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WASHINGTON, D.C. – The Senate Banking, Housing, and Urban Affairs Committee kicked off negotiations to reauthorize the U.S. Export-Import (EXIM) Bank and turn it into an even more powerful tool to spur domestic manufacturing. Last month, U.S. Senators Kevin Cramer (R-ND) and Mark Warner (D-VA) introduced legislation to reauthorize the bank for 10 years, the longest reauthorization of the bank in history. It is his second time leading the charge to reauthorize the bank.
John Jovanovic, Chairman of the EXIM Bank, testified before the committee and provided recommendations for the bank’s reauthorization.
Cramer reflected on his eight years in the Senate advocating for the EXIM bank, “The Export-Import Bank has been as high a priority on this committee for me as any, which is, you know, why I was quite honored seven years ago to be able to carry the ball for the, at that time, record reauthorization of seven years […] But now, of course, I have the bill, along with Senator Warner, to extend it to 10 years. I think that certainty helps the certainty of the bank and the ability of the bank to lend to companies who need long-term certainty. And so, I'm looking forward to that. I'm very encouraged by the encouragement and by the enthusiasm on both sides of the aisle on that.”
He asked Jovanovic his thoughts on freeing up the 2% default rate, “… I'd be interested in ideas, whether it's a menu of ideas or your favorite idea of what the default rate, what we could do to free that up a little bit or free you up a little bit, to do some of the bigger tasks, take on some of the greater risks while protecting the funds?”
“Senator Cramer, thank you for your continued thought leadership,” responded Jovanovic. “Thank you for championing EXIM clearly in times when it was a lot less popular to do so. I think the best thing that we could do on the risk management provisions is go back to the system that worked so well for 81 plus years, that's reasonable, that's accountable. Notice we're not asking to move the goalposts. We're not asking to be judged by different metrics. We're simply saying that over the course of the past few years, we've had provisions put on the bank that weren't meant to set it up for success. They were meant to suffocate it. And so what we're asking for is, bring us back to the system that works so well, for 81 plus years, and allow us to pursue the transactions that we're all describing, that we want to pursue. And that's really what we need, and that's what we're asking for today.”
“The 2% is not necessarily the problem? Or is that the problem?" Cramer asked. “Because you testify that your default rate is much lower than private lenders?”
“[It is] significantly lower. I'm not asking to move the goalpost,” Jovanovic continued. “You can keep the 2%. All I'm saying is that allow us a very reasonable opportunity to manage through it and manage through it together with actually more oversight and more partnership. It's really the threat of the looming pencils down provision that's chilling. I think we may be the only 92-year-old institution that has the threat of infant mortality, every few years. So, we just want the opportunity to operate, and more importantly, I think you said it best in your opening remarks, to send that very clear signal that we're here to stay, especially on these longer-dated strategic transactions.”
Cramer also discussed the China and Transformational Exports Program (CTEP), which was created in the previous reauthorization and is tasked with helping American companies compete with Chinese industries.
“We talked a lot about the China provision, and we all recall that, we hear some of the success of it,” concluded Cramer. “But it was sort of, I was sort of struck when Senator Warren was talking that if we're really doing our job, China doesn't matter. Every exporter and importer is competing against China. But I think it's great to have a focus, you know, or even if it's just a rhetorical focus. So with that, I just appreciate your service. I appreciate your being here. I appreciate your directness. But I also have to say, the irony is not lost on me that we're all in a bipartisan way championing Export-Import at the same time as our colleagues on the other side of the dais are trying to defund our customs offices. It's kind of unbelievable to me that we want to encourage you to help us do more export and import. Well, they want to shut down the very mechanism that allows that practice to take place.”