The Corner

Economy & Business

The Ex-Im Is Not Back in Business and Yet the Sky Isn’t Falling

Since July 1, 2015, the Export-Import Bank hasn’t been able to extend loans to finance deals above $10 million. That’s almost eight months. For five of those eight months the bank wasn’t even able to extend new loans, small or large, because its charter had expired. However, the reauthorization of the bank’s charter hasn’t brought the crony program back from the dead entirely. In fact, the situation hasn’t changed much at all. That’s because the agency lacks enough board members to authorize deals above $10 million.

These large loans over $10 million are the bread and butter of the program — a program that specializes in serving big businesses. According to the bank’s data, 84 percent of the value of approved deals between October 2006 and September 2014 (the whole range of the dataset that’s online) were above $10 million. Interestingly, we haven’t heard threats of an upcoming apocalypse if the bank doesn’t come back fully to life from Boeing and GE, the two main beneficiaries of the bank’s activities. As they resume their lobbying activities to sway politicians and stack the deck in their favor, they are strangely silent on this issue.

You would think that Democrats would like this situation, since it makes Ex-Im a truly small-business-focused program. But you’d be wrong. In fact, they are actively lobbying the president to put pressure on the Senate to confirm members to the Export-Import Bank board of directors. The Hill reports:

Two Senate Democrats are pushing President Obama to urge the Senate to confirm members to the Export-Import Bank board of directors.

“We fought for Ex-Im Bank’s reauthorization so it could continue to level the playing field for U.S. exporters to help them compete and win in the global marketplace. We need a director to be confirmed so Ex-Im Bank’s Board can again approve deals that drive economic growth,” Sens. Patty Murray (D-Wash.) and Maria Cantrell (D-Wash.) wrote in a letter sent Tuesday to the president.

Senator Richard Shelby (R., Ala.) has made it clear that a confirmation hearing is not on his priority list. In January, Melissa Quinn at the Daily Signal noted that Shelby was “waiting for the White House to send a nominee for vice chair for supervision of the Federal Reserve before moving on more than a dozen nominees.”

I wonder how the battle over the nomination of a Supreme Court justice will affect the fate of the Ex-Im Bank. If anything, I expect that it makes the Ex-Im nominations even more unlikely than before. But we will see.

We can be sure of one thing, though: If the Bank is able to function at less than 20 percent capacity for a whole year (four more months to go) without the sky falling on our heads, we should reconsider the need for the bank. I can’t deny that I would like that. Until then, I will enjoy the fact that Ex-Im isn’t fully back from the dead and that a few cronies still continue to be defeated.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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