The U.S. Export-Import Bank (ExIm Bank) is in the throes of its toughest experience yet.
Congress is heatedly debating whether to reauthorize the ExIm Bank’s charter, and if it doesn’t act by September 30th, the agency will no longer be able to extend new loan guarantees to U.S. exporters. The Bank and its supporters have said that a failure to reauthorize the 80-year-old institution will hurt exports and cause companies to cut jobs.
The many critics argue the bank picks winners and losers, is used by large corporations that could have access to affordable bank lending – in Washington, ExIm has long been talked about as “Boeing’s Bank”. Tea Party is of course overall fed up with federal programs and spearheads also ExIm opposition.
These battles are not new: the agency is notoriously politicized in Washington and repeatedly struggles to secure Congressional re-authorization. Yet never before has the fight been so bloody.
I think ExIm Bank should be allowed to keep going, for four reasons.
- First, all other major economies have export credit agencies much like ExIm aimed at helping their companies get an edge in world trade. By now, ExIm’s annual support to U.S. firms pales before that of China, for example. Without the ExIm Bank, many U.S. companies are immediately placed at a disadvantage in international markets.
- Second, ExIm has not lost any taxpayer monies: it is not exactly a federal agency that is draining the budget and expanding the deficit.
- Third, ExIm helps U.S. SMEs export. In our view it does a worthy job in this area, but it also has a great deal to improve, to enhance customer service to accommodate today’s realities of doing global business – something we at TradeUp work every day to bridge.
- Fourth, ExIm Bank’s financing to large companies helps small ones: as a large company like Boeing sells a plane overseas, many U.S. small businesses benefit as suppliers of parts and services to Boeing.
Let’s drill down one aspect of ExIm’s work, with SMEs in the U.S. in the past decade, and what some of the challenges are. Go here to my blog post at TradeUp.