Obama: Ex-Im Bank Fight Hurts U.S. Companies

By Dow Jones Business News, 

By Damian Paletta

WASHINGTON--President Barack Obama on Friday called for Congress to reauthorize the U.S. Export-Import Bank, saying the political impasse is hurting U.S. companies as they compete against foreign firms.

Mr. Obama's comments, which came at a news conference in response to an unrelated question, illustrate how pressing the Obama administration is starting to view the gridlock over the relatively arcane agency now at the center of a fierce political fight.

He used the analogy of running a Ford dealership, and he said he would be at a competitive disadvantage if a Toyota dealership across the street were allowed to offer financing for its automobiles but he was prevented from offering loans. This is essentially one of the services the Ex-Im Bank offers, though some of its loan guarantees can be for more than $1 billion.

A number of prominent Republicans, including House Financial Services Committee Chairman Jeb Hensarling (R., Texas), House Majority Leader Kevin McCarthy (R., Calif.) and House Budget Committee Chairman Paul Ryan (R., Wis.) have said the bank's charter shouldn't be reauthorized when it expires at the end of September. They have criticized the bank as representing "crony capitalism," allowing the government to help a select number of companies win business overseas.

Mr. Ryan on Wednesday said the Ex-Im Bank exemplified "big government and big business joining in a common cause to hand out preferences, and I believe that we as Republicans should be pro-market, not necessarily pro-business."

A majority of Democrats and a number of Republicans have said they want the 80-year-old agency to be reauthorized. They have argued--and Mr. Obama stated on Friday--that if the agency isn't renewed, U.S. companies will lose bids to foreign competitors that are backed by their own export-credit agencies.

"We will lose business and we will lose jobs if we don't pass it," Mr. Obama said.

The Ex-Im Bank offers loan guarantees, credit insurance and loans to help U.S. companies and U.S. subsidiaries of foreign companies sell their products overseas. Boeing Co. is the agency's single-largest beneficiary, as Ex-Im helps the aircraft manufacturer sell planes to foreign airlines. A number of other companies--big and small--also benefit. Mr. Obama mentioned Boeing and General Electric Co. as being caught in the middle of the fight.

"For some reason, right now the House Republicans have decided that we shouldn't do this, which means that when American companies go overseas and they're trying to close a sale on selling Boeing planes, for example, or a GE turbine or some other American product that has all kinds of subcontractors behind it and is creating all kinds of jobs and all of sorts of small businesses depend on that sale...we may lose that sale," Mr. Obama said Friday.

Some liberals, including Mr. Obama, have had more complex views of the agency in past years. As a senator from Illinois, Mr. Obama criticized the agency for representing a cozy relationship between certain businesses and the government, and Sen. Bernie Sanders, an independent from Vermont, has likened it to corporate welfare. Mr. Obama has supported the agency since becoming president, however.

The bank's charter came close to expiring a few years ago, but it was rescued in part by a deal struck by then- House Majority Leader Eric Cantor (R., Va.). When Mr. Cantor recently lost his primary for re-election, many felt that Ex-Im Bank's future hung in the balance. A recent House hearing illustrated the split within the House GOP over the agency, with Mr. Hensarling and other lawmakers saying the agency distorts competition and a separate group saying it helps jobs in their districts.

Mr. Hensarling has suggested he could be open to a compromise, but he has said he won't reauthorize the "status quo."

In the Senate, a number of Democrats and one Republican--Sen. Mark Kirk of Illinois--this week introduced a bill that would reauthorize the Ex-Im Bank. The U.S. Chamber of Commerce has said it supports the measure, and business groups are planning to use the August congressional recess to lobby lawmakers to support the bank.

But there is no certain path forward in either the House or the Senate. A number of lobbyists believe that because time is running out, lawmakers could decide to extend the bank's charter for three months, and then revisit the issue during a lame-duck session of Congress after the November elections.

Ex-Im Bank is facing scrutiny on a number of fronts. It recently dismissed three employees and has placed another on administrative leave amid investigations into improper behavior, including allegations of accepting kickbacks. The Justice Department is currently investigating at least some of these cases.

Write to Damian Paletta at damian.paletta@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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This article appears in: News Headlines

Referenced Stocks: GE

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