Senator Sees Deal Soon On ExIm Bank Charter
Published: April 18, 2012
A bipartisan deal to keep the US Export-Import Bank operating past the end of May appears to be in reach despite concerns raised by conservative Republicans and Delta Air Lines that have blocked action so far, a senior Democrat senator said on Tuesday.
“I am feeling more and more confident that this ill-advised effort to block the Eximbank has run its course and is about to run out of gas. I think we can have a deal sooner rather than later,” Senator Charles Schumer said at a Senate Banking Committee hearing on the bank’s future.
The nearly 80-year-old government bank provides direct loans and credit guarantees to help US exporters make sales in markets that private lenders consider too risky to operate in on their own. Boeing is the bank’s biggest customer, and many other US manufacturers also rely on its services.
“Last year, the bank supported almost USD$ 33 billion in export financing and helped support 290,000 American jobs,” Senate Banking Committee Chairman Tim Johnson said. “It’s important to note that the bank does this at no cost to taxpayers, charging interest and fees to cover all of its expenses.”
Efforts to renew Eximbank’s charter, due to expire on May 31, have run into objections from conservative Republicans who say it is unnecessary government interference in the market. Delta Air Lines has raised concerns, saying it has been hurt by low-interest Eximbank loans to foreign carriers.
China, Canada, France, Brazil and other countries have similar government export credit agencies.
Bank supporters such as the US Chamber of Commerce and the National Association of Manufacturers have said the institution is conservatively run, has experienced very few defaults and makes money for the government.
President Barack Obama has touted it as a key to his administration’s goal of doubling exports.
The bank has historically had bipartisan support and last September the Senate Banking Committee unanimously passed a bill to renew the bank’s charter to 2015 and raise its lending authority to USD$ 140 billion, from USD$ 100 billion currently.
However, that bill failed to clear the full Senate and an alternative plan in the House of Representatives, crafted by Majority Leader Eric Cantor, would renew the bank’s charter for only a year and raise the cap to just USD$ 113 billion.
The stand-off has threatened to put the Eximbank out of business at a time when the Obama administration and US business groups are saying foreign export credit agencies are moving aggressively to support their countries’ exports.
Schumer, the Senate’s No. 3 Democrat, said he sensed the situation was beginning to change. “In recent days, Leader Cantor has appeared more eager to negotiate a solution with Democrats as a way out. Also, my office has recently been in touch with Delta… At this point, my impression is they are scaling back their demands so that a resolution may not be far off,” Schumer said.
Delta welcomed Schumer’s involvement but denied in a statement that it had changed its position on the need for more transparency in Eximbank’s operation and “an analysis of its impact on US airline employees when it guarantees wide-body aircraft loans for foreign carriers.”
Delta also said it still wants the US government to press for an agreement with European export credit agencies to end government-backed loans for wide-body aircraft used primarily on long international flights.
A business group lobbyist who asked not to be named said Cantor and Representative Steny Hoyer, the House’s No. 2 Democrat, have been in talks, raising hopes of a deal.
Senator Richard Shelby, the senior Republican on the Senate Banking Committee, said the bill passed by the panel last September already contained “several important reforms that will make the bank more accountable.”
It includes provisions requiring Eximbank to publicly disclose more details on transactions valued at more than USD$ 100 million before its board can approve them and to publish a strategic plan outlining its objectives.
It also requires the US Government Accountability Office to study Eximbank’s risk management practices to determine if they pose any risk to American taxpayers.
“I believe that this study could also provide the basis for enacting further reforms of Exim’s operations and accounting practices,” Shelby said.