The U.S. Senate passed a bill yesterday to extend the charter of the U.S. Ex-Im Bank for another three years and raise its debt ceiling from $100 billion to $140 billion, at least temporarily issuing a reprieve to Boeing and other U.S. aerospace companies that depend on government-backed loan guarantees to sell their products to foreign customers unable to access private markets.
Already passed by the U.S. House of Representatives on May 9, the bill, in an apparent nod to Delta Air Lines and the Air Line Pilots Association, calls for the U.S. Treasury Department to negotiate with other governments toward eliminating state-backed loan guarantees for exports, including widebody aircraft sales.
Notwithstanding its reforms, Boeing—the biggest beneficiary of U.S. Ex-Im Bank guarantees—expressed satisfaction with the compromise. It also drew praise from trade groups such as Airlines for America (A4A), which unsuccessfully sued the Ex-Im Bank last year in an effort to halt a loan guarantee to Air India.
The bill would require the Treasury secretary to issue an annual report on progress of the multilateral negotiations aimed at ending government export loans or guarantees. It would also require the bank to show that, until that time, its support goes only to parties that cannot secure private loans or serves as an offset to competition from foreign export credit agencies. Another provision calls for the Ex-Im Bank to formulate a plan to correct an overall default rate that reaches 2 percent and update Congress on its progress each month.
Passage in the Senate means the bill will arrive on President Obama’s desk for signature before the Ex-Im Bank’s charter expires on May 31 and reaches the current lending ceiling of $100 billion by around the same time. Obama has said that he considers Ex-Im Bank reauthorization vital to his plan to double exports by 2015.