U.S. export lender in jeopardy as Republicans pull support

WASHINGTON, June 24 Tue Jun 24, 2014 4:19pm EDT

WASHINGTON, June 24 (Reuters) - A push to save the United States' export credit agency struck a new hurdle on Tuesday when Congress's top Republican refused to throw his support behind the Export-Import Bank after news that bank staff were under investigation for graft.

The bank's charter must be renewed by Sept. 30 for it to continue operating but the allegations of fraud have added to long-running criticism of handouts to big business and meddling by the government in the private sector.

"We are going to continue to work with our members" on whether the bank's role should be taken over by the private sector, House Speaker John Boehner said, sidestepping a question about whether he personally backed reauthorization.

Supporters of Ex-Im in the pro-business wing of the Republican Party were already on the defensive after their No.2 in the House of Representatives, Kevin McCarthy, spoke out unexpectedly against the bank on Sunday.

Many Tea Party Republicans view the bank as an example of "crony capitalism." One of Ex-Im's most vocal critics is Jeb Hensarling, chairman of the House committee with oversight of the bank. But until McCarthy's statement, the business community thought there was a good chance of renewal because establishment Republicans, including leadership figures such as Boehner, had been supportive in the past.

Renewal of the bank's charter would require approval by both Democratic-led Senate and the Republican-dominated House.

Exports at companies such as Boeing Co, General Electric Co and Caterpillar Inc could take a big hit if Ex-Im's charter is not renewed. Medium- and large-sized companies accounted for 81 percent of $27.3 billion of loans and other authorizations last year.

DEMOCRATS SEEK CAUSE WITH "PRO-BUSINESS" REPUBLICANS

Amid fierce lobbying by both sides, House Democrats said they plan to introduce a bill which would extend Ex-Im's charter until 2021 and lift its lending cap to $175 billion.

During a closed-door meeting of House Democrats on Tuesday, Washington state Representative Denny Heck urged fellow Democrats to sign up as co-sponsors of the bill, according to lawmakers at the meeting.

Representative Anna Eshoo of California expects close to 100 percent of Democrats will support renewing the bank's charter.

But the Democrats' status as the minority in the House will make it difficult, if not impossible, to advance the legislation to a floor vote without the help of Republican leaders.

Business groups, the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) are focusing their considerable lobbying powers on convincing leaders to allow a vote, given reauthorization passed by a wide margin in 2012.

"If this gets to the floor, I am very confident that it will get through the Congress," NAM President Jay Timmons said.

Republicans with ties to big business have been reeling since former House majority leader Eric Cantor lost a primary to Tea Party insurgent Dave Brat on June 10.

Lobbying actions by the Chamber and NAM include 350 Hill meetings, one-on-one visits to every senator, hiring specialist lobbyists such as former chairman of the Republican National Committee Haley Barbour and former House Speaker Dick Gephardt, and visits to every Congressional district in every state.

They also organized a letter signed by 865 businesses and industry groups stressing the importance of Ex-Im and noting Ex-Im equivalents in countries such as Germany, Brazil and China provided as much as seven times the level of support to their exporters than Ex-Im provided to U.S. exporters.

The House Financial Services Committee will hold a hearing into the bank on Wednesday where Hensarling is expected to question Ex-Im Chairman Fred Hochberg over a Wall Street Journal report four officials had been suspended or removed as investigators look into charges of improper gifts and kickbacks.

The White House said Tuesday that the Ex-Im bank is working with its internal inspector general on an investigation into improper gifts and kickbacks. Spokesman Josh Earnest said President Barack Obama had "zero tolerance" for fraud, but supports reauthorizing the bank because it contributes to the economy.

Heritage Foundation analyst Diane Katz said a review of Ex-Im reports to Congress showed 74 cases since April 2009 in which bank officials were forced to act on the basis of misconduct investigations by the Office of Inspector General. Dozens of other fraud cases involving Ex-Im beneficiaries had been referred to the Department of Justice for prosecution.

"Fraud and corruption are among a long list of operational problems at the bank, which is a conduit for corporate welfare and beset by mismanagement, inefficiency and risk," she said.

Ex-Im Bank had no immediate comment on the accusations by Heritage. (Additional reporting by Emily Stephenson, Andrea Shalal-Esa and Mark Felsenthal; Writing by Krista Hughes; Editing by Lisa Shumaker)