By Damian Paletta and Kristina Peterson
WASHINGTON--Incoming House Majority Leader Kevin McCarthy said
on Sunday he wouldn't support reauthorizing the charter of the
Export-Import Bank of the United States, placing in doubt the
future of a major agency that facilitates U.S. exports.
His remarks deepen a GOP rift over the bank and could aggravate
House Republicans' relationship with business leaders, who say the
bank is vital to boosting U.S. trade.
Conservative lawmakers have pushed for winding it down, and
House leaders have signaled sensitivity to their agenda after a tea
party-aligned upstart defeated outgoing Majority Leader Eric Cantor
this month.
The Ex-Im Bank was created 80 years ago and helps support U.S.
exports through a wide range of programs, including guaranteeing
loans to foreign buyers and providing credit insurance.
Beneficiaries include big manufacturers such as Boeing Co. and
Caterpillar Inc.
Congress sets the Ex-Im Bank's lending cap and must reauthorize
its charter, which is due to expire in September. If it isn't
reauthorized, the agency will be unable to back new financing and
will essentially wind down its loan portfolio.
Asked on Fox News Sunday if he would allow the bank's charter to
expire, Mr. McCarthy replied, "Yes, because it's something that the
private sector can be able to do."
The California Republican added that "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."
Mr. Cantor of Virginia helped steer a reauthorization of the
trade agency through Congress in 2012, bucking some of his more
conservative colleagues. The measure passed easily in the Senate as
well. Mr. McCarthy supported that 2012 move but recently had been
more ambiguous about his view of the agency.
Chances of the Ex-Im Bank's winning reauthorization without his
support are narrow, particularly given the recent shake-up among
House GOP leaders. The incoming House Majority Whip, Steve Scalise
of Louisiana, has signaled his opposition to the agency. The only
House Republican who could overrule them both, Speaker John Boehner
of 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.
Mr. McCarthy's stance bolsters the position of House Financial
Services Chairman Jeb Hensarling (R., Texas), who has also said the
Ex-Im Bank should be wound down, saying the government shouldn't be
involved in private-market decisions.
Critics of the bank have said it causes too much interference in
markets and allows the government to pick winners and losers.
Conservatives also say it creates too many risks for taxpayers, and
argue that other creditors should be on the hook for the loans they
make, not the U.S. government.
Some argue the Ex-Im Bank amounts to a form of "crony
capitalism" and helps support exporters at the expense of domestic
companies.
The issue has caused divisions within the GOP for several years.
In 2012, the House voted 330 to 93 for reauthorization, with 147
Republicans and 183 Democrats in favor.
Close to 40 House Republicans are expected to send House GOP
leaders a letter this week calling for reauthorization.
Supporters of the Ex-Im Bank say failure to renew its charter
would put U.S. companies at a disadvantage because other countries
have agencies offering similar support. The U.S. Chamber of
Commerce, the National Association of Manufacturers and a number of
corporations were planning this week to launch a public-relations
push to support reauthorization.
"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.
A Caterpillar spokeswoman said, "For the U.S. to close the Ex-Im
Bank in this environment is surrendering export markets and
economic growth in the U.S."
"This could be devastating," said Steven Wilburn, chairman and
chief executive of FirmGreen Inc., a Newport Beach, Calif., maker
of equipment used to purify biogas. About 80% of the privately
owned firm's business is outside the U.S., he said, and it could
lose contracts it seeks in the Philippines, Brazil and Mexico
without Ex-Im Bank backing.
Mr. Wilburn said European and South Korean rivals have
government-backed financing. "There's supposed to be a level
playing field," he said.
Boeing has consistently warned that without Ex-Im Bank
financing, it and other U.S. companies could lose business to
overseas competitors. Airbus Group NV receives export-credit
support from agencies in the U.K., France and Germany. Close to 60
countries have agencies to help finance exports.
"As a voting member of Congress, Rep. McCarthy is entitled to
his view," said Boeing in a statement. "We hope that as majority
leader, he will allow the process to continue to allow all members
a vote on this important issue."
The White House supports reauthorization of the Ex-Im Bank. It
"helps American companies create and support jobs here at home at
no cost to taxpayers, and helps us meet our export goals," a White
House spokeswoman said.
Most Democrats have backed reauthorization, but some liberals
have questioned whether the Ex-Im Bank facilitates too much
private-sector government aid.
In 2012, lawmakers raised the agency's credit-exposure limit to
$140 billion from $100 billion. 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.
The bank borrows money from the Treasury Department and pays
interest on the funds to the Treasury. It then lends some of that
money out in direct loans and charges a higher interest rate that,
along with its fees for providing loan guarantees, generates its
revenue. If the bank's charter isn't reauthorized, it could
continue servicing the loans it already has made and backed, but
not authorize new loans.
Devlin Barrett, Doug Cameron and James R. Hagerty contributed to
this article.
Write to Damian Paletta at damian.paletta@wsj.com and Kristina
Peterson at kristina.peterson@wsj.com
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