Ex-Im Bank’s Short-Term Reauthorization
The Export-Import (Ex-Im) Bank of the U.S., an independent federal government agency, is the official export credit agency (ECA) of the U.S. It helps finance American exports of manufactured goods and services, with the objective of contributing to the employment of U.S. workers, primarily in circumstances when alternative financing is not available. It is one of approximately 20 federal agencies involved in promoting U.S. exports and is a participant in President Barack Obama’s National Export Initiative (NEI), a plan to double exports by 2015 to support two million U.S. jobs.
Ex-Im Bank operates under a renewable charter that expired on Sept. 30, 2011, but had been kept operating as part of a continuing resolution to fund government programs through Dec. 16. Over the past several months, the issue for Congress was whether to reauthorize the Bank’s charter, and if so, for how long and under what terms.
One of the main sources of contention was over increasing the Bank’s lending authority. A bill in the House would have raised the exposure cap to $160 billion over the next four years, while a similar bill in the Senate put the limit at $140 billion. However, in the aftermath of the fierce summer debate over raising the debt ceiling, House and Senate negotiators agreed on a compromise proposal that would reauthorize the Bank for four years and increase its lending authority from $100 billion to $135 billion.
Unfortunately, there was a small handful of lawmakers who pushed against this widely-supported compromise and instead supported a very short-term—6 months—extension with no increase in the credit levels. This compromise was eventually included in the Omnibus Appropriations bill for FY 2012, which passed the Senate on Dec. 17 and the House the previous night.
Ex-Im Bank provides direct loans and loan guarantees to support small business exports, and the global financial crisis has only increased demand for its loans and guarantees as other sources of financing have been squeezed. Congress’ decision on its reauthorization will negatively affect U.S. export promotion activities and small exporters whose exports are facilitated by the Bank’s operations.
For FY 2011, Ex-Im Bank approved more than $32 billion in total authorizations and supported $41.3 billion in exports at more than 3,600 U.S. companies, helping to support approximately 290,000 export-related American jobs. The bank earned a profit of about $700 million on its fiscal 2011 operation and historically has a default rate of less than 2 percent, which it has been able to cover out of the revenues it collects.
Small-business financing rose over 70 percent from $3.3 billion in FY 2008 to $6 billion in FY 2011 and is up almost $1 billion from last year. As part of its efforts to increase this portfolio, Ex-Im Bank’s Global Access for Small Business initiative held more than 20 forums across the country this year, reaching 4,000 participants.