(CNSNews.com) – Export-Import Bank chairman and president Fred Hochberg blames a “vocal minority” in Congress for the anticipated lapse of authorization for his federal agency’s charter on Tuesday.
“We’ve had 16 reauthorizations, 81 years without controversy, 13 presidents, both Republican and Democrats… and yet we’ll vote to lapse because of a vocal minority in Washington that puts ideology before jobs,” Hochberg said Thursday at at a forum in Washington hosted by the publication Foreign Policy and underwritten by HSBC, a banking and financial services company.
The charter of the Ex-Im Bank, which backs loans to foreign companies that buy American products, is set to expire on June 30. Hochberg said that the prospect has already caused some companies to move jobs overseas.
“What’s going to happen on July 1st?” Hochberg asked. “Well, frankly, it’s not the right question. Because the damage has already been done. We’ve already seen a real cost to American jobs by just the debate and the threat to our U.S. competitiveness of Ex-Im not being around.”
But critics of the bank complain that it engages in crony capitalism and primarily backs loans for large corporations. Between 1997 and 2013, 65.4 percent of the bank’s loans went to foreign organizations that were Boeing customers, according to its annual reports.
During that period, the Ex-Im Bank, which was established in 1934 as part of President Franklin D. Roosevelt's New Deal, provided $1.9 billion in loans and long-term loan guarantees to banks in Communist China and Russia.
The Congressional Research Service describes the mission of the Ex-Im Bank, which it says finances less than 5 percent of U.S. exports, as helping to “finance American exports of manufactured goods and services, with the objective of contributing to the employment of U.S. workers, primarily in circumstances when alternative financing is not available.”
The bank’s main programs “are direct loans, loan guarantees, working capital guarantees and export credit insurance.”
“By trying to ‘level the playing field’ with foreign companies backed by their own governments, Ex-Im ‘unlevels’ the playing field for many more U.S. companies competing at home and abroad,” said Dan Ikenson, author of The Export-Import Bank and Its Victims.
Earlier this month, the House Subcommittee on Health Care, Benefits, and Administrative Rules held a hearing on taxpayer funds that were misspent by the bank, including a $300 million loan for NewSat, an Australian satellite company. The company later defaulted on its payments and declared bankruptcy.
Committee Chairman Jim Jordan (R-OH) suggested that such problems were systemic and said that was the reason that Congress should allow the Ex-Im Bank’s charter to expire.
“Much like Dr. Frankenstein and his monster, the world would be much better off letting the Bank remain dead after it expires at the end of the month,” Jordan said.
“At the end of June, the Bank will not fire all of its employees. It will not lock its doors and board up its windows. The Bank will be allowed to continue servicing existing loans and go through an orderly wind-down. The stories of calamity are over-stated and no one outside of the few major corporations benefiting from its financing will notice,” Jordan added.
However, Hochberg insisted on Thursday that American jobs would be lost if the bank expired, citing General Electric as an example of a company that would be adversely impacted.
“Last week, GE’s CEO Jeff Immelt reiterated… that GE would be forced to consider moving jobs overseas if Ex-Im goes away,” Hochberg said.
But House Financial Services Chairman Jeb Hensarling (R-TX) defended Congress’ refusal to reauthorize the bank.
“This is a small step toward renewing a competitive free-market economy and arresting the rise of the progressive welfare state and the cronyism attached to it,” Hensarling said.
Opponents have also objected to the bank’s support of foreign state-owned companies.
Veronique De Rugy, a senior research fellow at George Mason University's Mercatus Center, writes: “Outside of our borders, the majority of beneficiaries are large and often state-owned companies like Pemex, the Mexican oil and gas giant, and the wealthy United Arab Emirates airline Air Emirates.”