing and lng wont get built. Do you support lng in america . I support all industries in our country. Well, youre helping companies to the detriment of louisiana and American Companies. Youre financing at exim, i think the export of parts and equipment to places like mozambique that are building lng plants that compete with ours. How does that help america . Our mission at exim is u. S. Jobs. Were not allowed to discriminate on applications that come in to us. So if an application comes in for u. S. Workers to create u. S. Equipment to be exported to a foreign country, we judge that on that applications merits. We also have some economic tests that we do. I announced in my testimony that were going to be taking a hard look at additionality and economic impact, those tests. I hear you loud and clear. I want to support every job that we can support in this country. Okay. I believe you do. Between fiscal year 15 and 17, exim pretty much came to a halt, did it not . For everything except under 10 million. You didnt have a quorum. Do you think the exim bank is essential to americas export system . I do, sir. I know again, its a new day for me and i want to work to transform the agency. Over the past few years we now have 40 billion in applications. Again, this is to support u. S. Jobs. What do you think would happen to our exports if we didnt have exim bank . I have met with our competitor export credit agencies around the world, and i had one tell me we love when youre not in business because we get your deals and your jobs. You think our exports would tank . I think that exim feels a very specific role. You think our exports would tank . I dont think they would tank. Do you think excuse me . Do you think they would go down substantially . I think exim has a very specific role to play and i want to help every worker get a job. How come im sorry to cut you off, madam president , but i run out of time here. If its so central, how come between fiscal year 15 and 17 when you were pretty much shut down, nobody noticed . I mean exports just rocked right along. I cant see an impact. I attended the annual exportimport conference two years as a guest because i was not confirmed yet. I heard loud and clear the jobs we are losing or have lost because we were not functional. Yes, maam. Thats anecdotal. Im asking you, you werent in operation from 17 to 18, so a fair minded person would say, okay, lets go look and see what happened to exports. Nothing happened to them, ergo you might not be essential. Ive heard around the world we are essential and the president charged me with making this available. We received 40 billion worth of desired applications. I know youve got plenty of people that want the money. I get that. That supports u. S. Jobs and u. S. Workers. Right. Thanks, mr. Chairman. Senator van hollen. Mr. Chairman, Ranking Member brown, chairman, thank you for being here. I do believe exim bank plays a role in center sectors of job manufacturing. I support those efforts. As you probably know yesterday the House Financial Services committee postponed its markup of exim reauthorization because of concern pavilion with respect to china and how exim could if not properly structure be used to subsidize some of chinas stateowned enterprises. Last year in this committee we modernized cfius. My question to you is will you work with us through this authorization process to make sure any exim reauthorization effort addresses the need to protect american National Security interests, protect american competitiveness, and comply with cfius and pharma. Absolutely. There is one ongoing effort i have great concern about with respect to civilian Nuclear Sales and threat of nuclear proliferation. Thats specifically the current administrations plans, efforts to export civilian Nuclear Technology to saudi arabia, which in addition to all the human rights issues and murder of khashoggi has also expressed an interest in obtaining a Nuclear Weapon and has not implemented or indicated it will implement Gold Standard safeguards against nuclear proliferation. Now, i know exim bank does not have responsibility for negotiating section one, two, three, Nuclear Cooperation agreements, but my question to you is has exim, to your knowledge, been involved in any discussions with u. S. Government agencies, officials, or u. S. Companies or saudi entities with respect to transferring u. S. Nuclear technology or service toss saudi arabia. Im 49 days on the job, so im not aware of that. So youre not aware of any discussions anyone at exim bank has had with respect to such a deal. Not aware of that, sir. If you could, mr. Chairman, since youre new, if you could talk to your team about it and will you let me know what the answer to that question is . Be happy to get back. I appreciate that. Because i think at least speaking for myself as we look at the exim authorization bill, im going to want to make sure that the exim bank is not used in a way that would undermine our Nuclear Nonproliferation goals. As of right now it looks like thats where were headed with saudi arabia, so im going to want to make sure we tighten that down very well. Will you work with us on that effort . Happy to work with you . There are also issues regarding the transactions with respect to saudi arabia that the House Oversight committee has raised regarding particular entanglements between u. S. Government officials and u. S. Nuclear companies. Youve probably seen some mention of Jared Kushners interest in some of these transactions. So my question is, what process does the bank go through when it reviews applications for credit to ensure any export transaction is not that your financing does not pose conflict of interest . So we have a very details review process. We have a brandnew