Congress divided over Export-Import Bank
WASHINGTON — When a distributor in Cyprus needed cash last year to purchase products from Brown-Forman Corp., the Louisville-based wine and spirits giant went to the Export-Import Bank.
"We helped (the distributor) secure a loan so they could buy our product and then sell it," company spokesman Phil Lynch said.
The $1 million deal was just a small part of the $1 billion in exports by 21 Louisville area firms that the bank supported between 2007 and 2014, according to bank data.
But the 80-year-old bank's future appears murky as conservative Republicans, including Sen. Rand Paul and Rep. Thomas Massie of Kentucky, mount opposition to a renewal of its charter, which expires Sept. 30.
"The Export-Import Bank is crony capitalism," said Massie, who is co-sponsoring a bill to dissolve the bank. "Some argue that the Ex-Im bank makes money, but so did Fannie Mae and Freddie Mac until the day they didn't."
The bank has provided American exporters and farmers with billions of dollars in financing to sell their products to overseas buyers. It also provides credit insurance and loans to foreign purchasers of U.S.-made goods and crops.
Overall, it has helped American firms export $234 billion worth of products since 2007.
Rep. John Yarmuth, D-Ky., backs legislation reauthorizing the bank for another seven years.
"This is as much of a no-brainer as there is," he said. "It's something that provides demonstrable benefits at no cost to the taxpayers."
Louisville-based companies like Brown-Forman and ISCO Industries LLC, a maker of polyethylene pipes, also support the bank. ISCO has had more than $1 billion in export sales over the past seven years, helped by the Export-Import Bank.
"When a small company is attempting to navigate the international marketplace, it can be difficult to manage the risks related to financing growth and securing payment," ISCO chief sales officer Tom O'Neill said in an e-mail. "The EX-IM bank has helped us to manage those risks and as a result our export business has been strong in recent years."
That has meant adding more jobs, he said.
But Massie believes "the free market is better suited for determining which companies should receive capital investment."
And other Tea Party-backed Republicans agree, noting some of the bank's clients include politically connected corporate giants such as General Electric and Boeing Corp.
Critics also have highlighted recent revelations that four Export-Import Bank employees were suspended or fired for allegedly accepting gifts and kickbacks and steering contracts to favored companies.
Paul was outspoken when the bank's reauthorization was last debated in 2012. "The American people know corporate welfare when they see it," he said on the Senate floor.
However, the Senate at that time approved re-authorization 78-20.
While Paul remains against renewal, Senate Minority Leader Mitch McConnell, R-Ky., has not made his position on the bank clear. But he was among 20 who voted against the charter in 2012.
"I think we ought to take it up," he said in June. "The last time it was up I didn't support it, but I don't think that's an argument for not bringing it up."
Supporters of the bank point out that it supports itself through interest payments and fees and actually makes money for U.S. taxpayers. More importantly, they say, it's vital to the U.S. economy and small businesses competing against heavily subsidized foreign companies.
"At a time when American companies often are competing in a game rigged by foreign currency manipulation, intellectual property theft and insurmountable regulatory barriers, unilaterally eliminating our export credit agency would further handcuff U.S. job creators while allowing competitors in foreign countries to capitalize," Sen. Joe Donnelly, D-Ind., wrote last month in an op-ed in The Hill.
Other countries have their own versions of the Ex-Im Bank, ISCO's O'Neill said.
"For example, India, China, Australia, and Germany all have programs that assist and encourage businesses to look for opportunity outside their own borders," he said. "The U.S. government and U.S. businesses need to make sure we are getting our fair share of the global opportunity too."
Republican-leaning business groups like the U.S. Chamber of Commerce and the National Association of Manufacturing are pressing for reauthorization.
Thirty-one Democratic and Republican governors signed a July 15 letter to congressional leaders urging the bank's continuation.
"It is the right thing to do for our economy, companies and workers," the governors wrote.
Republican lawmakers who back the bank are also weighing in. In a June 23 letter to House Speaker John Boehner, R-Ohio, and House Majority Leader Kevin McCarthy, R-Calif., 41 House Republicans called for a multiyear reauthorization, saying such a move would provide "certainty and stability for U.S. manufacturers and exporters of all sizes."
Boehner, for his part, has treaded carefully on the issue after previously supporting the bank. But he has said the institution's operations merit fresh scrutiny.
McCarthy supported the bank in 2012 but now opposes it. The Californian's September House agenda raised some eyebrows when it omitted mention of the Export-Import Bank, a reflection of divisions over the issue within the GOP.
Yarmuth said it is possible a short-term reauthorization will get through Congress to give lawmakers time to deal with the November election. After that, "let's get cooler heads" to assemble a longer charter, he said.
Failure to renew the bank "is going to have a negative impact on just about every congressional district," Yarmuth warned. "Hundreds of jobs in Louisville are supported by it."
Contributing: Deirdre Shesgreen, Raju Chebium, Christopher Doering and Bart Jansen, USA TODAY