McCarthy Rejects Ex-Im Reauthorization, but Industry Proponents Pledge to Continue Fight
House Majority Leader-elect Kevin McCarthy, R-Calif., flatly rejected reauthorization of the Export-Import Bank during June 22 remarks on Fox News Sunday. The last reauthorization of the credit agency directed the administration to "wind down" the bank and pressure other countries to move to eliminate their state credit agency counterparts, said McCarthy. Ex-Im Bank is "something that government doesn’t have to be involved in," said McCarthy. "It’s something that the private sector can be able to do."
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After current Majority Leader Eric Cantor, R-Va., lost in a primary on June 10, House Republicans voted to propel McCarthy to the majority leader position (see 14061804). The House Republican caucus also elected Rep. Steve Scalise, R-La., as House Majority Whip, the position McCarthy currently holds. Scalise's office did not respond for comment. Both McCarthy and Scalise will take office on July 31. Cantor and Speaker of the House John Boehner, R-Ohio, have consistently supported the bank's reauthorization (see 14031813).
But industry proponents are still advocating for Ex-Im ahead of the bank's Sept. 30 expiration date, said Coalition for Employment Through Exports President John Hardy and other industry officials at a June 20 National Foreign Trade Council roundtable. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, continues to represent the most significant obstacle to passage of a reauthorization bill for the credit agency, lawmakers and industry officials say (see 14061804). Reauthorization legislation will have to pass through the Financial Services Committee. The Committee is set to hold a hearing on Ex-Im on June 25 (see 14062004).
The path forward on reauthorization remains questionable, however, said Hardy at the roundtable. “There is no readily agreed upon route for getting there,” Hardy said. “Obviously Chairman Hensarling, as Chairman of the Financial Services and having taken the position that he’s taken, that certainly creates significant impediments to the sort of traditional route that would flow.” Conservative lawmakers and advocates have regularly criticized the bank for “crony-capitalist” financing (see 14050533).
The reauthorization legislation will have to include reforms to the bank in order to sell the measure to Congress, said Hardy, while declining to elaborate on what specific reforms could be included. Lawmakers have not yet introduced reauthorization legislation in either the House or Senate. Hardy rejected legislation supposedly being considered at the moment by the Chairman of the Financial Services Committee on Monetary Policy and Trade John Campbell, R-Calif. “There is one bill that’s out there. It’s not very well understood, including by ourselves,” said Hardy. “[Campbell] has not publicly disclosed that. But from what we have heard, we have some significant concerns about the viability of that bill.”
Industry is pressuring Congress to take up a continuing resolution that would allow the bill to continue to function if lawmakers fail to reach consensus on reauthorization legislation, said the officials at the roundtable. In the meantime, the uncertainty is discouraging U.S. firms from seeking bids for export sales, said James McDevitt, chief operations officer at Applied Machinery Corporation, a firm that exports land oil rig supplies. “At the end of the day, we’re stepping back and looking at, ‘do we want to bid this project? Are we going to go out and do that?,’” said McDevitt. “We have to know for sure its going to be reauthorized before we commit.”
Commercial banks have now become more active in the debate since Ex-Im was last reauthorized in 2012, said Hardy. “In comparison to last time around, we did not have any commercial banks who were prepared to speak up and to help explain the dilemma for them, the role that they can play in terms of complementing, supporting, reinforcing what the bank is doing,” he added. “And now we’ve got an array of banks. People understand the gravity of the situation.”
U.S. commercial banks do not independently provide financing similar to Ex-Im Bank financing because the projects are often deemed too high risk. The termination of the bank will likely devastate firms that utilize the program, said Tom Parides, Senior Vice President at Ex-Im Bank partner PNC Bank, during the roundtable. “If you have a deal that matures on October 30th, that liquidity that Ex-Im Bank has provided is going to disappear and, in some cases, will do irreparable damage to the company because of that loss of liquidity.” -- Brian Dabbs