CI VIEW: EXIM Bank catalyst for US job growth and reform with Mnuchin/Waters duo UPDATE

WASHINGTON/WHEELING, WV (BBN) (Update on May 18, 2017 to add comments by US Treasury Secretary Steven Mnuchin) –The end of the long stalemate in Congress over the Export-Import Bank of the United States (EXIM) has unintentionally served as a catalyst to convince the CEOs of Fortune 100 giants such as General Electric Corp. (NYSE:GE), The Dow Chemical Company (NYSE: DOW), Honeywell International, INC (NYSE:HON), The Boeing Company (NYSE:BA) of the strategic need to lend their considerable resources to US small-and-medium and minority-and-veteran owned businesses to expand and compete in foreign markets.

[US House Financial Services Committee Ranking Member Maxine Waters (D-CA) speaks to Capitol Intelligence/BBN using CI Glass on President Trump naming former NJ Congressman Scott Garrett as EXIM Bank at Tax March at US Capitol, April 15, 2017]

The issue of large corporates helping US small and medium-sized businesses came after EXIM Bank opponents succeeded in blocking the nomination of new EXIM board members and thus limiting the export credit agency to making export guarantees of USD 10m or less.

President Donald Trump unblocked the impasse by nominating former New Jersey Congressman Scott Garrett as EXIM President and Chairman and former US House Financial Services Chairman and old-school Republican leader Spencer Bachus from Alabama as an EXIM board member. 

Meanwhile a highly unusual but effective alliance has been quietly forged between US Treasury Secretary Steven Mnuchin and US House Financial Services Ranking Member Maxine Waters (D-CA) to guarantee that EXIM Bank primary focus will be to serve US small-to-medium size exporters, with special attention to minority-and-veteran led businesses. 

The EXIM Bank only won re-authorization and subsequent support from President Trump after a lengthy political battle between Republican ideologues claiming EXIM is a symbol of corporate welfare while pro-business Democrats and Republicans were fighting to preserve high-paying jobs in their districts and States.

[US Export-Import Bank President designate and former US House Financial Services Subcommittee on Capital Market Chairman Scott Garrett (R-NJ) speaks to Capitol Intelligence/BBN using CI Glass at CPAC2016 at National Harbor, Prince George’s County MD.]

US Treasury Secretary Mnuchin in a previous interview said that he will judge how EXIM Bank handles loans of USD 10m to US SMEs before making a decision about opening the taps for the multi-billion dollar loans earmarked for GE, Boeing and Honeywell. The policy of favoring SMEs and minority-owned businesses is also sweet music to the ears of Congresswoman Waters who led the battle to save EXIM Bank and win the bank’s re-authorization.

[US Treasury Steven Mnuchin filmed by Capitol Intelligence/BBN using CI Glass questioned by US Senator Heidi Heitkamp (D-North Dakota) at US Senate Banking Committee. May 18, 2017]

A perfect example of big companies working with small businesses is Manchester, New Hampshire-based Boyle Energy Services & Technology, Inc which has been able to grow the company from 6 employees to 60 in a matter of years.

In an interview with Capitol Intelligence/BBN, Boyle Energy President and CEO Michael P. Boyle said his company success has been from a combination of EXIM bank financing and major contracts from US corporate giants such as now Boston-based General Electric using EXIM bank financing.

[Boyle Energy Services & Technology, Inc President and CEO Michael P. Boyle speaks to Capitol Intelligence/BBN using CI Glass at Export-Import Bank of the United States Annual Conference.  Washington, DC. April 8, 2016]

While Mr. Boyle’s company maybe a relatively small USD 25m in annual sales, he regularly meets with GE (NYSE: GE) Chief Executive Jeff Immelt and GE Vice Chairman John G. Rice.

 “What is really crazy that the Manhattan bankers who got their Wharton MBAs are absolutely clueless of how American business really works and interacts,” one SME CEO said. “They all seem to sit in their New York caves and have no knowledge that CEOs, no matter their size or location, talk to each other.”

The opposite of the typical Manhattan banker is Charles F. Withee, President of the Amesbury, Massachusetts-based The Provident Bank, whose work with Boyle earned his bank the EXIM Bank 2017 Community Lender of the Year.

 

[The Provident Bank President Charles F. Withee speaks to Capitol Intelligence/BBN using CI Glass with client Boyle Energy Services & Technology, Inc. CEO Michael P. Boyle at US EXIM Bank Annual Conference in DC April 4, 2017.]

A Republican Congressman initially opposed to the re-authorization of EXIM Bank, Rep. David Mckinley of Wheeling, West Virginia, was convinced to change his stance against EXIM after Volvo truck dealer and OEM parts distributor Wheeling Truck Center, Inc. said the end of EXIM Bank would destroy his massive export business and force significant lay-offs in area coming through a patchy economic recovery.

