UPDATE 2-Future of U.S. export lender at risk as conservatives mount attack

Wed Jun 25, 2014 6:28pm EDT

(Adds confirmation of Ex-Im employees leaving, comment from Campbell)

By Mark Felsenthal and Krista Hughes

WASHINGTON, June 25 (Reuters) - The future of the U.S. Export-Import Bank was thrown further into doubt on Wednesday after an influential conservative lawmaker labeled the bank an example of corporate cronyism that benefits multi-nationals at the expense of taxpayers and smaller companies.

Tea Party Republicans, led by Texas Representative Jeb Hensarling, have mounted a push to shut down the bank, ahead of a Sept. 30 deadline for Ex-Im's charter to be renewed.

The bank's financing benefited "some of the largest, richest, most politically connected corporations in the world," like Boeing, General Electric, Bechtel Corp and Caterpillar and it could not continue in its current form, Hensarling said.

"If you're a politically connected bank or company that benefits from Ex-Im, no doubt you would like it to continue. After all, it's a sweetheart deal for you," Hensarling, chairman of the House of Representatives Financial Services Committee, said at a hearing to consider the bank's reauthorization.

During the 6-1/2-hour hearing, Ex-Im Chairman Fred Hochberg urged lawmakers to keep the bank open, saying small businesses - which mainly receive short-term support - would be the first to feel the pinch.

Some Republicans are pushing for a compromise that would involve reforms to the bank, but if House Republican leaders decline to bring a renewal of Ex-Im's charter to the floor for a vote, the bank could be forced to close.

Representative Kevin McCarthy, chosen last week for the No. 2 job in the House, wants Ex-Im to shut down. House Speaker John Boehner took a sterner tone on Wednesday on media reports that four officials had been suspended or removed as investigators look into charges of improper gifts and kickbacks.

"Given where the Export-Import Bank is today and given the accounts of what's gone on down there, in terms of kickbacks and other things, it's clearly time for all the members to take a serious look at this," Boehner said.

Hochberg said two of the four employees mentioned had left the bank and the reports showed "if you are doing any funny business, we are onto you."

Ex-Im Inspector General Osvaldo Gratacos said other investigations were continuing, some involving external people.

FOCUS ON BIG-TICKET LOANS

At the hearing, many lawmakers focused questions on loans to foreign buyers of big-ticket Boeing planes after an airline pilots group and Delta Air Lines complained that U.S. carriers could not get the discounted financing Ex-Im provides foreign airlines to buy U.S.-made planes.

Some suggested limits on plane finance. Hochberg said that would just drive business to Boeing competitor Airbus.

Seeking to address those concerns, Republican Representative John Campbell released a proposal to extend the bank's charter for three years, lower its lending cap by a third and put more limits on lending, especially to foreign state-owned companies.

"I was frankly frustrated that this discussion was bouncing between a full reauthorization without any changes and letting the bank go away," Campbell told Reuters, adding that he had some preliminary talks with Democrats.

"Both of those options, I think, are equally bad and so I wanted to try and show that there is a third option."

Democrats on the panel were united in support for the bank and senior member Maxine Waters said 200 Democrats had signed up to co-sponsor a bill extending the bank for seven years and raising the lending cap.

"At one time, programs like the Ex-Im bank were so apolitical that they did not even require a vote. Now policies that create thousands of jobs and increase American competitiveness are under constant attack," Waters said.

Hochberg released a report showing South Korea companies had more medium- and long-term export support than their U.S. counterparts despite a much smaller economy, while Chinese firms had three times more. China also offered more than $20 billion in subsidized loans, most tied to purchases of Chinese goods and services. (Additional reporting by Emily Stephenson, David Lawder and Susan Cornwell; Editing by Caren Bohan and Leslie Adler)