How Will the Ex-Im Bank Battle Affect Business?

Some in Congress and industry want the Export-Import Bank shut down.

Jul 1, 2014 at 11:31AM

Reauthorization of the U.S. Export-Import Bank is usually a rubber-stamped affair in Congress. Not this year.

Lawmakers, interested parties, and competing business interests are gearing up for a battle over funding of the obscure government agency, which provides loans to foreign companies and countries so they can buy the goods of American businesses like The Boeing Company (NYSE:BA) and General Electric Company (NYSE:GE).

The Ex-Im Bank was envisioned to "create a level playing field" in "critical" industries. Supporters claim that it is needed to counterbalance subsidies offered by foreign governments such as that provided by European Union-member countries to the Airbus division of the European Aeronautic Defence and Space Co. NV (NASDAQOTH:EADSY). Airbus and Boeing have been battling it out for supremacy for many years, flip-flopping back and forth at the No. 1 and No. 2 positions.

Ex-Im detractors say that what the bank does amounts to corporate welfare that bets on certain industries and companies, all while fleecing taxpayers. On top of that, some corporations, like Delta Airlines(NYSE:DAL), suffer as the result of the practice.

Further complicating things are politics. Consumer advocate Ralph Nader and U.S. Rep. Jeb Hensarling (R-Texas) are on opposite sides of most issues, but they are united in wanting funding for the bank stopped. This group of opponents recently received a big shot in the arm when Rep. Eric Cantor (R-Virginia), a prominent Ex-Im supporter, was ousted in the GOP primary in his district. 

How will the fight affect business?

The case for renewed funding
Lobbyists for Boeing claim that it will be unfair to the company if the Ex-Im Bank doesn't provide loans to foreign airlines and leasing companies. The argument is that if the money was cut off, the carriers would simply go to Airbus to buy new passenger jets. Airbus can discount prices because of the subsidies received. 

Boeing and GE suppliers and employees would suffer, too, according to the crowd that wants to stay the course. The two companies together employ nearly a half-million people.

The case against renewed funding
Domestic airlines such as Delta don't get the same treatment as foreign carriers. There is really no "import" component of the bank, and U.S.-based companies have to go on the open market and borrow huge amounts to finance new aircraft deals, which are typically for billions of dollars.

There has been a lot of consolidation and turmoil in the airline industry, and until just recently, profits have suffered. Maybe domestic airlines need some help.  

U.S. taxpayers are the ones providing the Ex-Im Bank program funding. As the result, tax rates might be affected. Many tax-reform groups like the Tea Party would like to see the practice stopped. 

If funding is eliminated
If Congress removes funding, there could be a big shakeup in how some businesses operate. However, the bottom line would not necessarily be affected.

Boeing and GE -- and other large companies -- would probably need to shift their efforts to the other side of the pond and convince customers to buy their products by discounting prices or offering special financing deals. The auto industry does this on a regular basis. The industrial companies could also partner with big banks to do some deals. Again, not completely unheard of in the business world.

GE is a big supporter and benefactor of the Ex-Im Bank's services. GE sells products such as jet engines, turbines used for power generation, and medical equipment to companies and governments overseas. Any disruption in funding would cause havoc, at least temporarily. 

While in the short term, things could be affected, the net effect to business in the long run would likely be a wash once the dust settles. Investors who take a view that's longer than just a few quarters shouldn't have to worry. 

If funding is renewed
If the Ex-Im is allowed to keep functioning as is, the U.S. airline industry might have to keep consolidating in order to more effectively compete with foreign carriers that receive U.S. taxpayer money. Delta could be left out in the cold again. Boeing and others would continue to be beneficiaries. 

The bottom line is that the status quo, however measured, would benefit some and hurt others.

Foolish conclusion
The U.S. Congress will have to make a decision regarding funding for the Export-Import Bank. Its actions could have consequences for many American businesses and investors. Some could be affected negatively. If the Ex-Im Bank is cut off, the impact will be minimal in the long term. 

Let's see if the lawmakers do the right thing. 

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Mark Morelli has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers