By Gabe Rubin
November 10, 2015 at 2:12 pm ET
Though pro-bank companies and groups can revel in their victory, they recognize that the five-month lapse in the bank’s charter exposed major vulnerabilities that could jeopardize the long-term future of the bank.
“Opponents took advantage of the fact that it’s a small, esoteric agency that most people haven’t heard about,” said a pro-bank executive, who asked not to be identified before the president has officially signed the reauthorized charter.
Though he was pleased the agency would again be able to issue loan guarantees, he cautioned that the fight had not been bloodless. “Just because Ex-Im has been reauthorized, it doesn’t mean everything is great again. When a customer demands financing and you can’t deliver it, that hurts your business because you weren’t there when they needed it.”
Opponents of the bank, including groups like the Heritage Foundation and Americans for Prosperity, built momentum against the bank’s reauthorization by painting it as an example of “crony capitalism” and government subsidies for big businesses that could have gotten financing elsewhere. They turned the “Bank of Boeing” into a popular moniker for the agency, owing to the high percentage of Ex-Im loans that go to Boeing Co. and its smaller supply companies.
Ultimately, though, the House of Representatives voted overwhelmingly to reauthorize the bank on October 27. Nearly every Democrat supported the measure, along with 127 Republicans. The Senate would not take the matter up as standalone legislation, but both chambers voted to include reauthorization in their highway bill conference reports. The finalized version must be signed by President Obama by Nov. 20.
Still, opponents managed to take an obscure federal agency that used to be reauthorized by unanimous consent and make it one of the most contentious issues of this Congress. Now they’re bullish about shutting down Ex-Im permanently.
“This is the last time we’re in a position to see the bank reauthorized,” said Dan Holler, a spokesman for Heritage Action, in an interview Tuesday. “There will be a Republican nominee for president in 2016 who opposes the bank. That person will be president in 2019 when the bank comes up for reauthorization again.”
Bank opponents in Congress are also taking the long view. “I’m gratified and amazed that the charter has remained expired for four months. I never really thought I could achieve that,” said House Financial Services Committee Chairman Jeb Hensarling following the October 27 House vote that all but clinched Ex-Im’s fate. “I think a lot of members on the Republican side have now taken a second look and asked, ‘Do we want to support free enterprise interest? Do we want to support corporate welfare?’ I’m hopeful that, versus past practice, that more Republicans will let their voice be known.”
The pro-bank executive admitted that Hensarling’s perch atop the committee was a major reason for the long lapse in Ex-Im’s charter. “Everyone who’s involved in this fight recognizes that the opposition had two things going in its favor. One was having the Chairman of Financial Services on their side, because they could block a vote on Ex-Im,” he said. “The other was an education gap about Ex-Im, and they filled the education gap with misinformation about Ex-Im.”
Hensarling has repeatedly maintained that he never brought up the bank for a vote in committee because a majority of the panel’s Republicans did not support reauthorization—a fact that was borne out in the October House vote. And where bank supporters see a campaign of “misinformation,” opponents see an opportunity to promote a form of conservatism that emphasizes market freedom over the interests of big business.
“I don’t think anyone is under the illusion that the Republican Party is totally ready to change course and let go of its Chamber of Commerce wing. But the leadership is able to take that step,” Holler said. “If they are willing to make this a theme—getting rid of government favoritism and corporate welfare—I think you’ll see a lot more Republicans embrace these positions.”
For now, though, bank opponents have no intention of sitting on their hands for the next four years waiting to kill Ex-Im. They plan to turn their fire on other examples of what they consider to be government intrusions into the private sector, particularly in the form of tax credits. Their goal is not to punish big businesses, they say, but to make them abide by the rules of the market.
“We want them to be successful, but we don’t want taxpayers to be on the hook,” Holler said.
Gabe Rubin previously worked at Morning Consult as a reporter covering finance.