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Speaker: Chairman Fred P. Hochberg [Applause] Fred P. Hochberg: How was that dessert, I heard raves about that dessert I think it's a pretty good cake for a thousand people. We're drawing to a close. I want to just make a few comments and I'm going to ask Director Kian to join me in a moment. But first I also want to thank Ambassador Ron Kirk who's here in the front, my very good friend. [Applause] First as the mayor of Dallas, now a co-traveler, a co-worker as we work on doubling exports in the President's agenda. But more importantly a really, really good friend and a friend in the true sense of the word sometimes not a friend in the Washington sense but a real friend. Let me -- Director Kian is going to be introducing Vikram Pandit but I have a small surprise and that is both Director Kian and Director Farrell's terms concluded on January 20th and they will be I'm hopeful will stay until we have a new board that is both nominated by President Obama and confirmed by the senate. And there'll be many farewells and goodbyes but this will be probably the largest farewell and goodbye since we have at least a thousand or thirteen hundred of your nearest and dearest friends here and the chocolate cake was in your honor. So they have both done a spectacular job and when I think about the staff of the Ex-Im bank it is very much -- and do a spectacular job of credit analysis and looking at their credit risk. And I think one of the roles of directors is to also look at the broader geopolitical risk, government risk, reputational risk and I have had two spectacular partners in Director Kian and Director Farrell. I feel very, very fortunate to have had them at my side and actually there before I joined the bank there. Each of them have carved out their own areas to work in the bank. Diane Farrell is focused particularly on small business. I mentioned her role in helping us adjust our content policy this year and many other things in small business. And India has been another area and I know we have Anil Ambani was here and the Hinduja group was also here and our portfolio in India grew from $3.5 billion to $6 billion. This is a very early picture of Diane and Kian. Diane, Kian, I like the Diane Farrell she has done a great job in terms of moving our India portfolio. For a while she looked a little bit like Jim Lambright but we very much love the hair, Diane. On the road she often doubles as a nurse, she carries a full medical kit and has nursed more than a few colleagues back to work. The only thing I will say with all of her travels she is not known as the most adventuresome either. She knows her way around the room service menu in more than one hotel around the world but eating habits aside she's otherwise been adventuresome. She chaired our combined federal campaign and did it with great gusto and helped in terms of bringing more charitable contributions too in the Washington area. And on a personal note this past year Diane battled cancer and when they say if attitude has a lot to do with your health Diane is the best example of how her optimism, positive attitude and courage this cancer did not have a chance, not a chance. [Applause] And we do love the hair. Actually now they can't tell us apart. Now Director Kian before you introduce our keynote speaker today Vikram Pandit, I got to meet Director Kian in this position and he is really focused on the Mid East. Or I had an opportunity to travel with him to Saudi Arabia and the UAE this year. Our time -- well, Director Kian was with us our portfolio grew from $3 billion to $6 billion in the Middle East, a spectacular rise let me give her a round of applause for that. [Applause] And this is a part of the world where relationships are critical and Director Kian has really helped forge those kind of personal relationships and those business relationships. Now the other thing you may not know Director Kian is also a close horse, you may not be able to tell in that particular photograph, I do know a time when he was in Istanbul and knew a great place to get shoes made to order and found a way to stop at the bazaar. They were, staff was nervously watching, checking their watches to make sure they would not miss the flight but in the true Mid East tradition a tradition I somewhat share Director Kian knows how to haggle. He embodies the essence of the Mid East in terms of understanding haggling, sitting back occasionally but he understands the culture very well and has been a spectacular front person in representing the bank there. The other thing I will also say about Director Kian at one point he and Jeff Abramson were caught over a weekend and had to stay an extra time and he did not see Jeff all day and he was quite concerned where Jeff Abramson was and Director Kian was running down the halls of the hotel with security and embassy personnel to make sure nothing had happened to Jeff and Jeff was simply in his room working and that's why he was out of communication. But Director Kian and Director Farrell you both have done a spectacular job. This is the first of all the many tributes but I wanted to make sure we could do that today with this large audience. So, thank you both. [Applause] And with that please come up. Bijan Kian: Well, Fred, thank you so much for that very, very kind introduction and also the talk about my zest for increasing two way trade whenever I get a chance in any way I can. It's been truly an honor for me to serve two presidents of the United States and also serve with distinguished colleagues like yourself, Fred, and Diane Farrell. It gives me great pleasure on behalf of the board of directors of the United States Export Import Bank to introduce our keynote speaker today. Vikram Pandit is the chief executive officer of Citigroup the world's global bank with approximately 200 million customer accounts and activities in more than a 160 countries and jurisdictions. Vikram and I have something in common. We're both imports, he was born in India, Pandit moved to the United States at age 16. He enrolled at Columbia University earning a BS and MS degrees