There’s a nasty political fight going on in Washington D.C. over the reauthorization of the Export-Import Bank, which provides loan guarantees, insurance, and other financial support to U.S. companies that ship goods overseas.
We urge Congress to find common ground on the issue and renew Ex-Im Bank’s charter. Now is not the time to cut off financing to exporters that may not be able to find capital elsewhere.
Congress’s failure to act will leave Ex-Im Bank unable to guarantee new loans starting this July. That’s creating unnecessary uncertainty for Connecticut businesses at a time when exports are already being negatively impacted by the strong U.S. dollar.
The debate has pit business interest groups against conservative Republicans, whose anathema to anything resembling corporate welfare has some GOP lawmakers pushing for Ex-Im Bank’s extinction. The U.S. Chamber of Commerce, New England Council, and myriads of other industry groups are lobbying to keep Ex-Im alive, arguing that thousands of American jobs and billions of dollars in exports hang in the balance.
To be clear, Ex-Im Bank isn’t perfect. It should focus more on helping small and midsize companies; large corporations, which may not need the assistance, are currently among the biggest beneficiaries.
For example, in Connecticut, which has about 100 companies identified as exporters, United Technologies and General Electric are big users of Ex-Im Bank financing.
Ex-Im Bank has also come under scrutiny for accusations of fraud and waste. In April, it was reported that there were 31 open fraud hearings pending against the bank. As a result, it’s right for Congress to ask tough questions and try to reform the institution so that it operates in a more efficient, fair and ethical manner.
But shuttering Ex-Im altogether doesn’t make much sense. While we’ve been critical of the significant spike in state government aid to Connecticut businesses, Ex-Im Bank’s loan guarantees aren’t quite as offensive.
They help U.S. companies compete with international rivals, whose own governments, in some cases, tilt the rules in favor of domestic producers. China’s penchant for currency manipulation, for example, has increased the cost of U.S. exports, contributing to America’s blossoming $51.4 billion trade deficit, which reached a 6 ½ year high in March. And as Hartford Business Journal staff writer Matt Pilon reported last week, the strong U.S. dollar is already dragging down export sales of small and large Connecticut companies. Threatening to cutoff their financing at this time would only exacerbate the problem and stunt economic growth.
We understand Republicans’ distaste of the federal government playing a credit agency role, but many traditional banks, especially community lenders that cater to small and midsize companies, lack the appetite and/or expertise to finance export businesses.
That’s why it’s important to maintain Ex-Im Bank’s role, particularly at a time of continued economic uncertainty.
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