approved chief Ethics Officer and chief risk officer. I look forward to working with the congress to ensure that we have everything in place to relieve any concern you may have on such a front, and i would not stand as the new chairman of the Exportimport Bank conflict of interest. I appreciate that. So just to be clear, if one of the u. S. Nuclear Companies Cited in the House Oversight whistleblower report were saudi arabia applies for credit and finance transfer of Nuclear Equipment and services to saudi arabia, youll work with us to make sure that there are theres Due Diligence and no violation of u. S. Interest law. Absolutely. Thank you. Thank you, mr. Chairman. Senator tillis. Thank you, mr. Chairman. Miss reed, thank you for being here. I try to use the analogy of the work that i did when i was speaker of the house in North Carolina in terms of why exim is an important part of making Global Transactions work. In my case its economic incentives. Actually if you take a look, id love for there to be fed its not going to happen. I would love for there to be no states with economic incentives. We compete on basis of regulatory policy, tax policy, quality of life. The fact of the matter is, most states are actively involved in putting together economic incentives to at the end of the day and bottom line, its either a transaction that works or not. I was actually hurt because i lost an economic incentive bill to louisiana because the fine legislators in louisiana are happy to put that in there to make the bottom line work for those transactions. The fact of the matter is, these export credit agencies across this world would love to see us get out of business, the same way id love to see louisiana get out of economic incentive business because then we would own the Film Industry in the southeast. Get georgia out of it, too. If we unilaterally disarm and not provide there clearly has to be a but for test. Clearly we need to do, i believe, reform within the exim bank. I said this back in 2013, 14, so we can be very clear its not one of the first choices for working on financing. Its the last choice that makes the deal work. I hope that youll commit to producing some what i think some reforms that will stop making this the political football it is, much like economic incentives are and state legislatures and governors mansions in the country. We need exim bank to be competitive. China would love for us to get out of business. Of course we need reforms to make sure we have transparency to address the issues that senator van hollen raised and that senator kennedy raised. If we unilaterally disarm, there will be an impact. One of the things you do need to do is create a framework so you can give an answer to senator kennedys questions, why is this a big deal if you werent functioning a couple of years. I think if you look at the pipeline that ran through, it might not be the run rates dipped yet, might be a number of reasons for that, policies going on at the same time that obfuscated the impact it may have. I do believe if you look at the deal flow and transactions that did move through because we simply werent competitive, you could have answered to him this many employees in the southeast would have been employed, these businesses would have been a part of the supply chain. This looks like a boeing transaction but, in fact, its a transaction that involves the entire supply chain, which we know are a number of Small Businesses linked to it. I think if you focus on answering a lot of the fundamental questions that senator kennedy asked, that weve all been asking for, if you take a look at reforms, were suddenly going to get out of this mode of preventing a quorum, preventing you to operate, providing certainty on the part of our competitors that we cant give the best possible deal in but for scenarios where you have to be involved in the financing of the underlying deal. So i hope that i hope that we can actually get to those kinds of reforms. Then i believe we will no longer be in the scenario of the cessation of this being an opportunity. It will make us more competitive and will create a lot more american jobs. I know of a lot of jobs created in North Carolina because of these transactions. So i would like your commitment as youre ramping up your staff to simply put a reform for not just were going to tweak around the edges, but think about a real Reform Initiative that will give us Greater Transparency, that will as part of the process youll be audible to come back to senator ken, in and out of louisiana this flow of transactions had this economic impact. I believe if you do that reasonable people on this committee and senate will support and keep it functioning and make us more globally competitive. Incidentally i dont have a question. Thank you, and we will do that. Thank you, sir. Senator sinema. Thank you for being here today. By helping finance and ensure u. S. Exports to international buyer. Exim levels the Playing Field for american businesses including American Manufacturing. It supports good jobs for hardworking families and strengthens our states economies. In the past five years exim green lighted 2 billion in arizona exports for thousands of good arizona jobs. As we all know the banks authorization expires in september. One of my Top Priorities is to build a Bipartisan Coalition to provide for a longterm renewal of exim. Recently the United States senate restored a quorum at the bank ensuring that the bank can consider and approve bigger deals as well as implement reforms we passed in 2015 to modernize the banks operations and improve transparency and accountability to taxpayers. Chairman reed, congratulations and thank you for being here today. Thank you. Youve got a lot of work ahead of you. As