in engineering. Pandit received his Ph D in finance from Columbia in 1986. He joined Morgan Stanley in 1983 and ultimately rose to the post of president and chief operating officer of the company's institutional securities and investment banking businesses. He left Morgan Stanley to become a founding member and chairman of the members committee of Old Lane when Old Lane was acquired by Citi in 2007 he became chairman and CEO of Citi Alternative Investments. He later led Citi's institutional client's group and on December 11, 2007 was named Citi's CEO. Upon his appointment he embarked on a plan to refocus, recapitalize and restructure Citi during the toughest economic climates since the great Depression. With the goals of long term profitability and fueling economic recovery and growth that is core the strategy for building a new Citi is centered on the company's historic strengths and unique competitive advantages, its global franchise, unique emerging market footprints, innovative spirit and talented and diverse employee base. At Citi he has made responsible finance a priority. Citi is committed to providing choice control and transparency for clients, managing risk responsibly and contributing to economic growth. From innovative foreclosure prevention programs that have kept more than a million Americans in their homes to a new disciplined approach to risk management, responsible finance is being ingrained throughout Citi's practices and culture. When I just welcomed Vikram a few minutes ago I asked him, you know, if there was a very, very short sentence that you would like to say about where you work, what would it be. And he said when you're outside of the United States there are two things you need to know, the address for the United States embassy and the nearest Citi bank. And with that ladies and gentlmen, please join me in a warm Ex-Im bank welcome to Vikram Pandit. [Applause] Vikram Pandit: Thank you, Bijan, thank you very much for that complete introduction. And Fred as well, thank you for inviting me. When Bijan and I had a conversation earlier he did say we do have a couple of things in common. Both of us are imports and both of us also hail from countries starting with the letter I. I'm sure we'll find a lot more things in common if we spend more time together but, yes, we are America's global bank. We are in a 100 plus countries around the world and I'm honored to be here and grateful to be invited to speak at your conference. The U.S. Export Import Bank has been also a proponent and practitioner of responsible finance. Your leadership on such issues as environmental responsibility and climate change are impressive and well known and I'm particularly grateful that the Export Import Bank has formally adopted the equator principles and effort that Citi shares. You join more than 70 global financial institutions that seek to work with our mutual client base to make our transactions more environmentally sustainable over the long term. Now Citi and the Export Import Bank share much in common, our core missions are to finance world trade, to enhance global capital flows and to enable companies expand and create jobs these are the activities that help companies grow and that help nations grow. So it's refreshing to be here amidst so many people who share my view of the importance of trade for America's economic recovery. We at Citi are strong supporters of free trade and broad global economic engagement. We believe that the three trade agreements awaiting ratification with Columbia, Panama and South Korea are critical for the U.S. economy and for expanding U.S. exports. Delay in U.S. government approval of these arrangements and agreements is costing American companies market share in each of these countries. Citi wants to see each agreement passed as soon as possible. And we believe that through our leadership of various business coalitions we can help the Obama administration muster broad based bipartisan support on the Hill in favor of all three. And our advocacy does not end there, Citi serves as a corporate co-chair and advisor to the U.S. government in the ongoing Transpacific Partnership negotiations, regional trade talks in the Asia- Pacific region that hold promise for greatly expanding opportunities for American businesses. And we also co-chaired the recently organized business coalition to support the repeal of the Jackson-Vanik legislation that governs trade with Russia and to grant Russia Permanent Normal Trade Relations status as soon as Russia completes its accession process to enter the World Trade Organization. As you well know from the passage of NAFTA in 1993 to the ratification of the Peru FTA in 2007 this country and for that matter the world enjoyed an impressive run of opening markets and expanding trade opportunities. In that period the U.S. implemented no fewer than 10 separate agreements covering 16 countries. 18 countries and jurisdictions including China today the world's second largest economy joined the World Trade Organization. But about four years ago the wind started to shift, the Doha round has stalled and shows few signs of reviving, no new free trade agreements have emerged from the U.S. Congress since 2007. And, you know, as we think about that there should really be no mystery about the timing. The financial crisis was like a great storm that ripped the hood off our economy. It exposed the engine to plain sight for the first time in a very long time and allowed us to see that we face some serious structural issues including massive public and private debt, huge trade imbalances and lackluster exports. Before the crisis these issues were little noticed and heeded even less. Leverage papered over our deeper problems, consumers did well for a while but based on debt and not real growth and debt driven spending in the housing sector created hundreds of thousands of jobs for example in the construction and the mortgage industries but that job growth turned out to be fleeting and some of these jobs are unlikely to come back. Trade unquestionably has benefited consumers in recent years through more products and lower