The Honorable Fred Hochberg, chairman and president of the Export-Import Bank of the United States (Ex-Im Bank), is set to testify before the U.S. Senate Committee on Banking, Housing and Urban Affairs on January 28th.
The topic of the hearing will be the “Oversight and Reauthorization of the Export-Import Bank of the United States,” which should make for quite interesting conversation considering Hochberg should be peppered with questions concerning the Bank’s undermining of American taxpayers and employers at every turn during his tenure.
The Export-Import Bank is a federal agency, backed by the faith and credit of the American taxpayer, which was originally created in 1934 by President Franklin Delano Roosevelt to promote American products in foreign countries by providing loans, so that foreign companies could purchase American goods and products. Today, the Bank serves as a corporate welfare machine, handing out subsidies in the form of financial guarantees and favorable loan terms, constantly threatening the welfare of American industries and the workers they employ.
The Export-Import Bank has engaged in a litany of business deals that are demonstrative of its failure to take into account – as required by law – the impact its reckless actions have on American jobs.
Just recently, the Bank financed Roy Hill, an iron ore company owned by the richest woman in Australia to the tune of $650 million. The catch is that this loan, like many of Ex-Im’s other loans, is available exclusively to foreign companies purchasing American goods with the loans being offered at a sub-market rate oftentimes undercutting private lenders from the marketplace.
As a result, American companies have to pay more than their foreign competitors for goods and equipment placing them at a distinct competitive disadvantage. In this particular case, the American iron ore industry will see $600 million of iron ore exports displaced, all because of a transaction that was largely financed by the United States Government. The Roy Hill deal was so blatantly bad for American workers, Democratic Senators who previously supported both the Bank’s re-authorization and Hochberg’s nomination spoke out denouncing it joining their friends on the other side of the aisle.
Sadly, this hasn’t happened on just one occasion. It is a troubling trend that has grown under Hochberg’s watch. The most consistent and outrageous example of the Bank’s ignominious subversion of American employers takes place in the airline industry. Hochberg has failed to diversify Ex-Im’s subsidies sending roughly 82 percent of Ex-Im’s total portfolio to foreign companies purchasing Boeing airplanes.
In 2012, the Bank approved more than $11 billion in below market financing of American aircraft to more than 20 different countries leaving U.S. carriers on the sidelines. This has cost the U.S. airline industry dearly resulting in the loss of as much as $684 million and up to 7,500 jobs according to some estimates.
Not only has the Export-Import Bank imposed undue burdens onto American businesses, but its track record has also been riddled with scandals that give it a stench of negligence. Under Hochberg’s tenure, the Bank has expanded beyond its original intent, for example, providing financing for a Chinese company to make solar panels in India, clearly obviating from its original mission of providing financing for the purpose of boosting American exports.
In essence, Americans are taking all the risk on behalf of the Ex-Im Bank, while companies in foreign countries receive all the benefits and literally laugh all the way to the bank.
As if all this wasn’t enough, Hochberg has also failed to implement the most basic administrative measures that would prevent conflicts of interest, so much so that Ex-Im employees have received free travel and entertainment from companies under consideration for financing assistance. In fact, in 2010, one media report found that employees received a travel package worth an estimated $97,000 from a company, which coincidentally received a $3 billion loan 11 months later.
Another report found employees had received over $360,000 for trips paid by prospective companies over a two-year period. Most other government agencies prohibit staff travel paid by companies with business pending before them, but not Hochberg’s agency; it relishes the special treatment and returns the favor using the full faith and credit of the American people.
Due to space constraints, we can only mention a handful of issues that should be front and center in the questioning of Mr. Hochberg. Rather than allowing a polished Washington bureaucrat deliver spin, Senators need to ask tough questions and demand complete answers from Hochberg.
He must take responsibility for the Ex-Im Bank’s record of hurting American employers, disregarding the economic impact of its actions and obscuring information that would demonstrate the Bank has not been abiding by the law passed by Congress when it most recently re-authorized its charter.
Few things have brought Republicans and Democrats together on Capitol Hill as of late, but one is the irresponsible and damaging decisions made by the U.S. Export-Import Bank. Its time they find the truth before more Americans lose their jobs at the hands of an out-of-control federal agency.