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Hugh Hewitt Book Club

Yes To Reauthorizing The Export-Import Bank

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I am in D.C. for two weeks on a variety of tasks on the Hill having to do with getting ready for the 2016 news cycle and presidential campaign.  Along with catching up with D.C. friends from left to right –with many of them in the studio next week–  I will be able to nag every Republican Member of the House and Senate I see on the need to re-authorize the Export Import Bank.

I am not now, nor have I ever been a lobbyist, but “Ex Im” is very much a part of the nation’s soft-power arsenal, and it helps American manufacturing enter and stay in emerging markets while assisting American companies from large ones like Boeing to very small ones compete on a level playing field with heavily subsidized foreign entities, including some from our near-peer adversaries in the world.  As a matter of national security, Ex Im should be reauthorized. (I have been writing and speaking about this for a long time —here’s a column on the subject from 2012.)

Some conservatives think Ex Im is “crony capitalism,” the all purpose term for government spending, but from Hamilton to Lincoln to Reagan, Republicans who support U.S. manufacturing, exports, and global leadership support the programs like Ex Im which make it possible.

One of my law partners, Dan Renberg, was on the Board of Ex Im from 1999-2003 and he joined me in studio Monday to review the issue and I’ll return to it often before the deadline for re-authorization of Ex Im approaches by the end of June.  In the meantime, get on the horn to your congressmen and senators and urge them to support another tool in the box needed to rebuild American leadership in ther world.

Here’s my interview with Dan Renberg:




HH: One of the guys I was in Dallas with is Dan Renberg, who is in the studio with me here in Washington, D.C. And in casual conversation, he says to me he was on the board of directors of the Export-Import Bank. And I dragged him over the studio today, because one of the things I’m here to do is to nag every Republican I find to reauthorize the Export-Import Bank. And I did not know Dan, who is the co-leader of the Arent Fox government relations department, I had no idea he did this. Dan Renberg, welcome to the Hugh Hewitt Show.

DR: Thank you so much, Hugh. I appreciate the opportunity.

HH: Well, it’s great. Now first of all, tell people your experience on the Hill and how you came to end up running Ex-Im from, I think, what, 1999-2003 you were on the board?

DR: I was on the board, yes. Thank you, Hugh. First of all, let me just say that I was not running it. We had a president and vice president and all that, but I was a member of the board of directors, appointed by the President and confirmed by the U.S. Senate. It was a wonderful opportunity to do public service. And I came there from, almost straight from the Hill.

HH: And how many years had you been on the Hill?

DR: I had been on the Hill for four and a half years as a staffer, and had the opportunity then to serve in the executive branch.

HH: And like you, like me, you worked for Fred Fielding once, with Fred Fielding.

DR: I had the, yes, yes, I worked for Fred Fielding.

HH: Well, so did I, but I always like to say with Fred Fielding. And the Fielding alum around town are a small and hearty band of people. And now, government relations at Arent Fox, this does not involve Ex-Im. You’re not on the Ex-Im board anymore.

DR: No, it’s been 12 and a half years.

HH: Yeah.

DR: All my post-employment restrictions have now passed.

HH: Okay, so I want people to know that so they know we’re not here lobbying for Ex-Im. We’re here because we know about Ex-Im. And so tell people first of all what it does.

DR: Sure. I think it’s important to say that I’m not here on behalf of Ex-Im Bank nor any specific company, either. I’m here because I do believe that it plays an important role in our government and in our economy, and think there’s been a lot of misinformation out there. So simply put, what Ex-Im Bank does, and does quite well, is it supports the export of goods and services and technologies from the United States to foreign buyers. It does so with a variety of different financing tools. All of us in our personal lives typically end up buying a little bit more when we can use a credit card instead of the cash in our wallet. Ex-Im Bank facilitates these exports of goods, services and technologies by extending credit or by working with U.S. banks to extend credit to creditworthy foreign buyers.

HH: And they’re very good at it. And I always like to say at the beginning, this is not picking winners and losers. They only pick winners. I’m sure they’ve got a couple of bad loans. I mean, they’ve been around for 70 years?

DR: Actually, 80 years.

HH: 80 years.

DR: 80 years, but 80 is the new 70.

HH: (laughing) So it’s not like a risky deal. It’s not like the Obama stimulus package. This is a fairly traditional, and until recently, uncontroversial exercise of soft power.

