New Export-Import Bank President Has Opportunities for Reform

Reta Jo Lewis is about to become the next president of the Export-Import Bank. The Senate confirmed her nomination yesterday. Called Ex-Im for short, the bank seeks to boost U.S. exports by guaranteeing loans for buyers of U.S. aircraft and other goods. In many years, Boeing has been the beneficiary of as much as half of Ex-Im’s business. Around Washington, Ex-Im is informally known as the Bank of Boeing.

Unlike most other agencies, Ex-Im’s charter expires every so often. If Congress does not reauthorize it, it will close. The last two reauthorization rounds were contentious, with members of both parties calling out Ex-Im on grounds of corporate welfare and ineffectiveness. Ex-Im’s charter lapsed for a good part of 2014 and 2015, mostly closing the agency. It was only allowed to administer its existing portfolio, and was unable to take on new projects. These can exceed $20 billion per year when the agency is at full strength.

During Ex-Im’s shutdown, Boeing, the company most heavily affected, was easily able to find other financing options for its foreign buyers, and posted record profits. Ex-Im has remained open since, survived another reauthorization battle in 2019, and is due for its next reauthorization in 2027.

CEI has a long track record of favoring Ex-Im’s closure. See, for example, my 2014 paper giving 10 reasons to close Ex-Im, and op-eds for American Banker, the Washington Examiner, and Inside Sources, among other outlets.

Since 2027 is a ways off, incoming Ex-Im President Lewis may be interested instead in my paper about ways to reform Ex-Im. There are several ideas she can pursue during her term as Ex-Im’s president and board chairman:

• Ex-Im should be required to use the same accounting standards as other federal agencies. This would prevent funny business that Ex-Im has used in the past to show a profit while actually losing money.
• Ex-Im should have a 10 percent cap on how much of its business can benefit a single firm. This would prevent its capture by companies such as Boeing.
• Ex-Im should remove its quota for green projects so it can choose projects on the merits.
• Finally, Ex-Im’s in-house definition of “small business” includes companies with up to 1,500 employees. This definition needs to be made more realistic, so its quota of small business projects actually goes to small businesses.

The best Ex-Im reform is to end it. But that will have to wait until 2027.