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Detroit News | Huizenga: Many reasons to be wary of the Ex-Im BankWall Street Journal | House Lawmaker Presses SEC Chief on Bond-Market Liquidity
The Financial Services Subcommittee on Monetary Policy and Trade and the Oversight and Government Reform Subcommittee on Health Care, Benefits and Administrative Rules held the second in a series of hearings on Thursday on the Export-Import Bank. At Thursday’s hearing, the subcommittees examined the Export-Import Bank’s mandates.
“The Export-Import Bank’s stated goal is to support American jobs through exports. However in my opinion, judging by the Bank’s prior financing deals, it appears to be doing quite the opposite, oftentimes," said Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI). "American taxpayers have been unwittingly propping up foreign state-owned companies in Saudi Arabia, Russia, China, Venezuela, Pakistan, India, Colombia, Mexico, Ethiopia, South Africa and others who have done nothing but, frankly, work against the best interests of American citizens.”
|CLICK HERE TO WATCH
“Since you have taken the helm of Ex-Im, 65 matters have been referred to prosecution, 31 arrest warrants, 85 indictments, 48 criminal judgments, decades of combined prison time, a quarter of billion in fines, restitution and forfeiture,” said Chairman Jeb Hensarling (R-TX).
|CLICK HERE TO WATCH|
The Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, chaired by Rep. Scott Garrett (R-NJ), held a hearing on Wednesday to review proposals designed to reduce regulatory burdens so small companies can gain access to job-creating capital.
“Since 2011, this Subcommittee has held almost one dozen hearings to explore ways to facilitate capital formation, make the U.S. capital markets more attractive to companies, and increase investment opportunities for all investors. Most notably, this Subcommittee led the charge to implement one of the most meaningful updates to our securities laws in recent memory – the JOBS Act,” said Chairman Garrett. “But more still needs to be done. Therefore, it is incumbent upon Congress to provide sensible improvements to our securities laws to help small companies and startups access the capital they need to innovate and create jobs.”
Key Takeaways From the Hearing:
Topline Quotes from Witnesses:
“The JOBS Act has been so successful in the biotech industry because it represents a perfect balance of capital formation incentives and appropriately tailored regulations. This important law allows enhanced access to investors, increasing the capital potential of a public offering, and then reduces the regulatory burden on emerging growth companies, decreasing the amount of capital diverted from R&D… The search for capital in our industry is always ongoing – it does not end at the IPO. As such, I strongly support efforts by Congress and the SEC to enhance the capital formation ecosystem and incentivize funding for the next generation of breakthrough medicines.”
– Shane Kovacs, PTC Therapeutics, Inc.
“The initial cost to register with the SEC is often in excess of $100,000. Annual costs to comply with SEC investment adviser rules are often $50,000 or more per year. SBIA supports exempting small business investors from the Investment Advisers Act. The $150 million threshold that triggers SEC registration is too low and, at a minimum, should be raised. It is illustrative that one of the authors of Dodd-Frank, former Congressman Barney Frank, recently stated that Congress should consider amending the $150 million threshold with which private equity firms must register with the SEC; while further highlighting that ‘in the crisis situation, we erred on the side of maybe being too inclusive." – Gayle G. Hughes, Merion Investment Partners, on behalf of the Small Business Investor Alliance (SBIA)
“If these bills are not passed and if the JOBS Act is not fully implemented, economic growth and job creation will continue to underperform and stagnate for years to come.” – Thomas Quaadman, Center for Capital Markets at the U.S. Chamber of Commerce
The Financial Services Subcommittee on Housing and Insurance, chaired by Rep. Blaine Luetkemeyer (R-MO), held a hearing on Wednesday to examine the impact international regulatory standards could have on the competitiveness of U.S. insurers.
Wednesday, April 29th at 10:00 A.M.- The Housing and Insurance Subcommittee will hold a hearing to examine the impact of international regulatory standards on the competitiveness of U.S. insurers. Specifically, the hearing will focus on international regulatory standards considered by the G-20, the Financial Stability Board and other international supervisory authorities.
Witnesses invited to appear:
Mr. Michael McRaith, Director, Federal Insurance Office, U.S. Department of the Treasury
Mr. Mark van der Weide, Deputy Director, Division of Banking Supervision and Regulation, Federal Reserve Board of Governors
Mr. Kevin McCarty, Commissioner, Florida Office of Insurance Regulation, on behalf of the National Association of Insurance Commissioners
The hearing will take place in room HVC-210 of the Capitol Visitor Center.
