U.S. Senator Bob Corker, R-Tenn., has introduced an amendment (amdt.#2102) requiring minimum capital standards and certification of foreign exports to legislation (H.R.2072) reauthorizing the Export-Import Bank of the United States. The bank, similar to competing entities in other countries, makes affordable loans available to companies that export American products overseas but are unable to obtain financing from other sources. The Corker amendment would also require the bank to certify private financing is unavailable or too expensive before making a loan.
"The 2008 financial crisis taught us the hard way how critical it is for banks to have enough capital to protect against losses. Our amendment would finally apply the same principal to the Export-Import Bank by establishing a 10 percent minimum capital standard and certification that the private sector is unable to finance a similar loan," Corker said. "These added capital requirements help ensure if loans go bad, taxpayers are protected against those losses and the Ex-Im Bank is less likely to be bailed out by Congress. If we're going to reauthorize this institution to help sell American products overseas and keep our competitive edge in the world marketplace, we need to create an added buffer against taxpayer losses."
The Ex-Im Bank's existing charter requires $1 billion in capital but as lending limits have increased, the capital requirement has not. If the reauthorization were to proceed as written, with no limitations on leverage, the bank could be leveraged as highly as 140-to-1, a significant risk to taxpayers since there is an explicit link to the Treasury Department.
Specifically, the amendment would:
(1) Limit leverage to 10-to-1 at the bank as an additional buffer against taxpayer losses.
(2) Require the bank to certify that private financing is not available or is prohibitively expensive prior to making a loan, and that a loan by a foreign country's export agency is also available to a U.S. competitor. This is consistent with the Ex/Im Bank's stated mission and adds additional transparency to the bank's operations.