prices. Yet to many American workers especially those in the hardest hit industries and regions this rings hollow in a country that faces close to 9 percent unemployment rate. We need to be clear eyed about the fact that in certain circumstances trade can and sometimes does cause job loss. It doesn't happen as frequently as many think it does, the primary cause in the loss of manufacturing jobs for the last three decades has been productivity gains not trade. But for trade to be broadly popular it must be equitable. Its benefits have to be more evenly spread across society and the fact is that in the last several years trade hasn't benefited producers as much as it has benefited consumers. Our economy is out of balance, we lack a sound mix of imports and exports and the American worker suffers the most from that imbalance. So its no wonder that just as the bills for our leverage-fueled spending binge started coming due support for trade began to drop. The answer to this dilemma is not protectionism rather it is to address the core structural issues facing our economy. We benefit from trade the most when our economic architecture is sound. As our history has demonstrated the free flow of goods, services, capital and investment and ideas makes us stronger and more capable of maintaining and creating jobs. The last things we need now are rising prices for raw materials, constricted supply chains and limits on labor mobility. I think there are four key steps that we've got to take in our country. First, we have no choice but to get the country's finances in order. Second, we should work on correcting our trade imbalances which means addressing the consumer producer imbalances in our domestic economy. Third, we need more economic diversification. And fourth we need to advocate for and help create a better and more protective environment for intellectual property around the world. I'm not going to say much about the first point except that one never sees growth without confidence and a credible plan to address that debt as necessary to restore confidence which in turn will inspire real investment. When you look at the other three they essentially boil down to one. We need to become a bigger exporter. And despite all you heard about the decline of manufacturing in the West the United States remains one of the world's top two manufacturing economies. We're either number one or slightly behind China depending on which methodology is used to measure. Each country generated approximately $2 trillion in manufacturing output last year. But here's the thing, the U.S. did so with 11 million workers in the sector compared to 100 million on the Chinese side. America remains a strong manufacturer, but we have become, especially compared to our peers, a weak exporter. According to the National Association of Manufacturers amongst the world's top 15 manufacturing economies the U.S. ranks 13th in terms of measuring how much of our manufacturing output is exported. Only Brazil and Russia score lower than that. Stated differently we're 55 percent below the world average in the share of our manufacturing output that we export. For the last few decades consumer demand here and elsewhere in the developed world helped the emerging markets build their exports and their economies. In the process we not only consumed too much but we also didn't focus enough on stimulating consumption and demand for our goods in other countries. The remedy is obvious; the emerging markets are developing enormous consumer blocks. Around the globe millions of people rise above poverty and enter the middle class every year and by one estimate some 70 million in 2009 alone. According to another estimate by 2020 three quarters of the incremental consumer spending will come from the emerging markets. And if that bears out then Asia will overtake North America as the world's largest consumer block. Some may see this rising economic power as a geopolitical threat but I think it is more correctly viewed as an opportunity. American business can help kick start our economy and correct our consumer supply imbalance by reviving our export sector by selling to the emerging market consumer. Other countries have demonstrated that this is possible and its possible even with high labor costs and expensive products and its possible to succeed in selling briskly to consumers outside the developed world. The best example is Germany. In the mid 1990s Germany's economic performance was starting to lag behind those of its neighbors and its competitors. Growth was sluggish and the scale of structural reforms needed to deal with implications of reunification was significant. And yet the German economy has reestablished itself, labor productivity has risen, costs have fallen helping German exports rise bucking the trend of many developed economies. This was not a happy accident but the product of good design, good policy and careful planning. Germany benefited from the economic reforms it had introduced almost a decade earlier which provided much needed flexibility. It managed to avoid the housing and construction booms seen in some other countries and it enjoyed a balanced government budget and similarly well placed household and corporate balance sheets. Some of these steps are things we can or we must do here at home. We also need to make our tax code and regulatory policy more supportive of innovation and formation of new companies and we should address the ways that our tax laws handicap American business trying to compete in international markets. Innovative government action can also help. Franklyn Roosevelt created the Export Import Bank in he depths of the Great Recession and the Great Depression to help finance the sale of American made goods abroad. Citi is proud to be one of Export Import Bank's partners. Last year we launched a billion dollar partnership to offer relief from credit constraints to American small and medium sized businesses that sell their goods overseas. The program currently supports 4500 companies. Many of our clients plan to grow significantly with the help of these increased credit lines. Ultimately