Sen. Elizabeth Warren raised concerns Tuesday that negotiations over new trade agreements could be used as a backdoor way to water down financial regulations.
Speaking at a Senate confirmation hearing for Export-Import Bank President Fred Hochberg, Warren (D-Mass.) said there are “troubling indications” that negotiations over trade deals with Asia and Europe could be seen as an opportunity for banks to quietly weaken oversight of the financial services industry.
Warren didn’t detail which rules could be weakened through trade deals, but some consumer advocates have warned they could provide new avenues for corporations to appeal regulations at home and abroad and have questioned whether trade agreements could limit the ability of countries to ban certain financial transactions or instruments.
Striking new trade deals enjoys bipartisan support in Congress. Last week, lawmakers praised the president’s nomination of Michael Froman to be the next United States Trade Representative as a sign of renewed focus on trade during the president’s remaining years in office.
Hochberg told Warren that the Export-Import Bank, which provides financing and loan guarantees for U.S. companies that want to export goods, is not involved in the negotiation of the trade agreements.
“We’re really about implementation at the Export-Import Bank, so in terms of trade policy, that really is somewhat outside of our lane,” he said.
Warren asked Hochberg to “do what you can” to make sure the agreements do not weaken financial regulations.
Hochberg said the Export-Import Bank is working closely with private banks to secure financing for businesses that want to export.
“We have probably some of the strongest banks in the world right now because of the kinds of reserves that have been put in and the fact that they have built up their balance sheets,” Hochberg said. “A stronger banking system is far better for the Export-Import Bank.”
Hochberg, who has led the bank since 2009, was nominated by President Barack Obama in March to continue as president and chairman.
At the hearing Tuesday, he touted the work the bank has done to help boost exports and make exporting easier for small businesses and their lenders, including a joint effort between the bank, Small Business Administration and the Commerce Department to streamline the export process for small firms.
“We have done more for small business in the past four years than the previous eight years combined,” Hochberg said.
Senators praised his leadership of the bank during the financial crisis, when it helped secure financing for exporters when credit was difficult to obtain from private lenders.
Banking Committee Chairman Tim Johnson (D-S.D.) said Hochberg’s continued leadership is crucial while the economy is still recovering. He urged the panel to move “expeditiously” on the nomination, which is supported by labor and business groups, including the U.S. Chamber of Commerce and National Association of Manufacturers.
“If we do not again confirm Mr. Hochberg before July 20, we run the risk of leaving the bank without a quorum to act on many of the transactions before it, which will hurt American workers and exporters,” Johnson said.
Congress reauthorized funding for the bank last year through September 2014, despite efforts to block the measure by the conservative Club for Growth. The group issued a statement last month urging Minority Leader Mitch McConnell to block Hochberg’s nomination.
“The Export-Import Bank is a slush fund for market-distorting subsidies that pick winners and losers in the private sector,” Club for Growth President Chris Chocola said.