On July 1, the day after the Export-Import Bank’s charter expired, senators Rubio, Sasse, Lee, Cruz, Toomey and Paul sent a letter to Ex-Im chairman Fred Hochberg asking about his plans for the “orderly liquidation” of the bank, as called for by law. The letter requested information about the status of existing loans, a timeline for liquidation, and listings of the employees who would be necessary for the liquidation and those who would not.
Hochberg’s response came a week later. Once you sort through the confusing rhetoric, it is clear that he lacks any semblance of commitment to undertaking an orderly liquidation. In fact, he tries to justify his lack of a plan as within the broad discretion granted to him by the bank’s charter, even claiming that there exists uncertainty about the legal definition of the term.
These excuses are insufficient. It is obvious that Hochberg is dragging his feet in the hope that the charter will be reauthorized. But that’s no excuse for ignoring his legal responsibilities.
In his letter to the senators, Hochberg writes, “The bank has been assessing its options for determining the optimal path for an orderly restructuring.” It seems to me that Hochberg should have undertaken such an assessment before expiration of the charter. It is not as if he was caught by surprise. The Congressional Research Service has published at least two reports in the past two years addressing the liquidation issue precisely because expiration of the charter was a real possibility.
Hochberg also notes that the bank still must administer its portfolio of existing loans, and that his focus must remain “on making sure that that the Bank’s staff and the thousands of exporters that we are currently supporting understand the operating limits that apply after June 30.” However, there’s no reason that the bank can’t both inform exporters that the charter has expired and proceed to an orderly liquidation.
There is no dispute that the loans and guarantees extended before the charter expired must be honored. But it doesn’t follow that the portfolio must be administered by Ex-Im.
In their July 1 letter, the senators cited the opinion of the comptroller general that “payment of obligations incurred prior to the termination date is usually made by a successor agency, or by another agency pursuant to an Economy Act, 31 U.S.C. Sec. 1535, agreement entered into prior to the termination date.” Hence, they asked, “Which agency will be deemed your successor agency and, additionally, would like the estimated payments of obligations incurred.”
To this Hochberg responded that the transfer of the bank’s functions must first be approved by Congress. That’s good to know, and I assume that if Ex-Im doesn’t get reauthorized through the highway bill, someone will soon draft a bill requesting the transfer of Ex-Im assets and obligations. The Department Of Treasury would be a logical candidate if the portfolio is to remain under government purview.
But with arrogance to spare, Hochberg goes on to say that a transfer is a terrible idea because no one in the federal government has his and his staff’s level of expertise, nor is anyone else “equipped to simply take over the Bank’s portfolio of loans, guarantees, and insurance policies.”
I doubt that’s the case. But there is an even better alternative: Congress should auction off the bank’s portfolio to the private sector. There is obviously more expertise among private financiers than federal bureaucrats. After all, 98 percent of exports are financed without any help from the government. Problem solved.