Fred Hochberg was appointed to run the Export-Import Bank in 2009. In an interview with Globe Correspondent Jack Newsham, Hochberg described the role of Export-Import Bank, Ex-Im for short, and addressed criticisms of the federal agency.
For starters, what does the Ex-Im Bank do?
We've been around for 80 years. When we were created during the Depression, FDR's realization was, if we're going to put more people back to work, exports are going to be a key part of that. That's still true today.
Ex-Im does two things. Commercial banks are reluctant to make loans to people, particularly small businesses, so we fill a gap. Second, now that there are 59 other export credit agencies [in the world], we level the playing field.
Who does Ex-Im work with, and what sort of things does it offer to them?
We work with a lot of small businesses. A good example is a Massachusetts company called Parlee Cycles. It does $4 million in annual sales, and $1.2 million of its sales are exports. In their case, we provide credit insurance, so if your customer doesn't pay, we pay and collect [from the customer].
That's just one of the three major services we provide. The second is working capital. If you need to borrow money to buy the raw materials to prepare an order, we will provide up to 90 percent of that. When banks see a lot of sales overseas, they're reluctant to give you a working capital loan because they're not as sure that those invoices will get paid. That's why we offer it.
The last piece is buyer financing. A good example is satellites. They're expensive. They're risky. And we in the United States compete intensely with the French, the other major satellite providers. We make sure buyers get long-term, 12-year financing so they can buy from the United States.
The Ex-Im Bank says it doesn't compete with the private sector, but your bank returns a profit to the Treasury. How is it that the private sector doesn't jump in and chase these profits as well?
First of all, they do. Ninety-eight percent of exports are done by the private sector. But small business exporters are always going to have a hard time, and there's always going to be product categories that require long-term financing.
Ex-Im says that 90 percent of firms it works with are small businesses. But critics note that if you look at the sheer dollar figures, it's big companies that benefit. What do you say there?
First, when you look at the exports we support in terms of dollars, small businesses are about 20 percent of that. Second, that [argument] ignores the supply chain. At Lockheed, 60 to 70 percent of the value of their product is the supply chain. A large portion of the supply chain is small businesses. Sometimes people call those invisible exporters.
Another critique is a lot of Ex-Im beneficiaries are fossil fuel companies, which doesn't line up with the government's effort to cut carbon emissions. Have you ever considered stricter rules for oil, gas, and coal companies?
We have a full engineering and environmental department that reviews the environmental impact of every project we do. I'm also proud of our renewable record. Since 2009, we have supported $1.8 billion of renewable exports. That's close to 20 times what it was under the previous administration, and I would like to do more.
But what really drives us at the end of the day is the US jobs. We don't play favorites, as long as the job is supported here, there's a reasonable assurance of repayment, and it meets environmental standards.
Why do you think Ex-Im is seeing so much opposition now within Congress?
I think we're having a larger debate in our country about the role of government.
Any parting thoughts?
What gets lost in this whole debate is that we're not acting in a little bubble all by ourselves. We've got intense competition globally. We've got country after country that's trying to reboot their economies through exports, and US companies face the most intense competition they probably have ever faced.