Fred P. Hochberg, the gay president and CEO of the U.S. Export-Import Bank since 2009, has emerged as the Obama administration’s lead defender of the bank in the midst of efforts by Tea Party Republicans to shut it down.
Opponents are calling on Congress not to renew the bank’s charter, which expires Sept. 30.
The little-known bank was created by Congress in 1934 at the request of President Franklin D. Roosevelt to help U.S. companies sell products overseas at the height of the Depression. Among other things, it lends money to foreign companies to help them pay for American-made products and services.
Hochberg has been praised by the bank’s supporters for becoming a persuasive promoter and defender of the bank’s long record that Hochberg says has helped to create millions of American jobs during its 80-year history by enabling U.S. companies to sell more products abroad.
“The stakes could not be higher,” Hochberg told the House Financial Services Committee during a June 25 hearing. “We should not cede American jobs to China, Russia or other countries.”
But the mild-mannered Hochberg, himself a businessman who served as CEO of a home products company started by his mother in New York, has come under attack by critics of the so-called Ex-Im Bank from both conservative Republicans and environmentalists.
Tea Party activists and their allies in Congress have accused him and the bank of advancing what they call “crony capitalism” – a form of government handout, say the critics, to the largest and most politically connected U.S. corporations.
The GOP-leaning Heritage Foundation, the Club for Growth, and the ultra-right billionaire Koch brothers have all sided with this faction, saying the Ex-Im Bank should be closed and its lending role picked up by private banks rather than the U.S. government.
On the other side the of political spectrum, the Sierra Club has denounced both Hochberg and the Export-Import Bank for lending money to controversial coal mining projects in Australia and India. The Australian project has come under fire from environmentalists because it would require an expanded harbor near the mines to export coal. The harbor expansion, in turn, requires dredging that environmentalists say would threaten Australia’s Great Barrier Reef, considered a world ecological treasure.
“The U.S. Export-Import Bank and its president Fred Hochberg have never met a coal project they didn’t like,” Sierra Club official Justin Guay said in a 2012 statement.
Since that time Hochberg has pointed out that the Ex-Im Bank has lent money to dozens of foreign projects involving environmentally friendly renewable energy such as wind mills and solar energy facilities – all of which have purchased American-made equipment such as windmill blades and wind turbine generators.
The Sierra Club has since moderated its criticism, saying Congress should renew the Ex-Im Bank’s charter while directing the bank to put in place additional reforms to ensure it finances projects that don’t harm the environment.
Justin Nelson, president of the National Gay and Lesbian Chamber of Commerce, said his organization strongly supports renewal of the Export-Import Bank’s charter. According to Nelson, LGBT-owned businesses throughout the country are working with the NGLCC to enter the export trade and stand to benefit greatly from the Ex-Im Bank’s work.
“We have been doing a series of educational workshops at our conferences over the last couple of years so LGBT business owners start to realize the opportunity in exporting,” Nelson told the Blade. “Ninety-five percent of the world’s consumers live outside the U.S. borders,” he said.
“So having an organization like the Ex-Im that can come in and can work with our small business exporters – LGBT-owned businesses and non-LGBT owned businesses – is a huge opportunity,” said Nelson.
Like other supporters of the bank, Nelson points out that claims that the bank favors large corporations over small businesses are at odds with the bank’s records showing that 90 percent of its transactions in 2013 were for U.S. small businesses.
Hochberg told the House committee hearing in June that the default rate for Ex-Im Bank loans to companies that buy American products has been less than one percent over the past five years and that the bank has brought in just under $2 billion in profit from the interest and fees associated with the loans it makes.
Rather than costing taxpayers money, Hochberg told the committee, the profit from the bank’s loans pays for its entire budget and returns money to the U.S. treasury.
“I am proud of the work our 400-plus employees do each day to empower U.S. companies and support American job growth,” he told the committee, whose chairperson, Rep. Jeb Hensarling (R-Texas), opposes renewing the bank’s charter.
“Since our last reauthorization in 2012, Ex-Im Bank has supported nearly half a million American export-backed jobs, while generating nearly $2 billion for the taxpayer and maintaining a low default rate of 0.211 percent as of March 31, 2014,” he said.
During the June House committee hearing, members of the committee, including Rep. Michele Bachmann (R-Minn.), questioned Hochberg about a June 23 Wall Street Journal story reporting that four high-level Ex-Im Bank officials had been suspended or removed in recent months following allegations that they accepted gifts and kickbacks from companies doing business with the bank.
Hochberg said he could not provide details about the investigation while the bank’s Inspector General’s office was investigating the matter. However, he said the allegations of wrongdoing by the people under investigation came to the attention the Inspector General’s office by other bank employees who became suspicious of the actions of the people involved.
Congressional observers have said the allegations of possible misconduct by the Ex-Im Bank officials would likely complicate efforts by the bank’s mostly Democratic supporters to secure the renewal of its charter before the Sept. 30 deadline.
Rep. Maxine Waters (D-Calif.), the ranking minority member of the House Financial Services Committee, praised Hochberg for his leadership of the bank and called on her fellow committee members to quickly approve a renewed charter for the bank.