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Showdown looms over Ex-Im Bank

Fight waged over whether the support it gives businesses is needed.


It is just a tiny sliver of the federal government.

Yet the U.S. Export-Import Bank, dwarfed in size by the Pentagon and most federal agencies, is at the center of a brawl pitting American companies against a determined band of congressional Republican conservatives on Capitol Hill and their allies at conservative organizations.

At stake is whether conservatives can prevent re-authorizing an agency that offers credit and loan guarantees to foreign customers buying U.S. goods.

The companies and backers in Congress say the investment is low risk to taxpayers and allows American businesses to reach new markets that supports jobs at home.

Opponents say it’s a government handout to companies that don’t need one.

Ohio, and this region, has been a big participant in the program. Between 2007 and 2014, more than 360 Ohio companies relied on credit guarantees provided by the bank to export $3 billion worth of products, with many of those companies scattered along the Interstate 75 corridor linking Dayton to Cincinnati.

While corporate behemoths such as GE Aviation in suburban Cincinnati use the bank’s help to export their expensive aircraft engines, the bank also provides a lifeline to smaller firms such as Dayton Superior of Miamisburg and Greene Tool Systems of Dayton.

The U.S. Senate earlier this year handily approved renewing the bank, which is supported by President Barack Obama, Sens. Sherrod Brown, D-Ohio, and Rob Portman, R-Ohio; House Speaker John Boehner, R-West Chester Twp.; and Rep. Mike Turner, R-Dayton.

But the agency has smacked into intense opposition in the House from Republicans Jim Jordan of Urbana, Steve Chabot and Brad Wenstrup of Cincinnati, and others. Republican presidential candidates John Kasich of Ohio, Marco Rubio of Florida and Ted Cruz of Texas are also opposed, as are the wealthy Koch brothers, who own Koch Industries in Texas and are big donors to conservative candidates.

“It’s just amazing to me this has become partisan,” Brown told Ohio reporters this month in a conference call. “For some reason, it has become a presidential litmus test.”

‘It doesn’t cost taxpayers anything’

Rick Kennedy, a spokesman for GE Aviation in suburban Cincinnati, said it was “unconscionable” that any Ohio lawmaker “could not see the value of the Ex-Im bank. It doesn’t cost the taxpayers anything.”

Other Ohio businesses echoed similar sentiments.

“The bank serves an important purpose, especially if you are in the export business,” said Lutz Richter, vice president and chief financial officer of Dayton Superior. “We would very much welcome if the politicians in Washington could agree to a solution to allow the Ex-Im to take on new business again.”

Leah Simoes, owner of Davenport Aviation, a small 10-person firm in Columbus that exports aircraft spare parts, said the bank has “really helped us grow our business. We definitely don’t want to see it go away. It’s important for the country and businesses like ours.”

But Jordan and the others have held firm, even as businesses in their congressional districts push for renewal. Ex-Im Bank figures show companies in Jordan’s district relied on the bank to export $150 million worth of goods from 2007 through last year. Still, the Ohio congressman remains adamant that the program is a corporate giveaway that should be ended after 80 years of operation.

Jordan joined former Democratic Cleveland congressman Dennis Kucinich this year to write in USA Today that “taxpayers should not be forced to support welfare for some of the world’s largest companies,” calling it a “slush fund for a handful of well-connected mega-corporations.”

Jordan and other conservatives rallied earlier this year to prevent the House from voting on renewing the bank, but backers — including Rep. Pat Tiberi, a suburban Columbus Republican who is a close ally to Boehner — say a floor vote will take place later this fall.

Major companies such as General Electric are applying intense pressure on lawmakers to approve the bank. Earlier this month, GE officials made clear that opposition to the bank by Kasich and Jordan was one of a number reasons the company did not consider Cincinnati as a site for its corporate headquarters.

The latest salvo between GE and Congress came Thursday when the company announced that it has reached a new export financing agreement with the United Kingdom.

The company says access to export financing is driving other deals in Europe, a development that could pose a threat to Ohio jobs. GE is Ohio’s largest manufacturing employer.

At a news conference last week at GE Aviation Electrical Power Integrated System Center in Dayton, Turner called on Congress to reauthorize the Export-Import Bank and predicted that if it gets to the House floor, “a majority of Congress will vote for it.”

Risk to taxpayers debated

The Export-Import Bank says it helped support $27.5 billion worth of exports and 164,000 jobs last year. Although the largest chunk of the guarantees provided by the bank benefits large companies, most of the companies that rely on the bank are small firms.

Created during the Great Depression, the bank allows large companies to compete against foreign manufacturers that might be subsidized by their own governments. And it can guarantee bank loans to foreign customers buying products from small American firms or domestic banks financing exports.

The bank insists it has a default rate of less than 1 percent since it first was formed. Because it charges fees on transactions, the bank claims it runs a surplus, leading it to send $1.6 billion to the federal treasury during the past two years.

Critics don’t believe the numbers. They cite a report by the non-partisan Congress Budget Office suggesting there was a greater risk to the taxpayers if the bank operated under what is known as “Fair Value Accounting.”

Under this concept, opponents say, the bank’s transactions should be calculated on the risks posed to private investors during the lifetime of the loan.

Testifying last year before House Financial Services Committee, CBO director Douglas Elmendorf said, “The government is exposed to market risk through its credit programs because when the economy is weak, borrowers default on their debt obligations more frequently.”

Elmendorf did not say the bank lost money through fair value accounting concepts. But Americans For Prosperity — founded by the Koch Brothers — cites a study by the Massachusetts Institute of Technology claiming the bank loses $200 million a year.

Tiberi, a member of the House Ways and Means Committee, called the fair value accounting argument “disingenuous,” saying “it is based on assumptions, projections, and hypotheticals.”

“The accounting method the U.S. Treasury uses clearly shows that the Ex-Im Bank earns a profit and actually returns money to the Treasury,” Tiberi said.

Two views

Conservatives contend the bank fills a role better left to the private sector. Wenstrup, whose district includes GE Aviation, said in a statement, “If the bank is truly a profitable enterprise, I am sure companies in the private sector will be happy to find a way to serve that business.”

But Davenport Aviation’s Simoes dismissed the criticism of the bank, saying it comes from those who don’t have the experience to back up their theories.

“They’re not the ones running the businesses and seeing the need for it,” she said.

Staff Writer Chelsey Levingston contributed to this report.



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