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U.S. export lender in jeopardy as Republicans pull support

By Susan Cornwell and David Lawder

WASHINGTON (Reuters) - A push to save the United States' export credit agency struck a new hurdle on Tuesday when Congress's top Republican refused to throw his support behind the Export-Import Bank after news that bank staff were under investigation for graft.

The bank's charter must be renewed by Sept. 30 for it to continue operating but the allegations of fraud have added to long-running criticism of handouts to big business and meddling by the government in the private sector.

"We are going to continue to work with our members" on whether the bank's role should be taken over by the private sector, House Speaker John Boehner said, sidestepping a question about whether he personally backed reauthorization.

Supporters of Ex-Im in the pro-business wing of the Republican Party were already on the defensive after their No.2 in the House of Representatives, Kevin McCarthy, spoke out unexpectedly against the bank on Sunday.

Many Tea Party Republicans view the bank as an example of "crony capitalism." One of Ex-Im's most vocal critics is Jeb Hensarling, chairman of the House committee with oversight of the bank. But until McCarthy's statement, the business community thought there was a good chance of renewal because establishment Republicans, including leadership figures such as Boehner, had been supportive in the past.

Renewal of the bank's charter would require approval by both Democratic-led Senate and the Republican-dominated House.

Exports at companies such as Boeing Co, General Electric Co and Caterpillar Inc could take a big hit if Ex-Im's charter is not renewed, and Boeing said such a decision could affect 1.5 million jobs. Medium- and large-sized companies accounted for 81 percent of $27.3 billion of loans and other authorizations last year.

Amid fierce lobbying by both sides, House Democrats said they plan to introduce a bill which would extend Ex-Im's charter until 2021 and lift its lending cap to $175 billion. Senator Joe Manchin is working on a reauthorization bill in the Senate too.

During a closed-door meeting of House Democrats on Tuesday, Washington state Representative Denny Heck urged fellow Democrats to sign up as co-sponsors of the bill, according to lawmakers at the meeting.

Representative Anna Eshoo of California expects close to 100 percent of Democrats will support renewing the bank's charter.

But the Democrats’ status as the minority in the House will make it difficult, if not impossible, to advance the legislation to a floor vote without the help of Republican leaders.

DEMOCRATS SEEK CAUSE WITH "PRO-BUSINESS" REPUBLICANS

Business groups, the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) are focusing their considerable lobbying powers on convincing House leaders to allow a vote.

Senate Majority Leader Harry Reid said he intended for the chamber to take a vote on the bank before its charter expires Sept. 30, although he added that the onus for action was on House Republicans.

A Senate Democratic leadership aide said the threat to the bank in the House appeared “real and acute” and many senators were unlikely to want to vote before knowing what would happen in the other chamber.

Republicans with ties to big business have been reeling since former House majority leader Eric Cantor lost a primary to Tea Party insurgent Dave Brat on June 10.

Lobbying actions by the Chamber and NAM include 350 Hill meetings and one-on-one visits to every senator.

They also stressed the importance of Ex-Im and noted Ex-Im equivalents in countries such as Germany, Brazil and China provided as much as seven times the level of support to their exporters than Ex-Im provided to U.S. exporters.

The House Financial Services Committee will hold a hearing into the bank on Wednesday where Hensarling is expected to question Ex-Im Chairman Fred Hochberg over a report that four officials had been suspended or removed as investigators look into charges of improper gifts and kickbacks.

The White House said Ex-Im is working with its internal inspector general on an investigation. Spokesman Josh Earnest said President Barack Obama had "zero tolerance" for fraud, but supports reauthorizing the bank because it contributes to the economy.

Treasury Secretary Jack Lew told lawmakers that the bank was needed to provide U.S. companies with "a level playing field."

The Heritage Foundation said a review of Ex-Im reports to Congress showed 74 cases since April 2009 involving the dismissal or discipline of an employee, or an offer of finance being rescinded. Dozens of fraud cases involving Ex-Im beneficiaries had also been referred to the Department of Justice for prosecution.

Ex-Im Bank had no immediate comment on the accusations by Heritage.

(Additional reporting by Emily Stephenson, Andrea Shalal-Esa and Mark Felsenthal; Writing by Krista Hughes; Editing by Lisa Shumaker)

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