however the real effort must come from the private sector. We need to unleash the regenerative genius inherent in the economy and the American spirit. Industry, not government, is likely to revive our industrial base and unleash innovation to create new products, new services, business models that will meet the needs and demands of consumers in Shanghai, Mumbai, Moscow and Sao Paolo. We all understand the difficulties around that, many markets in the developing world are firmly shut to some of our exports or to the extent they are nominally open these countries through other means discourage the free flow of goods into their markets even as they do all they can to flood trade routes in the other direction. Some of our strongest industries especially those that depend on intellectual property protection can't sell in certain markets because of piracy and other unfair practices that central government's claim to oppose but do little to stop. Our vast and competitive service industries face especially high regulatory and other burdens such as restriction on cross border data flows that make operating and expanding abroad more difficult, less efficient and more expensive than they should be. The new trade agreements with South Korea, Columbia and Panama all address these issues with protections for patents, digital products, copyrights and trademarks that are the strongest ever negotiated. It's the responsibility of all parties, sellers and buyers, exporters and importers, multinationals and host countries to ensure that all agreements are adhered to strictly. For the developed economies to fairly compete in the global economy the world needs to ensure that intellectual property is protected and paid for. We should welcome for instance China's announcement that it will no longer maintain so called indigenous innovational requirements that force companies to turn over their most valuable intellectual property to local partners. Such provisions hamper the free flow of goods and services and ideas and should be ended wherever they are in place. For all the difficulties we should not succumb to undue pessimism, trade and trade agreements still benefit us even when other nations are slower to open up than we would like them to be. And let's not lose sight of the fact that some of America's biggest competitors face equally large if qualitatively different challenges. While it's less the case today than it was two years ago our economy is still imbalanced in favor of consumption away from production but it's also true that other economies for instance China's and Germany's are imbalanced in the other direction. Neither model is a recipe for long term success. Each type of imbalance is a threat for different reasons our imbalance in favor of domestic consumer spending threatens the continued viability of the trade agenda. That agenda is one of the fundamental pillars of America's economic success since at least the end of World War II. Those of us who understand or appreciate what trade and investment do for this economy need also to understand how they are threatened. Simply talking further about its benefits won't change the political equation, to do that we need to change the facts on the ground which requires acknowledging that America lags behind our competitors in export intensity. We need to redouble our efforts so that American workers can engage fully in the ultra competitive constantly evolving global marketplace. The Export Import Bank makes a valiant effort year in and year out to do exactly that. You deserve all our thanks but the game needs more players. We all have a responsibility to do our part to boost American exports and to revive American industry. And don't get me wrong the challenge is real but the work is necessary and the rewards are incalculable. Thank you again for inviting me here today to speak to you all. It's been a great honor and again remember Citi's America's global bank. When you go around the world remember where the embassy is and remember where the Citi Bank is. Thank you all. [Applause] Fred P. Hochberg: (inaudible) Vikram Pandit: It's up to you. Fred P. Hochberg: Do you mind. Vikram Pandit: Sure. Fred insists that I take questions. If you have any although Fred's here to answer them as well. And if not by the way the dessert is absolutely wonderful. [Laughter] Vikram Pandit: Oh, we have one right here. Speaker: That was a very fine speech. H1B Visas, what is your view of that. Vikram Pandit: Thank you, I appreciate that and thank you very much. You know, I got to give you an anecdote. Let me start that way. One of my very good friends is chairman and chief executive of a chemical company in the U.S. now this also happens to be a global chemical company and you know we're talking about how things are going. And he's doing his part and his company is doing his part in exporting. He's doing extremely well, this is a company that's also innovative and his factories are operating at good capacity and he has got a pipeline of orders that can make us all proud. And I asked him, okay, when you look around and look at everything that's going on what's your key challenge. And he said to me that his biggest issue is he can't get the chemical engineers he needs in the U.S. period. Okay, now you know by the way our schools are doing all they can to encourage science and engineering and you know the good old days engineers like me when they were no good became bankers. But you know it's nice to have demand for chemical engineers but those are the kind of things I think we need to be practical about. And we should be practical as Americans looking at where the demands are where the talent shortages are and America's been home to the best talent from around the world not only Bijan and I are imports here but you can see around the room there are plenty of us here. So I'd be very constructive on thinking through how to bring the best talent into America. Speaker: (inaudible) Vikram Pandit: Speak up a little bit. (question inaudible) Well, the question is, I'm sure most of you couldn't hear that. The question is on regulation primarily of Basel 3 