A new paper released today by the Competitive Enterprise Institute (CEI) calls on Congress to either allow the U.S. Export-Import (Ex-Im) Bank to close entirely or significantly reform the Bank’s operations.
The Ex-Im Bank was created in 1934 to boost exports by private American businesses through loan guarantees, direct loans, reinsurance and other financial products. Unlike most federal agencies, the bank must be reauthorized by Congress in order to stay open and operating. The bank’s current authorization expires on September 30, 2019.
“The Ex-Im Bank is compromised by internal corruption, constantly pressured by corporations seeking special favors, and creates economic inefficiencies by distorting markets. Congress should allow its authorization to expire and close its doors permanently,” said CEI senior fellow and paper author Ryan Young. “The Bank recently emerged from a nearly five-year period of reduced activity, which saved taxpayers an astonishing $47.9 billion – an average of $12 billion per year. Shuttering the bank could save Americans billions more.”
In July 2019, Sens. Kevin Cramer (R-N.D.) and Kyrsten Sinema (D-Ariz.) introduced a reauthorization bill to keep the Ex-Im Bank open through September 30, 2029 and most political observers expect it has the votes to pass. Young encourages lawmakers to learn the lessons of the 2014 reauthorization fight and seek reforms, if passage is assured.
“If Congress does not have the votes to close the Ex-Im Bank, principled senators should insist on specific reforms that would restrain the bank’s power, including shortening the reauthorization period to three years to allow for more regular review of the Bank’s performance. This and other reforms will potentially save taxpayers billions of dollars and serve as a template for significant reforms to even larger agencies,” said Young. “Congress should also consider extending Ex-Im’s reauthorization requirement to more federal agencies, putting the burden of proof on agencies to justify their policies, rather than on reformers.”
In addition to shortening the reauthorization cycle, the paper recommends several specific reforms, including:
- Ending the bank’s reinsurance pilot program;
- Cutting the bank’s portfolio cap to $60 billion from $140 billion;
- Maintaining the quorum requirement for transactions over $10 million;
- Using the same accounting standards as other federal agencies;
- Instituting a 10 percent cap on what percentage of its business can benefit a single firm;
- Removing its quota for green projects;
- Lowering the definition of a “small business” to 100 employees from the current standard of 1,500 employees.