DR: Right. Over the 80 years, Ex-Im Bank has had a default rate on its transactions of less than 2%. And in the past year, it was one-fifth of one percent. That’s because there’s some very capable underwriters who are career public servants at Ex-Im Bank who look at the deals. And the thing that a lot of people don’t realize is, and this offends me sometimes when I hear some of the Republicans using this kind of rhetoric, saying we’re putting all the taxpayer dollars at risk. Well, we’re not. Ex-Im Bank does the same kind of trade reference checks and due diligence that you’d expect a commercial bank to do. But it takes the risk where commercial banks won’t. It’s very important for people to understand. Ex-Im Bank is a lender of last resort, an insurer of last resort. No one in their right mind would go to a U.S. government agency if they didn’t have to. It’s always quicker and easier to work with a U.S. commercial bank or an export credit insurance company than to work with the federal government. You only go to Ex-Im Bank when you absolutely have to. And there’s a lot of misinformation out there, because some people continually say that Ex-Im Bank is competing unfairly with commercial banks. But they’re only doing the deals that the banks won’t.

HH: Now Dan Renberg, explain to people a typical transaction, because again, I think it’s important for, where it got into trouble, in my view, is when Solyndra came along, and a whole bunch of money went out the door to a whole bunch of shaky deals, and it vanished, and the taxpayer money was wasted. So walk people through a typical Export-Import Bank deal.

DR: Happy to do that. The first thing I want to always tell people, or I always used to tell people when I gave speeches around the country is not a dollar leaves our shores. The first thing people need to understand, it’s not like U.S. Treasury dollars are going to a foreign buyer and we hope that they will use that money to buy from the U.S. A typical deal, let’s say it’s a loan guarantee, okay? Ex-Im Bank will partner with a U.S. commercial bank, and they will offer financing terms to a foreign buyer for a specific purchase. Maybe it’s a printing press. Maybe, in one case, I remember, it was a potato chip manufacturing machine. It was sold to an end user in Kazakhstan. There are trade references checked, due diligence on the buyer, but ultimately, what happens is the U.S. exporter sends its product, its manufactured product abroad, and when it proves to Ex-Im Bank that it has done so, this is after, of course, the transaction has been approved conditionally, Ex-Im Bank will then let the commercial bank know that it’s okay to send the money to the U.S. exporter. And Ex-Im Bank steps in as a guarantor of a loan from the commercial bank to the foreign buyer. At no time are U.S. dollars leaving our shores. It’s going exactly to who it should go to. It’s going to the U.S. exporter when they prove that they have sent the manufactured product, or in the case of services, like engineering, consulting, architect consulting, when they can show that U.S. employees went abroad, did their work and came back. That’s when they’ll get paid by the commercial bank.

HH: I’m talking with Dan Renberg, who is one of my colleagues at Arent Fox. He also has been four years a board member of the Export-Import Bank from 1999-2003. He really knows this stuff and I corralled him in Dallas this weekend when our partnership was together, and said please come explain this. Now the stakes are high, because a lot of Republicans say it’s crony capitalism. It’s very easy to say. It’s not true. And I’m telling my conservative friends it’s not true. But they’re on the warpath against it. And so some of the beneficiaries of Ex-Im have been out there saying you don’t know the down side. What are they warning people about?

DR: The down side of getting rid of Ex-Im Bank?

HH: Right.

DR: Yeah, well, the down side is that we would be literally shooting ourselves in the foot as a nation in terms of our global trade competitiveness. Every industrialized nation has an official export credit agency, or ECA. That’s what the U.S. Ex-Im Bank is, and we were one of the first, if not the first, one of the first. All of our competitors that are in major industrialized nations have them. And then developing nations have also gotten their own ECA’s. In fact, we’re being outslugged by the Koreans. I just want to, I found a statistic that just fascinates me. The Korean Export Credit Agency, they used, they gave $2 billion dollars more than Ex-Im Bank in terms of supported exports last year, $2 billion more, even though their economy is one-tenth the size of the U.S.

HH: Wow.

DR: So when you talk about punching, they’re punching above their weight. We’re punching below our weight. The dynamic right now shouldn’t be about whether or not we should shut Ex-Im’s doors. The question is what could we do to further empower the U.S. Export –Import Bank to support even more small, medium and large-sized companies. When you think about the fact that every time there’s a deal, the Chinese, the Brazilians, the Indians, the Koreans are out there. They’re offering favorable credit payment terms, and we’re not going to do that? Guess what? The U.S. is not going to be sending anything overseas anymore.

HH: And that’s going to cost American jobs. And when we come back, I’m going to talk about the political consequences of this. This is nightmarish for 2016 if we shut this down, politically speaking. But I also want to remind people that some big American manufacturers have to take into account where they can get these credits. So don’t go anywhere. Dan Renberg is coming back next segment, and I’m going to be pounding on this all week and next week. Call your Senators and your Congressmen and say look, I’m a conservative, I’m a right winger, but I believe in soft power. Support Ex-Im. It has to be reauthorized by the end of June. Now’s the time to get in the game.

