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What Trump’s New Treasury Secretary Could Mean for Small Business

Key Speakers At The Bloomberg Breakaway SummitKey Speakers At The Bloomberg Breakaway Summit
Fred Hochberg, chairman and president of the Export-Import Bank of U.S.Bloomberg Bloomberg via Getty Images

President-elect Donald Trump is slated to make thousands of political appointments in the coming months.

Among them will be a new head of the Export Import Bank. The 82-year-old bank, which provides credit and loan support to U.S. exporters, has been in a fight for its life with legislators since 2012.

Since 2009, it has been headed by Fred P. Hochberg. Hochberg, the son of entrepreneur Lillian Vernon and a former acting head of the Small Business Administration, says 90% of the bank’s financing activity has been directed toward helping small businesses sell to foreign markets. It does that through various products and services, such as accounts receivable insurance for U.S. exporters and loans to overseas buyers.

Yet the bank has drawn the ire of Representative Jeb Hensarling (R, Texas), currently the chairman of the powerful House Financial Services Committee, who is rumored to be on the shortlist for Secretary of the Treasury. Hensarling and other prominent Republicans object to the bank’s support of big companies such as Boeing and Caterpillar. They claim the billions of dollars worth of loan guarantees such companies have received from the bank to support overseas trade are an example of “corporate welfare” and “crony capitalism”.


In July of 2014, critics in the Senate engineered the shutdown of the bank by failing to renew its charter. Although it reopened six months later, as part of a spending bill that only authorizes the bank to stay open until 2019, legislators have also blocked the nomination of three members to its board. Without those members, it can’t make transactions over $10 million.

Fortune spoke with Hochberg on Thursday about the fate of the bank under the new administration.

This interview has been edited for grammar and clarity.

How will Donald Trump’s win affect the Ex-Im Bank?

Hochberg: It’s a little early to tell. The landing team that will do the transition has not come in yet. We have a transition document in draft form, that our entire management team met earlier to make sure was clear and comprehensive. One thing that President-elect Trump has talked about is leveling the playing field with China and other countries we compete with. That is the core mission of what the Ex-Im Bank does.

Jeb Hensarling is rumored to be up for consideration for Treasury Secretary. He’s been one of the most vocal opponents of the bank. How would that affect the bank’s prospects?

Hochberg: This is not really a Democrat or Republican issue. We had a vocal minority that held up the reauthorization. We had overwhelmingly bipartisan support of the bill [to reauthorize the bank] in Congress last December. The U.S. will need more than sanctions as part of our trade policy. If we want to export, and President-elect Trump has mentioned having more manufacturing jobs in the U.S., the key to be being competitive globally is an export import bank. In the previous Congress Spencer Bachus (R, Alabama) was a tough chairman of House Financial Services Committee, but he also believed the bank had a role to play. Jeb Hensarling and I have talked, and he does not believe in the Export Import Bank. We have a number of requirements that comport with his position in our reauthorization, such as requiring more small business funding. It is a compromise between those who want a full-throated Export Import Bank and those who want something that is a little more constrained.

Lacking a board quorum, Ex-Im Bank hasn’t been able to conduct transactions of more than $10 million for more than a year. How has that affected the bank?

Hochberg: [There is a measure] in the appropriations bill before the Senate Banking Committee, to relax the quorum and define it simply as how many are on the board at one time. It was approved in committee in both the House and Senate by a voice vote. That would at least for now resolve the issue and we could go back to being fully supportive of transactions, regardless of size. We now have over 30 transactions [worth] north of $20 billion that are underwritten, on which we’ve done the due diligence. They are stacked up like planes at Washington National Airport. Once we get these deals to the board, we can make sure we don’t lose them to overseas competitors.

Related: U.S. Export-Import Bank Still in ‘Existential Fight for Its Life’

There are approximately 85 banks comparable to Ex-Im supporting business in other countries, what would the impact of permanently shuttering Ex-Im be on smaller U.S. businesses?

Hochberg: Two small businesses recently told me they would reluctantly move offshore themselves. They said they can’t let their businesses go sideways, and in order to compete globally, they rely on the Export Import Bank for financing. It would have a very big impact on small businesses. It may not be popular to look at that. Critics argue that the big, rich companies will be just fine. The only reason that companies come to us is when they can’t [get export finance support] without us. If they could, why would they come to the U.S. government? I am optimistic [the bank will not be shut down], and have no reason to think otherwise at this time.

An earlier version of this story referred to Jeb Hensarling as a senator. He is a representative.