Businesses and other supporters of the Export-Import Bank cheered the nine-month extension given final approval by the Senate on Thursday night, but remain worried about the future of the embattled agency.
“Congress has left thousands of small, medium and large U.S. exporters and their workers in limbo until the middle of next year and this will likely negatively impact U.S. sales to foreign customers,” said Boeing Co., the largest beneficiary of bank assistance.
Boeing and other companies want a long-term extension. Bank President Fred Hochberg said he would continue to pursue one with lawmakers, who include some key conservatives who want the bank shut down.
“Businesses don’t pursue overseas sales, invest in their operations, or hire new employees on a month-to-month basis,” he said after the Senate vote.
“Similarly, quality American goods shouldn’t lose out to aggressive foreign competitors because of the Export-Import Bank’s still-uncertain future,” said Hochberg, who has noted that about 60 other countries have similar export-assistance agencies to help their companies sell products abroad.
The bank, whose charter was set to expire Sept. 30, received only a temporary reprieve, said Chris Krueger, a senior analyst at financial-services firm Guggenheim Partners.
“Ex-Im received a stay of execution, but it remains on death row,” he said.
Krueger predicted the bank won’t be reauthorized by June 30 because its fate no longer would be helped by inclusion in legislation to avoid another government shutdown.
“Yes, Ex-Im lived to fight another day, but that day in June 2015 is likely its Waterloo,” he said.
The Obama administration and congressional backers of the 80-year-old bank want a five-year reauthorization of its charter to provide certainty to foreign buyers of U.S. goods that the bank’s loans and other assistance will be around for the long term.
The bank offers loans to foreign buyers of U.S. products, and insurance and other assistance to domestic exporters. Taxpayers provide no funds, as the bank pays for its operations through interest and fees on its assistance.
Last year, Ex-Im provided $27.7 billion in export assistance and sent a record $1.1 billion in profit to the Treasury. But taxpayers are on the hook for any losses on the bank’s $140 billion in outstanding assistance.
Many conservatives, led by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, criticize the aid as corporate welfare and complain that the bank mostly helps large multinational firms such as Boeing that don’t need the government’s assistance.
Critics have also highlighted corruption allegations at the bank. They got new fodder on Thursday, when SABA Inc., of Memphis, Tenn., agreed to pay $3.5 million to settle federal civil allegations that it defrauded the Ex-Im Bank when it obtained a loan guarantee for a construction project in Turkey.
In the face of stiff opposition in the Republican-controlled House, the best bank supporters could get was an extension of the charter until June 30 as part of a broader budget bill that passed Congress last week.
Even that outcome had been in question two weeks ago.
A strong conservative push to let the bank’s charter expire at the end of the month gained steam over the summer after incoming House Majority Leader Kevin McCarthy, R- Calif., said he favored closing the agency.
Heavy lobbying by businesses, led by Boeing, and leading trade groups helped convince House Speaker John Boehner, R-Ohio, to include an extension in a bill to temporarily fund the government after the fiscal year ends on Sept. 30.
Conservative activist groups Heritage Action for America and the Club for Growth urged lawmakers to vote against the funding bill in part because it included the bank extension.
But the legislation, which also authorized President Obama’s plan to arm Syrian rebels in their fight against Islamic State militants, passed the House on Wednesday and the Senate the next day.
Doug Oberhelman, CEO of Caterpillar Inc., another beneficiary of the bank’s export assistance, said the extension was “a step forward” but not enough.
“A long-term reauthorization is needed to provide more certainty to U.S. companies and their suppliers that rely on the Ex-Im Bank to out-compete well-financed foreign competitors for sales around the world,” said Oberhelman, who also chairs the international engagement committee of the Business Roundtable trade group.
The group, along with the U.S. Chamber of Commerce, the National Association of Manufacturers and eight other business trade associations wrote to congressional leaders recently urging them to move quickly to provide a long-term extension of the bank’s charter.
“Without Ex-Im Bank acting as a ‘lender of last resort’ to fill market gaps, many foreign customers may turn to non-U.S. suppliers that already have significant support from their own official export credit agencies,” the groups wrote.
Hensarling said two weeks ago that he would have preferred not to include the bank’s temporary extension in the funding bill, which needed to pass to avoid another government shutdown.
But he supported the decision by Republican leaders to make that link because it sets up a vote next year on the bank that won’t be part of a broader budget bill, allowing the agency to “stand or fall under its own weight.”
Opponents simply need to prevent a reauthorization bill from coming to a vote by June 30 to shut the bank down.
Rep. Maxine Waters, D-Calif., said she’s worried that the nine-month extension “is intended to be a death knell” for the bank.
“By isolating the expiration of the bank’s charter from any other must-pass legislation, Chairman Hensarling and his ideological stalwarts are counting on increased partisan gridlock to shutter the institution in July,” she said.