Loss of Export-Import Bank could affect Minnesota business

In a last-ditch effort to save the obscure Export-Import Bank, Minnesota businesses and legislators say the closing of a little-known government agency may hurt Minnesota companies.

Congress failed to reauthorize the more than 80-year-old institution, which finances U.S. exports when traditional banks won't. As a result, the bank's charter is set to expire today.

But some members of Minnesota's Congressional delegation have been working to keep the bank alive. They include U.S. Rep. Tim Walz, a Democrat who represents Minnesota's 1st District.

"These [companies] are using the bank to assure funding sources for exports and they make hiring decisions and production decisions based on their ability to use the Export-Import Bank," Walz said. "Businesses have been telling me for months, 'Reauthorize this thing.' It's been done unanimously since Eisenhower."

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The institution is caught in a political tug-of-war. Democrats and center-right Republicans, including House Speaker John Boehner, say the Export-Import Bank is critical to small and large businesses who want to do business overseas. But far-right conservatives say the bank is a form of corporate welfare.

Some high-profile interests in Washington, D.C., also are involved in the showdown.

The U.S. Chamber of Commerce, which has long supported reauthorization of the bank, has been lobbying lawmakers to save it.

But other groups, including the conservative Heritage Foundation, disagree. They argue that the bank has been mismanaged and would pose a financial threat to U.S. taxpayers if bank reserves run dry.

"The only meaningful way to remedy Ex-Im's multibillion-dollar risk to taxpayers — and the rampant cronyism the export subsidies perpetrate — is to allow the bank's charter to expire," wrote Diane Katz, a senior research fellow in regulatory policy at the Heritage Foundation.

Since 2007, the bank has supported more than 200 Minnesota businesses, from big names like 3M to much smaller businesses, and helped create $3 billion in state exports.

Alexandria Industries, a manufacturing company that employs about 600 people, most in Minnesota, has used the bank for 25 years, largely to insure exports to Asia, CEO Tom Schabel said.

Schabel isn't concerned about the livelihood of his current business if the bank expires. Instead, he's worried that larger companies he counts as customers will have trouble exporting, which will trickle down to businesses like his.

"Some of the rhetoric around it kind of poked me," Schabel said. "It's not just the big guys who are getting a benefit out of it. When I look a government, I think there's probably always better ways to do what we're doing. But this is a program that has many years of good results from it."

Another company that has used the bank is Nortech Systems of Wayzata, Minn. It makes custom cables and wires and employs 800 people, mostly in Minnesota. President and CEO Rich Wasielewski said his company also used the Export-Import Bank to insure foreign receivables.

"Those large, global customers need the Ex-Im Bank to compete in the global market," he said. "[In] most of the countries they deal with, other companies have that type of insurance and support from the government."

Even after its charter expires, the bank won't default on loans and other business it is currently handling. But as long as the bank awaits reauthorization, it won't be able to extend new financing.

Controversy over the Export-Import Bank also exposes fault lines within the Republican Party in Minnesota. In the 2nd District, U.S. Rep. John Kline, a Republican, faces a potential challenge from the right in David Gerson, who has written that the bank is "the poster child of corporate welfare and Washington favoritism."

"We hope [Kline] joins us in the fight to restore faith in the Republican Party by taking a leadership role in restoring free markets and ending Washington gamesmanship and favoritism," Gerson wrote on his blog.

Kline spokesman Troy Young would not say if Kline supports reauthorizing the bank's charter.

But in an email, Young said, "Any legislation should provide greater oversight by ensuring accountability on behalf of the taxpayer by enhancing transparency, improving accountability, and reducing risk. Congressman Kline hopes Republicans and Democrats can come together in a bipartisan way to help employers grow jobs in America."

The Export-Import Bank may get another shot later in the summer, when congressional leaders are considering attaching it to a highway funding bill that is considered essential legislation.