Brunell: Time to reauthorize the Ex-Im Bank

Since 1935, the Ex-Im Bank has provided financing to foreign companies seeking to purchase American goods. The purchasers buy needed products, and American companies export billions of dollars’ worth of goods each year, $37 billion in 2013 alone.

The bank — a federal agency — borrows money from the Treasury Department and pays interest on the money borrowed to the Treasury. It then lends that principal to foreign companies at higher interest rates.

The Ex-Im Bank is self-supporting through interest payments and fees. No tax money is used in its operations and, in fact, the bank generated a $1 billion surplus for the U.S. Treasury in 2013. Congress funds the bank’s Office of Inspector General and sets the bank’s lending limit.

Companies such as Ethiopian Airlines need the Export-Import Bank to secure its loans to buy Boeing aircraft. It intends to buy more than two dozen planes in coming years but reported it will consider going to European rival Airbus if the U.S. Ex-Im Bank stays out of business, the Wall Street Journal reported.

The Ex-Im Bank has been clouded in controversy. Some in Congress question whether the federal government should be involved in loans and loan guarantees for foreign customers of U.S. companies. They say companies such as Boeing should finance aircraft sales.

The U.S. airline industry, led by Delta Air Lines, sued the Ex-Im Bank over its long-standing support for Boeing’s sales to foreign airlines. Delta and other airlines say the loans allow foreign carriers to purchase planes at below market prices, giving them an unfair advantage against U.S. carriers on international routes.

But a strong dollar and weaker growth hamper U.S. exporters. America’s exports of goods and services were down 3 percent from a year earlier in the first seven months of 2015. Exports fell 3.2 percent in August, according to the Commerce Department. Declining exports with a lack of U.S. Ex-Im Bank funding is “a double-whammy,” said David Ickert, finance chief of Air Tractor, which makes small aircraft for the agriculture industry.

The bottom line is many foreign companies say they can’t secure financing from commercial banks without government-backed financing or guarantee, and most developed countries, our competitors, secure loans through their own ex-im banks.

As difficult as it may be, it is in our collective best interest to resurrect the U.S. Ex-Im Bank.

Don Brunell, retired as president of the Association of Washington Business, is a business analyst and writer. He lives in Vancouver and can be contacted at TheBrunells@msn.com.