Washington, DC – The Export-Import Bank of the US (EXIM) is in danger of extinction as incoming House Majority Leader Kevin McCarthy (R-California) has said that he would not support reauthorizing its charter once it expires in September.
McCarthy, speaking on a Sunday news program, said he felt EXIM’s role in guaranteeing loans made to help US companies export their goods “is something that the private sector can be able to do.”
His comments echoed critics of the bank who say the bank creates too much interference in private markets.
According to McCarthy, “One of the biggest problems with government is they go and take hard-earned money so others do things the private sector can do. That’s what the EXIM does.”
If the bank’s charter isn’t reauthorized, it could continue servicing the loans it already has made and backed, but it wouldn’t be able to authorize new loans.
The bank, created 80 years ago, borrows money from the Treasury Department and pays interest on the funds to the Treasury. It then lends that money out and charges a higher interest rate, plus a fee, that generate its revenue.
EXIM has been technically self- sustaining since fiscal 2008, though Congress provides funding for the bank’s Office of Inspector General and sets the bank’s lending limit.
In 2012, lawmakers raised the bank’s lending limit to $140 billion from $100 billion. In fiscal 2013, the bank authorized $27 billion to support an estimated $37.4 billion in US export sales.
EXIM also sent $1.06 billion to the US Treasury, money it earned from interest and fees it charged its customers.
The White House has said that EXIM is critical to helping sustain US exports. Close to 60 other countries have agencies to help finance exports, and supporters of the bank have said that ending the Export-Import Bank would put U.S. companies at a competitive disadvantage.
A number of organizations including the National Association of Manufacturers, the Business Roundtable and the US Chamber of Commerce, as well as a number of large- and small-sized US exporters that have been assisted by the bank are joining forces to push for its reauthorization.