Since July 1, the U.S. Export-Import Bank, the country’s official export credit agency providing financing and insurance for global trade with U.S. companies, has been unable to take on new business.
The stoppage came as a result of inaction by Congress, which adjourned for its August recess without reauthorizing the bank.
This has had a damaging effect on businesses large and small that utilize the Ex-Im Bank.
Over the bank’s more than 80-year history, it largely received bipartisan support until a growing chorus from conservative Republicans put a halt to bank’s reauthorization, claiming it serves as a form of corporate welfare, according to U.S. Sen. Chris Murphy, a Democrat and vocal proponent of the bank.
“Jobs in Connecticut rely on the Ex-Im Bank, plain and simple. If it doesn’t get reauthorized, people in Connecticut will be out of work and I’m sick and tired of Tea Party Republicans playing games with the lives of people in my state,” Murphy said in a statement following a House of Representatives vote to reauthorize the bank passed in late October.
“If we continue to delay, businesses in Connecticut will suffer. Like the manufacturer in New Britain who told me financing from the Ex-Im bank is ‘indispensable’ for his company to stay competitive in the global market. And a small solar company in Bethel was forced to lay off workers because it lacked financing the bank could have provided,” he said.
Voicing support for letting authorization for the Ex-Im bank to lapse, Jim DeMint, a former South Carolina senator and current president of the conservative think tank The Heritage Foundation, referred to the bank as a “monument to crony capitalism.”
“This hoary relic of the Great Depression has been plagued with corruption and fraud. Its lending practices primarily benefit a handful of wealthy American mega-corporations and, far too often, unsavory interests abroad,” DeMint wrote in the weeks after the bank’s renewal lapsed.
In 2014, the Ex-Im Bank insured or financed $79 million across 10 Fairfield County-based companies for a total of $50 million in export value.
Since 2007, total exports from Fairfield County-based businesses financed through the bank amount to more than $1 billion.
Statewide since 2007, 114 Connecticut exporters have received support from the bank totaling more than $4 billion in export value, nearly half of which was generated by 27 Connecticut aviation and aerospace companies, according to a report released by Murphy’s office detailing the importance of the bank to the state’s aerospace corridor.
The impact of the lapse has also been felt downstate in Fairfield County, where members of The Business Council of Fairfield County have benefited from the bank and its ability to allow them to compete on a global stage, said Joe McGee, vice president of public policy and program for the business council.
“Our members use Ex-Im Bank; it has been a very valuable tool. It allows us to sell competitively overseas and offset the fluctuations in the value of currency, which can have a huge impact on pricing,” he said. “We just don’t understand the desire of certain elements of the Congress to eliminate it. The idea it is corporate welfare escapes us.”
It is not only small and midsize businesses calling for the reactivation of the bank; Fairfield-based General Electric has been a major supporter.
“If you told me a decade ago this would ever be something our country would eliminate, I would have said you’re crazy,” GE CEO Jeffrey Immelt said at a meeting of The Economic Club in Washington D.C. on June 17.
“In 27 countries, including South Africa, India and Mexico, you are required to have Ex-Im financing just to bid on a large infrastructure project,” he said. “And in a world of competing countries, and competing credit agencies, we’re supposed to believe shutting ours down is a good idea? Why, then, is ours the only government on Earth — the only government on Earth — even considering such a move?”
GE made waves on the Ex-Im issue when it announced in September GE Power & Water would stop manufacturing gas engines in Waukesha, Wisconsin and open a new facility to build engines in Canada, citing the lapse in the Ex-Im bank’s renewal and access to Canada’s export credit agency.
“GE is currently bidding on $11 billion of projects that require export financing. While more than 60 other countries have export credit agencies that support domestic manufacturing for export, the U.S. does not,” GE’s statement read. “GE will build its new facility in Canada in order to access additional support from the country’s export credit agency, Export Development Canada.”
McGee said he and business council members are hopeful the Senate will take similar action as the House and renew the banks charter.
“There seems to be a sense of urgency that has developed around this,” he said. “We do think there is movement here.”
Murphy called renewing the bank a “no-brainer,” but whether or not the path ahead for the bank will be so simple is unclear.
While the House passed a standalone bill to renew the bank, Republican Senate Majority Leader Mitch McConnell has opposed bringing the bill to the Senate floor; however, there may be future opportunities to pass the legislation as part of a highway bill currently under debate in Congress, according to published reports.