and what now that we have some more clarity what does that mean for the international banking system, what the challenges are. You know, let me start by saying that we were at Citi probably the strongest supporter if not one of the strongest supporters of regulatory reform. We've been very clear that we needed it and that we needed it across the board and part of that reform was to make sure that capital was measured correctly and that it was implemented correctly. And so the work that's going on with the Basel Committee and Basel 3 is exactly the work that we need to do. And that work is about examining capitalization of the banking system, understanding the financial services, markets and the economy with the goal to make these markets and these banks not only stable but more productive. And part of that is for example doing what we've been doing. I mean, we changed the bank from being a supermarket just to becoming a bank, a bank that's focused on serving customers and helping the real economy grow and all of that. So I think there's been a lot of good work that's been done here in the U.S. but also from the Basel Committee on regulation but there's more work that needs to be done. I'll tell you there are -- this is a complicated issue. And there is a lot of work that needs to be done yet and they're cognizant of it and they're doing it. I'll give you an example. If you regulate all the banks but you don't pay enough attention to what we call the shadow banking system which is financial services players who many times play the same function but not under the regulatory umbrella that can create an issue because on the margin, prices are set by the least regulated companies. And so they are examining the shadow banking system what do we need to do there. The other is level playing fields around the world. We can regulate ourselves but one thing we've seen through this crisis is that problems don't start and stop here nor do global problems respect Atlantic and Pacific oceans. They all become our problems and so we need to have a globally consistent and level playing field. All that work is yet to be done. I will tell you I feel very comfortable with the capitalization of the American banks. I think our federal reserve bank, our government, our Treasury, our administration did a very fine job for the crisis to get banks to the right level of capitalization, the right amount of safety getting them focused in the right direction. But I suspect the answer to your question needs more time. We need to still see how the rules come out. The most important part of which is that there is a calibration that needs to be done between how much capital in banks and how much capital in the financial system versus how much lending do you need out there and how much growth do you need out there. That calibration has to be done and that's one of the things that's being talked about and we'll see where it goes. Thank you. Fred P. Hochberg: Excellent. Thank you. That's good. Vikram Pandit: Thank you all I appreciate you joining me today. Fred P. Hochberg: That was spectacular. Thank you so much. Thank you, Vikram. Let's give him another round of applause. [Applause] Speaker: We only can do what we do by partnering with banks around the world and when we travel around the world there is, I'm not making an ad but there is no more global bank than we work with it in every single country we visit and do work we see Citi group. Hopefully we learnt a lot in the last two days. Learnt a little bit about winning the future and when Vikram mentioned our unemployment is still actually around 9 percent we have actually dropped again today we added 216,000 new jobs in the month of February, month of March following 222,000 in February. So we had a spectacular job growth. [Applause] And unemployment actually dropped to 8.8 percent. So we're moving, continuing to move in the right direction. In the last few days you've heard from companies such as Kamesa, Ford, ABRO, Wallcrest, plans of many, many companies I am looking forward to talking about some other companies next year. They don't have to be new companies but other companies. So particularly if you are, if something happened at this conference and if you met a customer or a buyer or made a connection I want to hear about it and I want you to actually e-mail John McAdams because he's the -- so his e-mail is john.mcadams at exim dot gov I won't give your phone number or your cell phone but I do like to give, I love giving John McAdams e-mail out. There's very few things that give me greater pleasure than that. It was good to have Larry Summers here. One thing he's still learned is how to directly answer a question when he doesn't really want to answer it. I sat with Tom Conrad of Ben tech a company we just authorized a transaction in -- it's a Duluth, Minnesota company a $56 million transaction financed by a Russian bank for a Russian company doing work in India. This is the shape of things to come. And Tom said to me my big mistake was I don't know why I wasn't here four years ago. So the fact is none of you have made that mistake because you are here and I'm hopeful that as I said we can this conference has been both productive. You've learned something, you've expanded your horizons that we can have a more competitive edge as a result. Let me just say two things. On your table, on your chair there's a survey. We are customer focused to the extent that you can fill out the survey and give us your feedback on the program, how well it worked, what you might like to see differently even just write a comment and that will help us enormously as we plan next year's conference because we are determined to get more companies bringing more products to more customers in more countries and we are moving at the speed of business. Next year's conference is April 12th and 13th unlike what I commented on it will not be in Honolulu it will be right here back in Washington at the Omni Shoreham Hotel. So thank you for your patience, thanks for joining us. Hope you had a great conference and we'll see you well before next year. Thank you so much. [Applause]