Wednesday, April 29th at 2:00 P.M.- The Capital Markets and Government Sponsored Enterprises Subcommittee will hold a hearing to review legislative proposals to enhance capital formation and reduce regulatory burdens. The list of legislative proposals can be found here.
Witnesses invited to appear:
Mr. Thomas C. Deas, Vice President and Treasurer, FMC Corporation, on behalf of the Coalition for Derivatives End-Users
Professor Theresa A. Gabaldon, Lyle T. Alverson Professor of Law, George Washington University
Ms. Gayle Hughes, Partner, Merion Investment Partners, on behalf of the Small Business Investor Alliance
Mr. Shane Kovacs, Executive Vice President, Chief Financial Officer and Head of Corporate Development, PTC Therapeutics, Inc., on behalf of the Biotechnology Industry Organization
Mr. Thomas Quaadman, Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce
The hearing will take place in room HVC-210 of the Capitol Visitor Center.
Thursday, April 30th at 1:00 P.M.- The Financial Services Committee’s Monetary Policy and Trade Subcommittee and the Oversight and Government Reform Committee’s Health Care, Benefits and Administrative Rules Subcommittee will hold a joint hearing to examine the mandates of the Export-Import Bank of the United States.
This is the second joint hearing of the subcommittees to examine the Export-Import Bank. During the April 15, 2015 hearing, the Export-Import Bank’s Inspector General admitted additional future indictments surrounding illegal employee activity might be forthcoming.
Witnesses invited to appear:
Fred Hochberg, Chairman and President, Export-Import Bank of the United States
The hearing will take place in room 2154 of the Rayburn House Office Building
Friday, May 1st at 9:15 A.M.- The Capital Markets and Government Sponsored Enterprises Subcommittee will hold an oversight hearing on the Financial Industry Regulatory Authority (FINRA).
Witnesses invited to appear:
Richard Ketchum, Chairman and CEO, FINRA
The hearing will take place in room HVC-210 of the Capitol Visitors Center.
During the first joint subcommittee hearing on April 15, 2015, the Committees learned two key things: 1. the Obama Administration has failed to meaningfully comply with the requirements passed by Congress and signed into law as part of the reauthorization of Ex-Im in 2012 and 2. the Ex-Im Inspector General mentioned that future indictments at the bank are possible. For a full recap of this hearing click here.
Financial Services Subcommittee on Monetary Policy and Trade, Chairman Bill Huizenga (R-MI)
Oversight Subcommittee on Health Care, Benefits, and Administrative Rules, Chairman Jim Jordan (R-OH)
WHERE: Oversight and Government Reform Hearing Room
2154 Rayburn House Office Building
DATE: Thursday, April 30, 2015
TIME: 1:00 p.m. EST
INVITED WITNESS LIST:
Honorable Fred P. Hochberg
Chairman and President
Export-Import Bank of the United States
The meeting is open to the public and a live video stream will be broadcast here.
|The Peculiar Uses of a Taxpayer Bank|
|A look at the Export-Import Bank’s beneficiaries suggests that sometimes it works against U.S. interests abroad.|
By Mark Pfeifle
Only in Washington can a prominent example of corporate welfare be described as a “critical element” of America’s national security. That’s exactly what former Secretary of State Madeleine Albright, former Secretary of Defense William Cohen and 10 other former federal officials claimed in a recent letter to Congress, in which they pleaded with lawmakers to renew the Export-Import Bank’s charter before it expires in June. National Security Adviser Susan Rice, speaking at last week’s Ex-Im annual conference, similarly declared that the bank “is a very important part of our diplomacy.”
Most Americans would be hard-pressed to name the Ex-Im Bank, much less identify it as crucial to U.S. national security. The bank is a New Deal-era federal agency that provides taxpayer-backed financial assistance to foreign businesses that purchase American products.
In recent years, the bank has come under fire from politicians as diverse as Barack Obama and Paul Ryan, who have rightly noted that Ex-Im’s support mainly benefits a few multinational companies. Those same companies are now working to convince Congress to keep the taxpayer cash flowing.
