By Damian Paletta and Devlin Barrett
Incoming House Majority Leader Kevin McCarthy on Sunday said he
would not support reauthorizing the charter of the Export-Import
Bank of the United States once it expires in September, a shift
that brings wide political and economic ramifications.
Mr. McCarthy's comments, made during an appearance on Fox News
Sunday, clarified what had previously been a more ambiguous view
about the U.S. trade agency, which was created 80 years ago and
guarantees loans made to help U.S. companies export their goods,
among other things.
Mr. McCarthy's predecessor as majority leader, Rep. Eric Cantor
(R., Va.), helped rescue the Export-Import Bank in 2012 when some
conservatives said they wanted the agency to stop backing loans.
Mr. Cantor helped steer a reauthorization through Congress despite
the objection of some conservatives. Mr. McCarthy of California
supported the agency's reauthorization in 2012, but on Sunday said
the agency should no longer be backing new loans.
Asked if he would allow the Export-Import Bank's charter to
expire, Mr. McCarthy replied, "Yes, because it's something that the
private sector can be able to do."
He added, "One of the biggest problems with government is they
go and take hard-earned money so others do things the private
sector can do. That's what the Ex-Im Bank does."
The comments bolster the position of House Financial Services
Committee Chairman Jeb Hensarling (R., Texas), who has called the
Export-Import Bank "crony capitalism" and said it should expire.
The development, however, could be seen as a blow to a number of
U.S. manufacturers, particularly Boeing Co., as the government
backs a significant number of its sales to foreign airlines.
The U.S. Chamber of Commerce, the National Association of
Manufacturers, and a number of companies were planning this week to
launch a public relations effort to gin up support for
reauthorizing the Export-Import Bank's charter, but they will face
an uphill battle given Mr. McCarthy's new position.
"This is an all-hands-on-deck effort right now because we are
really at a very critical time given the bank's charter expires at
the end of September," said Christopher Wenk, senior director of
international policy at the U.S. Chamber of Commerce.
The chances of the trade agency securing reauthorization without
Mr. McCarthy's support are narrow, particularly given the recent
shakeup among House GOP leaders. The incoming House Majority Whip,
Republican Steve Scalise of Louisiana, has signaled his opposition
to the agency. The only House Republican who could overrule them
both--House Speaker John Boehner (R., Ohio)--has signaled he
won't.
"Boehner has been clear that this is an issue that members,
particularly on the Financial Services Committee, need to
discuss--and that is happening," said Michael Steel, a spokesman
for Mr. Boehner.
In 2012, lawmakers raised the Export-Import Bank's lending limit
to $140 billion from $100 billion, and in fiscal 2013, the bank
authorized $27 billion to support an estimated $37.4 billion in
U.S. export sales. It also sent $1.06 billion to the U.S. Treasury,
money it earned from interest and fees it charged its
customers.
The bank borrows money from the Treasury Department and pays
interest on the funds to the Treasury. It then lends that money out
and charges a higher interest rate, plus a fee, that generate its
revenue. It technically has been self-sustaining since fiscal 2008,
though Congress provides funding for the bank's Office of Inspector
General and sets the bank's lending limit.
If the bank's charter isn't reauthorized, it could continue
servicing the loans it already has made and backed, but it wouldn't
be able to authorize new loans.
After Mr. Cantor lost the Republican primary earlier this month,
speculation had spread through Washington--and Wall Street--that
the Export-Import Bank might fail to win reauthorization.
The Export-Import Bank has caused divisions within the GOP for
several years. More than 100 voted to reauthorize it in 2012, and
close to 40 are expected to send House Republican leaders a letter
this week calling for the charter to be extended again.
The White House also has supported it reauthorization, saying
the agency is critical to helping sustain U.S. exports. Close to 60
other countries have agencies to help finance exports, and
supporters of the bank have said that ending the Export-Import Bank
would put U.S. companies at a competitive disadvantage. Critics of
the bank have said the bank creates too much interference in
private markets.
Kristina Peterson contributed to this article.
Write to Damian Paletta at damian.paletta@wsj.com and Devlin
Barrett at devlin.barrett@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires