Congress let the Export-Import Bank’s lending authority expire on June 30. Tea Party Republicans, who want to limit government intervention in the free market, said the bank provided a form of corporate welfare. Some airlines, including Delta, said the bank’s loan guarantees for Boeing jets unfairly subsidized rival international airlines. Congress had considered four bills that would have reauthorized the lender with some reforms. But Republican Representative Jeb Hensarling, head of the House committee that oversees the bank, called for its abolition. The bank does not die immediately; it will complete making loans that were already under way and collect outstanding loans. Proponents still hope to reauthorize Ex-Im in the fall.
The Export-Import Bank was started by President Franklin D. Roosevelt in 1934 as a New Deal program to boost exports. Despite the name, Ex-Im doesn’t offer import assistance in the U.S. It provides loan guarantees, loans and insurance to help foreign companies — sometimes those with less-than-perfect credit — buy U.S. goods when private banks can’t or won’t make loans in industries including aerospace, energy and manufacturing. Over the years, Ex-Im helped bankroll projects ranging from the Pan American Highway to insurance waivers that kept airlines flying after the Sept. 11 terrorist attacks. For decades, Congress reauthorized the bank with little or no debate and didn’t even bother with a roll call in either chamber for its extension in 2006. Though Democrats widely support Ex-Im, Barack Obama criticized it while campaigning for president in 2008, calling it “little more than a fund for corporate welfare” at a time when opposition to government spending, triggered by the bailouts that year, was growing. Ex-Im transactions soared, reaching a peak of $114 billion in total outstanding financial commitments at the end of fiscal 2013, from $58 billion in 2008. President Obama now supports Ex-Im reauthorization.
The Export-Import Bank said it backed $27.5 billion in exports in fiscal 2014 — somewhat less than 2 percent of the U.S. total — and supported 164,000 American jobs. And Ex-Im noted that it made money for the government, sending more than $674 million in profits to the U.S. Treasury in fiscal 2014, though this was about 36 percent less than the previous year. The U.S. Chamber of Commerce ran a national ad campaign in favor of the bank, arguing that without it, jobs might be lost to competitors in China or Russia. While the bank said its default rate since 1934 was less than 1 percent, opponents said Ex-Im loans could be vulnerable in a downturn, leaving taxpayers stuck with the bill. House Majority Leader Kevin McCarthy said the current low interest rates make it a good time to start phasing out the institution. Hensarling said he was worried about “corruption” at Ex-Im, after a former bank employee pleaded guilty to accepting over $78,000 in bribes from 2006 through 2013. While about 90 percent of Ex-Im’s deals helped U.S. small businesses, an analysis by Veronique de Rugy, a bank critic at George Mason University, found that Boeing benefited from about 30 percent of the bank’s transactions in 2013.
The Reference Shelf
- U.S. Export-Import Bank’s fact sheet.
- Congressional Research Service report: “Export-Import Bank: Overview and Reauthorization Issues.”
- Testimony from a June 25, 2014, House Financial Services Committee hearing on the Export-Import Bank.
- Representative Jeb Hensarling speech at the Heritage Foundation: “A Time for Choosing: The Main Street Economy vs. The Washington Crony Economy.”