It looks like the hotly debated Export-Import Bank will not be brought back in the near future as Congress has adjourned on Wednesday without a vote on reauthorizing funds for the bank. Tea Party supporters and conservatives are celebrating as they claim a victory over “crony capitalism.” In the meantime, a few big businesses such as Boeing and couple of dozen smaller firms are scrambling to find ways to finance their operations after this year.
The ongoing wind down of the New Deal era Export-Import Bank means quite a few businesses in a tough spot. Congress is recessed for the next month, which means that any possible Ex-Im bank rescue is at least a month away, and by no means guaranteed even then, leaving some U.S. export-dependent businesses to try and keep market share in a fully open market with unsubsidized global competitors for the first time.
Of note, the Export-Import Bank guarantees loans for foreign companies purchasing U.S. exports, and also funds and manages programs that offer insurance and credit to assist small businesses in bringing in new customers and raising working capital.
When a liquidity crisis struck China's Evergrande Group in the summer of 2021, it shook the global markets. Debt payments by China's second-largest property developer by sales were estimated in the hundreds of billions of dollars, and the company missed several payments. Those missed payments led to downgrades by international ratings agencies, but the Chinese Read More
Statements from both sides of the Export-Import Bank issue
“What we’re asking for is a vote,” Rep. Denny Heck (D-Wash.) noted in exasperation during a Rules Committee markup session Tuesday in which an effort to add the Ex-Im back by adding it to the transportation bill failed in a 6-7 vote. “Bad things will happen if we don’t get to this. It will start first with small businesses.”
Rep. Heck also commented that “two major manufacturers in this country” say they will take their production offshore without the agency.
Om the other hand, Rep. Jim Jordan (R-Ohio), a conservative critic of the Export-Import Bank, sees the expiration of funding for the bank as a major victory.
“This is great news for families and taxpayers,” he told POLITICO in a statement yesterday. “Every day that goes by without the Ex-Im Bank being resurrected means it is more likely that it permanently ends. … This is the kind of example of good governance that I am excited to tell my constituents about during the August recess.”
Jordan and other critics claim that Ex-Im doesn’t create jobs, but just moves jobs from other sectors to export-related sectors. Critics also argue that the private sector can step in to fill the various roles played by the bank, noting statements by Boeing execs basically admitting this.
Threats from Boeing CEO Jim Nerney
Boeing Chairman Jim McNerney commented on Wednesday that the firm is considering moving some of its operations to other countries so they could take advantage of those nations’ equivalents to the Export-Import Bank.
“We’re actively considering now moving key pieces of our company to other countries, and we would’ve never considered that before this craziness on Ex-Im,” McNerney said.
Unabashedly lobbying, and in this writer's opinion continuing to lie out his teeth, the CEO of highly profitable McNerney went on to say he might have “made the wrong decision” in the past to try and keep production in the U.S., given the politics currently surrounding export financing in Washington. “People just playing politics — they’re not connected to the real world anymore,” he argued.