Toomey Opposes Reta Jo Lewis for EXIM President
“Ms. Lewis will not protect the U.S. taxpayers from EXIM’s inherently risky transactions”
Washington, D.C. – U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) today spoke on the Senate floor in opposition to the nomination of Reta Jo Lewis to serve as President and Chair of the Export-Import Bank of the United States (EXIM).
Ranking Member Toomey’s remarks, as prepared for delivery:
Mr. President, I rise today to discuss the nomination of Reta Jo Lewis to serve as President and Chair of the Export-Import Bank of the United States.
I continue to remain deeply skeptical of EXIM and its role in the global economy. EXIM claims that it only takes risks that private lenders are unable or unwilling to take. We should stop right there and ask ourselves: if private lenders are unwilling or unable to take a risk, why should taxpayers be forced to take that risk?
Yet at the same time, EXIM also claims it only makes safe bets. Mr. President, it's impossible to do both.
EXIM can't only take transactions so risky that no one else will do them, and at the same time only be doing safe transactions. EXIM wins business by systematically underpricing risk.
That's why borrowers go to EXIM, instead of any number of private lenders that will not offer deals on the same terms as EXIM. That’s why our largest banks go to EXIM for loan guarantees.
The EXIM terms are too good to be true – at least in the private sector. That is evident by the transactions EXIM approves.
In 2021, EXIM financed a deal guaranteeing an $82 million loan from JP Morgan to Qantas for the purpose of buying jet engines from General Electric. JP Morgan is the largest bank in America. Qantas is the largest airline in Australia. And GE is one of the largest industrial companies in the world.
Why do these companies need the American taxpayers to subsidize their deal? The obvious answer is they don’t. These are some of the biggest, most sophisticated companies in the world with full access to the capital markets.
To claim that EXIM is needed to achieve the goals of the bank defies the facts. The vast majority of American exports get done without EXIM support.
We’ve reviewed annual export data from 2007 through 2020. In that period, the highest percent of U.S. exports using EXIM financing was in 2012 and it was only 2.3 percent. And that was when EXIM had everything going for it. It was fully operational, had a quorum on its board, and had not reached its lending limit.
The reality is we’re the world’s second largest exporter of goods behind only China. We lead the world in value added exports. And we do it almost entirely without EXIM financing.
Shockingly, EXIM has been tasked by the Biden administration with developing a new Domestic Financing Program to expand the reach of the bank. The proposed Domestic Financing Program would support creating or expanding domestic manufacturing businesses and infrastructure projects as long as there is the expectation that some arbitrary portion of goods produced will be exported. This can include indirect exports. That is, an EXIM financed manufacturer doesn’t have to export a thing, so long as its customers do.
This is mission creep at its finest. Such a program subverts Congressional intent by straining the interpretation of EXIM’s charter to such an extent as to make it meaningless.
There is no reason that EXIM should be providing domestic financing – none. We live in a highly developed market economy in which promising businesses have access to capital on competitive terms.
Just like all of EXIM’s other programs – maybe even more so – EXIM will only win domestic financing business if it finances bad deals that the private sector refuses or it underprices the risk associated with the deal.
Turning to our nominee, I am concerned that Ms. Lewis will not protect the U.S. taxpayers from EXIM’s inherently risky transactions. She supports the Biden administration’s deeply flawed request to double EXIM’s statutory default rate from 2 percent to 4 percent.
Since 2018, the default rate has tripled to 1.4% and may soon breach its cap. Congress has laid out a clear corrective measure in the event the default rate cap is breached – and that is – to freeze EXIM’s book of business.
I also have no reason to believe that Ms. Lewis will object to EXIM’s unacceptable practice of providing taxpayer-financed subsidies to some of the world’s largest and most well-capitalized companies. I asked Ms. Lewis in a question for the record to commit to ensuring that large corporations having access to private capital do not turn to EXIM financing without first exhausting all efforts to obtain credit elsewhere. Unfortunately, her response failed to make this sensible commitment.
Finally, I’m concerned about her suitability to serve in such an important position at EXIM. While Ms. Lewis has some experience in international policy, she lacks the financial background that should be a prerequisite for serving as the president of a bank. Without such a background, she will likely have to rely heavily on EXIM’s staff.
And while I have not had the opportunity to ask Ms. Lewis about her thoughts on the proposed Domestic Financing Program, I am fairly confident she will support any proposal championed by this Administration.
The nomination process has not alleviated my concerns. For all of these reasons, I cannot support her nomination and I encourage my colleagues to vote against Ms. Lewis.
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