(Bloomberg View) -- Rex Tillerson isn’t the only administration official whose departure was announced on Tuesday. So was Scott Schloegel’s. Schloegel’s title is first vice president, vice chairman of the board, and agency head (acting) for the Export-Import Bank of the United States.
To put it more bluntly, he was the last man standing.
The Ex-Im bank hasn’t had a confirmed chairman since Fred Hochberg, who held the job during the Obama administration, leaving just before Donald Trump was sworn in as president. It doesn’t have an inspector general. There’s no deputy chief of staff. Its head of congressional affairs is serving in an “acting” capacity.
Most dire of all, only one seat of its five-member board is currently filled -- by Schloegel. Once he leaves on March 24, the board will be completely vacant. Conservatives have tried for years to shut down the Ex-Im bank, without success. Now, it appears, the Trump administration, with the help of Republican Senators Pat Toomey and Richard Shelby, is finding another way to wind it down. I’d call it benign neglect, except that it isn’t very benign.
The conservative case against the bank is that, in backing loans that allow companies abroad to pay U.S. companies for airplanes or to build refineries, it is engaging in “crony capitalism” and is “picking winners and losers.” I’ve never understood those complaints. The Ex-Im bank offers export credit financing to facilitate exports and in doing so, creates jobs. How can this possibly be bad? Besides, you’d think that an administration that claims to care about jobs (and reducing the trade deficit) would treasure an agency maniacally focused on just that. But apparently not.
Under the rules, the Ex-Im bank cannot make any deal over $10 million without the approval of a quorum of the board -- that is, three board members. But the bank hasn’t had a quorum since 2015 because Shelby, the powerful chairman of the Senate Banking Committee, refused to allow a committee vote on President Barack Obama’s nominee for a third board member.
And while the Trump administration had done a miserable job of filling executive positions inside the agency, it did send four nominees to the Senate for confirmation. Shelby and Toomey have put a hold on the nominees so they can’t come up for a vote.
Hobbling the Ex-Im bank may make Toomey and Shelby the darlings of the Heritage Foundation, but it’s doing real harm to the country. Big purchases of aircraft almost always require export credit financing; American companies simply won’t get the deal if their buyers can’t access such financing. Boeing has long been Ex-Im bank’s biggest customer. Now, however, it must turn to other countries’ export credit agencies, such as UK Export Finance in Britain.
There’s a catch, though. Britain will back Boeing orders only if they use British Rolls-Royce engines -- and not General Electric’s jet engines from the U.S. Yes, the customers get to decide which engines they want in their planes, but given the situation, there’s really one choice: Rolls-Royce. Which means more jobs for Britain, and fewer for the U.S.
GE itself, which had often needed export credit financing to seal deals in Africa and elsewhere, has been shifting all kinds of manufacturing to countries like France, Hungary and China instead of expanding in Texas and South Carolina.
Westinghouse, which is based in Toomey’s home state, Pennsylvania, is losing out on orders for nuclear power plants to China and Russia, both of which have aggressive export credit agencies. Americaribe, a construction company based in Florida, did much-praised, state-of-the-art work on a hospital in Ghana a few years ago. Now, as Ghana looks to expand the hospital, the work is more likely to go to a Chinese construction company than an American one.
There are lots of examples like this. Because of the lack of a quorum, $40 billion worth of deals are backlogged, with the potential to create several hundred thousand jobs. China, I’m told, has done more export financing in the last two years than the Ex-Im bank has done in its entire 84-year history.
Schloegel, who has been with the bank for five years, is leaving to force the issue with the administration. Once he is gone and the board has no members, “President Trump has the opportunity to appoint an acting president and an acting first vice president who can serve until he can convince Senator Toomey to lift his hold on the four nominees that are pending on the Senate floor,” Schloegel said in an email.
If the hold were lifted, the four nominees would pass in a landslide. Despite the fierce opposition the Ex-Im bank has engendered, the House and the Senate have always reauthorized it with big margins. The vast majority of members want the Ex-Im bank up and running.
“A simple Senate vote will unleash more middle-class jobs and increase U.S. exports more than any single action,” Hochberg, the former chairman, told me. “Why the U.S. wants to disarm in the trade arena is totally baffling to American exporters and workers.”
He’s right. Getting the Ex-Im bank back on track ought to be a natural priority for Trump. That it isn’t is more than baffling. It’s infuriating.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Joe Nocera is a Bloomberg View columnist. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is the co-author of "Indentured: The Inside Story of the Rebellion Against the NCAA."
To contact the author of this story: Joe Nocera at jnocera3@bloomberg.net.
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