Supporters of the Export-Import Bank of the United States are accelerating efforts to keep it in business as a potential life-or-death battle looms on Capitol Hill next month.
Failure to reauthorize the Ex-Im Bank would cost “thousands” of American jobs and potentially “billions of dollars” in exports, according to John Hardy, president of the Coalition for Employment through Exports and Bill Reinsch, president of the National Foreign Trade Council, on the same day the nation’s biggest business lobby launched its own multistate ad campaign to save the bank.
The bank, created in 1934 by President Franklin Delano Roosevelt, is designed to promote U.S. sales abroad by helping provide financial support and guarantees for exports on deals where considerable uncertainties — economic, financial or political — exist. Mr. Hardy said the bank can “provide comfort” for high-risk projects that the private financial sector would otherwise not touch.
Critics, who include conservative Republicans and some liberal Democrats, say the bank has become a form of corporate welfare, providing subsidies for big exporters such as Boeing who do not need taxpayer help. Defenders say the bank still fills a role and that many of America’s leading commercial rivals are providing the same support for their export sectors.
Congress, which provided only a temporary lifeline to the bank in last fall’s spending agreement, faces a June 30 deadline on whether the reauthorize the bank.
Ex-Im supporters held a press roundtable on Monday, giving anecdotal examples of projects that are “at risk” of losing financial backing if the bank did not exist.
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The projects included the construction of electrical grids in Egypt, water infrastructure in Cameroon and the construction of railroads in Angola, the total cost of which was estimated at around $2.5 billion. According to Mr. Hardy, without the financial support of the Ex-Im Bank, “these transactions would never go through” and “commercial banks won’t step in and support these projects.
The U.S. Chamber of Commerce, a strong supporter of the bank, launched its own ad campaign Monday urging Congress to reauthorize the bank. The Obama administration also supports reauthorization.
“Failure to reauthorize Ex-Im would amount to unilateral disarmament in the face of other countries’ far more aggressive government export credit programs,” Thomas J. Donohue, Chamber president and CEO, said in a statement.
But the bank has also come under fire in recent years for charges of inefficiency, fraud and government waste. A House of Representatives hearing last month concluded that “Ex-Im’s mandates create incentives for the Bank’s staff to churn out approvals — independent of an applicant’s merits — just to conform to a mandate. This invites the type of waste, fraud and abuse that has become emblematic of Ex-Im.”
The April hearing also revealed that there were concurrent 31 open fraud hearings pending against the bank.
House Financial Services Committee Chairman Jeb Hensarling, Texas Republican, told Ex-Im President and Chairman Fred Hochberg at the hearing, “Since you have taken the helm of Ex-Im, 65 matters have been referred to prosecution, 31 arrest warrants, 85 indictments, 48 criminal judgments, decades of combined prison time, a quarter of billion in fines, restitution and forfeiture.”
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At the press event, Mr. Hardy was dismissive of the claims, asserting that “no agency is more transparent” in its efforts to create jobs and increase U.S. exports.
The Congressional Budget Office released data last May showing that the Ex-Im Bank operates at a deficit that will cost taxpayers, in additional to regular operating costs, a total of $2 billion over the next decade. And while Mr. Hardy touted the benefits bank programs offer to small businesses, he conceded that those are only a quarter of total transactions. Furthermore, numbers from the conservative group Heritage Action concluded that only one out of every 183 U.S. small businesses use Ex-Im services.
Nonetheless, Mr. Hardy said he was “confident that [congressional] leadership knows the importance of” reauthorizing the bank and would find a way to pass reauthorizing legislation before the June 30 deadline.
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