Published April 04, 2013
The president of the U.S. Export-Import Bank on Thursday defended his agency from conservative Republicans who want to close it down, as well as against a new complaint by Delta Air Lines Inc that the bank's support for Boeing gives foreign airlines an unfair advantage.
"It is our job at Ex-Im to level the playing field. If we let our charter expire, it will amount to unilateral disarmament and nothing would please the other 59 export credit agencies around the world more," Ex-Im Bank President Fred Hochberg said at the bank's annual conference.
Hochberg has been at the bank since 2009 and was recently renominated by President Barack Obama for a second term.
A conservative Republican group called the Club for Growth, used the occasion of Ex-Im's annual meeting to urge all U.S. senators to oppose the Hochberg's "nomination until a real plan is implemented for reducing the bank's authority, with the ultimate goal of ending its charter completely."
"This vote will be included in the club's 2013 congressional scorecard. In 2008, when President Obama was a senator, he called the bank 'little more than a fund for corporate welfare.' Nothing has changed since then," the group said.
The Ex-Im Bank, which dates back to the 1930s, provides loans, loan guarantees, credit insurance and other types of financing to help Boeing and other U.S. manufacturers of all sizes to export their goods around the world.
"Despite what some of our critics say, Ex-Im Bank does not subsidize. We offer market-based loans. We are self-sustaining, our fees cover our expenses," Hochberg said.
Delta says the bank's programs put it at a disadvantage because, as a U.S. company, it cannot buy Boeing Co wide-body aircraft used for international flights on the same easy credit terms that Ex-Im Bank provides for foreign buyers.
That concern, plus the desire of some Republicans to close the depression-era government lender, led to a protracted battle last year over renewal of the bank's charter.
It was finally renewed with bipartisan support through September 2014, setting the stage for another battle next year.
"Let's be candid, there still remains a vocal minority who think there is no role for government to support export finance. None," Hochberg said.
In a lawsuit filed on Wednesday with Hawaiian Airlines and the Air Line Pilots Association, Delta said the Ex-Im Bank's loan guarantees lower the cost of capital for foreign airlines, allowing them to "recoup their investment in their new aircraft faster or reduce ticket prices on competing routes."
"Either way, unsubsidized U.S. airlines will be forced to respond by reducing their prices and reducing or altogether eliminating their capacity to serve those routes where they compete with Bank-subsidized foreign airlines."
Delta sued Ex-Im Bank in November 2011 over financing the bank provided to help Boeing sell aircraft to Air India. A judge ruled for the bank and the case remains on appeal.
In the latest case, Delta asked the U.S. District Court to "set aside" Ex-Im Bank approvals to support the sale of Boeing wide-body aircraft to airlines in the United Arab Emirates, Poland, South Korea and South America.
Delta and its co-litigants complained in their brief that Ex-Im "summarily ignored plaintiffs' comments" on the proposed transactions and performed "no meaningful economic impact analysis" on how U.S. airlines would be affected.