– World news selected by Gazette editors for Phuket’s international community
PHUKET: Hopes for a quick revival of the shuttered Export-Import Bank were dashed on Tuesday as the U.S. Congress moved toward a short-term extension of highway funding without a provision to renew the trade bank’s expired charter.
That means Ex-Im could be dead in the water for another two months or more, pressuring U.S. exporters who rely on it and meaning it may have to start procedures to wind down operations.
With the House of Representatives adjourning on Wednesday for five weeks, the next legislative chance for Ex-Im backers to put it back in business will not come until September or October.
Meanwhile, bank opponents who label it a nest of “crony capitalism” said that the longer the bank is idled, the closer it comes to a full shutdown. Here are some of the issues involved.
Ex-Im’s roughly 450 employees are still on the job in Washington and around the world, but cannot solicit or process new export credit deals, though compliance work goes on a $112 billion portfolio of outstanding commitments.
The trade bank last year provided $20.5 billion in financing, loan guarantees and trade insurance, supporting $27.5 billion in export sales that it said translated to 164,000 million U.S. jobs. When Ex-Im’s charter expired on June 30, about 195 transactions were frozen with requested financing and guarantee amounts totaling $9.1 billion.
Without reauthorization, these contracts will begin to unwind in coming months, with companies finding alternative financing or foreign customers switching to other suppliers.
Boeing Co has said near-term it will self-finance some aircraft sales to developing countries, but cannot sustain this long-term.
Exporters said as autumn approaches, they will have a harder time persuading customers not to defect to state-supported bids from China, Canada or Europe.
Ex-Im’s $106 million annual operating budget is approved through Sept. 30, the end of the fiscal year, so no employees have been furloughed. Without a charter in the new fiscal year, the 81-year-old trade bank would likely have to start “orderly liquidation,” details of which are unclear under current law.
A group of conservative Republican senators has demanded the bank detail liquidation plans, including layoffs and disposing of its imposing building near the White House.
Ex-Im has said if its authority is not renewed, it would manage its portfolio until maturity, including collecting loan payments and fees and processing insurance claims.
In recent years about $12 billion in obligations has rolled off the bank’s books annually as loans mature. At that rate it might take 10 years for the bank’s loans to be paid off.
— Phuket Gazette Editors