How does this fit into America’s national security framework? According to the letter, the bank’s economic activity drives “political stability abroad.” Put aside, if you can, the fact that Ex-Im supports less than 2% of U.S. exports, rendering it a negligible portion of America’s international economic activity. A look at Ex-Im’s beneficiary list suggests that the bank sometimes works against American interests abroad.
For decades, Ex-Im has sent American taxpayer money to companies and countries that either have no place doing business with America or actively undermine U.S. national security interests.
The most egregious example: Ex-Im has given hundreds of millions of dollars in taxpayer-backed guarantees to the state-owned Russian bank Vnesheconombank (VEB). Ex-Im only recently suspended new deals after the bank was targeted by American sanctions in the past year.
VEB has a long and sordid history. Known until 2007 as the Bank for Foreign Economic Affairs of the U.S.S.R., VEB maintains an operating agreement with Russian arms exporter Rosoboronexport “to promote exports of Russian military products and boost their competitive edge in the world market.” Rosoboronexport also handles more than 80% of Russia’s weapon exports. In this capacity, it has become a chief weapons supplier to Bashar Assad’s regime in Syria and has supplied advanced missile systems to Iran, according to reporting last year in this newspaper. VEB has said that its practices fully comply with European Union and United Nations sanctions.
Americans probably assume that Washington wouldn’t use taxpayer money to help a company that supports these regimes. Yet the bank’s records indicate that VEB received a $497 million loan guarantee in 2012 and a further $703 million in 2014. American taxpayers still haven’t received thank-you cards from President Assad and the mullahs.
Ex-Im has nearly $1.5 billion of taxpayer exposure in Russia by the bank’s own report. And its indiscriminate use of taxpayer money extends far beyond Vladimir Putin’s autocracy. Between 1997 and 2014, companies in countries such as China, Venezuela, Pakistan and others received billions of dollars in Ex-Im’s taxpayer-backed assistance.
Many of the bank’s foreign beneficiaries are also state-owned. American taxpayers are unwittingly propping up the bank accounts of foreign states, from China to Russia to a host of other countries. Thus it should also come as no surprise that the bank has a long history of assisting international firms that raise serious red flags.
Consider Pemex, Mexico’s state-owned oil company, which conceded in 2013 that it deals with “serious” levels of corruption and that it has been plagued by “interference from organized crime”—including roughly $1 billion in stolen oil over a two-year span. That hasn’t stopped it from becoming the Ex-Im Bank’s single largest debtor, owing American taxpayers some $5.6 billion at the end of the fiscal year 2014.
Corruption and graft are recurring problems for the bank. According to April 15 congressional testimony by Ex-Im’s inspector general, 47 people have been convicted of defrauding the bank in the past five years. The IG also indicated that 31 corruption and fraud investigations are ongoing. That doesn’t include the four Ex-Im employees who, according to reporting in The Wall Street Journal, were being investigated last year for allegedly accepting kickbacks and steering contracts to specific companies. One Ex-Im official last week pleaded guilty to accepting bribes.
This points to a simple conclusion. Despite the fanciful claims by Secretary Albright, Secretary Cohen and the officials who signed the recent letter, the Export-Import Bank is anything but a “critical element” of America’s national security. Congress should refuse to reauthorize the bank when its charter expires. Washington shouldn’t be spending taxpayer money on corporate welfare—especially when it goes to companies and countries that are either corrupt or are actively working to undermine America.
Mr. Pfeifle is president of Off the Record Strategies. He served as deputy national security adviser for strategic communications and global outreach at the White House, 2007-09.
In its coverage of the hearing, The Hill quoted Task Force Chairman Michael Fitzpatrick (R-PA) as saying that members will make sure "the federal government is using every tool at its disposal to deprive groups like the Islamic State, Boko Haram and other terrorist organizations of the funds they rely on to advance their warped ideology."
Members and hearing witnesses expressed concern that lifting sanctions against Iran as part of President Obama’s nuclear deal “could ease the flow of funding to terrorist groups around the world,” the Boston Herald reported.
The U.S. is ceding $11.9 billion in cash transfers to Iran as the Obama administration looks to finalize a nuclear deal with Tehran.
Juan Zarate with the Center for Strategic and International Studies testified that effectively fighting terrorists requires choking off their money supply. “Whether it is Al Qaeda, the Islamic State, or Hizballah, the reality is that terrorist groups need money to operate their networks, implement logistics, maintain territory or influence, and to plan strategically against the United States,” he said. "Money is their enabler, but it’s also their Achilles’ heel."
