Congress Holds Off on Deciding Export-Import Bank’s Fate Until Next Summer

Congress Holds Off on Deciding Export-Import Bank’s Fate Until Next Summer

The operating authority of the Export-Import Bank (Ex-Im Bank), the federal government’s export credit agency, was set to expire next week on September 30^th but has received temporary reprieve after Congress approved a short-term extension of its charter. House Speaker John Boehner included a measure temporarily extending the export credit agency’s authority until June 30^th as part of a broader deal that was tied to a stop-gap bill to fund the government through December 11^th.

The Ex-Im Bank offers loans to foreign buyers of U.S. products, and insurance and other assistance to domestic exporters at no annual taxpayer cost. The bank pays for its operations through interest and fees on its assistance. In 2013 Ex-Im provided $27.7 billion in export assistance for more than 3,400 companies and sent a record $1.1 billion in profit to the Treasury.

With the Ex-Im’s June 30^th extension in lieu of the five-year reauthorization sought by the Obama administration, many are concerned over its ultimate fate. Chris Krueger, a senior analyst at financial services firm Guggenheim Partners, noted in an article published by the Los Angeles Times that the extension of the bank’s charter was only a temporary reprieve. “Ex-Im received a stay of execution, but it remains on death row,” he said.

The debate over Ex-Im stems from conservatives who view it is as another example of “corporate welfare” and complain that the bank mostly aids Boeing and other large companies. But trade advocates say the Ex-Im Bank is critical, particularly for small businesses, to overcome challenges when operating in foreign markets. They argue for Ex-Im’s reauthorization because it helps keep U.S. businesses competitive in emerging markets. They also note that other countries, such as China, have government financing options similar to the ones offered by the Ex-Im Bank, which means that nixing the bank would simply boost America’s competitors.

Ex-Im President Fred Hochberg said he would continue to seek a long-term reauthorization from lawmakers. “Quality American goods shouldn’t lose out to aggressive foreign competitors because of the Export-Import Bank’s still-uncertain future,” said Hochberg, who underscored that about 60 other countries have similar export-assistance agencies to help their companies sell products abroad.

Moreover, the U.S. Chamber of Commerce, the National Association of Manufacturers and nine other business trade associations wrote to congressional leaders last week urging them to quickly provide a long-term extension of the bank’s charter. “Without Ex-Im Bank acting as a ‘lender of last resort’ to fill market gaps, many foreign customers may turn to non-U.S. suppliers that already have significant support from their own official export credit agencies,” the groups wrote.

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Sources: American Shipper, LA Times, The Hill