By Kevin Bogardus - 04/01/12 10:00 AM EDT
The future of the U.S. Export-Import Bank is up in the air as Congress battles over renewing the bank’s charter.
Fred Hochberg, Ex-Im's chairman and president, is arguing for a long-term renewal with a greater loan limit than what House Republican leaders have offered so far. The former businessman believes a multi-year extension would give greater certainty to U.S. exporters and help them better compete against foreign rivals.
“It sustains and creates jobs and does it at no cost to the taxpayer. Pays for itself and makes a profit. Sounds like a pretty good deal,” Hochberg said.
The bank’s charter is set to expire on May 31. Last week, the Senate failed to pass an amendment to renew Ex-Im, and the bank has been buffeted by Tea Party-fueled opposition from some Republicans who argue the bank amounts to “corporate welfare” for big business.
Hochberg cringes at that label, and stresses that the bank’s operations are paid for by the fees it collects from its customers.
“I don’t understand the whole idea of subsidy or welfare. That implies it’s not paying for itself. That implies there’s a transfer from taxpayers to another entity,” Hochberg said. “Yes, there’s a full faith and credit guarantee from the U.S. government but that is the only thing the government is providing. No money. No funding. No appropriation.”
House Majority Leader Eric Cantor (R-Va.) has offered a plan to renew the bank’s charter for one year with a $113 billion loan limit. Hochberg said a one-year extension was a “bad idea” due to the uncertainty it would cause.
“I ran a company for 20 years,” Hochberg said. “I’m not making plans six or 12 months at a time.”
“If we only have a one-year [plan] that signals to exporters that we’re an off again and on again enterprise. That has long-term impact,” Hochberg said. “We’re the backstop to a fragile banking system. We’re taking the backstop and making that more fragile as well.”
A Cantor aide said lawmakers are continuing to work towards a bill that both parties can support to be voted on after the recess at the beginning of April.
“We continue to work with the minority in hopes of finalizing a bipartisan measure the House can vote on after the Easter recess," said the Cantor aide.
Hochberg supports the proposal that failed to move through the Senate — a four-year extension with a $140 billion loan limit — arguing it would help make U.S. companies more competitive with their foreign rivals.
The bank has drawn a barrage of criticism in recent weeks. The conservative Club for Growth has been urging lawmakers to oppose the bank’s reauthorization, linking its past loans to Enron, Solyndra and Mexican drug cartels.
Hochberg took issue with those claims, saying they are “simply not accurate.”
“We don’t make crazy, undocumented loans. We make loans that have a reasonable assurance of repayment and we get repaid,” Hochberg said. “They’re all untrue. And if any of them were true, we wouldn’t have such a good credit rating.”
In response, Barney Keller, a spokesman for the Club for Growth, did not back down from the group’s claims, and pointed to several press reports documenting the loans made to the companies in question.
“The fact of the matter is that the Export-Import Bank has never disputed that they gave subsidies to Enron, Solyndra, and Mexican drug cartels. Even President Obama agreed that the Export-Import Bank is a prime example of corporate welfare. We urge Congress to shut the Export-Import Bank gravy train down for good,” Keller said.
Big companies like Boeing have benefited from the bank’s loans, but their lobbying for reauthorization has been countered by Delta Air Lines on Capitol Hill. The air carrier has been an Ex-Im critic, saying the bank has led to thousands of airline jobs being lost when they help the company’s foreign competitors buy Boeing’s airplanes at a cheaper price.
“The real issue is Boeing is competing against Airbus,” Hochberg said. “Why would we want to make Boeing less competitive because they would have to sell planes without Ex-Im financing, while the Airbus planes are sold with the European export credit agency’s support?”
Hochberg said Ex-Im financing helped create or sustain 85,000 jobs in the aerospace sector last year.
Further, the Ex-Im head said that while 20 percent of the bank’s loans in dollars might go to small businesses, they still made up 87 percent of the bank’s clients last year. Many of those smaller companies have no alternative to find financing for overseas projects.
“It’s not easy to get a bank to lend you money when you are selling medical supplies to the Mideast or locomotives to Kazakhstan or South Africa. I have said to others that the banks aren’t lining up four or five deep to lend you money to do so,” Hochberg said.
While Ex-Im’s reauthorization has struggled to move forward on Capitol Hill, there have been some positive signs for the bank.
This week, Rep. Rick Larsen (D-Wash.) and Rep. Don Manzullo (R-Ill.) introduced legislation in the House similar to what the Senate has considered in renewing Ex-Im’s charter.
Further, 26 GOP senators have written to Senate Majority Leader Harry Reid (D-Nev.) asking him to move quickly on scheduling floor time for more debate and another vote on Ex-Im’s reauthorization.
The bank is working hard to earn its renewal from lawmakers. Each month, every House member and senator — as well as every state governor — receives a letter from Ex-Im that tells them the dollar value of exports from their congressional district or state that the bank has supported with its financing. March’s edition of the letter also noted that Ex-Im has made $1.9 billion in surplus revenues over the past five years.
Hochberg said he didn’t know if Congress will reauthorize Ex-Im, but he will continue to push for the bank’s renewal.
“I have been meeting wherever I can make a difference. I will go to any meeting at any time of any day where I can make a difference. … I will see members, I will see staff, I will see whoever it takes to get us reauthorized,” Hochberg said. “I’m feeling alert and fit and ready, and I’ll talk to anybody I need to talk to get this thing done.”
Erik Wasson contributed to this report.