Skip to main content

WSJ: Small Businesses Bear Burden of Ex-Im Bank Shutdown

Yesterday, Speaker Boehner announced that today would be the last day of votes before the House adjourns for the August District Work Period. In their haste to leave town, House Republican leaders have clearly decided not to reopen the Export-Import Bank, even though it enjoys majority support in both chambers and plays a critical role in helping ensure American small businesses are competing on a level playing field with global competitors. From the WSJ:

“The Ex-Im Bank, a federal agency that finances exports, stopped accepting new loans at the beginning of July after Congress allowed its charter to expire. While a majority of lawmakers in Congress support reauthorizing the 81-year-old agency in some form, conservative Republicans who control key leadership positions have so far prevented a vote in the House of Representatives.”

“The bank’s backers have sought to rally support in recent weeks by highlighting the potential for lost sales at small businesses, a group that is both politically sympathetic and close to lawmakers in almost every congressional district.”

“President Barack Obama has called on Congress to reauthorize the agency, and most of the bank’s supporters expect lawmakers to follow suit later this year. On Monday, 64 senators voted for an amendment to reopen the bank, and some Republicans estimated that at least 300 of the 434 current House lawmakers would vote similarly, given the chance.

“‘At some point we’ll miss out on a business opportunity that will be of such magnitude that it will catch the attention of the public, and we’ll respond,’ said Rep. Frank Lucas (R., Okla.), who supports the bank’s reauthorization.”

Big businesses say closing the bank for good will leave them at enough of a disadvantage against European and Asian competitors, which benefit from export-credit agencies at home, that they will move production abroad. For now, they say they are getting along fine.”

“‘When our charter lapses, you won’t read about massive layoffs in the paper. Small businesses don’t put out press releases when they lose out on a sale,’ Fred Hochberg, chairman of the Ex-Im Bank who in the 1990s worked closely with entrepreneurs as an official at the Small Business Administration, said before the bank closed last month.”

Around 90% of loans backed by Ex-Im Bank last year went to small businesses, the highest level in more than a decade.”

“Some businesses and their workers say that count overlooks firms that don’t export directly but feed into supply chains. Yanke Machine Shop Inc. in Boise, Idaho, was one of 22 different U.S. companies that fulfilled an order for 150 pieces of construction equipment worth $37 million for a 2013 engineering project in Cameroon.”

“‘What a lapse does is it kills opportunity. You’ve got to have opportunity before you have work on the floor,’ said Dirk Christison, who works in customer support for the heavy-steel fabrication company.”

“At risk could be deals like one that Ray Garcia Jr., the principal of an energy consulting firm that arranges investment for infrastructure projects in Latin America, has put together to export American equipment for a $300 million gas-to-liquid plant in Paraguay.”

“He said the project is one of three in South and Central America that is now in limbo. ‘We have spent two years developing these projects just to have the rug pulled out from under us for political reasons,’ said Mr. Garcia, a self-described conservative Republican from Houston.”

“Mr. Garcia said that without Ex-Im, the deal would go to a foreign company or large multinational, leaving his U.S. manufacturers without contracts. ‘Small businesses that do not have $1 billion in capital to facilitate projects like these do benefit and can compete on a global platform armed with Ex-Im Bank,’ he said.”

“As the prospect of Ex-Im Bank’s reauthorization grows more distant, Mr. Mendell said more firms will run into difficulty as their working-capital loans or credit insurance expires. An overlooked casualty, he added, is that small businesses that have never exported have virtually no financing options right now.”

“Even the bank’s critics have taken note of the potential plight of small firms. On the eve of the agency’s shutdown last month, Sen. David Vitter (R., La.), expressed alarm that financing for thousands of small businesses might be at stake and said the agency should come up with a way for those companies to secure financing from the SBA.”