you know, exim lacked a quorum for three years. Do you know how many exports unable to consider for financing insurance during that time . Weve received 40 billion in applications that are now in our pipeline. I also know that we lost 20 billion in deals. Thats large amount of money and large amount of uncertainty for u. S. Businesses not to account for missed opportunities. Whether its a lack of quorum at exim or lapse in the authorization, is it fair to say this type of Business Uncertainty gives foreign competitors like the chinese an unfair advantage over our country . Yes. So were not the only country that has exim. Dont china and all the biggest competitors have their version of exim . Absolutely. You will receive a report tomorrow, annual competitiveness report that will show there are now 113 foreign export credit agencies around the world. When i testified at my very first confirmation hearing before this committee in 2017, there were 95. So more and more countries are using it in weaponized ways and more and more countries are creating them. I have been told firsthand we love exim was out of business because we got your deals and your jobs. Considering china specifically, would you say chinas multiple export credit agencies constitute a larger or smaller footprint than the u. S. Exim bank . Much larger. Larger than the next three credit export import agencies combined, ily, korea and germany. So thats important for, i think, members of the senate to understand. Some critics of exim bank have said export credit agencies distort markets and we should therefore unilaterally disarm ours. I appreciate we dont want to skew the market but im a practical person as are arizona businesses because export credit agencies exist. Other countries have them. They are real. In business we should deal in reality. The reality is if we get rid of our Exportimport Bank and china keeps their, u. S. Businesses and workers will suffer the consequences and be at a disadvantage. Do you have any reason to believe if we got rid of exim today the chinese would then resolve theirs or reduce the size of their exim . I dont think so. I dont think so either. Mr. Chairman and Ranking Member brown, we cant keep Good American jobs, innovation and opportunity captive to the whims of government gridlock and this bodys own dysfunction. Weve got to renew exim and do it now. I hear from arizonans every day sick of congress that lurches from one manufactured crisis to the next, because in our state folks work hard and take care of business. Frankly they wonder why congress cant do the same. So i hope that we as a committee and the senate can Work Together to provide a longterm renewal of exim so that businesses in my state and all of our states can compete, win, and grow. Mr. Chairman, thank you for time, thank you, director reed, and i yield back. Thank you, senator sinema. That concludes our question for todays hearing. Again, chairman reed, we appreciate you being here with us and the work youre doing at exim bank. We understand the importance of a timely reauthorization, and we are both committed, a you will of us are committed to assuring that that happens. We certainly have some hurdles. The politics are still strong here in the senate. But we understand the importance of this objective and we appreciate your attention to it. For senators who wish to submit questions for the record, those questions committee by tuesday, july 9th. We ask that you respond as promptly as you can to those questions, chairman, then you can. And again, we thank you for being here. This committee is adjourned. Later today, democratic president ial candidate senator Amy Klobuchar of minnesota will meet with voters in adel, iowa. You can see it live at 6 00 p. M. Eastern on cspan, online at cspan. Org or listen live on the free cspan radio app. Tonight on the communicators. We talk about the future of journalism in the age of big tech firms with news media alliances David Chavern and matthew schruers. Facebook, google, apple, they employ exactly zero journalists. Okay. So the amount of journalism theyre doing is zero. Theyre not going to city hall. Theyre not going to school Board Meetings. Theyre not covering the president. They rely on delivering our content and monetizing around that content. And if you dont do that anymore, if we dont have local journalism. So the question isnt whether or not we want a strong and vibrant journalism industry. The question is how to get there and should we do it with an antitrust exemption, specifically. We tried that in the 1970s when newspapers were last threatened by a new media, the broadcast raerks. It didnt work. Watch the communicators tonight at 8 00 eastern on cspan2. In 1979, a Small Network with an unusual name rolled out a big idea. Let viewers make up their own minds. Cspan opened the doors to washington policy making for all to see, bringing you unfiltered content from congress and beyond. A lot has changed in 40 years, but today that big idea is more relevant than ever. On television and online, cspan is your unfiltered view of government so you can make up your own mind. Brought to you as a Public Service by your cable or satellite provider. Whats the best way to help lowincome households with energy costs . The United States Energy Association in washington, d. C. , hosted a discussion of options. Speakers talked about both state and federal Energy Assistance programs. Good afternoon, and thank you for coming. My name is barry worthington. The executive director of the United States Energy Association. And this is a usca briefing on addressing Energy Poverty in the United States, a federal state utility collaboration. This is a little baste different
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