Ex-Im Bank Hits Hurdle

[Savonarola]

Ex-Im Bank Hits Hurdle in New GOP Leadership
Incoming House Majority Leader McCarthy Says He Won't Support Reauthorizing Export Agency's

By DAMIAN PALETTA and KRISTINA PETERSON CONNECT
Updated June 23, 2014 11:13 a.m. ET

Rep. Kevin McCarthy, the incoming House majority leader Associated Press

WASHINGTON—Incoming House Majority Leader Kevin McCarthy said on Sunday he wouldn't support reauthorizing the charter of the Export-Import Bank of the United States, placing in doubt the future of a major agency that facilitates U.S. exports.

His remarks deepen a GOP rift over the bank and could aggravate House Republicans' relationship with business leaders, who say the bank is vital to boosting U.S. trade.

Conservative lawmakers have pushed for winding it down, and House leaders have signaled sensitivity to their agenda after a tea party-aligned upstart defeated outgoing Majority Leader Eric Cantor this month.

The Ex-Im Bank was created 80 years ago and helps support U.S. exports through a wide range of programs, including guaranteeing loans to foreign buyers and providing credit insurance. Beneficiaries include big manufacturers such as Boeing Co. and Caterpillar Inc. CAT

Congress sets the Ex-Im Bank's lending cap and must reauthorize its charter, which is due to expire in September. If it isn't reauthorized, the agency will be unable to back new financing and will essentially wind down its loan portfolio.

Asked on Fox News Sunday if he would allow the bank's charter to expire, Mr. McCarthy replied, "Yes, because it's something that the private sector can be able to do."

The California Republican added that "one of the biggest problems with government is they go and take hard-earned money so others do things the private sector can do. That's what the Ex-Im Bank does."

Mr. Cantor of Virginia helped steer a reauthorization of the trade agency through Congress in 2012, bucking some of his more conservative colleagues. The measure passed easily in the Senate as well. Mr. McCarthy supported that 2012 move but recently had been more ambiguous about his view of the agency.

Chances of the Ex-Im Bank's winning reauthorization without his support are narrow, particularly given the recent shake-up among House GOP leaders. The incoming House Majority Whip, Steve Scalise of Louisiana, has signaled his opposition to the agency. The only House Republican who could overrule them both, Speaker John Boehner of Ohio, has signaled he won't.

"Boehner has been clear that this is an issue that members, particularly on the Financial Services Committee, need to discuss, and that is happening," said Michael Steel, a spokesman for Mr. Boehner.

Mr. McCarthy's stance bolsters the position of House Financial Services Chairman Jeb Hensarling (R., Texas), who has also said the Ex-Im Bank should be wound down, saying the government shouldn't be involved in private-market decisions.

Critics of the bank have said it causes too much interference in markets and allows the government to pick winners and losers. Conservatives also say it creates too many risks for taxpayers, and argue that other creditors should be on the hook for the loans they make, not the U.S. government.

Some argue the Ex-Im Bank amounts to a form of "crony capitalism" and helps support exporters at the expense of domestic companies.

Trade Agency

The issue has caused divisions within the GOP for several years. In 2012, the House voted 330 to 93 for reauthorization, with 147 Republicans and 183 Democrats in favor.

Close to 40 House Republicans are expected to send House GOP leaders a letter this week calling for reauthorization.

Supporters of the Ex-Im Bank say failure to renew its charter would put U.S. companies at a disadvantage because other countries have agencies offering similar support. The U.S. Chamber of Commerce, the National Association of Manufacturers and a number of corporations were planning this week to launch a public-relations push to support reauthorization.

"This is an all-hands-on-deck effort right now because we are really at a very critical time given the bank's charter expires at the end of September," said Christopher Wenk, senior director of international policy at the U.S. Chamber of Commerce.

A Caterpillar spokeswoman said, "For the U.S. to close the Ex-Im Bank in this environment is surrendering export markets and economic growth in the U.S."

"This could be devastating," said Steven Wilburn, chairman and chief executive of FirmGreen Inc., a Newport Beach, Calif., maker of equipment used to purify biogas. About 80% of the privately owned firm's business is outside the U.S., he said, and it could lose contracts it seeks in the Philippines, Brazil and Mexico without Ex-Im Bank backing.

Mr. Wilburn said European and South Korean rivals have government-backed financing. "There's supposed to be a level playing field," he said.

Boeing has consistently warned that without Ex-Im Bank financing, it and other U.S. companies could lose business to overseas competitors. Airbus Group NV receives export-credit support from agencies in the U.K., France and Germany. Close to 60 countries have agencies to help finance exports.

"As a voting member of Congress, Rep. McCarthy is entitled to his view," Boeing said in a statement. "We hope that as majority leader, he will allow the process to continue to allow all members a vote on this important issue."

The White House supports reauthorization of the Ex-Im Bank. It "helps American companies create and support jobs here at home at no cost to taxpayers, and helps us meet our export goals," a White House spokeswoman said.

Mr. McCarthy says he won't support the Export-Import Bank of the United States. Getty Images
Most Democrats have backed reauthorization, but some liberals have questioned whether the Ex-Im Bank facilitates too much private-sector government aid.

In 2012, lawmakers raised the agency's credit-exposure limit to $140 billion from $100 billion. In fiscal 2013, the bank authorized $27 billion to support an estimated $37.4 billion in U.S. export sales. It also sent $1.06 billion to the U.S. Treasury, money it earned from interest and fees.

The bank borrows money from the Treasury Department and pays interest on the funds to the Treasury. It then lends some of that money out in direct loans and charges a higher interest rate that, along with its fees for providing loan guarantees, generates its revenue. If the bank's charter isn't reauthorized, it could continue servicing the loans it already has made and backed, but not authorize new loans.

—Devlin Barrett, Doug Cameron and James R. Hagerty contributed to this article.

Yesterday everyone in GE Transport got an e-mail from our division head urging us to e-mail our congressman and Senators in favor of extending the charter of the Ex-Im bank.  GE even has a website with a form letter that you "Personalize" by putting your name on it.  I'm curious what Languish would do when faced with such a decision.

[The Brain]

Weed out the non-hackers.

[Admiral Yi]

I would assume they're keeping track of who has and who hasn't filled out the form, and crawl to it like the lickspittle I am.

[mongers]

I'm broadly supportive of this government agency functions.

I wouldn't use the employer 'sponsored' web-form, as I don't like overt coercion like this, but I would send in my own craft letter to the congressmen and mention that to my employer.

[dps]

Ex-Im Bank sounds like another way of saying, "The NBA player formerly known as "I'm Bank!".

[Scipio]

As long USAID is funding gay and lesbian startups in foreign countries that oppress the LGBT communities, how can we in good conscience oppose the Ex-Im Bank, which prop up American businesses in countries where consumers can't afford to buy bread? After all, how will the kleptocrats buy our industrial machinery if we don't give them the money to do it?

[The Minsky Moment]

Multi-national corps. are funny.
When the tax man comes, they insist they are as Irish as St. Patrick.
But when Uncle Sam shows up with moneybags they start singing Yankee Doodle.

[Savonarola]

Our congressman (Bill Posey R) is on the House Finance committee; and had previously voted against the reauthorizing the Ex-IM bank charter.  He stopped by for a site visit today.  At the end of his visit he gave a little speech.  We were encouraged to attend in order to impress upon him how important the Ex-IM bank is to all of us.

He had the same overly broad gestures of Dana Carvey's caricature of George H. W. Bush.  He took some questions from the audience.  One guy asked about infrastructure, and he talked to  us about immigration; close enough.