More than 80 years after its founding, the Export-Import Bank of the United States — instituted under President Franklin Roosevelt's New Deal to help American companies sell their good overseas — may be on the verge of shutting down. It's been under attack by not only environmental activists but also by Republican presidential candidates, Tea Partiers, and the Koch brothers. And on July 1 its authorization expired — and Congress has now adjourned for the summer.
For those wondering what might happen should it close, there is the "Plan for Orderly Termination of Ex-Im Bank Operations in the Event of Failure to Enact Regular Appropriations or a Continuing Resolution." It's a three-page paper by the agency itself from December 2014 that VICE News obtained in a FOIA request. Check out the full plan here.
The document's title may sound complicated, but the plan itself is not. For one thing, "U.S. exporters will be unable to obtain any new Ex-Im Bank financing which may result in loss of export sales." That's already been the case since July 1.
Here's what else will happen if Congress stops appropriation: The bank will halt employee travels and force as many as 403 of its 420 employees to take unpaid time off. Only 17 employees will remain — plus the employees who are appointed by the president and confirmed by the Senate, because they are exempt from furloughs, and 28 employees that are on an on-call status.
This shutdown could be "implemented within one-half day."
But the companies that received guarantees or credit from the Ex-Im Bank can relax. The bank will continue to process and deposit funds it receives and will pay claims under its guarantee and insurance programs in the case of a short-term interruption. And the renovation of the Ex-Im headquarters will go on as planned — which signals that the bank's officials do not seem to doubt their agency will be revived.
They should not be so sure though. Outside experts consider it possible that the bank could at least be hindered to hand out new loans and guarantees for some months or even a year. "It is quite possible that the Ex-Im Bank is not reauthorized this year or the next," Bill Galston, a senior fellow at Brookings Institution, told VICE News. Whether it can be shut down permanently and completely is a different question, he argues. "But depending on who will be in charge next year, that might happen, and might happen fast."
One thing is sure: The attacks will continue. Conservatives see Ex-Im Bank as offering "corporate welfare" for a few well-connected companies. They have a point when one looks at the largest beneficiary of Ex-Im Bank: Boeing. Though the bank itself claims that 90 percent of its transactions directly supported small businesses in 2014, according to a pie chart on the agency's website, only 39 percent of the export value supported by the Ex-Im Bank in 2014 went to small businesses.
The aircraft and avionics industry alone made up for 30 percent of the export value supported, nearly $8 billion. "The Bank gives most of its funds to people who are trying to sell airplanes," Galston said. "That is why its opponents have been calling it 'Bank of Boeing.'"
The fiercest opponents of the bank are the Koch brothers. They have made their opposition louder and more visible lastly by tying their financial support for Republican presidential candidates to their opinion on the bank.
Environmental activists have criticized the bank repeatedly for different reasons. Doug Norlen from Friends of the Earth, a network of environmental organizations, claims that in recent years, "the Ex-Im Bank has financed billions of dollars in harmful extractive and fossil fuel projects that worsen climate change, harm human health, and lead to human rights abuses." In 2013 President Obama acted to minimize that when he announced an end to public financing for coal plants abroad, except in limited circumstances. But that was not enough for Norlen. Without reforms he would prefer to see the agency closed.
The bank itself insists upon being a vital tool for small businesses. And it has an important ally: President Barack Obama. On a fact sheet that the White House provided, it is stated that "90 percent of Ex-Im's transactions—more than 3,340—directly supported American small businesses." In this document the White House strongly promotes the idea of reviving the bank in order to help "U.S. businesses succeed in global markets and grow their exports."
Up to now it is unclear whether Obama will succeed — or whether the bank will have to head toward the plan B that VICE News acquired. Most of the three-page document covers only what happens if the bank is shut down for a limited time. The plan for a longer or even complete interruption is unclear, indicating that the bank might recall staff to handle claims processing and disburse funds and that they will continue to pay claims.
Officials appear hopeful. Fred P. Hochberg, chairman of the bank, wrote in a letter to his clients, "We hope to get back to work equipping you to grow your business and support American jobs through exports." He claims that he "can report that the United States Senate recently voted 64 to 29 for a five-year EXIM reauthorization bill." He considers that "super majority vote a strong signal of bipartisan support for EXIM."
But Norlen told VICE News, "I have been watching the bank for 15 years now, and I have never seen such a vigorous fight before. Nobody knows what will happen, but for sure Ex-Im Bank has never been so close to termination."
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