For more on the Task Force, be sure to watch this week’s Sunday Video Message with Task Force Co-Chairman Rep. Robert Pittenger (R-NC).Subcommittee Hears From Regulators on Regulatory Burdens
The Financial Institutions and Consumer Credit Subcommittee continued examining the detrimental effect the regulatory burden on community financial institutions has on consumers at its hearing on Thursday.
As Bloomberg reported in its coverage of the hearing, “Smaller banks have been complaining for years of the compliance costs of post-crisis regulations, particularly those implementing the Dodd-Frank Act.”
Members shared their concerns about the shrinking number of local banks and credit unions due to burdensome and duplicative regulations.
Subcommittee Chairman Randy Neugebauer (R-TX) shared that "In the 19th District of Texas, we need relationship banking. My constituents want to know their banker. The local banker wants to be flexible and find ways to help his neighbor realize their dream and reach financial independence."
Members also discussed how their constituents struggle when one-size-fits-all Washington regulations impact their hometown banks and credit unions. Rep. Andy Barr (R-KY) said consumers in his area are not able to have their needs met by their local financial institutions because they are no longer in the “business of lending,” he said, but rather the “business of paperwork and compliance.”
Overregulation has limited choices for consumers, increased costs and made it harder for Americans, especially those with low and middle incomes, to achieve financial independence, said Rep. Frank Guinta (R-NJ).
Rep. Scott Tipton (R-CO) said in his rural district community financial institutions are "about to give up" due to the unmanageable amount of regulations.MEMBER SPOTLIGHT
April 29, 2015 10:00 a.m.
Housing and Insurance Subcommittee Hearing
"The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers"
April 29, 2015 2:00 p.m.
Capital Markets and Government Sponsored Enterprise Subcommittee Hearing
"Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens"
April 30, 2015 1:00 p.m.
Committee on Financial Service's Monetary Policy and Trade Subcommittee and Committee on Oversight and Government Reform's Subcommittee on Health Care, Benefits and Administrative Rules Joint Hearing
"Examining the Export-Import Bank’s Mandates"
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The Hill | Hensarling slams Boeing CEO for refusing to testify
Financial Times | America’s Main Street banks struggle at the core
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Washington Examiner | The incredible shrinking deficit is no more
Wall Street Journal | Regional Banks Sweat Through Low-Rate ‘Torture’
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The Hill | GOP: Probe of Fed leak 'inadequate'
Real Clear Markets | Regulation In the Form of Big Bank Coercion
American Banker | Banks Overreact to Risk, and Pawnbrokers Pay the Price
Politico Pro | Former Ex-Im Bank Loan Officer Pleads Guilty To Taking Bribes
Washington Examiner | House passes bill to rein in consumer bureau
The Hill | House passes Wall Street reform tweak
Bloomberg | Fed Fails to Meet House Deadline for Names of Possible Leakers
The Hill | Rep. Hensarling’s invite to Ex-Im conference ‘lost in the mail’
Bloomberg | Regulator Seeks Community Bank Definition; Calls on Congress to Create ID Process
Wall Street Journal | Fed Fails to Comply With Lawmakers’ Request For Names in Probe
|CLICK HERE TO WATCH|
Financial Services Committee Chairman Jeb Hensarling (R-TX) made the following opening statement at today’s first hearing of the Task Force to Investigate Terrorism Financing:
When it comes to protecting our homeland, when it comes to protecting our citizens, we again are Americans first.
I want to thank the Ranking Member for working to put together this bipartisan Task Force. I want to thank you, Mr. Chairman, for your commitment to the issue. I want to thank you for your leadership in advance. I want to thank the Ranking Member Mr. Lynch as well and the Vice Chair Mr. Pittenger of North Carolina and all Members -- you are charged with an incredible responsibility here.
We know that the terrorist threat is constantly evolving, morphing, metastasizing and so are their finances. So you are each charged to ensure that the work of this Task Force is to thoroughly examine and evaluate any need to upgrade and improve our nation’s ability to starve the terrorists of the financial resources they need to carry out their evil attacks. I can think of no more somber responsibility that you have. I thank you for undertaking it and I look forward to the Task Force getting on with its work and I look forward to hearing the witnesses at this hearing.Read More
2129 Rayburn HOB
Washington, DC 20515