House Financial Services Committee Chairman Jeb Hensarling, R-Texas, is leading an effort in Congress that would eliminate the bank. If lawmakers do not reauthorize the bank’s charter by June 30, it will stop issuing new credits and begin to wind down operations.
And it now appears that Hensarling and other opponents, who see the bank as emblematic of “crony capitalism,” have the advantage.
“I think the momentum’s in our favor,” Hensarling said in an interview, meaning bank critics are poised to block any effort to keep the institution alive. “We’ve had a lot of practice at doing nothing in Congress.”
His committee has scheduled a hearing June 3 when bank Chairman Fred Hochberg will testify about its successes, including job creation. But Hensarling said the bank interferes with markets because it “rewards” some companies with its credit financing.
“The bank leads to an unfair economy,” he said. “One-third of Ex-Im’s credit exposure benefits Boeing,”
Hensarling said the aircraft manufacturer was the largest single beneficiary of the Export-Import Bank.
The bank does not use congressional appropriations to make loans, but backs loans and financial instruments with U.S. credit. It makes money for the U.S. Treasury through fees it charges to clients.
The debate has spilled over into the 2016 presidential contest with most Republican contenders or likely contenders, including Sen. Ted Cruz, R-Texas, opposing the bank. Its only supporter among the hopefuls is Sen. Lindsey Graham of South Carolina where Boeing has a large plant.
Former Texas Gov. Rick Perry, who is expected to announce his own presidential campaign June 4th, reversed his long-time support for the bank during 14 years as governor in a May 5th Wall Street Journal op-ed.
On the other side, Democratic candidate Hillary Clinton voiced support for the bank as a job creator in a New Hampshire campaign swing May 22. Republicans “should know better,” she said. “It’s embarrassing.”
Hensarling is not apologizing. A conservative in the tea party mode, he was first elected to Congress in 2002. To him, the bank violates the principles of a free market economy.
“It is both a form of foreign aid and it is a kind of corporate welfare,” he said.
Hensarling is very critical of the bank’s credit financing of government-owned companies in such countries as China and Mexico and his committee has highlighted corruption in the bank. A former loan officer at the bank, Johnny Gutierrez, who took the Fifth Amendment against self-incrimination before the panel last year, pleaded guilty to bribery in April.
Hensarling said that the majority of Republican members on his panel are opposed to continuing the bank.
House Speaker John Boehner, R-Ohio, has expressed concern that the bank’s demise would cost jobs, but Hensarling said the speaker “did not ask me to move a bill” that would keep the bank in business.
In the Senate, there has been a strong push back by bank supporters, led by Sen. Maria Cantwell, D-Wash., who say U.S. has to compete with foreign countries that provide financing for their companies. Boeing has a large manufacturing presence in Washington.
Cantwell scored a coup in May by withholding support on a key vote for an unrelated trade bill. In return for her vote and those of some other bank supporters, Senate Majority Leader Mitch McConnell, R-Ky., who is opposed to the bank, agreed that the Senate would vote on the institution in June before the charter expired.
Cantwell’s strategy is to attach it to a “must-pass” bill, such as Defense Department funding. There will also be hearings June 2 and 4 before the Senate Banking, Housing and Urban Affairs Committee that supporters hope will highlight job losses.
Air Tractor, Inc., a West Texas-based maker of crop dusters and fire fighting planes, has used bank financing for 20 years. According to Dave Ickert, vice president of finance, 25 percent of company sales depend on the Export-Import Bank “Without the Ex-Im bank, those sales would not happen. Period,” he said. “There is no other alternative.”
And that means that 25 percent of the company’s 270 employees might lose their jobs.
But to Hensarling, that’s not enough to keep the bank going. “For every American beneficiary that you see, there’s an American victim,” he said.