On Tuesday, operation of the 81-year-old U.S. Export-Import Bank came to a halt because of Congress’ inaction, directly harming Colorado businesses, workers and families.
The Ex-Im Bank provides loans and loan guarantees to overseas buyers for purchasing U.S. products.
Unfortunately, the Ex-Im has been caught up in the political cross-fire that plagues Congress, most recently with the quarrel about giving President Obama “fast track authority” to complete a trade agreement with the Pacific Rim nations.
If Ex-Im is shut down permanently, the effect will be felt in Colorado, where Ex-Im has recently supported $821 million in exports for 114 companies. More than half of those, 77, are small businesses.
Here are just a few of the Colorado companies that have used Ex-Im in the last two years and their export value: Zuke’s LLC, Durango, $107,000; Sundyne Corp., Arvada, $1.22 million; Jack’s Bean Co, Holyoke, $646,000; Magnolia Trading, Superior, $156,000; MicroMotion, Boulder, $499,000; Coolerado, Denver, $703,000; and Cyclo Toolmakers, Longmont, $355,000.
These companies are important parts of their communities and Colorado’s economy.
It’s worth noting that every major developed country has a government bank dedicated to aiding and supporting its exporters.
The Ex-Im Bank is also one of the very few federal government programs that not only pays for itself but also returns revenue to the U.S. Treasury — to the tune of almost $1 billion per year.
Moreover, in the last six years, the Ex-Im generated $2.7 billion, mostly in fees collected from foreign buyers, and that money goes straight to the U.S. Treasury.
Since it was created during the Great Depression of the 1930s, the Ex-Im Bank has loaned and insured $590 billion in U.S. exports.
By stark contrast, in just two years, China has bankrolled its exporters to the tune of $670 billion and provided them a substantial competitive edge in virtually every manufacturing sector.
Of course, some Ex-Im deals do not work out, but its default rate is just one-tenth of 1 percent — meaning for every 10,000 loans, one fails. By contrast, the average default rate for U.S. banks for real estate loans is 6.23 percent and for consumer loans, 3.68 percent.
At a recent meeting with Denver-area business leaders, Ex-Im Chairman and President Fred Hochberg was asked, “What is ‘Plan B’ for the Bank?”
His response: “Ex-Im Bank is ‘Plan B.’ Plan A is the free market, and we are the alternative. If we aren’t reauthorized by Congress by June 30, China is ‘Plan C.’ ”
Unless Congress acts quickly, Plan C will come to pass and Colorado companies and workers will suffer as opportunities for trade export are lost to places like China. As of Tuesday, no new loans can be made by Ex-Im until it is re-authorized by Congress.
Colorado is an amazing place to live and run a business. However, when 95-percent of the world’s customers live outside of the U.S., we need Ex-Im to keep our exporters competitive and our economy growing.
Leah Curtsinger is federal policy representative for the Colorado Association of Commerce and Industry (CACI).
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