— – – – –

HH: He’s one of those D.C. K Street lawyers, and he’s a good guy, even though he’s wearing a Michigan sweatshirt. If I could show you, he wore it in to taunt me. So he’s got a kid at Michigan, so we’re going to give him the pass on that. I found out this weekend at our national law firm retreat down in Dallas that Dan had been on the board of the Export-Import Bank for four years, from 1999 to 2003, knows this stuff cold. And so I have said I have been writing about this since 2012. I have been speaking about it, but I actually don’t know that much of the details. I just know it’s good for national security. So he agreed to come across the river today and spend two segments with me. Dan Renberg, American jobs, this is what I really want to get to. We want to run a campaign. Republicans, you’re talking mostly to conservatives, and your politics don’t really matter. But if Republicans want to go out there and get jobs as part of their agenda in 2016, shutting down Ex-Im is not really a good way to go about doing that. Why?

DR: I couldn’t agree more. Our nation needs to be doing more to, we can’t create real wealth just selling to ourselves. We need to recognize that there are global markets. In fact, Republicans and conservatives routinely support free trade agreements, and trade promotion authority, That’s one of our big things as a party. If you can’t offer the credit and financing terms to those foreign buyers, they’re not going to take full advantage of free trade. So I think that that’s a really, really important point to make. The Commerce Department and Labor Department have various multipliers that they use to calculate the jobs that are created by certain transactions in our economy. Ex-Im Bank in the fiscal year that ended last September 30th supported $27.5 billion dollars of U.S. exports. And using one of those multipliers from another federal agency, that supported over 164,000 jobs. Small businesses are routinely able to add new employees when they start to see their global sales take off. Ex-Im Bank gives them the courage to do that. Large companies, the Boeings, the Caterpillars, John Deere, General Electric, they’re able to not only preserve jobs, but create new jobs through their innovation. If Boeing or G.E. had to finance every single transaction themselves, they’d be tying up precious capital that they couldn’t use for innovation. We wouldn’t necessarily see something as fantastic as the Boeing Dreamliner, because they’d be using all their money to try to push 737’s out the door to Kenya and Ethiopia and other foreign flight carriers.

HH: Am I right that the CEO’s of some of these companies are warning that they’re going to have to look about going abroad if this happens?

DR: Yeah, it’s a relatively new development. I have not seen anything like it before, but senior executives at both G.E. and Boeing have been saying publicly that a shutdown of Ex-Im Bank would leave them no choice but to look to where they could manufacture and take advantage of official export credit agencies in other countries. And that, to me, is the most troubling thing. I hope conservatives, you know, Hugh, you’re more conservative than I am.

HH: Right.

DR: But at least I remember this from my political times. Republicans typically are willing to intervene in the market when there’s a market failure. Well, when everyone is doing it, that’s a market failure for our economy. And what we need to do, frankly, and a couple of the bills introduced in Congress already would do this, we need to use the Treasury Department and the OECD in Paris to bring these other countries to the table and negotiate an end to the official export credits. We only need to do it as long as everyone else is doing it and doing it two and three times more than we are. At some point, maybe two years, five years, ten years down the road, we’ll all agree not to keep doing it. And that is the conservative principled approach, I think.

HH: Yeah, it’s like playing football with ten guys on the field. And if they want to change the rules to make it a ten player league, great, but until then, you don’t play with ten because you think you’re good enough to get away with it. Let me close with this, Dan Renberg. The politics just make me crazy, because I can’t figure it out. Most Republicans are supporting, some are not. Where do the Democrats come down on this?

DR: This is a fascinating time to live. I remember when I was on the board, we were very nervous about House Democrats in particular, because they thought that Ex-Im Bank was not pro-labor enough. Now, Maxine Waters is one of the most vociferous defenders of Ex-Im Bank. Steny Hoyer goes to the floor routinely and talks about it. The Democrats and the administration are supportive of reauthorization. And I’ve got to say, it’s not all Republicans who oppose it right now. Steve Fincher of Tennessee, a Congressman, has I think 60 other Republicans on a bill that he introduced that would reform Ex-Im Bank in some very appropriate ways, and keep it open. There’s now Mark Kirk out of Illinois has introduced a bill, his own version. He’s got bipartisan support, Heidi Heitkamp, Joe Manchin, Donnelly from Indiana, so we’re seeing some movement in the Congress to try to find a solution. My hope is that the leadership in the House, the leadership in the Senate will allow something to come to the floor, let debate occur, that’s always healthy in our democracy. But at the end of the day, don’t turn out the lights on Ex-Im Bank.

HH: And don’t use clichés in part of argument. Part of this has become the crony capitalism cliché, and people are looking past the end of their nose as soft power matters. I did a story last week on the Asia infrastructure bank that China is starting. China is doing, I’m assuming China uses these credits…

DR: Oh, they’re killing us, absolutely killing us with their official export credits.

HH: Dan Renberg, great to have you, thank you for coming over and doing this segment, and I’ll check in with you next week to see if anything develops along this line, great to have you.

DR: Thank you. Go Blue.

HH: (laughing) Oh, he got that in. He has to say that because of course, he can’t say that in the postseason. I’ll be right back, America.

End of interview.


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