Wheeling Truck Center, Inc Chief Operating Officer and owner Chad H. Remp told Capitol Intelligence/BBN in an interview that EXIM Bank was instrumental of making exports 50% of the company’s business in a little over five years and that the company exports parts to over 105 countries.

Remp said that the export boom for Wheeling Trucks Center derived from having “American trucks in markets where they were not supposed to be” such as Latin America, Africa, Eastern Europe and the Middle East.

[Wheeling Truck Center, Inc part-owner and COO Chad H. Remp speaks to Capitol Intelligence using CI Glass on importance of US Export-Import Bank for company’s export business in Wheeling, West Virginia. January 11, 2017]

Remp explained that foreign countries, including Europe, would purchase used American made trucks over European vehicles for their comfort and durability over long-haul routes.

Executives of Mack Trucks, a US subsidiary of Sweden’s AB Volvo with manufacturing plants in Hagerstown, Maryland and Macungie, Pa, attended the 2016 EXIM annual conference to push ahead with outstanding client orders in politically strategic markets in the Middle East and Africa.

As one of the last remain US-based truck manufacturers, Mack faces increasing pressure from its competitors who produce in Mexico and abroad and relies on EXIM Bank export financing to sell to foreign markets, especially those in the  Middle East and Africa that continue to value American made goods over those produced anywhere else.

EXIM Bank, under the leadership of President Garrett and board member Spencer Bachus, is looking to significantly increase EXIM Bank’s export guarantees to US small-to-medium size businesses by making large loans to GE, Honeywell and Boeing conditional on them boosting US SMEs exports to foreign markets.

[GE Vice Chairman John G. Rice filmed by Capitol Intelligence/CI MENA using CI Glass answering question on GE opening its M&A network to US small-to-medium businesses at IMF World Bank Spring Meetings in Washington, DC.]

While this year’s EXIM Bank Annual meeting was marked by the total absence of Fortune 100 CEOs and the highly questionable decision to name Hillary Clinton close confidante Virginia Governor Terry McAulliffe as the keynote speaker at EXIM Bank 2017 Annual Conference

The Carlyle Group Co-Founder and Co-CEO David Rubenstein who usually moderates a high level EXIM Bank conference panel of US Fortune 100 CEOs such as Dow Chemical Company Chairman and CEO Andrew Liveris, Honeywell International CEO Dave Cote and Xerox (NYSE: XRX) CEO Ursula Burns inexplicably pulled out of moderating a panel with Governor McAulliffe.

The presence of McAuliffe, who is currently under investigation by the FBI and the US Justice Department for illicit campaign contributions related to his time at the Clinton Global Initiative, raised eyebrows among the attendees on why EXIM Bank would give such a controversial  Democrat such a prominent speaking role under a GOP presidency and Congress.

“It is almost like (former EXIM Bank Fred) Hochberg wanted to sabotage EXIM Bank and make Trump close it down,” said one of the few US and non-European bankers (Credit Agricole, HSBS, BBVA, Santander etc] attending the conference.  “This year’s conference is so bad that I am worried I will be laid-off if I come back with the three days of business development excuse.”

[Carlyle Group co-founder David Rubenstein and Honeywell CEO Dave Cote filmed by Capitol Intelligence/BBN using CI Glass at Export-Import Bank of the United States Annual Conference. Omni Hotel & Resorts. Washington, DC. April 8, 2016]

The new alliance between Mnuchin and Waters — who have common connections from Mnuchin’s time as a film financier in Hollywood — is destined to radically change the dynamics of EXIM Bank.  Mnuchin and the Trump White House is determined to transform EXIM Bank that is seen as  a sleepy institution known to a few —  into an organization that is run as a for-profit private sector company and not a retirement home for failed bankers.

In fact, EXIM President Garrett and board member Spencer Bachus have much work to do clearing out EXIM Bank deadwood who were part of the Hillary Clinton cabal during the presidency of Barack Obama. It is understood that a number of senior EXIM Bank executives are target of probes by the EXIM Inspector General’s Office and the US House of Representatives Oversight and Government Reform Committee (OGR).

[The Dow Chemical Company CEO Andrew N. Liveris speaks to Capitol Intelligence/BBN using CI Glass ahead of Time Fortune Global Forum meeting Pope Francis in Rome. December 2, 2016]

But US small-and-medium size businesses have become the biggest supporters of the new Trump presidency and the administration’s focus on small businesses rather than the multi-billion Davos elite CEOs who have enough cash to weather any financial story or regulatory uncertainty.

By PK Semler in Washington, DC and Wheeling, West Virginia. For more information please call 202-549-3399 or email: pks@capitolintelgroup.com

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