Up for Debate: Will US Export-Import Bank Charter Be Renewed?
The US Export-Import Bank may have to shut its doors if Congress fails to act by September 30 to reauthorize the 80-year-old bank’s charter.
The Obama administration has asked Congress to reauthorize Ex-Im for five years and to raise its portfolio cap by $20 billion to $160 billion from the current level of $140 billion. In the past, Congress generally extended the authority by three to five years, but in 2012 the extension was limited to just two years. That was done in a relative display of bipartisanship, with large majorities in both the Senate and House acting in May.
This time around it’s going to be tougher, with Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, telling colleagues he is opposed to reauthorization. “In many respects, it’s the face of cronyism,” he said in a statement dated April 25.
A coalition of conservative groups has been organized by Americans for Prosperity to press Congress to “do nothing” and let the charter lapse. “[The bank] unfairly hurts domestic companies and risks billions of taxpayer dollars. By paying foreign companies to buy American exports, the Export-Import Bank tilts the playing field away from mid-sized and small businesses in favor of large, politically connected corporations,” the groups said in a May 1 letter to members of Congress.
The threat to the Ex-Im Bank has created deep concern among leading advocates in the business community. Letters dated March 19 from the National Association of Manufacturers (NAM) and 15 other business groups to Hensarling, Rep. Maxine Waters, D-Calif., the committee’s ranking member, and the leaders of the Senate Banking Committee, stated: “Failure to reauthorize Ex-Im would amount to unilateral disarmament in the face of other nations’ aggressive trade finance programs… Delaying Ex-Im Bank reauthorization would hurt US manufacturers of every size and sector, threatening the export sales of thousands of US companies and the security of hundreds of thousands of American jobs that depend directly or indirectly on the Ex-Im Bank’s export financing.”
Still, as Bloomberg reports, some in the business community don’t see eye-to-eye with NAM. Delta Air Lines charges that the bank finances foreign airlines’ purchases of aircraft at Delta’s expense. Expect a “lobbying battle royale” this summer, says Bloomberg.
The uncertainty of the outcome may be costing would-be exporters already.
Speaking at the bank’s annual conference in Washington last month, Fred Hochberg, Ex-Im’s chairman and president, said Firmgreen Inc. was told in early April it was the preferred supplier for a $57-million project in the Philippines.
But Firmgreen, last year’s winner of Ex-Im’s Renewable-Energy Exporter of the Year award, ultimately lost out to a South Korean competitor that used the debate on Ex-Im’s future to argue the California company might lack financing, saying “there’s too much uncertainty there. You can’t rely on America.”
- Datamyne blog anchor Bill Armbruster writes about the resources Ex-Im offers US exporters in Where Love & Quiches Found Working Capital: US Ex-Im Bank.
Date posted: May 29, 2014