VIDEO: Senator Lankford Explains Objection To Export-Import Bank Reauthorization
WASHINGTON, DC – Ahead of President Obama’s Wednesday meeting with small business owners on the reauthorization of the Export-Import Bank, and a possible vote on it in the Senate this week, Senator James Lankford (R-OK) released a video statement explaining his objection to the reauthorization, and possible reforms he would like to see. On June 30th, the Export-Import Bank’s authorization expired.
The Export-Import Bank is one of twenty federal agencies that participate in trade and export promotion activities. The Bank’s stated goal is to boost employment in the United States by promoting and financing exports through the extension of loans, loan guarantees, and insurance to foreign companies that buy American goods and services. Senator Lankford believes the federal government should facilitate trade and access to overseas markets, however, Lankford objects to the use of federal tax dollars for the subsidization of foreign company purchases while giving those foreign companies a competitive advantage against other American Companies. Among other objections, Lankford disagrees with the Bank’s definition of small businesses as 1,500 or fewer employees.
Below is the transcript from the video:
“The Ex-Im Bank was created to help promote trade. It’s one of twenty different entities in the federal government that promotes trade internationally. It’s a good thing for us to actually do international trade. We want American businesses to compete not only in America, but around the world, and it takes some connection with the government to help facilitate that trade. So the Ex-Im Bank it its purpose is not necessarily bad, but what it’s become has become a problem.
“There are four main things that it does. Two of them really dominate the Ex-Im Bank. One is the loans – just the direct loans that the Ex-Im bank does. Subsidizing taxpayer-backed loans to companies to be able to do overseas business. Now, the second one is taxpayer-backed loan guarantees. That is, someone would actually facilitate the loan, but if that loan defaults, either for political instability overseas, or for just the company overseas just went out of business, taxpayers then cover the bill for that. Those are the two main things that the Ex-Im Bank does.
“There are several different proposals on Ex-Im right now, and a lot of different issues that are hanging out there. I’ve proposed multiple different reforms, and there’s quite a few of us that have talked about it. Let me just bring up a couple of those reforms I think need to happen with Ex-Im before we do anything that deals with Ex-Im in the days ahead.
“One of them is this small business conversation about Ex-Im. Ex-Im likes to talk a lot about how many small businesses actually operate through Ex-Im, but the problem is the definition. When you ask Ex-Im ‘what is a small business?,’ they’ll tell you it’s a company with 1,500 employees or less. Well most Americans would not consider a business with 1,500 employees as a small business, so Ex-Im kind of fudges the numbers a little bit there to say we do allow small business, but you have to ask what the definition is, so that definition needs to go to an actual definition for small businesses and that to help promote small businesses. The majority of the loans that are done for international trade, 98% and in fact from the United States is done without using the Ex-Im bank and the vast majority of small businesses don’t use Ex-Im on that, though some do, and choose to be able to operate with that.
“Second thing is right now we’re subsidizing loans to foreign companies that those companies are also getting subsidies from their government and then they’re creating a product and then competing against American businesses. It’s not right for American taxpayer dollars to subsidize companies that actually compete against other American companies. We’ve got to fix that.
“We also have subsidies going to foreign-owned and state-owned banks overseas. Some of those we actually have a bar on right now, for instance, some of the largest Russian banks in the past were subsidized by Ex-Im loans.
“There’s also an issue about loan guarantees, and how we handle that with what’s instability in other countries versus what’s just commercial risk. Real banks do commercial risk in loans, and they can kind of figure that out. I understand why the federal government gets involved there if there’s international political risk involved in that alone, but right now, the Ex-Im Bank is doing both of those, both commercial risk and overseas political instability risks. That’s a real problem.
“So, a lot of these things that are hanging out there as real reforms as well as multiple others. We’ve got to be able to reform this Bank, if it’s going to continue. The problem is, the proposals are to press on and keep it as is, or to do more reporting and transparency. I don’t think the federal taxpayer needs more transparency, they need real reform in this Bank. That’s why I have not been able to support any of their proposals, because the Bank is not being reformed and not being fixed and the tax payers aren’t being protected in the process.
“This is an ongoing conversation, but I can’t support any of the current proposals on that, and I wanted to be able to explain the why’s and that what’s, and to give people the other side of the story as we deal with Ex-Im.”