14 May 2019
Ex-Im Bank Can Again Issue Large Loans and Guarantees
On 8 May, the U.S. Senate confirmed former Representative Spencer Bachus III, along with Judith DelZoppo Pryor (an Obama appointee to the Overseas Private Investment Corporation), to the five-person board of directors of the Export-Import Bank of the United States. The Senate also confirmed Kimberly Reed to serve as the next Ex-Im Bank president. These confirmations will enable the Ex-Im Bank to issue large loans again, at least until 30 September 2019 when its charter is due to expire.
Created during the Great Depression of the 1930s, the Ex-Im Bank helps U.S. companies export products by financing product purchases by foreign buyers. The Bank’s biggest beneficiaries have included large manufacturing and aerospace companies such as Boeing and General Electric. Its charter authorisation had lapsed in 2015 and by the time it was renewed in December of that year the Bank’s board of directors lacked a quorum. Delays in White House board nominations and Senate confirmations have legally precluded the Ex-Im Bank from issuing loans or guarantees of more than US$10 million. Business groups had lobbied for quorum restoration so that the Ex-Im Bank would again be able to guarantee and loan amounts greater than US$10 million.
Ex-Im Bank opponents, including Sens. Mike Lee (Republican-Utah), Pat Toomey (Republican-Pennsylvania) and Bernie Sanders (Independent-Vermont), have argued against the Bank’s reauthorisation and board confirmations. These critics have described the Bank as a form of “corporate welfare,” while Sen. Marco Rubio (Republican-Florida) argued on 7 May that the Bank “has too often subsidized protected interests over promoting real economic dynamism.” Sen. Rubio believes U.S. policy should focus relentlessly on “innovation over rent-seeking” in order to outcompete mainland China.
Several business associations issued statements in praise of the vote. Neil Bradley, chief policy officer for the U.S. Chamber of Commerce, indicated that “there is currently a backlog of nearly $40 billion in pending deals awaiting board approval at Ex-Im, and these deals will support thousands of good American jobs.” National Association of Manufacturers President Jay Timmons disagreed with Sen. Rubio’s statement, saying that Ex-Im Bank reauthorisation would help U.S. manufacturers “reach their full potential and more aggressively compete against China and others.” Timmons added that the “bipartisan victory will be short-lived, however, if Congress does not act swiftly to reauthorize the Ex-Im Bank before the September deadline.”