High-ranking Republicans looking to kill the Export-Import Bank of the United States have argued that it doles out a form of corporate welfare — but, as part of a deal proposed by lawmakers to keep the federal government running past they end of the month, they’ve decided to let it keep doing so, at least until the middle of next year.
The decision to extend the charter of the bank, which provides reduced-cost loans for the purchase of American goods by overseas buyers, is not the result of a change in heart by the members of the House Republican leadership, who still say they want the bank dead. It is simply recognition that shutting the bank is controversial and likely to produce a legislative fight at a time when Congress is anxious to get out of town in advance of the November mid-term elections.
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House Speaker John Boehner late Tuesday announced that the bank’s principal antagonist, House Financial Services Committee Chair Jeb Hensarling (R-TX), had agreed to back a six-month extension that will leave the bank in operation until the end of June 2015.
Another key Republican, House Majority Leader Kevin McCarthy (R-CA), has also bought in to the GOP criticism of the Ex-Im Bank. That argument holds that, by providing low-cost loans to the buyers of U.S. products and lending working capital to U.S. companies doing business overseas, the bank essentially offers a government subsidy to the firms it assists. In doing so, it takes away business from lenders who would otherwise be willing to offer credit to buyers on the open market.
Proponents of the bank say that there are two problems with this argument. First, they point out, most countries in the world have their own version of Ex-Im that offers trade financing to foreign buyers looking to buy their companies’ products. Doing away with it, they say, would tilt the international playing field against U.S. exporters.
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Second, they claim, it is wrong to say that the free market would pick up the slack for the businesses that use the bank’s services. While some deals, like the financing of Boeing jumbo jets, might be able to win the interest of a syndicate of large lenders, other deals the bank finances would not. Many of its clients do work in developing countries where conventional U.S. financial institutions have no presence and would therefore be unlikely to underwrite loans, at least at an affordable price.
The reprieve may do little more than guarantee a slow death for the bank, though, unless supporters can act quickly to push through legislation extending it further. Companies overseas that want to do business with U.S. firms aren’t likely to be willing to sign on to deals that depend on a government agency that may not be around six months from now.
Kate Bernard, a managing director with DC-based public relations firm Hamilton Place Strategies, said that’s why bank advocates are looking for a long-term deal. “The bottom line is that the goal is full multiyear authorization,” she said.
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