Ex-Im Bank Likely to Survive, for Now
Lawmakers are back in Washington deciding whether to intervene in a series of international crises — from Iraq to Ukraine — after a monthlong break. But they may have a self-made emergency back on their home turfs if they don’t fund the federal government beyond Sept. 30. Tyler Schroeder was on Capitol Hill Tuesday, Sept. ...
Lawmakers are back in Washington deciding whether to intervene in a series of international crises — from Iraq to Ukraine — after a monthlong break. But they may have a self-made emergency back on their home turfs if they don’t fund the federal government beyond Sept. 30.
Tyler Schroeder was on Capitol Hill Tuesday, Sept. 9, to remind them of another Sept. 30 deadline that means a lot for his company — the expiration of the trade bank that financially backs U.S. companies selling exports overseas.
Schroeder’s company, Air Tractor, makes one- and two-seater planes that can hold 400 to 800 gallons of liquid for crop-dusting or firefighting. He says Air Tractor built 182 planes in Olney, Texas, in 2013, and 25 percent of those orders relied on backing by the Export-Import Bank, or Ex-Im Bank for short.
Business owners such as Schroeder have been flocking to Washington all summer in a full-court press to convince Congress to extend the agency’s charter. The bank is likely to get a reprieve, but possibly only a short one.
House Speaker John Boehner (R-Ohio) pledged on Tuesday that the export credit agency will survive to back another deal, either as part of a spending package to keep the government running or as a separate bill. That move could push contentious fights about the bank and the budget into next year as both measures would be temporary.
House Republicans targeted the agency earlier this year, accusing it of providing corporate welfare. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and others argue that the bank picks winners and losers and that businesses will do just fine without government help, even though most developed countries have similar agencies, known as export credit agencies.
The government’s backing of private terrorism insurance is another program in some Republicans’ cross-hairs. The Terrorism Risk Insurance Act was passed after the 9/11 terrorist attacks, which was the most expensive disaster ever and cost private insurers $32 billion. The program expires at the end of the year, but it likely will be extended temporarily, albeit in a scaled-back version, after the Nov. 4 midterm elections.
Whether a similar compromise can be reached regarding the Ex-Im Bank depends on what happens on Election Day. A short-term extension puts the agency back on the chopping block, either early next year or mid-2015, but it’s unclear what that means for its long-term fate. Even if Republicans win control of the Senate, there will likely still be a fight. The issue has divided Republicans, with Tea Party government critics arguing that the bank should be shuttered and big-business backers championing its renewal.
The agency backs export deals for U.S. companies to make it easier for them to sell products overseas. It helped finance $37 billion in exports in 2013. The bank loans money to foreign buyers of U.S. exports, guarantees loans, and provides credit insurance. Its charter has been renewed 16 times — with little fanfare — since it was created during the Great Depression.
When a foreign company wants to buy a crop-duster from Air Tractor, the government insures the deal so that a commercial bank will extend a loan to the buyer with the assurance that if the buyer defaults, the Ex-Im Bank will pick up the tab. But Schroeder is quick to point out that none of Air Tractor’s customers have ever defaulted in 20 years and through about 200 transactions. He said the company paid the Ex-Im Bank $1.5 million in 2013 for insurance.
Schroeder has been to Washington to talk about the Ex-Im Bank before, and he will come back to plead its case again next year, if necessary. He said he would prefer a long-term deal now, but that a short-term extension is better than none.
"The mere uncertainty around the bank and the mere debate has already caused us to lose business," he said on the phone from the airport on his way out of Washington. He said he got an email Tuesday morning from a repeat customer in Brazil who didn’t want to send a deposit on a crop-duster because of uncertainty around the Ex-Im Bank’s reauthorization.
"We cannot get any private bank in the United States to do what the Ex-Im Bank does," he said.