US Export-Import Bank to be Granted Temporary Extension

The Export-Import Bank of the United States (US Exim), a US government export lender and insurance provider, is to have a temporary stay of execution, according to reports across the Atlantic.

Politico reports that the bank, which provides loans to overseas companies to buy US goods, will have its charter extended until June 2015, after a hard fought battle by members of the Republican Party to close it down seems to have failed, for now.

House Speaker John Boehner said on Tuesday 9 September that he "thinks a temporary extension of the Export-Import Bank is in order". Earlier in the year, Boehner, who was a key player the last time the bank needed its charter extended, refused to confirm his support.

This extension may provide short-term relief, and will be part of the plan to continue government funding until December, which is expected to be voted upon in the House of Representatives this week.

But US Exim has become a focal point of the seemingly perpetual battle to extend the US government's annual budget and the debate is likely to rumble on well into 2015.

Bipartisan support for US Exim was common through the financial crisis, when it was relied upon to fill the gap in the market left by private sector lenders, who became more risk averse and reduced their lending for exports.

The argument of conservative members of the Republican Party is that now the financial crisis is behind us, private banks are able to handle this duty without the support of the public sector.

But another complaint frequently angled at US Exim is that it provides "corporate welfare". Critics leap on the fact that 76% of its support in 2013 went to its top 10 beneficiaries, which include Boeing ($8.3bn), General Electric ($2.6bn), Bechtel ($1.8bn), Applied Materials ($1.5bn) and Caterpillar ($1.3bn).

Its charter also states that it must make available "not less than 20% of its lending authority to small businesses", a target it has met in recent years, but fallen short of in others.

Traditionally, the Democrat Party has been a vehement supporter of US Exim, citing the fact that is supported around $233bn of American exports in the seven years to 2014. Players on both parties have devoted serious political currency to debating its existence.

Some Republicans are looking to this particular debate as an opportunity to steer the party's direction further right, while Democrats see it as another chance to skewer the opposition party's leadership, painting it as dysfunctional in the eyes of the electorate.

The House majority leader Kevin McCarthy, a Republican, has been US Exim's staunchest critic and is unlikely to waver in his opposition, despite the extension. "I think US Exim is ... something government does not have to be involved in. The private sector can do it," he said earlier this year.

However, private sector beneficiaries have called on both sides to quit bickering and get behind an institution which provides support for a recovering US exports sector.

"The mere uncertainty around the bank and the mere debate has already caused us to lose business. We cannot get any private bank in the United States to do what the Ex-Im Bank does," Tyler Shroeder, a financial analyst at Air Tractor, a company which has benefited from the bank's support, told Foreign Policy.