WASHINGTON (Reuters) - The House of Representatives is expected to vote on Wednesday on a bipartisan deal to keep the U.S. Export-Import Bank operating past May 31st and gradually raise its lending cap to $140 billion, a House leadership aide said on Monday.
House Majority Leader Eric Cantor, a Virginia Republican, and House Minority Whip Steny Hoyer, a Maryland Democrat, struck the deal on Friday, signaling an end to months of uncertainty about the future of the government bank.
The U.S. Chamber of Commerce, the United States’ largest business group, urged House members to approve the compromise plan, which it said would protect tens of thousands of U.S. jobs that could be lost if the bank’s charter is not renewed.
“Ex-Im is especially important to small- and medium-sized businesses, which account for more than 85 percent of Ex-Im’s transactions,” the group’s executive vice president, Bruce Josten, said in a letter to House members.
The National Association of Manufacturers also urged lawmakers to support the Cantor-Hoyer bill.
The nearly 80-year-old government bank provides direct loans and credit guarantees to help U.S. exporters make sales in oversea markets that private lenders consider too risky to operate on their own.
Boeing Co is the bank’s biggest customer. Ex-Im officials have warned they could soon reach the current lending cap of $100 billion, forcing them to stop making new loans to support U.S. exports.
“We appreciate the work of House leadership and staff in putting forth legislation that will extend the Bank’s Charter and expand its lending authority, which will support hundreds of thousands of American export-related jobs,” Ex-Im Bank spokesman Phil Cogan said.
“Once the House votes we hope the Senate will then take necessary actions to extend and approve the Bank’s charter,” Cogan said.
The compromise, which renews the bank’s charter through September 30, 2014, falls short of a four-year renewal sought by the White House and approved late last year by the Senate Banking Committee on an unanimous bipartisan vote.
But efforts to renew the bank’s charter, which expires May 31, ran into opposition from conservative Republicans, who have questioned the need for the bank and raised concerns about taxpayer losses from potential bad loans.
Delta Air Lines also complained it had been hurt by low-interest Ex-Im Bank loans to foreign carriers.
It called the compromise a “good first step forward” because of language directing the U.S. Treasury Department to initiate and pursue multilateral negotiations for the purpose of reducing and then eliminating government export subsidies for aircraft and ultimately ending all government export subsidies.
“We look forward to working with Congress and the Administration on continued Ex-Im reforms that further reduce - and, ultimately, eliminate - the unintended harmful consequences of its presence in the market” the airline said in correspondence to lawmakers late on Friday.
The plan raises the bank’s lending cap to $120 billion through the end of the current fiscal year in September and allows it to rise to $140 billion in equal increments over the next two years as long as the bank maintains a default rate of less than 2 percent, according to a fact sheet provided by Cantor’s office.
The proposed lending cap increases also depend on the bank submitting a business plan to Congress and responding to a review by the Government Accountability Office on its risk management practices.
The bill also contains reporting provisions aimed at preventing defaults that would leave the U.S. taxpayer on the hook for bad loans.
If the overall default rate equals or exceeds 2 percent, Eximbank must implement a corrective plan and provide monthly updates to Congress. If the situation is not corrected within six months, a third party would be brought in to audit the bank.
Another provision requires all companies that do business with the bank to certify they do not do business with Iran, further isolating that country from the international business community due to Western concerns about its nuclear program.
Reporting By Doug Palmer and Thomas Ferraro; Editing by Doina Chiacu