Besieged Ex-Im Bank has helped local companies
WASHINGTON – Supporters of reauthorizing the Export-Import Bank of the United States say some New York businesses will have a tougher time growing sales overseas if Congress doesn't vote to let the bank make new loans after Sept. 30.
The bank, the federal government's export credit financing agency, has helped 126 New York companies finance $2 billion in exports since 2012.
Rochester-based Industrial Furnace Co. has used $329,889 in Export-Import Bank financing since 2012 for its initial entry into the export market selling steel-cast parts for high-temperature furnaces in the Czech Republic, Israel and Brazil.
Commodore Technology in the Ontario County community of Bloomfield began using Export-Import Bank financing during the Clinton administration, when it sold food packaging equipment in Ghana. The bank also has helped the company complete deals in Paraguay, El Salvador and Bulgaria.
"Would these projects have happened without it? I doubt it," Commodore CEO George "Brad" Braddon said. "A lot of times what happens in these places, the local in-country banks are not lending."
Commodore's most active current export market is Russia, but the company has not needed Export-Import Bank financing for those deals, Braddon said. According to the bank, Commodore has used $2.7 million of its financing since 2012 to support $14.9 million in export sales.
Other companies in the region that have used the bank since 2012 include electronics manufacturer Harris Corporation in Rochester ($25.58 million in financing for $32.4 million in exports), Image Sensor Technologies in Rochester ($54 million in financing for $70 million in exports), Chapman Instruments of Rochester ($1.28 million in financing for the same dollar value of exports) and the O-at-ka Milk Cooperative in Batavia ($9.5 million in financing for the same dollar value in exports).
House Republicans who are blocking a vote on reauthorization — led by House Financial Services Committee Chairman Jeb Hensarling of Texas — say taxpayers shouldn't be underwriting risky deals that commercial banks won't. They argue that the Ex-Im Bank is rife with "crony capitalism," and the free market will operate more efficiently if its charter expires.
All six House Republicans in the New York congressional delegation, however, back reauthorization, along with all delegation Democrats.
"I have been very outspoken and I have found other members very receptive to my firsthand experience with it," Republican Rep. Chris Collins of Clarence said of the Ex-Im Bank. "I know it works. And it's all about jobs and the economy and reducing our trade deficit for all the right reasons. This isn't a government handout. People pay a fee. It returned $1 billion to the government last year in fee income."
Collins, who owns several small businesses in the Buffalo area, initiated a pro-reauthorization letter to House Republican leaders in June that was signed by 42 GOP lawmakers.
Democratic Rep. Louise Slaughter of Fairport, who describes herself as a "very strong supporter" of the bank, has a dim view of its critics.
"I don't see a lot of brain power in a lot my colleagues," Slaughter said. "I'm not sure they have any sense of what it is or what it does. Because why in the world would you not like a company that pays for itself, puts $1 billion back in the Treasury and helps American business?"
The Export-Import Bank, which provides loan guarantees, working capital and insurance for commercial bank loans, returned $1 billion to the Treasury last year from its profits.
Its supporters note that 59 other countries — including China, Germany, Japan, Brazil, South Korea, Mexico, France and the United Kingdom — have their own export credit financing agencies helping manufacturers win new contracts.
"Our trading partners have larger export credit agencies and are growing them to boost their exports much more than the United States," Jay Timmons, president and CEO of the Nation Association of Manufacturers recently told reporters. "To win in the global marketplace, we simply can't let a political purity test trump pragmatic competitiveness and policies. The fact is, businesses need export credit assistance in the 21st century economy."
Democratic U.S. Sen. Kirsten Gillibrand of New York said the Ex-Im Bank most benefits small businesses just getting off the ground as exporters.
"If your local community bank isn't familiar with companies in Italy or cross-border transactions, they aren't going to loan you money," she said. "But Ex-Im is going to loan you money. It's just another source of capital that's helpful."
Gillibrand, who did an April "fly around" to several upstate communities with Export-Import Bank President Fred Hochberg, said some small-business owners they met with were unaware of the opportunities for export assistance.
"If Ex-Im went out of business and wasn't reauthorized, what I think it would mean is there would be less opportunity for New York businesses," she said. "And some might not ever get off the ground. Because it's usually that early stage financing to start increasing exports, to introduce our great products to new markets."
Gillibrand expects the reauthorization to pass the Senate in September.
"Most of the Senate Republicans that I've talked to think it's a great business model," she said. "It made $1 billion last year. It's not only good for our government, it's good for the bottom line."
Collins expects the House Republican leadership to allow a September floor vote on a three- to six-month reauthorization of the bank while "the loan program can be looked at and possibly tweaked in a way that satisfies some of the more conservative members who right now are out there saying terminate it."
A major target of the GOP critics has been loans to airlines owned by foreign governments to help them purchase commercial passenger planes from Boeing.
The critics, however, overlooked the Export-Import Bank's assistance to small businesses, Collins said.
"I think I can safely say the two small-business programs — the working capital loan guarantee program ... and the accounts receivable insurance — were somewhat ignored by those who were really upset by direct loans to countries," he said.
Congress has mandated that 20 percent of the dollar amount of loans backed by the Ex-Im Bank go to small businesses, but critics note that the bank fell short of that mark last year.
Conservative Republicans also point to corruption among the bank's staff.
The bank's defenders note that only four staffers have been accused of wrongdoing — including accepting inappropriate gifts and kickbacks — and all four were reported by whistle-blowing co-workers. Three have been fired.
Forty of the bank's deals are under investigation, but all involve efforts by outside groups to defraud the bank.
The Senate is expected to approve a five-year reauthorization after the August congressional recess. The Senate legislation may be paired with another must-pass bill that will be sent to the House, such as a stopgap budget bill to keep government agencies running after the Sept. 30 end of the fiscal year.
If the House approves a short-term reauthorization, as Collins predicts, the two chambers will have to negotiate a compromise.