By Nick Timiraos 

President-elect Donald Trump's jawboning of executives to keep jobs in the U.S. is putting free-market conservatives in an awkward spot after they fought the Obama administration on other government intervention in business.

Now, the fate of an agency that conservatives have fought to close over the past year because they say it is an example of the government picking winners and losers -- the U.S. Export-Import Bank -- will rest in Mr. Trump's hands.

Ex-Im Bank supporters are already using Mr. Trump's early moves to build their case. The president-elect's emerging industrial policy -- seen last week when he touted Carrier Corp.'s agreement to keep 800 manufacturing jobs in Indiana in exchange for some tax credits -- would appear at odds with conservative opposition that has weakened the bank over the past year, amid charges of "crony capitalism."

Critics of the Ex-Im Bank, which finances exports of U.S.-based companies, include House Speaker Paul Ryan (R., Wis.) and former Rep. Jim Jordan (R., Ohio), who was leader of the House Freedom Caucus, a group of conservative lawmakers. Both men have applauded Mr. Trump's push to keep Carrier jobs in Indiana.

The Ex-Im Bank's supporters, which include President Barack Obama, say the bank helps U.S. manufacturers compete on level footing with foreign companies that receive similar support from export-credit agencies in their home countries.

The Ex-Im Bank charter expired in July 2015. Over the objections of GOP leaders, it was reauthorized last December, ending a five-month shutdown. The bank is still operating at less than full strength because Sen. Richard Shelby (R., Ala.), chairman of the Senate Banking Committee, has refused to allow confirmation votes for vacant board seats, depriving the bank of the quorum needed to approve financing of more than $10 million.

Congress this week declined to pass a waiver for the bank to approve larger deals. So whether the bank is fully restored is likely not to happen until the Trump administration decides how to proceed.

"President-elect Trump is keenly focused on manufacturing jobs. That's one of the main things we do," Fred Hochberg, chairman of the Export-Import Bank, said in an interview. Mr. Hochberg said the bank has around $25 billion in loan applications in the pipeline and that six or seven export deals are ready to be approved by the bank once its board is allowed to resume full operations.

With the remaining two currently filled board seats becoming vacant after the presidential inauguration next month, Mr. Trump "can shape this agency to meet the needs of his administration," said Mr. Hochberg, an Obama appointee who has headed the bank since 2009. It isn't clear whether Mr. Trump will stick with Mr. Hochberg.

Other bank backers say restoring the Ex-Im Bank would allow Mr. Trump to do much more to promote manufacturing on U.S. soil. "We've lost far more jobs to the Ex-Im Bank being shut down" than those saved by the Carrier agreement, said Sen. Lindsey Graham (R., S.C.).

Mr. Trump hasn't taken a clear stand on the bank. He said last year that he didn't believe it was necessary, but he told a Seattle radio station in May that executives had told him they were at a disadvantage without it. "Everybody wants me to reject it. The standard conservative thought is to reject it," he said, adding he would "take a position in the very near future."

Vice President-elect Mike Pence, as an Indiana congressman, voted in favor of reauthorizing the bank's charter in 2012. Wilbur Ross Jr., Mr. Trump's nominee for Commerce secretary, and Peter Navarro, a top economic adviser, declined to comment.

Other potential rifts loom between GOP lawmakers' stated mission to limit the reach of government and Mr. Trump's more-freewheeling brand of economic nationalism. Over the past eight years, conservative lawmakers have resisted big increases in infrastructure spending, requirements that contractors buy American steel and iron for those projects and import tariffs on goods sold by U.S. companies that have moved jobs overseas. Those are all policies about which Mr. Trump has spoken favorably.

Some conservatives who have long been critical of the Ex-Im Bank said they were disappointed by Mr. Trump's ad hoc approach to state support in the Carrier deal last week, when Indiana officials agreed to give Carrier's parent United Technologies Corp. $7 million in tax breaks over 10 years.

"The Carrier one is stunning. It is government-granted privilege," said Veronique de Rugy, a conservative economist at the Mercatus Center at George Mason University.

Despite conservative opposition to the Ex-Im Bank over the past two years, the GOP reaction to the Carrier announcement shows "people who thought the Republicans would stop [Trump] are going to be thoroughly disappointed," Ms. de Rugy said.

For the year ended September, lending backed by Ex-Im fell 60% from a year earlier and 76% over the past two years, amid the congressional standoffs. The bank said the $5 billion in financing extended last year supported 52,000 jobs, the lowest since 1971. It sent $284 million to the U.S. Treasury earned in interest in fees, down from $432 million in the previous year.

Meanwhile, General Electric Co. last year said it would begin increasing hiring overseas because of the inability to submit competitive bids, which often require an export-credit agency to sponsor sales of industrial equipment in developing countries.

"If international customers of tractors, turbines, airplanes or satellites can't get financing from the United States, they'll simply take their business elsewhere to one of the dozens of other countries with similar export-credit assistance," said aircraft-maker Boeing's Chief Executive Dennis Muilenburg in remarks to the Illinois Manufacturers' Association last week.

Boeing, which faces stiff competition from state-backed companies abroad, has been the Ex-Im Bank's largest client in recent years.

--Kristina Peterson contributed to this article.

Write to Nick Timiraos at nick.timiraos@wsj.com

 

(END) Dow Jones Newswires

December 08, 2016 15:28 ET (20:28 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
General Electric (NYSE:GE)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more General Electric Charts.
General Electric (NYSE:GE)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more General Electric Charts.