In the News

Jul 19 2014

Mississippi lawmakers support Ex-Im Bank

Clarion-Ledger, Jackson

The fate of a bank that helps companies in Mississippi export products overseas is in doubt.

WASHINGTON – It’s been about five years since Tony Malik decided to “dabble” in foreign exports and asked the Export-Import Bank to help him complete a deal to sell window components to a customer in Chile.

This year, his company, Magnolia Metal & Plastics, expects $300,000 in sales to that customer, and Malik hopes to find others in South America.

“For me it’s been a real success,” Malik, co-owner of the Vicksburg company, said of his experience with the Export-Import Bank. “I know $300,000 isn’t a lot of sales to a lot of people, but to me that’s a major thing.”

But Malik is nervous about the fate of the bank, which helps companies in Mississippi and across the country export products overseas. With only weeks left before the summer recess, Congress is debating whether to reauthorize the bank’s charter and lending cap.

Most of Mississippi’s lawmakers support reauthorization.

Republican Rep. Gregg Harper, who represents the 3rd Congressional District, recently told GOP leaders reauthorizing the bank would provide “certainty and stability” for American companies.

“Efforts to diminish Ex-Im bank’s ability to fulfill its mission — to support U.S. jobs through exports — can only result in the bolstering of foreign companies competing with U.S. exporters, which will result in American jobs being lost,” Harper said.

But key House Republicans and some conservative lawmakers and groups oppose renewing the popular, 80-year-old Export-Import Bank, whose charter is set to expire Sept. 30.

The bank provides U.S. exporters with billions in financing, including export credit insurance, to sell their products and compete in the global marketplace. Its lending cap is currently set at $140 billion.

“Conservatism supports and protects people’s opportunity to succeed,” said Rep. John Fleming, R-La. “Ex-Im Bank supports and protects politically favored businesses with American tax dollars. If we’re serious when we say the federal government shouldn’t provide welfare for people who could do well on their own without it, then we certainly shouldn’t be providing corporate welfare.”

Two conservative groups — the Club for Growth and Heritage Action for America — likely will make reauthorization legislation a “key vote” in rating lawmakers.

“If (companies are) doing sound business deals, the idea that there wouldn’t be private-sector financing available is absurd, especially when you consider that 98 percent of exports occur without the help of the Export-Import bank,” said Dan Holler, Heritage Action for America’s communications director.

Some Mississippi companies, however, say the bank plays a valuable role helping them expand and create jobs.

Malik, whose company has 30-35 workers, said the bank is particularly helpful for small businesses.

“Large companies that can afford to insure their own receivables, they’re great to do it on their own,” Malik said. “But for small companies trying to develop an export market, I don’t see any way that any of us can do it without the backing of the Ex-Im bank.”

David Kass, a teaching fellow at the University of Maryland’s department of finance, said it’s unlikely the private sector could replicate the Export-Import Bank’s direct loans and guarantees to foreign buyers of U.S. goods and services, working capital guarantees and export credit insurance.

“Smaller banks lack the expertise to facilitate deals in numerous countries,” he wrote in an email. “Big banks and insurers do have this expertise but are unlikely to have an interest in facilitating the small transactions which represent the bulk of what the Ex-IM bank does.”

The bank has helped 21 Mississippi companies since 2007 with $164 million worth of exports, according to bank data. Nine Mississippi companies, including Magnolia Metal & Plastics and many companies in Harper’s district, used the bank last year.

Harper joined 39 other House Republicans on a June 23 letter to House Majority Leader Kevin McCarthy of California and House Speaker John Boehner of Ohio calling on Congress to approve a multi-year reauthorization.

“Given our nation’s fragile economic recovery, we must continue to promote U.S. exports and create American jobs and not disadvantage U.S. manufacturers in a competitive global marketplace,” the letter said.

House Democrats, including Rep. Bennie Thompson of Mississippi’s 2nd District, are united behind a bill to reauthorize the bank through 2021 and increase its lending cap by $5 billion each year, up to $175 billion.

“The Ex-Im Bank provides critical financial support to manufacturers in the 2nd District and throughout Mississippi by helping to finance exports with government-backed loan guarantees,” Thompson said.

Thompson, the only Democrat in the Mississippi delegation, said Republicans should also support the bank.

“Republicans claim to want to cut spending and balance the budget but are unwilling to reauthorize an agency that improves our balance of trade and adds revenue to the Treasury,” he said.

Republican Rep. Steve Palazzo of Mississippi’s 4th District did not respond to several requests for comment about his position.

Republican Sens. Thad Cochran and Roger Wicker say the bank is vital to state and national economies.

“The Export-Import Bank has played an important role in keeping American businesses globally competitive against foreign companies whose governments aggressively attempt to undercut U.S. products,” Cochran said. “The bank has an important role to play in both protecting American jobs and fostering an environment that helps create new jobs.”

Wicker said the bank has helped American businesses remain competitive in the global economy.

“It has bolstered Mississippi’s economy by supporting both large and small businesses across our state in cities like Greenwood, Corinth, Forest and Pearl, to name a few,” Wicker said. “This is done with little or no cost to taxpayers.”

Malik, co-owner of Magnolia Metal & Plastics in Vicksburg, said he was shocked to learn Congress is even debating whether to reauthorize the bank.

“I see this as an integral part of small businesses being able to create an export market,” he said. “I’m very nervous. I’ve got $250,000 in pending business right now for the fall months. Without that, I’m going to have to seek some other sort of guarantee... It could actually cost me my export business.”

Christopher Doering and Nicole Gaudiano of the Gannett Washington Bureau contributed to this report.

MISSISSIPPI EXPORTERS:
•   21: Total exporters
•   14: Small business
•   1: Minority owned
•   1: Women owned

Mississippi Export Summary:
•   $164 million: Exports supported
•   $155 million: Disbursements
•   $139 million: Total authorizations

Top 3 Export Destinations:
•   Mexico
•   United Kingdom
•   China

Top Exporters:
•   Pharmaceutical Trade Services Inc.
•   Viking Range Corp.
•   J.T. Shannon Lumber Co. Inc.

Source: Export-Import Bank of the United States

 

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