Economy

The Export-Import Bank Has Been Effectively Shut Down

JM Ashby
Written by JM Ashby

The United States Export-Import Bank is a bank that provides financing to foreign customers that want to purchase American exports. The bank services foreign buyers who, for whatever reason, have been turned away from traditional banks. This helps American companies find customers in developing nations or first-time customers in the developed world who need entry-level financing.

That probably sounds like something that would be useful if you're fighting a trade war and aiming to reduce your trade deficit, but the bank has been effectively shuttered since last month when the bank's remaining board members quit.

The New York Times reports that industry lobbyists are now doing everything they can to try get the bank running again, but they've run into multiple problems.

Trump himself has shown vague support for the bank, but appears to have either forgotten about it or doesn't consider it a priority.

That's a problem, but the bigger problem is Republican senators blocking Trump's nominees because they don't believe the bank should even exist.

"They distort markets, impose risk on taxpayers and they’re bad policy for everybody,” said Senator Patrick J. Toomey, Republican of Pennsylvania, who has been one of the most outspoken critics of Ex-Im and favors private financing alternatives.

Mr. Toomey has used procedural tactics to delay the nomination of the remaining nominees to the bank’s board. He said he wanted Mr. Trump to pick a “reformer” like Mr. Garrett, who does not believe in the current mission of the bank. And he said he hoped that the president would urge other countries to unwind their export financing banks as part of his trade negotiations.

You know, electing men who don't believe in government is generally a bad idea, but an even worse idea is electing men for whom words have no meaning.

If you understand literally anything about the Export-Import Bank, you'd understand that virtually everything Pat Toomey says is wrong.

The Export-Import Bank is alternative financing. It finances exports that cannot be financed by private banks. The bank also isn't financed by taxpayers; it's financed by fees and interest payments on the loans it provides.

If the Export-Import Bank is closed, that does not mean business will be redirected to "private financing alternatives," it means there will be no business. There are no other alternatives except those provided by other countries who are not playing grab-ass.

After the bank’s board became empty last month, Jay Timmons, the chief executive of the National Association of Manufacturers, sent letters to every senator urging them to hold a vote on Mr. Trump’s nominees. Mr. Timmons warned that the lack of action was costing American jobs.

“Countries in Europe and beyond have been luring U.S. manufacturers to set up shop overseas to take advantage of foreign export financing because the U.S. system is effectively broken,” Mr. Timmons said. “Manufacturers in the United States have lost billions of dollars in deals, and tens of thousands of American workers have lost opportunities for well-paying jobs supported by the exports that the Ex-Im Bank could have helped secure.”

Unfortunately, I can't say Senator Toomey is alone or that this is an exclusively Republican display of ignorance. Senator Bernie Sanders also attacked the Export-Import Bank during the 2016 election using almost the same language that Senator Toomey is using today. Sanders also claimed the bank provides subsidies to corporations. That's incorrect, but it's also a curious line of attack from a man who believes we should subsidize virtually everything else.

Among the many manufacturers begging Congress to reopen the bank, Boeing and General Electric are the heaviest hitters but even their considerable influence may not make a difference so long as cavemen like Senator Toomey are able to prevent any progress.

  • muselet

    NAM supports R candidates. NAM supports Righty R candidates with particular enthusiasm. That a Righty R has, through sheer economic stupidity, junk-punched NAM is something I find amusing.

    More seriously, the US Export-Import Bank is very important in selling American products overseas. Anyone who thinks otherwise is an economic imbecile. And anyone who thinks other countries will shutter their own export-financing institutions just because Donald Trump asks is delusional.

    In other words, Rs are doing all they can to sink the world economy. Must be a day that ends in a ‘y.’

    –alopecia