The U.S. Export-Import (Ex-Im) Bank closed its doors on Tuesday following a lapse in Congressional authority. The 81-year-old agency provided financing for both American companies that export goods and their foreign customers, helping to secure American exporters’ access to emerging markets. But following a push by conservative Republicans who claimed the Ex-Im Bank was a form of corporate welfare, Congress declined to extend the Bank’s charter before recessing for the Fourth of July holiday. Absent congressional action, the Ex-Im Bank is now unable to authorize new loans, insurance, or guarantees, effectively freezing new projects.
American businesses that rely on the Ex-Im Bank are concerned that, without access to the capital the Ex-Im Bank provides, they will not be able to take on large-scale projects abroad, resulting in a substantial loss of jobs here in the United States. The Ex-Im Bank often operates as a lender of last resort, taking on loans typically considered too large or risky for traditional banking arrangements. And companies and lawmakers alike are concerned that the shuttering of the Ex-Im Bank will enhance the positon of foreign competitors, which often are supported by export subsidies and financing by their home governments. As Jay Timmons, President and CEO of the National Association of Manufacturers, said in a statement issued on June 30, “The more than 60 foreign export credit agencies the United States competes against are not going away. It’s time to allow a bipartisan majority of Congress to reauthorize a tool that we need to enhance America’s free enterprise system against aggressive foreign competitors and level the playing field for manufacturers to win business for more U.S. jobs.”
Many lawmakers on both sides of the aisle agree. A recent test vote demonstrated that 65 Senators, including 22 Republicans, are in favor of a procedural step to preserve the Ex-Im Bank. Supporters of the Ex-Im Bank are moving to revive it, most likely by attaching renewal of the Bank’s charter to must-pass legislation. Former Congressman Dennis Cardoza (D-CA), Director of Public Affairs at Foley & Lardner LLP, offered the following insight into the process: “Senate Leader McConnell promised a vote as part of the discussion on Trade Promotion Authority and I am quite sure he will keep his word. He will likely tie it to a must-pass bill that the House will need to consider. The Ex-Im Bank was not controversial in the past; indeed, it was last reauthorized by voice vote. I cannot imagine that this very important trade tool will not get the support of the thoughtful members of the House of Representatives of both parties.”
For now, however, the future of the Ex-Im Bank remains up in the air.