Reforms Proposed for U.S. Ex-Im Bank Garner Multilateral Support
In at least a symbolic gesture to Delta Air Lines and the Air Line Pilots Association, a bill passed on May 9 by the U.S. House of Representatives to extend the charter of the country’s Ex-Im Bank calls for the U.S. Treasury Department to negotiate with other governments toward eliminating state-backed loan guarantees for exports, including widebody aircraft sales. At the same time, to the apparent delight of Boeing, the bill calls for an increase in the lending cap from $100 billion to $140 billion by 2014. Still, it drew praise from trade groups such as Airlines for America (A4A), which last year unsuccessfully sued the Ex-Im Bank in an effort to halt a loan guarantee to Air India.
“We appreciate the hard work of Republican House Majority Leader Eric Cantor and Democratic House Minority Whip Steny Hoyer, who negotiated a bipartisan agreement that ensures increased transparency in the Ex-Im Bank’s lending practices, calls for greater economic impact analysis of loans and would implement other important reforms,” said A4A president and CEO Nicholas Calio.
The support from A4A follows vocal opposition to Ex-Im Bank financing of widebody airliners from Delta Air Lines—one of the organization’s biggest and most influential members.
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. Until that happens, it also would require the bank to show that its support either serves as an offset to competition from foreign export credit agencies or goes only to customers that cannot secure private loans. 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.
The Ex-Im Bank’s charter expires on May 31, and the bank expects to reach the current lending ceiling of $100 billion by around the same time. A reauthorization bill, of course, must also pass the Senate before it reaches President Barack Obama’s desk for signature. Obama has said that he considers Ex-Im Bank reauthorization vital to his plan to double exports by 2015.
Notwithstanding the bill’s reforms, the biggest beneficiary of U.S. Ex-Im Bank guarantees expressed satisfaction with the compromise. “We commend the House for its vote today to reauthorize the Export-Import Bank—a critical competitive tool for U.S. exporters—and urge the Senate to act swiftly to approve the bill and send it to the President for his signature,” said Boeing in an April 9 statement.